Form 6-K

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

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

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of February 2019

 

 

LG Display Co., Ltd.

(Translation of Registrant’s name into English)

 

 

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

(Address of principal executive offices)

 

 

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

Form 20-F  ☒            Form 40-F  ☐

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

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

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

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

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

Yes  ☐            No  ☒

 

 

 


I. Activities and Remuneration of Outside Directors, etc.

 

  1.

Attendance and Voting Record of Outside Directors, etc.

 

     Date   

Agenda

  

Remark

  

Name of Outside Directors

  

Non-
standing

Director

  

Jin

Jang

(Attend

ance
rate:
100%)

  

Joon
Park

(Attend

ance
rate:
88%)

  

Sung

Sik
Hwang

(Attend

ance
rate:
100%)

  

Kun

Tai Han

(Attend

ance
rate:
100%)

  

Byoun

gho

Lee

(Attend

ance

rate:

100%)

  

Hyun-

Hwoi Ha

(Attend

ance
rate:
88%)

1    2018.01.22    Report on resolutions passed by the management committee    Reported    —      —      —      —     

Newly

appointed at FY2017 AGM

   —  
   Report on 2017 Q4 financial and operating results    Reported    —      —      —      —      —  
   Report on operation of internal accounting controls    Reported    —      —      —      —      —  
   Approval of FY2017 financial statements    Approved    For    Absent    For    For    For
   Approval of FY2017 annual business report    Approved    For    Absent    For    For    For
   Approval of change in composition of Outside Director Nomination Committee    Approved    For    Absent    For    For    For
2    2018.02.20    Report on operation and evaluation of internal accounting control system    Reported    —      —      —      —      —  
   Report on operation of the compliance system    Reported    —      —      —      —      —  
   Approval of convening of the FY2017 Annual General Meeting of shareholders    Approved    For    For    For    For    For
   Approval of FY2017 AGM agenda items    Approved    For    For    For    For    For
   1) Approval of Consolidated & Separate Financial Statements of FY2017    Approved    For    For    For    For    For
   2) Appointment of Directors    Approved    For    For    For    For    For
   3) Appointment of Audit Committee Member    Approved    For    For    For    For    For
   4) Approval of Remuneration Limit for Directors in 2018    Approved    For    For    For    For    For
3    2018.03.15    Approval of Chairman of Board of Directors election    Approved   

Retired

at FY2017 AGM

   For    For    For    For    For
   Approval of representative director nomination    Approved    For    For    For    For    For
   Approval of internal transaction    Approved    For    For    For    For    For
   Approval of remuneration for executive officers & other agenda    Approved    For    For    For    For    For
   1) Approval of remuneration for executive officers    Approved    For    For    For    For    For
   2) Approval of HR personnel policy revision for executive officers    Approved    For    For    For    For    For
   3) Approval of company advisor compensation to the retired executive officers who are outplaced in 2018    Approved    For    For    For    For    For
   4) Approval of the remuneration for board directors in 2017    Approved    For    For    For    For    For
   5) Approval of the performance-based bonus targets for executive officers in 2018        Approved    For    For    For    For    For

 

2


4    2018.04.24    Report on 2018 Q1 financial and operating results    Reported       —      —      —      —      —  
   Approval of transactions with significant shareholders    Approved       For    For    For    For    For
5    2018.07.24    Report on 2018 Q2 financial and operating results    Reported       —      —      —      —      —  
   Report on resolutions passed by the management committee    Reported       —      —      —      —      —  
   Approval of long-term debt    Approved       For    For    For    For    For
6    2018.10.23    Report on 2018 Q3 financial and operating results    Reported       —      —      —      —      —  
7    2018.11.28    Report on issuance of bonds in 2nd half of 2018    Reported       —      —      —      —      —  
   Approval of executive officer appointments    Approved       For    For    For    For    For
   Approval of FY2019 limits on issuance of bonds    Approved       For    For    For    For    For
   Review of FY2018 achievement and approval of FY2019 business plan    Approved       For    For    For    For    For
  

Approval of transactions with the largest shareholder and

special persons concerned

   Approved       For    For    For    For    For
   Approval of transaction limit with major shareholders and other related parties    Approved       For    For    For    For    For
   Re-approval of facility sales contract to offshore subsidiaries    Approved       For    For    For    For    For
   Approval of license agreement for LG brand    Approved       For    For    For    For    For
   Approval of LG Twin Tower lease agreement    Approved       For    For    For    For    For
   Approval of change in composition of Audit Committee    Approved       For    For    For    For    For
8    2018.12. 20    Approval of executive officer appointments    Approved       For    For    For    For    Absent

 

  2.

Activities of Outside Directors, etc. in Committees of the Board of Directors

 

     Date   

Agenda

  

Remarks

1    2018.01.22    The independent auditor’s report on audit progress    Reported
   Report of 2017 Q4 financial statements    Reported
   Report on FY2017 financial statements    Reported
   Report on the actual status regarding operation of the internal accounting management system    Reported
   Report on review of 2017 Q4 financial statements    Reported
   Report on internal audit    Reported
   Report on Audit Committee self-evaluation    Reported
   Report on FY2017 annual business report        Reported

 

3


2    2018.02.20    Evaluation on the actual status of the internal accounting management system    Approved
   Evaluation on the current status regarding operation of the internal monitoring system    Approved
   Drafting and submission of FY2017 audit report    Approved
   Approval of audit and relevant audit-services by the independent auditor    Approved
   Report on operation of the compliance system    Reported
   Report on review of AGM agenda and documents    Reported
   Report on review of FY2017 financial statements    Reported
3    2018.03.15    Approval of appointment of Chairman of Audit Committee    Approved
4    2018.04.24    The independent auditors report on audit progress    Reported
   Report on 2018 Q1 financial statements    Reported
   Report on review of 2018 Q1 financial statements    Reported
   Report on internal audit    Reported
5    2018.07.24    Approval of non-audit security related services    Approved
   The independent auditors report on audit progress    Reported
   Report on 2017 Q2 financial statements    Reported
   Report on review of 2017 Q2 financial statements    Reported
   Report on internal audit    Reported
6    2018.10.23    Approval of audit and relevant audit-services of overseas subsidiary by the independent auditor    Approved
   The independent auditors report on audit progress    Reported
   Report on internal audit    Reported
   Report on review of 2018 Q3 financial statements    Reported
   Report on 2018 Q3 financial statements    Reported
7    2018.11.28    Report on internal audit    Reported
8    2018.12.20    Approval of audit and relevant audit-services by the independent auditor    Approved

 

  3.

Remuneration of Outside Directors & Non-Standing Directors

 

               (KRW Million)
    

Number of

Persons

  

Remuneration Limit*

  

Results

  

Average Payment per Person

  

Remarks

Outside Director

   4    8,500    319    79.8   
Non-standing Director    1         

 

*

Remuneration limit for the total 7 directors, including 2 standing directors & 1 non-standing director.

 

4


II. Accumulated Transaction Amount of LG Display Co., Ltd with each of its Major Shareholders or their Affiliates, which was equivalent to [5]% or more of 2018 Total Assets or Revenue in Separate Financial Statement.

 

(KRW Million)

 

Transaction Type

   Counterpart (Relationship)   Transaction Period      Transaction Amount      Assets
Ratio*(%)
    Revenue
Ratio*(%)
 

Sales/Purchase

   LG Display America Inc. (Subsidiary)     Jan. 1, 2018 ~ Dec. 31, 2018        8,944,630        33     40

Sales/Purchase

   LG Display Japan Co., Ltd. (Subsidiary)     Jan. 1, 2018 ~ Dec. 31, 2018        2,415,595        9     11

Sales/Purchase

   LG Display Germany GmbH (Subsidiary)     Jan. 1, 2018 ~ Dec. 31, 2018        1,802,037        7     8

Sales/Purchase

   LG Display Taiwan Co., Ltd. (Subsidiary)     Jan. 1, 2018 ~ Dec. 31, 2018        1,489,015        6     7

Sales/Purchase

   LG Display Nanjing Co., Ltd. (Subsidiary)     Jan. 1, 2018 ~ Dec. 31, 2018        1,368,719        5     6

Sales/Purchase

   LG Display Guangzhou Co., Ltd. (Subsidiary)     Jan. 1, 2018 ~ Dec. 31, 2018        2,010,518        7     9

Sales/Purchase

   LG Display Shenzhen Co., Ltd. (Subsidiary)     Jan. 1, 2018 ~ Dec. 31, 2018        1,312,092        5     6

Sales/Purchase

   LG Display Yantai Co., Ltd. (Subsidiary)     Jan. 1, 2018 ~ Dec. 31, 2018        1,420,876        5     6

Sales/Purchase

   LG Display (China) Co., Ltd. (Subsidiary)     Jan. 1, 2018 ~ Dec. 31, 2018        1,411,534        5     6
       

 

 

    

 

 

   

 

 

 

Sales/Purchase

   LG Electronics Inc.(Largest Shareholder)     Jan. 1, 2018 ~ Dec. 31, 2018        1,800,949        7     8
       

 

 

    

 

 

   

 

 

 

Sales/Purchase.

   Serve one Co., Ltd. (Affiliate)     Jan. 1, 2018 ~ Dec. 31, 2018        1,129,063        4     5
       

 

 

    

 

 

   

 

 

 

*   Ratio in comparison with total assets or revenue, as applicable, in FY 2018

    

II-I. Individual Transactions of LG Display Co., Ltd with each of its Major Shareholders or their Affiliates, which was equivalent to 1% or more of 2018 Total Assets.

(KRW 100 Million)

 

Transaction Type

  

Counterpart (Relationship)

  

Transaction Period

  

Transaction Amount

  

Ratio*(%)

           

III. Reference Relating to AGM

 

  1.

Matters Relating to the Annual General Meeting

 

  A.

Date and Time: 9:30 A.M., March 15, 2019 (Friday)

 

  B.

Venue : Guest House, LG Display Paju Display Cluster. 245, LG-ro, Wollong-myeon, Paju-si, Gyeonggi-do, Republic of Korea

 

  2.

Agenda for Meeting

 

  A.

For Reporting

(1) Audit Committee’s Audit Report

(2) Fiscal Year 2018 Business Report

(3) Report on operation of internal accounting controls

 

  B.

For Approval

(1)  Consolidated and Separate the Financial Statements as of and for the fiscal year ended December 31, 2018

(2)  Amendment to the Articles of Incorporation

(3)  Appointment of Directors

3-1: Appointment of non-standing director (Young Soo Kwon)

3-2: Appointment of outside director (Kun Tai Han)

3-3: Appointment of outside director (Chang-Yang Lee)

 

5


3-4: Appointment of standing director (Dong Hee Suh)

(4)  Appointment of Audit Committee Member

4-1: Appointment of Audit Committee Member (Kun Tai Han)

4-2: Appointment of Audit Committee Member (Chang-Yang Lee)

(5)  Remuneration Limit for Directors in 2018 (KRW 8.5 billion)

 

  3.

Details of Agenda for Approval

 

  A.

Agenda 1: Consolidated and Separate the Financial Statements as of and for the fiscal year ended December 31, 2018

(1) Business Performance in FY 2018

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 December 31, 2018, 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.

As of December 31, 2018, 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.

 

2018 Financial highlights by business (based on K-IFRS)   
     (Unit: In 100 millions of Won)  

2018

   Display Business  

Sales

     243,336  

Gross Profit

     30,853  

Operating Profit (Loss)

     929  

B. Major products

 

We manufacture TFT-LCD 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 2018 (%)
Display   

Product/

Service/

Other Sales

  

Display Panel

(Overseas (1))

  

Panels for notebook computers, monitors, televisions,

smartphones, tablets, etc.

   LG Display    22,747 (93%)
  

Display Panel

(Korea (1))

  

Panels for notebook computers, monitors, televisions,

smartphones, tablets, etc.

   LG Display    1,590 (7%)
Total                24,336 (100%)

 

(1)

Based on ship-to-party.

 

6


(C) Consolidated Financial Statements

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Financial Position

As of December 31, 2018 and 2017

 

(In millions of won)    Note    December 31, 2018      December 31, 2017  

Assets

        

Cash and cash equivalents

   4, 26    W 2,365,022      2,602,560

Deposits in banks

   4, 26      78,400      758,078

Trade accounts and notes receivable, net

   5, 14, 26 28      2,829,163      4,325,120

Other accounts receivable, net

   5, 26      169,313      164,827

Other current financial assets

   6, 26      46,301      27,252

Inventories

   7      2,691,203      2,350,084

Prepaid income taxes

        4,516      3,854

Other current assets

   5      546,048      241,928

Non-current Assets Held for Sale

        70,161   
     

 

 

    

 

 

 

Total current assets

        8,800,127      10,473,703

Deposits in banks

   4, 26      11      11

Investments in equity accounted investees

   8      113,989      122,507

Other non-current accounts receivable, net

        11,448      8,738

Other non-current financial assets

   6, 26      144,214      59,836

Property, plant and equipment, net

   9      21,600,130      16,201,960

Intangible assets, net

   10      987,642      912,821

Deferred tax assets

   24      1,136,166      985,352

Other non-current assets

   5      381,983      394,759
     

 

 

    

 

 

 

Total non-current assets

        24,375,583      18,685,984
     

 

 

    

 

 

 

Total assets

      W 33,175,710      29,159,687
     

 

 

    

 

 

 

Liabilities

        

Trade accounts and notes payable

   26, 28    W 3,087,461      2,875,090

Current financial liabilities

   11, 26      1,553,907      1,452,926

Other accounts payable

   26      3,566,629      3,169,937

Accrued expenses

        633,346      812,615

Income tax payable

        105,900      321,978

Provisions

   13      98,254      76,016

Advances received

   14      834,010      194,129

Other current liabilities

   13      74,976      75,991
     

 

 

    

 

 

 

 

7


Total current liabilities

        9,954,483     8,978,682

Non-current financial liabilities

   11, 26      7,030,628     4,150,192

Non-current provisions

   13      32,764     28,312

Defined benefit liabilities, net

   12      45,360     95,447

Long-term advances received

   14      1,114,316     830,335

Deferred tax liabilities

   24      15,087     24,646

Other non-current liabilities

   13      96,826     70,563
     

 

 

   

 

 

 

Total non-current liabilities

        8,334,981     5,199,495
     

 

 

   

 

 

 

Total liabilities

        18,289,464     14,178,177
     

 

 

   

 

 

 

Equity

       

Share capital

   15      1,789,079     1,789,079

Share premium

        2,251,113     2,251,113

Retained earnings

        10,239,965     10,621,571

Reserves

   15      (300,968     (288,280
     

 

 

   

 

 

 

Total equity attributable to owners of the Controlling Company

        13,979,189     14,373,483
     

 

 

   

 

 

 

Non-controlling interests

        907,057     608,027
     

 

 

   

 

 

 

Total equity

        14,886,246     14,981,510
     

 

 

   

 

 

 

Total liabilities and equity

      W 33,175,710     29,159,687
     

 

 

   

 

 

 

See accompanying notes to the consolidated financial statements.

 

8


b. Consolidated Statements of Comprehensive Income

For the years ended December 31, 2018 and 2017

 

(In millions of won, except earnings per share)    Note    2018     2017  

Revenue

   16, 17, 28    W 24,336,571     27,790,216

Cost of sales

   7, 28      (21,251,305     (22,424,661
     

 

 

   

 

 

 

Gross profit

        3,085,266     5,365,555

Selling expenses

   19      (832,963     (994,483

Administrative expenses

   19      (938,214     (696,022

Research and development expenses

        (1,221,198     (1,213,432
     

 

 

   

 

 

 

Operating profit

        92,891     2,461,618
     

 

 

   

 

 

 

Finance income

   22      254,131     279,019

Finance costs

   22      (326,893     (268,856

Other non-operating income

   21      1,003,038     1,081,746

Other non-operating expenses

   21      (1,115,233     (1,230,455

Equity in income of equity accounted investees, net

   8      700     9,560
     

 

 

   

 

 

 

Profit before income tax

        (91,366     2,332,632

Income tax expense

   23      (88,077     (395,580
     

 

 

   

 

 

 

Profit for the year

        (179,443     1,937,052
     

 

 

   

 

 

 

Other comprehensive income (loss)

       

Items that will never be reclassified to profit or loss

       

Remeasurements of net defined benefit liabilities

   12, 23      5,690     (16,260

Other comprehensive income from associates and joint ventrues

        20     441

Related income tax

   12, 23      (1,169     9,259
     

 

 

   

 

 

 
        4,541     (6,560

Items that are or may be reclassified to profit or loss

       

Net change in fair value of available-for-sale financial assets

   22, 23      —       —  

Foreign currency translation differences for foreign operations

   22, 23      (19,987     (231,738

Other comprehensive income (loss) from associates and joint ventures

   23      37     905

Related income tax

   23      —       —  
     

 

 

   

 

 

 
        (19,950     (230,833
     

 

 

   

 

 

 

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

        (15,409     (237,393
     

 

 

   

 

 

 

Total comprehensive income for the year

      W (194,852     1,699,659
     

 

 

   

 

 

 

Profit attributable to:

       

Owners of the Controlling Company

        (207,239     1,802,756

Non-controlling interests

        27,796     134,296
     

 

 

   

 

 

 

Profit for the year

      W (179,443     1,937,052
     

 

 

   

 

 

 

Total comprehensive income attributable to:

       

Owners of the Controlling Company

        (215,386     1,596,394

Non-controlling interests

        20,534     103,265
     

 

 

   

 

 

 

Total comprehensive income for the year

      W (194,852     1,699,659
     

 

 

   

 

 

 

Earnings per share (In won)

       

Basic earnings per share

   25    W (579     5,038
     

 

 

   

 

 

 

Diluted earnings per share

   25    W (579     5,038
     

 

 

   

 

 

 

See accompanying notes to the consolidated financial statements.

 

9


C. Consolidated Statements of Changes in Equity (Appendix-1)

D. Consolidated Statements of Cash Flows

For the years ended December 31, 2018 and 2017

 

(In millions of won)    Note      2018     2017  

Cash flows from operating activities:

       

Profit for the year

      W (179,443     1,937,052

Adjustments for:

       

Income tax expense

     23        88,077     395,580

Depreciation

     9,18        3,123,659     2,791,883

Amortization of intangible assets

     10,18        430,906     422,693

Gain on foreign currency translation

        (84,643     (187,558

Loss on foreign currency translation

        138,452     174,919

Expenses related to defined benefit plans

     12,20        179,880     198,241

Gain on disposal of property, plant and equipment

        (6,620     (101,227

Loss on disposal of property, plant and equipment

        15,048     20,030

Impairment loss on property, plant and equipment

        43,601     —    

Gain on disposal of intangible assets

        (239     (308

Loss on disposal of intangible assets

        —         30

Impairment loss on intangible assets

        82     1,809

Reversal of impairment loss on intangible assets

        (348     (35

Warranty expense

        234,928     251,131

Finance income

        (101,313     (202,591

Finance costs

        173,975     142,591

Equity in income of equity method accounted investees, net

     8        (701     (9,560

Other income

        (3,310     (16,812

Other expenses

        593     1,870
     

 

 

   

 

 

 
        4,232,027     3,882,686

Changes in

       

Trade accounts and notes receivable

        1,304,963     484,592

Other accounts receivable

        (56,870     (3,004

Inventories

        (449,901     (55,979

Other current assets

        (249,968     180,844

Other non-current assets

        (61,164     (119,002

Trade accounts and notes payable

        267,358     113,590

 

10


Other accounts payable

        (111,053     106,930

Accrued expenses

        (194,394     181,509

Provisions

        (217,984     (210,973

Other current liabilities

        78,849     (585

Defined benefit liabilities, net

        (224,335     (261,966

Long-term advances received

        948,276     1,020,470

Other non-current liabilities

        24,510     5,974
     

 

 

   

 

 

 
        1,058,287     1,442,400

Cash generated from operating activities

        5,110,871     7,262,138

Income taxes paid

        (486,549     (416,794

Interests received

        71,819     55,340

Interests paid

        (212,019     (136,483
     

 

 

   

 

 

 

Net cash provided by operating activities

      W 4,484,122     6,764,201
     

 

 

   

 

 

 

 

11


Consolidated Statements of Cash Flows, Continued

 

For the years ended December 31, 2018 and 2017

 

(In millions of won)    Note      2018     2017  

Cash flows from investing activities:

       

Dividends received

      W 5,272     8,639

Proceeds from withdrawal of deposits in banks

        1,454,561     2,206,148

Increase in deposits in banks

        (775,239     (1,803,718

Acquisition of available-for-sale financial assets

          (273

Proceeds from disposal of available-for-sale financial assets

          917

Acquisition of financial assets at fair value through profit or loss

        (431  

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

 

     6  

Acquisition of investments in equity accounted investees

        (14,732     (20,309

Proceeds from disposal of investments in equity accounted investees

        4,527     13,128

Acquisition of property, plant and equipment

        (7,942,209     (6,592,435

Proceeds from disposal of property, plant and equipment

        142,088     160,252

Acquisition of intangible assets

        (480,607     (454,448

Proceeds from disposal of intangible assets

        960     1,674

Government grants received

        1,210     1,859

Receipt from settlement of derivatives

        2,026     2,592

Increase in short-term loans

        (7,700     —  

Proceeds from collection of short-term loans

        15,968     1,118

Increase in long-term loans

        (36,580     (13,930

Decrease in deposits

        4,136     4,272

Increase in deposits

        (58,794     (2,648

Proceeds from disposal of emission rights

        10,200     6,090
     

 

 

   

 

 

 

Net cash used in investing activities

        (7,675,338     (6,481,072
     

 

 

   

 

 

 

Cash flows from financing activities:

     27       

Proceeds from short-term borrowings

        552,163     —  

Repayments of short-term borrowings

        (552,884     (105,864

Proceeds from issuance of debentures

        828,169     497,959

Proceeds from long-term debt

        3,882,959     1,195,415

Repayments of long-term debt

        —         —  

Repayments of current portion of long-term debt and debentures

        (1,859,098     (544,731

Capital contribution from non-controlling interests

        331,603     4,300

Subsidiaries’ dividends distributed to non-controlling interests

        (51,085     (5,929

Dividends paid

        (178,908     (178,908
     

 

 

   

 

 

 

Net cash provided by financing activities

        2,952,919     862,242
     

 

 

   

 

 

 

Net increase in cash and cash equivalents

        (238,297     1,145,371

Cash and cash equivalents at January 1

        2,602,560     1,558,696

Effect of exchange rate fluctuations on cash held

        759     (101,507
     

 

 

   

 

 

 

Cash and cash equivalents at December 31

      W 2,365,022     2,602,560
     

 

 

   

 

 

 

See accompanying notes to the consolidated financial statements.

 

12


e. Notes to the Consolidated Financial Statements

 

1.

Reporting Entity

 

  (a)

Description of the Controlling Company

LG Display Co., Ltd. (the “Controlling Company”) was incorporated in February 1985 and the Controlling Company is a public corporation listed in the Korea Exchange since 2004. The main business of the Controlling Company and its subsidiaries (the “Group”) is to manufacture and sell displays and its related products. As of December 31, 2018, the Group is operating Thin Film Transistor Liquid Crystal Display (“TFT-LCD”) and Organic Light Emitting Diode (“OLED”) panel manufacturing plants in Gumi, Paju and China and TFT-LCD and OLED module manufacturing plants in Gumi, Paju, China, Poland and Vietnam. The Controlling Company is domiciled in the Republic of Korea with its address at 128 Yeouidae-ro, Yeongdeungpo-gu, Seoul, the Republic of Korea. As of December 31, 2018, LG Electronics Inc., a major shareholder of the Controlling Company, owns 37.9% (135,625,000 shares) of the Controlling Company’s common stock.

The Controlling Company’s common stock is listed on the Korea Exchange under the identifying code 034220. As of December 31, 2018, there are 357,815,700 shares of common stock outstanding. The Controlling Company’s common stock is also listed on the New York Stock Exchange in the form of American Depository Shares (“ADSs”) under the symbol “LPL”. One ADS represents one-half of one share of common stock. As of December 31, 2018, there are 20,890,926 ADSs outstanding.

 

13


1.

Reporting Entity, Continued

 

  (b)

Consolidated Subsidiaries as of December 31, 2017

(In millions)

 

Subsidiaries

   Location    Percentage
of
ownership
    Fiscal
year end
     Date of
incorporation
  

Business

   Capital
stocks
 

LG Display America, Inc.

   San Jose,

U.S.A.

     100     December 31      September 24,
1999
   Sell Display products    USD 411  

LG Display Japan Co., Ltd.

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

LG Display Germany GmbH

   Eschborn,

Germany

     100     December 31      November 5,
1999
   Sell Display products    EUR 1  

LG Display Taiwan Co., Ltd.

   Taipei,
Taiwan
     100     December 31      April 12,

1999

   Sell Display products    NTD 116  

LG Display Nanjing Co., Ltd.

   Nanjing,
China
     100     December 31      July 15,

2002

   Manufacture Display products    CNY 3,020  

LG Display Shanghai Co., Ltd.

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

LG Display Poland Sp. z o.o.

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

LG Display Guangzhou Co., Ltd.

   Guangzhou,
China
     100     December 31      June 30,

2006

   Manufacture Display products    CNY 1,655  

LG Display Shenzhen Co., Ltd.

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

LG Display Singapore Pte. Ltd.

   Singapore      100     December 31      January 12,
2009
   Sell Display products    USD 1.1  

L&T Display Technology (Fujian) Limited

   Fujian,

China

     51     December 31      January 5,

2010

   Manufacture and sell LCD module and LCD monitor sets    CNY 116  

LG Display Yantai Co., Ltd.

   Yantai,

China

     100     December 31      April 19,

2010

   Manufacture Display products    CNY 1,008  

Nanumnuri Co., Ltd.

   Gumi,

South Korea

     100     December 31      March 21,

2012

   Janitorial services    KRW 800  

LG Display (China) Co., Ltd.

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

Unified Innovative Technology, LLC

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

2014

   Manage intellectual property    USD 9  

LG Display Guangzhou Trading Co., Ltd.

   Guangzhou,
China
     100     December 31      April 28,

2015

   Sell Display products    CNY 1.2  

Global OLED Technology, LLC

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

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

   Haiphong,
Vietnam
     100     December 31      May 5,

2016

   Manufacture Display products    USD 100  

Suzhou Lehui Display Co., Ltd.

   Suzhou,
China
     100     December 31      July 1,

2016

   Manufacture and sell LCD module and LCD monitor sets    CNY 637  

LG DISPLAY FUND I LLC(*2)

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

2018

   Invest in venture business and obtain technologies    USD 2-  

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

   Guangzhou,
China
     69     December 31      July 11,

2018

   Manufacture Display products    CNY 6,517  

Money Market Trust(*4)

   Seoul,

South Korea

     100     December 31      —      Money market trust    KRW 24,501  

 

14


1.

Reporting Entity, Continued

 

  (b)

Consolidated Subsidiaries as of December 31, 2018, Continued

 

(*1)

For the year ended December 31, 2018, the Controlling Company contributed W212,600 million in cash for the capital increase of LG Display Vietnam Haiphong Co., Ltd. (“LGDVN”). There was no change in the Controlling Company’s ownership percentage in LGDVN as a result of this additional investment.

(*2)

For the year ended December 31, 2018, the Controlling Company established LG DISPLAY FUND I LLC in Wilmington, U.S.A. to invest in venture business and the Controlling Company has a 100% equity interest of this subsidiary.

(*3)

For the year ended December 31, 2018, the Controlling Company established LG Display High-Tech (China) Co., Ltd. in Guangzhou China to manufacture Display products and the Group has a 69% equity interest of this subsidiary.

(*4)

For the year ended December 31, 2018, the Controlling Company acquired and disposed interests in Money Market Trust (“MMT”) and the MMT amount as of December 31, 2018 is W24,501 million.

W90,281 million and W603,493 million, respectively, are attributable to the Controlling Company over the distributed dividends from consolidated subsidiaries for the years ended December 31, 2018 and 2017.

(c) Summary of financial information of subsidiaries at the reporting date is as follows:

 

(In millions of won)    December 31, 2018      2018  

Subsidiaries

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

LG Display America, Inc.

     1,048,112        1,035,975        12,137        8,985,127        7,268  

LG Display Japan Co., Ltd.

     374,356        370,860        3,496        2,388,644        2,359  

LG Display Germany GmbH

     451,328        444,676        6,653        1,780,233        4,322  

LG Display Taiwan Co., Ltd.

     294,103        280,794        13,308        1,558,166        2,653  

LG Display Nanjing Co., Ltd.

     1,397,886        758,499        639,387        1,738,895        55,623  

LG Display Shanghai Co., Ltd.

     931,773        921,289        10,483        994,258        5,977  

LG Display Poland Sp. z o.o.

     165,079        5,308        159,771        38,437        249  

LG Display Guangzhou Co., Ltd.

     2,689,670        1,860,804        828,866        2,366,355        293,222  

LG Display Shenzhen Co., Ltd.

     50,337        43,636        6,701        1,370,364        3,386  

LG Display Singapore Pte. Ltd.

     152,768        149,405        3,363        1,099,288        2,471  

L&T Display Technology (Fujian) Limited

     293,025        231,955        61,070        1,156,111        (1,937

LG Display Yantai Co., Ltd.

     1,336,692        989,121        347,570        1,459,165        53,480  

Nanumnuri Co., Ltd.

     5,171        3,757        1,414        22,964        295  

LG Display (China) Co., Ltd.

     2,780,364        932,526        1,847,838        2,573,254        106,269  

Unified Innovative Technology, LLC

     4,898        3        4,895        —          (986

LG Display Guangzhou Trading Co., Ltd.

     485,800        483,502        2,298        807,536        1,266  

Global OLED Technology, LLC

     81,922        18,537        63,386        7,962        (5,232

LG Display Vietnam Haiphong Co., Ltd.

     2,342,774        1,963,922        378,852        871,755        60,923  

Suzhou Lehui Display Co., Ltd

     212,138        95,359        116,779        365,914        5,018  

LG DISPLAY FUND I LLC

     7        —          7        —          (2,242

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

     3,258,830        2,208,244        1,050,585        —          (10,152
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
      18,357,033        12,798,172        5,558,859        29,584,428        584,232  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

15


1.

Reporting Entity, Continued

 

(In millions of won)    December 31, 2017      2017  

Subsidiaries

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

LG Display America, Inc.

     1,805,429        1,801,175        4,254        11,000,647        268  

LG Display Japan Co., Ltd.

     245,128        244,041        1,087        2,484,558        263  

LG Display Germany GmbH

     519,989        517,559        2,430        1,846,424        1,441  

LG Display Taiwan Co., Ltd.

     450,202        439,753        10,449        1,699,164        2,303  

LG Display Nanjing Co., Ltd.

     690,353        101,291        589,062        527,566        45,649  

LG Display Shanghai Co., Ltd.

     723,893        719,200        4,693        1,334,361        3,288  

LG Display Poland Sp. z o.o.

     173,243        8,419        164,825        35,722        1,228  

LG Display Guangzhou Co., Ltd.

     1,864,870        1,321,134        543,735        2,544,600        143,402  

LG Display Shenzhen Co., Ltd.

     230,670        227,288        3,383        1,870,152        2,384  

LG Display Singapore Pte. Ltd.

     365,426        364,604        822        968,583        1,082  

L&T Display Technology (Fujian) Limited

     322,684        259,558        63,126        1,348,391        (6,912

LG Display Yantai Co., Ltd.

     1,239,341        944,190        295,152        2,212,055        102,017  

Nanumnuri Co., Ltd.

     5,659        4,540        1,119        21,530        109  

LG Display (China) Co., Ltd.

     3,395,779        1,473,781        1,921,998        2,922,116        458,940  

Unified Innovative Technology, LLC

     5,664        14        5,650        —          (1,025

LG Display Guangzhou Trading Co., Ltd.

     98,079        97,038        1,041        626,322        852  

Global OLED Technology, LLC

     79,429        13,616        65,813        8,160        (4,779

LG Display Vietnam Haiphong Co., Ltd.

     1,066,218        976,339        89,879        148,725        (14,543

Suzhou Lehui Display Co., Ltd

     202,661        90,123        112,538        408,797        3,721  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     13,484,717        9,603,663        3,881,056        32,007,873        739,688  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

2.

Basis of Presenting Financial Statements

 

  (a)

Statement of Compliance

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

The consolidated financial statements were authorized for issuance by the Board of Directors on January 19, 2019, which will be submitted for approval to the shareholders’ meeting to be held on March 15, 2018.

 

16


2.

Basis of Presenting Financial Statements, Continued

 

  (b)

Basis of Measurement

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

 

   

derivative instruments, financial assets at fair value through profit or loss and available-for-sale financial assets are measured at fair value, and

 

   

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

 

  (c)

Functional and Presentation Currency

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

 

  (d)

Use of Estimates and Judgments

The preparation of the 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 the last annual financial statements, except for new significant judgments and key sources of estimation uncertainty related to the application of K-IFRS No. 1109, K-IFRS No. 1115 in Note 3 and the change in useful life of Mask and Mold.

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

 

   

Classification of financial instruments (note 3.(d))

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

 

   

Recognition and measurement of provisions (note 3.(j), 13 and 14(a))

 

   

Measurement of defined benefit obligations (note 12)

 

   

Deferred tax assets and liabilities (note 24)

 

17


3.

Summary of Significant Accounting Policies

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

 

  (a)

Consolidation

(i) Business Combinations

The Group accounts for business combinations using the acquisition method when control is transferred to the Group. The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognized in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities in accordance with K-IFRS No. 1032 and K-IFRS No. 1109. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognized in profit or loss.

(ii) Subsidiaries

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

(iii) Non-controlling interests

Non-controlling interests (“NCI”) are measured at their proportionate share of the acquiree’s identifiable net assets at the acquisition date.

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

(iv) Loss of Control

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

 

18


3.

Summary of Significant Accounting Policies, Continued

 

  (a)

Consolidation, Continued

 

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

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

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

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

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

(vi) Transactions eliminated on consolidation

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

 

19


3.

Summary of Significant Accounting Policies, Continued

 

  (b)

Foreign Currency Transactions and Translation

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

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

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

 

  (c)

Cash and cash equivalents

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

 

20


3.

Summary of Significant Accounting Policies, Continued

 

  (d)

Inventories

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

 

  (e)

Financial Instruments

(i) Non-derivative financial assets

Under K-IFRS No. 1109, on initial recognition, a financial asset is classified as measured at: amortized cost; FVOCI-debt investment; FVOCI-equity investment; or FVTPL. The classification of financial assets under K-IFRS 1109 is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics.

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

 

   

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

 

   

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

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

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

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

 

21


3.

Summary of Significant Accounting Policies, Continued

 

  (e)

Financial Instruments, Continued

 

The following accounting policies apply to the subsequent measurement of financial assets.

 

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

(ii) Non-derivative financial liabilities

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

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

Non-derivative financial liabilities other than financial liabilities classified as FVTPL are classified as other financial liabilities and measured initially at fair value minus transaction costs that are directly attributable to the issuance of financial liabilities. Subsequent to initial recognition, these financial liabilities are measured at amortized cost using the effective interest method. As of December 31, 2017, non-derivative financial liabilities comprise borrowings, bonds and others.

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

(iii) Share Capital

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

(iv) Derivative financial instruments

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

 

22


3.

Summary of Significant Accounting Policies, Continued

 

  (e)

Financial Instruments, Continued

(iv) Derivative financial instruments, Continued

 

Hedge Accounting

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

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

i) Fair value hedges

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

ii) Cash flow hedges

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

Embedded derivative

Embedded derivatives are separated from the host contract and accounted for separately if the economic characteristics and risks of the host contract and the embedded derivative are not closely related, a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative, and the combined instrument is not measured at FVTPL. Changes in the fair value of separable embedded derivatives are recognized immediately in profit or loss.

 

23


3.

Summary of Significant Accounting Policies, Continued

 

Other derivative financial instruments

Derivative financial instruments are measured at fair value and changes of them not designated as a hedging instrument or not effective for hedging are recognized in profit or loss.

 

  (f)

Property, Plant and Equipment

(i) Recognition and measurement

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

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

(ii) Subsequent costs

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

(iii) Depreciation

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

Estimated useful lives of the assets are as follows:

 

     Useful lives (years)

Buildings and structures

   20, 40

Machinery

   4, 5

Furniture and fixtures

   4

Equipment, tools and vehicles

   4, 12

Depreciation methods, useful lives and residual values are reviewed at each financial yearend and adjusted if appropriate and any changes are accounted for as changes in accounting estimates. There were no such changes for all periods presented.

Based on the review of the past accumulated usage information that became available, the Group management reassessed the economic useful life of the Mask and Mold which had previously been classified as inventory. The balances of such Mask and Mold inventories amounted to W111,456 million as of December 31, 2017. Based on the results of the reassessment, the Group changed useful lives of Mask and Mold to two years and accounted for the change as a change in accounting estimate. The Group also changed the classification of Mask and Mold to property, plant and equipment

 

24


3.

Summary of Significant Accounting Policies, Continued

 

  (g)

Borrowing Costs

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

 

  (h)

Government Grants

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

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

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

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

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

(iii) Other government grants

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

 

  (i)

Intangible Assets

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

(i) Goodwill

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

 

25


3.

Summary of Significant Accounting Policies, Continued

 

  (i)

Intangible Assets, Continued

 

(ii) Research and development

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognized in profit or loss as incurred.

Development activities involve a plan or design of the production of new or substantially improved products and processes. Development expenditure is capitalized only if the Group can demonstrate all of the following:

 

   

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

 

   

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

 

   

its ability to use or sell the intangible asset,

 

   

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

 

   

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

 

   

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

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

(iii) Other intangible assets

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

(iv) Subsequent costs

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific intangible asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred.

 

26


3.

Summary of Significant Accounting Policies, Continued

 

  (i)

Intangible Assets, Continued

 

(v) Amortization

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

 

     Estimated useful lives (years)

Intellectual property rights

   5, 10

Rights to use electricity, water and gas supply facilities

   10

Software

   4

Customer relationships

   7, 10

Technology

   10

Development costs

   (*)

Condominium and golf club memberships

   Not amortized

 

(*)

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

Amortization periods and the amortization methods for intangible assets with finite useful lives are reviewed at each financial year-end. The useful lives of intangible assets that are not being amortized are reviewed each period to determine whether events and circumstances continue to support indefinite useful life assessments for those assets. If appropriate, the changes are accounted for as changes in accounting estimates.

 

  (j)

Impairment

(i) Financial assets

The Group recognized loss allowances for an ‘expected credit loss as below’.

 

   

Financial assets at amortized cost

 

   

Financial assets at fair value through other comprehensive income

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group expects to receive).

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

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets. For debt instruments at FVOCI, the loss allowance is recognized in OCI, instead of reducing the carrying amount of the asset.

 

27


3.

Summary of Significant Accounting Policies, Continued

 

  (j)

Impairment, Continued

 

(ii) Non-financial assets

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

For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”, or “CGU”). The recoverable amount of an asset or cash-generating unit is determined as the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Fair value less costs to sell is based on the best information available to reflect the amount that the Group could obtain from the disposal of the asset in an arm’s length transaction between knowledgeable, willing parties, after deducting the costs of disposal.

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

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

 

28


3.

Summary of Significant Accounting Policies, Continued

 

  (k)

Provisions

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

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

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

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

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

 

  (l)

Employee Benefits

(i) Short-term employee benefits

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

(ii) Other long-term employee benefits

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

 

29


3.

Summary of Significant Accounting Policies, Continued

 

  (l)

Employee Benefits, Continued

 

(iii) Defined contribution plan

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

(iv) Defined benefit plan

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

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

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

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

 

  (m)

Revenue

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

The Group adopted K-IFRS No. 1115, Revenue from contracts with customers, as of January 1, 2018. K-IFRS No. 1115 establishes a single new revenue recognition standard for contracts with customers and introduces a five-step model as below.

The steps in five-step model are as follows:

a) Identify the contract with a customer.

b) Identify the performance obligations in the contract.

c) Determine the transaction price.

d) Allocate the transaction price to the performance obligations in the contract.

e) Recognize revenue when (or as) the entity satisfies a performance obligation.

The consideration received from customers may be variable as the Group allows its customers to return of the Display Panel product.

The Group recognized refund liabilities as substantial amount compare to gross sales profit for expected return of goods until the end of December 31, 2018.

The Group shall estimate an amount of variable consideration by using the expected value or the most likely amount, depending on which method the entity expects to better predict the amount of consideration to which it will be entitled and include in the transaction price some or all of an amount of variable consideration estimated only to the extent that is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur when return period expires.

The Group shall recognize refund liability measured at the amount of consideration received (or receivable) to which the Group does not expect to be entitled and a new asset for the right to recover returned goods.

On the other hand, VAT received from customers and paid to the government is not recognized as gain comprehensive income statement

 

30


3.

Summary of Significant Accounting Policies, Continued

 

  (n)

Operating Segments

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

 

  (o)

Finance Income and Finance Costs

Financial income and financial expenses of the Group consist of the following:

 

   

interest income

 

   

Interest expenses

 

   

Dividend income

 

   

Other comprehensive income—net profit or loss on disposal of investment assets on debt instruments measured at fair value

 

   

Profit or loss—Net profit or loss on financial assets measured at fair value

 

   

Foreign exchange gains and losses on financial assets and financial liabilities

 

   

Amortized cost or other comprehensive income—impairment loss (or reversal of impairment loss) arising on investments in debt instruments measured at fair value

Interest income or expense is recognized using the effective interest method. Dividend income is recognized when the Group’s right to receive dividends is established. Interest expense on borrowings directly related to the acquisition, construction or production of qualifying assets is included in the acquisition cost of the related assets.

 

  (p)

Income Tax

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

 

  (i)

Current tax

Current tax is the expected tax payable or receivable on the taxable profit or loss for the year, using tax rates enacted or substantively enacted at the reporting date and any adjustment to tax payable in respect of previous years. The taxable profit is different from the accounting profit for the period since the taxable profit is calculated excluding the temporary differences, which will be taxable or deductible in determining taxable profit (tax loss) of future periods, and non-taxable or non-deductible items from the accounting profit.

 

31


3.

Summary of Significant Accounting Policies, Continued

 

  (p)

Income Tax, Continued

 

(ii) Deferred tax

Deferred tax is recognized, using the liability method, in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and deferred tax assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. However, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill.

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

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

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

 

  (q)

Earnings Per Share

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

 

32


3.

Summary of Significant Accounting Policies, Continued

 

  (r)

Change in Accounting Policies

The Group has consistently applied the accounting policies to the consolidated financial statements for 2018 and 2017 except for the new amendment effective for annual periods beginning on or after January 1, 2018 as mentioned below.

 

  (i)

K-IFRS No. 1109, Financial Instruments

K-IFRS No. 1109 set out requirements for recognizing and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. This standards replaces K-IFRS No. 1039 Financial Instruments: Recognition and Measurement. The Group adopted K-IFRS No. 1109, Financial Instruments, from January 1, 2018, and the Group has taken an exemption not to restate the financial statements for prior years with respects to transition requirements.

The details of new significant accounting policies and the nature and effect of the changes to previous accounting policies are set out below. There is no impact on the opening balance of retained earnings at January 1, 2018.

i) Classification and measurement of financial assets and financial liabilities

K-IFRS No. 1109 largely retains the existing requirements in K-IFRS No. 1039 for the classification and measurement of financial liabilities. However, it eliminates the previous K-IFRS No. 1039 categories for financial assets of held to maturity, loans and receivables and available for sale.

The adoption K-IFRS No. 1109 has not had a significant effect on the Group’s accounting policies related to financial liabilities and derivative financial instruments. The following table below explain the original measurement categories under K-IFRS No. 1039 and the changes in measurement categories under K-IFRS No. 1109 for each class of the Group’s financial assets as at January 1, 2018 are as below.

 

(In millions of won)

   Classification
under
K-IFRS No. 1039
     Classification
under

K-IFRS No. 1109
     Carrying amount
under

K-IFRS No. 1039
     Carrying amount
under

K-IFRS No. 1109
     Difference  

Financial assets

              

Cash and cash equivalents

     Loans and receivables        Amortized cost      W 2,602,560        2,602,560        —    

Deposits

     Loans and receivables        Amortized cost        758,089        758,089        —    

Trade receivables

     Loans and receivables        Amortized cost        4,325,120        4,325,120        —    

Other receivables

     Loans and receivables        Amortized cost        173,565        173,565        —    

Debt instrument

     Available-for-sale       
FVOCI-debt
instrument
 
 
     162        162        —    

Equity instrument

     Available-for-sale       

Mandatorily at

FVTPL

 

 

     4,980        4,980        —    

Convertible bonds

     Designated as at FVTPL       
Mandatorily at
FVTPL
 
 
     1,552        1,552        —    

Derivatives

     Designated as at FVTPL       
Mandatorily at
FVTPL
 
 
     842        842        —    

Others

     Loans and receivables        Amortized cost        79,552        79,552        —    
        

 

 

    

 

 

    

 

 

 

Total financial assets

         W 7,946,422        7,946,422        —    
        

 

 

    

 

 

    

 

 

 

As of January 1, 2018, there were no financial liabilities measured at FVTPL.

ii) Impairment of financial assets

 

33


K-IFRS No. 1109 replaces the ‘incurred loss’ model in K-IFRS No. 1039 with an ‘expected credit loss’ (ECL) model. The new impairment model applies to financial assets measured at amortized cost, contract assets and debt investments at FVOCI, but not to investments in equity instruments. Under K-IFRS No. 1109, credit losses are recognized earlier than under K-IFRS No. 1039.

As a result of applying the loss allowances model under K-IFRS No. 1109, as of January 1, 2018, there are no additional loss allowances as compared with the loss allowances under K-IFRS No. 1039.

iii) Hedge Accounting

When initially applying K-IFRS No. 1109, the Group elected as its accounting policy to continue to apply hedge accounting requirements under K-IFRS No. 1039 instead of the requirements in K-IFRS No. 1109. As of January 1, 2018, there is no impact on the condensed consolidated interim financial statement of the Group resulting from the application of the requirements in K-IFRS No. 1109.

 

  (ii)

K-IFRS No. 1115, Revenue from Contracts with Customers

K-IFRS No. 1115, Revenue from contracts with customers, establishes a comprehensive framework for determining whether, how much and when revenue is recognized. K-IFRS No. 1115 replaces existing revenue recognition guidance, including K-IFRS No. 1018 Revenue, K-IFRS No. 1011, Construction Contracts, K-IFRS No. 2031, Revenue: Barter Transactions Involving Advertising Services, K-IFRS No. 2113, Customer Loyalty Programmes, K-IFRS No. 2115, Agreements for the Construction of Real Estate and K-IFRS No. 2118, Transfers of Assets from Customers.

The Group has initially applied K-IFRS No. 1115, Revenue from contracts with customers, from January 1, 2018. Regarding transition to K-IFRS No.1115, the Group has decided to apply the cumulative effect method, i.e. recognizing the cumulative effect of applying K-IFRS No. 1115 at the date of initial application, which is January 1, 2018, without restatement of the comparative periods presented. The impact on its condensed consolidated interim financial statements resulting from the application of the new standard is as follows.

 

  (i)

Variable Consideration

The consideration received from customers may be variable as the Group allows its customers to return their products according to the contracts. For the year-ended December 31, 2018, the Group recognizes a provision measured at the gross profit for products sold which are expected to be returned. Under K-IFRS No. 1115, the Group shall estimate an amount of variable consideration by using the expected value or the most likely amount, depending on which method the entity expects to better predict the amount of consideration to which it will be entitled and include in the transaction price some or all of an amount of variable consideration estimated only to the extent that is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur when return period expires. The Group shall recognize refund liability measured at the amount of consideration received (or receivable) to which the Group does not expect to be entitled and a new asset for the right to recover returned goods. As a result of this change, the refund liability and a new asset for the right to recover returned goods increased by W9,789 million, respectively, as of January 1, 2018. There is no impact on the opening balance of retained earnings at January 1, 2018. (Note 5(d), 13(a))

The effect of the application of K-IFRS No. 1115 on the Group’s consolidated interim statement of financial position as of December 31, 2018 is as follows. There is no impact on the condensed consolidated interim statement of comprehensive income and the cash flows for the year ended December 31, 2018.

 

(in millions won)       

Categories

   Adoption of
K-IFRS No. 1115
     Adjustments      Adoption of
K-IFRS No. 1018
 

Current Assets

        

Other current assets

   W 616,209        (7,489      608,720  

Current Liabilities

        

Provisions

   W 98,254        (7,489      90,765  

 

34


  (ii)

K-IFRS No. 2122, Foreign Currency Transactions and Advance Consideration

According to the new interpretation, K-IFRS No. 2122, Foreign Currency Transactions and Advance Consideration, the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income (or part of it) is the date on which an entity initially recognizes the non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration. If there are multiple payments or receipts in advance, the entity shall determine a date of the transaction for each payment or receipt of advance consideration. There is no significant impact on the condensed consolidated interim financial statements of the Group.

 

35


3.

Summary of Significant Accounting Policies, Continued

 

  (b)

New Standards and Amendments Not Yet Adopted

The following new standard is effective for annual periods beginning after January 1, 2018 and earlier application is permitted; however, the Group has not early adopted the following new standard in preparing these condensed consolidated interim financial statements.

 

  (i)

K-IFRS No. 1116, Leases

The Group plans to adopt K-IFRS No. 1116, Leases, in its consolidated financial statements for annual period beginning on January 1, 2019, assess the financial impact of the adoption of K-IFRS No. 1116 and disclose the results in its consolidated financial statements for the year ending December 31, 2018. As of September 30, 2018, other than the potential impacts described in the consolidated financial statements as of and for the year ended December 31, 2017, there are no significant changes in relation to preparation for the adoption of this new standard.

The Controlling Company will apply K-IFRS No. 1116 from the beginning of the fiscal year starting on January 1, 2019. At the date of commitment, the Controlling Company determines whether the contract is a lease or whether the contract includes a lease, and identifies whether the contract includes a lease or lease in accordance with the standard on the date of initial application. However, the Controlling Company may not re-judge all contracts by applying the simplified method for contracts before the first application date. Under the simplified method, the Group recognizes lease assets as January 1, 2019 amounting to W168,439 million.

 

36


4.

Cash and Cash Equivalents and Deposits in Banks

Cash and cash equivalents and deposits in banks at the reporting date are as follows:

 

(In millions of won)              
     December 31, 2018      December 31, 2017  

Current assets

     

Cash and cash equivalents

     

Demand deposits

   W 2,365,022        2,602,560  

Deposits in banks

     

Time deposits

   W 4,318        685,238  

Restricted cash (*)

     74,082        72,840  
  

 

 

    

 

 

 
   W 78,400        758,078  
  

 

 

    

 

 

 

Non-current assets

     

Deposits in banks

     

Restricted cash (*)

   W 11        11  
  

 

 

    

 

 

 
   W 2,443,433        3,360,649  
  

 

 

    

 

 

 

 

(*)

Restricted cash includes mutual growth fund to aid LG Group’s second and third-tier suppliers, pledge to enforce investment plans according to the receipt of subsidies from Gumi city and Gyeongsangbuk- do and others.

 

5.

Receivables and Other Current Assets

 

  (a)

Trade accounts and notes receivable at the reporting date are as follows:

 

(In millions of won)              
     December 31, 2018      December 31, 2017  

Trade, net

   W 2,305,368        3,275,902  

Due from related parties

     523,795        1,049,218  
  

 

 

    

 

 

 
   W 2,829,163        4,325,120  
  

 

 

    

 

 

 

 

  (b)

Other accounts receivable at the reporting date are as follows:

 

(In millions of won)              
     December 31, 2018      December 31, 2017  

Current assets

     

Non-trade receivable, net

   W 159,238        150,554  

Accrued income

     10,075        14,273  
  

 

 

    

 

 

 
   W 169,313        164,827  
  

 

 

    

 

 

 

Due from related parties included in other accounts receivable, as of December 31, 2018 and 2017 are W39,092 million and W10,821 million, respectively.

 

37


5.

Receivables and Other Current Assets, Continued

 

  (c)

The aging of trade accounts and note receivable, other accounts receivable and long-term non-trade receivable at the reporting date are as follows:

 

(In millions of won)    December 31, 2018  
     Book value      Impairment loss  
     Trade accounts
and notes
receivable
     Other
accounts
receivable
     Trade accounts
and notes
receivable
     Other
accounts
receivable
 

Not past due

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

Past due 1-15 days

     21,558        3,148        (4      (26

Past due 16-30 days

     454        441        —          (4

Past due 31-60 days

     30        96        —          (1

Past due more than 60 days

            668        —          (434
  

 

 

    

 

 

    

 

 

    

 

 

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

 

 

    

 

 

    

 

 

    

 

 

 
(In millions of won)    December 31, 2017  
     Book value      Impairment loss  
     Trade accounts
and notes
receivable
     Other
accounts
receivable
     Trade accounts
and notes
receivable
     Other
accounts
receivable
 

Not past due

   W 4,323,465        173,493        (1,631      (905

Past due 1-15 days

     2,652        488        (1      (3

Past due 16-30 days

     631        65        —          (1

Past due 31-60 days

     —          208        —          (2

Past due more than 60 days

     4        622        —          (400
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 4,326,752        174,876        (1,632      (1,311
  

 

 

    

 

 

    

 

 

    

 

 

 

The movement in the allowance for impairment in respect of trade accounts and notes receivable, other accounts receivable and long-term non-trade receivable for the years ended December 31, 2018 and 2017 are as follows:

 

(In millions of won)   2018     2017  
    Trade accounts and notes
receivable
    Other accounts receivable     Trade accounts and
notes receivable
    Other accounts
receivable
 

Balance at the beginning of the period

  W 1,632       1,311       1,488       1,116  

(Reversal of) bad debt expense

    (1,155     (30     144       195  
 

 

 

   

 

 

   

 

 

   

 

 

 

Balance at the reporting date

  W 477       1,281       1,632       1,311  
 

 

 

   

 

 

   

 

 

   

 

 

 

 

38


(d) Other assets at the reporting date are as follows:

 

(In millions of won)    December 31, 2018      December 31, 2017  

Current assets

     

Advance payments

   W 13,259        7,973  

Prepaid expenses

     89,110        83,626  

Value added tax refundable

     436,190        148,351  

Emission rights

     —          1,978  

Right to recover returned goods

     7,489        —    
  

 

 

    

 

 

 
   W 70,161        241,928  
  

 

 

    

 

 

 

Non-current assets

     

Long-term prepaid expenses

   W 381,983        394,759  
  

 

 

    

 

 

 
   W 381,983        394,759  
  

 

 

    

 

 

 

 

6.

Other Financial Assets

(a) Other financial assets at the reporting date are as follows:

 

(In millions of won)    December 31, 2018  

Current assets

  

Financial asset at fair value through profit or loss

  

Derivatives(*1)

   W 13,059  

Financial asset at fair value through other comprehensive income

  

Debt instrument

  

Government bonds

   W 106  

Financial asset carried at amortized cost

  

Deposits

   W 17,020  

Short-term loans

     16,116  
  

 

 

 
   W 46,301  
  

 

 

 

Non-current assets

  

Financial asset at fair value through profit or loss

  

Equity instrument

  

Intellectual Discovery, Ltd.

   W 4,598  

Kyulux, Inc.

     2,460  

Fineeva Co., Ltd.

     286  

ARCH Venture Fund Vill, L.P.

     6,338  
  

 

 

 
   W 13,682  
  

 

 

 

Convertible bonds

   W 1,327  

Derivatives(*2)

  

Financial asset at fair value through other comprehensive income

  

Debt instrument

  

Government bonds

   W 54  

Financial asset carried at amortized cost

  

Deposits

   W 74,103  

Long-term loans

     55,048  
  

 

 

 
   W 144,214  
  

 

 

 

 

(*1)

Represents exchange rate swap contracts related to foreign currency denominated borrowings.

(*2)

Represents interest rate swap contracts related to borrowings with variable interest rate.

 

39


(b) Other financial assets as of December 31, 2017 are as follows:

 

(In millions of won)    December 31, 2017  

Current assets

  

Available-for-sale financial assets

  

Debt instrument

  

Government bonds

   W 6  

Deposits

     10,480  

Short-term loans

     16,766  
  

 

 

 
   W 27,252  
  

 

 

 

Non-current assets

  

Financial asset at fair value through profit or loss

   W 1,552  

Available-for-sale financial assets

  

Debt instrument

  

Government bonds

   W 156  

Equity instrument

  

Intellectual Discovery, Ltd.

   W 729  

Kyulux, Inc.

     1,968  

ARCH Venture Fund Vill, LP.

     2,283  
  

 

 

 
   W 4,980  
  

 

 

 

Deposits

   W 19,898  

Long-term loans

     32,408  

Derivatives(*)

     842  
  

 

 

 
   W 59,836  
  

 

 

 

 

(*)

Represents interest rate swap contracts related to borrowings with variable interest rate.

Other financial assets of related parties as of December 31, 2018 and December 31, 2017 are W2,000 million and W2,750 million, respectively.

 

40


7.

Inventories

Inventories as of December 31, 2018 and December 31, 2017 are as follows:

 

(In millions of won)    December 31, 2018      December 31, 2017  

Finished goods

   W 1,084,297        965,643  

Work-in-process

     856,388        748,592  

Raw materials

     554,720        344,997  

Supplies

     195,798        290,852  
  

 

 

    

 

 

 
   W 2,691,203        2,350,084  
  

 

 

    

 

 

 

For the years ended December 31, 2018 and 2017, 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 are as follows:

 

(In millions of won)    2018      2017  

Inventories recognized as cost of sales

   W 21,251,305        22,424,661  

Including: inventory write-downs

     313,180        206,127  

Including: reversal and usage of inventory write downs

     (206,127      (204,123

There were no significant reversals of inventory write-downs recognized during 2018 and 2017.

 

41


8.

Investments in Equity Accounted Investees

(a) Associates as of December 31, 2018 are as follows:

 

(In millions of won)  

Associates

   Location    Fiscal year
end
   Date of
incorporation
   Business    2018      2017  
   Percentage
of
ownership
    Carrying
amount
     Percentage
of
ownership
    Carrying
amount
 

Paju Electric Glass Co., Ltd.

   Paju,

South Korea

   December 31    January

2005

   Manufacture electric glass for
FPDs
     40   W 47,823        40   W 46,511  

INVENIA Co., Ltd.

   Seongnam,

South Korea

   December 31    January

2001

   Develop and manufacture
equipment for FPDs
     13     4,167        13     2,887  

WooRee E&L Co., Ltd. (*4)

   Ansan,

South Korea

   December 31    June

2008

   Manufacture LED back light
unit packages
     14     4,746        14     7,270  

LB Gemini New Growth Fund No. 16 (*1)

   Seoul,

South Korea

   December 31    December

2009

   Invest in small and middle
sized companies and benefit
from M&A opportunities
     —         —          31     5,910  

YAS Co., Ltd.

   Paju,

South Korea

   December 31    April

2002

   Develop and manufacture
deposition equipment for
OLEDs
     15     16,308        15     15,888  

AVATEC Co., Ltd.

   Daegu,

South Korea

   December 31    August

2000

   Process and sell electric glass
for FPDs
     17     23,441        17     23,732  

Arctic Sentinel, Inc.

   Los
Angeles,
U.S.A.
   March 31    June

2008

   Develop and manufacture

tablet for kids

     10     —          10     —    

CYNORA GmbH(*5)

   Bruchsal,

Germany

   December 31    March

2003

   Develop organic emitting
materials for displays and
lighting devices
     14     8,667        14     20,309  

 

42


8.

Investments in Equity Accounted Investees, Continued

 

(In millions of won)  
                                 2018      2017  

Associates

   Location      Fiscal year
end
     Date of
incorporation
     Business      Percentage of
ownership
    Carrying
amount
     Percentage
of ownership
     Carrying
amount
 

Material Science Co., Ltd. (*2)

    

Seoul,

South Korea

 

 

     December 31       

January

2014


 

    

Develop, manufacture,
and sell materials for
display
 
 
 
     10   W 3,346        —        W —    

Nanosys Inc. (*3)

    

Milpitas,

U.S.A.

 

 

     December 31       

July

2001

 

 

    

Develop, manufacture,
and sell materials for
display
 
 
 
     4     5,491        —          —    
                

 

 

       

 

 

 
                 W 113,989         W 122,507  
                

 

 

       

 

 

 

Although the Controlling Company’s share interests in INVENIA Co., Ltd., WooRee E&L Co., Ltd., YAS Co., Ltd., AVATEC Co., Ltd., Arctic Sentinel, Inc., Cynora GmbH, Material Science Co., Ltd and Nanosys Inc. are below 20%, the Controlling Company is able to exercise significant influence through its right to appoint a director to the board of directors of each investee 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.

 

43


8.

Investments in Equity Accounted Investees, Continued

 

  (*1)

For the year ended December 31, 2018, the Controlling Company disposed of the entire investments in LB Gemini New Growth Fund No. 16. The Controlling Company recovered W1,545 million and recognized W 385 million as finance cost for the difference between the carried amount and the recovered amount of investments in LB Gemini New Growth Fund No. 16.

 

  (*2)

In March 2018, the Controlling Company invested W4,000 million and acquired 10,767 shares of common stock with voting rights in Material Science Co., Ltd. Ownership percentage is 10% and the Controlling Company is able to exercise significant influence through its right to appoint a director to the board of directors of each investee. The Controlling Company recognized an impairment loss of W671 million as finance cost for the difference between the carrying amount and the recoverable amount of investments in Material Science Co., Ltd..

 

  (*3)

In May 2018, the Controlling Company invested W10,732 million and acquired 5,699,954 shares of common stock with voting rights in Nanosys Inc.. Ownership percentage is 4% and the Controlling Company is able to exercise significant influence through its right to appoint a director to the board of directors of each investee. The Controlling Company recognized an impairment loss of W5,085 million as finance cost for the difference between the carrying amount and the recoverable amount of investments in Nanosys Inc..

 

  (*4)

The Controlling Company recognized a recovery on impairment loss of W802 million as finance income for the difference between the carrying amount and the recoverable amount of investments in WooRee E&L Co., Ltd..

 

  (*5)

The Controlling Company recognized an impairment loss of W11,641 million as finance cost for the difference between the carrying amount and the recoverable amount of investments in CYNORA GmbH.

As of December 31, 2018, the market value for the Controlling Company’s investments in INVENIA Co., Ltd., WooRee E&L Co., Ltd., YAS Co., Ltd., and AVATEC Co., Ltd., all of which are listed in KOSDAQ, are W8,850 million, W4,746 million, W31,200 million and W14,151 million, respectively.

Dividends received from related parties for the years ended December 31, 2018 and 2017 amounted to W5,272 million and W8,639 million, respectively.

 

44


8.

Investments in Equity Accounted Investees, Continued

 

(b) Summary of financial information as of and for the years ended December 31, 2018 and 2017 of a major associate is as follows:

(i) Paju Electric Glass Co., Ltd.

 

(In millions of won)    December 31, 2018      December 31, 2017  

Total assets

   W 194,020        193,584  

Current assets

     128,788        146,702  

Non-current assets

     65,233        46,882  

Total liabilities

     72,686        77,174  

Current liabilities

     66,797        71,973  

Non-current liabilities

     5,889        5,201  
(In millions of won)    2018      2017  

Revenue

   W 384,144        408,846  

Profit for the year

     12,744        12,132  

Other comprehensive income (loss)

     2,612        (9,171

Total comprehensive income

     15,356        2,961  

 

(c)

Reconciliation from financial information of a major associate to their carrying value in the consolidated financial statements as of December 31, 2018 and 2017 is as follows:

(i) As of December 31, 2018

 

(In millions of won)                                        

Company

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

Paju Electric Glass Co., Ltd.

   W 121,334        40     48,534        —          (710     47,824  

(ii) As of December 31, 2017

 

(In millions of won)                                        

Company

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

Paju Electric Glass Co., Ltd.

   W 116,410        40     46,564        —          (53     46,511  

 

45


8.

Investments in Equity Accounted Investees, Continued

 

  (d)

Book value of other associates, in aggregate, as of December 31, 2018 and 2017 is as follows:

(i) As of December 31, 2018

 

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

Other associates

   W 66,166        (3,739      (988      (4,727

(ii) As of December 31, 2017

 

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

Other associates

     75,996        3,943        5,093        9,036  

 

46


8.

Investments in Equity Accounted Investees, Continued

 

  (e)

Reconciliation from financial information of significant joint venture and associates to their carrying value in the consolidated financial statements for the years ended December 31, 2018 and 2017 is as follows:

 

(In millions of won)             
         2018  

Company

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

Associates

  Paju Electric Glass Co., Ltd. Others    W 46,511        —         (4,172     4,440       1,044       —         47,823  
       75,997        12,592       (1,100     (3,739     (988     (16,596     66,166  
    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     W 122,508        12,592       (5,272     701       56       (16,596     113,989  
    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
(In millions of won)             
         2017  

Company

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

Associates

  Paju Electric Glass Co., Ltd. Others      52,750        —         (8,109     5,617       (3,747     —         46,511  
       119,933        (48,209     (530     3,943       5,093       (4,234     75,996  
    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     W 172,683        (48,209     (8,639     9,560       1,346       (4,234     122,507  
    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

47


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

9.

Property, Plant and Equipment

Changes in property, plant and equipment for the year ended December 31, 2018 are as follows:

 

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

Acquisition cost as of January 1, 2018

  

W

460,511

 

    6,539,506       38,901,158       772,824       5,971,856       205,475       52,851,330  

Accumulated depreciation as of January 1, 2018

     —         (2,678,970     (33,186,118     (631,482     —         (148,753     (36,645,323

Accumulated impairment loss as of January 1, 2018

     —         (1,757     (2,290     —         —         —         (4,047
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Book value as of January 1, 2018

   W 460,511       3,858,779       5,712,750       141,342       5,971,856       56,722       16,201,960  

Additions

     —         —         —         —         8,605,551       —         8,605,551  

Depreciation

     —         (318,311     (2,568,335     (67,274     —         (169,739     (3,123,659

Disposals

     (15     (161     (112,752     (311     —         (2,971     (116,210

Impairment loss

     —         —         (25,711     —         (17,890     —         (43,601

Others (*2)

     1,332       55,430       1,959,645       68,177       (2,357,412     18,160       107,450  

Effect of movements in exchange rates

     —         9,809       14,520       359       15,010       312       40,010  

Government grants Received

     —         —         (1,029     —         (181     —         (1,210

Classified Assets Held for Sale

     —         (69,758     (1     (37     —         (365     (70,161
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Book value as of December 31, 2018

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Acquisition cost as of December 31, 2018

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated depreciation as of December 31, 2018

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated impairment loss as of December 31, 2018

  

W

—  

 

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(*1)

As of December 31, 2018, construction-in-progress mainly relates to construction of manufacturing facilities.

(*2)

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

 

48


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

9.

Property, Plant and Equipment, Continued

 

Changes in property, plant and equipment for the year ended December 31, 2017 are as follows:

 

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

Acquisition cost as of January 1, 2017

   W 461,484       6,284,778       37,472,177       775,682       2,981,964       202,306       48,178,391  

Accumulated depreciation as of January 1, 2017

     —         (2,397,967     (32,947,359     (651,424     —         (146,251     (36,143,001

Accumulated impairment loss as of January 1, 2017

     —         (1,651     (2,290     —         —         —         (3,941
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Book value as of January 1, 2017

   W 461,484       3,885,160       4,522,528       124,258       2,981,964       56,055       12,031,449  

Additions

     —         —         —         —         7,272,476       —         7,272,476  

Depreciation

     —         (295,045     (2,416,202     (66,963     —         (13,673     (2,791,883

Disposals

     (1,042     (7,206     (75,275     (52     —         (3,133     (86,708

Others (*2)

     69       339,640       3,825,155       87,186       (4,270,210     18,160       —    

Effect of movements in exchange rates

     —         (63,222     (140,306     (3,087     (14,213     (687     (221,515

Government grants received

     —         (548     (3,150     —         1,839       —         (1,859
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Book value as of December 31, 2017

   W 460,511       3,858,779       5,712,750       141,342       5,971,856       56,722       16,201,960  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Acquisition cost as of December 31, 2017

   W 460,511       6,539,506       38,901,158       772,824       5,971,856       205,475       52,851,330  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated depreciation as of December 31, 2017

   W —         (2,678,970     (33,186,118     (631,482     —         (148,753     (36,645,323
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated impairment loss as of December 31, 2017

   W —         (1,757     (2,290     —         —         —         (4,047
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(*1)

As of December 31, 2017, construction-in-progress mainly relates to construction of manufacturing facilities.

(*2)

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

The capitalized borrowing costs and capitalization rate for the years ended December 31, 2018 and 2017 are as follows:

 

(In millions of won)             
     2018     2017  

Capitalized borrowing costs

   W 146,607       47,686  

Capitalization rate

     2.80     1.92

 

F-49


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

10.

Intangible Assets

 

  (a)

Changes in intangible assets for the year ended December 31, 2018 are as follows:

 

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

Acquisition cost as of January 1, 2018

  W 895,721       898,278       54,985       1,769,998       30,933       59,176       11,074       103,048       13,077       3,836,290  

Accumulated amortization as of January 1, 2018

    (648,755     (736,788     —         (1,473,237     —         (31,338     (8,490     —         (13,076     (2,911,684

Accumulated impairment loss as of January 1, 2018

    —         —         (11,785     —         —         —         —         —         —         (11,785
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Book value as of January 1, 2018

  W 246,966       161,490       43,200       296,760       30,933       27,839       2,584       103,048       1       912,821  

Additions - internally developed

    —         —         —         372,835       —         —         —         —         —         372,835  

Additions - external purchases

    26,312       —         3,290       —         101,244       —         —         1,263       —         132,109  

Amortization (*1)

    (43,437     (80,159     —         (302,685     —         (3,517     (1,107     —         (1     (430,906

Disposals

    —         —         (721     —         —         —         —         —         —         (721

Impairment loss

    —         —         (47     —         —         —         —         —         —         (47

Reversal of Impairment loss

    —         —         313       —         —         —         —         —         —         313  

Transfer from construction-in-progress

    —         96,632       —         —         (96,632     —         —         —         —         —    

Effect of movements in exchange rates

    182       (364     3       —         1,417       —         —         —         —         1,238  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Book value as of December 31, 2018

  W 230,023       177,598       46,038       366,910       36,962       24,322       1,477       104,310       —         987,642  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Acquisition cost as of December 31, 2018

  W 926,971       992,138       57,557       2,142,832       36,962       59,176       11,074       104,310       13,077       4,344,100  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated amortization as of December 31, 2018

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated impairment loss as of December 31, 2018

  W —         —         (11,519     —         —         —         —         —         —         (11,519
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(*1)

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

(*2)

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

 

50


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

10.

Intangible Assets, Continued

 

 

  (b)

Changes in intangible assets for the year ended December 31, 2017 are as follows:

 

(In millions of won)                                                             
     Intellectual
property
rights
    Software     Member-
ships
    Development
costs
    Construction-in-
progress
(software)
    Customer
relationships
    Technology     Good-
will(*2)
    Others
(*3)
    Total  

Acquisition cost as of January 1, 2017

   W 904,664       806,835       51,564       1,433,791       18,738       59,176       11,074       110,072       13,077       3,408,991  

Accumulated amortization as of January 1, 2017

     (618,398     (661,063     —         (1,177,451     —         (26,678     (7,382     —         (13,071     (2,504,043

Accumulated impairment loss as of January 1, 2017

     —         —         (10,011     —         —         —         —         —         —         (10,011
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Book value as of January 1, 2017

   W 286,266       145,772       41,553       256,340       18,738       32,498       3,692       110,072       6       894,937  

Additions - internally developed

     —         —         —         336,207       —         —         —         —         —         336,207  

Additions - external purchases

     22,746       —         4,819       —         108,761       —         —         —         —         136,326  

Amortization (*1)

     (42,195     (78,939     —         (295,787     —         (4,659     (1,108     —         (5     (422,693

Disposals

     (4     —         (1,392     —         —         —         —         —         —         (1,396

Impairment loss

     —         —         (1,809     —         —         —         —         —         —         (1,809

Reversal of Impairment loss

     —         —         35       —         —         —         —         —         —         35  

Transfer from construction-in-progress

     —         98,989       —         —         (98,989     —         —         (3,218     —         (3,218

Effect of movements in exchange rates

     (19,847     (4,332     (6     —         2,423       —         —         (3,806     —         (25,568
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Book value as of December 31, 2017

   W 246,966       161,490       43,200       296,760       30,933       27,839       2,584       103,048       1       912,821  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Acquisition cost as of December 31, 2017

   W 895,721       898,278       54,985       1,769,998       30,933       59,176       11,074       103,048       13,077       3,836,290  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated amortization as of December 31, 2017

   W (648,755)       (736,788     —         (1,473,238     —         (31,337     (8,490     —         (13,076     (2,911,684
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated impairment loss as of December 31, 2017

   W —         —         (11,785     —         —         —         —         —         —         (11,785
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

51


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

10.

Intangible Assets, Continued

 

  (*1)

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

  (*2)

As of December 31, 2017, the book value of goodwill decreased by W3,218 million as the Group completed the fair value measurement of land use right, acquired from business combination during the year ended December 31, 2016.

  (*3)

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

(c) Development of new projects are divided into research activities and development activities. Expenditures on research activities are recognized in profit or loss and qualifying development expenditures are capitalized, respectively.

(d) Development costs for the year ended December 31, 2018 and 2017 are as follows:

 

  (i)

As of December 31, 2018

 

(In millions of won and in years)  

Classification

  

Product

   Book Value      Remaining
Useful life
 

Development completed

   Mobile    W 108,467        0.5  
   TV      28,001        0.5  
   Notebook      4,458        0.5  
   Others      9,475        0.4  
     

 

 

    
  

Sub-Total

   W 150,402     
     

 

 

    

Development in process

   Mobile    W 144,679     
   TV      55,580     
   Notebook      9,639     
   Others      6,611     
     

 

 

    
  

Sub-Total

   W 216,508     
     

 

 

    
  

Total

   W 366,910     
     

 

 

    

 

52


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

(ii)

As of December 31, 2017

 

(In millions of won and in years)  

Classification

  

Product

   Book Value      Remaining
Useful life
 

Development completed

   Mobile    W 79,372        0.6  
   TV      36,038        0.6  
   Notebook      14,311        0.5  
   Others      12,444        0.4  
     

 

 

    
  

Sub-Total

   W 142,165     
     

 

 

    

Development in process

   Mobile    W 117,222     
   TV      30,670     
   Notebook      2,356     
   Others      4,347     
     

 

 

    
  

Sub-Total

   W 154,595     
     

 

 

    
  

Total

   W 296,760     
     

 

 

    

 

53


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

11.

Financial Liabilities

 

  (a)

Financial liabilities at the reporting date are as follows:

 

(In millions of won)              
     December 31,
2018
     December 31,
2017
 

Current

     

Short-term borrowings

   W —          —    

Current portion of long-term debt

     1,553,907        1,452,926  
  

 

 

    

 

 

 
   W 1,553,907        1,452,926  
  

 

 

    

 

 

 

Non-current

     

Won denominated borrowings

   W 2,700,608        1,251,258  

Foreign currency denominated borrowings

     2,531,664        1,392,931  

Bonds

     1,772,599        1,506,003  

Derivatives(*)

     25,758        —    
  

 

 

    

 

 

 
   W 7,030,629        4,150,192  
  

 

 

    

 

 

 

 

  (*)

Represents interest rate swap contracts related to borrowings with variable interest rate.

 

  (b)

Won denominated long-term borrowings at the reporting date is as follows:

 

(In millions of won)                   

Lender

  

Annual interest rate

as of

December 31, 2018 (%)

   December 31,
2018
     December 31,
2017
 

Woori Bank

   0.0275    W 1,258        1,922  

Shinhan Bank

   CD rate (91days) + 0.30%      —          200,000  

Korea Development Bank and others

  

CD rate (91days) + 0.64%

2.43~3.25%

     2,850,000        1,250,000  

Less current portion of long-term borrowings

        (150,651      (200,664
     

 

 

    

 

 

 
      W 2,700,608        1,251,258  
     

 

 

    

 

 

 

 

  (c)

Foreign currency denominated long-term borrowings at the reporting date is as follows:

 

(In millions of won and USD, CNY)  

Lender

  

Annual interest rate

as of

December 31, 2018 (%)(*)

   December 31,
2018
     December 31,
2017
 

The ExportImport Bank of Korea

   3ML+0.75~1.70    W 955,976        755,337  

China Construction Bank and others

  

USD: 3ML+0.80~2.00

CNY: PBOC*(0.90~1.05)

     2,419,286        1,385,097  
     

 

 

    

 

 

 

Foreign currency equivalent

      USD  2,262      USD  1,500  
      CNY  5,198      CNY  3,263  

Less current portion of long-term borrowings

      W (843,598)        (747,503
     

 

 

    

 

 

 
      W 2,531,664        1,392,931  
     

 

 

    

 

 

 

 

  (*)

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

 

(e)

Details of bonds issued and outstanding at the reporting date are as follows:

 

54


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

(In millions of won)                        
    

Maturity

  

Annual interest rate

as of

December 31, 2018 (%)

   December 31,
2018
     December 31,
2017
 

Won denominated bonds (*)

           

Publicly issued bonds

  

April 2019 ~

February 2023

   1.80~3.45    W 2,015,000        2,015,000  

Privately issued bonds

  

May 2025 ~

May 2033

   3.25~4.25      110,000     

Less discount on bonds

           (3,949      (4,238

Less current portion

           (559,658      (504,759
        

 

 

    

 

 

 
         W 1,446,393        1,506,003  
        

 

 

    

 

 

 

Foreign currency denominated bonds (*)

           

Publicly issued bonds

  

November 2021

   3.875    W 335,430        —    

Foreign currency equivalent

         USD 300        —    

Less discount on bonds

           (9,224      —    

Less current portion

           —          —    
        

 

 

    

 

 

 
         W 326,206     
        

 

 

    

 

 

 
         W 1,772,599        1,506,003  
        

 

 

    

 

 

 

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

(*) Principal of the foreign currency denominated bonds is to be repaid at maturity and interests are paid half-yearly in arrears.

 

55


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

12.

Employee Benefits

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

The defined benefit plans expose the Group to actuarial risks, such as the risk associated with expected periods of service, interest rate risk, market (investment) risk, and others.

 

  (a)

Net defined benefit liabilities recognized at the reporting date are as follows:

 

(In millions of won)              
     December 31, 2018      December 31, 2017  

Present value of partially funded defined benefit obligations

   W 1,595,423        1,562,424  

Fair value of plan assets

     (1,550,063      (1,466,977
  

 

 

    

 

 

 
   W 45,360        95,447  
  

 

 

    

 

 

 

 

  (b)

Changes in the present value of the defined benefit obligations for the years ended December 31, 2018 and 2017 are as follows:

 

(In millions of won)              
     2018      2017  

Opening defined benefit obligations

   W 1,562,424        1,401,396  

Current service cost

     204,667        195,850  

Past service cost

     (25,749      —    

Interest cost

     49,145        40,844  

Remeasurements (before tax)

     (27,886      (114

Benefit payments

     (88,560      (76,011

Transfers from (to) related parties

     (4,217      534  

Liquidation of plans

     (74,459   

Others

     58        (75
  

 

 

    

 

 

 

Closing defined benefit obligations

   W  1,595,423        1,562,424  
  

 

 

    

 

 

 

Weighted average remaining maturity of defined benefit obligations as of December 31, 2018 and 2017 are 14.4 years and 14.0 years, respectively.

 

  (c)

Changes in fair value of plan assets for the years ended December 31, 2018 and 2017 are as follows:

 

(In millions of won)              
     2018      2017  

Opening fair value of plan assets

   W  1,466,977        1,258,409  

Expected return on plan assets

     48,183        38,453  

Remeasurements (before tax)

     (22,195      (16,374

Contributions by employer directly to plan assets

     212,246        250,998  

Benefit payments

     (80,689      (64,509

Liquidation of plans

     (74,459      —    
  

 

 

    

 

 

 

Closing fair value of plan assets

   W  1,550,063        1,466,977  
  

 

 

    

 

 

 

 

56


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

12.

Employee Benefits, Continued

 

 

  (d)

Plan assets at the reporting date are as follows:

 

(In millions of won)              
     December 31, 2018      December 31, 2017  

Guaranteed deposits in banks

   W  1,550,063        1,466,977  

As of December 31, 2018, the Controlling Company maintains the plan assets with Mirae Asset Securities Co., Ltd., KB Insurance Co., Ltd. and others.

A reasonable estimate of the plan assets expected to be paid by the Controlling Company in 2019 related to the defined benefit plan is W 69,134 million.

 

(e)

Expenses recognized in profit or loss for the years ended December 31, 2018 and 2017 are as follows:

 

(In millions of won)    2018      2017  

Current service cost

   W  204,667        195,850  

Past service cost

     (25,749      —    

Net interest cost

     962        2,391  
  

 

 

    

 

 

 
   W 179,880        198,241  
  

 

 

    

 

 

 

Expenses are recognized in the following line items in the consolidated statements of comprehensive income:

 

(In millions of won)    2018      2017  

Cost of sales

   W 134,728        158,418  

Selling expenses

     11,097        11,114  

Administrative expenses

     19,531        16,287  

Research and development expenses

     14,524        12,422  
  

 

 

    

 

 

 
   W  179,880        198,241  
  

 

 

    

 

 

 

 

(f)

Remeasurements of net defined benefit liabilities (assets) included in other comprehensive income (loss) for the years ended December 31, 2018 and 2017 are as follows:

 

(In millions of won)    2018      2017  

Balance at January 1

   W (170,510)        (163,950

Remeasurements

     

Actuarial profit or loss arising from:

     

Experience adjustment

     56,224        (48,890

Demographic assumptions

     (15,379      (7,702

Financial assumptions

     (12,961      56,706  

Return on plan assets

     (22,195      (16,374

Share of associates regarding remeasurements

     20        441  
  

 

 

    

 

 

 
   W  5,709        (15,819
  

 

 

    

 

 

 

Income tax

   W  (1,169)        9,259  
  

 

 

    

 

 

 

Balance at December 31

   W (165,970)        (170,510
  

 

 

    

 

 

 

 

57


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

12.

Employee Benefits, Continued

 

  (g)

Principal actuarial assumptions at the reporting date (expressed as weighted averages) are as follows:

 

     December 31, 2018     December 31, 2017  

Expected rate of salary increase

     4.7     4.7

Discount rate for defined benefit obligations

     2.8     3.2

Assumptions regarding future mortality are based on published statistics and mortality tables. The current mortality underlying the values of the liabilities in the defined benefit plans are as follows:

 

          December 31, 2018     December 31, 2017  

Teens

   Males      0.01     0.01
   Females      0.00     0.00

Twenties

   Males      0.01     0.01
   Females      0.00     0.00

Thirties

   Males      0.01     0.01
   Females      0.01     0.01

Forties

   Males      0.03     0.03
   Females      0.02     0.02

Fifties

   Males      0.05     0.05
   Females      0.02     0.02

 

  (h)

Reasonably possible changes to respective relevant actuarial assumptions would have affected the defined benefit obligations by the amounts as of December 31, 2018 are as follows:

 

In millions of won)    Defined benefit obligation  
     1% increase      1% decrease  

Discount rate for defined benefit obligations

   W  (199,750)        241,608  

Expected rate of salary increase

     236,002        (199,363

 

58


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

13.

Provisions and Other Liabilities

 

  (a)

Changes in provisions for the year ended December 31, 2018 are as follows:

 

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

Balance at January 1, 2018

   W 43       102,450       1,835       104,328  
  

 

 

   

 

 

   

 

 

   

 

 

 

Effect of Accounting policy changes in K-IFRS No. 1115

     —         —         9,789       9,789  

Additions

     —         234,928       (2,694     232,234  

Usage and reclassification

     (43     (215,290     —         (215,333
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance at December 31, 2018

   W —         122,088       8,930       131,018  
  

 

 

   

 

 

   

 

 

   

 

 

 

Current

   W —         89,324       8,930       98,254  

Non-current

   W —         32,764       —         32,764  

 

(*)

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

 

  (b)

Other liabilities at the reporting date are as follows:

 

(In millions of won)              
     December 31, 2018      December 31, 2017  

Current liabilities

     

Withholdings

   W 30,970        60,766  

Unearned revenues

     43,841        12,225  

Rent Deposits

     165        —    
  

 

 

    

 

 

 
   W 74,976        75,991  
  

 

 

    

 

 

 

Non-current liabilities

     

Long-term accrued expenses

   W 80,816        70,561  

Long-term Unearned Income

     2,117        —    

Long-term other accounts payable

     3,103        2  

Rent Deposits

     10,790        —    
  

 

 

    

 

 

 
   W 96,826        70,563  
  

 

 

    

 

 

 

 

59


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

14.

Contingent Liabilities and Commitments

 

  (a)

Legal Proceedings

Anti-trust litigations

In December 2016, Argos Limited and affiliated companies (“Argos”) filed a Notice of Claim against the Company and LG Display Taiwan Co., Ltd. in the High Court of Justice in London alleging infringement of Treaty on the Functioning of the European Union and Agreement on the European Economic Area. The parties reached settlement and executed a settlement agreement in November 2018

Others

The Group is defending against various claims in addition to pending proceedings described above. The Group does not have a present obligation for these matters and has not recognized any provision at December 31, 2018.

 

60


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

14.

Contingent Liabilities and Commitments, Continued

 

  (b)

Commitments

Factoring and securitization of accounts receivable

The Controlling Company has agreements with Korea Development Bank and several other banks for accounts receivable sales negotiating facilities of up to an aggregate of USD 1,670 million (W1,867,227 million) in connection with the Controlling Company’s export sales transactions with its subsidiaries. As of December 31, 2018, 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

   Contractual
amount
    

KRW
equivalent

Controlling

      KRW 90,000      90,000      —        —  
   Shinhan Bank    USD   25      27,953    USD  12      13,286

Company

  

Sumitomo Mitsui Banking Corporation

   USD   20      22,362      —        —  
  

Bank of Tokyo-Mitsubishi

   KRW  130,000      130,000    KRW  36,089      36,089
   UFJ    USD 40      44,724    USD 40      44,516
   BNP Paribas    USD 200      223,620    USD 12      13,630
   ING Bank    USD 150      167,715    USD 31      35,554
     

 

 

    

 

  

 

 

    

 

      USD 435         USD 95     
      KRW 220,000      706,374    KRW 36,089      143,075
     

 

 

    

 

  

 

 

    

 

Subsidiaries

              

LG Display Singapore

Pte. Ltd.

   Standard Chartered Bank    USD 300      335,430    USD 209      233,364
     

 

 

    

 

  

 

 

    

 

LG Display Taiwan

Co., Ltd.

   BNP Paribas    USD 52      58,141    USD 9      10,063
   Australia and New Zealand Banking Group Ltd.    USD 70      78,267    USD 52      58,142
   Taishin International Bank    USD 289      323,131    USD 86      96,157
     

 

 

    

 

  

 

 

    

 

LG Display Germany GmbH

   Citibank    USD 160      178,896    USD 0      0
   BNP Paribas    USD 75      83,858    USD 75      83,767
     

 

 

    

 

  

 

 

    

 

LG Display

America, Inc.

   Hongkong & Shanghai Banking Corp.    USD 400      447,240    USD 230      257,164
   Standard Chartered Bank    USD 600      670,860    USD 515      575,823
  

Sumitomo Mitsui

Banking Corporation

   USD 80      89,448    USD 67      74,915
     

 

 

    

 

  

 

 

    

 

LG Display Japan Co., Ltd.

  

Sumitomo Mitsui

Banking Corporation

   USD 20      22,362    USD 0      0
     

 

 

    

 

  

 

 

    

 

      USD 2,046      2,287,633    USD 1,243      1,389,396
     

 

 

    

 

  

 

 

    

 

      USD 2,481         USD 1,338     
      KRW 220,000      2,994,006    KRW 36,089      1,532,470
     

 

 

    

 

  

 

 

    

 

 

61


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

14.

Contingent Liabilities and Commitments, Continued

 

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

Letters of credit

As of December 31, 2018, the Controlling Company has agreements in relation to the opening of letters of credit up to USD 30 million (W33,543 million) with KEB Hana Bank, USD 80 million (W89,448 million) with Bank of China and USD 50 million (W55,905 million) with Sumitomo Mitsui Banking Corporation.

Payment guarantees

The Controlling Company obtained payment guarantees amounting to USD 1,538 million (W1,719,079 million) from KEB Hana Bank and others for advance received related to the long-term supply agreements and USD 306 million (W341,929 million) from Korea Development Bank related to Foreign currency denominated bonds. USD 8.5 million (W9,504 million) from Shinhan Bank for value added tax payments in Poland.

LG Display (China) Co., Ltd. and other subsidiaries are provided with payment guarantees from the China Construction Bank Corporation and other various banks amounting to CNY 1,989 million (W323,730 million), JPY 900 million (W9,119 million), EUR 2.5 million (W3,198 million), VND 40,498 million (W1,952 million), USD 0.5 million (W559 million), and PLN 0.1 million (W30 million) respectively, for their local tax payments and utility payments.

License agreements

As of December 31, 2018, in relation to its LCD business, the Group has technical license agreements with Hitachi Display, Ltd. and others and has a trademark license agreement with LG Corp.

Long-term supply agreement

As of December 31, 2018, in connection with long-term supply agreements with customers, the Controlling Company recognized USD 1,475 million (W1,649,198 million) in advances received. The advance received will be offset against outstanding accounts receivable balances after a given period of time, as well as those arising from the supply of products thereafter. The Controlling Company received payment guarantees amounting to USD 1,538 million (W1,719,079 million) from KEB Hana Bank and other various banks relating to advance received.

Pledged Assets

Regarding the secured bank loan amounting to USD 240 million (W268,093 million) from China Construction Bank, as of December 31, 2018, the Group provided its property, plant and equipment and others with carrying amount of W146,262 million as pledged assets.

 

62


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

15.

Capital and Reserves

 

  (a)

Share capital

The Controlling Company is authorized to issue 500,000,000 shares of capital stock (par value W5,000), and as of December 31, 2018 and December 31, 2017, the number of issued common shares is 357,815,700. There have been no changes in the capital stock from January 1, 2018 to December 31, 2018.

 

  (b)

Reserves

Reserves consist mainly of the following:

Translation reserve

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

Other comprehensive income (loss) from associates

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

Reserves as of December 31, 2018 and 2017 are as follows:

 

(In millions of won)  
     December 31, 2018      December 31, 2017  

Foreign currency translation differences for foreign operations

   W     (272,474      (259,749

Other comprehensive loss from associates (excluding remeasurements)

     
     (28,494      (28,531
  

 

 

    

 

 

 
   W     (300,968      (288,280
  

 

 

    

 

 

 

 

63


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

15.

Capital and Reserves, Continued

 

The movement in reserves for the years ended December 31, 2018 and 2017 are as follows:

 

(In millions of won)

 
     Net change in fair value of
available-for-sale  financial
assets
     Foreign currency translation
differences for foreign
operations
    Other comprehensive
income (loss) from
associates (excluding
remeasurements)
    Total  

January 1, 2017

   W —          (59,042     (29,436     (88,478

Change in reserves

     —          (200,707     905       (199,802

December 31, 2017

     —          (259,749     (28,531     (288,280

January 1, 2018

     —          (259,749     (28,531     (288,280

Change in reserves

     —          (12,725     37       (12,688

December 31, 2018

     —          (272,474     (28,494     (300,968

 

64


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

16.

Revenue

Details of revenue for the years ended December 31, 2018 and 2017 are as follows:

 

(In millions of won)  
     2018      2017  

Sales of goods

   W 24,293,798        27,745,047  

Royalties

     17,513        20,175  

Others

     25,260        24,994  
  

 

 

    

 

 

 
   W   24,336,571        27,790,216  
  

 

 

    

 

 

 

 

17.

Geographic and Other Information

The following is a summary of sales by region based on the location of the customers for the years ended December 31, 2018 and 2017.

(a) Revenue by geography

 

(In millions of won)  

Region

   2018      2017  

Domestic

   W   1,589,452        1,996,183  

Foreign

     

China

     15,242,533        18,090,974  

Asia (excluding China)

     2,481,112        2,383,390  

United States

     2,462,918        2,724,714  

Europe (excluding Poland)

     1,496,138        1,433,126  

Poland

     1,064,418        1,161,829  
  

 

 

    

 

 

 
   W 22,747,119        25,794,033  
  

 

 

    

 

 

 
   W 24,336,571        27,790,216  
  

 

 

    

 

 

 

Sales to Company A and Company B amount to W7,262,255 million and W5,171,354 million, respectively, for the year ended December 31, 2018 (2017: W9,027,165 million and W6,511,961 million). The Group’s top ten end-brand customers together accounted for 77% of sales for the year ended December 31, 2018 (2017: 81%).

 

(b)

Non-current assets by geography

 

(In millions of won)                

Region

   December 31, 2018      December 31, 2017  
   Property, plant
and equipment
     Intangible
assets
     Property, plant
and equipment
     Intangible
assets
 

Domestic

   W  14,991,090        816,808        12,487,111        731,373  

Foreign

           

China

     5,037,472        12,332        2,929,739        17,244  

Others

     1,571,568        158,502        785,110        164,204  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 6,609,040        170,834        3,714,849        181,448  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 21,600,130        987,642        16,201,960        912,821  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

65


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

17.

Geographic and Other Information, Continued

 

(c) Revenue by product and services

 

(In millions of won)              
     2018      2017  

Televisions

   W   9,727,260        11,717,982  

Desktop monitors

     4,040,025        4,393,482  

Tablet products

     1,990,766        2,369,634  

Notebook computers

     2,836,888        2,244,088  

Mobile and others

     5,741,632        7,065,030  
  

 

 

    

 

 

 
   W   24,336,571        27,790,216  
  

 

 

    

 

 

 

 

18.

The Nature of Expenses and Others

The classification of expenses by nature for the years ended December 31, 2018 and 2017 are as follows:

 

(In millions of won)              
     2018      2017  

Changes in inventories

   W   (341,120      (62,298

Purchases of raw materials, merchandise and others

     12,837,908        13,548,847  

Depreciation and amortization

     3,554,565        3,214,576  

Outsourcing fees

     825,393        771,697  

Labor costs

     3,248,014        3,258,427  

Supplies and others

     1,010,352        1,239,915  

Utility

     899,075        865,347  

Fees and commissions

     722,134        692,125  

Shipping costs

     240,288        249,820  

Advertising

     112,400        236,440  

Warranty expenses

     234,928        251,131  

Travel

     123,210        92,976  

Taxes and dues

     104,009        91,806  

Others

     757,673        919,051  
  

 

 

    

 

 

 
   W   24,328,829        25,369,860  
  

 

 

    

 

 

 

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

 

66


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

19.

Selling and Administrative Expenses

Details of selling and administrative expenses for the years ended December 31, 2018 and 2017 are as follows:

 

(In millions of won)  
     2018      2017  

Salaries

   W   315,669        327,288  

Expenses related to defined benefit plans

     215,665        27,401  

Other employee benefits

     90,348        94,740  

Shipping costs

     200,434        214,866  

Fees and commissions

     221,050        197,070  

Depreciation

     174,575        138,711  

Taxes and dues

     65,621        46,317  

Advertising

     112,400        236,440  

Warranty expenses

     234,928        251,131  

Rent

     26,691        26,711  

Insurance

     11,584        12,459  

Travel

     24,659        27,879  

Training

     13,309        16,311  

Others

     64,245        73,181  
  

 

 

    

 

 

 
     W  1,771,178        1,690,505  
  

 

 

    

 

 

 

 

20.

Personnel Expenses

Details of personnel expenses for the years ended December 31, 2018 and 2017 are as follows:

 

(In millions of won)  
     2018      2017  

Salaries and wages

   W   2,720,010        2,704,217  

Other employee benefits

     500,168        483,704  

Contributions to National Pension plan

     75,667        73,061  

Expenses related to defined benefit plan

     180,741        198,241  
  

 

 

    

 

 

 
   W   3,476,586        3,459,223  
  

 

 

    

 

 

 

 

67


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

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

 

  (a)

Details of other non-operating income for the years ended December 31, 2018 and 2017 are as follows:

 

(In millions of won)       
     2018      2017  

Foreign currency gain

   W   970,306        969,425  

Gain on disposal of property, plant and equipment

     6,620        101,227  

Gain on disposal of intangible assets

     239        308  

Reversal of impairment loss on intangible assets

     348        35  

Rental income

     3,584        2,212  

Others

     21,942        8,539  
  

 

 

    

 

 

 
     W  1,003,038      1,081,746  
  

 

 

    

 

 

 

(b) Details of other non-operating expenses for the years ended December 31, 2018 and 2017 are as follows:

 

(In millions of won)       
     2018      2017  

Foreign currency loss

   W   1,030,084        1,189,193  

Loss on disposal of property, plant and equipment

     15,048        20,030  

Impairment loss on property, plant, and equipment

     43,601        —    

Loss on disposal of intangible assets

     —          30  

Impairment loss on intangible assets

     82        1,809  

Donations

     7,698        17,152  

Expenses related to legal proceedings or claims and others

     4        1,798  

Others

     18,716        443  
  

 

 

    

 

 

 
     W 1,115,233      1,230,455  
  

 

 

    

 

 

 

 

68


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

22.

Finance Income and Finance Costs

 

  (a)

Finance income and costs recognized in profit or loss for the years ended December 31, 2018 and 2017 are as follows:

 

(In millions of won)              
     2018      2017  

Finance income

     

Interest income

   W   69,020        60,106  

Foreign currency gain

     160,989        210,890  

Gain on disposal of investments in equity accounted investees

     —          3,669  

Reversal of loss on impairment of investments in equity accounted investees

     802     

Gain on transaction of derivatives

     2,075        3,106  

Gain on valuation of derivatives

     13,059        1,070  

Gain on disposal of available-for-sales financial assets

     —          8  

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

     —          170  

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

     8,186        —    
  

 

 

    

 

 

 
     W 254,131      279,019  
  

 

 

    

 

 

 

Finance costs

     

Interest expense

   W 80,517        90,538  

Foreign currency loss

     184,309        126,642  

Loss on disposal of investments in equity accounted investees

     595        42,112  

Loss on impairment of investments in equity accounted investees

     17,398        4,234  

Loss on impairment of available-for-sale financial assets

     —          1,948  

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

     225        —    

Loss on sale of trade accounts and notes receivable

     13,361        784  

Loss on transaction of derivatives

     49        514  

Loss on valuation of derivatives

     26,600        —    

Others

     3,839        2,084  
  

 

 

    

 

 

 
     W 326,893      268,856  
  

 

 

    

 

 

 

 

  (b)

Finance income and costs recognized in other comprehensive income or loss for the years ended December 31, 2018 and 2017 are as follows:

 

(In millions of won)       
     2018      2017  

Foreign currency translation differences for foreign operations

   W   (19,987      (231,738

Net change in fair value of available-for-sale financial assets

     —          —    

Tax effect

     —          —    
  

 

 

    

 

 

 

Finance income (costs) recognized in other comprehensive income or loss after tax

   W   (19,987      (231,738
  

 

 

    

 

 

 

 

69


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

23.

Income Taxes

(a) Details of income tax expense for the years ended December 31, 2018 and 2017 are as follows:

 

(In millions of won)              
     2018      2017  

Current tax expense

     

Current year

   W   249,619        512,123  

Deferred tax expense (benefit)

     

Origination and reversal of temporary differences

     (218,959      (104,835

Change in unrecognized deferred tax assets

     57,417        (11,708
  

 

 

    

 

 

 
   W    (161,542      (116,543
  

 

 

    

 

 

 

Income tax expense

   W    88,077        395,580  
  

 

 

    

 

 

 

(b) Income taxes recognized directly in other comprehensive income or loss for the years ended December 31, 2018 and 2017 are as follows:

 

(In millions of won)    2018     2017  
     Before tax     Tax
benefit
    Net of
tax
    Before
tax
    Tax
benefit

(expense)
     Net of tax  

Net change in fair value of available-for-sale financial assets

   W —         —         —         —         —          —    

Remeasurements of net defined benefit liabilities (assets)

     5,690       (1,169     4,521       (16,260     9,259        (7,001

Foreign currency translation differences for foreign operations

     (19,987     —         (19,987     (231,738     —          (231,738

Change in equity of equity method investee

     57       —         57       1,346       —          1,346  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 
   W   (14,240     (1,169     (15,409     (246,652     9,259        (237,393
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

 

70


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

23.

Income Taxes, Continued

 

 

  (c)

Reconciliation of the actual effective tax rate for the years ended December 31, 2018 and 2017 is as follows:

 

(In millions of won)    2018     2017  

Profit for the year

   W       (179,443       1,937,052  

Income tax expense

       88,077         395,580  
    

 

 

     

 

 

 

Profit before income tax

       (91,366       2,332,632  
    

 

 

     

 

 

 

Income tax expense using the statutory tax rate of each country

     (33.60 %)      30,695       28.54     665,733  

Non-deductible expenses

     (40.07 %)      36,608       2.72     63,416  

Tax credits

     117.27     (107,147     (10.64 %)      (248,191

Change in unrecognized deferred tax assets

     (70.94 %)      64,818       (0.50 %)      (11,708

Adjustment of income tax related to prior period

     (81.90 %)      74,824      

Effect on change in tax rate

     2.20     (2,009     (3.10 %)      (72,376

Others

     10.63     (9,712     (0.06 %)      (1,294
    

 

 

     

 

 

 

Actual income tax expense

   W       88,077         395,580  
    

 

 

     

 

 

 

Actual effective tax rate

       (96.40 %)        16.96

 

24.

Deferred Tax Assets and Liabilities

 

  (a)

Unrecognized deferred tax liabilities

As of December 31, 2018, in relation to the temporary differences on investments in subsidiaries amounting to W85,368 million, the Controlling Company did not recognize deferred tax liabilities since the Controlling Company is able to control the timing of the reversal of the temporary difference and it is probable that the temporary differences will not reverse in the foreseeable future.

 

  (b)

Unused tax credit carryforwards for which no deferred tax asset is recognized

Realization of deferred tax assets related to tax credit carryforwards is dependent on whether sufficient taxable income will be generated prior to their expiration. As of December 31, 2018, the Controlling Company recognized deferred tax assets of W308,303 million, in relation to tax credit carryforwards, to the extent that management believes the realization is probable. The amount of unused tax credit carryforwards for which no deferred tax asset is recognized and their expiration dates are as follows:

 

(In millions of won)    December 31,
2019
     December 31,
2020
     December 31,
2021
     December 31,
2022
     December 31,
2023
 

Tax credit carryforwards

   W —          —          58,391        91,862        —    

 

71


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

24.

Deferred Tax Assets and Liabilities, Continued

 

 

  (c)

Deferred tax assets and liabilities are attributable to the following:

 

     Assets      Liabilities     Total  
(In millions of won)    December, 31,
2018
     December, 31,
2017
     December, 31,
2018
    December, 31,
2017
    December, 31,
2018
    December, 31,
2017
 

Other accounts receivable, net

   W —          —          (1,013     (1,441     (1,013     (1,441

Inventories, net

     60,606        34,550        —         —         60,606       34,550  

Defined benefit liabilities, net

     —          2,375        —         —         —         2,375  

Investments in subsidiaries and associates

     13,404        29,061        —         —         13,404       29,061  

Accrued expenses

     126,072        183,903        —         —         126,072       183,903  

Property, plant and equipment

     444,226        409,928        —         —         444,226       409,928  

Intangible assets

     3,468        3,457        (14,588     (24,646     (11,120     (21,189

Provisions

     32,468        27,018        —         —         32,468       27,018  

Gain or loss on foreign currency

translation, net

     13        13        —         —         13       13  

Others

     13,185        27,562        —         —         13,185       27,562  

Deficit loss carried forward

     134,845           —           134,845    

Tax credit carryforwards

     308,393        268,926        —         —         308,393       268,926  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Deferred tax assets (liabilities)

   W 1,136,680        986,793        (15,601     (26,087     1,121,079       960,706  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

72


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

24.

Deferred Tax Assets and Liabilities, Continued

 

 

  (d)

Changes in deferred tax assets and liabilities for the years ended December 31, 2018 and 2017 are as follows:

 

(In millions of won)    January 1,
2017
    Profit or
loss
    Other
comprehensive
income

(loss)
     December 31,
2017
    Profit or
loss
    Other
comprehensive
income
    December 31,
2018
 

Other accounts receivable, net

   W (1,190     (251     —          (1,441     428         (1,013

Inventories, net

     35,771       (1,221     —          34,550       26,056         60,606  

Available-for-sale financial assets

     —         —         —          —         —           —    

Defined benefit liabilities, net

     10,817       (17,701     9,259        2,375       (1,206     (1,169     —    

Investments in equity accounted investees and subsidiaries

     34,777       (5,716     —          29,061       (15,657       13,404  

Accrued expenses

     122,998       60,905       —          183,903       (57,831       126,072  

Property, plant and equipment

     338,860       71,068       —          409,928       34,298         444,226  

Intangible assets

     (31,027     9,838       —          (21,189     10,069         (11,120

Provisions

     15,051       11,967       —          27,018       5,450         32,468  

Gain or loss on foreign currency translation, net

     11       2       —          13       —           13  

Others

     21,435       6,127       —          27,562       (14,377       13,185  

Deficit loss carried forward

              134,845         134,845  

Tax credit carryforwards

     287,400       (18,474     —          268,926       39,467         308,393  
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Deferred tax assets (liabilities)

   W 834,903       116,544       9,259        960,706       161,542       (1,169     1,121,079  
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Statutory tax rate applicable to the Controlling Company is 24.2% for the year ended December 31, 2018. During the year ended December 31, 2018, certain corporate income tax rules in Korea were amended and effective on January 1, 2018 that resulted in application of 27.5% for taxable income in excess of W300,000 million. Accordingly, the Controlling Company applied such amendment when measuring the deferred tax. The effective tax rate for the year ended December 31, 2018, is different from the statutory tax rate due to the change in the realization possibility of deferred income tax including the lump sum payment.

 

73


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

25.

Earnings per Share

 

  (a)

Basic earnings per share for the years ended December 31, 2018 and 2017 are as follows:

 

(In won and No. of shares)    2018      2017  

Profit attributable to owners of the Controlling Company

   W (207,239,484,774      1,802,756,119,275  

Weighted-average number of common stocks outstanding

     357,815,700        357,815,700  
  

 

 

    

 

 

 

Earnings per share

   W (579      5,038  
  

 

 

    

 

 

 

For the years ended December 31, 2018 and 2017, there were no events or transactions that resulted in changes in the number of common stocks used for calculating earnings per share.

 

  (b)

Diluted earnings per share for the years ended December 31, 2018 and 2017 are not calculated since there was no potential common stock.

 

26.

Financial Risk Management

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

 

  (a)

Market Risk

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

 

  (i)

Currency Risk

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

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

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

 

74


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

26.

Financial Risk Management, Continued

 

  i)

Exposure to currency risk

The Group’s exposure to foreign currency risk based on notional amounts at the reporting date is as follows:

 

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

Cash and cash equivalents

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

Trade accounts and notes receivable

     2,175       7       1,098       —         —         —         —    

Non-trade receivable

     21       852       201       3       4       —         23,182  

Other assets denominated in foreign currencies

     33       220       11,157       108       12       23       2,782  

Trade accounts and notes payable

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

Other accounts payable

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

Debt

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

Aggregate notional amounts in financial positions

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Currency swap contracts

     780       —         —         —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net exposure

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

     December 31, 2017  
(In millions)    USD     JPY     CNY     TWD     EUR     PLN     VND  

Cash and cash equivalents

     1,228       152       6,940       16       3       165       342,063  

Deposits in banks

     —         —         750       —         —         —         —    

Trade accounts and notes receivable

     3,316       11       1,453       —         —         —         —    

Non-trade receivable

     62       1,340       136       2       9       —         13,405  

Other assets denominated in foreign currencies

     1       206       596       7       —         —         1,882  

Trade accounts and notes payable

     (1,345     (14,898     (2,843     —         —         —         (102,398

Other accounts payable

     (285     (14,653     (2,403     (11     (8     (4     (2,138,370

Debt

     (1,500     —         (3,263     —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net exposure

     1,477       (27,842     1,366       14       4       161       (1,883,418
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

75


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

26.

Financial Risk Management, Continued

 

Average exchange rates applied for the years ended December 31, 2018 and 2017 and the exchange rates at December 31, 2018 and December 31, 2017 are as follows:

 

     Average rate      Reporting date spot rate  
(In won)    2018      2017      December 31,
2018
     December 31,
2017
 

USD

   W  1,100.21        1,131.08        1,118.10        1,071.40  

JPY

     9.96        10.09        10.13        9.49  

CNY

     166.41        167.52        162.76        163.65  

TWD

     36.51        37.16        36.58        35.92  

EUR

     1,298.53        1,277.01        1,279.16        1,279.25  

PLN

     304.87        299.98        297.33        306.07  

VND

     0.0478        0.0498        0.0482        0.0472  

 

  ii)

Sensitivity analysis

A weaker won, as indicated below, against the following currencies which comprise the Group’s assets or liabilities denominated in a foreign currency as of December 31, 2018 and 2017, 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 the 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:

 

     December 31, 2018      December 31, 2017  
(In millions of won)    Equity      Profit or loss      Equity      Profit or loss  

USD (5 percent weakening)

   W  (46,136      38,725        50,040        91,238  

JPY (5 percent weakening)

     (12,060      (10,497      (10,294      (9,141

CNY (5 percent weakening)

     41,779        318        13,212        (6,396

TWD (5 percent weakening)

     413        1        23        1  

EUR (5 percent weakening)

     1,197        390        16        594  

PLN (5 percent weakening)

     3,451        (236      2,515        (120

VND (5 percent weakening)

     273        273        (4,445      —    

A stronger won against the above currencies as of December 31, 2018 and 2017 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.

 

76


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

26.

Financial Risk Management, Continued

 

  (ii)

Interest Rate Risk

 

  i)

Profile

The interest rate profile of the Group’s interest-bearing financial instruments at the reporting date is as follows:

 

(In millions of won)    December 31, 2018      December 31, 2017  

Fixed rate instruments

     

Financial assets

   W 2,443,583        3,360,800  

Financial liabilities

     (5,033,515      (2,962,671
  

 

 

    

 

 

 
   W (2,589,932      398,129  
  

 

 

    

 

 

 

Variable rate instruments

     

Financial liabilities

   W (3,525,262      (2,640,447

 

  ii)

Equity and profit or loss sensitivity analysis for variable rate instruments

For the years ended December 31, 2018 and 2017 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 the respective following years. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.

 

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

December 31, 2018

           

Variable rate instruments(*)

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

December 31, 2017

           

Variable rate instruments(*)

   W  (17,362      17,362        (17,362      17,362  

 

(*)

Financial instruments subject to interest rate swap not qualified for hedging are excluded.

 

(b)

Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers.

The Group’s exposure to credit risk of trade and other receivables is influenced mainly by the individual characteristics of each customer. However, management believes that the demographics of the Group’s customer base, including the default risk of the country in which customers operate, do not have a significant influence on credit risk since the majority of the customers are global electronic appliance manufacturers operating in global markets.

The Group establishes credit limits for each customer and each new customer is analyzed quantitatively and qualitatively before determining whether to utilize third party guarantees, insurance or factoring as appropriate.

 

77


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

26.

Financial Risk Management, Continued

 

  (b)

Credit risk, Continued

The Group does not establish allowances for receivables under insurance or receivables from customers with a high credit rating. For the rest of the receivables, the Group establishes an allowance for impairment of trade and other receivables that have been individually or collectively evaluated for impairment and estimated on the basis of historical loss experience for assets.

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk as of December 31, 2018 and December 31, 2017 are as follows:

 

  i)

As of December 31, 2018

 

(In millions of won)    December 31, 2018  

Financial assets carried at amortized cost

  

Cash and cash equivalents

   W  2,365,022  

Deposits in banks

     78,411  

Trade accounts and notes receivable

     2,829,163  

Non-trade receivable

     159,238  

Accrued income

     10,075  

Deposits

     91,123  

Short-term loans

     16,116  

Long-term loans

     55,048  

Long-term non-trade receivable

     5,604,196  
  

 

 

 
   W  2,365,022  
  

 

 

 

Financial assets at fair value through profit or loss

  

Convertible bonds

   W 1,327  

Derivatives

     13,059  
  

 

 

 
   W 14,386  
  

 

 

 

Financial assets at fair value through other comprehensive income

  

Debt instrument

   W 161  
  

 

 

 
   W 5,618,743  
  

 

 

 

 

  ii)

As of December 31, 2017

 

(In millions of won)    December 31, 2017  

Cash and cash equivalents

   W 2,602,560  

Deposits in banks

     758,089  

Trade accounts and notes receivable, net

     4,325,120  

Non-trade receivable, net

     150,554  

Accrued income

     14,273  

Available-for-sale financial assets

     162  

Financial assets at fair value through profit or

Loss

     1,552  

Deposits

     30,378  

Short-term loans

     16,766  

Long-term loans

     32,408  

Long-term non-trade receivable

     8,738  

Derivatives

     842  
  

 

 

 
   W  7,941,442  
  

 

 

 

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises primarily from the sales and investing activities. Trade accounts and notes receivables are insured in order to manage credit risk and uninsured trade accounts and notes receivables are managed in accordance with the Group’s management policy.

 

78


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

26.

Financial Risk Management, Continued

 

  (c)

Liquidity Risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

The Group has historically been able to satisfy its cash requirements from cash flows from operations and debt and equity financing. To the extent that the Group does not generate sufficient cash flows from operations to meet its capital requirements, the Group may rely on other financing activities, such as external long-term borrowings and offerings of debt securities, equity-linked and other debt securities. In addition, the Group maintains a line of credit with various banks

The following are the contractual maturities of financial liabilities, including estimated interest payments, as of December 31, 2018.

 

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

Non-derivative financial liabilities

               

Secured bank loans

   W 268,093        268,190       268,190       —         —         —         —    

Unsecured bank loans

     5,958,427        6,588,503       565,832       356,688       973,297       4,169,682       523,003  

Unsecured bond issues

     2,332,257        2,537,553       291,738       328,400       456,990       1,320,248       140,177  

Trade accounts and notes payable

     3,087,461        3,087,461       3,087,461       —         —         —         —    

Other accounts payable

     3,566,629        3,566,629       3,566,629       —         —         —         —    

Long-term other accounts payable

     3,103        3,103       —         —         3,103       —         —    

Rental deposit

     10,955        10,955       —         165       10,790       —         —    

Derivative financial liabilities

               

Derivatives

     25,758        (35,140     (6,742     (6,728     (12,517     (9,153     —    
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   W 15,252,683        16,027,254       7,773,108       678,525       1,431,663       5,480,777       663,180  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

 

79


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

26.

Financial Risk Management, Continued

 

  (d)

Capital Management

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

 

(In millions of won)    December 31, 2018     December 31, 2017  

Total liabilities

   W 18,289,464       14,178,177  

Total equity

     14,886,246       14,981,510  

Cash and deposits in banks (*1)

     2,443,422       3,360,638  

Borrowings (including bonds)

     8,558,778       5,603,118  

Total liabilities to equity ratio

     123     95

Net borrowings to equity ratio (*2)

     41     15

 

(*1)

Cash and deposits in banks consist of cash and cash equivalents and current deposit 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.

 

80


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

26.

Financial Risk Management, Continued

 

  (e)

Determination of fair value

 

  (i)

Measurement of fair value

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

 

  i)

Current Assets and Liabilities

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

 

  ii)

Trade Receivables and Other Receivables

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

 

  iii)

Investments in Equity and Debt Securities

The fair value of marketable available-for-sale financial assets is determined by reference to their quoted closing bid price at the reporting date. The fair value of non-marketable securities is determined using valuation methods.

 

  iv)

Non-derivative Financial Liabilities

Fair value, which is determined for disclosure purposes, except for the liabilities at FVTPL, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date.

 

81


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

26.

Financial Risk Management, Continued

 

  (e)

Determination of fair value, Continued

 

  (ii)

Fair values versus carrying amounts

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

 

  i)

As of December 31, 2018

 

     December 31, 2018  
(In millions of won)    Carrying amounts      Fair values  

Financial assets carried at amortized cost

     

Cash and cash equivalents

   W  2,365,022        (*)  

Deposits in banks

     78,411        (*)  

Trade accounts and notes receivable

     2,829,163        (*)  

Non-trade receivable

     159,238        (*)  

Accrued income

     10,075        (*)  

Deposits

     91,123        (*)  

Short-term loans

     16,116        (*)  

Long-term loans

     55,048        (*)  

Financial assets at fair value through profit or loss

     

Equity instrument

   W  13,682        13,682  

Convertible bonds

     1,327        1,327  

Derivatives

     13,059        13,059  

Financial assets at fair value through other comprehensive income

     

Debt instrument

   W  161        161  

Financial liabilities at fair value through profit or loss

     

Derivatives

   W  25,758        7,080  

Liabilities carried at amortized cost

     

Secured bank borrowings

   W 268,093        268,093  

Unsecured bank borrowings

     5,958,427        5,958,427  

Unsecured bond issues

     2,332,257        2,332,257  

Trade accounts and notes payable

     3,087,461        (*)  

Other accounts payable

     3,566,629        (*)  

Long-term other accounts payable

     3103        (*)  

Security deposits

     10,955        (*)  

 

82


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

26.

Financial Risk Management, Continued

 

  ii)

As of December, 2017

 

     December 31, 2017  
(In millions of won)    Carrying
amounts
     Fair
values
 

Assets carried at fair value

     

Available-for-sale financial assets

   W 162        162  

Financial asset at fair value through profit or loss

     1,552        1,552  

Derivatives

     842        842  

Assets carried at amortized cost

     

Cash and cash equivalents

   W 2,602,560        (*)  

Deposits in banks

     758,089        (*)  

Trade accounts and notes receivable

     4,325,120        (*)  

Non-trade receivable

     150,554        (*)  

Accrued income

     14,273        (*)  

Deposits

     30,378        (*)  

Short-term loans

     16,766        (*)  

Long-term loans

     32,408        (*)  

Long-term non-trade receivable

     8,738        (*)  

Liabilities carried at fair value

     

Derivatives

   W —          —    

Liabilities carried at amortized cost

     

Secured bank loans

   W 642,172        642,172  

Unsecured bank loans

     2,950,184        2,956,970  

Unsecured bond issues

     2,010,762        2,018,946  

Trade accounts and notes payable

     2,875,090        (*)  

Other accounts payable

     3,169,937        3,170,147  

Long-term other accounts payable

     2        (*)  

 

(*)

Excluded from disclosures as the carrying amount approximates fair value.

 

83


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

26.

Financial Risk Management, Continued

 

  (iii)

Financial Instruments measured at cost

Available-for-sale financial assets measured at cost as of December 31, 2018 and 2017 are as follows:

 

               
(In millions of won)    December 31, 2018      December 31, 2017  

Intellectual Discovery Co., Ltd.

   W 729        729  

Kyulux, Inc.

     1,968        1,968  

Fineeva Co., Ltd.

     286        —    

ARCH Venture Fund Vill, L.P.

     2,283        2,283  
  

 

 

    

 

 

 
     4,980        4,980  
  

 

 

    

 

 

 

 

84


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

26.

Financial Risk Management, Continued

 

The movement in the available-for-sale financial assets for the years ended December 31, 2018 and 2017 is as follows:

 

     December 31, 2018  
(In millions of won)    January 1,
2018
     Acquisition      Disposal and
others
     Impairment      Fair value
measurement
     Effect of
movements in
exchange rates
     December 31,
2018
 

Intellectual Discovery Co., Ltd.

   W 729        —          —          —          3,869        —          4,598  

Kyulux Inc.

     1,968        —          —          —          492        —          2,460  

Fineeva Co., Ltd.

     —          286        —          —          —          —          286  

ARCH Venture Fund Vill, L.P

     2,283        146        —          —          3,824        85        6,338  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 4,980        432        —          —          8,185        85        13,682  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

     December 31, 2017  
(In millions of won)    January 1,
2017
     Acquisition      Disposal and
others
    Impairment     Effect of
movements in
exchange rates
    December 31,
2017
 

Intellectual Discovery Co., Ltd.

   W 729        —          —         —         —         729  

Kyulux Inc.

     3,266        —          —         (1,298     —         1,968  

Henghao Technology Co., Ltd.

     1,559        —          (909     (650     —         —    

ARCH Venture Fund Vill, L.P

     2,285        266        —         —         (268     2,283  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 
   W 7,839        266        (909     (1,948     (268     4,980  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Available-for-sale-financial assets consist of investments in equity securities and the fair value of some investments in equity securities are measured at cost because the range of reasonable fair value measurements is significant and the probabilities of the various estimates cannot be reasonably assessed since they do not have a quoted price in an active market for an identical instruments.

 

85


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

26.

Financial Risk Management, Continued

 

  (iv)

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 December 31, 2018 and 2017 are as follows:

 

                             
(In millions of won)    Level 1      Level 2      Level 3      Total  

December 31, 2018

           

Financial asset at fiar value through profit or loss

           

Equity securities

     —          —          13,682        13,682  

Convertible bond

     —          —          1,327        1,327  

Derivatives

     —          —          13,059        13,059  

Financial asset at fair value through other comprehensive income

           

Debt securities

     161        —          —          161  

Financial liabilities at fair value through profit or loss

     —          —          —          —    

Derivatives

     —          —          25,758        25,758  
                             
(In millions of won)    Level 1      Level 2      Level 3      Total  

December 31, 2017

           

Assets

           

Available-for-sale financial assets

     162        —          —          162  

Financial asset at fair value through profit or loss

     —          —          1,552        1,552  

Derivatives

     —          —          842        842  

 

86


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

26.

Financial Risk Management, Continued

 

  iii)

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

Fair value hierarchy classifications, valuation technique and inputs for fair value measurements of the financial instruments not measured at fair value but for which the fair value is disclosed as of December 31, 2018 and December 31, 2017 are as follows:

 

(In millions of won)    December 31, 2018      Valuation
technique
     Input  

Classification

   Level 1      Level 2      Level 3  

Liabilities

              

Secured bank loans

   W       —          —          268,093       
Discounted
cash flow
 
 
     Discount rate  

Unsecured bank loans

     —          —          5,987,155       
Discounted
cash flow
 
 
     Discount rate  

Unsecured bond issues

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

Other accounts payable

     —          —          3,566,629       
Discounted
cash flow
 
 
     Discount rate  
(In millions of won)    December 31, 2017      Valuation
technique
     Input  

Classification

   Level 1      Level 2      Level 3  

Liabilities

              

Secured bank loans

   W —          —          642,172       
Discounted
cash flow
 
 
     Discount rate  

Unsecured bank loans

     —          —          2,956,970       
Discounted
cash flow
 
 
     Discount rate  

Unsecured bond issues

     —          —          2,016,086       
Discounted
cash flow
 
 
     Discount rate  

Other accounts payable

     —          —          3,170,147       
Discounted
cash flow
 
 
     Discount rate  

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

 

     December 31, 2018     December 31, 2017  

Debentures, loans and others

     2.09~3.37     1.57~2.85

 

87


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

27.

Changes in liabilities arising from financing activities

Changes in liabilities arising from financing activities for the year ended December 31, 2018 are as follows:

 

                  Non-cash transactions         
(In millions of won)    January 1, 2018      Cash flows from
financing activities
    Reclassification     Gain or loss on foreign
currency translation
    Effective interest
adjustment
     December 31,
2018
 

Short-term borrowings

   W —          (721     —         721       —          —    

Current portion of long-term debt

     1,452,926        (1,859,098     1,904,888       54,660       531        1,553,907  

Long-term borrowings

     2,644,189        3,882,959       (1,345,520     50,642       —          5,232,271  

Bonds

     1,506,003        828,169       (559,368     (4,172     1,967        1,772,599  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 
   W 5,603,118        2,851,309       —         101,851       2,498        8,558,777  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

 

88


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

28.

Related Parties and Others

 

(a)

Related parties

Related parties for the year ended December 31, 2017 are as follows:

 

Classification

  

Description

Associates(*)    Paju Electric Glass Co., Ltd. and others
Entity that has significant influence over the Controlling Company    LG Electronics Inc.
Subsidiaries of the entity that has significant influence over the Controlling Company    Subsidiaries of LG Electronics Inc.

 

(*)

Details of associates are described in note 8.

 

89


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

28.

Related Parties and Others, Continued

 

  (b)

Significant transactions such as sales of goods and purchases of raw material and outsourcing service and others, which occurred in the normal course of business with related parties for the years ended December 31, 2018 and 2017 are as follows:

 

     2018  
                   Purchase and others  
(In millions of won)    Sales
and others
     Dividend
income
     Purchase of raw
material and
others
     Acquisition of
property, plant
and equipment
     Outsourcing
fees
     Other costs  

Associates and their subsidiaries

                 

INVENIA Co., Ltd.

     —          30        1,608        58,111        —          896  

AVATEC Co., Ltd.

     —          530        —          —          71,403        905  

Paju Electric Glass Co., Ltd.

     —          4,172        364,183        —          —          4,411  

WooRee E&L Co., Ltd.

     —          —          58        —          —          144  

YAS Co., Ltd.

     —          —          5,281        143,192        —          3,391  

LB Gemini New Growth Fund No. 16(*)

     1,112        540        —          —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 1,112        5,272        371,130        201,303        71,403        9,747  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Entity that has significant influence over the Controlling Company

                 

LG Electronics Inc.

   W 1,215,153        —          36,522        1,041,563        —          127,775  

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

                 

LG Electronics India Pvt. Ltd.

   W 71,798        —          —          —          —          103  

LG Electronics Vietnam Haiphong Co., Ltd.

     173,051        —          —          4,541        —          166  

 

90


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

     2018  
                   Purchase and others  
(In millions of won)    Sales
and others
     Dividend
income
     Purchase of raw
material and

others
     Acquisition of
property, plant
and equipment
     Outsourcing
fees
     Other costs  

LG Electronics Nanjing New Technology Co., Ltd.

   W 223,524        —          —          424        —          1,528  

LG Electronics RUS, LLC

     106,631        —          —          —          —          2,673  

LG Electronics do Brasil Ltda.

     192,775        —          —          —          —          350  

LG Innotek Co., Ltd.

     29,267        —          147,453        —          —          39,136  

Qingdao LG Inspur Digital Communication Co., Ltd.

     37,738        —          —          —          —          —    

Inspur LG Digital Mobile Communications Co., Ltd.

     131,970        —          —          —          —          1  

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

     187,844        —          —          —          —          210  

LG Electronics Mlawa Sp. z o.o.

     740,784        —          —          —          —          631  

LG Hitachi Water Solutions Co., Ltd.

     9,100           —          304,365        —          8,980  

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

     1,030,414        —          —          —          —          2,021  

HiEntech Co., Ltd.

     —          —          —          22,378        —          29,215  

Hientech (Tianjin) Co., Ltd.

     —          —          —          92,900        —          23,880  

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

     —          —          330        26,871        —          7,264  

LG Electronics Almaty Kazakhstan

     3,759        —          —          —          —          42  

LG Electronics Egypt S.A.E.

     25,491           —          —          —          16  

LG Electronics S.A. (Pty) Ltd.

     7,244           —          —          —          20  

LG Electronics Taiwan Taipei Co., Ltd.

     12,746        —          —          —          —          330  

Others

     5,195        —          28        15        —          11,480  
                 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 2,989,331        —          147,811        451,494        —          128,046  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 4,205,596        5,272        555,463        1,694,360        71,403        265,569  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(*)

Represents transactions occurred prior to disposal of the entire investments.

 

91


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

28.

Related Parties and Others, Continued

 

     2017  
                   Purchase and others  
(In millions of won)    Sales
and others
     Dividend
income
     Purchase of raw
material and
others
     Acquisition of
property, plant
and equipment
     Outsourcing
fees
     Other costs  

Associates and their subsidiaries

                 

New Optics Ltd. (*)

   W 1        —          —          —          4        6  

INVENIA Co., Ltd.

     —          —          1,862        66,548        —          2,259  

AVATEC Co., Ltd.

     —          530        —          —          90,785        720  

Paju Electric Glass Co., Ltd.

     —          8,109        380,815        —          —          4,225  

Shinbo Electric Co., Ltd. (*)

     15,812        —          —          —          —          21  

Narenanotech Corporation (*)

     —          —          279        21,727        —          244  

WooRee E&L Co., Ltd.

     —          —          —          —          —          175  

YAS Co., Ltd.

     —          —          6,347        69,243        —          2,474  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 15,813        8,639        389,303        157,518        90,789        10,124  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Entity that has significant influence over the Controlling Company

                 

LG Electronics Inc.

   W 1,689,381        —          47,898        906,427        —          109,865  

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

                 

LG Electronics India Pvt. Ltd.

   W 71,597        —          —          —          —          163  

LG Electronics Vietnam Haiphong Co., Ltd.

     205,934        —          —          8,892        —          198  

 

92


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

28.

Related Parties and Others, Continued

 

 

     2017  
                   Purchase and others  
(In millions of won)    Sales
and others
     Dividend
income
     Purchase of raw
material and
others
     Acquisition of
property,
plant and
equipment
     Outsourcing
fees
     Other
costs
 

LG Electronics Nanjing New Technology Co., Ltd.

   W 300,785        —                 245        —          379  

LG Electronics RUS, LLC

     103,479        —          —          —          —          963  

LG Electronics do Brasil Ltda.

     228,821        —          —          —          —          430  

LG Innotek Co., Ltd.

     14,836        —          199,896        —          —          5,692  

Qingdao LG Inspur Digital Communication Co., Ltd.

     77,787        —          —          —          —          —    

Inspur LG Digital Mobile Communications Co., Ltd.

     230,832        —          —          —          —          —    

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

     319,772        —          —          —          —          186  

LG Electronics Mlawa Sp. z o.o.

     847,565        —          —          —          —          985  

LG Electronics Taiwan Taipei Co., Ltd.

     13,693        —          —          —          —          164  

LG Hitachi Water Solutions Co., Ltd.

     —          —          —          318,978        —          1,532  

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

     1,287,340        —          —          —          —          1,926  

LG Electronics Almaty Kazakhstan

     14,079        —          —          —          —          53  

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

     —          —          255        3,744        —          2,621  

HiEntech Co., Ltd.

     —          —          —          6,991        —          34,432  

Hientech (Tianjin) Co., Ltd.

     —          —          —          21,838        —          11,822  

LG Electronics S.A. (Pty) Ltd.

     14,155        —          —          —          —          25  

Others

     857        —          3        14        —          7,264  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 3,731,532        —          200,154        360,702        —          68,835  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 5,436,726        8,639        637,355        1,424,647        90,789        188,824  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(*)

Represents transactions occurred prior to disposal of the entire investments.

 

93


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

28.

Related Parties and Others, Continued

 

 

  (c)

Trade accounts and notes receivable and payable as of December 31, 2018 and 2017 are as follows:

 

     Trade accounts and notes receivable and
others
     Trade accounts and notes payable
and others
 
(In millions of won)    December 31, 2018      December 31, 2017      December 31, 2018      December 31, 2017  

Associates

           

INVENIA Co., Ltd.

     2,000        2,375        30,179        18,662  

AVATEC Co., Ltd.

     —          —          4,382        2,949  

Paju Electric Glass Co., Ltd.

     —          —          60,566        60,141  

WooRee E&L Co., Ltd.

     —          —          7        61  

YAS Co., Ltd.

     —          375        6,145        6,474  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 2,000        2,750        101,279        88,287  
  

 

 

    

 

 

    

 

 

    

 

 

 

Entity that has significant influence over the Controlling Company

           

LG Electronics Inc.

   W 247,679        550,335        430,677        257,071  

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

           

LG Electronics India Pvt. Ltd.

   W 9,047        3,030        29        —    

LG Electronics Vietnam Haiphong Co., Ltd.

     25,544        36,017        —          3,917  

LG Electronics Nanjing New Technology Co., Ltd.

     43,463        46,373        139        699  

LG Electronics RUS, LLC

     22,570        25,102        90        80  

LG Electronics do Brasil Ltda.

     15,608        19,091        62        10  

LG Innotek Co., Ltd.

     2,885        407        47,382        62,675  

Qingdao LG Inspur Digital Communication Co., Ltd.

     3,530        13,061        —          —    

 

94


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

28.

Related Parties and Others, Continued

 

 

     Trade accounts and notes receivable and
others
     Trade accounts and notes payable
and others
 
(In millions of won)    December 31, 2018      December 31, 2017      December 31, 2018      December 31, 2017  

Inspur LG Digital Mobile Communications Co., Ltd.

   W 13,172        55,278        —          —    

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

     15,305        29,440        —          —    

LG Electronics Mlawa Sp. z o.o.

     70,236        136,874        33        25  

LG Hitachi Water Solutions Co., Ltd.

     9,100        —          50,425        154,864  

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

     69,189        137,413        134        82  

HiEntech Co., Ltd.

     —          —          16,816        6,679  

Hientech (Tianjin) Co., Ltd.

     —          —          16,345        5,600  

LG Electronics Egypt S.A.E.

     10,296        —          —          1  

Others

     5,263        7,618        18,900        1,714  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 315,208        509,704        150,355        236,346  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 564,887        1,062,789        682,311        581,704  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(*)

Represents transactions occurred prior to disposal of the entire investments.

 

95


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

28.

Related Parties and Others, Continued

 

 

  (d)

Details of significant cash transactions such as loans and collection of loans, which occurred in the normal course of business with related parties for the years ended December 31, 2018 and 2017 are as follows:

 

(In millions of won)  
     Loans(*)  

Associates

   January 1,
2018
     Increase      Decrease      December 31,
2018
 

INVENIA Co., Ltd.

     2,375        —          375        2,000  

YAS Co., Ltd.

     375        —          375        —    
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 2,750        —          750        2,000  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(*)

Loans are presented based on nominal amounts.

 

(In millions of won)  
     Loans(*1)  

Associates

   January 1,
2017
     Increase      Decrease      December 31,
2017
 

New Optics Ltd.(*2)

   W 1,000        —          125        875  

INVENIA Co., Ltd.

     833        2,000        458        2,375  

Narenanotech Corporation(*2)

     300        —          75        225  

YAS Co., Ltd.

     833        —          458        375  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 2,966        2,000        1,116        3,850  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(*1)

Loans are presented based on nominal amounts.

(*2)

Excluded from related parties due to disposal of equity investments during the year ended December 31, 2017.

 

96


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

28.

Related Parties and Others, Continued

 

  (e)

Conglomerate Transactions

Transactions, trade accounts and notes receivable and payable, and others between the Group and certain companies and their subsidiaries, which are included in LG Group, one of conglomerates according to the Monopoly Regulation and Fair Trade Act for the years ended December 31, 2018 and 2017 are as follows. These entities are not affiliates according to K-IFRS No. 1024, Related Party Disclosures.

 

     For the year ended
December 31, 2018
     December 31, 2018  
     Sales
and others
     Purchase
and
others
     Trade accounts and
notes receivable
and others
     Trade accounts
and notes
payable and
others
 

LG Chem Ltd. and its subsidiaries

   W 1,648        1,233,945        173        184,357  

LG Household & Health Care and its subsidiaries

     1        118        —          —    

LG Hausys Ltd

     1,111        4        —          3  

Serveone and its subsidiaries

     401        1,928,820        21,307        510,132  

Silicon Works Co., Ltd

     —          713,093        —          140,694  

LG CNS Co., Ltd. and its subsidiaries

     —          278,330        1        95,703  

LG Holdings Japan Co., Ltd.

     —          1,836        2,037        —    

LG International Corp. and its subsidiaries(*)

     715,835        578,153        83,011        146,836  

LG Management Development Institute

     —          9,734        3,480        441  

G2R Inc. and its subsidiaries

     —          60,978        —          19,773  

LG Corp.

     —          54,434        11,246        —    

LG Uplus Corp.

     21        1,745        —          178  

Robostar Co., Ltd.

     —          3,616        —          2,723  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 719,017        4,864,806        121,255        1,100,840  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(*)

For transactions which LG International and its subsidiaries act as an agent of the Group and receive commission revenue from the Group, above transaction amount only include commission revenue recognized by LG International and its subsidiaries. For prior year comparative purpose, gross sales and others for the year ended December 31, 2018 amount to W770,277 million, respectively, and gross purchase and others for the year ended December 31, 2018 amount to W1,140,207 million, respectively.

 

97


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

     For the year ended
December 31, 2017
     December 31, 2017  
     Sales
and others
     Purchase and
others
     Trade accounts
and notes
receivable
and others
     Trade accounts
and notes
payable and
others
 

LG Chem Ltd. and its subsidiaries

   W 1,648        1,233,945        173        184,357  

LG Household & Health Care and its subsidiaries

     1        118        —          —    

LG Hausys Ltd

     1,111        4        —          3  

Serveone and its subsidiaries

     401        1,928,820        21,307        510,132  

Silicon Works Co., Ltd

     —          713,093        —          140,694  

LG CNS Co., Ltd. and its subsidiaries

     —          278,330        1        95,703  

LG Holdings Japan Co., Ltd.

     —          1,836        2,037        —        

LG International Corp. and its subsidiaries

     715,835        578,153        83,011        146,836  

LG Management Development Institute

     —          9,734        3,480        441  

G2R Inc. and its subsidiaries

     —          60,978        —          19,773  

LG Corp.

     —          54,434        11,246        —    

LG Uplus Corp.

     21        1,745        —          178  

Lusem Co., Ltd.(*)

           

SK Siltron Co., Ltd. (formerly, Siltron Co., Ltd.)(*)

           
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 719,017        4,861,190        121,255        1,098,117  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(*)

Represents transactions occurred prior to disposal of the entire investments.

LOGO Please refer to the detailed footnotes and final financial statements in the audit report, which will be on the electronic disclosure system (<http://dart.dss.or.kr>) on the last week of February

 

  (3)

Separate Financial Statements

 

  A.

Separate Statements of Financial Position

As of December 31, 2018 and 2017

 

 

98


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

(In millions of won)    Note      December 31,
2018
     December 31,
2017
 

Assets

        

Cash and cash equivalents

     4, 26      W 473,283      566,408

Deposits in banks

     4, 26        77,200      580,770

Trade accounts and notes receivable, net

     5, 14, 26, 28        3,389,108      4,673,570

Other accounts receivable, net

     5, 26        321,963      687,109

Other current financial assets

     6, 26        29,281      13,499

Inventories

     7        1,951,155      1,682,245

Other current assets

     5        136,349      177,473
     

 

 

    

 

 

 

Total current assets

        6,378,339      8,381,074

Deposits in banks

     4, 26        11      11

Investments

     8        3,602,214      2,683,941

Other non-current accounts receivable, net

     5, 26        25,823      15,115

Other non-current financial assets

     6, 26        77,192      49,657

Property, plant and equipment, net

     9        14,984,564      12,487,001

Intangible assets, net

     10        816,808      731,373

Deferred tax assets

     24        851,936      727,248

Other non-current assets

     5        325,219      333,995
     

 

 

    

 

 

 

Total non-current assets

        20,683,767      17,028,341
     

 

 

    

 

 

 

Total assets

      W 27,062,106      25,409,415
     

 

 

    

 

 

 

Liabilities

        

Trade accounts and notes payable

     26, 28      W 3,186,123      2,391,493

Current financial liabilities

     11, 26        1,044,841      1,060,735

Other accounts payable

     26        1,746,412      2,701,823

Accrued expenses

        516,970      755,062

Income tax payable

        17,404      235,593

Provisions

     13        96,555      73,685

Advances received

     14        780,906      142,700

Other current liabilities

     13        27,419      33,514
     

 

 

    

 

 

 

Total current liabilities

        7,416,630      7,394,605

Non-current financial liabilities

     11, 26        5,139,476      3,165,413

Non-current provisions

     13        32,764      28,312

Defined benefit liabilities, net

     12        44,187      94,535

Long-term advances received

     14        1,122,015      830,335

Other non-current liabilities

     13        94,453      66,956
     

 

 

    

 

 

 

Total non-current liabilities

        6,432,895      4,185,551
     

 

 

    

 

 

 

Total liabilities

        13,849,525      11,580,156
     

 

 

    

 

 

 

Equity

        

Share capital

     15        1,789,079      1,789,079

Share premium

        2,251,113      2,251,113

Retained earnings

     16        9,172,389      9,789,067
     

 

 

    

 

 

 

Total equity

        13,212,581      13,829,259
     

 

 

    

 

 

 

Total liabilities and equity

      W 27,062,106      25,409,415
     

 

 

    

 

 

 

See accompanying notes to the separate financial statements.

 

99


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

B. Separate Statements of Comprehensive Income

For the years ended December 31, 2018 and 2017

 

(In millions of won, except earnings per share)    Note    2018     2017  

Revenue

   17, 28    W 22,371,687     25,591,082

Cost of sales

   7, 18, 28      (20,439,681     (21,718,047
     

 

 

   

 

 

 

Gross profit

        1,932,006     3,873,035

Selling expenses

   19      (519,804     (666,891

Administrative expenses

   19      (678,861     (473,477

Research and development expenses

        (1,206,336     (1,195,937
     

 

 

   

 

 

 

Operating profit

        (472,995     1,536,730
     

 

 

   

 

 

 

Finance income

   22      148,301     763,489

Finance costs

   22      (129,652     (119,534

Other non-operating income

   21      541,547     790,476

Other non-operating expenses

   21      (577,007     (931,294
     

 

 

   

 

 

 

Profit before income tax

        (489,806     2,039,867

Income tax expense (Income)

   23      (47,515     260,146
     

 

 

   

 

 

 

Profit for the year

        (442,291     1,779,721
     

 

 

   

 

 

 

Other comprehensive income (loss)

       

Items that will never be reclassified to profit or loss

       

Remeasurements of net defined benefit liabilities

   12, 23      5,690     (16,260

Related income tax

   12, 23      (1,169     9,259
     

 

 

   

 

 

 
        4,521     (7,001
     

 

 

   

 

 

 

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

        4,521     (7,001
     

 

 

   

 

 

 

Total comprehensive income (loss) for the year

      W (437,770     1,772,720
     

 

 

   

 

 

 

Earnings per share (In won)

       

Basic earnings per share

   25    W (1,236     4,974
     

 

 

   

 

 

 

Diluted earnings per share

   25    W (1,236     4,974
     

 

 

   

 

 

 

See accompanying notes to the separate financial statements.

 

100


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

c. Separate Statements of Changes in Equity (Appendix-2)

d. Separate Statements of Cash Flows

For the years ended December 31, 2018 and 2017

 

(In millions of won)    Note      2018     2017  

Cash flows from operating activities:

       

Profit for the year

      W (442,291     1,779,721

Adjustments for:

       

Income tax expense

     23        (47,515     260,146

Depreciation

     9, 18        1,993,133     1,732,901

Amortization of intangible assets

     10, 18        399,635     391,580

Gain on foreign currency translation

        (38,724     (143,514

Loss on foreign currency translation

        102,689     143,022

Expenses related to defined benefit plans

     12, 20        178,274     196,853

Gain on disposal of property, plant and equipment

        (42,864     (139,053

Loss on disposal of property, plant and equipment

        8,615     11,620

Impairment loss on disposal of property, plant and equipment

        43,601     —  

Gain on disposal of intangible assets

        (239     (308

Loss on disposal of intangible assets

        —       30

Impairment loss on intangible assets

        82     1,809

Reversal of impairment loss on intangible assets

        (348     (35

Warranty expenses

        207,892     217,198

Finance income

        (145,293     (761,617

Finance costs

        119,915     80,995

Other income

        (3,400     (17,127

Other expenses

        612     2,293
     

 

 

   

 

 

 
        2,776,065     1,976,793

Changes in

       

Trade accounts and notes receivable

        1,110,769     316,119

Other accounts receivable

        21,444     (63,844

Inventories

        (355,858     24,738

Other current assets

        101,812     14,807

Other non-current assets

        (65,166     (112,015

Trade accounts and notes payable

        828,112     (272,656

Other accounts payable

        (223,707     161,337

Accrued expenses

        (249,579     166,035

Provisions

        (190,317     (177,439

Other current liabilities

        53,017     (6,883

Defined benefit liabilities, net

        (222,932     (260,790

Long-term advances received

        957,717     1,020,470

Other non-current liabilities

        25,745     6,368
     

 

 

   

 

 

 
        1,791,057     816,247

Cash generated from operating activities

        4,124,831     4,572,761

Income taxes paid

        (313,867     (232,477

Interests received

        19,592     25,017

Interests paid

        (145,082     (93,487
     

 

 

   

 

 

 

Net cash provided by operating activities

      W 3,685,474     4,271,814
     

 

 

   

 

 

 

 

101


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

Separate Statements of Cash Flows, Continued

 

For the years ended December 31, 2018 and 2017

 

(In millions of won)    Note      2018     2017  

Cash flows from investing activities:

       

Dividends received

      W 24,136     409,015

Increase in deposits in banks

        (275,700     (1,334,015

Proceeds from withdrawal of deposits in banks

        778,915     1,826,523

Acquisition of financial assets at fair value through profit or loss

        —       —  

Acquisition of available-for-sale financial assets

        —       (7

Proceeds from disposal of available-for-sale financial assets

        —       917

Acquisition of financial asset at fair value through profit or loss

        (286     —  

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

 

     6     —  

Acquisition of investments

        (192,611     (81,780

Proceeds from disposal of investments

        4,527     13,128

Acquisition of property, plant and equipment

        (5,548,289     (4,859,831

Proceeds from disposal of property, plant and equipment

        201,222     199,769

Acquisition of intangible assets

        (466,496     (437,290

Proceeds from disposal of intangible assets

        960     1,674

Government grants received

        1,210     1,859

Receipt from settlement of derivatives

        2,026     2,592

Proceeds from collection of short-term loans

        11,058     1,118

Increase in short-term loans

        (7,700     —  

Increase in long-term loans

        (36,580     (13,930

Increase in deposits

        (348     (1,388

Decrease in deposits

        569     1,185

Proceeds from disposal of emission rights

        10,200     6,090
     

 

 

   

 

 

 

Net cash used in investing activities

        (5,493,181     (4,264,371
     

 

 

   

 

 

 

Cash flows from financing activities:

     27       

Proceeds from short-term borrowings

        552,164     —  

Repayments of short-term borrowings

        (552,884     (105,864

Proceeds from issuance of debentures

        828,169     497,959

Proceeds from long-term debt

        2,489,560     630,000

Repayments of current portion of long-term debt and debentures

        (1,425,395     (544,557

Payment guarantee fee received

        1,876     868

Dividends paid

        (178,908     (178,908
     

 

 

   

 

 

 

Net cash provided by financing activities

        1,714,582     299,498
     

 

 

   

 

 

 

Net increase in cash and cash equivalents

        (93,125     306,941

Cash and cash equivalents at January 1

        566,408     259,467
     

 

 

   

 

 

 

Cash and cash equivalents at December 31

      W 473,283     566,408
     

 

 

   

 

 

 

See accompanying notes to the separate financial statements.

 

102


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

e. Notes to the Separate Financial Statements

 

1.

Organization and Description of Business

LG Display Co., Ltd. (the “Company”) was incorporated in February 1985 and the Company is a public corporation listed in the Korea Exchange since 2004. The main business of the Company is to manufacture and sell displays and its related products. As of December 31, 2018, the Company operates Thin Film Transistor Liquid Crystal Display (“TFT-LCD”) and Organic Light Emitting Diode (“OLED”) panel manufacturing plants in Gumi, Paju and China and TFT-LCD and OLED module manufacturing plants in Gumi, Paju, China, Poland and Vietnam. The Company is domiciled in the Republic of Korea with its address at 128 Yeouidae-ro, Yeongdeungpo-gu, Seoul, the Republic of Korea. As of December 31, 2017, LG Electronics Inc., a major shareholder of the Company, owns 37.9% (135,625,000 shares) of the Company’s common stock.

 

103


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

The Company’s common stock is listed on the Korea Exchange under the identifying code 034220. As of December 31, 2017, 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 December 31, 2018, there are 20,890,926 ADSs outstanding.

 

2.

Basis of Presenting Financial Statements

 

  (a)

Statement of Compliance

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

These financial statements are separate 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.

K-IFRS No. 1109, K-IFRS No. 1115, and K-IFRS No. 2122 have been applied in the condensed separate interim financial statements as of and for the nine-month period ended September 30, 2018. Changes to significant accounting policies are described in Note 3.

The separate financial statements were authorized for issuance by the Board of Directors on January 22, 2018, which will be submitted for approval to the shareholders’ meeting to be held on March 15, 2019.

 

104


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

2.

Basis of Presenting Financial Statements, Continued

 

  (b)

Basis of Measurement

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

 

   

derivative instruments, financial assets at fair value through profit or loss and available-for-sale financial assets are measured at fair value, and

 

   

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

 

  (c)

Functional and Presentation Currency

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

 

  (d)

Use of Estimates and Judgments

The preparation of the separate 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 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 the last annual financial statements, except for new significant judgments and key sources of estimation uncertainty related to the application of K-IFRS No. 1109, K-IFRS No. 1115 in Note 3 and the change in useful life of Mask and Mold.

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

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

 

   

Classification of financial instruments (note 3.(e))

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

 

   

Recognition and measurement of provisions (note 3.(k), 13 and 14.(a))

 

   

Measurement of defined benefit obligations (note 12)

 

   

Deferred tax assets and liabilities (note 24)

 

105


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

3.

Summary of Significant Accounting Policies

The significant accounting policies followed by the Company in preparation of its separate financial statements are as follows:

 

  (a)

Interest in subsidiaries, associates and joint ventures

These separate financial statements are prepared and presented in accordance with K-IFRS No.1027, Separate Financial Statements. The Company applied the cost method to investments in subsidiaries, associates and joint ventures in accordance with K-IFRS No.1027. Dividends from subsidiaries, associates or joint ventures are recognized in profit or loss when the right to receive the dividend is established.

 

  (b)

Foreign Currency Transactions and Translation

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

 

  (c)

Cash and cash equivalents

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

 

  (d)

Inventories

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

 

106


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

3.

Summary of Significant Accounting Policies, Continued

 

  (e)

Financial Instruments

(i) Non-derivative financial assets

Under K-IFRS No. 1109, on initial recognition, a financial asset is classified as measured at: amortized cost; FVOCI-debt investment; FVOCI-equity investment; or FVTPL. The classification of financial assets under K-IFRS 1109 is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics.

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

 

   

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

 

   

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

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

 

   

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

 

   

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

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

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

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

 

107


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

3.

Summary of Significant Accounting Policies, Continued

 

  (e)

Financial Instruments

(i) Non-derivative financial assets

The following accounting policies apply to the subsequent measurement of financial assets.

 

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

(ii) Non-derivative financial liabilities

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

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

Non-derivative financial liabilities other than financial liabilities classified as FVTPL are classified as other financial liabilities and measured initially at fair value minus transaction costs that are directly attributable to the issuance of financial liabilities. Subsequent to initial recognition, these financial liabilities are measured at amortized cost using the effective interest method. As of December 31, 2017, non-derivative financial liabilities comprise borrowings, bonds and others.

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

 

108


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

3.

Summary of Significant Accounting Policies, Continued

 

  (e)

Financial Instruments, Continued

 

(iii) Share Capital

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

(iv) Derivative financial instruments

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

Hedge Accounting

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

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

i) Fair value hedges

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

 

109


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

3.

Summary of Significant Accounting Policies, Continued

 

  (e)

Financial Instruments, Continued

 

 

(iv) Derivative financial instruments, Continued

 

 

ii) Cash flow hedges

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

Embedded derivative

Embedded derivatives are separated from the host contract and accounted for separately if the economic characteristics and risks of the host contract and the embedded derivative are not closely related, a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative, and the combined instrument is not measured at FVTPL. Changes in the fair value of separable embedded derivatives are recognized immediately in profit or loss.

Other derivative financial instruments

Derivative financial instruments are measured at fair value and changes of them not designated as a hedging instrument or not effective for hedging are recognized in profit or loss.

 

  (f)

Property, Plant and Equipment

(i) Recognition and measurement

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

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

(ii) Subsequent costs

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

 

110


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

3.

Summary of Significant Accounting Policies, Continued

 

  (f)

Property, Plant and Equipment, Continued

 

(iii) Depreciation

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

Estimated useful lives of the assets are as follows:

 

     Useful lives (years)

Buildings and structures

   20, 40

Machinery

   4, 5

Furniture and fixtures

   4

Equipment, tools and vehicles

   4, 12

Depreciation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate and any changes are accounted for as changes in accounting estimates. There were no such changes for all periods presented.

Based on the review of the past accumulated usage information that became available, the Company management reassessed the economic useful life of the Mask and Mold which had previously been classified as inventory. The balances of such Mask and Mold inventories amounted to W90,955 million as of December 31, 2017. Based on the results of the reassessment, the Company changed useful lives of Mask and Mold to two years and accounted for the change as a change in accounting estimate. The Company also changed the classification of Mask and Mold to property, plant and equipment.

 

  (g)

Borrowing Costs

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

 

  (h)

Government Grants

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

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

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

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

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

 

111


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

3.

Summary of Significant Accounting Policies, Continued

 

(iii) Other government grants

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

 

  (i)

Intangible Assets

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

(i) Goodwill

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

(ii) Research and development

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognized in profit or loss as incurred.

Development activities involve a plan or design of the production of new or substantially improved products and processes. Development expenditure is capitalized only if the Company can demonstrate all of the following:

 

   

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

 

   

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

 

   

its ability to use or sell the intangible asset,

 

   

how the intangible asset will generate probable future economic benefits. Among other things, the Company can demonstrate the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset,

 

   

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

 

   

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

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

(iii) Other intangible assets

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

 

112


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

3.

Summary of Significant Accounting Policies, Continued

 

  (i)

Intangible Assets, Continued

 

(iv) Subsequent costs

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific intangible asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred.

(v) Amortization

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

 

     Estimated useful lives (years)

Intellectual property rights

   5, 10

Rights to use electricity, water and gas supply facilities

   10

Software

   4

Customer relationships

   7, 10

Technology

   10

Development costs

   (*)

Condominium and golf club memberships

   Not amortized

 

(*)

Capitalized development costs are amortized over the useful life considering the life cycle of the developed products. Amortization of capitalized development costs is recognized in research and development expenses in the separate statement of comprehensive income.

Amortization periods and the amortization methods for intangible assets with finite useful lives are reviewed at each financial year-end. The useful lives of intangible assets that are not being amortized are reviewed each period to determine whether events and circumstances continue to support indefinite useful life assessments for those assets. If appropriate, the changes are accounted for as changes in accounting estimates.

 

  (j)

Impairment

(i) Financial assets

The Group recognized loss allowances for an ‘expected credit loss as below’.

 

   

Financial assets at amortized cost

 

   

Financial assets at fair value through other comprehensive income.

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Company expects to receive).

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

 

113


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

3.

Summary of Significant Accounting Policies, Continued

 

(j) Impairment, Continued

 

(i) Financial assets, Continued

 

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets. For debt instruments at FVOCI, the loss allowance is recognized in OCI, instead of reducing the carrying amount of the asset.

(ii) Non-financial assets

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

For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”, or “CGU”). The recoverable amount of an asset or cash-generating unit is determined as the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Fair value less costs to sell is based on the best information available to reflect the amount that the Company could obtain from the disposal of the asset in an arm’s length transaction between knowledgeable, willing parties, after deducting the costs of disposal.

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

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

 

114


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

3.

Summary of Significant Accounting Policies, Continued

 

  (k)

Provisions

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

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

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

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

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

 

  (l)

Employee Benefits

(i) Short-term employee benefits

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

(ii) Other long-term employee benefits

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

 

115


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

3.

Summary of Significant Accounting Policies, Continued

 

  (l)

Employee Benefits, Continued

 

(iii) Defined contribution plan

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

(iv) Defined benefit plan

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

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

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

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

 

  (m)

Revenue

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

The Company adopted K-IFRS No. 1115, Revenue from contracts with customers, as of January 1, 2018. K-IFRS No. 1115 establishes a single new revenue recognition standard for contracts with customers and introduces a five-step model as below.

The steps in five-step model are as follows:

 

  a)

Identify the contract with a customer.

 

  b)

Identify the performance obligations in the contract.

 

  c)

Determine the transaction price.

 

  d)

Allocate the transaction price to the performance obligations in the contract.

 

  e)

Recognize revenue when (or as) the entity satisfies a performance obligation.

 

116


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

3.

Summary of Significant Accounting Policies, Continued

 

  (m)

Revenue, Continued

 

The consideration received from customers may be variable as the Company allows its customers to return their products according to the contracts.

The Company recognized refund liabilities as substantial amount compare to gross sales profit for expected return of goods until the end of December 31, 2018.

The Company shall estimate an amount of variable consideration by using the expected value or the most likely amount, depending on which method the entity expects to better predict the amount of consideration to which it will be entitled and include in the transaction price some or all of an amount of variable consideration estimated only to the extent that is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur when return period expires.

The Company shall recognize refund liability measured at the amount of consideration received (or receivable) to which the Company does not expect to be entitled and a new asset for the right to recover returned goods.

On the other hand, VAT received from customers and paid to the government is not recognized as gain comprehensive income statement

 

  (n)

Operating Segments

In accordance with K-IFRS No. 1108, Operating Segments, entity wide disclosures of geographic and product revenue information are provided in the consolidated financial statements.

 

  (o)

Finance Income and Finance Costs

Financial income and financial expenses of the company consist of the following:

 

   

interest income

 

   

Interest expenses

 

   

Dividend income

 

   

Other comprehensive income—net profit or loss on disposal of investment assets on debt instruments measured at fair value

 

   

Profit or loss—Net profit or loss on financial assets measured at fair value

 

   

Foreign exchange gains and losses on financial assets and financial liabilities

 

   

Amortized cost or other comprehensive income—impairment loss (or reversal of impairment loss) arising on investments in debt instruments measured at fair value

Interest income or expense is recognized using the effective interest method. Dividend income is recognized when the Company’s right to receive dividends is established. Interest expense on borrowings directly related to the acquisition, construction or production of qualifying assets is included in the acquisition cost of the related assets.

 

117


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

3.

Summary of Significant Accounting Policies, Continued

 

  (p)

Income Tax

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

(i) Current tax

Current tax is the expected tax payable or receivable on the taxable profit or loss for the year, using tax rates enacted or substantively enacted at the reporting date and any adjustment to tax payable in respect of previous years. The taxable profit is different from the accounting profit for the period since the taxable profit is calculated excluding the temporary differences, which will be taxable or deductible in determining taxable profit (tax loss) of future periods, and non-taxable or non-deductible items from the accounting profit.

(ii) Deferred tax

Deferred tax is recognized, using the liability method, in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and deferred tax assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. However, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill.

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

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

The Company offsets deferred tax assets and deferred tax liabilities if, and only if, the Company has a legally enforceable right to set off current tax assets against current tax liabilities and the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority.

 

  (q)

Earnings Per Share

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

 

118


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

3.

Summary of Significant Accounting Policies, Continued

 

  (r)

Business Combinations

The Company accounts for business combinations using the acquisition method when control is transferred to the Company. The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognized in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities in accordance with K-IFRS No. 1032 and K-IFRS No. 1039.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognized in profit or loss

 

119


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

3.

Summary of Significant Accounting Policies, Continued

 

  (s)

Changes in Accounting Policies

The Company has initially adopted K-IFRS No. 1115, Revenue from Contracts with Customers, K-IFRS No. 1109, Financial Instruments, and K-IFRS No. 2122, Foreign Currency Transactions and Advance Consideration, from January 1, 2018.

 

  (i)

K-IFRS No. 1109, Financial Instruments

K-IFRS No. 1109 set out requirements for recognizing and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. This standards replaces K-IFRS No. 1039 Financial Instruments: Recognition and Measurement. The Company adopted K-IFRS No. 1109, Financial Instruments, from January 1, 2018, and the Company has taken an exemption not to restate the financial statements for prior years with respects to transition requirements.

The details of new significant accounting policies and the nature and effect of the changes to previous accounting policies are set out below. There is no impact on the opening balance of retained earnings at January 1, 2018.

i) Classification and measurement of financial assets and financial liabilities

K-IFRS No. 1109 largely retains the existing requirements in K-IFRS No. 1039 for the classification and measurement of financial liabilities. However, it eliminates the previous K-IFRS No. 1039 categories for financial assets of held to maturity, loans and receivables and available for sale.

The adoption K-IFRS No. 1109 has not had a significant effect on the Company’s accounting policies related to financial liabilities and derivative financial instruments. The following table below explain the original measurement categories under K-IFRS No. 1039 and the changes in measurement categories under K-IFRS No. 1109 for each class of the Company’s financial assets as at January 1, 2018 are as below.

 

(In millions of won)

  

Classification

under

K-IFRS No. 1039

  

Classification under

K-IFRS No. 1109

   Carrying amount
under

K-IFRS No. 1039
     Carrying amount
under

K-IFRS No. 1109
     Difference  

Financial assets

              

Cash and cash equivalents

  

Loans and

receivables

   Amortized cost    W  566,408        566,408        —    

Deposits

  

Loans and

receivables

   Amortized cost      580,781        580,781        —    

Trade receivables

  

Loans and

receivables

   Amortized cost      4,673,570        4,673,570        —    

Other receivables

  

Loans and

receivables

   Amortized cost      702,224        702,224        —    

Debt instrument

   Available-for-sale    FVOCI-debt instrument      162        162        —    

Equity instrument

   Available-for-sale   

Mandatorily at

FVTPL

     2,697        2,697        —    

Convertible bonds

   Designated as at FVTPL    Mandatorily at FVTPL      1,552        1,552        —    

Derivatives

   Designated as at FVTPL    Mandatorily at FVTPL      842        842        —    

Others

  

Loans and

receivables

   Amortized cost      57,903        57,903        —    
        

 

 

    

 

 

    

 

 

 

Total financial assets

         W  6,586,139        6,586,139        —    
        

 

 

    

 

 

    

 

 

 

As of January 1, 2018, there was no financial liabilities measured at FVTPL.

 

120


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

iv) Impairment of financial assets

K-IFRS No. 1109 replaces the ‘incurred loss’ model in K-IFRS No. 1039 with an ‘expected credit loss’ (ECL) model. The new impairment model applies to financial assets measured at amortized cost, contract assets and debt investments at FVOCI, but not to investments in equity instruments. Under K-IFRS No. 1109, credit losses are recognized earlier than under K-IFRS No. 1039.

As a result of applying the loss allowances model under K-IFRS No. 1109, as of January 1, 2018, there are no additional loss allowances as compared with the loss allowances under K-IFRS No. 1039.

v) Hedge Accounting

When initially applying K-IFRS No. 1109, the Company elected as its accounting policy to continue to apply hedge accounting requirements under K-IFRS No. 1039 instead of the requirements in K-IFRS No. 1109. As of January 1, 2018, there is no impact on the condensed consolidated interim financial statement of the Company resulting from the application of the requirements in K-IFRS No. 1109.

(iv) K-IFRS No. 1115, Revenue from Contracts with Customers

K-IFRS No. 1115, Revenue from contracts with customers, establishes a comprehensive framework for determining whether, how much and when revenue is recognized. K-IFRS No. 1115 replaces existing revenue recognition guidance, including K-IFRS No. 1018 Revenue, K-IFRS No. 1011, Construction Contracts, K-IFRS No. 2031, Revenue: Barter Transactions Involving Advertising Services, K-IFRS No. 2113, Customer Loyalty Programmes, K-IFRS No. 2115, Agreements for the Construction of Real Estate and K-IFRS No. 2118, Transfers of Assets from Customers.

The Company has initially applied K-IFRS No. 1115, Revenue from contracts with customers, from January 1, 2018. Regarding transition to K-IFRS No.1115, the Company has decided to apply the cumulative effect method, i.e. recognizing the cumulative effect of applying K-IFRS No. 1115 at the date of initial application, which is January 1, 2018, without restatement of the comparative periods presented. As a result of this change, the refund liability and a new asset for the right to recover returned goods increased by W9,789 million, respectively, as of January 1, 2018. There is no impact on the opening balance of retained earnings at January 1, 2018. (Note 5(d), 13(a))

The effect of the application of K-IFRS No. 1115 on the Company’s separate statement of financial position as of December 31, 2018 is as follows. There is no impact on the condensed separate statement of comprehensive income and the cash flows for year ended December 31, 2018.

 

(In millions of won)                

Categories

   Adoption of
K-IFRS No. 1115
     Adjustments      Adoption of
K-IFRS No. 1018
 

Current Assets

        

Other current assets

   W  136,350        (7,489      128,861  

Current Liabilities

        

Provisions

   W  96,554        (7,489      89,065  

 

121


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

3.

Summary of Significant Accounting Policies, Continue

 

(iii) K-IFRS No. 2112, Foreign Currency Transactions and Advance Consideration

According to the new interpretation, K-IFRS No. 2112, Foreign Currency Transactions and Advance Consideration, the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income (or part of it) is the date on which an entity initially recognizes the non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration. If there are multiple payments or receipts in advance, the entity shall determine a date of the transaction for each payment or receipt of advance consideration. There is no significant impact on the separate financial statements of the Company.

 

  (t)

New Standards and Amendments Not Yet Adopted

The following new standard is effective for annual periods beginning after January 1, 2018 and earlier application is permitted; however, the Group has not early adopted the following new standard in preparing these condensed consolidated interim financial statements.

(ii) K-IFRS No. 1116, Leases

K-IFRS No. 1116, Leases, published on May 22, 2017 is effective for annual periods beginning on or after January 1, 2019, with early adoption permitted. K-IFRS No. 1116 replaces existing leases guidance including K-IFRS No. 1017, Leases, K-IFRS No. 2014, Determining whether an Arrangement contains a Lease, K-IFRS No. 2015, Operating Leases—Incentives and K-IFRS No. 2027, Evaluating the Substance of Transactions Involving the Legal Form of a Lease.

The Company will apply K-IFRS No. 1116 from the beginning of the fiscal year starting on January 1, 2019. At inception of a contract, the Company assesses whether the contract is, or contains, a lease and reassess whether a contract is, or contains, a lease at the date of initial application. However, as a practical expedient, the Company is not required to reassess for contracts entered into, or changed, on or before January 1, 2019.

 

122


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

4.

Cash and Cash Equivalents and Deposits in Banks

Cash and cash equivalents and deposits in banks at the reporting date are as follows:

 

(In millions of won)    December 31, 2018      December 31, 2017  
Current assets      

Cash and cash equivalents

     

Demand deposits

   W  473,283        566,408  

Deposits in banks

     

Time deposits

   W  3,118        507,930  

Restricted cash (*)

     72,082        72,840  
  

 

 

    

 

 

 
   W  77,200        580,770  
  

 

 

    

 

 

 

Non-current assets

     

Deposits in banks

     

Restricted cash (*)

   W  11        11  
  

 

 

    

 

 

 
   W  550,494        1,147,189  
  

 

 

    

 

 

 

 

(*)

Restricted cash includes mutual growth fund to aid LG Group’s second and third-tier suppliers, pledge to enforce investment plans related to received subsidies from Gumi city and Gyeongsangbuk-do and others.

 

5.

Receivables and Other Current Assets

 

  (a)

Trade accounts and notes receivable at the reporting date are as follows:

 

(In millions of won)    December 31, 2018      December 31, 2017  

Trade, net

   W  257,038        355,332  

Due from related parties

     3,132,070        4,318,238  
  

 

 

    

 

 

 
   W  3,389,108        4,673,570  
  

 

 

    

 

 

 

 

  (b)

Other accounts receivable at the reporting date are as follows:

 

(In millions of won)    December 31, 2018      December 31, 2017  

Current assets

     

Non-trade receivable, net

   W  316,069        678,454  

Accrued income

     5,894        8,655  
  

 

 

    

 

 

 
   W  321,963        687,109  
  

 

 

    

 

 

 

Non-Current assets

     

Long-term non-trade receivable

   W  25,823        15,115  
  

 

 

    

 

 

 
   W  347,786        702,224  
  

 

 

    

 

 

 

Due from related parties included in other accounts receivable, as of December 31, 2018 and 2017 are W247,677 million and W567,996 million, respectively.

 

123


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

5.

Receivables and Other Assets, Continued

 

  (c)

The aging of trade accounts and note receivable and other accounts receivable at the reporting date are as follows:

 

     December 31, 2018  
     Book value      Impairment loss  
(In millions of won)    Trade accounts
and notes
receivable
     Other
accounts
receivable(*)
     Trade accounts
and notes
receivable
     Other
accounts
receivable(*)
 

Not past due

   W  3,387,653        347,669        (5      (551

Past due 1-15 days

     1,353        274        —          (2

Past due 16-30 days

     79        69        —          (1

Past due 31-60 days

     28        95        —          (1

Past due more than 60 days

     —          668        —          (434
  

 

 

    

 

 

    

 

 

    

 

 

 
   W  3,389,113        348,775        (5      (989
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(*)

Other accounts receivable includes non-trade receivable, accrued income and Long-term non-trade receivable.

 

     December 31, 2017  
     Book value      Impairment loss  
(In millions of won)    Trade accounts
and notes
receivable
     Other
accounts
receivable(*)
     Trade accounts
and notes
receivable
     Other
accounts
receivable(*)
 

Not past due

   W  4,673,660        701,952        (570      (686

Past due 1-15 days

     341        482        —          (3

Past due 16-30 days

     135        53        —          (1

Past due 31-60 days

     —          207        —          (2

Past due more than 60 days

     4        622        —          (400
  

 

 

    

 

 

    

 

 

    

 

 

 
   W  4,674,140        703,316        (570      (1,092
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(*)

Other accounts receivable includes non-trade receivable, accrued income and Long-term non-trade receivable.

The movement in the allowance for impairment in respect of trade accounts and notes receivable, other accounts receivable for the years ended December 31, 2018 and 2017 are as follows:

 

     2018      2017  
(In millions of won)    Trade accounts and
notes receivable
     Other
accounts
receivable
     Trade accounts
and notes
receivable
     Other
accounts
receivable
 

Balance at the beginning of the period

   W  570        1,092        520        827  

(Reversal of) bad debt expense

     (562      (103      50        265  
  

 

 

    

 

 

    

 

 

    

 

 

 

Balance at the reporting date

   W  5        989        570        1,092  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

124


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

5.

Receivables and Other Assets, Continued

 

  (d)

Other assets at the reporting date are as follows:

 

(In millions of won)    December 31, 2018      December 31, 2017  

Current assets

     

Advance payments

   W  3,354        3,597  

Prepaid expenses

     73,255        76,129  

Value added tax refundable

     52,252        95,769  

Emission rights

     —          1,978  

Right to recover returned goods(*)

     7,489        —    
  

 

 

    

 

 

 
   W  136,350        177,473  
  

 

 

    

 

 

 

Non-current assets

     

Long-term prepaid expenses

   W  325,220        333,995  
  

 

 

    

 

 

 

 

(*)

As a result from the initial application of K-IFRS No. 1115, the Company recognized an asset for right to recover returned goods returned by the customer.

 

125


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

6.

Other Financial Assets

 

  (a)

Other financial assets at the reporting date are as follows:

 

(In millions of won)    December 31, 2018  

Current assets

  

Financial asset at fair value through profit or loss

  

Derivatives(*)

   W  13,059  

Financial asset at fair value through other comprehensive income

  

Debt instrument

  

Government bonds

   W 106  

Financial asset carried at amortized cost

  

Short-term loans

   W  16,116  
  

 

 

 
   W  29,281  
  

 

 

 

Non-current assets

  

Financial asset at fair value through profit or loss

  

Equity instrument

  

Intellectual Discovery, Ltd.

   W  4,598  

Kyulux, Inc.

     2,460  

Fineeva Co., Ltd.

     286  
  

 

 

 
   W   7,344  
  

 

 

 

Convertible bonds

   W  1,327  

Financial asset at fair value through other comprehensive income

  

Debt instrument Government bonds

   W 54  

Financial asset carried at amortized cost

  

Deposits

   W  13,418  

Long-term loans

     55,048  
  

 

 

 
   W  77,191  
  

 

 

 

 

(*)

Represents interest rate swap contracts related to borrowings with variable interest rate.

 

126


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

6.

Other Financial Assets, Continued

 

  (b)

Other financial assets as of December 31, 2017 are as follows:

 

(In millions of won)    December 31, 2017  

Current assets

  

Available-for-sale financial assets

  

Debt instrument

  

Government bonds

   W  6  

Short-term loans

     13,493  
  

 

 

 
   W  13,499  
  

 

 

 

Non-current assets

  

Financial asset at fair value through profit or loss

   W  1,552  

Available-for-sale financial assets

  

Debt instrument

  

Government bonds

   W  156  

Equity instrument

  

Intellectual Discovery, Ltd.

   W  729  

Kyulux, Inc.

     1,968  
  

 

 

 
   W   2,697  
  

 

 

 

Deposits

   W  13,638  

Long-term loans

     30,772  

Derivatives(*)

     842  
  

 

 

 
   W  49,657  
  

 

 

 

 

(*)

Represents interest rate swap contracts related to borrowings with variable interest rate.

Other financial assets of related parties as of December 31, 2018 and 2017 are W2,000 million and W2,750 million, respectively.

 

127


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

7.

Inventories

Inventories at the reporting date are as follows:

 

(In millions of won)    December 31, 2018      December 31, 2017  

Finished goods

   W  539,859        491,330  

Work-in-process

     791,395        675,324  

Raw materials

     500,413        286,934  

Supplies

     119,487        228,657  
  

 

 

    

 

 

 
   W  1,951,155        1,682,245  
  

 

 

    

 

 

 

For the years ended December 31, 2018 and 2017, 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 are as follows:

 

(In millions of won)    2018      2017  

Inventories recognized as cost of sales

   W  20,439,681        21,718,047  

Including: inventory write-downs

     280,323        184,139  

Including: reversal and usage of inventory write-downs

     (184,139      (185,454

There were no significant reversals of inventory write-downs recognized during 2018 and 2017.

 

128


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

8.

Investments

 

 

  (a)

Investments in subsidiaries consist of the following:

 

(In millions of won)           December 31, 2018     December 31, 2017  

Overseas Subsidiaries

  Location  

Business

  Percentage
of ownership
    Book value     Percentage
of ownership
    Book Value  

LG Display America, Inc.

  San Jose,

U.S.A.

 

Sell Display

products

    100   W 36,815       100   W 36,815  

LG Display Germany GmbH

  Eschborn,
Germany
 

Sell Display

products

    100     19,373       100     19,373  

LG Display Japan Co., Ltd.

  Tokyo,
Japan
 

Sell Display

products

    100     15,686       100     15,686  

LG Display Taiwan Co., Ltd.

  Taipei,
Taiwan
 

Sell Display

products

    100     35,230       100     35,230  

LG Display Nanjing Co., Ltd.

  Nanjing,
China
 

Manufacture

Display products

    100     593,726       100     593,726  

LG Display Shanghai Co., Ltd.

  Shanghai,
China
 

Sell Display

products

    100     9,093       100     9,093  

LG Display Poland Sp. z o.o.

  Wroclaw,
Poland
 

Manufacture

Display products

    100     194,992       100     194,992  

LG Display Guangzhou Co., Ltd.

  Guangzhou,
China
 

Manufacture

Display products

    100     293,557       100     293,557  

LG Display Shenzhen Co., Ltd.

  Shenzhen,
China
 

Sell Display

products

    100     3,467       100     3,467  

LG Display Singapore Pte. Ltd.

  Singapore  

Sell Display

products

    100     1,250       100     1,250  

L&T Display Technology (Fujian) Limited

  Fujian,

China

  Manufacture LCD module and LCD monitor sets     51     10,123       51     10,123  

LG Display Yantai Co., Ltd.

  Yantai,

China

 

Manufacture

Display products

    100     169,195       100     169,195  

Nanumnuri Co., Ltd.

  Gumi,
South Korea
  Janitorial services     100     800       100     800  

LG Display (China) Co., Ltd.

  Guangzhou,
China
  Manufacture and Sell Display products     51     723,086       51     723,086  

Unified Innovative Technology, LLC

  Wilmington,
U.S.A.
  Manage intellectual property     100     9,489       100     9,489  

LG Display Guangzhou Trading Co., Ltd.

  Guangzhou,
China
  Sell Display products     100     218       100     218  

Global OLED Technology LLC

  Herndon,

U.S.A

  Manage OLED intellectual property     100     164,322       100     164,322  

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

  Haiphong,

Vietnam

 

Manufacture

Display Products

    100     329,978       100     117,378  

Suzhou Lehui Display Co., Ltd.

  Suzhou,

China

  Manufacture and sell LCD module and LCD monitor sets     100     121,640       100     121,640  

LG DISPLAY FUND I LLC(*2)

  Wilmington,
U.S.A.
  Invest in venture business and obtain technologies     100     2,249       —         —    

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

  Guangzhou,
China
 

Manufacture

Display Products

    69     749,154       —         —    

MMT(*4)

  Seoul,

Korea

  Money Market Trust     100     24,501       100     61,471  
       

 

 

     

 

 

 
                  W3,507,944           W2,580,911  
       

 

 

     

 

 

 

 

129


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

8.

Investments, Continued.

 

(*1)

For the year ended December 31, 2018, the Company contributed W212,600 million in cash for the capital increase of LG Display Vietnam Haiphong Co., Ltd. (“LGDVN”). There was no change in the Company’s ownership percentage in LGDVN as a result of this additional investment.

(*2)

For the year ended December 31, 2018, the Company established LG DISPLAY FUND I LLC in Wilmington, U.S.A. to invest in venture business and the Company has a 100% equity interest of this subsidiary.

(*3)

For the year ended December 31, 2018, the Company established LG Display High-Tech (China) Co., Ltd. in Guangzhou China to manufacture Display products and the Company has a 69% equity interest of this subsidiary.

(*4)

For the year ended December 31, 2018, the Company acquired W24,501 million of Money Market Trust.

 

130


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

8.

Investments, Continued.

 

 

  (b)

Investments in associates consist of the following:

 

(In millions of won)              December 31, 2017      December 31, 2016  

Associates

  

Location

  

Business

   Percentage
of ownership
     Book Value      Percentage
of ownership
     Book Value  

Paju Electric Glass

Co., Ltd.

  

Paju,

South Korea

   Manufacture electric glass for FPDs      40    W  45,089        40    W 45,089  

IINVENIA Co., Ltd.

  

Seongnam,

South Korea

   Develop and manufacture the equipment for FPDs      13      6,330        13      6,330  

WooRee E&L Co., Ltd.(*4)

  

Ansan,

South Korea

   Manufacture LED back light unit packages      14      4,746        14      10,268  

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      434  

YAS Co., Ltd.

  

Paju,

South Korea

   Develop and manufacture deposition equipment for OLEDs      15      10,000        15      10,000  

AVATEC Co., Ltd.

  

Daegu,

South Korea

   Process and sell electric glass for FPDs      17      10,600        17      10,600  

Arctic Sentinel, Inc.

   Los Angeles U.S.A.   

Develop and manufacture tablet

for kids

     10      —          10      —    

CYNORA Gmbh(*5)

  

Bruchsal

Germany

   Develop organic emitting materials for displays and lighting devices      14      8,668        14      20,309  

Material Science Co., Ltd.(*2)

  

Seoul,

South Korea

   Develop, manufacture and sell material for display      10      3,346        —          —    

Nanosys Inc.(*3)

  

Milpitas,

U.S.A.

   Develop, manufacture and sell material for display      4      5,491        —          —    
           

 

 

       

 

 

 
            W 94,270         W  103,030  
           

 

 

       

 

 

 

 

131


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

8.

Investments, Continued.

 

(*1)

In 2018, The LB Gemini New Growth Fund No.16 (“the Fund”). which the Company was a member of a limited partnership, was approved resolution to dissolve the fund at the general meeting and the fund completed liquidation. In December 2018, the Company received W1,545 million from the Fund and recognized an finance income of W1,112 million for the difference with carrying amount.

(*2)

In March 2018, the Company invested W4,000 million and acquired 10,767 shares of common stock with voting rights in Material Science Co., Ltd. In 2018, the Company recognized an impairment loss of W654 million as finance cost for the recoverable amount of investments in Material Science Co., Ltd.. As of December 31, 2018, the Company‘s ownership percentage in Material Science Co., Ltd. is 10% and the Company has the right to appoint a director to the board of directors of the investee.

(*3)

In May 2018, the Company invested W10,732 million and acquired 5,699,954 shares of preferred stock with voting rights in Nanosys Inc. In 2018, the Company recognized an impairment loss of W5,241 million as finance cost for the recoverable amount of investments in Nanosys Inc.. As of December 31, 2018, the Company‘s ownership percentage in Nanosys Inc. is 4% and the Company has the right to appoint a director to the board of directors of the investee.

(*4)

In 2018, the Company recognized an impairment loss of W5,522 million as finance cost for the difference between the carrying amount and the recoverable amount of investments in WooRee E&L Co., Ltd. which Manufacture LED back light unit packages.

(*5)

In 2018, the Company recognized an impairment loss of W11,641 million as finance cost for the difference between the carrying amount and the recoverable amount of investments in CYNORA Gmbh which Develop organic emitting materials for displays and lighting devices.

For the year ended December 31, 2018 and 2017, the aggregate amount of received dividends from subsidiaries and associates are W95,553 million and W612,132 million, respectively.

 

132


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

9.

Property, Plant and Equipment

 

  (a)

Changes in property, plant and equipment for the year ended December 31, 2018 are as follows:

 

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

Acquisition cost as of January 1, 2018

   W 460,511       4,857,328       33,969,092       622,955       5,586,631       139,774       45,636,291  

Accumulated depreciation as of January 1, 2018

     —         (2,218,404     (30,303,595     (531,316     —         (93,685     (33,147,000

Accumulated impairment loss as of January 1, 2018

     —         —         (2,290     —         —         —         (2,290
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Book value as of January 1, 2018

   W 460,511       2,638,924       3,663,207       91,639       5,586,631       46,089       12,487,001  

Additions

     —         —         —         —         4,943,986       —         4,943,986  

Depreciation

     —         (225,710     (1,584,542     (39,522     —         (143,359     (1,993,133

Disposals

     (15     (22     (147,490     (305     —         (4,434     (152,266

Impairment loss

     —         —         (25,711     —         (17,890     —         (43,601

Others (*2)

     1,332       3,216       1,438,365       31,088       (2,060,535     330,321       (256,213

Government grants received

     —         —         (1,029     —         (181     —         (1,210
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Book value as of December 31, 2018

   W 461,828       2,416,408       3,342,800       82,900       8,452,011       228,617       14,984,564  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Acquisition cost as of December 31, 2018

   W 461,828       4,860,942       34,433,030       652,723       8,469,902       479,594       49,358,019  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated depreciation as of December 31, 2018

   W —         (2,444,534     (31,062,229     (59,823     —         (250,977     (34,327,563
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated impairment loss as of December 31, 2018

   W —         —         (28,001     —         (17,890     —         (45,891
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(*1)

As of December 31, 2018, construction-in-progress mainly relates to construction of manufacturing facilities.

(*2)

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

 

133


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

9.

Property, Plant and Equipment, Continued

 

 

  (b)

Changes in property, plant and equipment for the year ended December 31, 2017 are as follows:

 

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

Acquisition cost

as of January 1, 2017

   W 461,483       4,730,093       33,536,183       637,918       2,680,073       134,488       42,180,238  

Accumulated depreciation

as of January 1, 2017

     —         (1,999,023     (30,772,830     (560,513     —         (87,609     (33,419,975

Accumulated impairment loss as of January 1, 2017

     —         —         (2,290     —         —         —         (2,290
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Book value as of January 1, 2017

   W 461,483       2,731,070       2,761,063       77,405       2,680,073       46,879       8,757,973  

Additions

     —         —         —         —         5,544,771       —         5,544,771  

Depreciation

     —         (222,663     (1,460,085     (40,484     —         (9,669     (1,732,901

Disposals

     (1,042     (6,727     (70,068     (24     —         (3,122     (80,983

Others (*2)

     70       137,792       2,435,447       54,742       (2,640,052     12,001       —    

Government grants received

     —         (548     (3,150     —         1,839       —         (1,859
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Book value as of December 31, 2017

   W 460,511       2,638,924       3,663,207       91,639       5,586,631       46,089       12,487,001  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Acquisition cost as of December 31, 2017

   W 460,511       4,857,328       33,969,092       622,955       5,586,631       139,774       45,636,291  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated depreciation as of December 31, 2017

   W —         (2,218,404     (30,303,595     (531,316     —         (93,685     (33,147,000
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated impairment loss as of December 31, 2017

   W —         —         (2,290     —         —         —         (2,290
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(*1)

As of December 31, 2017, construction-in-progress mainly relates to construction of manufacturing facilities.

(*2)

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

 

134


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

9.

Property, Plant and Equipment, Continued

 

 

  (c)

Capitalized borrowing costs and capitalization rate for the years ended December 31, 2017 and 2016 are as follows:

 

(In millions of won)    2018     2017  

Capitalized borrowing costs

   W 121,441       46,033  

Capitalization rate

     2.74     1.91

 

135


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

10.

Intangible Assets

 

  (a)

Changes in intangible assets for the year ended December 31, 2018 are as follows:

 

(In millions of won)   Intellectual
property rights
    Software     Member-
ships
    Develop-
ment costs
    Construction-
in-progress
(software)
    Customer
relation-ships
    Tech-
nology
    Goodwill     Others
(*2)
    Total  

Acquisition cost as of January 1, 2018

  W 665,645       810,270       54,834       1,769,998       30,722       59,176       11,074       72,588       13,077       3,487,384  

Accumulated amortization

as of January 1, 2018

    (546,105     (671,980     —         (1,473,238     —         (31,338     (8,489     —         (13,076     (2,744,226

Accumulated impairment loss

as of January 1, 2018

    —         —         (11,785     —         —         —         —         —         —         (11,785
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Book value as of January 1, 2018

  W 119,540       138,290       43,049       296,760       30,722       27,838       2,585       72,588       1       731,373  

Additions - internally developed

    —         —         —         372,835       —         —         —         —         —         372,835  

Additions - external purchases

    21,061       —         2,843       —         88,785       —         —         —         —         112,689  

Amortization (*1)

    (24,370     (67,955     —         (302,685     —         (3,516     (1,108     —         (1     (399,635

Disposals

    —         —         (721     —         —         —         —         —         —         (721

Impairment loss

    —         —         (82     —         —         —         —         —         —         (82

Reversal of impairment loss

    —         —         348       —         —         —         —         —         —         348  

Transfer from construction-in-progress

    —         85,640       —         —         (85,640     —         —         —         —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Book value as of December 31, 2018

  W 116,231       155,975       45,437       366,910       33,867       24,322       1,477       72,588       —         816,807  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Acquisition cost as of December 31, 2018

  W 686,707       895,186       56,956       2,142,832       33,867       59,176       11,075       72,588       13,077       3,971,464  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated amortization

as of December 31, 2018

  W (570,476     (739,211     —         (1,775,922     —         (34,854     (9,598     —         (13,077     (3,143,138
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated impairment loss

as of December 31, 2018

  W —         —         (11,519     —         —         —         —         —         —         (11,519
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(*1)

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

(*2)

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

 

136


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

10.

Intangible Assets, Continued

 

  (b)

Changes in intangible assets for the year ended December 31, 2017 are as follows:

 

(In millions of won)   Intellectual
property rights
    Software     Member-
ships
    Develop-
ment costs
    Construction-
in-progress
(software)
    Customer
relation-ships
    Tech-
nology
    Goodwill     Others
(*2)
    Total  

Acquisition cost as of January 1, 2017

  W 627,998       733,030       51,407       1,433,791       17,782       59,176       11,074       72,588       13,077       3,019,923  

Accumulated amortization as of January 1, 2017

    (506,117     (605,247     —         (1,177,451     —         (26,678     (7,382     —         (13,071     (2,335,946

Accumulated impairment loss as of January 1, 2017

    —         —         (10,011     —         —         —         —         —         —         (10,011
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Book value as of January 1, 2017

  W 12,881       127,783       41,396       256,340       17,782       32,498       3,692       72,588       6       673,966  

Additions - internally developed

    —         —         —         336,208       —         —         —         —         —         336,208  

Additions - external purchases

    20,295       —         4,819       —         90,835       —         —         —         —         115,949  

Amortization (*1)

    (22,632     (67,388     —         (295,788     —         (4,660     (1,107     —         (5     (391,580

Disposals

    (4     —         (1,392     —         —         —         —         —         —         (1,396

Impairment loss

    —         —         (1,809     —         —         —         —         —         —         (1,809

Reversal of impairment loss

    —         —         35       —         —         —         —         —         —         35  

Transfer from construction-in-progress

    —         77,895       —         —         (77,895     —         —         —         —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Book value as of December 31, 2017

  W 119,540       138,290       43,049       296,760       30,722       27,838       2,585       72,588       1       731,373  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Acquisition cost as of December 31, 2017

  W 665,645       810,270       54,834       1,769,998       30,722       59,176       11,074       72,588       13,077       3,487,384  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated amortization as of December 31, 2017

  W (546,105     (671,980     —         (1,473,238     —         (31,338     (8,489     —         (13,076     (2,744,226
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated impairment loss as of December 31, 2017

  W —         —         (11,785     —         —         —         —         —         —         (11,785
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(*1)

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

(*2)

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

 

137


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

10.

Intangible Assets, Continued

 

  (c)

Development of new projects are divided into research activities and development activities. Expenditures on research activities are recognized in profit or loss and development expenditures are capitalized, respectively.

 

  (d)

Development costs as of December 31, 2018 and 2017 are as follows:

 

  (i)

As of December 31, 2018

 

(In millions of won and in years)                   

Classification

  

Product

   Book Value      Remaining
Useful life
 

Development completed

   Mobile    W 108,467        0.5  
   TV      28,001        0.6  
   Notebook      4,458        0.6  
   Others      9,475        0.5  
     

 

 

    
  

Sub-Total

   W 150,402     
     

 

 

    

Development in process

   Mobile    W 144,679     
   TV      55,580     
   Notebook      9,639     
   Others      6,611     
     

 

 

    
  

Sub-Total

   W 216,508     
     

 

 

    

Total

      W 366,910     
     

 

 

    

 

  (ii)

As of December 31, 2017

 

(In millions of won and in years)                   

Classification

  

Product

   Book Value      Remaining
Useful life
 

Development completed

   Mobile    W 79,372        0.6  
   TV      36,038        0.6  
   Notebook      14,311        0.5  
   Others      12,444        0.4  
     

 

 

    
  

Sub-Total

   W 142,165     
     

 

 

    

Development in process

   Mobile    W 117,222     
   TV      30,670     
   Notebook      2,356     
   Others      4,347     
     

 

 

    
  

Sub-Total

   W 154,595     
     

 

 

    

Total

      W 296,760     
     

 

 

    

 

138


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

11. Financial Liabilities

 

  (a)

Financial liabilities at the reporting date is as follows:

 

(In millions of won)    December 31, 2018      December 31, 2017  

Current

     

Current portion of long-term debt

     1,058,985        1,058,985  

Current portion of Payment guarantee Liabilities

     4,693        1,750  
  

 

 

    

 

 

 
   W 1,044,841        1,060,735  
  

 

 

    

 

 

 

Non-current

     

Won denominated borrowings

   W 2,700,608        1,251,258  

Foreign currency denominated borrowings

     626,136        401,775  

Bonds

     1,772,599        1,506,003  

Payment guarantee Liabilities

     14,375        6,377  

Derivatives(*)

     25,758        —    
  

 

 

    

 

 

 
   W 5,139,476        3,165,413  
  

 

 

    

 

 

 

 

(*)

Represents interest rate swap contracts related to borrowings with variable interest rate.

 

(b)

Won denominated long-term borrowings at the reporting date are as follows:

 

(In millions of won)              

Lender

  

Annual interest rate as of

December 31, 2017 (%)

   December 31,
2018
     December 31,
2017
 

Woori Bank

   2.75    W 1,259        1,922  

Shinhan Bank

   —        —          200,000  

Korea Development Bank and others

  

CD rate (91days) + 0.64~

0.74, 2.43 ~ 3.25

     2,850,000        1,250,000  

Less current portion of long-term borrowings

        (150,651      (200,664
     

 

 

    

 

 

 
      W 2,700,608        1,251,258  
     

 

 

    

 

 

 

 

139


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

11.

Financial Liabilities, Continued

 

  (c)

Foreign currency denominated long-term borrowings at the reporting date are as follows:

 

(In millions of won)              

Lender

  

Annual interest rate as of

December 31, 2017 (%)(*)

   December 31,
2018
     December 31,
2017
 

The Export-Import Bank and Others

   3ML+0.75 ~1.70    W 955,976        755,337  
     

 

 

    

 

 

 

Foreign currency equivalent

      USD  855      USD  705  
     

 

 

    

 

 

 

Less current portion of long-term borrowings

        (329,839      (353,562
     

 

 

    

 

 

 
      W 626,137        401,775  
     

 

 

    

 

 

 

 

(*)

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

 

(d)

Details of bonds issued and outstanding at the reporting date are as follows:

 

(In millions of won)                     
    

Maturity

   Annual interest rate
as of
December 31, 2017 (%)
     December 31,
2018
     December 31,
2017
 

Won denominated bonds(*1)

           

Publicly issued bonds

   Apr 2019~ Feb 2023      1.80~3.45      W 1,900,000        2,015,000  

Privately placed bonds

   May 2025~ May 2033      3.25~4.25        110,000     

Less discount on bonds

           (3,949      (4,238

Less current portion

           (559,658      (504,759
        

 

 

    

 

 

 
         W 1,446,393        1,506,003  
        

 

 

    

 

 

 

Foreign currency denominated bonds(*2)

           

Publicly issued bonds

   Nov 2021      3.88      W 335,430        —    
        

 

 

    

 

 

 

Foreign currency equivalent

           USD 300        —    
        

 

 

    

 

 

 

Less discount on bonds

           (9,224      —    
        

 

 

    

 

 

 
         W 326,206        —    
        

 

 

    

 

 

 
         W 1,772,599        1,506,003  
        

 

 

    

 

 

 

 

  (*1)

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

  (*2)

Principal of the foreign currency denominated bonds is to be repaid at maturity and interests are paid half yearly in arrears.

 

140


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

12.

Employee Benefits

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

The defined benefit plans expose the Company to actuarial risks, such as the risk associated with expected periods of service, interest rate risk, market (investment) risk, and others.

 

  (a)

Net defined benefit liabilities recognized at the reporting date are as follows:

 

(In millions of won)    December 31,
2018
     December 31,
2017
 

Present value of partially funded defined benefit obligations

   W 1,592,366        1,560,525  

Fair value of plan assets

     (1,548,179      (1,465,990
  

 

 

    

 

 

 
   W 44,187        94,535  
  

 

 

    

 

 

 

 

  (b)

Changes in the present value of the defined benefit obligations for the years ended December 31, 2018 and 2017 are as follows:

 

(In millions of won)    2018      2017  

Opening defined benefit obligations

   W 1,560,525        1,400,621  

Current service cost

     203,062        194,462  

Past service cost

     (25,749      —    

Interest cost

     49,146        40,844  

Remeasurements (before tax)

     (27,886      (114

Benefit payments

     (88,056      (75,822

Transfers from (to) related parties

     (4,217      534  

Liquidation system

     (74,459      —    
  

 

 

    

 

 

 

Closing defined benefit obligations

   W 1,592,366        1,560,525  
  

 

 

    

 

 

 

Weighted average remaining maturity of defined benefit obligations as of December 31, 2018, and 2017 are 14.4 years and 14.0 years, respectively.

 

  (c)

Changes in fair value of plan assets for the years ended December 31, 2018 and 2017 are as follows:

 

(In millions of won)              
     2017      2016  

Opening fair value of plan assets

   W 1,465,990        1,258,409  

Expected return on plan assets

     48,184        38,453  

Remeasurements (before tax)

     (22,195      (16,374

Contributions by employer directly to plan assets

     211,006        250,000  

Benefit payments

     (80,369      (64,498
     (74,437      —    
  

 

 

    

 

 

 

Closing fair value of plan assets

   W 1,548,179        1,465,990  
  

 

 

    

 

 

 

 

141


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

12.

Employee Benefits, Continued

 

  (d)

Plan assets at the reporting date are as follows:

 

(In millions of won)              
     December 31, 2018      December 31, 2017  

Guaranteed deposits in banks

   W  1,548,179        1,465,990  

As of December 31, 2018, the Company maintains the plan assets with Mirae Asset Securities Co., Ltd., KB Insurance Co., Ltd. and others.

The Company’s estimated additional contribution to the plan assets for the year ending December 31, 2019 is W63,688 million.

 

  (e)

Expenses recognized in profit or loss for the years ended December 31, 2018 and 2017 is as follows:

 

(In millions of won)              
     2018      2017  

Current service cost

   W 203,062        194,462  

Past service cost

     (25,749      —    

Net interest cost

     962        2,391  
  

 

 

    

 

 

 
   W  178,275        196,853  
  

 

 

    

 

 

 

Expenses are recognized in the following line items in the separate statements of comprehensive income.

 

(In millions of won)              
     2018      2017  

Cost of sales

   W 134,880        158,419  

Selling expenses

     10,719        10,810  

Administrative expenses

     18,193        15,202  

Research and development expenses

     14,483        12,422  
  

 

 

    

 

 

 
   W  178,275        196,853  
  

 

 

    

 

 

 

 

142


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

12.

Employee Benefits, Continued

 

  (f)

Remeasurements of net defined benefit liabilities (assets) included in other comprehensive income for the years ended December 31, 2018 and 2017 are as follows:

 

(In millions of won)              
     2018      2017  

Included in other comprehensive income

     

Balance at January 1

   W  (170,134      (163,133

Remeasurements

     

Actuarial profit or loss arising from:

     

Experience adjustment

     56,224        (48,890

Demographic assumptions

     (15,379      (7,702

Financial assumptions

     (12,961      56,706  

Return on plan assets

     (22,195      (16,374
  

 

 

    

 

 

 
   W 5,689        (16,260
  

 

 

    

 

 

 

Income tax

   W (1,169      9,259  
  

 

 

    

 

 

 

Balance at December 31

   W  (165,613      (170,134
  

 

 

    

 

 

 

 

  (g)

Principal actuarial assumptions at the reporting date (expressed as weighted averages) are as follows:

 

     December 31, 2018     December 31, 2017  

Expected rate of salary increase

     4.3     4.7

Discount rate for defined benefit obligations

     2.8     3.2

Assumptions regarding future mortality are based on published statistics and mortality tables. The current mortality underlying the values of the liabilities in the defined benefit plans are as follows:

 

     December 31, 2018     December 31, 2017  

Teens

   Males      0.01     0.01
   Females      0.00     0.00

Twenties

   Males      0.01     0.01
   Females      0.00     0.00

Thirties

   Males      0.01     0.01
   Females      0.01     0.01

Forties

   Males      0.03     0.03
   Females      0.02     0.02

Fifties

   Males      0.05     0.05
   Females      0.02     0.02

 

143


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

12.

Employee Benefits, Continued

 

  (h)

Reasonably possible changes to respective relevant actuarial assumptions would have affected the defined benefit obligations by the following amounts as of December 31, 2018:

 

(In millions of won)    Defined benefit obligation  
     1% increase      1% decrease  

Discount rate for defined benefit obligations

   W  (199,750      241,608  

Expected rate of salary increase

     236,002        (199,363

 

13.

Provisions and Other Liabilities

 

  (a)

Changes in provisions for the year ended December 31, 2018 are as follows:

 

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

Balance at January 1, 2018

   W 43        100,119        1,835        101,997  

Adjustment from adoption of K-IFRS No. 1115

     —          —          9,789        9,789  

Additions (reversals)

     —          207,892        (2,694      205,198  

Usage

     (43      (187,623      —          (187,666
  

 

 

    

 

 

    

 

 

    

 

 

 

Balance at September 30, 2018

   W  —          120,388        8,930        129,318  
  

 

 

    

 

 

    

 

 

    

 

 

 

Current

   W —          87,624        8,930        96,554  

Non-current

   W —          32,764        —          32,764  

 

(*)

The provision for warranties covers defective products and is normally applicable for 18 months from the date of purchase. The warranty liability is calculated by using historical and anticipated rates of warranty claims, and costs per claim to satisfy the Company’s warranty obligation.

 

  (b)

Other liabilities at the reporting date is as follows:

 

(In millions of won)              
     December 31, 2018      December 31, 2017  

Current liabilities

     

Withholdings

   W  16,181        23,948  

Unearned revenues

     11,074        9,566  

Security deposits

     165        —    
  

 

 

    

 

 

 
   W 27,420        33,514  
  

 

 

    

 

 

 

Non-current liabilities

     

Long-term accrued expenses

   W 78,466        66,956  

Long-term other accounts payable

     3,081        —    

Long-term unearned revenues

     2,116        —    

Security deposits

     10,790        —    
  

 

 

    

 

 

 
   W 94,453        66,956  
  

 

 

    

 

 

 

 

144


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

14.

Contingent Liabilities and Commitments

 

  (a)

Legal Proceedings

Anti-trust litigations

In December 2016, Argos Limited and affiliated companies (“Argos”) filed a Notice of Claim against the Company and LG Display Taiwan Co., Ltd. in the High Court of Justice in London alleging infringement of Treaty on the Functioning of the European Union and Agreement on the European Economic Area. The parties reached settlement and executed a settlement agreement in November 2018.

Others

The Company is defending against various claims in addition to pending proceedings described above. The Company does not have a present obligation for these matters and has not recognized any provision at December 31, 2018.

 

145


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

14.

Contingent Liabilities and Commitments, Continued

 

  (b)

Commitments

Factoring and securitization of accounts receivable

The Company has agreements with Korea Development Bank and several other banks for accounts receivable sales negotiating facilities of up to an aggregate of USD 1,670 million (W1,867,227 million) in connection with the Company’s export sales transactions with its subsidiaries. As of December 31, 2018, no short-term borrowings were outstanding in connection with these agreements. In connection with all of the contracts mentioned about, the Company has sold its accounts receivable with recourse.

The Company has a credit facility agreement with Shinhan Bank and several other banks pursuant to which the Company could sell its accounts receivables up to an aggregate of W706,374 million in connection with its domestic and export sales transactions and, as of December 31, 2018, W143,075 million 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 December 31, 2018, the Company has agreements in relation to the opening of letters of credit up to USD 30 million (W33,543 million) with KEB Hana Bank, USD 80 million (W89,448 million) with Bank of China and USD 50 million (W55,905 million) with Sumitomo Mitsui Banking Corporation.

Payment guarantees

The Company provides a payment guarantee in connection with the term loan credit facilities of LG Display Vietnam Haiphong, Co., Ltd. amounting to USD 1,167 million (W1,305,167 million) for principals.

In addition, the Company obtained payment guarantees amounting to USD 1,538 million (W1,719,079 million) from KEB Hana Bank and others for advance received related to the long-term supply agreements, USD 306 million (W341,929 million) from Korea development Bank for foreign currency denominated bonds and USD 8.5 million (W9,504 million) from Shinhan bank for value added tax payments in Poland.

License agreements

As of December 31, 2018, in relation to its LCD business, the Company has technical license agreements with Hitachi Display, Ltd. and others and has a trademark license agreement with LG Corp.

Long-term supply agreement

As of December 31, 2018, in connection with long-term supply agreements with customers, the Company recognized USD 1,475 million (W1,649,198 million) in advances received. The advances received will be offset against outstanding accounts receivable balances after a given period of time, as well as those arising from the supply of products thereafter. The Company received payment guarantees amounting to USD 1,538 million (W1,719,079 million) from KEB Hana Bank and other various banks relating to advance received.

 

146


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

15.

Share Capital

 

The Company is authorized to issue 500,000,000 shares of capital stock (par value W5,000), and as of December 31, 2018 and December 31, 2017, the number of issued common shares is 357,815,700. There have been no changes in the capital stock from January 1, 2018 to December 31, 2018.

 

16.

Retained earnings

(a) Retained earnings at the reporting date is as follows:

 

(In millions of won)              
     2018      2017  

Legal reserve

   W 212,158        194,267  

Other reserve

     68,251        68,251  

Defined benefit plan actuarial loss

     (165,614      (170,134

Retained earnings

     9,057,594        9,696,683  
  

 

 

    

 

 

 
   W 9,172,389        9,789,067  
  

 

 

    

 

 

 

(b) For the years ended December 31, 2017 and 2016, details of the Company’s appropriations of retained earnings are as follows:

 

(In millions of won, except for cash dividend per common stock)              
     2017      2016  

Retained earnings before appropriations

     

Unappropriated retained earnings carried over from prior year

   W 9,499,884        7,916,962  

Profit for the year

     (442,291      1,779,721  
  

 

 

    

 

 

 
     9,057,594        9,696,683  

Appropriation of retained earnings (*)

     

Earned surplus reserve

     —          17,891  

Cash dividend

(Dividend per common stock (%): 2017: W500 (10%))

     —          178,908  
  

 

 

    

 

 

 
     —          196,799  

Unappropriated retained earnings carried forward to the following year

   W 9,057,594        9,499,884  
  

 

 

    

 

 

 

 

(*)

For the years ended December 31, 2018 and 2017, the date of appropriation is March 15, 2019 and March 15, 2018, respectively.

 

147


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

17.

Revenue

Details of revenue for the years ended December 31, 2018 and 2017 are as follows:

 

(In millions of won)              
     2018      2017  

Sales of goods

   W 22,324,003        25,541,281  

Royalties

     20,970        17,236  

Others

     26,714        32,565  
  

 

 

    

 

 

 
     W22,371,687      25,591,082  
  

 

 

    

 

 

 

 

18.

The Nature of Expenses and Others

The classification of expenses by nature for the years ended December 31, 2018 and 2017 are as follows:

 

(In millions of won)              
     2018      2017  

Changes in inventories

   W (268,910      24,738  

Purchases of raw materials, merchandise and others

     8,875,141        10,140,086  

Depreciation and amortization

     2,392,768        2,124,481  

Outsourcing fees

     6,012,740        5,372,293  

Labor costs

     2,592,716        2,696,869  

Supplies and others

     795,935        1,011,035  

Utility

     728,166        716,354  

Fees and commissions

     522,328        486,939  

Shipping costs

     102,913        124,303  

Advertising

     111,972        230,453  

Warranty expenses

     207,892        217,198  

Travel

     95,003        81,731  

Taxes and dues

     59,207        48,043  

Others

     694,166        812,902  
  

 

 

    

 

 

 
     W22,922,037      24,087,425  
  

 

 

    

 

 

 

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

 

148


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

19.

Selling and Administrative Expenses

 

 

Details of selling and administrative expenses for the years ended December 31, 2018 and 2017 are as follows:

 

(In millions of won)              
     2018      2017  

Salaries(*1)

   W 396,223        220,300  

Expenses related to defined benefit plans (*2)

     29,023        26,012  

Other employee benefits

     42,987        49,769  

Shipping costs

     72,876        97,666  

Fees and commissions

     136,417        112,035  

Depreciation

     111,133        88,665  

Taxes and dues

     4,777        2,449  

Advertising

     111,972        230,453  

Warranty expenses

     207,892        217,198  

Rent

     10,597        10,004  

Insurance

     6,175        6,620  

Travel

     18,197        19,812  

Training

     10,910        13,862  

Others

     39,486        45,523  
  

 

 

    

 

 

 
     W1,198,665      1,140,368  
  

 

 

    

 

 

 

 

(*1)

W184,941 million increased for retirement bonus payment.

(*2)

W110 million increased for additional accumulation on definded contribution.

 

20.

Personnel Expenses

Details of personnel expenses for the years ended December 31, 2018 and 2017 are as follows:

 

(In millions of won)              
     2018      2017  

Salaries and wages

   W 2,280,341        2,314,935  

Other employee benefits

     312,050        312,816  

Contributions to National Pension plan

     75,668        73,061  

Expenses related to defined benefit plan (*)

     179,137        196,853  
  

 

 

    

 

 

 
     W2,847,196      2,897,665  
  

 

 

    

 

 

 

 

(*)

W862 million increased for additional accumulation on definded contribution.

 

149


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

21.

Other Non-operating Income and Other Non-operating Expenses

 

(a) Details of other non-operating income for the years ended December 31, 2018 and 2017 are as follows:

 

(In millions of won)              
     2018      2017  

Foreign currency gain

     W483,160        642,208  

Gain on disposal of property, plant and equipment

     42,864        139,053  

Gain on disposal of intangible assets

     239        308  

Reversal of impairment loss on intangible assets

     348        35  

Rental income

     1,764        3,514  

Others

     13,172        5,358  
  

 

 

    

 

 

 
     W541,547      790,476  
  

 

 

    

 

 

 

(b) Details of other non-operating expenses for the years ended December 31, 2018 and 2017 are as follows:

 

(In millions of won)              
     2018      2017  

Foreign currency loss

     W499,652        898,221  

Loss on disposal of property, plant and equipment

     8,615        11,620  

Impairment loss on property, plant and equipment

     43,601     

Loss on disposal of intangible assets

     —          30  

Impairment loss on intangible assets

     82        1,809  

Donations

     7,294        16,991  

Other bad debt expense

     23        2,180  

Others

     17,740        443  
  

 

 

    

 

 

 
     W577,007      931,294  
  

 

 

    

 

 

 

 

150


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

22.

Finance Income and Finance Costs

 

(a) Finance income and costs recognized in profit or loss for the years ended December 31, 2018 and 2017 are as follows:

 

(In millions of won)              
     2018      2017  

Finance income

     

Interest income

   W 17,938        25,561  

Dividend income

     95,553        612,132  

Foreign currency gain

     10,170        116,085  

Gain on disposal of investments

     1,112        4,203  

Gain on transaction of derivatives

     2,075        3,106  

Gain on valuation of derivatives

     13,059        1,070  

Gain on disposal of available-for-sale financial assets

     —          8  

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

     —          170  

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

     4,362     

Others

     4,032        1,154  
  

 

 

    

 

 

 
   W 148,301        763,489  
  

 

 

    

 

 

 

Finance costs

     

Interest expense

   W 35,108        47,294  

Foreign currency loss

     39,869        39,639  

Loss on disposal of investments

     —          22,490  

Loss on impairment of investments

     23,059        5,505  

Loss on sale of trade accounts and notes receivable

     875        46  

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

     225        —    

Loss on impairment of available-for-sale financial assets

     —          1,948  

Loss on transaction of derivatives

     49        514  

Loss on valuation of derivatives

     26,600        —    

Others

     3,867        2,098  
  

 

 

    

 

 

 
   W 129,652        119,534  
  

 

 

    

 

 

 

 

151


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

23.

Income Taxes

 

 

(a) Details of income tax expense for the years ended December 31, 2018 and 2017 are as follows:

 

(In millions of won)              
     2018      2017  

Current tax expense

     

Current year

   W (3,883      324,522  

Adjustment of income tax related to prior period

     82,225     
  

 

 

    

 

 

 
   W 78,342        324,522  
  

 

 

    

 

 

 

Deferred tax expense (benefit)

     

Origination and reversal of temporary differences

   W (190,675      (52,668

Change in unrecognized deferred tax assets

     64,818        (11,708
  

 

 

    

 

 

 
   W (125,857)        (64,376
  

 

 

    

 

 

 

Income tax expense

   W (47,515)        260,146  
  

 

 

    

 

 

 

(b) Income taxes recognized directly in other comprehensive income or loss for the years ended December 31, 2018 and 2017 are as follows:

 

(In millions of won)                                        
     2018      2017  
     Before tax      Tax benefit
(expense)
    Net of tax      Before tax     Tax benefit
(expense)
     Net of tax  

Remeasurements of net defined benefit liabilities (assets)

   W 5,690        (1,169     4,521        (16,260     9,259        (7,001
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

(c) Reconciliation of the actual effective tax rate for the years ended December 31, 2018 and 2017 is as follows:

 

(In millions of won)                         
     2018     2017  

Profit for the year

   W       (442,291       1,779,721  

Income tax expense

       (47,515       260,146  
    

 

 

     

 

 

 

Profit before income tax

       (489,806       2,039,867  
    

 

 

     

 

 

 

Income tax expense using the Company’s statutory tax rate

     26.65     (130,533     24.20     493,648  

Non-deductible expenses

     (6.76 )%      33,112       2.63     53,671  

Tax credits

     19.97     (97,822     (11.81 %)      (240,788

Change in unrecognized deferred tax assets

     (13.23 %)      64,818       (0.57 %)      (11,708

Adjustment of income tax related to prior period

     (15.28 %)      82,225       —         —    

Effect on change in tax rate (Note 24(d))

     0.41     (2,007     (1.69 %)      (34,455

Others

     (2.06 %)      2,692       (0.01 %)      (222
    

 

 

     

 

 

 

Actual income tax expense

   W       (47,515       260,146  
    

 

 

     

 

 

 

Actual effective tax rate

       9.70       12.75

 

152


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

24.

Deferred Tax Assets and Liabilities

 

  (a)

Unrecognized deferred tax liabilities

As of December 31, 2018, in relation to the temporary differences on investments in subsidiaries amounting to W211,264 million, the Company did not recognize deferred tax liabilities since the Company is able to control the timing of the reversal of the temporary difference and it is probable that the temporary differences will not reverse in the foreseeable future.

 

  (b)

Unused tax credit carryforwards for which no deferred tax asset is recognized

Realization of deferred tax assets related to tax credit carryforwards is dependent on whether sufficient taxable income will be generated prior to their expiration. As of December 31, 2018, the Company recognized deferred tax assets of W308,393 million, in relation to tax credit carryforwards, to the extent that management believes the realization is probable.

(In millions of won)

     December 31,
2019
     December 31,
2020
     December 31,
2021
     December 31,
2022
     December 31,
2023
 

Tax credit carryforwards

   W —          —          58,391        91,862        —    

 

  (c)

Deferred tax assets and liabilities are attributable to the following:

(In millions of won)

     Assets      Liabilities     Total  
     December
31, 2018
     December 31,
2017
     December 31,
2018
    December
31, 2017
    December 31,
2018
    December
31, 2017
 

Other accounts receivable, net

   W —          —          (1,013     (1,378     (1,013     (1,378

Inventories, net

     53,882        30,688        —         —         53,882       30,688  

Defined benefit liabilities, net

     —          2,375        —         —         —         2,375  

Accrued expenses

     121,508        179,112        —         —         121,508       179,112  

Property, plant and equipment

     191,073        206,900        —         —         191,073       206,900  

Intangible assets

     925        1,249        —         —         925       1,249  

Provisions

     32,468        27,018        —         —         32,468       27,018  

Gain or loss on foreign currency translation, net

     13        13        —         —         13       13  

Others

     17,932        12,345        —         —         17,932       12,345  

Tax losses carryforwards

     126,755        —              126,755       —    

Tax credit carryforwards

     308,393        268,926        —         —         308,393       268,926  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Deferred tax assets (liabilities)

   W 852,949        728,626        (1,013     (1,378     851,936       727,248  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

153


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

24.

Deferred Tax Assets and Liabilities, Continued

 

(d) Changes in deferred tax assets and liabilities for the years ended December 31, 2018 and 2017 are as follows:

(In millions of won)

     January 1,
2017
    Profit or
loss
    Other
compre-
hensive
income
     December 31,
2017
    Profit or
loss
    Other
compre-
hensive
income
    December 31,
2018
 

Other accounts receivable, net

   W (1,190     (188     —          (1,378     365       —         (1,013

Inventories, net

     32,150       (1,462     —          30,688       23,194       —         53,882  

Defined benefit liabilities, net

     10,817       (17,701     9,259        2,375       (1,206     (1,169     —    

Accrued expenses

     119,952       59,160       —          179,112       (57,604     —         121,508  

Property, plant and equipment

     177,833       29,067       —          206,900       (15,827     —         191,073  

Intangible assets

     744       505       —          1,249       (324     —         925  

Provisions

     15,051       11,967       —          27,018       5,450       —         32,468  

Gain or loss on foreign currency translation, net

     11       2       —          13       —         —         13  

Others

     10,845       1,500       —          —         5,587       —         17,932  

Tax losses carryforwards

     —         —            12,345       126,755       —         126,755  

Tax credit carryforwards

     287,400       (18,474     —          268,926       39,467       —         308,393  
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Deferred tax assets (liabilities)

   W 653,613       64,376       9,259        727,248       125,857       (1,169     851,936  
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Statutory tax rate applicable to the Company is 24.2% for the year-ended December 31, 2017. During the year ended December 31, 2018, certain amendments to corporate income tax rules in Korea were enacted and effective on January 1, 2018 that resulted in application of 27.5% for taxable income in excess of W300,000 million. Accordingly, the Company recorded the impact from the amendment when measuring the deferred tax.

The effective tax rate for the year ended December 31, 2018, is different from the statutory tax rate due to the change in the realization possibility of deferred income tax including the lump sum payment.

 

25.

Earnings per Share

(a) Basic earnings per share for the years ended December 31, 2018 and 2017 are as follows:

 

(In won and No. of shares)              
     2018      2017  

Profit for the period

   W (442,291,281,486      1,779,721,318,741  

Weighted-average number of common stocks outstanding

     357,815,700        357,815,700  
  

 

 

    

 

 

 

Earnings per share

   W (1,236)        4,974  
  

 

 

    

 

 

 

For the years ended December 31, 2018 and 2017, there were no events or transactions that resulted in changes in the number of common stocks used for calculating earnings per share.

 

154


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

25.

Earnings per Share, Continued

 

(b) Diluted earnings per share for the years ended December 31, 2018 and 2017 are not calculated since there was no potential common stock.

 

26.

Financial Risk Management

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

(a) Market risk

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

(i) Currency risk

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

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

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

 

155


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

26.

Financial Risk Management, Continued

 

  i)

Exposure to currency risk

The Company’s exposure to foreign currency risk based on notional amounts at the reporting date is as follows:

 

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

Cash and cash equivalents

     66       —         54       1       7  

Trade accounts and notes receivable

     2,809       2,937       —         —         —    

Non-trade receivable

     48       836       1,018       —         —    

Trade accounts and notes payable

     (1,392     (11,477     —         —         —    

Other accounts payable

     (117     (13,982     —         (18     (2

Debt

     (1,163     —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Aggregate notional amounts in financial positions

     238       (21,686     1,072       (17     5  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Currency swap contracts

     780       —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net exposure

     1,031       (21,686     1,072       (17     5  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
(In millions)    December 31, 2017  
     USD     JPY     CNY     PLN     EUR  

Cash and cash equivalents

     482       77       —         2       —    

Trade accounts and notes receivable

     3,840       1,960       —         —         —    

Non-trade receivable

     73       1,674       1,085       —         9  

Trade accounts and notes payable

     (1,337     (13,659     —         —         —    

Other accounts payable

     (170     (12,582     (1,059     (10     (2

Debt

     (705     —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net exposure

     2,183       (22,530     26       (8     7  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

156


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

26.

Financial Risk Management, Continued

 

Average exchange rates applied for the years ended December 31, 2018 and 2017 and the exchange rates at December 31, 2018 and December 31, 2017 are as follows:

 

(In won)    Average rate      Reporting date spot rate  
     2018      2017      December 31, 2018      December 31, 2017  

USD

   W 1,100.21        1,131.08      W 1,118.10        1,071.40  

JPY

     9.96        10.09        10.13        9.49  

CNY

     166.41        167.52        162.76        163.65  

PLN

     304.87        299.98        297.33        306.07  

EUR

     1,298.53        1,277.01        1,279.16        1,279.25  

ii) Sensitivity analysis

A weaker won, as indicated below, against the following currencies which comprise the Company’s assets or liabilities denominated in a foreign currency as of December 31, 2018 and 2017, 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 the 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)    December 31, 2018      December 31, 2017  
     Equity      Profit
or loss
     Equity      Profit
or loss
 

USD (5 percent weakening)

   W 41,788        41,788      W 88,643        88,643  

JPY (5 percent weakening)

     (7,965      (7,965      (8,104      (8,104

CNY (5 percent weakening)

     6,325        6,325        161        161  

PLN (5 percent weakening)

     (183      (183      (93      (93

EUR (5 percent weakening)

     232        232        339        339  

A stronger won against the above currencies as of December 31, 2018 and 2017 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.

 

157


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

26.

Financial Risk Management, Continued

 

(ii) Interest rate risk

Interest rate risk arises principally from the Company’s debentures and borrowings. The Company establishes and applies its policy to reduce uncertainty arising from fluctuations in the interest rate and to minimize finance cost and manages interest rate risk by monitoring of trends of fluctuations in interest rate and establishing plan for countermeasures.

i) Profile

The interest rate profile of the Company’s interest-bearing financial instruments at the reporting date is as follows:

 

(In millions of won)             
     December 31, 2018     December 31, 2017  

Fixed rate instruments

    

Financial assets

   W 550,644       1,147,340  

Financial liabilities

     (5,033,516 ))      (2,962,671
  

 

 

   

 

 

 
   W (4,482,872 ))      (1,815,331
  

 

 

   

 

 

 

Variable rate instruments

    

Financial liabilities

   W (1,105,976     (1,255,350

 

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

For the years ended December 31, 2018 and 2017, 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 the respective following years. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.

 

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

December 31, 2018

           

Variable rate instruments(*)

   W  (8,018)        8,018        (8,018      8,018  

December 31, 2017

           

Variable rate instruments(*)

   W (6,863)        6,863        (6,863      6,863  

 

(*)

Financial instruments subject to interest rate swap not qualified for hedging are excluded.

 

158


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

26.

Financial Risk Management, Continued

 

  (b)

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers.

The Company’s exposure to credit risk of trade and other receivables is influenced mainly by the individual characteristics of each customer. However, management believes that the demographics of the Company’s customer base, including the default risk of the country in which customers operate, do not have a significant influence on credit risk since the majority of the customers are global electronic appliance manufacturers operating in global markets.

The Company establishes credit limits for each customer and each new customer is analyzed quantitatively and qualitatively before determining whether to utilize third party guarantees, insurance or factoring as appropriate.

In relation to the impairment of financial assets, the Company recognizes expected credit loss and its changes at each reporting date subsequent to initial recognition of financial asset according to an expected credit loss impairment model.

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date is as follows:

 

  i)

As of September 30, 2018

 

(In millions of won)       
     December 31, 2018  

Financial assets carried at amortized cost

  

Cash and cash equivalents

       473,283  

Deposits in banks

     77,211  

Trade accounts and notes receivable

     3,389,108  

Non-trade receivable

     316,069  

Accrued income

     5,894  

Deposits

     13,418  

Short-term loans

     16,116  

Long-term loans

     55,048  

Long-term non-trade receivable

     25,823  
  

 

 

 
       4,371,970  
  

 

 

 

Financial assets at fair value through profit or loss

  

Convertible bonds

   W   1,327  

Derivatives

     13,059  
  

 

 

 
   W 14,386  
  

 

 

 

Financial assets at fair value through other comprehensive income

  

Debt instrument

   W   161  
  

 

 

 
   W 4,386,517  
  

 

 

 

 

159


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

24.

Financial Risk Management, Continued

 

  ii)

As of December 31, 2017

 

(In millions of won)

 

   December 31, 2017  

Cash and cash equivalents

   W   566,408  

Deposits in banks

     580,781  

Trade accounts and notes receivable

     4,673,570  

Non-trade receivable

     678,454  

Accrued income

     8,655  

Available-for-sale financial assets

     162  

Financial assets at fair value through profit or loss

     1,552  

Deposits

     13,638  

Short-term loans

     13,493  

Long-term loans

     30,772  

Long-term non-trade receivable

     15,115  

Derivatives

     842  
  

 

 

 
   W   6,583,442  
  

 

 

 

In addition to the financial assets above, as of December 31, 2018, the Company provides a payment guarantee of USD 1,167 million (W1,305,167 million), for its subsidiary.

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises primarily from the sales and investing activities. Trade accounts and notes receivables are insured in order to manage credit risk and uninsured trade accounts and notes receivables are managed in accordance with the Company’s management policy.

 

160


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

26.

Financial Risk Management, Continued

 

  (c)

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

The Company has historically been able to satisfy its cash requirements from cash flows from operations and debt and equity financing. To the extent that the Company does not generate sufficient cash flows from operations to meet its capital requirements, the Company may rely on other financing activities, such as external long-term borrowings and offerings of debt securities, equity-linked and other debt securities. In addition, the Company maintains a line of credit with various banks.

The following are the contractual maturities of financial liabilities, including estimated interest payments, as of December 31, 2018.

 

(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   3,807,234        4,148,732       503,257       85,176       802,857       2,502,969       254,473  

Unsecured bond issues

     2,332,257        2,537,553       291,738       328,400       456,990       1,320,248       140,177  

Trade accounts and notes payable

     3,186,123        3,186,123       3,186,123       —         —         —         —    

Other accounts payable

     1,746,412        1,746,412       1,745,382       1,030       —         —         —    

Long-term other accounts payable

     3,081        3,081       —         —         2,055       1,026       —    

Payment guarantee(*)

     19,068        1,493,425       41,614       41,713       137,328       1,010,875       261,895  

Security deposits

     10,955        10,955       —         165       10,790       —         —    

Derivatives financial liabilities

               

Derivatives

   W   25,758        (35,140     (6,742     (6,728     (12,517     (9,153     —    
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   W   11,130,888        13,091,141       5,761,372       449,756       1,397,503       4,825,965       656,545  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(*)

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

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

 

161


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

26.

Financial Risk Management, Continued

 

  (d)

Capital Management

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

 

(In millions of won)             
     December 31, 2018     December 31, 2017  

Total liabilities

   W   13,849,525       11,580,156  

Total equity

     13,212,581       13,829,259  

Cash and deposits in banks (*1)

     550,483       1,147,178  

Borrowings (including bonds)

     6,139,491       4,218,021  

Total liabilities to equity ratio

     105     84

Net borrowings to equity ratio (*2)

     42     22

 

(*1)

Cash and deposits in banks consist of cash and cash equivalents and current deposit 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.

 

162


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

26.

Financial Risk Management, Continued

 

  (e)

Determination of fair value

 

  (i)

Measurement of fair value

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

i) Other current financial assets and liabilities

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

ii) Trade Receivables and Other Receivables

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

iii) Investments in Equity and Debt Securities

The fair value of marketable financial assets at fair value through profit or loss and at fair value through other comprehensive income is determined by reference to their quoted closing bid price at the reporting date. The fair value of non-marketable instruments is determined using valuation methods.

iv) Non-derivative Financial Liabilities

Fair value, which is determined for disclosure purposes, except for the liabilities at FVTPL, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date.

 

163


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

26.

Financial Risk Management, Continued

 

  (e)

Determination of fair value, Continued

 

  (ii)

Fair values versus carrying amounts

The fair values of financial assets and liabilities, together with the carrying amounts shown in the separate statement of financial position as of December 31, 2018 and December 31, 2017 are as follows:

i) As of December 31, 2018

 

(In millions of won)              
     December 31, 2018  
     Carrying amounts      Fair values  

Financial assets carried at amortized cost

     

Cash and cash equivalents

   W   473,283        (*

Deposits in banks

     77,211        (*

Trade accounts and notes receivable

     3,389,108        (*

Non-trade receivable

     316,069        (*

Accrued income

     5,894        (*

Deposits

     13,418        (*

Short-term loans

     16,116        (*

Long-term loans

     55,048       
(*

Long-term non-trade receivable

     25,823        (*

Financial assets at fair value through profit or loss

     

Equity instrument

   W   7,344        7,344  

Convertible bonds

     1,327        1,327  

Derivatives

     13,059        13,059  

Financial assets at fair value through other comprehensive income

     

Debt instrument

   W   161        161  

Financial liabilities at fair value through profit or loss

     

Derivatives

   W   25,758        25,758  

Financial liabilities carried at amortized cost

     

Unsecured bank borrowings

   W   3,807,234        3,862,709  

Unsecured bond issues

     2,332,257        2,384,987  

Trade accounts and notes payable

     3,186,123        (*

Other accounts payable

     3,081        (*

Payment guarantee liabilities

     19,068        (*

Security deposits

     10,955        (*

 

(*)

Excluded from disclosures as the carrying amount approximates fair value.

 

164


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

24.

Financial Risk Management, Continued

 

  ii)

As of December 31, 2017

 

(In millions of won)              
     December 31, 2017  
     Carrying amounts      Fair values  

Assets carried at fair value

     

Available-for-sale financial assets

   W   162        162  

Financial asset at fair value through profit or loss

     1,552        1,552  

Derivatives

     842        842  

Assets carried at amortized cost

     

Cash and cash equivalents

   W   566,408        (*)  

Deposits in banks

     580,781        (*)  

Trade accounts and notes receivable

     4,673,570        (*)  

Non-trade receivable

     678,454        (*)  

Accrued income

     8,655        (*)  

Deposits

     13,638        (*)  

Short-term loans

     13,493        (*)  

Long-term loans

     30,772        (*)  

Long-term non-trade receivable

     15,115        (*)  

Liabilities carried at amortized cost

     

Unsecured bank borrowings

   W   2,207,259        2,212,474  

Unsecured bond issues

     2,010,762        2,016,086  

Trade accounts and notes payable

     2,391,493        (*)  

Other accounts payable

     2,701,823        2,702,033  

Payment guarantee liabilities

     8,127        (*)  

 

(*)

Excluded from disclosures as the carrying amount approximates fair value.

 

165


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

  (iii)

Financial Instruments measured at cost

Financial assets at fair value through profit or loss measured at cost as of December 31, 2018 and 2017 are as follows:

 

(In millions of won)              
     December 31, 2018      December 31, 2017  

Intellectual Discovery Co., Ltd.

   W   4,598        729  

Kyulux Inc.

     2,460        1,968  

Fineeva Co., Ltd.

     286        —    
  

 

 

    

 

 

 
   W   7,344        2,697  
  

 

 

    

 

 

 

 

166


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

26.

Financial Risk Management, Continued

 

The movement in the financial assets at fair value through profit or loss for the years ended December 31, 2017 and 2016 is as follows:

 

(In millions of won)    December 31, 2018  
     January 1,
2018
     Acquisition      Disposal and
others
     Impairment      Fair value
measurement
     December 31,
2018
 

Intellectual Discovery Co., Ltd.

   W   729        —          —          —          3,869        4,598  

Kyulux Inc.

     1,968        —          —          —          492        2,460  

Fineeva Co., Ltd.

     —          286        —          —          —          286  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W   2,697        286        —          —          4,361        7,344  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(In millions of won)  
    December 31, 2017  
    January 1, 2017     Acquisition     Disposal and others     Impairment      December 31, 2017  

Intellectual Discovery Co., Ltd.

  W   729       —         —         —          729  

Kyulux Inc.

    3,266       —         —         (1,298      1,968  

Henghao Technology Co., Ltd.

    1,559       —         (909     (650      —    
 

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 
  W   5,554       —         (909     (1,948      2,697  
 

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Financial assets at fair value through profit or loss consist of investments in equity securities and the fair value of some investments in equity securities are measured at cost because the range of reasonable fair value measurements is significant and the probabilities of the various estimates cannot be reasonably assessed since they do not have a quoted price in an active market for an identical instruments.

 

167


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

26.

Financial Risk Management, Continued

 

  (iv)

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 December 31, 2018 and 2017 are as follows:

 

(In millions of won)    Level 1      Level 2      Level 3      Total  

December 31, 2018

           

Financial assets at fair value through profit or loss

           

Equity instrument

   W   —          —          7,344        7,344  

Convertible bonds

     —          —          1,327        1,327  

Derivatives

     —          —          13,059        13,059  

Financial asset at fair value through other comprehensive income

           

Debt instrument

     161        —          —          161  

Financial liabilities at fair value through profit or loss

           

Derivatives

     —          —          25,758        25,758  

 

(In millions of won)    Level 1      Level 2      Level 3      Total  

December 31, 2017

           

Assets

           

Available-for-sale financial assets

   W   162        —          —          162  

Financial asset at fair value through profit or loss

     —          —          1,552        1,552  

Derivatives

     —          —          842        842  

 

168


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

26.

Financial Risk Management, Continued

 

  iii)

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

Fair value hierarchy classifications, valuation technique and inputs for fair value measurements of the financial instruments not measured at fair value but for which the fair value is disclosed as of December 31, 2018 and December 31, 2017 are as follows:

 

(In millions of won)

 

   December 31, 2018      Valuation
technique
     Input  

Classification

   Level 1      Level 2      Level 3  

Liabilities

              

Unsecured bank loans

   W   —          —          3,835,962       
Discounted
cash flow
 
 
     Discount rate  

Unsecured bond issues

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

Other accounts payable

     —          —          1,746,412       
Discounted
cash flow
 
 
     Discount rate  

Long-term other accounts payable

     —          —          3,081       
Discounted
cash flow
 
 
     Discount rate  

(In millions of won)

 

   December 31, 2017      Valuation
technique
     Input  

Classification

   Level 1      Level 2      Level 3  

Liabilities

              

Unsecured bank loans

   W   —          —          2,212,474       
Discounted
cash flow
 
 
     Discount rate  

Unsecured bond issues

     —          —          2,016,086       
Discounted
cash flow
 
 
     Discount rate  

Other accounts payable

     —          —          2,702,033       
Discounted
cash flow
 
 
     Discount rate  

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

 

     December 31, 2017     December 31, 2017  

Debentures, loans and others

     2.09~3.37     1.57~2.92

 

169


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

27.

Changes in liabilities arising from financing activities

Changes in liabilities arising from financing activities for the year ended December 31, 2017 are as follows:

(In millions of won)

 

                  Non-cash transactions         
     January 1,
2018
     Cash flows from
financing activities
    Reclassification     Exchange rate effect      Effective interest
adjustment
    Others      December 31,
2018
 

Short-term borrowings

   W —          (720     —         —          —         —          —    

Current portion of long-term debt

     1,058,985        (1,425,395     1,376,082       531        29,945       —          1,040,148  

Payment Guarantee

     8,127        1,876       —         —          —         9,065        19,068  

Long-term borrowings

     1,653,033        2,489,560       (816,714     864        —         —          3,326,743  

Bonds

     1,506,003        828,169       (559,368     1,967        (4,172     —          1,772,599  
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 
   W 4,226,148        1,893,490       —         4,082        25,773       9,065        6,158,558  
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

 

170


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

28.

Related Parties and Others

 

  (a)

Related parties

Related parties for the year ended December 31, 2018 are as follows:

 

Classification

  

Description

Subsidiaries(*)    LG Display America, Inc. and others
Associates(*)    Paju Electric Glass Co., Ltd. and others
Entity that has significant influence over the Company    LG Electronics Inc.
Subsidiaries of the entity that has significant influence over the Company    Subsidiaries of LG Electronics Inc.

 

(*)

Details of subsidiaries and associates are described in note 8.

 

171


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

28.

Related Parties and Others, Continued

 

 

  (b)

Significant transactions such as sales of goods and purchases of raw material and outsourcing service and others, which occurred in the normal course of business with related parties for the years ended December 31, 2017 and 2016 are as follows:

 

(In millions of won)    2018  
                   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 8,944,621        —          —          —          —          9  

LG Display Japan Co., Ltd.

     2,413,437        —          —          —          —          2,158  

LG Display Germany GmbH

     1,796,479        —          —          —          —          5,558  

LG Display Taiwan Co., Ltd.

     1,488,447        —          —          —          —          568  

LG Display Nanjing Co., Ltd.

     13,840        —          6,037        —          1,321,700        27,142  

LG Display Shanghai Co., Ltd.

     963,865        —          —          —          —          52  

LG Display Poland Sp. z o.o.

     329        —          —          —          37,307        16  

LG Display Guangzhou Co., Ltd.

     52,168        —          14,043        —          1,930,113        14,194  

LG Display Shenzhen Co., Ltd.

     1,312,088        —          —          —          —          4  

LG Display Yantai Co., Ltd.

     23,018        —          25,759        —          1,358,502        13,597  

LG Display (China) Co., Ltd.

     328        90,281        1,409,953        —          —          1,253  

LG Display Singapore Pte LTD.

     1,087,835           —          —          —          38  

L&T Display Technology (Fujian) Limited

     392,318        —          —          —          8        38  

Nanumnuri Co., Ltd.

     180        —          —          —          —          21,356  

Global OLED Technology LLC

     —          —          —          —          —          6,007  

LG Display Guangzhou Trading Co., Ltd.

     782,603        —          —          —          —          —    

LG Display Vietnam Haiphong Co., Ltd.

     39,639        —          36,013        —          830,170        6,175  

Suzhou Lehui Display Co., Ltd.

     178,357        —          —             —          —    

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

     12,434        —          —          —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 19,501,986        90,281        1,491,805        —          5,477,800        98,165  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

172


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

28.

Related Parties and Others, Continued

 

 

(In millions of won)    2018  
                   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

                 

WooRee E&L Co., Ltd.

     —          —          50        —          —          144  

INVENIA Co., Ltd.

     —          30        1,608        28,657        —          795  

AVATEC Co., Ltd.

     —          530        —          —          71,403        905  

Paju Electric Glass Co., Ltd.

     —          4,172        364,183        —          —          4,411  

LB Gemini New Growth Fund No. 16 (*)

     1,112        540        —          —          —          —    

YAS Co., Ltd.

     —          —          5,281        25,422        —          3,391  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 1,112        5,272        371,122        54,079        71,403        9,646  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Entity that has significant influence over the Company

                 

LG Electronics Inc.

   W 1,207,372        —          31,161        454,555        —          107,861  

 

173


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

28.

Related Parties and Others, Continued

 

 

(In millions of won)    2017  
                   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 71,798        —          —          —          —          103  

LG Electronics Vietnam Haiphong Co., Ltd.

     173,051        —          —          —          —          166  

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

     33,225        —          —          —          —          2,021  

LG Electronics Almaty Kazakhstan

     3,759        —          —          —          —          42  

LG Electronics S.A. (Pty) Ltd.

     7,244        —          —          —          —          20  

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

     10,296        —          —          —          —          210  

LG Electronics RUS, LLC

     2,201        —          —          —          —          1,862  

LG Electronics Egypt S.A.E

     25,491                    16  

LG Electronics (Kunshan) Computer Co., Ltd.

     4,804                    —    

LG Innotek Co., Ltd.

     29,148        —          137,949        —          —          38,930  

LG Hitachi Water Solutions Co., Ltd.

     9,100        —          —          285,514        —          8,980  

Inspur LG Digital Mobile Communications Co., Ltd.

     59,769        —          —          —          —          1  

Qingdao LG Inspur Digital Communication Co., Ltd.

     37,738        —          —          —          —          —    

Hi Entech Co., Ltd.

     —          —          —          —          —          29,215  

Others

     2,185        —          27        —          —          9,498  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 479,809        —          137,976        285,514        —          91,064  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 21,190,279        95,553        2,032,064        794,148        5,549,203        306,736  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(*)

Represents transactions occurred prior to disposal of the entire investments

 

174


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

28.

Related Parties and Others, Continued

 

(In millions of won)    2017  
                   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 11,080,713        11,060        —          —          —          25  

LG Display Japan Co., Ltd.

     2,468,424        3,438        —          —          —          52  

LG Display Germany GmbH

     1,804,786        4,365        —          —          —          7,395  

LG Display Taiwan Co., Ltd.

     1,489,786        3,161        —          —          —          1,031  

LG Display Nanjing Co., Ltd.

     17,585        60,292        —          —          525,508        —    

LG Display Shanghai Co., Ltd.

     1,273,823        11,783        —          —          —          366  

LG Display Poland Sp. z o.o.

     314        —          —          —          34,540        34  

LG Display Guangzhou Co., Ltd.

     34,051        363,086        7,826        —          2,156,897        10,152  

LG Display Shenzhen Co., Ltd.

     1,842,778        4,988        —          —          —          7  

LG Display Yantai Co., Ltd.

     36,628        128,998        15,342        373        2,027,508        25,890  

LG Display (China) Co., Ltd.

     68,794        10,079        1,552,070        —          —          —    

LG Display Singapore Pte LTD.

     960,332        1,917        —          —          —          668  

L&T Display Technology (Fujian) Limited

     453,757        —          15        —          —          793  

Nanumnuri Co., Ltd.

     95        —          —          —          —          18,528  

Global OLED Technology LLC

     —          —          —          —          —          6,030  

LG Display Guangzhou Trading Co., Ltd.

     586,062        326        —          —          —          180  

LG Display Vietnam Haiphong Co., Ltd.

     4,321        —          —          —          148,758        —    

Suzhou Lehui Display Co., Ltd.

     207,280        —          —          —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 22,329,529        603,493        1,575,253        373        4,893,211        71,151  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

175


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

28.

Related Parties and Others, Continued

 

(In millions of won)    2017  
                   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 1        —          —          —          4        6  

WooRee E&L Co., Ltd.

     —          —          —          —          —          175  

INVENIA Co., Ltd.

     —          —          1,862        37,296        —          2,255  

AVATEC Co., Ltd.

     —          530        —          —          90,785        720  

Paju Electric Glass Co., Ltd.

     —          8,109        380,815        —          —          4,225  

Narenanotech Corporation(*)

     —          —          279        12,251        —          177  

YAS Co., Ltd.

     —          —          6,347        69,242        —          2,474  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 1        8,639        389,303        118,789        90,789        10,032  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Entity that has significant influence over the Company

                 

LG Electronics Inc.

   W 1,677,434        —          46,765        696,628        —          108,639  

 

176


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

28.

Related Parties and Others, Continued

 

(In millions of won)    2017  
                   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 71,597        —          —          —          —          163  

LG Electronics Vietnam Haiphong Co., Ltd.

     205,934        —          —          —          —          198  

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

     76,277        —          —          —          —          1,926  

LG Electronics Almaty Kazakhstan

     14,079        —          —          —          —          53  

LG Electronics S.A. (Pty) Ltd.

     14,155        —          —          —          —          25  

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

     29,115        —          —          —          —          186  

LG Electronics RUS, LLC

     3,941        —          —          —          —          963  

LG Innotek Co., Ltd.

     14,836        —          185,464        —          —          5,245  

LG Hitachi Water Solutions Co., Ltd.

     —          —          —          314,645        —          —    

Inspur LG Digital Mobile Communications Co., Ltd.

     110,310        —          —          —          —          —    

Qingdao LG Inspur Digital Communication Co., Ltd.

     77,355        —          —          —          —          —    

Hi Entech Co., Ltd.

     —          —          —          —          —          27,449  

Others

     3,121        —          3        —          —          8,252  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 620,720        —          185,467        314,645        —          44,460  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 24,627,684        612,132        2,196,788        1,130,435        4,984,000        234,282  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(*)

Represents transactions occurred prior to disposal of the entire investments

 

177


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

28.

Related Parties and Others, Continued

 

  (c)

Trade accounts and notes receivable and payable as of December 31, 2018 and 2017 are as follows:

(In millions of won)

 

     Trade accounts and notes receivable
and others
     Trade accounts and notes payable
and others
 
     December 31, 2018      December 31, 2017      December 31, 2018      December 31, 2017  

Subsidiaries

           

LG Display America, Inc.

   W 1,031,718        1,795,757        —          —    

LG Display Japan Co., Ltd.

     349,814        230,804        5        2  

LG Display Germany GmbH

     433,077        497,677        4,332        —    

LG Display Taiwan Co., Ltd.

     274,860        436,943        34        106  

LG Display Nanjing Co., Ltd.

     2,448        176        272,991        85,646  

LG Display Shanghai Co., Ltd.

     168,117        176,816        1        74  

LG Display Poland Sp. z o. o

     30        73        6,849        5,480  

LG Display Guangzhou Co., Ltd.

     167,814        345,212        196,070        189,996  

LG Display Guangzhou Trading Co., Ltd.

     377,145        88,876        —          —    

LG Display Shenzhen Co., Ltd.

     32,759        217,542        —          —    

LG Display Yantai Co., Ltd.

     115        123,059        382,448        30,397  

LG Display (China) Co., Ltd.

     —          55,309        187,004        150,933  

LG Display Singapore Pte. Ltd.

     85,680        187,420        1        1  

L&T Display Technology (Fujian) Limited

     62,336        57,545        139,171        177,487  

Nanumnuri Co., Ltd.

     —          —          2,065        2,453  

Global OLED Technology LLC

     —          —          1,146        —    

LG Display Vietnam Haiphong Co., Ltd.

     22,113        9,119        340,780        58,666  

Suzhou Lehui Display Co., Ltd.

     32,641        21,110        —          36,919  

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

     17,333        —          3,362        —    
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 3,058,000        4,243,438        1,536,259        738,160  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

178


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

28.

Related Parties and Others, Continued

 

(In millions of won)

     Trade accounts and notes receivable
and others
     Trade accounts and notes payable
and others
 
     December 31, 2018      December 31, 2017      December 31, 2018      December 31, 2017  

Associates and their subsidiaries

           

WooRee E&L Co., Ltd.

     —          —          6        61  

INVENIA Co., Ltd.

     2,000        2,375        1,671        18,523  

AVATEC Co., Ltd.

     —          —          4,382        2,949  

Paju Electric Glass Co., Ltd.

     —          —          60,566        60,141  

YAS Co., Ltd.

     —          375        2,709        6,474  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 2,000        2,750        69,334        88,148  
  

 

 

    

 

 

    

 

 

    

 

 

 

Entity that has significant influence over the Company

           

LG Electronics Inc.

   W 247,134        550,101        99,574        206,616  

 

(*)

Excluded from related parties due to disposal of equity investments during period 2017.

 

179


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

28.

Related Parties and Others, Continued

 

(In millions of won)

     Trade accounts and notes receivable
and others
     Trade accounts and notes payable
and others
 
     December 31, 2018      December 31, 2017      December 31, 2018      December 31, 2017  

Subsidiaries of the entity that has significant influence over the Company

           

LG Innotek Co., Ltd.

   W 2,782        407        45,815        58,741  

LG Hitachi Water Solutions Co., Ltd.

     9,100        —          47,463        154,079  

Hi Entech Co., Ltd.

     —          —          4,782        4,854  

Inspur LG Digital Mobile Communications Co., Ltd

     6,137        20,953        —          —    

LG Electronics Reynosa S.A. DE C.V

     2,572        11,494        134        82  

LG Electronics India Pvt. Ltd.

     9,047        3,030        29        —    

LG Electronics Vietnam Haiphong Co., Ltd.

     25,544        36,017        —          1  

LG Electronics S.A. (Pty) Ltd.

     896        2,400        5        4  

LG Electronics Egypt S.A.E

     10,296        —          —          —    

LG Electronics (Kunshan) Computer Co., Ltd.

     1,370        —          —          —    

Qingdao LG Inspur Digital Communication Co., Ltd.

     15        9        90        80  

Others

     6,855        18,385        1,185        1,309  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 74,614        92,695        99,503        219,150  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 3,381,748        4,888,984        1,804,670        1,252,074  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

180


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

28.

Related Parties and Others, Continued

 

 

  (d)

Details of significant cash transactions such as loans and collection of loans, which occurred in the normal course of business with related parties for the years ended December 31, 2018 and 2017 are as follows:

 

(In millions of won)

 

     Loans(*1)  

Associates

   January 1,
2018
     Increase      Decrease      December 31,
2018
 

INVENIA Co., Ltd.

   W 2,375        —          375        2,000  

YAS Co., Ltd.

     375        —          375        —    
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 2,750        —          750        2,000  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(*1)

Loans are presented based on nominal amounts.

 

 

(In millions of won)

 

     Loans(*1)  

Associates

   January 1,
2017
     Increase      Decrease      December 31,
2017
 

New Optics Ltd.(*2)

   W 1,000        —          125        875  

INVENIA Co., Ltd.

     833        2,000        458        2,375  

Narenanotech Corporation(*2)

     300        —          75        225  

YAS Co., Ltd.

     833        —          458        375  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 2,966        2,000        1,116        3,850  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(*1)

Loans are presented based on nominal amounts.

(*2)

Excluded from related parties due to disposal of equity investments during the year ended December 31, 2017.

 

181


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

28.

Related Parties and Others, Continued

 

  (e)

Conglomerate Transactions

Transactions, trade accounts and notes receivable and payable, and others between the Company and certain companies and their subsidiaries, which are included in LG Group, one of conglomerates according to the Monopoly Regulation and Fair Trade Act for the years ended December 31, 2018 and 2017 are as follows. These entities are not affiliates according to K-IFRS No. 1024, Related Party Disclosures.

 

(In millions of won)  
     For the year ended December 31, 2018      December 31, 2018  
     Sales
and others
     Purchase and others      Trade accounts and
notes receivable

and others
     Trade accounts and notes
payable and others
 

LG International Corp. and its subsidiaries(*)

   W 715,580        190,091        82,965        82,028  

LG Uplus Corp.

     21        1,739        —          178,  

LG Chem Ltd. and its subsidiaries

     1,648        776,031        14        93,274  

Serveone and its subsidiaries

     388        1,166,309        21,307        239,091  

Silicon Works Co., Ltd

     —          713,093        —          140,694  

LG Corp.

     —          54,434        11,246        —    

LG Management Development Institute

     —          9,734        3,480        441  

LG CNS Co., Ltd. and its subsidiaries

     —          210,344        —          72,694  

LG Hausys Ltd

     1,111        4        —          3  

G2R Inc. and its subsidiaries

     —          57,744        —          19,773  

Robostar

     —          1,374        —          530  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 718,748        3,180,897        119,012        648,706  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(*)

For transactions which LG International and its subsidiaries act as an agent of the Company and receive commission revenue from the Company, above transaction amount only include commission revenue recognized by LG International and its subsidiaries. For prior year comparative purpose, gross sales and others for 2018 amount to W715,580 million, respectively, and gross purchase and others for 2018 amount to        million, respectively.

 

182


LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2018 and 2017

 

28.

Related Parties and Others, Continued

 

(In millions of won)                            
     For the year ended December 31, 2017      December 31, 2017  
     Sales
and others
     Purchase and others      Trade accounts and notes
receivable

and others
     Trade accounts and notes
payable and others
 

LG International Corp. and its subsidiaries

   W 611,274        1,354,039        110,786        186,799  

LG Household & Health Care and its subsidiaries

     —          116        —          —    

LG Uplus Corp.

     152        1,854        —          1,505  

LG Chem Ltd. and its subsidiaries

     16,915        869,579        8,659        127,416  

SK Siltron Co., Ltd.

(formerly, Siltron Co., Ltd.)(*)

     10        —          —          —    

Lusem Co., Ltd.(*)

     13        694        1        53  

Serveone and its subsidiaries

     677        1,390,323        21,565        491,719  

Silicon Works Co., Ltd

     —          624,127        —          120,031  

LG Corp.

     —          60,756        4,700        1,523  

LG Management Development Institute

     —          10,221        3,480        699  

LG CNS Co., Ltd. and its subsidiaries

     323        226,229        —          90,374  

LG Hausys Ltd

     1,673        391        —          374  

G2R Inc. and its subsidiaries

     —          93,799        —          14,275  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 631,037        4,632,128        149,191        1,034,768  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(*)

Represents transactions occurred prior to disposal of the entire investments.

 

183


28.

Related Parties and Others, Continued

 

  (f)

Key management personnel compensation

Compensation costs of key management for the years ended December 31, 2018 and 2017 are as follows:

 

(In millions of won)              
     2018      2017  

Short-term benefits

   W 2,622        3,724  

Expenses related to the defined benefit plan

     794        488  
  

 

 

    

 

 

 
   W 3,416        4,212  
  

 

 

    

 

 

 

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

 

29.

Supplemental Cash Flow Information

Supplemental cash flow information for the years ended December 31, 2018 and 2017 is as follows:

 

(In millions of won)              
     2018      2017  

Non-cash investing and financing activities:

     

Changes in other accounts payable arising from the purchase of property, plant and equipment

   W (725,744      638,907  

Changes in other accounts receivable arising from the investment by the subsidiary’s dividend.

     (405,992      —    

 

LOGO

Please refer to the detailed footnotes and final financial statements in the audit report, which will be on the electronic disclosure system (<http://dart.dss.or.kr>) on the last week of February

 

184


LOGO

Appendix-1. Consolidated Statements of Changes in Equity

Consolidated Statements of Changes in Equity

For the years ended December 31, 2018 and 2017

 

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

Balances at January 1, 2017

   W 1,789,079      2,251,113      9,004,283     (88,478     12,955,997     506,391     13,462,388
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income (loss) for the year

                

Profit for the year

     —        —        1,802,756     —       1,802,756     134,296     1,937,052

Other comprehensive income (loss)

                

Net change in fair value of available-for-sale financial assets, net of tax

                

Remeasurements of net defined benefit liabilities, net of tax

     —        —        (7,001     —       (7,001     —       (7,001

Foreign currency translation differences for foreign operations, net of tax

     —        —        —       (200,707     (200,707     (31,031     (231,738

Other comprehensive income from associates and joint ventures

     —        —        441     905     1,346     —       1,346
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other comprehensive loss

     —        —        (6,560     (199,802     (206,362     (31,031     (237,393
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income (loss) for the year

   W —          —        1,796,196     (199,802     1,596,394     103,265     1,699,659
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

185


Transaction with owners, recognized directly in equity

                

Dividends to equity holders

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

Subsidiaries’ dividends distributed to non-controlling interests

     —          —          —         —         —         (5,929     (5,929

Capital contribution from non-controlling interests

     —          —          —         —         —         4,300     4,300
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balances at December 31, 2017

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

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balances at January 1, 2018

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

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income (loss) for the year

                

Profit for the year

     —          —          (207,239     —         (207,239     27,796     (179,443
               —        

Other comprehensive income (loss)

                

Net change in fair value of available-for-sale financial assets, net of tax

     —          —          —         —         —         —      

Remeasurements of net defined benefit liabilities, net of tax

     —          —          4,521     —         4,521     —         4,521

Foreign currency translation differences for foreign operations, net of tax

     —          —          —         (12,725     (12,725     (7,262  

Other comprehensive income from associates and joint ventures

     —          —          20     37     57       57
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other comprehensive loss

     —          —          4,541     (12,688     (8,147     (7,262     (15,409
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income (loss) for the year

   W —          —          (202,698     (12,688     (215,386     20,534     (194,852
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Transaction with owners, recognized directly in equity

                

Dividends to equity holders

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

Subsidiaries’ dividends distributed to non-controlling interests

               —         (53,107     (53,107

Capital contribution from non-controlling interests

     —          —          —         —         —         331,603     331,603
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balances at December 31, 2018

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

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

See accompanying notes to the consolidated financial statements.

 

186


LOGO

Appendix-2. Seperate Statements of Changes in Equity

Separate Statements of Changes in Equity

For the years ended December 31, 2018 and 2017

 

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

Balances at January 1, 2017

   W 1,789,079      2,251,113      8,195,255      12,235,447
  

 

 

    

 

 

    

 

 

    

 

 

 

Total comprehensive income for the year

           

Profit for the year

     —        —        1,779,721      1,779,721

Other comprehensive income (loss)

           

Remeasurements of net defined benefit liabilities, net of tax

     —        —        (7,001      (7,001
  

 

 

    

 

 

    

 

 

    

 

 

 

Total other comprehensive loss

     —        —        (7,001      (7,001
  

 

 

    

 

 

    

 

 

    

 

 

 

Total comprehensive income for the year

   W —          —        1,772,720      1,772,720
  

 

 

    

 

 

    

 

 

    

 

 

 

Transaction with owners, recognized directly in equity

           

Dividends to equity holders

     —        —        (178,908      (178,908
  

 

 

    

 

 

    

 

 

    

 

 

 

Balances at December 31, 2017

   W 1,789,079      2,251,113      9,789,067      13,829,259
  

 

 

    

 

 

    

 

 

    

 

 

 

Balances at January 1, 2018

   W 1,789,079      2,251,113      9,789,067      13,829,259
  

 

 

    

 

 

    

 

 

    

 

 

 

Total comprehensive income (loss) for the year

           

Profit for the year

     —        —        (442,291      (442,291

Other comprehensive income (loss)

           

Remeasurements of net defined benefit liabilities, net of tax

     —        —        4,521      4,521
  

 

 

    

 

 

    

 

 

    

 

 

 

Total other comprehensive loss (Income)

     —        —        4,521      4,521
  

 

 

    

 

 

    

 

 

    

 

 

 

Total comprehensive income (loss) for the year

   W —          —        (437,770      (437,770
  

 

 

    

 

 

    

 

 

    

 

 

 

Transaction with owners, recognized directly in equity

           

Dividends to equity holders

     —        —        (178,908      (178,908
  

 

 

    

 

 

    

 

 

    

 

 

 

Balances at December 31, 2018

   W 1,789,079      2,251,113      9,172,389      13,212,581
  

 

 

    

 

 

    

 

 

    

 

 

 

See accompanying notes to the separate financial statements.

 

187


B. Agenda 2: Amendment to the Articles of Incorporation

- Reasons for amending the Articles of Incorporation:

a. To reflect applicable provisions of the Act on the Electronic Registration of Stocks and Bonds, Etc., which has been enacted in order to improve the efficiency and transparency of securities transactions and is expected to become effective in September 2019.

b. To reflect applicable provisions of the Act on External Audit of Stock Companies, Etc. and the Korean Commercial Code.

 

Before Amendment    After Amendment    Purpose of Amendment

Article 5 (Method of Public Notice)

 

Public notice by the Company shall be given by publication in “Maeil Business Newspaper” and “The Chosun Ilbo,” both daily newspapers of general circulation published in Seoul.

  

Article 5 (Method of Public Notice)

 

Public notice by the Company shall be given on the Company’s website (http://www.lgdisplay.com). However, if public notice cannot be given on the Company’s website due to technical difficulties or other unavoidable circumstances, it shall be published in “Maeil Business Newspaper” and “The Chosun Ilbo”, both daily newspapers of general circulation published in Seoul.

  

•   To reflect applicable provisions of the Korean Commercial Code

 

-   Reflect changes in the method of public notice under the Korean Commercial Code.

 

-   Enhance the accessibility of information through announcement via the Company’s website.

Article 8 (Types of Share Certificates)

 

The share certificates of the Company shall be issued in the following eight (8) denominations: one (1), five (5), ten (10), fifty (50), one hundred (100), five hundred (500), one thousand (1,000), and ten thousand (10,000) shares.

  

Article 8 (Electronic Registration of Shares and Rights that would otherwise be Indicated on Certificates of Preemptive Rights)

 

In lieu of issuing share certificates or certificates of preemptive rights, the Company shall electronically register the shares and rights that would otherwise be indicated on certificates of preemptive rights on an electronic registry of an electronic registration institution.

  

•   To reflect applicable provisions of the Electronic Securities Registration Act

 

-   Delete the provision on the types of share certificates of the Company and their denominations.

 

-   Establish grounds for electronic registration of shares and preemptive rights that would otherwise be indicated on certificates.

 

188


Article 13 (Transfer Agent)

 

(1)   The Company shall retain a transfer agent for shares.

 

(2)   The transfer agent, the location where its services are rendered and the scope of a transfer agent’s duties shall be determined by a resolution of the Board of Directors of the Company and shall be publicly notified.

 

(3)   The Company shall keep the shareholders registry, or a duplicate thereof, at a location where a transfer agent renders its services. In addition, the Company shall cause the transfer agent to handle activities such as making entries into its shareholders registry, registering the creation and cancellation of pledges over shares, indicating or canceling trust assets, issuing share certificates, receiving reports filed, and other related businesses.

 

(4)   Those activities of a transfer agent set forth in Paragraph (3) above shall be performed in accordance with the Regulations for Securities Agency Business of the Transfer Agent.

  

Article 13 (Transfer Agent)

 

(1)   The Company shall retain a transfer agent for shares.

 

(2)   The transfer agent, the location where its services are rendered and the scope of a transfer agent’s duties shall be determined by a resolution of the Board of Directors of the Company and shall be publicly notified.

 

(3)   The Company shall keep the shareholders registry, or a duplicate thereof, at a location where a transfer agent renders its services. In addition, the Company shall cause the transfer agent to handle activities such as the electronic registration of shares, management of the shareholders registry and other related businesses.

 

(4)   Those activities of a transfer agent set forth in Paragraph (3) above shall be performed in accordance with the Regulations for Securities Agency Business of the Transfer Agent.

  

•   To reflect applicable provisions of the Electronic Securities Registration Act

 

-   Modify the scope of the transfer agent’s responsibilities.

Article 14 (Report of Name, Address and Seal or Signatures of Shareholders and Others)

 

(1)   Shareholders and registered pledgees shall report their names, addresses and seals or signatures to a transfer agent prescribed by Article 13 herein.

   Article 14 [Deleted]   

•   To reflect applicable provisions of the Electronic Securities Registration Act

 

-   Delete the requirement for shareholders to report their information to the transfer agent, as such reporting is no longer necessary when shares are registered electronically.

 

189


(2)   Shareholders and registered pledgees who reside in a foreign country shall report their appointed agents and their addresses in Korea to whom notices are to be sent.

 

(3)   The above provisions shall also apply to changes in any item mentioned in Paragraphs (1) and (2).

     
[N/A]   

Article 15-4 (Electronic Registration of Bonds and Warrant Rights that would otherwise be Indicated on Certificates)

 

In lieu of issuing bond or warrant certificates, the Company shall electronically register the bonds and warrant rights that would otherwise be indicated on certificates on an electronic registry of an electronic registration institution.

  

•   To reflect applicable provisions of the Electronic Securities Registration Act

 

-   Establish grounds for electronic registration of bonds and warrant rights that would otherwise be indicated on certificates.

Article 15-4 (Provisions Applicable to Bond Issuance)

 

Articles 13 and 14 shall apply mutatis mutandis to issuance of bonds.

  

Article 15-5 (Provisions Applicable to Bond Issuance)

 

Article 13 shall apply mutatis mutandis to issuance of bonds.

  

•   To reflect applicable provisions of the Electronic Securities Registration Act

 

-   Reflect the deletion of Article 14.

Article 31 (Resolutions of the Board of Directors)

 

(1)   The quorum for the Meeting of the Board of Directors of the Company shall require the presence of the majority of Directors in office.

 

(2)   Resolutions of a meeting of the Board of Directors shall be adopted by the affirmative votes of a majority of the Directors present.

  

Article 31 (Resolutions of the Board of Directors)

 

(1)   The quorum for the Meeting of the Board of Directors of the Company shall require the presence of the majority of Directors in office.

 

(2)   Resolutions of a meeting of the Board of Directors shall be adopted by the affirmative votes of a majority of the Directors present.

  

•   To reflect applicable provisions of the Korean Commercial Code

 

-   Reflect revisions relating to the method of participation in resolutions of the board of directors under the Korean Commercial Code.

 

-   Reflect permission for a director’s participation in the resolutions of the board of directors through an audio conference call without visual images under the Korean Commercial Code.

 

190


(3)   The Board of Directors may allow all or part of the Directors in office to exercise his/her and/or their voting rights by telecommunication means through which they may transmit and receive visual images and voices at the same time without attending a meeting of the Board of Directors in person. In such case, the concerned Director(s) shall be deemed as having attended the meeting of the Board of Directors in person.

 

(4)   Each member of the Board of Directors shall have one (1) voting right; provided, however, that any person who has special interests concerning a resolution of the Board of Directors may not exercise his/her voting right.

  

(3)   The Board of Directors may allow all or part of the Directors in office to exercise his/her and/or their voting rights by telecommunication means through which they may transmit and receive voices at the same time without attending a meeting of the Board of Directors in person. In such case, the concerned Director(s) shall be deemed as having attended the meeting of the Board of Directors in person.

 

(4)   Each member of the Board of Directors shall have one (1) voting right; provided, however, that any person who has special interests concerning a resolution of the Board of Directors may not exercise his/her voting right.

  

Article 41-2 (Appointment of Independent Certified Public Accountant)

 

The Company shall appoint an independent certified public accountant after obtaining an approval of the Company’s Audit Committee, and shall report such to the first ordinary General Meeting of Shareholders to be convened after such appointment.

  

Article 41-2 (Appointment of External Auditor)

 

The Company shall appoint an external auditor pursuant to the Act on External Audit of Stock Companies, Etc. and shall report such fact at the first ordinary General Meeting of Shareholders to be convened after the appointment or shall otherwise notify or publicly announce such fact to the shareholders as prescribed in the Enforcement Decree of the Act on External Audit of Stock Companies, Etc.

  

•   To reflect applicable provisions of the Act on External Audit of Stock Companies, Etc.

 

-   Included additional methods of notification or public announcement for notifying the appointment of an external auditor to the shareholders in accordance with the Act on External Audit of Stock Companies, Etc. and the Enforcement Decree thereunder.

C. Agenda 3: Appointment of Directors

- The following 4 candidates were proposed to be reappointed and newly appointed as directors.

3-1) Young Soo Kwon (Non-standing Director)

Date of birth: February, 1957

Candidate for Outside Director: None

Nominator: Board of Directors

Appointment Term: 3 years

Type of appointment: Newly Appointed

Main experience: CEO of LG Display

 

191


Present position: CEO & President, LG

Business Transaction with LG Display during the last 3 years: None

Nationality: Korean

3-2) Kun Tai Han (Outside Director)

Date of birth: October, 1956

Candidate for Outside Director: Yes

Nominator: Outside Director Nomination Committee

Appointment Term: 3 years

Type of appointment: Reappointed

Main experience: CEO, Korea Leadership Center

Present position: CEO, Han’s Consulting

Business Transaction with LG Display during the last 3 years: None

Nationality: Korean

3-3) Chang-Yang Lee (Outside Director)

Date of birth: September, 1962

Candidate for Outside Director: Yes

Nominator: Outside Director Nomination Committee

Appointment Term: 3 years

Type of appointment: Newly Appointed

Main experience: Policy making at the Ministry of Trade and Industry of Korea

Present position: Professor of Economics and Public Policy, KAIST

Business Transaction with LG Display during the last 3 years: None

Nationality: Korean

3-4) Dong Hee Suh (Standing Director)

Date of birth: February, 1964

Candidate for Outside Director: None

Nominator: Board of Directors

Appointment Term: 1 years

Type of appointment: Newly Appointed

Main experience: Head of Ethical Management Department, LG Household & Health Care

Present position: CFO & Senior Vice President, LG Display

Business Transaction with LG Display during the last 3 years: None

Nationality: Korean

 

192


D.

Agenda 4: Appointment of Audit Committee Members

- The following 2 candidates were proposed to be reappointed and newly appointed as Audit Committee Member.

4-1) Kun Tai Han (Outside Director)

Date of birth: October, 1956

Candidate for Outside Director: Yes

Nominator: Board of Directors

Appointment Term: 3 years

Type of appointment: Reappointed

Main experience: CEO, Korea Leadership Center

Present position: CEO, Han’s Consulting

Business Transaction with LG Display during the last 3 years: None

Nationality: Korean

4-2) Chang-Yang Lee (Outside Director)

Date of birth: September, 1962

Candidate for Outside Director: Yes

Nominator: Board of Directors

Appointment Term: 3 years

Type of appointment: Newly Appointed

Main experience: Policy making at the Ministry of Trade and Industry of Korea

Present position: Professor of Economics and Public Policy, KAIST

Business Transaction with LG Display during the last 3 years: None

Nationality: Korean

E. Agenda 5: Approval of Remuneration Limit for Directors

- Remuneration limit for directors in 2019 is for all 7 directors including 4 outside directors.

The remuneration limit in 2019 is same as that of 2018.

 

Category

   FY2018      FY2019  

Number of Directors (Number of Outside Directors)

     7 (4)        7 (4)  

Total Amount of Remuneration Limit

     KRW 8.5 billion        KRW 8.5 billion  

 

193


IV.

Matters Relating to the Solicitor of Proxy

1. Matters Relating to the Solicitor of Proxy

A. Name of Solicitor: LG Display Co., Ltd.

B. Number of LG Display Shares Held by Solicitor: None

C. The Principal Shareholders of the Solicitor

 

Name of principal shareholder

   Relationship with LGD   

Number of shares held

   Ownership ratio  

LG Electronics Inc.

   Largest shareholder    135,625,000 (common stock)      37.90

Sang Beom Han

   Director (President, CEO)    48,355 (Common stock)      0.01

Sang Don Kim

   Director    6,000 (Common stock)      0.00

Gi Ryun Jung

   Others    400 (Common stock)      0.00

Young Soon Hong

   Others    400 (Common stock)      0.00

Total

   —      135,680,155 (common stock)      37.92

2. Matters Relating to the Proxy

 

Name of Agents for the Proxy    Daniel Kim    Su Yeon Suh    Jee Hae Choi
Number of Shares Held by Agents as of 2018 End.    155    —      16
Relationship with LGD    Employee    Employee    Employee

3. Criteria for Shareholders Whom Proxy is Asked to

- All shareholders holding more than 10,000 shares of LGD common stock

4. Others

- The Period of Proxy Instruction: From Feb. 26, 2019 to Mar. 14, 2019 (Prior to the AGM day)

 

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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: February 22, 2019

  By:  

/s/ Heeyeon Kim

  (Signature)
  Name:   Heeyeon Kim
  Title:   Head of IR / Vice President

 

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