Form 6-K

6-K 1 d52916d6k.htm FORM 6-K Form 6-K

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 2020

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 ☒

SEMI-ANNUAL REPORT

(From January 1, 2020 to June 30, 2020)

THIS IS A TRANSLATION OF THE SEMI-ANNUAL 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.	Credit rating	4
	C.	Capitalization	6
	D.	Voting rights (as of June 30, 2020)	7
	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	11
	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	13

5.	Sales		13
	A.	Sales performance	13
	B.	Sales organization and sales route	13
	C.	Sales methods and sales terms	14
	D.	Sales strategy	14
	E.	Major customers	14

6.	Purchase Orders		14

7.	Market Risks and Risk Management		15


	A.	Market risks	15
	B.	Risk management	15

8.	Derivative Contracts		15
	A.	Currency risks	15
	B.	Interest rate risks	16

9.	Major Contracts		16

10.	Research & Development		17
	A.	Summary of R&D-related expenditures	17
	B.	R&D achievements	17

11.	Intellectual Property		19

12.	Environmental and Safety Matters		19

13.	Financial Information		22
	A.	Financial highlights (Based on consolidated K-IFRS)	22
	B.	Financial highlights (Based on separate K-IFRS)	23
	C.	Consolidated subsidiaries as of June 30, 2020	24
	D.	Status of equity investments as of June 30, 2020	24

14.	Audit Information		25
	A.	Audit service	25
	B.	Non-audit service	26

15.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		26

16.	Board of Directors		26
	A.	Members of the board of directors	26
	B.	Committees of the board of directors	26
	C.	Independence of directors	27

17.	Information Regarding Shares		27
	A.	Total number of shares	27
	B.	Shareholder list	27

18.	Directors and Employees		28
	A.	Directors	28
	B.	Employees	31

19.	Other Matters		32
	A.	Legal proceedings	32
	B.	Material events subsequent to the reporting period	32
	C.	Material change in management	32

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

1.	Company

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.

Credit rating

(1)

Corporate bonds (Domestic)


Subject instrument	Month of rating	Credit rating⁽¹⁾	Rating agency (Rating range)
Corporate bonds	February 2018	AA	NICE Information Service Co., Ltd. (AAA ~ D)
	May 2018	AA
	February 2019	AA-
	April 2019
	November 2019
	February 2020	A+
	June 2020	A+
	May 2018	AA	Korea Investors Service, Inc. (AAA ~ D)
	February 2019	AA-
	June 2019
	October 2019
	February 2020	A+
	June 2020	A+
	February 2018	AA	Korea Ratings Corporation (AAA ~ D)
	April 2018	AA
	April 2019	AA-
	November 2019	AA-
	February 2020	A+
	May 2020	A+

(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.

(2)

Corporate bonds (Overseas)


Subject instrument	Month of rating	Credit rating⁽²⁾	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 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)

(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.

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

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

Capitalization

(1)

Change in capital stock (as of June 30, 2020)

There were no changes to our issued capital stock during the reporting period ended June 30, 2020.

(2)

Convertible bonds (as of June 30, 2020)

Description

Issue
Date

Maturity
Date

Issue
Amount
(in Won)

Class of
Shares
Subject to
Conversion

Conversion
Period

Conditions for Conversion

Outstanding Bonds

Notes

Conversion
Ratio

Conversion
Price

Issue Amount
(in Won)

Number of Shares
subject to
conversion

Unsecured Foreign Convertible Bonds No. 3

Aug. 22,
2019

Aug. 22,
2024

813,426,670,000

⁽¹⁾⁽²⁾

Registered Common Shares

Aug. 23,
2020 ~
Aug. 12,
2024

100

W19,845

813,426,670,000

⁽¹⁾

40,988,998

Listed on
Singapore
Stock
Exchange

Total

—

813,426,670,000

—

100

W19,845

813,426,670,000

40,988,998

—

(1)

The issue amount for Unsecured Foreign Convertible Bonds No. 3 is calculated based on the application of the mid-point of the relevant Won-US dollar exchange rates as of noon, July 30, 2019 (Korea Standard Time) quoted on Bloomberg, which was W1,182.65 per U.S. dollar, to the actual issue amount of USD 687,800,000.

(2)	The proceeds of our Unsecured Foreign Convertible Bonds No. 3 were used for general corporate purposes.

Voting rights (as of June 30, 2020)


		(Unit: share)
Description		Number of shares
A. Total number of shares issued⁽¹⁾:	Common shares⁽¹⁾		357,815,700
A. Total number of shares issued⁽¹⁾:	Preferred shares		—
B. Shares without voting rights:	Common shares		—
B. Shares without voting rights:	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		—
E. Shares with restored voting rights:	Preferred shares		—

Total number of issued shares with voting rights (=A – B – C – D + E):	Common shares		357,815,700

	Preferred shares		—

(1)	Authorized: 500,000,000 shares

Dividends

Dividends for the three most recent fiscal years


Description (unit)		2020 H1			2019			2018
Par value (Won)			5,000			5,000			5,000
Profit (loss) for the year (million Won)⁽¹⁾			(688,112	)		(2,829,705	)		(207,239	)
Earnings (loss) per share (Won)⁽²⁾			(1,923	)		(7,908	)		(579	)

Total cash dividend amount for the period (million Won)			—			—			—

Total stock dividend amount for the period (million Won)			—			—			—

Cash dividend payout ratio (%)⁽³⁾			—			—			—
Cash dividend yield (%)⁽⁴⁾	Common shares		—			—			—
	Preferred shares		—			—			—
Stock dividend yield (%)	Common shares		—			—			—
	Preferred shares		—			—			—
Cash dividend per share (Won)	Common shares		—			—			—
	Preferred shares		—			—			—
Stock dividend per share (share)	Common shares		—			—			—
	Preferred shares		—			—			—

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

(2)	Earnings per share is based on par value of W5,000 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

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, 2020, 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, 2020, 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)
	2020 H1			2019			2018
Sales Revenue		10,031			23,476			24,337
Gross Profit		406			1,868			3,085
Operating Profit (loss)		(879	)		(1,359	)		93
Total Assets		35,054			35,575			33,176
Total Liabilities		22,953			23,086			18,289

Industry

(1)

Industry characteristics

•

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

•

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

•

While the overall growth in the market for display panels for televisions in terms of quantity has become somewhat stagnant, there is emerging demand for premium products with high resolution and large-sized display panels in developed countries, while demand for lower-end products has sustained in developing countries.

•

While the growth in the market for display panels for IT products, which include laptops, desktop monitors and tablet products, has slowed down or declined in terms of quantity, demand for high-end products has consistently sustained. In addition, there have been increased new opportunities from the demand side of IT products due to an expanding social tendency to avoid face-to-face contact resulting in increased instances of online classes and working from home in light of the COVID-19 pandemic.

•

While the growth in the market for small- and medium-sized display panels, which is centered around smartphones, has somewhat slowed down, further growth is expected with the release of new products using plastic OLED panels and products that offer changes in form factors or new customer experiences such as foldable smartphones.

•

As the scope of application of display panels gradually expand to products other than traditional IT devices, we also expect to see growth in the market for new and high value-added product segments such as display panels for industrial uses and automobiles.

(2)

Growth Potential

•

We are focusing on securing profitability through differentiated products such as “Cinematic Sound” OLED and “Wallpaper” display panels under our strategic plan to transition our business to center around OLED, which has a strong future growth potential. In the television business, we are expanding our offerings of premium products such as OLED 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 business, we are increasing the proportion of premium products such as high resolution and wide screen products based on IPS and Oxide technologies. In the mobile business, we 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.

(4)

Market conditions

•

Most display panel manufacturers are located in Asia as set forth below. Pursuant to the Chinese government’s initiative and support, Chinese panel manufacturers have continued to invest in new fabrication facilities and additional supplies, and the concern over intensification of a structural oversupply in the LCD industry continues to exist.

Korea: LG Display, Samsung Display, etc.

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

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

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:


	2020 H1	2019	2018
Panels for Televisions⁽¹⁾⁽²⁾	21.0%	28.1%	28.3%
Panels for Monitors⁽¹⁾	26.2%	27.5%	30.7%
Panels for Notebook and Tablet Computers⁽¹⁾	21.9%	23.0%	25.8%

Total⁽¹⁾	22.3%	27.2%	28.8%

(1)	Source: Large-Area Display Market Tracker (OMDIA (formerly known as IHS Technology)). The relevant amounts for the second quarter of 2020 reflect OMDIA Technology’s 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 shown that we are technologically a step ahead of the competition by continuing to introduce differentiated products with a variety of unique features specific to OLED technology, such as our “Wallpaper,” “Cinematic Sound,” “Rollable” and “Transparent” OLED panels for televisions. Moreover, we have supplied plastic OLED products for foldable notebook computers, automotive products, smartphones and wearable devices, among others. With respect to TFT-LCD panels, we are leading the market with our competitive advantages in technology, including through our IPS technology-based ultra-large and high-resolution ultra-high definition (“Ultra HD” or “UHD”) television panels, desktop and notebook monitors featuring differentiated designs and high frequency refresh rates, and specialized products for automotive, commercial and medical uses. Our production facilities are also equipped to produce products incorporating in-TOUCH technology.

•

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

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

Major products

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

(Unit: In billions of Won, except percentages)

Business area

Sales type

Items (By
product)

Usage

Major
trademark

2020 H1

Sales
Revenue

Percentages
(%)

Display

Goods/

Products/
Services/
Other sales

Televisions

Panels for televisions

LG Display

2,678

26.70

Desktop
monitors

Panels for monitors

LG Display

2,020

20.14

Notebook
computers
and tablet
products

Panels for notebook computers and tablet products

LG Display

2,478

24.71

Mobile,

etc.

Panels for smartphones, etc.

LG Display

2,854

28.45

Total

10,031

100.0

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 2020 increased by approximately 15% compared to the first quarter of 2020 in part due to an increase in sales of our IT products as a result of increased instances of online classes and working from home in light of the COVID-19 pandemic. 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$ / m²)


Period	Average Selling Price⁽¹⁾⁽²⁾(in US$ / m²)
2020 Q2		654
2020 Q1		567
2019 Q4		606
2019 Q3		513
2019 Q2		456
2019 Q1		528
2018 Q4		559
2018 Q3		500
2018 Q2		501
2018 Q1		522

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

(2)	Excludes semi-finished products in the cell process.

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		1,153		21.54	%	Korea SMT Co., Ltd., etc.
		Polarizers			880		16.44	%	LG Chem, etc.
		Backlights			801		14.96	%	Heesung Electronics LTD., etc.
		Glass			380		7.11	%	Paju Electric Glass Co., Ltd., Asahi Electric Glass Co., Ltd., etc.
		Drive IC			447		8.35	%	Silicon Works Co., Ltd., MagnaChip Semiconductor Corporation, etc.
		Others			1,692		31.60	%	—

Total					5,353		100.0	%

- Period: January 1, 2020 ~ June 30, 2020.

(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, decreased by 8.6% from 2018 to 2019 and by 3.2% from 2019 to the second quarter of 2020. Such decrease in the second quarter of 2020 was mainly due to the effects of the COVID-19 pandemic. The average price of resin decreased by 38.2% from 2018 to 2019 and by 16.2% from 2019 to the second quarter of 2020. Such decrease in the second quarter of 2020 was also mainly due to the effects of the COVID-19 pandemic. The average price of copper, the main raw material for PCB components, decreased by 8.0% from 2018 to 2019 and by 8.7% from 2019 to the second quarter of 2020. Such decrease in the second quarter of 2020 was also mainly due to the effects of the COVID-19 pandemic.

4.	Production and Equipment

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

2020 H1⁽¹⁾

2019⁽²⁾

2018⁽²⁾

Display

Display
panel

Gumi, Paju,
Guangzhou

3,744

9,408

10,161

(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., 6 months). The production capacity for facilities with adjusted utilization rates have been calculated based on the maximum input capacity during the period.

(2)

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

(2)

Production output

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

(Unit: 1,000 glass sheets)

Business area

Items

Location of facilities

2020 H1⁽¹⁾

2019⁽¹⁾

2018⁽¹⁾

Display

Display
panel

Gumi, Paju,
Guangzhou

2,997

8,373

9,428

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

Production performance and utilization ratio


(Unit: Hours, except percentages)
Production facilities	Available working hours in 2020 H1	Actual working hours in 2020 H1	Average utilization ratio
Gumi	4,368⁽¹⁾(24 hours x 182 days)⁽²⁾	4,320⁽¹⁾(24 hours x 180 days)⁽²⁾		98.9%
Paju	4,368⁽¹⁾(24 hours x 182 days)⁽²⁾	4,340⁽¹⁾(24 hours x 181 days)⁽²⁾		99.4%
Guangzhou	4,368⁽¹⁾(24 hours x 182 days)⁽²⁾	4,368⁽¹⁾(24 hours x 182 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.

Investment plan

In 2019, our total capital expenditures on a cash out basis was approximately W7 trillion. In 2020, given that our investment in large OLED and plastic OLED technology is nearly completed, we plan to reduce our capital expenditures by at least half as that compared to 2019 to an amount slightly above W3 trillion.

Sales

Sales performance


(Unit: In billions of Won)
Business area	Sales types	Items (Market)		2020 H1		2019		2018
Display	Products	Display panel	Overseas⁽¹⁾		9,523		22,180		22,722
			Korea⁽¹⁾		487		1,255		1,572

			Total		10,009		23,435		24,294

	Royalty	LCD, OLED technology patent	Overseas⁽¹⁾		8		14		18
			Korea⁽¹⁾		0		0		0

			Total		8		14		18

	Others	Raw materials, components, etc.	Overseas⁽¹⁾		11		17		13
			Korea⁽¹⁾		3		10		1

			Total		14		26		25

			Overseas⁽¹⁾		9,542		22,211		22,747
	Total		Korea⁽¹⁾		490		1,265		1,590

			Total		10,031		23,476		24,337

(1)	Based on ship-to-party.

Sales organization and sales route

•

As of June 30, 2020, 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		95.3	%
Overseas	Headquarters		4.7	%
Overseas sales portion (overseas sales / total sales)			95.1	%
Korea	Overseas subsidiaries		3.1	%
Korea	Headquarters		96.9	%
Korea sales portion (Korea sales / total sales)			4.9	%

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 of and demand for panels.

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, cinematic sound, rollable, etc.). We are also continuing to strengthen sales of high-resolution, IPS, narrow bezel and other high-end display panels in the monitor, notebook computer and tablet markets.

•

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

Major customers

•

Customers “A” and “B” each accounted for more than 10% of our sales revenue in each of the first half of 2019 and 2020, and our sales revenue derived from our top ten customers comprised 83% of our total sales revenue in the first half of 2020 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.

7.	Market Risks and Risk Management

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.

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.

Risk management

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

8.	Derivative Contracts

Currency risks

•

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

•

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

•

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

•

As of the end of the reporting period, 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 $2,085 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 W36,035 million with respect to our currency risk derivative instruments held during the reporting period.

Interest rate risks

•

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

•

As of the end of the reporting period, in order to mitigate risks of interest rate fluctuations and exchange rate fluctuations on foreign currency denominated borrowings with floating interest rates, we have entered into interest rate swap and cross currency swap agreements.

•

As of the end of the reporting period, we have entered into an aggregate of W120 billion in interest rate swap agreement with KB Kookmin Bank, for which we have not applied hedge accounting.

We recognized a net loss on valuation of derivative instruments in the amount of W2,117 million with respect to our interest rate risk derivative instruments held during the reporting period.

9.	Major Contracts

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


Type of agreement	Name of party	Term	Content
Technology licensing agreement	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

10.

Research & Development

Summary of R&D-related expenditures


(Unit: In millions of Won, except percentages)
Items⁽¹⁾		2020 H1			2019			2018
Material Cost			193,395			388,444			496,789
Labor Cost			297,057			618,187			630,695
Depreciation Expense			286,271			523,631			351,936
Others			128,171			246,027			277,699
Total R&D-Related Expenditures			904,894			1,776,289			1,757,119
Accounting Treatment⁽²⁾	Selling & Administrative Expenses		405,986			924,020			918,512
	Manufacturing Cost		321,787			414,324			465,772
	Development Cost (Intangible Assets)		177,121			437,945			372,835
R&D-Related Expenditures / Revenue Ratio (Total R&D-Related Expenditures ÷ Revenue for the period × 100)			9.0	%		7.6	%		7.2	%

(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.

R&D achievements

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

•

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 ® 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 LOGO 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

(4)

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

•

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

(5)

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

•

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

•

Pioneered gaming/curved premium monitor product market

(6)

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

•

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

•

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

(7)

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

•

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

Achievements in 2020

(1)

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

•

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

11.

Intellectual Property

As of June 30, 2020, our cumulative patent portfolio (including patents that have already expired) included a total of 47,067 patents, consisting of 20,573 in Korea and 26,494 in other countries.

12.

Environmental and Safety Matters

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

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 2019 to the Korean government in April 2020 after it was certified by BSI Korea, a government-designated certification agency. The table below sets forth yearly levels of our greenhouse gases emissions and energy usage in the statement submitted to the Korean government:


			(Unit: thousand tonnes of CO₂ equivalent; Tetra Joules)
Category	2019		2018		2017
Greenhouse gases		5,885		6,696		6,314
Energy		62,776		64,296		63,451

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 2019, we reduced our carbon dioxide greenhouse gas emission levels by 1.21 million tons, which was 0.40 million tons more than our initial target of 0.81 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 the operation of our domestic panel and module production facilities and our overseas module production plants in Paju, Gumi, Nanjing, Yantai, Guangzhou and Vietnam, and in December 2013, we have obtained energy management system ISO 50001 certifications for the operation of our domestic panel and module production plants and our overseas module production plants in Nanjing and Guangzhou and are operating such facilities in accordance with such certifications.

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

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

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

In June 2017, we were assessed a fine of W1 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 W2.4 million. In addition, the trial court ordered a fine of W0.5 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 W3.0 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 W3.0 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 W14.4 million. In relation to this matter, in January 2019, the trial court (Goyang Branch of Uijeongbu District Court) assessed a fine of W1 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 W4 million and W2 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 W1 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 W0.04 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 W6.95 million, which we subsequently paid, and have strengthened our efforts to promote health and safety training programs in advance as well as our management and supervision activities to ensure such programs are conducted.

In April 2018, we were assessed a fine of W0.24 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 W1.6 million by the government of Gyeong-gi Province, which we subsequently paid, for the violation of Article 39 of the Air Quality Management Act. To prevent the recurrence, we have established a monthly self-measurement plan for our reserve facilities.

In May 2020, we were assessed a fine of W1.4 million by the National Institute of Chemical Safety for our failure to conduct safety training on hazardous chemicals in violation of Article 33 of the Chemicals Control Act, which we subsequently paid. In order to prevent recurrence, we conducted safety training on hazardous chemicals for the relevant personnel and newly established a working process that complies with safety regulations.

13.

Financial Information

Financial highlights (Based on consolidated K-IFRS).


	(Unit: In millions of Won)
Description	As of June 30, 2020		As of December 31, 2019			As of December 31, 2018
Current assets		9,826,257		10,248,315			8,800,127
Quick assets		7,786,872		8,197,160			6,108,924
Inventories		2,039,385		2,051,155			2,691,203
Non-current assets		25,227,997		25,326,248			24,375,583
Investments in equity accounted investees		110,868		109,611			113,989
Property, plant and equipment, net		21,725,224		22,087,645			21,600,130
Intangible assets		847,401		873,448			987,642
Other non-current assets		2,544,504		2,255,544			1,673,822
Total assets		35,054,254		35,574,563			33,175,710
Current liabilities		11,160,360		10,984,976			9,954,483
Non-current liabilities		11,793,121		12,101,306			8,334,981
Total liabilities		22,953,481		23,086,282			18,289,464
Share capital		1,789,079		1,789,079			1,789,079
Share premium		2,251,113		2,251,113			2,251,113
Retained earnings		6,812,370		7,503,312			10,239,965
Other equity		1,812		(203,021	)		(300,968	)
Non-controlling interest		1,246,399		1,147,798			907,057

Total equity		12,100,773		12,488,281			14,886,246


	(Unit: In millions of Won, except for per share data and number of consolidated entities)
Description	For the six months ended June 30, 2020			For the year ended December 31, 2019			For the year ended December 31, 2018
Revenue		10,031,270			23,475,567			24,336,571
Operating profit (loss)		(878,942	)		(1,359,382	)		92,891
Operating profit (loss) from continuing operations		(702,727	)		(2,872,078	)		(179,443	)
Profit (loss) for the period		(702,727	)		(2,872,078	)		(179,443	)
Profit (loss) attributable to:
Owners of the Company		(688,112	)		(2,829,705	)		(207,239	)
Non-controlling interest		(14,615	)		(42,373	)		27,796
Basic earnings (loss) per share		(1,923	)		(7,908	)		(579	)
Diluted earnings (loss) per share		(1,923	)		(7,908	)		(579	)
Number of consolidated entities		21			22			22

Financial highlights (Based on separate K-IFRS).


	(Unit: In millions of Won)
Description	As of June 30, 2020		As of December 31, 2019		As of December 31, 2018
Current assets		6,465,839		7,081,228		6,378,339
Quick assets		5,017,246		5,554,929		4,427,184
Inventories		1,448,593		1,526,299		1,951,155
Non-current assets		19,835,618		20,301,452		20,683,767
Investments		4,848,926		4,958,308		3,602,214
Property, plant and equipment, net		12,174,549		12,764,175		14,984,564
Intangible assets		681,839		708,047		816,808
Other non-current assets		2,130,304		1,870,922		1,280,181
Total assets		26,301,457		27,382,680		27,062,106
Current liabilities		9,810,910		9,140,483		7,416,630
Non-current liabilities		6,620,925		7,576,104		6,432,895
Total liabilities		16,431,835		16,716,587		13,849,525
Share capital		1,789,079		1,789,079		1,789,079
Share premium		2,251,113		2,251,113		2,251,113
Retained earnings		5,829,430		6,625,901		9,172,389
Other equity		0		0		0
Total equity		9,869,622		10,666,093		13,212,581


	(Unit: In millions of Won, except for per share data)
Description	For the six months ended June 30, 2020			For the year ended December 31, 2019			For the year ended December 31, 2018
Revenue		9,372,529			21,658,329			22,371,687
Operating profit (loss)		(1,104,977	)		(1,784,245	)		(472,995	)
Operating profit (loss) from continuing operations		(793,661	)		(2,639,893	)		(442,291	)
Profit (loss) for the period		(793,661	)		(2,639,893	)		(442,291	)
Basic earnings (loss) per share		(2,218	)		(7,378	)		(1,236	)
Diluted earnings (loss) per share		(2,218	)		(7,378	)		(1,236	)

Consolidated subsidiaries (as of June 30, 2020)


Company Interest	Primary Business	Location	Equity
LG Display America, Inc.	Sales	U.S.A.		100	%
LG Display Germany GmbH	Sales	Germany		100	%
LG Display Japan Co., Ltd.	Sales	Japan		100	%
LG Display Taiwan Co., Ltd.	Sales	Taiwan		100	%
LG Display Nanjing Co., Ltd.	Manufacturing	China		100	%
LG Display Shanghai Co., Ltd.	Sales	China		100	%
LG Display Guangzhou Co., Ltd.	Manufacturing	China		100	%
LG Display Shenzhen Co., Ltd.	Sales	China		100	%
LG Display Singapore Pte. Ltd.	Sales	Singapore		100	%
L&T Display Technology (Fujian) Limited	Manufacturing and sales	China		51	%
LG Display Yantai Co., Ltd.	Manufacturing	China		100	%
LG Display (China) Co., Ltd.	Manufacturing and sales	China		70	%
Nanumnuri Co., Ltd.	Workplace services	Korea		100	%
Unified Innovative Technology, LLC	Managing intellectual property	U.S.A.		100	%
Global OLED Technology LLC	Managing intellectual property	U.S.A.		100	%
LG Display Guangzhou Trading Co., Ltd.	Sales	China		100	%
LG Display Vietnam Haiphong Co., Ltd.	Manufacturing	Vietnam		100	%
Suzhou Lehui Display Co., Ltd.	Manufacturing and sales	China		100	%
LG Display Fund I LLC ⁽¹⁾	Investing in new emerging companies	U.S.A		100	%
LG Display High-Tech (China) Co., Ltd. ⁽²⁾	Manufacturing	China		70	%
MMT (Money Market Trust)	Money market trust	Korea		100	%

(1)	During the reporting period, we invested an additional W1,979 million in LG Display Fund I LLC.

(2)	During the reporting period, the non-controlling shareholders invested an additional W84,829 million. Due to such additional investment, our interest in LG Display High-Tech (China) Co., Ltd. has decreased from 75% as of the end of 2019 to 72% as of the end of the reporting period.

Additionally, the liquidation process of LG Display Poland Sp. z o.o., our former consolidated subsidiary, was completed in May 2020.

Status of equity investments (as of June 30, 2020)

(1)

Consolidated subsidiaries


Company	Book Value of Investment Amount (in millions of Won)		Initial Equity Investment Date		Equity Interest
LG Display America, Inc.		36,815		September 24, 1999		100	%
LG Display Germany GmbH		19,373		November 5, 1999		100	%
LG Display Japan Co., Ltd.		15,686		October 12, 1999		100	%
LG Display Taiwan Co., Ltd.		35,230		April 12, 1999		100	%
LG Display Nanjing Co., Ltd.		593,726		July 15, 2002		100	%
LG Display Shanghai Co., Ltd.		9,093		January 16, 2003		100	%
LG Display Guangzhou Co., Ltd.		293,557		June 30, 2006		100	%
LG Display Shenzhen Co., Ltd.		3,467		August 28, 2007		100	%
LG Display Singapore Pte. Ltd.		1,250		January 12, 2009		100	%
L&T Display Technology (Fujian) Limited		10,123		January 5, 2010		51	%


Company	Book Value of Investment Amount (in millions of Won)		Initial Equity Investment Date		Equity Interest
LG Display Yantai Co., Ltd.		169,195		April 19, 2010		100	%
Nanumnuri Co., Ltd.		800		March 19, 2012		100	%
LG Display (China) Co., Ltd.		723,086		December 10, 2012		70	%
Unified Innovative Technology, LLC		9,489		March 12, 2014		100	%
LG Display Guangzhou Trading Co., Ltd.		218		April 28, 2015		100	%
Global OLED Technology LLC		164,322		December 18, 2009		100	%
LG Display Vietnam Haiphong Co., Ltd.		672,658		May 5, 2016		100	%
Suzhou Lehui Display Co., Ltd.		121,640		July 1, 2016		100	%
LG Display Fund I LLC ⁽¹⁾		8,301		May 1, 2018		100	%
LG Display High-Tech (China) Co., Ltd.⁽²⁾		1,794,547		July 11, 2018		72	%
MMT (Money Market Trust)		83,700		January 2, 2018		100	%

(1)	During the reporting period, we invested an additional W1,979 million in LG Display Fund I LLC.

(2)	During the reporting period, the non-controlling shareholders invested an additional W84,829 million. Due to such additional investment, our interest in LG Display High-Tech (China) Co., Ltd. has decreased from 75% as of the end of 2019 to 72% as of the end of the reporting period.

Additionally, the liquidation process of LG Display Poland Sp. z o.o., our former consolidated subsidiary, was completed in May 2020.

(2)

Affiliated companies


Company	Carrying Amount (in millions)		Date of Incorporation		Equity Interest
Paju Electric Glass Co., Ltd.	W	48,860		January 2005		40	%
Wooree E&L Co., Ltd.	W	7,382		June 2008		14	%
YAS Co., Ltd.	W	23,159		April 2002		15	%
Avatec Co., Ltd.	W	19,326		August 2000		14	%
Arctic Sentinel, Inc.		—		June 2008		10	%
CYNORA GmbH	W	4,714		March 2003		12	%
Material Science Co., Ltd.	W	2,501		January 2014		10	%
Nanosys Inc.	W	4,926		July 2001		4	%

For the six months ended June 30, 2019 and 2020, the aggregate amount of dividends we received from our affiliated companies was W7,502 million and W8,239 million, respectively.

14.

Audit Information

Audit service

(Unit: In millions of Won)

Period

Auditor

Description of
service

Audit contract details

Actual performance details

Compensation

Hours of
service⁽¹⁾

Compensation

Hours of
service⁽¹⁾

2020 H1

KPMG Samjong

Audit by independent auditor

1,410

(540)⁽²⁾

20,426

510

6,167

2019

KPMG Samjong

Audit by independent auditor

1,280

(500)⁽²⁾

20,000

1,280

(500)⁽²⁾

21,194

2018

KPMG Samjong

Audit by independent auditor

1,170

(450)⁽²⁾

19,000

1,170

(450)⁽²⁾

17,269

(1)	Total hours of service includes the number of hours for work related to the English audit and/or review reports and SOX 404 audit.

(2)	Compensation amount in ( ) is for work related to the English audit and/or review reports (including Form 20-F and 6-K filings) and SOX 404 audit.

Non-audit service


			(Unit: In millions of Won, hours)
Period	Date of contract	Description of service	Period of service	Compensation
2020 H1	—	—	—		—
2019	July 23, 2019	Issuance of comfort letters	July 23, 2019 ~ August 31, 2019		120
2018	September 11, 2018	Green bond verification	September 11, 2018 ~ October 9, 2018		45

15.

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

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

16.

Board of Directors

Members of the board of directors

As of the date of this report, our board of directors consisted of two non-outside directors, one non-standing director and four outside directors.


		(As of the date of this report)
Name	Position	Primary responsibility
James (Hoyoung) Jeong⁽¹⁾	Representative Director (non-outside), Chief Executive Officer and President	Overall head of business management
Donghee Suh⁽²⁾	Director (non-outside), Chief Financial Officer and Senior Vice President	Overall head of finances
Young-Soo Kwon	Director (non-standing)	Chairman of the board of directors
Sung-Sik Hwang	Outside Director	Related to the overall management
Kun Tai Han	Outside Director	Related to the overall management
Byung Ho Lee	Outside Director	Related to the overall management
Chang-Yang Lee	Outside Director	Related to the overall management

(1)	James (Hoyoung) Jeong was newly appointed as a non-outside director at the annual general meeting of shareholders and as the representative director at the board of directors’ meeting, both held on March 20, 2020.

(2)	Donghee Suh was reappointed for another term as a non-outside director at the annual general meeting of shareholders held on March 20, 2020.

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, James (Hoyoung) Jeong and Donghee Suh.

As of March 20, 2020, the composition of the Outside Director Nomination Committee was as follows.

(As of March 20, 2020)


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

(1)	Each of Young-Soo Kwon,Kun Tai Han, Chang-Yang 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 20, 2020.

As of June 30, 2020, the composition of the Audit Committee was as follows.

(As of June 30, 2020)


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.

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

Independence of directors

Directors are appointed in accordance with applicable procedures under the Commercial Act, other relevant laws and regulations, our articles of association and our other internal regulations, and we do not maintain separate independence standards for the election of directors. However, in order to ensure fairness and independence in appointing our directors, our non-outside directors and other non-executive directors are nominated by the board of directors, and our outside directors are nominated by our Outside Director Nomination Committee, in each case for appointment at our shareholders’ meeting, in accordance with the relevant laws and regulations, our articles of association, board regulations and standards governing our Outside Director Nomination Committee. As part of such process, our board of directors and our Outside Director Nomination Committee conducts a rigorous review of each candidate for his or her independence, expertise and suitability as a director, among other factors.

17.

Information Regarding Shares

Total number of shares

(1)

Total number of shares authorized to be issued (as of June 30, 2020): 500,000,000 shares.

(2)

Total shares issued and outstanding (as of June 30, 2020): 357,815,700 shares.

Shareholder list

(1)

Largest shareholder and related parties as of June 30, 2020:


Name⁽¹⁾	Relationship	Number of shares of common stock		Equity interest
LG Electronics	Largest shareholder		135,625,000		37.9	%
Donghee Suh⁽²⁾	Officer of member company		5,000		0.0	%

(1)	Following the end of the reporting period, James (Hoyoung) Jeong, our current chief executive officer and president, acquired 10,000 shares of our common stock, which purchase was publicly disclosed on August 5, 2020.

(2)	Following the end of the reporting period, Donghee Suh acquired an additional 4,000 shares of our common stock, which purchase was publicly disclosed on August 5, 2020. As a result, he currently holds 9,000 shares of our common stock as of the end of the reporting period.

(2)

Shareholders who are known to us that own 5% or more of our shares as of June 30, 2020:


Beneficial owner	Number of shares of common stock		Equity interest
LG Electronics		135,625,000		37.90	%
National Pension Service⁽¹⁾		18,161,082		5.08	%

(1)	As of May 2, 2020.

18.

Directors and Employees

Directors

(1)

Remuneration for directors in 2020 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		1,387			462
Outside directors who are not audit committee members		1		39			39
Outside directors who are audit committee members		3		117			39
Total		7		1,543	⁽⁴⁾		220

(1)	Number of directors as at June 30, 2020.

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

(3)	Per capita average remuneration paid is calculated by dividing total amount paid by the average number of directors for the six months ended June 30, 2020.

(4)	Due to Mr. Sang Beom Han’s resignation as a non-outside director and Mr. James (Hoyoung) Jeong’s nomination as a non-outside director at the annual general meeting of shareholders held on March 20, 2020, the total amount paid includes the remuneration paid to both directors.

(2)

Standards of remuneration paid to non-outside and outside directors

—

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

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

•

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

•

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

—

Outside directors, audit committee members and auditor

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

(3)

Remuneration for individual directors and audit committee members

—

Individual remuneration amount


		(Unit: in millions of Won)
Name	Position	Total remuneration		Payment not included in total remuneration
James (Hoyoung) Jeong	Chief Executive Officer		659		—

—

Method of calculation

Name

Method of calculation

James (HoYoung) Jeong

Total remuneration

• W659 million.

Salary

• Base salary is set in accordance with the executive compensation regulations established by the board of directors. Monthly payments of W61 million between January and June were made.

• Position salary is calculated based on the significance of the position and responsibilities of the job. Monthly payments of W49 million between January and June were made.

• A total of W1 million of welfare benefits were paid on an annual basis in accordance with welfare benefits standards.

(4)

Remuneration for the five highest paid individuals (among those paid over W500 million per year)

—

Individual remuneration amount


				(Unit: in millions of Won)
Name	Position	Total remuneration			Payment not included in total remuneration
Sang Beom Han	Senior Advisor		4,979			—
Kyung Ho Lee	Advisor		1,440			—
Chul Gu Lee	Advisor		1,200			—
Sang Hoon Lee	Advisor		1,032			—
Sang Eon Jeon	Advisor		1,001			—

—

Method of calculation

Name

Method of calculation

Sang Beom Han⁽¹⁾

Total remuneration

• W4,979 million (consisting of W512 million in salary and W4,467 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 W72 million between January and March and W36 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 W57 million between January and March were made.

• A total of W18 million of welfare benefits were paid on an annual basis in accordance with other 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 (18 years), monthly base salary at the time of retirement and payment rate per position (2.5 to 4.5%).


Kyung Ho Lee⁽¹⁾		Total remuneration • W1,440 million (consisting of W137 million in salary and W1,303 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 W30 million between January and March and W15 million between April and June were made. • A total of W4 million of welfare benefits were paid on an annual basis in accordance with other 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%).

Chul Gu Lee⁽¹⁾		Total remuneration • W1,200 million (consisting of W157 million in salary and W1,043 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 W30 million between January and March and W15 million between April and June were made. • A total of W24 million of welfare benefits were paid on an annual basis in accordance with other 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 (13 years), monthly base salary at the time of retirement and payment rate per position (2.5 to 4.5%).

Sang Hoon Lee⁽¹⁾		Total remuneration • W1,032 million (consisting of W138 million in salary and W894 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 W30 million between January and March and W15 million between April and June were made. • A total of W5 million of welfare benefits were paid on an annual basis in accordance with other 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 (11 years), monthly base salary at the time of retirement and payment rate per position (2.5 to 4.5%).

Sang Eon Jeon⁽¹⁾

Total remuneration

• W1,001 million (consisting of W136 million in salary and W865 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 W30 million between January and March and W15 million between April and June were made.

• A total of W3 million of welfare benefits were paid on an annual basis in accordance with other 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 (11 years), monthly base salary at the time of retirement and payment rate per position (2.5 to 4.5%).

⁽¹⁾	Mssrs. Sang Beom Han, Kyung Ho Lee, Chul Gu Lee, Sang Hoon Lee and Sang Eon Jeon are former officers who retired from our company effective as of March 31, 2020.

(5)

Stock options

Not applicable.

Employees

As of June 30, 2020, we had 26,231 employees (excluding our directors). On average, our male employees have served 11.5 years and our female employees have served 9.4 years. The total amount of salary paid to our employees for the six months ended June 30, 2020 based on income tax statements submitted to the Korean tax authority in accordance with Article 20 of the Income Tax Act was W846,795 million for our male employees and W116,335 million for our female employees. The following table provides details of our employees as of June 30, 2020:


	(Unit: person, in millions of Won, year)
	Number of employees⁽¹⁾		Total salary in 2019^(2)(3)(4)		Average salary per capita⁽⁵⁾		Average years of service
Male		22,151		846,795		38		11.5
Female		4,080		116,335		28		9.4
Total		26,231		963,131		37		11.1

(1)	Includes part-time employees and 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 six months ended June 30, 2020 was W160,736 million and the per capita welfare benefit provided was W6.1 million.

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

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

(5)	Calculated using the cumulative salary and the average number of employees (male: 22,204, female: 4,096) for the six months ended June 30, 2020.

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 W2,893 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 W2,166 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 W27 million, which we subsequently paid. In order to prevent such violation from occurring again, we have amended the relevant provisions of the applicable employment contracts.

19.

Other Matters

Legal proceedings

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

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. A court hearing for the case in Germany has been scheduled for September 11, 2020. A pre-trial hearing for the case in the United States was held on May 22, 2020 and the case is currently in the discovery phase. The expected outcome of each of these cases is currently unclear.

Material events subsequent to the reporting period

None.

Material change in management

At our annual general meeting of shareholders held on March 20, 2020, Mr. Sang Beom Han resigned as a non-outside director, Mr. James (Hoyoung) Jeong was newly appointed as a non-outside director and Donghee Suh was reappointed for another term as a non-outside director. At our meeting of the board of directors held on March 20, 2020, Mr. James (Hoyoung) Jeong was appointed as our Representative Director.

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Financial Statements

(Unaudited)

June 30, 2020 and 2019

(With Independent Auditors’ Review Report Thereon)

Table of Contents


	Page
Independent Auditors’ Review Report		35

Condensed Consolidated Interim Statements of Financial Position		37

Condensed Consolidated Interim Statements of Comprehensive Loss		38

Condensed Consolidated Interim Statements of Changes in Equity		39

Condensed Consolidated Interim Statements of Cash Flows		40

Notes to the Condensed Consolidated Interim Financial Statements		42

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, 2020, the condensed consolidated interim statements of comprehensive loss for the three-month and six-month periods ended June 30, 2020 and 2019, and statements of changes in equity and cash flows for the six-month periods ended June 30, 2020 and 2019, 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, 2019 and the related consolidated statements of comprehensive loss, changes in equity and cash flows for the year then ended, which are not accompanying this review report, in accordance with Korean Standards on Auditing, and our report thereon, dated March 11, 2020, expressed an unmodified opinion. The accompanying condensed consolidated statement of financial position of the Group as of December 31, 2019, presented for comparative purposes, is not different from that audited by us from which it was derived in all material respects.

KPMG Samjong Accounting Corp.

Seoul, Korea

August 12, 2020

This report is effective as of August 12, 2020 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.

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Statements of Financial Position

(Unaudited)

As of June 30, 2020 and December 31, 2019


(In millions of won)	Note	June 30, 2020		December 31, 2019
Assets
Cash and cash equivalents	4, 25	W	3,520,803		3,336,003
Deposits in banks	4, 25		78,252		78,757
Trade accounts and notes receivable, net	5, 14, 25, 27		2,802,830		3,154,080
Other accounts receivable, net	5, 25		145,532		474,048
Other current financial assets	6, 25		63,324		70,945
Inventories	7		2,039,385		2,051,155
Prepaid income taxes			116,878		114,143
Other current assets	5		1,059,253		969,184

Total current assets			9,826,257		10,248,315

Deposits in banks	4, 25		11		11
Investments in equity accounted investees	8		110,868		109,611
Other non-current accounts receivable, net	5, 25		7,883		9,072
Other non-current financial assets	6, 25		140,066		111,510
Property, plant and equipment, net	9, 14, 17		21,725,224		22,087,645
Intangible assets, net	10, 17		847,401		873,448
Deferred tax assets	23		2,059,838		1,727,122
Defined benefits assets, net	12		49,562		127,252
Other non-current assets	5		287,144		280,577

Total non-current assets			25,227,997		25,326,248

Total assets		W	35,054,254		35,574,563

Liabilities
Trade accounts and notes payable	25, 27	W	3,466,222		2,618,261
Current financial liabilities	11, 25		3,146,882		1,977,084
Other accounts payable	25		2,980,909		4,397,121
Accrued expenses			567,977		675,270
Income tax payable			31,912		120,034
Provisions	13		165,071		189,525
Advances received	14		751,632		925,662
Other current liabilities	13		49,755		82,019

Total current liabilities			11,160,360		10,984,976

Non-current financial liabilities	11, 25		11,606,109		11,612,910
Non-current provisions	13		66,076		67,118
Defined benefit liabilities, net	12		1,539		1,338
Long-term advances received	14		16,086		320,582
Deferred tax liabilities	23		10,586		11,210
Other non-current liabilities	13		92,725		88,148

Total non-current liabilities			11,793,121		12,101,306

Total liabilities			22,953,481		23,086,282

Equity
Share capital	15		1,789,079		1,789,079
Share premium			2,251,113		2,251,113
Retained earnings			6,812,370		7,503,312
Reserves	15		1,812		(203,021	)

Total equity attributable to owners of the Controlling Company			10,854,374		11,340,483

Non-controlling interests			1,246,399		1,147,798

Total equity			12,100,773		12,488,281

Total liabilities and equity		W	35,054,254		35,574,563

See accompanying notes to the consolidated financial statements.

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Statements of Comprehensive Loss

(Unaudited)

For the three-month and six-month periods ended June 30, 2020 and 2019


(In millions of won, except earnings per share)	Note		For the three-month periods ended June 30						For the six-month periods ended June 30
			2020			2019			2020			2019
Revenue		16, 17, 27	W	5,307,021			5,353,410			10,031,270			11,232,191
Cost of sales		7, 18, 27		(5,178,834	)		(4,871,729	)		(9,624,930	)		(10,117,750	)

Gross profit				128,187			481,681			406,340			1,114,441

Selling expenses		19		(163,791	)		(242,591	)		(363,645	)		(474,808	)
Administrative expenses		19		(193,902	)		(183,558	)		(367,191	)		(383,006	)
Research and development expenses				(287,517	)		(424,276	)		(554,446	)		(757,389	)

Operating loss				(517,023	)		(368,744	)		(878,942	)		(500,762	)

Finance income		22		103,536			75,454			346,734			135,264
Finance costs		22		(142,464	)		(109,910	)		(356,302	)		(193,607	)
Other non-operating income		21		182,637			419,606			724,468			667,000
Other non-operating expenses		21		(299,365	)		(461,250	)		(806,243	)		(685,504	)
Equity in income of equity accounted investees, net				3,732			2,446			6,465			6,553

Loss before income tax				(668,947	)		(442,398	)		(963,820	)		(571,056	)
Income tax expense (benefit)		23		(165,117	)		107,782			(261,093	)		41,764

Loss for the period				(503,830	)		(550,180	)		(702,727	)		(612,820	)

Other comprehensive income (loss)
Items that will never be reclassified to profit or loss
Remeasurements of net defined benefit liabilities		12		(1,208	)		(1,935	)		(3,782	)		(4,848	)
Other comprehensive income (loss) from associates				(52	)		(4	)		39			133
Related income tax		12		310			(4,328	)		972			(3,551	)

				(950	)		(6,267	)		(2,771	)		(8,266	)

Items that are or may be reclassified to profit or loss
Foreign currency translation differences for foreign operations				(43,734	)		(1,694	)		230,169			189,438
Other comprehensive income from associates				1,397			3,706			2,992			4,106

				(42,337	)		2,012			233,161			193,544

Other comprehensive income (loss) for the period, net of income tax				(43,287	)		(4,255	)		230,390			185,278

Total comprehensive loss for the period			W	(547,117	)		(554,435	)		(472,337	)		(427,542	)

Loss attributable to:
Owners of the Controlling Company				(489,121	)		(548,377	)		(688,112	)		(609,310	)
Non-controlling interests				(14,709	)		(1,803	)		(14,615	)		(3,510	)

Loss for the period			W	(503,830	)		(550,180	)		(702,727	)		(612,820	)

Total comprehensive income (loss) attributable to:
Owners of the Controlling Company				(514,853	)		(547,644	)		(486,525	)		(455,741	)
Non-controlling interests				(32,264	)		(6,791	)		14,188			28,199

Total comprehensive loss for the period			W	(547,117	)		(554,435	)		(472,337	)		(427,542	)

Loss per share (in won)
Basic and diluted loss per share		24	W	(1,367	)		(1,533	)		(1,923	)		(1,703	)

See accompanying notes to the consolidated financial statements.

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Statements of Changes in Equity

For the six-month periods ended June 30, 2020 and 2019

(Unaudited)


	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, 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 year
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

Balances at January 1, 2020	W	1,789,079		2,251,113		7,503,312			(203,021	)		11,340,483			1,147,798			12,488,281

Total comprehensive income (loss) for the period
Loss for the period		—		—		(688,112	)		—			(688,112	)		(14,615	)		(702,727	)

Other comprehensive income (loss)
Remeasurements of net defined benefit liabilities, net of tax		—		—		(2,810	)		—			(2,810	)		—			(2,810	)
Foreign currency translation differences		—		—		—			201,366			201,366			28,803			230,169
Other comprehensive income from associates		—		—		39			2,992			3,031			—			3,031

Total other comprehensive income (loss)		—		—		(2,771	)		204,358			201,587			28,803			230,390

Total comprehensive income (loss) for the period	W	—		—		(690,883	)		204,358			(486,525	)		14,188			(472,337	)

Transaction with owners, recognized directly in equity
Capital contribution from non-controlling interests		—		—		(59	)		475			416			84,413			84,829

Balances at June 30, 2020	W	1,789,079		2,251,113		6,812,370			1,812			10,854,374			1,246,399			12,100,773

See accompanying notes to the consolidated financial statements.

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Statements of Cash Flows

(Unaudited)

For the six-month periods ended June 30, 2020 and 2019


(In millions of won)	Note	2020			2019
Cash flows from operating activities:
Loss for the period		W	(702,727	)		(612,820	)
Adjustments for:
Income tax expense (benefit)	23		(261,093	)		41,764
Depreciation and amortization	18		1,921,928			1,713,172
Gain on foreign currency translation			(104,474	)		(107,510	)
Loss on foreign currency translation			175,139			199,176
Expenses related to defined benefit plans	12		80,274			98,499
Gain on disposal of property, plant and equipment			(9,046	)		(8,625	)
Loss on disposal of property, plant and equipment			18,619			21,999
Impairment loss on property, plant and equipment			9,326			9,765
Gain on disposal of intangible assets			—			(552	)
Loss on disposal of intangible assets			7			139
Impairment loss on intangible assets			30,511			—
Reversal of impairment loss on intangible assets			(600	)		(201	)
Gain on disposal of non-current assets held for sale			—			(8,353	)
Expense on increase of provisions			113,120			198,357
Finance income			(266,116	)		(93,278	)
Finance costs			304,419			138,817
Equity in income of equity method accounted investees, net	8		(6,465	)		(6,553	)
Other income			(17,332	)		(552	)
Other expenses			72,655			3,472

			2,060,872			2,199,536
Changes in:
Trade accounts and notes receivable			(215,123	)		(139,708	)
Other accounts receivable			112,422			34,767
Inventories			8,518			119,151
Lease receivables			2,707			2,895
Other current assets			(69,266	)		(206,160	)
Other non-current assets			(44,245	)		(7,489	)
Trade accounts and notes payable			898,742			(228,703	)
Other accounts payable			(592,911	)		461,043
Accrued expenses			(94,148	)		189,725
Provisions			(126,836	)		(156,613	)
Other current liabilities			(40,504	)		(26,936	)
Defined benefit liabilities, net			(6,227	)		(21,736	)
Short-term advances received			(35,783	)		—
Long-term advances received			—			63,672
Other non-current liabilities			6,372			6,173

			(196,282	)		90,081

Cash generated from operating activities			1,161,863			1,676,797
Income taxes paid			(156,159	)		(231,703	)
Interests received			33,324			26,749
Interests paid			(291,395	)		(181,814	)

Net cash provided by operating activities		W	747,633			1,290,029

See accompanying notes to the consolidated interim financial statements.

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Statements of Cash Flows, Continued

(Unaudited)

For the six-month periods ended June 30, 2020 and 2019


(In millions of won)	Note	2020			2019
Cash flows from investing activities:
Dividends received		W	8,239			1,445
Increase in deposits in banks			(7,452	)		(41,180	)
Proceeds from withdrawal of deposits in banks			7,957			41,180
Acquisition of financial asset at fair value through profit or loss			(29	)		(80	)
Proceeds from disposal of financial asset at fair value through profit or loss			90			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			—
Proceeds from disposal of investments in equity accounted investees			1,200			1,200
Acquisition of property, plant and equipment			(1,829,385	)		(4,313,847	)
Proceeds from disposal of property, plant and equipment			275,436			21,224
Acquisition of intangible assets			(216,218	)		(253,482	)
Proceeds from disposal of intangible assets			300			2,349
Government grants received			19,035			248,124
Proceeds from disposal of non-current assets held for sale			—			81,351
Receipt from settlement of derivatives			27,551			13,167
Proceeds from collection of short-term loans			7,759			11,772
Increase in short-term loans			—			(8,225	)
Increase in long-term loans			—			(6,465	)
Increase in deposits			(1,115	)		(26,328	)
Decrease in deposits			1,217			1,386
Proceeds from disposal of other assets			11,000			—

Net cash used in investing activities			(1,694,409	)		(4,226,371	)

Cash flows from financing activities:	26
Proceeds from short-term borrowings			1,599,298			1,374,123
Repayments of short-term borrowings			(1,267,503	)		(688,143	)
Proceeds from issuance of bonds			49,949			503,665
Proceeds from long-term borrowings			1,294,452			2,499,192
Repayments of current portion of long-term borrowings and bonds			(646,786	)		(995,460	)
Payment of lease liabilities			(34,443	)		(30,311	)
Capital contribution from non-controlling interests			84,829			276,395
Subsidiaries’ dividends distributed to non-controlling interests			—			(6,541	)

Net cash provided by financing activities			1,079,796			2,932,920

Net increase (decrease) in cash and cash equivalents			133,020			(3,422	)
Cash and cash equivalents at January 1			3,336,003			2,365,022
Effect of exchange rate fluctuations on cash held			51,780			61,811

Cash and cash equivalents at June 30		W	3,520,803			2,423,411

See accompanying notes to the consolidated interim financial statements.

1.	Reporting Entity

(a)

Description of the Controlling Company

LG Display Co., Ltd. (the “Controlling Company”) was incorporated in February 1985 and the Controlling Company is a public corporation listed in the Korea Exchange since 2004. The main business of the Controlling Company and its subsidiaries (the “Group”) is to manufacture and sell displays and its related products. As of June 30, 2020, 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, 2020, 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, 2020, 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, 2020, there are 21,176,408 ADSs outstanding.

1.	Reporting Entity, Continued

(b)

Consolidated Subsidiaries as of June 30, 2020

(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 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

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

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.

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(*1)

Wilmington, U.S.A.

100

December 31

May 1, 2018

Invest in venture business and acquire technologies

USD 7

LG Display High-Tech (China) Co., Ltd.(*2)

Guangzhou, China

December 31

July 11, 2018

Manufacture and sell display products

CNY 15,070

1.	Reporting Entity, Continued

(*1)

For the six-month period ended June 30, 2020, the Controlling Company contributed W1,979 million in cash for the capital increase by LG DISPLAY FUND I LLC. There was no change in the Controlling Company’s ownership percentage in LG DISPLAY FUND I LLC as a result of this additional investment.

(*2)

For the six-month period ended June 30, 2020, non-controlling shareholders contributed W84,829 million in cash for the stocks issued by LG Display High-Tech (China) Co., Ltd. (“LGDCO”). The Group’s ownership percentage in LGDCO decreased from 75% to 72% as a result of the additional shares issue.

Meanwhile, the liquidation process of LG Display Poland Sp. z.o.o., a subsidiary of the Controlling Company, was completed in May 2020 and the Group reclassified the comprehensive loss amounting to W72,654 million from foreign currency translation differences to profit or loss.

In addition to the above subsidiaries, the Controlling Company has invested W83,700 million in MMT (Money Market Trust), which is controlled by the Controlling Company.

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 Standards (“K-IFRSs”) 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 consolidated financial statements of the Group as of and for the year ended December 31, 2019.

(b)

Basis of Measurement

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

•

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

•

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

(c)

Functional and Presentation Currency

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

(d)

Use of Estimates and Judgments

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

3.	Summary of Significant Accounting Policies

The accounting policies applied in these condensed consolidated interim financial statements are the same as those applied in the Group’s consolidated financial statements as of and for the year ended December 31, 2019, except for the application of K-IFRS No.1034, Interim Financial Reporting. A number of amended standards are effective from January 1, 2020 but they do not have a material effect on the Group’s financial statements.

4.	Cash and Cash Equivalents and Deposits in Banks

Cash and cash equivalents and deposits in banks as of June 30, 2020 and December 31, 2019 are as follows:


(In millions of won)	June 30, 2020		December 31, 2019
Current assets
Cash and cash equivalents
Demand deposits	W	3,520,803		3,336,003
Deposits in banks
Time deposits	W	1,400		1,500
Restricted deposits (*)		76,852		77,257

	W	78,252		78,757

Non-current assets
Deposits in banks
Restricted deposits (*)	W	11		11

	W	3,599,066		3,414,771

(*)	Include 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.

5.	Receivables and Other Assets

(a)

Trade accounts and notes receivable as of June 30, 2020 and December 31, 2019 are as follows:


(In millions of won)	June 30, 2020		December 31, 2019
Due from third parties	W	2,412,573		2,576,391
Due from related parties		390,257		577,689

	W	2,802,830		3,154,080

(b)

Other accounts receivable as of June 30, 2020 and December 31, 2019 are as follows:


(In millions of won)	June 30, 2020		December 31, 2019
Current assets
Non-trade receivables, net	W	132,892		463,614
Accrued income		12,640		10,434

	W	145,532		474,048

Non-current assets
Long-term non-trade receivables		7,883		9,072

	W	153,415		483,120

Due from related parties included in other accounts receivable as of June 30, 2020 and December 31, 2019 are W359 million and W19,431 million, respectively.

5.	Receivables and Other Assets, Continued

(c)

The aging of trade accounts and notes receivable and other accounts receivable as of June 30, 2020 and December 31, 2019 are as follows:


	June 30, 2020
	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	2,801,030		154,734		(2,240	)		(2,854	)
1-15 days past due		3,835		339		(2	)		(1	)
16-30 days past due		207		10		—			—
31-60 days past due		—		25		—			—
More than 60 days past due		—		1,196		—			(34	)

	W	2,805,072		156,304		(2,242	)		(2,889	)


	December 31, 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	3,119,914		208,086		(454	)		(3,292	)
1-15 days past due		34,626		3,512		(6	)		(1	)
16-30 days past due		—		598		—			(4	)
31-60 days past due		—		61		—			—
More than 60 days past due		—		274,185		—			(25	)

	W	3,154,540		486,442		(460	)		(3,322	)

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, 2020 and the year ended December 31, 2019 are as follows:


	June 30, 2020					December 31, 2019
(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	460		3,322			477			1,281
(Reversal of) bad debt expense		1,782		(433	)		(17	)		2,041

Balance at the end of the reporting period	W	2,242		2,889			460			3,322

5.	Receivables and Other Assets, Continued

(d)

Other assets as of June 30, 2020 and December 31, 2019 are as follows:


(In millions of won)	June 30, 2020		December 31, 2019
Current assets
Advanced payments	W	31,730		6,203
Prepaid expenses		130,133		114,145
Value added tax refundable		877,856		826,730
Right to recover returned goods		19,534		22,106

	W	1,059,253		969,184

Non-current assets
Long-term prepaid expenses	W	253,727		272,835
Long-term advanced payments		33,417		7,742

	W	287,144		280,577

6.	Other Financial Assets

Other financial assets as of June 30, 2020 and December 31, 2019 are as follows:


(In millions of won)	June 30, 2020		December 31, 2019
Current assets
Financial assets at fair value through profit or loss
Derivatives(*)	W	21,088		34,036
Financial assets at fair value through other comprehensive income
Debt instruments
Government bonds	W	24		6
Financial assets carried at amortized cost
Deposits	W	10,146		9,585
Short-term loans		26,134		21,623
Lease receivables		5,932		5,695

	W	42,212		36,903

	W	63,324		70,945

Non-current assets
Financial assets at fair value through profit or loss
Equity instruments
Intellectual Discovery, Ltd.	W	1,104		1,104
Kyulux, Inc.		396		1,889
Fineeva Co., Ltd.		4		4
ARCH Venture Fund Vll, L.P.		6,477		6,302
Sierra Ventures Fund XII, L.P.		600		580

	W	8,581		9,879

Convertible bonds	W	1,544		1,544
Derivatives(*)		62,734		15,640

	W	72,859		27,063

Financial assets at fair value through other comprehensive income
Debt instruments
Government bonds	W	48		70
Financial assets carried at amortized cost
Deposits	W	21,344		21,451
Long-term loans		26,187		40,827
Lease receivables		19,628		22,099

	W	67,159		84,377

	W	140,066		111,510

(*)

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.

7.	Inventories

Inventories as of June 30, 2020 and December 31, 2019 are as follows:


(In millions of won)	June 30, 2020		December 31, 2019
Finished goods	W	797,446		730,009
Work-in-process		629,414		756,744
Raw materials		426,930		405,854
Supplies		185,595		158,548

	W	2,039,385		2,051,155

For the six-month periods ended June 30, 2020 and 2019, the amount of inventories recognized as cost of sales including inventory write-downs and usage of inventory write-downs are as follows:


(In millions of won)	2020			2019
Inventories recognized as cost of sales	W	9,624,930			10,117,750
Inventory write-downs		362,468			403,462
Usage of inventory write-downs		(472,885	)		(313,180	)

8.	Investments in Equity Accounted Investees

Associates as of June 30, 2020 and December 31, 2019 are as follows:

(In millions of won)

Associates

Location

Fiscal year end

Date of
incorporation

Business

June 30, 2020

December 31, 2019

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%

48,860

40%

50,697

WooRee E&L Co., Ltd.

Ansan,

South Korea

December 31

June
2008

Manufacture LED back light unit packages

14%

7,382

14%

7,310

YAS Co., Ltd.

Paju,

South Korea

December 31

April
2002

Develop and manufacture deposition equipment for OLEDs

15%

23,159

15%

19,424

AVATEC Co., Ltd.

Daegu,

South Korea

December 31

August

2000

Process and sell glass for display

14%

19,326

14%

19,929

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%

4,714

12%

4,714

8.	Investments in Equity Accounted Investees, Continued

(In millions of won)

Associates

Location

Fiscal year end

Date of
incorporation

Business

June 30, 2020

December 31, 2019

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%

2,501

10%

2,354

Nanosys Inc.

Milpitas,

U.S.A.

December 31

July

2001

Develop, manufacture, and sell materials for display

4,926

5,183

110,868

109,611

(*)

For the six-month period ended June 30, 2020, the Controlling Company’s ownership percentage in Cynora GmbH decreased from 12.2% to 11.6% as the Controlling Company did not participate in the rights issue.

Although the Controlling Company’s respective share interests in WooRee E&L Co., Ltd., YAS Co., Ltd., AVATEC Co., Ltd., Arctic Sentinel, Inc., Cynora GmbH, Material Science 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, 2020 and 2019 amounted to W8,239 million and W7,502 million, respectively.

9.	Property, Plant and Equipment

For the six-month periods ended June 30, 2020 and 2019, the Group purchased property, plant and equipment of W1,193,675 million and W3,771,126 million, respectively. The capitalized borrowing costs and the annualized capitalization rate were W143,782 million and 4.14%, and W142,957 million and 3.40% for the six-month periods ended June 30, 2020 and 2019, respectively. In addition, for the six-month periods ended June 30, 2020 and 2019, the Group disposed of property, plant and equipment with carrying amounts of W67,341 million and W96,467 million, respectively, and recognized W9,046 million and W18,619 million, respectively, as gain and loss on disposal of property, plant and equipment for the six-month period ended June 30, 2020 (gain and loss for the six-month period ended June 30, 2019: W8,625 million and W21,999 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, 2020 and December 31, 2019 are W374,007 million and W375,183 million, respectively. In addition, for the six-month period ended June 30, 2020, the Group recognized an impairment loss amounting to W29,838 million in connection with development projects.

11.	Financial Liabilities

(a)

Financial liabilities as of June 30, 2020 and December 31, 2019 are as follows:


(In millions of won)	June 30, 2020		December 31, 2019
Current
Short-term borrowings	W	1,049,865		696,793
Current portion of long-term borrowings and bonds		2,049,429		1,242,904
Derivatives (*)		12,530		—
Lease liabilities		35,058		37,387

	W	3,146,882		1,977,084

Non-current
Won denominated borrowings	W	2,343,750		2,692,560
Foreign currency denominated borrowings		6,785,569		6,107,117
Bonds		2,415,285		2,741,516
Derivatives (*)		8,291		20,592
Lease liabilities		53,214		51,125

	W	11,606,109		11,612,910

(*)

Represents currency interest rate swap contracts and others entered into the Group to hedge currency and interest rate risks with respect to foreign currency denominated borrowings and bonds.

(b)

Short-term borrowings as of June 30, 2020 and December 31, 2019 are as follows:


(In millions of won, USD and CNY) Lender	Annual interest rate as of *June 30, 2020 (%)()**		June 30, 2020		December 31, 2019
Standard Chartered Bank Korea Limited		12ML + 0.98 6ML + 2.00	W	480,030		347,340
The Export-Import Bank of Korea		1.55		200,000		—
Bank of China		6ML + 1.50		82,858		—
Standard Chartered Bank Vietnam and others		3ML + 0.80~0.90		75,602		61,613
Standard Chartered Bank (China) Limited and others		PBOC LPR + 0.25~0.45 3.71		211,375		287,840

Foreign currency equivalent			USD	532	USD	353
			CNY	1,246	CNY	1,737

			W	1,049,865		696,793

(*)

ML represents Month LIBOR (London Inter-Bank Offered Rates), PBOC represents the benchmark interest rate of People’s Bank of China and PBOC LPR represents Loan Prime Rate of People’s Bank of China.

11.	Financial Liabilities, Continued

(c)

Won denominated long-term borrowings as of June 30, 2020 and December 31, 2019 are as follows:


(In millions of won) Lender	Annual interest rate as of June 30, 2020 (%)(*)	June 30, 2020			December 31, 2019
Woori Bank	2.75	W	282			608
Korea Development Bank and others	CD rate (91days) + 1.00~1.60, 2.21~3.40		3,381,250			3,330,000
Less current portion of long-term borrowings			(1,037,782	)		(638,048	)

		W	2,343,750			2,692,560

(*)

CD represents certificate of deposit.

(d)

Foreign currency denominated long-term borrowings as of June 30, 2020 and December 31, 2019 are as follows:


(In millions of won, USD and CNY) Lender	Annual interest rate as of June 30, 2020 (%)	June 30, 2020			December 31, 2019
The Export-Import Bank of Korea and others	3ML+0.75~1.70 6ML+1.25~1.35	W	1,723,005			1,696,177
China Construction Bank and others	USD: 3ML+0.65~1.43 CNY: PBOC x (0.95~1.05) PBOC LPR + 0.00~0.50 4.70		5,624,531			4,606,094

Foreign currency equivalent		USD	2,717		USD	2,767
		CNY	24,081		CNY	18,699
Less current portion of long-term borrowings			(561,967	)		(195,154	)

		W	6,785,569			6,107,117

11.	Financial Liabilities, Continued

(e)

Details of bonds issued and outstanding as of June 30, 2020 and December 31, 2019 are as follows:


(In millions of won and USD)	Maturity		Annual interest rate as of June 30, 2020 (%)		June 30, 2020			December 31, 2019
*Won denominated bonds at amortized cost (1)**
Publicly issued bonds		October 2020 ~ February 2024		1.95~2.95	W	1,470,000			1,730,000
Privately issued bonds		May 2022 ~ May 2033		3.25~4.25		160,000			110,000
Less discount on bonds						(2,554	)		(3,404	)
Less current portion						(449,680	)		(409,702	)

					W	1,177,766			1,426,894

*Foreign currency denominated bonds at amortized cost (2)**
Publicly issued bonds		November 2021		3.88	W	360,210			347,340
Privately issued bonds		April 2023		3ML+1.47		120,070			115,780
Foreign currency equivalent						USD 400			USD 400
Less discount on bonds						(5,376	)		(6,883	)

					W	474,904			456,237
Financial liabilities at fair value through profit or loss
Foreign currency denominated convertible bonds		August 2024		1.50	W	762,615			858,385
Foreign currency equivalent					USD	635		USD	741

					W	2,415,285			2,741,516

(*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.

11.	Financial Liabilities, Continued

(f)

Details of convertible bonds issued and outstanding by the Controlling Company as of June 30, 2020 are as follows:


(In won, USD)
		Description
Type		Unsecured foreign currency denominated convertible bonds

Issuance amount		USD 687,800,000

Annual interest rate (%)		1.50

Issuance date		August 22, 2019

Maturity date		August 22, 2024

Interest payment		Payable semi-annually in arrear until maturity date

Principal redemption		1. Redemption at maturity: Redeemed on the maturity date, at their outstanding principal amount, which has not been early redeemed or converted.
Principal redemption		2. Early redemption: The Controlling Company has a right to redeem before maturity (call option) and the bondholders have a right to require the Controlling Company to redeem before maturity (put option). At exercise of each option, the outstanding principal amount together with accrued but unpaid interest are to be redeemed.

Conversion price		W19,845 per common share (subject to adjustment based on diluted effects of certain events)

Conversion period		From August 23, 2020 to August 12, 2024

Redemption at the option of the issuer (Call option)		• On or at any time after 3 years from the issuance, if the closing price of the shares for any 20 trading days out of the 30 consecutive trading days is at least 130% of the applicable conversion price • The aggregate principal amount of the convertible bonds outstanding is less than 10% of the aggregate principal amount originally issued, or • In the event of certain changes in laws and other directives resulting in additional taxes for the holders

Redemption at the option of the bondholders (Put option)		On the day of 3 years from the issuance

The Controlling Company designated the convertible bonds as financial liabilities at fair value through profit of loss and recognized the change in fair value in profit or loss. The Controlling Company measures the convertible bond at fair value using the market price of convertible bonds disclosed on Bloomberg. The number of convertible shares as of June 30, 2020 is as follows:


(In won and No. of shares)	June 30, 2020
Aggregate outstanding amount of the convertible bonds	W	813,426,670,000
Conversion price	W	19,845
Number of common shares to be issued at conversion		40,988,998

12.	Employee Benefits

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

(a)

Net defined benefit liabilities (defined benefit assets) recognized as of June 30, 2020 and December 31, 2019 are as follows:


(In millions of won)	June 30, 2020			December 31, 2019
Present value of partially funded defined benefit obligations	W	1,492,711			1,481,339
Fair value of plan assets		(1,540,734	)		(1,607,253	)

	W	(48,023	)		(125,914	)

Defined benefit liabilities, net	W	1,539			1,338
Defined benefit assets, net	W	49,562			127,252

(b)

Expenses recognized in profit or loss for the three-month and six-month periods ended June 30, 2020 and 2019 are as follows:


	For the three-month periods ended June 30,					For the six-month periods ended June 30,
(In millions of won)	2020			2019		2020			2019
Current service cost	W	40,828			48,973		81,827			97,891
Net interest cost		(777	)		304		(1,553	)		608

	W	40,051			49,277		80,274			98,499

(c)

Plan assets as of June 30, 2020 and December 31, 2019 are as follows:


(In millions of won)	June 30, 2020		December 31, 2019
Guaranteed deposits in banks	W	1,540,734		1,607,253

As of June 30, 2020, 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, 2020 and 2019 are as follows:


	For the three-month periods ended June 30,						For the six-month periods ended June 30,
(In millions of won)	2020			2019			2020			2019
Remeasurements of net defined benefit liabilities	W	(1,208	)		(1,935	)		(3,782	)		(4,848	)
Tax effect		310			(4,328	)		972			(3,551	)

Remeasurements of net defined benefit liabilities, net of income tax	W	(898	)		(6,263	)		(2,810	)		(8,399	)

13.	Provisions and Other Liabilities

(a)

Changes in provisions for the six-month period ended June 30, 2020 are as follows:


(In millions of won)	*Warranties ()**			Others			Total
Balance at January 1, 2020	W	230,262			26,381			256,643
Additions (reversal)		102,119			(3,916	)		98,203
Usage		(122,921	)		(778	)		(123,699	)

Balance at June 30, 2020	W	209,460			21,687			231,147

Current	W	143,384			21,687			165,071
Non-current	W	66,076			—			66,076

(*)

Product warranties on defective products is normally applicable for 18~36 months from the date of customer’s purchase. The provision is calculated by using historical and anticipated rates of warranty claims and costs per claim to satisfy the Group’s warranty obligation.

(b)

Other liabilities as of June 30, 2020 and December 31, 2019 are as follows:


(In millions of won)	June 30, 2020		December 31, 2019
Current liabilities
Withholdings	W	26,903		28,376
Unearned revenue		16,612		44,333
Security deposits received		6,240		9,310

	W	49,755		82,019

Non-current liabilities
Long-term accrued expenses	W	83,146		78,537
Long-term other accounts payable		7		1,069
Long-term unearned revenue		4,502		6,852
Security deposits received		5,070		1,690

	W	92,725		88,148

14.	Contingencies and Commitments

(a)

Legal Proceedings

Anti-trust Litigations

Some individual claimants filed “follow-on” damages claims against the Group and other TFT-LCD manufacturers alleging violations of EU competition law. While the Group continues its vigorous defense of the various pending proceedings described above, as of June 30, 2020, the Group cannot reliably estimate the timing and amount of outflows of resources embodying economic benefits relating to the proceedings.

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 manufacturers in the Mannheim District Court in Germany. As of June 30, 2020, the Group cannot reliably estimate the timing and amount of outflows of resources embodying economic benefits relating to the proceedings.

Others

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

(b)

Commitments

Factoring and securitization of accounts receivable

The Controlling Company has agreements with Korea Development Bank and several other banks for accounts receivable sales negotiating facilities of up to an aggregate of USD 1,110 million (W1,332,777 million) in connection with the Controlling Company’s export sales transactions with its subsidiaries. As of June 30, 2020, 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.

14.	Contingencies and Commitments, Continued

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


(In millions of USD and KRW)
		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		30,018		—		—
	Sumitomo Mitsui Banking Corporation	USD	20		24,014		—		—
	MUFG Bank	KRW	130,000		130,000		—		—
		USD	70		84,049		—		—
	BNP Paribas	USD	125		150,087	USD	32		38,559
	ING Bank	USD	150		180,105	USD	9		10,993

		USD	390			USD	41
		KRW	220,000		688,273		—		49,552

Subsidiaries
LG Display Singapore Pte. Ltd.	Standard Chartered Bank	USD	300		360,210	USD	150		180,071

LG Display Taiwan Co., Ltd.	BNP Paribas	USD	15		18,011		—		—
	Australia and New Zealand Banking Group Ltd.	USD	70		84,049		—		—

LG Display Germany GmbH	BNP Paribas	USD	75		90,052		—		—
	Commerzbank AG	USD	2		2,056	USD	2		1,956
	DZ Bank AG	USD	9		10,576	USD	1		795
	Oddo Bank	USD	2		1,885	USD	0.1		76

LG Display America, Inc.	Hong Kong & Shanghai Banking Corp.	USD	800		960,560	USD	100		120,073
	Standard Chartered Bank	USD	600		720,420	USD	287		344,361
	Sumitomo Mitsui Banking Corporation	USD	200		240,140	USD	20		24,016

		USD	2,073		2,487,959	USD	560.1		671,348

		USD	2,463			USD	601.1		720,900
		KRW	220,000		3,176,232		—

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

14.	Contingencies and Commitments, Continued

Letters of credit

As of June 30, 2020, the Controlling Company has agreements in relation to the opening of letters of credit up to USD 150 million (W180,105 million) with KEB Hana Bank, USD 50 million (W60,035 million) with Sumitomo Mitsui Banking Corporation, USD 100 million (W120,070 million) with Industrial Bank of Korea, USD 100 million (W120,070 million) with Industrial and Commercial Bank of China, USD 200 million (W240,140 million) with Shinhan Bank, USD 100 million (W120,070 million) with KB Kookmin Bank, USD 50 million (W60,035 million) with MUFG Bank, and USD 200 million (W240,140 million) with the Export-Import Bank of Korea.

Meanwhile, LG Display Guangzhou Co., Ltd. has an agreement in relation to the opening of letters of credit up to CNY 500 million (W84,830 million) with Bank of China.

Payment guarantees

The Controlling Company obtained payment guarantees amounting to USD 675 million (W810,473 million) from KEB Hana Bank and others for advances received related to the long-term supply agreements. The Controlling Company also obtained payment guarantees amounting to USD 306 million (W367,189 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 1,334 million (W226,326 million), JPY 900 million (W10,044 million), EUR 2.5 million (W3,375 million), VND 47,554 million (W2,463 million), and USD 0.5 million (W600 million), respectively, for their local tax payments and utility payments.

License agreements

As of June 30, 2020, the Group has technical license agreements with Hitachi Display, Ltd. and others in relation to its LCD business and patent cross license agreement with Universal Display Corporation in relation to its OLED business. Also, the Group has a trademark license agreement with LG Corp. as of June 30, 2020.

Long-term supply agreement

As of June 30, 2020, in connection with long-term supply agreements with customers, the Controlling Company recognized USD 475 million (W570,333 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 675 million (W810,473 million) from KEB Hana Bank and other various banks relating to advances received (see note 14(b) payment guarantees).

Pledged Assets

Regarding the secured bank borrowing amounting to CNY 18,650 million (W3,164,159 million) from China Construction Bank, as of June 30, 2020, the Group provided its property, plant and equipment with carrying amount of W652,584 million as pledged assets.

15.	Capital and Reserves

(a)

Share capital

The Controlling Company is authorized to issue 500,000,000 shares of capital stock (par value W5,000), and as of June 30, 2020 and December 31, 2019, the number of issued common shares is 357,815,700. There have been no changes in the capital stock from January 1, 2019 to June 30, 2020.

(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, 2020 and December 31, 2019 are as follows:


(In millions of won)	June 30, 2020			December 31, 2019
Foreign currency translation differences for foreign operations	W	23,389			(178,452	)
Other comprehensive loss from associates		(21,577	)		(24,569	)

	W	1,812			(203,021	)

16.

Revenue

Details of revenue for the three-month and six-month periods ended June 30, 2020 and 2019 are as follows:


(In millions of won)	For the three-month periods ended June 30				For the six-month periods ended June 30
	2020		2019		2020		2019
Sales of goods	W	5,296,446		5,344,359		10,009,244		11,213,364
Royalties		2,981		3,080		7,698		6,649
Others		7,594		5,971		14,328		12,178

	W	5,307,021		5,353,410		10,031,270		11,232,191

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, 2020 and 2019.

(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	2020		2019		2020		2019
Domestic	W	217,437		336,073		489,488		729,846
Foreign
China		3,803,261		3,369,694		6,846,322		7,123,259
Asia (excluding China)		495,996		626,884		1,083,681		1,237,479
United States		390,970		483,375		737,946		973,558
Europe (excluding Poland)		225,985		368,997		529,633		712,192
Poland		173,372		168,387		344,200		455,857

	W	5,089,584		5,017,337		9,541,782		10,502,345

	W	5,307,021		5,353,410		10,031,270		11,232,191

Sales to Company A and Company B amount to W3,873,614 million and W1,594,870 million, respectively, for the six-month period ended June 30, 2020 (the six-month period ended June 30, 2019: W3,557,468 million and W2,389,400 million). The Group’s top ten end-brand customers together accounted for 83% of revenue for the six-month period ended June 30, 2020 (the six-month period ended June 30, 2019: 78%).

17.	Geographic and Other Information, Continued

(b)

Non-current assets by geography


	June 30, 2020				December 31, 2019
(In millions of won) Region	Property, plant and equipment		Intangible assets		Property, plant and equipment		Intangible assets
Domestic	W	12,175,359		681,839		12,764,240		708,047
Foreign
China		7,535,176		38,755		7,391,279		34,337
Vietnam		1,994,873		8,124		1,923,765		7,630
Others		19,816		118,683		8,361		123,434

	W	9,549,865		165,562		9,323,405		165,401

	W	21,725,224		847,401		22,087,645		873,448

(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	2020		2019		2020		2019
Televisions	W	1,194,410		2,171,904		2,678,464		4,295,084
Desktop monitors		1,210,058		971,055		2,020,155		1,953,077
Notebook computers & Tablet products		1,541,649		1,184,604		2,478,310		2,504,492
Mobile and others		1,360,904		1,025,847		2,854,341		2,479,538

	W	5,307,021		5,353,410		10,031,270		11,232,191

18.	The Nature of Expenses and Others

The classification of expenses by nature for the three-month and six-month periods ended June 30, 2020 and 2019 are as follows:


	For the three-month periods ended June 30,				For the six-month periods ended June 30,
(In millions of won)	2020		2019		2020		2019
Changes in inventories	W	270,706		60,619		11,770		121,982
Purchases of raw materials, merchandise and others		2,814,740		2,769,537		5,486,182		5,929,508
Depreciation and amortization		929,486		901,932		1,921,928		1,713,172
Outsourcing		257,507		219,877		423,576		433,542
Labor		710,017		775,435		1,391,416		1,562,436
Supplies and others		203,552		242,240		370,301		448,264
Utility		194,525		213,226		404,356		432,854
Fees and commissions		152,010		175,940		303,039		356,973
Shipping		38,524		52,999		81,266		106,704
Advertising		26,920		20,022		69,458		34,486
Warranty		43,474		101,117		102,120		198,357
Travel		10,250		26,324		23,321		49,708
Taxes and dues		45,585		22,744		72,945		55,012
Impairment loss on property, plant, and equipment		3,413		5,583		9,326		9,765
Impairment loss on intangible assets		26,165		—		30,511		—
Others		216,610		161,039		351,756		320,340

	W	5,943,484		5,748,634		11,053,271		11,773,103

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

19.	Selling and Administrative Expenses

Details of selling and administrative expenses for the three-month and six-month periods ended June 30, 2020 and 2019 are as follows:


	For the three-month periods ended June 30,				For the six-month periods ended June 30,
(In millions of won)	2020		2019		2020		2019
Salaries	W	73,280		86,667		145,752		172,690
Expenses related to defined benefit plans		6,501		8,530		13,256		16,656
Other employee benefits		16,630		20,346		33,850		42,832
Shipping		29,338		44,448		63,028		89,588
Fees and commissions		53,340		53,320		105,533		110,813
Depreciation		54,784		54,511		110,494		108,866
Taxes and dues		31,880		8,431		44,776		24,937
Advertising		26,920		20,022		69,458		34,486
Warranty		43,474		101,117		102,120		198,357
Insurance		3,176		2,841		5,977		5,487
Travel		1,207		6,435		4,592		11,926
Training		2,155		3,414		3,055		6,750
Others		15,008		16,067		28,945		34,426

	W	357,693		426,149		730,836		857,814

20.	Personnel Expenses

Details of personnel expenses for the three-month and six-month periods ended June 30, 2020 and 2019 are as follows:


	For the three-month periods ended June 30,				For the six-month periods ended June 30,
(In millions of won)	2020		2019		2020		2019
Salaries and wages	W	562,068		652,177		1,116,965		1,308,371
Other employee benefits		103,265		118,721		209,508		242,322
Contributions to National Pension plan		16,943		18,003		33,970		36,153
Expenses related to defined benefit plans and defined contribution plans		40,399		49,277		80,675		98,516

	W	722,675		838,178		1,441,118		1,685,362

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, 2020 and 2019 are as follows:


	For the three-month periods ended June 30,				For the six-month periods ended June 30,
(In millions of won)	2020		2019		2020		2019
Foreign currency gain	W	168,360		400,551		696,100		642,344
Gain on disposal of property, plant and equipment		5,467		5,335		9,046		8,625
Gain on disposal of intangible assets		—		—		—		552
Reversal of impairment loss on intangible assets		50		—		600		201
Rental income		1,004		764		2,037		1,390
Gain on disposal of non-current assets held for sale		—		8,353		—		8,353
Others		7,756		4,603		16,685		5,535

	W	182,637		419,606		724,468		667,000

(b)

Details of other non-operating expenses for the three-month and six-month periods ended June 30, 2020 and 2019 are as follows:


	For the three-month periods ended June 30,				For the six-month periods ended June 30,
(In millions of won)	2020		2019		2020		2019
Foreign currency loss	W	179,926		434,771		663,184		645,354
Other bad debt expense		—		—		—		398
Loss on disposal of property, plant and equipment		14,243		15,080		18,619		21,999
Loss on disposal of intangible assets		7		121		7		139
Impairment loss on property, plant and equipment		3,413		5,583		9,326		9,765
Impairment loss on intangible assets		26,165		—		30,511		—
Loss on disposal of investments in subsidiaries		72,654		—		72,654		—
Donations		353		411		426		425
Others		2,604		5,284		11,516		7,424

	W	299,365		461,250		806,243		685,504

22.	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, 2020 and 2019 are as follows:


	For the three-month periods ended June 30,				For the six-month periods ended June 30,
(In millions of won)	2020		2019		2020		2019
Finance income
Interest income	W	15,854		11,129		36,050		21,927
Foreign currency gain		79,901		29,008		88,637		47,286
Gain on transaction of derivatives		5,937		7,782		27,551		13,167
Gain on valuation of derivatives		—		27,533		60,917		52,878
Gain on valuation of financial assets at fair value through profit or loss		—		2		—		6
Gain on valuation of financial liabilities at fair value through profit or loss		1,844		—		133,579		—

	W	103,536		75,454		346,734		135,264

Finance costs
Interest expense	W	73,386		32,881		146,294		51,582
Foreign currency loss		27,211		54,547		176,995		108,313
Loss on repayment of borrowings		498		—		498		—
Loss on sale of trade accounts and notes receivable		879		5,921		2,941		12,224
Loss on valuation of derivatives		39,740		15,542		27,000		15,542
Loss on valuation of financial assets at fair value through profit or loss		240		—		1,492		3,960
Others		510		1,019		1,082		1,986

	W	142,464		109,910		356,302		193,607

23.	Income Taxes

(a)

Details of income tax expense (benefit) for the three-month and six-month periods ended June 30, 2020 and 2019 are as follows:


	For the three-month periods ended June 30,					For the six-month periods ended June 30,
(In millions of won)	2020			2019		2020			2019
Current tax expense		W15,558			82,118		71,276			111,228
Deferred tax expense (benefit)		(180,675)			25,664		(332,369)			(69,464)

Income tax expense (benefit)	W	(165,117	)		107,782		(261,093	)		41,764

23.	Income Taxes, Continued

(b)

Deferred Tax Assets and Liabilities

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

Deferred tax assets and liabilities as of June 30, 2020 and December 31, 2019 are attributable to the following:


	Assets				Liabilities						Total
(In millions of won)	June 30, 2020		December 31, 2019		June 30, 2020			December 31, 2019			June 30, 2020			December 31, 2019
Other accounts receivable, net	W	—		—		(97	)		(4,364	)		(97	)		(4,364	)
Inventories, net		98,325		89,522		—			—			98,325			89,522
Defined benefit liabilities, net		—		—		(24,132	)		—			(24,132	)		—
Investments in subsidiaries and associates		—		—		(64,330	)		(20,015	)		(64,330	)		(20,015	)
Accrued expenses		114,579		131,196		—			—			114,579			131,196
Property, plant and equipment		709,222		691,599		(16,263	)		(21,690	)		692,959			669,909
Intangible assets		18,877		21,886		(10,103	)		(10,759	)		8,774			11,127
Provisions		46,726		59,875		—			(4,446	)		46,726			55,429
Other temporary differences		94,632		137,667		(803	)		(328	)		93,829			137,339
Tax losses carryforwards		1,003,307		607,432		—			—			1,003,307			607,432
Tax credit carryforwards		79,312		38,337		—			—			79,312			38,337

Deferred tax assets (liabilities)	W	2,164,980		1,777,514		(115,728	)		(61,602	)		2,049,252			1,715,912

24.	Loss Per Share

(a)

Basic loss per share for the three-month and six-month periods ended June 30, 2020 and 2019 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,
	2020			2019			2020			2019
Loss attributable to owners of the Controlling Company	W	(489,121,168,535	)		(548,377,244,386	)		(688,111,821,200	)		(609,310,453,775	)
Weighted-average number of common stocks outstanding		357,815,700			357,815,700			357,815,700			357,815,700

Loss per share	W	(1,367	)		(1,533	)		(1,923	)		(1,703	)

For the three-month and six-month periods ended June 30, 2020 and 2019, 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 is not different from basic loss per share due to loss for the six-month period ended June 30, 2020. As of June 30, 2020, 40,988,998 shares of potential common stock to be issued from conversion were excluded from the calculation of weighted-average number of common stocks due to antidilution.

25.	Financial Risk Management

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

(a)

Market risk

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

(i) Currency risk

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

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

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

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, 2020 and December 31, 2019 is as follows:


(In millions)	June 30, 2020
	USD			JPY			CNY			TWD			EUR			PLN		VND
Cash and cash equivalents		1,638			115			8,292			15			4			2		40,859
Trade accounts and notes receivable		2,184			763			393			—			—			—		—
Non-trade receivables		43			83			220			4			1			—		9,904
Other assets denominated in foreign currencies		—			207			93			6			—			—		4,329
Trade accounts and notes payable		(1,425	)		(7,190	)		(1,614	)		—			—			—		(306,548	)
Other accounts payable		(255	)		(5,801	)		(1,759	)		(3	)		(5	)		—		(497,695	)
Financial liabilities		(4,279	)		—			(25,327	)		—			—			—		—

		(2,094	)		(11,823	)		(19,702	)		22			—			2		(749,151	)

Currency swap contracts		2,085			—			—			—			—			—		—

Net exposure		(9	)		(11,823	)		(19,702	)		22			—			2		(749,151	)


(In millions)	December 31, 2019
	USD			JPY			CNY			TWD			EUR			PLN		VND
Cash and cash equivalents		1,594			68			8,360			33			5			25		28,663
Trade accounts and notes receivable		2,485			19			550			—			—			—		—
Non-trade receivables		276			455			230			3			2			—		13,131
Other assets denominated in foreign currencies		29			526			5,668			369			5			503		4,032
Trade accounts and notes payable		(628	)		(9,043	)		(2,289	)		—			—			—		(291,891	)
Other accounts payable		(488	)		(12,396	)		(3,239	)		(4	)		(10	)		—		(786,356	)
Financial liabilities		(4,255	)		—			(20,436	)		—			—			—		—

		(987	)		(20,371	)		(11,156	)		401			2			528		(1,032,421	)

Currency swap contracts		2,085			—			—			—			—			—		—

Net exposure		1,098			(20,371	)		(11,156	)		401			2			528		(1,032,421	)

25.	Financial Risk Management, Continued

Average exchange rates applied for the six-month periods ended June 30, 2020 and 2019 and the exchange rates at June 30, 2020 and December 31, 2019 are as follows:


(In won)	Average rate				Reporting date spot rate
	2020		2019		June 30, 2020		December 31, 2019
USD	W	1,206.72		1,145.44		1,200.70		1,157.80
JPY		11.15		10.41		11.16		10.63
CNY		171.36		168.62		169.66		165.74
TWD		40.23		36.99		40.74		38.48
EUR		1,329.43		1,293.61		1,350.19		1,297.43
PLN		301.39		301.47		303.09		304.87
VND		0.0518		0.0493		0.0518		0.0500

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, 2020 and December 31, 2019, would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Group considers to be reasonably possible as of the end of reporting period. The analysis assumes that all other variables, in particular interest rates, would remain constant. The changes in equity and profit or loss would have been as follows:


(In millions of won)	June 30, 2020						December 31, 2019
	Equity			Profit or loss			Equity			Profit or loss
USD (5 percent weakening)	W	(25,514	)		65,927			23,570			105,398
JPY (5 percent weakening)		(5,236	)		(3,589	)		(8,397	)		(6,418	)
CNY (5 percent weakening)		(167,126	)		7			(92,454	)		11
TWD (5 percent weakening)		45			—			772			—
EUR (5 percent weakening)		19			(41	)		221			(278	)
PLN (5 percent weakening)		21			21			8,036			28
VND (5 percent weakening)		(1,407	)		(1,407	)		(1,871	)		(1,871	)

A stronger won against the above currencies as of June 30, 2020 and December 31, 2019 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.

25.	Financial Risk Management, Continued

(ii) Interest rate risk

Interest rate risk arises principally from the Group’s variable interest-bearing bonds and borrowings. The Group establishes and applies its policy to reduce uncertainty arising from fluctuations in the interest rate and to minimize finance cost and manages interest rate risk by monitoring of trends of fluctuations in interest rate and establishing plan for countermeasures. Meanwhile, the Group entered into currency interest rate swap contracts amounting to USD 1,785 million (W2,143,250 million) and interest rate swap contracts amounting to W120,000 million in notional amount to hedge interest rate risk with respect to variable interest bearing borrowings.

i) Profile

The interest rate profile of the Group’s interest-bearing financial instruments as of June 30, 2020 and December 31, 2019 is as follows:


(In millions of won)
	June 30, 2020			December 31, 2019
Fixed rate instruments
Financial assets	W	3,599,126			3,414,838
Financial liabilities		(6,765,803	)		(6,066,554	)

	W	(3,166,677	)		(2,651,716	)

Variable rate instruments
Financial liabilities	W	(7,878,095	)		(7,414,336	)

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

As of June 30, 2020 and December 31, 2019, 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.


(In millions of won)
	Equity					Profit or loss
	1%p increase			1%p decrease		1%p increase			1%p decrease
June 30, 2020
Variable rate instruments (*)	W	(43,322	)		43,322		(43,322	)		43,322

December 31, 2019
Variable rate instruments (*)	W	(38,774	)		38,774		(38,774	)		38,774

(*)	Financial instruments related to non-hedging interest rate swaps are excluded.

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

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposures to credit risk as of June 30, 2020 and December 31, 2019 are as follows:


(In millions of won)
	June 30, 2020		December 31, 2019
Financial assets carried at amortized cost
Cash and cash equivalents	W	3,520,803		3,336,003
Deposits in banks		78,263		78,768
Trade accounts and notes receivable, net		2,802,830		3,154,080
Non-trade receivables		132,892		463,614
Accrued income		12,640		10,434
Deposits		31,490		31,036
Short-term loans		26,134		21,623
Long-term loans		26,187		40,827
Long-term non-trade receivables		7,883		9,072
Lease receivables		25,560		27,794

	W	6,664,682		7,173,251
Financial assets at fair value through profit or loss
Convertible bonds	W	1,544		1,544
Derivatives		83,822		49,676

	W	85,366		51,220
Financial assets at fair value through other comprehensive income
Debt instruments	W	72		76

	W	6,750,120		7,224,547

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

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 securities. 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, 2020.


(In millions of won)			Contractual cash flows in
	Carrying amount		Total		6 months or less		6-12 months		1-2 years		2-5 years			More than 5 years
Non-derivative financial liabilities
Borrowings	W	11,778,933		12,896,954		1,315,878		1,711,964		2,605,654		6,517,937			745,521
Bonds		2,864,965		3,110,842		186,172		332,939		1,160,673		1,337,286			93,772
Trade accounts and notes payable		3,466,222		3,466,222		2,553,057		913,165		—		—			—
Other accounts payable		1,189,771		1,189,771		1,188,669		1,102		—		—			—
Other accounts payable (enterprise procurement cards)(*)		1,791,138		1,810,605		1,170,555		640,050		—		—			—
Long-term other accounts payable		7		7		—		—		7		—			—
Security deposits received		11,310		11,310		6,240		—		5,070		—			—
Lease liabilities		88,272		96,161		23,624		14,226		18,815		30,013			9,483

Derivative financial liabilities
Derivatives		20,821		10,748		5,179		7,264		3,146		(4,841	)		—

	W	21,211,439		22,592,620		6,449,374		3,620,710		3,793,365		7,880,395			848,776

(*)

Represents the amount of utility expenses and others paid by enterprise procurement cards and the outstanding payables are settled at the end of the billing cycle. The payments to the card company arises from operating activities of purchasing of goods and services thus the related cash flow is disclosed as operating activities.

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

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, 2020			December 31, 2019
Total liabilities	W	22,953,481			23,086,282
Total equity		12,100,773			12,488,281
Cash and deposits in banks (*1)		3,599,055			3,414,760
Borrowings (including bonds)		14,643,898			13,480,889
Total liabilities to equity ratio		190	%		185	%
Net borrowings to equity ratio (*2)		91	%		81	%

(*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.

25.	Financial Risk Management, Continued

(e)

Determination of fair value

(i) Measurement of fair value

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

i) Current assets and liabilities

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

ii) Trade receivables and other receivables

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

iii) Investments in equity and debt 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.

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, 2020 and December 31, 2019 are as follows:


(In millions of won)
	June 30, 2020					December 31, 2019
	Carrying amounts		Fair values			Carrying amounts		Fair values
Financial assets carried at amortized cost
Cash and cash equivalents	W	3,520,803		(	*)		3,336,003		(	*)
Deposits in banks		78,263		(	*)		78,768		(	*)
Trade accounts and notes receivable		2,802,830		(	*)		3,154,080		(	*)
Non-trade receivables		132,892		(	*)		463,614		(	*)
Accrued income		12,640		(	*)		10,434		(	*)
Deposits		31,490		(	*)		31,036		(	*)
Short-term loans		26,134		(	*)		21,623		(	*)
Long-term loans		26,187		(	*)		40,827		(	*)
Long-term non-trade receivables		7,883		(	*)		9,072		(	*)
Lease receivables		25,560		(	*)		27,794		(	*)

Financial assets at fair value through profit or loss
Equity instruments	W	8,581		8,581			9,879		9,879
Convertible bonds		1,544		1,544			1,544		1,544
Derivatives		83,822		83,822			49,676		49,676

Financial assets at fair value through other comprehensive income
Debt instruments	W	72		72			76		76

Financial liabilities at fair value through profit or loss
Derivatives	W	20,821		20,821			20,592		20,592
Convertible bonds		762,615		762,615			858,385		858,385

Financial liabilities carried at amortized cost
Borrowings	W	11,778,933		11,800,495			10,329,671		10,394,498
Bonds		2,102,350		2,122,950			2,292,833		2,345,867
Trade accounts and notes payable		3,466,222		(	*)		2,618,261		(	*)
Other accounts payable		2,980,909		(	*)		4,397,121		(	*)
Long-term other accounts payable		7		(	*)		1,069		(	*)
Security deposits received		11,310		(	*)		11,000		(	*)
Lease liabilities		88,272		(	*)		88,512		(	*)

(*)	Excluded from disclosures as the carrying amount approximates fair value.

25.	Financial Risk Management, Continued

(iii)

Fair values of financial assets and liabilities

i) Fair value hierarchy

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

•

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

•

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

•

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

ii) Financial instruments measured at fair value

Fair value hierarchy classifications of the financial instruments that are measured at fair value as of June 30, 2020 and December 31, 2019 are as follows:


(In millions of won)	June 30, 2020
	Level 1		Level 2		Level 3		Total
Financial assets at fair value through profit or loss
Equity instruments	W	—		—		8,581		8,581
Convertible bonds		—		—		1,544		1,544
Derivatives		—		—		83,822		83,822
Financial assets at fair value through other comprehensive income
Debt instruments	W	72		—		—		72
Financial liabilities at fair value through profit or loss
Derivatives	W	—		—		20,821		20,821
Convertible bonds		762,615		—		—		762,615


(In millions of won)	December 31, 2019
	Level 1		Level 2		Level 3		Total
Financial assets at fair value through profit or loss
Equity instruments	W	—		—		9,879		9,879
Convertible bonds		—		—		1,544		1,544
Derivatives		—		—		49,676		49,676
Financial assets at fair value through other comprehensive income
Debt instruments	W	76		—		—		76
Financial liabilities at fair value through profit or loss
Derivatives	W	—		—		20,592		20,592
Convertible bonds		858,385		—		—		858,385

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, 2020 and December 31, 2019 are as follows:

(In millions of won)

June 30, 2020

Valuation
technique

Input

Classification

Level 1

Level 2

Level 3

Liabilities

Borrowings

—

11,800,495

Discounted
cash flow

Discount
rate

Bonds

—

2,122,950

Discounted
cash flow

Discount
rate

(In millions of won)

December 31, 2019

Valuation
technique

Input

Classification

Level 1

Level 2

Level 3

Liabilities

Borrowings

—

10,394,498

Discounted
cash flow

Discount
rate

Bonds

—

2,345,867

Discounted
cash flow

Discount
rate

iv)

The interest rates applied for determination of the above fair value as of June 30, 2020 and December 31, 2019 are as follows:


	June 30, 2020	December 31, 2019
Borrowings, bonds and others	2.34~4.40%	1.87~3.56%

26.	Changes in liabilities arising from financing activities

Changes in liabilities arising from financing activities for the six-month period ended June 30, 2020 are as follows:


(In millions of won)
						Non-cash transactions
	January 1, 2020		Cash flows from financing activities			Reclassification			Gain or loss on foreign currency translation		Effective interest adjustment		Others			June 30, 2020
Short-term borrowings	W	696,793		331,795			—			21,277		—		—			1,049,865
Current portion of long-term borrowings and bonds		1,242,904		(646,786	)		1,434,682			18,271		358		—			2,049,429
Long-term borrowings		8,799,677		1,294,452			(1,135,062	)		170,252		—		—			9,129,319
Bonds(*)		2,741,516		49,949			(299,620	)		46,974		10,045		(133,579	)		2,415,285
Lease liabilities		88,512		(34,443	)		—			11,029		—		23,174			88,272

	W	13,569,402		994,967			—			267,803		10,403		(110,405	)		14,732,170

(*)	Others include gain on valuation of financial liabilities at fair value through profit or loss amounting to W133,579 million.

27.	Related Parties and Others

(a)

Related parties

Related parties as of June 30, 2020 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.

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, 2020 and 2019 are as follows:


(In millions of won)	For the three-month period ended June 30, 2020
					Purchase and others
	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
AVATEC Co., Ltd.	W	—		—		—		—		18,832		217
Paju Electric Glass Co., Ltd.		—		—		64,097		—		—		653
WooRee E&L Co., Ltd.		—		—		3,735		—		—		14
YAS Co., Ltd.		—		—		1,844		2,544		—		681
Material Science Co., Ltd.		—		—		9		—		—		—

	W	—		—		69,685		2,544		18,832		1,565

Entity that has significant influence over the Controlling Company
LG Electronics Inc.	W	133,977		—		6,748		28,283		—		37,926

Subsidiaries of the entity that has significant influence over the Controlling Company
LG Electronics India Pvt. Ltd.	W	3,013		—		—		—		—		—
LG Electronics Vietnam Haiphong Co., Ltd.		54,019		—		—		—		—		247

27.	Related Parties and Others, Continued


(In millions of won)	For the three-month period ended June 30, 2020
					Purchase and others
	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	102,977		—		—		—		—		256
LG Electronics RUS, LLC		9,372		—		—		—		—		38
LG Electronics do Brasil Ltda.		27,521		—		—		—		—		44
LG Innotek Co., Ltd.		1,900		—		7,303		—		—		20,366
Qingdao LG Inspur Digital Communication Co., Ltd.		1,589		—		—		—		—		—
LG Electronics Mexicali, S.A. DE C.V.		18,290		—		—		—		—		8
LG Electronics Mlawa Sp. z o.o.		106,324		—		—		—		—		278
LG Electronics Reynosa, S.A. DE C.V.		76,160		—		—		—		—		142
LG Electronics Egypt S.A.E.		15,477		—		—		—		—		56
LG Electronics Japan, Inc.		—		—		—		—		—		1,358
P.T. LG Electronics Indonesia		13,754		—		—		—		—		24
Others		1,265		—		136		—		—		2,174

	W	431,661		—		7,439		—		—		24,991

	W	565,638		—		83,872		30,827		18,832		64,482

27.	Related Parties and Others, Continued


(In millions of won)	For the six-month period ended June 30, 2020
					Purchase and others
	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
AVATEC Co., Ltd.	W	—		200		—		—		33,815		416
Paju Electric Glass Co., Ltd.		—		7,739		138,377		—		—		1,626
WooRee E&L Co., Ltd.		—		—		5,318		—		—		19
YAS Co., Ltd.		—		300		3,328		3,658		—		1,651
Material Science Co., Ltd.		—		—		69		—		—		—

	W	—		8,239		147,092		3,658		33,815		3,712

Entity that has significant influence over the Controlling Company
LG Electronics Inc.	W	330,272		—		10,369		155,075		—		67,763

Subsidiaries of the entity that has significant influence over the Controlling Company
LG Electronics India Pvt. Ltd.	W	17,005		—		—		—		—		65
LG Electronics Vietnam Haiphong Co., Ltd.		125,920		—		—		—		—		446
LG Electronics Nanjing New Technology Co., Ltd.		192,627		—		—		—		—		497
LG Electronics RUS, LLC		34,457		—		—		—		—		155
LG Electronics do Brasil Ltda.		57,545		—		—		—		—		84
LG Innotek Co., Ltd.		3,092		—		14,871		—		—		40,718

27.	Related Parties and Others, Continued


(In millions of won)	For the six-month period ended June 30, 2020
					Purchase and others
	Sales and others		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	6,899		—		—		—		—		—
LG Electronics Mexicali, S.A. DE C.V.		53,394		—		—		—		—		17
LG Electronics Mlawa Sp. z o.o.		206,562		—		—		—		—		806
LG Electronics Reynosa, S.A. DE C.V.		205,460		—		—		—		—		672
LG Electronics Egypt S.A.E		35,889		—		—		—		—		302
LG Electronics Japan, Inc.		—		—		—		8		—		2,861
P.T. LG Electronics Indonesia		34,533		—		—		—		—		122
Others		2,645		—		153		—		—		3,595

	W	976,028		—		15,024		8		—		50,340

	W	1,306,300		8,239		172,485		158,741		33,815		121,815

27.	Related Parties and Others, Continued


(In millions of won)	For the three-month period ended June 30, 2019
					Purchase and others
	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
INVENIA Co., Ltd.(*1)	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
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

27.	Related Parties and Others, Continued


(In millions of won)	For the three-month period ended June 30, 2019
					Purchase and others
	Sales and others		Dividend income		Purchase of raw material and others		Acquisition of property, plant and equipment		Outsourcing fees		Other costs
LG Innotek Co., Ltd.	W	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.(*2)		—		—		—		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.(*2)		18		—		—		2,347		—		7,080
HiEntech (Tianjin) Co., Ltd.(*2)		—		—		—		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

(*1)	Represents transactions occurred prior to the Group’s disposal of the entire investments.

(*2)	Represents transactions occurred prior to LG Electronics Inc.’s disposal of the entire investments.

27.	Related Parties and Others, Continued


(In millions of won)	For the six-month period ended June 30, 2019
					Purchase and others
	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
INVENIA Co., Ltd.(*1)	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

27.	Related Parties and Others, Continued


(In millions of won)	For the six-month period ended June 30, 2019
					Purchase and others
	Sales and others		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.(*2)		—		—		—		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.(*2)		36		—		—		6,013		—		14,191
HiEntech (Tianjin) Co., Ltd.(*2)		—		—		—		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

(*1)	Represents transactions occurred prior to the Group’s disposal of the entire investments.

(*2)	Represents transactions occurred prior to LG Electronics Inc.’s disposal of the entire investments.

27.	Related Parties and Others, Continued

(c)

Trade accounts and notes receivable and payable and others as of June 30, 2020 and December 31, 2019 are as follows:


(In millions of won)
	Trade accounts and notes receivable and others				Trade accounts and notes payable and others
	June 30, 2020		December 31, 2019		June 30, 2020		December 31, 2019
Associates and their subsidiaries
AVATEC Co., Ltd.	W	—		—		4,857		1,029
Paju Electric Glass Co., Ltd.		—		—		60,610		62,853
WooRee E&L Co., Ltd.		—		—		3,526		1,888
YAS Co., Ltd.		—		—		4,520		27,489
Material Science Co., Ltd.		—		—		—		8

	W	—		—		73,513		93,267

Entity that has significant influence over the Controlling Company
LG Electronics Inc.	W	115,457		209,939		91,000		157,713

Subsidiaries of the entity that has significant influence over the Controlling Company
LG Electronics Vietnam Haiphong Co., Ltd.	W	47,608		47,740		28		75
LG Electronics Nanjing New Technology Co., Ltd.		82,193		55,343		122		49
LG Electronics RUS, LLC		6,118		17,600		37		83
LG Electronics do Brasil Ltda.		11,280		14,805		14		26
LG Innotek Co., Ltd.		225		267		35,149		36,426

27.	Related Parties and Others, Continued


(In millions of won)
	Trade accounts and notes receivable and others				Trade accounts and notes payable and others
	June 30, 2020		December 31, 2019		June 30, 2020		December 31, 2019
LG Electronics Mexicali, S.A. DE C.V.	W	13,336		11,195		—		17
LG Electronics Mlawa Sp. z o.o.		66,923		124,390		86		75
LG Electronics Reynosa, S.A. DE C.V.		32,306		82,927		71		62
P.T. LG Electronics Indonesia		9,986		7,696		6		16
Others		5,184		25,218		3,101		3,548

	W	275,159		387,181		38,614		40,377

	W	390,616		597,120		203,127		291,357

27.	Related Parties and Others, Continued

(d)

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


(In millions of won)
	2019
Associates	Loans		Collection of loans
INVENIA Co., Ltd.(*)	W	1,000		—

(*)	Excluded from related parties due to disposal of equity investments during the year ended December 31, 2019.

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 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, 2020 and 2019 and as of June 30, 2020 and December 31, 2019 are as follows. These entities are not related parties according to K-IFRS No. 1024, Related Party Disclosures.


(In millions of won)
	For the three-month period ended June 30, 2020				For the six-month period ended June 30, 2020				June 30, 2020
	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	56,690		66,424		172,015		143,466		45,362		29,097
LG Uplus Corp.		—		557		—		1,118		—		132
LG Chem Ltd. and its subsidiaries		968		193,054		1,139		406,676		173		156,042
S&I Corp. and its subsidiaries		83		19,873		167		83,095		21,332		27,371
Silicon Works Co., Ltd.		—		151,841		36		304,329		—		88,590
LG Corp.		—		12,634		—		24,417		10,250		—
LG Management Development Institute		—		1,987		—		3,584		3,480		224
LG CNS Co., Ltd. and its subsidiaries		11		35,067		13		59,298		2		24,763
LG Household & Health Care and its subsidiaries		—		7		—		84		—		—
LG Holdings Japan Co., Ltd.		—		553		—		1,086		2,375		—
G2R Inc. and its subsidiaries		—		8,724		—		10,507		—		9,017
Robostar Co., Ltd.		—		131		—		537		—		27

	W	57,752		490,852		173,370		1,038,197		82,974		335,263

27.	Related Parties and Others, Continued


(In millions of won)
	For the three-month period ended June 30, 2019				For the six-month period ended June 30, 2019				December 31, 2019
	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		93,623		77,721
LG Uplus Corp.		—		579		—		1,139		—		208
LG Chem Ltd. and its subsidiaries		81,614		302,544		82,335		589,151		97		128,636
S&I Corp. and its subsidiaries		100		184,659		184		514,222		21,307		159,202
Silicon Works Co., Ltd.		—		156,264		92		306,556		—		126,856
LG Corp.		—		13,096		—		26,369		8,781		—
LG Management Development Institute		—		1,915		—		4,385		3,480		231
LG CNS Co., Ltd. and its subsidiaries		4		57,683		9		93,605		2		75,850
LG Hausys Ltd.		1		1		1		1		—		—
LG Household & Health Care and its subsidiaries		—		2		—		97		—		6
LG Holdings Japan Co., Ltd.		—		495		—		987		2,264		—
G2R Inc. and its subsidiaries		—		839		—		1,903		—		29,540
Robostar Co., Ltd.		—		1,553		—		6,900		—		2,332
Other(*)		4		119,763		4		119,763		—		—

	W	238,352		946,031		434,454		1,889,861		129,554		600,582

(*)	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.

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, 2020 and 2019 are as follows:


(In millions of won)	For the three-month periods ended June 30,				For the six-month periods ended June 30,
	2020		2019		2020		2019
Short-term benefits	W	530		610		1,099		1,501
Expenses related to the defined benefit plan		83		247		179		347

	W	613		857		1,278		1,848

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

LG DISPLAY CO., LTD.

Condensed Separate Interim Financial Statements

(Unaudited)

June 30, 2020 and 2019

(With Independent Auditors’ Review Report Thereon)

Table of Contents


	Page
Independent Auditors’ Review Report		101

Condensed Separate Interim Statements of Financial Position		103

Condensed Separate Interim Statements of Comprehensive Loss		104

Condensed Separate Interim Statements of Changes in Equity		105

Condensed Separate Interim Statements of Cash Flows		106

Notes to the Condensed Separate Interim Financial Statements		108

100

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, 2020, the condensed separate interim statements of comprehensive loss for the three-month and six-month periods ended June 30, 2020 and 2019, and statements of changes in equity and cash flows for the six-month periods ended June 30, 2020 and 2019, 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.

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, 2019, and the related separate statements of comprehensive loss, changes in equity and cash flows for the year then ended, which are not accompanying this review report, in accordance with Korean Standards on Auditing, and our report thereon, dated March 11, 2020, expressed an unmodified opinion. The accompanying condensed separate statement of financial position of the Company as of December 31, 2019, presented for comparative purposes, is not different from that audited by us from which it was derived in all material respects.

101

KPMG Samjong Accounting Corp.

Seoul, Korea

August 12, 2020

This report is effective as of August 12, 2020, 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.

102

LG DISPLAY CO., LTD.

Condensed Separate Interim Statements of Financial Position

(Unaudited)

As of June 30, 2020 and December 31, 2019


(In millions of won)	Note	June 30, 2020		December 31, 2019
Assets
Cash and cash equivalents	4, 24	W	918,639		1,105,245
Deposits in banks	4, 24		76,852		77,257
Trade accounts and notes receivable, net	5, 14, 24, 26		3,525,187		3,565,860
Other accounts receivable, net	5, 24		114,165		439,940
Other current financial assets	6, 24		47,246		55,665
Inventories	7		1,448,593		1,526,299
Prepaid income tax			110,112		111,129
Other current assets	5		225,045		199,833

Total current assets			6,465,839		7,081,228

Deposits in banks	4, 24		11		11
Investments	8		4,848,926		4,958,308
Other non-current accounts receivable, net	5, 24		16,511		19,899
Other non-current financial assets	6, 24		104,283		74,203
Property, plant and equipment, net	9		12,174,549		12,764,175
Intangible assets, net	10		681,839		708,047
Deferred tax assets	22		1,672,845		1,367,714
Defined benefits assets	12		49,562		127,252
Other non-current assets	5		287,092		281,843

Total non-current assets			19,835,618		20,301,452

Total assets		W	26,301,457		27,382,680

Liabilities
Trade accounts and notes payable	24, 26	W	3,679,767		2,682,403
Current financial liabilities	11, 24		2,253,402		1,474,589
Other accounts payable	24		2,531,620		3,329,040
Accrued expenses			427,990		520,395
Provisions	13		163,754		188,238
Advances received	14		721,942		898,447
Other current liabilities	13		32,435		47,371

Total current liabilities			9,810,910		9,140,483

Non-current financial liabilities	11, 24		6,441,300		7,094,405
Non-current provisions	13		66,076		67,118
Long-term advances received	14		23,251		328,677
Other non-current liabilities	13		90,298		85,904

Total non-current liabilities			6,620,925		7,576,104

Total liabilities			16,431,835		16,716,587

Equity
Share capital	15		1,789,079		1,789,079
Share premium			2,251,113		2,251,113
Retained earnings			5,829,430		6,625,901

Total equity			9,869,622		10,666,093

Total liabilities and equity		W	26,301,457		27,382,680

See accompanying notes to the separate interim financial statements.

103

LG DISPLAY CO., LTD.

Condensed Separate Interim Statements of Comprehensive Loss

(Unaudited)

For the three-month and six-month periods ended June 30, 2020 and 2019


(In millions of won, except earnings per share)	Note	For the three-month periods ended June 30						For the six-month periods ended June 30
		2020			2019			2020			2019
Revenue	16, 26	W	4,891,108			4,935,961			9,372,529			10,319,565
Cost of sales	7, 17, 26		(4,960,160	)		(4,649,658	)		(9,493,536	)		(9,624,904	)

Gross profit (loss)			(69,052	)		286,303			(121,007	)		694,661

Selling expenses	18		(94,297	)		(160,281	)		(229,767	)		(312,211	)
Administrative expenses	18		(105,538	)		(120,269	)		(208,143	)		(249,869	)
Research and development expenses			(282,381	)		(420,411	)		(546,060	)		(750,021	)

Operating loss			(551,268	)		(414,658	)		(1,104,977	)		(617,440	)

Finance income	21		79,484			59,111			274,367			106,981
Finance costs	21		(106,354	)		(82,544	)		(281,084	)		(134,540	)
Other non-operating income	20		130,043			304,317			580,790			445,713
Other non-operating expenses	20		(174,031	)		(315,138	)		(566,664	)		(437,341	)

Loss before income tax			(622,126	)		(448,912	)		(1,097,568	)		(636,627	)
Income tax expense (benefit)	22		(166,042	)		(41,148	)		(303,907	)		(114,921	)

Loss for the period			(456,084	)		(407,764	)		(793,661	)		(521,706	)

Other comprehensive income (loss)
Items that will never be reclassified to profit or loss
Remeasurements of net defined benefit liabilities	12		(1,208	)		(1,935	)		(3,782	)		(4,848	)
Related income tax	12		310			(4,328	)		972			(3,551	)

Other comprehensive loss for the period, net of income tax			(898	)		(6,263	)		(2,810	)		(8,399	)

Total comprehensive loss for the period		W	(456,982	)		(414,027	)		(796,471	)		(530,105	)

Loss per share (in won)
Basic and diluted loss per share	23	W	(1,275	)		(1,140	)		(2,218	)		(1,458	)

See accompanying notes to the separate interim financial statements.

104

LG DISPLAY CO., LTD.

Condensed Separate Interim Statements of Changes in Equity

(Unaudited)

For the six-month periods ended June 30, 2020 and 2019


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

Balances at January 1, 2020	W	1,789,079		2,251,113		6,625,901			10,666,093

Total comprehensive loss for the period
Loss for the period		—		—		(793,661	)		(793,661	)

Other comprehensive loss
Remeasurements of net defined benefit liabilities, net of tax		—		—		(2,810	)		(2,810	)

Total comprehensive loss for the period	W	—		—		(796,471	)		(796,471	)

Balances at June 30, 2020	W	1,789,079		2,251,113		5,829,430			9,869,622

See accompanying notes to the separate interim financial statements.

105

LG DISPLAY CO., LTD.

Condensed Separate Interim Statements of Cash Flows

(Unaudited)

For the six-month periods ended June 30, 2020 and 2019


(In millions of won)	Note	2020			2019
Cash flows from operating activities:
Loss for the period		W	(793,661	)		(521,706	)
Adjustments for:
Income tax expense (benefit)	22		(303,907	)		(114,921	)
Depreciation and amortization	17		1,296,487			1,209,059
Gain on foreign currency translation			(83,171	)		(77,872	)
Loss on foreign currency translation			152,312			153,273
Expenses related to defined benefit plans	12		79,397			97,553
Gain on disposal of property, plant and equipment			(12,148	)		(27,963	)
Loss on disposal of property, plant and equipment			17,886			6,747
Impairment loss on disposal of property, plant and equipment			5,576			5,943
Gain on disposal of intangible assets			—			(552	)
Loss on disposal of intangible assets			7			18
Impairment loss on intangible assets			30,511			—
Reversal of impairment loss on intangible assets			(600	)		(201	)
Expense on increase of provisions			99,155			175,711
Finance income			(253,139	)		(97,645	)
Finance costs			262,661			123,175
Other income			(16,889	)		(127	)
Other expenses			—			4,169

			1,274,138			1,456,367

Changes in
Trade accounts and notes receivable			(513,093	)		(165,385	)
Other accounts receivable			105,521			3,687
Inventories			77,706			93,651
Other current assets			(3,850	)		(12,106	)
Other non-current assets			(42,927	)		(13,529	)
Trade accounts and notes payable			1,045,005			66,643
Other accounts payable			(587,626	)		428,153
Accrued expenses			(81,246	)		168,658
Provisions			(112,902	)		(134,182	)
Advances received			(39,189	)		(51,773	)
Other current liabilities			(23,175	)		(6,722	)
Defined benefit liabilities, net			(5,489	)		(20,861	)
Long-term advances received			—			63,672
Other non-current liabilities			6,188			6,318

			(175,077	)		426,224

Cash generated from operating activities			305,400			1,360,885
Income taxes refunded			763			17,859
Interests received			7,274			5,363
Interests paid			(156,479	)		(104,707	)

Net cash provided by operating activities		W	156,958			1,279,400

See accompanying notes to the separate interim financial statements.

106

LG DISPLAY CO., LTD.

Condensed Separate Interim Statements of Cash Flows

(Unaudited)

For the six-month periods ended June 30, 2020 and 2019


(In millions of won)	Note	2020			2019
Cash flows from investing activities:
Dividends received		W	8,239			12,565
Increase in deposits in banks			(6,852	)		(41,180	)
Proceeds from withdrawal of deposits in banks			7,257			41,180
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			(50,979	)		(1,102,607	)
Proceeds from disposal of investments			169,953			1,200
Acquisition of property, plant and equipment			(715,069	)		(1,314,030	)
Proceeds from disposal of property, plant and equipment			278,048			55,796
Acquisition of intangible assets			(204,556	)		(243,779	)
Proceeds from disposal of intangible assets			300			2,349
Government grants received			—			3,979
Receipt from settlement of derivatives			27,551			13,167
Proceeds from collection of short-term loans			7,759			11,772
Increase in short-term loans			—			(8,225	)
Increase in long-term loans			—			(6,465	)
Increase in deposits			(358	)		(500	)
Decrease in deposits			1,217			1,000
Proceeds from disposal other assets			11,000			—

Net cash used in investing activities			(466,484	)		(2,573,799	)

Cash flows from financing activities:	25
Proceeds from short-term borrowings			775,095			1,024,723
Repayments of short-term borrowings			(453,549	)		(688,143	)
Proceeds from issuance of bonds			49,949			503,665
Proceeds from long-term borrowings●			370,000			1,136,968
Repayments of current portion of long-term borrowings and bonds●			(616,482	)		(708,097	)
Payment guarantee fee received			4,029			3,756
Payment of lease liabilities			(6,122	)		(7,175	)

Net cash provided by financing activities			122,920			1,265,697

Net decrease in cash and cash equivalents			(186,606	)		(28,702	)
Cash and cash equivalents at January 1			1,105,245			473,283

Cash and cash equivalents at June 30		W	918,639			444,581

See accompanying notes to the separate interim financial statements.

107

1.	Organization and Description of Business

LG Display Co., Ltd. (the “Company”) was incorporated in February 1985 and the Company is a public corporation listed in the Korea Exchange since 2004. The main business of the Company is to manufacture and sell displays and its related products. As of June 30, 2020, 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, 2020, 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, 2020, 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, 2020, there are 21,176,408 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 Standards (“K-IFRSs”) 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, 2019.

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

(b)

Basis of Measurement

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

•

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

108

2.	Basis of Presenting Financial Statements, Continued

(c)

Functional and Presentation Currency

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

(d)

Use of Estimates and Judgments

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

3.	Summary of Significant Accounting Policies

The accounting policies applied in these condensed separate interim financial statements are the same as those applied in the Company’s separate financial statements as of and for the year ended December 31, 2019, except for the application of K-IFRS No.1034, Interim Financial Reporting. A number of amended standards are effective from January 1, 2020 but they do not have a material effect on the Company’s financial statements.

109

4.	Cash and Cash Equivalents and Deposits in Banks

Cash and cash equivalents and deposits in banks as of June 30, 2020 and December 31, 2019 are as follows:


(In millions of won)	June 30, 2020		December 31, 2019
Current assets
Cash and cash equivalents
Demand deposits	W	918,639		1,105,245
Deposits in banks
Restricted deposits (*)	W	76,852		77,257

Non-current assets
Deposits in banks
Restricted deposits (*)	W	11		11

	W	995,502		1,182,513

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

5.	Receivables and Other Assets

(a)

Trade accounts and notes receivable as of June 30, 2020 and December 31, 2019 are as follows:


(In millions of won)	June 30, 2020		December 31, 2019
Due from third parties	W	127,372		221,243
Due from related parties		3,397,815		3,344,617

	W	3,525,187		3,565,860

(b)

Other accounts receivable as of June 30, 2020 and December 31, 2019 are as follows:


(In millions of won)	June 30, 2020		December 31, 2019
Current assets
Non-trade receivables, net	W	113,401		438,659
Accrued income		764		1,281

	W	114,165		439,940

Non-current assets
Long-term non-trade receivables	W	16,511		19,899

	W	130,676		459,839

Due from related parties included in other accounts receivable as of June 30, 2020 and December 31, 2019 are W24,734 million and W45,518 million, respectively.

110

5.	Receivables and Other Assets, Continued

(c)

The aging of trade accounts and notes receivable and other accounts receivable as of June 30, 2020 and December 31, 2019 are as follows:


	June 30, 2020
	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	3,523,414		132,335		(10	)		(2,573	)
1-15 days past due		1,779		302		—			—
16-30 days past due		4		—		—			—
31-60 days past due		—		1		—			—
More than 60 days past due		—		641		—			(30	)

	W	3,525,197		133,279		(10	)		(2,603	)


	December 31, 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	3,565,795		184,991		(5	)		(2,952	)
1-15 days past due		70		3,488		—			(1	)
16-30 days past due		—		94		—			—
31-60 days past due		—		61		—			—
More than 60 days past due		—		274,183		—			(25	)

	W	3,565,865		462,817		(5	)		(2,978	)


	June 30, 2020					December 31, 2019
(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		2,978			5		989
(Reversal of) bad debt expense		5		(375	)		—		1,989

Balance at the end of the reporting period	W	10		2,603			5		2,978

111

5.	Receivables and Other Assets, Continued

(d)

Other assets as of June 30, 2020 and December 31, 2019 are as follows:


(In millions of won)	June 30, 2020		December 31, 2019
Current assets
Advanced payments	W	29,388		1,849
Prepaid expenses		117,828		100,561
Value added tax refundable		58,295		75,317
Right to recover returned goods		19,534		22,106

	W	225,045		199,833

Non-current assets
Long-term prepaid expenses	W	253,675		274,101
Long-term advanced payments		33,417		7,742

	W	287,092		281,843

112

6.	Other Financial Assets

Other financial assets as of June 30, 2020 and December 31, 2019 are as follows:


(In millions of won)	June 30, 2020		December 31, 2019
Current assets
Financial assets at fair value through profit or loss
Derivatives(*)	W	21,088		34,036
Financial assets at fair value through other comprehensive income
Debt instruments
Government bonds	W	24		6
Financial assets carried at amortized cost
Short-term loans	W	26,134		21,623

	W	47,246		55,665

Non-current assets
Financial assets at fair value through profit or loss
Equity instruments
Intellectual Discovery, Ltd.	W	1,104		1,104
Kyulux, Inc.		396		1,889
Fineeva Co., Ltd.		4		4

	W	1,504		2,997

Convertible bonds	W	1,544		1,544
Derivatives(*)		62,734		15,640

	W	65,782		20,181

Financial assets at fair value through other comprehensive income
Debt instruments
Government bonds	W	48		70
Financial assets carried at amortized cost
Deposits	W	12,266		13,125
Long-term loans		26,187		40,827

	W	38,453		53,952

	W	104,283		74,203

(*)	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.

113

7.	Inventories

Inventories as of June 30, 2020 and December 31, 2019 are as follows:


(In millions of won)	June 30, 2020		December 31, 2019
Finished goods	W	414,818		394,069
Work-in-process		563,016		696,993
Raw materials		361,253		341,004
Supplies		109,506		94,233

	W	1,448,593		1,526,299

For the six-month periods ended June 30, 2020 and 2019, the amount of inventories recognized as cost of sales including inventory write-downs and usage of inventory write-downs are as follows:


(In millions of won)	2020			2019
Inventories recognized as cost of sales	W	9,493,536			9,624,904
Inventory write-downs		297,115			321,418
Usage of inventory write-downs		(408,567	)		(280,323	)

114

8.	Investments

(a)

Investments in subsidiaries consist of the following:


			June 30, 2020					December 31, 2019
(In millions of won) 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	%		160,361
LG Display Guangzhou Co., Ltd.	Guangzhou, China	Manufacture display products		100	%		293,557		100	%		293,557
LG Display Shenzhen Co., Ltd.	Shenzhen, China	Sell display products		100	%		3,467		100	%		3,467
LG Display Singapore Pte. Ltd.	Singapore	Sell display products		100	%		1,250		100	%		1,250
L&T Display Technology (Fujian) Limited	Fujian, China	Manufacture and sell LCD module and LCD monitor sets		51	%		10,123		51	%		10,123
LG Display Yantai Co., Ltd.	Yantai, China	Manufacture display products		100	%		169,195		100	%		169,195
Nanumnuri Co., Ltd.	Gumi, South Korea	Provide janitorial services		100	%		800		100	%		800
LG Display (China) Co., Ltd.	Guangzhou,China	Manufacture and sell display products		51	%		723,086		51	%		723,086
Unified Innovative Technology, LLC	Wilmington, U.S.A.	Manage intellectual property		100	%		9,489		100	%		9,489
LG Display Guangzhou Trading Co., Ltd.	Guangzhou, China	Sell display products		100	%		218		100	%		218
Global OLED Technology LLC	Sterling, U.S.A	Manage OLED intellectual property		100	%		164,322		100	%		164,322
LG Display Vietnam Haiphong Co., Ltd.	Haiphong, Vietnam	Manufacture display products		100	%		672,658		100	%		672,658
Suzhou Lehui Display Co., Ltd.	Suzhou, China	Manufacture and sell LCD module and LCD monitor sets		100	%		121,640		100	%		121,640
LG DISPLAY FUND I LLC(*2)	Wilmington, U.S.A	Invest in venture business and acquire technologies		100	%		8,301		100	%		6,322
LG Display High-Tech (China) Co., Ltd.(*3)	Guangzhou, China	Manufacture and sell display products		71	%		1,794,547		74	%		1,794,547
Money Market Trust	Seoul, Korea	Money market trust		100	%		83,700		100	%		34,700

						W	4,766,276				W	4,875,658

115

8.	Investments, Continued

(*1)	In May 2020, LG Display Poland Sp. z o.o. completed the liquidation process.

(*2)	For the six-month period ended June 30, 2020, the Company contributed W1,979 million in cash for the capital increase by 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.

(*3)	For the six-month period ended June 30, 2020, non-controlling shareholders contributed W84,829 million in cash for the stocks issued by LG Display High-Tech (China) Co., Ltd. (“LGDCO”). The Company’s ownership percentage in LGDCO decreased from 74% to 71% as a result of the additional shares issue.

116

8.	Investments, Continued

(b)

Investments in associates consist of the following:


			June 30, 2020					December 31, 2019
(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
WooRee E&L Co., Ltd.	Ansan, South Korea	Manufacture LED back light unit packages		14	%		7,310		14	%		7,310
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		14	%		8,000		14	%		8,000
Arctic Sentinel, Inc.	Los Angeles, U.S.A.	Develop and manufacture tablet for kids		10	%		—		10	%		—
Cynora GmbH(*)	Bruchsal Germany	Develop organic emitting materials for displays and lighting devices		12	%		4,714		12	%		4,714
Material Science Co., Ltd.	Seoul, South Korea	Develop, manufacture and sell materials for display		10	%		2,354		10	%		2,354
Nanosys Inc.	Milpitas, U.S.A.	Develop, manufacture and sell materials for display		4	%		5,183		4	%		5,183

						W	82,650				W	82,650

(*)	For the six-month period ended June 30, 2020, the Company’s ownership percentage in Cynora GmbH decreased from 12.2% to 11.6% as the Company did not participate in the rights issue.

Dividends income recognized from subsidiaries and associates for the six-month periods ended June 30, 2020 and 2019 amounted to W8,239 million and W18,622 million, respectively.

117

9.	Property, Plant and Equipment

For the six-month periods ended June 30, 2020 and 2019, the Company purchased property, plant and equipment of W581,766 million and W1,079,423 million, respectively. The capitalized borrowing costs and the annualized capitalization rate were W50,071 million and 2.99%, and W77,335 million and 2.78%, for the six-month periods ended June 30, 2020 and 2019, respectively. In addition, for the six-month periods ended June 30, 2020 and 2019, the Company disposed of property, plant and equipment with carrying amounts of W66,393 million and W90,794 million, respectively, and recognized W12,148 million and W17,886 million, respectively, as gain and loss on disposal of property, plant and equipment for the six-month period ended June 30, 2020 (gain and loss for the six-month period ended June 30, 2019: W27,963 million and W6,747 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, 2020 and December 31, 2019, are W374,007 million and W375,183 million, respectively. In addition, for the six-month period ended June 30, 2020, the Company recognized an impairment loss amounting to W29,838 million in connection with development projects.

118

11.	Financial Liabilities

(a)

Financial liabilities as of June 30, 2020 and December 31, 2019 are as follows:


(In millions of won)	June 30, 2020		December 31, 2019
Current
Short-term borrowings	W	680,030		347,340
Current portion of long-term borrowings and bonds		1,547,497		1,117,218
Current portion of payment guarantee liabilities		5,529		5,674
Derivatives(*)		12,530		—
Lease liabilities		7,816		4,357

	W	2,253,402		1,474,589

Non-current
Won denominated borrowings	W	2,343,750		2,692,560
Foreign currency denominated borrowings		1,662,970		1,626,709
Bonds		2,415,285		2,741,516
Payment guarantee liabilities		8,627		10,828
Derivatives(*)		8,291		20,592
Lease liabilities		2,377		2,200

	W	6,441,300		7,094,405

(*)	Represents currency interest rate swap contracts and others entered into by the Company to hedge currency and interest rate risks with respect to foreign currency denominated borrowings and bonds.

(b)

Short-term borrowings as of June 30, 2020 and December 31, 2019 as follows:



(In millions of won and USD) Lender	Annual interest rate as of *June 30, 2020 (%)()**		June 30, 2020		December 31, 2019
Standard Chartered Bank Korea Limited		12ML + 0.98 6ML + 2.00	W	480,030		347,340
The Export-Import Bank of Korea		1.55		200,000		—

Foreign currency equivalent			USD	400	USD	300

			W	680,030		347,340

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

119

11.	Financial Liabilities, Continued

(c)

Won denominated long-term borrowings as of June 30, 2020 and December 31, 2019 are as follows:



(In millions of won) Lender	Annual interest rate as of *June 30, 2020 (%)()**		June 30, 2020			December 31, 2019
Woori Bank		2.75	W	282			608
Korea Development Bank and others		CD rate (91days) + 1.00~1.60, 2.21~3.40		3,381,250			3,330,000
Less current portion of long-term borrowings				(1,037,782	)		(638,048	)

			W	2,343,750			2,692,560

(*)	CD represents certificate of deposit.

(d)

Foreign currency denominated long-term borrowings as of June 30, 2020 and December 31, 2019 are as follows:



(In millions of won and USD) Lender	Annual interest rate as of June 30, 2020 (%)		June 30, 2020			December 31, 2019
The Export-Import Bank of Korea and others		3ML+0.75 ~1.70 6ML+1.25 ~1.35	W	1,723,005			1,696,177

Foreign currency equivalent			USD	1,435		USD	1,465
Less current portion of long-term borrowings				(60,035	)		(69,468	)

			W	1,662,970			1,626,709

120

11.	Financial Liabilities, Continued

(e)

Details of bonds issued and outstanding as of June 30, 2020 and December 31, 2019 are as follows:


(In millions of won and USD)	Maturity	Annual interest rate as of June 30, 2020 (%)		June 30, 2020			December 31, 2019
*Won denominated bonds at amortized cost (1)**
Publicly issued bonds	October 2020~ February 2024		1.95~2.95	W	1,470,000			1,730,000
Privately issued bonds	May 2022~ May 2033		3.25~4.25		160,000			110,000
Less discount on bonds					(2,554	)		(3,404	)
Less current portion					(449,680	)		(409,702	)

				W	1,177,766			1,426,894

*Foreign currency denominated bonds at amortized cost (2)**
Publicly issued bonds	November 2021		3.88	W	360,210			347,340
Privately issued bonds	April 2023		3ML+1.47		120,070			115,780

Foreign currency equivalent				USD	400		USD	400

Less discount on bonds					(5,376	)		(6,883	)

				W	474,904			456,237

Financial liabilities at fair value through profit or loss
Foreign currency denominated convertible bonds	August 2024		1.50	W	762,615			858,385

Foreign currency equivalent				USD	635		USD	741

				W	2,415,285			2,741,516

(*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.

121

11.	Financial Liabilities, Continued

(f)

Details of convertible bonds issued and outstanding as of June 30, 2020 are as follows:


(In won, USD)		Description
Type		Unsecured foreign currency denominated convertible bonds
Issuance amount		USD 687,800,000
Annual interest rate (%)		1.50
Issuance date		August 22, 2019
Maturity date		August 22, 2024
Interest payment		Payable semi-annually in arrear until maturity date
Principal redemption		1. Redemption at maturity: Redeemed on the maturity date, at their outstanding principal amount, which has not been early redeemed or converted.
Principal redemption		2. Early redemption: The Company has a right to redeem before maturity (call option) and the bondholders have a right to require the Company to redeem before maturity (put option). At exercise of each option, the outstanding principal amount together with accrued but unpaid interest are to be redeemed.
Conversion price		W 19,845 per common share (subject to adjustment based on diluted effects of certain events)
Conversion period		From August 23, 2020 to August 12, 2024
Redemption at the option of the issuer (Call option)		• On or at any time after 3 years from the issuance, if the closing price of the shares for any 20 trading days out of the 30 consecutive trading days is at least 130% of the applicable conversion price • The aggregate principal amount of the convertible bonds outstanding is less than 10% of the aggregate principal amount originally issued, or • In the event of certain changes in laws and other directives resulting in additional taxes for the holders
Redemption at the option of the bondholders (Put option)		On the day of 3 years from the issuance

The Company designated the convertible bonds as financial liabilities at fair value through profit of loss and recognized the change in fair value in profit or loss. The Company measures the convertible bond at fair value using the market price of convertible bonds disclosed on Bloomberg. The number of convertible shares as of June 30, 2020 is as follows:


(In won and No. of shares)	June 30, 2020
Aggregate outstanding amount of the convertible bonds	W	813,426,670,000
Conversion price	W	19,845
Number of common shares to be issued at conversion		40,988,998

122

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 (defined benefit assets) recognized as of June 30, 2020 and December 31, 2019 are as follows:


(In millions of won)	June 30, 2020			December 31, 2019
Present value of partially funded defined benefit obligations	W	1,487,784			1,476,866
Fair value of plan assets		(1,537,346	)		(1,604,118	)

	W	(49,562	)		(127,252	)

(b)

Expenses recognized in profit or loss for the three-month and six-month periods ended June 30, 2020 and 2019 are as follows:


	For the three-month periods ended June 30					For the six-month periods ended June 30
(In millions of won)	2020			2019		2020			2019
Current service cost	W	40,475			48,472		80,949			96,945
Net interest cost		(776	)		304		(1,552	)		608

	W	39,699			48,776		79,397			97,553

(c)

Plan assets as of June 30, 2020 and December 31, 2019 are as follows:


(In millions of won)	June 30, 2020		December 31, 2019
Guaranteed deposits in banks	W	1,537,346		1,604,118

As of June 30, 2020, 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, 2020 and 2019 are as follows:


	For the three-month periods ended June 30						For the six-month periods ended June 30
(In millions of won)	2020			2019			2020			2019
Remeasurements of net defined benefit liabilities	W	(1,208	)		(1,935	)		(3,782	)		(4,848	)
Tax effect		310			(4,328	)		972			(3,551	)

Remeasurements of net defined benefit liabilities, net of income tax	W	(898	)		(6,263	)		(2,810	)		(8,399	)

123

13.	Provisions and Other Liabilities

(a)

Changes in provisions for the six-month period ended June 30, 2020 are as follows:


(In millions of won)	*Warranties ()**			Others			Total
Balance at January 1, 2020	W	228,975			26,381			255,356
Additions (reversal)		88,155			(3,916	)		84,239
Usage		(108,987	)		(778	)		(109,765	)

Balance at June 30, 2020	W	208,143			21,687			229,830

Current	W	142,067			21,687			163,754
Non-current	W	66,076			—			66,076

(*)	Product warranties on defective products is normally applicable for 18~36 months from the date of customer’s purchase. The provision is calculated by using historical and anticipated rates of warranty claims and costs per claim to satisfy the Company’s warranty obligation.

(b)

Other liabilities as of June 30, 2020 and December 31, 2019 are as follows:


(In millions of won)	June 30, 2020		December 31, 2019
Current liabilities
Withholdings	W	12,988		13,049
Unearned revenue		13,207		25,012
Security deposits received		6,240		9,310

	W	32,435		47,371

Non-current liabilities
Long-term accrued expenses	W	80,726		76,300
Long-term other accounts payable		—		1,062
Long-term unearned revenue		4,502		6,852
Security deposits received		5,070		1,690

	W	90,298		85,904

124

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, as of June 30, 2020, the Company cannot reliably estimate the timing and amount of outflows of resources embodying economic benefits relating to the proceedings.

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 the Mannheim District Court in Germany. As of June 30, 2020, the Company cannot reliably estimate the timing and amount of outflows of resources embodying economic benefits relating to the proceedings.

Others

The Company is involved in various disputes in addition to the 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 1,110 million (W1,332,777 million) in connection with the Company’s export sales transactions with its subsidiaries. As of June 30, 2020, 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 Company has sold its accounts receivable with recourse.

The Company has credit facility agreements with Shinhan Bank and several other banks pursuant to which the Company could sell its accounts receivables up to an aggregate of W688,273 million in connection with its domestic and export sales transactions and, as of June 30, 2020, W49,552 million accounts and notes receivable sold were outstanding in connection with the agreement. In connection with the contracts above, the Company has sold its accounts receivable without recourse.

Letters of credit

As of June 30, 2020, the Company has agreements in relation to the opening of letters of credit up to USD 150 million (W180,105 million) with KEB Hana Bank, USD 50 million (W60,035 million) with Sumitomo Mitsui Banking Corporation, USD 100 million (W120,070 million) with Industrial Bank of Korea, USD 100 million (W120,070 million) with Industrial and Commercial Bank of China, USD 200 million (W240,140 million) with Shinhan Bank, USD 100 million (W120,070 million) with KB Kookmin Bank, USD 50 million (W60,035 million) with MUFG Bank and USD 200 million (W240,140 million) with the Export-Import Bank of Korea.

125

14.	Contingencies and Commitments, Continued

Payment guarantees

The Company provides payment guarantees to LG Display Vietnam Haiphong Co., Ltd. in connection with the principal amount of term loan credit facilities amounting to USD 1,282 million (W1,538,948 million) and payables for raw material purchases amounting to USD 100 million (W119,820 million).

In addition, the Company obtained payment guarantees amounting to USD 675 million (W810,473 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 (W367,189 million) from Korea Development Bank for foreign currency denominated bonds.

License agreements

As of June 30, 2020, the Company has technical license agreements with Hitachi Display, Ltd. and others in relation to its LCD business and patent cross license agreement with Universal Display Corporation in relation to its OLED business. Also, the Company has a trademark license agreement with LG Corp. as of June 30, 2020.

Long-term supply agreement

As of June 30, 2020, in connection with long-term supply agreements with customers, the Company recognized USD 475 million (W570,333 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 675 million (W810,473 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 W5,000), and as of June 30, 2020 and December 31, 2019, the number of issued common shares is 357,815,700. There have been no changes in the capital stock from January 1, 2019 to June 30, 2020.

16.

Revenue

Details of revenue for the three-month and six-month periods ended June 30, 2020 and 2019 are as follows:


	For the three-month periods ended June 30				For the six-month periods ended June 30
(In millions of won)	2020		2019		2020		2019
Sales of goods	W	4,874,110		4,921,524		9,337,924		10,289,646
Royalties		10,129		9,783		20,165		19,021
Others		6,869		4,654		14,440		10,898

	W	4,891,108		4,935,961		9,372,529		10,319,565

126

17.	The Nature of Expenses and Others

The classification of expenses by nature for the three-month and six-month periods ended June 30, 2020 and 2019 are as follows:


	For the three-month periods ended June 30				For the six-month periods ended June 30
(In millions of won)	2020		2019		2020		2019
Changes in inventories	W	154,890		70,903		77,706		93,651
Purchases of raw materials, merchandise and others		1,781,935		1,965,852		3,540,109		4,112,732
Depreciation and amortization		633,217		645,827		1,296,487		1,209,059
Outsourcing		1,716,116		1,276,488		3,252,729		2,740,641
Labor		540,820		613,432		1,056,735		1,243,123
Supplies and others		159,473		192,535		284,969		347,850
Utility		152,360		167,197		318,987		343,917
Fees and commissions		90,133		120,849		187,085		251,284
Shipping		13,515		19,635		26,791		38,197
Advertising		26,839		19,969		68,824		34,311
Warranty		33,917		89,410		88,155		175,711
Travel		9,426		23,618		21,048		44,737
Taxes and dues		13,005		14,515		27,155		29,622
Impairment loss on property, plant and equipment		82		5,583		5,576		5,943
Impairment loss on intangible assets		26,164		—		30,511		—
Others		131,190		143,113		251,675		287,055

	W	5,483,082		5,368,926		10,534,542		10,957,833

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

127

18.	Selling and Administrative Expenses

Details of selling and administrative expenses for the three-month and six-month periods ended June 30, 2020 and 2019 are as follows:


	For the three-month periods ended June 30				For the six-month periods ended June 30
(In millions of won)	2020		2019		2020		2019
Salaries	W	47,467		58,418		95,301		116,991
Expenses related to defined benefit plans		6,084		8,374		12,315		16,053
Other employee benefits		10,773		12,437		21,141		27,335
Shipping		8,893		15,319		17,748		29,395
Fees and commissions		31,102		30,860		63,784		68,326
Depreciation		21,944		27,125		43,729		55,439
Taxes and dues		502		740		1,056		1,287
Advertising		26,839		19,969		68,824		34,311
Warranty		33,917		89,410		88,155		175,711
Insurance		1,932		1,516		3,563		2,867
Travel		870		4,698		3,333		8,697
Training		1,859		2,592		2,531		5,354
Others		7,653		9,092		16,430		20,314

	W	199,835		280,550		437,910		562,080

19.	Personnel Expenses

Details of personnel expenses for the three-month and six-month periods ended June 30, 2020 and 2019 are as follows:


	For the three-month periods ended June 30				For the six-month periods ended June 30
(In millions of won)	2020		2019		2020		2019
Salaries and wages	W	433,384		536,093		865,257		1,080,246
Other employee benefits		63,170		73,303		127,477		152,080
Contributions to National Pension plan		16,943		18,003		33,970		36,153
Expenses related to defined benefit plans and defined contribution plans		39,983		48,776		79,734		97,570

	W	553,480		676,175		1,106,438		1,366,049

128

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, 2020 and 2019 are as follows:


	For the three-month periods ended June 30				For the six-month periods ended June 30
(In millions of won)	2020		2019		2020		2019
Foreign currency gain	W	120,443		289,070		564,022		414,022
Gain on disposal of property, plant and equipment		7,867		12,863		12,148		27,963
Gain on disposal of intangible assets		—		—		—		552
Reversal of impairment loss on intangible assets		50		—		600		201
Rental income		438		523		848		1,010
Others		1,245		1,861		3,172		1,965

	W	130,043		304,317		580,790		445,713

(b)

Details of other non-operating expenses for the three-month and six-month periods ended June 30, 2020 and 2019 are as follows:


	For the three-month periods ended June 30				For the six-month periods ended June 30
(In millions of won)	2020		2019		2020		2019
Foreign currency loss	W	133,325		296,829		509,628		416,513
Other bad debt expense		—		10		—		10
Loss on disposal of property, plant and equipment		13,512		6,745		17,886		6,747
Impairment loss on property, plant and equipment		82		5,583		5,576		5,943
Loss on disposal of intangible assets		7		—		7		18
Impairment loss on intangible assets		26,164		—		30,511		—
Donations		312		382		318		382
Others		629		5,589		2,738		7,728

	W	174,031		315,138		566,664		437,341

129

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, 2020 and 2019 are as follows:


	For the three-month periods ended June 30				For the six-month periods ended June 30
(In millions of won)	2020		2019		2020		2019
Finance income
Interest income	W	2,235		2,484		6,663		5,269
Dividend income		—		11,120		8,239		18,622
Foreign currency gain		59,463		8,894		25,779		14,452
Gain on disposal of investments		8,392		—		8,392		—
Gain on transaction of derivatives		5,937		7,782		27,551		13,167
Gain on valuation of derivatives		—		27,533		60,917		52,878
Gain on valuation of financial liabilities at fair value through profit or loss		1,844		—		133,579		—
Other		1,613		1,298		3,247		2,593

	W	79,484		59,111		274,367		106,981

Finance costs
Interest expense	W	51,748		26,617		107,075		39,689
Foreign currency loss		12,707		38,427		142,709		71,867
Loss on repayment of borrowings		498		—		498		—
Loss on sale of trade accounts and notes receivable		937		941		1,205		1,447
Loss on valuation of financial assets at fair value through profit or loss		240		—		1,492		3,960
Loss on valuation of derivatives		39,740		15,542		27,000		15,542
Others		484		1,017		1,105		2,035

	W	106,354		82,544		281,084		134,540

130

22.	Income Taxes

(a)

Details of income tax expense (benefit) for the three-month and six-month periods ended June 30, 2020 and 2019 are as follows:


	For the three-month periods ended June 30						For the six-month periods ended June 30
(In millions of won)	2020			2019			2020			2019
Current tax expense (benefit)	W	109			(124,849	)		253			(124,958	)
Deferred tax expense (benefit)		(166,151	)		83,701			(304,160	)		10,037

Income tax expense (benefit)	W	(166,042	)		(41,148	)		(303,907	)		(114,921	)

(b)

Deferred Tax Assets and Liabilities

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

Deferred tax assets and liabilities as of June 30, 2020 and December 31, 2019 are attributable to the following:


	Assets				Liabilities						Total
(In millions of won)	June 30, 2020		December 31, 2019		June 30, 2020			December 31, 2019			June 30, 2020			December 31, 2019
Other accounts receivable, net	W	—		—		(97	)		(4,364	)		(97	)		(4,364	)
Inventories, net		70,439		78,730		—			—			70,439			78,730
Defined benefit liabilities, net		—		—		(24,132	)		—			(24,132	)		—
Accrued expenses		102,461		120,854		—			—			102,461			120,854
Property, plant and equipment		492,214		465,883		—			—			492,214			465,883
Intangible assets		16,450		19,422		—			—			16,450			19,422
Provisions		53,983		59,875		—			—			53,983			59,875
Other temporary differences		19,125		52,293		—			—			19,125			52,293
Tax losses carryforwards		869,567		536,684		—			—			869,567			536,684
Tax credit carryforwards		72,835		38,337		—			—			72,835			38,337

Deferred tax assets (liabilities)	W	1,697,074		1,372,078		(24,229	)		(4,364	)		1,672,845			1,367,714

131

23.	Loss Per Share

(a)

Basic loss per share for the three-month and six-month periods ended June 30, 2020 and 2019 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)	2020			2019			2020			2019
Loss for the period	W	(456,084,231,516	)		(407,764,101,091	)		(793,660,585,626	)		(521,705,305,640	)
Weighted-average number of common stocks outstanding		357,815,700			357,815,700			357,815,700			357,815,700

Loss per share	W	(1,275	)		(1,140	)		(2,218	)		(1,458	)

(b)

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.

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.

132

24.	Financial Risk Management, Continued

Exposure to currency risk

The Company’s exposure to foreign currency risk based on notional amounts as of June 30, 2020 and December 31, 2019 is as follows:


	June 30, 2020
(In millions)	USD			JPY			CNY		EUR
Cash and cash equivalents		721			75			1		—
Trade accounts and notes receivable		2,813			3,688			—		—
Non-trade receivables		61			83			—		—
Trade accounts and notes payable		(1,847	)		(7,013	)		—		—
Other accounts payable		(164	)		(4,687	)		—		(3	)
Financial liabilities		(2,865	)		—			—		—

		(1,281	)		(7,854	)		1		(3	)

Currency swap contracts		2,085			—			—		—

Net exposure		804			(7,854	)		1		(3	)


	December 31, 2019
(In millions)	USD			JPY			CNY		PLN		EUR
Cash and cash equivalents		907			3			2		1		2
Trade accounts and notes receivable		2,880			3,974			—		—		—
Non-trade receivables		306			452			—		—		—
Trade accounts and notes payable		(1,035	)		(7,346	)		—		—		—
Other accounts payable		(145	)		(3,619	)		—		—		(9	)
Financial liabilities		(2,900	)		—			—		—		—

		13			(6,536	)		2		1		(7	)

Currency swap contracts		2,085			—			—		—		—

Net exposure		2,098			(6,536	)		2		1		(7	)

133

24.	Financial Risk Management, Continued

Average exchange rates applied for the six-month periods ended June 30, 2020 and 2019 and the exchange rates at June 30, 2020 and December 31, 2019 are as follows:


	Average rate				Reporting date spot rate
(In won)	2020		2019		June 30, 2020		December 31, 2019
USD	W	1,206.72		1,145.44		1,200.70		1,157.80
JPY		11.15		10.41		11.16		10.63
CNY		171.36		168.62		169.66		165.74
PLN		301.39		301.47		303.09		304.87
EUR		1,329.43		1,293.61		1,350.19		1,297.43

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, 2020 and December 31, 2019, 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, 2020						December 31, 2019
(In millions of won)	Equity			Profit or loss			Equity			Profit or loss
USD (5 percent weakening)	W	34,994			34,994			88,054			88,054
JPY (5 percent weakening)		(3,177	)		(3,177	)		(2,520	)		(2,520	)
CNY (5 percent weakening)		6			6			12			12
PLN (5 percent weakening)		—			—			11			11
EUR (5 percent weakening)		(147	)		(147	)		(329	)		(329	)

134

24.	Financial Risk Management, Continued

(ii)

Interest rate risk

Interest rate risk arises principally from the Company’s variable interest-bearing 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 currency interest rate swap contracts amounting to USD 1,785 million (W2,143,250 million) and interest rate swap contracts amounting to W120,000 million in notional amount to hedge interest rate risk with respect to variable interest bearing borrowings.

Profile

The interest rate profile of the Company’s interest-bearing financial instruments as of June 30, 2020 and December 31, 2019 is as follows:


(In millions of won)	June 30, 2020			December 31, 2019
Fixed rate instruments
Financial assets	W	995,563			1,182,579
Financial liabilities		(6,386,909	)		(6,066,554	)

	W	(5,391,346	)		(4,883,975	)

Variable rate instruments
Financial liabilities	W	(2,262,623	)		(2,458,789	)

ii)

Equity and profit or loss sensitivity analysis for variable rate instruments


	Equity					Profit or loss
(In millions of won)	1%p increase			1%p decrease		1%p increase			1%p decrease
June 30, 2020
Variable rate instruments (*)	W	(2,610	)		2,610		(2,610	)		2,610

December 31, 2019
Variable rate instruments (*)	W	(2,847	)		2,847		(2,847	)		2,847

(*)	Financial instruments related to non-hedging interest rate swaps are excluded.

135

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 subsequent to initial recognition, the Company recognizes the changes in expected credit loss (“ECL”) in profit or loss at each reporting date.

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposures to credit risk as of June 30, 2020 and December 31, 2019 are as follows:


(In millions of won)	June 30, 2020		December 31, 2019
Financial assets carried at amortized cost
Cash and cash equivalents	W	918,639		1,105,245
Deposits in banks		76,863		77,268
Trade accounts and notes receivable, net		3,525,187		3,565,860
Non-trade receivables		113,401		438,659
Accrued income		764		1,281
Deposits		12,266		13,125
Short-term loans		26,134		21,623
Long-term loans		26,187		40,827
Long-term non-trade receivables		16,511		19,899

	W	4,715,952		5,283,787

Financial assets at fair value through profit or loss
Convertible bonds	W	1,544		1,544
Derivatives		83,822		49,676

	W	85,366		51,220

Financial assets at fair value through other comprehensive income
Debt instruments	W	72		76

	W	4,801,390		5,335,083

136

24.	Financial Risk Management, Continued

In addition to the financial assets above, as of June 30, 2020, the Company provides payment guarantees in connection with the principal amount of credit facilities amounting to USD 1,282 million (W1,538,948 million) and payables for raw material purchases amounting to USD 100 million (W119,820 million), for its subsidiary (see note 14).

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

(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 assets. 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 securities. In addition, the Company maintains a line of credit with various banks.

137

24.	Financial Risk Management, Continued

The following are the contractual maturities of financial liabilities, including estimated interest payments, as of June 30, 2020.


			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
Borrowings	W	5,784,567		6,152,948		746,304		1,176,144		1,184,854		2,976,597			69,049
Bonds		2,864,965		3,110,842		186,172		332,939		1,160,673		1,337,286			93,772
Trade accounts and notes payable		3,679,767		3,679,767		2,766,602		913,165		—		—			—
Other accounts payable		740,482		740,482		739,380		1,102		—		—			—
Other accounts payable (enterprise procurement cards)(*1)		1,791,138		1,810,605		1,170,555		640,050		—		—			—
Payment guarantee(*2)		14,156		1,606,689		114,350		126,770		470,379		895,190			—
Security deposits received		11,310		11,310		6,240		—		5,070		—			—
Lease liabilities		10,193		10,430		6,024		1,977		1,824		605			—

Derivative financial liabilities
Derivatives	W	20,821		10,748		5,179		7,264		3,146		(4,841	)		—

	W	14,917,399		17,133,821		5,740,806		3,199,411		2,825,946		5,204,837			162,821

(*1)

(*2)	Contractual cash flows of payment guarantee is identical to timing of principal and interest payment and represent the maximum amount that the Company could be required to pay the guarantee amount.

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

138

24.	Financial Risk Management, Continued

(d)

Capital management


(In millions of won)	June 30, 2020			December 31, 2019
Total liabilities	W	16,431,835			16,716,587
Total equity		9,869,622			10,666,093
Cash and deposits in banks (*1)		995,491			1,182,502
Borrowings (including bonds)		8,649,532			8,525,343
Total liabilities to equity ratio		166	%		157	%
Net borrowings to equity ratio (*2)		78	%		69	%

(*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.

139

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 their fair value because of the short maturity of these instruments.

ii) Trade receivables and other receivables

iii) Investments in equity and debt instruments

iv) Non-derivative financial liabilities

140

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, 2020 and December 31, 2019 are as follows:


	June 30, 2020					December 31, 2019
(In millions of won)	Carrying amounts		Fair values			Carrying amounts		Fair values
Financial assets carried at amortized cost
Cash and cash equivalents	W	918,639		(*	)		1,105,245		(*	)
Deposits in banks		76,863		(*	)		77,268		(*	)
Trade accounts and notes receivable		3,525,187		(*	)		3,565,860		(*	)
Non-trade receivables		113,401		(*	)		438,659		(*	)
Accrued income		764		(*	)		1,281		(*	)
Deposits		12,266		(*	)		13,125		(*	)
Short-term loans		26,134		(*	)		21,623		(*	)
Long-term loans		26,187		(*	)		40,827		(*	)
Long-term non-trade receivables		16,511		(*	)		19,899		(*	)
Financial assets at fair value through profit or loss
Equity instruments	W	1,504		1,504			2,997		2,997
Convertible bonds		1,544		1,544			1,544		1,544
Derivatives		83,822		83,822			49,676		49,676
Financial assets at fair value through other comprehensive income
Debt instruments	W	72		72			76		76
Financial liabilities at fair value through profit or loss
Derivatives	W	20,821		20,821			20,592		20,592
Convertible bonds		762,615		762,615			858,385		858,385
Financial liabilities carried at amortized cost
Borrowings	W	5,784,567		5,806,129			5,374,125		5,438,952
Bonds		2,102,350		2,122,950			2,292,833		2,345,867
Trade accounts and notes payable		3,679,767		(*	)		2,682,403		(*	)
Other accounts payable		2,531,620		(*	)		3,329,040		(*	)
Long-term other accounts payable		—		(*	)		1,062		(*	)
Payment guarantee liabilities		14,156		(*	)		16,502		(*	)
Security deposits received		11,310		(*	)		11,000		(*	)
Lease liabilities		10,193		(*	)		6,557		(*	)

(*)	Excluded from disclosures as the carrying amount approximates fair value.

141

24.	Financial Risk Management, Continued

(iii)

Fair values of financial assets and liabilities

i) Fair value hierarchy

•

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, 2020 and December 31, 2019 are as follows:


	June 30, 2020
(In millions of won)	Level 1		Level 2		Level 3		Total
Financial assets at fair value through profit or loss
Equity instruments	W	—		—		1,504		1,504
Convertible bonds		—		—		1,544		1,544
Derivatives		—		—		83,822		83,822
Financial assets at fair value through other comprehensive income
Debt instruments	W	72		—		—		72
Financial liabilities at fair value through profit or loss
Derivatives	W	—		—		20,821		20,821
Convertible bonds		762,615		—		—		762,615


	December 31, 2019
(In millions of won)	Level 1		Level 2		Level 3		Total
Financial assets at fair value through profit or loss
Equity instruments	W	—		—		2,997		2,997
Convertible bonds		—		—		1,544		1,544
Derivatives		—		—		49,676		49,676
Financial assets at fair value through other comprehensive income
Debt instruments	W	76		—		—		76
Financial liabilities at fair value through profit or loss
Derivatives	W	—		—		20,592		20,592
Convertible bonds		858,385		—		—		858,385

142

24	Financial Risk Management, Continued

iii)

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

(In millions of won)

June 30, 2020

Valuation
technique

Input

Classification

Level 1

Level 2

Level 3

Liabilities

Borrowings

—

5,806,129

Discounted
cash flow

Discount
rate

Bonds

—

2,122,950

Discounted
cash flow

Discount
rate

(In millions of won)

December 31, 2019

Valuation
technique

Input

Classification

Level 1

Level 2

Level 3

Liabilities

Borrowings

—

5,438,952

Discounted
cash flow

Discount
rate

Bonds

—

2,345,867

Discounted
cash flow

Discount
rate

iv)

The interest rates applied for determination of the above fair value as of June 30, 2020 and December 31, 2019 are as follows:


	June 30, 2020	December 31, 2019
Borrowings, bonds and others	2.34~4.40%	1.87~3.56%

143

25.	Changes in liabilities arising from financing activities

Changes in liabilities arising from financing activities for the six-month period ended June 30, 2020 are as follows:


	January 1, 2020					Non-cash transactions
(In millions of won)	January 1, 2020		Cash flows from financing activities			Reclassification			Gain or loss on foreign currency translation		Effective interest adjustment		Others			June 30, 2020
Short-term borrowings	W	347,340		321,546			—			11,144		—		—			680,030
Current portion of long-term borrowings and bonds		1,117,218		(616,482	)		1,041,586			4,320		357		498			1,547,497
Payment guarantee liabilities		16,502		4,029			—			—		—		(6,375	)		14,156
Long-term borrowings		4,319,269		370,000			(741,966	)		59,417		—		—			4,006,720
Bonds (*)		2,741,516		49,949			(299,620	)		46,974		10,045		(133,579	)		2,415,285
Lease liabilities		6,557		(6,122	)		—			—		—		9,758			10,193

	W	8,548,402		122,920			—			121,855		10,402		(129,698	)		8,673,881

(*)	Others include gain on valuation of financial liabilities at fair value through profit or loss amounting to W133,579 million.

144

26.	Related Parties and Others

(a)

Related parties

Related parties as of June 30, 2020 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.

145

26.	Related Parties and Others, Continued

(b)


	For the three-month period ended June 30, 2020
					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	2,369,574		—		—		—		—		—
LG Display Japan Co., Ltd.		408,731		—		—		—		—		—
LG Display Germany GmbH		206,705		—		—		—		—		262
LG Display Taiwan Co., Ltd.		252,031		—		—		—		—		180
LG Display Nanjing Co., Ltd.		2,113		—		784		—		323,387		5,713
LG Display Shanghai Co., Ltd.		316,655		—		—		—		—		—
LG Display Poland Sp. z o.o.		8,392		—		—		—		—		—
LG Display Guangzhou Co., Ltd.		6,363		—		2,783		—		483,222		8,423
LG Display Shenzhen Co., Ltd.		176,083		—		—		—		—		—
LG Display Yantai Co., Ltd.		21		—		2,343		—		208,951		11,260
LG Display (China) Co., Ltd.		961		—		257,934		—		—		860
LG Display Singapore Pte. Ltd.		348,619		—		—		—		—		161
L&T Display Technology (Fujian) Limited		91,640		—		—		—		—		179
Nanumnuri Co., Ltd.		52		—		—		—		—		4,694
Global OLED Technology LLC		—		—		—		—		—		1,393
LG Display Guangzhou Trading Co., Ltd.		216,470		—		—		—		—		—
LG Display Vietnam Haiphong Co., Ltd.		4,424		—		28,261		—		350,846		5,864
Suzhou Lehui Display Co., Ltd.		63,885		—		96		—		—		—
LG Display High-Tech (China) Co., Ltd.		4,831		—		633		—		248,647		1,876

	W	4,477,550		—		292,834		—		1,615,053		40,865

146

26.	Related Parties and Others, Continued


	For the three-month period ended June 30, 2020
	Sales and others		Dividend income		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	—		—		5		—		—		14
AVATEC Co., Ltd.		—		—		—		—		18,832		217
Paju Electric Glass Co., Ltd.		—		—		64,097		—		—		653
YAS Co., Ltd.		—		—		1,844		2,302		—		681
Material Science Co., Ltd.		—		—		9		—		—		—

	W	—		—		65,955		2,302		18,832		1,565

Entity that has significant influence over the Company
LG Electronics Inc.	W	132,430		—		2,939		13,350		—		36,180

Subsidiaries of the entity that has significant influence over the Company
LG Electronics India Pvt. Ltd.	W	3,013		—		—		—		—		—
LG Electronics Vietnam Haiphong Co., Ltd.		54,019		—		—		—		—		247
LG Electronics Reynosa S.A. DE C.V.		—		—		—		—		—		142
LG Electronics Mexicali S.A.DE C.V.		5,992		—		—		—		—		8
LG Electronics RUS, LLC		—		—		—		—		—		38

147

26.	Related Parties and Others, Continued


	For the three-month period ended June 30, 2020
	Sales and others		Dividend income		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	15,477		—		—		—		—		56
LG Innotek Co., Ltd.		1,677		—		7		—		—		20,366
Qingdao LG Inspur Digital Communication Co., Ltd.		1,588		—		—		—		—		—
Others		19,295		—		7		—		—		2,884

	W	101,061		—		14		—		—		23,741

	W	4,711,041		—		361,742		15,652		1,633,885		102,351

148

26.	Related Parties and Others, Continued


	For the six-month period ended June 30, 2020
					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	4,221,867		—		—		—		—		—
LG Display Japan Co., Ltd.		871,404		—		—		—		—		—
LG Display Germany GmbH		536,704		—		—		—		—		5,749
LG Display Taiwan Co., Ltd.		545,340		—		—		—		—		315
LG Display Nanjing Co., Ltd.		3,626		—		1,293		—		629,287		11,863
LG Display Shanghai Co., Ltd.		516,469		—		—		—		—		—
LG Display Poland Sp. z o.o.		8,392		—		—		—		—		—
LG Display Guangzhou Co., Ltd.		9,706		—		5,059		—		933,545		13,935
LG Display Shenzhen Co., Ltd.		389,233		—		—		—		—		—
LG Display Yantai Co., Ltd.		106		—		3,835		—		462,867		19,881
LG Display (China) Co., Ltd.		1,798		—		662,113		—		—		1,211
LG Display Singapore Pte. Ltd.		568,689		—		—		—		—		238
L&T Display Technology (Fujian) Limited		159,482		—		—		—		—		277
Nanumnuri Co., Ltd.		104		—		—		—		—		11,415
Global OLED Technology LLC		—		—		—		—		—		2,668
LG Display Guangzhou Trading Co., Ltd.		443,542		—		—		—		—		—
LG Display Vietnam Haiphong Co., Ltd.		9,975		—		41,733		—		741,523		13,425
Suzhou Lehui Display Co., Ltd.		94,851		—		147		—		—		—
LG Display High-Tech (China) Co., Ltd.		12,064		—		1,293		—		344,106		2,870

	W	8,393,352		—		715,473		—		3,111,328		83,847

149

26.	Related Parties and Others, Continued


	For the six-month period ended June 30, 2020
	Sales and others		Dividend income		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	—		—		30		—		—		19
AVATEC Co., Ltd.		—		200		—		—		33,815		416
Paju Electric Glass Co., Ltd.		—		7,739		138,377		—		—		1,626
YAS Co., Ltd.		—		300		3,328		2,352		—		1,651
Material Science Co., Ltd.		—		—		69		—		—		—

	W	—		8,239		141,804		2,352		33,815		3,712

Entity that has significant influence over the Company
LG Electronics Inc.	W	326,449		—		4,978		32,889		—		65,841

Subsidiaries of the entity that has significant influence over the Company
LG Electronics India Pvt. Ltd.	W	17,005		—		—		—		—		65
LG Electronics Vietnam Haiphong Co., Ltd.		125,920		—		—		—		—		446
LG Electronics Reynosa S.A. DE C.V.		—		—		—		—		—		672
LG Electronics Mexicali S.A.DE C.V.		16,037		—		—		—		—		17
LG Electronics RUS, LLC		—		—		—		—		—		155

150

26.	Related Parties and Others, Continued


	For the six-month period ended June 30, 2020
					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	35,889		—		—		—		—		302
LG Innotek Co., Ltd.		2,761		—		653		—		—		40,718
Qingdao LG Inspur Digital Communication Co., Ltd.		6,665		—		—		—		—		—
Others		48,667		—		7		—		—		5,593

	W	252,944		—		660		—		—		47,968

	W	8,972,745		8,239		862,915		35,241		3,145,143		201,368

151

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
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		—		—		—		—		—

	W	4,288,939		11,120		387,406		—		1,141,230		36,526

152

26.	Related Parties and Others, Continued


	For the three-month period ended June 30, 2019
			Dividend income		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.(*1)		—		—		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

153

26.	Related Parties and Others, Continued


	For the three-month period ended June 30, 2019
	Sales and others		Dividend income		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.(*2)		—		—		—		21,898		—		—
Inspur LG Digital Mobile Communications Co., Ltd.		18,328		—		—		—		—		—
Qingdao LG Inspur Digital Communication Co., Ltd.		208		—		—		—		—		—
HiEntech Co., Ltd.(*2)		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

(*1)	Represents transactions occurred prior to the Company’s disposal of the entire investments.

(*2)	Represents transactions occurred prior to LG Electronics Inc.’s disposal of the entire investments.

154

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

155

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)	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	—		—		12		—		—		1
INVENIA Co., Ltd. (*1)		—		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

156

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)	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	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.(*2)		—		—		—		46,259		—		—
Inspur LG Digital Mobile Communications Co., Ltd.		35,258		—		—		—		—		—
Qingdao LG Inspur Digital Communication Co., Ltd.		2,796		—		—		—		—		—
HiEntech Co., Ltd.(*2)		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

(*1)	Represents transactions occurred prior to the Company’s disposal of the entire investments.

(*2)	Represents transactions occurred prior to LG Electronics Inc.’s disposal of the entire investments.

157

26.	Related Parties and Others, Continued

(c)

Trade accounts and notes receivable and payable and others as of June 30, 2020 and December 31, 2019 are as follows:


	Trade accounts and notes receivable and others				Trade accounts and notes payable and others
(In millions of won)	June 30, 2020		December 31, 2019		June 30, 2020		December 31, 2019
Subsidiaries
LG Display America, Inc.	W	1,041,295		937,409		—		—
LG Display Japan Co., Ltd.		324,970		274,964		—		5
LG Display Germany GmbH		255,609		382,463		898		2,794
LG Display Taiwan Co., Ltd.		417,378		454,563		43		104
LG Display Nanjing Co., Ltd.		3,371		1,358		25,537		220,327
LG Display Shanghai Co., Ltd.		358,426		172,259		—		3
LG Display Guangzhou Co., Ltd.		12,468		12,465		196,816		313,756
LG Display Guangzhou Trading Co., Ltd.		355,187		351,322		—		—
LG Display Shenzhen Co., Ltd.		165,023		116,494		5		2
LG Display Yantai Co., Ltd.		—		—		211,574		149,715
LG Display (China) Co., Ltd.		961		22		121,399		112,053
LG Display Singapore Pte. Ltd.		173,462		298,132		82		21
L&T Display Technology (Fujian) Limited		61,981		46,375		221,462		199,349
Nanumnuri Co., Ltd.		—		—		1,897		3,866
LG Display Vietnam Haiphong Co., Ltd.		25,522		24,385		413,123		395,429
Suzhou Lehui Display Co., Ltd.		45,894		24,830		93		46
LG Display High-Tech (China) Co., Ltd.		8		1,722		182,243		54,662

	W	3,241,555		3,098,763		1,375,172		1,452,132

158

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, 2020		December 31, 2019		June 30, 2020		December 31, 2019
Associates and their subsidiaries
WooRee E&L Co., Ltd.	W	—		—		9		8
AVATEC Co., Ltd.		—		—		4,857		1,029
Paju Electric Glass Co., Ltd.		—		—		60,610		62,853
YAS Co., Ltd.		—		—		4,225		4,533
Material Science Co., Ltd.		—		—		—		8

	W	—		—		69,701		68,431

Entity that has significant influence over the Company
LG Electronics Inc.	W	114,748		208,870		41,223		110,784

159

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, 2020		December 31, 2019		June 30, 2020		December 31, 2019
Subsidiaries of the entity that has significant influence over the Company
LG Innotek Co., Ltd.	W	4		4		26,343		29,613
LG Electronics Reynosa S.A. DE C.V		—		—		71		62
LG Electronics India Pvt. Ltd.		604		6,113		—		—
LG Electronics Vietnam Haiphong Co., Ltd.		47,608		47,740		28		29
LG Electronics RUS, LLC		—		—		37		67
LG Electronics Egypt S.A.E		3,026		9,432		—		—
Qingdao LG Inspur Digital Communication Co., Ltd.		646		6,456		—		—
Others		14,358		12,757		1,371		1,768

	W	66,246		82,502		27,850		31,539

	W	3,422,549		3,390,135		1,513,946		1,662,886

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26.	Related Parties and Others, Continued


(In millions of won)	2019
Associates	Loans		Collection of loans
INVENIA Co., Ltd.(*)	W	1,000		—

(*)	Excluded from related parties due to disposal of equity investments during the year ended December 31, 2019.

161

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 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, 2020 and 2019 and as of June 30, 2020 and December 31, 2019 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, 2020				For the six-month period ended June 30, 2020				June 30, 2020
(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	56,690		22,989		172,015		44,658		45,351		12,723
LG Uplus Corp.		—		555		—		1,115		—		132
LG Chem Ltd. and its subsidiaries		915		109,054		1,033		226,871		46		85,482
S&I Corp. and its subsidiaries		83		12,590		167		69,035		21,332		14,493
Silicon Works Co., Ltd		—		99,596		36		197,193		—		69,076
LG Corp.		—		12,634		—		24,417		10,250		—
LG Management Development Institute		—		1,987		—		3,584		3,480		224
LG CNS Co., Ltd. and its subsidiaries		—		24,060		—		34,674		—		19,217
G2R Inc. and its subsidiaries		—		8,722		—		10,007		—		9,017
Robostar Co., Ltd.		—		111		—		123		—		3

	W	57,688		292,298		173,251		611,677		80,459		210,367

162

26.	Related Parties and Others, Continued


	For the three-month period ended June 30, 2019				For the six-month period ended June 30, 2019				December 31, 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		93,622		45,363
LG Uplus Corp.		—		577		—		1,135		—		208
LG Chem Ltd. and its subsidiaries		47		146,715		66		300,227		23		53,428
S&I Corp. and its subsidiaries		83		75,600		167		245,868		21,307		85,312
Silicon Works Co., Ltd		—		156,214		92		306,506		—		88,355
LG Corp.		—		13,096		—		26,369		8,781		—
LG Management Development Institute		—		1,915		—		4,385		3,480		231
LG CNS Co., Ltd. and its subsidiaries		—		40,208		—		58,316		—		58,967
LG Hausys Ltd		1		1		1		1		—		—
G2R Inc. and its subsidiaries		—		823		—		1,887		—		29,540
Robostar Co., Ltd.		—		1,274		—		1,988		—		—
Other(*)		—		56,976		—		56,976		—		—

	W	156,754		525,349		352,121		1,068,199		127,213		361,404

(*)	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.

163

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, 2020 and 2019 are as follows:


	For the three-month periods ended June 30				For the six-month periods ended June 30
(In millions of won)	2020		2019		2020		2019
Short-term benefits	W	530		610		1,099		1,501
Expenses related to the defined benefit plan		83		247		179		347

	W	613		857		1,278		1,848

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

164

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, 2020	By:	/s/ Heeyeon Kim
		(Signature)

	Name:	Heeyeon Kim
	Title:	Head of IR / Vice President

165