6-K 1 d719227d6k.htm FORM 6-K Form 6-K
Table of Contents

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

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

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of May 2021

 

 

LG Display Co., Ltd.

(Translation of Registrant’s name into English)

 

 

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

(Address of principal executive offices)

 

 

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

Form 20-F  ☒            Form 40-F  ☐

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

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

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

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

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

Yes  ☐            No  ☒

 

 

 


Table of Contents

QUARTERLY REPORT

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

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

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

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

Contents

 

 

1.

 

Company

     3  
   

A.

 

Name and contact information

     3  
   

B.

 

Credit rating

     3  
   

C.

 

Capitalization

     4  
   

D.

 

Voting rights

     5  
   

E.

 

Dividends

     5  
 

2.

 

Business

     6  
   

A.

 

Business overview

     6  
   

B.

 

Industry

     7  
   

C.

 

New businesses

     9  
 

3.

 

Major Products and Raw Materials

     9  
   

A.

 

Major products

     9  
   

B.

 

Average selling price trend of major products

     9  
   

C.

 

Major raw materials

     10  
 

4.

 

Production and Equipment

     11  
   

A.

 

Production capacity and output

     11  
   

B.

 

Production performance and utilization ratio

     11  
   

C.

 

Investment plan

     11  
 

5.

 

Sales

     12  
   

A.

 

Sales performance

     12  
   

B.

 

Sales organization and sales route

     13  
   

C.

 

Sales methods and sales terms

     13  
   

D.

 

Sales strategy

     13  
   

E.

 

Major customers

     13  
 

6.

 

Purchase Orders

     13  
 

7.

 

Market Risks and Risk Management

     13  
   

A.

 

Market risks

     13  
   

B.

 

Risk management

     14  

 

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Table of Contents
 

8.

 

Derivative Contracts

   14
   

A.

 

Currency risks

   14
   

B.

 

Interest rate risks

   14
 

9.

 

Major Contracts

   15
 

10.

 

Research & Development

   15
   

A.

 

Summary of R&D-related expenditures

   15
   

B.

 

R&D achievements

   15
 

11.

 

Intellectual Property

   16
 

12.

 

Environmental and Safety Matters

   16
 

13.

 

Financial Information

   20
   

A.

 

Financial highlights (Based on consolidated K-IFRS)

   20
   

B.

 

Financial highlights (Based on separate K-IFRS)

   21
   

C.

 

Consolidated subsidiaries as of March 31, 2021

   22
   

D.

 

Status of equity investments as of March 31, 2021

   22
  14.  

Audit Information

   23
   

A.

 

Audit service

   23
   

B.

 

Non-audit service

   23
 

15.

 

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

   24
 

16.

 

Board of Directors

   24
   

A.

 

Members of the board of directors

   24
   

B.

 

Committees of the board of directors

   24
   

C.

 

Independence of directors

   25
 

17.

 

Information Regarding Shares

   25
   

A.

 

Total number of shares

   25
   

B.

 

Shareholder list

   25
 

18.

 

Directors and Employees

   26
   

A.

 

Directors

   26
   

B.

 

Employees

   27
 

19.

 

Other Matters

   27
   

A.

 

Legal proceedings

   27
   

B.

 

Material events subsequent to the reporting period

   28

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

 

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1.

Company

 

  A.

Name and contact information

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

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

 

  B.

Credit rating

 

  (1)

Corporate bonds (Domestic)

 

Subject instrument

  

Month of rating

  

Credit rating(1)

  

Rating agency (Rating range)(2)

Corporate bonds    February 2019    AA-   

 

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

   April 2019
   November 2019
  

 

February 2020

   A+
   June 2020
  

 

February 2019

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

 

February 2020

   A+
   June 2020
   March 2021
  

 

April 2019

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

 

February 2020

   A+
   May 2020

 

(1)

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

 

Subject instrument

  

Month of rating

  

Credit rating(2)

  

Rating agency (Rating range)

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

 

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(2)

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

 

Subject

instrument

 

Credit rating

  

Definition

Corporate bonds   AAA    Strongest capacity for timely repayment.
 

 

AA+/AA/AA-

  

 

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

 

 

A+/A/A-

  

 

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

 

 

BBB+/BBB/BBB-

  

 

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

 

 

BB+/BB/BB-

  

 

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

 

 

B+/B/B-

  

 

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

 

 

CCC

  

 

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

 

 

CC

  

 

Greater uncertainties than higher ratings.

 

 

C

  

 

High credit risk and lack of capacity for timely repayment.

 

 

D

  

 

Insolvency.

 

  (2)

Corporate bonds (Overseas)

 

Subject instrument

  

Month of rating

  

Credit rating

  

Rating agency (Rating range) (2)

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

 

(1)

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

(2)

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

 

Subject

instrument

  

Credit rating

  

Definition

Corporate bonds    AAA    Highest level of stability.
  

 

AA+/AA/AA-

  

 

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

  

 

A+/A/A-

  

 

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

  

 

BBB+/BBB/BBB-

  

 

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

  

 

BB+/BB/BB-

  

 

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

  

 

B+/B/B-

  

 

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

  

 

CCC/CC/C

  

 

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

  

 

D

  

 

Bankruptcy.

 

  C.

Capitalization

 

  (1)

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

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

 

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  (2)

Convertible bonds (as of March 31, 2021)

 

Description

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

Unsecured Foreign Convertible Bonds No. 3

    

Aug.
22,
2019
 
 
 
    

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

Registered
Common
Shares
 
 
 
    



Aug.
23,

2020
~

Aug.
12,

2024

 
 

 
 

 
 

 

     100   W 19,845        813,426,670,000 (1)      40,988,998       


Listed on
Singapore
Stock
Exchange
 
 
 
 

Total

     —          —          813,426,670,000       —          —          100   W 19,845        813,426,670,000       40,988,998        —    

 

(1)

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

 

  D.

Voting rights (as of March 31, 2021)

(Unit: share)

 

Description

   Number of shares  

A. Total number of shares issued(1):

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

B. Shares without voting rights:

   Common shares      —    
   Preferred shares      —    

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

   Common shares      —    
   Preferred shares      —    

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

   Common shares      —    
   Preferred shares      —    

E. Shares with restored voting rights:

   Common shares      —    
   Preferred shares      —    

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

   Common shares      357,815,700  
   Preferred shares      —    

 

(1)

Authorized: 500,000,000 shares

 

  E.

Dividends

Dividends for the three most recent fiscal years

 

Description (unit)

  2021 Q1     2020     2019  

Par value (Won)

    5,000       5,000       5,000  

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

    228,011       (89,342     (2,829,705

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

    637       (250     (7,908

Total cash dividend amount for the period (million Won)

    —         —         —    

Total stock dividend amount for the period (million Won)

    —         —         —    

Cash dividend payout ratio (%)(3)

    —         —         —    

Cash dividend yield (%)(4)

   Common shares     —         —         —    
   Preferred shares     —         —         —    

Stock dividend yield (%)

   Common shares     —         —         —    
   Preferred shares     —         —         —    

Cash dividend per share (Won)

   Common shares     —         —         —    
   Preferred shares     —         —         —    

Stock dividend per share (share)

   Common shares     —         —         —    
   Preferred shares     —         —         —    

 

(1)

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

(2)

Earnings per share is based on par value of W5,000 per share and is calculated by dividing net income by weighted average number of common shares.

(3)

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

 

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(4)

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

Historical dividend information

 

Number of consecutive years of dividends (*)

     Average Dividend Yield  

Interim dividends

     Annual dividends        Last 3 years        Last 5 years  

—  

     —          —          0.65 (**) 

 

*

No dividends were paid during the last three fiscal years.

**

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

 

  F.

Matters relating to Articles of Incorporation

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

 

Articles to be Amended

  

Description of Amendments

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

 

2.

Business

 

  A.

Business overview

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

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

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

 

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Consolidated operating results highlights

(Unit: In billions of Won)

 

     2021 Q1      2020      2019  

Sales Revenue

     6,883        24,230        23,476  

Gross Profit

     1,231        2,643        1,868  

Operating Profit (loss)

     523        (29      (1,359

Total Assets

     36,398        35,072        35,575  

Total Liabilities

     23,158        22,335        23,086  

 

  B.

Industry

 

  (1)

Industry characteristics

 

   

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

 

   

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

 

   

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

 

   

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

 

   

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

 

   

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

 

  (2)

Growth Potential

 

   

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

 

  (3)

Cyclicality

 

   

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

 

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

 

  (4)

Market conditions

 

   

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

 

  a.

Korea: LG Display, Samsung Display, etc.

 

  b.

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

 

  c.

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

 

  d.

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

 

   

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

 

     2021 Q1     2020     2019  

Panels for Televisions(1)(2)

     22.1     21.6     28.1

Panels for IT Products(1)

     21.7     21.2     24.8

Total(1)

     21.9     21.4     27.2

 

(1)

Source: Large Area Display Market Tracker (OMDIA).

(2)

Includes panels for public displays.

 

  (5)

Competitiveness and competitive advantages

 

   

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

 

   

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

 

   

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

 

   

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

 

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

 

   

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

 

  C.

New businesses

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

 

3.

Major Products and Raw Materials

 

  A.

Major products

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

(Unit: In billions of Won, except percentages)

 

Business area

   Sales type      Items (By
product)
    

Usage

   Major
trademark
   2021 Q1  
   Sales
Revenue
     Percentages
(%)
 

Display

    




Goods/

Products/
Services/
Other
sales

 

 
 
 
 

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

Mobile,

etc.


 

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

Total

                 6,883        100.0

 

  B.

Average selling price trend of major products

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

 

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(Unit: US$ / m2)

 

Period

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

2021 Q1

     736  

2020 Q4

     790  

2020 Q3

     706  

2020 Q2

     654  

2020 Q1

     567  

2019 Q4

     606  

2019 Q3

     513  

2019 Q2

     456  

2019 Q1

     528  

 

(1)

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

(2)

Excludes semi-finished products in the cell process.

 

  C.

Major raw materials

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

 

 

                       

(Unit: In billions of Won, except percentages)

 

Business area

   Purchase type     

Items

   Usage      Cost(1)      Ratio (%)    

Suppliers

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

Display

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

Total

              3,102        100.0  

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

(1)

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

(2)

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

 

   

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

 

   

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

 

   

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

 

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4.

Production and Equipment

 

  A.

Production capacity and output

 

  (1)

Production capacity

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

 

                     

(Unit: 1,000 glass sheets)

 

 

Business area

  

Items

  

Location of facilities

   2021 Q1(1)      2020(2)      2019(2)  

Display

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

 

(1)

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

(2)

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

 

  (2)

Production output

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

 

                     

(Unit: 1,000 glass sheets)

 

 

Business area

  

Items

  

Location of facilities

   2021 Q1(1)      2020(1)      2019(1)  

Display

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

 

(1)

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

 

  B.

Production performance and utilization ratio

(Unit: Hours, except percentages)

 

Production facilities

  

Available working hours

in 2021 Q1

  

Actual working hours in

2021 Q1

   Average utilization ratio  

Gumi

  

2,160(1)

(24 hours x 90 days)

  

2,160(1)

(24 hours x 90 days)(2)

     100.0

Paju

  

2,160(1)

(24 hours x 90 days)

  

2,160(1)

(24 hours x 90 days)(2)

     100.0

Guangzhou

  

2,160(1)

(24 hours x 90 days)

  

2,160(1)

(24 hours x 90 days)(2)

     100.0

 

(1)

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

(2)

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

 

  C.

Investment plan

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

 

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5.

Sales

 

  A.

Sales performance

(Unit: In billions of Won)

 

Business area

  

Sales types

  

Items (Market)

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

Display

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

 

(1)

Based on ship-to-party.

 

  B.

Sales organization and sales route

 

   

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

 

   

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

 

   

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

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

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

 

   

Sales performance by sales route

 

Sales performance

    

Sales route

     Ratio  

Overseas

     Overseas subsidiaries        93.2
     Headquarters        6.8

Overseas sales portion (overseas sales / total sales)

       97.8

Korea

     Overseas subsidiaries        3.6
     Headquarters        96.4

Korea sales portion (Korea sales / total sales)

       2.2

 

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  C.

Sales methods and sales terms

 

   

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

 

  D.

Sales strategy

 

   

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

 

   

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

 

   

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

 

  E.

Major customers

 

   

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

 

6.

Purchase Orders

 

   

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

 

7.

Market Risks and Risk Management

 

  A.

Market risks

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

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

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

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

 

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  B.

Risk management

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

 

8.

Derivative Contracts

 

  A.

Currency risks

 

   

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

 

   

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

 

   

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

 

   

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

 

   

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

We recognized a net gain on valuation of derivative instruments in the amount of W117 billion with respect to our foreign exchange derivative instruments held during the reporting period.

 

  B.

Interest rate risks

 

   

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

 

   

As of March 31, 2021, we entered into an aggregate of W170 billion in interest rate swap agreements to KB Kookmin Bank and others, for which we have not applied hedge accounting. We recognized a net gain on valuation of derivative instruments in the amount of W1 billion with respect to our interest rate derivative instruments held during the reporting period.

 

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9.

Major Contracts

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

 

Type of agreement

  

Name of party

  

Term

  

Content

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

January 2015 ~

December 2025

   Patent licensing of OLED related technology

 

10.

Research & Development (“R&D”)

 

  A.

Summary of R&D-related expenditures

(Unit: In millions of Won, except percentages)

 

Items

   2021 Q1     2020     2019  

R&D Expenditures (prior to deducting governmental subsidies)

     475,299       1,740,083       1,776,879  

Governmental Subsidies

     (41     (1,524     (590

Net R&D-Related Expenditures

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

Accounting Treatment(1)

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

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

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

     6.9     7.2     7.6

 

(1)

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

(2)

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

 

  B.

R&D achievements

Achievements in 2019

 

  (1)

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

 

   

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

 

   

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

 

  (2)

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

 

   

Developed WOLED-based Top Emission OLED device and process technology

 

  (3)

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

 

   

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

 

  (4)

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

 

   

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

 

  (5)

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

 

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

 

   

Pioneered gaming/curved premium monitor product market

 

  (6)

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

 

   

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

 

   

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

 

  (7)

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

 

   

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

Achievements in 2020

 

  (1)

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

 

   

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

 

  (2)

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

 

   

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

 

   

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

 

  (3)

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

 

   

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

 

   

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

 

   

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

Achievements in 2021

 

  (1)

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

 

   

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

 

  (2)

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

 

   

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

 

  (3)

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

 

   

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

 

   

Led the QHD high-speed gaming product market

 

11.

Intellectual Property

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

 

12.

Environmental and Safety Matters

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

 

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

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

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

 

               

Category

   2020      2019      2018  

Greenhouse gases

     4,748        5,885        6,696  

Energy

     56,668        62,776        64,296  

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

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

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

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

 

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

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

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

 

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In June 2017, we were assessed a fine of W1 million, which we subsequently paid, for failure to meet certain waste disposal subcontractor requirements under the Waste Management Act. To prevent such violations from occurring again, we are strengthening the periodic evaluation process for our waste management subcontractors.

In June 2017, we were audited by the Ministry of Employment and Labor in connection with the occurrence of a safety accident and found to be in violation of certain provisions of the Industrial Safety and Health Act relating to supervisory obligations. As a result, we were issued a corrective order and assessed a fine of W2.4 million. In addition, the trial court ordered a fine of W0.5 million on each of us and our chief production officer on the basis of certain other applicable provisions of the Industrial Safety and Health Act. In relation to the same matter, in May 2018, the Prosecutor’s Office sought a fine of W3.0 million on each of us and our chief production officer on the basis of certain other applicable provisions of the Industrial Safety and Health Act. The trial court (Goyang Branch of Uijeongbu District Court) issued a summary order confirming the same fines of W3.0 million on November 22, 2018, which fines were paid in full after such order was confirmed on November 5, 2020. In order to prevent such accidents from occurring again, we are strengthening our safety management standards and training for our employees.

In January 2018, we were audited by the Ministry of Employment and Labor in connection with the occurrence of another safety accident and found to be in violation of certain provisions of the Industrial Safety and Health Act relating to supervisory obligations. As a result, we were issued a corrective order and assessed a fine of W14.4 million. In relation to this matter, in January 2019, the trial court (Goyang Branch of Uijeongbu District Court) assessed a fine of W1 million as a summary order on each of us and our chief production officer pursuant to certain other provisions of the Industrial Safety and Health Act. In addition, in January 2019, the trial court sought a fine of W4 million and W2 million on us and the employee in charge of on-site safety management, respectively, on the basis of certain other provisions of the Industrial Safety and Health Act. Relevant authorities are currently conducting further investigations. In order to prevent such accidents from occurring again, we are strengthening our safety management standards and training for our employees.

Also in January 2018, the government of Gyeong-gi Province issued a warning and assessed a fine of W1 million on us, which we subsequently paid, for the failure to comply with certain requirements relating to air pollutant emission and prevention facilities under the Air Quality Management Act. To prevent such violations from occurring again, we have shortened the air pollutant emission maintenance reporting period and strengthened the verification process for relevant data.

In March 2018, we were audited by the Ministry of Employment and Labor in connection with our health and safety training practices, and we were found to have omitted requisite health and safety training sessions for certain employees in our P9 facilities in 2016 and 2017. As a result, we were assessed a fine of W6.95 million, which we subsequently paid, and have strengthened our efforts to promote health and safety training programs in advance as well as our management and supervision activities to ensure such programs are conducted.

In June 2019, the government of Gyeong-gi Province reviewed the operational history and the number of self-measurements of our emission outlets and confirmed that there were certain deficiencies in self-measurements for our reserve facilities. As a result, we were assessed a fine of W1.6 million by the government of Gyeong-gi Province, which we subsequently paid, for the violation of Article 39 of the Air Quality Management Act. To prevent the recurrence, we have established a monthly self-measurement plan for our reserve facilities.

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

 

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In May 2020, we received a warning from Daegu Regional Environmental Office regarding a safety incident that occurred in April 2020 in violation of Article 13-1 of the Chemical Control Act. In addition, in connection with another safety incident that occurred in May 2020, we were assessed an administrative penalty of W1.44 million in May 2020 and an improvement order in June 2020, in each case by Daegu Regional Environmental Office, for a violation of Article 13-2 of the Chemical Control Act. We subsequently paid such fine, and we also submitted a report of compliance with such improvement order in July 2020. Regarding these two incidents, Gimcheon Branch of Daegu District Court issued a summary order to assess fines of W3 million on each of us and two of our employees (the former head of safety and health management at our Gumi facilities and a former working level staff), which order was subsequently confirmed. In order to prevent recurrence, we are strengthening our safety management standards and employee training efforts.

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

 

13.

Financial Information

 

  A.

Financial highlights (Based on consolidated K-IFRS).

(Unit: In millions of Won)

 

Description

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

Current assets

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

Quick assets

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

Inventories

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

Non-current assets

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

Investments in equity accounted investees

     111,187        114,551        109,611  

Property, plant and equipment, net

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

Intangible assets

     1,259,004        1,020,088        873,448  

Other non-current assets

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

Total assets

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

Current liabilities

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

Non-current liabilities

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

Total liabilities

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

Share capital

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

Share premium

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

Retained earnings

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

Other equity

     32,982        (163,446      (203,021

Non-controlling interest

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

Total equity

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

 

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

 

Description

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

Revenue

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

Operating profit (loss)

     523,029        (29,117      (1,359,382

Profit (loss) from continuing operations

     265,811        (70,636      (2,872,078

Profit (loss) for the period

     265,811        (70,636      (2,872,078

Profit (loss) attributable to:

        

Owners of the Company

     228,011        (89,342      (2,829,705

Non-controlling interest

     37,800        18,706        (42,373

Basic earnings (loss) per share

     637        (250      (7,908

Diluted earnings (loss) per share

     637        (250      (7,908

Number of consolidated entities

     21        21        22  

 

  B.

Financial highlights (Based on separate K-IFRS).

(Unit: In millions of Won)

 

Description

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

Current assets

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

Quick assets

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

Inventories

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

Non-current assets

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

Investments

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

Property, plant and equipment, net

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

Intangible assets

     1,073,094        887,431        708,047  

Other non-current assets

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

Total assets

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

Current liabilities

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

Non-current liabilities

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

Total liabilities

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

Share capital

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

Share premium

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

Retained earnings

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

Other equity

     0        0        0  

Total equity

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

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

 

Description

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

Revenue

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

Operating profit (loss)

     187,076        (812,979      (1,784,245

Profit (loss) from continuing operations

     45,322        (513,262      (2,639,893

Profit (loss) for the period

     45,322        (513,262      (2,639,893

Basic earnings (loss) per share

     127        (1,434      (7,378

Diluted earnings (loss) per share

     127        (1,434      (7,378

 

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  C.

Consolidated subsidiaries (as of March 31, 2021)

 

Company Interest

  

Primary Business

  

Location

   Equity  

LG Display America, Inc.

   Sales    U.S.A.      100

LG Display Germany GmbH

   Sales    Germany      100

LG Display Japan Co., Ltd.

   Sales    Japan      100

LG Display Taiwan Co., Ltd.

   Sales    Taiwan      100

LG Display Nanjing Co., Ltd.

   Manufacturing    China      100

LG Display Shanghai Co., Ltd.

   Sales    China      100

LG Display Guangzhou Co., Ltd.

   Manufacturing    China      100

LG Display Shenzhen Co., Ltd.

   Sales    China      100

LG Display Singapore Pte. Ltd.

   Sales    Singapore      100

L&T Display Technology (Fujian) Limited

   Manufacturing and sales    China      51

LG Display Yantai Co., Ltd.

   Manufacturing    China      100

LG Display (China) Co., Ltd.

   Manufacturing and sales    China      70

Nanumnuri Co., Ltd.

   Workplace services    Korea      100

Unified Innovative Technology, LLC

   Managing intellectual property    U.S.A.      100

Global OLED Technology LLC

   Managing intellectual property    U.S.A.      100

LG Display Guangzhou Trading Co., Ltd.

   Sales    China      100

LG Display Vietnam Haiphong Co., Ltd.

   Manufacturing    Vietnam      100

Suzhou Lehui Display Co., Ltd.

   Manufacturing and sales    China      100

LG Display Fund I LLC (1)

   Investing in new emerging companies    U.S.A      100

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

   Manufacturing and sales    China      70

 

(1)

During the reporting period, we invested an additional W6,157 million in LG Display Fund I LLC.

 

  D.

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

 

  (1)

Consolidated subsidiaries

 

Company

   Capital Stock
(in millions)
     Date of
Incorporation
     Equity
Interest
 

LG Display America, Inc.

   USD 411        September 1999        100

LG Display Germany GmbH

   EUR 1        November 1999        100

LG Display Japan Co., Ltd.

   JPY 95        October 1999        100

LG Display Taiwan Co., Ltd.

   NTD 116        April 1999        100

LG Display Nanjing Co., Ltd.

   CNY   3,020        July 2002        100

LG Display Shanghai Co., Ltd.

   CNY    4        January 2003        100

LG Display Guangzhou Co., Ltd.

   CNY   1,655        June 2006        100

LG Display Shenzhen Co., Ltd.

   CNY 4        August 2007        100

LG Display Singapore Pte. Ltd.

   USD 1        January 2009        100

L&T Display Technology (Fujian) Limited

   CNY 116        January 2010        51

LG Display Yantai Co., Ltd.

   CNY 1,008        April 2010        100

Nanumnuri Co., Ltd.

   KRW 800        March 2012        100

LG Display (China) Co., Ltd.

   CNY 8,232        December 2012        70

Unified Innovative Technology, LLC

   USD 9        March 2014        100

LG Display Guangzhou Trading Co., Ltd.

   CNY 1        April 2015        100

Global OLED Technology LLC

   USD 138        December 2009        100

LG Display Vietnam Haiphong Co., Ltd.

   USD 600        May 2016        100

Suzhou Lehui Display Co., Ltd.

   CNY 637        July 2016        100

 

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Company

   Capital Stock
(in millions)
     Date of
Incorporation
     Equity
Interest
 

LG Display Fund I LLC (1)

   USD  17        May 2018        100

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

   CNY  15,600        July 2018        70

MMT (Money Market Trust)

     —          January 2018        —    

 

(1)

During the reporting period, we invested an additional W6,157 million in LG Display Fund I LLC.

 

  (2)

Affiliated companies

 

Company

   Carrying Amount
(in millions)
     Date of
Incorporation
     Equity
Interest
 

Paju Electric Glass Co., Ltd.

   W 43,805        January 2005        40

Wooree E&L Co., Ltd.

   W 10,025        June 2008        14

YAS Co., Ltd.

   W 25,096        April 2002        15

Avatec Co., Ltd.

   W 20,766        August 2000        15

Arctic Sentinel, Inc.

     —          June 2008        10

Cynora GmbH

   W 2,609        March 2003        11

Material Science Co., Ltd.

   W 3,244        January 2014        10

Nanosys Inc.

   W 5,642        July 2001        3

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

For the three months ended March 31, 2020 and 2021, the aggregate amount of dividends we received from our affiliated companies was W4,068 million and W8,239 million, respectively.

 

14.

Audit Information

 

  A.

Audit service

(Unit: In millions of Won, hours)

 

Description

  

2021 Q1

  

2019

  

2018

Auditor

   KPMG Samjong    KPMG Samjong    KPMG Samjong

Activity

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

Compensation(1)

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

Time required

  

2,210

   19,777    21,194

 

(1)

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

(2)

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

 

  B.

Non-audit service

(Unit: In millions of Won, hours)

 

Period

   Date of contract   

Description of service

  

Period of service

   Compensation  

2021 Q1

   —      —      —        —    

2020

   —      —      —        —    

2019

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

 

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15.

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

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

 

16.

Board of Directors

 

  A.

Members of the board of directors

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

(As of March 31, 2021)

 

Name

  

Position

  

Primary responsibility

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

 

(1)

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

 

  B.

Committees of the board of directors

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

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

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

(As of March 23, 2021)

 

Committee

  

Composition

  

Member

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

 

(1)

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

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

(As of March 31, 2021)

 

Committee

  

Composition

  

Member

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

 

(1)

Doocheol Moon is the audit committee chairman.

 

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

(As of the date of this report)

 

Committee

  

Composition

  

Member

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

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

(As of the date of this report)

 

Committee

  

Composition

  

Member

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

 

  C.

Independence of directors

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

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

 

17.

Information Regarding Shares

 

  A.

Total number of shares

 

  (1)

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

 

  (2)

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

 

  B.

Shareholder list

 

  (1)

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

 

Name

  

Relationship

   Number of shares of common stock      Equity interest  

LG Electronics

   Largest shareholder      135,625,000        37.9

James (Hoyoung) Jeong

   Registered director of member company      10,000        0.0

Donghee Suh

   Registered director of member company      9,000        0.0

 

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  (2)

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

 

Beneficial owner

   Number of shares of common stock     Equity interest  

LG Electronics

     135,625,000       37.90

National Pension Service

     22,671,167  (1)      6.34 (1) 

 

(1)

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

 

18.

Directors and Employees

 

  A.

Directors

 

  (1)

Remuneration for directors in 2021 Q1:

(Unit: person, in millions of Won)

 

Classification

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

Non-outside directors

     3        436        145  

Outside directors who are not audit committee members

     1        20        20  

Outside directors who are audit committee members

     3        59        20  

Total

     7        514        73  

 

(1)

Number of directors as at March 31, 2021.

(2)

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

(3)

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

 

  (2)

Standards of remuneration paid to non-outside and outside directors

 

   

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

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

 

   

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

 

   

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

 

   

Outside directors, audit committee members and auditor

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

 

  (3)

Remuneration for individual directors and audit committee members

Not required for quarterly reports.

 

  (4)

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

Not required for quarterly reports.

 

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  (5)

Stock options

Not applicable.

 

  B.

Employees

As of March 31, 2021, we had 26,017 employees (excluding our directors). On average, our male employees have served 12.1 years and our female employees have served 10.0 years. The total amount of salary paid to our employees for the three months ended March 31, 2021 based on income tax statements submitted to the Korean tax authority in accordance with Article 20 of the Income Tax Act was W553,737 million for our male employees and W75,777 million for our female employees. The following table provides details of our employees as of March 31, 2021:

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

 

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

Male

     21,954        553,737        25        12.1  

Female

     4,063        75,777        18        10.0  

Total

     26,017        629,514        24        11.8  

 

(1)

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

(2)

Welfare benefits and retirement expenses have been excluded. Total welfare benefit provided to our employees for the three months ended March 31, 2021 was W85,041 million and the per capita welfare benefit provided was W3.3 million.

(3)

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

(4)

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

(5)

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

In December 2017, we were audited by the Ministry of Employment and Labor regarding our human resource practices (including in relation to employment contracts, hours of work, outsourcing and employees in pregnancy), and we were found to be in violation of certain provisions of the Labor Standard Act relating to overtime, night and holiday work. As a result, we were issued a corrective order in January 2018 and paid additional overtime wages of W2,893 million to 16,106 administrative employees of our Paju facilities for their nighttime work between January 1, 2015 to December 31, 2017. In addition, we reviewed nighttime work records of our administrative employees outside of our Paju facilities during the same period and paid additional overtime wages of W2,166 million to eligible employees. In order to prevent such violation from occurring again, we are periodically monitoring the nighttime work records of our employees.

From December 2017 to January 2018, we were audited by the Ministry of Employment and Labor regarding our human resource practices relating to temporary and part-time employees, and we were found to have omitted certain required information (including the number of break hours and vacation days) in the employment contracts of 82 temporary employees. As a result, we were assessed a fine of W27 million, which we subsequently paid. In order to prevent such violation from occurring again, we have amended the relevant provisions of the applicable employment contracts.

 

19.

Other Matters

 

  A.

Legal proceedings

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

 

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

 

  B.

Material events subsequent to the reporting period

None.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Financial Statements

(Unaudited)

March 31, 2021 and 2020

(With Independent Auditors’ Review Report Thereon)


Table of Contents


Table of Contents

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Condensed Consolidated Interim Financial Statements

March 31, 2021 and 2020

(Unaudited)

Independent Auditors’ Review Report

Based on a report originally issued in Korean

To the Board of Directors and Shareholders

LG Display Co., Ltd.:

Reviewed Financial Statements

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

Management’s Responsibility for the Condensed Consolidated Interim Financial Statements

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

Auditors’ Responsibility

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

We conducted our reviews in accordance with the Review Standards for Quarterly and Semiannual Financial Statements established by the Security and Futures Commission of the Republic of Korea. A review of interim financial information consists principally of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Korean Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our reviews, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial statements referred to above are not presented fairly, in all material respects, in accordance with Korean International Financial Reporting Standards No. 1034, Interim Financial Reporting.

Other Matters

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

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

 

1


Table of Contents

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Condensed Consolidated Interim Financial Statements

March 31, 2021 and 2020

(Unaudited)

KPMG Samjong Accounting Corp.

Seoul, Korea

May 14, 2021

 

This report is effective as of May 14, 2021 the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying condensed consolidated interim financial statements and notes thereto. Accordingly, the readers of the review report should understand that the above review report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

 

2


Table of Contents

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Statements of Financial Position

(Unaudited)

As of March 31, 2021 and December 31, 2020

 

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

Assets

        

Cash and cash equivalents

     4, 25      W 3,904,032      4,218,099

Deposits in banks

     4, 25        447,634      78,652

Trade accounts and notes receivable, net

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

Other accounts receivable, net

     5, 25        121,248      144,480

Other current financial assets

     6, 25        43,132      52,403

Inventories

     7        2,351,689      2,170,656

Prepaid income taxes

        114,668      114,202

Other current assets

     5        872,060      803,466
     

 

 

    

 

 

 

Total current assets

        12,163,134      11,099,470

Deposits in banks

     4, 25        11      11

Investments in equity accounted investees

     8        111,187      114,551

Other non-current financial assets

     6, 25        78,193      68,231

Property, plant and equipment, net

     9, 17        20,203,685      20,147,051

Intangible assets, net

     10, 17        1,259,004      1,020,088

Deferred tax assets

     23        2,262,614      2,273,677

Defined benefits assets, net

     12        183,424      224,997

Other non-current assets

        136,299      123,447
     

 

 

    

 

 

 

Total non-current assets

        24,234,417      23,972,053
     

 

 

    

 

 

 

Total assets

      W 36,397,551      35,071,523
     

 

 

    

 

 

 

Liabilities

        

Trade accounts and notes payable

     25, 27        3,974,921      3,779,290

Current financial liabilities

     11, 25        3,729,125      3,195,024

Other accounts payable

     25        3,116,263      2,781,941

Accrued expenses

        598,907      651,880

Income tax payable

        36,522      25,004

Provisions

     13        193,066      197,468

Advances received

     14        295,078      333,821

Other current liabilities

        54,198      42,520
     

 

 

    

 

 

 

Total current liabilities

        11,998,080      11,006,948

Non-current financial liabilities

     11, 25        10,727,311      11,124,846

Non-current provisions

     13        93,992      89,633

Defined benefit liabilities, net

     12        1,479      1,498

Deferred tax liabilities

     23        9,046      9,530

Other non-current liabilities

        328,542      102,129
     

 

 

    

 

 

 

Total non-current liabilities

        11,160,370      11,327,636
     

 

 

    

 

 

 

Total liabilities

        23,158,450      22,334,584
     

 

 

    

 

 

 

Equity

        

Share capital

     15        1,789,079      1,789,079

Share premium

        2,251,113      2,251,113

Retained earnings

        7,748,806      7,524,297

Reserves

     15        32,982      (163,446 )
     

 

 

    

 

 

 

Total equity attributable to owners of the Controlling Company

        11,821,980      11,401,043
     

 

 

    

 

 

 

Non-controlling interests

        1,417,121      1,335,896
     

 

 

    

 

 

 

Total equity

        13,239,101      12,736,939
     

 

 

    

 

 

 

Total liabilities and equity

      W 36,397,551      35,071,523
     

 

 

    

 

 

 

See accompanying notes to the consolidated interim financial statements.

 

3


Table of Contents

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Statements of Comprehensive Income (Loss)

(Unaudited)

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

 

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

Revenue

     16, 17, 27      W 6,882,761     4,724,249

Cost of sales

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

 

 

   

 

 

 

Gross profit

        1,231,465     278,153

Selling expenses

     18, 19        (216,605     (199,854

Administrative expenses

     18, 19        (216,056     (173,289

Research and development expenses

     18        (275,775     (266,929
     

 

 

   

 

 

 

Operating profit (loss)

        523,029     (361,919
     

 

 

   

 

 

 

Finance income

     22        212,883     333,196

Finance costs

     22        (419,639     (303,835

Other non-operating income

     21        479,371     542,033

Other non-operating expenses

     18, 21        (473,638     (507,081

Equity in income of equity accounted investees, net

        1,287     2,733
     

 

 

   

 

 

 

Profit (loss) before income tax

        323,293     (294,873

Income tax expense (benefit)

     23        57,482     (95,976
     

 

 

   

 

 

 

Profit (loss) for the period

        265,811     (198,897
     

 

 

   

 

 

 

Other comprehensive income (loss)

       

Items that will never be reclassified to profit or loss

       

Remeasurements of net defined benefit liabilities

     12        (4,594     (2,574

Other comprehensive income (loss) from associates

        (81     92

Related income tax

     12        1,173     661
     

 

 

   

 

 

 
        (3,502     (1,821

Items that are or may be reclassified to profit or loss

       

Foreign currency translation differences for foreign operations

        240,355     273,903

Other comprehensive income (loss) from associates

        (502     1,595
     

 

 

   

 

 

 
        239,853     275,498
     

 

 

   

 

 

 

Other comprehensive income for the period, net of income tax

        236,351     273,677
     

 

 

   

 

 

 

Total comprehensive income for the period

      W 502,162     74,780
     

 

 

   

 

 

 

Profit (loss) attributable to:

       

Owners of the Controlling Company

        228,011     (198,991

Non-controlling interests

        37,800     94
     

 

 

   

 

 

 

Profit (loss) for the period

      W 265,811     (198,897
     

 

 

   

 

 

 

Total comprehensive income attributable to:

       

Owners of the Controlling Company

        420,937     28,328

Non-controlling interests

        81,225     46,452
     

 

 

   

 

 

 

Total comprehensive income for the period

      W 502,162     74,780
     

 

 

   

 

 

 

Earnings (loss) per share (in won)

       

Basic and diluted earnings (loss) per share

     24      W 637     (556
     

 

 

   

 

 

 

See accompanying notes to the consolidated interim financial statements.

 

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Table of Contents

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Statements of Changes in Equity

(Unaudited)

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

 

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

Balances at January 1, 2020

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

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Total comprehensive income (loss) for the period

                 

Profit (loss) for the period

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

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Other comprehensive income (loss)

                 

Remeasurements of net defined benefit liabilities, net of tax

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

Foreign currency translation differences for foreign operations, net of tax

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

Other comprehensive income from associates

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

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Total other comprehensive income (loss)

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

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Total comprehensive income (loss) for the period

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

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Balances at March 31, 2020

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

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Balances at January 1, 2021

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

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Total comprehensive income (loss) for the period

                 

Profit for the period

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

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Other comprehensive income (loss)

                 

Remeasurements of net defined benefit liabilities, net of tax

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

Foreign currency translation differences for foreign operations, net of tax

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

Other comprehensive loss from associates

     —          —          (81     (502     (583     —          (583
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Total other comprehensive income (loss)

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

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Total comprehensive income for the period

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

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Balances at March 31, 2021

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

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

See accompanying notes to the consolidated interim financial statements.

 

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Table of Contents

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Statements of Cash Flows

(Unaudited)

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

 

(In millions of won)    Note      2021     2020  

Cash flows from operating activities:

       

Profit (loss) for the period

      W 265,811     (198,897

Adjustments for:

       

Income tax expense (benefit)

     23        57,482     (95,976

Depreciation and amortization

     18        1,096,999     992,442

Gain on foreign currency translation

        (177,983     (201,052

Loss on foreign currency translation

        199,616     237,887

Expenses related to defined benefit plans

     12        35,879     40,223

Gain on disposal of property, plant and equipment

        (1,352     (3,579

Loss on disposal of property, plant and equipment

        8,372     4,377

Impairment loss on property, plant and equipment

        1,727     5,912

Reversal of impairment loss on property, plant and equipment

        (532     —    

Impairment loss on intangible assets

        7,767     4,347

Reversal of impairment loss on intangible assets

        (1,250     (550

Expense on increase of provision

        52,263     69,646

Finance income

        (173,567     (263,600

Finance costs

        405,299     278,888

Equity in income of equity method accounted investees, net

     8        (1,287     (2,733

Other income

        —         (13,944

Other expenses

        15,432     202
     

 

 

   

 

 

 
        1,524,865     1,052,490

Changes in:

       

Trade accounts and notes receivable

        (617,249     299,683

Other accounts receivable

        26,643     6,160

Inventories

        (171,184     (257,525

Lease receivables

        987     583

Other current assets

        (43,530     (96,090

Other non-current assets

        (34,220     (27,205

Trade accounts and notes payable

        42,841     151,249

Other accounts payable

        120,318     (314,044

Accrued expenses

        (37,934     (112,180

Provisions

        (52,306     (70,545

Advances received

        70,057     (19,211

Other current liabilities

        6,968     (40,207

Defined benefit liabilities, net

        1,116     (4,440

Other non-current liabilities

        (514     3,427
     

 

 

   

 

 

 
        (688,007     (480,345

Cash generated from operating activities

        1,102,669     373,248

Income taxes paid

        (20,810     (47,206

Interests received

        16,365     17,043

Interests paid

        (136,013     (158,391
     

 

 

   

 

 

 

Net cash provided by operating activities

      W 962,211     184,694
     

 

 

   

 

 

 

See accompanying notes to the consolidated interim financial statements.

 

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Table of Contents

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Statements of Cash Flows, Continued

(Unaudited)

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

 

(In millions of won)    Note    2021     2020  

Cash flows from investing activities:

       

Dividends received

      W 3,668     7,739

Increase in deposits in banks

        (366,883     (600

Proceeds from withdrawal of deposits in banks

        400     1,200

Acquisition of financial assets at fair value through profit or loss

        (5,069     (29

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

        380     —    

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

        9     6

Proceeds from disposal of investments in equity accounted investees

        600     600

Acquisition of property, plant and equipment

        (570,379     (1,027,979

Proceeds from disposal of property, plant and equipment

        2,885     269,174

Acquisition of intangible assets

        (197,377     (119,264

Government grants received

        —         19,035

Receipt from (payment for) settlement of derivatives

        (20,435     21,615

Proceeds from collection of short-term loans

        7,204     6,134

Increase in deposits

        —         (791

Decrease in deposits

        215     947

Proceeds from disposal of other assets

        —         11,000
     

 

 

   

 

 

 

Net cash used in investing activities

        (1,144,782     (811,213
     

 

 

   

 

 

 

Cash flows from financing activities:

   26     

Proceeds from short-term borrowings

        1,226,939     1,027,114

Repayments of short-term borrowings

        (904,668     (877,007

Proceeds from long-term borrowings

        200,000     642,613

Repayments of current portion of long-term borrowings and bonds

        (736,264     (19,059

Payment of lease liabilities

        (15,879     (17,675
     

 

 

   

 

 

 

Net cash provided by (used in) financing activities

        (229,872     755,986
     

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

        (412,443     129,467

Cash and cash equivalents at January 1

        4,218,099     3,336,003

Effect of exchange rate fluctuations on cash held

        98,376     92,916
     

 

 

   

 

 

 

Cash and cash equivalents at March 31

      W 3,904,032     3,558,386
     

 

 

   

 

 

 

See accompanying notes to the consolidated interim financial statements.

 

7


Table of Contents
1.

Reporting Entity

 

  (a)

Description of the Controlling Company

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

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

 

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Table of Contents
1.

Reporting Entity, Continued

 

  (b)

Consolidated Subsidiaries as of March 31, 2021

 

(In millions)                                 

Subsidiaries

   Location    Percentage of
ownership
    Fiscal year end    Date of
incorporation
  

Business

   Capital stocks  

LG Display America, Inc.

   San Jose,

U.S.A.

     100   December 31    September 24,
1999
   Sell display products    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(*)

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

2018

   Invest in venture business and acquire technologies    USD 17  

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

   Guangzhou,
China
     70   December 31    July 11,

2018

   Manufacture and sell display products    CNY  15,600  

 

(*)

For the three-month period ended March 31, 2021, the Controlling Company contributed W6,157 million in cash for the capital increase of LG DISPLAY FUND I LLC.

 

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2.

Basis of Presenting Financial Statements

 

  (a)

Statement of Compliance

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

 

  (b)

Basis of Measurement

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

 

   

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

 

   

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

 

  (c)

Functional and Presentation Currency

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

 

  (d)

Use of Estimates and Judgments

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

 

3.

Summary of Significant Accounting Policies

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

 

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4.

Cash and Cash Equivalents and Deposits in Banks

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

 

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

Current assets

     

Cash and cash equivalents

     

Cash

   W 1,233        156  

Demand deposits

     3,902,799        4,217,943  
  

 

 

    

 

 

 
   W 3,904,032        4,218,099  
  

 

 

    

 

 

 

Deposits in banks

     

Time deposits

   W 2,000        1,800  

Restricted deposits (*)

     445,634        76,852  
  

 

 

    

 

 

 
   W 447,634        78,652  
  

 

 

    

 

 

 

Non-current assets

     

Deposits in banks

     

Restricted deposits (*)

   W 11        11  
  

 

 

    

 

 

 
   W 4,351,677        4,296,762  
  

 

 

    

 

 

 

 

(*)

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

 

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5.

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

 

  (a)

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

 

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

Due from third parties

   W 3,489,070        3,054,471  

Due from related parties

     819,601        463,041  
  

 

 

    

 

 

 
   W 4,308,671        3,517,512  
  

 

 

    

 

 

 

 

  (b)

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

 

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

Current assets

     

Non-trade receivables, net

   W 114,509        140,616  

Accrued income

     6,739        3,864  
  

 

 

    

 

 

 
   W 121,248        144,480  
  

 

 

    

 

 

 

Due from related parties included in other accounts receivable as of March 31, 2021 and December 31, 2020 are W1,044 million and W21,189 million, respectively.

 

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5.

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

 

  (c)

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

 

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

Current

   W 4,306,503        120,531        (1,348     (1,829

1-15 days past due

     3,516        243        —         (2

16-30 days past due

     —          782        —         (6

31-60 days past due

     —          2        —         —    

More than 60 days past due

     —          1,560        —         (33
  

 

 

    

 

 

    

 

 

   

 

 

 
   W 4,310,019        123,118        (1,348     (1,870
  

 

 

    

 

 

    

 

 

   

 

 

 

 

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

Current

   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
  

 

 

    

 

 

    

 

 

   

 

 

 

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

 

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

Balance at the beginning of the period

   W 1,047        1,778        460        3,322  

(Reversal of) bad debt expense

     301        92        587        (480

Write-off

     —          —          —          (1,064
  

 

 

    

 

 

    

 

 

    

 

 

 

Balance at the end of the reporting period

   W 1,348        1,870        1,047        1,778  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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5.

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

 

  (d)

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

 

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

Advanced payments

   W 51,792        34,808  

Prepaid expenses

     111,105        63,972  

Value added tax refundable

     699,111        693,623  

Right to recover returned goods

     10,052        11,063  
  

 

 

    

 

 

 
   W 872,060        803,466  
  

 

 

    

 

 

 

 

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6.

Other Financial Assets

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

 

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

Current assets

     

Financial assets at fair value through profit or loss

     

Derivatives(*)

   W 10,605        9,252  

Financial assets at fair value through other comprehensive income

     

Debt instruments

     

Government bonds

   W 15        24  

Financial assets carried at amortized cost

     

Deposits

   W 4,403        8,696  

Short-term loans

     21,925        28,491  

Lease receivables

     6,184        5,940  
  

 

 

    

 

 

 
   W 32,512        43,127  
  

 

 

    

 

 

 
   W 43,132        52,403  
  

 

 

    

 

 

 

Non-current assets

     

Financial assets at fair value through profit or loss

     

Equity instruments

   W 19,795        13,223  

Convertible securities

     2,422        2,377  

Derivatives(*)

     7,969        111  
  

 

 

    

 

 

 
   W 30,186        15,711  
  

 

 

    

 

 

 

Financial assets at fair value through other comprehensive income

     

Debt instruments

     

Government bonds

   W 48        48  

Financial assets carried at amortized cost

     

Deposits

   W 22,034        22,251  

Long-term loans

     10,643        13,899  

Lease receivables

     15,282        16,322  
  

 

 

    

 

 

 
   W 47,959        52,472  
  

 

 

    

 

 

 
   W 78,193        68,231  
  

 

 

    

 

 

 

 

(*)

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

 

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7.

Inventories

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

 

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

Finished goods

   W 819,313        785,282  

Work-in-process

     860,899        733,071  

Raw materials

     505,382        491,432  

Supplies

     166,095        160,871  
  

 

 

    

 

 

 
   W 2,351,689        2,170,656  
  

 

 

    

 

 

 

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

 

(In millions of won)    2021      2020  

Inventories recognized as cost of sales

   W 5,651,296        4,446,096  

Including: inventory write-downs

     173,804        389,679  

Including: usage of inventory write-downs

     (213,932      (472,885

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

 

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8.

Investments in Equity Accounted Investees

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

 

(In millions of won)                                              

Associates

  

Location

   Fiscal
year end
  

Date of
incorporation

  

Business

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

Paju Electric Glass Co., Ltd.

  

Paju,

South Korea

   December 31   

January

2005

   Manufacture glass for display      40   W 43,805        40   W 47,262  

WooRee E&L Co., Ltd.

  

Ansan,

South Korea

   December 31   

June

2008

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

YAS Co., Ltd.

  

Paju,

South Korea

   December 31   

April

2002

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

AVATEC Co., Ltd.

  

Daegu,

South Korea

   December 31   

August

2000

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

Arctic Sentinel, Inc.

   Los Angeles, U.S.A.    March 31   

June

2008

  

Develop and manufacture

tablet for kids

     10     —          10     —    

Cynora GmbH

  

Bruchsal,

Germany

   December 31   

March

2003

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

 

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8.

Investments in Equity Accounted Investees, Continued

 

(In millions of won)                                         

Associates

  

Location

   Fiscal
year end
  

Date of
incorporation

  

Business

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

Material Science Co., Ltd.

  

Seoul,

South Korea

   December 31   

January

2014

   Develop, manufacture, and sell materials for display      10   W 3,244        10   W 3,791  

Nanosys Inc.

  

Milpitas,

U.S.A.

   December 31   

July

2001

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

 

 

      

 

 

 
                 W 111,187        W 114,551  
                

 

 

      

 

 

 

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

Dividends income recognized from equity method investees for the three-month periods ended March 31, 2021 and 2020 amounted to W4,068 million and W8,239 million, respectively.

 

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9.

Property, Plant and Equipment

For the three-month periods ended March 31, 2021 and 2020, the Group purchased property, plant and equipment of W760,741 million and W745,993 million, respectively. The capitalized borrowing costs and the annualized capitalization rate were W14,686 million and 4.63%, and W72,618 million and 4.18% for the three-month periods ended March 31, 2021 and 2020, respectively. In addition, for the three-month periods ended March 31, 2021 and 2020, the Group recognized the right-of-use asset for use of vehicles, machinery and others of W10,770 million and W18,863 million, respectively. Also, for the three-month periods ended March 31, 2021 and 2020, the Group disposed of property, plant and equipment with carrying amounts of W9,590 million and W3,101 million, respectively, and recognized W1,352 million and W8,372 million, respectively, as gain and loss, on disposal of property, plant and equipment for the three-month period ended March 31, 2021 (gain and loss for the three-month period ended March 31, 2020: W3,579 million and W4,377 million, respectively).

 

10.

Intangible Assets

The Group capitalizes expenditures related to development activities, such as expenditures incurred on designing, manufacturing and testing of products after those related activities meet the capitalization criteria of development costs including technical feasibility, future economic benefits and others. The balances of capitalized development costs as of March 31, 2021 and December 31, 2020 are W301,024 million and W301,953 million, respectively. For the three-month period ended March 31, 2021, the Group recognized an impairment loss amounting to W7,767 million in connection with development projects.

 

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11.

Financial Liabilities

 

  (a)

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

 

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

Current

     

Short-term borrowings

   W 742,443        394,906  

Current portion of long-term borrowings and bonds

     2,928,631        2,705,709  

Derivatives(*)

     17,627        58,875  

Lease liabilities

     40,424        35,534  
  

 

 

    

 

 

 
   W 3,729,125        3,195,024  
  

 

 

    

 

 

 

Non-current

     

Won denominated borrowings

   W 2,443,625        2,435,000  

Foreign currency denominated borrowings

     6,414,540        6,584,658  

Bonds

     1,779,295        1,948,541  

Derivatives(*)

     41,131        108,750  

Lease liabilities

     48,720        47,897  
  

 

 

    

 

 

 
   W 10,727,311        11,124,846  
  

 

 

    

 

 

 

 

(*)

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

 

  (b)

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

 

(In millions of won, USD and CNY)                

Lender

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

Standard Chartered Bank Korea Limited

     12ML + 1.68      W 340,050        326,400  

Standard Chartered Bank Vietnam and others

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

 

 

    

 

 

 

Foreign currency equivalent

      USD 655      USD  363  
     

 

 

    

 

 

 
      W 742,443        394,906  
     

 

 

    

 

 

 

 

(*)

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

 

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11.

Financial Liabilities, Continued

 

  (c)

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

 

(In millions of won)                   

Lender

  

Annual interest rate

as of

March 31, 2021 (%)(*)

   March 31,
2021
     December 31, 2020  

Woori Bank

   2.75    W —          60  

Korea Development Bank and others

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

Less current portion of long-term borrowings

        (619,500      (837,560
     

 

 

    

 

 

 
      W 2,443,625        2,435,000  
     

 

 

    

 

 

 

 

(*)

CD represents certificate of deposit.

 

  (d)

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

 

(In millions of won, USD and CNY)  

Lender

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

The Export-Import Bank of Korea and others

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

China Construction Bank and others

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

LPR(1Y)-0.20~+0.30,

4.20

 

 

    6,024,955       5,948,472  
    

 

 

   

 

 

 

Foreign currency equivalent

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

Less current portion of long-term borrowings

       (1,361,672     (1,044,774
    

 

 

   

 

 

 
     W 6,414,540       6,584,658  
    

 

 

   

 

 

 

 

(*)

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

 

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11.

Financial Liabilities, Continued

 

  (e)

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

 

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

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

Won denominated bonds at amortized cost (*1)

          

Publicly issued bonds

    

May 2021 ~

February 2024

 

 

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

Privately issued bonds

    

May 2022 ~

May 2033

 

 

     3.25~4.25        160,000       160,000  

Less discount on bonds

           (1,477     (1,798

Less current portion

           (609,528     (499,796
        

 

 

   

 

 

 
         W 668,995       978,406  
        

 

 

   

 

 

 

Foreign currency denominated bonds at amortized cost (*2)

          

Publicly issued bonds

     November 2021        3.88      W 340,050       326,400  

Privately issued bonds

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

Foreign currency equivalent

         USD 400     USD 400  

Less discount on bonds

           (2,437     (3,161

Less current portion

           (337,931     (323,579
        

 

 

   

 

 

 
         W 113,032       108,460  

Financial liabilities at fair value through profit or loss

          

Foreign currency denominated convertible bonds

     August 2024        1.50      W 997,268       861,675  

Foreign currency equivalent

         USD 880     USD 792  
        

 

 

   

 

 

 
         W 1,779,295       1,948,541  
        

 

 

   

 

 

 

 

(*1)

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

(*2)

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

 

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11.

Financial Liabilities, Continued

 

  (f)

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

 

(In won, USD)
        

Description

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

1.  Redemption at maturity:

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

 

2.  Early redemption:

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

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

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

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

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

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

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

 

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

Aggregate outstanding amount of the convertible bonds

   W 813,426,670,000  

Conversion price

   W 19,845  

Number of common shares to be issued at conversion

     40,988,998  

 

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12.

Employee Benefits

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

 

  (a)

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

 

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

Present value of partially funded defined benefit obligations

   W 1,421,888        1,397,542  

Fair value of plan assets

     (1,603,833      (1,621,041
  

 

 

    

 

 

 
   W (181,945      (223,499
  

 

 

    

 

 

 

Defined benefit liabilities, net

   W 1,479        1,498  

Defined benefit assets, net

   W 183,424        224,997  

 

  (b)

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

 

(In millions of won)              
     2021      2020  

Current service cost

   W 37,353        40,999  

Net interest cost

     (1,474      (776
  

 

 

    

 

 

 
   W 35,879        40,223  
  

 

 

    

 

 

 

 

  (c)

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

 

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

Guaranteed deposits in banks

   W 1,603,833        1,621,041  

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

 

  (d)

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

 

(In millions of won)              
     2021      2020  

Remeasurements of net defined benefit liabilities

   W (4,594      (2,574

Tax effect

     1,173        661  
  

 

 

    

 

 

 

Remeasurements of net defined benefit liabilities, net of income tax

   W (3,421      (1,913
  

 

 

    

 

 

 

 

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13.

Provisions and Other Liabilities

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

 

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

Balance at January 1, 2021

   W 272,195        14,906        287,101  

Additions (reversal)

     52,263        (1,677      50,586  

Usage

     (50,629      —          (50,629
  

 

 

    

 

 

    

 

 

 

Balance at March 31, 2021

   W 273,829        13,229        287,058  
  

 

 

    

 

 

    

 

 

 

Current

   W 179,837        13,229        193,066  

Non-current

   W 93,992        —          93,992  

 

(*)

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

 

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14.

Contingencies and Commitments

 

  (a)

Legal Proceedings

Anti-trust litigations

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

Solas OLED Ltd. Litigations

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

Others

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

 

  (b)

Commitments

Factoring and securitization of accounts receivable

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

 

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14.

Contingencies and Commitments, Continued

 

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

 

(In millions of USD and KRW)                                 

Classification

  

Financial institutions

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

Controlling

  

Shinhan Bank

   KRW 90,000        90,000        —          —    

Company

      USD 60        68,010        —          —    
  

Sumitomo Mitsui Banking Corporation

   USD 20        22,670        —          —    
  

MUFG Bank

   KRW 17,000        17,000        —          —    
      USD 160        181,360        —          —    
  

BNP Paribas

   USD 125        141,688        —          —    
  

ING Bank

   USD 90        102,015      USD 15        17,003  
     

 

 

    

 

 

    

 

 

    

 

 

 
      USD 455         USD 15     
      KRW  107,000        622,743        —          17,003  
     

 

 

    

 

 

    

 

 

    

 

 

 

Subsidiaries

              

LG Display Singapore Pte. Ltd.

  

Standard Chartered Bank

   USD 290        328,715        —          —    
     

 

 

    

 

 

    

 

 

    

 

 

 
  

BNP Paribas

   USD 15        17,003        —          —    

LG Display Taiwan Co., Ltd.

  

Australia and New Zealand Banking Group Ltd.

   USD 70        79,345        —          —    
  

KGI Bank Co., Ltd.

   USD 30        34,005        —          —    
     

 

 

    

 

 

    

 

 

    

 

 

 
  

BNP Paribas

   USD 75        85,012      USD 75        85,012  

LG Display Germany GmbH

  

Commerzbank AG

   USD 2        2,632        —          —    
  

DZ Bank AG

   USD 8        8,501      USD 4        4,106  
     

 

 

    

 

 

    

 

 

    

 

 

 

LG Display America, Inc.

  

Hong Kong & Shanghai Banking Corp.

   USD 400        453,400        —          —    
  

Standard Chartered Bank

   USD 600        680,100      USD  256        290,630  
  

Sumitomo Mitsui

Banking Corporation

   USD 150        170,025      USD 20        22,671  
     

 

 

    

 

 

    

 

 

    

 

 

 

LG Display Japan Co., Ltd.

  

Chelsea Capital Corporation Tokyo Branch

   USD 120        136,020      USD 30        34,025  
     

 

 

    

 

 

    

 

 

    

 

 

 

LG Display Guangzhou Trading Co., Ltd.

  

KEB Hana Bank (China) Company Limited

   USD 30        34,005        —          —    
     

 

 

    

 

 

    

 

 

    

 

 

 
      USD 1,790        2,028,763      USD 385        436,444  
     

 

 

    

 

 

    

 

 

    

 

 

 
      USD 2,245         USD 400     
      KRW 107,000        2,651,506        —          453,447  
     

 

 

    

 

 

    

 

 

    

 

 

 

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

 

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14.

Contingencies and Commitments, Continued

 

Letters of credit

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

 

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

KEB Hana Bank

     USD 150      W 170,025  

Sumitomo Mitsui Banking Corporation

     USD 50        56,675  

Industrial Bank of Korea

     USD 100        113,350  

Industrial and Commercial Bank of China

     USD 200        226,700  

Shinhan Bank

     USD 200        226,700  

KB Kookmin Bank

     USD 100        113,350  

MUFG Bank

     USD 100        113,350  

The Export–Import Bank of Korea

     USD 200        226,700  

Standard Chartered Bank

     USD 300        340,050  
  

 

 

    

 

 

 
   USD 1,400      W 1,586,900  
  

 

 

    

 

 

 

Payment guarantees

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

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

License agreements

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

Long-term supply agreement

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

 

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14.

Contingencies and Commitments, Continued

 

Pledged Assets

In connection with the borrowings amounting to CNY 19,320 million (W3,329,802 million) from China Construction Bank and others, as of March 31, 2021, the Group is providing its property, plant and equipment with carrying amount of W663,630 million as pledged assets.

 

15.

Share Capital and Reserves

 

  (a)

Share capital

The Controlling Company is authorized to issue 500,000,000 shares of capital stock (par value W5,000) and, as of March 31, 2021 and December 31, 2020, the number of issued common shares is 357,815,700. There have been no changes in the capital stock from January 1, 2020 to March 31, 2021.

 

  (b)

Reserves

Reserves consist mainly of the following:

Translation reserve

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

Other comprehensive income (loss) from associates

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

Reserve