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 August 2019

 

 

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

SEMI-ANNUAL REPORT

(From January 1, 2019 to June 30, 2019)

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. REFERENCES TO “H1” OF A FISCAL YEAR ARE REFERENCES TO THE SIX-MONTH PERIOD ENDED JUNE 30 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      4  
    A.   Name and contact information      4  
    B.   Domestic credit rating      4  
    C.   Capitalization      6  
    D.   Voting rights      6  
    E.   Dividends      7  
  2.   Business      7  
    A.   Business overview      7  
    B.   Industry      8  
    C.   New businesses      10  
  3.   Major Products and Raw Materials      10  
    A.   Major products      10  
    B.   Average selling price trend of major products      10  
    C.   Major raw materials      11  
  4.   Production and Equipment      12  
    A.   Production capacity and output      12  
    B.   Production performance and utilization ratio      12  
    C.   Investment plan      12  
  5.   Sales      13  
    A.   Sales performance      13  
    B.   Sales route and sales method      13  
    C.   Purchase orders      14  
  6.   Market Risks and Risk Management      14  
    A.   Market risks      14  
    B.   Risk management      15  

 

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  7.   Derivative Contracts      15  
    A.   Currency risks      15  
    B.   Interest rate risks      15  
  8.   Major Contracts      16  
  9.   Research & Development      16  
    A.   Summary of R&D-related expenditures      16  
    B.   R&D achievements      16  
  10.   Intellectual Property      18  
  11.   Environmental and Safety Matters      19  
  12.   Financial Information      22  
    A.   Financial highlights (Based on consolidated K-IFRS)      22  
    B.   Financial highlights (Based on separate K-IFRS)      23  
    C.   Consolidated subsidiaries      24  
    D.   Status of equity investment      24  
  13.   Audit Information      25  
    A.   Audit service      25  
    B.   Non-audit service      25  
  14.   Board of Directors      26  
    A.   Members of the board of directors      26  
    B.   Committees of the board of directors      26  
    C.   Independence of directors      26  
  15.   Information Regarding Shares      27  
    A.   Total number of shares      27  
    B.   Shareholder list      27  
  16.   Directors and Employees      27  
    A.   Directors      27  
    B.   Employees      30  
  17.   Other Matters      31  
    A.   Legal proceedings      31  
    B.   Material events subsequent to the reporting period      32  

Attachment: 1. Financial Statements in accordance with K-IFRS

 

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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)

Corporate bonds    May 2017    AA    NICE Information Service Co., Ltd. (AAA ~ D)
   February 2018
   May 2018
   February 2019    AA-   
   April 2019   
   May 2017    AA    Korea Investors Service, Inc. (AAA ~ D)
   October 2017
   May 2018
   February 2019    AA-   
   June 2019   
   May 2017    AA    Korea Ratings Corporation (AAA ~ D)
   October 2017
   February 2018
   April 2018
   April 2019    AA-   

 

(1)

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.

 

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  (2)

Corporate bonds (Overseas)

 

Subject instrument

  

Month of rating

   Credit rating   

Rating agency (Rating range)

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.

 

  (3)

Commercial paper

 

Subject instrument

  

Month of rating

   Credit rating (1)   

Rating agency (Rating range)

Commercial paper

   May 2017    A1    Korea Investors Service, Inc. (A1 ~ D)
   May 2017    A1    Korea Ratings Corporation (A1 ~ D)
   October 2017    A1    Korea Investors Service, Inc. (A1 ~ D)
   December 2017    A1    Korea Ratings Corporation (A1 ~ D)
   May 2018    A1    Korea Investors Service, Inc. (A1 ~ D)
   May 2018    A1    NICE Information Service Co., Ltd. (A1 ~ D)
   November 2018    Cancelled (2)    Korea Investors Service, Inc. (A1 ~ D)
   November 2018    Cancelled (2)    NICE Information Service Co., Ltd. (A1 ~ D)

 

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(1)

Domestic commercial paper credit ratings are generally defined to indicate the following:

 

Subject instrument

  

Credit rating

  

Definition

Commercial paper

   A1    Timely repayment capability is at the highest level with extremely low investment risk and is stable such that it will not be influenced by any reasonably foreseeable changes in external factors.
   A2    Strong capacity for timely repayment with very low investment risk. This capacity may, nevertheless, be slightly inferior than is the case for the highest rating category.
   A3    Capacity for timely repayment is adequate with low investment risk. This capacity may, nevertheless, be somewhat influenced by sudden changes in external factors.
   B    Capacity for timely repayment is acknowledged, but there are some speculative characteristics.
   C    Capacity for timely repayment is questionable.
   D    Insolvency.

LOGO ‘+’ or ‘-’ modifier can be attached to ratings A2 through B to differentiate ratings within broader rating categories.

 

(2)

Ratings have been cancelled due to repayment of our outstanding commercial paper on October 22, 2018 upon maturity.

 

  C.

Capitalization

 

  (1)

Change in capital stock (as of June 30, 2019)

There were no changes to our issued capital stock during the reporting period ended June 30, 2019.

 

  D.

Voting rights (as of June 30, 2019)

 

         (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     —    
    

 

 

 

 

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(1)

Authorized: 500,000,000 shares

 

  E.

Dividends

Dividends for the three most recent fiscal years

 

Description (unit)

     2019 H1      2018      2017  

Par value (Won)

 

     5,000        5,000        5,000  

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

 

     (609,310 )       (207,239 )       1,802,756  

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

        (1,703 )       (579 )       5,038  
     

 

 

    

 

 

    

 

 

 

Total cash dividend amount for the period (million Won)

        —          —          178,908  
     

 

 

    

 

 

    

 

 

 

Total stock dividend amount for the period (million Won)

        —          —          —    
     

 

 

    

 

 

    

 

 

 

Cash dividend payout ratio (%) (3)

        —          —          9.92 % 

Cash dividend yield (%) (4)

     Common shares        —          —          1.69 % 
     Preferred shares        —          —          —    

Stock dividend yield (%)

     Common shares        —          —          —    
     Preferred shares        —          —          —    

Cash dividend per share (Won)

     Common shares        —          —          500  
     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 of W 5,000 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.

(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.

 

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 June 30, 2019, 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 June 30, 2019, 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.

Consolidated operating results highlights

 

     (Unit: In billions of Won)  
     2019 H1      2018      2017 (1)  

Sales Revenue

     11,232        24,337        27,790  

Gross Profit

     1,114        3,085        5,366  

Operating Profit (loss)

     (501 )       93        2,462  

Total Assets

     35,601        33,176        29,160  

Total Liabilities

     20,872        18,289        14,178  

 

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(1)

Figures for 2017 were recorded in accordance with the previously applicable accounting standards, including K-IFRS 1018, “Revenue” and K-IFRS 1039, “Financial Instruments.”

 

  B.

Industry

 

  (1)

Industry characteristics

 

  •  

The entry barriers to manufacture display panels are relatively high due to the technology and capital intensive nature of the mass manufacturing process that is required to achieve economies of scale, among other factors.

 

  •  

While growth in the market for displays used in notebook computer, monitor and other traditional IT products has stagnated or declined, the market for small- and medium-sized displays (including those used in smartphones) in the rapidly evolving IT environment has shown gradual growth. The display market for televisions has also shown steady growth mainly due to growing demand from developing countries as well as from consumers in general for larger sized display panels. As for displays used in industrial, automobile and other value added products, we expect to see growth in these markets.

 

  (2)

Growth Potential

 

  •  

We are focusing on securing profitability through differentiated products such as “Crystal 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 sector, we are expanding our offerings of premium products such as OLED and UHD 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 through building a successful line-up of new products and investments in the 8.5th and 10.5th generation OLED display panel production. In the IT sector, 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 sector, we are continuously striving to secure mass production capabilities for 6th generation plastic OLED smartphones through additional investments. We are also strengthening the foundation for the expansion of small- and medium-sized OLED business.

 

  (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.

 

  •  

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.

 

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  (4)

Market conditions

 

  •  

Most display panel manufacturers are located in East Asia as set forth below. Chinese panel manufacturers have continued to invest in new fabrication facilities and additional supplies, and although the actual level of oversupply has become less severe than the previously forecast level due to certain delays in investments, the concern over a structural oversupply in the market continues to exist.

 

  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:

 

     2019 H1     2018     2017  

Panels for Televisions (1)(2)

     27.2 %      28.3 %      28.1 % 

Panels for Monitors (1)

     24.9 %      30.7 %      36.3 % 

Panels for Notebook Computers (1)

     22.7 %      23.7 %      21.3 % 

Panels for Tablet Computers (1)

     25.2 %      31.0 %      29.1 % 
  

 

 

   

 

 

   

 

 

 

Total (1)

     26.4 %      28.8 %      29.2 % 
  

 

 

   

 

 

   

 

 

 

 

(1)

Source: Large-Area Display Market Tracker (IHS Technology). The relevant amounts for the second quarter of 2019 are estimates only, as the actual results for such period have not yet been released.

(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 product pricing, our relationship with customers, timely investments, adaptable production capabilities, development of new and premium products through technological advances, competitive production costs, success in marketing to our end-brand customers, component and raw material supply costs, foreign exchange rates and general economic and industry conditions.

 

  •  

In order to compete effectively, it is critical to be cost competitive and maintain stable and long-term relationships with customers which will enable us to be profitable even in a buyer’s market.

 

  •  

A substantial portion of our sales is attributable to a limited number of end-brand customers and their designated system integrators. The loss of these end-brand customers, as a result of customers entering into strategic supplier arrangements with our competitors or otherwise, would result in reduced sales.

 

  •  

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 by obtaining patents and undertaking monitoring activities in our major markets. It is also necessary to recruit and retain experienced key managerial personnel and skilled line operators.

 

  •  

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 OLED, IPS, 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 supplied ultra-high definition (“Ultra HD” or “UHD”) OLED panels as well as “Wallpaper” and “Crystal Sound” OLED panels for televisions, plastic OLED panels for smartphones, round OLED panels for wearable devices among others and have shown that we are technologically a step ahead of the competition. With respect to TFT-LCD panels, we are leading the market with our differentiated products with IPS technology, such as our ultra-large and high definition UHD television panels, large sized/borderless monitors, high-resolution/oxide notebooks and automotive and commercial products, and have prepared our production facilities to produce products with in-TOUCH technology.

 

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  •  

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)
                               2019 H1  

Business area

  

Sales type

   Items
(By product) 		     Usage      Major
trademark 		     Sales
Revenue 		     Percentages
(%) 		 

Display

   Goods/ Products/ Services/ Other sales      Televisions       
Panels for
televisions 		 
  		     LG Display        4,295        38.24 % 
    
Desktop
monitors 		 
  		    
Panels for
monitors 		 
  		     LG Display        1,953        17.39 % 
    
Tablet
products 		 
  		    
Panels for
tablets 		 
  		     LG Display        1,191        10.61 % 
    
Notebook
computers 		 
  		    

Panels for
notebook
computers 		 
 
  		     LG Display        1,313        11.69 % 
    
Mobile,
etc. 		 
  		    

Panels for
smartphones,
etc. 		 
 
  		     LG Display        2,480        22.07 % 
              

 

 

    

 

 

 

Total

                 11,232        100.0 % 
              

 

 

    

 

 

 

 

  B.

Average selling price trend of major products

While 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 second quarter of 2019 decreased by approximately 14% compared to the first quarter of 2019 mainly due to conservative purchases from electronics manufacturers and decrease in the average selling price of television panels. There is no assurance that the average selling prices of display panels will not fluctuate in the future due to changes in market conditions.

 

     (Unit: US$ / m 2 )

Period

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

2019 Q2

   456

2019 Q1

   528

2018 Q4

   559

2018 Q3

   500

2018 Q2

   501

2018 Q1

   522

2017 Q4

   589

2017 Q3

   600

2017 Q2

   574

2017 Q1

   608

 

(1)

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

(2)

Excludes semi-finished products in the cell process.

 

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  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

Display

  

Raw materials

   Printed
circuit boards 		  

Display panel
manufacturing

     1,106        19.0 %    Korea SMT Co., Ltd., etc.
   Polarizers      1,037        17.8 %    LG Chem, etc.
   Backlights      920        15.8 %    Heesung Electronics LTD., etc.
   Glass      585        10.1 %    Paju Electric Glass Co., Ltd.,
Asahi Electric Glass Co., Ltd.,
etc.
   Drive IC      424        7.3 %    Silicon Works Co., Ltd.,
MagnaChip Semiconductor
Corporation, etc.
   Others      1,752        30.1 %    —  
           

 

 

    

 

 

   
Total               5,824        100.0 %   
           

 

 

    

 

 

   

- Period: January 1, 2019 ~ June 30, 2019.

(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 EGI (Electrolytic Galvanized Iron), which is the main raw material for BLU components, increased by 0.3% from 2017 to 2018 but decreased by 9.9% from 2018 to the second quarter of 2019. Such decrease in the second quarter of 2019 was due to the concerns of a slowdown in the economy and a decrease in demand as a result of the prolonged U.S.-China trade dispute. The average price of resin increased by 18.7% from 2017 to 2018 but decreased by 36.6% from 2018 to the second quarter of 2019. Such decrease in the second quarter of 2019 was due to an increase in supply as a result of new investments by suppliers. The average price of copper, the main raw material for PCB components, increased by 5.9% from 2017 to 2018 but decreased by 6.4% from 2018 to the second quarter of 2019. Such decrease in the second quarter of 2019 was due to the effects of an expected interest rate cut in the United States in the third quarter of 2019 and the prolonged U.S.-China trade disputes.

 

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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    2019 H1 (1)      2018 (2)      2017 (2)  

Display

   Display panel    Gumi, Paju, Guangzhou      4,910        10,161        10,538  

 

(1)

Calculated based on the maximum monthly input capacity (based on glass input substrate size for eighth-generation glass sheets) during the period multiplied by the number of months in the period (i.e., 3 months).

(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).

 

  (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    2019 H1 (1)      2018 (1)      2017 (1)  

Display

   Display panel    Gumi, Paju, Guangzhou      4,510        9,428        9,262  

 

(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 2019 H1 		   Actual working hours
in 2019 H1 		   Average utilization ratio

Gumi

   4,344 (1)

(24 hours x 181 days) (2)

   4,296 (1)

(24 hours x 179 days) (2)

   98.9%

Paju

   4,344 (1)

(24 hours x 181 days) (2)

   4,296 (1)

(24 hours x 179 days) (2)

   98.9%

Guangzhou

   4,344 (1)

(24 hours x 181 days) (2)

   4,344 (1)

(24 hours x 181 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 2018, our total capital expenditures on a cash out basis was W 7.9 trillion. In 2019, we plan to continue investing in new technologies for the future, including OLED and oxide technologies, and respond to increases in demand for large-sized panels.

 

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5.

Sales

 

  A.

Sales performance

 

               (Unit: In billions of Won)  

Business area

   Sales types    Items (Market)    2019 H1      2018      2017  

Display

   Products    Display panel    Overseas (1)      10,487        22,722        25,763  
   Korea (1)      726        1,572        1,982  
     

 

 

    

 

 

    

 

 

 
   Total      11,213        24,294        27,745  
           

 

 

    

 

 

    

 

 

 
   Royalty    LCD, OLED
technology
patent 		   Overseas (1)      7        18        20  
   Korea (1)      0        0        0  
     

 

 

    

 

 

    

 

 

 
   Total      7        18        20  
           

 

 

    

 

 

    

 

 

 
   Others    Raw materials,
components,
etc. 		   Overseas (1)      9        8        11  
   Korea (1)      3        17        14  
     

 

 

    

 

 

    

 

 

 
   Total      12        25        25  
           

 

 

    

 

 

    

 

 

 
         Overseas (1)      10,502        22,747        25,794  
      Total    Korea (1)      730        1,590        1,996  
           

 

 

    

 

 

    

 

 

 
         Total      11,232        24,337        27,790  
           

 

 

    

 

 

    

 

 

 

 

(1)

Based on ship-to-party.

(2)

Sales for 2017 were recorded based on previously applicable accounting standards of K-IFRS 1018, “Revenue” and K-IFRS 1039, “Financial Instruments.”

 

  B.

Sales organization and sales route

 

  •  

As of June 30, 2019, each of our television, IT, mobile and OLED 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      93.8 % 
   Headquarters      6.2 % 

Overseas sales portion (overseas sales / total sales)

        93.5 % 

Korea

   Overseas subsidiaries      4.5 % 
   Headquarters      95.5 % 

Korea sales portion (Korea sales / total sales)

        6.5 % 

 

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  (3)

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.

 

  (4)

Sales strategy

 

  •  

As part of our sales strategy, 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, CSO, 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), industrial products (including aviation and medical equipment) 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.

 

  (5)

Major customers

 

  •  

Customers “A” and “B” each accounted for more than 10% of our sales revenue in each of the first half of 2018 and 2019, and our sales revenue derived from our top ten customers comprised 77% of our total sales revenue in the first half of 2018 and 78% in the first half of 2019.

 

  (6)

Purchase orders

 

  •  

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

 

6.

Market Risks and Risk Management

 

  A.

Market risks

The display industry continues to experience continued declines in the average selling prices of TFT-LCD and OLED panels irrespective of cyclical fluctuations in the industry, and our margins would be adversely impacted if prices decrease faster than we are able to reduce our costs.

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

Our ability to compete successfully depends on factors both within and outside our control, including product pricing, performance and reliability, timely investments, adaptable production capabilities, utilization of differentiated technologies in product development, success or failure of our end-brand customers in marketing their brands and products, component and raw material supply costs, and general economic and industry conditions. We cannot provide assurance that we will be able to compete successfully with our competitors on these fronts and, as a result, we may be unable to sustain our current market position.

 

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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.

 

  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.

 

7.

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.

 

  •  

In 2018, 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 $1,785 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 of W 37,336 million 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.

 

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8.

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

   Semiconductor Energy Laboratory    October 2005 ~    Patent licensing of LCD and OLED related technology
   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 2022    Patent cross-licensing of OLED related technology

 

9.

Research & Development

 

  A.

Summary of R&D-related expenditures

 

   (Unit: In millions of Won, except percentages)

 

Items (1)

   2019 H1     2018     2017  

Material Cost

     485,286       656,011       646,622  

Labor Cost

     353,669       667,837       668,429  

Depreciation Expense

     229,060       426,264       298,383  

Others

     137,196       314,007       298,256  
     

 

 

   

 

 

   

 

 

 

Total R&D-Related Expenditures

     1,205,211       2,064,119       1,911,690  
     

 

 

   

 

 

   

 

 

 
   Selling & Administrative Expenses      594,262       918,512       917,645  

Accounting Treatment (2)

   Manufacturing Cost      487,445       772,772       657,838  
   Development Cost (Intangible Assets)      123,504       372,835       336,207  
     

 

 

   

 

 

   

 

 

 

R&D-Related Expenditures / Revenue Ratio

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

     10.7 %      8.5 %      6.9 % 
     

 

 

   

 

 

   

 

 

 

 

(1)

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

(2)

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

 

  B.

R&D achievements

Achievements in 2017

 

  (1)

Developed 5.7-inch QHD+ full vision display (LG Electronics)

 

  •  

Developed a full vision display smartphone product (G6) through strategic collaboration with other LG Group companies

 

  •  

Applied first 18:9 screen aspect ratio with 4-corner round display

 

  (2)

Developed mobile LTPS 30Hz product (SH 5.1-inch FHD)

 

  •  

Secured 30Hz low-frequency drive technology based on LTPS TFT-LCD

 

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  •  

Reduced logic power consumption through 30Hz low-frequency drive (reduced from 96mW to 69mW on 5.1-inch FHD)

 

  (3)

Developed and released the world’s first Crystal Sound OLED, or CSO, television product

 

  •  

Released product with a new platform concept through development of OLED panel product with integrated speakers

 

  •  

Delivered OLED television product that achieves differentiated value not only in picture quality and design, but also sound quality

 

  (4)

Developed notebook oxide product (13.9-inch, Ultra HD)

 

  •  

Achieved high definition/narrow bezel product through application of oxide BCE GIP technology

 

  •  

Delivered low power consumption product through application of low refresh rate, or LRR, technology

 

  (5)

Developed medical monitor product for surgical endoscope (27.0-inch, Ultra HD)

 

  •  

Newly entered the medical devices market through development and production of medical monitor product for surgical endoscope

 

  •  

Achieved high definition (3,840 x 2,160), high luminance (800 nit) and high contrast ratio (1,300:1)

 

  •  

Implemented coverglass direct bonding applying our own manufacturing processes (M6 line)

 

  (6)

Developed the world’s first four-side borderless monitor with a resolution of 8K4K (31.5-inch 8K4K oxide)

 

  •  

Pioneered Ultra HD Premium MNT market through development of the world’s first four-side borderless monitor with a resolution of 8K4K

 

  •  

Delivered Ultra HD based on oxide GIP (280 PPI with a resolution of 7680x4320)

 

  •  

Delivered wide color gamut (Adobe RGB 100%/DCI 98%), four-side borderless

 

  (7)

Developed the world’s largest automotive Center Information Display (“CID”) product (15.4-inch Widescreen Ultra Extended Graphics Array (“WUXGA”))

 

  •  

Developed the world’s largest auto component display in the automotive industry

 

  •  

Guaranteed the first 1000hr reliability in the automotive industry

 

  (8)

Developed the world’s first 88-inch Ultra Stretch display product

 

  •  

Strengthened competitiveness through application of smart (digital) stepper

 

  (9)

Developed products utilizing U-IPS (75-inch/65-inch/55-inch/49-inch, Ultra HD)

 

  •  

Utilized U-IPS technology to strengthen product competitiveness by improving panel transmittance rate and reflectivity

 

  (10)

Developed the world’s first 65-inch UHD OLED television product utilizing GIP

 

  •  

Strengthened product competitiveness through application of the world’s first oxide based UHD GIP technology

Achievements in 2018

 

  (1)

Developed the world’s first glass-integrated LCD television product (Art Glass Series)

 

  •  

Achieved LCD modular appearance and simplicity in design by using glass material throughout product (including the panel, light guide plate and back cover)

 

  •  

Strengthened competitiveness of frameless design by decreasing bezel size from 7.8mm to 5.9mm

 

  (2)

Developed our first 5.8-inch Ultra HD Mobile 4K product

 

  •  

Developed our first Ultra HD mobile product

 

  •  

Achieved high luminance, low power consumption and HD resolution by applying Ultra HD RGBW (M+) pixel structure

 

  (3)

Developed the world’s first 5.8-inch mobile FHD product applying M+

 

  •  

Our first product applying camera notch concept technology

 

  (4)

Developed the world’s first four-side borderless curved monitor with 1900R curvature radius

 

  •  

Our first product applying glass 0.25T (etching) bezel printing/reverse bonding process technology

 

  •  

Strengthened product competitiveness with our first shared design applying three-side/four-side borderless TFT Mask

 

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  •  

Achieved high-speed driving at 144Hz, high color recall (DCI 98%) and HDR (peak luminance 550nit)

 

  (5)

Developed the world’s first 34-inch large-screen monitor/high-resolution four-sided borderless HDR

 

  •  

Pioneered HD Premium 21:9 monitor market through development of the world’s first WUHD(5K2K), four-side borderless monitor

 

  •  

Delivered Ultra HD (DCI 98Z%, sRGB 135%) by applying Adv. KSF LED PKG technology

 

  •  

Achieved high luminance (HDR 600); typ. 450 nit, maximum 600nit

 

  (6)

Developed LGD 6.01QHD+M+ Full Screen Display (LG Electronics)

 

  •  

Developed a full screen display concept smartphone product (G7) through strategic collaboration with other LG Group companies

 

  •  

Implemented a full screen display product concept through achievement of our first 19.5:9 screen aspect ratio and lower bezel of 2.7mm

 

  (7)

Developed the world’s narrowest bezel videowall product (0.44mm bezel, 55-inch FHD)

 

  •  

Achieved product competitiveness by developing the world’s narrowest bezel (originally 0.9mm g 0.44mm, Even Bezel)

 

  (8)

Developed the world’s first automotive glassless 3D cluster product

 

  •  

Developed FHD glassless barrier type 3D model (12.3 inches, 167 ppi level)

 

  •  

Achieved customers’ eye-tracking movement by applying a top moving barrier panel at the top of the panel

 

  •  

Improved adhesion accuracy of image panel and barrier panel by using OCA bonding technology

 

  •  

Improved barrier contrast ratio by applying a copper-based metal barrier panel

 

  (9)

Developed the world’s first 6th generation a-Si Indirect DXD product (21.9-inch, 14 x 17 resolution, 14 µm pixel pitches)

 

  •  

Entered the DXD market through development of the world’s first 6th generation a-Si Indirect DXD product

 

  •  

Set up infrastructure for DXD product development through the development of our first DXD product

 

  (10)

Developed the world’s first 17-inch large-sized and lightweight notebook monitor

 

  •  

Developed large-sized (17-inch) product with a new screen aspect ratio (16:10)

 

  •  

Developed light-weight product (268g) through securing 17-inch+ Slim Design model technology

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

 

10.

Intellectual Property

As of June 30, 2019, our cumulative patent portfolio (including patents that have already expired) included a total of 42,578 patents, consisting of 18,629 in Korea and 23,949 in other countries.

 

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11.

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 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.

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 2018 to the Korean government in March 2019 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 CO 2  equivalent; Tetra Joules)  

Category

   2018      2017      2016  

Greenhouse gases

     6,696        6,314        6,092  

Energy

     64,296        63,451        60,423  

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 2045 by 65.1%. 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 2018, we reduced our carbon dioxide greenhouse gas emission levels by 1.28 million tons, which was 0.63 million tons more than our initial target of 0.65 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.

The increase in greenhouse gas emission in 2018 is due to the inclusion of certain other greenhouse gas emissions (N2O used in deposition facilities and CO2 in cleaning facilities) during the second planning period (2018 to 2020) that were not included during the first planning period (2015 to 2017) in the overall amount of greenhouse gas emissions in accordance with guidelines issued by the Korean government.

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 and our overseas module production plants in Nanjing, Yantai, Guangzhou and Vietnam, and in December 2013, we have obtained energy management system ISO 50001 certifications for our domestic panel and module production plants and our overseas module production plants in Nanjing and Guangzhou.

 

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In addition, in August 2014, GP1, our newest 8th generation panel fabrication facility located in Guangzhou, China, was the first electronics plant in China to receive the “Green Plant” designation under China’s Green China Policy, in addition to receiving ISO 14001, ISO 50001, OHSAS 18001, ISO 9001, PAS 2050 and ISO 14064-1 certifications. Furthermore, with respect to our production facilities in Gumi, we were first certified by the Ministry of Environment as a “Green Company” for P1 in 1997, and such certification has since been renewed on a timely basis, most recently in May 2018. 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 & 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.) and greenhouse gas emission reduction activities (process gas and energy reduction, 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. We also attained a Leadership A in the climate change information technology sector and received a carbon management honors award. Our continued efforts to reduce greenhouse gas emissions was recognized again in 2018 following 2017 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 Industry, Trade 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 Technology and the Korea Energy Agency in November 2018.

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 scheduled to be 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.

 

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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 received the SGS Eco Label accreditation for our OLED and LCD television models in 2017 and 2018. 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.

In June 2017, we were assessed a fine of W 1 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 of W 2.4 million. In addition, the trial court ordered a fine of W 0.5 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 of W 3.0 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 fine of W 3.0 million on November 22, 2018. We and our chief production officer appealed the trial court’s decision, and the case is currently pending appeal at the Uijeongbu District Court. 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 of W 14.4 million. In relation to this matter, in January 2019, the trial court (Goyang Branch of Uijeongbu District Court) assessed a fine of W 1 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 of W 4 million and W 2 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 of W 1 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 February 2018, we were assessed a fine of W 0.04 million by Paju City for stopping a vehicle in front of a day care center in violation of certain provisions of the Road Traffic Law. We have since paid the fine and are in the process of strengthening our parking guidance procedures to prevent such recurrence.

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 of W 6.95 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.

 

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In April 2018, we were assessed a fine of W 0.24 million by Yeongdeungpo-gu Office for our failure to keep one of our rescue vehicles current with its statutory inspection requirements, which we subsequently paid. In order to prevent recurrence, we are continually monitoring the compliance of inspection requirements for our vehicles.

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 of W 1.6 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.

 

12.

Financial Information

 

  A.

Financial highlights (Based on consolidated K-IFRS). Figures for 2017 are based on previously applicable accounting standards of K-IFRS 1018, “Revenue” and K-IFRS 1039, “Financial Instruments.”

 

     (Unit: In millions of Won)  

Description

   As of June 30, 2019      As of December 31, 2018      As of December 31, 2017  

Current assets

     8,989,170        8,800,127        10,473,703  

Quick assets

     6,419,949        6,108,924        8,123,619  

Inventories

     2,569,221        2,691,203        2,350,084  

Non-current assets

     26,611,569        24,375,583        18,685,984  

Investments in equity accounted investees

     117,281        113,989        122,507  

Property, plant and equipment, net

     23,941,535        21,600,130        16,201,960  

Intangible assets

     931,395        987,642        912,821  

Other non-current assets

     1,621,358        1,673,822        1,448,696  

Total assets

     35,600,739        33,175,710        29,159,687  

Current liabilities

     10,220,308        9,954,483        8,978,682  

Non-current liabilities

     10,651,873        8,334,981        5,199,495  

Total liabilities

     20,872,181        18,289,464        14,178,177  

Share capital

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

Share premium

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

Retained earnings

     9,622,298        10,239,965        10,621,571  

Other equity

     (139,309 )       (300,968 )       (288,280 ) 

Non-controlling interest

     1,205,377        907,057        608,027  
  

 

 

    

 

 

    

 

 

 

Total equity

     14,728,558        14,886,246        14,981,510  
  

 

 

    

 

 

    

 

 

 

 

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

Description

   For the six months ended
June 30, 2019 		     For the year ended
December 31, 2018 		     For the year ended
December 31, 2017 		 

Revenue

     11,232,191        24,336,571        27,790,216  

Operating profit (loss)

     (500,762 )       92,891        2,461,618  

Operating profit (loss) from continuing operations

     (612,820 )       (179,443 )       1,937,052  

Profit (loss) for the period

     (612,820 )       (179,443 )       1,937,052  

Profit (loss) attributable to:

        

Owners of the Company

     (609,310 )       (207,239 )       1,802,756  

Non-controlling interest

     (3,510 )       27,796        134,296  

Basic earnings (loss) per share

     (1,703 )       (579 )       5,038  

Diluted earnings (loss) per share

     (1,703 )       (579 )       5,038  

Number of consolidated entities

     22        22        20  

 

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  B.

Financial highlights (Based on separate K-IFRS). Figures for 2017 are based on previously applicable accounting standards of K-IFRS 1018, “Revenue” and K-IFRS 1039, “Financial Instruments.”

 

     (Unit: In millions of Won)  

Description

   As of June 30, 2019      As of December 31, 2018      As of December 31, 2017  

Current assets

     6,198,149        6,378,339        8,381,074  

Quick assets

     4,340,646        4,427,184        6,698,829  

Inventories

     1,857,503        1,951,155        1,682,245  

Non-current assets

     21,941,498        20,683,767        17,028,341  

Investments

     4,882,331        3,602,214        2,683,941  

Property, plant and equipment, net

     15,059,506        14,984,564        12,487,001  

Intangible assets

     759,928        816,808        731,373  

Other non-current assets

     1,239,733        1,280,181        1,126,026  

Total assets

     28,139,647        27,062,106        25,409,415  

Current liabilities

     8,184,753        7,416,630        7,394,605  

Non-current liabilities

     7,272,418        6,432,895        4,185,551  

Total liabilities

     15,457,171        13,849,525        11,580,156  

Share capital

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

Share premium

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

Retained earnings

     8,642,284        9,172,389        9,789,067  

Other equity

     0        0        0  

Total equity

     12,682,476        13,212,581        13,829,259  

 

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

Description

   For the six months ended
June 30, 2019 		     For the year ended
December 31, 2018 		     For the year ended
December 31, 2017 		 

Revenue

     10,319,565        22,371,687        25,591,082  

Operating profit (loss)

     (617,440 )       (472,995 )       1,536,730  

Operating profit (loss) from continuing operations

     (521,706 )       (442,291 )       1,779,721  

Profit (loss) for the period

     (521,706 )       (442,291 )       1,779,721  

Basic earnings (loss) per share

     (1,458 )       (1,236 )       4,974  

Diluted earnings (loss) per share

     (1,458 )       (1,236 )       4,974  

 

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  C.

Consolidated subsidiaries (as of June 30, 2019)

 

Company Interest

   Primary Business    Location    Equity  

LG Display America, Inc.

   Sales    U.S.A.      100 % 

LG Display Japan Co., Ltd.

   Sales    Japan      100 % 

LG Display Germany GmbH

   Sales    Germany      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 Poland Sp. zo.o.

   Manufacturing    Poland      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

   Investing in new emerging
companies 		   U.S.A      100 % 

LG Display High-Tech (China) Co., Ltd. (3)

   Manufacturing    China      70 % 

MMT (Money Market Trust)

   Money market trust    Korea      100 % 

 

  D.

Status of equity investments (as of June 30, 2019)

 

  (1)

Consolidated subsidiaries

 

Company

   Investment Amount
(in millions) 		     Initial Equity
Investment Date 		     Equity
Interest 		 

LG Display America, Inc.

   US$ 411        September 24, 1999        100 % 

LG Display Japan Co., Ltd.

   ¥ 95        October 12, 1999        100 % 

LG Display Germany GmbH

   EUR 1        November 5, 1999        100 % 

LG Display Taiwan Co., Ltd.

   NT$ 116        May 19, 2000        100 % 

LG Display Nanjing Co., Ltd.

   CNY 3,020        July 15, 2002        100 % 

LG Display Shanghai Co., Ltd.

   CNY 4        January 16, 2003        100 % 

LG Display Poland Sp. zo.o.

   PLN 511        September 6, 2005        100 % 

LG Display Guangzhou Co., Ltd.

   CNY 1,655        August 7, 2006        100 % 

LG Display Shenzhen Co., Ltd.

   CNY 4        August 28, 2007        100 % 

LG Display Singapore Pte. Ltd.

   US$ 1        January 12, 2009        100 % 

L&T Display Technology (Fujian) Limited

   CNY 116        January 5, 2010        51 % 

LG Display Yantai Co., Ltd.

   CNY 1,008        April 19, 2010        100 % 

Nanumnuri Co., Ltd.

   W 800        March 19, 2012        100 % 

LG Display (China) Co., Ltd.

   CNY 8,232        December 27, 2012        70 % 

Unified Innovative Technology, LLC

   US$ 9        March 21, 2014        100 % 

LG Display Guangzhou Trading Co., Ltd.

   CNY 1        May 27, 2015        100 % 

Global OLED Technology LLC

   US$ 138        May 7, 2015        100 % 

LG Display Vietnam Haiphong Co., Ltd. (1)

   US$ 600        May 13, 2016        100 % 

Suzhou Lehui Display Co., Ltd.

   CNY 637        July 1, 2016        100 % 

LG Display Fund I LLC (2)

   US$ 3.5        May 1, 2018        100 % 

LG Display High-Tech (China) Co., Ltd. (3)

   CNY 12,168        July 11, 2018        70 % 

MMT (Money Market Trust) (4)

   W 326,600        March 31, 2017        100 % 

Changes since December 31, 2018:

 

(1)

During the reporting period, we invested an additional W 342,680 million in LG Display Vietnam Haiphong Co., Ltd.

(2)

During the reporting period, we invested an additional W 1,692 million in LG DISPLAY FUND I LLC.

(3)

During the reporting period, we invested an additional W 633,646 million in LG Display High-Tech (China) Co., Ltd. and the non-controlling shareholders invested an additional W 276,395 million. Due to such additional investment, our interest in LG Display High-Tech (China) Co., Ltd. has increased from 69% in 2018 to 70% as of the end of the reporting period.

(4)

As a result of our money market trust acquisition and disposal transactions conducted during the reporting period, the amount outstanding in our money market trust accounts as of June 30, 2019 is W 326,600 million.

 

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Additionally, the amount of dividends attributable to the parent company from the aggregate dividends distributed by our consolidated subsidiaries is W 11,120 million during the reporting period.

 

  (2)

Affiliated companies

 

Company

  Carrying Amount
(in millions) 		    Date of
Incorporation 		    Equity
Interest 		 

Paju Electric Glass Co., Ltd.

  W 48,987       January 2005       40 % 

Invenia Co., Ltd.

  W 4,443       January 2001       13 % 

Wooree E&L Co., Ltd.

  W 5,088       June 2008       14 % 

YAS Co., Ltd.

  W 17,162       April 2002       15 % 

Avatec Co., Ltd.

  W 24,463       August 2000       17 % 

Arctic Sentinel, Inc.

    —         June 2008       10 % 

CYNORA GmbH (1)

  W 8,668       March 2003       12 % 

Material Science Co., Ltd.

  W 3,299       January 2014       10 % 

Nanosys Inc.

  W 5,171       July 2001       4 % 

Changes since December 31, 2018:

 

(1)

We did not participate in CYNORA GmbH’s paid-in capital increase during the reporting period, and as a result, our equity interest decreased from 14% as of December 31, 2018 to 12% as of June 30, 2019.

 

13.

Audit Information

 

  A.

Audit service

 

     (Unit: In millions of Won, hours)

Description

   2019 H1   2018   2017

Auditor

   KPMG Samjong   KPMG Samjong   KPMG Samjong

Activity

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

Compensation (1)

   1,280 (500) (2)   1,170 (450) (2)   1,040 (450) (2)

Time required

   5,010   17,269   17,909

 

(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  

2018

     September 11, 2018       
Green bond
verification 		 
  		   September 11, 2018
~ October 9, 2018 		     45  

Subsequent to the reporting period, on July 23, 2019, we entered into a non-audit service contract for the issuance of a comfort letter, which period of service lasted from July 23, 2019 to August 31, 2019, and the compensation amount was W 120 million.

 

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14.

Board of Directors

 

  A.

Members of the board of directors

As of June 30, 2019, our board of directors consisted of two non-outside directors, one non-standing director and four outside directors.

 

          (As of June 30, 2019)

Name

  

Position

  

Primary responsibility

Sang Beom Han    Representative Director (non-outside), Chief Executive Officer and Vice Chairman    Overall head of business management
Donghee Suh (1)    Director (non-outside), Chief Financial Officer and Senior Vice President    Overall head of finances
Young-Soo Kwon (1)    Director (non-standing)    Chairman of the board of directors
Sung-Sik Hwang    Outside Director    Related to the overall management
Kun Tai Han (2)    Outside Director    Related to the overall management
Byung Ho Lee    Outside Director    Related to the overall management
Chang-Yang Lee (1)    Outside Director    Related to the overall management

 

(1)

Each of Donghee Suh, Young-Soo Kwon and Chang-Yang Lee was newly appointed at the annual general meeting of shareholders held on March 15, 2019.

(2)

Kun Tai Han was reappointed for another term as an outside director at the annual general meeting of shareholders held on March 15, 2019.

 

  B.

Committees of the board of directors

We have the following committees that serve under our board of directors: Audit Committee, Outside Director Nomination Committee and Management Committee. The Management Committee consists of two non-outside directors, Sang Beom Han and Donghee Suh.

As of March 15, 2019, the composition of the Outside Director Nomination Committee was as follows.

 

     (As of March 15, 2019)

Committee

  

Composition

   Member
Outside Director Nomination Committee (1)    1 non-standing director and 2 outside directors    Young-Soo Kwon, Kun Tai Han,
Byung Ho Lee

 

(1)

Each of Young-Soo Kwon, Kun Tai Han, Byung Ho Lee was appointed as a member of the outside director nomination committee of the board of directors at the board of directors’ meeting on March 15, 2019.

As of the June 30, 2019, the composition of the Audit Committee was as follows.

 

          (As of June 30, 2019)

Committee

  

Composition

   Member
Audit Committee    3 outside directors    Sung-Sik Hwang (1) , Kun Tai Han,
Chang-Yang Lee (2)

 

(1)

Sung-Sik Hwang is the audit committee chairman. He was reappointed for another term as an Audit Committee member at the annual general meeting of shareholders held on March 15, 2018.

(2)

Chang-Yang Lee was newly appointed as an audit committee member at the annual general meeting of shareholders held on March 15, 2019.

 

  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.

 

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15.

Information Regarding Shares

 

  A.

Total number of shares

 

  (1)

Total number of shares authorized to be issued (as of June 30, 2019): 500,000,000 shares.

 

  (2)

Total shares issued and outstanding (as of June 30, 2019): 357,815,700 shares.

 

  B.

Shareholder list

 

  (1)

Largest shareholder and related parties as of June 30, 2019:

 

Name

   Relationship    Number of shares of common stock      Equity interest  

LG Electronics

   Largest
shareholder 		     135,625,000        37.9 % 

Sang Beom Han

   Officer of
member
company 		     54,000        0.0 % 

Gi Ryun Jeong

   Relative of
LG Corp.’s
largest
shareholder 		     400        0.0 % 

Young Soon Hong

   Relative of
LG Corp.’s
largest
shareholder 		     400        0.0 % 

 

  (2)

Shareholders who are known to us that own 5% or more of our shares as of June 30, 2019:

 

Beneficial owner

   Number of shares of common stock      Equity interest  

LG Electronics

     135,625,000        37.90 % 

National Pension Service

     24,515,566        6.85 % 

 

16.

Directors and Employees

 

  A.

Directors

 

  (1)

Remuneration for directors in 2019 H1:

 

     (Unit: person, in millions of Won)  

Classification

   No. of directors (1)      Amount paid (2)     Per capita average
remuneration paid (3) 		 

Non-outside directors

     3        977       326  

Outside directors who are not audit committee members

     1        39       39  

Outside directors who are audit committee members

     3        124       39  
  

 

 

    

 

 

   

 

 

 

Total

     7        1,140 (4)       163  
  

 

 

    

 

 

   

 

 

 

 

(1)

Number of directors as at June 30, 2019.

(2)

Amount paid is calculated on the basis of amount of cash actually paid.

 

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(3)

Per capita average remuneration paid is calculated by dividing total amount paid by the average number of directors for the three months ended June 30, 2019.

(4)

As Joon Park resigned as an outside director on March 14, 2019 and Chang Yang Lee was appointed as an outside director at the annual general meeting of shareholders held on March 15, 2019, the total amount paid includes remuneration paid to both Mr. Park and Mr. Lee.

 

  (2)

Remuneration for individual directors and audit committee members

 

  •  

Individual amount of remuneration paid in 2019 H1

 

     (Unit: in millions of Won)  

Name

   Position    Total remuneration      Payment not included in
total remuneration 		 

Sang Beom Han

   Chief Executive Officer      765        —    

 

  •  

Method of calculation

 

Name

  

Method of calculation

Sang Beom Han   

Total remuneration

 

•   W 765 million.

 

Salary

 

•  Base salary is set in accordance with the executive compensation regulations established by the board of directors. Monthly payments of W 70 million between January and March and W 72 million between April and June were made.

 

•  Position salary is calculated based on the significance of the position and responsibilities of the job. Monthly payments of W 56 million between January and March and W 57 million between April and June were made.

 

•  A total of W 2 million of welfare benefits were paid on an annual basis in accordance with welfare benefits standards.

 

  (3)

Remuneration for the five highest paid individuals (among those paid over W 500 million per year)

 

  •  

Individual remuneration amount

 

     (Unit: in millions of Won)  

Name

   Position    Total remuneration      Payment not included in
total remuneration 		 

Sang Beom Han

   Chief Executive Officer      765        —    

Yong Kee Hwang

   Senior Advisor      2,792        —    

Yu Seoung Yin

   Advisor      1,726        —    

Soo Youle Cha

   Advisor      1,631        —    

Jeung Gon Shin

   Advisor      619        —    

 

  •  

Method of calculation

 

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Name

  

Method of calculation

Sang Beom Han   

Total remuneration

 

•   W 765 million.

 

Salary

 

•  Base salary is set in accordance with the executive compensation regulations established by the board of directors. Monthly payments of W 70 million between January and March and W 72 million between April and June were made.

 

•  Position salary is calculated based on the significance of the position and responsibilities of the job. Monthly payments of W 56 million between January and March and W 57 million between April and June were made.

 

•  A total of W 2 million of welfare benefits were paid on an annual basis in accordance with welfare benefits standards.

Yong Kee Hwang (1)   

Total remuneration

 

•   W 2,792 million (consisting of W 337 million in salary and W 2,455 million in retirement pay).

 

Salary

 

•  Base salary is set in accordance with the executive compensation regulations established by the board of directors. Monthly payments of W 59 million between January and March and W 47 million between April and June were made.

 

•  A total of W 17 million of welfare benefits were paid on an annual basis in accordance with welfare benefits standards.

 

Retirement pay

 

•  Retirement pay is calculated in accordance with the applicable provisions of our regulations on compensation for retiring executives and is evaluated by the duration of employment (14 years), monthly base salary at the time of retirement and payment rate per position (2.5 to 4.5%).

Yu Seoung Yin (1)   

Total remuneration

 

•   W 1,726 million (consisting of W 177 million in salary and W 1,549 million in retirement pay).

 

Salary

 

•  Base salary is set in accordance with the executive compensation regulations established by the board of directors. Monthly payments of W 34 million between January and March and W 17 million between April and June were made.

 

•  A total of W 26 million of welfare benefits were paid on an annual basis in accordance with welfare benefits standards.

 

Retirement pay

 

•  Retirement pay is calculated in accordance with the applicable provisions of our regulations on compensation for retiring executives and is evaluated by the duration of employment (16 years), monthly base salary at the time of retirement and payment rate per position (2.5 to 4.5%).

 

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Soo Youle Cha (1)   

Total remuneration

 

•   W 1,631 million (consisting of W 182 million in salary and W 1,449 million in retirement pay).

 

Salary

 

•  Base salary is set in accordance with the executive compensation regulations established by the board of directors. Monthly payments of W 34 million between January and March and W 27 million between April and June were made.

 

•  A total of W 1 million of welfare benefits were paid on an annual basis in accordance with regulations of other welfare benefits.

 

Retirement pay

 

•  Retirement pay is calculated in accordance with the applicable provisions of our regulations on compensation for retiring executives and is evaluated by the duration of employment (15 years), monthly base salary at the time of retirement and payment rate per position (2.5 to 4.5%).

Jeung Gon Shin (1)   

Total remuneration

 

•   W 619 million (consisting of W 116 million in salary and W 503 million in retirement pay).

 

Salary

 

•  Base salary is set in accordance with the executive compensation regulations established by the board of directors. Monthly payments of W 22 million between January and March and W 11 million between April and June were made.

 

•  A total of W 18 million of welfare benefits were paid on an annual basis in accordance with welfare benefits standards.

 

Retirement pay

 

•  Retirement pay is calculated in accordance with the applicable provisions of our regulations on compensation for retiring executives and is evaluated by the duration of employment (9 years), monthly base salary at the time of retirement and payment rate per position (2.5 to 4.5%).

 

(1)  

Mssrs. Yong Kee Hwang, Yu Seoung Yin, Soo Youle Cha and Jeung Gon Shin are former officers who retired from our company effective as of March 30, 2019.

 

  (4)

Stock options

Not applicable.

 

  B.

Employees

As of June 30, 2019, we had 29,147 employees (excluding our directors). On average, our male employees have served 10.5 years and our female employees have served 8.6 years. The total amount of salary paid to our employees for the six months ended June 30, 2019 based on income tax statements submitted to the Korean tax authority in accordance with Article 20 of the Income Tax Act was W 907,271 million for our male employees and W 158,288 million for our female employees. The following table provides details of our employees as of June 30, 2019:

 

(Unit: person, in millions of Won, year)  
     Number of
employees (1) 		     Total salary in 2019 H1 (2)(3)(4)      Average salary
per capita (5) 		     Average years of
service 		 

Male

     23,444        907,271        38        10.5  

Female

     5,659        158,288        28        8.6  

Total

     29,103        1,065,559        36        10.1  

 

(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 June 30, 2019 was W 181,928 million and the per capita welfare benefit provided was W 6.2 million.

 

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(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 average number of employees (male: 23,694, female: 5,734) for the six months ended June 30, 2019.

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 of W 2,893 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 of W 2,166 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 of W 27 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.

 

17.

Other Matters

 

  A.

Legal proceedings

We are a defendant in four separate civil lawsuits (comprising two damages claims 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.

We are also a defendant in two patent infringement lawsuits (one in the United States and the other in Germany) filed against us by Solas OLED Ltd. In each of these cases, the amount being sought has not been determined, and no trial has been scheduled. The expected outcome of each of these cases is currently unclear.

 

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  B.

Material events subsequent to the reporting period

 

  (1)

Issuance of foreign convertible bonds

On July 30, 2019, pursuant to a resolution of our board of directors, we approved the issuance of certain foreign currency-denominated convertible bonds. The following table provides details of such expected issuance:

 

    

Contents

Issue Amount

   US$688 million (equivalent to W 813,427 million)

Coupon Rate

   1.5%

Date of Maturity

   August 22, 2024
   Conversion Price    W 19,845
   Applicable Exchange Rate *    W 1,182.65
   Type of Securities    Registered common shares

Details of Conversion

   Number of Shares subject to Conversion    40,988,998
   Conversion Period   

 

Start Date

   August 23, 2020
  

 

End Date

   August 12, 2024

Expected Issue Date

   August 22, 2019

 

*

The applicable exchange rate represents the mid-point of the relevant Won-US dollar exchange rates as of noon, July 30, 2019 (Korea Standard Time) quoted on Bloomberg.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Financial Statements

(Unaudited)

June 30, 2019 and 2018

(With Independent Auditors’ Review Report Thereon)

 

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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 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 June 30, 2019, the condensed consolidated interim statements of comprehensive loss for each of the three-month and six-month periods ended June 30, 2019 and 2018, and statements of changes in equity and cash flows for the six-month periods ended June 30, 2019 and 2018, 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, 2018 and the related consolidated statements of comprehensive income, 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 February 25, 2019, expressed an unqualified opinion. The accompanying condensed consolidated statement of financial position of the Group as of December 31, 2018, 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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KPMG Samjong Accounting Corp.

Seoul, Korea

August 13, 2019

 

This report is effective as of August 13, 2019 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

Consolidated Statements of Financial Position

(Unaudited)

As of June 30, 2019 and December 31, 2018

 

(In millions of won)    Note    June 30, 2019     December 31, 2018  

Assets

       

Cash and cash equivalents

   4, 25    W 2,423,411     2,365,022

Deposits in banks

   4, 25      78,400     78,400

Trade accounts and notes receivable, net

   5, 14, 25, 27      2,675,837     2,829,163

Other accounts receivable, net

   5, 25      195,465     169,313

Other current financial assets

   6, 25      77,204     46,301

Inventories

   7      2,569,221     2,691,203

Prepaid income taxes

        113,044     4,516

Non-current assets held for sale

   28      —       70,161

Other current assets

   5      856,588     546,048
     

 

 

   

 

 

 

Total current assets

        8,989,170     8,800,127

Deposits in banks

   4, 25      11     11

Investments in equity accounted investees

   8      117,281     113,989

Other non-current accounts receivable, net

   5, 25      10,260     11,448

Other non-current financial assets

   6, 25      118,689     144,214

Property, plant and equipment, net

   9, 17      23,941,535     21,600,130

Intangible assets, net

   10, 17      931,395     987,642

Deferred tax assets

   23      1,201,343     1,136,166

Other non-current assets

   5      291,055     381,983
     

 

 

   

 

 

 

Total non-current assets

        26,611,569     24,375,583
     

 

 

   

 

 

 

Total assets

      W 35,600,739     33,175,710
     

 

 

   

 

 

 

Liabilities

       

Trade accounts and notes payable

   25, 27    W 2,815,327     3,087,461

Current financial liabilities

   11, 25      1,847,549     1,553,907

Other accounts payable

   25      3,336,658     3,566,629

Accrued expenses

        833,413     633,346

Income tax payable

        99,346     105,900

Provisions

   13      128,745     98,254

Advances received

   14      1,096,914     834,010

Other current liabilities

   13      62,356     74,976
     

 

 

   

 

 

 

Total current liabilities

        10,220,308     9,954,483

Non-current financial liabilities

   11, 25      9,677,944     7,030,628

Non-current provisions

   13      47,090     32,764

Defined benefit liabilities, net

   12      127,035     45,360

Long-term advances received

   14      690,570     1,114,316

Deferred tax liabilities

   23      14,351     15,087

Other non-current liabilities

   13      94,883     96,826
     

 

 

   

 

 

 

Total non-current liabilities

        10,651,873     8,334,981
     

 

 

   

 

 

 

Total liabilities

        20,872,181     18,289,464
     

 

 

   

 

 

 

Equity

       

Share capital

   15      1,789,079     1,789,079

Share premium

        2,251,113     2,251,113

Retained earnings

        9,622,298     10,239,965

Reserves

   15      (139,309 )      (300,968 ) 
     

 

 

   

 

 

 

Total equity attributable to owners of the Controlling Company

        13,523,181     13,979,189
     

 

 

   

 

 

 

Non-controlling interests

        1,205,377     907,057
     

 

 

   

 

 

 

Total equity

        14,728,558     14,886,246
     

 

 

   

 

 

 

Total liabilities and equity

      W 35,600,739     33,175,710
     

 

 

   

 

 

 

See accompanying notes to the consolidated financial statements.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

For the three-month and six-month periods ended June 30, 2019 and 2018

 

(In millions of won, except earnings per share)    Note      For the three-month period
ended June 30 		    For the six-month period
ended June 30 		 
            2019     2018     2019     2018  

Revenue

     16, 17, 27      W 5,353,410     5,611,248     11,232,191     11,286,412

Cost of sales

     7, 18, 27        (4,871,729 )      (5,144,505 )      (10,117,750 )      (10,277,585 ) 
     

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

        481,681     466,743     1,114,441     1,008,827

Selling expenses

     19        (242,591 )      (203,853 )      (474,808 )      (376,811 ) 

Administrative expenses

     19        (183,558 )      (196,083 )      (383,006 )      (378,413 ) 

Research and development expenses

        (424,276 )      (294,915 )      (757,389 )      (580,034 ) 
     

 

 

   

 

 

   

 

 

   

 

 

 

Operating loss

        (368,744 )      (228,108 )      (500,762 )      (326,431 ) 
     

 

 

   

 

 

   

 

 

   

 

 

 

Finance income

     22        75,454     32,886     135,264     153,883

Finance costs

     22        (109,910 )      (61,966 )      (193,607 )      (192,327 ) 

Other non-operating income

     21        419,606     370,513     667,000     598,061

Other non-operating expenses

     21        (461,250 )      (455,055 )      (685,504 )      (667,798 ) 

Equity in income (loss) of equity accounted investees, net

        2,446     1,710     6,553     (1,183 ) 
     

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income tax

        (442,398 )      (340,020 )      (571,056 )      (435,795 ) 

Income tax expense(benefit)

     23        107,782     (39,477 )      41,764     (86,270 ) 
     

 

 

   

 

 

   

 

 

   

 

 

 

Loss for the period

        (550,180 )      (300,543 )      (612,820 )      (349,525 ) 
     

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income (loss)

           

Items that will never be reclassified to profit or loss

           

Remeasurements of net defined benefit liabilities

     12        (1,935 )      (4,973 )      (4,848 )      (11,392 ) 

Other comprehensive income(loss) from associates and joint ventrues

        (4 )      (18 )      133     23

Related income tax

     12        (4,328 )      1,330     (3,551 )      3,626
     

 

 

   

 

 

   

 

 

   

 

 

 
        (6,267 )      (3,661 )      (8,266 )      (7,743 ) 

Items that are or may be reclassified to profit or loss

           

Foreign currency translation differences for foreign operations

        (1,694 )      12,042     189,438     139,932

Other comprehensive income (loss) from associates and joint ventures

        3,706     (626 )      4,106     689
     

 

 

   

 

 

   

 

 

   

 

 

 
        2,012     11,416     193,544     140,621
     

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income (loss) for the period, net of income tax

 

     (4,255 )      7,755     185,278     132,878
  

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive loss for the period

      W (554,435 )      (292,788 )      (427,542 )      (216,647 ) 
     

 

 

   

 

 

   

 

 

   

 

 

 

Profit (loss) attributable to:

           

Owners of the Controlling Company

        (548,377 )      (297,385 )      (609,310 )      (356,839 ) 

Non-controlling interests

        (1,803 )      (3,158 )      (3,510 )      7,314
     

 

 

   

 

 

   

 

 

   

 

 

 

Loss for the period

      W (550,180 )      (300,543 )      (612,820 )      (349,525 ) 
     

 

 

   

 

 

   

 

 

   

 

 

 
Total comprehensive income (loss) attributable to:                                

Owners of the Controlling Company

        (547,644 )      (288,692 )      (455,741 )      (245,988 ) 

Non-controlling interests

        (6,791 )      (4,096 )      28,199     29,341
     

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive loss for the period

      W (554,435 )      (292,788 )      (427,542 )      (216,647 ) 
     

 

 

   

 

 

   

 

 

   

 

 

 

Loss per share (in won)

           

Basic and diluted loss per share

     24      W (1,533 )      (831 )      (1,703 )      (997 ) 
     

 

 

   

 

 

   

 

 

   

 

 

 

See accompanying notes to the consolidated financial statements.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

For the six-month periods ended June 30, 2019 and 2018

 

     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, 2018

   W 1,789,079      2,251,113      10,621,571     (288,280 )      14,373,483     608,027     14,981,510
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income (loss) for the year

                

Profit (loss) for the period

     —          —          (356,839 )      —         (356,839 )      7,314     (349,525 ) 

Other comprehensive income (loss)

                

Remeasurements of net defined benefit liabilities, net of tax

     —          —          (7,766 )      —         (7,766 )      —         (7,766 ) 

Foreign currency translation differences

     —          —          —         117,905     117,905     22,027     139,932

Other comprehensive income from associates

     —          —          23     689     712     —         712
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other comprehensive income (loss)

     —          —          (7,743 )      118,594     110,851     22,027     132,878
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income (loss) for the period

   W —          —          (364,582 )      118,594     (245,988 )      29,341     (216,647 ) 
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Transaction with owners, recognized directly in equity

                

Dividends to shareholders

     —          —          (178,908 )      —         (178,908 )      —         (178,908 ) 

Subsidiaries’ dividends distributed to non-controlling interests

     —          —          —         —         —         (53,107 )      (53,107 ) 
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balances at June 30, 2018

   W 1,789,079      2,251,113      10,078,081     (169,686 )      13,948,587     584,261     14,532,848
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balances at January 1, 2019

   W 1,789,079      2,251,113      10,239,965     (300,968 )      13,979,189     907,057     14,886,246
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income (loss) for the period

                

Loss for the period

     —          —          (609,310 )      —         (609,310 )      (3,510 )      (612,820 ) 

Other comprehensive income (loss)

                

Remeasurements of net defined benefit liabilities, net of tax

     —          —          (8,399 )      —         (8,399 )      —         (8,399 ) 

Foreign currency translation differences

     —          —          —         157,729     157,729     31,709     189,438

Other comprehensive income from associates

     —          —          133     4,106     4,239     —         4,239
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other comprehensive income (loss)

     —          —          (8,266 )      161,835     153,569     31,709     185,278
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income (loss) for the period

   W —          —          (617,576 )      161,835     (455,741 )      28,199     (427,542 ) 
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Transaction with owners, recognized directly in equity

                

Capital contribution from non-controlling interests

     —          —          (91 )      (176 )      (267 )      276,662     276,395

Subsidiaries’ dividends distributed to non-controlling interests

     —          —          —         —         —         (6,541 )      (6,541 ) 
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balances at June 30, 2019

   W 1,789,079      2,251,113      9,622,298     (139,309 )      13,523,181     1,205,377     14,728,558
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

See accompanying notes to the consolidated financial statements.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Statements of Cash Flows

(Unaudited)

For the six-month periods ended June 30, 2019 and 2018

 

(In millions of won)    Note      2019     2018  

Cash flows from operating activities:

       

Loss for the period

      W (612,820 )      (349,525 ) 

Adjustments for:

       

Income tax expense (benefit)

     23        41,764     (86,270 ) 

Depreciation and amortization

     18        1,713,172     1,819,111

Gain on foreign currency translation

        (107,510 )      (236,639 ) 

Loss on foreign currency translation

        199,176     285,901

Expenses related to defined benefit plans

     12        98,499     103,671

Gain on disposal of property, plant and equipment

        (8,625 )      (4,330 ) 

Loss on disposal of property, plant and equipment

        21,999     10,568

Impairment loss on property, plant and equipment

        9,765     27,491

Gain on disposal of intangible assets

        (552 )      (239 ) 

Loss on disposal of intangible assets

        139     —    

Impairment loss on intangible assets

        —         301

Reversal of impairment loss on intangible assets

        (201 )      (36 ) 

Gain on disposal of non-current assets held for sale

        (8,353 )      —    

Warranty expense

        198,357     92,062

Finance income

        (93,278 )      (40,690 ) 

Finance costs

        138,817     84,412

Equity in loss (income) of equity method accounted investees, net

     8        (6,553 )      1,183

Other income

        (552 )      (2,161 ) 

Other expenses

        3,472     617
     

 

 

   

 

 

 
        2,199,536     2,054,952

Changes in:

       

Trade accounts and notes receivable

        (139,708 )      1,052,117

Other accounts receivable

        34,767     (16,472 ) 

Inventories

        119,151     (188,410 ) 

Lease receivables

        2,895     —    

Other current assets

        (206,160 )      (137,809 ) 

Other non-current assets

        (7,489 )      (27,362 ) 

Trade accounts and notes payable

        (228,703 )      (112,186 ) 

Other accounts payable

        461,043     (163,479 ) 

Accrued expenses

        189,725     (131,698 ) 

Provisions

        (156,613 )      (104,267 ) 

Other current liabilities

        (26,936 )      (9,222 ) 

Defined benefit liabilities, net

        (21,736 )      (5,141 ) 

Long-term advances received

        63,672     767,830

Other non-current liabilities

        6,173     12,184
     

 

 

   

 

 

 
        90,081     936,085

Cash generated from operating activities

        1,676,797     2,641,512

Income taxes paid

        (231,703 )      (353,564 ) 

Interests received

        26,749     41,863

Interests paid

        (181,814 )      (91,479 ) 
     

 

 

   

 

 

 

Net cash provided by operating activities

      W 1,290,029     2,238,332
     

 

 

   

 

 

 

 

See accompanying notes to the consolidated interim financial statements.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Statements of Cash Flows, Continued

(Unaudited)

For the six-month periods ended June 30, 2019 and 2018

 

(In millions of won)    Note      2019     2018  

Cash flows from investing activities:

       

Dividends received

      W 1,445     5,272

Increase in deposits in banks

        (41,180 )      (740,720 ) 

Proceeds from withdrawal of deposits in banks

        41,180     1,152,277

Acquisition of financial asset at fair value through profit or loss

        (80 )      (391 ) 

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

        59     —    

Acquisition of financial assets at fair value through other comprehensive income

        (21 )      —    

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

        —         6

Acquisition of investments in equity accounted investees

        —         (14,732 ) 

Proceeds from disposal of investments in equity accounted investees

        1,200     2,382

Acquisition of property, plant and equipment

        (4,313,847 )      (3,965,992 ) 

Proceeds from disposal of property, plant and equipment

        21,224     105,323

Acquisition of intangible assets

        (253,482 )      (254,527 ) 

Proceeds from disposal of intangible assets

        2,349     960

Government grants received

        248,124     1,210

Proceeds from disposal of non-current assets held for sale

        81,351     —    

Receipt from settlement of derivatives

        13,167     71

Proceeds from collection of short-term loans

        11,772     7,908

Increase in short-term loans

        (8,225 )      —    

Increase in long-term loans

        (6,465 )      (19,420 ) 

Increase in deposits

        (26,328 )      (3,523 ) 

Decrease in deposits

        1,386     685

Proceeds from disposal of emission rights

        —         10,200
     

 

 

   

 

 

 

Net cash used in investing activities

        (4,226,371 )      (3,713,011 ) 
     

 

 

   

 

 

 

Cash flows from financing activities:

     26       

Proceeds from short-term borrowings

        1,374,123     —    

Repayments of short-term borrowings

        (688,143 )      —    

Proceeds from issuance of bonds

        503,665     498,170

Proceeds from long-term borrowings

        2,499,192     1,982,289

Repayments of current portion of long-term borrowings and bonds

        (995,460 )      (646,476 ) 

Payment of lease liabilities

        (30,311 )      —    

Capital contribution from non-controlling interests

        276,395     —    

Subsidiaries’ dividends distributed to non-controlling interests

        (6,541 )      —    

Dividends paid

        —         (178,908 ) 
     

 

 

   

 

 

 

Net cash provided by financing activities

        2,932,920     1,655,075
     

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

        (3,422 )      180,396

Cash and cash equivalents at January 1

        2,365,022     2,602,560

Effect of exchange rate fluctuations on cash held

        61,811     68,525
     

 

 

   

 

 

 

Cash and cash equivalents at June 30

      W 2,423,411     2,851,481
     

 

 

   

 

 

 

See accompanying notes to the consolidated interim financial statements.

 

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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 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 June 30, 2019, 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 June 30, 2019, 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 June 30, 2019, 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 June 30, 2019, there are 19,264,164 ADSs outstanding.

 

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1.

Reporting Entity, Continued

 

  (b)

Consolidated Subsidiaries as of June  30, 2019

 

(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      USD  411  

LG Display Germany GmbH

   Eschborn, Germany      100 %    December 31    November 5, 1999    Sell display products      EUR  1  

LG Display Japan Co., Ltd.

   Tokyo, Japan      100 %    December 31    October 12, 1999    Sell display products      JPY 95  

LG Display Taiwan Co., Ltd.

   Taipei, Taiwan      100 %    December 31    April 12, 1999    Sell display products      NTD  116  

LG Display Nanjing Co., Ltd.

   Nanjing, China      100 %    December 31    July 15, 2002    Manufacture display products      CNY  3,020  

LG Display Shanghai Co., Ltd.

   Shanghai, China      100 %    December 31    January 16, 2003    Sell display products      CNY  4  

LG Display Poland Sp. z o.o.(*1)

   Wroclaw, Poland      100 %    December 31    September 6, 2005    Manufacture display products      PLN  511  

LG Display Guangzhou Co., Ltd.

   Guangzhou, China      100 %    December 31    June 30, 2006    Manufacture display products      CNY  1,655  

LG Display Shenzhen Co., Ltd.

   Shenzhen, China      100 %    December 31    August 28, 2007    Sell display products      CNY  4  

LG Display Singapore Pte. Ltd.

   Singapore      100 %    December 31    January 12, 2009    Sell display products      USD  1  

L&T Display Technology (Fujian) Limited

   Fujian, China      51 %    December 31    January 5, 2010    Manufacture and sell LCD module and LCD monitor sets      CNY  116  

LG Display Yantai Co., Ltd.

   Yantai, China      100 %    December 31    April 19, 2010    Manufacture display products      CNY  1,008  

Nanumnuri Co., Ltd.

   Gumi, South Korea      100 %    December 31    March 21, 2012    Janitorial services      KRW  800  

LG Display (China) Co., Ltd.

   Guangzhou, China      70 %    December 31    December 10, 2012    Manufacture and sell display products      CNY  8,232  

Unified Innovative Technology, LLC

   Wilmington, U.S.A.      100 %    December 31    March 12, 2014    Manage intellectual property      USD  9  

LG Display Guangzhou Trading Co., Ltd.

   Guangzhou, China      100 %    December 31    April 28, 2015    Sell display products      CNY  1  

Global OLED Technology, LLC

   Sterling, U.S.A.      100 %    December 31    December 18, 2009    Manage OLED intellectual property      USD  138  

LG Display Vietnam Haiphong Co.,
Ltd.(*2)

   Haiphong, Vietnam      100 %    December 31    May 5, 2016    Manufacture display products      USD  600  

Suzhou Lehui Display Co., Ltd.

   Suzhou, China      100 %    December 31    July 1, 2016    Manufacture and sell LCD module and LCD monitor sets      CNY  637  

LG DISPLAY FUND I LLC(*3)

   Wilmington, U.S.A.      100 %    December 31    May 1, 2018    Invest in venture business and acquire technologies      USD  4  

LG Display High-Tech (China) Co.,
Ltd. (*4)

   Guangzhou, China      70 %    December 31    July 11, 2018    Manufacture display products      CNY 12,168  

Money Market Trust

   Seoul, South Korea      100 %    December 31    —      Money market trust      KRW  326,600  

 

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Table of Contents
1.

Reporting Entity, Continued

 

  (*1)

On July 1, 2019, LG Display Poland Sp. Z o.o. commenced the liquidation process.

 

  (*2)

For the six-month period ended June 30, 2019, the Controlling Company contributed W 342,680 million in cash for the capital increase of LG Display Vietnam Haiphong Co., Ltd. (“LGDVN”).

 

  (*3)

For the six-month period ended June 30, 2019, the Controlling Company contributed W 1,692 million in cash for the capital increase of LG DISPLAY FUND I LLC.

 

  (*4)

For the six-month period ended June 30, 2019, the Controlling Company contributed W 633,646 million in cash for the capital increase of LG Display High-Tech (China) Co., Ltd. (“LGDCO”) Meanwhile, additional contribution from non-controlling interest amounted to W 276,396 million. The Group’s ownership percentage in LGDCO increased from 69% to 70% as a result of this additional investment.

W 11,120 million and W 90,281 million are attributable to the Controlling Company over the distributed dividends from consolidated subsidiaries for the six-month periods ended June 30, 2019 and 2018, respectively.

 

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, 2018.

From January 1, 2019, the Group adopted K-IFRS No. 1116, Leases for the first time. Changes to significant accounting policies are described in Note 3.

 

  (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) and financial asset at fair value through other comprehensive income (“FVOCI”), and

 

  •  

net defined benefit liabilities 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.

 

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2.

Basis of Presenting Financial Statements, Continued

 

  (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, 2018, except for the application of K-IFRS No. 1034, Interim Financial Reporting and the changes in accounting policies explained below . The changes in accounting policies are also expected to be reflected in the Group’s consolidated financial statements as at and for the year ending December 31, 2019.

Changes in Accounting Policies

The Group has initially adopted K-IFRS No. 1116, Leases , from January 1, 2019. A number of other new standards are effective from January 1, 2019 but they do not have a material effect on the Group’s condensed consolidated interim financial statements.

K-IFRS No. 1116 introduced a single, on-balance sheet accounting model for lessees. As a result, the Group, as a lessee, has recognized right-of-use assets representing its rights to use the underlying assets and lease liabilities representing its obligation to make lease payments. Lessor accounting remains similar to previous accounting policies.

 

  (i)

Definition of a lease

Previously, the Group determined at contract inception whether an arrangement was or contained a lease under K-IFRS No. 2104, Determining Whether an Arrangement contains a Lease . The Group now assesses whether a contract is or contains a lease based on the new definition of a lease. Under K-IFRS No. 1116, a contract is, or contains, a lease if the contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration.

On transition to K-IFRS No. 1116, the Group elected to apply the practical expedient to grandfather the assessment of which transactions are leases for contracts that were previously identified as leases under K-IFRS No. 1017 and K-IFRS No. 2104 as of January 1, 2019. Contracts that were not identified as leases under K-IFRS No. 1017 and K-IFRS No. 2104 were not reassessed. Therefore, the definition of a lease under K-IFRS No. 1116 has been applied only to contracts entered into or changed on or after January 1, 2019.

 

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3.

Summary of Significant Accounting Policies, Continued

 

  (ii)

Accounting as a lessee

The Group leases land, buildings, vehicles, machinery and equipment and others.

As a lessee, the Group previously classified leases as operating or finance leases based on its assessment of whether the lease transferred substantially all of the risks and rewards of ownership. Under K-IFRS No. 1116, the Group recognizes right-of-use assets and lease liabilities for most leases on the condensed consolidated interim statement of financial position.

However, as permitted in K-IFRS No. 1116, the Group has elected not to recognize right-of-use assets and lease liabilities for certain short-term leases and leases of low-value assets. The Group recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

The carrying amounts of right-of-use assets recognized in the condensed consolidated interim financial statements are as below and those right-of use assets are presented in property, plant and equipment in the condensed consolidated interim statements of financial position.

 

(In millions of won)    Land      Buildings      Machinery
and equipment 		     Vehicles      Others      Total  

Balance at January 1, 2019

   W 53,960        75,777        1,111        10,800        392        142,040  

Balance at June 30, 2019

   W 54,555        60,884        964        9,902        484        126,789  

The Group presents lease liabilities in financial liabilities in the condensed consolidated interim statements of financial position.

 

  i)

Significant accounting policies

The Group recognizes a right-of-use asset and lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, and subsequently at cost less any accumulated depreciation and impairment losses. The book value of right-of-use asset is adjusted when there is a remeasurement of the lease liability arising from a change in future lease payments.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate that would be applicable when the Group were to borrow the funds to obtain and asset of a similar value to the right-of-use asset over a similar term, and with a similar security in a similar economic environment. Generally, the Group uses its incremental borrowing rate as the discount rate.

The lease liability is subsequently increased by the interest expense on the lease liability and decreased by lease payment made. The Group remeasures the lease liability when there is a change in future lease payments arising from a change in an index or rate, a change in the estimate of the amount expected to be payable under a residual value guarantee, or as appropriate, changes in the assessment of whether a purchase or extension option is reasonably certain to be exercised or a termination option is reasonably certain not to be exercised.

 

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3.

Summary of Significant Accounting Policies, Continued

 

Determination of the lease term for some lease contracts that include renewal options require the Group’s judgment. The assessment of whether the Group is reasonably certain to exercise such options impacts the lease term, which significantly affects the amount of lease liabilities and right-of-use assets recognized.

 

  ii)

Initial application

At initial application, the Group measures lease liabilities for leases classified as operating leases under K-IFRS No. 1017, at the present value of the remaining lease payments, discounted at the Group’s incremental borrowing rate as at January 1, 2019. Right-of-use assets are measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments.

The Group used the following practical expedients when applying K-IFRS No. 1116 to leases previously classified as operating leases under K-IFRS No. 1017.

 

  •  

Applied the exemption not to recognize right-of-use assets and liabilities for leases with less than 12 months of remaining lease term at initial application.

 

  •  

Excluded initial direct costs from measuring the right-of-use asset at the date of initial application.

 

  •  

Used hindsight when determining the lease term if the contract contains options to extend or terminate the lease.

 

  (iii)

Accounting as a lessor

The accounting policies applicable to the Group as a lessor are not different from those under K-IFRS No. 1017. However, when the Group is an intermediate lessor, the sub-leases are classified with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset.

The Group sub-leases some of its right-of-use assets. Under K-IFRS No. 1017, the Group previously classified the head lease and sub-lease contracts as operating leases. On initial application to K-IFRS No. 1116, the right-of-use assets recognized from the head leases are presented in property, plant and equipment and the sub-lease contracts are classified as finance leases under K-IFRS No. 1116.

 

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3.

Summary of Significant Accounting Policies, Continued

 

  (iv)

Impacts on condensed consolidated interim financial statements

 

  i)

Impacts on initial application

On initial application to K-IFRS No. 1116, the Group recognized additional right-of-use assets and additional lease liabilities. The impact on initial application is summarized below.

 

(In millions of won)    January 1, 2019  

Right-of-use assets presented in property, plant and equipment

   W 142,040  

Prepaid expenses

     (61,570 ) 

Lease receivables

     34,649  

Lease liabilities

     115,119  

When measuring lease liabilities for leases that were classified as operating leases, the Group discounted lease payments using its incremental borrowing rate at January 1, 2019. The weighted-average rate applied is 3.36%.

 

  ii)

Impacts for the period

As a result of initially applying K-IFRS No. 1116, the Group recognized W 126,789 million of right-of-use assets and W 99,347 million of lease liabilities as at June 30, 2019.

Also in accordance with K-IFRS No. 1116, the Group has recognized depreciation and interest expense, instead of operating lease expense in relation to leases. During the six-month period ended June 30, 2019, the Group recognized W 23,982 million of depreciation and W 1,914 million of interest expense from these leases.

 

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4.

Cash and Cash Equivalents and Deposits in Banks

Cash and cash equivalents and deposits in banks as of June 30, 2019 and December 31, 2018 are as follows:

 

(In millions of won)    June 30, 2019      December 31, 2018  

Current assets

     

Cash and cash equivalents

     

Demand deposits

   W  2,423,411        2,365,022  

Deposits in banks

     

Time deposits

   W 1,200        4,318  

Restricted deposits (*)

     77,200        74,082  
  

 

 

    

 

 

 
   W 78,400        78,400  
  

 

 

    

 

 

 

Non-current assets

     

Deposits in banks

     

Restricted deposits (*)

   W 11        11  
  

 

 

    

 

 

 
   W 2,501,822        2,443,433  
  

 

 

    

 

 

 

 

(*)

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, and others.

 

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5.

Receivables and Other Assets

 

  (a)

Trade accounts and notes receivable as of June 30, 2019 and December 31, 2018 are as follows:

 

(In millions of won)    June 30, 2019      December 31, 2018  

Due from third parties

   W 2,277,700        2,305,368  

Due from related parties

     398,137        523,795  
  

 

 

    

 

 

 
   W 2,675,837        2,829,163  
  

 

 

    

 

 

 

 

  (b)

Other accounts receivable as of June 30, 2019 and December 31, 2018 are as follows:

 

(In millions of won)    June 30, 2019      December 31, 2018  

Current assets

     

Non-trade receivables, net

   W 175,199        159,238  

Accrued income

     20,266        10,075  
  

 

 

    

 

 

 
   W 195,465        169,313  
  

 

 

    

 

 

 

Non-current assets

     

Long-term non-trade receivables

     10,260        11,448  
  

 

 

    

 

 

 
   W 205,725        180,761  
  

 

 

    

 

 

 

Due from related parties included in other accounts receivable as of June 30, 2019 and December 31, 2018 are W 6,594 million and W 39,092 million, respectively.

 

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5.

Receivables and Other Assets, Continued

 

  (c)

The aging of trade accounts and notes receivable and other accounts receivable as of June 30, 2019 and December 31, 2018 are as follows:

 

     June 30, 2019  
     Book value      Allowance for impairment  
(In millions of won)    Trade accounts
and notes
receivable 		     Other
accounts
receivable 		     Trade accounts
and notes
receivable 		     Other
accounts
receivable 		 

Current

   W 2,659,771        197,897        (878 )       (1,747 ) 

1-15 days past due

     11,074        6,366        (4 )       (32 ) 

16-30 days past due

     250        21        —          —    

31-60 days past due

     2,943        302        (1 )       (2 ) 

More than 60 days past due

     2,683        2,959        (1 )       (39 ) 
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 2,676,721        207,545        (884 )       (1,820 ) 
  

 

 

    

 

 

    

 

 

    

 

 

 
     December 31, 2018  
     Book value      Allowance for impairment  
(In millions of won)    Trade accounts
and notes
receivable 		     Other
accounts
receivable 		     Trade accounts
and notes
receivable 		     Other
accounts
receivable 		 

Current

   W 2,807,598        177,689        (473 )       (816 ) 

1-15 days past due

     21,558        3,148        (4 )       (26 ) 

16-30 days past due

     454        441        —          (4 ) 

31-60 days past due

     30        96        —          (1 ) 

More than 60 days past due

     —          668        —          (434 ) 
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 2,829,640        182,042        (477 )       (1,281 ) 
  

 

 

    

 

 

    

 

 

    

 

 

 

The movement in the allowance for impairment in respect of trade accounts and notes receivable and other accounts receivable for the six-month period ended June 30, 2019 and the year ended December 31, 2018 are as follows:

 

     2019      2018  
(In millions of won)    Trade accounts
and notes
receivable 		     Other
accounts
receivable 		     Trade accounts
and notes
receivable 		     Other
accounts
receivable 		 

Balance at the beginning of the period

   W 477        1,281        1,632        1,311  

(Reversal of) bad debt expense

     407        539        (1,155 )       (30 ) 
  

 

 

    

 

 

    

 

 

    

 

 

 

Balance at the reporting date

   W 884        1,820        477        1,281  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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5.

Receivables and Other Assets, Continued

 

  (d)

Other assets as of June 30, 2019 and December 31, 2018 are as follows:

 

(In millions of won)    June 30, 2019      December 31, 2018  

Current assets

     

Advance payments

   W 8,669        13,259  

Prepaid expenses

     128,802        89,110  

Value added tax refundable

     708,760        436,190  

Right to recover returned goods

     10,357        7,489  
  

 

 

    

 

 

 
   W 856,588        546,048  
  

 

 

    

 

 

 

Non-current assets

     

Long-term prepaid expenses

   W 291,055        381,983  

 

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6.

Other Financial Assets

 

  Other

financial assets as of June 30, 2019 and December 31, 2018 are as follows:

 

(In millions of won)    June 30, 2019      December 31, 2018  

Current assets

     

Financial asset at fair value through profit or loss

     

Derivatives (*)

   W 31,869        13,059  

Financial asset at fair value through other comprehensive income

     

Debt instruments

     

Government bonds

   W 113        106  

Financial asset carried at amortized cost

     

Deposits

   W 16,252        17,020  

Short-term loans

     23,294        16,116  

Lease receivables

     5,676        —    
  

 

 

    

 

 

 
   W 45,222        33,136  
  

 

 

    

 

 

 
   W 77,204        46,301  
  

 

 

    

 

 

 

Non-current assets

     

Financial asset at fair value through profit or loss

     

Equity instruments

     

Intellectual Discovery, Ltd.

   W 920        4,598  

Kyulux, Inc.

     2,460        2,460  

Fineeva Co., Ltd.

     4        286  

ARCH Venture Fund Vill, L.P.

     6,586        6,337  
  

 

 

    

 

 

 
   W 9,970        13,681  
  

 

 

    

 

 

 

Convertible bonds

   W 1,327        1,327  

Derivatives (*)

     10,903        —    
  

 

 

    

 

 

 
   W 22,200        15,008  

Financial asset at fair value through other comprehensive income

     

Debt instruments

     

Government bonds

   W 70        55  

Financial asset carried at amortized cost

     

Deposits

   W 21,017        74,103  

Long-term loans

     50,081        55,048  

Lease receivables

     25,321        —    
  

 

 

    

 

 

 
   W 96,419        129,151  
  

 

 

    

 

 

 
   W 118,689        144,214  
  

 

 

    

 

 

 

 

  (*)

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

Other financial assets issued by related parties as of June 30, 2019 and December 31, 2018 are W 3,000 million and W 2,000 million, respectively.

 

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7.

Inventories

Inventories as of June 30, 2019 and December 31, 2018 are as follows:

 

(In millions of won)    June 30, 2019      December 31, 2018  

Finished goods

   W 1,088,812        1,084,297  

Work-in-process

     869,304        856,388  

Raw materials

     422,606        554,720  

Supplies

     188,499        195,798  
  

 

 

    

 

 

 
   W 2,569,221        2,691,203  
  

 

 

    

 

 

 

For the six-month periods ended June 30, 2019 and 2018, the amount of inventories recognized as cost of sales including inventory write-downs and reversal and usage of inventory write-downs included in cost of sales are as follows:

 

(In millions of won)    2019      2018  

Inventories recognized as cost of sales

   W 10,117,750        10,277,585  

Including: inventory write-downs

     403,462        261,036  

Including: reversal and usage of inventory write-downs

     (313,180 )       (206,127 ) 

 

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8.

Investments in Equity Accounted Investees

Associates as of June 30, 2019 are as follows:

 

(In millions of won)

Associates

 

Location

  Fiscal year
end 		  Date of
incorporation 		 

Business

  June 30, 2019     December 31, 2018  
  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%   W 48,987     40%   W 47,823  

INVENIA Co., Ltd.

 

Seongnam,

South Korea

  December 31   January

2001

  Develop and manufacture equipment for display   13%     4,443     13%     4,166  

WooRee E&L Co., Ltd.

 

Ansan,

South Korea

  December 31   June

2008

  Manufacture LED back light unit packages   14%     5,088     14%     4,746  

YAS Co., Ltd.

 

Paju,

South Korea

  December 31   April

2002

  Develop and manufacture deposition equipment for OLEDs   15%     17,162     15%     16,308  

AVATEC Co., Ltd.

 

Daegu,

South Korea

  December 31   August

2000

  Process and sell glass for display   17%     24,463     17%     23,441  

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   12%     8,668     14%     8,668  

 

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8.

Investments in Equity Accounted Investees, Continued

 

(In millions of won)

Associates

 

Location

  Fiscal
year end 		  Date of
incorporation 		 

Business

  June 30, 2019     December 31, 2018  
  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%   W 3,299     10%   W 3,346  

Nanosys Inc.

 

Milpitas,

U.S.A.

  December 31   July

2001

  Develop, manufacture, and sell materials for display   4%     5,171     4%     5,491  
           

 

 

     

 

 

 
            W 117,281       W 113,989  
           

 

 

     

 

 

 

 

  (*)

For the six-month period ended June 30, 2019, the Controlling Company’s ownership percentage in CYNORA GmbH decreased from 14% to 12% as the Controlling Company did not participate in the capital increase of CYNORA GmbH.

Although the Controlling Company’s respective share interests in INVENIA Co., Ltd., WooRee E&L Co., Ltd., YAS Co., Ltd., AVATEC Co., Ltd., Arctic Sentinel, Inc., CYNORA GmbH, Material Science 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 six-month periods ended June 30, 2019 and 2018 amounted to W 7,502 million and W 5,272 million, respectively.

 

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9.

Property, Plant and Equipment

For the six-month periods ended June 30, 2019 and 2018, the Group purchased property, plant and equipment of W 3,771,126 million and W 4,267,244 million, respectively. The capitalized borrowing costs and the annualized capitalization rate were W 142,957 million and 3.40%, and W 54,323 million and 2.67% for the six-month periods ended June 30, 2019 and 2018, respectively. In addition, for the six-month period ended June 30, 2019, the Group entered into various new lease agreements for use of buildings, vehicles and others. In relation to these leases, the Group recognized W 14,862 million of right-of-use assets and lease liabilities, in aggregate, during the six-month period ended June 30, 2019. Also, for the six-month periods ended June 30, 2019 and 2018, the Group disposed of property, plant and equipment with carrying amounts of W 96,467 million and W 66,931 million, respectively, and recognized W 8,625 million and W 21,999 million, respectively, as gain and loss, on disposal of property, plant and equipment for the six-month period ended June 30, 2019 (gain and loss for the six-month period ended June 30, 2018: W 4,330 million and W 10,568 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 June 30, 2019 and December 31, 2018 are W 327,287 million and W 366,910 million, respectively.

 

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11.

Financial Liabilities

 

  (a)

Financial liabilities as of June 30, 2019 and December 31, 2018 are as follows:

 

( In millions of won )    June 30, 2019      December 31, 2018  

Current

     

Short-term borrowings

   W 700,503        —    

Current portion of long-term borrowings and bonds

     1,102,196        1,553,907  

Lease liabilities

     44,850        —    
  

 

 

    

 

 

 
   W 1,847,549        1,553,907  

Non-current

     

Won denominated borrowings

   W 2,931,532        2,700,608  

Foreign currency denominated borrowings

     4,643,687        2,531,663  
  

 

 

    

 

 

 

Long-term borrowings

   W 7,575,219        5,232,271  
  

 

 

    

 

 

 

Bonds

     2,030,092        1,772,599  

Derivatives (*)

     18,136        25,758  

Lease liabilities

     54,497        —    
  

 

 

    

 

 

 
   W 9,677,944        7,030,628  
  

 

 

    

 

 

 

 

  (*)

Represents currency interest rate swap contracts related to foreign currency denominated borrowings and bonds.

 

  (b)

Foreign currency denominated short-term borrowings as of June 30, 2019 and December 31, 2018 are as follows:

 

                    

(In millions of won, USD and CNY)

Lender

  

Annual interest rate

as of

June 30, 2019 (%)(*)

   June 30, 2019      December 31, 2018  

Standard Chartered Bank Korea Limited

   12ML + 0.78~0.88    W 347,040        —    

Standard Chartered Bank Vietnam and others

   3ML + 0.80~0.90      61,559        —    

Standard Chartered Bank (China) Limited and others

  

PBOC x 1.05

PBOC - 0.05

     291,904        —    
     

 

 

    

 

 

 

Foreign currency equivalent

      USD 353        —    
      CNY 1,737        —    
     

 

 

    

 

 

 
      W 700,503        —    
     

 

 

    

 

 

 

 

  (*)

ML represents Month LIBOR (London Inter-Bank Offered Rates) and PBOC represents People’s Bank of China.

 

 

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11.

Financial Liabilities, Continued

 

  (c)

Won denominated long-term borrowings as of June 30, 2019 and December 31, 2018 are as follows:

 

                    

(In millions of won)

Lender

  

Annual interest rate

as of

June 30, 2019 (%)

   June 30, 2019      December 31, 2018  

Woori Bank

   2.75    W 933        1,259  

Korea Development Bank and others

  

CD rate (91 days) + 1.00,

2.43~3.25

     3,150,000        2,850,000  

Less current portion of long-term borrowings

        (219,401 )       (150,651 ) 
     

 

 

    

 

 

 
      W 2,931,532        2,700,608  
     

 

 

    

 

 

 

 

  (d)

Foreign currency denominated long-term borrowings as of June 30, 2019 and December 31, 2018 are as follows:

 

(In millions of won, USD and CNY)

Lender

   Annual interest rate
as of
June 30, 2019 (%) 		     June 30, 2019      December 31, 2018  

The Export-Import Bank of Korea and others

    

3ML+0.75~1.70

6ML+1.25~1.35

 

 

   W 1,382,376        955,975  

China Construction Bank and others

    


USD: 3ML+0.80~1.43

CNY: PBOC x
(0.90~1.05)

 

 
 

     3,584,480        2,419,286  
     

 

 

    

 

 

 

Foreign currency equivalent

      USD 2,347      USD 2,262  
      CNY   13,398      CNY 5,198  

Less current portion of long-term borrowings

        (323,169 )       (843,598 ) 
     

 

 

    

 

 

 
      W 4,643,687        2,531,663  
     

 

 

    

 

 

 

 

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11.

Financial Liabilities, Continued

 

  (e)

Details of bonds issued and outstanding as of June 30, 2019 and December 31, 2018 are as follows:

 

(In millions of won, USD)    Maturity      Annual interest rate
as of
June 30, 2019 (%) 		     June 30, 2019      December 31, 2018  

Won denominated bonds (*1)

           

Publicly issued bonds

    

October 2019 ~

February 2024

 

 

     1.80~2.95      W 2,030,000        1,900,000  

Privately issued bonds

    

May 2025 ~

May 2033

 

 

     3.25~4.25        110,000        110,000  

Less discount on bonds

           (4,407 )       (3,949 ) 

Less current portion

           (559,626 )       (559,658 ) 
        

 

 

    

 

 

 
         W 1,575,967        1,446,393  

Foreign currency denominated bonds (*2)

           

Publicly issued bond

    
November
2021 		 
  		     3.88      W 347,040        335,430  

Privately issued bonds

     April 2023        3ML+1.47        115,680        —    

Foreign currency equivalent

         USD 400      USD 300  

Less discount on bonds

           (8,595 )       (9,224 ) 
        

 

 

    

 

 

 
           454,125        326,206  
        

 

 

    

 

 

 
         W 2,030,092        1,772,599  
        

 

 

    

 

 

 

 

  (*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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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 Group.

 

  (a)

Net defined benefit liabilities recognized as of June 30, 2019 and December 31, 2018 are as follows:

 

(In millions of won)    June 30, 2019      December 31, 2018  

Present value of partially funded defined benefit obligations

   W 1,663,878        1,595,423  

Fair value of plan assets

     (1,536,843 )       (1,550,063 ) 
  

 

 

    

 

 

 
   W 127,035        45,360  
  

 

 

    

 

 

 

 

  (b)

Expenses recognized in profit or loss for the three-month and six-month periods ended June 30, 2019 and 2018 are as follows:

 

     For the three-month
periods ended June 30, 		     For the six-month
periods ended June 30, 		 
(In millions of won)    2019      2018      2019      2018  

Current service cost

   W 48,973        51,628        97,891        103,187  

Net interest cost

     304        242        608        484  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 49,277        51,870        98,499        103,671  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

  (c)

Plan assets as of June 30, 2019 and December 31, 2018 are as follows:

 

               
(In millions of won)    June 30, 2019      December 31, 2018  

Guaranteed deposits in banks

   W 1,536,843        1,550,063  

As of June 30, 2019, 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 and six-month periods ended June 30, 2019 and 2018 are as follows:

 

     For the three-month
periods ended June 30, 		     For the six-month
periods ended June 30, 		 
(In millions of won)        2019              2018              2019              2018      

Remeasurements of net defined benefit liabilities

   W (1,935 )       (4,973 )       (4,848 )       (11,392 ) 

Tax effect

     (4,328 )       1,330        (3,551 )       3,626  
  

 

 

    

 

 

    

 

 

    

 

 

 

Remeasurements of net defined benefit liabilities, net of income tax

   W (6,263 )       (3,643 )       (8,399 )       (7,766 ) 
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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13.

Provisions and Other Liabilities

 

  (a)

Changes in provisions for the six-month period ended June 30, 2019 are as follows:

 

(In millions of won)    Litigations
and claims 		     Warranties (*)      Returns      Total  

Balance at January 1, 2019

   W —          122,088        8,930        131,018  

Additions

     3,073        198,357        3,222        204,652  

Usage

     —          (159,835 )       —          (159,835 ) 
  

 

 

    

 

 

    

 

 

    

 

 

 

Balance at June 30, 2019

   W 3,073        160,610        12,152        175,835  
  

 

 

    

 

 

    

 

 

    

 

 

 

Current

   W 3,073        113,520        12,152-        128,745  

Non-current

   W —          47,090        —          47,090  

 

  (*)

The provision for warranties on defective products is normally applicable for 18~36 months from the date of 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.

 

  (b)

Other liabilities as of June 30, 2019 and December 31, 2018 are as follows:

 

(In millions of won)    June 30, 2019      December 31, 2018  

Current liabilities

     

Withholdings

   W 49,428        30,970  

Unearned revenues

     8,083        43,841  

Security deposits received

     4,845        165  
  

 

 

    

 

 

 
   W 62,356        74,976  
  

 

 

    

 

 

 

Non-current liabilities

     

Long-term accrued expenses

   W 85,226        80,817  

Long-term other accounts payable

     2,148        3,103  

Long-term unearned revenues

     1,529        2,116  

Security deposits received

     5,980        10,790  
  

 

 

    

 

 

 
   W 94,883        96,826  
  

 

 

    

 

 

 

 

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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, management’s assessment of the facts and circumstances could change based upon new information, intervening events and the final outcome of the cases. Consequently, the actual results could be different from management’s current estimates.

Solas OLED Ltd. Litigations

In April 2019, Solas OLED Ltd. filed patent infringement actions against the Controlling Company and television manufacturers in the United States District Court for the Western District of Texas as well as the Controlling Company and its subsidiary, LG Display Germany GmbH, and television manufactures in the Mannheim District Court in Germany. The Controlling Company has not recognized any provision as of June 30, 2019. It is not possible to reasonably estimate an amount of potential loss, if any, because the plaintiffs have not provided any information regarding damages.

Others

The Group is involved in various disputes in addition to 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 1,610 million ( W 1,862,448 million) in connection with the Controlling Company’s export sales transactions with its subsidiaries. As of June 30, 2019, 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 agreement and the amount of sold but not yet due accounts receivables by contract are as follows:

 

(In millions of USD and KRW)                                 
          Credit limit      Not yet due  
Classification   

Financial institutions

   Contractual
amount 		     KRW
equivalent 		     Contractual
amount 		     KRW
equivalent 		 

Controlling Company

   Shinhan Bank    KRW  90,000        90,000        —          —    
      USD  25        28,920      USD   14        16,727  
   Sumitomo Mitsui Banking Corporation    USD  20        23,136      USD  4        4,088  
   Bank of Tokyo-Mitsubishi UFJ    KRW  130,000        130,000      KRW  82,711        82,711  
      USD  70        80,976      USD  44        51,130  
   BNP Paribas    USD  125        144,600      USD  20        23,321  
   ING Bank    USD  150        173,520      USD  27        30,950  
  

 

  

 

 

    

 

 

    

 

 

    

 

 

 
      USD  390         USD  109     
      KRW  220,000        671,152      KRW   82,711        208,927  
     

 

 

    

 

 

    

 

 

    

 

 

 

Subsidiaries

              

LG Display Singapore
Pte. Ltd.

   Standard Chartered Bank    USD  300        347,040      USD  152        175,386  
  

 

  

 

 

    

 

 

    

 

 

    

 

 

 

LG Display Taiwan Co., Ltd.

   BNP Paribas    USD  52        60,154      USD  3        3,471  
   Australia and New Zealand Banking Group Ltd.    USD  70        80,976      USD  24        27,763  
   Taishin International Bank    USD  280        323,904      USD  52        60,155  
  

 

  

 

 

    

 

 

    

 

 

    

 

 

 

LG Display Germany GmbH

   Citibank    USD  80        92,544        —          —    
   BNP Paribas    USD  75        86,760      USD  35        40,501  
   Commerzbank AG and others      Not Applicable        Not Applicable      USD  14        15,620  
  

 

  

 

 

    

 

 

    

 

 

    

 

 

 

LG Display America, Inc.

  

Hong Kong & Shanghai

    Banking Corp.

   USD  400        462,720      USD  276        319,277  
   Standard Chartered Bank    USD  600        694,080      USD  60        69,409  
  

Sumitomo Mitsui

    Banking Corporation

   USD  250        289,200      USD  53        61,317  
  

 

  

 

 

    

 

 

    

 

 

    

 

 

 
      USD  2,107        2,437,378      USD  669        772,899  
     

 

 

    

 

 

    

 

 

    

 

 

 
      USD  2,497         USD  778     
      KRW   220,000        3,108,530      KRW  82,711        981,826  
     

 

 

    

 

 

    

 

 

    

 

 

 

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

 

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14.

Contingencies and Commitments, Continued

 

Letters of credit

As of June 30, 2019, the Controlling Company has agreements in relation to opening of letters of credit up to USD 30 million ( W 34,704 million) with KEB Hana Bank, USD 30 million ( W 34,704 million) with Bank of China and USD 50 million ( W 57,840 million) with Sumitomo Mitsui Banking Corporation.

Payment guarantees

The Controlling Company obtained payment guarantees amounting to USD 1,375 million ( W 1,590,600 million) from KEB Hana Bank and others for advance received related to the long-term supply agreements. The Controlling Company also obtained payment guarantees amounting to USD 306 million ( W 353,764 million) from Korea Development Bank for foreign currency denominated bonds.

LG Display (China) Co., Ltd. and other subsidiaries are provided with payment guarantees from the China Construction Bank Corporation and other various banks amounting to CNY 1,233 million ( W 207,159 million), JPY 900 million ( W 9,660 million), EUR 2.5 million ( W 3,288 million), VND 42,914 million ( W 2,129 million) and USD 0.5 million ( W 578 million), respectively, for their local tax payments and utility payments.

License agreements

As of June 30, 2019, in relation to its LCD business, the Group has technical license agreements with Hitachi Display, Ltd. and others and has a trademark license agreement with LG Corp.

Long-term supply agreement

As of June 30, 2019, in connection with long-term supply agreements with customers, the Controlling Company recognized USD 1,275 million ( W 1,474,920 million) in advances received. The advances received will be 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 1,375 million ( W 1,590,600 million) from KEB Hana Bank and other various banks relating to advances received (see note 14(b) payment guarantees).

 

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15.

Capital and Reserves

 

  (a)

Share capital

The Controlling Company is authorized to issue 500,000,000 shares of capital stock (par value W 5,000), and as of June 30, 2019 and December 31, 2018, the number of issued common shares is 357,815,700. There have been no changes in the capital stock from January 1, 2018 to June 30, 2019.

 

  (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 June 30, 2019 and December 31, 2018 are as follows:

 

(In millions of won)    June 30, 2019      December 31, 2018  

Foreign currency translation differences for foreign operations

   W   (114,921 )       (272,474 ) 

Other comprehensive loss from associates

     (24,388 )       (28,494 ) 
  

 

 

    

 

 

 
   W (139,309 )       (300,968 ) 
  

 

 

    

 

 

 

 

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16.

Revenue

Details of revenue for the three-month and six-month periods ended June 30, 2019 and 2018 are as follows:

 

               
(In millions of won)    For the three-month periods ended
June 30 		     For the six-month periods ended
June 30 		 
     2019      2018      2019      2018  

Sales of goods

   W 5,344,359        5,601,749        11,213,364        11,266,199  

Royalties

     3,080        4,167        6,649        9,575  

Others

     5,971        5,332        12,178        10,638  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 5,353,410        5,611,248        11,232,191        11,286,412  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

17.

Geographic and Other Information

The following is a summary of sales by region based on the location of the customers for the three-month and six-month periods ended June 30, 2019 and 2018.

 

  (a)

Revenue by geography

 

        
(In millions of won)    For the three-month
periods ended June 30 		     For the six-month
periods ended June 30 		 

Region

   2019      2018      2019      2018  

Domestic

   W 336,073        437,277        729,846        871,390  

Foreign

           

China

     3,369,694        3,431,123        7,123,259        7,027,414  

Asia (excluding China)

     626,884        577,441        1,237,479        979,715  

United States

     483,375        579,967        973,558        1,193,880  

Europe (excluding Poland)

     368,997        347,324        712,192        693,376  

Poland

     168,387        238,116        455,857        520,637  
  

 

 

    

 

 

    

 

 

    

 

 

 

Sub total

   W 5,017,337        5,173,971        10,502,345        10,415,022  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W 5,353,410        5,611,248        11,232,191        11,286,412  
  

 

 

    

 

 

    

 

 

    

 

 

 

Sales to Company A and Company B amount to W 3,557,468 million and W 2,389,400 million, respectively, for the six-month period ended June 30, 2019 (the six-month period ended June 30, 2018: W 3,290,397 million and W 2,692,462 million). The Group’s top ten end-brand customers together accounted for 78% of revenue for the six-month period ended June 30, 2019 (the six-month period ended June 30, 2018: 77%).

 

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17.

Geographic and Other Information, Continued

 

  (b)

Non-current assets by geography

 

   
     June 30, 2019      December 31, 2018  

(In millions of won)

Region

   Property, plant
and equipment 		     Intangible
assets 		     Property, plant
and equipment 		     Intangible
assets 		 

Domestic

   W 15,059,648        759,928        14,984,688        816,808  

Foreign

           

China

     6,556,607        24,986        5,049,216        12,332  

Others

     2,325,280        146,481        1,566,226        158,502  
  

 

 

    

 

 

    

 

 

    

 

 

 

Sub total

     8,881,887        171,467        6,615,442        170,834  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W 23,941,535        931,395        21,600,130        987,642  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

  (c)

Revenue by product and services

 

   
     For the three-month
periods ended June 30, 		     For the six-month
periods ended June 30, 		 

(In millions of won)

Product

   2019      2018      2019      2018  

Televisions

   W 2,171,904        2,331,519        4,295,084        4,745,269  

Desktop monitors

     971,055        982,871        1,953,077        1,918,902  

Tablet products

     497,034        411,583        1,191,264        887,712  

Notebook computers

     687,570        629,432        1,313,228        1,219,131  

Mobile and others

     1,025,847        1,255,843        2,479,538        2,515,398  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 5,353,410        5,611,248        11,232,191        11,286,412  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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18.

The Nature of Expenses and Others

The classification of expenses by nature for the three-month and six-month periods ended June 30, 2019 and 2018 are as follows:

 

   
     For the three-month
periods ended June 30, 		     For the six-month
periods ended June 30, 		 
(In millions of won)    2019      2018      2019      2018  

Changes in inventories

   W 60,619        (79,923 )       121,982        (80,224 ) 

Purchases of raw materials, merchandise and others

     2,769,537        2,982,655        5,929,508        5,810,279  

Depreciation and amortization

     901,932        909,036        1,713,172        1,819,111  

Outsourcing

     219,877        191,551        433,542        381,773  

Labor

     775,435        834,508        1,562,436        1,692,192  

Supplies and others

     242,240        249,089        448,264        493,253  

Utility

     213,226        211,048        432,854        432,317  

Fees and commissions

     175,940        177,621        356,973        369,327  

Shipping

     52,999        58,878        106,704        113,303  

Advertising

     20,022        23,584        34,486        38,528  

Warranty

     101,117        56,415        198,357        92,062  

Travel

     26,324        26,040        49,708        52,170  

Taxes and dues

     22,744        37,942        55,012        66,629  

Others

     166,622        197,932        330,105        379,452  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 5,748,634        5,876,376        11,773,103        11,660,172  
  

 

 

    

 

 

    

 

 

    

 

 

 

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 and six-month periods ended June 30, 2019 and 2018 are as follows:

 

     For the three-month
periods ended June 30, 		     For the six-month
periods ended June 30, 		 
(In millions of won)    2019      2018      2019      2018  

Salaries

   W 86,667        89,529        172,690        180,592  

Expenses related to defined benefit plans

     8,530        7,578        16,656        15,062  

Other employee benefits

     20,346        23,648        42,832        46,720  

Shipping

     44,448        48,795        89,588        94,666  

Fees and commissions

     53,320        51,138        110,813        99,835  

Depreciation

     54,511        41,029        108,866        80,824  

Taxes and dues

     8,431        24,788        24,937        37,895  

Advertising

     20,022        23,584        34,486        38,528  

Warranty

     101,117        56,415        198,357        92,062  

Rent

     778        6,541        1,388        13,190  

Insurance

     2,841        2,994        5,487        5,877  

Travel

     6,435        5,545        11,926        11,723  

Training

     3,414        3,986        6,750        6,553  

Others

     15,289        14,366        33,038        31,697  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 426,149        399,936        857,814        755,224  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

20.

Personnel Expenses

Details of personnel expenses for the three-month and six-month periods ended June 30, 2019 and 2018 are as follows:

 

     For the three-month
periods ended June 30, 		     For the six-month
periods ended June 30, 		 
(In millions of won)    2019      2018      2019      2018  

Salaries and wages

   W 652,177        710,725        1,308,371        1,424,159  

Other employee benefits

     118,721        120,974        242,322        259,158  

Contributions to National Pension plan

     18,003        18,673        36,153        37,480  

Expenses related to defined benefit plan and defined contribution plan

     49,277        51,870        98,516        103,671  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 838,178        902,242        1,685,362        1,824,468  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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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 and six-month periods ended June 30, 2019 and 2018 are as follows:

 

     For the three-month
periods ended June 30, 		     For the six-month
periods ended June 30, 		 
(In millions of won)    2019      2018      2019      2018  

Foreign currency gain

   W 400,551        369,413        642,344        589,883  

Gain on disposal of property, plant and equipment

     5,335        324        8,625        4,330  

Gain on disposal of intangible assets

     —          —          552        239  

Reversal of impairment loss on intangible assets

     —          —          201        36  

Rental income

     764        254        1,390        587  

Gain on disposal of non-current assets held for sale

     8,353        —          8,353        —    

Others

     4,603        522        5,535        2,986  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 419,606        370,513        667,000        598,061  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

  (b)

Details of other non-operating expenses for the three-month and six-month periods ended June 30, 2019 and 2018 are as follows:

 

     For the three-month
periods ended June 30, 		     For the six-month
periods ended June 30, 		 
(In millions of won)    2019      2018      2019      2018  

Foreign currency loss

   W 434,771        418,035        645,354        620,469  

Other bad debt expense

     —          —          398        28  

Loss on disposal of property, plant and equipment

     15,080        2,257        21,999        10,568  

Loss on disposal of intangible assets

     121        —          139        —    

Impairment loss on property, plant and equipment

     5,583        27,491        9,765        27,491  

Impairment loss on intangible assets

     —          265        —          301  

Donations

     411        1,207        425        3,073  

Expenses related to legal proceedings or claims and others

     5,284        5,800        7,424        5,868  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 461,250        455,055        685,504        667,798  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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22.

Finance Income and Finance Costs

 

  (a)

Finance income and costs recognized in profit and loss for the three-month and six-month periods ended June 30, 2019 and 2018 are as follows:

 

(In millions of won)    For the three-month
periods ended June 30, 		     For the six-month
periods ended June 30, 		 
Finance income    2019      2018      2019      2018  

Interest income

   W 11,129        20,099        21,927        39,568  

Foreign currency gain

     29,008        12,710        47,286        114,202  

Gain on transaction of derivatives

     7,782        77        13,167        113  

Gain on valuation of derivatives

     27,533        —          52,878        —    

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

     2        —          6        —    
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 75,454        32,886        135,264        153,883  
  

 

 

    

 

 

    

 

 

    

 

 

 

Finance costs

           

Interest expense

   W 32,881        21,529        51,582        44,288  

Foreign currency loss

     54,547        37,878        108,313        144,182  

Loss on sale of trade accounts and notes receivable

     5,921        1,391        12,224        1,736  

Loss on transaction of derivatives

     —          5        —          43  

Loss on valuation of derivatives

     15,542        259        15,542        501  

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

     —          —          3,960        —    

Other

     1,019        904        1,986        1,577  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 109,910        61,966        193,607        192,327  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

23.

Income Taxes

 

  (a)

Details of income tax expense (benefit) for the three-month and six-month periods ended June 30, 2019 and 2018 are as follows:

 

     For the three-month
periods ended June 30, 		     For the six-month
periods ended June 30, 		 
(In millions of won)    2019      2018      2019      2018  

Current tax expense

   W 82,118        42,789        111,228        92,173  

Deferred tax expense (benefit)

     25,664        (82,266 )       (69,464 )       (178,443 ) 
  

 

 

    

 

 

    

 

 

    

 

 

 

Income tax expense (benefit)

   W 107,782        (39,477 )       41,764        (86,270 ) 
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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23.

Income Taxes, Continued

 

  (b)

Tax Assets and Liabilities

The carrying amount of tax assets are reviewed at each reporting date and deferred tax assets are 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 tax assets and liabilities may differ from actual refundable or payable amount.

Deferred tax assets and liabilities as of June 30, 2019 and December 31, 2018 are attributable to the following:

 

     Assets      Liabilities     Total  
(In millions of won)    June
30, 2019 		     December,
31, 2018 		     June
30, 2019 		    December,
31, 2018 		    June
30, 2019 		    December,
31, 2018 		 

Other accounts receivable, net

   W —          —          (3,513 )      (1,013 )      (3,513 )      (1,013 ) 

Inventories, net

     76,629        60,606        —         —         76,629       60,606  

Defined benefit liabilities, net

     14,925        —          —         —         14,925       —    

Investments in subsidiaries and associates

     1,073        13,404        —         —         1,073       13,404  

Accrued expenses

     162,360        126,072        —         —         162,360       126,072  

Property, plant and equipment

     419,667        445,721        (5,326 )      (1,495 )      414,341       444,226  

Intangible assets

     2,674        3,468        (13,835 )      (14,588 )      (11,161 )      (11,120 ) 

Provisions

     39,395        32,468        (4,557 )      —         34,838       32,468  

Gain or loss on foreign currency translation, net

     12        13        —         —         12       13  

Other temporary differences

     97,470        20,850        (748 )      (7,665 )      96,722       13,185  

Tax loss carryforwards

     214,334        134,845        —         —         214,334       134,845  

Tax credit carryforwards

     186,432        308,393        —         —         186,432       308,393  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Deferred tax assets (liabilities)

   W 1,214,971        1,145,840        (27,979 )      (24,761 )      1,186,992       1,121,079  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

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24.

Loss Per Share

 

  (a)

Basic loss per share for the three-month and six-month periods ended June 30, 2019 and 2018 are as follows:

 

     For the three-month
periods ended June 30, 		    For the six-month
periods ended June 30, 		 
(In won and number of shares)    2019     2018     2019     2018  

Loss attributable to owners of the Controlling Company

   W (548,377,244,386 )      (297,385,160,764 )      (609,310,453,775 )      (356,839,048,265 ) 

Weighted-average number of common stocks outstanding

     357,815,700       357,815,700       357,815,700       357,815,700  
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss per share

   W (1,533 )      (831 )      (1,703 )      (997 ) 
  

 

 

   

 

 

   

 

 

   

 

 

 

For the three-month and six-month periods ended June 30, 2019 and 2018, there were no events or transactions that resulted in changes in the number of common stocks used for calculating loss per share.

 

  (b)

Diluted loss per share for the three-month and six-month periods ended June 30, 2019 and 2018 are not calculated since there was no potential common stock.

 

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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 denominated 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 denominated 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 June 30, 2019 and December 31, 2018 is as follows:

 

     June 30, 2019  
(In millions)    USD     JPY     CNY     TWD     EUR     PLN     VND  

Cash and cash equivalents

     900       878       5,735       45       1       78       22,910  

Trade accounts and notes receivable

     2,067       3       736       —         —         3       —    

Non-trade receivables

     66       1,283       235       3       2       4       12,771  

Other assets denominated in foreign currencies

     35       359       4,384       156       3       486       3,031  

Trade accounts and notes payable

     (584 )      (11,147 )      (2,720 )      —         —         3       (196,715 ) 

Other accounts payable

     (863 )      (25,793 )      (2,905 )      (5 )      (4 )      (4 )      (1,268,848 ) 

Financial liabilities

     (3,093 )      —         (15,135 )      —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Aggregate amounts in the statement of financial position

     (1,472 )      (34,417 )      (9,670 )      199       2       570       (1,426,851 ) 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Currency interest swap contracts

     1,785       —         —         —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net exposure

     313       (34,417 )      (9,670 )      199       2       570       (1,426,851 ) 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

     December 31, 2018  
(In millions)    USD     JPY     CNY     TWD     EUR     PLN     VND  

Cash and cash equivalents

     790       83       5,515       121       8       206       2,070,889  

Trade accounts and notes receivable

     2,175       7       1,098       —         —         —         —    

Non-trade receivables

     21       852       201       3       4       —         23,182  

Other assets denominated in foreign currencies

     33       220       11,157       108       12       23       2,782  

Trade accounts and notes payable

     (863 )      (12,501 )      (2,862 )      —         —         —         (355,390 ) 

Other accounts payable

     (928 )      (20,326 )      (4,762 )      (6 )      (3 )      (4 )      (1,585,130 ) 

Financial liabilities

     (2,571 )      —         (5,198 )      —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Aggregate amounts in the statements of financial position

     (1,343 )      (31,665 )      5,149       226       21       225       156,333  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Currency interest swap contracts

     780       —         —         —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net exposure

     (563 )      (31,665 )      5,149       226       21       225       156,333  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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25.

Financial Risk Management, Continued

 

Average exchange rates applied for the six-month periods ended June 30, 2019 and 2018 and the exchange rates at June 30, 2019 and December 31, 2018 are as follows:

 

     Average rate      Reporting date spot rate  
(In won)    2019      2018      June 30,
2019 		     December 31,
2018 		 

USD

   W 1,145.44        1,075.44      W 1,156.80        1,118.10  

JPY

     10.41        9.89        10.73        10.13  

CNY

     168.62        168.98        168.08        162.76  

TWD

     36.99        36.42        37.35        36.58  

EUR

     1,293.61        1,301.51        1,315.11        1,279.16  

PLN

     301.47        308.55        309.30        297.33  

VND

     0.0493        0.0472        0.0496        0.0482  

ii) Sensitivity analysis

A weaker won, as indicated below, against the following currencies which comprise the Group’s assets or liabilities denominated in foreign currency as of June 30, 2019 and December 31, 2018, 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:

 

     June 30, 2019      December 31, 2018  
(In millions of won)    Equity      Profit
or loss 		     Equity      Profit
or loss 		 

USD (5 percent weakening)

   W (11,750 )       78,751        (46,136 )       38,725  

JPY (5 percent weakening)

     (13,767 )       (12,401 )       (12,060 )       (10,497 ) 

CNY (5 percent weakening)

     (81,414 )       394        41,779        318  

TWD (5 percent weakening)

     371        —          413        1  

EUR (5 percent weakening)

     172        (32 )       1,197        390  

PLN (5 percent weakening)

     8,807        (3 )       3,451        (236 ) 

VND (5 percent weakening)

     (2,565 )       (2,565 )       273        273  

A stronger won against the above currencies as of June 30, 2019 and December 31, 2018 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.

 

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25.

Financial Risk Management, Continued

 

(ii) Interest rate risk

Interest rate risk arises principally from the Group’s 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 rate and establishing plan for countermeasures. Meanwhile, the Group entered into currency interest swap contracts amounting to USD 1,485 million ( W 1,717,270 million) in notional amount to hedge interest rate risk with respect to variable rate foreign currency denominated borrowings.

i) Profile

The interest rate profile of the Group’s interest-bearing financial instruments as of June 30, 2019 and December 31, 2018 is as follows:

 

(In millions of won)    June 30, 2019      December 31, 2018  

Fixed rate instruments

     

Financial assets

   W 2,501,994        2,443,583  

Financial liabilities

     (5,540,651 )       (5,033,515 ) 
  

 

 

    

 

 

 
   W (3,038,657 )       (2,589,932 ) 
  

 

 

    

 

 

 

Variable rate instruments

     

Financial liabilities

   W (5,867,360 )       (3,525,262 ) 

ii) Equity and profit or loss sensitivity analysis for variable rate instruments

As of June 30, 2019 and December 31, 2018, 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 each 12-month period following the reporting dates. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.

 

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

June 30, 2019

           

Variable rate instruments

   W (30,088 )       30,088        (30,088 )       30,088  

December 31, 2018

           

Variable rate instruments

   W (25,558 )       25,558        (25,558 )       25,558  

 

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25.

Financial Risk Management, Continued

 

  (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, the Group recognizes expected credit loss and its changes at each reporting date subsequent to initial recognition of financial asset.

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposures to credit risk as of June 30, 2019 and December 31, 2018 are as follows:

 

(In millions of won)    June 30, 2019      December 31, 2018  

Financial assets carried at amortized cost

     

Cash and cash equivalents

   W 2,423,411        2,365,022  

Deposits in banks

     78,411        78,411  

Trade accounts and notes receivable, net

     2,675,837        2,829,163  

Non-trade receivables

     175,199        159,238  

Accrued income

     20,266        10,075  

Deposits

     37,269        91,123  

Short-term loans

     23,294        16,116  

Long-term loans

     50,081        55,048  

Long-term non-trade receivables

     10,260        11,448  

Lease receivables

     30,997        —    
  

 

 

    

 

 

 
   W 5,525,025        5,615,644  

Financial assets at fair value through profit or loss

     

Convertible bonds

   W 1,327        1,327  

Derivatives

     42,772        13,059  
  

 

 

    

 

 

 
   W 44,099        14,386  

Financial assets at fair value through other comprehensive income

     

Debt instruments

   W 183        161  
  

 

 

    

 

 

 
   W 5,569,307        5,630,191  
  

 

 

    

 

 

 

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 primarily from the sales and investing activities. Trade accounts and notes receivable are insured in order to manage credit risk if it does not meet the Group’s internal credit ratings. Uninsured trade accounts and notes receivables are managed by continuous monitoring of internal credit ratings 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 June 30, 2019.

 

            Contractual cash flows in  
(In millions of won)    Carrying
amount 		     Total     6 months
or less 		     6-12
months 		     1-2 years     2-5 years     More
than 5
years 		 

Non-derivative financial liabilities :

                 

Unsecured bank borrowings

   W 8,818,292        9,841,344       453,509        1,114,322        1,883,224       5,951,057       439,232  

Unsecured bond issues

     2,589,718        2,812,308       335,563        292,043        505,312       1,541,348       138,042  

Trade accounts and notes payable

     2,815,327        2,815,327       2,815,327        —          —         —         —    

Other accounts payable

     2,921,328        2,921,328       2,920,267        1,061        —         —         —    

Other accounts payable

(enterprise procurement card)(*)

     415,330        415,330       415,330        —          —         —         —    

Long-term other accounts payable

     2,148        2,148       —          —          2,148       —         —    

Security deposits received

     10,825        10,825       165        4,680        5,980       —         —    

Lease liabilities

     99,347        107,876       30,264        18,341        26,244       22,437       10,590  

Derivative financial liabilities

                 

Derivatives

     18,136        (28,768 )      —          —          (3,893 )      (24,875 )      —    
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 
   W 17,690,451        18,897,718       6,970,425        1,430,447        2,419,015       7,489,967       587,864  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

 

(*)

Represents the amount of utility expenses and others paid by enterprise procurement card and the outstanding payables are settled at the end of the billing cycle.

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

 

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25.

Financial Risk Management, Continued

 

  (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)    June 30, 2019     December 31, 2018  

Total liabilities

   W 20,872,181       18,289,464  

Total equity

     14,728,558       14,886,246  

Cash and deposits in banks (*1)

     2,501,811       2,443,422  

Borrowings (including bonds)

     11,408,010       8,558,777  

Total liabilities to equity ratio

     142 %      123 % 

Net borrowings to equity ratio (*2)

     60 %      41 % 

 

(*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.

 

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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 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 short-term receivables approximate fair value.

iii) Investments in Equity and Debt Instruments

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 institution 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.

 

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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 June 30, 2019 and December 31, 2018 are as follows:

 

     June 30, 2019      December 31, 2018  
(In millions of won)    Carrying amounts      Fair Values      Carrying amounts      Fair Values  

Financial assets carried at amortized cost

           

Cash and cash equivalents

   W 2,423,411        (*)        2,365,022        (*)  

Deposits in banks

     78,411        (*)        78,411        (*)  

Trade accounts and notes receivable

     2,675,837        (*)        2,829,163        (*)  

Non-trade receivables

     175,199        (*)        159,238        (*)  

Accrued income

     20,266        (*)        10,075        (*)  

Deposits

     37,269        (*)        91,123        (*)  

Short-term loans

     23,294        (*)        16,116        (*)  

Long-term loans

     50,081        (*)        55,048        (*)  

Long-term non-trade receivables

     10,260        (*)        11,448        (*)  

Lease receivables

     30,997        (*)        —          —    

Financial assets at fair value through profit or loss

           

Equity instruments

   W 9,970        9,970        13,681        13,681  

Convertible bonds

     1,327        1,327        1,327        1,327  

Derivatives

     42,772        42,772        13,059        13,059  

Financial assets at fair value through other comprehensive income

           

Debt instruments

   W 183        183        161        161  

Financial liabilities at fair value through profit or loss

           

Derivatives

   W 18,136        18,136        25,758        25,758  

Liabilities carried at amortized cost

           

Secured bank borrowings

   W —          —          268,093        268,093  

Unsecured bank borrowings

     8,818,292        8,896,354        5,958,427        6,013,903  

Unsecured bond issues

     2,589,718        2,655,789        2,332,257        2,384,987  

Trade accounts and notes payable

     2,815,327        (*)        3,087,461        (*)  

Other accounts payable

     3,336,658        (*)        3,566,629        (*)  

Long-term other accounts payable

     2,148        (*)        3,103        (*)  

Security deposits received

     10,825        (*)        10,955        (*)  

Lease liabilities

     99,347        (*)        —          —    

 

(*)

Excluded from disclosures as the carrying amount approximates fair value.

 

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25.

Financial Risk Management, Continued

 

  (iii)

Fair values of financial assets and liabilities

 

  i)

Fair value hierarchy

The table below analyzes financial instruments carried at fair value based on the input variables used in the valuation method to measure fair value of assets and liabilities. The different 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 June 30, 2019 and December 31, 2018 are as follows:

 

     June 30, 2019  
(In millions of won)    Level 1      Level 2      Level 3      Total  

Financial assets at fair value through profit or loss

           

Equity instruments

   W     —          —          9,970        9,970  

Convertible bonds

     —          —          1,327        1,327  

Derivatives

     —          —          42,772        42,772  

Financial assets at fair value through other comprehensive income

           

Debt instruments

   W 183        —          —          183  

Financial liabilities at fair value through profit or loss

           

Derivatives

   W —          —          18,136        18,136  

 

     December 31, 2018  
(In millions of won)    Level 1      Level 2      Level 3      Total  

Financial assets at fair value through profit or loss

           

Equity instruments

   W      —          —          13,681        13,681  

Convertible bonds

     —          —          1,327        1,327  

Derivatives

     —          —          13,059        13,059  

Financial assets at fair value through other comprehensive income

           

Debt instruments

   W 161        —          —          161  

Financial liabilities at fair value through profit or loss

           

Derivatives

   W —          —          25,758        25,758  

 

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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 June 30, 2019 and December 31, 2018 are as follows:

 

(In millions of won)    June 30, 2019      Valuation
technique 		     Input  

Classification

   Level 1      Level 2      Level 3  

Liabilities

              

Unsecured bank borrowings

   W     —          —          8,896,354       
Discounted
cash flow 		 
  		    
Discount
rate 		 
 

Unsecured bond issues

     —          —          2,655,789       
Discounted
cash flow 		 
  		    
Discount
rate 		 
 
(In millions of won)    December 31, 2018      Valuation
technique 		     Input  

Classification

   Level 1      Level 2      Level 3  

Liabilities

              

Secured bank borrowings

   W —          —          268,093       
Discounted
cash flow 		 
  		    
Discount
rate 		 
 

Unsecured bank borrowings

     —          —          6,013,903       
Discounted
cash flow 		 
  		    
Discount
rate 		 
 

Unsecured bond issues

     —          —          2,384,987       
Discounted
cash flow 		 
  		    
Discount
rate 		 
 

 

iv)

The interest rates applied for determination of the above fair value as of June 30, 2019 and December 31, 2018 are as follows:

 

     June 30, 2019     December 31, 2018  

Borrowings, bonds and others

     1.91~3.46 %      2.09~3.37 % 

 

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Changes in liabilities arising from financing activities

Changes in liabilities arising from financing activities for the six-month period ended June 30, 2019 are as follows:

 

                  Non-cash transactions         
(In millions of won)    January 1,
2019 		     Cash flows from
financing
activities 		    Reclassification     Gain or loss on
foreign currency
translation 		    Effective
interest
adjustment 		     Others      June 30,
2019 		 

Short-term borrowings

   W —          685,980       —         14,523       —          —          700,503  

Current portion of long-term borrowings and bonds

     1,553,907        (995,460 )      529,499       13,962       288        —          1,102,196  

Long-term borrowings

     5,232,271        2,499,192       (269,820 )      113,576       —          —          7,575,219  

Bonds

     1,772,599        503,665       (259,679 )      11,202       2,305        —          2,030,092  

Lease liabilities

     —          (30,311 )      —         (1,077 )      1,914        128,821        99,347  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 
   W 8,558,777        2,663,066       —         152,186       4,507        128,821        11,507,357  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

 

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27.

Related Parties and Others

 

  (a)

Related parties

Related parties as of June 30, 2019 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.

 

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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 and six-month periods ended June 30, 2019 and 2018 are as follows:

 

     For the three-month period ended June 30, 2019  
     Sales and
others 		            Purchase and others  
( In millions of won )    Dividend
income 		     Purchase of
raw material
and others 		     Acquisition of
property, plant
and equipment 		     Outsourcing
fees 		     Other costs  

Associates and their subsidiaries

                 

INVENIA Co., Ltd.

   W —          —          419        7,856        —          49  

AVATEC Co., Ltd.

     —          —          —          —          16,062        219  

Paju Electric Glass Co., Ltd.

     —          —          89,238        —          —          1,138  

WooRee E&L Co., Ltd.

     —          —          1,382        —          —          —    

YAS Co., Ltd.

     —          —          1,923        10,194        —          1,025  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W —          —          92,962        18,050        16,062        2,431  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Entity that has significant influence over the Controlling Company

                 

LG Electronics Inc.

   W 246,515        —          3,947        192,159        —          44,560  

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

                 

LG Electronics India Pvt. Ltd.

   W 22,571        —          —          —          —          39  

LG Electronics Vietnam Haiphong Co., Ltd.

     65,828        —          —          1,425        —          4  

 

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27.

Related Parties and Others, Continued

 

     For the three-month period ended June 30, 2019  
                   Purchase and others  
( In millions of won )    Sales and
others 		     Dividend
income 		     Purchase of
raw material
and others 		     Acquisition of
property, plant
and equipment 		     Outsourcing
fees 		     Other costs  

LG Electronics Nanjing New Technology Co., Ltd.

   W 77,832        —          —          1        —          75  

LG Electronics RUS, LLC

     15,215        —          —          —          —          682  

LG Electronics do Brasil Ltda.

     36,874        —          —          —          —          86  

LG Innotek Co., Ltd.

     1,201        —          17,152        —          —          17,340  

Qingdao LG Inspur Digital Communication Co., Ltd.

     208        —          —          —          —          —    

Inspur LG Digital Mobile Communications Co., Ltd.

     20,007        —          —          —          —          —    

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

     30,264        —          —          —          —          23  

LG Electronics Mlawa Sp. z o.o.

     117,347        —          —          —          —          289  

LG Electronics Taiwan Taipei Co., Ltd.

     956        —          —          31        —          89  

LG Hitachi Water Solutions Co., Ltd.

     —          —          —          23,467        —          —    

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

     176,612        —          —          —          —          265  

LG Electronics Air-Conditioning (Shandong) Co., Ltd.

     —          —          126        145        —          58  

HiEntech Co., Ltd.

     18        —          —          2,347        —          7,080  

HiEntech (Tianjin) Co., Ltd.

     —          —          —          18,296        —          4,116  

LG Electronics Egypt S.A.E.

     30,613        —          —          —          —          —    

LG Electronics Alabama Inc.

     2,537        —          —          —          —          —    

LG Electronics Japan, Inc.

     —          —          —          11        —          1,510  

LG Electronics U.S.A., Inc.

     350        —          —          —          —          —    

Others

     1,544        —          —          —          —          1,539  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 599,977        —          17,278        45,723        —          33,195  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 846,492        —          114,187        255,932        16,062        80,186  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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27.

Related Parties and Others, Continued

 

     For the six-month period ended June 30, 2019  
     Sales and
others 		            Purchase and others  
( In millions of won )    Dividend
income 		     Purchase of
raw material
and others 		     Acquisition of
property, plant
and equipment 		     Outsourcing
fees 		     Other costs  

Associates and their subsidiaries

                 

INVENIA Co., Ltd.

   W —          180        762        36,060        —          102  

AVATEC Co., Ltd.

     —          265        —          —          37,219        420  

Paju Electric Glass Co., Ltd.

     —          6,057        179,854        —          —          2,102  

WooRee E&L Co., Ltd.

     —          —          2,687        —          —          1  

YAS Co., Ltd.

     —          1,000        3,570        90,612        —          1,983  

Material Science Co., Ltd.

        —          —          —          —          313  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W —          7,502        186,873        126,672        37,219        4,921  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Entity that has significant influence over the Controlling Company

                 

LG Electronics Inc.

   W 532,049        —          7,780        614,434        —          72,602  

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

                 

LG Electronics India Pvt. Ltd.

   W 45,435        —          —          —          —          40  

LG Electronics Vietnam Haiphong Co., Ltd.

     128,611        —          —          2,940        —          125  

LG Electronics Nanjing New Technology Co., Ltd.

     134,390        —          —          30        —          174  

LG Electronics RUS, LLC

     42,193        —          —          —          —          1,425  

LG Electronics do Brasil Ltda.

     80,228        —          —          —          —          131  

LG Innotek Co., Ltd.

     4,234        —          32,712        —          —          42,071  

 

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27.

Related Parties and Others, Continued

 

 

     For the six-month period ended June 30, 2019  
     Sales and
others 		            Purchase and others  
( In millions of won )    Dividend
income 		     Purchase of
raw material
and others 		     Acquisition of
property, plant
and equipment 		     Outsourcing
fees 		     Other costs  

Qingdao LG Inspur Digital Communication Co., Ltd.

   W 2,796        —          —          —          —          —    

Inspur LG Digital Mobile Communications Co., Ltd.

     40,424        —          —          —          —          —    

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

     68,736        —          —          —          —          50  

LG Electronics Mlawa Sp. z o.o.

     308,857        —          —          —          —          864  

LG Electronics Taiwan Taipei Co., Ltd.

     3,639        —          —          31        —          178  

LG Hitachi Water Solutions Co., Ltd.

     —          —          —          50,975        —          —    

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

     344,626           —          —          —          523  

LG Electronics Air-Conditioning (Shandong) Co., Ltd.

     —          —          159        4,159        —          75  

HiEntech Co., Ltd.

     36        —          —          6,013        —          14,191  

HiEntech (Tianjin) Co., Ltd.

     —          —          —          22,351        —          9,790  

LG Electronics Egypt S.A.E

     58,526        —          —          —          —          —    

LG Electronics Alabama Inc.

     5,100        —          —          —          —          —    

LG Electronics Japan, Inc.

     —          —          —          14        —          3,062  

LG Electronics U.S.A., Inc.

     2,920        —          —          —          —          —    

Others

     3,815        —          1        —          —          3,136  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 1,274,566        —          32,872        86,513        —          75,835  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 1,806,615        7,502        227,525        827,619        37,219        153,358  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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27.

Related Parties and Others, Continued

 

 

     For the three-month period ended June 30, 2018  
     Sales
and others 		            Purchase and others  
( In millions of won )    Dividend
income 		     Purchase of raw
material and
others 		     Acquisition of
property, plant
and equipment 		     Outsourcing
fees 		     Other costs  

Associates and their subsidiaries

                 

INVENIA Co., Ltd.

   W —          —          499        13,972        —          206  

AVATEC Co., Ltd.

     —          —          —          —          17,306        104  

Paju Electric Glass Co., Ltd.

     —          —          91,301        —          —          923  

WooRee E&L Co., Ltd.

     —          —          38        —          —          39  

YAS Co., Ltd.

     —          —          1,421        5,135        —          722  

LB Gemini New Growth Fund No. 16

     —          —          —          —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W —          —          93,259        19,107        17,306        1,994  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Entity that has significant influence over the Controlling Company

                 

LG Electronics Inc.

   W 336,637        —          12,427        335,653        —          29,554  

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

                 

LG Electronics India Pvt. Ltd.

   W 15,419        —          —          —          —          13  

LG Electronics Vietnam Haiphong Co., Ltd.

     37,248        —          —          201        —          3  

 

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27.

Related Parties and Others, Continued

 

 

     For the three-month period ended June 30, 2018  
     Sales
and others 		            Purchase and others  
( In millions of won )    Dividend
income 		     Purchase of raw
material and
others 		     Acquisition of
property, plant
and equipment 		     Outsourcing
fees 		     Other costs  

LG Electronics Nanjing New Technology Co., Ltd.

   W 50,101        —          —          —          —          1,221  

LG Electronics RUS, LLC

     24,052        —          —          —          —          779  

LG Electronics do Brasil Ltda.

     38,694        —          —          —          —          60  

LG Innotek Co., Ltd.

     10,098        —          33,022        —          —          16,970  

Qingdao LG Inspur Digital Communication Co., Ltd.

     12,430        —          —          —          —          —    

Inspur LG Digital Mobile Communications Co., Ltd.

     41,059        —          —          —          —          —    

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

     45,185        —          —          —          —          11  

LG Electronics Mlawa Sp. z o.o.

     189,415        —          —          —          —          242  

LG Hitachi Water Solutions Co., Ltd.

     —          —          —          86,247        —          5,770  

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

     246,502        —          —          —          —          398  

HiEntech Co., Ltd.

     —          —          —          1,132        —          6,931  

HiEntech (Tianjin) Co., Ltd.

     —          —          —          5,619        —          4,294  

LG Electronics Air-Conditioning (Shandong) Co., Ltd.

     —          —          122        1,803        —          17,348  

LG Electronics Almaty Kazakhstan

     782        —          —          —          —          13  

LG Electronics Egypt S.A.E.

     14,881        —          —          —          —          16  

LG Electronics S.A. (Pty) Ltd.

     2,038        —          —          —          —          4  

LG Electronics Taiwan Taipei Co., Ltd.

     3,062        —          —          —          —          64  

Others

     751        —          9        1        —          3,065  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 731,717        —          33,153        95,003        —          57,202  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 1,068,354        —          138,839        449,763        17,306        88,750  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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27.

Related Parties and Others, Continued

 

 

     For the six-month period ended June 30, 2018  
     Sales
and others 		            Purchase and others  
( In millions of won )    Dividend
income 		     Purchase of raw
material and
others 		     Acquisition of
property, plant
and equipment 		     Outsourcing
fees 		     Other costs  

Associates and their subsidiaries

                 

INVENIA Co., Ltd.

   W —          30        769        21,874        —          278  

AVATEC Co., Ltd.

     —          530        —          —          35,079        223  

Paju Electric Glass Co., Ltd.

     —          4,172        183,798        —          —          1,843  

WooRee E&L Co., Ltd.

     —          —          38        —          —          86  

YAS Co., Ltd.

     —          —          2,181        17,552        —          1,516  

LB Gemini New Growth Fund No. 16

     —          540        —          —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W —          5,272        186,786        39,426        35,079        3,946  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Entity that has significant influence over the Controlling Company

                 

LG Electronics Inc.

   W 700,336        —          23,540        557,024        —          48,668  

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

                 

LG Electronics India Pvt. Ltd.

   W 23,774        —          —          —          —          26  

LG Electronics Vietnam Haiphong Co., Ltd.

     70,236        —          —          1,415        —          5  

LG Electronics Nanjing New Technology Co., Ltd.

     121,584        —          —          18        —          1,346  

LG Electronics RUS, LLC

     39,380        —          —          —          —          1,099  

LG Electronics do Brasil Ltda.

     124,699        —          —          —          —          164  

LG Innotek Co., Ltd.

     17,048        —          72,638        —          —          28,052  

 

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27.

Related Parties and Others, Continued

 

 

     For the six-month period ended June 30, 2018  
     Sales
and others 		            Purchase and others  
( In millions of won )    Dividend
income 		     Purchase of raw
material and
others 		     Acquisition of
property, plant
and equipment 		     Outsourcing
fees 		     Other costs  

Qingdao LG Inspur Digital Communication Co., Ltd.

   W 20,086        —          —          —          —          —    

Inspur LG Digital Mobile Communications Co., Ltd.

     75,046        —          —          —          —          —    

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

     100,213        —          —          —          —          65  

LG Electronics Mlawa Sp. z o.o.

     362,037        —          —          —          —          314  

LG Hitachi Water Solutions Co., Ltd.

     —          —          —          205,784        —          6,261  

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

     493,430        —          —          —          —          1,296  

HiEntech Co., Ltd.

     —          —          —          6,362        —          14,866  

HiEntech (Tianjin) Co., Ltd.

     —          —          —          13,160        —          14,537  

LG Electronics Air-Conditioning (Shandong) Co., Ltd.

     —          —          128        1,803        —          19,416  

LG Electronics Almaty Kazakhstan

     3,207        —          —          —          —          21  

LG Electronics Egypt S.A.E.

     14,881        —          —          —          —          16  

LG Electronics S.A. (Pty) Ltd.

     4,435        —          —          —          —          6  

LG Electronics Taiwan Taipei Co., Ltd.

     6,738        —          —          —          —          192  

Others

     790        —          9        1        —          3,726  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 1,477,584        —          72,775        228,543        —          91,408  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 2,177,920        5,272        283,101        824,993        35,079        144,022  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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27.

Related Parties and Others, Continued

 

  (c)

Trade accounts and notes receivable and payable and others as of June 30, 2019 and December 31, 2018 are as follows:

 

        
     Trade accounts and notes receivable
and others 		     Trade accounts and notes payable
and others 		 
( In millions of won )    June 30, 2019      December 31, 2018      June 30, 2019      December 31, 2018  

Associates

           

INVENIA Co., Ltd.

   W 3,000        2,000        14,551        30,179  

AVATEC Co., Ltd.

     —          —          3,647        4,382  

Paju Electric Glass Co., Ltd.

     6,365        —          62,656        60,566  

WooRee E&L Co., Ltd.

     —          —          1,332        7  

YAS Co., Ltd.

     —          —          50,327        6,145  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 9,365        2,000        132,513        101,279  
  

 

 

    

 

 

    

 

 

    

 

 

 

Entity that has significant influence over the Controlling Company

           

LG Electronics Inc.

   W 160,888        247,679        378,803        430,677  

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

           

LG Electronics India Pvt. Ltd.

   W 12,180        9,047        35        29  

LG Electronics Vietnam Haiphong Co., Ltd.

     25,779        25,544        1,305        —    

LG Electronics Nanjing New Technology Co., Ltd.

     53,428        43,463        3        139  

LG Electronics RUS, LLC

     7,712        22,570        188        90  

LG Electronics do Brasil Ltda.

     11,729        15,608        63        62  

 

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27.

Related Parties and Others, Continued

 

        
     Trade accounts and notes receivable
and others 		     Trade accounts and notes payable
and others 		 
( In millions of won )    June 30, 2019      December 31, 2018      June 30, 2019      December 31, 2018  

LG Innotek Co., Ltd.

   W 206        2,885        43,326        47,382  

Inspur LG Digital Mobile Communications Co., Ltd.

     19,996        13,172        —          —    

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

     12,437        15,305        —          —    

LG Electronics Mlawa Sp. z o.o.

     30,967        70,236        62        33  

LG Hitachi Water Solutions Co., Ltd.

     —          9,100        34,366        50,425  

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

     47,454        69,189        —          134  

HiEntech Co., Ltd.

     2        —          8,357        16,816  

HiEntech (Tianjin) Co., Ltd.

     —          —          22,579        16,345  

LG Electronics Egypt S.A.E.

     13,048        10,296        —          —    

Others

     2,540        8,793        1,453        18,900  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 237,478        315,208        111,737        150,355  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 407,731        564,887        623,053        682,311  
  

 

 

    

 

 

    

 

 

    

 

 

 

.

 

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27.

Related Parties and Others, Continued

 

  (d)

Details of significant cash transactions such as loans and collection of loans, which occurred in the normal course of business with related parties for the six-month periods ended June 30, 2019 and 2018 are as follows:

 

        
     2019      2018  

(In millions of won)

Associates

   Loans      Collection
of loans 		     Loans      Collection
of loans 		 

INVENIA Co., Ltd.

   W 1,000        —          —          250  

YAS Co., Ltd.

     —          —          —          250  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 1,000        —          —          500  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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27.

Related Parties and Others, Continued

 

  (e)

Conglomerate Transactions

Transactions, trade accounts and notes receivable and payable, and others between the Group and certain companies and their subsidiaries, which are included in LG Group, one of conglomerates according to the Monopoly Regulation and Fair Trade Act for the three-month and six-month periods ended June 30, 2019 and 2018 and as of June 30, 2019 and December 31, 2018 are as follows. These entities are not related parties according to K-IFRS No. 1024, Related Party Disclosures.

 

   
     For the three-month period
ended June 30, 2019 		     For the six-month period
ended June 30, 2019 		     June 30, 2019  
(In millions of won)    Sales and
others 		     Purchase
and others 		     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

   W 156,629        106,638        351,829        224,783        63,863        239,563  

LG Uplus Corp.

     —          579        —          1,139        —          207  

LG Chem Ltd. and its subsidiaries

     81,614        302,544        82,335        589,151        1,305        240,354  

S&I Corp. and its subsidiaries (formerly, Serveone)

     100        184,659        184        514,222        21,310        141,212  

Silicon Works Co., Ltd.

     —          156,264        92        306,556        —          157,256  

LG Corp.

     —          13,096        —          26,369        8,853        5,334  

LG Management Development Institute

     —          1,915        —          4,385        3,480        304  

LG CNS Co., Ltd. and its subsidiaries

     4        57,683        9        93,605        2        55,736  

LG Hausys Ltd.

     1        1        1        1        2        1  

LG Household & Health Care and its subsidiaries

     —          2        —          97        —          1  

LG Holdings Japan Co., Ltd.

     —          495        —          987        2,281        —    

G2R Inc. and its subsidiaries

     —          839        —          1,903        —          1,072  

Robostar Co., Ltd.

     —          1,553        —          6,900        —          2,188  

Other(*)

     4        119,763        4        119,763        47        230,158  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 238,352        946,031        434,454        1,889,861        101,143        1,073,386  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(*)

Due to S&I Corp.’s disposal of partial interests in Serveone in May 2019, Serveone was reclassified from one of the S&I Corp.’s subsidiaries to associates. Accordingly, transactions with S&I Corp. after the disposal are classified as other.

 

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27.

Related Parties and Others, Continued

 

   
     For the three-month period
ended June 30, 2018 		     For the six-month period
ended June 30, 2018 		     December 31, 2018  
( In millions of won )    Sales
and others 		     Purchase
and others 		     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

   W 203,365        147,186        387,758        320,473        83,011        146,836  

LG Uplus Corp.

     21        396        21        620        —          178  

LG Chem Ltd. and its subsidiaries

     —          279,505        1,564        576,206        173        184,357  

S&I Corp. and its subsidiaries (Formerly, Serveone)

     104        521,406        208        997,374        21,307        510,132  

Silicon Works Co., Ltd.

     —          160,546        —          303,841        —          140,694  

LG Corp.

     —          12,578        —          25,369        11,246        —    

LG Management Development Institute

     —          2,305        —          5,118        3,480        441  

LG CNS Co., Ltd. and its subsidiaries

     —          48,152        —          85,965        1        95,703  

LG Hausys Ltd.

     —          —          1,110        1        —          3  

LG Household & Health Care and its subsidiaries

     —          13        —          25        —          —    

LG Holdings Japan Co., Ltd.

     —          456        —          912        2,037        —    

G2R Inc. and its subsidiaries

     —          36,171        —          40,212        —          19,773  

Robostar Co., Ltd.

     —          —          —          —          —          2,723  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 203,490        1,208,714        390,661        2,356,116        121,255        1,100,840  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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27.

Related Parties and Others, Continued

 

  (f)

Key management personnel compensation

Compensation costs of key management for the three-month and six-month periods ended June 30, 2019 and 2018 are as follows:

 

(In millions of won)    For the three-month
periods ended June 30, 		     For the six-month
periods ended June 30, 		 
     2019      2018      2019      2018  

Short-term benefits

   W 610        928        1,501      1,816

Expenses related to the defined benefit plan

     247        314        347      587
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 857        1,242        1,848      2,403
  

 

 

    

 

 

    

 

 

    

 

 

 

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

 

28.

Non-Current Assets Held for Sale

The Group decided to dispose a part of tangible assets of LG Display Poland Sp. z o.o. based on the management’s approval and began effort to sell the disposal group. During the six-month period ended June 30, 2019, the Group completed disposal to LG Chem Poland Sp. z o.o..

Gain from disposal of non-current assets held for sale amount to W 8,353 million and are recognized as other non-operating income.

 

29.

Subsequent Event

The Controlling Company resolved to issue the following foreign currency denominated convertible bonds at the Board of Directors’ meeting on July 30, 2019:

 

Classification

  

Description

Issue    USD 668 million (KRW equivalent: 813,427 million)
Interest rate (%)    1.5
Maturity date    August 22, 2024
Conversion price    W 19,845
Exchange rate (*)    W 1,182.65
Class of shares subject to conversion    Registered common shares
Number of shares convertible    40,988,998
Conversion period    August 23, 2020 ~ August 12, 2024
Expected issuance date    August 22, 2019

 

(*)

The exchange rate represents Bloomberg closing mid-rate at 12:00 pm (Korea time) on July 30, 2019.

 

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LG DISPLAY CO., LTD.

Condensed Separate Interim Financial Statements

(Unaudited)

June 30, 2019 and 2018

(With Independent Auditors’ Review Report Thereon)

 

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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 June 30, 2019, the condensed separate interim statements of comprehensive loss for the three-month and six-month periods ended June 30, 2019 and 2018, and statements of changes in equity and cash flows for the six-month periods ended June 30, 2019 and 2018, 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, 2018, and the related separate statements of comprehensive income, 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 February 25, 2019, expressed an unqualified opinion. The accompanying condensed separate statement of financial position of the Company as of December 31, 2018, 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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KPMG Samjong Accounting Corp.

Seoul, Korea

August 13, 2019

 

This report is effective as of August 13, 2019, 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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LG DISPLAY CO., LTD.

Condensed Separate Interim Statements of Financial Position

(Unaudited)

As of June 30, 2019 and December 31, 2018

 

(In millions of won)    Note      June 30, 2019      December 31, 2018  

Assets

        

Cash and cash equivalents

     4, 24      W 444,581      473,283

Deposits in banks

     4, 24        77,200      77,200

Trade accounts and notes receivable, net

     5, 14, 24, 26        3,263,319      3,389,108

Other accounts receivable, net

     5, 24        216,181      321,963

Other current financial assets

     6, 24        55,276      29,281

Inventories

     7        1,857,503      1,951,155

Prepaid income tax

        110,048      —  

Other current assets

     5        174,041      136,349
     

 

 

    

 

 

 

Total current assets

        6,198,149      6,378,339

Deposits in banks

     4, 24        11      11

Investments

     8        4,882,331      3,602,214

Other non-current accounts receivable, net

     5, 24        23,483      25,823

Other non-current financial assets

     6, 24        78,683      77,192

Property, plant and equipment, net

     9        15,059,506      14,984,564

Intangible assets, net

     10        759,928      816,808

Deferred tax assets

     22        838,348      851,936

Other non-current assets

     5        299,208      325,219
     

 

 

    

 

 

 

Total non-current assets

        21,941,498      20,683,767
     

 

 

    

 

 

 

Total assets

      W 28,139,647      27,062,106
     

 

 

    

 

 

 

Liabilities

        

Trade accounts and notes payable

     24, 26      W 3,202,412      3,186,123

Current financial liabilities

     11, 24        1,207,806      1,044,841

Other accounts payable

     24        1,852,987      1,746,412

Accrued expenses

        697,263      516,970

Income tax payable

        29,118      17,404

Provisions

     13        126,831      96,555

Advances received

     14        1,042,241      780,906

Other current liabilities

     13        26,095      27,419
     

 

 

    

 

 

 

Total current liabilities

        8,184,753      7,416,630

Non-current financial liabilities

     11, 24        6,308,646      5,139,476

Non-current provisions

     13        47,090      32,764

Defined benefit liabilities, net

     12        125,727      44,187

Long-term advances received

     14        698,301      1,122,015

Other non-current liabilities

     13        92,654      94,453
     

 

 

    

 

 

 

Total non-current liabilities

        7,272,418      6,432,895
     

 

 

    

 

 

 

Total liabilities

        15,457,171      13,849,525
     

 

 

    

 

 

 

Equity

        

Share capital

     15        1,789,079      1,789,079

Share premium

        2,251,113      2,251,113

Retained earnings

        8,642,284      9,172,389
     

 

 

    

 

 

 

Total equity

        12,682,476      13,212,581
     

 

 

    

 

 

 

Total liabilities and equity

      W 28,139,647      27,062,106
     

 

 

    

 

 

 

See accompanying notes to the separate interim financial statements.

 

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LG DISPLAY CO., LTD.

Condensed Separate Interim Statements of Comprehensive Loss

(Unaudited)

For the three-month and six-month periods ended June 30, 2019 and 2018

 

(In millions of won, except earnings per share)   Note      For the three-month period
ended June 30 		    For the six-month period
ended June 30 		 
           2019     2018     2019     2018  

Revenue

    16, 26      W 4,935,961     5,034,966   W 10,319,565     10,189,227

Cost of sales

    7, 17, 26        (4,649,658 )      (4,896,707 )      (9,624,904 )      (9,799,231 ) 
    

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

       286,303     138,259     694,661     389,996

Selling expenses

    18        (160,281 )      (130,361 )      (312,211 )      (229,574 ) 

Administrative expenses

    18        (120,269 )      (126,262 )      (249,869 )      (250,917 ) 

Research and development expenses

       (420,411 )      (290,704 )      (750,021 )      (572,194 ) 
    

 

 

   

 

 

   

 

 

   

 

 

 

Operating loss

       (414,658 )      (409,068 )      (617,440 )      (662,689 ) 
    

 

 

   

 

 

   

 

 

   

 

 

 

Finance income

    21        59,111     5,784     106,981     111,479

Finance costs

    21        (82,544 )      (43,201 )      (134,540 )      (60,111 ) 

Other non-operating income

    20        304,317     245,892     445,713     362,802

Other non-operating expenses

    20        (315,138 )      (274,612 )      (437,341 )      (386,933 ) 
    

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income tax

       (448,912 )      (475,205 )      (636,627 )      (635,452 ) 

Income tax expense (benefit)

    22        (41,148 )      (57,966 )      (114,921 )      (137,849 ) 
    

 

 

   

 

 

   

 

 

   

 

 

 

Loss for the period

       (407,764 )      (417,239 )      (521,706 )      (497,603 ) 
    

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive loss

          

Items that will never be reclassified to profit or loss

          

Remeasurements of net defined benefit liabilities

    12        (1,935 )      (4,973 )      (4,848 )      (11,392 ) 

Related income tax

    12        (4,328 )      1,330     (3,551 )      3,626
    

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive loss for the period, net of income tax

       (6,263 )      (3,643 )      (8,399 )      (7,766 ) 
    

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive loss for the period

     W (414,027 )      (420,882 )    W (530,105 )      (505,369 ) 
    

 

 

   

 

 

   

 

 

   

 

 

 

Loss per share (in won)

          

Basic and diluted loss per share

    23      W (1,140 )      (1,166 )    W (1,458 )      (1,391 ) 
    

 

 

   

 

 

   

 

 

   

 

 

 

See accompanying notes to the separate interim financial statements.

 

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LG DISPLAY CO., LTD.

Condensed Separate Interim Statements of Changes in Equity

(Unaudited) 

For the six-month periods ended June 30, 2019 and 2018

 

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

Balances at January 1, 2018

   W 1,789,079      2,251,113      9,789,067     13,829,259
  

 

 

    

 

 

    

 

 

   

 

 

 

Total comprehensive loss for the period

          

Loss for the period

     —        —        (497,603 )      (497,603 ) 

Other comprehensive loss

          

Remeasurements of net defined benefit liabilities, net of tax

     —        —        (7,766 )      (7,766 ) 
  

 

 

    

 

 

    

 

 

   

 

 

 

Total comprehensive loss for the period

   W —        —        (505,369 )      (505,369 ) 
  

 

 

    

 

 

    

 

 

   

 

 

 

Transaction with owners, recognized directly in equity

          

Dividends to shareholders

     —        —        (178,908 )      (178,908 ) 
  

 

 

    

 

 

    

 

 

   

 

 

 

Balances at June 30, 2018

   W 1,789,079      2,251,113      9,104,790     13,144,982
  

 

 

    

 

 

    

 

 

   

 

 

 

Balances at January 1, 2019

   W 1,789,079      2,251,113      9,172,389     13,212,581
  

 

 

    

 

 

    

 

 

   

 

 

 

Total comprehensive loss for the period

          

Loss for the period

     —        —        (521,706 )      (521,706 ) 

Other comprehensive loss

          

Remeasurements of net defined benefit liabilities, net of tax

     —        —        (8,399 )      (8,399 ) 
  

 

 

    

 

 

    

 

 

   

 

 

 

Total comprehensive loss for the period

   W —        —        (530,105 )      (530,105 ) 
  

 

 

    

 

 

    

 

 

   

 

 

 

Balances at June 30, 2019

   W 1,789,079      2,251,113      8,642,284     12,682,476
  

 

 

    

 

 

    

 

 

   

 

 

 

See accompanying notes to the separate interim financial statements.

 

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LG DISPLAY CO., LTD.

Condensed Separate Interim Statements of Cash Flows

(Unaudited)

For the six-month periods ended June 30, 2019 and 2018

 

(In millions of won)    Note      2019     2018  

Cash flows from operating activities:

       

Loss for the period

      W (521,706 )      (497,603 ) 

Adjustments for:

       

Income tax benefit

     22        (114,921 )      (137,849 ) 

Depreciation and amortization

     17        1,209,059     1,170,718

Gain on foreign currency translation

        (77,872 )      (163,645 ) 

Loss on foreign currency translation

        153,273     182,923

Expenses related to defined benefit plans

     12        97,553     102,702

Gain on disposal of property, plant and equipment

        (27,963 )      (27,019 ) 

Loss on disposal of property, plant and equipment

        6,747     4,597

Impairment loss on disposal of property, plant and equipment

        5,943     27,491

Gain on disposal of intangible assets

        (552 )      (239 ) 

Loss on disposal of intangible assets

        18     —  

Impairment loss on intangible assets

        —       301

Reversal of impairment loss on intangible assets

        (201 )      (36 ) 

Warranty expenses

        175,711     80,411

Finance income

        (97,645 )      (106,070 ) 

Finance costs

        123,175     57,271

Other income

        (127 )      (2,173 ) 

Other expenses

        4,169     683
     

 

 

   

 

 

 
        1,456,367     1,190,066

Changes in

       

Trade accounts and notes receivable

        (165,385 )      1,252,507

Other accounts receivable

        3,687     33,743

Inventories

        93,651     (144,794 ) 

Other current assets

        (12,106 )      (22,256 ) 

Other non-current assets

        (13,529 )      (30,775 ) 

Trade accounts and notes payable

        66,643     602,544

Other accounts payable

        428,153     (202,574 ) 

Accrued expenses

        168,658     (174,139 ) 

Provisions

        (134,182 )      (92,841 ) 

Other current liabilities

        (58,495 )      (2,559 ) 

Defined benefit liabilities, net

        (20,861 )      (4,244 ) 

Long-term advances received

        63,672     767,830

Other non-current liabilities

        6,318     13,289
     

 

 

   

 

 

 
        426,224     1,995,731

Cash generated from operating activities

        1,360,885     2,688,194

Income taxes refunded (paid)

        17,859     (225,644 ) 

Interests received

        5,363     12,443

Interests paid

        (104,707 )      (64,486 ) 
     

 

 

   

 

 

 

Net cash provided by operating activities

      W 1,279,400     2,410,507
     

 

 

   

 

 

 

 

See accompanying notes to the separate interim financial statements.

 

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LG DISPLAY CO., LTD.

Condensed Separate Interim Statements of Cash Flows, Continued

(Unaudited)

For the six-month periods ended June 30, 2019 and 2018

 

(In millions of won)    Note      2019     2018  

Cash flows from investing activities:

       

Dividends received

      W 12,565       24,136

Increase in deposits in banks

        (41,180 )      (241,180 )

Proceeds from withdrawal of deposits in banks

        41,180       544,395

Acquisition of financial asset at fair value through profit or loss

        —         (285 )

Acquisition of financial assets at fair value through other comprehensive income

        (21 )      —    

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

        —         6

Acquisition of investments

        (1,102,607 )      (550,262 )

Proceeds from disposal of investments

        1,200       2,382

Acquisition of property, plant and equipment

        (1,314,030 )      (3,260,303 )

Proceeds from disposal of property, plant and equipment

        55,796       144,530

Acquisition of intangible assets

        (243,779 )      (251,736 )

Proceeds from disposal of intangible assets

        2,349       960

Government grants received

        3,979       1,210

Receipt from settlement of derivatives

        13,167       71

Proceeds from collection of short-term loans

        11,772       6,271

Increase in short-term loans

        (8,225 )      —    

Increase in long-term loans

        (6,465 )      (19,420 )

Increase in deposits

        (500 )      (349 )

Decrease in deposits

        1,000       300

Proceeds from disposal of emission rights

        —         10,200
     

 

 

   

 

 

 

Net cash used in investing activities

        (2,573,799 )      (3,589,074 )
     

 

 

   

 

 

 

Cash flows from financing activities:

     25       

Proceeds from short-term borrowings

        1,024,723       —    

Repayments of short-term borrowings

        (688,143 )      —    

Proceeds from issuance of debentures

        503,665       498,170

Proceeds from long-term borrowings

        1,136,968       1,230,000

Repayments of current portion of long-term borrowings and bonds

        (708,097 )      (390,339 )

Payment guarantee fee received

        3,756       797

Repayments of lease liabilities

        (7,175 )      —    

Dividends paid

        —         (178,908 )
     

 

 

   

 

 

 

Net cash provided by financing activities

        1,265,697       1,159,720
     

 

 

   

 

 

 

Net decrease in cash and cash equivalents

        (28,702 )      (18,847 )

Cash and cash equivalents at January 1

        473,283       566,408
     

 

 

   

 

 

 

Cash and cash equivalents at June 30

      W 444,581       547,561
     

 

 

   

 

 

 

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 Korea Exchange since 2004. The main business of the Company is to manufacture and sell displays and its related products. As of June 30, 2019, 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 June 30, 2019, 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 June 30, 2019, 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 June 30, 2019, there are 19,264,164 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, 2018.

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.

From January 1, 2019, the Company adopted K-IFRS No. 1116, Leases, for the first time. Changes to significant accounting policies are described in Note 3.

 

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2.

Basis of Presenting Financial Statements, Continued

 

  (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”) and financial asset at fair value through other comprehensive income (“FVOCI”) and

 

  •  

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

 

  (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.

 

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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, 2018, except for the application of K-IFRS No. 1034, Interim Financial Reporting and the changes in accounting policies explained below. The changes in accounting policies are also expected to be reflected in the Company’s separate financial statements as at and for the year ending December 31, 2019.

Changes in Accounting Policies

The Company has initially adopted K-IFRS 1116, Leases, from January 1, 2019. A number of other new standards are effective from January 1, 2019 but they do not have a material effect on the Company’s condensed consolidated interim financial statements.

K-IFRS No. 1116 introduced a single, on-balance sheet accounting model for lessees. As a result, the Company, as a lessee, has recognized right-of-use assets representing its rights to use the underlying assets and lease liabilities representing its obligation to make lease payments. Lessor accounting remains similar to previous accounting policies.

 

  (i)

Definition of a lease

Previously, the Company determined at contract inception whether an arrangement was or contained a lease under K-IFRS No. 2104, Determining Whether an Arrangement contains a Lease . The Company now assesses whether a contract is or contains a lease based on the new definition of a lease. Under K-IFRS No. 1116, a contract is, or contains, a lease if the contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration.

On transition to K-IFRS No. 1116, the Company elected to apply the practical expedient to grandfather the assessment of which transactions are leases for contracts that were previously identified as leases under K-IFRS No. 1017 and K-IFRS No. 2104 as of January 1, 2019. Contracts that were not identified as leases under K-IFRS No. 1017 and K-IFRS No. 2104 were not reassessed. Therefore, the definition of a lease under K-IFRS No. 1116 has been applied only to contracts entered into or changed on or after January 1, 2019.

 

  (ii)

Accounting as a lessee

The Company leases buildings, vehicles, machinery and equipment and others.

As a lessee, the Company previously classified leases as operating or finance leases based on its assessment of whether the lease transferred substantially all of the risks and rewards of ownership. Under K-IFRS No. 1116, the Company recognizes right-of-use assets and lease liabilities for most leases on the condensed separate interim statement of financial position.

However, as permitted in K-IFRS No.1116, the Company has elected not to recognize right-of-use assets and lease liabilities for certain short-term leases and leases of low-value assets. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

 

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3.

Summary of Significant Accounting Policies, Continued

 

The carrying amounts of right-of-use assets recognized in the condensed separate interim financial statements are as below and those right-of use assets are presented in property, plant and equipment in the condensed separate interim statements of financial position.

 

(In millions of won)    Buildings      Machinery
and equipment 		     Vehicles      Others      Total  

Balance at January 1, 2019

   W 9,338        1,021        5,922        51        16,332  

Balance at June 30, 2019

   W 5,014        961        5,330        —          11,305  

The Company presents lease liabilities in financial liabilities in the condensed separate interim statement of financial position.

 

  i)

Significant accounting policies

The Company recognizes a right-of-use asset and lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, and subsequently at cost less any accumulated depreciation and impairment losses. The book value of right-of-use asset is adjusted when there is a remeasurement of the lease liability arising from a change in future lease payments.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate that would be applicable when the Company were to borrow the funds to obtain an asset of a similar value to the right-of-use asset over a similar term and with a similar security in a similar economic environment. Generally, the Company uses its incremental borrowing rate as the discount rate.

The lease liability is subsequently increased by the interest expense on the lease liability and decreased by lease payment made. The Company remeasures the lease liability when there is a change in future lease payments arising from a change in an index or rate, a change in the estimate of the amount expected to be payable under a residual value guarantee, or as appropriate, changes in the assessment of whether a purchase or extension option is reasonably certain to be exercised or a termination option is reasonably certain not to be exercised.

Determination of the lease term for some lease contracts that include renewal options require the Company’s judgment. The assessment of whether the Company is reasonably certain to exercise such options impacts the lease term, which significantly affects the amount of lease liabilities and right-of-use assets recognized.

 

  ii)

Initial application

At initial application, the Company measures lease liabilities for leases classified as operating leases under K-IFRS No. 1017, at the present value of the remaining lease payments, discounted at the Company’s incremental borrowing rate as at January 1, 2019. Right-of-use assets are measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments.

 

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3.

Summary of Significant Accounting Policies, Continued

 

The Company used the following practical expedients when applying K-IFRS No. 1116 to leases previously classified as operating leases under K-IFRS No. 1017.

 

  •  

Applied the exemption not to recognize right-of-use assets and liabilities for leases with less than 12 months of remaining lease term at initial application.

 

  •  

Excluded initial direct costs from measuring the right-of-use asset at the date of initial application.

 

  •  

Used hindsight when determining the lease term if the contract contains options to extend or terminate the lease.

 

  (iii)

Impacts on condensed consolidated interim financial statements

 

  i)

Impacts on initial application

On initial application to K-IFRS No. 1116, the Company recognized additional right-of-use assets and additional lease liabilities. The impact on initial application is summarized below.

 

(In millions of won)    January 1, 2019  

Right-of-use assets presented in property, plant and equipment

   W 16,332  

Lease liabilities

     16,332  

When measuring lease liabilities for leases that were classified as operating leases, the Company discounted lease payments using its incremental borrowing rate at January 1, 2019. The weighted-average rate applied is 2.96%.

 

  ii)

Impacts for the period

As a result of initially applying K-IFRS No. 1116, the Company recognized W 11,305 million of right-of-use assets and W 11,186 million of lease liabilities as at June 30, 2019.

Also in accordance with K-IFRS No. 1116, the Company has recognized depreciation and interest expense, instead of operating lease expense in relation to leases. During the six-month period ended June 30, 2019, the Company recognized W 7,025 million of depreciation and W 212 million of interest expense from these leases.

 

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4.

Cash and C ash E quivalents and Deposits in Banks

Cash and cash equivalents and deposits in banks as of June 30, 2019 and December 31, 2018 are as follows:

 

( In millions of won )    June 30, 2019      December 31, 2018  

Current assets

     

Cash and cash equivalents

     

Demand deposits

   W 444,581        473,283  

Deposits in banks

     

Time deposits

   W —          3,118  

Restricted deposits (*)

     77,200        74,082  
  

 

 

    

 

 

 
   W 77,200        77,200  
  

 

 

    

 

 

 

Non-current assets

     

Deposits in banks

     

Restricted deposits (*)

   W 11        11  
  

 

 

    

 

 

 
   W  521,792        550,494  
  

 

 

    

 

 

 

 

(*)

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.

 

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5.

Receivables and Other Assets

 

  (a)

Trade accounts and notes receivable as of June 30, 2019 and December 31, 2018 are as follows:

 

(In millions of won)    June 30, 2019      December 31, 2018  

Due from third parties

   W 230,124        257,037  

Due from related parties

     3,033,195        3,132,071  
  

 

 

    

 

 

 
   W 3,263,319        3,389,108  
  

 

 

    

 

 

 

 

  (b)

Other accounts receivable as of June 30, 2019 and December 31, 2018 are as follows:

 

(In millions of won)    June 30, 2019      December 31, 2018  

Current assets

     

Non-trade receivables, net

   W 201,491        316,069  

Accrued income

     14,690        5,894  
  

 

 

    

 

 

 
   W 216,181        321,963  
  

 

 

    

 

 

 

Non-current assets

     

Long-term non-trade receivables

   W 23,483        25,823  
  

 

 

    

 

 

 
   W 239,664        347,786  
  

 

 

    

 

 

 

Due from related parties included in other accounts receivable as of June 30, 2019 and December 31, 2018 are W 76,998 million and W 247,677 million, respectively.

 

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5.

Receivables and Other Assets, Continued

 

  (c)

The aging of trade accounts and notes receivable and other accounts receivable as of June 30, 2019 and December 31, 2018 are as follows:

 

     June 30, 2019  
     Book value      Allowance for impairment  
(In millions of won)    Trade accounts
and notes
receivable 		     Other
accounts
receivable 		     Trade accounts
and notes
receivable 		     Other
accounts
receivable 		 

Current

   W 3,263,281        240,969        (5 )       (1,534 ) 

1-15 days past due

     37        104        —          (1 ) 

16-30 days past due

     6        17        —          —    

31-60 days past due

     —          107        —          (1 ) 

More than 60 days past due

     —          27        —          (24 ) 
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 3,263,324        241,224        (5 )       (1,560 ) 
  

 

 

    

 

 

    

 

 

    

 

 

 
(In millions of won)    December 31, 2018  
     Book value      Allowance for impairment  
     Trade accounts
and notes
receivable 		     Other
accounts
receivable 		     Trade accounts
and notes
receivable 		     Other
accounts
receivable 		 

Current

   W 3,387,653        347,669        (5 )       (551 ) 

1-15 days past due

     1,353        274        —          (2 ) 

16-30 days past due

     79        69        —          (1 ) 

31-60 days past due

     28        95        —          (1 ) 

More than 60 days past due

     —          668        —          (434 ) 
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 3,389,113        348,775        (5 )       (989 ) 
  

 

 

    

 

 

    

 

 

    

 

 

 

The movement in the allowance for impairment in respect of trade accounts and notes receivable and other accounts receivable for the six-month period ended June 30, 2019 and the year ended December 31, 2018 are as follows:

 

     2019      2018  
(In millions of won)    Trade accounts
and notes
receivable 		     Other
accounts
receivable 		     Trade accounts
and notes
receivable 		     Other
accounts
receivable 		 

Balance at the beginning of the period

   W 5        989        570        1,092  

(Reversal of) bad debt expense

     —          571        (565 )       (103 ) 
  

 

 

    

 

 

    

 

 

    

 

 

 

Balance at the reporting date

   W 5        1,560        5        989  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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5.

Receivables and Other Assets, Continued

 

  (d)

Other assets as of June 30, 2019 and December 31, 2018 are as follows:

 

(In millions of won)              
     June 30, 2019      December 31, 2018  

Current assets

     

Advance payments

   W 2,325        3,354  

Prepaid expenses

     114,821        73,254  

Value added tax refundable

     46,538        52,252  

Right to recover returned goods

     10,357        7,489  
  

 

 

    

 

 

 
   W  174,041        139,349  
  

 

 

    

 

 

 

Non-current assets

     

Long-term prepaid expenses

   W 299,208        325,219  

 

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6.

Other Financial Assets

Other financial assets as of June 30, 2019 and December 31, 2018 are as follows:

 

(In millions of won)    June 30, 2019      December 31, 2018  

Current assets

     

Financial asset at fair value through profit or loss

     

Derivatives(*)

   W 31,869        13,059  

Financial asset at fair value through other comprehensive income

     

Debt instruments

     

Government bonds

   W 113        106  

Financial asset carried at amortized cost

     

Short-term loans

   W 23,294        16,116  
  

 

 

    

 

 

 
   W 55,276        29,281  
  

 

 

    

 

 

 

Non-current assets

     

Financial asset at fair value through profit or loss

     

Equity instruments

     

Intellectual Discovery, Ltd.

   W 920        4,598  

Kyulux, Inc

     2,460        2,460  

Fineeva Co., Ltd.

     4        286  
  

 

 

    

 

 

 
   W 3,384        7,344  
  

 

 

    

 

 

 

Convertible bonds

   W 1,327        1,327  

Derivatives(*)

     10,903        —    
  

 

 

    

 

 

 
   W 15,614        8,671  
  

 

 

    

 

 

 

Financial asset at fair value through

other comprehensive income

     

Debt instruments

     

Government bonds

   W 70        55  

Financial asset carried at amortized cost

     

Deposits

   W 12,918        13,418  

Long-term loans

     50,081        55,048  
  

 

 

    

 

 

 
   W 62,999        68,466  
  

 

 

    

 

 

 
   W 78,683        77,192  
  

 

 

    

 

 

 

 

(*)

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

Other financial assets issued by related parties as of June 30, 2019 and December 31, 2018 are W 3,000 million and W 2,000 million, respectively.

 

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7.

Inventories

Inventories as of June 30, 2019 and December 31, 2018 are as follows:

 

(In millions of won)    June 30, 2019      December 31,
2018 		 

Finished goods

   W 584,093        539,859  

Work-in-process

     790,144        791,396  

Raw materials

     363,388        500,413  

Supplies

     119,878        119,487  
  

 

 

    

 

 

 
   W 1,857,503        1,951,155  
  

 

 

    

 

 

 

For the six-month periods ended June 30, 2019 and 2018, the amount of inventories recognized as cost of sales including inventory write-downs and reversal and usage of inventory write-downs included in cost of sales are as follows:

 

(In millions of won)    2019      2018  

Inventories recognized as cost of sales

   W 9,624,904        9,799,231  

Including: inventory write-downs

     321,418        237,232  

Including: reversal and usage of inventory write-downs

     (280,323 )       (184,139 ) 

 

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8.

Investments

 

  (a)

Investments in subsidiaries consist of the following:

 

               June 30, 2019      December 31, 2018  

( In millions of won )

Overseas 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 %    W 36,815        100 %    W 36,815  

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 Poland Sp. z o.o. (*1)

   Wroclaw, Poland    Manufacture display products      100 %      194,992        100 %      194,992  

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

   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.(*2)

   Haiphong,
Vietnam 		   Manufacture display Products      100 %      672,658        100 %      329,978  

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(*3)

   Wilmington, U.S.A    Invest in venture business and
acquire technologies 		     100 %      3,941        100 %      2,249  

LG Display High-Tech (China) Co., Ltd.(*4)

   Guangzhou, China    Manufacture display products      68 %      1,382,800        69 %      749,154  

Money Market Trust

  

Seoul,

South Korea

   Money market trust      100 %      326,600        100 %      24,501  
          

 

 

      

 

 

 
           W   4,788,061        W   3,507,944  
          

 

 

      

 

 

 

 

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8.

Investments, Continued

 

(*1) On July 1, 2019, LG Display Poland Sp. Z o.o. commenced the liquidation process.

(*2) For the six-month period ended June 30, 2019, the Company contributed W 342,680 million in cash for the capital increase of LG Display Vietnam Haiphong Co., Ltd. (“LGDVN”). There was no change in the Company’s ownership percentage in LGDVN as a result of this additional investment.

(*3) For the six-month period ended June 30, 2019, the Company contributed W 1,692 million in cash for the capital increase of LG DISPLAY FUND I LLC. There was no change in the Company’s ownership percentage in LG DISPLAY FUND I LLC as a result of this additional investment.

(*4) For the six-month period ended June 30, 2019, the Company contributed W 633,646 million in cash and cash equivalents, including the right to receive cash dividends amounting to W 177,509 million from LG Display Guangzhou Co., Ltd., for the capital increase of LG Display High-Tech (China) Co., Ltd. (“LGDCO”). The Company’s ownership percentage in LGDCO decreased from 69% to 68% as a result.

 

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8.

Investments, Continued

 

  (b)

Investments in associates consist of the following:

 

                                       
               June 30, 2019      December 31, 2018  

(In millions of won)

Associates

  

Location

  

Business

   Percentage
of ownership 		     Book Value      Percentage
of ownership 		     Book Value  

Paju Electric Glass Co., Ltd.

  

Paju,

South Korea

   Manufacture glass for display      40 %     W 45,089        40 %     W 45,089  

INVENIA Co., Ltd.

  

Seongnam,

South Korea

   Develop and manufacture the equipment for display      13 %       6,330        13 %       6,330  

WooRee E&L Co., Ltd.

  

Ansan,

South Korea

   Manufacture LED back light unit packages      14 %       4,746        14 %       4,746  

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      17 %       10,600        17 %       10,600  

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      12 %       8,668        14 %       8,668  

Material Science Co., Ltd.

  

Seoul,

South Korea

   Develop, manufacture and sell materials for display      10 %       3,346        10 %       3,346  

Nanosys Inc.

  

Milpitas,

U.S.A.

   Develop, manufacture and sell materials for display      4 %       5,491        4 %       5,491  
           

 

 

       

 

 

 
            W 94,270         W 94,270  
           

 

 

       

 

 

 

 

(*)

For the six-month period ended June 30, 2019, the Company’s ownership percentage in CYNORA GmbH decreased from 14% to 12% as the Company did not participate in the capital increase of CYNORA GmbH.

For the six-month periods ended June 30, 2019 and 2018, the aggregate amount of recognized dividends income from subsidiaries and associates are W 18,622 million and W 95,553 million, respectively.

 

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9.

Property, Plant and Equipment

For the six-month periods ended June 30, 2019 and 2018, the Company purchased property, plant and equipment of W 1,079,423 million and W 3,106,611 million, respectively. The capitalized borrowing costs and the annualized capitalization rate were W 77,335 million and 2.78%, and W 47,291 million and 2.64% for the six-month periods ended June 30, 2019 and 2018, respectively. In addition, for the six-month period ended June 30, 2019, the Company entered into various new lease agreements for use of buildings, vehicles and others. In relation to these leases, the Company recognized W 1,998 million of right-of-use assets and lease liabilities, in aggregate, during the six-month period ended June 30, 2019. Also, for the six-month periods ended June 30, 2019 and 2018, the Company disposed of property, plant and equipment with carrying amounts of W 90,794 million and W 87,948 million, respectively, and recognized W 27,963 million and W 6,747 million, respectively, as gain and loss on disposal of property, plant and equipment for the six-month period ended June 30, 2019 (gain and loss for the six-month period ended June 30, 2018: W 27,019 million and W 4,597 million, respectively).

 

10.

Intangible Assets

The Company 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 June 30, 2019 and December 31, 2018, are W 327,287 million and W 366,910 million, respectively.

 

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11.

Financial Liabilities

(a) Financial liabilities as of June 30, 2019 and December 31, 2018 are as follows:

 

(In millions of won)    June 30, 2019      December 31, 2018  

Current

     

Short-term borrowings

   W 347,040        —    

Current portion of long-term borrowings and bonds

     848,435        1,040,148  

Current portion of Payment guarantee

Liabilities

     3,840        4,693  

Lease liabilities

     8,491        —    
  

 

 

    

 

 

 
   W 1,207,806        1,044,841  
  

 

 

    

 

 

 

Non-current

     

Won denominated borrowings

   W 2,931,532        2,700,608  

Foreign currency denominated borrowings

     1,312,968        626,136  

Long-term borrowings

   W 7,575,219        5,232,271  

Bonds

     2,030,092        1,772,599  

Payment guarantee liabilities

     13,223        14,375  

Derivatives(*)

     18,136        25,758  

Lease liabilities

     2,695        —    
  

 

 

    

 

 

 
   W   6,308,646        5,139,476  
  

 

 

    

 

 

 

 

(*)

Represents currency interest rate swap contracts related to foreign currency denominated borrowings and bonds.

 

  (b)

Foreign currency denominated short-term borrowings as of June 30, 2019 and December 31, 2018 are as follows:

 

(In millions of won and USD)

Lender

  

Annual interest rate as of
June 30, 2019 (%)(*)

   June 30,
2019 		     December 31,
2018 		 

Standard Chartered Bank Korea Limited

   12ML + 0.78~0.88    W   347,040        —    
     

 

 

    

 

 

 

Foreign currency equivalent

   USD 300        —    

 

(*)

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 June 30, 2019 and December 31, 2018 are as follows:

 

( In millions of won )

Lender

  

Annual interest rate as of

June 30, 2019 (%)

   June 30,
2019 		     December 31,
2018 		 

Woori Bank

   2.75    W 933        1,259  

Korea Development Bank and others

   CD rate (91days) + 1.00, 2.43~3.25      3,150,000        2,850,000  

Less current portion of long-term borrowings

        (219,401 )       (150,651 ) 
     

 

 

    

 

 

 
      W   2,931,532        2,700,608  
     

 

 

    

 

 

 

 

  (d)

Foreign currency denominated long-term borrowings as of June 30, 2019 and December 31, 2018 are as follows:

 

( In millions of won and USD )

Lender

  

Annual interest rate as of

June 30, 2019 (%)(*)

   June 30,
2019 		     December 31,
2018 		 

The Export-Import Bank of Korea and others

  

3ML+0.75 ~1.70

6ML+1.25 ~1.35

   W 1,382,376        955,975  
     

 

 

    

 

 

 

Foreign currency equivalent

        USD 1,195        USD 855

Less current portion of long-term borrowings

        (69,408 )       (329,839 ) 
     

 

 

    

 

 

 
      W 1,312,968        626,136  
     

 

 

    

 

 

 

 

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11.

Financial Liabilities, Continued

 

  (e)

Details of bonds issued and outstanding as of June 30, 2019 and December 31, 2018 are as follows:

 

(In millions of won)   

Maturity

  

Annual interest

rate as of

June 30, 2019 (%)

   June 30, 2019      December 31, 2018  
Won denominated bonds (*1)            

Publicly issued bonds

  

Oct 2019~

Feb 2024

   1.80~2.95    W 2,030,000        1,900,000  

Privately issued bonds

  

May 2025~

May 2033

   3.25~4.25      110,000        110,000  

Less discount on bonds

           (4,407 )       (3,949 ) 

Less current portion

           (559,626 )       (559,658 ) 
        

 

 

    

 

 

 
         W 1,575,967        1,446,393  
        

 

 

    

 

 

 
Foreign currency denominated bonds (*2)            

Publicly issued bonds

   Nov 2021    3.88    W 347,040        335,430  

Privately issued bonds

   Apr 2023    3ML+1.47      115,680        —    
        

 

 

    

 

 

 

Foreign currency equivalent

           USD 400        USD 300  
        

 

 

    

 

 

 

Less discount on bonds

           (8,595 )       (9,224 ) 
        

 

 

    

 

 

 
         W 454,125        326,206  
        

 

 

    

 

 

 
         W    2,030,092        1,772,599  
        

 

 

    

 

 

 

 

(*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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12.

Employee Benefits

The Company’s 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 Company.

 

  (a)

Net defined benefit liabilities recognized as of June 30, 2019 and December 31, 2018 are as follows:

 

(In millions of won)    June 30, 2019      December 31, 2018  

Present value of partially funded defined benefit obligations

   W 1,660,196        1,592,366  

Fair value of plan assets

       (1,534,469 )       (1,548,179 ) 
  

 

 

    

 

 

 
   W 125,727        44,187  
  

 

 

    

 

 

 

 

  (b)

Expenses recognized in profit or loss for the three-month and six-month periods ended June 30, 2019 and 2018 are as follows:

 

(In millions of won)    For the three-month
periods ended June 30 		     For the six-month
periods ended June 30 		 
     2019      2018      2019      2018  

Current service cost

   W 48,472        51,109        96,945        102,218  

Net interest cost

     304        242        608        484  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W   48,776        51,351        97,553        102,702  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

  (c)

Plan assets as of June 30, 2019 and December 31, 2018 are as follows:

 

(In millions of won)    June 30, 2019      December 31, 2018  

Guaranteed deposits in banks

   W   1,534,469        1,548,179  

As of June 30, 2019, the 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 and six-month periods ended June 30, 2019 and 2018 are as follows:

 

     For the three-month
periods ended June 30 		     For the six-month
periods ended June 30 		 
(In millions of won)    2019      2018      2019      2018  

Remeasurements of net defined benefit liabilities

   W (1,935 )       (4,973 )       (4,848 )       (11,392 ) 

Tax effect

     (4,328 )       1,330        (3,551 )       3,626  
  

 

 

    

 

 

    

 

 

    

 

 

 

Remeasurements of net defined benefit liabilities, net of income tax

   W   (6,263 )       (3,643 )       (8,399 )       (7,766 ) 
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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13.

Provisions and Other Liabilities

 

  (a)

Changes in provisions for the six-month period ended June 30, 2019 are as follows:

 

(In millions of won)    Litigations and
claims 		     Warranties (*)     Returns      Total  

Balance at January 1, 2019

   W —          120,389       8,930        129,319  

Additions

     3,073        175,711       3,222        182,006  

Usage

     —          (137,404 )      —          (137,404 ) 
  

 

 

    

 

 

   

 

 

    

 

 

 

Balance at June 30, 2019

   W   3,073        158,696       12,152        173,921  
  

 

 

    

 

 

   

 

 

    

 

 

 

Current

   W 3,073        111,606       12,152        126,831  

Non-current

   W —          47,090       —          47,090  

 

(*)

The provision for warranties on defective products is normally applicable for 18~36 months from the date of purchase. The provision is calculated by using historical and anticipated rates of warranty claims and costs per claim to satisfy the Company’s warranty obligation.

 

  (b)

Other liabilities as of June 30, 2019 and December 31, 2018 are as follows:

 

(In millions of won)    June 30, 2019      December 31, 2018  

Current liabilities

     

Withholdings

   W 16,778        16,181  

Unearned revenues

     4,472        11,073  

Security deposits received

     4,845        165  
  

 

 

    

 

 

 
   W 26,095        27,419  
  

 

 

    

 

 

 

Non-current liabilities

     

Long-term accrued expenses

   W 83,018        78,466  

Long-term other accounts payable

     2,127        3,081  

Long-term unearned revenues

     1,529        2,116  

Security deposits received

     5,980        10,790  
  

 

 

    

 

 

 
   W   92,654        94,453  
  

 

 

    

 

 

 

 

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14.

Contingencies and Commitments

 

  (a)

Legal Proceedings

Anti-trust litigations

Some individual claimants filed “follow-on” damages claims against the Company and other TFT-LCD manufacturers alleging violations of EU competition law. While the Company continues its vigorous defense of the various pending proceedings described above, management’s assessment of the facts and circumstances could change based upon new information, intervening events and the final outcome of the cases. Consequently, the actual results could be different from management’s current estimates.

Solas OLED Ltd. Litigations

In April 2019, Solas OLED Ltd. filed patent infringement actions against the Company and television manufacturers in the United States District Court for the Western District of Texas as well as the Company and its subsidiary, LG Display Germany GmbH, and television manufacturers in Mannheim District Court in Germany. The Company has not recognized any provision as of June 30, 2019. It is not possible to reasonably estimate an amount of potential loss, if any, because plaintiffs have not provided any information regarding damages.

Others

The Company is involved in various disputes in addition to pending proceedings described above. The Company 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 Company has agreements with Korea Development Bank and several other banks for accounts receivable sales negotiating facilities of up to an aggregate of USD 1,610 million ( W 1,862,448 million) in connection with the Company’s export sales transactions with its subsidiaries. As of June 30, 2019, there are no outstanding short-term borrowings that are past due in connection with these agreements. In connection with all of the contracts in this paragraph, the Company has sold its accounts receivable with recourse.

The Company has a credit facility agreement with Shinhan Bank and several other banks pursuant to which the Company could sell its accounts receivables up to an aggregate of W 671,152 million in connection with its domestic and export sales transactions and, as of June 30, 2019, W 208,927 million of accounts and notes receivable sold to Shinhan Bank were outstanding in connection with the agreement. In connection with the contract above, the Company has sold its accounts receivable without recourse.

Letters of credit

As of June 30, 2019, the Company has agreements in relation to opening of letters of credit up to USD 30 million ( W 34,704 million) with KEB Hana Bank, USD 30 million ( W 34,704 million) with Bank of China and USD 50 million ( W 57,840 million) with Sumitomo Mitsui Banking Corporation.

 

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14.

Contingencies and Commitments, Continued

 

Payment guarantees

The Company provides a payment guarantee in connection with the term loan credit facilities of LG Display Vietnam Haiphong, Co., Ltd. amounting to USD 1,152 million ( W 1,332,545 million) for principals.

In addition, the Company obtained payment guarantees amounting to USD 1,375 million ( W 1,590,600 million) from KEB Hana Bank and others for advances received related to the long-term supply agreements. The Company also obtained payment guarantees amounting to USD 306 million ( W 353,764 million) from Korea Development Bank for foreign currency denominated bonds.

License agreements

As of June 30, 2019, in relation to its LCD business, the Company has technical license agreements with Hitachi Display, Ltd. and others and has a trademark license agreement with LG Corp.

Long-term supply agreement

As of June 30, 2019, in connection with long-term supply agreements with customers, the Company recognized USD 1,275 million ( W 1,474,920 million) in advances received. The advances received will be offset against outstanding accounts receivable balances after a given period of time, as well as those arising from the supply of products thereafter. The Company received payment guarantees amounting to USD 1,375 million ( W 1,590,600 million) from KEB Hana Bank and other various banks relating to advances received (see note 14(b) payment guarantees).

 

15.

Share capital

The Company is authorized to issue 500,000,000 shares of capital stock (par value W 5,000), and as of June 30, 2019 and December 31, 2018, the number of issued common shares is 357,815,700. There have been no changes in the capital stock from January 1, 2018 to June 30, 2019.

 

16.

Revenue

Details of revenue for the three-month and six-month periods ended June 30, 2019 and 2018 are as follows:

 

     For the three-month
periods ended June 30 		     For the six-month
periods ended June 30 		 
(In millions of won)    2019      2018      2019      2018  

Sales of goods

   W 4,921,524        5,023,610        10,289,646        10,168,036  

Royalties

     9,783        4,139        19,021        7,865  

Others

     4,654        7,217        10,898        13,326  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W   4,935,961        5,034,966        10,319,565        10,189,227  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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17.

The Nature of Expenses and Others

The classification of expenses by nature for the three-month and six-month periods ended June 30, 2019 and 2018 are as follows:

 

     For the three-month
periods ended June 30 		     For the six-month
periods ended June 30 		 
(In millions of won)    2019      2018      2019      2018  

Changes in inventories

   W 70,903        (90,035 )       93,651        (57,846 ) 

Purchases of raw materials, merchandise and others

     1,965,852        1,900,976        4,112,732        3,887,562  

Depreciation and amortization

     645,827        597,268        1,209,059        1,170,718  

Outsourcing

     1,276,488        1,570,819        2,740,641        2,909,586  

Labor

     613,432        677,964        1,243,123        1,374,209  

Supplies and others

     192,535        198,336        347,850        389,504  

Utility

     167,197        168,339        343,917        348,151  

Fees and commissions

     120,849        137,998        251,284        278,525  

Shipping

     19,635        23,212        38,197        50,520  

Advertising

     19,969        23,486        34,311        38,415  

Warranty

     89,410        51,071        175,711        80,411  

Travel

     23,618        23,843        44,737        47,867  

Taxes and dues

     14,515        13,242        29,622        29,014  

Others

     148,696        183,215        292,998        346,650  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W   5,368,926        5,479,734        10,957,833        10,893,286  
  

 

 

    

 

 

    

 

 

    

 

 

 

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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18.

Selling and Administrative Expenses

Details of selling and administrative expenses for the three-month and six-month periods ended June 30, 2019 and 2018 are as follows:

 

     For the three-month
periods ended June 30 		     For the six-month
periods ended June 30 		 
(In millions of won)    2019      2018      2019      2018  

Salaries

   W 58,418        62,776        116,991        125,571  

Expenses related to defined benefit plans

     8,374        7,058        16,053        14,092  

Other employee benefits

     12,437        10,568        27,335        22,649  

Shipping

     15,319        15,598        29,395        36,152  

Fees and commissions

     30,860        36,968        68,326        64,333  

Depreciation

     27,125        27,552        55,439        53,976  

Taxes and dues

     740        699        1,287        1,492  

Advertising

     19,969        23,486        34,311        38,415  

Warranty

     89,410        51,071        175,711        80,411  

Rent

     152        2,678        336        5,316  

Insurance

     1,516        1,585        2,867        3,120  

Travel

     4,698        3,934        8,697        8,484  

Training

     2,592        3,356        5,354        5,557  

Others

     8,940        9,294        19,978        20,923  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W   280,550        256,623        562,080        480,491  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

19.

Personnel Expenses

Details of personnel expenses for the three-month and six-month periods ended June 30, 2019 and 2018 are as follows:

 

     For the three-month
periods ended June 30 		     For the six-month
periods ended June 30 		 
(In millions of won)    2019      2018      2019      2018  

Salaries and wages

   W 536,093        600,257        1,080,246        1,198,813  

Other employee benefits

     73,303        75,419        152,080        167,491  

Contributions to National Pension plan

     18,003        18,673        36,153        37,480  

Expenses related to defined benefit plan and defined contribution plan

     48,776        51,351        97,570        102,702  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W   676,175        745,700        1,366,049        1,506,486  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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20.

Other Non-operating Income and Other Non-operating Expenses

 

  (a)

Details of other non-operating income for the three-month and six-month periods ended June 30, 2019 and 2018 are as follows:

 

     For the three-month
periods ended June 30 		     For the six-month
periods ended June 30 		 
(In millions of won)    2019      2018      2019      2018  

Foreign currency gain

   W 289,070        231,717        414,022        332,436  

Gain on disposal of property, plant and equipment

     12,863        13,304        27,963        27,019  

Gain on disposal of intangible assets

     —          —          552        239  

Reversal of impairment loss on intangible assets

     —          —          201        36  

Rental income

     523        429        1,010        877  

Others

     1,861        442        1,965        2,195  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W   304,317        245,892        445,713        362,802  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

  (b)

Details of other non-operating expenses for the three-month and six-month periods ended June 30, 2019 and 2018 are as follows:

 

     For the three-month
periods ended June 30 		     For the six-month
periods ended June 30 		 
(In millions of won)    2019      2018      2019      2018  

Foreign currency loss

   W 296,829        238,912        416,513        345,563  

Other bad debt expense

     10        90        10        94  

Loss on disposal of property, plant and equipment

     6,745        865        6,747        4,597  

Impairment loss on property, plant and equipment

     5,583        27,491        5,943        27,491  

Loss on disposal of intangible assets

     —          —          18        —    

Impairment loss on intangible assets

     —          264        —          301  

Donations

     382        1,169        382        3,019  

Others

     5,589        5,821        7,728        5,868  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W   315,138        274,612        437,341        386,933  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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21.

Finance Income and Finance Costs

Finance income and costs recognized in profit and loss for the three-month and six-month periods ended June 30, 2019 and 2018 are as follows:

 

     For the three-month
periods ended June 30 		     For the six-month
periods ended June 30 		 
(In millions of won)    2019      2018      2019      2018  

Finance income

           

Interest income

   W 2,484        4,139        5,269        8,922  

Dividend income

     11,120        —          18,622        95,553  

Foreign currency gain

     8,894        603        14,452        5,410  

Gain on transaction of derivatives

     7,782        77        13,167        113  

Gain on valuation of derivatives

     27,533        —          52,878        —    

Other

     1,298        965        2,593        1,481  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 59,111        5,784        106,981        111,479  
  

 

 

    

 

 

    

 

 

    

 

 

 

Finance costs

           

Interest expense

   W 26,617        9,924        39,689        20,911  

Foreign currency loss

     38,427        32,008        71,867        36,974  

Loss on sale of trade accounts and notes receivable

     941        68        1,447        68  

Loss on impairment of available-for-sale financial assets

     —          —          3,960        —    

Loss on transaction of derivatives

     —          5        —          43  

Loss on valuation of derivatives

     15,542        259        15,542        501  

Other

     1,017        937        2,035        1,614  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 82,544        43,201        134,540        60,111  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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22.

Income Taxes

 

  (a)

Details of income tax expense (benefit) for the three-month and six-month periods ended June 30, 2019 and 2018 are as follows:

 

     For the three-month
periods ended June 30 		     For the six-month
periods ended June 30 		 
(In millions of won)    2019      2018      2019      2018  

Current tax expense (benefit)

   W (124,849 )       1,112        (124,958 )       (8,192 ) 

Deferred tax expense (benefit)

     83,701        (59,078 )       10,037        (129,657 ) 
  

 

 

    

 

 

    

 

 

    

 

 

 

Income tax expense (benefit)

   W (41,148 )       (57,966 )       (114,921 )       (137,849 ) 
  

 

 

    

 

 

    

 

 

    

 

 

 

 

  (b)

Tax Assets and Liabilities

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

Deferred tax assets and liabilities as of June 30, 2019 and December 31, 2018 are attributable to the following:

 

     Assets      Liabilities     Total  
(In millions of won)    June 30,
2019 		     December 31,
2018 		     June 30,
2019 		    December 31,
2018 		    June 30,
2019 		    December 31,
2018 		 

Other accounts receivable, net

   W —          —          (3,501 )      (1,013 )      (3,501 )      (1,013 ) 

Inventories, net

     57,455        53,882        —         —         57,455       53,882  

Defined benefit liabilities, net

     14,925        —          —         —         14,925       —    

Accrued expenses

     154,223        121,508        —         —         154,223       121,508  

Property, plant and equipment

     177,913        191,073        —         —         177,913       191,073  

Intangible assets

     163        925        —         —         163       925  

Provisions

     39,395        32,468        —         —         39,395       32,468  

Gain or loss on foreign currency translation, net

     12        13        —         —         12       13  

Other temporary differences

     21,899        17,932        —         —         21,899       17,932  

Tax loss carryforwards

     189,432        126,755        —         —         189,432       126,755  

Tax credit carryforwards

     186,432        308,393        —         —         186,432       308,393  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Deferred tax assets (liabilities)

   W 841,849        852,949        (3,501 )      (1,013 )      838,348       851,936  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

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23.

Loss Per Share

 

  (a)

Basic loss per share for the three-month and six-month periods ended June 30, 2019 and 2018 are as follows:

 

(In won and number of shares)    For the three-month
periods ended June 30 		     For the six-month
periods ended June 30 		 
     2019      2018      2019      2018  

Loss for the period

   W (407,764,101,091 )       (417,238,094,408 )       (521,705,305,640 )       (497,602,540,739 ) 

Weighted-average number of common stocks outstanding

     357,815,700        357,815,700        357,815,700        357,815,700  
  

 

 

    

 

 

    

 

 

    

 

 

 

Loss per share

   W (1,140 )       (1,166 )       (1,458 )       (1,391 ) 
  

 

 

    

 

 

    

 

 

    

 

 

 

For the three-month and six-month periods ended June 30, 2019 and 2018, there were no events or transactions that resulted in changes in the number of common stocks used for calculating loss per share.

 

  (b)

Diluted loss per share for the three-month and six-month periods ended June 30, 2019 and 2018 are not calculated since there was no potential common stock.

 

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24.

Financial Risk Management

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

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

In respect of other monetary assets and liabilities denominated in foreign currencies, the Company 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 Company entered into currency interest rate swap contracts to hedge currency risk with respect to foreign currency denominated borrowings and bonds.

i) Exposure to currency risk

The Company’s exposure to foreign currency risk based on notional amounts as of June 30, 2019 and December 31, 2018 is as follows:

 

     June 30, 2019  

(In millions)

   USD     JPY     CNY      PLN     EUR  

Cash and cash equivalents

     333       623       —          1       —    

Trade accounts and notes receivable

     2,657       2,510       —          —         —    

Non-trade receivables

     124       1,280       65        —         —    

Trade accounts and notes payable

     (1,328 )      (10,278 )      —          —         —    

Other accounts payable

     (143 )      (16,843 )      —          (3 )      (1 ) 

Financial liabilities

     (1,888 )      —         —          —         —    
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Aggregate notional amounts in the consolidated statements of financial position

     (245 )      (22,708 )      65        (2 )      (1 ) 
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Currency interest rate swap contracts

     1,785       —         —          —         —    
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Net exposure

     1,540       (22,708 )      65        (2 )      (1 ) 
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

 

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24.

Financial Risk Management, Continued

 

     December 31, 2018  
(In millions)    USD     JPY     CNY      PLN     EUR  

Cash and cash equivalents

     66       —         54        1       7  

Trade accounts and notes receivable

     2,809       2,937       —          —         —    

Non-trade receivables

     48       836       1,018        —         —    

Trade accounts and notes payable

     (1,392 )      (11,477 )      —          —         —    

Other accounts payable

     (117 )      (13,982 )      —          (18 )      (2 ) 

Financial liabilities

     (1,163 )      —         —          —         —    
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Aggregate notional amounts in the consolidated statements of financial position

     251       (21,686 )      1,072        (17 )      5  
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Currency interest rate swap contracts

     780       —         —          —         —    
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Net exposure

     1,031       (21,686 )      1,072        (17 )      5  
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Average exchange rates applied for the six-month periods ended June 30, 2019 and 2018 and the exchange rates at June 30, 2019 and December 31, 2018 are as follows:

 

     Average rate      Reporting date spot rate  
(In won)    2019      2018      June 30,
2019 		     December 31,
2018 		 

USD

   W 1,145.44        1,075.44        1,156.80        1,118.10  

JPY

     10.41        9.89        10.73        10.13  

CNY

     168.62        168.98        168.08        162.76  

PLN

     301.47        308.55        309.30        297.33  

EUR

     1,293.61        1,301.51        1,315.11        1,279.16  

 

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24.

Financial Risk Management, Continued

 

  ii)

Sensitivity analysis

A weaker won, as indicated below, against the following currencies which comprise the Company’s assets or liabilities denominated in foreign currency as of June 30, 2019 and December 31, 2018, 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 Company 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:

 

     June 30, 2019      December 31, 2018  
(In millions of won)    Equity      Profit or loss      Equity      Profit or loss  

USD (5 percent weakening)

   W   64,578        64,578        41,788        41,788  

JPY (5 percent weakening)

     (8,835 )       (8,835 )       (7,965 )       (7,965 ) 

CNY (5 percent weakening)

     396        396        6,325        6,325  

PLN (5 percent weakening)

     (22 )       (22 )       (183 )       (183 ) 

EUR (5 percent weakening)

     (48 )       (48 )       232        232  

A stronger won against the above currencies as of June 30, 2019 and December 31, 2018 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.

 

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24.

Financial Risk Management, Continued

 

  (ii)

Interest rate risk

Interest rate risk arises principally from the Company’s bonds and borrowings. The Company 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 rate and establishing plan for countermeasures. Meanwhile, the Company entered into a currency interest swap contracts amounting to USD 1,485 million ( W 1,717,270 million) in notional amount to hedge interest rate risk with respect to variable rate foreign currency denominated borrowings.

 

  i)

Profile

The interest rate profile of the Company’s interest-bearing financial instruments as of June 30, 2019 and December 31, 2018 is as follows:

 

(In millions of won)    June 30, 2019      December 31, 2018  

Fixed rate instruments

     

Financial assets

   W 521,964        550,644  

Financial liabilities

     (5,425,549 )       (5,033,515 ) 
  

 

 

    

 

 

 
   W (4,903,585 )       (4,482,871 ) 
  

 

 

    

 

 

 

Variable rate instruments

     

Financial liabilities

   W (2,044,518 )       (1,105,976 ) 

 

  ii)

Equity and profit or loss sensitivity analysis for variable rate instruments

As of June 30, 2019 and December 31, 2018, 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 each 12-month period following the reporting dates. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.

 

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

June 30, 2019

           

Variable rate instruments

   W (2,373 )       2,373        (2,373 )       2,373  

December 31, 2018

           

Variable rate instruments

   W (8,018 )       8,018        (8,018 )       8,018  

 

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24.

Financial Risk Management, Continued

 

  (b)

Credit risk

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

The Company’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 Company 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, the Company recognizes expected credit loss and its changes at each reporting date subsequent to initial recognition of financial asset.

 

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24.

Financial Risk Management, Continued

 

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposures to credit risk as of June 30, 2019 and December 31, 2018 are as follows:

 

(In millions of won)    June 30, 2019      December 31, 2018  

Financial assets carried at amortized cost

     

Cash and cash equivalents

   W 444,581        473,283  

Deposits in banks

     77,211        77,211  

Trade accounts and notes receivable, net

     3,263,319        3,389,108  

Non-trade receivables

     201,491        316,069  

Accrued income

     14,690        5,894  

Deposits

     12,918        13,418  

Short-term loans

     23,294        16,116  

Long-term loans

     50,081        55,048  

Long-term non-trade receivables

     23,483        25,823  
  

 

 

    

 

 

 
   W   4,111,068        4,371,970  
  

 

 

    

 

 

 

Financial assets at fair value through profit or loss

     

Convertible bonds

   W 1,327        1,327  

Derivatives

     42,772        13,059  
  

 

 

    

 

 

 
   W 44,099        14,386  
  

 

 

    

 

 

 

Financial assets at fair value through other comprehensive income

     

Debt instruments

   W 183        161  
  

 

 

    

 

 

 
   W 4,155,350        4,386,517  
  

 

 

    

 

 

 

In addition to the financial assets above, as of June 30, 2019, the Company provides a payment guarantee of USD 1,152 million ( W 1,332,545 million), for its subsidiary.

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises primarily from the sales and investing activities. Trade accounts and notes receivable are insured in order to manage credit risk if it does not meet the Company’s internal credit ratings. Uninsured trade accounts and notes receivables are managed by continuous monitoring of internal credit ratings and seeking insurance coverage, if necessary.

 

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24.

Financial Risk Management, Continued

 

  (c)

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or other financial asset. The Company’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 Company’s reputation.

The Company has historically been able to satisfy its cash requirements from cash flows from operations and debt and equity financing. To the extent that the Company does not generate sufficient cash flows from operations to meet its capital requirements, the Company 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 Company maintains a line of credit with various banks.

The following are the contractual maturities of financial liabilities, including estimated interest payments, as of June 30, 2019.

 

            Contractual cash flows in  
(In millions of won)    Carrying
amount 		     Total     6 months
or less 		     6-12
months 		     1-2
years 		    2-5
years 		    More than
5 years 		 

Non-derivative financial liabilities

                 

Unsecured bank borrowings

   W 4,880,349        5,348,330       107,648        686,053        1,316,417       3,048,808       189,404  

Unsecured bond issues

     2,589,718        2,812,308       335,563        292,043        505,312       1,541,348       138,042  

Trade accounts and notes payable

     3,202,412        3,202,412       3,202,412        —          —         —         —    

Other accounts payable

     1,437,657        1,437,657       1,436,596        1,061        —         —         —    

Other accounts payable (enterprise procurement card) (*1)

     415,330        415,330       415,330        —          —         —         —    

Long-term other accounts payable

     2,127        2,127       —          —          2,127       —         —    

Payment guarantee (*2)

     17,063        1,497,913       42,623        41,884        209,137       1,059,439       144,830  

Security deposits received

     10,825        10,825       165        4,680        5,980       —         —    

Lease liabilities

     11,186        11,431       6,460        2,215        2,026       730       —    
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Derivative financial liabilities

                 

Derivatives

     18,136        (28,768 )      —          —          (3,893 )      (24,875 )      —    
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total

   W 12,584,803        14,709,565       5,546,797        1,027,936        2,037,106       5,625,450       472,276  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

 

(*1)

Represents the amount of utility expenses and others paid by enterprise procurement card and the outstanding payables are settled at the end of the billing cycle.

(*2)

Contractual cash flows of payment guarantee is identical to timing of principal payment and represent the maximum amount that the Company could be required to pay the guarantee amount.

 

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24.

Financial Risk Management, Continued

 

    

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)    June 30, 2019     December 31, 2018  

Total liabilities

   W 15,457,171       13,849,525  

Total equity

     12,682,476       13,212,581  

Cash and deposits in banks (*1)

     521,781       550,483  

Borrowings (including bonds)

     7,470,067       6,139,491  

Total liabilities to equity ratio

     122 %      105 % 

Net borrowings to equity ratio (*2)

     55 %      42 % 

 

(*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.

 

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24.

Financial Risk Management, Continued

 

  (e)

Determination of fair value

(i) Measurement of fair value

A number of the Company’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 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 short-term receivables approximate fair value.

iii) Investments in Equity and Debt Instruments

The fair value of marketable financial assets at FVTPL and at 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 institution 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.

 

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24.

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 separate interim statements of financial position as of June 30, 2019 and December 31, 2018 are as follows:

 

     June 30, 2019      December 31, 2018  
(In millions of won)    Carrying amounts      Fair values      Carrying amounts      Fair values  

Financial assets carried at amortized cost

           

Cash and cash equivalents

   W 444,581        (* )       473,283        (* ) 

Deposits in banks

     77,211        (* )       77,211        (* ) 

Trade accounts and notes receivable

     3,263,319        (* )       3,389,108        (* ) 

Non-trade receivables

     201,491        (* )       316,069        (* ) 

Accrued income

     14,690        (* )       5,894        (* ) 

Deposits

     12,918        (* )       13,418        (* ) 

Short-term loans

     23,294        (* )       16,116        (* ) 

Long-term loans

     50,081        (* )       55,048        (* ) 

Long-term non-trade receivables

     23,483        (* )       25,823        (* ) 

Financial assets at fair value through profit or loss

           

Equity instruments

   W 3,384        3,384        7,344        7,344  

Convertible bonds

     1,327        1,327        1,327        1,327  

Derivatives

     42,772        42,772        13,059        13,059  

Financial assets at fair value through other comprehensive income

           

Debt instruments

   W 183        183        161        161  

Financial liabilities at fair value through profit or loss

           

Derivatives

   W 18,136        18,136        25,758        25,758  

Liabilities carried at amortized cost

           

Unsecured bank borrowings

   W 4,880,349        4,958,410        3,807,234        3,862,709  

Unsecured bond issues

     2,589,718        2,655,789        2,332,257        2,384,987  

Trade accounts and notes payable

     3,202,412        (* )       3,186,123        (* ) 

Other accounts payable

     1,852,987        (* )       1,746,412        (* ) 

Long-term other accounts payable

     2,127        (* )       3,081        (* ) 

Payment guarantee liabilities

     17,063        (* )       19,068        (* ) 

Security deposits received

     10,825        (* )       10,955        (* ) 

Lease liabilities

     11,186        (* )       —          —    

 

(*)

Excluded from disclosures as the carrying amount approximates fair value.

 

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24.

Financial Risk Management, Continued

 

(iii) Fair values of financial assets and liabilities

i) Fair value hierarchy

The table below analyzes financial instruments carried at fair value based on the input variables used in the valuation method to measure fair value of assets and liabilities. The different 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 June 30, 2019 and December 31, 2018 are as follows:

 

     June 30, 2019  
(In millions of won)    Level 1      Level 2      Level 3      Total  

Financial assets at fair value through profit or loss

           

Equity instruments

   W —          —          3,384        3,384  

Convertible bonds

     —          —          1,327        1,327  

Derivatives

     —          —          42,772        42,772  

Financial assets at fair value through other comprehensive income

           

Debt instruments

     183        —          —          183  

Financial liabilities at fair value through profit or loss

           

Derivatives

     —          —          18,136        18,136  
     December 31, 2018  
(In millions of won)    Level 1      Level 2      Level 3      Total  

Financial assets at fair value through profit or loss

           

Equity instruments

   W —          —          7,344        7,344  

Convertible bonds

     —          —          1,327        1,327  

Derivatives

     —          —          13,059        13,059  

Financial assets at fair value through other comprehensive income

           

Debt instruments

     161        —          —          161  

Financial liabilities at fair value through profit or loss

           

Derivatives

     —          —          25,758        25,758  

 

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24.

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 June 30, 2019 and December 31, 2018 are as follows:

 

(In millions of won)    June 30, 2019     

Valuation technique

   Input  

Classification

   Level 1      Level 2      Level 3  

Liabilities

              

Unsecured bank borrowings

   W —          —          4,958,410      Discounted cash flow      Discount rate  

Unsecured bond issues

     —          —          2,655,789      Discounted cash flow      Discount rate  
(In millions of won)    December 31, 2018     

Valuation technique

   Input  

Classification

   Level 1      Level 2      Level 3  

Liabilities

              

Unsecured bank borrowings

   W —          —          3,862,709      Discounted cash flow      Discount rate  

Unsecured bond issues

     —          —          2,384,987      Discounted cash flow      Discount rate  

 

iv)

The interest rates applied for determination of the above fair value as of June 30, 2019 and December 31, 2018 are as follows:

 

     June 30, 2019   December 31, 2018
Borrowings, bonds and others    1.91~3.46%   2.09~3.37%

 

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25.

Changes in liabilities arising from financing activities

Changes in liabilities arising from financing activities for the six-month period ended June 30, 2019 are as follows:

 

                  Non-cash transactions  
( In millions of won )    January 1,
2019 		     Cash flows from
financing
activities 		    Reclassification     Gain or loss on
foreign currency
translation 		     Effective
interest
adjustment 		     Others     June 30,
2019 		 

Short-term borrowings

   W —          336,580       —         10,460           —         347,040  

Current portion of long-term borrowings and bonds

     1,040,148        (708,097 )      512,297       3,798        289        —         848,435  

Payment guarantee liabilities

     19,068        3,756       —         —          —          (5,761 )      17,063  

Long-term borrowings

     3,326,744        1,136,968       (252,619 )      33,407        —          —         4,244,500  

Bonds

     1,772,599        503,665       (259,678 )      11,202        2,304        —         2,030,092  

Lease liabilities

     —          (7,175 )      —         —          212        18,149       11,186  
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 
   W 6,158,559        1,265,697       —         58,867        2,805        12,388       7,498,316  
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

 

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26.

Related Parties and Others

(a) Related parties

Related parties as of June 30, 2019 are as follows:

 

Classification

  

Description

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

 

(*)

Details of subsidiaries and associates are described in note 8.

 

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26.

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 and six-month periods ended June 30, 2019 and 2018 are as follows:

 

     For the three-month period ended June 30, 2019  
                   Purchase and others  
( In millions of won )    Sales and
others 		     Dividend
income 		     Purchase of
raw material
and others 		     Acquisition of
property, plant
and equipment 		     Outsourcing
fees 		     Other
costs 		 

Subsidiaries

                 

LG Display America, Inc.

   W 1,785,403        —          —          —          —          5  

LG Display Japan Co., Ltd.

     636,294        —          —          —          —          5  

LG Display Germany GmbH

     353,500        —          —          —          —          —    

LG Display Taiwan Co., Ltd.

     317,904        —          —          —          —          129  

LG Display Nanjing Co., Ltd.

     5,241        —          1,413        —          331,183        7,383  

LG Display Shanghai Co., Ltd.

     290,572        —          —          —          —          —    

LG Display Poland Sp. z o.o.

     8        —          —          —          2,682        1,111  

LG Display Guangzhou Co., Ltd.

     33,438        —          3,283        —          495,595        10,320  

LG Display Shenzhen Co., Ltd.

     78,495        —          —          —          —          —    

LG Display Yantai Co., Ltd.

     515        —          5,506        —          150,847        3,419  

LG Display (China) Co., Ltd.

     —          11,120        354,838        —          —          115  

LG Display Singapore Pte. Ltd.

     256,076        —          —          —          —          315  

L&T Display Technology (Fujian) Limited

     98,190        —          —          —          —          579  

Nanumnuri Co., Ltd.

     48        —          —          —          —          5,557  

Global OLED Technology LLC

     —          —          —          —          —          1,459  

LG Display Guangzhou Trading Co., Ltd.

     378,757        —          —          —          —          —    

LG Display Vietnam Haiphong Co., Ltd.

     11,518        —          22,366        —          160,923        6,129  

Suzhou Lehui Display Co., Ltd.

     35,771        —          —          —          —          —    

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

     7,209        —          —          —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     4,288,939        11,120        387,406        —          1,141,230        36,526  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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26.

Related Parties and Others, Continued

 

     For the three-month period ended June 30, 2019  
                   Purchase and others  
( In millions of won )    Sales
and others 		     Dividend
income 		     Purchase of
raw material
and others 		     Acquisition of
property, plant
and equipment 		     Outsourcing
fees 		     Other
costs 		 

Associates and their subsidiaries

                 

WooRee E&L Co., Ltd.

   W —          —          11        —          —          —    

INVENIA Co., Ltd.

     —          —          419        7,428        —          49  

AVATEC Co., Ltd.

     —          —          —          —          16,062        219  

Paju Electric Glass Co., Ltd.

     —          —          89,238        —          —          1,138  

YAS Co., Ltd.

     —          —          1,923        4,566        —          1,025  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W —          —          91,591        11,994        16,062        2,431  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Entity that has significant influence over the Company

                 

LG Electronics Inc.

   W 245,118        —          3,188        71,175        —          36,347  

Subsidiaries of the entity that has significant influence over the Company

                 

LG Electronics India Pvt. Ltd.

   W 22,571        —          —          —          —          39  

LG Electronics Vietnam Haiphong Co., Ltd.

     65,828        —          —          —          —          4  

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

     —          —          —          —          —          265  

LG Electronics S.A. (Pty) Ltd

     389        —          —          —          —          4  

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

     167        —          —          —          —          23  

LG Electronics RUS, LLC

     2        —          —          —          —          682  

 

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26.

Related Parties and Others, Continued

 

     For the three-month period ended June 30, 2019  
                   Purchase and others  
( In millions of won )    Sales
and others 		     Dividend
income 		     Purchase of
raw material
and others 		     Acquisition of
property, plant
and equipment 		     Outsourcing
fees 		     Other
costs 		 

Subsidiaries of the entity that has significant influence over the Company

                 

LG Electronics Egypt S.A.E.

   W 30,613        —          —          —          —          —    

LG Innotek Co., Ltd.

     1,037        —          10,194        —          —          17,340  

LG Hitachi Water Solutions Co., Ltd.

     —          —          —          21,898        —          —    

Inspur LG Digital Mobile Communications Co., Ltd.

     18,328        —          —          —          —          —    

Qingdao LG Inspur Digital Communication Co., Ltd.

     208        —          —          —          —          —    

HiEntech Co., Ltd.

     18        —          —          —          —          7,080  

Others

     3,604        —          —          —          —          2,588  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 142,765        —          10,194        21,898        —          28,025  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 4,676,822        11,120        492,379        105,067        1,157,292        103,329  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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26.

Related Parties and Others, Continued

 

     For the six-month period ended June 30, 2019  
                   Purchase and others  
( In millions of won )    Sales
and others 		     Dividend
income 		     Purchase of
raw material
and others 		     Acquisition of
property, plant
and equipment 		     Outsourcing
fees 		     Other
costs 		 

Subsidiaries

                 

LG Display America, Inc.

   W 4,026,667        —          —          —          —          5  

LG Display Japan Co., Ltd.

     1,154,991        —          —          —          —          5  

LG Display Germany GmbH

     834,797        —          —          —          —          6,560  

LG Display Taiwan Co., Ltd.

     640,434        —          —          —          —          282  

LG Display Nanjing Co., Ltd.

     7,941        —          2,625        —          709,380        15,125  

LG Display Shanghai Co., Ltd.

     480,067        —          —          —          —          —    

LG Display Poland Sp. z o.o.

     47        —          —          —          7,672        1,162  

LG Display Guangzhou Co., Ltd.

     52,933        —          6,674        —          1,007,885        14,695  

LG Display Shenzhen Co., Ltd.

     198,793        —          —          —          —          —    

LG Display Yantai Co., Ltd.

     1,879        —          7,578        —          394,996        6,088  

LG Display (China) Co., Ltd.

     —          11,120        677,562        —          —          485  

LG Display Singapore Pte. Ltd.

     542,045        —          —          —          —          360  

L&T Display Technology (Fujian) Limited

     186,150        —          —          —          —          580  

Nanumnuri Co., Ltd.

     97        —          —          —          —          11,329  

Global OLED Technology LLC

     —          —          —          —          —          2,909  

LG Display Guangzhou Trading Co., Ltd.

     725,076        —          —          —          —          —    

LG Display Vietnam Haiphong Co., Ltd.

     13,891        —          43,013        —          352,462        14,180  

Suzhou Lehui Display Co., Ltd.

     71,872        —          —          —          —          —    

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

     26,338        —          —          —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 8,964,018        11,120        737,452        —          2,472,395        73,765  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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26.

Related Parties and Others, Continued

 

     For the six-month period ended June 30, 2019  
     Sales
and others 		     Dividend
income 		     Purchase and others  
( In millions of won )    Purchase of
raw material
and others 		     Acquisition of
property, plant
and equipment 		     Outsourcing
fees 		     Other
costs 		 

Associates and their subsidiaries

                 

WooRee E&L Co., Ltd.

   W —          —          12        —          —          1  

INVENIA Co., Ltd.

     —          180        762        7,682        —          102  

AVATEC Co., Ltd.

     —          265        —          —          37,219        420  

Paju Electric Glass Co., Ltd.

     —          6,057        179,854        —          —          2,102  

YAS Co., Ltd.

     —          1,000        3,570        11,908        —          1,983  

Material Science Co., Ltd.

     —          —          —          —          —          313  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W —          7,502        184,198        19,590        37,219        4,921  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Entity that has significant influence over the Company

                 

LG Electronics Inc.

   W 529,775        —          6,544        132,825        —          64,297  

Subsidiaries of the entity that has significant influence over the Company

                 

LG Electronics India Pvt. Ltd.

   W 45,435        —          —          —          —          40  

LG Electronics Vietnam Haiphong Co., Ltd.

     128,611        —          —          —          —          125  

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

     —          —          —          —          —          523  

LG Electronics S.A. (Pty) Ltd

     2,117        —          —          —          —          9  

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

     1,266        —          —          —          —          50  

LG Electronics RUS, LLC

     276        —          —          —          —          1,425  

 

157

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26.

Related Parties and Others, Continued

 

 

     For the six-month period ended June 30, 2019  
     Sales
and others 		     Dividend
income 		     Purchase and others  
( In millions of won )    Purchase of
raw material
and others 		     Acquisition
of property, plant
and equipment 		     Outsourcing
fees 		     Other
costs 		 

Subsidiaries of the entity that has significant influence over the Company

                 

LG Electronics Egypt S.A.E.

   W 58,526        —          —          —          —          —    

LG Electronics (Kunshan) Computer Co., Ltd.

     385        —          —          —          —          —    

LG Innotek Co., Ltd.

     4,033        —          23,036        —          —          42,071  

LG Hitachi Water Solutions Co., Ltd.

     —          —          —          46,259        —          —    

Inspur LG Digital Mobile Communications Co., Ltd.

     35,258        —          —          —          —          —    

Qingdao LG Inspur Digital Communication Co., Ltd.

     2,796        —          —          —          —          —    

HiEntech Co., Ltd.

     36        —          —          —          —          14,191  

Others

     9,336        —          —          —          —          5,576  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 288,075        —          23,036        46,259        —          64,010  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 9,781,868        18,622        951,230        198,674        2,509,614        206,993  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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26.

Related Parties and Others, Continued

 

 

     For the three-month period ended June 30, 2018  
     Sales
and others 		            Purchase and others  
( In millions of won )    Dividend
income 		     Purchase of
raw material
and others 		     Acquisition of
property, plant
and equipment 		     Outsourcing
fees 		     Other
costs 		 

Subsidiaries

                 

LG Display America, Inc.

   W 1,810,086        —          —          —          —          1  

LG Display Japan Co., Ltd.

     556,822        —          —          —          —          1  

LG Display Germany GmbH

     400,805        —          —          —          —          489  

LG Display Taiwan Co., Ltd.

     322,871        —          —          —          —          179  

LG Display Nanjing Co., Ltd.

     5,295        —          1,484        —          381,049        6,838  

LG Display Shanghai Co., Ltd.

     218,961        —          —          —          —          33  

LG Display Poland Sp. z o.o.

     63        —          —          —          8,930        4  

LG Display Guangzhou Co., Ltd.

     17,499        —          3,298        —          513,406        3,680  

LG Display Shenzhen Co., Ltd.

     367,312        —          —          —          —          4  

LG Display Yantai Co., Ltd.

     6,671        —          3,122        —          375,578        3,029  

LG Display (China) Co., Ltd.

     328        —          316,418        —          —          318  

LG Display Singapore Pte. Ltd.

     240,695        —          —          —          —          6  

L&T Display Technology (Fujian) Limited

     104,586        —          —          —          —          31  

Nanumnuri Co., Ltd.

     44        —          —          —          —          5,048  

Global OLED Technology LLC

     —          —          —          —          —          1,508  

LG Display Guangzhou Trading Co., Ltd.

     143,880        —          —          —          —          —    

LG Display Vietnam Haiphong Co., Ltd.

     770        —          6,690        —          173,813        548  

Suzhou Lehui Display Co., Ltd.

     42,240        —          —          —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 4,238,928        —          331,012        —          1,452,776        21,717  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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26.

Related Parties and Others, Continued

 

 

     For the three-month period ended June 30, 2018  
     Sales
and others 		     Dividend
income 		     Purchase and others  
( In millions of won )    Purchase of
raw material
and others 		     Acquisition of
property, plant
and equipment 		     Outsourcing
fees 		     Other
costs 		 

Associates and their subsidiaries

                 

WooRee E&L Co., Ltd.

   W —          —          34        —          —          39  

INVENIA Co., Ltd.

     —          —          499        13,838        —          184  

AVATEC Co., Ltd.

     —          —          —          —          17,306        104  

Paju Electric Glass Co., Ltd.

     —          —          91,301        —          —          923  

LB Gemini New Growth Fund No.16

     —          —          —          —          —          —    

YAS Co., Ltd.

     —          —          1,421        5,135        —          722  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W —          —          93,255        18,973        17,306        1,972  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Entity that has significant influence over the Company

                 

LG Electronics Inc.

   W 335,012        —          11,394        153,463        —          30,341  

Subsidiaries of the entity that has significant influence over the Company

                 

LG Electronics India Pvt. Ltd.

   W 15,419        —          —          —          —          13  

LG Electronics Vietnam Haiphong Co., Ltd.

     37,248        —          —          —          —          3  

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

     12,657        —          —          —          —          398  

LG Electronics Almaty Kazakhstan

     782        —          —          —          —          13  

LG Electronics S.A. (Pty) Ltd

     2,038        —          —          —          —          4  

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

     220        —          —          —          —          11  

LG Electronics RUS, LLC

     1,559        —          —          —          —          779  

 

160

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26.

Related Parties and Others, Continued

 

     For the three-month period ended June 30, 2018  
     Sales
and others 		     Dividend
income 		     Purchase and others  
(In millions of won)    Purchase of
raw material
and others 		     Acquisition of
property, plant
and equipment 		     Outsourcing
fees 		     Other
costs 		 

Subsidiaries of the entity that has significant influence over the Company

                 

LG Electronics Egypt S.A.E.

   W 14,881        —          —          —          —          16  

LG Innotek Co., Ltd.

     10,098        —          30,506        —          —          16,970  

LG Hitachi Water Solutions Co., Ltd.

     —          —          —          79,142        —          5,770  

Inspur LG Digital Mobile Communications Co., Ltd.

     24,440        —          —          —          —          —    

Qingdao LG Inspur Digital Communication Co., Ltd.

     12,430        —          —          —          —          —    

HiEntech Co., Ltd.

     —          —          —          —          —          6,931  

Others

     1,005        —          9        —          —          2,116  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 132,777        —          30,515        79,142        —          33,024  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 4,706,717        —          466,176        251,578        1,470,082        87,054  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

161

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26.

Related Parties and Others, Continued

 

     For the six-month period ended June 30, 2018  
     Sales
and others 		            Purchase and others  
(In millions of won)    Dividend
income 		     Purchase of
raw material
and others 		     Acquisition of
property, plant
and equipment 		     Outsourcing
fees 		     Other
costs 		 

Subsidiaries

                 

LG Display America, Inc.

   W 3,958,533        —          —          —          —          1  

LG Display Japan Co., Ltd.

     993,506        —          —          —          —          2,152  

LG Display Germany GmbH

     825,961        —          —          —          —          818  

LG Display Taiwan Co., Ltd.

     664,083        —          —          —          —          350  

LG Display Nanjing Co., Ltd.

     10,160        —          1,752        —          643,337        8,223  

LG Display Shanghai Co., Ltd.

     442,481        —          —          —          —          43  

LG Display Poland Sp. z o.o.

     204        —          —          —          18,519        6  

LG Display Guangzhou Co., Ltd.

     22,948        —          5,877        —          955,037        7,148  

LG Display Shenzhen Co., Ltd.

     755,588        —          —          —          —          4  

LG Display Yantai Co., Ltd.

     14,330        —          8,602        —          771,523        8,572  

LG Display (China) Co., Ltd.

     328        90,281        675,639        —          —          742  

LG Display Singapore Pte. Ltd.

     434,959        —          —          —          —          19  

L&T Display Technology (Fujian) Limited

     186,603        —          —          —          8        36  

Nanumnuri Co., Ltd.

     89        —          —          —          —          11,171  

Global OLED Technology LLC

     —          —          —          —          —          3,002  

LG Display Guangzhou Trading Co., Ltd.

     233,400        —          —          —          —          —    

LG Display Vietnam Haiphong Co., Ltd.

     36,510        —          10,855        —          285,482        617  

Suzhou Lehui Display Co., Ltd.

     77,963        —          —          —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 8,657,646        90,281        702,725        —          2,673,906        42,904  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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26.

Related Parties and Others, Continued

 

     For the six-month period ended June 30, 2018  
     Sales
and others 		            Purchase and others  
(In millions of won)    Dividend
income 		     Purchase of
raw material
and others 		     Acquisition of
property, plant
and equipment 		     Outsourcing
fees 		     Other
costs 		 

Associates and their subsidiaries

                 

WooRee E&L Co., Ltd.

   W —          —          34        —          —          86  

INVENIA Co., Ltd.

     —          30        769        21,587        —          256  

AVATEC Co., Ltd.

     —          530        —          —          35,079        223  

Paju Electric Glass Co., Ltd.

     —          4,172        183,798        —          —          1,843  

LB Gemini New Growth Fund No.16

     —          540        —          —          —          —    

YAS Co., Ltd.

     —          —          2,181        17,552        —          1,516  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W —          5,272        186,782        39,139        35,079        3,924  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Entity that has significant influence over the Company

                 

LG Electronics Inc.

   W 696,056        —          21,580        305,953        —          47,807  

Subsidiaries of the entity that has significant influence over the Company

                 

LG Electronics India Pvt. Ltd.

   W 23,774        —          —          —          —          26  

LG Electronics Vietnam Haiphong Co., Ltd.

     70,236        —          —          —          —          5  

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

     17,500        —          —          —          —          1,296  

LG Electronics Almaty Kazakhstan

     3,207        —          —          —          —          21  

LG Electronics S.A. (Pty) Ltd

     4,435        —          —          —          —          6  

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

     1,501        —          —          —          —          65  

LG Electronics RUS, LLC

     2,162        —          —          —          —          1,099  

 

163

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26.

Related Parties and Others, Continued

 

     For the six-month period ended June 30, 2018  
     Sales
and others 		     Dividend
income 		     Purchase and others  
(In millions of won)    Purchase of
raw material
and others 		     Acquisition of
property, plant
and equipment 		     Outsourcing
fees 		     Other
costs 		 

Subsidiaries of the entity that has significant influence over the Company

                 

LG Electronics Egypt S.A.E.

   W 14,881        —          —          —          —          16  

LG Innotek Co., Ltd.

     17,048        —          65,132        —          —          28,052  

LG Hitachi Water Solutions Co., Ltd.

     —          —          —          196,956        —          6,261  

Inspur LG Digital Mobile Communications Co., Ltd.

     36,617        —          —          —          —          —    

Qingdao LG Inspur Digital Communication Co., Ltd.

     20,086        —          —          —          —          —    

HiEntech Co., Ltd.

     —          —          —          —          —          14,866  

Others

     1,735        —          9        —          —          4,029  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 213,182        —          65,141        196,956        —          55,742  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 9,566,884        95,553        976,228        542,048        2,708,985        150,377  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

164

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26.

Related Parties and Others, Continued

 

  (c)

Trade accounts and notes receivable and payable as of June 30, 2019 and December 31, 2018 are as follows:

 

        
     Trade accounts and notes receivable
and others 		     Trade accounts and notes payable
and others 		 
(In millions of won)    June 30, 2019      December 31, 2018      June 30, 2019      December 31, 2018  

Subsidiaries

           

LG Display America, Inc.

   W 874,193        1,031,718        —          —    

LG Display Japan Co., Ltd.

     386,597        349,814        6        5  

LG Display Germany GmbH

     312,169        433,077        1,401        4,332  

LG Display Taiwan Co., Ltd.

     355,637        274,860        66        34  

LG Display Nanjing Co., Ltd.

     4,782        2,448        426,990        272,991  

LG Display Shanghai Co., Ltd.

     218,927        168,117        —          1  

LG Display Poland Sp. z o. o

     —          30        2,941        6,849  

LG Display Guangzhou Co., Ltd.

     11,661        167,814        367,900        196,070  

LG Display Guangzhou Trading Co., Ltd.

     428,333        377,145        —          —    

LG Display Shenzhen Co., Ltd.

     52,439        32,759        —          —    

LG Display Yantai Co., Ltd.

     160        115        238,570        382,448  

LG Display (China) Co., Ltd.

     —          —          267,612        187,004  

LG Display Singapore Pte. Ltd.

     71,880        85,680        40        1  

L&T Display Technology (Fujian) Limited

     62,944        62,336        176,100        139,171  

Nanumnuri Co., Ltd.

     —          —          3,041        2,065  

Global OLED Technology LLC

     —          —          —          1,146  

LG Display Vietnam Haiphong Co., Ltd.

     56,120        22,113        250,359        340,780  

Suzhou Lehui Display Co., Ltd.

     25,094        32,641        —          —    

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

     10,876        17,333        —          3,362  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W   2,871,812        3,058,000        1,735,026        1,536,259  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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26.

Related Parties and Others, Continued

 

        
     Trade accounts and notes receivable
and others 		     Trade accounts and notes payable
and others 		 
(In millions of won)    June 30, 2019      December 31,
2018 		     June 30,
2019 		     December 31,
2018 		 

Associates

           

WooRee E&L Co., Ltd.

   W —          —          12        6  

INVENIA Co., Ltd.

     3,000        2,000        8,685        1,671  

AVATEC Co., Ltd.

     —          —          3,647        4,382  

Paju Electric Glass Co., Ltd.

     6,365        —          62,656        60,566  

YAS Co., Ltd.

     —          —          9,174        2,709  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 9,365        2,000        84,174        69,334  
  

 

 

    

 

 

    

 

 

    

 

 

 

Entity that has significant influence over the Company

           

LG Electronics Inc.

   W   160,240        247,134        130,104        99,574  

 

166

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26.

Related Parties and Others, Continued

 

        
     Trade accounts and notes receivable
and others 		     Trade accounts and notes payable
and others 		 
(In millions of won)    June 30, 2019      December 31, 2018      June 30, 2019      December 31, 2018  

Subsidiaries of the entity that has significant influence over the Company

           

LG Innotek Co., Ltd.

   W 6        2,782        36,497        45,815  

LG Hitachi Water Solutions Co., Ltd.

     —          9,100        29,302        47,463  

Hi Entech Co., Ltd.

     2        —          6,352        4,782  

Inspur LG Digital Mobile Communications Co., Ltd

     18,156        6,137        —          —    

LG Electronics Reynosa S.A. DE C.V

     —          2,572        —          134  

LG Electronics India Pvt. Ltd.

     12,180        9,047        35        29  

LG Electronics Vietnam Haiphong Co., Ltd.

     25,779        25,544        —          —    

LG Electronics S.A. (Pty) Ltd.

     133        896        6        5  

LG Electronics RUS, LLC

     3        —          188        —    

LG Electronics Egypt S.A.E

     13,048        10,296        —          —    

LG Electronics (Kunshan) Computer Co., Ltd.

     —          1,370        —          —    

Qingdao LG Inspur Digital Communication Co., Ltd.

     207        3,530        —          —    

Others

     2,262        3,340        1,116        1,275  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 71,776        74,614        73,496        99,503  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W   3,113,193        3,381,748        2,022,800        1,804,670  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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26.

Related Parties and Others, Continued

 

  (d)

Details of significant cash transactions such as loans and collection of loans, which occurred in the normal course of business with related parties for the six-month periods ended June 30, 2019 and 2018 are as follows:

 

     2019      2018  

(In millions of won)

Associates

   Loans      Collection
of loans 		     Loans      Collection
of loans 		 

INVENIA Co., Ltd.

   W 1,000        —          —          250  

YAS Co., Ltd.

     —          —          —          250  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 1,000        —          —          500  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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26.

Related Parties and Others, Continued

 

  (e)

Conglomerate Transactions

Transactions, trade accounts and notes receivable and payable, and others between the Company and certain companies and their subsidiaries, which are included in LG Group, one of conglomerates according to the Monopoly Regulation and Fair Trade Act for the three-month and six-month periods ended June 30, 2019 and 2018 and as of June 30, 2019 and December 31, 2018 are as follows. These entities are not affiliates according to K-IFRS No. 1024, Related Party Disclosures.

 

     For the three-month period
ended June 30, 2019 		     For the six-month period
ended June 30, 2019 		     June 30, 2019  
(In millions of won)    Sales
and others 		     Purchase
and others 		     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(*)

   W 156,623        31,950        351,795        64,541        63,836        137,316  

LG Uplus Corp.

     —          577        —          1,135        —          207  

LG Chem Ltd. and its subsidiaries

     47        146,715        66        300,227        32        76,278  

S&I Corp. and its subsidiaries (formerly, Serveone)

     83        75,600        167        245,868        21,307        63,302  

Silicon Works Co., Ltd

     —          156,214        92        306,506        —          157,206  

LG Corp.

     —          13,096        —          26,369        8,853        5,334  

LG Management Development Institute

     —          1,915        —          4,385        3,480        304  

LG CNS Co., Ltd. and its subsidiaries

     —          40,208        —          58,316        —          33,438  

LG Hausys Ltd

     1        1        1        1        2        1  

G2R Inc. and its subsidiaries

     —          823        —          1,887        —          1,052  

Robostar Co., Ltd.

     —          1,274        —          1,988        —          1,398  

Other(*)

     —          56,976        —          56,976        —          99,031  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W   156,754        525,349        352,121        1,068,199        97,510        574,867  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(*)

Due to S&I Corp.’s disposal of partial interests in Serveone in May 2019, Serveone was reclassified from one of the S&I Corp.’s subsidiaries to associates. Accordingly, transactions with S&I Corp. after the disposal are classified as other.

 

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26.

Related Parties and Others, Continued

 

     For the three-month period
ended June 30, 2018 		     For the six-month period
ended June 30, 2018 		     December 31, 2018  
(In millions of won)    Sales
and others 		     Purchase
and others 		     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

   W 203,335        41,987        387,592        96,539        82,965        82,028  

LG Uplus Corp.

     21        395        21        618        —          178  

LG Chem Ltd. and its subsidiaries

     —          175,568        1,564        369,120        14        93,274  

S&I Corp. and its subsidiaries (Formerly, Serveone)

     98        350,253        195        686,552        21,307        239,091  

Silicon Works Co., Ltd

     —          160,546        —          303,841        —          140,694  

LG Corp.

     —          12,578        —          25,369        11,246        —    

LG Management Development Institute

     —          2,305        —          5,118        3,480        441  

LG CNS Co., Ltd. and its subsidiaries

     —          40,483        —          71,254        —          72,694  

LG Hausys Ltd

     —          —          1,110        1        —          3  

G2R Inc. and its subsidiaries

     —          33,029        —          37,070        —          19,773  

Robostar Co., Ltd.

     —          —          —          —          —          530  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W   203,454        817,144        390,482        1,595,482        119,012        648,706  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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26.

Related Parties and Others, Continued

 

  (f)

Key management personnel compensation

Compensation costs of key management for the three-month and six-month periods ended June 30, 2019 and 2018 are as follows:

 

     For the three-month
periods ended June 30 		     For the six-month
periods ended June 30 		 
(In millions of won)    2019      2018      2019      2018  

Short-term benefits

   W 610        928        1,501        1,816  

Expenses related to the defined benefit plan

     247        314        347        587  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 857        1,242        1,848        2,403  
  

 

 

    

 

 

    

 

 

    

 

 

 

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

 

27.

Subsequent Event

The Company resolved to issue the following foreign currency denominated convertible bonds at the Board of Director meetings on July 30, 2019:

 

Classification

  

Description

Issue

  

USD 668 million (KRW equivalent: 813,427 million)

Interest rate (%)

  

1.5

Maturity date

  

August 22, 2024

Conversion price

  

W 19,845

Exchange rate (*)

  

W 1,182.65

Class of shares subject to conversion

  

Registered common shares

Number of shares convertible

  

40,988,998

Conversion period

  

August 23, 2020 ~ August 12, 2024

Expected issuance date

  

August 22, 2019

 

(*)

The exchange rate represents Bloomberg closing mid-rate at 12:00 pm (Korea time) on July 30, 2019.

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

    LG Display Co., Ltd.
    (Registrant)
Date: August 14, 2019     By:  

/s/ Heeyeon Kim

      (Signature)
    Name:   Heeyeon Kim
    Title:   Head of IR / Vice President

 

172

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