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 2015

 

 

LG Display Co., Ltd.

(Translation of Registrant’s name into English)

 

 

LG Twin Towers, 128 Yeoui-daero, Yeongdeungpo-gu, Seoul 150-721, 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  x            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   x

 

 

 

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QUARTERLY REPORT

(From January 1, 2015 to March 31, 2015)

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

 

 

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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 150-721, Republic of Korea, and our telephone number is +82-2-3777-1010. Our website address is http://www.lgdisplay.com.

 

B.

Domestic credit rating

 

Subject instrument		Month of rating		Credit rating (1)		Rating agency (Rating range)
Corporate bonds		February 2010		AA-		NICE Information Service Co., Ltd. (AAA ~ D)
		May 2010
		December 2010
		August 2011
		June 2012
		October 2012
		March 2013
		June 2013
		October 2013
		April 2014		AA
		September 2014
		April 2015
		February 2010		AA-		Korea Investors Service, Inc. (AAA ~ D)
		May 2010
		August 2010
		February 2011
		April 2011
		August 2011
		October 2011
		June 2012
		October 2012
		June 2013
		October 2013
		March 2014		AA
		April 2015
		August 2010		AA-		Korea Ratings Corporation (AAA ~ D)
		December 2010
		February 2011
		April 2011
		July 2011
		October 2011
		June 2012
		March 2013
		June 2013
		March 2014		AA
		September 2014
		May 2015

 

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(1)	Domestic 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.

 

C.

Capitalization

 

(1)

Change in capital stock (as of March 31, 2015)

There were no changes to our issued capital stock during the quarterly reporting period ended March 31, 2015.

 

(2)

Convertible bonds

Not applicable.

 

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D.

Voting rights (as of March 31, 2015)

(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)				2014				2013				2012
Par value (Won)					5,000				5,000				5,000
Profit for the year (million Won) (1)					904,268				426,118				233,204
Earnings per share (Won) (2)					2,527				1,191				652
Total cash dividend amount for the period (million Won)					178,908				—				—
Total stock dividend amount for the period (million Won)					—				—				—
Cash dividend payout ratio (%)					19.78	%			—				—
Cash dividend yield (%) (3)		Common shares			1.47	%			—				—
		Preferred shares			—				—				—
Stock dividend yield (%)		Common shares			—				—				—
		Preferred shares			—				—				—
Cash dividend per share (Won)		Common shares			500				—				—
		Preferred shares			—				—				—
Stock dividend per share (share)		Common shares			—				—				—
		Preferred shares			—				—				—

 

(1)	Based on profit for the year attributable to us as 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 yield is the percentage that is derived by dividing cash dividend by the arithmetic average of the daily closing prices of our common shares during the one-week period ending two trading days prior to the closing of the register of shareholders for the purpose of determining the shareholders entitled to receive annual dividends.

 

2.

Business

 

A.

Business overview

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

As of March 31, 2015, in Korea we operated TFT-LCD and OLED production facilities and a research center in Paju and TFT-LCD production facilities in Gumi. We have also established subsidiaries in the Americas, Europe and Asia.

 

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As of March 31, 2015, 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.

2015 Q1 consolidated operating results highlights

(Unit: In billions of Won)

 

2015 Q1		Display business
Sales Revenue			7,022
Gross Profit			1,361
Operating Profit			744

 

B.

Industry

 

(1)

Industry characteristics and growth potential

 

•

TFT-LCD display panels are one of the most widely used type of display panels in flat panel display products, and the entry barriers to manufacture TFT-LCD display panels are relatively high due to the technology and capital intensive nature of the mass manufacturing process that is required to achieve economies of scale, among other factors.

 

•

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

 

(2)

Cyclicality

 

•

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

 

•

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

 

(3)

Market conditions

 

•

Overall, while there have been some variations in rates of production capacity growth among individual display panel manufacturers, display panel manufacturers have generally slowed their respective rates of production capacity growth since 2011 due to a slowdown in growth of the display panel industry.

 

•

Most display panel manufacturers are located in Asia.

 

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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, etc.

 

(4)

Market shares

 

•

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

 

		2015 Q1				2014				2013
Panels for Televisions (1)			25.5	%			25.0	%			24.7	%
Panels for Monitors			35.8	%			32.7	%			34.0	%
Panels for Notebook Computers (2)			27.5	%			27.5	%			32.3	%
Panels for Tablet Computers			18.0	%			27.0	%			32.0	%
Total			27.3	%			26.9	%			27.8	%

Source: DisplaySearch

 

(1)	Includes panels for public displays.

(2)	Includes panels for netbooks.

 

(5)

Competitiveness

 

•

Our ability to compete successfully depends on factors both within and outside our control, including product pricing, our relationship with customers, timely investments, adaptable production capabilities, development of new and premium products through technological advances, competitive production costs, success in marketing to our end-brand customers, component and raw material supply costs, foreign exchange rates and general economic and industry conditions.

 

•

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

 

•

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

 

•

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

 

•

As a leading technology innovator in the display industry, we continue to focus on delivering differentiated value to our customers by developing various technologies and products, including display panels with IPS, Advanced In-cell Touch, OLED and other technologies. With respect to TFT-LCD panels, we are leading the market with our differentiated products with IPS technology, such as our slim and light ultra-high definition (“Ultra HD”) television panels and 21:9 screen aspect ratio curved monitors, and have prepared our production facilities to produce touch modules with Advanced In-cell Touch technology. With respect to OLED panels, following our supply of the world’s first 55-inch OLED 3D panels for televisions in January 2013, we have supplied curved Ultra HD OLED panels for televisions, curved plastic OLED panels for smartphones, round OLED panels for wearable devices among others and have shown that we are technologically a step ahead of the competition.

 

•

Moreover, we entered into long-term sales contracts with major global firms to secure customers and expand partnerships for technology development.

 

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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 exported overseas.

(Unit: In billions of Won, except percentages)

 

Business area		Sales type		Items (Market)		Usage		Major trademark		Sales in 2015 Q1 (%)
Display		Product/ Service/ Other sales		Display panel (Overseas (1))		Panels for notebook computers, monitors, televisions, smartphones, tablets, etc.		LG Display		6,297 (89.7%)
				Display panel (Korea (1))		Panels for notebook computers, monitors, televisions, smartphones, tablets, etc.		LG Display		725 (10.3%)
Total										7,022 (100.0%)

- Period: January 1, 2015 ~ March 31, 2015.

 

(1)	Based on ship-to-party.

 

B.

Average selling price trend of major products

The average selling price of LCD panels per square meter of net display area shipped in the first quarter of 2015 decreased by approximately 16% from the fourth quarter of 2014 largely as a result of a decrease in the shipment of new small- to medium-sized products reflecting seasonal factors, despite average selling prices of LCD panels remaining relatively stable. There is no assurance that the average selling prices of LCD panels will not fluctuate in the future due to change in market conditions.

(Unit: US$ / m²)

 

Description		2015 Q1				2014 Q4				2014 Q3				2014 Q2
Display panel (1)(2)			652				773				658				615

 

(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.

 

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(Unit: In billions of Won, except percentages)

 

Business area		Purchase type				Items		Usage		Cost (1)				Ratio (%)
Display			Raw materials			Glass		Display panel manufacturing			396				11.01	%
						Backlight					718				19.96	%
						Polarizer					601				16.70	%
						Others					1,884				52.33	%
Total											3,599				100.0	%

- Period: January 1, 2015 ~ March 31, 2015.

 

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

 

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		2015 Q1 (1)				2014(2)				2013(2)
Display		Display panel		Gumi, Paju, Guangzhou			2,327				9,573				8,562

 

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

(2)	Calculated based on the maximum monthly input capacity (based on glass input substrate size for eighth generation glass sheets) during the year multiplied by the number of months in a year (i.e., 12 months).

 

(2)

Production output

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

(Unit: 1,000 glass sheets)

 

Business area		Items		Location of facilities		2015 Q1				2014				2013
Display		Display panel		Gumi, Paju, Guangzhou			2,184				8,425				7,670

- Based on glass input substrate size for eighth generation glass sheets.

 

B.

Production performance and utilization ratio

(Unit: Hours, except percentages)

 

Production facilities		Available working hours in 2015 Q1		Actual working hours in 2015 Q1		Average utilization ratio
Gumi		2,160(1) (90.0 days) (2)		2,106 (1) (88.0 days) (2)			97.5	%
Paju		2,160(1) (90.0 days) (2)		2,104 (1) (88.0 days)			97.4	%
Guangzhou		2,160 (1) (90.0 days) (2)		2,160 (1) (90.0 days) (2)			100.0	%

 

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(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 2014, our total capital expenditures on a cash out basis was W3 trillion. In 2015, we currently expect that our total capital expenditures on a cash out basis will be similar to that of 2014 (at a level of W3 trillion or less) in anticipation of funding the production of future display products and leading the market for OLED panels, as well as investing in our production facilities to respond to increases in demand for large-sized panels. Such amount is subject to change depending on business conditions and market environment

 

5.

Sales

 

A.

Sales performance

(Unit: In billions of Won)

 

Business area		Sales types		Items (Market)				2015 Q1				2014				2013
Display		Products, etc.		Display panel		Overseas (1)			6,297				23,847				24,341
						Korea (1)			725				2,609				2,692
						Total			7,022				26,456				27,033

 

(1)	Based on ship-to-party.

 

B.

Sales route and sales method

 

(1)

Sales organization

 

•

As of March 31, 2015, each of our television, IT/mobile and OLED businesses had individual sales and customer support functions.

 

•

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

 

(2)

Sales route

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

 

•

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

 

•

LG Display HQ and overseas manufacturing subsidiaries ® System integrators and end-brand customers ® End users

 

(3)

Sales methods and sales terms

 

•

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

 

(4)

Sales strategy

 

•

As part of our sales strategy, we have secured stable sales to major personal computer manufacturers and leading consumer electronics manufacturers globally, strengthened sales of high-resolution, IPS, narrow bezel and other high-end display panels in the tablet, notebook computer and monitor markets, led the television market with our OLED and other market leading television panels and increased the proportion of sales of our differentiated television panels, such as our Ultra HD and large television panels, in our product mix.

 

•

In the smartphone, industrial products (including aviation and medical equipment) and automobile displays segment, 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, Advanced In-cell Touch and other technologies.

 

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(5)

Purchase orders

 

•

Customers generally place purchase orders with us one month prior to delivery. Our customary practice for procuring orders from our customers and delivering our products to such customers is as follows:

 

•

Receive order from customer (overseas sales subsidiaries, etc.) ® Headquarter is notified ® Manufacture product ® Ship product (overseas sales subsidiaries, etc.) ® Sell product (overseas sales subsidiaries, etc.)

 

6.	Market Risks and Risk Management

 

A.

Market risks

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

The display industry is highly competitive. We have experienced pressure on the prices and margins of our major products due largely to additional industry capacity from panel manufacturers in Korea, Taiwan, China and Japan coupled with changes in the production mix of such manufacturers. Our main competitors in the industry include Samsung Display, AU Optronics, Innolux, Sharp, BOE, CSOT, Japan Display, CPT, HannStar and Panasonic LCD.

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

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

 

B.

Risk management

As the average selling prices of TFT-LCD and OLED panels can continue to decline over time irrespective of industry-wide cyclical fluctuations, we may find it hard to manage risks associated with certain factors that are outside our control. However, we counteract such declines in average selling prices by increasing the proportion of high value added panels in our product mix while also implementing various cost reduction measures. In addition, in order to manage our risk against foreign currency fluctuations, we 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. As of March 31, 2015, we had not entered into any such contract for currency related derivative products.

 

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7.	Derivative Contracts

 

A.

Currency risks

 

•

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

 

•

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 and the U.S. dollar.

 

•

In respect of other monetary assets and liabilities denominated in foreign currencies, we ensure that our net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates, when necessary, to address short-term imbalances.

 

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.

 

8.	Major contracts

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

 

Type of agreement		Name of party		Term		Content
Technology licensing agreement		Semiconductor Energy Laboratory		October 2005 ~		Patent licensing of LCD and OLED related technology
		Fergason Patent Properties		October 2007 ~		Patent licensing of LCD driving technology
		Hewlett-Packard		January 2011 ~		Patent licensing of semi-conductor device technology
Technology licensing/supply agreement		HannStar Display Corporation		November 2009 ~		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, etc.

 

9.	Research & Development

 

A.

Summary of R&D-related expenditures

(Unit: In millions of Won, except percentages)

 

Items				2015 Q1				2014				2013
Material Cost					159,745				762,008				586,901
Labor Cost					138,205				542,857				500,705
Depreciation Expense					66,166				249,306				319,854
Others					55,529				233,422				267,320
Total R&D-Related Expenditures					419,645				1,787,593				1,674,780
Accounting Treatment (1)		Selling & Administrative Expenses			282,883				1,164,294				1,095,727
		Manufacturing Cost			85,013				356,218				456,818
		Development Cost (Intangible Assets)			51,749				267,081				122,235
R&D-Related Expenditures / Revenue Ratio (Total R&D-Related Expenditures ÷ Revenue for the period × 100)					6.0	%			6.8	%			6.2	%

 

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(1)	For accounting purposes, R&D-related expenditures are recognized in accordance with our financial statements.

 

B.

R&D achievements

Achievements in 2013

 

(1)

Developed 19.5-inch desktop monitor product

 

•

Developed new display panel size for desktop monitor products

 

•

Increased yield of glass panel area per glass substrate by cutting glass substrates at 19.5 inches

 

(2)

Developed 11.6-inch Tab Book product applying GF2 touch technology

 

•

Applied GF2 direct bonding process

 

(3)

Developed 5.0-inch and 5.5-inch high resolution (over 400 PPI) smartphone products applying AH-IPS technology

 

•

Luminance increased by 10% compared to conventional panels (5.0-inch FHD panel has 403 PPI and 5.5-inch FHD panel has 440 PPI)

 

•

Developed new source D-IC to drive 4 lanes of MIPI with speeds of up to 1 Gbps per lane

 

(4)

Developed the world’s first 60-inch three-side borderless product

 

•

Made possible by removing the forward-facing case top, resulting in “zero” bezel on three sides with a borderless like bottom design

 

(5)

Developed the world’s first 47-inch and 55-inch FHD TV product with 2.3 mm narrow bezels

 

•

Achieved optimal slim design by minimizing bezel width to 2.3 mm

 

(6)

Developed 55-inch and 65-inch Ultra HD products with narrow bezels

 

•

Ultra HD (55-inch model has 80 PPI and 65-inch model has 68 PPI)

 

•

Achieved high transmittance panel by applying 1 Gate 1 Data structure

 

•

Achieved narrow bezels (55-inch model has 6.9 mm and 65-inch has 7.5 mm) by optimizing panel and mechanical design

 

(7)

Developed 42-inch, 47-inch and 55-inch FHD three-side borderless products with direct backlight units

 

•

Borderless design made possible by removing the forward-facing case top, resulting in “zero” bezel on three sides

 

(8)

Developed 5-inch HD smartphone product utilizing oxide cell technology

 

•

Reduced energy consumption and achieved narrower bezels by using indium gallium zinc oxide (IGZO) cell technology (energy consumption reduced by 26.7% and bezel size reduced by 23.0% compared to products utilizing conventional silicon (a-Si) cell technology)

 

(9)

Developed FHD a-Si AH-IPS technology for use in smartphone products (more than 400 PPI)

 

•

Improved structure and technology compared to conventional FHD panels (luminance increased by 30%, achieved 443 PPI in 5.0-inch FHD panel)

 

•

Developed new D-IC and IC bonding materials and processes

 

(10)

Developed new line of 19.5-inch HD+ monitor products with IPS technology

 

•

Developed new line of display panels for desktop monitor products

 

•

Increased yield of glass panel area per glass substrate by cutting glass substrates at 19.5 inches

 

(11)

Developed 19.5-inch HD+ ultra-light monitor product

 

•

The world’s lightest (at the time) 19.5-inch HD+ IPS monitor product with slim concept design

 

•

Reduced weight by 55% from 1520g to 830g and thickness from 7.6t to 5.4t compared to a conventional 19.5-inch HD+ IPS monitor product

 

(12)

Developed the world’s first borderless monitor product with 3.5 mm narrow bezel (23.8-inch FHD)

 

•

Developed 23.8-inch FHD Neo Blade1 monitor product with the world’s narrowest (at the time) bezel (3.5 mm)

 

14

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(13)

Introduced 9.2-inch WXGA high resolution / high luminance automotive display product

 

•

The first automotive display product to apply EPI interface (800Mbps high speed transmission with Real 8it)

 

•

High luminance (800 nit) and high color gamut (70%)

 

•

Developed T-con with improved reliability and resolution

 

(14)

Developed 49-inch FHD four sided borderless like product

 

•

Achieved narrow borders by applying 4.9 mm GIP technology and developed a new PSJ mechanical structure

 

•

Developed new resin technology to apply to the bottom base decoration

 

(15)

Developed 55-inch FHD wide color gamut (“WCG”) LCM product

 

•

Achieved life like colors with WCG by combining panel and optical technologies

 

•

Developed differentiated case top set design

 

(16)

Developed our first 60-inch FHD product

 

•

Achieved narrow panel bezel size (7.8 mm)

 

•

New size in our product lineup

 

(17)

Developed the world’s first 23.8-inch Ultra HD monitor product

 

•

The world’s first Ultra HD AH-IPS monitor product (23.8-inch Ultra HD: 185 ppi)

 

•

Applied PAC panel technology and developed Ultra HD T-con/D-IC driver

 

•

Developed high luminance dual LED array structure

 

(18)

Expanded product lineup of 21:9 screen aspect ratio monitors

 

•

Expanded product lineup of 21:9 screen aspect ratio monitors to include 25-inch, 29-inch and 34-inch monitors

 

•

Borderless on three sides by removing case top

 

(19)

Developed the world’s first 13.3-inch FHD notebook model with 1.9 mm narrow bezel

 

•

Development slim notebook design by utilizing panel GLA structure and minimizing bezel size to 1.9 mm

 

•

Achieved slim (3.0 mm) and ultra-light (230 g) LCM by utilizing 0.25 mm glass PPP LGP technology

 

(20)

Developed our first quad HD (“QHD”) notebook model (13.3-inch, 222 ppi / 14.0-inch / 210 ppi)

 

•

Increased transmittance rate by utilizing 3rd metal, coop CS, red eye 12 um technology and improving aperture ratio

 

•

Achieved slim (2.6 mm) and ultra-light (235 g) LCM by utilizing 0.3 mm glass PPP LGP technology

 

(21)

Introduced product applying PPP LGP to maximize light collimation

 

•

Developed PPP technology for light collimation (improved luminance by 44% compared to conventional panels) for a more energy efficient panel model

 

•

Used 2 sheet structure to reduce thickness

 

(22)

Developed 12.3-inch FHD full cluster automotive product

 

•

The world’s first full cluster product to apply IPS technology

 

•

Ultra-high luminance (800 nit) and high color gamut (85%). High color PR and developed RG LED for high light collimation

 

•

Applied the highest resolution (1920 x 720), at the time, for clusters

 

(23)

Developed 5.5-inch QHD LTPS smartphone panel applying AH-IPS technology with the worlds’ highest resolution, at the time, for smartphone panels (more than 500 ppi)

 

•

Designed and developed QHD, the world’s highest resolution, at the time, for smartphone panels (538 ppi)

 

•

The world’s first QHD module applying 1 chip D-IC driver

 

15

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Achievements in 2014

 

(1)

Developed the world’s first green plus structure television panel products (42-inch, 49-inch and 55-inch Ultra HD)

 

•

Added white pixels to increase transmittance by 55% compared to conventional display panels

 

•

Developed energy conservation technology for Ultra HD products

 

(2)

Developed the world’s narrowest, at the time, bezel (BtB 3.5 mm) videowall product (55-inch FHD)

 

•

The world’s narrowest, at the time, bezel (BtB 3.5 mm) videowall product

 

•

Reduced panel PAD parts and minimized bezel size

 

(3)

Developed our first 79-inch Ultra HD product

 

•

New size in our product lineup

 

•

Achieved narrow bezel (On 9.9 mm) and slim depth (13.9 mm)

 

(4)

Developed the world’s first 4 sided borderless like product (49-inch, 55-inch and 60-inch FHD)

 

•

Removed front case top and narrowed gap between the panel and front deco cabinet (set side reduced from 2.0 mm to 0.5 mm)

 

(5)

Developed the world’s first a-Si AF-IPS 5Mask panel product for smartphones (5.0 WVGA)

 

•

Reduced production cost and simplified manufacturing process by reducing the number of mask steps from 6 to 5

 

•

Same level of performance as 6Mask panels

 

(6)

Developed the world’s first LTPS AH-IPS photo alignment and negative LC panel product for smartphones (5.0-inch FHD)

 

•

LTPS AH-IPS photo alignment and negative LC panel product for smartphones developed in March 2014

 

•

Improved luminance and contrast ratio through improvement in panel transmittance (450 nit to 515 nit; 1,000:1 to 1500:1).

 

(7)

Developed the world’s first 23.8-inch FHD ultra slim and light monitor product

 

•

Achieved ultra-light design (reduced LCM weight from 2,270g to 1,280g compared to conventional LCMs)

 

•

Achieved ultra slim design by using slim component parts (7.6t reduced to 5.5t)

 

(8)

Developed LTPS AH-IPS QHD smartphone product (5.5-inch QHD, 538 ppi, LG Electronics’ G3 model smartphone)

 

•

LTPS AH-IPS QHD smartphone product developed in April 2014

 

•

Width of panel bezel: 0.95 mm (L/R); luminance: 500 nit; G1F Touch Direct Bonded LCM

 

(9)

Developed our first curved Ultra HD product (65-inch and 55-inch Ultra HD)

 

•

The curved LCM retains the same panel transmissivity as a conventional flat LCM through application of BM-less COT structure with a double pigment lamination

 

•

Realized curved LCM technology by applying Frame (Horizontal / Vertical / Center) Structure and Curved C/T & Guide Panel Technologies

 

(10)

Developed the world’s first 6-inch plastic OLED product

 

•

Developed the world’s first curved display with a curvature radius (“R”) of 700

 

•

Precursor to the development of future bendable, foldable and rollable display products

 

(11)

Developed the world’s first 34-inch curved monitor product (3,800R)

 

•

Launched the world’s first blade type 21:9 screen aspect ratio 34-inch wide QHD 3,800R curved monitor product and created a new market and standard for curved monitor products

 

•

Achieved curvature of 3,800R by using annealing process and setting up assembly equipment utilizing 0.4t glass for curved panels and pol edge type curved backlight

 

(12)

Developed the world’s first AH-IPS FHD GIP/DRD product (15.6-inch notebook product)

 

•

The world’s first AH-IPS FHD (more than 142 ppi) GIP/DRD product developed in September 2014

 

•

Increased cost competitiveness by developing GIP/DRD technology

 

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(13)

Developed the world’s first Advanced In-cell Touch LTPS smartphone product (4.5-inch HD product)

 

•

Completed development of an AH-IPS LTPS product applying LG Display’s own in-cell touch technology, which utilizes the AH-IPS Vcom electrodes in an all point sensing self-capacitive manner in July 2014 (450 nit luminance; L/R panel bezel of 1.00 mm; module thickness of 2.28 mm)

 

•

Simplified SCM and provided a cost competitive and differentiated valued product with touch functionality

 

(14)

Developed the world’s first Advanced In-cell Touch a-Si smartphone product (4.5-inch WVGA product)

 

•

Completed development of an AH-IPS a-Si product applying LG Display’s own in-cell touch technology, which utilizes the AH-IPS Vcom electrodes in an all point sensing self-capacitive manner in August 2014 (450 nit luminance; L/R panel bezel of 1.35 mm; module thickness of 2.6 mm)

 

•

Simplified SCM and provided a cost competitive and differentiated valued product with touch functionality

 

(15)

Developed the world’s first Ultra HD+ curved (6,000R) product (105-inch Ultra HD)

 

•

The world’s first large 105-inch 21:9 screen aspect ratio Ultra HD curved (6,000R) display product

 

(16)

Developed our first 98-inch Ultra HD product

 

•

Our new line of 98-inch Ultra HD products

 

•

Achieved ultra-high definition through utilizing the direct BLU local dimming and FCIC circuit compensation algorithm.

 

(17)

Developed four sided product with even bezels (5.9 mm) for commercial use (42-inch, 49-inch and 55-inch FHD product)

 

•

Developed our first 4 sided even bezel product (off bezel: 5.9 mm)

 

•

Reduced panel PAD and lower bezel thickness

 

•

Improved PAC transmittance and after image reliability

 

(18)

Developed our first 60-inch Ultra HD product

 

•

Our new line of 60-inch Ultra HD products

 

•

Achieved narrow panel bezel of 7.8 mm

 

(19)

Developed the world’s first circular plastic OLED product (1.3 F)

 

•

Developed the world’s first circular plastic OLED product in September 2014

 

•

Developed ultrathin display module of 559 um (without cover window)

 

•

Lowered power consumption by developing Power Save Mode algorithm

 

•

Display can be turned on without powering the P-IC

 

(20)

Developed the world’s first four sided borderless OLED television product (55-inch)

 

•

Product developed using the world’s first four sided borderless technology utilizing reverse tab bonding manufacturing process in September 2014

 

(21)

Developed the world’s first ultra-slim OLED television products (49-inch, 55-inch and 65-inch Ultra HD)

 

•

Achieved LCM thickness of 7.5 mm

 

•

Reduced thickness by combining exterior set with LCM parts (B/cover, M/cabinet)

 

(22)

Developed the world’s first 1:1 screen aspect ratio New Platform Monitor (26.5-inch; 1920 x 1920 resolution)

 

•

Creation of new market through the development of new 1:1 screen aspect ratio platform display

 

•

Development of high resolution display with four sided even bezels (on bezel: 8 mm)

 

(23)

Development of 14-inch FHD notebook product with three sided even bezels (3.9 mm)

 

•

World’s first notebook panel with three sided narrow bezels (top and side bezels: 3.9 mm)

 

•

Reduced GIP area by 50% compared to conventional GIP area

 

(24)

Development of 12.3-inch new display size UXGA tablet product

 

•

Developed new display panel size for tablet products: 12.3-inch UXGA (4:3 screen aspect ratio)

 

•

Increased yield of glass panel area per glass substrate by cutting glass substrates at 12.3 inches

 

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Achievements in 2015

 

(1)

Developed the world’s narrowest, at the time, module bezel (0.7mm) LTPS smartphone display (5.3-inch FHD AIT)

 

•

Developed the world’s first FHD Advanced In-cell Touch display (LTPS 5.3-inch FHD) applying the “Neo Edge” module process (new manufacturing technology) in January 2015

 

•

Set-up glue & laser cutting process, 0.6mm panel bezel (L/R)

 

(2)

Developed the world’s first QHD Advanced In-cell Touch (AIT) LTPS smartphone display (5.5-inch QHD)

 

•

Developed LTPS 5.5-inch QHD display applying LG Display’s new capacitive type in-cell touch technology with “all points sensing” in March 2015; luminance: 500nit, contrast ratio: 1500:1(using photo alignment & negative LC), 0.95mm panel bezel (L/R)

 

•

Delivered differentiated value proposition based on touch performance, simplified SCM process and competitive cost innovation

 

10.	Intellectual Property

As of March 31, 2015, our cumulative patent portfolio (including patents that have already expired) included a total of 27,036 patents, consisting of 13,377 in Korea and 13,659 in other countries.

 

11.	Environmental and Safety Matters

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

In accordance with the Framework Act on Low Carbon, Green Growth, we implemented the greenhouse gas emission and energy consumption target system from 2012 to 2014. Starting from 2015, we plan on implementing the greenhouse gas trading system, under which we will be 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 may need to invest 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. As a designated company subject to greenhouse gas emission targets under the Framework Act on Low Carbon, Green Growth, if we fail to meet a reduction target and are unable to comply with the government’s subsequent enforcement notice relating to such failure, we may be subject to fines. Furthermore, as a designated company subject to the Act on Allocation and Trading of Greenhouse Gas Emissions, if do not have enough emission credits, we may be required to purchase additional credits or be subject to fines.

In connection with the greenhouse gas emission and energy reduction target system, we submitted a statement of our domestic emissions and energy usage for the 2013 to the Korean government (i.e., the Ministry of Environment and the Ministry of Trade, Industry & Energy) in March 2014 after it was certified by Lloyd’s Register Quality Assurance, 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		2014				2013				2012
Greenhouse gases			7,537				6,922				6,161
Energy			60,002				61,092				61,169

 

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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 air pollution, toxic materials and waste water. In February 2013, to reduce costs and ensure safe water quality, we entered into a contract with a specialist company to operate our waste water treatment facilities. We currently have ISO 14001 certifications with respect to the environmental record for P1 through P98, our OLED production facility in Gumi, Korea, our Gumi module production plant and our Paju module production plant, as well as our module production plants in Nanjing, Yantai and Guangzhou, China.

In addition, with respect to P1 through P98 and our module production plants in Gumi and Paju, we received certification from BSI Group Korea in November 2011 and ISO 5001 certification in December 2013 for our green management system. In August 2014, GP1, our newest eighth-generation panel fabrication facility located in Guangzhou, China, was the first electronics plant in China to receive the “Green Plant” designation under China’s Green China Policy, in addition to receiving ISO 50001, ISO 14001, OHSAS 18001, ISO 9001, GB/T 26125, PAS 2050 and ISO 14064-1 certifications. Furthermore, with respect to our production facilities in Gumi, we have been certified by the Ministry of Environment as a “Green Company” for P1 and our Gumi module production plant since 1997, P2 and P3 since 2006 and P4, P5 and P6 since 2008. Also, we received certification to self-inspect designated waste products with respect to our Paju plant by the Ministry of Environment in 2011, which was recertified in 2013. In addition, in recognition of our efforts to reduce greenhouse gas emissions, we were awarded a commendation from the Minster of Environment in the efforts against climate change category in the 2013 Green Management Awards, which was jointly hosted by the Ministry of Environment and the Ministry of Trade, Industry & Energy. In recognition of our efforts to improve recycling and reduce waste, we received a citation for being a leading recycling company by the Prime Minister of Korea.

We also have an internal monitoring system to control the use of hazardous substances in the manufacture of our products as we are committed to compliance with all applicable environmental laws and regulations, including European Union Restriction of Hazardous Substances (RoHS) Directive 2011/65/EU, and restricts the use of certain hazardous substances in the manufacture of electrical and electronic equipment.

In addition, as part of our commitment to use environment-friendly raw materials, we have implemented a green purchasing system that prevents the introduction of hazardous materials at the purchasing stage. The green purchasing system has been a key component in our efforts to comply with RoHS and other applicable environmental laws and regulation.

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 February 2015, we were issued a corrective order and assessed a fine of W276 million, which we subsequently followed and paid, respectively, for violating the Occupational Health and Safety Act in connection with an accidental nitrogen gas exposure at one of our production facilities in Paju, Korea in January 2015. To prevent such accidents happening again in the future, we have strengthened our safety standards and management and employee education.

 

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12.	Financial Information

 

A.

Financial highlights (Based on consolidated K-IFRS)

(Unit: In millions of Won)

 

Description		As of March 31, 2015				As of December 31, 2014				As of December 31, 2013
Current assets			9,224,466				9,240,629				7,731,788
Quick assets			6,578,923				6,486,531				5,798,547
Inventories			2,645,543				2,754,098				1,933,241
Non-current assets			13,248,114				13,726,394				13,983,496
Investments in equity accounted investees			381,633				407,644				406,536
Property, plant and equipment, net			10,974,411				11,402,866				11,808,334
Intangible assets			547,450				576,670				468,185
Other non-current assets			1,344,620				1,339,214				1,300,441
Total assets			22,472,580				22,967,023				21,715,284
Current liabilities			7,164,054				7,549,556				6,788,919
Non-current liabilities			3,115,944				3,634,057				4,128,945
Total liabilities			10,279,998				11,183,613				10,917,864
Share capital			1,789,079				1,789,079				1,789,079
Share premium			2,251,113				2,251,113				2,251,113
Reserves			(54,734	)			(63,843	)			(91,674	)
Retained earnings			7,732,754				7,455,063				6,662,655
Non-controlling interest			474,370				351,998				186,247
Total equity			12,192,582				11,783,410				10,797,420

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

 

Description		For the three months ended March 31, 2015				For the year ended December 31, 2014				For the year ended December 31, 2013
Revenue			7,022,349				26,455,529				27,033,035
Operating profit			743,900				1,357,255				1,163,314
Operating profit from continuing operations			475,751				917,404				418,973
Profit for the period			475,751				917,404				418,973
Profit (loss) attributable to:
Owners of the Company			458,224				904,268				426,118
Non-controlling interest			17,527				13,136				(7,145	)
Basic earnings per share			1,281				2,527				1,191
Diluted earnings per share			1,281				2,527				1,191
Number of consolidated entities			18				18				18

 

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B.

Financial highlights (Based on separate K-IFRS)

(Unit: In millions of Won)

 

Description		As of March 31, 2015				As of December 31, 2014				As of December 31, 2013
Current assets			7,689,116				8,291,088				6,877,367
Quick assets			5,601,323				6,244,413				5,290,725
Inventories			2,087,793				2,046,675				1,586,642
Non-current assets			12,495,460				12,720,749				13,767,226
Investments			2,511,762				2,301,881				1,820,806
Property, plant and equipment, net			8,297,140				8,700,301				10,294,740
Intangible assets			518,782				548,078				461,620
Other non-current assets			1,167,776				1,170,489				1,190,060
Total assets			20,184,576				21,011,837				20,644,593
Current liabilities			7,094,252				7,550,330				6,754,175
Non-current liabilities			2,311,403				2,837,432				4,127,993
Total liabilities			9,405,655				10,387,762				10,882,168
Share capital			1,789,079				1,789,079				1,789,079
Share premium			2,251,113				2,251,113				2,251,113
Reserves			288				276				(305	)
Retained earnings			6,738,441				6,583,607				5,722,538
Total equity			10,778,921				10,624,075				9,762,425

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

 

Description		For the three months ended March 31, 2015				For the year ended December 31, 2014				For the year ended December 31, 2013
Revenue			6,349,476				25,383,670				25,854,183
Operating profit			526,665				984,790				753,550
Operating profit from continuing operations			334,772				973,118				99,672
Profit for the period			334,772				973,118				99,672
Basic earnings per share			936				2,720				279
Diluted earnings per share			936				2,720				279

 

C.

Consolidated subsidiaries (as of March 31, 2015)

 

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 and sales		China			100	%
LG Display Shanghai Co., Ltd.		Sales		China			100	%
LG Display Poland Sp. zo.o.		Manufacturing and sales		Poland			100	%
LG Display Guangzhou Co., Ltd.		Manufacturing and sales		China			100	%
LG Display Shenzhen Co., Ltd.		Sales		China			100	%
LG Display Singapore Pte. Ltd.		Sales		Singapore			100	%
L&T Display Technology (Xiamen) Limited		Manufacturing		China			51	%
L&T Display Technology (Fujian) Limited		Manufacturing		China			51	%
LG Display Yantai Co., Ltd.		Manufacturing and sales		China			100	%
LG Display (China) Co., Ltd.		Manufacturing and sales		China			70	%
LG Display U.S.A. Inc.		Manufacturing and sales		U.S.A.			100	%
Nanumnuri Co., Ltd.		Workplace services		Korea			100	%
Unified Innovative Technology, LLC		Managing intellectual property		U.S.A.			100	%
MMT (Money Market Trust)		Money market trust		Korea			100	%

 

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D.

Status of equity investments (as of March 31, 2015)

 

Company		Investment Amount				Initial Equity Investment Date				Equity Interest
LG Display America, Inc.		US$	411,000,000				September 24, 1999				100	%
LG Display Germany GmbH		EUR	960,000				November 5, 1999				100	%
LG Display Japan Co., Ltd.		¥	95,000,000				October 12, 1999				100	%
LG Display Taiwan Co., Ltd.		NT$	115,500,000				May 19, 2000				100	%
LG Display Nanjing Co., Ltd.		CNY	2,936,759,345				July 15, 2002				100	%
LG Display Shanghai Co., Ltd.		CNY	4,138,650				January 16, 2003				100	%
LG Display Poland Sp. zo.o.		PLN	511,071,000				September 6, 2005				100	%
LG Display Guangzhou Co., Ltd.		CNY	1,654,693,079				August 7, 2006				100	%
LG Display Shenzhen Co., Ltd.		CNY	3,775,250				August 28, 2007				100	%
LG Display Singapore Pte. Ltd.		SGD	1,400,000				January 12, 2009				100	%
L&T Display Technology (Xiamen) Limited		CNY	41,785,824				January 5, 2010				51	%
L&T Display Technology (Fujian) Limited		CNY	59,197,026				January 5, 2010				51	%
LG Display Yantai Co., Ltd.		CNY	955,915,000				April 19, 2010				100	%
LG Display U.S.A. Inc.		US$	10,920,000				December 8, 2011				100	%
Nanumnuri Co., Ltd.		W	800,000,000				March 19, 2012				100	%
LG Display (China) Co., Ltd.(1)		CNY	5,668,466,124				December 27, 2012				70	%
Unified Innovative Technology, LLC		US$	9,000,000				March 21, 2014				100	%
MMT (Money Market Trust)		W	94,900,000,000				June 11, 2007				100	%
Suzhou Raken Technology Co., Ltd.		CNY	637,079,715				October 7, 2008				51	%
Paju Electric Glass Co., Ltd.		W	33,648,000,000				March 25, 2005				40	%
TLI Co., Ltd.		W	14,073,806,250				May 16, 2008				10	%
AVACO Co., Ltd.		W	6,172,728,120				June 9, 2008				16	%
New Optics Ltd.		W	12,199,600,000				July 30, 2008				46	%
LIG ADP Co., Ltd.		W	6,330,000,000				February 24, 2009				13	%
Wooree E&L Co., Ltd. (formerly Wooree LED Co., Ltd.)		W	11,900,000,000				May 22, 2009				21	%
Global OLED Technology LLC		US$	45,170,000				December 23, 2009				33	%
LB Gemini New Growth Fund No. 16(2)		W	14,424,704,518				December 7, 2009				31	%
Can Yang Investment Ltd.		CNY	93,740,124				January 27, 2010				9	%
YAS Co., Ltd.		W	10,000,000,000				September 16, 2010				19	%
Narae Nanotech Corporation		W	30,000,000,000				April 22, 2011				23	%
Avatec Co., Ltd.		W	10,600,000,000				December 6, 2011				16	%
Glonix Co., Ltd.		W	2,000,000,000				April 10, 2012				20	%

Changes since December 31, 2014:

 

(1)	In January 2015, we invested CNY1,414 million in cash for the capital increase of LG Display (China) Co., Ltd. The investment did not affect our percentage interest.

(2)	In March 2015, we invested W360 million in LB Gemini New Growth Fund No. 16. The investment did not affect our percentage interest.

 

13.	Audit Information

 

A.

Audit service

(Unit: In millions of Won, hours)

 

Description		2015		2014		2013
Auditor		KPMG Samjong		KPMG Samjong		KPMG Samjong
Activity		Audit by independent auditor		Audit by independent auditor		Audit by independent auditor
Compensation (1)		990 (400) (2)		910 (326) (2)		910 (325) (2)
Time required		2,884		16,380		16,202

 

(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.

 

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B.

Non-audit service

(Unit: In millions of Won)

 

Fiscal year		Contract date		Service description		Service period		Compensation
2013		July 29, 2013		Advisory services in establishing a compliance system in connection with our disclosure obligations under the U.S. Securities and Exchange commission’s conflict mineral rule.		July 2013 to October 2013		126

 

14.	Board of Directors

 

A.

Members of the board of directors

As of March 31, 2015 our board of directors consist of two non-outside directors, one non-standing director and four outside directors.

(As of March 31, 2015)

 

Name		Position		Primary responsibility
Yu Sig Kang(1)		Director (non-standing)		Chairman of the board of directors
Sang Beom Han(2)		Representative Director (non-outside), Chief Executive Officer and President		Overall head of management
Sangdon Kim		Director (non-outside), Chief Financial Officer and Senior Vice President		Overall head of finances
Jin Jang		Outside Director		Related to the overall management
Dongil Kwon(3)		Outside Director		Related to the overall management
Joon Park		Outside Director		Related to the overall management
Sung-Sik Hwang(4)		Outside Director		Related to the overall management

 

(1)	Yu Sig Kang is also a registered executive of LG Electronics.

(2)	Sang Beom Han was reappointed for another term as a non-outside director at the annual general meeting of shareholders held on March 13, 2015.

(3)	Dongil Kwon was reappointed for another term as a non-outside director at the annual general meeting of shareholders held on March 13, 2015.

(4)	Sung-Sik Hwang was appointed as an outside director by the courts on January 22, 2015. Mr. Hwang was reappointed for a full term at the annual general meeting of shareholders held on March 13, 2015.

 

•

Tae Sik Ahn stepped down as an outside director on January 15, 2015 before the end of his term.

 

B.

Committees of the board of directors

As of March 31, 2015, we have the following committees that serve under our board of directors: Audit Committee, Outside Director Nomination Committee and Management Committee.

(As of March 31, 2015)

 

Committee		Composition		Member
Audit Committee		3 outside directors		Joon Park, Jin Jang, Sung-Sik Hwang(1)
Outside Director Nomination Committee		1 non-standing director and 2 outside directors		Yu Sig Kang, Jin Jang(2), Joon Park(2)
Management Committee		2 non-outside directors		Sang Beom Han, Sangdon Kim

 

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(1)	Sung-Sik Hwang was appointed as member of the audit committee of the board of directors by the courts on January 22, 2015. Mr. Hwang was reappointed for a full term at the annual general meeting of shareholders held on March 13, 2015.

(2)	Jin Jang and Joon Park were appointed as members of the outside director nomination committee of the board of directors by the board of directors on January 27, 2015.

 

•

Tae Sik Ahn stepped down as a member of the audit committee and the outside director nomination committee of the board of directors on January 15, 2015 before the end of his term.

 

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.

 

15.	Information Regarding Shares

 

A.

Total number of shares

 

(1)

Total number of shares authorized to be issued (as of March 31, 2015): 500,000,000 shares.

 

(2)

Total shares issued and outstanding (as of March 31, 2015): 357,815,700 shares.

 

B.

Shareholder list

 

(1)

Largest shareholder and related parties as of March 31, 2015:

 

Name		Relationship				Number of shares of common stock				Equity interest
LG Electronics			Largest Shareholder				135,625,000				37.9	%
Sang Beom Han(1)			Related Party				5,014				0.0	%
Sangdon Kim			Related Party				1,500				0.0	%

 

(1)	In April 2015, Sang Beom Han acquired additional shares of our common stock and as of the date of this filing, he held 13,014 shares of our common stock.

 

(2)

Shareholders who are known to us to own 5% or more of our shares as of March 31, 2015:

 

Beneficial owner		Number of shares of common stock				Equity interest
LG Electronics			135,625,000				37.9	%
National Pension Service			35,749,428				9.99	%

 

16.	Directors and Employees

 

A.

Directors

 

(1)

Remuneration for directors in 2015 Q1

(Unit: person, in millions of Won)

 

Classification		No. of directors(1)				Amount paid(2)				Per capita average remuneration paid(4)
Non-outside directors			3				1,419	(3)			473
Outside directors who are not audit committee members			1				18				18
Outside directors who are audit committee members			3				58				19
Total			7				1,495				—

 

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(1)	Number of directors as at March 31, 2015.

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

(3)	Among the non-outside directors, Yu Sig Kang does not receive any remuneration.

(4)	Per capita average remuneration paid is calculated by dividing total amount paid by the average number of directors for the three months ended March 31, 2015.

 

(2)

Remuneration for individual directors and audit committee members

 

•

Individual amount of remuneration paid in 2015 Q1

(Unit: in millions of Won)

 

Name		Position		Total remuneration				Payment not included in total remuneration
Sang Beom Han		President			1,120				—

 

•

Method of calculation

 

Name		Method of calculation
Sang Beom Han		Total remuneration
		•		W1,120 million (consisting of W280 million in salary and W840 million in bonus).
		Salary
		•		Annual salary is set in accordance with the executive compensation regulations established by the board of directors.
		•		Annual salary is equally divided and paid on a monthly basis.
		Bonus
		•		Bonus is awarded by the board of directors based on performance and evaluation standards derived from the special bonus provisions of the executive compensation regulations.
		•		Bonus in the range of 0 to 150% of annual salary may be awarded by evaluating the previous year’s performance through certain financial indicators, such as revenue and operating profit, and non-financial indicators, such as meeting our medium- to long-term expectations, leadership and other contributions.
				•		Financial indicators: For the year ended December 31, 2014, revenue was W26,456 billion and operating profit was W1,357 billion, which was a 17% improvement compared to the previous year’s operating profit.
				•		Non-financial indictors: We maintained industry-leading technology through the continual release of differentiated technologies and products while improving profit margins and market position and Mr. Han showed leadership in leading us.

 

(3)

Stock options

Not applicable.

 

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B.

Employees

As of March 31, 2015, we had 32,372 employees (excluding our executive officers). On average, our male employees have served 7.4 years and our female employees have served 5.5 years. The total amount of salary paid to our employees for the three months ended March 31, 2015 based on income tax statements submitted to the Korean tax authority in accordance with Article 20 of the Income Tax Act was W634,202 million for our male employees and W163,987 million for our female employees. The following table provides details of our employees as of March 31, 2015:

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

 

		Number of employees(1)				Total salary in 2015 Q1(2)(3)(4)				Total salary per capita(5)				Average years of service
Male			23,489				634,202				27				7.4
Female			8,883				163,987				18				5.5
Total			32,372				798,189				25				6.8

 

(1)	Includes part-time employees.

(2)	Welfare benefits and retirement expenses have been excluded. Total welfare benefit provided to our employees for the three months ended March 31, 2015 was W90,822 million and the per capita welfare benefit provided was W2.8 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 average number of employees (male: 23,523, female: 9,027) for the three months ended March 31, 2015.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Financial Statements

(Unaudited)

March 31, 2015 and 2014

(With Independent Auditors’ Review Report Thereon)

 

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Table of Contents

 

		Page
Independent Auditors’ Review Report			29
Condensed Consolidated Interim Statements of Financial Position			31
Condensed Consolidated Interim Statements of Comprehensive Income (Loss)			32
Condensed Consolidated Interim Statements of Changes in Equity			33
Condensed Consolidated Interim Statements of Cash Flows			34
Notes to the Condensed Consolidated Interim Financial Statements			36

 

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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, 2015 and the condensed consolidated interim statements of comprehensive income (loss), changes in equity and cash flows for the three-month periods ended March 31, 2015 and 2014, 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 auditing standards generally accepted in the Republic of Korea 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.

Emphasis of Matter

As discussed in note 17 to the consolidated financial statements, the Group has been or is named as defendants in a number of individual lawsuits and class actions in the United States and Canada, respectively, in connection with alleged antitrust violations concerning the sale of LCD panels. The Group estimated and recognized losses related to these alleged violations. However, actual losses are subject to change in the future based on new developments in each matter, or changes in circumstances, which could be materially different from those estimated and recognized by the Group.

 

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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, 2014 and the related consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended, which are not accompanying this review report, in accordance with Korean Standards on Auditing, and our report thereon, dated February 17, 2015, expressed an unqualified opinion. The accompanying condensed consolidated statement of financial position of the Group as of December 31, 2014, presented for comparative purposes, is not different from that audited by us from which it was derived in all material respects.

/s/ KPMG Samjong Accounting Corp.

Seoul, Korea

April 29, 2015

This report is effective as of April 29, 2015 the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying condensed consolidated interim financial statements and notes thereto. Accordingly, the readers of the review report should understand that the above review report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Statements of Financial Position

(Unaudited)

As of March 31, 2015 and December 31, 2014

 

(In millions of won)		Note		March 31, 2015				December 31, 2014
Assets
Cash and cash equivalents		9		W	1,290,750				889,839
Deposits in banks		9			1,446,826				1,526,482
Trade accounts and notes receivable, net		9,16,19			3,224,951				3,444,477
Other accounts receivable, net		9			102,246				119,478
Other current financial assets		9			3,433				3,250
Inventories		5			2,645,543				2,754,098
Prepaid income taxes					18,053				6,340
Other current assets					492,664				496,665
Total current assets					9,224,466				9,240,629
Deposits in banks		9			13				8,427
Investments in equity accounted investees		6			381,633				407,644
Other non-current financial assets		9			33,357				33,611
Property, plant and equipment, net		7,20			10,974,411				11,402,866
Intangible assets, net		8,20			547,450				576,670
Deferred tax assets		21			1,007,404				1,036,507
Other non-current assets					303,846				260,669
Total non-current assets					13,248,114				13,726,394
Total assets				W	22,472,580				22,967,023
Liabilities
Trade accounts and notes payable		9,19		W	2,910,738				3,391,635
Current financial liabilities		9,10			1,281,161				967,909
Other accounts payable		9,19			1,377,761				1,508,158
Accrued expenses					646,280				740,492
Income tax payable					202,723				227,714
Provisions		17			262,477				193,884
Advances received		16			253,266				488,379
Other current liabilities					229,648				31,385
Total current liabilities					7,164,054				7,549,556
Non-current financial liabilities		9,10			2,715,115				3,279,477
Non-current provisions					9,567				8,014
Defined benefit liabilities, net		14			372,972				324,180
Deferred tax liabilities		21			—				245
Other non-current liabilities					18,290				22,141
Total non-current liabilities					3,115,944				3,634,057
Total liabilities					10,279,998				11,183,613
Equity
Share capital		18			1,789,079				1,789,079
Share premium					2,251,113				2,251,113
Reserves		18			(54,734	)			(63,843	)
Retained earnings					7,732,754				7,455,063
Total equity attributable to owners of the Controlling Company					11,718,212				11,431,412
Non-controlling interests					474,370				351,998
Total equity					12,192,582				11,783,410
Total liabilities and equity				W	22,472,580				22,967,023

See accompanying notes to the condensed consolidated interim financial statements.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Statements of Comprehensive Income (Loss)

(Unaudited)

For the three-month periods ended March 31, 2015 and 2014

 

(In millions of won, except earnings (loss) per share)		Note		2015				2014
Revenue		19,20		W	7,022,349				5,587,698
Cost of sales		5,11,19			(5,661,060	)			(4,923,867	)
Gross profit					1,361,289				663,831
Selling expenses		12			(190,077	)			(157,880	)
Administrative expenses		12			(144,429	)			(121,696	)
Research and development expenses					(282,883	)			(289,974	)
Operating profit					743,900				94,281
Finance income		15			28,315				28,680
Finance costs		15			(56,143	)			(57,063	)
Other non-operating income		13			253,064				181,953
Other non-operating expenses		13			(343,639	)			(227,805	)
Equity in income of equity accounted investees, net					(1,733	)			8,552
Profit before income tax					623,764				28,598
Income tax expense		21			(148,013	)			(110,566	)
Profit (loss) for the period					475,751				(81,968	)
Other comprehensive income (loss)
Items that will never be reclassified to profit or loss
Remeasurements of the net defined benefit liabilities		14			(1,954	)			(2,719	)
Related income tax					329				704
					(1,625	)			(2,015	)
Items that are or may be relcassified to profit or loss
Net change in fair value of available-for-sale financial assets		15			881				830
Foreign currency translation differences for foreign operations					13,193				(22,994	)
Share of loss from sale of treasury stocks by associates					(285	)			(365	)
Related income tax					24				74
					13,813				(22,455	)
Other comprehensive income (loss) for the period, net of income tax					12,188				(24,470	)
Total comprehensive income (loss) for the period				W	487,939				(106,438	)
Profit (loss) attributable to:
Owners of the Controlling Company				W	458,224				(79,951	)
Non-controlling interests					17,527				(2,017	)
Profit (loss) for the period				W	475,751				(81,968	)
Total comprehensive income (loss) attributable to:
Owners of the Controlling Company				W	465,708				(102,256	)
Non-controlling interests					22,231				(4,182	)
Total comprehensive income (loss) for the period				W	487,939				(106,438	)
Earnings (loss) per share (In won)
Basic earnings (loss) per share		22		W	1,281				(223	)
Diluted earnings (loss) per share		22		W	1,281				(223	)

See accompanying notes to the condensed consolidated interim financial statements.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Statements of Changes in Equity

(Unaudited)

For the three-month periods ended March 31, 2015 and 2014

 

		Attributable to owners of the Controlling Company
(In millions of won)		Share capital				Share premium				Share of loss from sale of treasury stocks by associates				Fair value reserve				Translation reserve				Retained earnings				Non-controlling interests				Total equity
Balances at January 1, 2014		W	1,789,079				2,251,113				(254	)			572				(91,992	)			6,662,655				186,247				10,797,420
Total comprehensive income (loss) for the period
Loss for the period			—				—				—				—				—				(79,951	)			(2,017	)			(81,968	)
Other comprehensive income (loss)
Net change in fair value of available-for-sale financial assets, net of tax			—				—				—				949				—				—				—				949
Remeasurements of the net defined benefit liabilities, net of tax			—				—				—				—				—				(2,015	)			—				(2,015	)
Foreign currency translation differences for foreign operations, net of tax			—				—				—				—				(20,874	)			—				(2,165	)			(23,039	)
Share of loss from sale of treasury stocks by associates, net of tax			—				—				(365	)			—				—				—				—				(365	)
Total other comprehensive income (loss)			—				—				(365	)			949				(20,874	)			(2,015	)			(2,165	)			(24,470	)
Total comprehensive income (loss) for the period		W	—				—				(365	)			949				(20,874	)			(81,966	)			(4,182	)			(106,438	)
Transaction with owners, recognized directly in equity
Capital contribution from non-controlling interests			—				—				—				—				—				—				24,840				24,840
Balances at March 31, 2014		W	1,789,079				2,251,113				(619	)			1,521				(112,866	)			6,580,689				206,905				10,715,822
Balances at January 1, 2015		W	1,789,079				2,251,113				(1,614	)			1,368				(63,597	)			7,455,063				351,998				11,783,410
Total comprehensive income for the period
Profit for the period			—				—				—				—				—				458,224				17,527				475,751
Other comprehensive income (loss)
Net change in fair value of available-for-sale financial assets, net of tax			—				—				—				877				—				—				—				877
Remeasurements of the net defined benefit liabilities, net of tax			—				—				—				—				—				(1,625	)			—				(1,625	)
Foreign currency translation differences for foreign operations, net of tax			—				—				—				—				8,517				—				4,704				13,221
Share of loss from sale of treasury stocks by associates, net of tax			—				—				(285	)			—				—				—				—				(285	)
Total other comprehensive income (loss)			—				—				(285	)			877				8,517				(1,625	)			4,704				12,188
Total comprehensive income (loss) for the period		W	—				—				(285	)			877				8,517				456,599				22,231				487,939
Transaction with owners, recognized directly in equity
Dividends to equity holders			—				—								—				—				(178,908	)			—				(178,908	)
Capital contribution from non-controlling interests			—				—				—				—				—				—				100,141				100,141
Balances at March 31, 2015		W	1,789,079				2,251,113				(1,899	)			2,245				(55,080	)			7,732,754				474,370				12,192,582

See accompanying notes to the condensed consolidated interim financial statements.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Statements of Cash Flows

(Unaudited)

For the three-month periods ended March 31, 2015 and 2014

 

(In millions of won)		Note		2015				2014
Cash flows from operating activities:
Profit (loss) for the period				W	475,751				(81,968	)
Adjustments for:
Income tax expense		21			148,013				110,566
Depreciation		11			759,830				864,215
Amortization of intangible assets		11			91,307				56,444
Gain on foreign currency translation					(51,034	)			(25,973	)
Loss on foreign currency translation					50,255				46,976
Expenses related to defined benefit plans		14			49,765				64,905
Impairment loss on intangible assets					184				286
Gain on disposal of property, plant and equipment					(6,118	)			(2,765	)
Loss on disposal of property, plant and equipment					8				295
Loss on disposal of intangible assets					11				—
Finance income					(13,864	)			(13,927	)
Finance costs					36,056				43,166
Equity in income of equity method accounted investees, net					1,733				(8,552	)
Other income					(791	)			(7,281	)
Other expenses					145,983				49,331
					1,211,338				1,177,686
Change in trade accounts and notes receivable					(22,375	)			452,340
Change in other accounts receivable					41,840				11,966
Change in other current assets					11,837				(171,337	)
Change in inventories					108,556				(265,603	)
Change in other non-current assets					(55,737	)			(61,428	)
Change in trade accounts and notes payable					(485,516	)			(41,248	)
Change in other accounts payable					(276,357	)			(1,896	)
Change in accrued expenses					(94,211	)			(35,300	)
Change in other current liabilities					28,146				16,756
Change in other non-current liabilities					418				3,972
Change in provisions					(34,162	)			(34,051	)
Change in defined benefit liabilities, net					(2,330	)			(807	)
					(779,891	)			(126,636	)
Cash generated from operating activities					907,198				969,082
Income taxes paid					(105,407	)			(26,352	)
Interests received					15,505				6,233
Interests paid					(34,172	)			(38,742	)
Net cash provided by operating activities				W	783,124				910,221

See accompanying notes to the condensed consolidated interim financial statements.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Statements of Cash Flows

(Unaudited)

For the three-month periods ended March 31, 2015 and 2014

 

(In millions of won)		Note		2015				2014
Cash flows from investing activities:
Dividends received				W	20,021				—
Proceeds from withdrawal of deposits in banks					602,805				231,176
Increase in deposits in banks					(514,735	)			(400,210	)
Acquisition of investments in equity accounted investees					(360	)			(324	)
Proceeds from disposal of investments in equity accounted investees					—				3,589
Acquisition of property, plant and equipment					(437,398	)			(1,041,001	)
Proceeds from disposal of property, plant and equipment					168,164				10,352
Acquisition of intangible assets					(82,983	)			(63,168	)
Government grants received					2,511				2,006
Proceeds from disposal of other financial assets					81				—
Acquisition of other non-current financial assets					(179	)			(2,152	)
Proceeds from disposal of other non-current financial assets					267				2,957
Net cash used in investing activities					(241,806	)			(1,256,775	)
Cash flows from financing activities:
Proceeds from short-term borrowings					—				1,163,680
Repayments of short-term borrowings					(223,626	)			(792,164	)
Repayments of long-term debt					—				(503,618	)
Repayments of current portion of long-term debt and debentures					(39,485	)			(22,360	)
Capital contribution from non-controlling interest					100,141				24,840
Net cash used in financing activities					(162,970	)			(129,622	)
Net increase (decrease) in cash and cash equivalents					378,348				(476,176	)
Cash and cash equivalents at January 1					889,839				1,021,870
Effect of exchange rate fluctuations on cash held					22,563				4,428
Cash and cash equivalents at March 31				W	1,290,750				550,122

See accompanying notes to the condensed consolidated interim financial statements.

 

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1.	Reporting Entity

 

(a)

Description of the Controlling Company

LG Display Co., Ltd. (the “Controlling Company”) was incorporated in February 1985 under its original name of LG Soft, Ltd. as a wholly owned subsidiary of LG Electronics Inc. In 1998, LG Electronics Inc. and LG Semicon Co., Ltd. transferred their respective Thin Film Transistor-Liquid Crystal Display (“TFT-LCD”) related business to the Controlling Company. The main business of the Controlling Company and its subsidiaries (the “Group”) is to manufacture and sell TFT-LCD panels. The Controlling Company is a stock company (“Jusikhoesa”) domiciled in the Republic of Korea with its address at 128 Yeouidae-ro, Yeongdeungpo-gu, Seoul, the Republic of Korea. In July 1999, LG Electronics Inc. and Koninklijke Philips Electronics N.V. (“Philips”) entered into a joint venture agreement. Pursuant to the agreement, the Controlling Company changed its name to LG.Philips LCD Co., Ltd. However, in February 2008, the Controlling Company changed its name to LG Display Co., Ltd. considering the decrease of Philips’s share interest in the Controlling Company and the possibility of its business expansion to other display products including Organic Light Emitting Diode (“OLED”) and Flexible Display products. As of March 31, 2014, LG Electronics Inc. owns 37.9% (135,625,000 shares) of the Controlling Company’s common stock.

As of March 31, 2015, the Controlling Company has TFT-LCD manufacturing plants, an OLED manufacturing plant and a Research & Development Center in Paju and TFT-LCD manufacturing plants in Gumi. The Controlling Company has overseas subsidiaries located in North America, Europe and Asia.

The Controlling Company’s common stock is listed on the Korea Exchange under the identifying code 034220. As of March 31, 2015, 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, 2015, there are 23,010,462 ADSs outstanding.

 

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1.	Reporting Entity, Continued

 

(b)

Consolidated Subsidiaries as of March 31, 2015

 

(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 TFT-LCD products

USD

411

LG Display Japan Co., Ltd.

Tokyo, Japan

100%

December 31

October 12, 1999

Sell TFT-LCD products

JPY

95

LG Display Germany GmbH

Ratingen, Germany

100%

December 31

November 5, 1999

Sell TFT-LCD products

EUR

1

LG Display Taiwan Co., Ltd.

Taipei, Taiwan

100%

December 31

April 12, 1999

Sell TFT-LCD products

NTD

116

LG Display Nanjing Co., Ltd.

Nanjing, China

100%

December 31

July 15, 2002

Manufacture and sell TFT-LCD products

CNY

2,937

LG Display Shanghai Co., Ltd.

Shanghai, China

100%

December 31

January 16, 2003

Sell TFT-LCD products

CNY

4

LG Display Poland Sp. z o.o.

Wroclaw, Poland

80%

December 31

September 6, 2005

Manufacture and sell TFT-LCD products

PLN

511

LG Display Guangzhou Co., Ltd.

Guangzhou, China

100%

December 31

June 30, 2006

Manufacture and sell TFT-LCD products

CNY

1,655

LG Display Shenzhen Co., Ltd.

Shenzhen, China

100%

December 31

August 28, 2007

Sell TFT-LCD products

CNY

4

LG Display Singapore Pte. Ltd.

Singapore

100%

December 31

January 12, 2009

Sell TFT-LCD products

SGD

1.4

L&T Display Technology (Xiamen) Limited

Xiamen, China

51%

December 31

January 5, 2010

Manufacture LCD module and LCD TV sets

CNY

82

L&T Display Technology (Fujian) Limited

Fujian, China

51%

December 31

January 5, 2010

Manufacture LCD module and monitor sets

CNY

116

LG Display Yantai Co., Ltd.

Yantai, China

100%

December 31

April 19, 2010

Manufacture and sell TFT-LCD products

CNY

956

LG Display U.S.A. Inc.

McAllen, U.S.A.

100%

December 31

October 26, 2011

Manufacture and sell TFT-LCD products

USD

11

Nanumnuri Co., Ltd.

Gumi, South Korea

100%

December 31

March 21, 2012

Janitorial services

KRW

800

LG Display (China) Co., Ltd. (*1)

Guangzhou, China

70%

December 31

December 10, 2012

Manufacture and sell TFT-LCD products

CNY

8,097

Unified Innovative Technology, LLC

Wilmington, U.S.A.

100%

December 31

March 12, 2014

Manage intellectual property

USD

9

Money Market Trust(*2)

Seoul, South Korea

100%

December 31

—

Money market trust

KRW

94,900

 

(*1)

In January 2015, the Controlling Company invested W134,620 million in cash for the capital increase of LG Display (China) Co., Ltd. (“LGDCA”). In addition, in January 2015, LG Display Guangzhou Co., Ltd. (“LGDGZ”), a subsidiary of the Controlling Company, invested W112,485 million in cash for the capital increase of LGDCA. The Controlling Company’s ownership percentage in LGDCA decreased from 56% to 52% and LGDGZ’s ownership percentage in LGDCA increased from 14% to 18%, respectively, as of December 31, 2014 to March 31, 2015.

(*2)	In January 2015, the Controlling Company disposed W18,100 million and acquired W94,900 million in March 2015 in Money Market Trust. There was no change in the Controlling Company’s ownership percentage in MMT as a result of its disposal and acquisition.

 

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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 Standards (“K-IFRSs”) 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, 2014.

The condensed consolidated interim financial statements were authorized for issuance by the Board of Directors on April 21, 2015.

 

(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 statements of financial position:

 

•

available-for-sale financial assets measured at fair value, and

 

•

liabilities for defined benefit plans are recognized as the present value of defined benefit obligations less the fair value of plan assets

 

(c)

Functional and Presentation Currency

The condensed consolidated interim financial statements are presented in Korean won, which is the Controlling Company’s functional currency. All amounts in Korean won are in millions unless otherwise stated.

 

(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.

In preparing these condensed consolidated interim financial statements, the significant judgments made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those applied in its consolidated financial statements as of and for the year ended December 31, 2014.

 

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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, 2014.

 

4.	Financial Risk Management

The objectives and policies on financial risk management followed by the Group are consistent with those disclosed in the consolidated financial statements as of and for the year ended December 31, 2014.

 

5.	Inventories

Inventories as of March 31, 2015 and December 31, 2014 are as follows:

 

(In millions of won)		March 31, 2015				December 31, 2014
Finished goods		W	1,038,827				1,200,592
Work-in-process			796,496				745,614
Raw materials			413,448				426,380
Supplies			396,772				381,512
		W	2,645,543				2,754,098

For the three-month periods ended March 31, 2015 and 2014, the amount of inventories recognized as cost of sales, inventory write-downs and reversal and usage of inventory write-downs included in cost of sales is as follows;

 

(In millions of won)
		2015				2014
Inventories recognized as cost of sales		W	5,661,060				4,923,867
Including: inventory write-downs			326,601				267,087
Including: reversal and usage of inventory write-downs			(332,699	)			(211,363	)

 

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6.	Investments in Equity Accounted Investees

Associates and Joint Ventures (Equity Method Investees) as of March 31, 2015 are as follows:

 

(In millions of won)

Associates and joint ventures

Location

Percentage of ownership

Fiscal year end

Date of incorporation

Business

Carrying amount

Suzhou Raken Technology Co., Ltd.(*1)

Suzhou, China

51

%

December 31

October 2008

Manufacture and sell LCD modules and LCD TV set

W

136,128

Global OLED Technology, LLC

Virginia, U.S.A.

33

%

December 31

December 2009

Manage and license OLED patents

28,024

Paju Electric Glass Co., Ltd.

Paju, South Korea

40

%

December 31

January 2005

Manufacture electric glass for FPDs

53,188

TLI Inc.(*2)

Seongnam, South Korea

10

%

December 31

October 1998

Manufacture and sell semiconductor parts for FPDs

5,185

AVACO Co., Ltd.(*2)

Daegu, South Korea

16

%

December 31

January 2001

Manufacture and sell equipment for FPDs

11,420

New Optics Ltd.

Yangju, South Korea

46

%

December 31

August 2005

Manufacture back light parts for TFT-LCDs

44,194

LIG INVENIA Co., Ltd. (LIG ADP Co., Ltd.)(*2)

Seongnam, South Korea

13

%

December 31

January 2001

Develop and manufacture equipment for FPDs

2,289

WooRee E&L Co., Ltd.

Ansan, South Korea

21

%

December 31

June 2008

Manufacture LED back light unit packages

22,244

LB Gemini New Growth Fund No. 16 (*3)

Seoul, South Korea

31

%

December 31

December 2009

Invest in small and middle sized companies and benefit from M&A opportunities

15,988

Can Yang Investments Limited(*2)

Hong Kong

9

%

December 31

January 2010

Develop, manufacture and sell LED parts

7,568

YAS Co., Ltd.(*2)

Paju, South Korea

19

%

December 31

April 2002

Develop and manufacture deposition equipment for OLEDs

11,355

Narenanotech Corporation

Yongin, South Korea

23

%

December 31

December 1995

Manufacture and sell FPD manufacturing equipment

25,457

AVATEC Co., Ltd.(*2)

Daegu, South Korea

16

%

December 31

August 2000

Process and sell glass for FPDs

18,189

Glonix Co., Ltd.

Gimhae, South Korea

20

%

December 31

October 2006

Manufacture and sell LCD

404

W

381,633

 

(*1)

Despite its 51% ownership, management concluded that the Controlling Company does not have control of Suzhou Raken Technology Co., Ltd. because the Controlling Company and AmTRAN Technology Co., Ltd., which has a 49% equity interest of the investee, jointly control the board of directors of the investee through equal voting powers. Accordingly, investment in Suzhou Raken Technology Co., Ltd. was accounted as an equity method investment.

(*2)

Although the Controlling Company’s share interests in TLI Inc., AVACO Co., Ltd., LIG INVENIA Co., Ltd., Can Yang Investments Limited, YAS Co., Ltd., and AVATEC Co., Ltd. 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 and the transactions between the Controlling Company and the investees are significant. Accordingly, the investments in these investees have been accounted for using the equity method.

(*3)

The Controlling Company is a member of a limited partnership in the LB Gemini New Growth Fund No.16 (“the Fund”). In March 2015, the Controlling Company made an additional cash investment of W360 million in the Fund. There were no changes in the Controlling Company’s ownership percentage in the Fund and the Controlling Company is committed to making future investments of up to an aggregate of W30,000 million.

 

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7.	Property, Plant and Equipment

For the three-month periods ended March 31, 2015 and 2014, the Group purchased property, plant and equipment of W516,553 million and W1,231,327 million, respectively. The capitalized borrowing costs and the annualized capitalization rate were W4,636 million and 3.97%, and W9,837 million and 4.46% for the three-month periods ended March 31, 2015 and 2014, respectively. Also, for the three-month periods ended March 31, 2015 and 2014, the Group disposed of property, plant and equipment with carrying amounts of W182,858 million and W7,882 million, respectively, and recognized W6,118 million and W8 million as gain and loss, respectively, on disposal of property, plant and equipment for the three-month period ended March 31, 2015 (gain and loss for the three-month period ended on March 31, 2014: W2,765 million and W295 million, respectively).

 

8.	Intangible Assets

The Group capitalizes expenditures related to development activities, such as expenditures incurred on designing, manufacturing and testing of products that are ultimately selected for production. The balances of capitalized development costs as of March 31, 2015 and December 31, 2014 are W238,055 million and W253,624 million, respectively.

 

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9.	Financial Instruments

 

(a)

Credit risk

 

(i)

Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk as of March 31, 2015 and December 31, 2014 is as follows:

 

(In millions of won)
		March 31, 2015				December 31, 2014
Cash and cash equivalents		W	1,290,750				889,839
Deposits in banks(*)			1,446,839				1,534,909
Trade accounts and notes receivable, net			3,224,951				3,444,477
Other accounts receivable, net			102,246				119,478
Available-for-sale financial assets			3,177				3,237
Deposits			19,117				19,602
Other non-current financial assets			8,160				7,859
		W	6,095,240				6,019,401

 

(*)	As of March 31, 2015, the amount of deposits in banks restricted in use is W85,983 million (as of December 31, 2014: W81,232 million).

The maximum exposure to credit risk for trade accounts and notes receivable as of March 31, 2015 and December 31, 2014 by geographic region was as follows:

 

(In millions of won)
		March 31, 2015				December 31, 2014
Domestic		W	447,751				406,163
Euro-zone countries			404,252				309,296
Japan			160,115				135,972
United States			590,221				1,300,700
China			929,963				746,111
Taiwan			478,371				378,272
Others			214,278				167,963
		W	3,224,951				3,444,477

 

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9.	Financial Instruments, Continued

 

(ii)

Impairment loss

The aging of trade accounts and notes receivable as of March 31, 2015 and December 31, 2014 was as follows:

 

(In millions of won)
		March 31, 2015								December 31, 2014
		Book value				Impairment loss				Book value				Impairment loss
Not past due		W	3,198,083				(1,359	)			3,412,933				(762	)
Past due 1-15 days			14,133				(7	)			26,220				(30	)
Past due 16-30 days			4				—				4,130				(13	)
Past due 31-60 days			6,882				(69	)			1,830				(18	)
Past due more than 60 days			7,338				(54	)			189				(2	)
		W	3,226,440				(1,489	)			3,445,302				(825	)

The movement in the allowance for impairment in respect of receivables during the three-month period ended March 31, 2015 and the year ended December 31, 2014 are as follows:

 

(In millions of won)
		2015				2014
Balance at the beginning of the period		W	825				330
Bad debt expense			664				495
Balance at the reporting date		W	1,489				825

 

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9.	Financial Instruments, Continued

 

(b)

Liquidity risk

The following are the contractual maturities of financial liabilities, including estimated interest payments, as of March 31, 2015.

 

(In millions of won)						Contractual cash flows
		Carrying amount				Total				6 months or less				6-12 months				1-2 years				2-5 years				More than 5 years
Non-derivative financial liabilities :
Secured bank loan		W	655,876				723,138				10,106				10,106				20,156				682,770				—
Unsecured bank loans			745,070				763,749				101,507				171,682				228,688				261,421				451
Unsecured bond issues			2,595,330				2,774,584				247,007				860,276				640,092				1,027,209				—
Trade accounts and notes payables			2,910,738				2,910,738				2,910,738				—				—				—				—
Other accounts payable			1,339,892				1,341,194				1,325,090				2,660				5,464				7,980				—
		W	8,246,906				8,513,403				4,594,448				1,044,724				894,400				1,979,380				451

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

 

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9.	Financial Instruments, Continued

 

(c)

Currency risk

 

(i)

Exposure to currency risk

The Group’s exposure to foreign currency risk based on notional amounts as of March 31, 2015 and December 31, 2014 is as follows:

 

(In millions)		March 31, 2015
		USD				JPY				CNY				TWD				EUR				PLN
Cash and cash equivalents			186				540				3,493				41				5				76
Deposits in banks			—				—				618				—				—				—
Trade accounts and notes receivable			2,400				444				1,155				—				—				—
Other accounts receivable			22				2				82				9				—				—
Long-term other accounts receivable			7				—				—				—				—				—
Other assets denominated in foreign currencies			1				253				19				7				—				—
Trade accounts and notes payable			(1,138	)			(19,579	)			(1,738	)			—				—				—
Other accounts payable			(138	)			(9,112	)			(1,362	)			(6	)			(4	)			(5	)
Long-term other accounts payable			—				—				(1	)			—				—				—
Debt			(1,270	)			—				—				—				—				—
Net exposure			70				(27,452	)			2,266				51				1				71

 

(In millions)		December 31, 2014
		USD				JPY				CNY				TWD				EUR				PLN				BRL
Cash and cash equivalents			507				1,221				1,565				146				1				79				—
Trade accounts and notes receivable			2,737				682				962				—				—				—				—
Other accounts receivable			13				—				205				1				21				—				—
Long-term other accounts receivable			6				—				—				—				—				—				—
Other assets denominated in foreign currencies			1				255				18				7				—				—				—
Trade accounts and notes payable			(1,750	)			(21,468	)			(1,233	)			—				—				—				—
Other accounts payable			(268	)			(6,056	)			(1,522	)			(128	)			(20	)			(11	)			(34	)
Long-term other accounts payable			—				—				(1	)			—				—				—				—
Debt			(1,508	)			—				—				—				—				—				—
Net exposure			(262	)			(25,366	)			(6	)			26				2				68				(34	)

 

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9.	Financial Instruments, Continued

 

Average exchange rates applied for the three-month periods ended March 31, 2015 and 2014 and the exchange rates at March 31, 2015 and December 31, 2014 are as follows:

 

(In won)		Average rate								Reporting date spot rate
		2015				2014				March 31, 2015				December 31, 2014
USD		W	1,100.16				1,069.00				1,105.00				1,099.20
JPY			9.23				10.39				9.20				9.20
CNY			176.18				175.39				177.97				176.81
TWD			34.89				35.32				35.33				34.69
EUR			1,241.51				1,465.08				1,196.77				1,336.52
PLN			295.99				350.33				292.59				312.49
BRL			387.09				452.39				342.17				413.62

 

(ii)

Sensitivity analysis

A weaker won, as indicated below, against the following currencies which comprise the Group’s assets or liabilities denominated in foreign currency as of March 31, 2015 and December 31, 2014, would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Group considers to be reasonably possible as of the end of reporting period. The analysis assumes that all other variables, in particular interest rates, would remain constant. The changes in equity and profit or loss would have been as follows:

 

(In millions of won)		March 31, 2015								December 31, 2014
		Equity				Profit or loss				Equity				Profit or loss
USD (5 percent weakening)		W	127				11,544				(15,674	)			3,829
JPY (5 percent weakening)			(10,480	)			(6,738	)			(9,701	)			(6,169	)
CNY (5 percent weakening)			20,547				(1,244	)			197				(757	)
TWD (5 percent weakening)			89				—				46				—
EUR (5 percent weakening)			12				162				(360	)			1,511
PLN (5 percent weakening)			969				204				981				242
BRL (5 percent weakening)			—				—				(533	)			(533	)

A stronger won against the above currencies as of March 31, 2015 and December 31, 2014 would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.

 

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9.	Financial Instruments, Continued

 

(d)

Interest rate risk

 

(i)

Profile

The interest rate profile of the Group’s interest-bearing financial instruments as of March 31, 2015 and December 31, 2014 is as follows:

 

(In millions of won)
		March 31, 2015				December 31, 2014
Fixed rate instruments
Financial assets		W	2,740,753				2,427,972
Financial liabilities			(2,599,028	)			(2,822,170	)
		W	141,725				(394,198	)
Variable rate instruments
Financial liabilities		W	(1,397,248	)			(1,425,216	)

 

(ii)

Equity and profit or loss sensitivity analysis for variable rate instruments

As of March 31, 2015 and December 31, 2014, a change of 100 basis points in interest rates at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown below for each 12-month period following the reporting dates. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.

 

(In millions of won)		Equity								Profit or loss
		1%p increase				1%p decrease				1%p increase				1%p decrease
March 31, 2015
Variable rate instruments		W	(10,591	)			10,591				(10,591	)			10,591
December 31, 2014
Variable rate instruments		W	(10,803	)			10,803				(10,803	)			10,803

 

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9.	Financial Instruments, Continued

 

(e)

Fair values

 

(i)

Fair values versus carrying amounts

The fair values of financial assets and liabilities, together with the carrying amounts shown in the condensed consolidated interim statements of financial position, are as follows:

 

(In millions of won)
		March 31, 2015								December 31, 2014
		Carrying amounts				Fair values				Carrying amounts				Fair values
Assets carried at fair value
Available-for-sale financial assets		W	3,177				3,177				3,237				3,237
Assets carried at amortized cost
Cash and cash equivalents		W	1,290,750				(	*)			889,839				(	*)
Deposits in banks			1,446,839				(	*)			1,534,909				(	*)
Trade accounts and notes receivable			3,224,951				(	*)			3,444,477				(	*)
Other accounts receivable			102,246				(	*)			119,478				(	*)
Other non-current financial assets			8,160				(	*)			7,859				(	*)
Deposits			19,117				(	*)			19,602				(	*)
Liabilities carried at amortized cost
Secured bank loans		W	655,876				655,876				649,140				649,140
Unsecured bank loans			745,070				745,153				1,003,563				1,003,590
Unsecured bond issues			2,595,330				2,679,841				2,594,683				2,667,092
Trade accounts and notes payable			2,910,738				(	*)			3,391,635				(	*)
Other accounts payable			1,327,604				1,327,595				1,494,095				1,493,869
Other non-current liabilities			12,288				12,904				12,924				13,376

 

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

The basis for determining fair values above by the Group are consistent with those disclosed in the financial statements as of and for the year ended December 31, 2014

 

(ii)

Financial Instruments measured at cost

Available-for-sale financial assets measured at cost as of March 31, 2015 are as follows:

 

(In millions of won)
		March 31, 2015				December 31, 2014
Intellectual Discovery Co., Ltd.		W	2,673				2,673
ARCH Venture Fund VIII, L.P			292				118
Henghao Technology Co., Ltd.			3,372				3,372
		W	6,337				6,163

 

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9.	Financial Instruments, Continued

 

(e)

Fair Values, Continued

 

(iii)

Fair values of financial assets and liabilities

 

i)

Fair value hierarchy

The table below analyzes financial instruments carried at fair value based on the input variables used in the valuation method to measure fair value of assets and liabilities. The different levels have been defined as follows:

 

 

ii)

Financial instruments measured at fair value

Fair value hierarchy classifications of the financial instruments that are measured at fair value as of March 31, 2014 and December 31, 2014 are as follows:

 

(In millions of won)

Level 1

Level 2

Level 3

Total

March 31, 2015

Assets

Available-for-sale financial assets

W

3,177

—

—

3,177

(In millions of won)

Level 1

Level 2

Level 3

Total

December 31, 2014

Assets

Available-for-sale financial assets

W

3,237

—

—

3,237

 

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9.	Financial Instruments, Continued

 

(e)

Fair Values, Continued

 

iii)

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

Fair value hierarchy classifications, valuation technique and inputs for fair value measurements of the financial instruments not measured at fair value but for which the fair value is disclosed as of March 31, 2015 and December 31, 2014 are as follows:

 

(In millions of won)

March 31, 2015

Valuation technique

Input

Classification

Level 1

Level 2

Level 3

Liabilities

Secured bank loan

W

—

—

655,876

Discounted cash flow

Discount rate

Unsecured bank loans

—

—

745,153

Discounted cash flow

Discount rate

Unsecured bond issues

—

—

2,679,841

Discounted cash flow

Discount rate

Other accounts payable

—

—

1,327,595

Discounted cash flow

Discount rate

Other non-current liabilities

—

—

12,904

Discounted cash flow

Discount rate

(In millions of won)

December 31, 2014

Valuation technique

Input

Classification

Level 1

Level 2

Level 3

Liabilities

Secured bank loan

W

—

—

649,140

Discounted cash flow

Discount rate

Unsecured bank loans

—

—

1,003,590

Discounted cash flow

Discount rate

Unsecured bond issues

—

—

2,667,092

Discounted cash flow

Discount rate

Other accounts payable

—

—

1,493,869

Discounted cash flow

Discount rate

Other non-current liabilities

—

—

13,376

Discounted cash flow

Discount rate

The significant interest rates applied for determination of the above fair value at the reporting date are as follows:

 

		March 31, 2015		December 31, 2014
Debentures, loans and others		1.84~2.07%		2.23%~2.60%

 

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9.	Financial Instruments, Continued

 

(f)

Capital management

Management’s policy is to maintain a capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Liabilities to equity ratio, net borrowings to equity ratio and other financial ratios are used by management to achieve an optimal capital structure. Management also monitors the return on capital as well as the level of dividends to ordinary shareholders.

 

(In millions of won)
		March 31, 2015				December 31, 2014
Total liabilities		W	10,279,998				11,183,613
Total equity			12,192,582				11,783,410
Cash and deposits in banks (*1)			2,737,576				2,416,321
Borrowings (including bonds)			3,996,276				4,247,386
Total liabilities to equity ratio			84	%			95	%
Net borrowings to equity ratio (*2)			10	%			16	%

 

(*1)	Cash and deposits in banks consist of cash and cash equivalents and current deposits in banks.

(*2)	Net borrowings to equity ratio is calculated by dividing total borrowings (including bonds) less cash and current deposits in banks by total equity.

 

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10.	Financial Liabilities

 

(a)

Financial liabilities as of March 31, 2015 and December 31, 2014 are as follows:

 

(In millions of won)
		March 31, 2015				December 31, 2014
Current
Short-term borrowings		W	—				223,626
Current portion of long-term debt			1,281,161				744,283
		W	1,281,161				967,909
Non-current
Won denominated borrowings		W	4,087				4,452
Foreign currency denominated borrowings			1,134,948				1,289,837
Bonds			1,576,080				1,985,188
		W	2,715,115				3,279,477

 

(b)

Short-term borrowings as of March 31, 2015 and December 31, 2014 are as follows:

 

(In millions of won, USD and CNY)
Lender		Annual interest rate as of March 31, 2015 (%)		March 31, 2015				December 31, 2014
Korea Development Bank and others		—		W	—				219,839
Industrial and Commercial Bank of China and others		—			—				3,787
Foreign currency equivalent					—			USD	203
				W	—				223,626

 

(c)

Won denominated long-term debt as of March 31, 2015 and December 31, 2014 is as follows:

 

(In millions of won)
Lender		Annual interest rate as of March 31, 2015 (%)		March 31, 2015				December 31, 2014
Woori Bank and others		3-year Korean Treasury Bond rate less 1.75, 2.75		W	6,323				7,336
Less current portion of long-term debt					(2,236	)			(2,884	)
				W	4,087				4,452

 

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10.	Financial Liabilities, Continued

 

(d)

Long-term debt denominated in currencies other than won as of March 31, 2015 and December 31, 2014 is as follows:

 

(In millions of won and USD)
Lender		Annual interest rate as of March 31, 2015 (%)(*)		March 31, 2015				December 31, 2014
China Construction Bank and others		3ML+0.90~2.80		W	1,394,623				1,421,741
Foreign currency equivalent				USD	1,270			USD	1,305
Less current portion of long-term debt					(259,675	)			(131,904	)
				W	1,134,948				1,289,837

 

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

 

(e)

Details of bonds issued and outstanding as of March 31, 2015 and December 31, 2014 are as follows:

 

(In millions of won)
		Maturity		Annual interest rate as of March 31, 2015 (%)		March 31, 2015				December 31, 2014
Won denominated bonds (*)
Publicly issued bonds		June 2015~ October 2019		2.40~5.31		W	2,600,000				2,600,000
Less discount on bonds							(4,670	)			(5,317	)
Less current portion							(1,019,250	)			(609,495	)
						W	1,576,080				1,985,188

 

(*)	Principal of the won denominated bonds is to be repaid at maturity and interests are paid quarterly in arrears.

 

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11.	The Nature of Expenses and Others

The classification of expenses by nature for the three-month periods ended March 31, 2015 and 2014 are as follows:

 

(In millions of won)
		2015				2014
Changes in inventories		W	108,555				(265,603	)
Purchases of raw materials, merchandise and others			3,275,924				2,920,064
Depreciation and amortization			851,137				920,659
Outsourcing fees			327,351				235,971
Labor cost			743,882				741,762
Supplies and others			234,766				230,952
Utility			207,016				184,884
Fees and commissions			135,534				110,768
Shipping costs			58,633				55,940
Advertising			41,161				26,608
Warranty expenses			33,719				21,165
Taxes and dues			22,472				16,345
Travel			15,929				14,639
Others			343,304				316,186
(*)		W	6,399,383				5,530,340

 

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

 

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12.	Selling and Administrative Expenses

Details of selling and administrative expenses for the three-month periods ended March 31, 2015 and 2014 are as follows:

 

(In millions of won)
		2015				2014
Salaries		W	65,281				64,136
Expenses related to defined benefit plans			6,868				9,148
Other employee benefits			19,103				17,629
Shipping costs			50,784				44,894
Fees and commissions			49,687				40,216
Depreciation			26,144				22,525
Taxes and dues			9,512				4,559
Advertising			41,161				26,608
Warranty expenses			33,719				21,165
Rent			5,672				5,304
Insurance			2,807				3,229
Travel			5,623				5,768
Training			2,738				2,025
Others			15,407				12,370
		W	334,506				279,576

 

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13.	Other Non-operating Income and Other Non-operating Expenses

 

(a)

Details of other non-operating income for the three-month periods ended March 31, 2015 and 2014 are as follows:

 

(In millions of won)
		2015				2014
Rental income		W	971				1,935
Foreign currency gain			245,031				167,728
Gain on disposal of property, plant and equipment			6,118				2,765
Reversal of allowance for doubtful accounts for other receivables			791				—
Others			153				9,525
		W	253,064				181,953

 

(b)

Details of other non-operating expenses for the three-month periods ended March 31, 2015 and 2014 are as follows:

 

(In millions of won)
		2015				2014
Other bad debt expense		W	456				288
Foreign currency loss			222,705				190,882
Loss on disposal of property, plant and equipment			8				295
Loss on disposal of intangible assets			11				—
Impairment loss on intangible assets			184				286
Donations			3,208				3,332
Expenses related to legal proceedings or claims and others			117,067				32,722
		W	343,639				227,805

 

14.	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.

 

(a)

Recognized liabilities for defined benefit plans as of March 31, 2015 and December 31, 2014 are as follows:

 

(In millions of won)
		March 31, 2015				December 31, 2014
Present value of partially funded defined benefit obligations		W	1,156,409				1,114,689
Fair value of plan assets			(783,437	)			(790,509	)
		W	372,972				324,180

 

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14.	Employee Benefits, Continued

 

(b)

Expenses recognized in profit or loss for the three-month periods ended March 31, 2015 and 2014 are as follows:

 

(In millions of won)
		2015				2014
Current service cost		W	46,949				39,137
Past service cost			—				21,990
Net interest cost			2,816				3,778
		W	49,765				64,905

 

(c)

Plan assets as of March 31, 2015 and December 31, 2014 are as follows:

 

(In millions of won)
		March 31, 2015				December 31, 2014
Guaranteed deposits in banks		W	783,437				790,509

As of March 31, 2015, the Group maintains the plan assets primarily with Mirae Asset Securities Co., Ltd. and Shinhan Bank.

 

(d)

Remeasurements of the net defined benefit liabilities (assets) included in other comprehensive income (loss) for the three-month periods ended March 31, 2015 and 2014 are as follows:

 

(In millions of won)		2015				2014
Remeasurements of the net defined benefit liabilities (assets)		W	(1,954	)			(2,719	)
Income tax			329				704
Remeasurements of the net defined benefit liabilities (assets), net of income tax		W	(1,625	)			(2,015	)

 

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15.	Finance Income and Finance Costs

 

(a)

Finance income and costs recognized in profit and loss for the three-month periods ended March 31, 2015 and 2014 are as follows:

 

(In millions of won)
		2015				2014
Finance income
Interest income		W	13,856				14,036
Foreign currency gain			14,459				14,639
Gain on disposal of available-for-sale financial assets			—				5
		W	28,315				28,680
Finance costs
Interest expense		W	30,212				27,252
Foreign currency loss			24,529				19,398
Loss on sale of trade accounts and notes receivable			1,402				3,271
Loss on early redemption of debt			—				6,986
Loss on disposal of investments in equity accounted investees			—				156
		W	56,143				57,063

 

(b)

Finance income and costs recognized in other comprehensive income for the three-month periods ended March 31, 2015 and 2014 are as follows:

 

(In millions of won)
		2015				2014
Net change in fair value of available-for-sale financial assets		W	881				830
Tax effect			(4	)			119
Finance income recognized in other comprehensive income after tax		W	877				949

 

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16.	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 2,153 million (W2,379,595 million) in connection with the Controlling Company’s export sales transactions with its subsidiaries. As of March 31, 2015, no short-term borrowings were outstanding 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.

The Controlling Company and oversea subsidiaries entered into agreements with financial institutions for accounts receivables sales negotiating facilities. The respective maximum amount of accounts receivables sales and the amount of sold accounts receivables before maturity by contract are as follows:

 

(In millions of USD and KRW)
Classification		Financial institutions		Maximum								Not yet due
				Contractual amount				KRW equivalent				Amount				KRW equivalent
Controlling Company		Shinhan Bank		KRW	100,000				100,000				—				—
Subsidiaries
LG Display Singapore Pte. Ltd.		Standard Chartered Bank		USD	300				331,500			USD	250				275,883
LG Display Taiwan Co., Ltd.		BNP Paribas		USD	105				116,025			USD	1				545
		Hongkong & Shanghai Banking Corp.		USD	150				165,750			USD	72				79,741
		Sumitomo Mitsui Banking Corporation		USD	200				221,000			USD	77				85,465
LG Display Shanghai Co., Ltd.		BNP Paribas		USD	125				138,125				—				—
		Hongkong & Shanghai Banking Corp.		USD	55				60,775				—				—
LG Display Germany GmbH		Citibank		USD	200				221,000				—				—
		BNP Paribas		USD	192				212,160				—				—
LG Display America, Inc.		Hongkong & Shanghai Banking Corp.		USD	800				884,000			USD	475				525,207
		Sumitomo Mitsui Banking Corporation		USD	250				276,250			USD	25				27,626
LG Display Japan Co., Ltd.		Sumitomo Mitsui Banking Corporation		USD	90				99,450				—				—
				USD	2,467				2,726,035			USD	900				994,467
				USD	2,467							USD	900
				KRW	100,000				2,826,035				—				994,467

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

 

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16.	Commitments, Continued

 

Letters of credit

As of March 31, 2015, the Controlling Company has agreements in relation to the opening of letters of credit up to USD 15 million (W16,575 million) with Korea Exchange Bank, USD 15 million (W16,75 million) with China Construction Bank, USD 80 million (W88,400 million) with Bank of China, USD 60 million (W66,300 million) with Sumitomo Mitsui Banking Corporation and USD 30 million (W33,150 million) with Hana Bank.

Payment guarantees

The Controlling Company obtained payment guarantees from Korea Exchange Bank for borrowings amounting to USD 200 million (W221,000 million) and USD 8.5 million (W9,393 million) from Shinhan Bank for value added tax payments in Poland.

LG Display Japan Co., Ltd. and other subsidiaries are provided with payment guarantees from the Bank of Tokyo-Mitsubishi UFJ and other various banks amounting to JPY 700 million (W6,442 million), CNY 4,220 million (W751,033million), TWD 14 million (W495 million), EUR 0.5 million (W598 million) and PLN 0.2 million (W59 million), respectively, for their local tax payments.

Credit facility

LG Display Japan Co., Ltd. and other subsidiaries have entered into short-term credit facility agreements of up to USD 60 million (W66,300 million) and JPY 8,000 million (W73,621 million) in total, with Mizuho Corporate Bank and other various banks.

License agreements

As of March 31, 2015, in relation to its TFT-LCD business, the Group has technical license agreements with Hitachi Display, Ltd. and others and has a trademark license agreement with LG Corp.

Long-term supply agreement

In connection with long-term supply agreements, as of March 31, 2015 the Controlling Company’s balance of advances received from a customer amount to USD 180 million (W198,900 million) in aggregate. The advances received will be offset against outstanding accounts receivable balances after a given period of time, as well as those arising from the supply of products thereafter. The Controlling Company received a payment guarantee amounting to USD 140 million (W154,700 million) from the Industrial Bank of Korea relating to advances received.

Pledged Assets

Regarding the secured bank loan amounting to USD 600 million (W663,000 million) from China Construction Bank, as of March 31, 2015, the Group provided its property, plant and equipment and others with carrying amount of W1,372,616 million as pledged assets.

 

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17.	Legal proceedings

Delaware Display Group LLC and Innovative Display Technologies LLC

In December 2013, Delaware Display Group LLC and Innovative Display Technologies LLC filed a patent infringement case against the Controlling Company and LG Display America, Inc. in the United States District Court for the District of Delaware. The Controlling Company does not have a present obligation for this matter and has not recognized any provision at March 31, 2015. It is not possible to reasonably estimate an amount of potential loss, if any, because the plaintiffs have not provided any information regarding damages.

Surpass Tech Innovation LLC

In March 2014, Surpass Tech Innovation LLC filed a complaint in the United States District Court for the District of Delaware against the Controlling Company and LG Display America, Inc. for alleged patent infringement. In November 2014, the case has been stayed by the United States District Court for the District of Delaware pending Inter Partes Review. The Controlling Company does not have a present obligation for this matter and has not recognized any provision at March 31, 2015. It is not possible to reasonably estimate an amount of potential loss, if any, because the plaintiffs have not provided any information regarding damages.

Anti-trust litigations

Certain individual plaintiffs filed complaints in various state or federal courts in the United States alleging violation of the respective antitrust laws and related laws by various LCD panel manufacturers. As of March 31, 2015, the Controlling Company is currently defending against Direct Action Plaintiffs including Motorola Mobility, Inc., Electrograph Technologies Corp. and its affiliates, TracFone Wireless Inc., Costco Wholesale Corp., Office Depot, Inc., Interbond Corp. of America (BrandsMart), P.C. Richard & Son Long Island Corp., MARTA Cooperative of America, Inc., ABC Appliance (ABC Warehouse), Schultze Agency Services, LLC (Tweeter), AASI Creditor Liquidating Trust for All American Semiconductor Inc., Tech Data Corp. and its affiliates, CompuCom Systems, Inc. and NECO Alliance LLC. The timing and amounts of outflows are uncertain and the outcomes depend upon the various court proceedings.

In Canada, class action complaints alleging violations of Canada competition laws were filed in 2007 against the Controlling Company and other TFT-LCD manufacturers in Ontario, British Columbia and Quebec. The Ontario Superior Court of Justice certified the class action complaints filed by the direct and indirect purchasers in May 2011. The Controlling Company is pursuing an appeal of the class certification decision. The actions in Quebec and British Columbia are in abeyance. The timing and amount of outflows are uncertain and the outcome depends upon the court proceedings.

During the three-month period ended March 31, 2015, based on the developments of the above pending proceedings, the Group updated its estimates on the amount of potential outflow of resources which resulted in an increase of provision-current for pending proceedings, in the amount of W111,172 million which is offset by a decrease of W41,769 million upon utilization of the provision for proceedings closed. While the Group continues its vigorous defense of the various pending proceedings described above, management’s assessment of the facts and circumstances could change based upon new information, intervening events and the final outcome of the cases. Consequently, the actual results could be materially different from management’s current estimates.

 

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18.	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, 2015 and December 31, 2014, the number of issued common shares is 357,815,700. There have been no changes in the capital stock from January 1, 2014 to March 31, 2015.

 

(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.

Fair value reserve

The fair value reserve comprises the cumulative net change in the fair value of available-for-sale financial assets until the investments are derecognized or impaired.

 

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19.	Related Parties

 

(a)

Related parties

Related parties as of March 31, 2015 are as follows:

 

Classification		Description
Associates and joint ventures(*)		Suzhou Raken Technology Co., Ltd. and others
Subsidiaries of Associates		ADP System Co., Ltd. and others
Entity that has significant influence over the Controlling Company		LG Electronics Inc.
Subsidiaries of the entity that has significant influence over the Controlling Company		Subsidiaries of LG Electronics Inc.

 

(*)	Details of associates and joint ventures are described in note 6.

Related parties other than associates and joint ventures that have transactions such as sales or balance of trade accounts and notes receivable and payable with the Group as of March 31, 2015 and December 31 2014 are as follows:

 

Classification				March 31, 2015				December 31, 2014
Subsidiaries of Associates				ADP System Co., Ltd.				ADP System Co., Ltd.
				Shinbo Electric Co., Ltd.				Shinbo Electric Co., Ltd.
				AVATEC Electronics Yantai Co., Ltd				AVATEC Electronics Yantai Co., Ltd.
				New Optics USA,Inc				-
Entity that has significant influence over the Controlling Company				LG Electronics Inc.				LG Electronics Inc.
Subsidiaries of the entity that has significant influence over the Controlling Company				Hi Business Logistics Co., Ltd.				Hi Business Logistics Co., Ltd.
				Hiplaza Co., Ltd.				Hiplaza Co., Ltd.
				Hi Entech Co., Ltd.				Hi Entech Co., Ltd.
				LG Hitachi Water Solutions Co., Ltd.				LG Hitachi Water Solutions Co., Ltd.
				LG Innotek Co., Ltd.				LG Innotek Co., Ltd.
				Hanuri Co., Ltd.				Hanuri Co., Ltd.
				Qingdao LG Inspur Digital Communication Co., Ltd.				Qingdao LG Inspur Digital Communication Co., Ltd.
				-				LG Innotek Poland Sp. z o.o.
				-				LG Innotek (Guangzhou) Co., Ltd.
				-				LG Innotek Huizhou Co., Ltd
				-				LG Innotek USA, Inc.
				LG Electronics Wroclaw Sp. z o.o.				LG Electronics Wroclaw Sp. z o.o.
				LG Electronics Vietnam Co., Ltd.				LG Electronics Vietnam Co., Ltd.
				LG Electronics Reynosa, S.A. DE C.V.				LG Electronics Reynosa, S.A. DE C.V.
				LG Electronics Thailand Co., Ltd.				LG Electronics Thailand Co., Ltd.

 

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19.	Related Parties, Continued

 

Classification		March 31, 2015		December 31, 2014
		LG Electronics Taiwan Taipei Co., Ltd.		LG Electronics Taiwan Taipei Co., Ltd.
		LG Electronics Shenyang Inc.		LG Electronics Shenyang Inc.
		LG Electronics RUS, LLC		LG Electronics RUS, LLC
		LG Electronics Nanjing Display Co., Ltd.		LG Electronics Nanjing Display Co., Ltd.
		LG Electronics Mlawa Sp. z o.o.		LG Electronics Mlawa Sp. z o.o.
		LG Electronics Mexicali, S.A. DE C.V.		LG Electronics Mexicali, S.A. DE C.V.
		LG Electronics India Pvt. Ltd.		LG Electronics India Pvt. Ltd.
		LG Electronics do Brasil Ltda.		LG Electronics do Brasil Ltda.
		LG Electronics Air-Conditioning (Shandong) Co., Ltd.		LG Electronics Air-Conditioning (Shandong) Co., Ltd.
		LG Electronics (Kunshan) Computer Co., Ltd.		LG Electronics (Kunshan) Computer Co., Ltd.
		-		LG Electronics (Hangzhou) Co., Ltd.
		-		LG Electronics Polska Sp. z o.o.
		-		LG Electronics Philippines Inc.
		LG Electronics Singapore PTE LTD.		LG Electronics Singapore PTE LTD.
		Inspur LG Digital Mobile Communications Co., Ltd.		Inspur LG Digital Mobile Communications Co., Ltd.
		Hi Logistics Europe B.V.		Hi Logistics Europe B.V.
		Hi Logistics (China) Co., Ltd.		Hi Logistics (China) Co., Ltd.
		-		LG Electronics Alabama Inc.
		LG Electronics Japan, Inc.		LG Electronics Japan, Inc.
		LG Electronics U.S.A., Inc.		LG Electronics U.S.A., Inc.
		LG Electronics Vietnam Haiphong Co., Ltd.		LG Electronics Vietnam Haiphong Co., Ltd.
		P.T. LG Electronics Indonesia		P.T. LG Electronics Indonesia
		Hientech (Tianjin) Co., Ltd.		Hientech (Tianjin) Co., Ltd.
		Hi M Solutek		Hi M Solutek

 

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19.	Related Parties, Continued

 

(b)

Key management personnel compensation

Compensation costs of key management for the three-month periods ended March 31, 2015 and 2014 are as follows:

 

(In millions of won)
		2015				2014
Short-term benefits		W	758				445
Expenses related to the defined benefit plan			71				69
		W	829				514

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

 

(c)

Significant transactions such as sales of goods and purchases of raw material and outsourcing service and others, which occurred in the normal course of business with related parties for the three-month periods ended March 31, 2015 and 2014 are as follows:

 

(In millions of won)		2015
										Purchase and others
		Sales and others				Dividend income				Purchase of raw material and others				Acquisition of property, plant and equipment				Outsourcing fees				Other costs
Joint Venture
Suzhou Raken Technology Co., Ltd.		W	39,089				—				—				—				—				—
Global OLED Technology LLC			—				—				—				—				—				902
		W	39,089				—				—				—				—				902

 

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19.	Related Parties, Continued

 

(In millions of won)		2015
										Purchase and others
		Sales and others				Dividend income				Purchase of raw material and others				Acquisition of property, plant and equipment				Outsourcing fees				Other costs
Associates and their subsidiaries
New Optics Ltd.		W	—				—				20,905				—				2,679				103
New Optics USA, Inc			—				—				—				—				2,967				—
LIG INVENIA Co., Ltd. (LIG ADP Co., Ltd)			—				—				6				7,071				—				—
TLI Inc.			—				101				18,573				—				—				227
AVACO Co., Ltd.			—				128				337				26,143				—				1,159
AVATEC Co., Ltd.			—				530				130				—				13,934				20
AVATEC Electronics Yantai Co., Ltd.			—				—				—				—				—				627
Paju Electric Glass Co., Ltd.			—				24,058				107,521				—				—				267
Shinbo Electric Co., Ltd.			99,718				—				146,910				—				28,061				40
Narenanotech Corporation			—				—				169				3,604				—				266
Glonix Co., Ltd			—				—				3,399				—				—				23
ADP System Co., Ltd.			—				—				331				1,589				—				170
YAS Co., Ltd.			—				—				45				7,999				—				140
		W	99,718				24,817				298,326				46,406				47,641				3,042
Entity that has significant influence over the Controlling Company
LG Electronics Inc.		W	542,051				—				19,473				57,228				—				14,266
Subsidiaries of the entity that has significant influence over the Controlling Company
LG Electronics India Pvt. Ltd.		W	42,440				—				—				—				—				—

 

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19.	Related Parties, Continued

 

(In millions of won)		2015
										Purchase and others
		Sales and others				Dividend income				Purchase of raw material and others				Acquisition of property, plant and equipment				Outsourcing fees				Other costs
LG Electronics Vietnam Co., Ltd.		W	22,595				—				—				—				—				—
LG Electronics Thailand Co., Ltd.			12,902				—				—				—				—				—
LG Electronics Nanjing Display Co., Ltd.			66,986				—				—				—				—				318
LG Electronics RUS, LLC			70,381				—				—				—				—				—
LG Electronics do Brasil Ltda.			148,439				—				—				—				—				175
LG Electronics (Kunshan) Computer Co., Ltd			8,520				—				—				—				—				—
LG Innotek Co., Ltd.			1,238				—				89,742				—				—				5,795
Qingdao LG Inspur Digital Communication Co., Ltd.			82,100				—				—				—				—				—
Inspur LG Digital Mobile Communications Co., Ltd.			31,528				—				—				—				—				—
LG Electronics Mexicali, S.A. DE C.V.			64,596				—				—				—				—				—
LG Electronics Mlawa Sp. z o.o.			180,422				—				—				—				—				—
LG Electronics Shenyang Inc.			29,169				—				—				—				—				—
LG Electronics Taiwan Taipei Co., Ltd.			5,896				—				—				—				—				—
LG Electronics Wroclaw Sp. z o.o.			165,624				—				—				—				—				29
LG Hitachi Water Solutions Co., Ltd.			—				—				—				6,047				—				—
LG Electronics Reynosa, S.A. DE C.V.			216,705				—				—				—				—				—
HiEntech Co., Ltd.			—				—				—				—				—				6,782
Hi Business Logistics Co., Ltd.			10				—				—				—				—				8,201
Others			—				—				1				—				1				3,011
		W	1,149,551				—				89,743				6,047				1				24,311
		W	1,830,409				24,817				407,542				109,681				47,642				42,521

 

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19.	Related Parties, Continued

 

(In millions of won)		2014
										Purchase and others
		Sales and others				Dividend income				Purchase of raw material and others				Acquisition of property, plant and equipment				Outsourcing fees				Other costs
Joint Venture
Suzhou Raken Technology Co., Ltd.		W	54,820				—				—				—				28,420				—
Associates and their subsidiaries
New Optics Ltd.		W	1,263				—				11,673				—				2,406				651
LIG INVENIA Co., Ltd. (LIG ADP Co., Ltd.)			—				—				273				5,623				—				7
TLI Inc.			—				—				15,010				—				—				627
AVACO Co., Ltd.			41				—				270				70,592				—				344
AVATEC Co., Ltd.			—				—				14				—				14,160				43
AVATEC Electronics Yantai Co., Ltd.			—				—				—				—				—				1,468
Paju Electric Glass Co., Ltd.			—				—				178,867				—				—				1,077
Shinbo Electric Co., Ltd.			3,679				—				172,137				—				24,963				37
Narenanotech Corporation			—				—				46				912				—				757
Glonix Co., Ltd			—				—				4,402				—				—				114
ADP System Co., Ltd.			—				—				180				208				—				29
YAS Co., Ltd.			—				—				404				2,009				—				28
		W	4,983				—				383,276				79,344				41,529				5,182
Entity that has significant influence over the Controlling Company
LG Electronics Inc.		W	541,287				—				6,830				38,843				—				5,766
Subsidiaries of the entity that has significant influence over the Controlling Company
LG Electronics India Pvt. Ltd.		W	18,714				—				—				—				—				—

 

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19.	Related Parties, Continued

 

(In millions of won)		2014
										Purchase and others
		Sales and others				Dividend income				Purchase of raw material and others				Acquisition of property, plant and equipment				Outsourcing fees				Other costs
LG Electronics Vietnam Co., Ltd.		W	9,670				—				—				—				—				—
LG Electronics Thailand Co., Ltd.			12,639				—				—				—				—				—
LG Electronics Nanjing Display Co., Ltd.			126,877				—				—				—				—				—
LG Electronics RUS, LLC			99,102				—				—				—				—				—
LG Electronics do Brasil Ltda.			132,378				—				—				—				—				73
Hi Business Logistics Co., Ltd.			10				—				—				—				—				7,339
LG Innotek Co., Ltd.			733				—				115,237				—				—				2,496
LG Hitachi Water Solutions Co., Ltd.			—				—				—				10,301				—				—
Qingdao LG Inspur Digital Communication Co., Ltd.			31,843				—				—				—				—				—
Inspur LG Digital Mobile Communications Co., Ltd.			29,872				—				—				—				—				—
LG Electronics Mexicali, S.A. DE C.V.			47,963				—				—				—				—				—
LG Electronics Mlawa Sp. z o.o.			93,395				—				—				—				—				—
LG Electronics Shenyang Inc.			23,110				—				—				—				—				—
LG Electronics Taiwan Taipei Co., Ltd.			5,984				—				—				—				—				—
LG Electronics Reynosa, S.A. DE C.V.			196,582				—				—				—				—				86
LG Electronics Wroclaw Sp. z o.o.			219,195				—				—				—				—				15
HiEntech Co., Ltd.			—				—				—				—				—				6,131
Others			111				—				804				—				—				1,416
		W	1,048,178				—				116,041				10,301				—				17,556
		W	1,649,268				—				506,147				128,488				69,949				28,504

 

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19.	Related Parties, Continued

 

(d)

Trade accounts and notes receivable and payable as of March 31, 2015 and December 31, 2014 are as follows:

 

(In millions of won)
		Trade accounts and notes receivable and others								Trade accounts and notes payable and others
		March 31, 2015				December 31, 2014				March 31, 2015				December 31, 2014
Joint Venture
Suzhou Raken Technology Co., Ltd.		W	29,741				27,750				—				—
Global OLED Technology LLC			—				—				227				505
		W	29,741				27,750				227				505
Associates
New Optics Ltd.		W	—				440				22,477				14,785
New Optics USA,Inc			—				—				2,713				—
LIG INVENIA Co., Ltd. (LIG ADP Co., Ltd.)			—				—				8,195				2,471
TLI Inc.			101				—				18,833				14,086
AVACO Co., Ltd.			128				—				32,354				14,236
AVATEC Co., Ltd.			530				—				5,076				10,645
AVATEC Electronics Yantai Co., Ltd.			—				—				299				247
Paju Electric Glass Co., Ltd.			4,038				—				70,386				82,792
Shinbo Electric Co., Ltd.			80,110				58,207				103,338				113,660
Narenanotech Corporation			—				—				4,695				1,532
Glonix Co., Ltd.			—				—				693				1,752
ADP System Co., Ltd.			—				—				2,423				1,941
YAS Co., Ltd.			—				—				10,196				7,300
		W	84,907				58,647				281,678				265,447

 

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19.	Related Parties, Continued

 

(In millions of won)
		Trade accounts and notes receivable and others								Trade accounts and notes payable and others
		March 31, 2015				December 31, 2014				March 31, 2015				December 31, 2014
Entity that has significant influence over the Controlling Company
LG Electronics Inc.		W	396,970				385,403				153,736				114,291
Subsidiaries of the entity that has significant influence over the Controlling Company
LG Electronics India Pvt. Ltd.		W	24,879				13,825				—				—
LG Electronics do Brasil Ltda.			87,249				12,011				—				97
LG Electronics Thailand Co., Ltd			7,218				17,792				—				—
LG Electronics RUS, LLC			24,552				71,912				—				—
LG Innotek Co., Ltd.			186				4				107,283				88,661
Qingdao LG Inspur Digital Communication Co., Ltd.			82,686				68,754				—				—
Inspur LG Digital Mobile Communications Co., Ltd.			32,753				44,872				—				—
LG Electronics Mexicali, S.A. DE C.V.			24,576				5,389				—				—
LG Electronics Mlawa Sp. z o.o.			121,668				68,397				—				—
LG Electronics Nanjing Display Co., Ltd.			58,195				23,342				88				575
LG Electronics Shenyang Inc.			29,625				15,659				—				—
LG Electronics Reynosa, S.A. DE C.V.			133,426				34,668				—				94
LG Electronics Wroclaw Sp. z o.o.			113,307				13,742				10				—
LG Hitachi Water Solutions Co., Ltd.			—				—				9,000				7,079
HiEntech Co., Ltd.			—				—				5,303				5,954
LG Electronics Vietnam Co., Ltd.			13,469				—				—				—
LG Electronics (Kunshan) Computer Co., Ltd			6,235				—				—				—
Others			2,202				23,124				5,068				5,540
		W	762,226				413,491				126,752				108,000
		W	1,273,844				885,291				562,393				488,243

 

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20.	Geographic and Other Information

The following is a summary of sales by region based on the location of the customers for the three-month periods ended March 31, 2015 and 2014.

 

(a)

Revenue by geography

 

(In millions of won)
		Revenue
Region		2015				2014
Domestic		W	725,019				644,697
Foreign
China			4,420,019				3,036,726
Asia (excluding China)			668,921				736,782
United States			545,382				484,261
Europe (excluding Poland) 685,232			288,727				358,515
Poland			374,281				326,717
Sub total		W	6,297,330				4,943,001
Total		W	7,022,349				5,587,698

Sales to Company A and Company B constituted 30% and 28% of total revenue, respectively, for the three-month period ended March 31, 2015 (the three-month period ended March 31, 2014: 23% and 31%). The Group’s top ten end-brand customers together accounted for 83% of sales for the three-month period ended March 31, 2015 (the three-month period ended March 31, 2014: 80%).

 

(b)

Non-current assets by geography

 

(In millions of won)
		March 31, 2015								December 31, 2014
Region		Property, plant and equipment				Intangible assets				Property, plant and equipment				Intangible assets
Domestic		W	8,297,381				518,789				8,699,862				548,086
Foreign
China			2,572,703				21,007				2,588,511				20,954
Others			104,327				7,654				114,493				7,630
Sub total			2,677,030				28,661				2,703,004				28,584
Total		W	10,974,411				547,450				11,402,866				576,670

 

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20.	Geographic and Other Information, Continued

 

(c)

Revenue by product

 

(millions of won)
		Revenue
Product		2015				2014
Panels for:
Televisions		W	2,894,533				2,283,596
Desktop monitors			1,203,201				1,122,805
Tablet products			558,373				584,314
Notebook computers			635,539				677,510
Mobile and others			1,730,703				919,473
		W	7,022,349				5,587,698

 

21.	Income Taxes

 

(a)

Details of income tax expense for the three-month periods ended March 31, 2015 and 2014 are as follows:

 

(In millions of won)
		2015				2014
Current tax expense		W	118,802				29,227
Deferred tax expense			29,211				81,339
Income tax expense		W	148,013				110,566

 

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21.	Income Taxes, Continued

 

(b)

Deferred Tax Assets and Liabilities

Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the deferred tax assets at the reporting date will be realized with the Group’s estimated future taxable income.

Deferred tax assets and liabilities as of March 31, 2015 and December 31, 2014 are attributable to the following:

 

(In millions of won)		Assets								Liabilities								Total
		March, 31, 2015				December, 31, 2014				March, 31, 2015				December, 31, 2014				March, 31, 2015				December, 31, 2014
Other accounts receivable, net		W	—				—				(2,813	)			(3,440	)			(2,813	)			(3,440	)
Inventories, net			26,577				46,377				—				—				26,577				46,377
Available-for-sale financial assets			—				—				(92	)			(88	)			(92	)			(88	)
Defined benefit liabilities, net			108,889				112,213				—				—				108,889				112,213
Investments in equity accounted investees and subsidiaries			30,667				29,839				—				—				30,667				29,839
Accrued expenses			170,600				177,163				—				—				170,600				177,163
Property, plant and equipment			252,001				236,848				—				—				252,001				236,848
Intangible assets			1,603				1,423				—				—				1,603				1,423
Provisions			12,956				12,710				—				—				12,956				12,710
Gain or loss on foreign currency translation, net			165				169				(1	)			(1	)			164				168
Others			26,526				26,212				—				(268	)			26,526				25,944
Tax credit carryforwards			380,326				397,105				—				—				380,326				397,105
Deferred tax assets (liabilities)		W	1,010,310				1,040,059				(2,906	)			(3,797	)			1,007,404				1,036,262

Statutory tax rate applicable to the Controlling Company is 24.2% for the three-month period ended March 31, 2015.

 

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22.	Earnings (Loss) Per Share

 

(a)

Basic earnings (loss) per share for the three-month periods ended March 31, 2015 and 2014 are as follows:

 

(In won and No. of shares)		2015				2014
Profit (loss) attributable to owners of the Controlling Company		W	458,224,102,494				(79,951,218,508	)
Weighted-average number of common stocks outstanding			357,815,700				357,815,700
Earnings (loss) per share		W	1,281				(223	)

There were no events or transactions that resulted in changes in the number of common stocks used for calculating earnings (loss) per share from January 1, 2014 to March 31, 2015.

 

(b)

Diluted earnings (loss) per share for the three-month period ended March 31, 2015 is not calculated since there was no potential common stock. In addition, there is no effect of dilutive potential ordinary shares due to the Controlling Company’s net loss for the three-month period ended March 31, 2014.

 

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LG DISPLAY CO., LTD.

Condensed Separate Interim Financial Statements

(Unaudited)

March 31, 2015 and 2014

(With Independent Auditors’ Review Report Thereon)

 

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		Page
Independent Auditors’ Review Report			78
Condensed Separate Interim Statements of Financial Position			80
Condensed Separate Interim Statements of Comprehensive Income (Loss)			81
Condensed Separate Interim Statements of Changes in Equity			82
Condensed Separate Interim Statements of Cash Flows			83
Notes to the Condensed Separate Interim Financial Statements			85

 

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Independent Auditors’ Review Report

Based on a report originally issued in Korean

To the Board of Directors and Shareholders

LG Display Co., Ltd.:

Reviewed Financial Statements

We have reviewed the accompanying condensed separate interim financial statements of LG Display Co., Ltd. (the “Company”) which comprise the condensed separate interim statement of financial position as of March 31, 2015, the condensed separate interim statements of comprehensive income (loss), changes in equity and cash flows for the three-month periods ended March 31, 2015 and 2014, and notes, comprising a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Condensed Separate Interim Financial Statements

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

Auditors’ Responsibility

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

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

Conclusion

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

Emphasis of Matter

As discussed in note 17 to the separate financial statements, the Company has been or is named as defendants in a number of individual lawsuits and class actions in the United States and Canada, respectively, in connection with alleged antitrust violations concerning the sale of LCD panels. The Company estimated and recognized losses related to these alleged violations. However, actual losses are subject to change in the future based on new developments in each matter, or changes in circumstances, which could be materially different from those estimated and recognized by the Company.

 

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Other Matters

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

We audited the separate statement of financial position as of December 31, 2014, and the related separate statements of comprehensive income, changes in equity and cash flows for the year then ended, which are not accompanying this review report, in accordance with Korean Standards on Auditing, and our report thereon, dated February 17, 2015, expressed an unqualified opinion. The accompanying condensed separate statement of financial position of the Company as of December 31, 2014, presented for comparative purposes, is not different from that audited by us from which it was derived in all material respects.

/s/ KPMG Samjong Accounting Corp.

Seoul, Korea

April 29, 2015

This report is effective as of April 29, 2015, the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying condensed separate interim financial statements and notes thereto. Accordingly, the readers of the review report should understand that the above review report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

 

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LG DISPLAY CO., LTD.

Condensed Separate Interim Statements of Financial Position

(Unaudited)

As of March 31, 2015 and December 31, 2014

 

(In millions of won)		Note		March 31, 2015				December 31, 2014
Assets
Cash and cash equivalents		9		W	346,220				100,558
Deposits in banks		9			1,335,970				1,525,609
Trade accounts and notes receivable, net		9, 16, 19			3,569,648				4,015,904
Other accounts receivable, net		9			91,901				396,651
Other current financial assets		9			2,954				2,569
Inventories		5			2,087,793				2,046,675
Other current assets					254,630				203,122
Total current assets					7,689,116				8,291,088
Deposits in banks		9			13				8,427
Investments		6			2,511,762				2,301,881
Other non-current financial assets		9			26,938				27,609
Property, plant and equipment, net		7			8,297,140				8,700,301
Intangible assets, net		8			518,782				548,078
Deferred tax assets		20			847,168				883,965
Other non-current assets					293,657				250,488
Total non-current assets					12,495,460				12,720,749
Total assets				W	20,184,576				21,011,837
Liabilities
Trade accounts and notes payable		9, 19		W	3,332,164				3,989,505
Current financial liabilities		9, 10			1,281,161				964,122
Other accounts payable		9, 19			1,035,501				1,057,485
Accrued expenses					635,408				708,664
Income tax payable					103,952				142,760
Provisions		17			262,298				193,429
Advances received		16			215,168				463,740
Other current liabilities					228,600				30,625
Total current liabilities					7,094,252				7,550,330
Non-current financial liabilities		9, 10			1,911,667				2,484,280
Non-current provisions					9,567				8,014
Defined benefit liabilities, net		14			372,499				323,710
Other non-current liabilities					17,670				21,428
Total non-current liabilities					2,311,403				2,837,432
Total liabilities					9,405,655				10,387,762
Equity
Share capital		18			1,789,079				1,789,079
Share premium					2,251,113				2,251,113
Reserves		18			288				276
Retained earnings					6,738,441				6,583,607
Total equity					10,778,921				10,624,075
Total liabilities and equity				W	20,184,576				21,011,837

See accompanying notes to the condensed separate interim financial statements.

 

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LG DISPLAY CO., LTD.

Condensed Separate Interim Statements of Comprehensive Income (Loss)

(Unaudited)

For the three-month periods ended March 31, 2015 and 2014

 

(In millions of won, except earnings (loss) per share)		Note		2015				2014
Revenue		19		W	6,349,476				5,534,134
Cost of sales		5, 11, 19			(5,296,994	)			(5,059,797	)
Gross profit					1,052,482				474,337
Selling expenses		12			(134,389	)			(94,468	)
Administrative expenses		12			(110,617	)			(93,240	)
Research and development expenses					(280,811	)			(288,316	)
Operating profit (loss)					526,665				(1,687	)
Finance income		15			38,542				15,115
Finance costs		15			(30,490	)			(48,992	)
Other non-operating income		13			173,975				133,943
Other non-operating expenses		13			(272,245	)			(172,066	)
Profit (loss) before income tax					436,447				(73,687	)
Income tax expense		20			(101,675	)			(75,305	)
Profit (loss) for the period					334,772				(148,992	)
Other comprehensive income (loss)
Items that will never be reclassified to profit or loss
Remeasurements of the net defined benefit liabilities		14			(1,359	)			(2,910	)
Related income tax					329				704
					(1,030	)			(2,206	)
Items that are or may be reclassified to profit or loss
Net change in fair value of available-for-sale financial assets		15			16				(494	)
Related income tax					(4	)			119
					12				(375	)
Other comprehensive income (loss) for the period, net of income tax					(1,018	)			(2,581	)
Total comprehensive income (loss) for the period				W	333,754				(151,573	)
Earnings (loss) per share (In won)
Basic earnings (loss) per share		21		W	936				(416	)
Diluted earnings (loss) per share		21		W	936				(416	)

See accompanying notes to the condensed separate interim financial statements.

 

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LG DISPLAY CO., LTD.

Condensed Separate Interim Statements of Changes in Equity

(Unaudited)

For the three-month periods ended March 31, 2015 and 2014

 

		Share				Share								Retained				Total
(In millions of won)		capital				premium				Reserves				earnings				equity
Balances at January 1, 2014		W	1,789,079				2,251,113				(305	)			5,722,538				9,762,425
Total comprehensive income (loss) for the period
Loss for the period			—				—				—				(148,992	)			(148,992	)
Other comprehensive income (loss)
Net change in fair value of available-for-sale financial assets, net of tax			—				—				(375	)			—				(375	)
Remeasurements of the net defined benefit liabilities, net of tax			—				—				—				(2,206	)			(2,206	)
Total other comprehensive income (loss)			—				—				(375	)			(2,206	)			(2,581	)
Total comprehensive income (loss) for the period		W	—				—				(375	)			(151,198	)			(151,573	)
Transaction with owners, recognized directly in equity			—				—				—				—				—
Balances at March 31, 2014		W	1,789,079				2,251,113				(680	)			5,571,340				9,610,852
Balances at January 1, 2015		W	1,789,079				2,251,113				276				6,583,607				10,624,075
Total comprehensive income (loss) for the period
Profit for the period			—				—				—				334,772				334,772
Other comprehensive income (loss)
Net change in fair value of available-for-sale financial assets, net of tax			—				—				12				—				12
Remeasurements of the net defined benefit liabilities, net of tax			—				—				—				(1,030	)			(1,030	)
Total other comprehensive income (loss)			—				—				12				(1,030	)			(1,018	)
Total comprehensive income (loss) for the period		W	—				—				12				333,742				333,754
Transaction with owners, recognized directly in equity
Dividends to equity holders			—				—				—				(178,908	)			(178,908	)
Balances at March 31, 2015		W	1,789,079				2,251,113				288				6,738,441				10,778,921

See accompanying notes to the condensed separate interim financial statements.

 

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LG DISPLAY CO., LTD.

Condensed Separate Interim Statements of Cash Flows

(Unaudited)

For the three-month periods ended March 31, 2015 and 2014

 

(In millions of won)		Note		2015				2014
Cash flows from operating activities:
Profit (loss) for the period				W	334,772				(148,992	)
Adjustments for:
Income tax expense		20			101,675				75,305
Depreciation		11			612,193				816,020
Amortization of intangible assets		11			89,063				55,498
Gain on foreign currency translation					(31,854	)			(15,821	)
Loss on foreign currency translation					36,116				33,222
Expenses related to defined benefit plans		14			49,691				64,836
Gain on disposal of property, plant and equipment					(7,088	)			(7,774	)
Loss on disposal of property, plant and equipment					3				1,135
Impairment loss on intangible assets					184				286
Finance income					(34,306	)			(12,259	)
Finance costs					29,399				46,943
Other income					(107	)			(7,316	)
Other expenses					140,986				50,247
					985,955				1,100,322
Change in trade accounts and notes receivable					195,178				472,750
Change in other accounts receivable					19,141				(15,054	)
Change in other current assets					(43,875	)			(99,641	)
Change in inventories					(41,118	)			(95,179	)
Change in other non-current assets					(55,730	)			(61,466	)
Change in trade accounts and notes payable					(657,806	)			(320,674	)
Change in other accounts payable					(216,517	)			(122,925	)
Change in accrued expenses					(73,470	)			(38,723	)
Change in other current liabilities					14,401				14,879
Change in other non-current liabilities					515				3,694
Change in provisions					(29,346	)			(33,889	)
Change in defined benefit liabilities, net					(2,261	)			(783	)
					(890,888	)			(297,011	)
Cash generated from operating activities					429,839				654,319
Income taxes refund (paid)					(53,207	)			10,236
Interests received					12,645				4,150
Interests paid					(28,396	)			(36,817	)
Net cash provided by operating activities				W	360,881				631,888

See accompanying notes to the condensed separate interim financial statements.

 

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LG DISPLAY CO., LTD.

Condensed Separate Interim Statements of Cash Flows

(Unaudited)

For the three-month periods ended March 31, 2015 and 2014

 

(In millions of won)		2015				2014
Cash flows from investing activities:
Dividends received		W	328,487				—
Proceeds from withdrawal of deposits in banks			602,805				231,176
Increase in deposits in banks			(404,752	)			(400,000	)
Acquisition of investments			(229,880	)			(4,607	)
Proceeds from disposal of investments			18,100				3,589
Acquisition of property, plant and equipment			(263,621	)			(287,858	)
Proceeds from disposal of property, plant and equipment			170,718				39,744
Acquisition of intangible assets			(80,865	)			(57,129	)
Government grants received			2,511				2,006
Proceeds from disposal of other current financial assets			81				—
Acquisition of other non-current financial assets			(6	)			(311	)
Proceeds from disposal of other non-current financial assets			527				2,847
Net cash provided by (used in) investing activities			144,105				(470,543	)
Cash flows from financing activities:
Proceeds from short-term borrowings			—				1,111,567
Repayments of short-term borrowings			(219,839	)			(729,045	)
Repayments of long-term debt			—				(503,618	)
Repayments of current portion of long-term debt and debentures			(39,485	)			(22,360	)
Net cash used in financing activities			(259,324	)			(143,456	)
Net increase in cash and cash equivalents			245,662				17,889
Cash and cash equivalents at January 1			100,558				253,059
Cash and cash equivalents at March 31		W	346,220				270,948

See accompanying notes to the condensed separate interim financial statements.

 

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1.	Organization and Description of Business

LG Display Co., Ltd. (the “Company”) was incorporated in February 1985 under its original name of LG Soft, Ltd. as a wholly owned subsidiary of LG Electronics Inc. In 1998, LG Electronics Inc. and LG Semicon Co., Ltd. transferred their respective Thin Film Transistor-Liquid Crystal Display (“TFT-LCD”) related business to the Company. The main business of the Company is to manufacture and sell TFT-LCD panels. The Company is a stock company (“Jusikhoesa”) domiciled in the Republic of Korea with its address at 128 Yeouidae-ro, Yeongdeungpo-gu, Seoul, the Republic of Korea. In July 1999, LG Electronics Inc. and Koninklijke Philips Electronics N.V. (“Philips”) entered into a joint venture agreement. Pursuant to the agreement, the Company changed its name to LG.Philips LCD Co., Ltd. However, in February 2008, the Company changed its name to LG Display Co., Ltd. considering the decrease of Philips’s share interest in the Company and the possibility of its business expansion to other display products including Organic Light Emitting Diode (“OLED”) and Flexible Display products. As of March 31, 2014, LG Electronics Inc. owns 37.9% (135,625,000 shares) of the Company’s common stock.

As of March 31, 2015, the Company has TFT-LCD manufacturing plants, an OLED manufacturing plant and a Research & Development Center in Paju and TFT-LCD manufacturing plants in Gumi. The Company has overseas subsidiaries located in North America, Europe and Asia.

The Company’s common stock is listed on the Korea Exchange under the identifying code 034220. As of March 31, 2015, there are 357,815,700 shares of common stock outstanding. The Company’s common stock is also listed on the New York Stock Exchange in the form of American Depository Shares (“ADSs”) under the symbol “LPL”. One ADS represents one-half of one share of common stock. As of March 31, 2015, there are 23,010,462 ADSs outstanding.

 

2.	Basis of Presenting Financial Statements

 

(a)

Statement of Compliance

The condensed separate interim financial statements have been prepared in accordance with Korean International Financial Reporting Standards (“K-IFRSs”) No.1034, Interim Financial Reporting. They do not include all of the information required for full annual financial statements and should be read in conjunction with the financial statements of the Company as of and for the year ended December 31, 2014.

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

The condensed separate interim financial statements were authorized for issuance by the Board of Directors on April 21, 2015.

 

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2.	Basis of Presenting Financial Statements, Continued

 

(b)

Basis of Measurement

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

 

•

available-for-sale financial assets measured at fair value, and

 

•

liabilities for defined benefit plans are recognized as the present value of defined benefit obligations less the fair value of plan assets

 

(c)

Functional and Presentation Currency

The condensed separate interim financial statements are presented in Korean won, which is the Company’s functional currency. All amounts in Korean won are in millions unless otherwise stated.

 

(d)

Use of Estimates and Judgments

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

In preparing these condensed separate interim financial statements, the significant judgments made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those applied in its financial statements as of and for the year ended December 31, 2014.

 

3.	Summary of Significant Accounting Policies

The significant accounting policies followed by the Company in the preparation of its condensed separate interim financial statements are the same as those followed by the Company in its preparation of the financial statements as of and for the year ended December 31, 2014.

 

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4.	Financial Risk Management

The objectives and policies on financial risk management followed by the Company are consistent with those disclosed in the financial statements as of and for the year ended December 31, 2014.

 

5.	Inventories

Inventories as of March 31, 2015 and December 31, 2014 are as follows:

 

(In millions of won)		March 31, 2015				December 31, 2014
Finished goods		W	659,206				653,610
Work-in-process			759,745				710,813
Raw materials			366,209				381,558
Supplies			302,633				300,694
		W	2,087,793				2,046,675

For the three-month periods ended March 31, 2015 and 2014, the amount of inventories recognized as cost of sales, inventory write-downs and reversal and usage of inventory write-downs included in cost of sales is as follows:

 

(In millions of won)		2015				2014
Inventories recognized as cost of sales		W	5,296,994				5,059,797
Including: inventory write-downs			290,441				223,155
Including: reversal and usage of inventory write-downs			(299,948	)			(189,312	)

 

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6.	Investments

 

(a)

Investments in subsidiaries consist of the following:

 

(In millions of won)						March 31, 2015								December 31, 2014
Subsidiaries		Location		Business		Percentage of ownership				Book value				Percentage of ownership				Book Value
LG Display America, Inc.		San Jose, U.S.A.		Sell TFT-LCD products			100	%		W	36,815				100	%		W	36,815
LG Display Germany GmbH		Ratingen, Germany		Sell TFT-LCD products			100	%			19,373				100	%			19,373
LG Display Japan Co., Ltd.		Tokyo, Japan		Sell TFT-LCD products			100	%			15,686				100	%			15,686
LG Display Taiwan Co., Ltd.		Taipei, Taiwan		Sell TFT-LCD products			100	%			35,230				100	%			35,230
LG Display Nanjing Co., Ltd.		Nanjing, China		Manufacture and sell TFT-LCD products			100	%			579,747				100	%			579,747
LG Display Shanghai Co., Ltd.		Shanghai, China		Sell TFT-LCD products			100	%			9,093				100	%			9,093
LG Display Poland Sp. z o.o.		Wroclaw, Poland		Manufacture and sell TFT-LCD products			100	%			194,992				100	%			194,992
LG Display Guangzhou Co., Ltd.		Guangzhou, China		Manufacture and sell TFT-LCD products			100	%			293,557				100	%			293,557
LG Display Shenzhen Co., Ltd.		Shenzhen, China		Sell TFT-LCD products			100	%			3,467				100	%			3,467
LG Display Singapore Pte. Ltd.		Singapore		Sell TFT-LCD products			100	%			1,250				100	%			1,250
L&T Display Technology (Xiamen) Limited		Xiamen, China		Manufacture LCD module and LCD TV sets			51	%			—				51	%			—
L&T Display Technology (Fujian) Limited		Fujian, China		Manufacture LCD module and LCD monitor sets			51	%			10,123				51	%			10,123
LG Display Yantai Co., Ltd.		Yantai, China		Manufacture and sell TFT-LCD products			100	%			159,769				100	%			159,769
LG Display U.S.A., Inc.		McAllen, U.S.A.		Manufacture and sell TFT-LCD products			100	%			12,353				100	%			12,353
Nanumnuri Co., Ltd.		Gumi, South Korea		Janitorial services			100	%			800				100	%			800
LG Display (China) Co., Ltd. (*1)		Guangzhou, China		Manufacture and sell TFT-LCD products			52	%			723,087				56	%			588,467

 

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6.	Investments, Continued

 

(In millions of won)						March 31, 2015								December 31, 2014
Subsidiaries		Location		Business		Percentage of ownership				Book value				Percentage of ownership				Book Value
Unified Innovative Technology, LLC		Wilmington, U.S.A.		Manage intellectual property			100	%			9,489				100	%			9,489
Money Market Trust(*2)		Seoul, South Korea		Money market trust			100	%			94,900				100	%			18,100
										W	2,199,731							W	1,988,311

 

(*1)

In January 2015, the Company contributed W134,620 million in cash for the capital increase of LG Display (China) Co., Ltd. (“LGDCA”). In addition, LG Display Guangzhou Co., Ltd. (“LGDGZ”) contributed W112,485 million in cash for the capital increase of LG Display (China) Co., Ltd. (“LGDCA”). The Company’s ownership percentage in LGDCA decreased from 56% to 52% and LGDGZ’s ownership percentage in LGDCA increased from 14% to 18%, respectively, as of December 31, 2014 to March 31, 2015.

(*2)	In January 2015, the Company disposed W18,100 million and acquired W94,900 million in March 2015 in Money Market Trust. There was no change in the Company’s ownership percentage in MMT as a result of its disposal and acquisition.

 

(b)

Investments in joint ventures and associates consist of the following:

 

(In millions of won)
						March 31, 2015								December 31, 2014
Associates and Joint Ventures		Location		Business		Percentage of ownership				Book Value				Percentage of ownership				Book value
Suzhou Raken Technology Co., Ltd.		Suzhou, China		Manufacture and sell LCD modules and LCD TV sets			51	%		W	120,184				51	%		W	120,184
Global OLED Technology, LLC		Herndon, U.S.A.		Managing and licensing OLED patents			33	%			28,732				33	%			28,732
Paju Electric Glass Co., Ltd.		Paju, South Korea		Manufacture electric glass for FPDs			40	%			45,089				40	%			45,089
TLI Inc.		Seongnam, South Korea		Manufacture and sell semiconductor parts for FPDs			10	%			6,961				10	%			6,961
AVACO Co., Ltd.		Daegu, South Korea		Manufacture and sell equipment for FPDs			16	%			6,021				16	%			6,021
New Optics Ltd.		Yangju, South Korea		Manufacture back light parts for TFT-LCDs			46	%			14,221				46	%			14,221
LIG INVENIA Co., Ltd. (LIG ADP Co., Ltd)		Seongnam, South Korea		Develop and manufacture equipment for FPDs			13	%			6,330				13	%			6,330
WooRee E&L Co., Ltd		Ansan, South Korea		Manufacture LED back light unit packages			21	%			11,900				21	%			11,900

 

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6.	Investments, Continued

 

(In millions of won)
						March 31, 2015								December 31, 2014
Associates and Joint Ventures		Location		Business		Percentage of ownership				Book Value				Percentage of ownership				Book value
LB Gemini New Growth Fund No.16 (*1)		Seoul, South Korea		Invest in small and middle sized companies and benefit from M&A opportunities			31	%			14,425				31	%			14,065
Can Yang Investments Limited		Hong Kong		Develop, manufacture and sell LED parts			9	%			7,568				9	%			9,467
YAS Co., Ltd.		Paju, South Korea		Develop and manufacture deposition equipment for OLEDs			19	%			10,000				19	%			10,000
Narenanotech Corporation		Yongin, South Korea		Manufacture and sell FPD manufacturing equipment			23	%			30,000				23	%			30,000
AVATEC Co., Ltd.		Daegu, South Korea		Process and sell glass for FPDs			16	%			10,600				16	%			10,600
Glonix Co., Ltd.		Gimhae, South Korea		Manufacture and sell LCD			20	%			—				20	%			—
										W	312,031							W	313,570

 

(*1)

The Company is a member of a limited partnership in the LB Gemini New Growth Fund No.16 (“the Fund”). In March 2015, the Company made an additional cash investment of W360 million in the Fund. There were no changes in the Company’s ownership percentage in the Fund and the Company is committed to making future investments of up to an aggregate of W30,000 million.

(*2)	In 2015, the Company recognized an impairment loss of W1,899 million as finance cost for the difference between the carrying amount and the recoverable amount of investments in Can Yang Investments Limited which develop, manufactures and sells LED parts.

For the year ended March 31, 2015, the aggregate amount of received dividends from subsidiaries, joint ventures and associates are W24,817 million.

 

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7.	Property, Plant and Equipment

For the three-month periods ended March 31, 2015 and 2014, the Company purchased property, plant and equipment of W395,977 million and W348,708 million, respectively. The capitalized borrowing costs and the annualized capitalization rate were W4,635 million and 3.97%, and W5,671 million and 4.46% for the three-month periods ended March 31, 2015 and 2014, respectively. Also, for the three-month periods ended March 31, 2015 and 2014, the Company disposed of property, plant and equipment with carrying amounts of W184,435 million and W33,105 million, respectively, and recognized W7,088 million and W3 million, respectively, as gain and loss on disposal of property, plant and equipment for the three-month period ended March 31, 2015 (gain and loss for the three-month period ended on March 31, 2014: W7,774 million and W1,135 million, respectively).

 

8.	Intangible Assets

The Company capitalizes expenditures related to development activities, such as expenditures incurred on designing, manufacturing and testing of products that are ultimately selected for production. The balances of capitalized development costs as of March 31, 2015 and December 31, 2014, are W238,055 million and W253,624 million, respectively.

 

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9.	Financial Instruments

 

(a)

Credit risk

 

(i)

Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk as of March 31, 2015 and December 31, 2014 is as follows:

 

(In millions of won)
		March 31, 2015				December 31, 2014
Cash and cash equivalents		W	346,220				100,558
Deposits in banks(*)			1,335,983				1,534,036
Trade accounts and notes receivable, net			3,569,648				4,015,904
Other accounts receivable, net			91,901				396,651
Available-for-sale financial assets			3,177				3,237
Deposits			12,511				13,037
Other non-current financial assets			8,160				7,859
		W	5,367,600				6,071,282

 

(*)	As of March 31, 2015, the amount of deposits in banks restricted in use is W85,983 million (as of December 31, 2014: W81,232 million).

In addition to the financial assets above, as of March 31, 2015 and December 31, 2014, the Company provides payment guarantees of W149,175 million and W148,392 million, respectively, for its subsidiaries.

The maximum exposure to credit risk for trade accounts and notes receivable as of March 31, 2015 and December 31, 2014 by geographic region was as follows:

 

(In millions of won)
		March 31, 2015				December 31, 2014
Domestic		W	447,751				406,163
Euro-zone countries			315,681				283,257
Japan			202,811				127,354
United States			1,037,703				1,816,906
China			769,990				784,896
Taiwan			559,151				368,503
Others			236,561				228,825
		W	3,569,648				4,015,904

 

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9.	Financial Instruments, Continued

 

(ii)

Impairment loss

The aging of trade accounts and notes receivable as of March 31, 2015 and December 31, 2014 was as follows:

 

(In millions of won)		March 31, 2015								December 31, 2014
		Book value				Impairment loss				Book value				Impairment loss
Not past due		W	3,554,054				(53	)			4,006,346				(114	)
Past due 1-15 days			325				—				3,061				(25	)
Past due 16-30 days			2				—				1,252				(12	)
Past due 31-60 days			6,877				(69	)			1,830				(18	)
Past due more than 60 days			18,734				(10,222	)			13,540				(9,956	)
		W	3,579,992				(10,344	)			4,026,029				(10,125	)

The movement in the allowance for impairment in respect of receivables during the three-month period ended March 31, 2015 and the year ended December 31, 2014 are as follows:

 

(In millions of won)
		2015				2014
Balance at the beginning of the period		W	10,125				9,898
Bad debt expense			219				227
Balance at the reporting date		W	10,344				10,125

 

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9.	Financial Instruments, Continued

 

(b)

Liquidity risk

The following are the contractual maturities of financial liabilities, including estimated interest payments, as of March 31, 2015.

 

(In millions of won)						Contractual cash flows
		Carrying amount				Total				6 months or less				6-12 months				1-2 years				2-5 years				More than 5 years
Non-derivative financial liabilities
Unsecured bank loans		W	597,498				610,883				100,326				170,502				226,335				113,269				451
Unsecured bond issues			2,595,330				2,774,584				247,007				860,276				640,092				1,027,209				—
Trade accounts and notes payables			3,332,164				3,332,164				3,332,164				—				—				—				—
Other accounts payable			997,488				998,789				982,829				2,660				5,320				7,980				—
Payment guarantee			—				154,392				1,163				1,163				2,319				149,747				—
		W	7,522,480				7,870,812				4,663,489				1,034,601				874,066				1,298,205				451

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

 

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9.	Financial Instruments, Continued

 

(c)

Currency risk

 

(i)

Exposure to currency risk

The Company’s exposure to foreign currency risk based on notional amounts as of March 31, 2015 and December 31, 2014 is as follows:

 

(In millions)		March 31, 2015
		USD				JPY				CNY				PLN				EUR
Cash and cash equivalents			5				502				1				3				—
Trade accounts and notes receivable			2,823				8,341				—				—				—
Other accounts receivable			17				2				—				—				—
Long-term other accounts receivable			7				—				—				—				—
Other assets denominated in foreign currencies			—				51				—				—				—
Trade accounts and notes payable			(1,781	)			(19,580	)			—				—				—
Other accounts payable			(75	)			(5,486	)			(13	)			(18	)			(2	)
Debt			(535	)			—				—				—				—
Net exposure			461				(16,170	)			(12	)			(15	)			(2	)

 

(In millions)		December 31, 2014
		USD				JPY				CNY				PLN				EUR				BRL
Cash and cash equivalents			78				1,150				2				—				—				—
Trade accounts and notes receivable			3,332				7,909				—				—				—				—
Other accounts receivable			25				13				—				—				16				—
Long-term other accounts receivable			6				—				—				—				—				—
Other assets denominated in foreign currencies			—				51				—				—				—				—
Trade accounts and notes payable			(2,463	)			(21,474	)			—				—				—				—
Other accounts payable			(106	)			(3,484	)			(260	)			(19	)			(1	)			(34	)
Debt			(770	)			—				—				—				—				—
Net exposure			102				(15,835	)			(258	)			(19	)			15				(34	)

 

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9.	Financial Instruments, Continued

 

Average exchange rates applied for the three-month periods ended March 31, 2015 and 2014 and the exchange rates at March 31, 2015 and December 31, 2014 are as follows:

 

(In won)		Average rate								Reporting date spot rate
		2015				2014				March 31, 2015				December 31, 2014
USD		W	1,100.16				1,069.00			W	1,105.00				1,099.20
JPY			9.23				10.39				9.20				9.20
CNY			176.18				175.39				177.97				176.81
PLN			295.99				350.33				292.59				312.49
EUR			1,241.51				1,465.08				1,196.77				1,336.52
BRL			387.09				452.39				342.17				413.62

 

(ii)

Sensitivity analysis

A weaker won, as indicated below, against the following currencies which comprise the Company’s assets or liabilities denominated in foreign currency as of March 31, 2015 and December 31, 2014, would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Company considers to be reasonably possible as of the end of reporting period. The analysis assumes that all other variables, in particular interest rates, would remain constant. The changes in equity and profit or loss would have been as follows:

 

(In millions of won)		March 31, 2015								December 31, 2014
		Equity				Profit or loss				Equity				Profit or loss
USD (5 percent weakening)		W	19,306				19,306				4,249				4,249
JPY (5 percent weakening)			(5,640	)			(5,640	)			(5,522	)			(5,522	)
CNY (5 percent weakening)			(81	)			(81	)			(1,729	)			(1,729	)
PLN (5 percent weakening)			(166	)			(166	)			(225	)			(225	)
EUR (5 percent weakening)			(91	)			(91	)			760				760
BRL (5 percent weakening)			—				—				(533	)			(533	)

A stronger won against the above currencies as of March 31, 2015 and December 31, 2014 would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.

 

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9.	Financial Instruments, Continued

 

(d)

Interest rate risk

 

(i)

Profile

The interest rate profile of the Company’s interest-bearing financial instruments as of March 31, 2015 and December 31, 2014 is as follows:

 

(In millions of won)
		March 31, 2015				December 31, 2014
Fixed rate instruments
Financial assets		W	1,685,367				1,637,818
Financial liabilities			(2,599,028	)			(2,818,383	)
		W	(913,661	)			(1,180,565	)
Variable rate instruments
Financial liabilities		W	(593,800	)			(630,019	)

 

(ii)

Equity and profit or loss sensitivity analysis for variable rate instruments

As of March 31, 2015 and December 31, 2014, a change of 100 basis points in interest rates at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown below for each 12-month period following the reporting dates. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.

 

(In millions of won)
		Equity								Profit or loss
		1%p increase				1%p decrease				1%p increase				1%p decrease
March 31, 2015
Variable rate instruments		W	(4,501	)			4,501				(4,501	)			4,501
December 31, 2014
Variable rate instruments		W	(4,776	)			4,776				(4,776	)			4,776

 

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9.	Financial Instruments, Continued

 

(e)

Fair values

 

(i)

Fair values versus carrying amounts

The fair values of financial assets and liabilities, together with the carrying amounts shown in the condensed separate interim statements of financial position, are as follows:

 

(In millions of won)		March 31, 2015								December 31, 2014
		Carrying amounts				Fair values				Carrying amounts				Fair values
Assets carried at fair value
Available-for-sale financial assets		W	3,177				3,177				3,237				3,237
Assets carried at amortized cost
Cash and cash equivalents		W	346,220					(*)			100,558					(*)
Deposits in banks			1,335,983					(*)			1,534,036					(*)
Trade accounts and notes receivable			3,569,648					(*)			4,015,904					(*)
Other accounts receivable			91,901					(*)			396,651					(*)
Deposits			12,511					(*)			13,037					(*)
Other non-current financial assets			8,160					(*)			7,859					(*)
Liabilities carried at amortized cost
Unsecured bank loans		W	597,498				597,580				853,719				853,753
Unsecured bond issues			2,595,330				2,679,841				2,594,683				2,667,092
Trade accounts and notes payable			3,332,164					(*)			3,989,505					(*)
Other accounts payable			985,344				985,335				1,043,422				1,043,196
Other non-current liabilities			12,144				12,760				12,805				13,257

 

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

The basis for determining fair values above by the Company are consistent with those disclosed in the financial statements as of and for the year ended December 31, 2014.

 

(ii)

Financial Instruments measured at cost

Available-for-sale financial assets measured at cost as of March 31, 2015 and December 31, 2014 are as follows:

 

(In millions of won)
		March 31, 2015				December 31, 2014
Intellectual Discovery Co., Ltd.		W	2,673				2,673
Henghao Technology Co., Ltd.			3,372				3,372
		W	6,045				6,045

 

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9.	Financial Instruments, Continued

 

(e)

Fair Values, Continued

 

(iii)

Fair values of financial assets and liabilities

 

i)

Fair value hierarchy

The table below analyzes financial instruments carried at fair value based on the input variables used in the valuation method to measure fair value of assets and liabilities. The different levels have been defined as follows:

 

•

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

 

•

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

 

•

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

 

ii)

Financial instruments measured at fair value

Fair value hierarchy classifications of the financial instruments that are measured at fair value as of March 31, 2015 and December 31, 2014 are as follows:

 

(In millions of won)

Level 1

Level 2

Level 3

Total

March 31, 2015

Assets

Available-for-sale financial assets

W

3,177

—

—

3,177

(In millions of won)

Level 1

Level 2

Level 3

Total

December 31, 2014

Assets

Available-for-sale financial assets

W

3,237

—

—

3,237

 

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9.	Financial Instruments, Continued

 

(e)

Fair Values, Continued

 

iii)

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

Fair value hierarchy classifications, valuation technique and inputs for fair value measurements of the financial instruments not measured at fair value but for which the fair value is disclosed as of March 31, 2015 and December 31, 2014 are as follows:

 

(In millions of won)

March 31, 2014

Valuation technique

Input

Classification

Level 1

Level 2

Level 3

Liabilities

Unsecured bank loans

W

—

—

597,580

Discounted cash flow

Discount rate

Unsecured bond issues

—

—

2,679,841

Discounted cash flow

Discount rate

Other accounts payable

—

—

985,335

Discounted cash flow

Discount rate

Other non-current liabilities

—

—

12,760

Discounted cash flow

Discount rate

(In millions of won)

December 31, 2013

Valuation technique

Input

Classification

Level 1

Level 2

Level 3

Liabilities

Unsecured bank loans

W

—

—

853,753

Discounted cash flow

Discount rate

Unsecured bond issues

—

—

2,667,092

Discounted cash flow

Discount rate

Other accounts payable

—

—

1,043,196

Discounted cash flow

Discount rate

Other non-current liabilities

—

—

13,257

Discounted cash flow

Discount rate

The significant interest rates applied for determination of the above fair value at the reporting date are as follows:

 

		March 31, 2015		December 31, 2014
Debentures, loans and others		1.84 ~2.07%		2.23~2.60%

 

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9.	Financial Instruments, Continued

 

(f)

Capital management

Management’s policy is to maintain a capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Liabilities to equity ratio, net borrowings to equity ratio and other financial ratios are used by management to achieve an optimal capital structure. Management also monitors the return on capital as well as the level of dividends to ordinary shareholders.

 

(In millions of won)
		March 31, 2015				December 31, 2014
Total liabilities		W	9,405,655				10,387,762
Total equity			10,778,921				10,624,075
Cash and deposits in banks (*1)			1,682,190				1,626,167
Borrowings (including bonds)			3,192,828				3,448,402
Total liabilities to equity ratio			87	%			98	%
Net borrowings to equity ratio (*2)			14	%			17	%

 

(*1)	Cash and deposits in banks consist of cash and cash equivalents and current deposits in banks.

(*2)	Net borrowings to equity ratio is calculated by dividing total borrowings (including bonds) less cash and current deposits in banks by total equity.

 

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10.	Financial Liabilities

 

(a)

Financial liabilities as of March 31, 2015 and December 31, 2014 are as follows:

 

(In millions of won)
		March 31, 2015				December 31, 2014
Current
Short-term borrowings		W	—				219,839
Current portion of long-term debt			1,281,161				744,283
		W	1,281,161				964,122
Non-current
Won denominated borrowings		W	4,087				4,452
Foreign currency denominated borrowings			331,500				494,640
Bonds			1,576,080				1,985,188
		W	1,911,667				2,484,280

 

(b)

Short-term borrowings as of March 31, 2015 and December 31, 2014 are as follows:

 

(In millions of won and USD)
Lender		Annual interest rate as of March 31, 2015 (%)				March 31, 2015				December 31, 2014
Korea Development Bank and others			—			W	—				219,839
Foreign currency equivalent			—				—			USD	200
						W	—				219,839

 

(c)

Won denominated long-term debt as of March 31, 2015 and December 31, 2014 is as follows:

 

(In millions of won)
Lender		Annual interest rate as of March 31, 2015 (%)		March 31, 2015				December 31, 2014
Woori Bank and others		3-year Korean Treasury Bond rate less 1.75, 2.75		W	6,323				7,336
Less current portion of long-term debt					(2,236	)			(2,884	)
				W	4,087				4,452

 

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10.	Financial Liabilities

 

(d)

Long-term debt denominated in currencies other than won as of March 31, 2015 and December 31, 2014 is as follows:

 

(In millions of won and USD)
Lender		Annual interest rate as of March 31, 2015 (%)(*)		March 31, 2015				December 31, 2014
Mizuho Bank, Ltd. and others		3ML+0.90~1.90		W	591,175				626,544
Foreign currency equivalent				USD	535			USD	570
Less current portion of long-term debt					(259,675	)			(131,904	)
				W	331,500				494,640

 

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

 

(e)

Details of bonds issued and outstanding as of March 31, 2015 and December 31, 2014 are as follows:

 

(In millions of won)
		Maturity		Annual interest rate as of March 31, 2015 (%)		March 31, 2015				December 31, 2014
Won denominated bonds (*)
Publicly issued bonds		June 2015~ October 2019		2.40~5.31		W	2,600,000				2,600,000
Less discount on bonds							(4,670	)			(5,317	)
Less current portion							(1,019,250	)			(609,495	)
						W	1,576,080				1,985,188

 

(*)	Principal of the won denominated bonds is to be repaid at maturity and interests are paid quarterly in arrears.

 

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11.	The Nature of Expenses and Others

The classification of expenses by nature for the three-month periods ended March 31, 2015 and 2014 are as follows:

 

(In millions of won)
		2015				2014
Changes in inventories		W	(41,118	)			(95,179	)
Purchases of raw materials, merchandise and others			2,563,404				2,383,626
Depreciation and amortization			701,256				871,518
Outsourcing fees			1,136,313				894,018
Labor costs			625,947				643,396
Supplies and others			205,836				210,053
Utility			183,033				177,656
Fees and commissions			114,572				89,836
Shipping costs			32,666				32,194
Advertising			41,137				26,570
Warranty expenses			29,178				16,610
Travel			13,494				12,587
Taxes and dues			13,657				12,223
Others			323,888				299,056
		W	5,943,263				5,574,164

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

 

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12.	Selling and Administrative Expenses

Details of selling and administrative expenses for the three-month periods ended March 31, 2015 and 2014 are as follows:

 

(In millions of won)
		2015				2014
Salaries		W	44,378				42,017
Expenses related to defined benefit plans			6,646				8,962
Other employee benefits			12,477				9,694
Shipping costs			26,035				22,090
Fees and commissions			44,001				26,260
Depreciation			20,508				18,914
Taxes and dues			856				623
Advertising			41,137				26,570
Warranty expenses			29,178				16,610
Rent			2,361				2,229
Insurance			1,517				1,518
Travel			3,796				4,085
Training			2,458				1,799
Others			9,658				6,337
		W	245,006				187,708

 

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13.	Other Non-operating Income and Other Non-operating Expenses

 

(a)

Details of other non-operating income for the three-month periods ended March 31, 2015 and 2014 are as follows:

 

(In millions of won)
		2015				2014
Rental income		W	847				925
Foreign currency gain			165,498				117,844
Reversal of allowance for doubtful accounts for other receivables			107				—
Gain on disposal of property, plant and equipment			7,088				7,774
Commission earned			392				—
Others			43				7,400
		W	173,975				133,943

 

(b)

Details of other non-operating expenses for the three-month periods ended March 31, 2015 and 2014 are as follows:

 

(In millions of won)
		2015				2014
Other bad debt expense		W	—				569
Foreign currency loss			151,793				133,723
Loss on disposal of property, plant and equipment			3				1,135
Impairment loss on intangible assets			184				286
Donations			3,198				3,319
Expenses related to legal proceedings or claims and others			117,067				33,034
		W	272,245				172,066

 

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14.	Employee Benefits

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

 

(a)

Recognized liabilities for defined benefit plans as of March 31, 2015 and December 31, 2014 are as follows:

 

(In millions of won)		March 31, 2015				December 31, 2014
Present value of partially funded defined benefit obligations		W	1,155,936				1,114,219
Fair value of plan assets			(783,437	)			(790,509	)
		W	372,499				323,710

 

(b)

Expenses recognized in profit or loss for the three-month periods ended March 31, 2015 and 2014 are as follows:

 

(In millions of won)
		2015				2014
Current service cost		W	46,875				39,068
Past service cost			—				21,990
Net interest cost			2,816				3,778
		W	49,691				64,836

 

(c)

Plan assets as of March 31, 2015 and December 31, 2014 are as follows

 

(In millions of won)
		March 31, 2015				December 31, 2014
Guaranteed deposits in banks		W	783,437				790,509

As of March 31, 2015, the Company maintains the plan assets primarily with Mirae Asset Securities Co., Ltd. and Shinhan Bank.

 

(d)

Remeasurements of the net defined benefit liabilities (assets) included in other comprehensive income (loss) for the three-month periods ended March 31, 2015 and 2014 are as follows:

 

(In millions of won)		2015				2014
Remeasurements of the net defined benefit liabilities (assets)		W	(1,359	)			(2,910	)
Income tax			329				704
Remeasurements of the net defined benefit liabilities (assets), net of income tax		W	(1,030	)			(2,206	)

 

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15.	Finance Income and Finance Costs

 

(a)

Finance income and costs recognized in profit and loss for the three-month periods ended March 31, 2015 and 2014 are as follows:

 

(In millions of won)
		2015				2014
Finance income
Interest income		W	9,489				12,259
Dividend income			24,817				—
Foreign currency gain			4,236				2,856
		W	38,542				15,115
Finance costs
Interest expense		W	24,651				31,216
Foreign currency loss			3,940				10,593
Loss on early redemption of debt			—				6,986
Loss on impairment of investments			1,899				—
Loss on disposal of investments			—				197
		W	30,490				48,992

 

(b)

Finance income and costs recognized in other comprehensive income or loss for the three-month periods ended March 31, 2015 and 2014 are as follows:

 

(In millions of won)
		2015				2014
Net change in fair value of available-for-sale financial assets		W	16				(494	)
Tax effect			(4	)			119
Finance income (costs) recognized in other comprehensive income after tax		W	12				(375	)

 

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16.	Commitments

Factoring and securitization of accounts receivable

The Company has agreements with Korea Development Bank and several other banks for accounts receivable sales negotiating facilities of up to an aggregate of USD 2,153 million (W2,379,595 million) in connection with the Company’s export sales transactions with its subsidiaries. As of March 31, 2015, no short-term borrowings were outstanding in connection with these agreements. In connection with all of the contracts in this paragraph, the Company has sold its accounts receivable with recourse.

The Company has a credit facility agreement with Shinhan Bank pursuant to which the Company could sell its accounts receivables up to an aggregate of W100,000 million in connection with its domestic sales transactions and, as of March 31, 2015, no accounts and notes receivable sold to Shinhan Bank were outstanding in connection with the agreement. In connection with the contract above, the Company has sold its accounts receivable without recourse.

Letters of credit

As of March 31, 2015, the Company has agreements in relation to the opening of letters of credit up to USD 15 million (W16,575 million) with Korea Exchange Bank, USD 15 million (W16,575 million) with China Construction Bank, USD 80 million (W88,400 million) with Bank of China, USD 60 million (W66,300 million) with Sumitomo Mitsui Banking Corporation and USD 30 million (W33,150 million) with Hana Bank.

Payment guarantees

The Company obtained payment guarantees from Korea Exchange Bank for borrowings amounting to USD 200 million (W221,000 million) and USD 8.5 million (W9,393 million) from Shinhan Bank for value added tax payments in Poland. In addition, the Company provides a payment guarantee in connection with the term loan credit facilities of LG Display Yantai, Co., Ltd. amounting to USD 135 million (W149,175 million) for principals and related interests.

License agreements

As of March 31, 2015, in relation to its TFT-LCD business, the Company has technical license agreements with Hitachi Display, Ltd. and others and has a trademark license agreement with LG Corp.

Long-term supply agreement

In connection with long-term supply agreements, as of March 31, 2015, the Company’s balance of advances received from a customer amount to USD 180 million (W198,900 million) in aggregate. The advances received will be offset against outstanding accounts receivable balances after a given period of time, as well as those arising from the supply of products thereafter. The Company received a payment guarantee amounting to USD 140 million (W154,700 million) from the Industrial Bank of Korea relating to advances received.

 

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17.	Legal proceedings

Delaware Display Group LLC and Innovative Display Technologies LLC

In December 2013, Delaware Display Group LLC and Innovative Display Technologies LLC filed a patent infringement case against the Company and LG Display America, Inc. in the United States District Court for the District of Delaware. The Company does not have a present obligation for this matter and has not recognized any provision at March 31, 2015. It is not possible to reasonably estimate an amount of potential loss, if any, because the plaintiffs have not provided any information regarding damages.

Surpass Tech Innovation LLC

In March 2014, Surpass Tech Innovation LLC filed a complaint in the United States District Court for the District of Delaware against the Company and LG Display America, Inc. for alleged patent infringement. In November 2014, the case has been stayed by the United States District Court for the District of Delaware pending Inter Partes Review. The Company does not have a present obligation for this matter and has not recognized any provision at March 31, 2015. It is not possible to reasonably estimate an amount of potential loss, if any, because the plaintiffs have not provided any information regarding damages.

Anti-trust litigations

Certain individual plaintiffs filed complaints in various state or federal courts in the United States alleging violation of the respective antitrust laws and related laws by various LCD panel manufacturers. As of March 31, 2015, the Company is currently defending against Direct Action Plaintiffs including Motorola Mobility, Inc., Electrograph Technologies Corp. and its affiliates, TracFone Wireless Inc., Costco Wholesale Corp., Office Depot, Inc., Interbond Corp. of America (BrandsMart), P.C. Richard & Son Long Island Corp., MARTA Cooperative of America, Inc., ABC Appliance (ABC Warehouse), Schultze Agency Services, LLC (Tweeter), AASI Creditor Liquidating Trust for All American Semiconductor Inc., Tech Data Corp. and its affiliates, CompuCom Systems, Inc. and NECO Alliance LLC. The timing and amounts of outflows are uncertain and the outcomes depend upon the various court proceedings.

In Canada, class action complaints alleging violations of Canada competition laws were filed in 2007 against the Company and other TFT-LCD manufacturers in Ontario, British Columbia and Quebec. The Ontario Superior Court of Justice certified the class action complaints filed by the direct and indirect purchasers in May 2011. The Company is pursuing an appeal of the class certification decision. The actions in Quebec and British Columbia are in abeyance. The timing and amount of outflows are uncertain and the outcome depends upon the court proceedings.

During the three-month period ended March 31, 2015, based on the developments of the above pending proceedings, the Company updated its estimates on the amount of potential outflow of resources which resulted in an increase of provision-current for pending proceedings, in the amount of W111,172 million which is offset by a decrease of W41,769 million upon utilization of the provision for proceedings closed. While the Company continues its vigorous defense of the various pending proceedings described above, management’s assessment of the facts and circumstances could change based upon new information, intervening events and the final outcome of the cases. Consequently, the actual results could be materially different from management’s current estimates.

 

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18.	Capital and Reserves

 

(a)

Share capital

The Company is authorized to issue 500,000,000 shares of capital stock (par value W5,000), and as of March 31, 2015 and December 31, 2014, the number of issued common shares is 357,815,700. There have been no changes in the capital stock from January 1, 2014 to March 31, 2015.

 

(b)

Reserve

Reserve is comprised of the fair value reserve which is the cumulative net change in the fair value of available-for-sale financial assets until the investments are derecognized or impaired.

 

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19.	Related Parties

 

(a)

Related parties

Related parties as of March 31, 2015 are as follows:

 

Classification		Description
Subsidiaries(*)		LG Display America, Inc. and others
Associates and joint ventures(*)		Suzhou Raken Technology Co., Ltd. and others
Subsidiaries of Associates		ADP System Co., Ltd.
Entity that has significant influence over the Company		LG Electronics Inc.
Subsidiaries of the entity that has significant influence over the Company		Subsidiaries of LG Electronics Inc.

 

(*)	Details of subsidiaries, associates and joint ventures are described in note 6.

Related parties that have transactions such as sales or balance of trade accounts and notes receivable and payable with the Company excluding subsidiaries, associates and joint ventures as of March 31, 2015 and December 31, 2014 are as follows:

 

Classification				March 31, 2015				December 31, 2014
Subsidiaries of Associates				ADP System Co., Ltd.				ADP System Co., Ltd.
				New Optics USA, Inc				-
Entity that has significant influence over the Company				LG Electronics Inc.				LG Electronics Inc.
Subsidiaries of the entity that has significant influence over the Company				Hi Business Logistics Co., Ltd.				Hi Business Logistics Co., Ltd.
				Hiplaza Co., Ltd.				Hiplaza Co., Ltd.
				Hi Entech Co., Ltd				Hi Entech Co., Ltd
				LG Hitachi Water Solutions Co., Ltd.				LG Hitachi Water Solutions Co., Ltd.
				LG Innotek Co., Ltd.				LG Innotek Co., Ltd.
				Hanuri Co., Ltd.				Hanuri Co., Ltd.
				Hi M Solutek				Hi M Solutek
				Inspur LG Digital Mobile Communication Co., Ltd				-
				Qingdao LG Inspur Digital Communication Co., Ltd.				Qingdao LG Inspur Digital Communication Co., Ltd.
				Hi Logistics Europe B.V.				Hi Logistics Europe B.V.
				-				LG Innotek Poland Sp z o.o.
				LG Electronics Vietnam Co., Ltd.				LG Electronics Vietnam Co., Ltd.
				-				LG Electronics Vietnam Haiphong Co., Ltd.
				LG Electronics Thailand Co., Ltd.				LG Electronics Thailand Co., Ltd.
				LG Electronics RUS, LLC				LG Electronics RUS, LLC
				LG Electronics (Nanjing) Plasma Co., Ltd.				LG Electronics Nanjing Display Co., Ltd.

 

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19.	Related Parties, Continued

 

Classification		December 31, 2014		December 31, 2013
		LG Electronics India Pvt. Ltd.		LG Electronics India Pvt. Ltd.
		LG Electronics do Brasil Ltda.		LG Electronics do Brasil Ltda.
		LG Electronics (Kunshan) Computer Co., Ltd.		LG Electronics (Kunshan) Computer Co., Ltd.
		-		LG Electronics Alabama Inc.
		LG Electronics Reynosa S.A. DE C.V.		LG Electronics Reynosa S.A. DE C.V.
		LG Electronics Singapore PTE LTD.		LG Electronics Singapore PTE LTD.
		LG Electronics Japan, Inc.		LG Electronics Japan, Inc.
		-		LG Electronics Philippines Inc.
		P.T. LG Electronics Indonesia		P.T. LG Electronics Indonesia

 

(b)

Key management personnel compensation

Compensation costs of key management for the three-month periods ended March 31, 2015 and 2014 are as follows:

 

(In millions of won)
		2015				2014
Short-term benefits		W	758				445
Expenses related to the defined benefit plan			71				69
		W	829				514

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

 

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19.	Related Parties, Continued

 

(c)

Significant transactions such as sales of goods and purchases of raw material and outsourcing service and others, which occurred in the normal course of business with related parties for the three-month periods ended March 31, 2015 and 2014 are as follows:

 

(In millions of won)		2015
										Purchase and others
		Sales and others				Dividend income				Purchase of raw material and others				Acquisition of property, plant and equipment				Outsourcing fees				Other costs
Subsidiaries
LG Display America, Inc.		W	2,397,581				—				1				—				—				19
LG Display Japan Co., Ltd.			381,055				—				—				—				—				40
LG Display Germany GmbH			661,904				—				—				—				—				12,272
LG Display Taiwan Co., Ltd.			520,268				—				—				—				—				181
LG Display Nanjing Co., Ltd.			2,488				—				12				—				90,358				—
LG Display Shanghai Co., Ltd.			415,187				—				—				—				—				—
LG Display Poland Sp. z o.o.			179				—				5				—				15,828				—
LG Display Guangzhou Co., Ltd.			5,963				—				3,302				—				580,539				2,755
LG Display Shenzhen Co., Ltd.			442,183				—				—				—				—				1
LG Display Yantai Co., Ltd.			4,991				—				4,069				—				283,021				2,384
LG Display (China) Co., Ltd.			599				—				38,558				—				—				—
LG Display U.S.A., Inc.			4,332				—				—				—				—				—
LG Display Singapore Pte. Ltd.			345,612				—				—				—				—				—
L&T Display Technology (Fujian) Limited			144,467				—				—				—				—				69
Nanumnuri Co., Ltd.			13				—				—				—				—				2,663
		W	5,326,822				—				45,947				—				969,746				20,384

 

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19.	Related Parties, Continued

 

(In millions of won)		2015
										Purchase and others
		Sales and others				Dividend income				Purchase of raw material and others				Acquisition of property, plant and equipment				Outsourcing fees				Other costs
Joint Venture
Suzhou Raken Technology Co., Ltd.		W	39,089				—				—				—				—				—
Global OLED Technology LLC			—				—				—				—				—				902
		W	39,089				—				—				—				—				902
Associates and their subsidiaries
New Optics Ltd.		W	—				—				20,905				—				2,679				103
New Optics USA,Inc			—				—				—				—				2,967				—
LIG INVENIA Co., Ltd. (LIG ADP Co., Ltd)			—				—				6				7,071				—				—
TLI Inc.			—				101				18,573				—				—				227
AVACO Co., Ltd.			—				128				337				25,639				—				1,129
AVATEC Co., Ltd.			—				530				130				—				13,934				20
Paju Electric Glass Co., Ltd.			—				24,058				107,521				—				—				267
Narenanotech Corporation			—				—				169				3,604				—				266
Glonix Co., Ltd.			—				—				3,399				—				—				23
ADP System Co., Ltd.			—				—				331				1,417				—				170
YAS Co., Ltd.			—				—				45				7,999				—				140
		W	—				24,817				151,416				45,730				19,580				2,345
Entity that has significant influence over the Company
LG Electronics Inc.		W	528,645				—				19,473				53,892				—				14,266

 

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19.	Related Parties, Continued

 

(In millions of won)		2015
										Purchase and others
		Sales and others				Dividend income				Purchase of raw material and others				Acquisition of property, plant and equipment				Outsourcing fees				Other costs
Subsidiaries of the entity that has significant influence over the Company
LG Electronics India Pvt. Ltd.		W	42,440				—				—				—				—				—
LG Electronics Vietnam Co., Ltd.			22,595				—				—				—				—				—
LG Electronics Thailand Co., Ltd.			12,902				—				—				—				—				—
LG Electronics (Kunshan) Computer Co., Ltd.			8,520				—				—				—				—				—
Hi Business Logistics Co., Ltd.			10				—				—				—				—				8,201
LG Innotek Co., Ltd.			1,238				—				89,742				—				—				632
LG Hitachi Water Solutions Co., Ltd.			—				—				—				6,047				—				—
Inspur LG Digital Mobile Communication Co.,Ltd			7,385				—				—				—				—				—
Qingdao LG Inspur Digital Communication Co., Ltd.			76,329				—				—				—				—				—
Hi Entech Co., Ltd.			—				—				—				—				—				6,782
Others		W	4,274				—				3				—				—				1,004
		W	175,693				—				89,745				6,047				—				16,619
			6,070,249				24,817				306,581				105,669				989,326				54,516

 

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19.	Related Parties, Continued

 

(In millions of won)		2014
										Purchase and others
		Sales and others				Dividend income				Purchase of raw material and others				Acquisition of property, plant and equipment				Outsourcing fees				Other costs
Subsidiaries
LG Display America, Inc.		W	1,775,167				—				3				—				—				—
LG Display Japan Co., Ltd.			388,124				—				—				—				—				8
LG Display Germany GmbH			704,642				—				—				—				—				2,859
LG Display Taiwan Co., Ltd.			516,002				—				—				—				—				44
LG Display Nanjing Co., Ltd.			668				—				5				—				95,158				—
LG Display Shanghai Co., Ltd.			708,104				—				—				—				—				56
LG Display Poland Sp. z o.o.			178				—				37				—				19,119				—
LG Display Guangzhou Co., Ltd.			2,189				—				4,243				—				485,517				1,419
LG Display Shenzhen Co., Ltd.			329,428				—				—				—				—				4
LG Display Yantai Co., Ltd.			9,315				—				1,459				—				97,560				865
LG Display (China) Co., Ltd.			30,926				—				—				—				—				—
LG Display U.S.A., Inc.			25,256				—				—				—				—				—
LUCOM Display Technology (Kunshan) Limited			505				—				—				—				4,802				—
LG Display Singapore Pte. Ltd.			301,920				—				—				—				—				—
L&T Display Technology (Fujian) Limited			117,149				—				1				—				—				—
Nanumnuri Co., Ltd.			—				—				—				—				—				2,035
		W	4,909,573				—				5,748				—				702,156				7,290
Joint Venture
Suzhou Raken Technology Co., Ltd.		W	54,820				—				—				—				28,420				—

 

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19.	Related Parties, Continued

 

(In millions of won)		2014
										Purchase and others
		Sales and others				Dividend income				Purchase of raw material and others				Acquisition of property, plant and equipment				Outsourcing fees				Other costs
Associates and their subsidiaries
New Optics Ltd.		W	—				—				11,673				—				2,406				651
LIG INVENIA Co., Ltd. (LIG ADP Co., Ltd)			—				—				273				5,623				—				7
TLI Inc.			—				—				15,010				—				—				627
AVACO Co., Ltd.			41				—				270				17,396				—				344
AVATEC Co., Ltd.			—				—				14				—				14,160				43
Paju Electric Glass Co., Ltd.			—				—				178,867				—				—				1,077
Narenanotech Corporation			—				—				46				912				—				757
Glonix Co., Ltd.			—				—				4,402				—				—				114
ADP System Co., Ltd.			—				—				180				208				—				29
YAS Co., Ltd.			—				—				404				2,009				—				28
		W	41				—				211,139				26,148				16,566				3,677
Entity that has significant influence over the Company
LG Electronics Inc.		W	323,644				—				6,830				38,843				—				5,766

 

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19.	Related Parties, Continued

 

(In millions of won)		2014
										Purchase and others
		Sales and others				Dividend income				Purchase of raw material and others				Acquisition of property, plant and equipment				Outsourcing fees				Other costs
Subsidiaries of the entity that has significant influence over the Company
LG Electronics India Pvt. Ltd.		W	18,714				—				—				—				—				—
LG Electronics Vietnam Co., Ltd.			9,670				—				—				—				—				—
LG Electronics Thailand Co., Ltd.			12,639				—				—				—				—				—
Hi Business Logistics Co., Ltd.			10				—				—				—				—				7,339
LG Innotek Co., Ltd.			733				—				115,237				—				—				508
LG Hitachi Water Solutions Co., Ltd.			—				—				—				10,301				—				—
Qingdao LG Inspur Digital Communication Co., Ltd.			26,000				—				—				—				—				—
Hi Entech Co., Ltd.			—				—				—				—				—				6,131
Others		W	5,485				—				804				—				—				543
		W	73,251				—				116,041				10,301				—				14,521
			5,361,329				—				339,758				75,292				747,142				31,254

 

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19.	Related Parties, Continued

 

(d)

Trade accounts and notes receivable and payable as of March 31, 2015 and December 31, 2014 are as follows:

 

(In millions of won)
		Trade accounts and notes receivable and others								Trade accounts and notes payable and others
		March 31, 2015				December 31, 2014				March 31, 2015				December 31, 2014
Subsidiaries
LG Display America, Inc.		W	1,019,389				1,810,674				1				—
LG Display Japan Co., Ltd.			203,632				128,248				17				—
LG Display Germany GmbH			316,306				306,277				12,007				6,312
LG Display Taiwan Co., Ltd.			558,947				368,188				81				52
LG Display Nanjing Co., Ltd.			95				19,732				34,194				86,499
LG Display Shanghai Co., Ltd.			299,120				311,532				—				20
LG Display Poland Sp. z o.o.			153				131				10,672				10,746
LG Display Guangzhou Co., Ltd.			3,128				307,469				464,495				772,702
LG Display Shenzhen Co., Ltd.			214,127				260,602				1				—
LG Display Yantai Co., Ltd.			567				2,214				442,241				447,994
LG Display China Co., Ltd.			612				—				11,546				12,147
LG Display U.S.A., Inc.			—				4,397				—				2,923
LG Display Singapore Pte. Ltd.			96,405				106,506				—				—
L&T Display Technology (Fujian) Limited			101,509				81,898				218,621				199,470
Nanumnuri Co., Ltd.			—				—				834				1,077
		W	2,813,990				3,707,868				1,194,710				1,539,942

 

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19.	Related Parties, Continued

 

(In millions of won)
		Trade accounts and notes receivable and others								Trade accounts and notes payable and others
		March 31, 2015				December 31, 2014				March 31, 2015				December 31, 2014
Joint Venture
Suzhou Raken Technology Co., Ltd.		W	29,741				27,750				—				—
Global OLED Technology LLC			—				—				227				505
		W	29,741				27,750				227				505
Associates and their subsidiaries
New Optics Ltd.		W	—				440				22,477				14,785
New Optics USA,Inc			—				—				2,713				—
LIG INVENIA Co., Ltd. (LIG ADP Co., Ltd)			—				—				8,195				2,471
TLI Inc.			101				—				18,833				14,086
AVACO Co., Ltd.			128				—				31,745				12,700
AVATEC Co., Ltd.			530				—				5,076				10,645
Paju Electric Glass Co., Ltd.			4,038				—				70,386				82,792
Narenanotech Corporation			—				—				4,695				1,532
Glonix Co., Ltd.			—				—				693				1,752
ADP System Co., Ltd.			—				—				2,204				1,822
YAS Co., Ltd.			—				—				10,196				7,300
		W	4,797				440				177,213				149,885
Entity that has significant influence over the Company
LG Electronics Inc.		W	392,665				379,977				151,500				110,281

 

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19.	Related Parties, Continued

 

(In millions of won)
		Trade accounts and notes receivable and others								Trade accounts and notes payable and others
		March 31, 2015				December 31, 2014				March 31, 2015				December 31, 2014
Subsidiaries of the entity that has significant influence over the Company
LG Electronics India Pvt. Ltd.		W	24,879				13,825				—				—
LG Electronics Vietnam Co., Ltd.			13,469				—				—				—
LG Electronics Vietnam Haiphong Co., Ltd.			—				13,491				—				—
LG Electronics Thailand Co., Ltd.			7,218				17,792				—				—
LG Electronics (Kunshan) Computer Co., Ltd			6,235				—				—				—
LG Innotek Co., Ltd.			186				4				101,465				84,931
LG Hitachi Water Solutions Co., Ltd.			—				—				9,000				7,079
Inspur LG Digital Mobile Communication Co., Ltd			7,425				—				—				—
Qingdao LG Inspur Digital Communication Co., Ltd.			76,856				65,641				—				—
Hi Entech Co., Ltd.			—				—				5,303				5,954
Others			3,720				7,082				3,494				5,008
		W	139,988				117,835				119,262				102,972
		W	3,381,181				4,233,870				1,642,912				1,903,585

 

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20.	Income Taxes

 

(a)

Details of income tax expense for the three-month periods ended March 31, 2015 and 2014 are as follows:

 

(In millions of won)
		2015				2014
Current tax expense (benefit)		W	64,553				(10,158	)
Deferred tax expense			37,122				85,463
Income tax expense		W	101,675				75,305

 

(b)

Deferred Tax Assets and Liabilities

Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the deferred tax assets at the reporting date will be realized with the Company’s estimated future taxable income.

Deferred tax assets and liabilities as of March 31, 2015 and December 31, 2014 are attributable to the following:

 

(In millions of won)		Assets								Liabilities								Total
		March 31, 2015				December 31, 2014				March 31, 2015				December 31, 2014				March 31, 2015				December 31, 2014
Other accounts receivable, net		W	—				—				(2,813	)			(3,440	)			(2,813	)			(3,440	)
Inventories, net			24,660				44,543				—				—				24,660				44,543
Available-for-sale financial assets			—				—				(92	)			(88	)			(92	)			(88	)
Defined benefit liabilities, net			108,889				112,213				—				—				108,889				112,213
Accrued expenses			167,949				173,635				—				—				167,949				173,635
Property, plant and equipment			137,115				129,370				—				—				137,115				129,370
Intangible assets			1,603				1,423				—				—				1,603				1,423
Provisions			12,956				12,710				—				—				12,956				12,710
Gain or loss on foreign currency translation, net			165				169				(1	)			(1	)			164				168
Others			16,411				16,326				—				—				16,411				16,326
Tax credit carryforwards			380,326				397,105				—				—				380,326				397,105
Deferred tax assets (liabilities)		W	850,074				887,494				(2,906	)			(3,529	)			847,168				883,965

Statutory tax rate applicable to the Company is 24.2% for the three-month period ended March 31, 2015.

 

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21.	Earnings (Loss) per Share

 

(a)

Basic earnings (loss) per share for the three-month periods ended March 31, 2015 and 2014 are as follows:

 

(In won and No. of shares)		2015				2014
Profit (Loss) for the period		W	334,771,558,584				(148,992,346,597	)
Weighted-average number of common stocks outstanding			357,815,700				357,815,700
Earnings (Loss) per share		W	936				(416	)

There were no events or transactions that resulted in changes in the number of common stocks used for calculating earnings (loss) per share from January 1, 2014 to March 31, 2015.

 

(b)

Diluted earnings (loss) per share for the three-month period ended March 31, 2015 is not calculated since there was no potential common stock. In addition, there is no effect of dilutive potential ordinary shares due to the Company’s net loss for the three-month period ended March 31, 2014.

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

				LG Display Co., Ltd.
				(Registrant)
Date: May 15, 2015				By:		/s/ Heeyeon Kim
						(Signature)
				Name:		Heeyeon Kim
				Title:		Head of IR / Vice President

 

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