6-K 1 d143801d6k.htm FORM 6-K Form 6-K
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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 March 2021

 

 

LG Display Co., Ltd.

(Translation of Registrant’s name into English)

 

 

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

(Address of principal executive offices)

 

 

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

Form 20-F  ☒            Form 40-F  ☐

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

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

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

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

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

Yes  ☐            No  ☒

 

 

 


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Submission of Audit Report

 

1.

Name of external auditor: Samjong Accounting Corporation (KPMG)

 

2.

Date of receiving external audit report: March 3, 2021

 

3.

Auditor’s opinion

 

     FY 2020      FY 2019  

Audit Report on Consolidated Financial Statements

     Unqualified        Unqualified  

 

4.

Financial Highlights of Consolidated Financial Statements

 

Items

   FY 2020     FY 2019  

Total Assets

     35,071,522,695,879       35,574,562,414,792  

Total Liabilities

     22,334,584,392,324       23,086,281,885,144  

Total Shareholders’ Equity

     12,736,938,303,559       12,488,280,529,651  

Capital Stock

     1,789,078,500,000       1,789,078,500,000  

Revenues

     24,230,124,227,625       23,475,567,487,286  

Operating Income

     -29,116,374,583       -1,359,381,867,172  

Ordinary Income

     -595,097,624,603       -3,344,241,721,215  

Net Income

     -70,635,680,744       -2,872,078,218,445  

Total Shareholders’ Equity / Capital Stock

     712     698


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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Consolidated Financial Statements

For the Years Ended December 31, 2020 and 2019

(With Independent Auditors’ Report Thereon)


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Independent Auditors’ Report

Based on a report originally issued in Korean

To the Shareholders and Board of Directors

LG Display Co., Ltd.:

Opinion

We have audited the accompanying consolidated financial statements of LG Display Co., Ltd. and its subsidiaries (the “Group”), which comprise the consolidated statements of financial position of the Group as of December 31, 2020 and 2019, the related consolidated statements of comprehensive income (loss), changes in equity and cash flows for the years then ended, and notes to the consolidated financial statements comprising significant accounting policies and other explanatory information.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2020 and 2019, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with Korean International Financial Reporting Standards (“K-IFRS”).

Basis for Opinion

We conducted our audits in accordance with Korean Standards on Auditing. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in the Republic of Korea, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements as of and for the year ended December 31, 2020. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

(i) Impairment test for Display CGU

As discussed in Notes 3(j), 9 and 10 to the consolidated financial statements, the goodwill of W45,531 million is allocated to the Group’s Display CGU. The Group’s non-financial assets as of December 31, 2020 amount to W21,167,139 million, and a large portion of which are related to the Display CGU. The recoverable amount used by the Group in impairment test of the Display CGU is value in use based on discounted cash flow model. As a result of impairment test for Display CGU, the Group concluded that recoverable amount exceeds the carrying amount.

We identified impairment test for Display CGU as a key audit matter. Revenue and operating expenditures for the forecast period, growth rates for subsequent years (“terminal growth rate”), and discount rate used to estimate value in use for impairment test of Display CGU involve significant judgement and minor changes would have a significant effect on the results of the Group’s impairment test of Display CGU.


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The primary procedures we performed to address the impairment test for Display CGU include followings:

 

   

We tested certain internal controls over the Group’s non-financial assets impairment test process, including controls related to development of the revenue and operating expenditures forecasts, terminal growth rate and discount rate assumptions for Display CGU.

 

   

We compared the Group’s historical revenue and operating expenditures forecasts to actual results to assess the Group’s ability to accurately forecast.

 

   

We evaluated the revenue and operating expenditures forecasts used to determine the value in use by comparison with the financial budgets approved by the board of directors.

 

   

We performed sensitivity analysis over the terminal growth rate and discount rate assumptions to assess their impact on the Group’s impairment test.

 

   

We involved our valuation professionals with specialized skills and knowledge who assisted us in the following:

 

   

testing discount rate by comparing them against independently developed rates using publicly available market data for comparable entities; and

 

   

testing revenue, operating expenditures forecasts and terminal growth rate by comparing them against analyst reports and industry reports.

(ii) Assessment of recognition of deferred tax assets

As discussed in Note 24 to the consolidated financial statements, the deferred tax assets arise primarily due to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as well as, unused tax losses and tax credit carryforwards. The assessment of the recognition of these deferred tax assets is dependent on the generation of future taxable income of the Group. As of December 31, 2020, the Group had W2,273,677 million of deferred tax assets in the consolidated statement of financial position and W230,768 million of unrecognized tax credit carryforwards as of December 31, 2020, primarily related to LG Display Co., Ltd.

We identified the assessment of the recognition of the deferred tax assets as a key audit matter because it involves high degree of subjective management judgment in estimating future taxable profits over the periods in which the above mentioned differences become deductible and within the periods before the unused tax losses and tax credit forwards expire and the feasibility of planned tax strategies. The subjectivity is primarily driven by the Group’s assumptions in revenue, operating expenditures and subsidiaries’ dividend distribution, which are used to estimate the forecasted taxable income in the future.

The primary procedures we performed to address the assessment of recognition of deferred tax assets include followings:

 

   

We tested certain internal controls relating to the Group’s deferred tax assets recognition process, including controls related to the development of assumptions in determining the future taxable income and subsidiaries’ dividend distribution for each year.

 

   

We analyzed the Group’s estimates of taxable income, including analyzing the Group’s forecasted revenue and operating expense by comparing them with the financial budgets approved by the board of directors and historical performance.

 

   

We compared the forecasts of taxable income and timing of utilization of tax losses and tax credit carryforwards in prior years to actual results to assess the Group’s ability to accurately forecast.

 

   

We also evaluated the Group’s assessment on the history of realizing deferred tax assets in connection with the unused tax losses carryforwards and collecting declared subsidiaries’ dividends in connection with the development of assumptions in determining subsidiaries’ dividend distribution.

 

   

We involved tax professionals with specialized skills and knowledge who assisted in assessing the feasibility of planned tax strategies when recognizing deferred tax assets.

Other matter

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

 

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Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with K-IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing these consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether theses consolidated financial statements as a whole are free from material misstatements, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Korean Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with Korean Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

 

   

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal control.

 

   

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

 

   

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

 

   

Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, then we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.

 

   

Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

 

   

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

 

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We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditors’ report is Sang Hyun Han.

KPMG Samjong Accounting Corp.

Seoul, Korea

March 3, 2021

 

This report is effective as of March 3, 2021, the audit report date. Certain subsequent events or circumstances, which may occur between the audit report date and the time of reading this report, could have a material impact on the accompanying consolidated financial statements and notes thereto. Accordingly, the readers of the audit report should understand that the above audit report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Financial Position

As of December 31, 2020 and 2019

 

(In millions of won)    Note      December 31, 2020     December 31, 2019  

Assets

       

Cash and cash equivalents

     4, 26      W 4,218,099     3,336,003

Deposits in banks

     4, 26        78,652     78,757

Trade accounts and notes receivable, net

     5, 14, 26, 29        3,517,512     3,154,080

Other accounts receivable, net

     5, 26        144,480     474,048

Other current financial assets

     6, 26, 27        52,403     70,945

Inventories

     7        2,170,656     2,051,155

Prepaid income tax

        114,202     114,143

Other current assets

     5        803,466     969,184
     

 

 

   

 

 

 

Total current assets

        11,099,470     10,248,315

Deposits in banks

     4, 26        11     11

Investments in equity accounted investees

     8        114,551     109,611

Other non-current accounts receivable, net

     5, 26        —       9,072

Other non-current financial assets

     6, 26, 27        68,231     111,510

Property, plant and equipment, net

     9, 17, 27        20,147,051     22,087,645

Intangible assets, net

     10, 17        1,020,088     873,448

Deferred tax assets

     24        2,273,677     1,727,122

Defined benefits assets, net

     12        224,997     127,252

Other non-current assets

        123,447     280,577
     

 

 

   

 

 

 

Total non-current assets

        23,972,053     25,326,248
     

 

 

   

 

 

 

Total assets

      W 35,071,523     35,574,563
     

 

 

   

 

 

 

Liabilities

       

Trade accounts and notes payable

     26, 29      W 3,779,290     2,618,261

Current financial liabilities

     11, 26, 27        3,195,024     1,977,084

Other accounts payable

     26        2,781,941     4,397,121

Accrued expenses

        651,880     675,270

Income tax payable

        25,004     120,034

Provisions

     13        197,468     189,525

Advances received

     14        333,821     925,662

Other current liabilities

        42,520     82,019
     

 

 

   

 

 

 

Total current liabilities

        11,006,948     10,984,976

Non-current financial liabilities

     11, 26, 27        11,124,846     11,612,910

Non-current provisions

     13        89,633     67,118

Defined benefit liabilities, net

     12        1,498     1,338

Long-term advances received

     14        —       320,582

Deferred tax liabilities

     24        9,530     11,210

Other non-current liabilities

        102,129     88,148
     

 

 

   

 

 

 

Total non-current liabilities

        11,327,636     12,101,306
     

 

 

   

 

 

 

Total liabilities

        22,334,584     23,086,282
     

 

 

   

 

 

 

Equity

       

Share capital

     15        1,789,079     1,789,079

Share premium

        2,251,113     2,251,113

Retained earnings

        7,524,297     7,503,312

Reserves

     15        (163,446     (203,021
     

 

 

   

 

 

 

Total equity attributable to owners of the Controlling Company

        11,401,043     11,340,483
     

 

 

   

 

 

 

Non-controlling interests

        1,335,896     1,147,798
     

 

 

   

 

 

 

Total equity

        12,736,939     12,488,281
     

 

 

   

 

 

 

Total liabilities and equity

      W 35,071,523     35,574,563
     

 

 

   

 

 

 

See accompanying notes to the consolidated financial statements.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss)

For the years ended December 31, 2020 and 2019

 

(In millions of won, except earnings per share)    Note      2020     2019  

Revenue

     16, 17, 29      W 24,230,124     23,475,567

Cost of sales

     7, 18, 29        (21,587,554     (21,607,240
     

 

 

   

 

 

 

Gross profit

        2,642,570     1,868,327

Selling expenses

     19        (817,611     (1,057,753

Administrative expenses

     19        (755,340     (947,978

Research and development expenses

        (1,098,736     (1,221,978
     

 

 

   

 

 

 

Operating loss

        (29,117     (1,359,382
     

 

 

   

 

 

 

Finance income

     22        438,786     276,732

Finance costs

     22        (802,678     (443,247

Other non-operating income

     21        1,784,646     1,267,251

Other non-operating expenses

     21        (1,999,280     (3,097,743

Equity in income of equity accounted investees, net

     8        12,545     12,147
     

 

 

   

 

 

 

Loss before income tax

        (595,098     (3,344,242

Income tax benefit

     23        (524,462     (472,164
     

 

 

   

 

 

 

Loss for the year

        (70,636     (2,872,078
     

 

 

   

 

 

 

Other comprehensive income (loss)

       

Items that will never be reclassified to profit or loss

       

Remeasurements of net defined benefit liabilities

     12, 23        148,436     128,640

Other comprehensive income from associates

     8        39     238

Related income tax

     12, 23        (38,032     (35,235
     

 

 

   

 

 

 
        110,443     93,643

Items that are or may be reclassified to profit or loss

       

Foreign currency translation differences for foreign operations

     22, 23        48,181     106,690

Other comprehensive income (loss) from associates

     8, 23        (210     3,925
     

 

 

   

 

 

 
        47,971     110,615
     

 

 

   

 

 

 

Other comprehensive income for the period, net of income tax

        158,414     204,258
     

 

 

   

 

 

 

Total comprehensive income (loss) for the period

      W 87,778     (2,667,820
     

 

 

   

 

 

 

Profit (loss) attributable to:

       

Owners of the Controlling Company

        (89,342     (2,829,705

Non-controlling interests

        18,706     (42,373
     

 

 

   

 

 

 

Loss for the year

      W (70,636     (2,872,078
     

 

 

   

 

 

 

Total comprehensive income (loss) attributable to:

       

Owners of the Controlling Company

        59,730     (2,636,948

Non-controlling interests

        28,048     (30,872
     

 

 

   

 

 

 

Total comprehensive income (loss) for the year

      W 87,778     (2,667,820
     

 

 

   

 

 

 

Loss per share (in won)

       

Basic and diluted loss per share

     25      W (250     (7,908
     

 

 

   

 

 

 

See accompanying notes to the consolidated financial statements.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

For the years ended December 31, 2020 and 2019

 

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

     —          —          (2,829,705     —         (2,829,705     (42,373     (2,872,078

Other comprehensive income (loss)

                

Remeasurements of net defined benefit liabilities, net of tax

     —          —          93,405     —         93,405     —         93,405

Foreign currency translation differences

     —          —          —         95,189     95,189     11,501     106,690

Other comprehensive income from associates

     —          —          238     3,925     4,163     —         4,163
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other comprehensive income (loss)

     —          —          93,643     99,114     192,757     11,501     204,258
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income (loss) for the year

   W —          —          (2,736,062     99,114     (2,636,948     (30,872     (2,667,820
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Transaction with owners, recognized directly in equity

                

Subsidiaries’ dividends distributed to non-controlling interests

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

Capital contribution from non-controlling interests

     —          —          (591     (1,167     (1,758     278,154     276,396
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balances at December 31, 2019

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

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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 year

                

Profit (loss) for the year

     —          —          (89,342     —         (89,342     18,706     (70,636

Other comprehensive income (loss)

                

Remeasurements of net defined benefit liabilities, net of tax

     —          —          110,404     —         110,404     —         110,404

Foreign currency translation differences

     —          —          —         38,839     38,839     9,342     48,181

Other comprehensive income from associates

     —          —          39     (210     (171     —         (171
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other comprehensive income

     —          —          110,443     38,629     149,072     9,342     158,414
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the year

   W —          —          21,101     38,629     59,730     28,048     87,778
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Transaction with owners, recognized directly in equity

                

Subsidiaries’ dividends distributed to non-controlling interests

     —          —          —         —         —         (12,086     (12,086

Capital contribution from non-controlling interests

     —          —          (116     946     830     172,136     172,966
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balances at December 31, 2020

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

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

See accompanying notes to the consolidated financial statements.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2020 and 2019

 

(In millions of won)    Note    2020     2019  

Cash flows from operating activities:

       

Loss for the year

      W (70,636     (2,872,078

Adjustments for:

       

Income tax benefit

   23      (524,462     (472,164

Depreciation and amortization

   9,10,18      4,134,843     3,695,051

Gain on foreign currency translation

        (296,870     (103,460

Loss on foreign currency translation

        217,287     171,966

Expenses related to defined benefit plans

   12, 20      160,669     162,997

Gain on disposal of property, plant and equipment

        (37,835     (35,788

Loss on disposal of property, plant and equipment

        60,294     40,897

Impairment loss on property, plant and equipment

        38,494     1,550,430

Gain on disposal of intangible assets

        (111     (552

Loss on disposal of intangible assets

        368     139

Impairment loss on intangible assets

        79,593     249,450

Reversal of impairment loss on intangible assets

        (1,110     (960

Impairment loss on other assets

        —       3,602

Gain on disposal of non-current assets held for sale

        —       (8,353

Expense on increase of provisions

        308,334     419,720

Finance income

        (331,723     (186,707

Finance costs

        612,164     338,419

Equity in income of equity method accounted investees, net

   8      (12,545     (12,147

Loss on liquidation of investments in subsidiaries

        72,654     —  

Other income

        (11,485     (20,416

Other expenses

        —       4,451
     

 

 

   

 

 

 
        4,468,559     5,796,575

Changes in:

       

Trade accounts and notes receivable

        (935,888     (1,007,373

Other accounts receivable

        63,192     (49,443

Inventories

        (128,495     632,359

Lease receivables

        6,428     6,617

Other current assets

        175,486     (288,770

Other non-current assets

        (58,641     (38,608

Trade accounts and notes payable

        1,387,084     (394,564

Other accounts payable

        (1,152,786     2,035,750

Accrued expenses

        (9,704     11,787

Provisions

        (277,876     (294,096

Short-term advances received

        (408,900     (242,365

Other current liabilities

        (40,200     27,690

Defined benefit liabilities, net

        (109,801     (65,681

Long-term advances received

        —       63,672

Other non-current liabilities

        12,973     7,045
     

 

 

   

 

 

 
        (1,477,128     404,020

Cash generated from operating activities

        2,920,795     3,328,517

Income taxes paid

        (156,997     (252,812

Interests received

        75,424     47,276

Interests paid

        (552,274     (416,436
     

 

 

   

 

 

 

Net cash provided by operating activities

      W 2,286,948     2,706,545
     

 

 

   

 

 

 

 

See accompanying notes to the consolidated financial statements.

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2020 and 2019

 

(In millions of won)    Note    2020     2019  

Cash flows from investing activities:

       

Dividends received

      W 8,239     7,502

Increase in deposits in banks

        (78,452     (114,557

Proceeds from withdrawal of deposits in banks

        78,557     114,200

Acquisition of financial assets at fair value through profit or loss

        (3,227     (708

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

        99     452

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     107

Proceeds from disposal of investments in equity accounted investees

        2,400     16,738

Acquisition of property, plant and equipment

        (2,603,545     (6,926,985

Proceeds from disposal of property, plant and equipment

        446,193     335,446

Acquisition of intangible assets

        (353,313     (540,996

Proceeds from disposal of intangible assets

        16,996     2,468

Government grants received

        118,341     248,124

Proceeds from disposal of non-current assets held for sale

        —       81,351

Receipt from settlement of derivatives

        24,468     21,752

Increase in short-term loans

        —       (8,725

Proceeds from collection of short-term loans

        13,720     19,881

Increase in long-term loans

        —       (6,465

Increase in deposits

        (2,084     (30,680

Decrease in deposits

        1,286     5,307

Proceeds from disposal of other assets

        11,000     20,416
     

 

 

   

 

 

 

Net cash used in investing activities

        (2,319,316     (6,755,393
     

 

 

   

 

 

 

Cash flows from financing activities:

   28     

Proceeds from short-term borrowings

        2,238,806     1,841,008

Repayments of short-term borrowings

        (2,506,420     (1,154,911

Proceeds from issuance of bonds

        49,949     1,323,251

Proceeds from long-term borrowings

        2,329,013     4,341,087

Repayments of current portion of long-term borrowings and bonds

        (1,278,199     (1,567,818

Repayment of lease liabilities

        (62,200     (64,570

Capital contribution from non-controlling interests

        172,966     276,396

Subsidiaries’ dividends distributed to non-controlling interests

        (12,086     (6,541
     

 

 

   

 

 

 

Net cash provided by financing activities

        931,829     4,987,902
     

 

 

   

 

 

 

Net increase in cash and cash equivalents

        899,461     939,054

Cash and cash equivalents at January 1

        3,336,003     2,365,022

Effect of exchange rate fluctuations on cash held

        (17,365     31,927
     

 

 

   

 

 

 

Cash and cash equivalents at December 31

      W 4,218,099     3,336,003
     

 

 

   

 

 

 

See accompanying notes to the consolidated financial statements.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

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 December 31, 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 December 31, 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 December 31, 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 December 31, 2020, there are 23,525,460 ADSs outstanding.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

1.

Reporting Entity, Continued

 

  (b)

Consolidated Subsidiaries as of December 31, 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

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

LG Display Yantai Co., Ltd.

   Yantai,

China

     100     December 31      April 19,

2010

   Manufacture display products      CNY 1,008  

Nanumnuri Co., Ltd.

   Gumi,

South Korea

     100     December 31      March 21,

2012

   Provide janitorial services      KRW 800  

LG Display (China) Co., Ltd.

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

Unified Innovative Technology, LLC

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

2014

   Manage intellectual property      USD 9  

LG Display Guangzhou Trading Co., Ltd.

   Guangzhou,
China
     100     December 31      April 28,

2015

   Sell display products      CNY 1  

Global OLED Technology, LLC

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

LG Display Vietnam Haiphong Co., Ltd.

   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 12  

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

   Guangzhou,
China
     70     December 31      July 11,

2018

   Manufacture and sell display products      CNY 15,600  

 

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Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

1.

Reporting Entity, Continued

 

  (b)

Consolidated Subsidiaries as of December 31, 2020, Continued

 

(*1)

For the year ended December 31, 2020, the Controlling Company contributed W7,242 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 year ended December 31, 2020, non-controlling shareholders contributed W172,966 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 70% as a result.

Meanwhile, the liquidation process of LG Display Poland Sp. z o.o., a subsidiary of the Controlling Company, was completed during the year ended December 31, 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 Group has invested W11,300 million in MMT (Money Market Trust), which is controlled by the Group.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

1.

Reporting Entity, Continued

 

  (c)

Summary of financial information of subsidiaries as of and for the years ended December 31, 2020 and 2019 is as follows:

 

(In millions of won)    December 31, 2020      2020  

Subsidiaries

   Total
assets
     Total
liabilities
     Total
shareholders’
equity
     Sales      Net
income

(loss)
 

LG Display America, Inc.

   W 1,375,795        1,351,562        24,233        11,383,528        8,063  

LG Display Germany GmbH

     309,702        295,599        14,103        1,440,763        1,890  

LG Display Japan Co., Ltd.

     365,295        359,114        6,181        1,923,132        1,105  

LG Display Taiwan Co., Ltd.

     319,284        301,210        18,074        1,453,734        2,363  

LG Display Nanjing Co., Ltd.

     1,476,667        710,717        765,950        1,487,428        99,311  

LG Display Shanghai Co., Ltd.

     373,503        348,609        24,894        814,964        7,237  

LG Display Poland Sp. z o.o.

     —          —          —          —          17,216  

LG Display Guangzhou Co., Ltd.

     4,081,473        3,025,937        1,055,536        2,506,152        107,163  

LG Display Shenzhen Co., Ltd.

     50,255        34,421        15,834        580,638        4,924  

LG Display Singapore Pte. Ltd.

     499,158        492,045        7,113        1,176,876        2,105  

L&T Display Technology (Fujian) Limited

     323,801        242,939        80,862        1,168,972        10,796  

LG Display Yantai Co., Ltd.

     791,520        345,930        445,590        966,393        56,735  

Nanumnuri Co., Ltd.

     5,659        3,323        2,336        21,062        631  

LG Display (China) Co., Ltd.

     2,424,290        737,462        1,686,828        1,907,421        (12,279

Unified Innovative Technology, LLC

     2,740        14        2,726        —          (1,094

LG Display Guangzhou Trading Co., Ltd.

     931,858        924,180        7,678        1,372,006        1,050  

Global OLED Technology, LLC

     66,691        14,369        52,322        8,899        (4,934

LG Display Vietnam Haiphong Co., Ltd.

     3,319,103        2,708,904        610,199        1,829,840        164,533  

Suzhou Lehui Display Co., Ltd.

     281,293        152,665        128,628        531,464        2,494  

LG DISPLAY FUND I LLC

     3,127        11        3,116        —          (4,353

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

     7,011,443        4,346,187        2,665,256        1,249,487        57,000  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 24,012,657        16,395,198        7,617,459        31,822,759        521,956  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

1.

Reporting Entity, Continued

 

(In millions of won)    December 31, 2019      2019  

Subsidiaries

   Total
assets
     Total
liabilities
     Total
shareholders’
equity
     Sales      Net income
(loss)
 

LG Display America, Inc.

   W 961,070        942,860        18,210        9,669,140        5,366  

LG Display Germany GmbH

     404,852        392,824        12,028        1,715,627        5,451  

LG Display Japan Co., Ltd.

     296,106        290,976        5,130        2,268,430        1,641  

LG Display Taiwan Co., Ltd.

     473,177        457,469        15,708        1,455,596        1,671  

LG Display Nanjing Co., Ltd.

     1,239,381        575,137        664,244        1,428,020        13,046  

LG Display Shanghai Co., Ltd.

     297,068        279,362        17,706        1,001,478        7,182  

LG Display Poland Sp. z o.o.

     160,385        228        160,157        7,904        (3,440

LG Display Guangzhou Co., Ltd.

     2,893,673        1,949,732        943,941        2,582,137        100,726  

LG Display Shenzhen Co., Ltd.

     134,575        123,641        10,934        445,691        4,163  

LG Display Singapore Pte. Ltd.

     517,449        511,962        5,487        1,140,952        2,006  

L&T Display Technology (Fujian) Limited

     342,450        272,489        69,961        1,153,099        8,008  

LG Display Yantai Co., Ltd.

     886,198        498,890        387,308        1,273,553        34,044  

Nanumnuri Co., Ltd.

     5,243        3,537        1,706        22,529        292  

LG Display (China) Co., Ltd.

     2,026,541        329,133        1,697,408        1,978,487        (164,764

Unified Innovative Technology, LLC

     3,976        —          3,976        —          (1,104

LG Display Guangzhou Trading Co., Ltd.

     377,295        370,665        6,630        1,250,110        4,396  

Global OLED Technology, LLC

     81,481        21,004        60,477        8,380        (5,220

LG Display Vietnam Haiphong Co., Ltd.

     3,367,337        2,878,707        488,630        1,261,053        (253,694

Suzhou Lehui Display Co., Ltd.

     219,974        94,615        125,359        350,870        6,682  

LG DISPLAY FUND I LLC

     589        39        550        —          (3,532

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

     6,606,874        4,188,766        2,418,108        40,766        12,503  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 21,295,694        14,182,036        7,113,658        29,053,822        (224,577
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

1.

Reporting Entity, Continued

 

  (d)

Information of subsidiaries which have significant non-controlling interests as of and for the years ended December 31, 2020 and 2019 are as follows:

 

(In millions of won)             
     2020  
     LG Display (China)
Co., Ltd.
    LG Display High-Tech
(China) Co., Ltd.
 

Percentage of ownership in non-controlling interest(%)

     30       30  

Current assets

   W 1,573,028       1,544,816  

Non-current assets

     851,262       5,466,627  

Current liabilities

     326,785       1,588,688  

Non-current liabilities

     410,677       2,757,499  

Net assets

     1,686,828       2,665,256  

Book value of non-controlling interests

     498,084       798,190  

Revenue

   W 1,907,421       1,249,487  

Profit(Loss) for the year

     (12,279     57,000  

Profit(Loss) attributable to non-controlling interests

     (3,684     17,100  

Cash flows from operating activities

   W 138,692       142,648  

Cash flows from investing activities

     (686,387     (849,577

Cash flows from financing activities

     436,936       826,940  

Effect of exchange rate fluctuations on cash held

     5,367       (1,501

Net increase (decrease) in cash and cash equivalents

     (105,392     118,510  

Cash and cash equivalents at January 1

     382,194       171,951  

Cash and cash equivalents at December 31

     276,802       290,461  

Dividends distributed to non-controlling interests

   W 12,086       —    

 

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Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

1.

Reporting Entity, Continued

 

(In millions of won)  
     2019  
     LG Display (China)
Co., Ltd.
    LG Display High-Tech
(China) Co., Ltd.
 

Percentage of ownership in non-controlling interest(%)

     30       25  

Current assets

   W 817,702       1,022,736  

Non-current assets

     1,208,840       5,584,138  

Current liabilities

     327,049       1,248,446  

Non-current liabilities

     2,084       2,940,320  

Net assets

     1,697,409       2,418,108  

Book value of non-controlling interests

     509,718       603,799  

Revenue

   W 1,978,487       40,766  

Profit(Loss) for the year

     (164,764     12,503  

Profit(Loss) attributable to non-controlling interests

     (49,429     3,126  

Cash flows from operating activities

   W 427,324       (453,784

Cash flows from investing activities

     380,331       (3,520,965

Cash flows from financing activities

     (518,529     3,487,367  

Effect of exchange rate fluctuations on cash held

     (3,077     19,862  

Net increase (decrease) in cash and cash equivalents

     286,049       (467,520

Cash and cash equivalents at January 1

     96,145       639,471  

Cash and cash equivalents at December 31

     382,194       171,951  

Dividends distributed to non-controlling interests

   W 6,541       —    

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

2.

Basis of Presenting Financial Statements

 

  (a)

Statement of Compliance

 

In accordance with the Act on External Audits of Stock Companies, Etc., these consolidated financial statements have been prepared in accordance with Korean International Financial Reporting Standards (“K-IFRS”).

The consolidated financial statements were authorized for issuance by the Board of Directors on January 26, 2021, which will be submitted for approval to the shareholders’ meeting to be held on March 23, 2021.

 

  (b)

Basis of Measurement

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

 

   

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

 

   

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

 

  (c)

Functional and Presentation Currency

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

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Information about critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements is included in the following notes:

 

   

Financial instruments (Note 3(e))

 

   

Impairment assessment of non-financial assets (Note 3(j), 10)

 

   

Deferred tax assets and liabilities (Note 3(r), 24)

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

2.

Basis of Presenting Financial Statements, Continued

 

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next 12 months is included in the following notes:

 

   

Provisions (Note 3(l), 13)

 

   

Inventories (Note 3(d), 7)

 

   

Property, plant and equipment (Note 9)

 

   

Intangible assets (Impairment assessment of non-financial assets) (Note 10)

 

   

Employee benefits (Note 12)

 

   

Deferred tax assets and liabilities (Note 24)

 

3.

Summary of Significant Accounting Policies

The accounting policies applied in these consolidated 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 and the significant accounting policies followed by the Group in the preparation of its consolidated financial statements are as follows:

 

  (a)

Consolidation

(i) Business Combinations

The Group accounts for business combinations using the acquisition method except for a combination of entities or businesses under common control. The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. If the aggregate sum of consideration transferred and non-controlling interest exceeds the fair value of identifiable net asset, the Group recognizes goodwill; if not, then the Group recognizes gain on a bargain purchase. Any goodwill that arises is tested annually for impairment. Transaction costs are expensed as incurred, except if related to the issue of debt or equity instruments in accordance with K-IFRS No. 1032 and K-IFRS No. 1109. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognized in profit or loss.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

3.

Summary of Significant Accounting Policies, Continued

 

  (a)

Consolidation, Continued

 

(ii) Subsidiaries

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed, or has right to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases.

(iii) Non-controlling interests

Non-controlling interests (“NCI”) are measured at their proportionate share of the acquiree’s identifiable net assets at the acquisition date. Profit or loss and other comprehensive income (loss) of subsidiaries are attributed to owners of the Controlling Company and non-controlling interests.

Changes in the Group’s interest in subsidiaries that do not result in a loss of control are accounted for as equity transactions.

(iv) Loss of Control

If the Controlling Company loses control of subsidiaries, the Controlling Company derecognizes the assets and liabilities of the former subsidiaries from the consolidated statement of financial position and recognizes the gain or loss associated with the loss of control attributable to the former controlling interest. Meanwhile, the Controlling Company recognizes any investment retained in the former subsidiaries at its fair value when control is lost.

(v) Associates and joint ventures (equity method investees)

Associates are those entities in which the Group has significant influence, but not control or joint control, over the financial and operating policies. A joint venture is an arrangement in which the parties have joint control, whereby the parties has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities.

Investments in associates and joint ventures are initially recognized at cost and subsequently accounted for using the equity method of accounting. The carrying amount of investments in associates and joint ventures is increased or decreased to recognize the Group’s share of the profits or losses and changes in the Group’s proportionate interest of the investee after the date of acquisition. Distributions received from an investee reduce the carrying amount of the investment.

If an associate or a joint venture uses accounting policies different from those of the Controlling Company for like transactions and events in similar circumstances, appropriate adjustments are made to the consolidated financial statements. As of and during the periods presented in the consolidated financial statements, no adjustments were made in applying the equity method.

When the Group’s share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest, including any long-term investments, is reduced to nil, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

3.

Summary of Significant Accounting Policies, Continued

 

  (a)

Consolidation, Continued

 

(vi) Transactions eliminated on consolidation

Intra-group balances and transactions, including income and expenses and any unrealized income and expenses and balance of trade accounts and notes receivable and payable arising from intra-group transactions, are eliminated. Unrealized gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.

 

  (b)

Foreign Currency Transaction and Translation

Transactions in foreign currencies are translated to the functional currency of the Group at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated to the functional currency at the exchange rate on the reporting date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was originally determined. Foreign currency differences arising on retranslation are recognized in profit or loss, except for differences arising on an investment in equity instruments designated as at FVOCI and a financial asset and liability designated as a cash flow hedge, which are recognized in other comprehensive income. Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition are recognized in profit or loss in the period in which they arise. Foreign currency differences arising from assets and liabilities in relation to the investing and financing activities including borrowings, bonds and cash and cash equivalents are recognized in finance income (costs) in the consolidated statement of comprehensive income (loss) and foreign currency differences arising from assets and liabilities in relation to activities other than investing and financing activities are recognized in other non-operating income (expense) in the consolidated statement of comprehensive income (loss). Foreign currency differences are presented in gross amounts in the consolidated statement of comprehensive income (loss).

If the presentation currency of the Group is different from a foreign operation’s functional currency, the financial position and financial performance of the foreign operation are translated into the presentation currency using the following methods. The assets and liabilities of foreign operations, whose functional currency is not the currency of a hyperinflationary economy are translated to the Group’s functional currency at exchange rates at the reporting date. The income and expenses of foreign operations are translated to the Group’s functional currency at exchange rates at the dates of the transactions and foreign currency differences are recognized in other comprehensive income (loss). Relevant proportionate shares of foreign currency differences are allocated to the controlling interests and non-controlling interests. When a foreign operation is disposed of in its entirety or partially such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. If the Group disposes part of its interest in a subsidiary but retains control, then the relevant proportion of the cumulative amount is reattributed to NCI. When the Group disposes of only part of an associate or joint venture while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

3.

Summary of Significant Accounting Policies, Continued

 

  (b)

Foreign Currency Transaction and Translation, Continued

 

Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of that foreign operation is treated as assets and liabilities of the foreign operation. Thus, they are expressed in the functional currency of the foreign operation and translated at the at each reporting date’s exchange rate.

 

  (c)

Cash and cash equivalents

Cash and cash equivalents include all cash balances and short-term highly liquid investments with an original maturity of three months or less that are readily convertible into known amounts of cash.

 

  (d)

Inventories

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on the weighted-average method, and includes expenditures incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated selling expenses. In the case of manufactured inventories and work-in-process, cost includes an appropriate share of production overheads based on the actual capacity of production facilities. However, the normal capacity is used for the allocation of fixed production overheads if the actual level of production is lower than the normal capacity.

 

  (e)

Financial Instruments

(i) Non-derivative financial assets

Recognition and initial measurement

Trade receivables and debt instruments issued are initially recognized when they are originated. All other financial assets are recognized in statement of financial position when, and only when, the Group becomes a party to the contractual provisions of the instrument.

A financial asset (unless it is a trade receivable without a significant financing component) is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

Classification and subsequent measurement

i) Financial assets

On initial recognition, a financial asset is classified as measured at: amortized cost; FVOCI – debt investment; FVOCI – equity investments; or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the subsequent reporting period following the change in the business model.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

3.

Summary of Significant Accounting Policies, Continued

 

  (e)

Financial Instruments, Continued

 

A financial asset is measured as at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:

 

   

it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

 

   

its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

 

   

it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

 

   

the contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

On initial recognition of an equity investments that is not held for trading, the Group may irrevocably elect to present subsequent changes in the investment’s fair value in OCI. This election is made on an investment-by-investment basis.

All financial assets not classified as measured at amortized cost or FVOCI as described above are measured as at FVTPL. This includes all derivative financial assets. At initial recognition, the Group may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortized cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

ii) Financial assets: business model

The Group makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:

 

   

the stated policies and objectives for the portfolio and the operation of those policies in practice (these include whether management’s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realizing cash flows through the sale of the assets);

 

   

how the performance of the portfolio is evaluated and reported to the Group’s management;

 

   

the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed; and

 

   

the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.

Transfers of financial assets to third parties in transaction that do not qualify for derecognition are not considered sale for this purpose.

A financial asset that is held for trading or is managed and whose performance is evaluated on a fair value basis is measured at FVTPL.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

3.

Summary of Significant Accounting Policies, Continued

 

  (e)

Financial Instruments, Continued

 

iii) Financial assets: Assessment whether contractual cash flows are solely payments of principal and interest

For the purpose of the assessment, “principal” is defined as the fair value of the financial asset on initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and cost (e.g. liquidity risk and administrative costs), as well as profit margin.

In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Group considers.

 

   

contingent events that would change the amount or timing of cash flows:

 

   

terms that may adjust the contractual coupon rate, including variable-rate features;

 

   

prepayment and extension features; and

 

   

terms that limit the Group’s claim to cash flows from specified assets (e.g. non-recourse features)

A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment amount substantially represents unpaid amounts of principal and interest or the principal amount outstanding, which may include reasonable additional compensation for early termination of the contract.

Additionally, for a financial asset acquired at a discount or premium to its contractual par amount, a feature that permits or requires prepayment at an amount that substantially represents the contractual par amount plus accrued but unpaid contractual interest (which may also include reasonable additional compensation for early termination) is treated as consistent with this criterion if the fair value of the prepayment feature is insignificant at initial recognition.

iv) Financial assets: Subsequent measurement and gains and losses

 

Financial assets at   FVTPL    These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.
Financial assets at   amortized cost    These assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.
Debt investments at   FVOCI    These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

3.

Summary of Significant Accounting Policies, Continued

 

  (e)

Financial Instruments, Continued

 

Derecognition

The Group derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, it transfers the rights to receive the contractual cash flows of the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred, or it transfers or does not retain substantially all the risks and rewards of ownership of a transferred asset, and does not retain control of the transferred asset.

If the Group has retained substantially all the risks and rewards of ownership of the transferred asset, the Group continues to recognize the transferred asset.

Offset

Financial assets and liabilities are offset and the net amount is presented in the consolidated statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

(ii) Non-derivative financial liabilities

The Group classifies financial liabilities into two categories, financial liabilities at FVTPL and other financial liabilities in accordance with the substance of the contractual arrangement and the definitions of financial liabilities, and recognizes them in the consolidated statement of financial position when the Group becomes a party to the contractual provisions of the instrument.

Financial liabilities at FVTPL include financial liabilities held for trading or designated as such upon initial recognition at FVTPL. After initial recognition, financial liabilities at FVTPL are measured at fair value, and changes therein are recognized in profit or loss. Upon initial recognition, transaction costs that are directly attributable to the issuance of financial liabilities are recognized in profit or loss as incurred.

Non-derivative financial liabilities other than financial liabilities classified as at FVTPL are classified as other financial liabilities and measured initially at fair value minus transaction costs that are directly attributable to the issuance of financial liabilities. Subsequent to initial recognition, these financial liabilities are measured at amortized cost using the effective interest method. As of December 31, 2020, non-derivative financial liabilities comprise borrowings, bonds, trade accounts and notes payable, other accounts payable and others.

The Group derecognizes a financial liability when its contractual obligations are discharged, cancelled or expired.

(iii) Share Capital

The Group issued common stocks and they are classified as equity. Incremental costs directly attributable to the issuance of common stocks are recognized as a deduction from equity, net of tax effects. Capital contributed in excess of par value upon issuance of common stocks is classified as share premium within equity.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

3.

Summary of Significant Accounting Policies, Continued

 

  (e)

Financial Instruments, Continued

 

(iv) Derivative financial instruments

Derivatives are initially recognized at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are accounted for as described below.

Hedge Accounting

If necessary, the Group designates derivatives as hedging items to hedge the risk of changes in the fair value of assets, liabilities or firm commitments (a fair value hedge) and foreign currency risk of highly probable forecasted transactions or firm commitments (a cash flow hedge).

On initial designation of the hedge, the Group’s management formally designates and documents the relationship between the hedging instrument(s) and hedged item(s), including the risk management objectives and strategy in undertaking the hedge transaction, together with the methods that will be used to assess the effectiveness of the hedging relationship, both at the inception of the hedge relationship as well as on an ongoing basis.

i) Fair value hedges

Change in the fair value of a derivative hedging instrument designated as a fair value hedge and the hedged item is recognized in profit or loss, respectively. The gain or loss from remeasuring the hedging instrument at fair value and the gain or loss on the hedged item attributable to the hedged risk are recognized in profit or loss in the same line item of the statement of comprehensive income (loss). The Group discontinues fair value hedge accounting if it does not designate the derivative hedging instrument and the hedged item as the hedge relationship between them anymore; if the hedging instrument expires or is sold, terminated or exercised; or if the hedge no longer meets the criteria for hedge accounting.

ii) Cash flow hedges

When a derivative designated as a cash flow hedging instrument meets the criteria of cash flow hedge accounting, the effective portion of changes in the fair value of the derivative is recognized in other comprehensive income and the ineffective portion of changes in the fair value of the derivative is recognized in profit or loss. The Group discontinues cash flow hedge accounting if it does not designate the derivative hedging instrument and the hedged item as the hedge relationship between them anymore; if the hedging instruments expires or is sold, terminated or exercised; or if the hedge no longer meets the criteria for hedge accounting. The cumulative gain or loss on the hedging instrument that has been recognized in other comprehensive income is reclassified to profit or loss in the periods during which the forecasted transaction occurs. If the forecasted transaction is no longer expected to occur, then the balance in other comprehensive income is recognized immediately in profit or loss.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

3.

Summary of Significant Accounting Policies, Continued

 

  (e)

Financial Instruments, Continued

 

Embedded derivative

Embedded derivatives are separated from the host contract and accounted for separately if the host contract is not a financial asset and certain criteria are met.

Other derivative financial instruments

Other derivative financial instruments are measured at fair value and changes of their fair value are recognized in profit or loss.

 

  (f)

Property, Plant and Equipment

(i) Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes an expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labor, any costs directly attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located and borrowing costs on qualifying assets.

The gain or loss arising from the derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item and recognized in other non-operating income or other non-operating expenses.

(ii) Subsequent costs

Subsequent expenditure on an item of property, plant and equipment is recognized as part of its cost only if it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognized in profit or loss as incurred.

(iii) Depreciation

Land is not depreciated and depreciation of other items of property, plant and equipment is recognized in profit or loss on a straight-line basis, reflecting the pattern in which the asset’s future economic benefits are expected to be consumed by the Group. The residual value of property, plant and equipment is zero.

Estimated useful lives of the assets are as follows:

 

     Useful lives (years)

Buildings and structures

   20, 40

Machinery

   4, 5

Furniture and fixtures

   4

Equipment, tools and vehicles

   2, 4, 12

Right-of-use assets

   (*)

 

  (*)

The Group depreciates the right-of-use assets from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

3.

Summary of Significant Accounting Policies, Continued

 

  (f)

Property, Plant and Equipment, Continued

Depreciation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate and any changes are accounted for as changes in accounting estimates.

 

  (g)

Borrowing Costs

The Group capitalizes borrowing costs, which includes interests and exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs, directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale. To the extent that the Group borrows funds specifically for the purpose of obtaining a qualifying asset, the Group determines the amount of borrowing costs eligible for capitalization as the actual borrowing costs incurred on that borrowing during the period less any investment income on the temporary investment of those borrowings. The Group immediately recognizes other borrowing costs as an expense.

 

  (h)

Government Grants

In case there is reasonable assurance that the Group will comply with the conditions attached to a government grant, the government grant is recognized as follows:

(i) Grants related to the purchase or construction of assets

A government grant related to the purchase or construction of assets is deducted in calculating the carrying amount of the asset. The grant is recognized in profit or loss over the life of a depreciable asset as a reduced depreciation expense and cash related to grant received is presented in investing activities in the statement of cash flows.

(ii) Grants for compensating the Group’s expenses incurred

A government grant that compensates the Group for expenses incurred is recognized in profit or loss as a deduction from relevant expenses on a systematic basis in the periods in which the expenses are recognized.

(iii) Other government grants

A government grant that becomes receivable for the purpose of giving immediate financial support to the Group with no compensation for expenses or losses already incurred or no future related costs is recognized as income of the period in which it becomes receivable.

 

  (i)

Intangible Assets

Intangible assets are initially measured at cost. Subsequently, intangible assets are measured at cost less accumulated amortization and accumulated impairment losses.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

3.

Summary of Significant Accounting Policies, Continued

 

  (i)

Intangible Assets, Continued

(i) Goodwill

Goodwill arising from business combinations is recognized as the excess of the acquisition cost of a business over the net fair value of the identifiable assets acquired and liabilities assumed. Any deficit is a bargain purchase that is recognized in profit or loss. Goodwill is measured at cost less accumulated impairment losses.

(ii) Research and development

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognized in profit or loss as incurred. Development activities involve a plan or design of the production of new or substantially improved products and processes. Development expenditure is capitalized as intangible assets only if the Group can demonstrate all of the following:

 

   

the technical feasibility of completing the intangible asset so that it will be available for use or sale,

 

   

its intention to complete the intangible asset and use or sell it,

 

   

its ability to use or sell the intangible asset,

 

   

how the intangible asset will generate probable future economic benefits (among other things, the Group can demonstrate the usefulness of the intangible asset by existence of a market for the output of the intangible asset or the intangible asset itself if it is to be used internally),

 

   

the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset, and

 

   

its ability to measure reliably the expenditure attributable to the intangible asset during its development.

Development projects are divided into research activities and development activities. Expenditures on research activities are recognized in profit or loss and qualifying development expenditures on development activities are capitalized.

The expenditure capitalized includes the cost of materials, direct labor and overhead costs that are directly attributable to preparing the asset for its intended use, and borrowing costs on qualifying assets.

(iii) Other intangible assets

Other intangible assets include intellectual property rights, software, customer relationships, technology, memberships and others.

(iv) Subsequent costs

Subsequent expenditures are capitalized only when they increase the future economic benefits embodied in the specific intangible asset to which they relate. All other expenditures, including expenditures on internally generated goodwill and brands, are recognized in profit or loss as incurred.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

3.

Summary of Significant Accounting Policies, Continued

 

  (i)

Intangible Assets, Continued

(v) Amortization

Amortization is calculated on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use. The residual value of intangible assets is zero. However, as there are no foreseeable limits to the periods over which condominium and golf club memberships are expected to be available for use, these intangible assets are regarded as having indefinite useful lives and not amortized.

 

     Estimated useful lives (years)

Intellectual property rights

   5,10 (*1)

Rights to use electricity, water and gas supply facilities

   10

Software

   4 (*1)

Customer relationships

   7, 10

Technology

   10

Development costs

   (*2)

Condominium and golf club memberships

   Indefinite

 

  (*1)

Software license and patent royalty are amortized over the useful lives considering the contract period.

 

  (*2)

Capitalized development costs are amortized over the useful lives considering the life cycle of the developed products. Amortization of capitalized development costs are recognized in research and development expenses in the consolidated statement of comprehensive income (loss).

Amortization periods and the amortization methods for intangible assets with finite useful lives are reviewed at each financial year-end. The useful lives of intangible assets with indefinite useful lives are reviewed at each financial year-end to determine whether events and circumstances continue to support indefinite useful life assessments for those assets. If appropriate, the changes are accounted for as changes in accounting estimates.

 

  (j)

Impairment

(i) Financial assets

Financial instruments and contract assets

The Group recognizes loss allowance for financial assets measured at amortized cost and debt investments at FVOCI at the ‘expected credit loss’ (ECL).

The Group recognizes a loss allowance for the life-time expected credit losses except for following, which are measured at 12-month ECLs:

 

   

debt instruments that are determined to have low credit risk at the reporting date; and

 

   

other debt instruments and bank deposits for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

3.

Summary of Significant Accounting Policies, Continued

 

  (j)

Impairment, Continued

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both qualitative and quantitative information and analysis, based on the Group’s historical experience and informed credit assessment including forward-looking information.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.

12-month ECLs are the portion of the ECLs that result from default events that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).

The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk.

Estimation of expected credit losses

Expected credit losses are a probability-weighted estimate of credit losses. Credit losses are measured using the present value of the difference between the contractual cash flows and the expected contractual cash flows. The expected credit losses are discounted using effective interest rate of the financial assets.

Credit-impaired financial assets

At each reporting period-end, the Group assesses whether financial assets carried at amortized cost and debt instruments at FVOCI are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

Evidence that a financial asset is credit-impaired includes the following observable data:

 

   

significant financial difficulty of the issuer or the borrower;

 

   

the lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty, having granted to the borrower a concession(s) that the lender(s) would not otherwise consider;

 

   

it is probable that the borrower will enter bankruptcy or other financial reorganization; or

 

   

the disappearance of an active market for a security because of financial difficulties.

Presentation of loss allowance for ECL in the statement of financial position

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets. For debt instruments at FVOCI, the loss allowance is charged to profit or loss and is recognized in OCI instead of reducing the carrying amount of financial assets in the consolidated statement of financial position.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

3.

Summary of Significant Accounting Policies, Continued

 

  (j)

Impairment, Continued

Write-off

The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations for recovering the financial asset in its entirety or a portion thereof. The Group assess whether there are reasonable expectations of recovering the contractual cash flows from customers and individually assess the timing and amount of write-off. The Group expects no significant recovery from the amount written-off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group’s procedures for recovery of amounts due.

(ii) Non-financial assets

The carrying amounts of the Group’s non-financial assets, other than assets arising from employee benefits, inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For goodwill, and intangible assets that have indefinite useful lives or that are not yet available for use, irrespective of whether there is any indication of impairment, the recoverable amount is estimated each year.

Recoverable amount is estimated for the individual asset. If it is not possible to estimate the recoverable amount of the individual asset, the Group determines the recoverable amount of the cash-generating unit to which the asset belongs. The cash-generating unit (“CGU”) is the smallest group of assets that includes the asset and generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination. The recoverable amount of an asset or cash-generating unit is determined as the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. Fair value less costs to sell is based on the best information available to reflect the amount that the Group could obtain from the disposal of the asset in an arm’s length transaction between knowledgeable, willing parties, after deducting the costs of disposal.

An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognized in profit or loss. Impairment losses recognized in respect of a CGU are allocated first to reduce the carrying amount of any goodwill allocated to the unit, and then to reduce the carrying amounts of the other assets in the unit on a pro rata basis.

In respect of assets other than goodwill, impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of accumulated depreciation or amortization, if no impairment loss had been recognized from the acquisition cost. An impairment loss in respect of goodwill is not reversed.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

3.

Summary of Significant Accounting Policies, Continued

 

  (k)

Leases

A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

(i) As a lessee

At commencement or on modification of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease and non-lease component on the basis of its relative stand-alone price. For certain leases, the Group accounts for the lease and non-lease components as a single lease component by applying the practical expedient not to separate non-lease components.

The Group recognizes a right-of-use asset and lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at of before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the lease term or the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In that case, the right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

The Group determines its incremental borrowing rate by obtaining interest rates from various external financing sources and makes certain adjustments to reflect the terms of the lease and type of the asset leased.

Lease payments included in the measurement of the lease liability comprise the following:

 

   

fixed payments, including in-substance fixed payments;

 

   

variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

 

   

amounts expected to be payable under a residual value guarantee; and

 

   

the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

3.

Summary of Significant Accounting Policies, Continued

 

  (k)

Leases, Continued

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee, if the Group changes its assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment.

When the lease liability is remeasured, the Group recognizes the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset. However, if the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, the Group recognizes any remaining amount of the remeasurement in profit or loss.

The Group presents right-of-use assets in ‘property, plant and equipment’ and lease liabilities in ‘financial liabilities’ in the consolidated statement of financial position.

The Group has elected not to recognize right-of-use assets and lease liabilities for leases of low-value assets and short-term leases. The Group recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

(ii) As a lessor

When the Group acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease.

To classify each lease, the Group makes an overall assessment of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying asset. If the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying asset, then the lease is a finance lease; if not, then it is an operating lease. As part of this assessment, the Group considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the Group applies the exemption described above, then it classifies the sub-lease as an operating lease.

If an arrangement contains lease and non-lease components, then the Group applies K-IFRS No. 1115 to allocate the consideration in the contract.

At the commencement date, the Group recognizes assets held under a finance lease in its statement of financial position and present them as a receivable at an amount equal to the net investment in the lease and recognize finance income over the lease term, based on a pattern reflecting a constant periodic rate of return on the lessor’s net investment in the lease.

The Group recognizes lease payments received under operating leases as income on a straight-line basis over the lease term as part of ‘other revenue’.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

3.

Summary of Significant Accounting Policies, Continued

 

  (l)

Provisions

A provision is recognized as a result of a past event, if the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.

The risks and uncertainties that inevitably surround events and circumstances are taken into account in reaching the best estimate of a provision. Where the effect of the time value of money is material, provisions are determined at the present value of the expected future cash flows. The unwinding of the discount is recognized as finance cost.

Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed.

The Group recognizes a liability for warranty obligations based on the estimated costs expected to be incurred under its basic limited warranty. This warranty covers defective products and is normally applicable for a warranty period from the date of purchase. These liabilities are accrued when product revenues are recognized. Factors that affect the Group’s warranty liability include historical and anticipated rates of warranty claims on those repairs and cost per claim to satisfy the Group’s warranty obligation. Warranty costs primarily include raw materials and labor costs. As these factors are impacted by actual experience and future expectations, management periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary. Accrued warranty obligations are included in the current and non-current provisions.

Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties and other sources, are recorded when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated.

 

  (m)

Non-current Assets Held for Sale

Non-current assets, or disposal groups comprising assets and liabilities, are classified as held-for-sale if it is highly probable that they will be recovered primarily from sale rather than through continuing use. In order to be classified as held for sale, the asset (or disposal group) is available for immediate sale in its present condition and its sale is highly probable. The assets (or disposal groups) that are classified as non-current assets held for sale are measured at the lower of their carrying amount and fair value less costs to sell on initial classification. The Group recognizes an impairment loss for any subsequent decrease in fair value of the asset (or disposal group) for which an impairment loss was recognized on initial classification as held-for-sale and a gain for any subsequent increase in fair value in profit or losses, up to the cumulative impairment loss previously recognized.

The Group does not depreciate a non-current asset while it is classified as held for sale or while it is part of a disposal group classified as held for sale.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

3.

Summary of Significant Accounting Policies, Continued

 

  (n)

Employee Benefits

(i) Short-term employee benefits

Short-term employee benefits that are due to be settled within twelve months after the end of the period in which the employees render the related service are recognized in profit or loss on an undiscounted basis. The expected cost of profit-sharing and bonus plans and others are recognized when the Group has a present legal or constructive obligation to make payments as a result of past events and a reliable estimate of the obligation can be made.

(ii) Other long-term employee benefits

The Group’s net obligation in respect of long-term employee benefits other than pension plans is the amount of future benefit that employees have earned in return for their service in the current and prior periods.

(iii) Defined contribution plan

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in profit or loss in the period during which services are rendered by employees.

(iv) Defined benefit plan

A defined benefit plan is a post-employment benefit plan other than defined contribution plans. The Group’s net obligation in respect of its defined benefit plan is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. The fair value of any plan assets is deducted.

The calculation is performed annually by an independent actuary using the projected unit credit method. The discount rate is the yield at the reporting date on high quality corporate bonds that have maturity dates approximating the terms of the Group’s obligations and that are denominated in the same currency in which the benefits are expected to be paid. The Group recognizes all actuarial gains and losses arising from defined benefit plans in retained earnings immediately.

The Group determines the net interest expense (income) on the net defined benefit liability (employee benefits asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (employee benefits asset), taking into account any changes in the net defined benefit liability (employee benefits asset) during the period as a result of contributions and benefit payments. Consequently, the net interest on the net defined benefit liability (defined benefit asset) now comprises: interest cost on the defined benefit obligation, interest income on plan assets, and interest on the effect on the asset ceiling.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in profit or loss. The Group recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

3.

Summary of Significant Accounting Policies, Continued

 

  (n)

Employee Benefits, Continued

(v) Termination benefits

The Group recognizes expense for termination benefits at the earlier of the date when the entity can no longer withdraw the offer of those benefits and when the entity recognizes costs for a restructuring involving the payment of termination benefits. If the termination benefits are not expected to be settled wholly before twelve months after the end of the annual reporting period, the Group measures the termination benefit with present value of future cash payments.

 

  (o)

Revenue from contracts with customers

Revenue from the sale of goods in the course of ordinary activities is measured at the fair value of the consideration received or receivable, net of estimated returns, trade discounts, volume rebates and other cash incentives paid to customers.

The Group recognizes revenue according to the five stage revenue recognition model (① Identifying the contract à ② Identifying performance obligations à ③ Determining transaction price à ④ Allocating the transaction price to performance obligations à ⑤ Recognizing revenue for performance obligations).

The Group generates revenue primarily from sale of display panels. Product revenue is recognized when a customer obtains control over the Group’s products, which typically occurs upon shipment or delivery depending on the terms of the contracts with the customer.

The Group includes return option in the sales contract of display panels with its customers and the consideration receivable from the customer is subject to change due to returns. The Group estimates an amount of variable consideration by using the expected value method which the Group expects to better predict the amount of consideration. The Group includes in the transaction price an amount of variable consideration estimated only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur during the return period when the uncertainty associated with the variable consideration is subsequently resolved. The Group recognizes a refund liability and an asset for its right to recover products from customers if the Group receives consideration from a customer and expects to refund some or all of that consideration to the customer. Sales taxes or value-added taxes collected from customers and remitted to governmental authorities are accounted for on a net basis and are excluded from revenues in the consolidated statement of comprehensive income (loss).

 

  (p)

Operating Segments

An operating segment is a component of the Group that: 1) engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with other components of the group, 2) whose operating results are reviewed regularly by the Group’s chief operating decision maker (“CODM”) in order to allocate resources and assess its performance, and 3) for which discrete financial information is available. Management has determined that the CODM of the Group is the Board of Directors. The CODM does not receive and therefore does not review discrete financial information for any component of the Group. Consequently, no operating segment information is included in these consolidated financial statements. Entity wide disclosures of geographic and product revenue information are provided in Note 17 to these consolidated financial statements.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

3.

Summary of Significant Accounting Policies, Continued

 

 

  (q)

Finance Income and Finance Costs

Finance income comprises interest income on funds invested (including debt instruments measured at FVOCI), dividend income, gains on disposal of debt instruments measured at FVOCI, changes in fair value of financial assets at FVTPL, and gains on hedging instruments that are recognized in profit or loss. Interest income is recognized as it accrues in profit or loss, using the effective interest method. Dividend income is recognized in profit or loss on the date that the Group’s right to receive payment is established.

Finance costs comprise interest expense on borrowings, unwinding of the discount on provisions, gain and losses from financial assets measured at FVTPL, impairment losses recognized on financial assets, and losses on hedging instruments that are recognized in profit or loss. Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of the cost of that asset.

 

  (r)

Income Tax

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in profit or loss except to the extent that it relates to a business combination, or items recognized directly in equity or in other comprehensive income.

(i) Current tax

Current tax comprises the expected tax payable or receivable on the taxable profit or loss for the year, using tax rates enacted or substantively enacted at the reporting date and any adjustment to tax payable in respect of previous years. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. The taxable profit is different from the accounting profit for the period since the taxable profit is calculated excluding the temporary differences, which will be taxable or deductible in determining taxable profit (tax loss) of future periods, and non-taxable or non-deductible items from the accounting profit.

(ii) Deferred tax

Deferred tax is recognized, using the liability method, in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and deferred tax assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

The Group recognizes a deferred tax liability for all taxable temporary differences associated with investments in subsidiaries, associates, and interests in joint ventures, except to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future. A deferred tax asset is recognized for all deductible temporary differences to the extent that it is probable that the differences relating to investments in subsidiaries, associates and joint ventures will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilized.

Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

3.

Summary of Significant Accounting Policies, Continued

 

 

  (r)

Income Tax, Continued

The Group offsets deferred tax assets and deferred tax liabilities if, and only if the Group has a legally enforceable right to set off current tax assets against current tax liabilities and the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously.

 

  (s)

Earnings (Loss) Per Share

The Controlling Company presents basic and diluted earnings (loss) per share (“EPS”) data for its common stocks. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Controlling Company by the weighted average number of common stocks outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of common stocks outstanding, adjusted for the effects of all dilutive potential common stocks such as convertible bonds and others.

 

  (t)

New Standards and Amendments Not Yet Adopted

A number of amended standards are effective for annual periods beginning after January 1, 2020 and earlier application is permitted; however, the Group has not early adopted the amended standards in preparing these separate financial statements.

 

  (i)

Interest Rate Benchmark Reform – Phase 2 (Amendments to K-IFRS No. 1109, Financial Instruments, K-IFRS No. 1039, Financial Instruments: Recognition and Measurement, K-IFRS No. 1107, Financial Instruments: Disclosures, K-IFRS No. 1104, Insurance Contracts and K-IFRS No. 1116, Leases)

The amendments clarify the following accounting requirements according to market-wide reform of an interest rate:

 

   

application of practical expedient to account for a change in the basis;

 

   

temporary exceptions from applying specific hedge accounting requirements; and

 

   

additional disclosures related to interest rate benchmark reform.

 

  (ii)

COVID-19-Related Rent Concessions (Amendment to K-IFRS No. 1116, Leases)

The amendment provides a practical expedient that permits a lessee not to assess whether rent concessions that occur as a direct consequence of the COVID-19 pandemic are lease modification if they meet the following conditions:

 

   

any reduction in lease payments affects only payments originally due on or before 30 June 2021;

 

   

the change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change; and

 

   

there is no substantive change to other terms and conditions of the lease

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

3.

Summary of Significant Accounting Policies, Continued

 

 

  (t)

New Standards and Amendments Not Yet Adopted, Continued

 

  (iii)

Property, Plant and Equipment: Proceeds before Intended Use (Amendments to K-IFRS No. 1016, Property, Plant and Equipment);

This amendments require an entity to recognize the proceeds from selling items produced in the manner intended by management (such as samples produced when testing whether the asset is functioning properly) and the cost of those items in profit or loss and prohibit an entity from deducting the proceeds from selling items produced before that asset is available for use from the cost of an items of property, plant and equipment.

 

  (iv)

Amendment of Reference to the Definition of an Asset and a Liability in the Conceptual Framework (Amendments to K-IFRS No. 1103, Business Combinations);

These amendments replace the reference to the definitions of an asset and a liability in the Conceptual Framework issued in 2007 to 2018 and added an exception to the recognition principle in K-IFRS No. 1103, Business Combinations, for liabilities and contingent liabilities that would be within the scope of K-IFRS No. 1037, Provisions, Contingent Liabilities and Contingent Assets, and K-IFRS No. 2121, Levies, to apply the recognition criteria specified in those standards.

 

  (v)

Classification of Liabilities as Current or Non-current (Amendments to K-IFRS No. 1001, Presentation of Financial Statements)

These amendments clarify that an entity has a right to defer settlement of the liability at the end of the reporting period if it complies with the conditions at that date and classification of a liability is unaffected by the likelihood that the entity will exercise its right to defer settlement of the liability for at least 12 months after the reporting period.

 

  (vi)

Onerous Contracts – Cost of Fulfilling a Contract (Amendments to K-IFRS No. 1037, Provisions, Contingent Liabilities and Contingent Assets)

These amendments specify the scope of “the unavoidable costs of meeting the obligations under the contract” is “the costs that relate directly to the contracts” (the incremental costs of fulfilling the contract and an allocation of other costs that relate directly to fulfilling contracts).

The Group is currently assessing the impacts of adoption of above amended standards on the Group’s financial position and business performance and management believes that the adoption of the amended standards are expected to have no significant impact on the consolidated financial statements of the Group, except for the amendments to K-IFRS No. 1016, Property, Plant and Equipment.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

4.

Cash and Cash Equivalents and Deposits in Banks

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

 

(In millions of won)              
     December 31, 2020      December 31, 2019  

Current assets

     

Cash and cash equivalents

     

Cash

   W 156        375  

Demand deposits

     4,217,943        3,335,628  
  

 

 

    

 

 

 
   W 4,218,099        3,336,003  
  

 

 

    

 

 

 

Deposits in banks

     

Time deposits

   W 1,800        1,500  

Restricted deposits (*)

     76,852        77,257  
  

 

 

    

 

 

 
   W 78,652        78,757  
  

 

 

    

 

 

 

Non-current assets

     

Deposits in banks

     

Restricted deposits (*)

   W 11        11  
  

 

 

    

 

 

 
   W 4,296,762        3,414,771  
  

 

 

    

 

 

 

 

(*)

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

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

5.

Trade Accounts and Notes Receivable, Other Accounts Receivable and Others

 

  (a)

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

 

(In millions of won)              
     December 31, 2020      December 31, 2019  

Due from third parties

   W 3,054,471        2,576,391  

Due from related parties

     463,041        577,689  
  

 

 

    

 

 

 
   W  3,517,512        3,154,080  
  

 

 

    

 

 

 

 

  (b)

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

 

(In millions of won)              
     December 31, 2020      December 31, 2019  

Current assets

     

Non-trade receivables, net

   W 140,616        463,614  

Accrued income

     3,864        10,434  
  

 

 

    

 

 

 
   W  144,480        474,048  
  

 

 

    

 

 

 

Non-current assets

     

Long-term non-trade receivables

   W —          9,072  
  

 

 

    

 

 

 
   W 144,480        483,120  
  

 

 

    

 

 

 

Due from related parties included in other accounts receivable, as of December 31, 2020 and 2019 are W21,189 million and W19,431 million, respectively.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

5.

Trade Accounts and Notes Receivable, Other Accounts Receivable and Others, Continued

 

  (c)

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

 

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

Current

   W 3,516,891        143,674        (1,047      (1,740

1-15 days past due

     1,638        1,023        —          (8

16-30 days past due

     30        522        —          —    

31-60 days past due

     —          782        —          (8

More than 60 days past due

     —          257        —          (22
  

 

 

    

 

 

    

 

 

    

 

 

 
   W  3,518,559        146,258        (1,047      (1,778
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(In millions of won)    December 31, 2019  
     Book value      Allowance for impairment  
     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 years ended December 31, 2020 and 2019 are as follows:

 

(In millions of won)    2020      2019  
     Trade accounts
and notes
receivable
     Other
accounts
receivable
     Trade accounts
and notes
receivable
     Other
accounts
receivable
 

Balance at the beginning of the year

   W 460        3,322        477        1,281  

(Reversal of) bad debt expense

     587        (480      (17      2,041  

Write-off

     —          (1,064      —          —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Balance at the end of the year

   W 1,047        1,778        460        3,322  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

5.

Trade Accounts and Notes Receivable, Other Accounts Receivable and Others, Continued

 

  (d)

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

 

(In millions of won)              
     December 31, 2020      December 31, 2019  

Advanced payments

   W 34,808        6,203  

Prepaid expenses

     63,972        114,145  

Value added tax refundable

     693,623        826,730  

Right to recover returned goods

     11,063        22,106  
  

 

 

    

 

 

 
   W  803,466        969,184  
  

 

 

    

 

 

 

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

6.

Other Financial Assets

 

  Other

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

 

(In millions of won)    December 31, 2020      December 31, 2019  

Current assets

     

Financial assets at fair value through profit or loss

     

Derivatives(*)

   W 9,252        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 8,696        9,585  

Short-term loans

     28,491        21,623  

Lease receivables

     5,940        5,695  
  

 

 

    

 

 

 
   W 43,127        36,903  
  

 

 

    

 

 

 
   W  52,403        70,945  
  

 

 

    

 

 

 

Non-current assets

     

Financial assets at fair value through profit or loss

     

Equity instruments

   W 13,223        9,879  

Convertible securities

     2,377        1,544  

Derivatives(*)

     111        15,640  
  

 

 

    

 

 

 
   W 15,711        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 22,251        21,451  

Long-term loans

     13,899        40,827  

Lease receivables

     16,322        22,099  
  

 

 

    

 

 

 
   W 52,472        84,377  
  

 

 

    

 

 

 
   W 68,231        111,510  
  

 

 

    

 

 

 

 

(*)

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

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

7.

Inventories

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

 

(In millions of won)    December 31, 2020      December 31, 2019  

Finished goods

   W 785,282        730,009  

Work-in-process

     733,071        756,744  

Raw materials

     491,432        405,854  

Supplies

     160,871        158,548  
  

 

 

    

 

 

 
   W 2,170,656        2,051,155  
  

 

 

    

 

 

 

For the years ended December 31, 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 21,587,554        21,607,240  

Inventory write-downs

     213,932        472,885  

Usage of inventory write-downs

     (472,885      (313,180

There were no significant reversals of inventory write-downs recognized during the years ended December 31, 2020 and 2019.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

8.

Investments in Equity Accounted Investees

 

  (a)

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

 

(In millions of won)                                        

Associates

 

Location

  Fiscal year end  

Date of
incorporation

 

Business

  2020     2019  
  Percentage of
ownership
    Carrying
amount
    Percentage of
ownership
    Carrying
amount
 

Paju Electric Glass Co., Ltd. (*1)

 

Paju,

South Korea

  December 31   January 2005   Manufacture glass for display     40   W 47,262       40   W 50,697  

WooRee E&L Co., Ltd. (*2)

 

Ansan,

South Korea

  December 31   June 2008   Manufacture LED back light unit packages     14     10,540       14     7,310  

YAS Co., Ltd.

 

Paju,

South Korea

  December 31   April 2002   Develop and manufacture deposition equipment for OLEDs     15     24,493       15     19,424  

AVATEC Co., Ltd.

 

Daegu,

South Korea

  December 31   August 2000   Process and sell glass for display     14     20,196       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 (*3)

 

Bruchsal,

Germany

  December 31   March 2003   Develop organic emitting materials for displays and lighting devices     12     2,609       12     4,714  

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

8.

Investments in Equity Accounted Investees, Continued

 

(In millions of won)

                                           

Associates

 

Location

  Fiscal year end     Date of
incorporation
   

Business

  2020     2019  
  Percentage of
ownership
    Carrying
amount
    Percentage of
ownership
    Carrying
amount
 

Material Science Co., Ltd. (*4)

 

Seoul,

South Korea

    December 31       January 2014     Develop, manufacture, and sell materials for display     10   W 3,791       10   W 2,354  

Nanosys Inc. (*5)

 

Milpitas,

U.S.A.

    December 31       July 2001     Develop, manufacture, and sell materials for display     3     5,660       4     5,183  
           

 

 

     

 

 

 
            W 114,551       W 109,611  
           

 

 

     

 

 

 

 

(*1)

During 2020, the Controlling Company recognized a reversal of impairment loss of W433 million as finance income for the investments in Paju Electric Glass Co., Ltd.

(*2)

During 2020, the Controlling Company recognized a reversal of impairment loss of W2,905 million as finance income for the investments in WooRee E&L Co., Ltd.

(*3)

During 2020, the Controlling Company recognized an impairment loss of W2,105 million as finance cost for the investments in Cynora GmbH. As of December 31, 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.

(*4)

During 2020, the Controlling Company recognized an impairment loss of W1,239 million as finance cost for the investments in Material Science Co., Ltd.

(*5)

During 2020, the Controlling Company recognized a reversal of impairment loss of W811 million as finance income for the investments in Nanosys Inc. As of December 31, 2020, the Controlling Company’s ownership percentage in Nanosys Inc. decreased from 4% to 3% as the Controlling Company did not participate in the rights issue.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

8.

Investments in Equity Accounted Investees, Continued

 

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

As of December 31, 2020, the market value of the Group’s share in WooRee E&L Co., Ltd., YAS Co., Ltd., and AVATEC Co., Ltd., all of which are listed in KOSDAQ, are W10,540 million, W26,700 million and W17,180 million, respectively.

Dividends income recognized from equity method investees for the years ended December 31, 2020 and 2019 amounted to W8,239 million and W7,502 million, respectively.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

8.

Investments in Equity Accounted Investees, Continued

 

  (b)

Summary of financial information as of and for the years ended December 31, 2020 and 2019 of the significant associate is as follows:

 

  (i)

Paju Electric Glass Co., Ltd.

 

(In millions of won)    December 31, 2020      December 31, 2019  

Total assets

   W 204,880        195,815  

Current assets

     143,086        126,314  

Non-current assets

     61,794        69,501  

Total liabilities

     85,224        66,017  

Current liabilities

     64,921        51,625  

Non-current liabilities

     20,303        14,392  

Revenue

     307,756        346,434  

Profit for the year

     9,615        13,672  

Other comprehensive income (loss)

     (409      9,933  

Total comprehensive income

     9,206        23,605  

 

  (c)

Reconciliation from financial information of the significant associate to its carrying value in the consolidated financial statements as of December 31, 2020 and 2019 is as follows:

 

  (i)

As of December 31, 2020

 

(In millions of won)                                               

Company

   Net asset      Ownership
interest
    Net asset
(applying
ownership
interest)
     Goodwill      Intra-group
transaction
    Impairment
loss
     Book value  

Paju Electric Glass Co., Ltd.

   W 119,656        40     47,862        —          (600     —          47,262  

 

  (ii)

As of December 31, 2019

 

(In millions of won)                                              

Company

   Net asset      Ownership
interest
    Net asset
(applying
ownership
interest)
     Goodwill      Intra-group
transaction
    Impairment
loss
    Book value  

Paju Electric Glass Co., Ltd.

   W 129,798        40     51,919        —          (789     (433     50,697  

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

8.

Investments in Equity Accounted Investees, Continued

 

  (d)

Book value of other associates, in aggregate, as of December 31, 2020 and 2019 is as follows:

 

  (i)

As of December 31, 2020

 

(In millions of won)                           
     Book value      Net profit (loss) of associates
(applying ownership interest)
 
   Profit (loss)
for the year
     Other
comprehensive
income (loss)
    Total
comprehensive
income (loss)
 

Other associates

   W 67,289        8,510        (7     8,503  

 

  (ii)

As of December 31, 2019

 

(In millions of won)                            
     Book value      Net profit (loss) of associates
(applying ownership interest)
 
   Profit (loss)
for the year
     Other
comprehensive
income (loss)
     Total
comprehensive
income (loss)
 

Other associates

   W 58,914        6,756        190        6,946  

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

8.

Investments in Equity Accounted Investees, Continued

 

  (e)

Changes in investments in associates accounted for using the equity method for the years ended December 31, 2020 and 2019 are as follows:

 

(In millions of won)                                             
     2020  

Company

   January 1      Dividends
received
    Equity income
(loss) on
investments
     Other
comprehensive
income (loss)
    Other
gain (loss)
     December 31  

Associates

   Paju Electric Glass Co., Ltd.    W 50,697        (7,739     4,035        (164     433        47,262  
   Others      58,914        (500     8,510        (7     372        67,289  
     

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 
   W  109,611        (8,239     12,545        (171     805        114,551  
     

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

 

(In millions of won)                                              
     2019  

Company

   January 1      Acquisition/
Disposal
    Dividends
received
    Equity income
(loss) on
investments
     Other
comprehensive
income (loss)
     Other
gain (loss)
    December 31  

Associates

   Paju Electric Glass Co., Ltd.    W 47,823        —         (6,057     5,391        3,973        (433     50,697  
   Others      66,166        (9,807     (1,445     6,756        190        (2,946     58,914  
     

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 
   W  113,989        (9,807     (7,502     12,147        4,163        (3,379     109,611  
     

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

9.

Property, Plant and Equipment

 

  (a)

Changes in property, plant and equipment for the year ended December 31, 2020 are as follows:

 

(In millions of won)                                                 
     Land     Buildings
and
structures
    Machinery
and
equipment
    Furniture
and
fixtures
    Construction-
in-progress
(*1)
    Right-of-use
asset
    Others     Total  

Acquisition cost as of January 1, 2020

   W 454,035       7,381,156       43,604,721       899,053       9,618,256       169,133       823,101       62,949,455  

Accumulated depreciation as of January 1, 2020

     —         (3,154,387     (34,810,300     (753,987     —         (51,581     (534,013     (39,304,268

Accumulated impairment loss as of January 1, 2020

     —         (120,876     (1,223,648     (8,278     (171,929     (4,302     (28,509     (1,557,542
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Book value as of January 1, 2020

   W 454,035       4,105,893       7,570,773       136,788       9,446,327       113,250       260,579       22,087,645  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Additions

     —         —         —         —         2,098,911       51,754       —         2,150,665  

Depreciation

     —         (332,058     (3,036,497     (67,391     —         (54,069     (236,986     (3,727,001

Disposals

     (11,266     (31,936     (117,538     (2,963     —         —         (38,345     (202,048

Impairment loss

     —         1,074       (30,815     8       (3,801     —         (4,960     (38,494

Others (*2)

     53       117,900       4,984,430       59,758       (5,481,494     —         319,353       —    

Government grants received

     —         (12,647     (93,825     —         (11,869     —         —         (118,341

Effect of movements in exchange rates

     —         (1,020     (1,882     (33     (2,347     (28     (65     (5,375
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Book value as of December 31, 2020

   W 442,822       3,847,206       9,274,646       126,167       6,045,727       110,907       299,576       20,147,051  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Acquisition cost as of December 31, 2020

   W 442,822       7,420,854       48,174,525       735,329       6,122,364       184,036       1,021,641       64,101,571  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated depreciation as of December 31, 2020

   W —         (3,457,052     (37,582,109     (600,912     —         (69,130     (697,134     (42,406,337
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated impairment loss as of December 31, 2020

   W —         (116,596     (1,317,770     (8,250     (76,637     (3,999     (24,931     (1,548,183
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(*1)

As of December 31, 2020, construction-in-progress mainly relates to construction of manufacturing facilities.

(*2)

Others are mainly amounts transferred from construction-in-progress.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

9.

Property, Plant and Equipment, Continued

 

  (b)

Changes in property, plant and equipment for the year ended December 31, 2019 are as follows:

 

(In millions of won)                                                 
     Land     Buildings
and
structures
    Machinery
and
equipment
    Furniture
and
fixtures
    Construction-
in-progress
(*1)
    Right-of-use
asset
    Others     Total  

Acquisition cost as of January 1, 2019

   W 461,828       6,528,939       39,825,070       834,628       12,234,824       —         633,220       60,518,509  

Accumulated depreciation as of January 1, 2019

     —         (2,991,445     (34,817,982     (692,372     —         —         (368,983     (38,870,782

Accumulated impairment loss as of January 1, 2019

     —         (1,706     (28,001     —         (17,890     —         —         (47,597
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Book value as of January 1, 2019

   W 461,828       3,535,788       4,979,087       142,256       12,216,934       —         264,237       21,600,130  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Recognition of right-of-use assets on initial application of K-IFRS No. 1116

     —         —         —         —         —         142,040       —         142,040  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted book value as of January 1, 2019

   W 461,828       3,535,788       4,979,087       142,256       12,216,934       142,040       264,237       21,742,170  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Additions

     —         —         —         —         5,878,369       29,733       —         5,908,102  

Depreciation

     —         (302,157     (2,609,205     (66,592     —         (51,063     (239,762     (3,268,779

Disposals

     (7,861     (4,958     (559,616     (1,622     —         (3,594     (16,953     (594,604

Impairment loss (*2)

     —         (125,687     (1,212,215     (8,278     (171,439     (4,302     (28,509     (1,550,430

Others (*3)

     68       1,064,123       6,958,793       70,140       (8,373,047     —         279,923       —    

Government grants received

     —         (83,200     (17,028     —         (180,448     —         —         (280,676

Effect of movements in exchange rates

     —         21,984       30,957       884       75,958       436       1,643       131,862  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Book value as of December 31, 2019

   W 454,035       4,105,893       7,570,773       136,788       9,446,327       113,250       260,579       22,087,645  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Acquisition cost as of December 31, 2019

   W 454,035       7,381,156       43,604,721       899,053       9,618,256       169,133       823,101       62,949,455  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated depreciation as of December 31, 2019

   W —         (3,154,387     (34,810,300     (753,987     —         (51,581     (534,013     (39,304,268
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated impairment loss as of December 31, 2019

   W —         (120,876     (1,223,648     (8,278     (171,929     (4,302     (28,509     (1,557,542
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(*1)

As of December 31, 2019, construction-in-progress mainly relates to construction of manufacturing facilities.

(*2)

During 2019, Display(AD PO) and Lighting CGUs were assessed for impairment, and impairment losses amounting to W1,491,292 million (W1,369,371 million and W121,921 million for Display(AD PO) and Lighting CGUs, respectively) were recognized as other non-operating expenses.

(*3)

Others are mainly amounts transferred from construction-in-progress.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

9.

Property, Plant and Equipment, Continued

 

  (c)

Capitalized borrowing costs and capitalization rate for the years ended December 31, 2020 and 2019 are as follows:

 

(In millions of won)             
     2020     2019  

Capitalized borrowing costs

   W 191,876       283,525  

Capitalization rate

     4.14     3.74

 

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Table of Contents

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

10.

Intangible Assets and Non-current Asset Impairment

 

  (a)

Changes in intangible assets for the year ended December 31, 2020 are as follows:

 

(In millions of won)   Intellectual
property

rights
    Software     Member-
ships
    Development
costs
    Construction
-in-progress
    Customer
relationships
    Technology     Good-
will
    Others
(*2)
    Total  

Acquisition cost as of January 1, 2020

  W 959,683       1,097,290       56,612       2,580,777       15,245       59,176       11,074       105,414       13,080       4,898,351  

Accumulated amortization as of January 1, 2020

    (739,498     (890,281     —         (2,073,881     —         (37,491     (10,705     —         (13,079     (3,764,935

Accumulated impairment loss as of January 1, 2020

    (29,151     (8,864     (10,560     (131,713     —         (21,685     —         (57,995     —         (259,968
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Book value as of January 1, 2020

  W 191,034       198,145       46,052       375,183       15,245       —         369       47,419       1       873,448  

Additions - internally developed

    —         —         —         284,487       —         —         —         —         —         284,487  

Additions - external purchases

    291,405       27,789       —         —         51,520       —         —         —         3       370,717  

Amortization (*1)

    (42,205     (86,466     —         (278,799     —         —         (369     —         (3     (407,842

Disposals

    —         —         (17,252     —         —         —         —         —         —         (17,252

Impairment loss (*3)

    —         (675     —         (78,918     —         —         —         —         —         (79,593

Reversal of impairment loss

    —         —         1,110       —         —         —         —         —         —         1,110  

Transfer from construction-in-progress

    —         54,753       —         —         (54,753     —         —         —         —         —    

Effect of movements in exchange rates

    (4,031     (887     (10     —         55       —         —         (1,888     —         (4,987
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Book value as of December 31, 2020

  W 436,203       194,433       29,900       301,953       12,067       —         —         45,531       1       1,020,088  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Acquisition cost as of December 31, 2020

  W 1,247,057       1,180,719       39,350       2,865,264       12,067       59,176       11,074       103,526       13,083       5,531,316  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated amortization as of December 31, 2020

  W (781,703     (976,747     —         (2,352,680     —         (37,491     (11,074     —         (13,082     (4,172,777
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated impairment loss as of December 31, 2020

  W (29,151     (9,539     (9,450     (210,631     —         (21,685     —         (57,995     —         (338,451
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(*1)

The Group has classified the amortization as manufacturing overhead costs, selling expenses, administrative expenses and research and development expenses.

(*2)

Others mainly consist of rights to use electricity and gas supply facilities.

(*3)

The Group recognized an impairment loss amounting to W78,918 million for development projects with low feasibility to result in revenue generation after the impairment review.

 

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Table of Contents

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

10.

Intangible Assets and Non-current Asset Impairment, Continued

 

  (b)

Changes in intangible assets for the year ended December 31, 2019 are as follows:

 

(In millions of won)                                                            
    Intellectual
property rights
    Software     Member-
ships
    Development
costs
    Construction-
in-progress
    Customer
relationships
    Technology     Good-
will
    Others
(*2)
    Total  

Acquisition cost as of January 1, 2019

  W 926,969       992,139       57,560       2,142,832       36,963       59,176       11,075       104,311       13,077       4,344,102  

Accumulated amortization as of

January 1, 2019

    (696,948     (814,540     —         (1,775,922     —         (34,854     (9,598     —         (13,077     (3,344,939

Accumulated impairment loss as of January 1, 2019

    —         —         (11,521     —         —         —         —         —         —         (11,521
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Book value as of January 1, 2019

  W 230,021       177,599       46,039       366,910       36,963       24,322       1,477       104,311       —         987,642  

Additions - internally developed

    —         —         —         437,945       —         —         —         —         —         437,945  

Additions - external purchases

    28,397       —         846       —         90,369       —         —         —         3       119,615  

Amortization (*1)

    (42,550     (82,016     —         (297,959     —         (2,637     (1,108     —         (2     (426,272

Disposals

    —         (239     (1,816     —         —         —         —         —         —         (2,055

Impairment loss (*3)(*4)

    (29,152     (8,905     —         (131,713     —         (21,685     —         (57,995     —         (249,450

Reversal of impairment loss

    —         —         960       —         —         —         —         —         —         960  

Transfer from construction-in-progress

    —         111,359       —         —         (112,159     —         —         —         —         (800

Effect of movements in exchange rates

    4,318       347       23       —         72       —         —         1,103       —         5,863  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Book value as of December 31, 2019

  W 191,034       198,145       46,052       375,183       15,245       —         369       47,419       1       873,448  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Acquisition cost as of December 31, 2019

  W     959,683       1,097,290       56,612       2,580,777       15,245       59,176       11,074       105,414       13,080       4,898,351  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated amortization as of December 31, 2019

  W (739,498     (890,281     —         (2,073,881     —         (37,491     (10,705     —         (13,079     (3,764,935
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated impairment loss as of December 31, 2019

  W (29,151     (8,864     (10,560     (131,713     —         (21,685     —         (57,995     —         (259,968
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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Table of Contents

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

10.

Intangible Assets and Non-current Asset Impairment, Continued

 

(*1)

The Group has classified the amortization as manufacturing overhead costs, selling expenses, administrative expenses and research and development expenses.

(*2)

Others mainly consist of rights to use electricity and gas supply facilities.

(*3)

During 2019, Display(AD PO) and Lighting CGUs were assessed for impairment, and the impairment losses amounting to W133,628 million (W26,284 and W105,344 million for Display(AD PO) and Lighting CGUs, respectively) were recognized as other non-operating expenses. The impairment amount is reduced in goodwill, customer relationships and others.

(*4)

The Group recognized an impairment loss amounting to W117,822 million for development projects with low feasibility to result in revenue generation after the impairment review.

 

  (c)

Development costs as of December 31, 2020 and 2019 are as follows:

 

  (i)

As of December 31, 2020

 

(In millions of won and in years)            

Classification

   Product
type
   Book Value  

Development completed

   TV    W 20,803  
   IT      51,784  
   Mobile      33,097  
     

 

 

 
      W 105,684  
     

 

 

 

Development in process

   TV    W 49,773  
   IT      42,762  
   Mobile      103,734  
     

 

 

 
      W 196,269  
     

 

 

 
      W 301,953  
     

 

 

 

 

  (ii)

As of December 31, 2019

 

(In millions of won and in years)              

Classification

   Product
type
     Book Value  

Development completed

     TV      W 22,597  
     IT        26,834  
     Mobile        53,350  
     

 

 

 
      W 102,781  
     

 

 

 

Development in process

     TV      W 42,587  
     IT        72,332  
     Mobile        157,483  
     

 

 

 
      W 272,402  
     

 

 

 
      W 3751,183  
     

 

 

 

 

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Table of Contents

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

10.

Intangible Assets and Non-current Asset Impairment, Continued

 

  (d)

Impairment assessment on CGU with allocated goodwill

As of December 31, 2020, goodwill is allocated to the Group’s Display CGU which has a large portion of the Group’s non-current financial assets. The carrying amount of goodwill allocated to Display CGU is as follows:

 

(In millions of won)              
     December 31, 2020      December 31, 2019  

Display CGU

   W 45,531        47,419  

The recoverable amount of Display CGU is estimated based on its value in use. Value in use is calculated using the estimated pre-tax cash flow based on 5-year business plan approved by management. The estimated sales of the Group’s products used in the forecast was determined considering external sources and the Group’s past experience. Management estimated the future pre-tax cash flows based on its past performance and forecasts on market growth. The key assumptions used in the estimation of value in use for Display CGU include revenue and operating expenditures for the forecast period, growth rates for subsequent years (“terminal growth rate”), and discount rate. For Display CGU, the terminal growth rate and the discount rate in the estimation of value in use as of December 31, 2020 are as follows.

 

(In millions of won)             
     Discount rate(*)     Terminal growth rate  

Display CGU

   W 7.0     1.0

 

(*)

The discount rate was calculated using the weighted average cost of equity capital and debt and the beta of equity capital was calculated as the average of five global listed companies in the same industry and the Group. Cost of debt was calculated using the yield rate of non-guaranteed corporate bond considering the Group’s credit rating and debt ratio was determined using the average of the debt ratios of the five global listed companies in the same industry and the Group.

As a result of impairment test, the Display CGU’s recoverable amount exceeds the carrying amount by W1,663,483 million. The value in use determined for this CGU is sensitive to the discount rate and terminal growth rate used in the discounted cash flow model. An increase in the discount rate by 0.68% or a decrease in terminal growth rate by 0.66% would result in the estimated recoverable amount to be equal to the carrying amount of the CGU.

 

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Table of Contents

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

11.

Financial Liabilities

 

  (a)

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

 

(In millions of won)              
     December 31, 2020      December 31, 2019  

Current

     

Short-term borrowings

   W 394,906        696,793  

Current portion of long-term borrowings and bonds

     2,705,709        1,242,904  

Derivatives(*)

     58,875        —    

Lease liabilities

     35,534        37,387  
  

 

 

    

 

 

 
   W  3,195,024        1,977,084  
  

 

 

    

 

 

 

Non-current

     

Won denominated borrowings

   W 2,435,000        2,692,560  

Foreign currency denominated borrowings

     6,584,658        6,107,117  

Bonds

     1,948,541        2,741,516  

Derivatives(*)

     108,750        20,592  

Lease liabilities

     47,897        51,125  
  

 

 

    

 

 

 
   W 11,124,846        11,612,910  
  

 

 

    

 

 

 

 

(*)

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

 

  (b)

Short-term borrowings as of December 31, 2020 and 2019 are as follows.

 

(In millions of won, USD and CNY)  

Lender

   Annual interest rate
as of
December 31, 2020 (%)(*)
     December 31,
2020
     December 31,
2019
 

Standard Chartered Bank Korea Limited

     12ML + 0.98      W 326,400        347,340  

Standard Chartered Bank Vietnam and others

     3ML + 0.80~0.90        68,506        61,613  

Standard Chartered Bank (China) Limited and others

     —          —          287,840  
     

 

 

    

 

 

 

Foreign currency equivalent

        USD 363        USD 353  
        —          CNY 1,737  
     

 

 

    

 

 

 
      W 394,906        696,793  
     

 

 

    

 

 

 

 

(*)

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

 

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Table of Contents

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

 

11.

Financial Liabilities, Continued

 

  (c)

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

 

(In millions of won)

        

Lender

   Annual interest rate
as of
December 31, 2020 (%)(*)
     December 31,
2020
     December 31,
2019
 

Woori Bank

     2.75      W 60        608  

Korea Development Bank and others

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