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 November 2022
LG Display Co., Ltd.
(Translation of Registrants name into English)
LG Twin Towers, 128 Yeoui-daero, Yeongdeungpo-gu, Seoul 07336, Republic of Korea
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submission to furnish a report or other document that the registration foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrants home country), or under the rules of the home country exchange on which the registrants 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 registrants 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 ☒
QUARTERLY REPORT
(From January 1, 2022 to September 30, 2022)
THIS IS A TRANSLATION OF THE SEMI-ANNUAL REPORT ORIGINALLY PREPARED IN KOREAN AND IS IN SUCH FORM AS REQUIRED BY THE KOREAN FINANCIAL SUPERVISORY COMMISSION.
IN THE TRANSLATION PROCESS, SOME PARTS OF THE REPORT WERE REFORMATTED, REARRANGED OR SUMMARIZED AND CERTAIN NUMBERS WERE ROUNDED FOR THE CONVENIENCE OF
READERS. REFERENCES TO Q1, Q2, Q3 AND Q4 OF A FISCAL YEAR ARE REFERENCES TO THE THREE-MONTH PERIODS ENDED MARCH 31, JUNE 30, SEPTEMBER 30 AND
DECEMBER 31, RESPECTIVELY, OF SUCH FISCAL YEAR. REFERENCES TO Q1~Q3 OF A FISCAL YEAR ARE REFERENCES TO THE NINE-MONTH PERIOD ENDED SEPTEMBER 30 OF SUCH FISCAL YEAR. REFERENCES TO W OR
KRW ARE REFERENCES TO THE KOREAN WON.
UNLESS EXPRESSLY STATED OTHERWISE, ALL INFORMATION CONTAINED HEREIN IS PRESENTED ON A CONSOLIDATED BASIS IN ACCORDANCE WITH KOREAN INTERNATIONAL FINANCIAL REPORTING STANDARDS, OR K-IFRS, WHICH DIFFER IN CERTAIN RESPECTS FROM GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CERTAIN OTHER COUNTRIES, INCLUDING THE UNITED STATES. K-IFRS ALSO DIFFERS IN CERTAIN RESPECTS FROM THE INTERNATIONAL FINANCIAL REPORTING STANDARDS AS ISSUED BY THE INTERNATIONAL ACCOUNTING STANDARDS BOARD. WE HAVE MADE NO ATTEMPT TO IDENTIFY OR QUANTIFY THE IMPACT OF THESE DIFFERENCES IN THIS DOCUMENT.
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Attachment: 1. Financial Statements in accordance with K-IFRS
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1. | Company |
A. | Name and contact information |
The name of our company is EL-GI DISPLAY CHUSIK HOESA, which shall be LG Display Co., Ltd. in English.
Our principal executive office is located at LG Twin Towers, 128 Yeoui-daero, Yeongdeungpo-gu, Seoul 07336, Republic of Korea, and our telephone number is +82-2-3777-1010. Our website address is http://www.lgdisplay.com.
B. | Credit rating |
(1) | Corporate bonds (Domestic)(1) |
Subject instrument |
Month of rating |
Credit rating | Rating agency (Rating range) | |||
Corporate bonds | February 2020 | A+ | NICE Information Service Co., Ltd. (AAA ~ D) | |||
June 2020 | ||||||
May 2021 | ||||||
February 2022 | ||||||
June 2022 | ||||||
February 2020 | A+ | Korea Investors Service, Inc. (AAA ~ D) | ||||
June 2020 | ||||||
March 2021 | ||||||
August 2021 | ||||||
February 2022 | ||||||
June 2022 | ||||||
August 2022 | ||||||
February 2020 | A+ | Korea Ratings Corporation (AAA ~ D) | ||||
May 2020 | ||||||
April 2021 | ||||||
September 2021 | ||||||
June 2022 |
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(1) | Domestic corporate bond credit ratings are generally defined to indicate the following: |
Subject instrument |
Credit rating |
Definition | ||
Corporate bonds |
AAA | Strongest capacity for timely repayment. | ||
AA+/AA/AA- | Very strong capacity for timely repayment. This capacity may, nevertheless, be slightly inferior than is the case for the highest rating category | |||
A+/A/A- | Strong capacity for timely repayment. This capacity may, nevertheless, be more vulnerable to adverse changes in circumstances or in economic conditions than is the case for higher rating categories. | |||
BBB+/BBB/BBB- | Capacity for timely repayment is adequate, but adverse changes in circumstances and in economic conditions are more likely to impair this capacity. | |||
BB+/BB/BB- | Capacity for timely repayment is currently adequate, but that there are some speculative characteristics that make the repayment uncertain over time. | |||
B+/B/B- | Lack of adequate capacity for repayment and speculative characteristics. Interest payment in time of unfavorable economic conditions is uncertain. | |||
CCC | Lack of capacity for even current repayment and high risk of default. | |||
CC | Greater uncertainties than higher ratings. | |||
C | High credit risk and lack of capacity for timely repayment. | |||
D | Insolvency. |
C. | Capitalization |
(1) | Change in capital stock (as of September 30, 2022) |
There were no changes to our issued capital stock during the reporting period ended September 30, 2022.
(2) | Convertible bonds (as of September 30, 2022) |
Description |
Issue Date | Maturity Date |
Issue Amount (in Won) |
Class of Shares Subject to Conversion |
Conversion Period |
Conditions for Conversion | Outstanding Bonds | Notes | ||||||||||||||||||||||||||||||||
Conversion Ratio |
Conversion Price |
Issue Amount (in Won) |
Number of Shares subject to conversion |
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Unsecured Foreign Convertible Bonds No. 3 |
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Aug. 22, 2019 |
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Aug. 22, 2024 |
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813,426,670,000(1) | |
Registered Common Shares |
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Aug. 23, 2020 ~ Aug. 12, 2024 |
100 | % | 24,599,120,000 | (3)(4) | 1,283,543 | |
Listed on Singapore Stock Exchange |
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Total |
| | 813,426,670,000 | | | 100 | % | 24,599,120,000 | 1,283,543 | | ||||||||||||||||||||||||||||||
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(1) | The issue amount for Unsecured Foreign Convertible Bonds No. 3 is calculated based on the application of
the mid-point of the relevant Won-US dollar exchange rates as of noon, July 30, 2019 (Korea Standard Time) quoted on Bloomberg, which was |
(2) | Pursuant to the resolution on cash dividends on March 23, 2022, the conversion price has been adjusted
from |
(3) | Pursuant to the noteholders exercise of the put option, we repaid an aggregate amount of USD 667,000,000 on August 22, 2022. |
(4) | We notified the exercise of our call option to the noteholders on September 21, 2022, and the entire remaining outstanding issue amount of USD 20,800,000 was repaid on October 24, 2022. |
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D. | Voting rights (as of September 30, 2022) |
(Unit: share) | ||||||
Description |
Number of shares | |||||
A. Total number of shares issued(1): |
Common shares(1) | 357,815,700 | ||||
Preferred shares | | |||||
B. Shares without voting rights: |
Common shares | | ||||
Preferred shares | | |||||
C. Shares subject to restrictions on voting rights pursuant to our articles of incorporation: |
Common shares | | ||||
Preferred shares | | |||||
D. Shares subject to restrictions on voting rights pursuant to regulations: |
Common shares | | ||||
Preferred shares | | |||||
E. Shares with restored voting rights: |
Common shares | | ||||
Preferred shares | | |||||
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Total number of issued shares with voting rights (=A B C D + E): |
Common shares | 357,815,700 | ||||
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Preferred shares | | |||||
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(1) | Authorized: 500,000,000 shares |
E. | Dividends |
Dividends for the three most recent fiscal years
Description (unit) |
2022 Q1~Q3 | 2021 | 2020 | |||||||||||||
Par value (Won) |
5,000 | 5,000 | 5,000 | |||||||||||||
Profit (loss) for the year (million Won)(1) |
(1,174,075 | ) | 1,186,182 | (94,853 | ) | |||||||||||
Earnings (loss) per share (Won)(2) |
(3,281 | ) | 3,315 | (265 | ) | |||||||||||
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Total cash dividend amount for the period (million Won) |
| 232,580 | | |||||||||||||
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Total stock dividend amount for the period (million Won) |
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Cash dividend payout ratio (%)(3) |
| 19.61 | | |||||||||||||
Cash dividend yield (%)(4) |
Common shares | | 2.82 | | ||||||||||||
Preferred shares | | | | |||||||||||||
Stock dividend yield (%) |
Common shares | | | | ||||||||||||
Preferred shares | | | | |||||||||||||
Cash dividend per share (Won) |
Common shares | | 650 | | ||||||||||||
Preferred shares | | | | |||||||||||||
Stock dividend per share (share) |
Common shares | | | | ||||||||||||
Preferred shares | | | |
(1) | Based on profit for the year attributable to the owners of the controlling company. |
(2) | Earnings per share is based on par value of |
(3) | Cash dividend payout ratio is the percentage that is derived by dividing total cash dividend by profit for the year attributable to the owners of the controlling company. |
(4) | Cash dividend yield is the percentage that is derived by dividing cash dividend by the arithmetic average of the daily closing prices of our common shares during the one-week period ending two trading days prior to the closing of the register of shareholders for the purpose of determining the shareholders entitled to receive annual dividends. |
Historical dividend information
Number of consecutive years of dividends |
Average Dividend Yield | |||||
Interim dividends | Annual dividends | Last 3 years | Last 5 years | |||
| 1 | 0.94 | 0.90 |
(1) | Pursuant to the approval at the general meeting of shareholders, we distributed cash dividends for the fiscal year 2021. |
(2) | The average dividend yield is calculated using the simple arithmetic average method, including the fiscal years in which no dividend was paid (no dividends were paid with respect to fiscal years 2018, 2019 and 2020). |
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F. | Matters relating to Articles of Incorporation |
Our current articles of incorporation were amended as of March 23, 2022 at the annual general meeting of shareholders.
Articles to be Amended |
Description of Amendments | |
Revision of Article 37-2 (Composition of Audit Committee) | To enhance the independence of the audit committee and strengthen its internal monitoring function by requiring the committee to consist of four outside directors (from three outside directors). |
2. | Business |
A. | Business overview |
We were incorporated in February 1985 under the laws of the Republic of Korea. LG Electronics and LG Semicon transferred their respective LCD business to us in 1998, and since then, our business has been focused on the research, development, manufacture and sale of products that apply display technologies such as OLED and TFT-LCD. Sorting by major sales product category, television, IT products and mobile and other products accounted for 27%, 46% and 27% of our total sales, respectively, in the three quarters of 2022. Our customers primarily consist of global set makers, and our top ten customers comprised 85% of our total sales revenue in the three quarters of 2022. As a company focused on exports, our overseas sales accounted for approximately 97% of our total sales in the three quarters of 2022. We provide close local support through our overseas sales subsidiaries located in the United States, Germany, Japan, Taiwan, China and Singapore.
We operate key
production facilities in Korea, China and Vietnam, and our production capacity is approximately 6.6 million glass sheets per year, as converted into eighth-generation sheets (2200x2500mm). In order to expand our production capacity of
differentiated and competitive products such as OLED panels, our total capital expenditures on a cash out basis was around W3.2 trillion in 2021, and we plan to make investments within our depreciation and amortization costs in 2022
while focusing on enhancing our business structure and preparing for the future. The major raw materials for display panel production include glass, semiconductors, polarizers, organic matter, backlight units (BLU) and printed circuit
boards (PCB), and the prices of major raw materials may fluctuate as a result of supply and demand in the market as well as changes in our purchase quantity.
As securing production capacity through large scale investments in the display industry requires a long period of time, panel prices may fluctuate due to the imbalance between the increase in production capacity and growth in demand. The sales performance of industry players is differentiated by not only the production capacity of each company but also other competitive differences arising from factors including technology, product development capability, manufacturing efficiency, quality control and customer relationships, along with the price differentiation incorporating such factors. In addition, given the high proportion of our sales overseas, our sales of display panels are denominated mainly in U.S. dollars whereas our purchases of raw materials are denominated mainly in U.S. dollars, Japanese Yen and Chinese Yuan. Accordingly, our profit margins may be affected by changes in the exchange rates between the currencies. We strive to minimize the risk relating to foreign currency denominated assets, liabilities and operating cash flow due to exchange rate fluctuations.
Our research and development expenses represent approximately 10% of our sales, and we are continually creating customer value through systematic R&D activities for new products and technologies. Leveraging our competitive R&D activities, we are leading the display market by providing differentiated values in display panel products utilizing our OLED and TFT-LCD technologies for various uses including television, IT and mobile products, as well as automobiles and industrial uses.
Consolidated operating results highlights
(Unit: In billions of Won) | ||||||||||||
2022 Q1~Q3 | 2021 | 2020 | ||||||||||
Sales Revenue |
18,850 | 29,878 | 24,262 | |||||||||
Gross Profit |
1,144 | 5,305 | 2,635 | |||||||||
Operating Profit (loss) |
(1,209 | ) | 2,231 | (36 | ) | |||||||
Total Assets |
40,134 | 38,155 | 35,066 | |||||||||
Total Liabilities |
25,850 | 23,392 | 22,335 |
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B. | Industry |
(1) | Industry characteristics |
| From the supply perspective, the display panel industry is technology- and capital-intensive in nature and requires mass production through achieving an economy of scale. |
| From the demand perspective, the display panel industry tends to demonstrate a high level of volatility depending on the global macroeconomic conditions, major regional sales events and/or seasonal factors. |
| Despite an increased risk of reduced confidence of investors and decreased consumption of display products due to the gradual transition towards living with COVID-19 and increasing uncertainty in the global macroenvironment, the high-end product market has been structurally expanding to meet changes in consumer lifestyle and specific needs of the consumers. |
| In the market for television display panels, demand for high-end products is expected to sustain in light of continued consumer preference for high-resolution panels and customized products. We also anticipate a gradual growth in the market for higher value-added product segments such as display panels for commercial uses. |
| In the market for traditional IT products such as laptops and desktop monitors, demand for new offerings such as gaming products and portable products is expected to be maintained in a stable manner due to sustained lifestyle changes, including partially remote work arrangements and education, as well as the continually expanding demand for digital content production and consumption. |
| The market for products using plastic OLED products that offer superior performance through design flexibility, low-power consumption and high resolution is growing due to increased use of smartphones for mobile contents and gaming purposes with the development of 5G communication infrastructure. |
(2) | Growth Potential |
| We are strengthening our business base with a focus on customer value and developing new markets under our strategic plan to transition our business to center around OLED, which has a strong future growth potential. With respect to large-sized display panels, we are focusing on securing OLED dominance in the market through differentiated products such as OLED.EX, Cinematic Sound OLED and Wallpaper display panels while leading the expansion into new business areas, such as transparent OLED display panels and gaming display panels. In the small-sized display panel business, we are further expanding our production capacity by securing stable operating capabilities for 6th generation plastic OLED smartphone displays while continuing to grow our small- and medium-sized OLED business in other product lines, including automotive display panels. Furthermore, in the medium-sized display panel business, we are increasing the proportion of premium products such as high resolution and wide screen products based on IPS and Oxide technologies. |
(3) | Cyclicality |
| The display panel business is characterized by being highly cyclical and sensitive to fluctuations in the general economy. The industry experiences recurring volatility caused by imbalances between supply and demand due to capacity expansion and changing production utilization rates within the industry. |
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| Macroeconomic factors and other causes of business cycles can affect the rate of growth in demand for display panels. Accordingly, if supply exceeds demand, average selling prices of display panels may decrease. Conversely, if growth in demand outpaces growth in supply, average selling prices may increase. |
(4) | Market conditions |
| Most display panel manufacturers are located in Asia as set forth below. Competition in the TFT-LCD sector is intensifying amid active investments in new fabrication facilities led by Chinese panel manufacturers and their expanding level of dominance in the sector. In response, Korean panel manufacturers are continuing their efforts to maintain their market leadership and differentiate themselves by transitioning their business focus to OLED products and upgrading their TFT-LCD businesses. |
a. | Korea: LG Display, Samsung Display, etc. |
b. | Taiwan: AU Optronics, Innolux, CPT, HannStar, etc. |
c. | Japan: Japan Display, Sharp, etc. |
d. | China: BOE, CSOT, CEC Panda, HKC, etc. |
| Our worldwide market share of large-sized display panels (i.e., panels that are 9 inches or larger) based on revenue is as follows: |
2022 Q1~Q3 | 2021 | 2020 | ||||||||||
Panels for Televisions(1)(2) |
24.7 | % | 21.7 | % | 21.6 | % | ||||||
Panels for IT Products(1) |
19.2 | % | 19.0 | % | 21.2 | % | ||||||
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Total(1) |
21.1 | % | 19.9 | % | 21.4 | % | ||||||
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(1) | Source: Large Area Display Market Tracker (OMDIA). Data for 2022 Q1~Q3 are based on OMDIAs estimates, as actual results for 2022 Q3 have not yet been made available. |
(2) | Includes panels for public displays. |
(5) | Competitiveness and competitive advantages |
| Our ability to compete successfully depends on factors both within and outside our control, including the development of new and premium products through technological advances, timely investments based on visibility of profitability, adaptable product portfolio and flexible fabrication mix, achievement of competitive production costs through enhancing productivity and managing supply costs of components and raw materials, our relationship with customers, success in marketing to our end-brand customers, general economic and industry conditions and foreign exchange rates. |
| In order for us to compete effectively, it is critical to offer differentiated products that enable us to secure profit margins even during times of a mismatch in the market supply and demand, to be price- and cost-competitive and to maintain stable relationships with customers. |
| A substantial portion of our sales is attributable to a limited number of end-brand customers and their designated system integrators. As such, it is important to build a sustained relationship with such customers. |
| Developing new products and technologies that can be differentiated from those of our competitors is critical to the success of our business. It is important that we take active measures to protect our intellectual property internationally. It is also necessary to recruit and retain experienced key managerial personnel and skilled line operators. |
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| As a leading technology innovator in the display industry, we continue to focus on delivering differentiated value to our customers by developing various technologies and products, including display panels with WOLED/POLED, IPS, Oxide, in-TOUCH and other technologies. With respect to OLED panels, following our supply of the worlds first 55-inch OLED panels for televisions in January 2013, we have shown that we are technologically a step ahead of the competition by continuing to enhance the performance of our WOLED products and to offer differentiated large-sized OLED products such as our Transparent, Cinematic Sound, Bendable, Rollable and Gaming large-sized OLED. Moreover, we have continually introduced differentiated plastic OLED products for smartphones, automotive products, wearable devices and foldable notebook computers, among others. With respect to TFT-LCD panels, we are leading the market with our competitive advantages in technology, including through our IPS, Oxide and LTPS technology-based ultra-large and ultra-high definition (Ultra HD or UHD) television panels, desktop and notebook monitors featuring high resolutions, differentiated designs and high frequency refresh rates, and specialized products for automotive, commercial and medical uses. Our production facilities are also equipped to produce products incorporating in-TOUCH technology. |
| Moreover, we are maintaining and strengthening close long-term relationships with major global firms to secure customers and expand partnerships for technology development. |
C. | New businesses |
For our continued growth, we are actively exploring and preparing for new business opportunities in response to the changing market environment. As such, we are continually reviewing and looking at opportunities in the display and promising new industries.
D. | Customer-oriented marketing activities |
Through engaging in detailed analysis and acquiring insight on the market and industry conditions, technology, products and end-user consumers, we seek to provide differentiated values that are customer- and consumer-friendly. In addition, we engage in activities that are geared to proactively identify and offer meaningful benefits to customers and consumers. As a result, we are continually developing products that provide differentiated values using our differentiated technologies. At the same time, we strive to create new markets and mutually benefit our business and our customers by obtaining customer trust and satisfaction through our customer- and consumer-oriented marketing activities.
3. | Major Products and Raw Materials |
A. | Major products |
We manufacture TFT-LCD and OLED panels, of which a significant majority is sold overseas.
(Unit: In billions of Won, except percentages) |
2022 Q1~Q3 | ||||||||||||||||||||||
Business area |
Sales type |
Items (By product) | Usage | Major trademark | Sales Revenue(1) |
Percentages (%) |
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Display |
Goods/Products/Services/ Other sales |
Televisions | |
Panels for televisions |
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LG Display |
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5,165 | 27.2 | % | |||||||||||
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IT products |
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Panels for monitors, notebook computers and tablets |
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LG Display |
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8,719 | 45.9 | % | |||||||||||
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Mobile, etc. |
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Panels for smartphones, etc. |
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LG Display |
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5,119 | 26.9 | % | |||||||||||
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Total |
19,003 | 100.0 | % | |||||||||||||||||||
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(1) | Sales revenues exclude loss related to currency forward instruments in the amount of
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B. | Average selling price trend of major products |
The average selling prices of display panels are subject to change based on market conditions and demand by product category. The average selling price of display panels per square meter of net display area shipped in the third quarter of 2022 increased by approximately 19% compared to the second quarter of 2022 due to increases in the proportions of plastic OLED smartphone products and wearable devices. The average selling prices of display panels per square meter of net display area may continually fluctuate in the future due to changes in market conditions.
(Unit: US$ / m2)
Period |
Average Selling Price(1)(2) (in US$ / m2) | |
2022 Q3 |
675 | |
2022 Q2 |
566 | |
2022 Q1 |
660 | |
2021 Q4 |
806 | |
2021 Q3 |
750 | |
2021 Q2 |
703 | |
2021 Q1 |
736 | |
2020 Q4 |
790 | |
2020 Q3 |
706 | |
2020 Q2 |
654 | |
2020 Q1 |
567 |
(1) | Quarterly average selling price per square meter of net display area shipped. |
(2) | Excludes semi-finished products in the cell process. |
Prices of major raw materials depend on fluctuations in supply and demand in the market as well as on change in size and quantity of raw materials due to the increased production of large-sized panels.
(Unit: In billions of Won, except percentages) | ||||||||||||||||||||
Business area |
Purchase type | Items | Usage | Cost(1) | Ratio (%) | Suppliers | ||||||||||||||
Display |
Raw materials | PCB | |
Display panel manufacturing |
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1,923 | 19.0 | % | Youngpoong Electronics Co., Ltd., etc. | |||||||||||
Polarizers | 1,565 | 15.4 | % | LG Chem, etc. | ||||||||||||||||
BLU | 1,155 | 11.4 | % | Heesung Electronics LTD., etc. | ||||||||||||||||
Glass | 559 | 5.5 | % | Paju Electric Glass Co., Ltd., etc. | ||||||||||||||||
Drive IC | 1,294 | 12.8 | % | LX Semicon, etc. | ||||||||||||||||
Others | 3,648 | 36.0 | % | | ||||||||||||||||
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Total |
10,144 | 100.0 | % | |||||||||||||||||
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- Period: January 1, 2022 ~ September 30, 2022.
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(1) | Based on total cost for purchase of raw materials which includes manufacturing and development costs, etc. |
(2) | Among our major suppliers, Paju Electric Glass Co., Ltd. is our affiliate, LG Chem is a member company of the LG Group and LX Semicon is an affiliate of LX Holdings Corp. |
| The average price of electrolytic galvanized iron, which is the main raw material for BLU components, decreased by 28.0% in the third quarter of 2022 compared to the third quarter of 2021. The market price has shown a downward trend due to reduced demand and increased inventories in the home electronics market as well as a decrease in the prices of raw materials (iron ore, cokes, etc.). However, the market price may potentially increase in the future due to the deteriorating profitability of cold-rolled plating companies and prospects of a recovery in the Chinese automobile market. |
| The average price of polymethyl methacrylate decreased by 1.0% in the third quarter of 2022 compared to the third quarter of 2021. There has been a downward trend in the market price and increased inventories due to reduced demand in light of an economic downturn. |
| The average price of copper, the main raw material for PCB components, decreased by 17.4% in the third quarter of 2022 compared to the third quarter of 2021. The market price has shown a downward trend since May 2022 in light of a deteriorating global economic outlook and reduced demand. |
4. | Production and Equipment |
A. | Production capacity and output |
(1) | Production capacity |
The table below sets forth the production capacity of our Gumi, Paju and Guangzhou facilities in the periods indicated.
(Unit: 1,000 glass sheets) | ||||||||||||||||||||
Business area |
Items | Location of facilities | 2022 Q1~Q3(1) | 2021(1) | 2020(1) | |||||||||||||||
Display |
Display panel | Gumi, Paju, Guangzhou | 6,638 | 9,230 | 8,589 |
(1) | Calculated based on the maximum monthly input capacity (based on glass input substrate size for eighth-generation glass sheets) during the year multiplied by the number of months in a year (i.e., 12 months). The production capacity for facilities with adjusted utilization rates have been calculated based on the maximum input capacity during the period. |
(2) | Production output |
The table below sets forth the production output of our Gumi, Paju and Guangzhou facilities in the periods indicated.
(Unit: 1,000 glass sheets) | ||||||||||||||||||||
Business area |
Items | Location of facilities | 2022 Q1~Q3(1) | 2021(1) | 2020(1) | |||||||||||||||
Display |
Display panel | Gumi, Paju, Guangzhou | 5,249 | 8,124 | 6,815 |
(1) | Based on the production results (input standard) of each plant converted into eighth-generation glass sheets. |
B. | Production performance and utilization ratio |
(Unit: Hours, except percentages) | ||||||||
Production facilities |
Available working hours in 2022 Q1~Q3 |
Actual working hours in 2022 Q1~Q3 |
Average utilization ratio | |||||
Gumi |
5,988(1) (24 hours x 249.5 days) |
5,688(1) (24 hours x 237 days) |
95.0 | % | ||||
Paju |
6,552(1) (24 hours x 273 days) |
6,490(1) (24 hours x 270.4 days) |
99.0 | % | ||||
Guangzhou |
6,552(1) (24 hours x 273 days) |
6,552(1) (24 hours x 273 days) |
100.0 | % |
(1) | Number of days is calculated by averaging the number of working days for each facility. |
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C. | Investment plan |
In 2021, our total capital expenditures on a cash out basis was around W3.2 trillion. In 2022, we expect to make investments
within the level of our depreciation and amortization costs and estimate that our total capital expenditures will increase compared to 2021.
5. | Sales |
A. | Sales performance |
(Unit: In billions of Won) | ||||||||||||||||||
Business area |
Sales types | Items (Market) | 2022 Q1~Q3(2) | 2021 | 2020 | |||||||||||||
Display |
Products | Display panel | Overseas(1) | 18,456 | 29,204 | 23,312 | ||||||||||||
Korea(1) | 512 | 621 | 905 | |||||||||||||||
Total | 18,968 | 29,825 | 24,217 | |||||||||||||||
Royalty | LCD, OLED technology patent |
Overseas(1) | 10 | 14 | 14 | |||||||||||||
Korea(1) | 0 | 0 | 0 | |||||||||||||||
Total | 10 | 14 | 14 | |||||||||||||||
Others | Raw materials, components, etc. |
Overseas(1) | 18 | 27 | 24 | |||||||||||||
Korea(1) | 8 | 12 | 7 | |||||||||||||||
Total | 26 | 39 | 31 | |||||||||||||||
Total | Overseas(1) | 18,483 | 29,245 | 23,350 | ||||||||||||||
Korea(1) | 520 | 633 | 912 | |||||||||||||||
Total | 19,003 | 29,878 | 24,262 |
(1) | Based on ship-to-party. |
(2) | Sales excluding loss related to currency forward instruments in the amount of
|
B. | Sales organization and sales route |
| As of September 30, 2022, each of our television, IT and mobile businesses had individual sales and customer support functions. |
| Sales subsidiaries in the United States, Germany, Japan, Taiwan, China and Singapore perform sales activities and provide local technical support to customers. |
| Sales of our products take place through one of the following two routes: |
1) LG Display Headquarters and overseas manufacturing subsidiaries g Overseas sales subsidiaries (USA/Germany/Japan/Taiwan/China/Singapore), etc. g System integrators and end-brand customers g End users
2) LG Display Headquarters and overseas manufacturing subsidiaries g System integrators and end-brand customers g End users
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| Sales performance by sales route |
Sales performance |
Sales route |
Ratio | ||||
Overseas | Overseas subsidiaries | 95.4 | % | |||
Headquarters | 4.6 | % | ||||
Overseas sales portion (overseas sales / total sales) | 97.3 | % | ||||
Korea | Overseas subsidiaries | 18.7 | % | |||
Headquarters | 81.3 | % | ||||
Korea sales portion (Korea sales / total sales) | 2.7 | % |
C. | Sales methods and sales terms |
| Direct sales and sales through overseas subsidiaries, etc. Sales terms are subject to change depending on the fluctuation in the supply and demand. |
D. | Sales strategy |
| With respect to television products, we are leading the premium television market with our OLED televisions and working towards strengthening our business portfolio and reinforcing consumer values through new businesses such as gaming and transparent products. We are also securing business stability in the LCD market with products that are commercially differentiated while mainly targeting global customers. |
| With respect to IT products, we are securing stable sales by having major global personal computer and home electronics manufacturers as our primary customer base, and we are also continually strengthening the sales of high-resolution, IPS, narrow bezel and other high-end display panels for monitors, notebook computers and tablets. |
| With respect to smartphones, commercial products (including interactive whiteboards and video wall displays, among others), industrial products (including aviation and medical equipment, among others) and automobile display products, we have continued to build a strong and diversified business portfolio by expanding our business with customers with a global reach on the strength of our differentiated products applying IPS, plastic OLED, high-resolution, high-reliability, Super Narrow bezel, in-TOUCH and other technologies. |
E. | Major customers |
| Customers A, B and C each accounted for more than 10% of our sales revenue in the three quarters of 2022, and customers A and B each accounted for more than 10% of our sales revenue in the three quarters of 2021. Our sales revenue derived from our top ten customers comprised 85% of our total sales revenue in the three quarters of 2021 and 85% in the three quarters of 2022. |
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6. | Purchase Orders |
| We do not have purchase order contracts that recognize unbilled revenue by implementing the cost-based method. |
7. | Risk Management and Derivative Contracts |
A. | Risk management |
(1) | Major market risks |
Our business is exposed to credit risk, liquidity risk and market risk. Accordingly, we operate a risk management system that identifies and analyzes these risks while monitoring and managing risk level by establishing appropriate risk controls in order to ensure that such risks do not exceed certain threshold levels.
Market risk refers to the risk that income from the financial instruments that we hold or the fair value of such financial instruments will fluctuate due to fluctuations in market prices, such as exchange rates, interest rates and prices of equity securities. The objective of our market risk management system is to manage and control our exposure to market risk within an acceptable level while optimizing our profit levels.
(2) | Risk management method |
As the average selling prices of OLED and TFT-LCD panels can continue to decline over time irrespective of industry-wide cyclical fluctuations, we may find it hard to manage risks associated with certain factors that are outside our control. However, we counteract such declines in average selling prices by increasing the proportion of high value added panels in our product mix while also implementing various cost reduction measures.
In addition, in order to manage our risk against foreign currency fluctuations, we eliminate such risk by adopting a policy of maintaining our net exposure risk within an acceptable level by buying or selling foreign currencies at spot rates, when necessary, to address short-term imbalances in the inflow and outflow of foreign currency funds. We also continually monitor our currency position and risk for other monetary assets and liabilities denominated in foreign currencies, and when needed, we may from time to time enter into cross-currency interest rate swap contracts and foreign currency forward contracts. Furthermore, we have adopted a policy aimed at minimizing uncertainty and financial costs arising from interest rate fluctuations and manage our interest rate risk through periodic monitoring of interest rate trends and adoption of appropriate countermeasures.
B. | Derivative contracts |
(1) | Currency risks |
| We are exposed to currency risks on sales, purchases and borrowings that are denominated in currencies other than in Won, our functional currency. These currencies are primarily the U.S. dollar, the Chinese Yuan and the Japanese Yen. |
| Interest on borrowings is denominated in the currency of the borrowing. Generally, borrowings are denominated in currencies that match the cash flows generated by our underlying operations, primarily in Won, the U.S. dollar and the Chinese Yuan. |
| As of the end of the reporting period, we have entered into a forward currency contract with a short U.S. dollar position in order to hedge the risk of fluctuations in future cash flows resulting from exchange rate fluctuations in expected export transactions. In the valuation gains and losses of derivative contracts to which we apply cash flow hedge accounting, there is no ineffective portion, and the valuation loss of the effective portion was Won 104,656 million (contracted amount: $600 million, contracted exchange rate: Won 1,212.3 ~ 1,293.4), which is reflected as part of our accumulated other comprehensive income. In addition, in relation to cash flow hedging, the maximum expected period of exposure to cash flow fluctuation risk due to the expected transaction to be hedged is three months from the end of this reporting period. The amount transferred from other components of equity to profit or loss (product revenue) during the reporting period due to the realization of the anticipated export transaction was Won 152,656 million. |
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| As of the end of the reporting period, in order to avoid risks of interest rate fluctuations and exchange rate fluctuations on foreign currency denominated borrowings with floating interest rates, we entered into an aggregate of $2,525 million in Won/US dollar cross currency swap agreements with Standard Chartered Bank and others, for which we have not applied hedge accounting. |
| Any rights or obligations arising from derivative contracts that do not apply hedge accounting are measured at fair value and are accounted for as assets and liabilities, whereas any resulting valuation gain or loss is recognized as profit or loss at the time such valuation gain or loss is incurred. |
| We recognized a net gain on valuation of derivative instruments in the amount of
|
(2) | Interest rate risks |
| Our exposure to interest rate risks relates primarily to our floating rate long term loan obligations. We have established and are managing interest rate risk policies to minimize uncertainty and costs associated with interest rate fluctuations by monitoring cyclical interest rate fluctuations and enacting countermeasures. |
| As of the end of the reporting period, we entered into an aggregate face value of US$1,625 million
(equivalent to Won 2,331.6 billion) in cross-currency interest swap agreements with Hana Bank and others, and an aggregate of |
| A fundamental transition in benchmark reference rates is taking place globally and some interbank lending rates (IBORs) are becoming replaced with new risk-free benchmark rates. In particular, in the case of London Interbank Offered Rate (LIBOR), with the exception of overnight, 1-month, 3-month, 6-month and 12-month USD LIBOR rates, all rates have been ceased as of December 31, 2021. The aforementioned five USD LIBOR rates will also cease to exist as of June 30, 2023. While none of our financial instruments currently outstanding are tied to LIBOR rates that have been ceased to date, we plan to replace our existing financial instruments tied to LIBOR rates with the Secured Overnight Financing Rate (SOFR). In addition, while Korea Overnight Financing Repo Rate (KOFR) was selected as the benchmark reference rate for domestic certificate of deposit interest rates as part of the benchmark reference rate reform, we are not planning to adopt KOFR, as certificate of deposit interest rates are not scheduled to be ceased. Following the transition away from the LIBOR, we are exposed to legal risk associated with amending the contracts for such financial instruments as well as operational risk associated with managing the transition and its impact. We are also exposed to the risk of monitoring the market trend on alternative benchmark reference rates and establishing a risk management strategy accordingly. In order to manage such risks in relation to benchmark reference rate reform, we are assessing the extent to which each contract references IBOR cash flows, whether such contract should be amended and how to manage communication with counterparties on benchmark reference rate transition. Moreover, we have inserted replacement clauses for IBORs that have not yet been converted to alternative benchmark reference rates. However, even if a replacement clause has been inserted, if the interest rate of the financial instrument is still tied to an IBOR, we consider such financial instrument as not yet having been converted. See Note 25 of the notes to our consolidated interim financial statements included elsewhere in this report for further information. |
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8. | Major Contracts |
Our material contracts, other than contracts entered into in the ordinary course of business, are set forth below:
Type of agreement |
Name of party | Term | Content | |||
Technology licensing/supply agreement |
Hewlett-Packard | January 2011 ~ | Patent licensing of semi-conductor device technology | |||
Ignis Innovation, Inc. |
July 2016 ~ | Patent licensing of OLED related technology | ||||
HannStar Display Corporation |
December 2013 ~ |
Patent cross-licensing of LCD technology | ||||
AU Optronics Corporation |
August 2011~ | Patent cross-licensing of LCD technology | ||||
Innolux Corporation |
July 2012 ~ | Patent cross-licensing of LCD technology | ||||
Universal Display Corporation |
January 2015 ~ December 2025 |
Patent licensing of OLED related technology | ||||
Semiconductor Energy Laboratory |
January 2021 ~ December 2030 |
Patent licensing of LCD and OLED related technology |
9. | Research & Development (R&D) |
A. | Summary of R&D-related expenditures |
(Unit: In millions of Won, except percentages) | ||||||||||||
Items |
2022 Q1~Q3 |
2021 | 2020 | |||||||||
R&D Expenditures (prior to deducting governmental subsidies) |
1,852,742 | 2,127,705 | 1,740,083 | |||||||||
Governmental Subsidies |
(616) | (941 | ) | (1,524 | ) | |||||||
|
|
|
|
|
||||||||
Net R&D-Related Expenditures |
1,852,126 | 2,126,764 | 1,738,559 | |||||||||
|
|
|
|
|
||||||||
Accounting Treatment(1)
|
R&D Expenses | 1,444,417 | 1,813,876 | 1,454,072 | ||||||||
Development Cost (Intangible Assets) | 407,709 | 312,888 | 284,487 | |||||||||
|
|
|
|
|
||||||||
R&D-Related Expenditures / Revenue Ratio(2) (Total R&D-Related Expenditures ÷ Revenue for the period × 100) |
9.8% | 7.1 | % | 7.2 | % | |||||||
|
|
|
|
|
(1) | For accounting treatment purposes, R&D expenses are presented as research and development expenses in our statements of comprehensive income, net of amortization of capitalized intangible asset development costs. |
(2) | Calculated based on the R&D-related expenditures before subtracting government subsidies (state subsidies). |
B. | R&D achievements |
Achievements in 2020
(1) | Developed the first products in our Guangzhou OLED panel production facility (77 UHD, 48 UHD) |
| Completed the development of the first products in our Guangzhou OLED panel production facility (77 UHD, 48 UHD) |
(2) | Developed the worlds first rollable television display product (65 UHD) |
| Introduced a new form factor (from flat to rollable) to the television market |
| Enhanced space utilization through adjusting the display size and ratio based on the purpose of use |
(3) | Developed the worlds first 2K zone mini-LED & ultra-slim UHD monitor product |
| Fulfilled customer needs for top quality monitor products and strengthened our market position in the premium market by developing the worlds first differentiated 2K zone product |
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| By leveraging early advantage in the underlying mini-LED technology, explored a new revenue source through applying the technology to all IT products |
| Achieved high luminance at HDR 1000 and wide color gamut at 99.8% DCI |
Achievements in 2021
(1) | Developed the worlds first bendable OLED television display product (65 UHD) |
| Implemented both flat and bendable forms based on the scene usage and provided diverse form factors to customers |
(2) | Developed the worlds first 83 OLED television display product |
| Increased the range of options for customers by developing the new 83 UHD |
(3) | Developed the worlds first QHD 240Hz gaming notebook product (15.6) |
| Developed the worlds first QHD resolution 240Hz high-speed notebook product (obtained panel characteristics through new design and process optimization) |
| Led the QHD high-speed gaming product market |
(4) | Developed the worlds first high contrast ratio 2000:1 monitor product (27, 31.5) |
| Developed the worlds first IPS contrast ratio 2000:1 monitor product through the development of high contrast nega-LC material (Existing product: posi-LC, 1000:1) |
| Led the high-end display quality product market |
(5) | Developed the worlds first 42 OLED television display product |
| Expanded the product segment by developing the new 42 UHD display panel |
(6) | Developed our first Auto LCD 750R extreme curvature product (12.66 FHD) |
| Achieved differentiated design by developing LTPS 750R extreme curvature product |
Achievements in 2022
(1) | Developed the worlds first 16:18 aspect ratio monitor product (27.6 SDQHD) |
| Developed a 27.6 (21.5, 21.5, vertical arrangement) monitor product, which is optimized for multi-tasking amid the increase in working remotely as a result of the COVID-19 pandemic |
| Created a new market through the development of a new aspect ratio (16:18, 2560x2880) product |
(2) | Developed our first three-sided Borderless notebook panel product (13.4 WU XPS) |
| Led the high-end market by adopting a new, three-sided borderless design applying low power consumption variable refresh rate technology |
(3) | Developed the worlds first 97 OLED TV product |
| Developed an extra-large OLED TV product that outperforms competitors products both in display quality and in size in the high-end market |
| Strengthened the global trend towards OLED dominance by expanding our extra-large OLED TV product lineup and secured related original technology |
(4) | Developed the worlds first Curved 1,900R Black monitor product (34) |
| Developed the worlds first IPS Black Curved monitor product (contrast ratio 2000:1) by utilizing nega-LC material |
| Led the high-end Curved product market |
(5) | Developed our first 12.3 cluster product utilizing VDA 3D technology |
| Utilizing VDA (Viewing Distance Adaption) technology, developed a 12.3 cluster product that applies glassless 3D technology and changes the users viewing distance while driving |
(6) | Developed the worlds first 12.3 cluster product utilizing DLC technology |
| Utilizing DLC (Double LGP Control) technology, developed a 12.3 cluster product which display is, when positioned in the passenger seat, visually recognizable from the passenger seat but not from the drivers seat. |
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10. | Intellectual Property |
As of September 30, 2022, our cumulative patent portfolio (including patents that have already expired) included 24,821 patents in Korea and 31,977 patents in other countries. In 2022, we registered 1,721 patents in Korea and 1,637 patents in other countries.
11. | Environmental and Safety Matters |
In order to minimize the environmental impact of our business activities, we are actively responding to environmental regulations applicable to our products and business sites.
A. | Business environment management |
We have installed and operate various types of prevention facilities to minimize the emission of environmental pollutants generated in our production process. With respect to air and water pollutants, we set and manage our internal standard at 70% of the permitted levels under the regulatory emission standards. In addition, in order to establish a resource circulation system, we operate a proprietary system to monitor waste from its generation to treatment, have developed waste treatment technology and identified suitable recycling companies to reduce the amount of waste we generate and maximize recycling.
We are subject to a variety of environmental laws and regulations, and operations at our manufacturing plants are subject to regulation and periodic scheduled and unscheduled on-site inspections by the Ministry of Environment and local environmental protection authorities. The primary types of environmental laws applicable to us include the following:
(1) | Environmental pollutant emission regulations: Clean Air Conservation Act, Water Quality Conservation Act, Wastes Control Act, Environmental Impact Assessment Act, etc. |
(2) | Greenhouse gas emission management: Framework Act on Carbon Neutral and Green Growth to Respond to Climate Crisis, Act on the Allocation and Trading of Greenhouse Gas Emission Permits, etc. |
(3) | Other workplace environment management: Chemicals Control Act, Chemicals Registration and Evaluation Act, Soil Environment Conservation Act, etc. |
In addition, as we were designated a target company for the greenhouse gas emission trading system in 2015, we allocate and monitor our greenhouse gas emissions every year. In order to continually promote the reduction of greenhouse gas emissions, we have set a medium- to long-term goal to reduce the emission level by continually investing in facility improvements and monitoring our emission levels.
In accordance with the Framework Act on Carbon Neutral and Green Growth to Respond to Climate Crisis, we implemented the greenhouse gas emission and energy consumption target system from 2012 to 2014. In 2015, we implemented the greenhouse gas trading system, under which we are responsible to meet our emission targets based on the emission credits allocated to us by the Ministry of Environment of the Korean government. As a result, we have been investing in additional equipment and there may be other costs associated with meeting reduction targets, which may have a negative effect on our profitability or production activities.
In connection with the greenhouse gas emission and energy reduction target system, we submitted a statement of our domestic emissions and energy usage for 2021 to the Korean government in March 2022 after it was certified by EQA, a government-designated certification agency. The table below sets forth yearly levels of our greenhouse gases emissions and energy usage in the statement submitted to the Korean government:
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(Unit: thousand tonnes of CO2 equivalent; Tetra Joules) | ||||||||||||
Category |
2021 | 2020 | 2019 | |||||||||
Greenhouse gases |
4,784 | 4,748 | 5,885 | |||||||||
Energy |
60,927 | 56,668 | 62,776 |
Note: Our greenhouse gas emission and energy usage in 2021 was determined upon assessment by the Ministry of Environment.
The decrease in greenhouse gas emissions in 2020 compared to 2019 was due primarily to the introduction of a reduction facility that decomposes fluorinated greenhouse gases used in our manufacturing process, resulting in an overall decrease in emission levels.
Since we were designated as a target company for the greenhouse gas emission trading system in 2015, we receive greenhouse gas emission allowances from the government and at the same time submit our greenhouse gas emission calculations and specifications to the government every year. In order to continually promote the reduction of greenhouse gas emissions, we have set a mid-term goal to reduce the emission level from 2014 to 2030 by 40% and a medium- to long-term goal to reduce the emission level from 2014 to 2050 by 90%. To achieve this, we are continually investing in facility improvements and monitoring our emission levels.
We are making extensive investments to replace SF6 gas, which is the main component of greenhouse gases, with NF3 gas. In addition, as a short-term strategy, we are actively implementing measures in compliance with the emission trading system. In 2021, we reduced our carbon dioxide greenhouse gas emission levels by 1.71 million tons, and our carbon dioxide greenhouse gas emission level in 2021 was 4.78 million tons, which was 2.95 million tons, or 38%, less than our carbon dioxide greenhouse gas emission levels in 2014 (7.73 million tons).
As our medium- to long-term goal, we are developing and integrating high-efficiency greenhouse gas emission reduction technology (above 95% reduction efficiency level) into our manufacturing process. We are also seeking to develop low-carbon and environment-friendly alternative gas. Moreover, we will continue to accelerate our transition to recyclable energy and develop low-electricity/environment-friendly products.
Through the implementation of an environmental and energy management system, we are continuously making efforts to minimize environmental impact and reduce energy usage in all aspects of our business process. Accordingly, we have acquired and currently operate the environmental management system ISO14001 for all of our domestic and overseas production sites, and we have also obtained energy management system ISO 50001 certifications for our domestic business sites and overseas subsidiaries in Nanjing, Guangzhou, and Yantai in order to build a sustainable management system. In addition, we have established company-wide safety, healthy, energy and environment management policies and manuals, which are regularly updated based on international standards. We also conduct systematic management of our business process in accordance with international standards through annual follow-up and renewal audits.
In recognition of our efforts, we were awarded the highest level, Leadership A, and received the grand prize award at the CDP Water Korea Best Awards in 2016 from the Carbon Disclosure Project, which was presided over by the Carbon Disclosure Project Korea Committee. Since then, we have continued to maintain our excellence in water conservation activities and received Leadership A recognition from 2018 to 2021. In addition, we have also received the Carbon Management Honors Club award from 2017 to 2020 and the Carbon Management Sector Honors every year since 2016 in recognition of our continued greenhouse gas emission reduction activities. Moreover, in recognition of our efforts to improve our recycling rate and reduce waste, we received a citation in 2020 for being a leading resource circulation company from the Minister of Environment.
In addition, in recognition of our efforts toward recycling rate improvement and waste reduction, we were nominated as a leading company with an excellent performance in resource circulation and received a commendation from the Minister of Environment in 2020. Our overseas subsidiary in Yantai earned Platinum Zero Waste to Landfill (ZWTL) validation in 2021, and all of our domestic production facilities earned Gold ZWTL validation (above 95% recycling rate), and our overseas subsidiary in Nanjing earned Platinum validation in 2022. In 2022, we introduced a resource recirculation recognition program in accordance with the Korean governments waste management policy and received circular resource certification on eight types of our discarded trays and vinyl. We will continue our efforts to reinforce our resource circulation program by minimizing waste and maximizing recycling rate.
Moreover, in line with the global trend for environmental, social, and governance (ESG) management, we earned Gold rating (which recognizes top 5% companies) in the ESG assessment conducted by global research center EcoVadis. We have continued to pursue ESG management activities based on the spirit of value creation for consumers and human-first management, and we plan to obtain further recognition for our eco-friendly management and share relevant information with the stakeholders.
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B. | Product environment management |
In the case of the European Unions Restriction of Hazardous Substances (RoHS) Directive 2011/65/EU, with the adoption of Directive (EU) 2015/863 in 2016, four additional substances (four phthalate substances) have been added to the six already restricted substances, which additional restrictions became effective as of July 22, 2019. In order to address the latent risk elements of the four phthalate substances that became restricted in 2019 and to establish a more stable management system, we implemented in 2016 a preemptive response process with respect to such four phthalate substances. In implementing this process, we collaborated with external agencies to ascertain regulatory trends and establish our response strategy, and we formulated and applied effective management measures through the collaborative efforts of our development, procurement and quality teams.
While Beryllium (Be) has not been designated internationally as a mandatorily restricted substance, it has continued to be the subject of discussion for restriction, and certain of our customers have designated it as a restricted substance not to be used in products. Accordingly, we have completed verification of the parts used in products for customers who have banned the use of Beryllium. We have also conducted verification of the parts used in products for all customers who are expected to implement a ban and we have established a Beryllium verification process for parts in development. Through such efforts, we have established a voluntary hazardous substance response process that can be expanded to products for all customers, not only those who have requested a response.
In response to the continued strengthening of regulations governing environmentally-regulated substances, we operate our own verification process for such substances in accordance with international standards. Moreover, we participated in reforming IEC 62321, an international testing standard published by the International Electrotechnical Commission and used by RoHS, and the commission adopted our halogen-free combustion ion chromatography method in as IEC 62321-3-2, which was published in June 2013. In 2017, in a joint effort with the global product testing/accreditation agency SGS, we became the first display panel company to develop Eco Label, an environmentally friendly accreditation program for television display modules, and have since continuously received the SGS Eco Label accreditation for our OLED television models. For the IPS Nano Color for LCD, we received the Quality & Performance Mark from Intertek, a global product testing/accreditation agency, by applying a technology to eliminate cadmium (Cd) and indium phosphide (InP). In 2018, we became the first display panel company to receive the Green Technology Certification from the Korean Ministry of Science and ICT for improving the light efficiency technology of OLED to promote energy use reduction. More recently, in 2021, we received the Green Technology Certification from the Korean Ministry of Science and ICT for our advanced incell touch display technology, an eco-friendly technology with touch-sensing electrodes and transmission lines that reduce carbon emissions and the use of rare metals. We also obtained an eco-friendly certification from TUV SUD, a globally recognized accreditation agency, for excellence in resource circulation and non-use of specific hazardous substances in our OLED television and PO mobile models, following our co-development of such certification program with such agency.
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C. | Status of sanctions |
Date |
Sanctioning |
Classification of |
Target |
Description and |
Sanctions |
Implementation | ||||||
May 7, 2020 | Daegu Regional Environmental Office | Administrative Agency | Company | - Safety incident on April 17, 2020 - Article 13-1 of the Chemical Control Act |
Warning | - Strengthened safety management standards and training | ||||||
May 25, 2020 | Daegu Regional Environmental Office | Administrative Agency | Company | - Safety incident on May 14, 2020 - Article 13-2 of the Chemical Control Act |
Fine of |
- Paid fine - Strengthened safety management standards and training | ||||||
May 25, 2020 | National Institute of Chemical Safety | Administrative Agency | Company | - Failure to conduct safety training on hazardous chemicals - Article 33 of the Chemical Control Act |
Fine of |
- Paid fine - Conducted safety training and established a working process that complies with the safety regulations | ||||||
June 22, 2020 | Daegu Regional Environmental Office | Administrative Agency | Company | - Safety incident on May 14, 2020 - Article 13-2 of the Chemical Control Act |
Improvement Order | - Submitted a report of compliance with the improvement order - Strengthened safety management standards and training | ||||||
November 5, 2020 | Goyang Branch of Uijeongbu District Court | Court | Company and one officer (CPO) | - Safety incident on June 24, 2017 (Fine announcement on November 22, 2018, Ruling confirmation on November 5, 2020) - Paragraph 1 of Article 23, Provision 2 of Article 66, and Article 71 of the Industrial Safety and Health Act |
Fine of |
- Paid fine - Strengthened safety management standards and training for employees to prevent recurrence | ||||||
January 26, 2021 | Gimcheon Branch of Daegu District Court | Court | Company and two employees (Former Head of Safety and Health Management at Gumi facilities (Incumbent, 22 years of service) and Former Working level staff (Incumbent, 21 years of service)) | - Safety incidents on April 17, 2020 and May 14, 2020 - Article 59-1 of the Chemical Control Act |
Fine of |
- Paid fine - Strengthened safety management standards and training | ||||||
April 12, 2021 | Goyang Branch of Ministry of Employment and Labor | Administrative Agency | Company | - Violation of safety information material posting and education requirements - Provision 1 of Article 114 of the Industrial Safety and Health Act |
Fine of |
- Paid fine - Complied with the corrective orders and submitted a report on the implementation of the corrective order as of October 1, 2021 |
22
April 28, 2021 | Paju Fire Station | Administrative Agency | Company | - Failure to preserve regular inspection records of firefighting facilities inspection - Provision 1 of Article 18 of the Act on Safety Control of Hazardous Substances |
Fine of
|
- Paid fine - Established procedures for conducting regular inspection of dangerous substances according to the inspection checklist and for consulting with administrative agencies in ambiguous situations | ||||||
April 4, 2022 | Han River Basin Environmental Office | Administrative Agency | Company | - Failure to file a subcontract report pertaining to the handling of hazardous chemical materials - Provision 1 of Article 31 of the Chemical Control Act and other applicable law |
Fine of
|
- Paid fine - Established procedures for the management of subcontract reporting | ||||||
April 13, 2022 | Goyang Branch of Ministry of Employment and Labor | Administrative Agency | Company | - Delay in reporting a safety incident dated February 12, 2022 - Provision 3 of Article 57 of the Industrial Safety and Health Act and other applicable law |
Fine of
|
- Paid fine - Provided a company-wide notice and training regarding standards for immediate reporting of incidents. - Took personnel actions relating to relevant employees | ||||||
May 16, 2022 | Goyang Branch of Uijeongbu District Court | Court | Company and one employee (Executive Director and On-site Safety Manager, Incumbent, 23 years of service) | - Deficiencies spotted during a regular inspection of facility (from March 29 to April 2, 2021) following industrial accident at the site - Article 173-2, Article 168-1, Paragraph 1 or 3 of Article 38, and Paragraph 1 of Article 39 of the Industrial Safety and Health Act |
Fine of
|
- Paid fine - Strengthened safety management standards and training program |
23
In November 2018, in connection with the occurrence of a safety accident in June 2017, the
trial court (Goyang Branch of Uijeongbu District Court) ordered a fine of W3.0 million on each of us and our chief production officer on the basis of violation of certain provisions of the Industrial Safety and Health Act,
which fines were paid in full after such order was confirmed on November 5, 2020. In order to prevent such accidents from occurring again, we are strengthening our safety management standards and training for our employees.
In May 2020, we received a warning from Daegu Regional Environmental Office regarding a safety incident that occurred in April 2020 in
violation of Article 13-1 of the Chemical Control Act. In addition, in connection with another safety incident that occurred in May 2020, we were assessed an administrative penalty of
W1.44 million in May 2020 and an improvement order in June 2020, in each case by Daegu Regional Environmental Office, for a violation of Article 13-2 of the Chemical Control Act. We
subsequently paid such fine, and we also submitted a report of compliance with such improvement order in July 2020. Regarding these two incidents, Gimcheon Branch of Daegu District Court issued a summary order to assess fines of
W3 million on each of us and two of our employees (the former head of safety and health management at our Gumi facilities and a former working level staff), which order was subsequently confirmed. In order to prevent
recurrence, we are strengthening our safety management standards and employee training efforts.
In May 2020, we were assessed a fine of
W1.4 million by the National Institute of Chemical Safety for our failure to conduct safety training on hazardous chemicals in violation of Article 33 of the Chemicals Control Act, which we subsequently paid. In order to
prevent recurrence, we conducted safety training on hazardous chemicals for the relevant personnel and newly established a working process that complies with safety regulations.
In January 2021, an incident involving a leakage of tetramethylammonium hydroxide chemicals occurred during refurbishment of equipment at one of our plants in Paju, causing bodily harm to workers. In December 2021, we and one of our employees were prosecuted for violating the Industrial Safety and Health Act and the Chemicals Control Act, and a criminal trial is currently pending at the Goyang Branch of the Uijeongbu District Court. Government authorities are currently investigating the cause of such incident. In light of such incident, we plan to implement measures to fundamentally enhance our safety management standards with an aim to ensure health and safety of all workers at our facilities and maintain public trust, including four key safety management initiatives comprising (i) performing detailed safety diagnosis at all of our facilities, (ii) internalizing major hazardous tasks, (iii) developing dedicated personnel for safety- and environment-related matters and strengthening our support to our service providers, and (iv) strengthening the authority and capability of our safety management organizations.
In January 2021, we were audited by the Ministry of Employment and Labor in connection with the occurrence of a safety
accident and found to be in violation of Article 114-1 of the Industrial Safety and Health Act relating to supervisory obligations with respect to the posting of safety information material and employee
education. As a result, we were issued a corrective order and assessed a fine of W122.6 million, which we subsequently paid. We submitted a report on the implementation of the corrective order as of October 1, 2021.
24
In April 2021, we were assessed a fine of W1.2 million by the Paju
Fire Station for failure to preserve regular inspection records of firefighting facilities related to the joint fire inspection by Gyeong-gi-Province Fire and Disaster
Headquarters in violation of Article 18-1 of the Act on Safety Control of Hazardous Substances, which we subsequently paid. As a result, we have been conducting regular inspections of dangerous substances
according to the inspection checklist related to this, and have taken measures to consult with relevant administrative agencies to the extent there are any ambiguous regulations related to performing inspections in order to prevent any legal issues.
On March 3, 2022, an accident occurred at our contracted construction site in Paju, resulting in injuries of four LS Cable & System workers. Authorities are currently investigating the exact cause of the accident and we plan to actively cooperate with the investigation of related organizations to determine the cause.
In April 2022, the Han River Basin Environmental Office ordered a fine of W2.4 million on us for a violation of
Provision 1 of Article 31 of the Chemical Control Act and other applicable law. We paid the fine and established procedures to manage scheduling and documentation and guarantee timely subcontract declaration that follows regulations by the
department in charge.
In April 2022, following a relevant departments delay in reporting an industrial accident (dated
February 12, 2022) to the company by over a month, we were assessed a fine of W5.6 million for a violation of Provision 3 of Article 57 of the Industrial Safety and Health Act and other applicable law. We paid the fine and
provided a company-wide notice and training to promote immediate reporting upon the occurrence of similar incidents and to prevent such delays in the future. We also took personnel actions relating to relevant employees.
In May 2022, after a regular facility inspection following an industrial accident at the site, the trial court (Goyang Branch of Uijeongbu
District Court) ordered a fine of W5 million on each of us and one employee (Executive Director and On-site Safety Manager, Incumbent, 23 years of service) for a violation of certain
provisions of the Industrial Safety and Health Act. We are strengthening our safety management standards and employee training program to prevent industrial accidents.
12. | Financial Information |
A. | Financial highlights (Based on consolidated K-IFRS). |
(Unit: In millions of Won) | ||||||||||||
Description |
As of September 30, 2022 | As of December 31, 2021 | As of December 31, 2020(1) | |||||||||
Current assets |
11,778,600 | 13,187,067 | 11,099,470 | |||||||||
Quick assets |
7,261,283 | 9,836,692 | 8,928,814 | |||||||||
Inventories |
4,517,317 | 3,350,375 | 2,170,656 | |||||||||
Non-current assets |
28,355,350 | 24,967,448 | 23,966,542 | |||||||||
Investments in equity accounted investees |
106,533 | 126,719 | 114,551 | |||||||||
Property, plant and equipment, net |
22,778,871 | 20,558,446 | 20,139,703 | |||||||||
Intangible assets |
1,850,732 | 1,644,898 | 1,020,088 | |||||||||
Other non-current assets |
3,619,214 | 2,637,385 | 2,692,200 | |||||||||
Total assets |
40,133,950 | 38,154,515 | 35,066,012 | |||||||||
Current liabilities |
14,962,941 | 13,994,817 | 11,006,948 | |||||||||
Non-current liabilities |
10,887,406 | 9,397,197 | 11,327,636 | |||||||||
Total liabilities |
25,850,347 | 23,392,014 | 22,334,584 | |||||||||
Share capital |
1,789,079 | 1,789,079 | 1,789,079 | |||||||||
Share premium |
2,251,113 | 2,251,113 | 2,251,113 | |||||||||
Retained earnings |
7,278,419 | 8,541,521 | 7,518,786 | |||||||||
Other equity |
1,187,631 | 537,142 | (163,446 | ) | ||||||||
Non-controlling interest |
1,777,361 | 1,643,646 | 1,335,896 | |||||||||
Total equity |
14,283,603 | 14,762,501 | 12,731,428 |
25
(Unit: In millions of Won, except for per share data and number of consolidated entities) | ||||||||||||
Description |
For the nine months ended September 30, 2022 |
For the year ended December 31, 2021 |
For the year ended December 31, 2020(1) |
|||||||||
Revenue |
18,850,153 | 29,878,043 | 24,261,561 | |||||||||
Operating profit (loss) |
(1,209,305 | ) | 2,230,608 | (36,465 | ) | |||||||
Profit (loss) from continuing operations |
(1,101,784 | ) | 1,333,544 | (76,147 | ) | |||||||
Profit (loss) for the period |
(1,101,784 | ) | 1,333,544 | (76,147 | ) | |||||||
Profit (loss) attributable to: |
||||||||||||
Owners of the Company |
(1,174,075 | ) | 1,186,182 | (94,853 | ) | |||||||
Non-controlling interest |
72,291 | 147,362 | 18,706 | |||||||||
Basic earnings (loss) per share |
(3,281 | ) | 3,315 | (265 | ) | |||||||
Diluted earnings (loss) per share |
(3,370 | ) | 3,130 | (265 | ) | |||||||
Number of consolidated entities |
22 | 22 | 22 |
(1) | We have adopted certain amendments to IFRS No. 1016 Property, Plant and Equipment: Proceeds before Intended Use beginning January 1, 2021 and retroactively restated our results of operations for the year ended December 31, 2020. |
B. | Financial highlights (Based on separate K-IFRS). |
(Unit: In millions of Won) | ||||||||||||
Description |
As of September 30, 2022 | As of December 31, 2021 | As of December 31, 2020 | |||||||||
Current assets |
7,541,008 | 8,566,656 | 6,948,054 | |||||||||
Quick assets |
4,699,790 | 6,435,659 | 5,529,932 | |||||||||
Inventories |
2,841,218 | 2,130,997 | 1,418,122 | |||||||||
Non-current assets |
23,941,973 | 20,911,466 | 19,757,148 | |||||||||
Investments |
4,834,908 | 4,942,729 | 4,784,828 | |||||||||
Property, plant and equipment, net |
13,965,198 | 12,010,858 | 11,736,673 | |||||||||
Intangible assets |
1,670,344 | 1,459,812 | 887,431 | |||||||||
Other non-current assets |
3,471,523 | 2,498,067 | 2,348,216 | |||||||||
Total assets |
31,482,981 | 29,478,122 | 26,705,202 | |||||||||
Current liabilities |
16,681,563 | 13,148,969 | 10,180,660 | |||||||||
Non-current liabilities |
6,011,422 | 5,686,335 | 6,261,307 | |||||||||
Total liabilities |
22,692,985 | 18,835,304 | 16,441,967 | |||||||||
Share capital |
1,789,079 | 1,789,079 | 1,789,079 | |||||||||
Share premium |
2,251,113 | 2,251,113 | 2,251,113 | |||||||||
Retained earnings |
4,827,082 | 6,611,853 | 6,223,043 | |||||||||
Other equity |
(77,278 | ) | (9,227 | ) | 0 | |||||||
Total equity |
8,789,996 | 10,642,818 | 10,263,235 |
(Unit: In millions of Won, except for per share data) | ||||||||||||
Description |
For the nine months ended September 30, 2022 |
For the year ended December 31, 2021 |
For the year ended December 31, 2020 |
|||||||||
Revenue |
17,703,943 | 28,364,914 | 22,799,273 | |||||||||
Operating profit (loss) |
(2,058,552 | ) | 721,931 | (812,979 | ) | |||||||
Profit (loss) from continuing operations |
(1,695,712 | ) | 552,173 | (513,262 | ) | |||||||
Profit (loss) for the period |
(1,695,712 | ) | 552,173 | (513,262 | ) | |||||||
Basic earnings (loss) per share |
(4,739 | ) | 1,543 | (1,434 | ) | |||||||
Diluted earnings (loss) per share |
(4,739 | ) | 1,540 | (1,434 | ) |
26
C. | Consolidated subsidiaries (as of September 30, 2022) |
Company Interest |
Primary Business | Location | Equity | |||||
LG Display America, Inc. |
Sales | U.S.A. | 100 | % | ||||
LG Display Germany GmbH |
Sales | Germany | 100 | % | ||||
LG Display Japan Co., Ltd. |
Sales | Japan | 100 | % | ||||
LG Display Taiwan Co., Ltd. |
Sales | Taiwan | 100 | % | ||||
LG Display Nanjing Co., Ltd. |
Manufacturing | China | 100 | % | ||||
LG Display Shanghai Co., Ltd. |
Sales | China | 100 | % | ||||
LG Display Guangzhou Co., Ltd. |
Manufacturing | China | 100 | % | ||||
LG Display Shenzhen Co., Ltd. |
Sales | China | 100 | % | ||||
LG Display Singapore Pte. Ltd. |
Sales | Singapore | 100 | % | ||||
L&T Display Technology (Fujian) Limited |
Manufacturing and sales | China | 51 | % | ||||
LG Display Yantai Co., Ltd. |
Manufacturing | China | 100 | % | ||||
LG Display (China) Co., Ltd. |
Manufacturing and sales | China | 70 | % | ||||
Nanumnuri Co., Ltd. |
Workplace services | Korea | 100 | % | ||||
Unified Innovative Technology, LLC |
Managing intellectual property | U.S.A. | 100 | % | ||||
Global OLED Technology LLC |
Managing intellectual property | U.S.A. | 100 | % | ||||
LG Display Guangzhou Trading Co., Ltd. |
Sales | China | 100 | % | ||||
LG Display Vietnam Haiphong Co., Ltd. |
Manufacturing | Vietnam | 100 | % | ||||
Suzhou Lehui Display Co., Ltd. |
Manufacturing and sales | China | 100 | % | ||||
LG Display Fund I LLC (1) |
Investing in new emerging companies | U.S.A | 100 | % | ||||
LG Display High-Tech (China) Co., Ltd. |
Manufacturing and sales | China | 70 | % |
(1) | During the reporting period, we invested an additional |
D. | Status of equity investments (as of September 30, 2022) |
(1) | Consolidated subsidiaries |
Company |
Capital Stock (in millions) |
Date of Incorporation |
Equity Interest |
|||||||||
LG Display America, Inc. |
USD 411 | September 1999 | 100 | % | ||||||||
LG Display Germany GmbH |
EUR 1 | October 1999 | 100 | % | ||||||||
LG Display Japan Co., Ltd. |
JPY 95 | October 1999 | 100 | % | ||||||||
LG Display Taiwan Co., Ltd. |
NTD 116 | April 1999 | 100 | % | ||||||||
LG Display Nanjing Co., Ltd. |
CNY 3,020 | July 2002 | 100 | % | ||||||||
LG Display Shanghai Co., Ltd. |
CNY 4 | January 2003 | 100 | % | ||||||||
LG Display Guangzhou Co., Ltd. |
CNY 1,655 | June 2006 | 100 | % | ||||||||
LG Display Shenzhen Co., Ltd. |
CNY 4 | July 2007 | 100 | % | ||||||||
LG Display Singapore Pte. Ltd. |
USD 1 | November 2008 | 100 | % | ||||||||
L&T Display Technology (Fujian) Limited |
CNY 116 | December 2009 | 51 | % | ||||||||
LG Display Yantai Co., Ltd. |
CNY 1,008 | March 2010 | 100 | % | ||||||||
Nanumnuri Co., Ltd. |
KRW 800 | March 2012 | 100 | % | ||||||||
LG Display (China) Co., Ltd. |
CNY 8,232 | December 2012 | 70 | % | ||||||||
Unified Innovative Technology, LLC |
USD 9 | March 2014 | 100 | % |
27
Company |
Capital Stock (in millions) |
Date of Incorporation |
Equity Interest |
|||||||||
LG Display Guangzhou Trading Co., Ltd. |
CNY 1 | April 2015 | 100 | % | ||||||||
Global OLED Technology LLC |
USD 138 | December 2009 | 100 | % | ||||||||
LG Display Vietnam Haiphong Co., Ltd. |
USD 600 | May 2016 | 100 | % | ||||||||
Suzhou Lehui Display Co., Ltd. |
CNY 637 | July 2016 | 100 | % | ||||||||
LG Display Fund I LLC (1) |
USD 69 | May 2018 | 100 | % | ||||||||
LG Display High-Tech (China) Co., Ltd. |
CNY 15,600 | July 2018 | 70 | % | ||||||||
MMT (Money Market Trust) |
| January 2018 | |
(1) | During the reporting period, we invested an additional |
(2) | Affiliated companies |
Company |
Carrying Amount (in millions) |
Date of Incorporation |
Equity Interest |
|||||||||
Paju Electric Glass Co., Ltd. |
January 2005 | 40 | % | |||||||||
Wooree E&L Co., Ltd. |
June 2008 | 13 | % | |||||||||
YAS Co., Ltd. |
April 2002 | 15 | % | |||||||||
Avatec Co., Ltd. |
August 2000 | 14 | % | |||||||||
Arctic Sentinel, Inc. |
| June 2008 | 10 | % | ||||||||
Cynora GmbH |
March 2003 | 11 | % | |||||||||
Material Science Co., Ltd. |
January 2014 | 10 | % | |||||||||
Nanosys Inc.(1) |
| July 2001 | |
(1) | As we lost our right to appoint directors of the company due to changes in shareholder rights during the third quarter of 2022, we classified such investment as a financial asset at fair value through profit or loss. |
Although our respective share interests in Wooree E&L Co., Ltd., YAS Co., Ltd., Avatec Co., Ltd., Arctic Sentinel, Inc., Cynora GmbH, Material Science Co., Ltd. and Nanosys Inc. are below 20%, we are able to exercise significant influence through our right to appoint a director to the board of directors of each investee. Accordingly, the investments in these investees have been accounted for using the equity method.
For
the nine months ended September 30, 2021 and 2022, the aggregate amount of dividends we received from our affiliated companies was W4,068 million and W4,461 million, respectively.
13. | Audit Information |
A. | Audit service |
(Unit: In millions of Won, hours) | ||||||
Description |
2022 Q3 | 2021 | 2020 | |||
Auditor |
KPMG Samjong | KPMG Samjong | KPMG Samjong | |||
Activity |
Audit by independent auditor |
Audit by independent auditor |
Audit by independent auditor | |||
Compensation(1) |
1,470 (550)(2) | 1,470 (550)(2) | 1,410 (540)(2) | |||
Time required |
9,804 | 19,039 | 19,777 |
(1) | Compensation amount is the contracted amount for the full fiscal year. |
(2) | Compensation amount in ( ) is for Form 20-F filing and SOX 404 audit. |
28
B. | Non-audit service |
(Unit: In millions of Won, hours) | ||||||||||
Period |
Date of contract | Description of service | Period of service | Compensation | ||||||
2022 Q3 |
| | | | ||||||
2021 |
| | | | ||||||
2020 |
| | | |
* | Based on direct contracts on a separate basis. |
14. | Managements Discussion and Analysis of Financial Condition and Results of Operations |
Omitted in quarterly and semi-annual reports in accordance with Korean disclosure rules.
15. | Board of Directors |
A. | Members of the board of directors |
As of the date of this report, our board of directors consisted of two non-outside directors, one non-standing director and three outside directors.
(As of the date of this report) | ||||
Name(1)(2)(4) |
Position |
Primary responsibility | ||
James (Hoyoung) Jeong | Representative Director (non-outside), Chief Executive Officer and President | Chairman of board of directors | ||
Sung Hyun Kim | Director (non-outside), Chief Financial Officer and Senior Vice President | Overall head of finances | ||
Beom Jong Ha | Non-standing Director | Related to the overall management | ||
Doocheol Moon | Outside Director | Related to the overall management | ||
Chung Hae Kang | Outside Director | Related to the overall management | ||
Jeongsuk Oh(3) | Outside Director | Related to the overall management |
(1) | Donghee Suh, our former chief financial officer, resigned from his position on March 23, 2022. |
(2) | Kun Tai Han resigned from his position on March 23, 2022 following the expiration of his term. Beom Jong Ha, Sung Hyun Kim and Chung Hae Kang were newly appointed as a non-standing director, non-outside director, and outside director, respectively, at the annual general meeting of shareholders held on March 23, 2022. |
(3) | Chang-Yang Lee resigned from his position on April 8, 2022, and Jeongsuk Oh was appointed as a temporary outside director and member of the Audit Committee by the court on April 26, 2022. Mr. Ohs term will end at the completion of the 38th regular meeting of shareholders in 2023. |
(4) | Byung Ho Lee, a former outside director, has ceased to be a director due to his death on November 7, 2022. |
B. | Committees of the board of directors |
We have the following committees that serve under our board of directors: Management Committee, Outside Director Nomination Committee, Audit Committee, ESG Committee and Related Party Transaction Committee.
As of September 30, 2022, the Management Committee consisted of two non-outside directors, James (Hoyoung) Jeong (Chairman) and Sung Hyun Kim.
As of September 30, 2022, the composition of the Outside Director Nomination Committee was as follows.
(As of September 30, 2022) | ||||
Committee |
Composition |
Members | ||
Outside Director Nomination Committee(1) | 1 non-standing director and 2 outside directors | Beom Jong Ha, Doocheol Moon and Chung Hae Kang |
29
(1) | Beom Jong Ha, Doocheol Moon and Chung Hae Kang were each appointed as a member of the outside director nomination committee of the board of directors at the board of directors meeting on March 23, 2022. |
As of the date of this report, the composition of the Audit Committee was as follows.
(As of the date of this report) | ||||
Committee |
Composition |
Members(1) | ||
Audit Committee | 3 outside directors | Doocheol Moon (Chairperson), Chung Hae Kang and Jeongsuk Oh(2) |
(1) | Chang-Yang Lee was reappointed as a member of the Audit Committee at the shareholders meeting on May 23, 2022. Byung Ho Lee and Chung Hae Kang were appointed as the committee members in the same meeting. Byung Ho Lee has ceased to be a member of the Audit Committee due to his death on November 7, 2022. |
(2) | Chang-Yang Lee resigned from his position on April 8, 2022, and Jeongsuk Oh was appointed as a temporary outside director and member of the Audit Committee by the court on April 26, 2022. Mr. Ohs term will end at the completion of the 38th regular meeting of shareholders in 2023. |
As of the date of this report, the composition of the ESG Committee was as follows.
(As of the date of this report) | ||||
Committee |
Composition |
Members(1) | ||
ESG Committee | 1 non-outside director and 3 outside directors | Doocheol Moon (Chairperson), Chung Hae Kang, Jeongsuk Oh(2) and James (Hoyoung) Jeong |
(1) | Byung Ho Lee has ceased to be a member of the committee due to his death on November 7, 2022. |
(2) | Jeongsuk Oh was nominated as a member of the committee on July 26, 2022. |
As of the date of this report, the composition of the Related Party Transaction Committee was as follows.
(As of the date of this report) | ||||
Committee |
Composition |
Members(1) | ||
Related Party Transaction Committee | 1 non-outside director and 2 outside directors | Chung Hae Kang (Chairperson), Sung Hyun Kim and Jeongsuk Oh(2) |
(1) | Byung Ho Lee has ceased to be a member of the committee due to his death on November 7, 2022. |
(2) | Jeongsuk Oh was nominated as a member of the committee on July 26, 2022. |
C. | Independence of directors |
Directors are appointed in accordance with the procedures of the Commercial Act and other relevant laws and regulations. Our board of directors is independent as four out of the seven directors that comprise the board are outside directors. Outside directors candidates are nominated for appointment at a shareholders meeting after undergoing rigorous review by the Outside Director Nomination Committee.
16. | Information Regarding Shares |
A. | Total number of shares |
(1) | Total number of shares authorized to be issued (as of September 30, 2022): 500,000,000 shares. |
(2) | Total shares issued and outstanding (as of September 30, 2022): 357,815,700 shares. |
B. | Shareholder list |
(1) | Largest shareholder and related parties as of September 30, 2022: |
Name |
Relationship | Number of shares of common stock | Equity interest | |||||||
LG Electronics |
Largest shareholder |
135,625,000 | 37.9 | % | ||||||
James (Hoyoung) Jeong |
Registered director of member company |
15,000 | 0.0 | % |
30
(2) | Shareholders who are known to us that own 5% or more of our shares as of September 30, 2022: |
Beneficial owner |
Number of shares of common stock | Equity interest | ||||||
LG Electronics |
135,625,000 | 37.90 | % | |||||
National Pension Service |
19,063,230 | 5.33 | % |
17. | Directors and Employees |
A. | Directors |
(1) | Remuneration for directors in 2022 Q1~Q3: |
(Unit: person, in millions of Won) | ||||||||||||
Classification |
No. of directors(1) | Amount paid(3) | Per capita average remuneration paid(2) |
|||||||||
Non-outside directors |
3 | 2,825 | 1,413 | |||||||||
Outside directors who are not audit committee members |
| | | |||||||||
Outside directors who are audit committee members |
4 | 304 | 76 | |||||||||
|
|
|
|
|
|
|||||||
Total |
7 | 3,129 | 522 | |||||||||
|
|
|
|
|
|
(1) | Number of directors as at September 30, 2022. |
(2) | Per capita average remuneration paid is calculated by using the sum of the average monthly remuneration paid for the nine months ended September 30, 2022 (excluding one non-standing director who is not compensated). |
(3) | The total compensation is based on the income under the Income Tax Act (earned income, other income and retirement income, each in accordance with Article 20, 21, and 22 of such act, respectively). It includes the compensation for the new or retired members of the board of directors. Among the directors, one non-standing director is not compensated. The amount includes compensation for the relevant directors employment during which they worked as non-director executive officers, where applicable. |
(2) | Standards of remuneration paid to non-outside and outside directors |
- | Non-outside directors (excluding outside directors and audit committee members) |
The remuneration system for non-outside directors consists of base salary, position salary and performance-related pay. The remuneration for non-outside directors is measured in accordance with the standards established by the board of directors (within the amount approved at the annual general meeting of shareholders), including the non-outside directors position and job responsibilities.
| Standards for base salary/position salary: relevant position and job responsibilities, among others |
| Standards for performance-related pay: financial performance of the company and achievement of individual management goals, among others |
31
- | Outside directors, audit committee members and auditor |
The remuneration for outside directors, audit committee members and auditor is measured in accordance with the standards established by the board of directors (within the amount approved at the annual general meeting of shareholders), including the individuals job responsibilities, among others.
(3) | Remuneration for individual directors and audit committee members |
- | Not required for quarterly reports. |
(4) | Remuneration for the five highest paid individuals (among those paid over |
- | Not required for quarterly reports. |
(5) | Stock options |
- | Not applicable. |
B. | Employees |
As of September 30, 2022, we had 29,931 employees (excluding our directors). On average, our male employees have served 11.7 years and our
female employees have served 9.3 years. The total amount of salary paid to our employees for the nine months ended September 30, 2022 based on income tax statements submitted to the Korean tax authority in accordance with Article 20 of the
Income Tax Act was W1,949,690 million for our male employees and W277,597 million for our female employees. The following table provides details of our employees as of September 30, 2022:
(Unit: person, in millions of Won, year) | ||||||||||||||||
Number of employees(1) |
Total salary in 2022(2)(3)(4) | Average salary per capita(5) |
Average years of service |
|||||||||||||
Male |
24,993 | 1,949,690 | 79 | 11.7 | ||||||||||||
Female |
4,938 | 277,597 | 58 | 9.3 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
29,931 | 2,227,287 | 76 | 11.3 | ||||||||||||
|
|
|
|
|
|
|
|
(1) | Includes part-time employees hired for temporary needs or to serve as temporary replacements for employees on parental leave. |
(2) | Welfare benefits and retirement expenses have been excluded. Total welfare benefit provided to our employees
for the nine months ended September 30, 2022 was |
(3) | Based on income tax statements, which are submitted to the Korean tax authority in accordance with Article 20 of the Income Tax Act. |
(4) | Includes incentive payments to employees who have transferred from our affiliated companies. |
(5) | Calculated using the sum of the average monthly salary. |
C. | Remuneration for executive officers (excluding directors) |
(Unit: person, in millions of Won) | ||||||||
Number of executive officers |
Total salary in 2022 | Average salary per capita(1) |
||||||
97 |
40,690 | 398 |
(1) | Calculated using the sum of the average monthly salary. |
32
18. | Other Matters |
A. | Legal proceedings |
We are a defendant in three separate civil lawsuits (comprising one damages claim in the United Kingdom filed by private plaintiffs, one damages claim in Israel filed by private plaintiffs and one unjust enrichment claim in the United States filed by the Commonwealth of Puerto Rico) filed against us and certain other TFT-LCD panel manufacturers in connection with alleged anticompetitive behavior of the defendants. In each of these cases, the amount being sought has not been determined, and no trial has been scheduled. While the expected outcome of each of these cases is unclear, we do not believe that any of these cases would have a material effect on our financial conditions.
B. | Material events subsequent to the reporting period |
None.
33
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Condensed Consolidated Interim Financial Statements
(Unaudited)
September 30, 2022 and 2021
(With Independent Auditors Review Report Thereon)
34
Table of Contents
35
Independent Auditors Review Report
Based on a report originally issued in Korean
To the Shareholders and Board of Directors
LG Display Co., Ltd.:
Reviewed Financial Statements
We have reviewed the accompanying condensed consolidated interim financial statements of LG Display Co., Ltd. and subsidiaries (the Group) which comprise the condensed consolidated interim statement of financial position as of September 30, 2022, the condensed consolidated interim statements of comprehensive income (loss) for the three-month and nine-month periods ended September 30, 2022 and 2021, and statements of changes in equity and cash flows for the nine-month periods ended September 30, 2022 and 2021, and notes comprising a summary of significant accounting policies and other explanatory information.
Managements Responsibility for the Condensed Consolidated Interim Financial Statements
Management is responsible for the preparation and fair presentation of these condensed consolidated interim financial statements in accordance with Korean International Financial Reporting Standards No. 1034, Interim Financial Reporting, and for such internal controls as management determines necessary to enable the preparation of condensed consolidated interim financial statements that are free from material misstatement, whether due to fraud or error.
Auditors Responsibility
Our responsibility is to issue a report on these condensed consolidated interim financial statements based on our reviews.
We conducted our reviews in accordance with the Review Standards for Quarterly and Semiannual Financial Statements established by the Security and Futures Commission of the Republic of Korea. A review of interim financial information consists principally of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Korean Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our reviews, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial statements referred to above are not presented fairly, in all material respects, in accordance with Korean International Financial Reporting Standards No. 1034, Interim Financial Reporting.
Other Matters
The procedures and practices utilized in the Republic of Korea to review such condensed consolidated interim financial statements may differ from those generally accepted and applied in other countries.
We audited the consolidated statement of financial position as of December 31, 2021 and the related consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended, which are not accompanying this review report, in accordance with Korean Standards on Auditing, and our report thereon, dated March 8, 2022, expressed an unmodified opinion. The accompanying condensed consolidated statement of financial position of the Group as of December 31, 2021, presented for comparative purposes, is not different from that audited by us from which it was derived in all material respects.
36
KPMG Samjong Accounting Corp.
Seoul, Korea
November 11, 2022
This report is effective as of November 11, 2022 the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying condensed consolidated interim financial statements and notes thereto. Accordingly, the readers of the review report should understand that the above review report has not been updated to reflect the impact of such subsequent events or circumstances, if any.
37
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Condensed Consolidated Interim Statements of Financial Position
(Unaudited)
As of September 30, 2022 and December 31, 2021
(In millions of won) | Note | September 30, 2022 | December 31, 2021 | |||||||
Assets |
||||||||||
Cash and cash equivalents |
4, 25 | 3,541,597 | ||||||||
Deposits in banks |
4, 25 | 1,723,226 | 743,305 | |||||||
Trade accounts and notes receivable, net |
5, 14, 25, 27 | 2,864,694 | 4,574,789 | |||||||
Other accounts receivable, net |
5, 25 | 269,482 | 121,899 | |||||||
Other current financial assets |
6, 25 | 342,453 | 68,203 | |||||||
Inventories |
7 | 4,517,317 | 3,350,375 | |||||||
Prepaid income taxes |
2,823 | 58,536 | ||||||||
Other current assets |
5 | 517,756 | 728,363 | |||||||
|
|
|
|
|||||||
Total current assets |
11,778,600 | 13,187,067 | ||||||||
Deposits in banks |
4, 25 | 11 | 11 | |||||||
Investments in equity accounted investees |
8 | 106,533 | 126,719 | |||||||
Other non-current accounts recivable, net |
5, 25 | | 2,376 | |||||||
Other non-current financial assets |
6, 25 | 542,455 | 156,211 | |||||||
Property, plant and equipment, net |
9, 17 | 22,778,871 | 20,558,446 | |||||||
Intangible assets, net |
10, 17 | 1,850,732 | 1,644,898 | |||||||
Deferred tax assets |
23 | 2,877,377 | 2,307,692 | |||||||
Defined benefits assets, net |
12 | 143,259 | 68,276 | |||||||
Other non-current assets |
56,112 | 102,819 | ||||||||
|
|
|
|
|||||||
Total non-current assets |
28,355,350 | 24,967,448 | ||||||||
|
|
|
|
|||||||
Total assets |
38,154,515 | |||||||||
|
|
|
|
|||||||
Liabilities |
||||||||||
Trade accounts and notes payable |
25, 27 | 4,814,055 | ||||||||
Current financial liabilities |
11, 25, 26 | 5,312,236 | 4,069,712 | |||||||
Other accounts payable |
25 | 3,378,733 | 3,401,346 | |||||||
Accrued expenses |
751,056 | 1,218,456 | ||||||||
Income tax payable |
131,202 | 179,335 | ||||||||
Provisions |
13 | 171,859 | 173,431 | |||||||
Advances received |
65,831 | 67,046 | ||||||||
Other current liabilities |
123,160 | 71,436 | ||||||||
|
|
|
|
|||||||
Total current liabilities |
14,962,941 | 13,994,817 | ||||||||
Non-current financial liabilities |
11, 25, 26 | 10,176,982 | 8,702,745 | |||||||
Non-current provisions |
13 | 87,183 | 92,942 | |||||||
Defined benefit liabilities, net |
12 | 1,585 | 1,589 | |||||||
Deferred tax liabilities |
23 | 9,394 | 6,636 | |||||||
Other non-current liabilities |
25 | 612,262 | 593,285 | |||||||
Total non-current liabilities |
10,887,406 | 9,397,197 | ||||||||
|
|
|
|
|||||||
Total liabilities |
25,850,347 | 23,392,014 | ||||||||
|
|
|
|
|||||||
Equity | ||||||||||
Share capital |
15 | 1,789,079 | 1,789,079 | |||||||
Share premium |
15 | 2,251,113 | 2,251,113 | |||||||
Retained earnings |
7,278,419 | 8,541,521 | ||||||||
Reserves |
15 | 1,187,631 | 537,142 | |||||||
|
|
|
|
|||||||
Total equity attributable to owners of the Controlling Company |
12,506,242 | 13,118,855 | ||||||||
|
|
|
|
|||||||
Non-controlling interests |
1,777,361 | 1,643,646 | ||||||||
|
|
|
|
|||||||
Total equity |
14,283,603 | 14,762,501 | ||||||||
|
|
|
|
|||||||
Total liabilities and equity |
38,154,515 | |||||||||
|
|
|
|
See accompanying notes to the consolidated financial statements.
38
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Condensed Consolidated Interim Statements of Comprehensive Income (Loss)
(Unaudited)
For the three-month and nine-month periods ended September 30, 2022 and 2021
(In millions of won, except earnings per share) | Note | For the three-month periods ended September 30 |
For the nine-month periods ended September 30 |
|||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||
Revenue |
16, 17, 27 | 7,223,196 | 18,850,153 | 21,071,527 | ||||||||||||||
Cost of sales |
7, 18, 27 | (6,720,587 | ) | (5,914,812 | ) | (17,706,000 | ) | (17,080,804 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||||
Gross profit |
50,768 | 1,308,384 | 1,144,153 | 3,990,723 | ||||||||||||||
Selling expenses |
18, 19 | (221,406 | ) | (225,920 | ) | (672,450 | ) | (678,571 | ) | |||||||||
Administrative expenses |
18, 19 | (239,064 | ) | (235,793 | ) | (690,547 | ) | (669,689 | ) | |||||||||
Research and development expenses |
18 | (349,604 | ) | (317,363 | ) | (990,461 | ) | (888,249 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||||
Operating profit (loss) |
(759,306 | ) | 529,308 | (1,209,305 | ) | 1,754,214 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Finance income |
22 | 540,585 | 373,154 | 1,145,259 | 445,483 | |||||||||||||
Finance costs |
22 | (586,507 | ) | (302,138 | ) | (1,147,324 | ) | (730,193 | ) | |||||||||
Other non-operating income |
21 | 1,142,592 | 486,047 | 2,283,006 | 1,077,285 | |||||||||||||
Other non-operating expenses |
18, 21 | (1,435,451 | ) | (479,513 | ) | (2,648,473 | ) | (1,069,047 | ) | |||||||||
Equity in income of equity accounted investees, net |
(722 | ) | 1,663 | 3,375 | 4,913 | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Profit (loss) before income tax |
(1,098,809 | ) | 608,521 | (1,573,462 | ) | 1,482,655 | ||||||||||||
Income tax expense (benefit) |
23 | (324,778 | ) | 144,744 | (471,678 | ) | 328,621 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Profit (loss) for the period |
(774,031 | ) | 463,777 | (1,101,784 | ) | 1,154,034 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Other comprehensive income (loss) |
||||||||||||||||||
Items that will never be reclassified to profit or loss |
||||||||||||||||||
Remeasurements of net defined benefit liabilities |
12 | (4,960 | ) | (2,171 | ) | 143,521 | (8,084 | ) | ||||||||||
Other comprehensive income (loss) from associates |
(19 | ) | | 32 | (83 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
(4,979 | ) | (2,171 | ) | 143,553 | (8,167 | ) | ||||||||||||
Items that are or may be reclassified to profit or loss | ||||||||||||||||||
Foreign currency translation differences for foreign operations |
463,175 | 391,780 | 845,523 | 733,480 | ||||||||||||||
Loss on valuation of derivative |
25 | (25,252 | ) | (10,331 | ) | (68,051 | ) | (10,331 | ) | |||||||||
Other comprehensive income (loss) from associates |
(5,644 | ) | 8,166 | (9,503 | ) | 6,601 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
432,279 | 389,615 | 767,969 | 729,750 | |||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Other comprehensive income for the period, net of income tax |
427,300 | 387,444 | 911,522 | 721,583 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Total comprehensive income (loss) for the period |
851,221 | (190,262 | ) | 1,875,617 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Profit (loss) attributable to: |
||||||||||||||||||
Owners of the Controlling Company |
(789,511 | ) | 419,834 | (1,174,075 | ) | 1,011,499 | ||||||||||||
Non-controlling interests |
15,480 | 43,943 | 72,291 | 142,535 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Profit (loss) for the period |
463,777 | (1,101,784 | ) | 1,154,034 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Total comprehensive income (loss) attributable to: | ||||||||||||||||||
Owners of the Controlling Company |
(423,527 | ) | 736,045 | (380,033 | ) | 1,597,348 | ||||||||||||
Non-controlling interests |
76,796 | 115,176 | 189,771 | 278,269 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Total comprehensive income (loss) for the period |
851,221 | (190,262 | ) | 1,875,617 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Earnings (loss) per share (in won) |
||||||||||||||||||
Basic and diluted earning (loss) per share |
24 | 1,173 | (3,281 | ) | 2,827 | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Diluted earnings (loss) per share |
24 | 671 | (3,370 | ) | 2,444 | |||||||||||||
|
|
|
|
|
|
|
|
See accompanying notes to the consolidated financial statements.
39
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Condensed Consolidated Interim Statements of Changes in Equity
(Unaudited)
For the nine-month periods ended September 30, 2022 and 2021
Attributable to owners of the Controlling Company | ||||||||||||||||||||||||||||
(In millions of won) | Share capital |
Share premium |
Retained earnings |
Reserves | Sub-total | Non-controlling interests |
Total equity | |||||||||||||||||||||
Balances at January 1, 2021 |
2,251,113 | 7,518,786 | (163,446 | ) | 11,395,532 | 1,335,896 | 12,731,428 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total comprehensive income (loss) for the year |
||||||||||||||||||||||||||||
Profit (loss) for the period |
| | 1,011,499 | | 1,011,499 | 142,535 | 1,154,034 | |||||||||||||||||||||
Other comprehensive income (loss) |
||||||||||||||||||||||||||||
Remeasurements of net defined benefit liabilities, net of tax |
| | (8,084 | ) | | (8,084 | ) | | (8,084 | ) | ||||||||||||||||||
Foreign currency translation differences |
| | | 597,746 | 597,746 | 135,734 | 733,480 | |||||||||||||||||||||
Other comprehensive income (loss) from associates |
| | (83 | ) | 6,601 | 6,518 | | 6,518 | ||||||||||||||||||||
Loss on valuation of derivative |
| | (10,331 | ) | (10,331 | ) | | (10,331 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total other comprehensive income (loss) |
| | (8,167 | ) | 594,016 | 585,849 | 135,734 | 721,583 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total comprehensive income (loss) for the period |
| 1,003,332 | 594,016 | 1,597,348 | 278,269 | 1,875,617 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balances at September 30, 2021 |
2,251,113 | 8,522,118 | 430,570 | 12,992,880 | 1,614,165 | 14,607,045 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balances at January 1, 2022 |
2,251,113 | 8,541,521 | 537,142 | 13,118,855 | 1,643,646 | 14,762,501 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total comprehensive income (loss) for the period |
||||||||||||||||||||||||||||
Profit (loss) for the period |
| | (1,174,075 | ) | | (1,174,075 | ) | 72,291 | (1,101,784 | ) | ||||||||||||||||||
Other comprehensive income (loss) |
||||||||||||||||||||||||||||
Remeasurements of net defined benefit liabilities, net of tax |
| | 143,521 | | 143,521 | | 143,521 | |||||||||||||||||||||
Foreign currency translation differences |
| | | 728,043 | 728,043 | 117,480 | 845,523 | |||||||||||||||||||||
Other comprehensive income (loss) from associates |
| | 32 | (9,503 | ) | (9,471 | ) | | (9,471 | ) | ||||||||||||||||||
Loss on valuation of derivative |
| | | (68,051 | ) | (68,051 | ) | | (68,051 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total other comprehensive income |
| | 143,553 | 650,489 | 794,042 | 117,480 | 911,522 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total comprehensive income (loss) for the period |
| (1,030,522 | ) | 650,489 | (380,033 | ) | 189,771 | (190,262 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Transaction with owners, recognized directly in equity |
||||||||||||||||||||||||||||
Dividends to Non-Controlling shareholders in subsidiaries |
| | | | | (56,056 | ) | (56,056 | ) | |||||||||||||||||||
Dividends |
| | (232,580 | ) | | (232,580 | ) | | (232,580 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total transaction with owners, recognized directly in equity |
| | (232,580 | ) | | (232,580 | ) | (56,056 | ) | (288,636 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balances at September 30, 2022 |
2,251,113 | 7,278,419 | 1,187,631 | 12,506,242 | 1,777,361 | 14,283,603 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to the consolidated financial statements.
40
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Condensed Consolidated Interim Statements of Cash Flows
(Unaudited)
For the nine-month periods ended September 30, 2022 and 2021
(In millions of won) | Note | 2022 | 2021 | |||||||
Cash flows from operating activities: |
||||||||||
Profit (Loss) for the period |
1,154,034 | |||||||||
Adjustments for: |
||||||||||
Income tax expense (benefit) |
23 | (471,678 | ) | 328,621 | ||||||
Depreciation and amortization |
18 | 3,473,042 | 3,332,140 | |||||||
Gain on foreign currency translation |
(678,792 | ) | (197,260 | ) | ||||||
Loss on foreign currency translation |
1,146,632 | 271,750 | ||||||||
Expenses related to defined benefit plans |
12 | 131,066 | 108,179 | |||||||
Gain on disposal of property, plant and equipment |
(12,936 | ) | (12,147 | ) | ||||||
Loss on disposal of property, plant and equipment |
36,289 | 40,563 | ||||||||
Impairment loss on property, plant and equipment |
7,200 | 11,688 | ||||||||
Reversal of impairment loss on property, plant and equipment |
(3,181 | ) | (1,121 | ) | ||||||
Gain on disposal of intangible assets |
| (196 | ) | |||||||
Loss on disposal of intangible assets |
163 | | ||||||||
Impairment loss on intangible assets |
19,388 | 13,835 | ||||||||
Reversal of impairment loss on intangible assets |
(5,571 | ) | (640 | ) | ||||||
Expense on increase of provisions |
180,011 | 171,355 | ||||||||
Finance income |
(911,117 | ) | (377,212 | ) | ||||||
Finance costs |
1,042,489 | 671,177 | ||||||||
Equity in income of equity method accounted investees, net |
8 | (3,375 | ) | (4,913 | ) | |||||
Other income |
(133,652 | ) | | |||||||
Other expenses |
| 15,388 | ||||||||
|
|
|
|
|||||||
3,815,978 | 4,371,207 | |||||||||
Changes in: |
||||||||||
Trade accounts and notes receivable |
2,415,179 | (537,579 | ) | |||||||
Other accounts receivable |
7,399 | 63,698 | ||||||||
Inventories |
(1,051,007 | ) | (1,364,674 | ) | ||||||
Lease receivables |
4,602 | 3,267 | ||||||||
Other current assets |
249,092 | 46,057 | ||||||||
Other non-current assets |
(32,083 | ) | (35,638 | ) | ||||||
Trade accounts and notes payable |
(609,055 | ) | 409,675 | |||||||
Other accounts payable |
(636,197 | ) | (3,873 | ) | ||||||
Accrued expenses |
(484,477 | ) | 408,433 | |||||||
Provisions |
(187,341 | ) | (179,140 | ) | ||||||
Short-term advances received |
(1,215 | ) | (231,427 | ) | ||||||
Other current liabilities |
3,872 | 19,309 | ||||||||
Defined benefit liabilities, net |
(11,631 | ) | (486 | ) | ||||||
Other non-current liabilities |
(22,313 | ) | 1,950 | |||||||
|
|
|
|
|||||||
(355,175 | ) | (1,400,428 | ) | |||||||
Cash generated from operating activities |
2,359,019 | 4,124,813 | ||||||||
Income taxes paid |
(162,228 | ) | (91,487 | ) | ||||||
Interests received |
63,146 | 59,044 | ||||||||
Interests paid |
(335,322 | ) | (364,222 | ) | ||||||
|
|
|
|
|||||||
Net cash provided by operating activities |
3,728,148 | |||||||||
|
|
|
|
See accompanying notes to the consolidated interim financial statements.
41
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Condensed Consolidated Interim Statements of Cash Flows, Continued
(Unaudited)
For the nine-month periods ended September 30, 2022 and 2021
(In millions of won) | Note | 2022 | 2021 | |||||||
Cash flows from investing activities: |
||||||||||
Dividends received |
4,201 | |||||||||
Increase in deposits in banks |
(1,659,164 | ) | (693,813 | ) | ||||||
Proceeds from withdrawal of deposits in banks |
755,567 | 77,152 | ||||||||
Acquisition of financial asset at fair value through profit or loss |
(27,100 | ) | (29,862 | ) | ||||||
Proceeds from disposal of financial asset at fair value through profit or loss |
412 | 4,814 | ||||||||
Acquisition of financial assets at fair value through other comprehensive income |
(1,721 | ) | | |||||||
Proceeds from disposal of financial assets at fair value through other comprehensive income |
1,628 | 24 | ||||||||
Proceeds from disposal of investments in equity accounted investees |
4,800 | 1,800 | ||||||||
Acquisition of property, plant and equipment |
(3,845,133 | ) | (2,295,883 | ) | ||||||
Proceeds from disposal of property, plant and equipment |
63,279 | 50,011 | ||||||||
Acquisition of intangible assets |
(560,903 | ) | (458,781 | ) | ||||||
Proceeds from disposal of intangible assets |
10,446 | 2,946 | ||||||||
Government grants received |
57,503 | 85,923 | ||||||||
Receipt from settlement of derivatives |
19,378 | (26,446 | ) | |||||||
Proceeds from collection of short-term loans |
(9,643 | ) | | |||||||
Increase in short-term loans |
6,156 | 12,067 | ||||||||
Increase in long-term loans |
(49,756 | ) | (12,918 | ) | ||||||
Increase in deposits |
(2,260 | ) | (249 | ) | ||||||
Decrease in deposits |
6,798 | 2,400 | ||||||||
Proceeds from disposal of other assets |
1,464 | | ||||||||
|
|
|
|
|||||||
Net cash used in investing activities |
(5,223,788 | ) | (3,276,614 | ) | ||||||
|
|
|
|
|||||||
Cash flows from financing activities: |
26 | |||||||||
Proceeds from short-term borrowings |
2,821,076 | 2,279,770 | ||||||||
Repayments of short-term borrowings |
(1,166,765 | ) | (1,753,533 | ) | ||||||
Proceeds from issuance of bonds |
443,230 | 498,027 | ||||||||
Proceeds from long-term borrowings |
3,283,880 | 479,770 | ||||||||
Repayments of current portion of long-term borrowings and bonds |
(3,913,540 | ) | (2,920,172 | ) | ||||||
Payment of lease liabilities |
(61,214 | ) | (48,888 | ) | ||||||
Payment of dividends |
(232,580 | ) | | |||||||
Subsidiaries dividends distributed to non-controlling interests |
(22,835 | ) | | |||||||
|
|
|
|
|||||||
Net cash provided (used) by financing activities |
1,151,252 | (1,465,026 | ) | |||||||
|
|
|
|
|||||||
Net decrease in cash and cash equivalents |
(2,147,921 | ) | (1,013,492 | ) | ||||||
Cash and cash equivalents at January 1 |
3,541,597 | 4,218,099 | ||||||||
Effect of exchange rate fluctuations on cash held |
147,173 | 273,037 | ||||||||
|
|
|
|
|||||||
Cash and cash equivalents at September 30 |
3,477,644 | |||||||||
|
|
|
|
See accompanying notes to the consolidated interim financial statements.
42
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
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 September 30, 2022, the Group is operating Thin Film Transistor Liquid Crystal Display (TFT-LCD) and Organic Light Emitting Diode (OLED) panel manufacturing plants in Gumi, Paju and China and TFT-LCD and OLED module manufacturing plants in Gumi, Paju, China and Vietnam. The Controlling Company is domiciled in the Republic of Korea with its address at 128 Yeouidae-ro, Yeongdeungpo-gu, Seoul, the Republic of Korea. As of September 30, 2022, LG Electronics Inc., a major shareholder of the Controlling Company, owns 37.9% (135,625,000 shares) of the Controlling Companys common stock.
The Controlling Companys common stock is listed on the Korea Exchange under the identifying code 034220. As of September 30, 2022, there are 357,815,700 shares of common stock outstanding. The Controlling Companys 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 September 30, 2022, there are 17,232,298 ADSs outstanding.
43
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
1. | Reporting Entity, Continued |
(b) | Consolidated Subsidiaries as of September 30, 2022 |
(In millions) | ||||||||||||||||||
Subsidiaries |
Location | Percentage of ownership |
Fiscal year end |
Date of incorporation | Business | Capital stocks | ||||||||||||
LG Display America, Inc. |
San Jose, U.S.A. | 100 | % | December 31 | September 24, 1999 | Sell display products | USD 411 | |||||||||||
LG Display Germany GmbH |
Eschborn, Germany | 100 | % | December 31 | October 15, 1999 | Sell display products | EUR 1 | |||||||||||
LG Display Japan Co., Ltd. |
Tokyo, Japan | 100 | % | December 31 | October 12, 1999 | Sell display products | JPY 95 | |||||||||||
LG Display Taiwan Co., Ltd. |
Taipei, Taiwan | 100 | % | December 31 | April 12, 1999 | Sell display products | NTD 116 | |||||||||||
LG Display Nanjing Co., Ltd. |
Nanjing, China | 100 | % | December 31 | July 15, 2002 | Manufacture display products | CNY 3,020 | |||||||||||
LG Display Shanghai Co., Ltd. |
Shanghai, China | 100 | % | December 31 | January 16, 2003 | Sell display products | CNY 4 | |||||||||||
LG Display Guangzhou Co., Ltd. |
Guangzhou, China | 100 | % | December 31 | June 30, 2006 | Manufacture display products | CNY 1,655 | |||||||||||
LG Display Shenzhen Co., Ltd. |
Shenzhen, China | 100 | % | December 31 | July 27, 2007 | Sell display products | CNY 4 | |||||||||||
LG Display Singapore Pte. Ltd. |
Singapore | 100 | % | December 31 | November 4, 2008 | Sell display products | USD 1 | |||||||||||
L&T Display Technology (Fujian) Limited |
Fujian, China | 51 | % | December 31 | December 7, 2009 | Manufacture and sell LCD module and LCD monitor sets |
CNY 116 | |||||||||||
LG Display Yantai Co., Ltd. |
Yantai, China | 100 | % | December 31 | March 17, 2010 | Manufacture display products | CNY 1,008 | |||||||||||
Nanumnuri Co., Ltd. |
Gumi, South Korea | 100 | % | December 31 | March 21, 2012 | Provide janitorial services | KRW 800 | |||||||||||
LG Display (China) Co., Ltd. |
Guangzhou, China | 70 | % | December 31 | December 10, 2012 | Manufacture and sell display products |
CNY 8,232 | |||||||||||
Unified Innovative Technology, LLC |
Wilmington, U.S.A. | 100 | % | December 31 | March 12, 2014 | Manage intellectual property | USD 9 | |||||||||||
LG Display Guangzhou Trading Co., Ltd. |
Guangzhou, China | 100 | % | December 31 | April 28, 2015 | Sell display products | CNY 1 | |||||||||||
Global OLED Technology, LLC |
Sterling, U.S.A. | 100 | % | December 31 | December 18, 2009 | Manage OLED intellectual property |
USD 138 | |||||||||||
LG Display Vietnam Haiphong Co., Ltd. |
Haiphong, Vietnam | 100 | % | December 31 | May 5, 2016 | Manufacture display products | USD 600 | |||||||||||
Suzhou Lehui Display Co., Ltd. |
Suzhou, China | 100 | % | December 31 | July 1, 2016 | Manufacture and sell LCD module and LCD monitor sets |
CNY 637 | |||||||||||
LG DISPLAY FUND I LLC(*) |
Wilmington, U.S.A. | 100 | % | December 31 | May 1, 2018 | Invest in venture business and acquire technologies |
USD 69 | |||||||||||
LG Display High-Tech (China) Co., Ltd. |
Guangzhou, China | 70 | % | December 31 | July 11, 2018 | Manufacture and sell display products |
CNY 15,600 |
(*) | For the nine-month period ended September 30, 2022, the Controlling Company contributed
|
44
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
2. | Basis of Presenting Financial Statements |
(a) | Statement of Compliance |
The condensed consolidated interim financial statements have been prepared in accordance with Korean International Financial Reporting Standard (K-IFRS) No.1034, Interim Financial Reporting. They do not include all of the information required for full annual consolidated financial statements and should be read in conjunction with the consolidated financial statements of the Group as of and for the year ended December 31, 2021.
(b) | Basis of Measurement |
The condensed consolidated interim financial statements have been prepared on the historical cost basis except for the following material items in the consolidated statement of financial position:
| derivative financial instruments at fair value, financial assets at fair value through profit or loss (FVTPL), financial assets at fair value through other comprehensive income (FVOCI), financial liabilities at fair value through profit or loss (FVTPL), and |
| net defined benefit liabilities (defined benefit assets) recognized at the present value of defined benefit obligations less the fair value of plan assets. |
(c) | Functional and Presentation Currency |
Each subsidiarys financial statements within the Group are presented in the subsidiarys functional currency, which is the currency of the primary economic environment in which each subsidiary operates. The condensed consolidated interim financial statements are presented in Korean won, which is the Controlling Companys 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.
45
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
3. | Summary of Significant Accounting Policies |
The significant accounting policies followed by the Group in the preparation of its condensed consolidated interim financial statements are the same as those followed by the Group in its preparation of the consolidated financial statements as of and for the year ended December 31, 2021, except for the application of K-IFRS No. 1034, Interim Financial Reporting.
(a) | Changes in Accounting Policies |
The Group early adopted the amendments to K-IFRS No. 1016, Property, Plant and Equipment: Proceeds before Intended Use, in the annual consolidated financial statements from January 1, 2021.
Before the application of the amendments to K-IFRS No. 1016, directly attributable costs of acquiring property, plant and equipment included the costs of testing whether it is functioning properly, after deducting the net proceeds from selling items produced using the property, plant and equipment. However, after the application of the amendments, the proceeds from selling any such produced items and the cost of producing those items are recognized in profit or loss. The amendments also clarify that testing whether an item of property, plant and equipment is functioning properly means assessing its technical and physical performance rather than assessing its financial performance e.g. assessing whether the property, plant and equipment has achieved a certain level of operating margin.
The Group applied amendments retrospectively, but only to items of property, plant and equipment that were brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2020 and the Group restated and presented the condensed consolidated interim financial statements as of and for the three-month and nine-month periods ended September 30, 2021 as follows.
i) | Impacts on the condensed consolidated interim statement of comprehensive income for the three-month and nine-month periods ended September 30, 2021 |
(In millions of won, except earnings per share) | ||||||||||||
For the three-month periods ended September 30, 2022 |
||||||||||||
As previously reported |
Adjustments | As restated | ||||||||||
Revenue |
| 7,223,196 | ||||||||||
Cost of sales |
(5,915,220 | ) | 408 | (5,914,812 | ) | |||||||
|
|
|
|
|
|
|||||||
Gross profit |
408 | 1,308,384 | ||||||||||
|
|
|
|
|
|
|||||||
Operating profit |
408 | 529,308 | ||||||||||
Profit before income tax |
408 | 608,521 | ||||||||||
Income tax expense |
(144,643 | ) | (101 | ) | (144,744 | ) | ||||||
|
|
|
|
|
|
|||||||
Profit for the period |
307 | 463,777 | ||||||||||
|
|
|
|
|
|
|||||||
Basic earnings per share (in won) |
1 | 1,173 | ||||||||||
Diluted earnings per share (in won) |
670 | 1 | 671 |
46
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
3. | Summary of Significant Accounting Policies, Continued |
For the nine-month periods ended September 30, 2022 | ||||||||||||
(In millions of won, except earnings per share) | As previously reported |
Adjustments | As restated | |||||||||
Revenue |
| 21,071,527 | ||||||||||
Cost of sales |
(17,082,029 | ) | 1,225 | (17,080,804 | ) | |||||||
|
|
|
|
|
|
|||||||
Gross profit |
1,225 | 3,990,723 | ||||||||||
|
|
|
|
|
|
|||||||
Operating profit |
1,225 | 1,754,214 | ||||||||||
Profit before income tax |
1,225 | 1,482,655 | ||||||||||
Income tax expense |
(328,315 | ) | (306 | ) | (328,621 | ) | ||||||
|
|
|
|
|
|
|||||||
Profit for the period |
919 | 1,154,034 | ||||||||||
|
|
|
|
|
|
|||||||
Basic earnings per share (in won) |
3 | 2,827 | ||||||||||
Diluted earnings per share (in won) |
2,442 | 2 | 2,444 |
ii) | Impacts on the condensed consolidated interim statement of changes in equity for the nine-month period ended September 30, 2021 |
| As previously reported |
Attributable to owners of the Controlling Company |
||||||||||||
(In millions of won) | Retained earnings |
Sub-total | Total equity | |||||||||
Balances at January 1, 2021 |
11,401,043 | 12,736,939 | ||||||||||
Profit for the period |
1,010,580 | 1,010,580 | 1,153,115 | |||||||||
|
|
|
|
|
|
|||||||
Balances at September 30, 2021 |
12,997,472 | 14,611,637 | ||||||||||
|
|
|
|
|
|
47
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
3. | Summary of Significant Accounting Policies, Continued |
| Adjustments |
Attributable to owners of the Controlling Company |
||||||||||||
(In millions of won) | Retained earnings |
Sub-total | Total equity | |||||||||
Balances at January 1, 2021 |
(5,511 | ) | (5,511 | ) | ||||||||
Profit for the period |
919 | 919 | 919 | |||||||||
|
|
|
|
|
|
|||||||
Balances at September 30, 2021 |
(4,592 | ) | (4,592 | ) | ||||||||
|
|
|
|
|
|
| As restated |
Attributable to owners of the Controlling Company |
||||||||||||
(In millions of won) | Retained earnings |
Sub-total | Total equity | |||||||||
Balances at January 1, 2021 |
11,395,532 | 12,731,428 | ||||||||||
Profit for the period |
1,011,499 | 1,011,499 | 1,154,034 | |||||||||
|
|
|
|
|
|
|||||||
Balances at September 30, 2021 |
12,992,880 | 14,607,045 | ||||||||||
|
|
|
|
|
|
(*) | There are no impacts on net cash provided by operating activities and net cash used in investing activities in the condensed consolidated interim statement of cash flows for the nine-month period ended September 30, 2021 due to the change in accounting policy. |
48
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
4. | Cash and Cash Equivalents and Deposits in Banks |
Cash and cash equivalents and deposits in banks as of September 30, 2022 and December 31, 2021 are as follows:
(In millions of won) | September 30, 2022 | December 31, 2021 | ||||||
Current assets |
||||||||
Cash and cash equivalents |
||||||||
Cash |
1,122 | |||||||
Demand deposits |
1,539,632 | 3,540,475 | ||||||
|
|
|
|
|||||
3,541,597 | ||||||||
|
|
|
|
|||||
Deposits in banks |
||||||||
Time deposits |
2,600 | |||||||
Restricted deposits (*) |
1,428,534 | 740,705 | ||||||
|
|
|
|
|||||
743,305 | ||||||||
|
|
|
|
|||||
Non-current assets |
||||||||
Deposits in banks |
||||||||
Restricted deposits (*) |
11 |
(*) | Includes funds deposited under agreements on mutually beneficial cooperation to aid LG Group companies suppliers, restricted deposits pledged to enforce the Groups investment plans upon the receipt of grants from Gyeongsangbuk-do, restricted deposits pledged to guarantee a subsidiarys borrowings and others. |
49
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
5. | Trade Accounts and Notes Receivable, Other Accounts Receivable and Others |
(a) | Trade accounts and notes receivable as of September 30, 2022 and December 31, 2021 are as follows: |
(In millions of won) | September 30, 2022 | December 31, 2021 | ||||||
Due from third parties |
3,818,980 | |||||||
Due from related parties |
673,200 | 755,809 | ||||||
|
|
|
|
|||||
4,574,789 | ||||||||
|
|
|
|
(b) | Other accounts receivable as of September 30, 2022 and December 31, 2021 are as follows: |
(In millions of won) | September 30, 2022 | December 31, 2021 | ||||||
Current assets |
||||||||
Non-trade receivables, net(*) |
108,875 | |||||||
Accrued income |
11,218 | 13,024 | ||||||
|
|
|
|
|||||
121,899 | ||||||||
|
|
|
|
|||||
Non-current assets |
||||||||
Long-term non-trade receivables |
| 2,376 | ||||||
|
|
|
|
|||||
124,275 | ||||||||
|
|
|
|
(*) | On May 16, 2022, in connection with the Groups patent contract with Sharp, Singapore International Arbitration Centre ruled in favor of the Group. Accordingly, compensation receivable in the amount of USD 95 million (KRW 136,645 million) was recognized as non-trade receivables and reduction to cost of sales and other non-operating incomes and others. |
Due from related parties included in other accounts receivable as of September 30, 2022 and
December 31, 2021 are W126 million and W2,846 million, respectively.
50
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
5. | Trade Accounts and Notes Receivable, Other Accounts Receivable and Others, Continued |
(c) | The aging of trade accounts and notes receivable and other accounts receivable as of September 30, 2022 and December 31, 2021 are as follows: |
September 30, 2022 | ||||||||||||||||
Book value | Allowance for impairment | |||||||||||||||
(In millions of won) | Trade accounts and notes receivable |
Other accounts receivable |
Trade accounts and notes receivable |
Other accounts receivable |
||||||||||||
Current |
266,077 | (591 | ) | (1,770 | ) | |||||||||||
1-15 days past due |
10,309 | 3,587 | (3 | ) | (36 | ) | ||||||||||
16-30 days past due |
2,542 | 620 | | (3 | ) | |||||||||||
31-60 days past due |
| 227 | | (2 | ) | |||||||||||
More than 60 days past due |
13,987 | 823 | (32 | ) | (41 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
271,334 | (626 | ) | (1,852 | ) | ||||||||||||
|
|
|
|
|
|
|
|
December 31, 2021 | ||||||||||||||||
Book value | Allowance for impairment | |||||||||||||||
(In millions of won) | Trade accounts and notes receivable |
Other accounts receivable |
Trade accounts and notes receivable |
Other accounts receivable |
||||||||||||
Current |
124,877 | (1,204 | ) | (1,932 | ) | |||||||||||
1-15 days past due |
566 | 822 | | (6 | ) | |||||||||||
16-30 days past due |
10 | 44 | | | ||||||||||||
31-60 days past due |
61 | 16 | | | ||||||||||||
More than 60 days past due |
2 | 521 | | (67 | ) | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
126,280 | (1,204 | ) | (2,005 | ) | ||||||||||||
|
|
|
|
|
|
|
|
The movements in the allowance for impairment in respect of trade accounts and notes receivable and other accounts receivable for the nine-month period ended September 30, 2022 and for the year ended December 31, 2021 are as follows:
September 30, 2022 | December 31, 2021 | |||||||||||||||
(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 |
2,005 | 1,047 | 1,778 | |||||||||||||
(Reversal of) bad debt expense |
(578 | ) | (153 | ) | 157 | 227 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance at the end of the reporting period |
1,852 | 1,204 | 2,005 | |||||||||||||
|
|
|
|
|
|
|
|
51
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
5. | Trade Accounts and Notes Receivable, Other Accounts Receivable and Others, Continued |
(d) | Other current assets as of September 30, 2022 and December 31, 2021 are as follows: |
(In millions of won) | September 30, 2022 | December 31, 2021 | ||||||
Advanced payments |
44,907 | |||||||
Prepaid expenses |
146,162 | 67,540 | ||||||
Value added tax refundable |
332,793 | 608,476 | ||||||
Right to recover returned goods |
8,052 | 7,440 | ||||||
|
|
|
|
|||||
728,363 | ||||||||
|
|
|
|
52
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
6. | Other Financial Assets |
Other financial assets as of September 30, 2022 and December 31, 2021 are as follows:
(In millions of won) | September 30, 2022 | December 31, 2021 | ||||||
Current assets |
||||||||
Financial assets at fair value through profit or loss |
||||||||
Convertible securities |
1,573 | |||||||
Derivatives(*1) |
300,313 | 12,741 | ||||||
|
|
|
|
|||||
14,314 | ||||||||
|
|
|
|
|||||
Cash flow hedging derivatives |
||||||||
Derivatives(*2) |
905 | |||||||
Financial assets at fair value through other comprehensive income |
||||||||
Debt instruments |
||||||||
Government bonds |
27 | |||||||
Financial assets carried at amortized cost |
||||||||
Deposits |
23,581 | |||||||
Short-term loans |
30,463 | 22,518 | ||||||
Lease receivables |
7,542 | 6,858 | ||||||
|
|
|
|
|||||
52,957 | ||||||||
|
|
|
|
|||||
68,203 | ||||||||
|
|
|
|
|||||
Non-current assets |
||||||||
Financial assets at fair value through profit or loss |
||||||||
Equity instruments |
48,805 | |||||||
Convertible securities |
| 1,185 | ||||||
Derivatives(*1) |
355,125 | 52,871 | ||||||
|
|
|
|
|||||
102,861 | ||||||||
|
|
|
|
|||||
Financial assets at fair value through other comprehensive income |
||||||||
Debt instruments |
||||||||
Government bonds |
21 | |||||||
Financial assets carried at amortized cost |
||||||||
Deposits |
22,039 | |||||||
Long-term loans |
63,807 | 19,939 | ||||||
Lease receivables |
6,486 | 11,351 | ||||||
|
|
|
|
|||||
53,329 | ||||||||
|
|
|
|
|||||
156,211 | ||||||||
|
|
|
|
(*1) | Represents cross currency interest rate swap contracts and others entered into by the Group to hedge currency and interest rate risks with respect to foreign currency denominated borrowings and bonds. The contracts are not designated as hedging instruments. |
(*2) | Represents forward exchange contracts entered into by the Group to hedge exchange rate risks with respect to forecast sales in foreign currency. The contracts are designated as hedging instruments. |
53
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
7. | Inventories |
Inventories as of September 30, 2022 and December 31, 2021 are as follows:
(In millions of won) | September 30, 2022 | December 31, 2021 | ||||||
Finished goods |
1,180,329 | |||||||
Work-in-process |
1,941,191 | 1,202,548 | ||||||
Raw materials |
807,658 | 786,739 | ||||||
Supplies |
208,358 | 180,759 | ||||||
|
|
|
|
|||||
3,350,375 | ||||||||
|
|
|
|
For the nine-month periods ended September 30, 2022 and 2021, the amount of inventories recognized as cost of sales and inventory write-downs and usage of inventory write-downs included in cost of sales are as follows:
(In millions of won) | 2022 | 2021 | ||||||
Inventories recognized as cost of sales |
17,080,804 | |||||||
Including: inventory write-downs |
291,284 | 199,685 | ||||||
Including: usage of inventory write-downs |
(224,576 | ) | (213,932 | ) |
There were no significant reversals of inventory write-downs recognized during the nine-month periods ended September 30, 2022 and 2021.
54
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
8. | Investments in Equity Accounted Investees |
Associates as of September 30, 2022 and December 31, 2021 are as follows:
(In millions of won) Associates |
Location |
Fiscal year end |
Date of incorporation |
Business |
September 30, 2022 | December 31, 2021 | ||||||||||||||
Percentage of ownership |
Carrying amount |
Percentage of ownership |
Carrying amount |
|||||||||||||||||
Paju Electric Glass Co., Ltd. |
Paju, South Korea |
December 31 | January 2005 |
Manufacture glass for display | 40% | 40% | ||||||||||||||
WooRee E&L Co., Ltd. |
Ansan, South Korea |
December 31 | June 2008 |
Manufacture LED back light unit packages | 13% | 12,988 | 13% | 11,947 | ||||||||||||
YAS Co., Ltd. |
Paju, South Korea |
December 31 | April 2002 |
Develop and manufacture deposition equipment for OLEDs | 15% | 28,433 | 15% | 27,337 | ||||||||||||
AVATEC Co., Ltd. |
Daegu, South Korea |
December 31 | August 2000 |
Process and sell glass for display | 14% | 20,188 | 15% | 20,708 | ||||||||||||
Arctic Sentinel, Inc. |
Los Angeles, U.S.A. | March 31 | June 2008 |
Develop and manufacture tablet for kids |
10% | | 10% | | ||||||||||||
Cynora GmbH |
Bruchsal, Germany |
December 31 | March 2003 |
Develop organic emitting materials for displays and lighting devices | 11% | 1 | 11% | |
55
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
8. | Investments in Equity Accounted Investees, Continued |
(In millions of won) Associates |
Location |
Fiscal year end |
Date of incorporation |
Business |
September 30, 2022 | December 31, 2021 | ||||||||||||||||
Percentage of ownership |
Carrying Amount |
Percentage of ownership |
Carrying amount |
|||||||||||||||||||
Material Science Co., Ltd. |
Seoul, South Korea |
December 31 | January 2014 |
Develop, manufacture, and sell materials for display | 10% | 10% | ||||||||||||||||
Nanosys Inc.(*) |
Milpitas, U.S.A. |
December 31 | July 2001 |
Develop, manufacture, and sell materials for display | | | 4% | 14,650 | ||||||||||||||
|
|
|
|
|||||||||||||||||||
|
|
|
|
(*) | For the nine-month period ended September 30, 2022, Nanosys Inc. was reclassified into the financial asset at fair value through profit or loss as the Group losses its right to appoint members of the board of directors due to the changes in contractual arrangement. |
Although the Controlling Companys respective share interests in WooRee E&L Co., Ltd., YAS Co., Ltd., AVATEC Co., Ltd., Arctic Sentinel, Inc., Cynora GmbH and Material Science Co., Ltd. are below 20%, the Controlling Company is able to exercise significant influence through its right to appoint a director to the board of directors of each investee. Accordingly, the investments in these investees have been accounted for using the equity method.
Dividends income recognized from equity method investees
for the nine-month periods ended September 30, 2022 and 2021 amounted to W4,461 million and W4,068 million, respectively.
56
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
9. | Property, Plant and Equipment |
For the nine-month periods ended September 30, 2022 and 2021, the Group purchased property, plant and equipment of
W4,528,160 million and W2,517,800 million, respectively. The capitalized borrowing costs and the annualized capitalization rate were W101,991 million and 3.00%, and
W40,931 million and 4.29% for the nine-month periods ended September 30, 2022 and 2021, respectively. Also, for the nine-month periods ended September 30, 2022 and 2021, the Group disposed of property, plant and
equipment with carrying amounts of W99,414 million and W76,383 million, respectively, and recognized W12,936 million and W36,289 million, respectively, as gain
and loss on disposal of property, plant and equipment for the nine-month period ended September 30, 2022 (gain and loss on disposal of property, plant and equipment for the nine-month period ended September 30, 2021:
W12,147 million and W40,563 million, respectively).
10. | Intangible Assets |
The Group capitalizes expenditures related to development activities, such as expenditures incurred on designing, manufacturing and testing of products after
those related activities meet the capitalization criteria of development costs including technical feasibility, future economic benefits and others. The balances of capitalized development costs as of September 30, 2022 and December 31,
2021 are W600,390 million and W389,215 million, respectively. For the nine-month periods ended September 30, 2022 and 2021, the Group recognized an impairment loss amounting to
W11,273 million and W13,835 million, respectively, in connection with development projects.
57
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
11. | Financial Liabilities |
(a) | Financial liabilities as of September 30, 2022 and December 31, 2021 are as follows: |
(In millions of won) | September 30, 2022 | December 31, 2021 | ||||||
Current |
||||||||
Short-term borrowings |
613,733 | |||||||
Current portion of long-term borrowings and bonds |
2,634,766 | 3,393,506 | ||||||
Derivatives (*1) |
| 8,594 | ||||||
Cash flow hedging derivatives (*2) |
104,656 | 13,400 | ||||||
Lease liabilities |
51,699 | 40,479 | ||||||
|
|
|
|
|||||
4,069,712 | ||||||||
|
|
|
|
|||||
Non-current |
||||||||
Won denominated borrowings |
2,173,500 | |||||||
Foreign currency denominated borrowings |
7,332,179 | 5,487,091 | ||||||
Bonds |
1,131,816 | 995,976 | ||||||
Derivatives (*1) |
| 2,331 | ||||||
Lease liabilities |
41,612 | 43,847 | ||||||
|
|
|
|
|||||
8,702,745 | ||||||||
|
|
|
|
(*1) | Represents cross currency interest rate swap contracts and others entered into by the Group to hedge currency and interest rate risks with respect to foreign currency denominated borrowings and bonds. The contracts are not designated as hedging instruments. |
(*2) | Represents forward exchange contracts entered into by the Group to hedge exchange rate risks with respect to forecast sales in foreign currency. The contracts are designated as hedging instruments. |
(b) | Short-term borrowings as of September 30, 2022 and December 31, 2021 are as follows: |
(In millions of won, USD and CNY) Lender |
Annual interest rate as of September 30, 2022 (%) |
September 30, 2022 |
December 31, 2021 |
|||||||
The Export-Import Bank of Korea and others |
2.13 ~ 4.75 | | ||||||||
Standard Chartered Bank Singapore and others |
3.10 ~ 4.56 | 703,275 | 613,733 | |||||||
|
|
|
|
|||||||
Foreign currency equivalent |
USD | 1,151 | USD | 518 | ||||||
CNY | 1,000 | | ||||||||
|
|
|
|
|||||||
613,733 | ||||||||||
|
|
|
|
58
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
11. | Financial Liabilities, Continued |
(c) | Won denominated long-term borrowings as of September 30, 2022 and December 31, 2021 are as follows: |
(In millions of won) Lender |
Annual interest rate as of September 30, 2022 (%) |
September 30, 2022 |
December 31, 2021 |
|||||||
Korea Development Bank and others |
1.90 ~ 4.54 | 2,785,000 | ||||||||
Less current portion of long-term borrowings |
(1,341,500 | ) | (611,500 | ) | ||||||
|
|
|
|
|||||||
2,173,500 | ||||||||||
|
|
|
|
(d) | Foreign currency denominated long-term borrowings as of September 30, 2022 and December 31, 2021 are as follows: |
(In millions of won, USD and CNY) Lender |
Annual interest rate as of September 30, 2022 (%) |
September 30, 2022 |
December 31, 2021 |
|||||||||
KEB Hana Bank and others |
1.82 ~ 5.40 | 2,163,538 | ||||||||||
China Construction Bank and others |
3.00 ~ 5.33 | 5,335,820 | 4,489,974 | |||||||||
|
|
|
|
|||||||||
Foreign currency equivalent |
USD | 3,272 | USD | 2,782 | ||||||||
CNY | 17,618 | CNY | 18,017 | |||||||||
Less current portion of long-term borrowings |
(880,415 | ) | (1,166,421 | ) | ||||||||
|
|
|
|
|||||||||
5,487,091 | ||||||||||||
|
|
|
|
59
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
11. | Financial Liabilities, Continued |
(e) | Details of bonds issued and outstanding as of September 30, 2022 and December 31, 2021 are as follows: |
(In millions of won and USD) | Maturity | Annual interest rate as of September 30, 2022 (%) |
September 30, 2022 |
December 31, 2021 |
||||||||
Won denominated bonds at amortized cost (*1) |
||||||||||||
Publicly issued bonds |
October 2022 ~ February 2027 |
2.29 ~ 3.66 | 1,320,000 | |||||||||
Privately issued bonds |
May 2025 ~ May 2033 |
3.25 ~ 4.25 | 110,000 | 160,000 | ||||||||
|
|
|
|
|||||||||
Less discount on bonds |
(3,251 | ) | (2,534 | ) | ||||||||
Less current portion |
(239,933 | ) | (599,825 | ) | ||||||||
|
|
|
|
|||||||||
877,641 | ||||||||||||
|
|
|
|
|||||||||
Foreign currency denominated bonds at amortized cost (*2) |
||||||||||||
Privately issued bonds |
April 2023 | 4.28 | 118,550 | |||||||||
|
|
|
|
|||||||||
Foreign currency equivalent |
USD | 100 | USD | 100 | ||||||||
Less discount on bonds |
(115 | ) | (215 | ) | ||||||||
Less current portion |
(143,365 | ) | | |||||||||
|
|
|
|
|||||||||
118,335 | ||||||||||||
|
|
|
|
|||||||||
Financial liabilities at fair value through profit or loss |
||||||||||||
Foreign currency denominated convertible bonds (*3) |
August 2024 | 1.50 | 1,015,760 | |||||||||
|
|
|
|
|||||||||
Foreign currency equivalent |
USD | 21 | USD | 857 | ||||||||
Less current portion |
(29,553 | ) | (1,015,760 | ) | ||||||||
|
|
|
|
|||||||||
| ||||||||||||
|
|
|
|
|||||||||
995,976 | ||||||||||||
|
|
|
|
(*1) | Principal of the won denominated bonds is to be repaid at maturity and interests are paid quarterly. |
(*2) | Principal of the foreign currency denominated bonds is to be repaid at maturity and interests are paid quarterly or semi-annually. |
(*3) | For the nine-month period ended September 30, 2022, USD 667 million was redeemed upon the bondholders exercise of their put option, and the remaining outstanding balance was fully redeemed subsequent to September 30, 2022 upon the Groups exercise of it early redemption right. |
60
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
11. | Financial Liabilities, Continued |
(f) | Details of the convertible bonds issued by the Controlling Company and outstanding as of September 30, 2022 are as follows: |
(In won, USD) |
Description | |
Type |
Unsecured foreign currency denominated convertible bonds | |
Issuance amount |
USD 687,800,000 | |
Annual interest rate (%) |
1.50 | |
Issuance date |
August 22, 2019 | |
Maturity date |
August 22, 2024 | |
Interest payment |
Payable semi-annually in arrear until maturity date | |
Principal redemption |
1. Redemption at maturity: Redeemed on the maturity date, at their outstanding principal amount, which has not been early redeemed or converted. | |
2. Early redemption: The Controlling Company has a right to redeem before maturity (call option) or the bondholders have a right to require the Controlling Company to redeem before maturity (put option). At exercise of each option, the outstanding principal amount together with accrued but unpaid interest are to be redeemed. | ||
Conversion price |
||
Conversion period |
From August 23, 2020 to August 12, 2024 | |
Redemption at the option of the issuer (Call option) |
- On or at any time after 3 years from the issuance, if the closing price of the shares for any 20 trading days out of the 30 consecutive trading days is at least 130% of the applicable conversion price - The aggregate principal amount of the convertible bonds outstanding is less than 10% of the aggregate principal amount originally issued, or - In the event of certain changes in laws and other directives resulting in additional taxes for the holders | |
Redemption at the option of the bondholders (Put option) |
On the third anniversary from the issuance date |
The Controlling Company designated the convertible bonds as financial liabilities at fair value through profit or loss and recognized the change in fair value in profit or loss. The Controlling Company measures the convertible bond at fair value using the market price of convertible bonds disclosed on Bloomberg. The number of convertible shares as of September 30, 2022 is as follows:
(In won and number of shares) | September 30, 2022 | |||
Aggregate outstanding amount of the convertible bonds |
||||
Conversion price |
||||
Number of common shares to be issued at conversion |
1,283,543 |
61
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
12. | Employee Benefits |
The Controlling Company and certain subsidiaries defined benefit plans provide a lump-sum payment to an employee based on final salary rates and length of service at the time the employee leaves the Controlling Company or certain subsidiaries.
(a) | Net defined benefit liabilities (defined benefit assets) recognized as of September 30, 2022 and December 31, 2021 are as follows: |
(In millions of won) | September 30, 2022 | December 31, 2021 | ||||||
Present value of partially funded defined benefit obligations |
1,684,096 | |||||||
Fair value of plan assets |
(1,692,649 | ) | (1,750,783 | ) | ||||
|
|
|
|
|||||
(66,687 | ) | |||||||
|
|
|
|
|||||
Defined benefit liabilities, net |
1,589 | |||||||
Defined benefit assets, net |
68,276 |
(b) | Expenses related to defined benefit plans recognized in profit or loss for the three-month and nine-month periods ended September 30, 2022 and 2021 are as follows: |
For the three-month periods ended September 30 |
For the nine-month periods ended September 30 |
|||||||||||||||
(In millions of won) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
Current service cost |
37,533 | 133,446 | 112,600 | |||||||||||||
Net interest cost |
(1,318 | ) | (1,474 | ) | (2,380 | ) | (4,421 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
36,059 | 131,066 | 108,179 | ||||||||||||||
|
|
|
|
|
|
|
|
(c) | Plan assets as of September 30, 2022 and December 31, 2021 are as follows: |
(In millions of won) | September 30, 2022 | December 31, 2021 | ||||||
Guaranteed deposits in banks |
1,750,783 |
As of September 30, 2022 the Controlling Company maintains the plan assets primarily with Mirae Asset Securities Co., Ltd., KB Insurance Co., Ltd. and others.
62
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
12. | Employee Benefits, Continued |
(d) | Remeasurements of the net defined benefit liabilities (assets) included in other comprehensive income (loss) for the three-month and nine-month periods ended September 30, 2022 and 2021 are as follows: |
For the three-month periods ended September 30 |
For the nine-month periods ended September 30 |
|||||||||||||||
(In millions of won) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
Remeasurements of net defined benefit liabilities |
(2,914 | ) | 194,367 | (10,855 | ) | |||||||||||
Tax effect |
1,758 | 743 | (50,846 | ) | 2,771 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Remeasurements of net defined benefit liabilities, net of income tax |
(2,171 | ) | 143,521 | (8,084 | ) | |||||||||||
|
|
|
|
|
|
|
|
13. | Provisions |
Changes in provisions for the nine-month period ended September 30, 2022 are as follows:
(In millions of won) | Litigation and claims |
Warranties (*) | Others | Total | ||||||||||||
Balance at January 1, 2022 |
257,126 | 9,247 | 266,373 | |||||||||||||
Additions (reversal) |
1,758 | 178,252 | (737 | ) | 179,273 | |||||||||||
Usage |
| (186,604 | ) | | (186,604 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance at September 30, 2022 |
248,774 | 8,510 | 259,042 | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Current |
161,591 | 8,510 | 171,859 | |||||||||||||
Non-current |
87,183 | | 87,183 |
(*) | Product warranties on defective products are normally applicable for warranty periods from the date of customers purchase. The provision is calculated by using historical and anticipated rates of warranty claims and costs per claim to satisfy the Groups warranty obligation. |
63
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
14. | Contingent Liabilities and Commitments |
(a) | Legal Proceedings |
Anti-trust litigations
Certain individual claimants filed follow-on damages claims against the Group and other TFT-LCD manufacturers alleging violations of EU competition law. While the Group continues its vigorous defense of the various pending proceedings described above, as of September 30, 2022, the Group cannot reliably estimate the timing and amount of outflows of resources embodying economic benefits relating to the proceedings.
Others
The Group is involved in various lawsuits and disputes in addition to pending proceedings described above. The Group cannot reliably estimate the timing and amount of outflows of resources embodying economic benefits relating to the disputes.
(b) | Commitments |
Factoring and securitization of accounts receivable
The Controlling Company has agreements with Korea Development Bank and several other banks for accounts receivable sales negotiating facilities
of up to an aggregate of USD 1,070 million (W1,535,236 million) in connection with the Controlling Companys export sales transactions with its subsidiaries. As of September 30, 2022, there are no short-term borrowings
that are outstanding but past due in connection with these agreements. In connection with all of the contracts in this paragraph, the Controlling Company has sold its accounts receivable with recourse.
64
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
14. | Contingent Liabilities and Commitments, Continued |
The Controlling Company and overseas subsidiaries have agreements with financial institutions for accounts receivables sales negotiating facilities. As of September 30, 2022, the respective maximum amount of accounts receivables that could be sold under the agreement and the amount of sold but not yet due accounts receivables by contract are as follows:
Credit limit | Not yet due | |||||||||||||||||
(In millions of USD and KRW) Classification |
Financial institutions |
Contractual amount |
KRW equivalent |
Contractual amount |
KRW equivalent |
|||||||||||||
Controlling Company |
Shinhan Bank | KRW | 90,000 | 90,000 | | | ||||||||||||
USD | 10 | 14,348 | USD | 10 | 14,342 | |||||||||||||
Sumitomo Mitsui Banking Corporation | USD | 20 | 28,696 | | | |||||||||||||
MUFG Bank | USD | 180 | 258,264 | USD | 20 | 28,705 | ||||||||||||
BNP Paribas | USD | 65 | 93,262 | | | |||||||||||||
ING Bank | USD | 90 | 129,132 | | | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
USD | 365 | USD | 30 | |||||||||||||||
KRW | 90,000 | 613,702 | | 43,047 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Subsidiaries |
||||||||||||||||||
LG Display Singapore Pte. Ltd. |
Standard Chartered Bank | USD | 150 | 215,220 | | | ||||||||||||
United Overseas Bank Limited | USD | 200 | 286,960 | USD | 128 | 183,458 | ||||||||||||
JPMorgan Chase Bank, N.A., Singapore Branch | USD | 50 | 71,740 | | | |||||||||||||
Credit Agricole Corporate & Investment Bank, Singapore Branch | USD | 300 | 430,440 | USD | 50 | 71,588 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
LG Display Taiwan Co., Ltd. |
BNP Paribas | USD | 15 | 21,522 | | | ||||||||||||
Australia and New Zealand Banking Group Ltd. | USD | 120 | 172,176 | USD | 10 | 14,348 | ||||||||||||
KGI Bank Co., Ltd. | USD | 30 | 43,044 | | | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
LG Display Germany GmbH |
BNP Paribas | USD | 135 | 193,698 | USD | 65 | 93,530 | |||||||||||
Commerzbank AG | | | | | ||||||||||||||
DZ Bank AG | USD | 7 | 9,650 | USD | 6 | 8,873 | ||||||||||||
UniCredit Bank | USD | 4 | 5,985 | USD | 4 | 5,428 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
LG Display America, Inc. |
Hong Kong & Shanghai Banking Corp. | USD | 400 | 573,920 | USD | 300 | 430,440 | |||||||||||
Standard Chartered Bank | USD | 800 | 1,147,840 | USD | 763 | 1,094,688 | ||||||||||||
Sumitomo Mitsui Banking Corporation | USD | 150 | 215,220 | USD | 50 | 71,740 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
LG Display Japan Co., Ltd. |
Standard Chartered Bank | USD | 200 | 286,960 | | | ||||||||||||
Chelsea Capital Corporation | USD | 120 | 172,176 | USD | 50 | 71,751 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
LG Display Guangzhou Trading Co., Ltd |
KEB Hana Bank (China) Company Limited | USD | 30 | 43,044 | USD | 20 | 28,689 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||||
USD | 2,711 | 3,889,595 | USD | 1,446 | 2,074,533 | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
USD | 3,076 | USD | 1,476 | |||||||||||||||
KRW | 90,000 | 4,503,297 | | 2,117,580 | ||||||||||||||
|
|
|
|
|
|
|
|
65
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
14. | Contingent Liabilities and Commitments, Continued |
In connection with all of the contracts in the above table, the Group has sold its accounts receivable without recourse.
Letters of credit
As of September 30, 2022, the Group entered into agreements with financial institutions in relation to the opening of letters of credit and the respective credit limits under the agreements are as follows:
(In millions of won, USD and CNY) | Contractual amount |
KRW equivalent |
||||||
KEB Hana Bank |
USD | 350 | ||||||
CNY | 855 | 170,803 | ||||||
Sumitomo Mitsui Banking Corporation |
USD | 100 | 143,480 | |||||
Industrial Bank of Korea |
USD | 200 | 286,960 | |||||
Industrial and Commercial Bank of China |
USD | 200 | 286,960 | |||||
Shinhan Bank |
USD | 270 | 387,396 | |||||
KRW | 300,000 | 300,000 | ||||||
KB Kookmin Bank |
USD | 400 | 573,920 | |||||
MUFG Bank |
USD | 150 | 215,220 | |||||
The ExportImport Bank of Korea |
USD | 100 | 143,480 | |||||
Citibank Korea |
USD | 100 | 143,480 | |||||
Standard Chartered Bank |
USD | 300 | 430,440 | |||||
|
|
|
|
|||||
USD | 2,170 | |||||||
CNY | 855 | |||||||
KRW | 300,000 | |||||||
|
|
|
|
Payment guarantees
The Controlling Company obtained payment guarantees amounting to USD 2 million (W2,870 million) from Shinhan Bank for
value added tax payments in Poland.
LG Display (China) Co., Ltd. and other subsidiaries are provided with payment guarantees from the
China Construction Bank and other various banks amounting to CNY 1,115 million (W222,621 million), JPY 900 million (W8,939 million), EUR 2.5 million (W3,522 million), VND
31,679 million (W1,907 million), and USD 0.5 million (W717 million), respectively, for their local tax payments and utility payments.
License agreements
As of September 30, 2022, the Group has technical license agreements with Hitachi Display, Ltd. and others in relation to its LCD business and patent license agreement with Universal Display Corporation in relation to its OLED business. Also, the Group has a trademark license agreement with LG Corp. and other intellectual property license agreements with various companies as of September 30, 2022.
Pledged Assets
In connection with the borrowings amounting to CNY 11,164 million (W2,229,004 million) from China Construction Bank and
others, as of September 30, 2022, the Group is providing its property, plant and equipment with carrying amount of W1,028,922 million as pledged assets.
66
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
15. | Share Capital, Share Premium and Reserves |
(a) | Share capital and Share premium |
The Controlling Company is authorized to issue 500,000,000 shares of capital stock (par value W5,000), and as of
September 30, 2022 and December 31, 2021, the number of issued common shares is 357,815,700. There have been no changes in the capital stock from January 1, 2021 to September 30, 2022.
The Groups capital surplus consists of share premium. There have been no changes in share premium from January 1, 2021 to September 30, 2022.
(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.
Gain or loss on valuation of derivatives
Gain or loss on valuation of derivatives is the effective portion of the gains or losses from derivatives to which cash flow hedging accounting has been applied.
Reserves as of September 30, 2022 and December 31, 2021 are as follows:
(In millions of won) | September 30, 2022 | December 31, 2021 | ||||||
Loss on valuation of derivatives |
(9,227 | ) | ||||||
Foreign currency translation differences for foreign operations |
1,294,694 | 566,651 | ||||||
Other comprehensive loss from associates |
(29,785 | ) | (20,282 | ) | ||||
|
|
|
|
|||||
537,142 | ||||||||
|
|
|
|
67
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
16. | Revenue |
Details of revenue for the three-month and nine-month periods ended September 30, 2022 and 2021 are as follows:
For the three-month periods ended September 30 |
For the nine-month periods ended September 30 |
|||||||||||||||
(In millions of won) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
Sales of goods |
7,209,265 | 18,967,555 | 21,030,726 | |||||||||||||
Royalties |
2,846 | 3,454 | 9,584 | 10,593 | ||||||||||||
Others |
10,338 | 10,477 | 25,670 | 30,208 | ||||||||||||
Hedging loss |
(83,371 | ) | | (152,656 | ) | | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
7,223,196 | 18,850,153 | 21,071,527 | ||||||||||||||
|
|
|
|
|
|
|
|
17. | Geographic and Other Information |
The following is a summary of the Groups operation by region based on the location of customers for the three-month and nine-month periods ended September 30, 2022 and 2021.
(a) | Revenue by geography |
For the three-month periods ended September 30 |
For the nine-month periods ended September 30 |
|||||||||||||||
(In millions of won) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
Domestic |
151,014 | 519,806 | 472,707 | |||||||||||||
Foreign |
||||||||||||||||
China |
4,541,702 | 4,790,907 | 12,262,462 | 13,793,446 | ||||||||||||
Asia (excluding China) |
769,424 | 798,796 | 2,169,121 | 2,438,482 | ||||||||||||
United States |
834,746 | 849,368 | 2,375,427 | 2,361,660 | ||||||||||||
Europe (excluding Poland) |
237,834 | 261,085 | 776,752 | 808,710 | ||||||||||||
Poland |
322,104 | 372,026 | 899,241 | 1,196,522 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
7,072,182 | 18,483,003 | 20,598,820 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
7,223,196 | 19,002,809 | 21,071,527 | ||||||||||||||
|
|
|
|
|
|
|
|
Total revenue excludes W152,656 million of forward exchange hedging loss which was
reclassified from accumulated other comprehensive income to revenue when the sales from the hedged forecast transactions are recognized.
Sales to Company A, Company B and Company C amount to W7,673,206 million, W3,431,692 and
W2,031,272 million, respectively, for the nine-month period ended September 30, 2022 (the nine-month period ended September 30, 2021: W8,072,842 million, W4,407,302 and
W1,640,828 million, respectively). The Groups top ten end-brand customers together accounted for 85% of sales for the nine-month period ended September 30, 2022 (the nine-month
period ended September 30, 2021: 85%).
68
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
17. | Geographic and Other Information, Continued |
(b) | Non-current assets by geography |
September 30, 2022 | December 31, 2021 | |||||||||||||||
(In millions of won) | Property, plant and equipment |
Intangible assets |
Property, plant and equipment |
Intangible assets |
||||||||||||
Domestic |
1,667,548 | 12,006,204 | 1,452,823 | |||||||||||||
Foreign |
||||||||||||||||
China |
5,850,166 | 66,220 | 6,393,129 | 83,655 | ||||||||||||
Vietnam |
2,952,202 | 25,572 | 2,146,652 | 19,954 | ||||||||||||
Others |
13,556 | 91,392 | 12,461 | 88,466 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
183,184 | 8,552,242 | 192,075 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
1,850,732 | 20,558,446 | 1,644,898 | ||||||||||||||
|
|
|
|
|
|
|
|
(c) | Revenue by product and services |
For the three-month periods ended September 30 |
For the nine-month periods ended September 30 |
|||||||||||||||
(In millions of won) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
TV |
2,293,578 | 5,164,962 | 7,076,941 | |||||||||||||
IT products |
3,060,066 | 3,278,391 | 8,719,159 | 8,738,043 | ||||||||||||
Mobile and others |
2,075,491 | 1,651,227 | 5,118,688 | 5,256,543 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
7,223,196 | 19,002,809 | 21,071,527 | ||||||||||||||
|
|
|
|
|
|
|
|
Total revenue excludes W152,656 million of forward exchange hedging loss which was
reclassified from accumulated other comprehensive income to revenue when the sales from the hedged forecast transactions are recognized.
69
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
18. | The Nature of Expenses and Others |
The classification of expenses by nature for the three-month and nine-month periods ended September 30, 2022 and 2021 are as follows:
For the three-month periods ended September 30 |
For the nine-month periods ended September 30 |
|||||||||||||||
(In millions of won) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
Changes in inventories |
(857,509 | ) | (1,166,942 | ) | (1,409,670 | ) | ||||||||||
Purchases of raw materials, merchandise and others |
3,636,844 | 3,814,230 | 10,500,178 | 10,399,265 | ||||||||||||
Depreciation and amortization |
1,150,500 | 1,166,728 | 3,473,042 | 3,332,140 | ||||||||||||
Outsourcing |
317,469 | 408,191 | 858,189 | 994,558 | ||||||||||||
Labor |
948,303 | 1,038,554 | 2,747,256 | 2,730,743 | ||||||||||||
Supplies and others |
318,517 | 320,674 | 921,718 | 872,087 | ||||||||||||
Utility |
312,325 | 276,562 | 878,561 | 752,163 | ||||||||||||
Fees and commissions |
205,903 | 202,369 | 617,245 | 555,911 | ||||||||||||
Shipping |
72,129 | 78,914 | 227,376 | 226,523 | ||||||||||||
Advertising |
28,617 | 32,130 | 84,802 | 105,878 | ||||||||||||
Warranty |
55,624 | 49,647 | 178,252 | 171,355 | ||||||||||||
Travel |
19,098 | 16,109 | 48,250 | 43,383 | ||||||||||||
Taxes and dues |
34,290 | 33,001 | 106,671 | 110,717 | ||||||||||||
Others |
251,546 | 146,388 | 652,712 | 502,743 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
6,725,988 | 20,127,310 | 19,387,796 | ||||||||||||||
|
|
|
|
|
|
|
|
Total expenses consist of cost of sales, selling, administrative, research and development expenses and other non-operating expenses, excluding foreign exchange differences.
70
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
19. | Selling and Administrative Expenses |
Details of selling and administrative expenses for the three-month and nine-month periods ended September 30, 2022 and 2021 are as follows:
For the three-month periods ended September 30 |
For the nine-month periods ended September 30 |
|||||||||||||||
(In millions of won) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
Salaries |
104,270 | 262,846 | 279,609 | |||||||||||||
Expenses related to defined benefit plans |
5,721 | 5,701 | 20,779 | 17,255 | ||||||||||||
Other employee benefits |
23,950 | 21,351 | 67,841 | 59,637 | ||||||||||||
Shipping |
55,405 | 67,391 | 177,241 | 194,229 | ||||||||||||
Fees and commissions |
68,241 | 61,677 | 198,097 | 172,119 | ||||||||||||
Depreciation |
67,142 | 70,108 | 199,985 | 199,934 | ||||||||||||
Taxes and dues |
15,539 | 16,219 | 49,013 | 61,032 | ||||||||||||
Advertising |
28,617 | 32,130 | 84,802 | 105,878 | ||||||||||||
Warranty |
55,624 | 49,647 | 178,252 | 171,356 | ||||||||||||
Insurance |
3,909 | 4,471 | 11,666 | 12,406 | ||||||||||||
Travel |
5,070 | 1,690 | 12,677 | 4,344 | ||||||||||||
Training |
5,228 | 4,588 | 13,453 | 10,933 | ||||||||||||
Others |
33,940 | 22,470 | 86,345 | 59,528 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
461,713 | 1,362,997 | 1,348,260 | ||||||||||||||
|
|
|
|
|
|
|
|
20. | Personnel Expenses |
Details of personnel expenses for the three-month and nine-month periods ended September 30, 2022 and 2021 are as follows:
For the three-month periods ended September 30 |
For the nine-month periods ended September 30 |
|||||||||||||||
(In millions of won) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
Salaries and wages |
864,264 | 2,230,813 | 2,265,226 | |||||||||||||
Other employee benefits |
172,312 | 157,016 | 474,151 | 415,398 | ||||||||||||
Contributions to National Pension plan |
20,250 | 17,423 | 56,832 | 50,473 | ||||||||||||
Expenses related to defined benefit plans and defined contribution plans |
42,274 | 36,232 | 131,786 | 108,535 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
1,074,935 | 2,893,582 | 2,839,632 | ||||||||||||||
|
|
|
|
|
|
|
|
71
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
21. | Other Non-operating Income and Other Non-operating Expenses |
(a) | Details of other non-operating income for the three-month and nine-month periods ended September 30, 2022 and 2021 are as follows: |
For the three-month periods ended September 30 |
For the nine-month periods ended September 30 |
|||||||||||||||
(In millions of won) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
Foreign currency gain |
467,016 | 2,218,676 | 1,047,099 | |||||||||||||
Gain on disposal of property, plant and equipment |
3,476 | 8,984 | 12,936 | 12,147 | ||||||||||||
Gain on disposal of intangible assets |
| 196 | | 196 | ||||||||||||
Reversal of impairment loss on property, plant and equipment |
9 | 589 | 3,181 | 1,121 | ||||||||||||
Reversal of impairment loss on intangible assets |
| | 5,571 | 640 | ||||||||||||
Rental income |
502 | 372 | 1,720 | 1,426 | ||||||||||||
Others |
15,287 | 8,890 | 40,922 | 14,656 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
486,047 | 2,283,006 | 1,077,285 | ||||||||||||||
|
|
|
|
|
|
|
|
(b) | Details of other non-operating expenses for the three-month and nine-month periods ended September 30, 2022 and 2021 are as follows: |
For the three-month periods ended September 30 |
For the nine-month periods ended September 30 |
|||||||||||||||
(In millions of won) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
Foreign currency loss |
447,413 | 2,580,621 | 998,564 | |||||||||||||
Loss on disposal of property, plant and equipment |
11,607 | 22,343 | 36,289 | 40,563 | ||||||||||||
Loss on disposal of intangible assets |
7 | | 163 | | ||||||||||||
Impairment loss on property, plant and equipment |
| 3,083 | 7,200 | 11,688 | ||||||||||||
Impairment loss on intangible assets |
12,686 | 5,306 | 19,388 | 13,835 | ||||||||||||
Donations |
223 | 90 | 1,302 | 878 | ||||||||||||
Others |
1,114 | 1,278 | 3,510 | 3,519 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
479,513 | 2,648,473 | 1,069,047 | ||||||||||||||
|
|
|
|
|
|
|
|
72
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
22. | Finance Income and Finance Costs |
Finance income and costs recognized in profit or loss for the three-month and nine-month periods ended September 30, 2022 and 2021 are as follows:
For the three-month periods ended September 30 |
For the nine-month periods ended September 30 |
|||||||||||||||
(In millions of won) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
Finance income |
||||||||||||||||
Interest income |
22,993 | 62,286 | 66,134 | |||||||||||||
Dividend income |
| 134 | | 134 | ||||||||||||
Foreign currency gain |
123,355 | 19,831 | 238,542 | 74,772 | ||||||||||||
Gain on disposal of investments in equity accounted investees |
4,480 | | 2,993 | | ||||||||||||
Gain on transaction of derivatives |
6,098 | | 19,754 | | ||||||||||||
Gain on valuation of derivatives |
383,839 | 121,639 | 600,752 | 242,351 | ||||||||||||
Gain on disposal of financial assets at fair value through profit or loss |
| | 267 | | ||||||||||||
Gain on valuation of financial assets at fair value through profit or loss |
| | 310 | 1,254 | ||||||||||||
Gain on valuation of financial liabilities at fair value through profit or loss |
2,967 | 208,557 | 220,355 | 60,838 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
373,154 | 1,145,259 | 445,483 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Finance costs |
||||||||||||||||
Interest expense |
119,633 | 283,954 | 342,553 | |||||||||||||
Foreign currency loss |
465,527 | 175,531 | 840,111 | 355,957 | ||||||||||||
Loss on early repayment of borrowings and bonds |
2,540 | | 2,540 | 250 | ||||||||||||
Loss on disposal of investments in equity accounted investees |
| | 81 | | ||||||||||||
Loss on sale of trade accounts and notes receivable |
11,791 | 1,232 | 18,463 | 3,419 | ||||||||||||
Loss on transaction of derivatives |
38 | 4,657 | 376 | 26,446 | ||||||||||||
Loss on disposal of financial assets at fair value through profit or loss |
96 | 991 | 96 | 1,169 | ||||||||||||
Loss on valuation of financial assets at fair value through profit or loss |
97 | | 1,514 | 63 | ||||||||||||
Others |
24 | 94 | 189 | 336 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
302,138 | 1,147,324 | 730,193 | ||||||||||||||
|
|
|
|
|
|
|
|
73
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
23. | Income Tax Expense (Benefit) |
(a) | Details of income tax expense (benefit) for the three-month and nine-month periods ended September 30, 2022 and 2021 are as follows: |
For the three-month periods ended September 30 |
For the nine-month periods ended September 30 |
|||||||||||||||
(In millions of won) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
Current tax expense (benefit) |
81,725 | 134,887 | 257,987 | |||||||||||||
Deferred tax expense (benefit) |
(383,205 | ) | 63,019 | (606,565 | ) | 70,634 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Income tax expense (benefit) |
144,744 | (471,678 | ) | 328,621 | ||||||||||||
|
|
|
|
|
|
|
|
(b) | Deferred Tax Assets and Liabilities |
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that the deferred tax assets at each reporting date will be realized with the Groups estimated future taxable income. The Groups deferred tax assets and liabilities may differ from actual refundable or payable amount.
Deferred tax assets and liabilities as of September 30, 2022 and December 31, 2021 are attributable to the following:
Assets | Liabilities | Total | ||||||||||||||||||||||
(In millions of won) | September 30, 2022 |
December 31, 2021 |
September 30, 2022 |
December 31, 2021 |
September 30, 2022 |
December 31, 2021 |
||||||||||||||||||
Other accounts receivable, net |
| (2,048 | ) | (17 | ) | (2,048 | ) | (17 | ) | |||||||||||||||
Inventories, net |
91,307 | 68,679 | | | 91,307 | 68,679 | ||||||||||||||||||
Defined benefit liabilities, net |
| | | (26,642 | ) | | (26,642 | ) | ||||||||||||||||
Investments in subsidiaries and associates |
| | (287,381 | ) | (233,552 | ) | (287,381 | ) | (233,552 | ) | ||||||||||||||
Accrued expenses |
123,065 | 250,582 | | | 123,065 | 250,582 | ||||||||||||||||||
Property, plant and equipment |
509,423 | 632,378 | (4,252 | ) | (28,886 | ) | 505,171 | 603,492 | ||||||||||||||||
Intangible assets |
26,852 | 17,450 | (6,079 | ) | (6,636 | ) | 20,773 | 10,814 | ||||||||||||||||
Provisions |
64,800 | 68,893 | | | 64,800 | 68,893 | ||||||||||||||||||
Other temporary differences |
79,492 | 130,274 | (38,665 | ) | (19,596 | ) | 40,827 | 110,678 | ||||||||||||||||
Tax losses carryforwards |
1,751,098 | 958,624 | | | 1,751,098 | 958,624 | ||||||||||||||||||
Tax credit carryforwards |
560,371 | 489,505 | | | 560,371 | 489,505 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Deferred tax assets (liabilities) |
2,616,385 | (338,425 | ) | (315,329 | ) | 2,867,983 | 2,301,056 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
74
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
24. | Earnings (Loss) Per Share Attributable to Owners of the Controlling Company |
(a) | Basic earnings (loss) per share for the three-month and nine-month periods ended September 30, 2022 and 2021 are as follows: |
For the three-month periods ended September 30 |
For the nine-month periods ended September 30 |
|||||||||||||||
(In won and number of shares) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
Profit (loss) attributable to owners of the Controlling Company |
419,833,757,721 | (1,174,074,737,680 | ) | 1,011,498,753,403 | ||||||||||||
Weighted-average number of common stocks outstanding |
357,815,700 | 357,815,700 | 357,815,700 | 357,815,700 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Basic earnings (loss) per share |
1,173 | (3,281 | ) | 2,827 | ||||||||||||
|
|
|
|
|
|
|
|
For the three-month and nine-month periods ended September 30, 2022 and 2021, there were no events or transactions that resulted in changes in the number of common stocks used for calculating basic earnings (loss) per share.
75
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
24. | Earnings (Loss) Per Share Attributable to Owners of the Controlling Company, Continued |
(b) | Diluted earnings (loss) per share for the three-month and nine-month periods ended September 30, 2022 are as follows: |
For the three-month periods ended September 30 |
For the nine-month periods ended September 30 |
|||||||||||||||
(In won and number of shares) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
Profit (loss) attributable to owners of the Controlling Company |
419,833,757,721 | (1,174,074,737,680 | ) | 1,011,498,753,403 | ||||||||||||
Adjustment: |
||||||||||||||||
interest expenses of convertible bond, net of income tax |
1,863,058,952 | 2,907,409,095 | 8,175,578,596 | 8,533,633,457 | ||||||||||||
gain on fair value valuation of convertible bond, net of income tax |
(2,190,733,528 | ) | (155,312,239,309 | ) | (162,710,366,491 | ) | (45,305,824,343 | ) | ||||||||
Diluted profit attributable to owners of the Controlling Company |
(789,838,916,958 | ) | 267,428,927,507 | (1,328,609,525,575 | ) | 974,726,562,517 | ||||||||||
Weighted-average number of common stocks outstanding, after adjustment |
382,363,478 | 398,804,698 | 394,228,303 | 398,804,698 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Diluted earnings (loss) per share |
671 | (3,370 | ) | 2,444 | ||||||||||||
|
|
|
|
|
|
|
|
Weighted-average number of common stocks outstanding, after adjustment, for measurement of diluted earnings (loss) per share is determined as follows:
For the three-month periods ended September 30 |
For the nine-month periods ended September 30 |
|||||||||||||||
(No. of shares) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
Weighted-average number of common stocks outstanding |
357,815,700 | 357,815,700 | 357,815,700 | |||||||||||||
Adjustment : Convertible bonds |
24,547,778 | 40,988,998 | 36,412,603 | 40,988,998 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Weighted-average number of common stocks outstanding, after adjustment |
398,804,698 | 394,228,303 | 398,804,698 | |||||||||||||
|
|
|
|
|
|
|
|
76
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
25. | Financial Risk Management |
The Group is exposed to credit risk, liquidity risk and market risks. The Group identifies and analyzes such risks, and controls are implemented under a risk management system to monitor and manage these risks at below an acceptable level.
(a) | Market risk |
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices, will affect the Groups income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.
(i) | Currency risk |
The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the functional currency of the Controlling Company, Korean won (KRW). The currencies in which these transactions primarily are denominated are USD, CNY, JPY, etc.
Interest on borrowings is accrued in the currency of the borrowing. Generally, borrowings are denominated in currencies that match the cash flows generated by the underlying operations of the Group, primarily KRW, USD and CNY.
The Group adopts policies to ensure that its net exposure is kept to a manageable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances. In respect of monetary assets and liabilities denominated in foreign currencies, the Group manages currency risk through continuously managing the position of foreign currencies, measuring the currency risk and, if necessary, using derivatives such as currency forwards, currency swap and others.
77
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
25. | Financial Risk Management, Continued |
i) Exposure to currency risk
The Groups exposure to foreign currency risk based on notional amounts as of September 30, 2022 and December 31, 2021 is as follows:
September 30, 2022 | ||||||||||||||||||||||||||||
(In millions) | USD | JPY | CNY | TWD | EUR | PLN | VND | |||||||||||||||||||||
Cash and cash equivalents |
538 | 1,164 | 3,685 | 39 | 1 | 1 | 52,983 | |||||||||||||||||||||
Deposits in banks |
65 | | 7,953 | | | | | |||||||||||||||||||||
Trade accounts and notes receivable |
1,911 | 572 | 569 | | | | | |||||||||||||||||||||
Other accounts receivables |
77 | 430 | 242 | 6 | 40 | | 11,742 | |||||||||||||||||||||
Other assets denominated in foreign currencies |
27 | 176 | 45 | 7 | | | 10,879 | |||||||||||||||||||||
Trade accounts and notes payable |
(1,712 | ) | (4,645 | ) | (1,862 | ) | | | | (347,004 | ) | |||||||||||||||||
Other accounts payable |
(620 | ) | (17,094 | ) | (1,895 | ) | (6 | ) | (11 | ) | | (1,699,003 | ) | |||||||||||||||
Financial liabilities |
(4,544 | ) | | (18,618 | ) | | | | | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(4,258 | ) | (19,397 | ) | (9,881 | ) | 46 | 30 | 1 | (1,970,403 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Cross currency interest rate swap contracts(*) |
2,525 | | | | | | | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net exposure |
(1,733 | ) | (19,397 | ) | (9,881 | ) | 46 | 30 | 1 | (1,970,403 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*) | Of cross currency interest rate swap contracts, USD 900 million were entered into to hedge currency risk with respect to foreign currency denominated borrowings and USD 1,625 million were entered into to hedge currency risk and interest rate risk with respect to foreign currency denominated borrowings and bonds. |
78
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
25. | Financial Risk Management, Continued |
December 31, 2021 | ||||||||||||||||||||||||||||
(In millions) | USD | JPY | CNY | TWD | EUR | PLN | VND | |||||||||||||||||||||
Cash and cash equivalents |
1,138 | 195 | 11,024 | 29 | 3 | 3 | 44,525 | |||||||||||||||||||||
Deposits in banks |
| | 3,564 | | | | | |||||||||||||||||||||
Trade accounts and notes receivable |
3,708 | 221 | 568 | | | | | |||||||||||||||||||||
Other accounts receivables |
24 | 71 | 297 | 4 | | | 15,828 | |||||||||||||||||||||
Other assets denominated in foreign currencies |
| 176 | 167 | 6 | | | 6,481 | |||||||||||||||||||||
Trade accounts and notes payable |
(2,170 | ) | (8,850 | ) | (2,343 | ) | | | | (465,390 | ) | |||||||||||||||||
Other accounts payable |
(1,227 | ) | (4,630 | ) | (2,203 | ) | (5 | ) | (5 | ) | | (1,610,640 | ) | |||||||||||||||
Financial liabilities |
(4,257 | ) | | (18,017 | ) | | | | | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(2,784 | ) | (12,817 | ) | (6,943 | ) | 34 | (2 | ) | 3 | (2,009,196 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Cross currency interest rate swap contracts(*) |
1,545 | | | | | | | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net exposure |
(1,239 | ) | (12,817 | ) | (6,943 | ) | 34 | (2 | ) | 3 | (2,009,196 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*) | Of cross currency interest rate swap contracts, USD 100 million were entered into to hedge currency risk with respect to foreign currency denominated borrowings and USD 1,445 million were entered into to hedge currency risk and interest rate risk with respect to foreign currency denominated borrowings and bonds. |
Average exchange rates applied for the nine-month periods ended September 30, 2022 and 2021 and the exchange rates at September 30, 2022 and December 31, 2021 are as follows:
Average exchange rate | Exchange rate on reporting date | |||||||||||||||
(In won) | 2022 | 2021 | September 30, 2022 | December 31, 2021 | ||||||||||||
USD |
1,130.99 | 1,434.80 | 1,185.50 | |||||||||||||
JPY |
9.92 | 10.43 | 9.93 | 10.30 | ||||||||||||
CNY |
191.75 | 174.82 | 199.66 | 186.26 | ||||||||||||
TWD |
43.34 | 40.46 | 45.34 | 42.84 | ||||||||||||
EUR |
1,347.18 | 1,353.22 | 1,408.83 | 1,342.34 | ||||||||||||
PLN |
288.55 | 297.68 | 290.22 | 292.11 | ||||||||||||
VND |
0.0548 | 0.0492 | 0.0602 | 0.0521 |
79
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
25. | Financial Risk Management, Continued |
ii) Sensitivity analysis
A weaker won, as indicated below, against the following currencies which comprise the Groups assets or liabilities denominated in a foreign currency as of September 30, 2022 and December 31, 2021, 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 at 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:
September 30, 2022 | December 31, 2021 | |||||||||||||||
(In millions of won) | Equity | Profit or loss | Equity | Profit or loss | ||||||||||||
USD (5 percent weakening) |
6,912 | (74,214 | ) | 2,339 | ||||||||||||
JPY (5 percent weakening) |
(7,307 | ) | (6,565 | ) | (5,437 | ) | (3,288 | ) | ||||||||
CNY (5 percent weakening) |
(98,647 | ) | (2 | ) | (64,732 | ) | 172 | |||||||||
TWD (5 percent weakening) |
97 | 21 | 70 | 5 | ||||||||||||
EUR (5 percent weakening) |
2,294 | (273 | ) | 178 | (858 | ) | ||||||||||
PLN (5 percent weakening) |
10 | 10 | 29 | 29 | ||||||||||||
VND (5 percent weakening) |
(4,379 | ) | (4,379 | ) | (3,865 | ) | (3,865 | ) |
A stronger won against the above currencies as of September 30, 2022 and December 31, 2021 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.
iii) Derivatives for cash flow hedge
In relation to forecast export transactions, the Controlling Company uses derivative instruments to hedge fluctuations in future cash flows due
to foreign currency exchange rate changes. As of September 30, 2022, there is no ineffective portion of the loss on valuation of derivatives to which cash flow hedging accounting has been applied and loss on valuation amounting to
W104,656 million (contracted selling amount: USD 600 million, contracted exchange rate: W1,212.3 ~ 1,293.4) are recognized in accumulated other comprehensive income (loss). The expected settlement dates of
derivative instrument contracts are within three months from September 30, 2022. The amount which have been reclassified from reserve to profit (revenue) for the nine-month period ended September 30, 2022 is
W152,656 million as a result of realization of forecast export transactions.
(ii) Interest rate risk
Interest rate risk arises principally from the Groups variable interest-bearing bonds and borrowings. The Group establishes and applies
its policy to reduce uncertainty arising from fluctuations in interest rates and to minimize finance cost and manages interest rate risk by monitoring of trends of fluctuations in interest rate and establishing plan for countermeasures. Meanwhile,
the Group entered into cross currency interest rate swap contracts amounting to USD 1,625 million (W2,331,550 million) and interest rate swap contracts amounting to W480,000 million in notional amount to
hedge interest rate risk with respect to variable interest bearing borrowings.
80
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
25. | Financial Risk Management, Continued |
i) Profile
The interest rate profile of the Groups interest-bearing financial instruments as of September 30, 2022 and December 31, 2021 is as follows:
(In millions of won) | September 30, 2022 | December 31, 2021 | ||||||
Fixed rate instruments |
||||||||
Financial assets |
4,284,950 | |||||||
Financial liabilities |
(6,038,636 | ) | (5,237,711 | ) | ||||
|
|
|
|
|||||
(952,761 | ) | |||||||
|
|
|
|
|||||
Variable rate instruments |
||||||||
Financial liabilities |
(7,426,095 | ) |
ii) Equity and profit or loss sensitivity analysis for variable rate instruments
As of September 30, 2022 and December 31, 2021, 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 12-month periods. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.
Equity | Profit or loss | |||||||||||||||
(In millions of won) | 1%p increase |
1%p decrease |
1%p increase |
1%p decrease |
||||||||||||
September 30, 2022 |
||||||||||||||||
Variable rate instruments (*) |
47,562 | (47,562 | ) | 47,562 | ||||||||||||
December 31, 2021 |
||||||||||||||||
Variable rate instruments (*) |
40,931 | (40,931 | ) | 40,931 |
(*) | Financial instruments related to non-hedging interest rate swap are excluded from the calculation. |
81
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
25. | Financial Risk Management, Continued |
(iii) Managing interest rate benchmark reform and associated risks
A fundamental reform of major interest rate benchmarks is being undertaken globally, including the replacement of some interbank offered rates (IBORs) with alternative risk-free rates (referred to as IBOR reform). The publication of LIBOR, except overnight, 1-month, 3-month, 6-month, and 12-month USD LIBORs, was terminated as of December 31, 2021 and the five LIBORs, as mentioned above, will be discontinued by June 30, 2023.
The Group does not have financial instruments affected by already discontinued LIBORs. The Group plans to change benchmark interest rate applied to some of its financial instruments from LIBORs to Secured Overnight Financing Rates (SOFRs), an alternative indicator interest rate. For these LIBOR-related financial instruments, the LIBORs are continued to be published. Meanwhile, in the case of the CD rate, an alternative reference rate was selected as the Korea Overnight Financing Repo Rate (KOFR) as part of the reform of the interest rate benchmark. However, unlike LIBOR, the termination of the publication of the CD rate is not scheduled, and the Group does not have plan to change to KOFR.
The Group is exposed to the legal risk of changing the contract of financial instruments due to the reform of the interest rate indicator, as well as the process and operational risks to deal with such changes. In addition, the Group is also exposed to the risk of monitoring the market trend on the alternative index interest rate and establishing a risk management strategy accordingly to manage the risk of the new alternative index interest rate. The Group manages and monitors the transition to alternative interest rate benchmark by evaluating the extent to which a contract references IBOR cash flows, whether such contracts will need to be amended as a result of IBOR reform and how to manage communication about IBOR reform with counterparties.
The Group monitors the transition to an alternative interest rate benchmark by reviewing the total amounts of contracts that have yet to transition to an alternative benchmark rate and the amounts of such contracts that include an appropriate fallback clause. The Group considers that a contract is not yet transitioned to an alternative benchmark rate when interest rate under the contract is indexed to a benchmark rate that is still subject to IBOR reform, even if it includes a fallback clause that deals with the cessation of the existing IBOR. As of September 30, 2022, the total amounts of contracts not yet transitioned and those with appropriate fallback language are as follows, and the financial instruments that will be settled before June 30, 2023 are excluded:
(In millions of won) | Total amount of not transitioned contracts |
Amount with appropriate fallback clause |
||||||
Non-derivative financial liabilities |
||||||||
Borrowings |
1,944,154 | |||||||
Derivative assets |
||||||||
Cross currency interest rate swap contracts |
356,219 |
82
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
25. | Financial Risk Management, Continued |
(b) | Credit risk |
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Groups receivables from customers.
The Groups exposure to credit risk of trade and other receivables is influenced mainly by the individual characteristics of each customer. However, management believes that the default risk of the country in which each customer operates, do not have a significant influence on credit risk since the majority of the customers are global electronic appliance manufacturers operating in global markets.
The Group establishes credit limits for each customer and each new customer is analyzed quantitatively and qualitatively before determining whether to utilize third party guarantees, insurance or factoring as appropriate.
In relation to the impairment of financial assets subsequent to initial recognition, the Group recognizes the changes in expected credit loss (ECL) in profit or loss at each reporting date.
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk as of September 30, 2022 and December 31, 2021 are as follows:
(In millions of won) | September 30, 2022 | December 31, 2021 | ||||||
Financial assets carried at amortized cost |
||||||||
Cash equivalents |
3,540,475 | |||||||
Deposits in banks |
1,723,237 | 743,316 | ||||||
Trade accounts and notes receivable, net |
2,864,694 | 4,574,789 | ||||||
Non-trade receivables |
258,264 | 108,875 | ||||||
Accrued income |
11,218 | 13,024 | ||||||
Deposits |
20,707 | 45,620 | ||||||
Short-term loans |
30,463 | 22,518 | ||||||
Long-term loans |
63,807 | 19,939 | ||||||
Long-term non-trade receivables |
| 2,376 | ||||||
Lease receivables |
14,028 | 18,209 | ||||||
|
|
|
|
|||||
9,089,141 | ||||||||
|
|
|
|
|||||
Financial assets at fair value through profit or loss |
||||||||
Convertible securities |
2,758 | |||||||
Derivatives |
655,438 | 65,612 | ||||||
|
|
|
|
|||||
68,370 | ||||||||
|
|
|
|
|||||
Financial assets effective for cash flow hedging |
||||||||
Derivatives |
| 905 | ||||||
Financial assets at fair value through other comprehensive income |
||||||||
Debt instruments |
48 | |||||||
|
|
|
|
|||||
9,158,464 | ||||||||
|
|
|
|
83
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
25. | Financial Risk Management, Continued |
Trade accounts and notes receivable are insured in order for the Group to manage credit risk if they do not meet the Groups internal credit ratings. Uninsured trade accounts and notes receivable are managed by continuous monitoring of internal credit rating standards established by the Group and seeking insurance coverage, if necessary.
(c) | Liquidity risk |
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or other financial assets. The Groups 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 Groups 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 instruments, equity-linked and other debt instruments. 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 September 30, 2022.
Contractual cash flows in | ||||||||||||||||||||||||||||
(In millions of won) | Carrying amount |
Total | 6 months or less |
6-12 months |
1-2 years | 2-5 years | More than 5 years |
|||||||||||||||||||||
Non-derivative financial liabilities |
||||||||||||||||||||||||||||
Borrowings |
14,778,952 | 3,690,014 | 1,542,958 | 2,811,042 | 6,438,805 | 296,133 | ||||||||||||||||||||||
Bonds |
1,544,667 | 1,678,416 | 293,109 | 161,970 | 402,921 | 733,330 | 87,086 | |||||||||||||||||||||
Trade accounts and notes payable |
5,028,864 | 5,028,864 | 5,028,864 | | | | | |||||||||||||||||||||
Other accounts payable |
2,944,791 | 2,947,323 | 2,858,903 | 88,420 | | | | |||||||||||||||||||||
Other accounts payable (enterprise procurement cards)(*) |
433,942 | 433,942 | 433,942 | | | | | |||||||||||||||||||||
Long-term other accounts payable |
534,492 | 623,968 | | | 117,124 | 295,928 | 210,916 | |||||||||||||||||||||
Security deposits received |
10,736 | 10,736 | 1,820 | 1,092 | 7,824 | | | |||||||||||||||||||||
Lease liabilities |
93,311 | 100,041 | 35,143 | 20,428 | 23,555 | 13,780 | 7,135 | |||||||||||||||||||||
Derivative financial liabilities |
||||||||||||||||||||||||||||
Derivatives for cash flow hedge |
104,656 | 104,656 | | | | | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
25,706,898 | 12,446,451 | 1,814,868 | 3,362,466 | 7,481,843 | 601,270 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
84
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
25. | Financial Risk Management, Continued |
(*) | Represents liabilities payable to credit card companies for utility expenses and others paid using enterprise procurement cards. The Group presented the payable to credit card companies as other accounts payable and presented related cash flows as operating activities since the Group is using the enterprise procurement cards through agreements with suppliers for transactions arising from purchasing of goods and services, the payment term is within a year from the purchase, as part of the normal operating cycle, and no security is provided. Change in liabilities related to procurement cards for the nine-month period ended September 30, 2022 is as follows: |
(In millions of won) | January 1, 2022 | Change (Cash flows from operation activities) |
September 30, 2022 | |||||||||
Other accounts payable (enterprise procurement cards) |
(640,147 | ) | 433,942 |
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts.
(d) | Capital management |
Managements 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) | September 30, 2022 | December 31, 2021 | ||||||
Total liabilities |
23,392,014 | |||||||
Total equity |
14,283,603 | 14,762,501 | ||||||
Cash and deposits in banks (*1) |
3,264,075 | 4,284,902 | ||||||
Borrowings (including bonds) |
15,291,251 | 12,663,806 | ||||||
Total liabilities to equity ratio |
181% | 158% | ||||||
Net borrowings to equity ratio (*2) |
84% | 57% |
(*1) | Cash and deposits in banks consist of cash and cash equivalents and current deposits in banks. |
(*2) | Net borrowings to equity ratio is calculated by dividing total borrowings (including bonds and excluding lease liabilities and others) less cash and current deposits in banks by total equity. |
85
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
25. | Financial Risk Management, Continued |
(e) | Determination of fair value |
(i) | Measurement of fair value |
A number of the Groups accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.
i) | Current assets and liabilities |
The carrying amounts approximate their fair value because of the short maturity of these instruments.
ii) | Trade receivables and other receivables |
The fair value of trade and other receivables is estimated as the present value of future cash flows, discounted at the market rate of interest at the reporting date. This fair value is determined for disclosure purposes. The carrying amounts of current receivables approximate their fair value.
iii) | Investments in equity and debt securities |
The fair value of marketable financial assets at FVTPL and FVOCI is determined by reference to their quoted closing bid price at the reporting date. The fair value of non-marketable instruments is determined using the results of fair value assessment performed by external valuation institutions and others.
iv) | Non-derivative financial liabilities |
Fair value, which is determined for disclosure purposes, except for the liabilities at FVTPL, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date.
v) | Derivatives |
The inputs used to measure the fair value of currency forward and cross currency interest rate swap are calculated based on the exchange rates and interest rates observable in the market at the reporting date.
86
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
25. | Financial Risk Management, Continued |
(ii) | Fair values versus carrying amounts |
The fair values of financial assets and liabilities, together with the carrying amounts shown in the consolidated interim statements of financial position as of September 30, 2022 and December 31, 2021 are as follows:
September 30, 2022 | December 31, 2021 | |||||||||||||||
(In millions of won) | Carrying amounts | Fair values | Carrying amounts | Fair values | ||||||||||||
Financial assets carried at amortized cost |
||||||||||||||||
Cash and cash equivalents |
(*) | 3,541,597 | (*) | |||||||||||||
Deposits in banks |
1,723,237 | (*) | 743,316 | (*) | ||||||||||||
Trade accounts and notes receivable |
2,864,694 | (*) | 4,574,789 | (*) | ||||||||||||
Non-trade receivables |
258,264 | (*) | 108,875 | (*) | ||||||||||||
Accrued income |
11,218 | (*) | 13,024 | (*) | ||||||||||||
Deposits |
20,707 | (*) | 45,620 | (*) | ||||||||||||
Short-term loans |
30,463 | (*) | 22,518 | (*) | ||||||||||||
Long-term loans |
63,807 | (*) | 19,939 | (*) | ||||||||||||
Long-term non-trade receivables |
| | 2,376 | (*) | ||||||||||||
Lease receivables |
14,028 | (*) | 18,209 | (*) | ||||||||||||
Financial assets at fair value through profit or loss |
||||||||||||||||
Equity instruments |
98,892 | 48,805 | 48,805 | |||||||||||||
Convertible securities |
1,573 | 1,573 | 2,758 | 2,758 | ||||||||||||
Derivatives |
655,438 | 655,438 | 65,612 | 65,612 | ||||||||||||
Financial assets effective for cash flow hedging |
||||||||||||||||
Derivatives |
| 905 | 905 | |||||||||||||
Financial assets at fair value through other comprehensive income |
||||||||||||||||
Debt instruments |
| 48 | 48 | |||||||||||||
Financial liabilities at fair value through profit or loss |
||||||||||||||||
Derivatives |
| 10,925 | 10,925 | |||||||||||||
Convertible bonds |
29,553 | 29,553 | 1,015,760 | 1,015,760 | ||||||||||||
Financial liabilities effective for cash flow hedging |
||||||||||||||||
Derivatives |
104,656 | 13,400 | 13,400 | |||||||||||||
Financial liabilities carried at amortized cost |
||||||||||||||||
Borrowings |
13,672,949 | 10,052,245 | 10,064,068 | |||||||||||||
Bonds |
1,515,114 | 1,441,065 | 1,595,801 | 1,596,044 | ||||||||||||
Trade accounts and notes payable |
5,028,864 | (*) | 4,814,055 | (*) | ||||||||||||
Other accounts payable |
3,378,733 | (*) | 3,401,346 | (*) | ||||||||||||
Long-term other accounts payable |
534,492 | (*) | 496,083 | (*) | ||||||||||||
Security deposits received |
10,736 | (*) | 11,199 | (*) | ||||||||||||
Lease liabilities |
93,311 | (*) | 84,326 | (*) |
(*) | Excluded from disclosures as the carrying amount approximates fair value. |
87
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
25. | Financial Risk Management, Continued |
(iii) | Fair values of financial assets and liabilities |
i) Fair value hierarchy
Financial instruments carried at fair value are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques. The levels have been defined as follows:
| Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities |
| Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly |
| Level 3: inputs for the asset or liability that are not based on observable market data |
ii) Financial instruments measured at fair value
Fair value hierarchy classifications of the financial instruments that are measured at fair value as of September 30, 2022 and December 31, 2021 are as follows:
September 30, 2022 | ||||||||||||||||
(In millions of won) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Financial assets at fair value through profit or loss |
||||||||||||||||
Equity instruments |
| 98,892 | 98,892 | |||||||||||||
Convertible securities |
| | 1,573 | 1,573 | ||||||||||||
Derivatives |
| 655,438 | | 655,438 | ||||||||||||
Financial liabilities at fair value through profit or loss |
||||||||||||||||
Convertible bonds |
| | 29,553 | |||||||||||||
Financial liabilities effective for cash flow hedging |
||||||||||||||||
Derivatives |
104,656 | | 104,656 |
88
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
25. | Financial Risk Management, Continued |
December 31, 2021 | ||||||||||||||||
(In millions of won) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Financial assets at fair value through profit or loss |
||||||||||||||||
Equity instruments |
| 48,805 | 48,805 | |||||||||||||
Convertible securities |
| | 2,758 | 2,758 | ||||||||||||
Derivatives |
| 65,612 | | 65,612 | ||||||||||||
Financial assets effective for cash flow hedging |
| | | | ||||||||||||
Derivatives |
| 905 | | 905 | ||||||||||||
Financial assets at fair value through other comprehensive income |
||||||||||||||||
Debt instruments |
| | 48 | |||||||||||||
Financial liabilities at fair value through profit or loss |
||||||||||||||||
Derivatives |
10,925 | | 10,925 | |||||||||||||
Convertible bonds |
1,015,760 | | | 1,015,760 | ||||||||||||
Financial liabilities effective for cash flow hedging |
||||||||||||||||
Derivatives |
| 13,400 | | 13,400 |
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 September 30, 2022 and December 31, 2021 are as follows:
(In millions of won) | September 30, 2022 | Valuation technique |
Input | |||||||||||||||||
Classification |
Level 1 | Level 2 | Level 3 | |||||||||||||||||
Liabilities |
||||||||||||||||||||
Borrowings |
| 13,672,949 | |
Discounted cash flow |
|
|
Discount rate |
| ||||||||||||
Bonds |
| | 1,441,065 | |
Discounted cash flow |
|
|
Discount rate |
| |||||||||||
(In millions of won) | December 31, 2021 | Valuation technique |
Input | |||||||||||||||||
Classification |
Level 1 | Level 2 | Level 3 | |||||||||||||||||
Liabilities |
||||||||||||||||||||
Borrowings |
| 10,064,068 | |
Discounted cash flow |
|
|
Discount rate |
| ||||||||||||
Bonds |
| | 1,596,044 | |
Discounted cash flow |
|
|
Discount rate |
|
iv) | The interest rates applied for determination of the above fair value as of September 30, 2022 and December 31, 2021 are as follows: |
September 30, 2022 | December 31, 2021 | |||
Borrowings, bonds and others |
3.92~6.46% | 2.21~4.38% |
89
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
26. | Changes in liabilities arising from financing activities |
Changes in liabilities arising from financing activities for the nine-month period ended September 30, 2022 are as follows:
Non-cash transactions | ||||||||||||||||||||||||||||
(In millions of won) | January 1, 2022 | Cash flows from financing activities |
Reclassification | Gain or loss on foreign currency translation |
Effective interest adjustment |
Others | September 30, 2022 |
|||||||||||||||||||||
Short-term borrowings |
1,654,311 | | 253,071 | | | 2,521,115 | ||||||||||||||||||||||
Current portion of long-term borrowings and bonds(*) |
3,393,506 | (3,913,540 | ) | 3,005,066 | 356,116 | 11,433 | (217,815 | ) | 2,634,766 | |||||||||||||||||||
Long-term borrowings |
7,660,591 | 3,283,880 | (2,696,864 | ) | 755,947 | | | 9,003,554 | ||||||||||||||||||||
Bonds |
995,976 | 443,230 | (308,202 | ) | | 812 | | 1,131,816 | ||||||||||||||||||||
Lease liabilities |
84,326 | (61,214 | ) | | 18,416 | | 51,783 | 93,311 | ||||||||||||||||||||
Dividend payable |
3,679 | (255,415 | ) | | | | 290,301 | 38,565 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
1,151,252 | | 1,383,550 | 12,245 | 124,269 | 15,423,127 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*) | Others include |
90
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
27. | Related Parties and Others |
(a) | Related parties |
Related parties as of September 30, 2022 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. |
91
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
27. | Related Parties and Others, Continued |
(b) | Significant transactions such as sales of goods and purchases of raw material and outsourcing service and others, which occurred in the normal course of business with related parties for the three-month and nine-month periods ended September 30, 2022 and 2021 are as follows: |
For the three-month period ended September 30, 2022 | ||||||||||||||||||||||||
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 |
||||||||||||||||||||||||
AVATEC Co., Ltd. |
| | | 17,324 | 1,245 | |||||||||||||||||||
Paju Electric Glass Co., Ltd. |
| | 47,187 | | | 798 | ||||||||||||||||||
WooRee E&L Co., Ltd. |
| | 4,369 | | | | ||||||||||||||||||
YAS Co., Ltd. |
| | 2,400 | 7,385 | | 2,408 | ||||||||||||||||||
Material Science Co., Ltd. |
| | | | | | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 53,956 | 7,385 | 17,324 | 4,451 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Entity that has significant influence over the Controlling Company |
||||||||||||||||||||||||
LG Electronics Inc. |
| 4,992 | 171,616 | | 33,734 | |||||||||||||||||||
Subsidiaries of the entity that has significant influence over the Controlling Company |
||||||||||||||||||||||||
LG Electronics India Pvt. Ltd. |
| | | | 101 | |||||||||||||||||||
LG Electronics Vietnam Haiphong Co., Ltd. |
139,145 | | | | | 112 |
92
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
27. | Related Parties and Others, Continued |
For the three-month period ended September 30, 2022 | ||||||||||||||||||||||||
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. |
| | | | 783 | |||||||||||||||||||
LG Electronics RUS, LLC |
58 | | | | | 16 | ||||||||||||||||||
LG Electronics do Brasil Ltda. |
23,440 | | | | | 24 | ||||||||||||||||||
LG Innotek Co., Ltd. |
1,967 | | 1,599 | | | 18,689 | ||||||||||||||||||
LG Electronics Mlawa Sp. z o.o. |
280,755 | | | | | 267 | ||||||||||||||||||
LG Electronics Reynosa, S.A. DE C.V. |
331,264 | | | | | 296 | ||||||||||||||||||
LG Electronics Egypt S.A.E. |
28,220 | | | | | 179 | ||||||||||||||||||
LG Electronics Japan, Inc. |
| | | 6 | | 2,395 | ||||||||||||||||||
P.T. LG Electronics Indonesia |
154,290 | | | | | 227 | ||||||||||||||||||
LG Electronics Taiwan Taipei Co., Ltd. |
30 | | | | | 183 | ||||||||||||||||||
LG Technology Ventures LLC |
| | | | | 1,334 | ||||||||||||||||||
Hi-M.SOLUTEK |
| | 36 | | | 2,938 | ||||||||||||||||||
LG Electronics U.S.A., Inc. |
| | | | | 581 | ||||||||||||||||||
Others |
310 | | 110 | 607 | | 197 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 1,745 | 613 | | 28,322 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 60,693 | 179,614 | 17,324 | 66,507 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
93
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
27. | Related Parties and Others, Continued |
For the nine-month period ended September 30, 2022 | ||||||||||||||||||||||||
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 |
||||||||||||||||||||||||
AVATEC Co., Ltd. |
| 58 | | 49,007 | 2,114 | |||||||||||||||||||
Paju Electric Glass Co., Ltd. |
| 4,361 | 208,133 | | | 2,306 | ||||||||||||||||||
WooRee E&L Co., Ltd. |
| | 10,903 | | | 2 | ||||||||||||||||||
YAS Co., Ltd. |
| 100 | 12,182 | 13,461 | | 6,299 | ||||||||||||||||||
Material Science Co., Ltd. |
| | 17 | | | | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
4,461 | 231,293 | 13,461 | 49,007 | 10,721 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Entity that has significant influence over the Controlling Company |
||||||||||||||||||||||||
LG Electronics Inc. |
| 14,799 | 456,482 | | 93,296 | |||||||||||||||||||
Subsidiaries of the entity that has significant influence over the Controlling Company |
||||||||||||||||||||||||
LG Electronics India Pvt. Ltd. |
| | | | 393 | |||||||||||||||||||
LG Electronics Vietnam Haiphong Co., Ltd. |
325,101 | | | | | 674 | ||||||||||||||||||
LG Electronics Nanjing New Technology Co., Ltd. |
272,497 | | | | | 1,103 | ||||||||||||||||||
LG Electronics RUS, LLC |
21,783 | | | | | 400 | ||||||||||||||||||
LG Electronics do Brasil Ltda. |
73,097 | | | | | 176 | ||||||||||||||||||
LG Innotek Co., Ltd. |
4,852 | | 5,210 | | | 61,979 |
94
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
27. | Related Parties and Others, Continued |
For the nine-month period ended September 30, 2022 | ||||||||||||||||||||||||
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 Mlawa Sp. z o.o. |
| | | | 674 | |||||||||||||||||||
LG Electronics Reynosa, S.A. DE C.V. |
863,392 | | | | | 692 | ||||||||||||||||||
LG Electronics Egypt S.A.E |
64,943 | | | | | 336 | ||||||||||||||||||
LG Electronics Japan, Inc. |
| | | 13 | | 5,650 | ||||||||||||||||||
P.T. LG Electronics Indonesia |
416,606 | | | | | 979 | ||||||||||||||||||
LG Electronics Taiwan Taipei Co., Ltd. |
3,431 | | | | | 438 | ||||||||||||||||||
LG Technology Ventures LLC |
| | | | | 3,643 | ||||||||||||||||||
Hi-M.SOLUTEK |
| | 45 | | | 7,153 | ||||||||||||||||||
LG Electronics U.S.A., Inc. |
| | | | | 1,426 | ||||||||||||||||||
Others |
316 | | 588 | 607 | | 615 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 5,843 | 620 | | 86,331 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
4,461 | 251,935 | 470,563 | 49,007 | 190,348 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
95
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
27. | Related Parties and Others, Continued |
For the three-month period ended September 30, 2021 | ||||||||||||||||||||||||
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 |
||||||||||||||||||||||||
AVATEC Co., Ltd. |
| | 137 | | 18,220 | 257 | ||||||||||||||||||
Paju Electric Glass Co., Ltd. |
| | 99,663 | | | 623 | ||||||||||||||||||
WooRee E&L Co., Ltd. |
| | 3,348 | | | 18 | ||||||||||||||||||
YAS Co., Ltd. |
| | 3,057 | 1,934 | | 2,047 | ||||||||||||||||||
Material Science Co., Ltd. |
| | 54 | | | | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 106,259 | 1,934 | 18,220 | 2,945 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Entity that has significant influence over the Controlling Company |
||||||||||||||||||||||||
LG Electronics Inc. |
| 5,691 | 78,539 | | 30,255 | |||||||||||||||||||
Subsidiaries of the entity that has significant influence over the Controlling Company |
||||||||||||||||||||||||
LG Electronics India Pvt. Ltd. |
| | | | 58 | |||||||||||||||||||
LG Electronics Vietnam Haiphong Co., Ltd. |
109,793 | | | 7 | | 153 |
96
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
27. | Related Parties and Others, Continued |
For the three-month period ended September 30, 2021 | ||||||||||||||||||||||||
Sales and others |
Purchase and others | |||||||||||||||||||||||
(In millions of won) | 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. |
| | | | 230 | |||||||||||||||||||
LG Electronics RUS, LLC |
16,021 | | | | | 635 | ||||||||||||||||||
LG Electronics do Brasil Ltda. |
39,803 | | | | | 82 | ||||||||||||||||||
LG Innotek Co., Ltd. |
789 | | 7,919 | | | 20,999 | ||||||||||||||||||
Hi-M.SOLUTEK |
| | 20 | | | 1,021 | ||||||||||||||||||
LG Electronics Mexicali, S.A. DE C.V. |
73,128 | | | | | 12 | ||||||||||||||||||
LG Electronics Mlawa Sp. z o.o. |
288,192 | | | | | 113 | ||||||||||||||||||
LG Electronics Reynosa S.A. DE C.V. |
273,768 | | | | | 259 | ||||||||||||||||||
LG Electronics Egypt S.A.E. |
22,185 | | | | | 31 | ||||||||||||||||||
LG Electronics Japan, Inc. |
| | | 10 | | 1,310 | ||||||||||||||||||
P.T. LG Electronics Indonesia |
131,860 | | | | | 48 | ||||||||||||||||||
LG Electronics Taiwan Taipei Co., Ltd. |
867 | | | | | 191 | ||||||||||||||||||
LG Electronics Nanjing Vehicle Components Co., Ltd. |
236 | | | | | | ||||||||||||||||||
LG Technology Ventures LLC |
| | | | | 1,113 | ||||||||||||||||||
Others |
2 | | 123 | 8 | | 222 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 8,062 | 25 | | 26,477 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 120,012 | 80,498 | 18,220 | 59,677 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
97
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
27. | Related Parties and Others, Continued |
For the nine-month period ended September 30, 2021 | ||||||||||||||||||||||||
Sales and others |
Purchase and others | |||||||||||||||||||||||
(In millions of won) | Dividend income |
Purchase of raw material and others |
Acquisition of property, plant and equipment |
Outsourcing fees |
Other costs | |||||||||||||||||||
Associates |
||||||||||||||||||||||||
AVATEC Co., Ltd. |
200 | 242 | | 54,394 | 733 | |||||||||||||||||||
Paju Electric Glass Co., Ltd. |
| 3,668 | 275,351 | | | 1,969 | ||||||||||||||||||
WooRee E&L Co., Ltd. |
| | 10,589 | | | 73 | ||||||||||||||||||
YAS Co., Ltd. |
| 200 | 6,912 | 12,064 | | 5,298 | ||||||||||||||||||
Cynora GmbH |
| | 10 | | | | ||||||||||||||||||
Material Science Co., Ltd. |
| | 96 | | | | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
4,068 | 293,200 | 12,064 | 54,394 | 8,073 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Entity that has significant influence over the Controlling Company |
||||||||||||||||||||||||
LG Electronics Inc. |
| 12,860 | 313,792 | | 86,654 | |||||||||||||||||||
Subsidiaries of the entity that has significant influence over the Controlling Company |
||||||||||||||||||||||||
LG Electronics India Pvt. Ltd. |
| | | | 222 | |||||||||||||||||||
LG Electronics Vietnam Haiphong Co., Ltd. |
326,031 | | | 592 | | 991 | ||||||||||||||||||
LG Electronics Nanjing New Technology Co., Ltd. |
315,482 | | | | | 1,047 | ||||||||||||||||||
LG Electronics RUS, LLC |
65,813 | | | | | 1,120 | ||||||||||||||||||
LG Electronics do Brasil Ltda. |
141,568 | | | | | 219 | ||||||||||||||||||
LG Innotek Co., Ltd. |
2,352 | | 18,693 | 451 | | 63,730 |
98
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
27. | Related Parties and Others, Continued |
For the nine-month period ended September 30, 2021 | ||||||||||||||||||||||||
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 | ||||||||||||||||||
Hi-M.SOLUTEK |
| 44 | | | 3,410 | |||||||||||||||||||
LG Electronics Mexicali, S.A. DE C.V. |
228,967 | | | | | 64 | ||||||||||||||||||
LG Electronics Mlawa Sp. z o.o. |
847,309 | | | | | 391 | ||||||||||||||||||
LG Electronics Reynosa, S.A. DE C.V. |
890,467 | | | | | 639 | ||||||||||||||||||
LG Electronics Egypt S.A.E |
67,219 | | | | | 126 | ||||||||||||||||||
LG Electronics Japan, Inc. |
| | | 10 | | 3,961 | ||||||||||||||||||
P.T. LG Electronics Indonesia |
406,003 | | | | | 124 | ||||||||||||||||||
LG Electronics Taiwan Taipei Co., Ltd. |
2,613 | | | | | 507 | ||||||||||||||||||
LG Electronics Nanjing Vehicle Components Co., Ltd. |
1,846 | | | | | | ||||||||||||||||||
LG Technology Ventures LLC |
| | | | | 3,267 | ||||||||||||||||||
Others |
2 | | 231 | 594 | | 690 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 18,968 | 1,647 | | 80,508 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
4,068 | 325,028 | 327,503 | 54,394 | 175,235 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
99
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
27. | Related Parties and Others, Continued |
(c) | Trade accounts and notes receivable and payable and others as of September 30, 2022 and December 31, 2021 are as follows: |
Trade accounts and notes receivable and others |
Trade accounts and notes payable and others |
|||||||||||||||
(In millions of won) | September 30, 2022 | December 31, 2021 | September 30, 2022 | December 31, 2021 | ||||||||||||
Associates |
||||||||||||||||
AVATEC Co., Ltd. |
3 | 4,032 | 2,748 | |||||||||||||
Paju Electric Glass Co., Ltd. |
| | 28,166 | 79,302 | ||||||||||||
WooRee E&L Co., Ltd. |
878 | 878 | 3,795 | 2,915 | ||||||||||||
YAS Co., Ltd. |
| | 6,378 | 20,116 | ||||||||||||
Material Science Co., Ltd. |
| | | 99 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
881 | 42,371 | 105,180 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Entity that has significant influence over the Controlling Company |
||||||||||||||||
LG Electronics Inc. |
67,629 | 172,427 | 105,918 | |||||||||||||
Subsidiaries of the entity that has significant influence over the Controlling Company |
||||||||||||||||
LG Electronics India Pvt. |
14,367 | 7,319 | 764 | 111 | ||||||||||||
LG Electronics Vietnam Haiphong Co., Ltd. |
83,120 | 52,327 | 77 | 252 | ||||||||||||
LG Electronics Nanjing New Technology Co., Ltd. |
35,796 | 102,691 | 97 | 155 | ||||||||||||
LG Electronics do Brasil Ltda. |
17,777 | 5,910 | 7 | | ||||||||||||
LG Innotek Co., Ltd. |
164 | 767 | 25,861 | 40,135 |
100
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
27. | Related Parties and Others, Continued |
Trade accounts and notes receivable and others |
Trade accounts and notes payable and others |
|||||||||||||||
(In millions of won) | September 30, 2022 | December 31, 2021 | September 30, 2022 | December 31, 2021 | ||||||||||||
LG Electronics Mlawa Sp. z o.o. |
218,206 | 54 | 22 | |||||||||||||
LG Electronics Reynosa, S.A. DE C.V. |
200,642 | 195,093 | 58 | 10 | ||||||||||||
LG Electronics Egypt S.A.E |
20,195 | 19,489 | 166 | | ||||||||||||
LG Electronics Japan, Inc. |
| | 559 | 471 | ||||||||||||
P.T. LG Electronics Indonesia |
80,498 | 73,732 | 89 | 32 | ||||||||||||
LG Electronics Taiwan Taipei Co., Ltd. |
| 2,046 | 53 | 53 | ||||||||||||
Others |
334 | 13,443 | 5,449 | 3,921 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
691,023 | 33,234 | 45,162 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
759,533 | 248,032 | 256,260 | ||||||||||||||
|
|
|
|
|
|
|
|
101
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
27. | Related Parties and Others, Continued |
(d) | There were no significant financing transactions with related parties for the nine-month period ended September 30, 2022, and details of significant financing transactions with related parties for the nine-month period ended September 30, 2021, are as follows: |
(In millions of won) | 2021 | |||||||
Associates |
Loans | Collection of loans | ||||||
WooRee E&L Co., Ltd. |
|
102
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
27. | Related Parties and Others, Continued |
(e) | Conglomerate Transactions |
Transactions, trade accounts and notes receivable and payable, and others between the Group and certain companies and their subsidiaries included in LG Group, one of the conglomerates in the Republic of Korea according to the Monopoly Regulation and Fair Trade Act for the three-month and nine-month periods ended September 30, 2022 and 2021 and as of September 30, 2022 and December 31, 2021 are as follows. These entities are not related parties according to K-IFRS No. 1024, Related Party Disclosures.
For the three-month period ended September 30, 2022 |
For the nine-month period ended September 30, 2022 |
September 30, 2022 | ||||||||||||||||||||||
(In millions of won) | Sales and others |
Purchase and others |
Sales and others |
Purchase and others |
Trade accounts and notes receivable and others |
Trade accounts and notes payable and others |
||||||||||||||||||
LX International Corp. and its subsidiaries (*1) |
| 201,144 | 165,875 | | | |||||||||||||||||||
LG Uplus Corp. |
| 621 | | 1,860 | | 145 | ||||||||||||||||||
LG Chem Ltd. and its subsidiaries |
54 | 135,755 | 238 | 436,421 | 55 | 90,919 | ||||||||||||||||||
D&O Corp. and its subsidiaries (formerly, S&I Corp.)(*2) |
77 | 279,877 | 230 | 833,796 | 21 | 273,804 | ||||||||||||||||||
LX Semicon Co., Ltd. (*1) |
| | | 723,152 | | | ||||||||||||||||||
LG Corp. |
| 15,577 | | 43,775 | 14,448 | | ||||||||||||||||||
LG Management Development Institute |
| 8,531 | | 26,276 | | 859 | ||||||||||||||||||
LG CNS Co., Ltd. and its subsidiaries |
8 | 68,502 | 23 | 169,450 | 3 | 57,937 | ||||||||||||||||||
LG Household & Health Care and its subsidiaries |
| 129 | | 281 | | 80 | ||||||||||||||||||
G2R Inc. and its subsidiaries |
| 9,537 | | 28,221 | | 8,400 | ||||||||||||||||||
Robostar Co., Ltd. |
| 335 | | 1,343 | | 755 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
518,864 | 201,635 | 2,430,450 | 14,527 | 432,899 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(*1) | The separation of LX affiliates was approved by the Fair Trade Commission on June 21, 2022. |
(*2) | S&I Corp. renamed its name as D&O Corp. on April 1, 2022. |
103
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
27. | Related Parties and Others, Continued |
For the three-month period ended September 30, 2021 |
For the nine-month period ended September 30, 2021 |
December 31, 2021 | ||||||||||||||||||||||
(In millions of won) | Sales and others |
Purchase and others |
Sales and others |
Purchase and others |
Trade accounts and notes receivable and others |
Trade accounts and notes payable and others |
||||||||||||||||||
LX International Corp. and its subsidiaries (formerly, LG International Corp.)(*1) |
65,789 | 473,317 | 210,061 | 48,955 | 41,355 | |||||||||||||||||||
LG Uplus Corp. |
| 577 | | 1,736 | | 163 | ||||||||||||||||||
LG Chem Ltd. and its subsidiaries |
36 | 159,523 | 103 | 473,638 | 2,974 | 111,761 | ||||||||||||||||||
S&I Corp. and its subsidiaries |
78 | 80,091 | 235 | 243,266 | 5,862 | 171,870 | ||||||||||||||||||
LX Semicon Co., Ltd. (formerly, Silicon Works Co., Ltd)(*2) |
2,434 | 356,865 | 2,434 | 947,227 | 117 | 112,572 | ||||||||||||||||||
LG Corp. |
| 16,606 | | 48,818 | 6,754 | 11,193 | ||||||||||||||||||
LG Management Development Institute |
| 6,108 | | 16,245 | 3,480 | 205 | ||||||||||||||||||
LG CNS Co., Ltd. and its subsidiaries |
8 | 49,140 | 22 | 137,426 | 100 | 186,784 | ||||||||||||||||||
LG Household & Health Care and its subsidiaries |
| 128 | | 260 | | 55 | ||||||||||||||||||
LG Holdings Japan Co., Ltd. |
| | | 512 | | | ||||||||||||||||||
G2R Inc. and its subsidiaries |
| 6,504 | | 10,563 | | 11,933 | ||||||||||||||||||
Robostar Co., Ltd. |
| 965 | | 5,958 | | 2,006 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
742,296 | 476,111 | 2,095,710 | 68,242 | 649,897 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(*1) | LG International Corp. renamed its name as LX International Corp. on July 1, 2021. |
(*2) | Silicon Work Co., Ltd. renamed its name as LX Semicon Co., Ltd. on July 1, 2021. |
104
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Condensed Consolidated Interim Financial Statements
September 30, 2021 and 2020
(Unaudited)
27. | Related Parties and Others, Continued |
(f) | Key management personnel compensation |
Compensations to key management for the three-month and nine-month periods ended September 30, 2022 and 2021 are as follows:
For the three-month periods ended September 30 |
For the nine-month periods ended September 30 |
|||||||||||||||
(In millions of won) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
Short-term benefits |
961 | 1,734 | 2,663 | |||||||||||||
Expenses related to the defined benefit plan |
89 | 86 | 329 | 289 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
1,047 | 2,063 | 2,952 | ||||||||||||||
|
|
|
|
|
|
|
|
Key management refers to the registered directors who have significant control and responsibilities over the Controlling Companys operations and business.
105
LG DISPLAY CO., LTD.
Condensed Separate Interim Financial Statements
(Unaudited)
September 30, 2022 and 2021
(With Independent Auditors Review Report Thereon)
106
Table of Contents
Page | ||||
108 | ||||
110 | ||||
Condensed Separate Interim Statements of Comprehensive Income (Loss) |
111 | |||
112 | ||||
113 | ||||
Notes to the Condensed Separate Interim Financial Statements |
115 |
107
Independent Auditors Review Report
Based on a report originally issued in Korean
To the Shareholders and Board of Directors
LG Display Co., Ltd.:
Reviewed Financial Statements
We have reviewed the accompanying condensed separate interim financial statements of LG Display Co., Ltd. (the Company) which comprise the condensed separate interim statement of financial position as of September 30, 2022, the condensed separate interim statements of comprehensive income (loss) for the three-month and nine-month periods ended September 30, 2022 and 2021, and statements of changes in equity and cash flows for the nine-month periods ended September 30, 2022 and 2021, and notes, comprising a summary of significant accounting policies and other explanatory information.
Managements Responsibility for the Condensed Separate Interim Financial Statements
Management is responsible for the preparation and fair presentation of these condensed separate interim financial statements in accordance with Korean International Financial Reporting Standards No. 1034, Interim Financial Reporting, and for such internal controls as management determines necessary to enable the preparation of condensed separate interim financial statements that are free from material misstatement, whether due to fraud or error.
Auditors Responsibility
Our responsibility is to issue a report on these condensed separate interim financial statements based on our reviews.
We conducted our reviews in accordance with the Review Standards for Quarterly and Semiannual Financial Statements established by the Security and Futures Commission of the Republic of Korea. A review of interim financial information consists principally of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Korean Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our reviews, nothing has come to our attention that causes us to believe that the condensed separate interim financial statements referred to above are not presented fairly, in all material respects, in accordance with Korean International Financial Reporting Standards No. 1034, Interim Financial Reporting.
Other Matters
The procedures and practices utilized in the Republic of Korea to review such condensed separate interim financial statements may differ from those generally accepted and applied in other countries.
We audited the separate statement of financial position as of December 31, 2021, and the related separate statements of comprehensive income, changes in equity and cash flows for the year then ended, which are not accompanying this review report, in accordance with Korean Standards on Auditing, and our report thereon, dated March 8, 2022, expressed an unmodified opinion. The accompanying condensed separate statement of financial position of the Company as of December 31, 2021, presented for comparative purposes, is not different from that audited by us from which it was derived in all material respects.
108
KPMG Samjong Accounting Corp.
Seoul, Korea
November 11, 2022
This report is effective as of November 11, 2022, the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying condensed separate interim financial statements and notes thereto. Accordingly, the readers of the review report should understand that the above review report has not been updated to reflect the impact of such subsequent events or circumstances, if any.
109
LG DISPLAY CO., LTD.
Condensed Separate Interim Statements of Financial Position
(Unaudited)
As of September 30, 2022 and December 31, 2021
(In millions of won) | Note | September 30, 2022 | December 31, 2021 | |||||||||
Assets |
||||||||||||
Cash and cash equivalents |
4, 24 | 950,847 | ||||||||||
Deposits in banks |
4, 24 | 42,804 | 76,913 | |||||||||
Trade accounts and notes receivable, net |
5, 14, 24, 26 | 3,708,413 | 5,051,836 | |||||||||
Other accounts receivable, net |
5, 24 | 233,861 | 79,939 | |||||||||
Other current financial assets |
6, 24 | 332,349 | 37,764 | |||||||||
Inventories |
7 | 2,841,218 | 2,130,997 | |||||||||
Prepaid income tax |
831 | 57,722 | ||||||||||
Other current assets |
5 | 296,002 | 180,638 | |||||||||
|
|
|
|
|||||||||
Total current assets |
7,541,008 | 8,566,656 | ||||||||||
Deposits in banks |
4, 24 | 11 | 11 | |||||||||
Investments |
8 | 4,834,908 | 4,942,729 | |||||||||
Other non-current accounts receivable, net |
5, 24 | 11,986 | 5,122 | |||||||||
Other non-current financial assets |
6, 24 | 439,885 | 87,469 | |||||||||
Property, plant and equipment, net |
9 | 13,965,198 | 12,010,858 | |||||||||
Intangible assets, net |
10 | 1,670,344 | 1,459,812 | |||||||||
Deferred tax assets |
22 | 2,853,514 | 2,238,410 | |||||||||
Employee Benefits assets |
12 | 143,259 | 68,276 | |||||||||
Other non-current assets |
22,868 | 98,779 | ||||||||||
|
|
|
|
|||||||||
Total non-current assets |
23,941,973 | 20,911,466 | ||||||||||
|
|
|
|
|||||||||
Total assets |
29,478,122 | |||||||||||
|
|
|
|
|||||||||
Liabilities |
||||||||||||
Trade accounts and notes payable |
24, 26 | 6,528,451 | ||||||||||
Current financial liabilities |
11, 24, 25 | 4,032,891 | 2,557,696 | |||||||||
Other accounts payable |
24 | 2,934,361 | 2,800,823 | |||||||||
Accrued expenses |
597,804 | 1,012,009 | ||||||||||
Provisions |
13 | 170,333 | 171,865 | |||||||||
Advances received |
36,384 | 30,060 | ||||||||||
Other current liabilities |
60,889 | 48,065 | ||||||||||
|
|
|
|
|||||||||
Total current liabilities |
16,681,563 | 13,148,969 | ||||||||||
Non-current financial liabilities |
11, 24, 25 | 5,350,785 | 5,038,155 | |||||||||
Non-current provisions |
13 | 87,183 | 92,942 | |||||||||
Other non-current liabilities |
24 | 573,454 | 555,238 | |||||||||
|
|
|
|
|||||||||
Total non-current liabilities |
6,011,422 | 5,686,335 | ||||||||||
|
|
|
|
|||||||||
Total liabilities |
22,692,985 | 18,835,304 | ||||||||||
|
|
|
|
|||||||||
Equity |
||||||||||||
Share capital |
15 | 1,789,079 | 1,789,079 | |||||||||
Share premium |
15 | 2,251,113 | 2,251,113 | |||||||||
Retained earnings |
4,827,082 | 6,611,853 | ||||||||||
Reserves |
15 | (77,278 | ) | (9,227 | ) | |||||||
|
|
|
|
|||||||||
Total equity |
8,789,996 | 10,642,818 | ||||||||||
|
|
|
|
|||||||||
Total liabilities and equity |
29,478,122 | |||||||||||
|
|
|
|
See accompanying notes to the separate interim financial statements.
110
LG DISPLAY CO., LTD.
Condensed Separate Interim Statements of Comprehensive Income (Loss)
(Unaudited)
For the three-month and nine-month periods ended September 30, 2022 and 2021
(In millions of won, except earnings per share) | Note | For the three-month periods ended September 30 |
For the nine-month periods ended September 30 |
|||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||
Revenue |
16, 26 | 6,977,999 | 17,703,943 | 20,221,202 | ||||||||||||||
Cost of sales |
7, 17, 26 | (6,590,402 | ) | (6,207,794 | ) | (17,941,397 | ) | (17,891,257 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||||
Gross profit (loss) |
(404,879 | ) | 770,205 | (237,454 | ) | 2,329,945 | ||||||||||||
Selling expenses |
17, 18 | (144,236 | ) | (144,944 | ) | (413,623 | ) | (408,879 | ) | |||||||||
Administrative expenses |
17, 18 | (150,717 | ) | (153,721 | ) | (431,980 | ) | (427,031 | ) | |||||||||
Research and development expenses |
17 | (343,369 | ) | (313,239 | ) | (975,495 | ) | (874,087 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||||
Operating profit (loss) |
(1,043,201 | ) | 158,301 | (2,058,552 | ) | 619,948 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Finance income |
21 | 432,210 | 343,466 | 1,030,406 | 338,925 | |||||||||||||
Finance costs |
21 | (487,778 | ) | (245,898 | ) | (892,993 | ) | (517,259 | ) | |||||||||
Other non-operating income |
20 | 781,096 | 429,772 | 1,514,420 | 823,725 | |||||||||||||
Other non-operating expenses |
17, 20 | (1,140,337 | ) | (412,744 | ) | (1,934,156 | ) | (798,662 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||||
Profit (loss) before income tax |
(1,458,010 | ) | 272,897 | (2,340,875 | ) | 466,677 | ||||||||||||
Income tax expense (benefit) |
22 | (417,562 | ) | 28,174 | (645,163 | ) | 46,691 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Profit (loss) for the period |
(1,040,448 | ) | 244,723 | (1,695,712 | ) | 419,986 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Other comprehensive income (loss) |
||||||||||||||||||
Items that will never be reclassified to profit or loss |
||||||||||||||||||
Remeasurements of net defined benefit liabilities |
12 | (4,960 | ) | (2,171 | ) | 143,521 | (8,084 | ) | ||||||||||
Items that will be reclassified to profit or loss |
||||||||||||||||||
Loss on valuation of derivative |
24 | (25,252 | ) | (10,331 | ) | (68,051 | ) | (10,331 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||||
Other comprehensive income (loss) for the period, net of income tax |
(30,212 | ) | (12,502 | ) | 75,470 | (18,415 | ) | |||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Total comprehensive income (loss) for the period |
232,221 | (1,620,242 | ) | 401,571 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Earnings (loss) per share (in won) |
||||||||||||||||||
Basic earnings (loss) per share |
23 | 684 | (4,739 | ) | 1,174 | |||||||||||||
Diluted earnings (loss) per share |
23 | 231 | (4,739 | ) | 961 |
See accompanying notes to the separate interim financial statements.
111
LG DISPLAY CO., LTD.
Condensed Separate Interim Statements of Changes in Equity
(Unaudited)
For the nine-month periods ended September 30, 2022 and 2021
(In millions of won) | Share capital |
Share premium |
Retained earnings |
Other capital |
Total equity |
|||||||||||||||
Balances at January 1, 2021 |
2,251,113 | 6,223,043 | | 10,263,235 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total comprehensive income(loss) for the period |
||||||||||||||||||||
Profit for the period |
| | 419,986 | | 419,986 | |||||||||||||||
Other comprehensive income (loss) |
||||||||||||||||||||
Remeasurements of net defined benefit liabilities, net of tax |
| | (8,084 | ) | | (8,084 | ) | |||||||||||||
Loss on valuation of derivative |
(10,331 | ) | (10,331 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total other comprehensive loss |
| | (8,084 | ) | (10,331 | ) | (18,415 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total comprehensive income (loss) for the period |
| 411,902 | (10,331 | ) | 401,571 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balances at September 30, 2021 |
2,251,113 | 6,634,945 | (10,331 | ) | 10,664,806 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balances at January 1, 2022 |
2,251,113 | 6,611,853 | (9,227 | ) | 10,642,818 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total comprehensive income (loss) for the period |
||||||||||||||||||||
Loss for the period |
| | (1,695,712 | ) | | (1,695,712 | ) | |||||||||||||
Other comprehensive income (loss) |
||||||||||||||||||||
Remeasurements of net defined benefit liabilities, net of tax |
| | 143,521 | | 143,521 | |||||||||||||||
Loss on valuation of derivative |
| | | (68,051 | ) | (68,051 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total other comprehensive income (loss) |
| | 143,521 | (68,051 | ) | 75,470 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total comprehensive income (loss) for the period |
| (1,552,191 | ) | (68,051 | ) | (1,620,242 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Transaction with owners, recognized directly in equity |
||||||||||||||||||||
Dividends |
| | (232,580 | ) | | (232,580 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balances at September 30, 2022 |
2,251,113 | 4,827,082 | (77,278 | ) | 8,789,996 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
See accompanying notes to the separate interim financial statements.
112
LG DISPLAY CO., LTD.
Condensed Separate Interim Statements of Cash Flows
(Unaudited)
For the nine-month periods ended September 30, 2022 and 2021
(In millions of won) | Note | 2022 | 2021 | |||||||||
Cash flows from operating activities: |
||||||||||||
Profit (loss) for the period |
419,986 | |||||||||||
Adjustments for: |
||||||||||||
Income tax expense (benefit) |
22 | (645,163 | ) | 46,691 | ||||||||
Depreciation and amortization |
17 | 1,797,931 | 1,894,735 | |||||||||
Gain on foreign currency translation |
(459,131 | ) | (169,026 | ) | ||||||||
Loss on foreign currency translation |
984,083 | 231,586 | ||||||||||
Expenses related to defined benefit plans |
12 | 129,523 | 106,901 | |||||||||
Gain on disposal of property, plant and equipment |
(14,063 | ) | (18,328 | ) | ||||||||
Loss on disposal of property, plant and equipment |
35,801 | 39,830 | ||||||||||
Impairment loss on disposal of property, plant and equipment |
3,351 | 9,480 | ||||||||||
Gain on disposal of intangible assets |
| (196 | ) | |||||||||
Loss on disposal of intangible assets |
163 | | ||||||||||
Impairment loss on intangible assets |
19,388 | 13,835 | ||||||||||
Reversal of impairment loss on intangible assets |
(5,571 | ) | (640 | ) | ||||||||
Warranty expenses |
149,737 | 148,902 | ||||||||||
Finance income |
(979,204 | ) | (318,419 | ) | ||||||||
Finance costs |
880,442 | 508,828 | ||||||||||
Other income |
(133,345 | ) | | |||||||||
Other expenses |
6 | 15,357 | ||||||||||
|
|
|
|
|||||||||
1,763,948 | 2,509,536 | |||||||||||
Changes in: |
||||||||||||
Trade accounts and notes receivable |
1,771,520 | (1,255,784 | ) | |||||||||
Other accounts receivable |
(14,761 | ) | 66,320 | |||||||||
Inventories |
(710,221 | ) | (933,558 | ) | ||||||||
Other current assets |
(97,898 | ) | (51,344 | ) | ||||||||
Other non-current assets |
(2,879 | ) | (37,696 | ) | ||||||||
Trade accounts and notes payable |
1,501,700 | 760,063 | ||||||||||
Other accounts payable |
(453,249 | ) | (38,521 | ) | ||||||||
Accrued expenses |
(425,214 | ) | 381,378 | |||||||||
Provisions |
(157,028 | ) | (156,836 | ) | ||||||||
Advances Received |
6,325 | (247,034 | ) | |||||||||
Other current liabilities |
(582 | ) | (579 | ) | ||||||||
Defined benefit liabilities, net |
(10,139 | ) | 685 | |||||||||
Other non-current liabilities |
(23,200 | ) | 1,838 | |||||||||
|
|
|
|
|||||||||
1,384,374 | (1,511,068 | ) | ||||||||||
Cash generated from operating activities |
1,452,610 | 1,418,454 | ||||||||||
Income taxes refunded (paid) |
53,988 | 6,238 | ||||||||||
Interests received |
7,223 | 1,896 | ||||||||||
Interests paid |
(181,038 | ) | (175,967 | ) | ||||||||
|
|
|
|
|||||||||
Net cash provided by operating activities |
1,250,621 | |||||||||||
|
|
|
|
See accompanying notes to the separate interim financial statements.
113
LG DISPLAY CO., LTD.
Condensed Separate Interim Statements of Cash Flows
(Unaudited)
For the nine-month periods ended September 30, 2022 and 2021.
(In millions of won) | Note | 2022 | 2021 | |||||||||
Cash flows from investing activities: |
||||||||||||
Dividends received |
4,068 | |||||||||||
Increase in deposits in banks |
(42,804 | ) | (76,913 | ) | ||||||||
Proceeds from withdrawal of deposits in banks |
76,913 | 76,852 | ||||||||||
Acquisition of financial asset at fair value through profit or loss |
(150 | ) | | |||||||||
Acquisition of financial assets at fair value through other comprehensive income |
(1,721 | ) | | |||||||||
Proceeds from disposal of financial assets at fair value through other comprehensive income |
|
1,628 | 24 | |||||||||
Acquisition of investments |
(30,311 | ) | (171,865 | ) | ||||||||
Proceeds from disposal of investments |
132,200 | 1,800 | ||||||||||
Acquisition of property, plant and equipment |
(2,871,319 | ) | (1,328,243 | ) | ||||||||
Proceeds from disposal of property, plant and equipment |
73,469 | 53,946 | ||||||||||
Acquisition of intangible assets |
(553,418 | ) | (441,937 | ) | ||||||||
Proceeds from disposal of intangible assets |
10,446 | 2,946 | ||||||||||
Receipt from settlement of derivatives |
19,378 | (26,446 | ) | |||||||||
Proceeds from collection of short-term loans |
6,156 | 12,067 | ||||||||||
Increase in short-term loans |
(9,643 | ) | | |||||||||
Increase in long-term loans |
(49,756 | ) | (12,918 | ) | ||||||||
Increase in deposits |
(731 | ) | (249 | ) | ||||||||
Decrease in deposits |
3,981 | 1,237 | ||||||||||
Proceeds from disposal other assets |
1,464 | | ||||||||||
|
|
|
|
|||||||||
Net cash used in investing activities |
(3,107,665 | ) | (1,905,631 | ) | ||||||||
|
|
|
|
|||||||||
Cash flows from financing activities: |
25 | |||||||||||
Proceeds from short-term borrowings |
1,897,280 | 770,460 | ||||||||||
Repayments of short-term borrowings |
(220,000 | ) | (770,460 | ) | ||||||||
Proceeds from issuance of debentures |
443,230 | 498,027 | ||||||||||
Proceeds from long-term borrowings |
1,338,723 | 479,770 | ||||||||||
Repayments of current portion of long-term borrowings and bonds |
(2,310,478 | ) | (1,200,651 | ) | ||||||||
Payment guarantee fee received |
3,403 | 3,763 | ||||||||||
Dividends paid |
(232,580 | ) | | |||||||||
Repayments of lease liabilities |
(10,013 | ) | (9,398 | ) | ||||||||
|
|
|
|
|||||||||
Net cash provided (used) by financing activities |
909,565 | (228,489 | ) | |||||||||
|
|
|
|
|||||||||
Net decrease in cash and cash equivalents |
(865,317 | ) | (883,499 | ) | ||||||||
Cash and cash equivalents at January 1 |
950,847 | 1,220,098 | ||||||||||
|
|
|
|
|||||||||
Cash and cash equivalents at September 30 |
336,599 | |||||||||||
|
|
|
|
See accompanying notes to the separate interim financial statements.
114
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
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 September 30, 2022, the Company is operating Thin Film Transistor Liquid Crystal Display (TFT-LCD) and Organic Light Emitting Diode (OLED) panel manufacturing plants in Gumi, Paju and China and TFT-LCD and OLED module manufacturing plants in Gumi, Paju, China and Vietnam. The Company is domiciled in the Republic of Korea with its address at 128 Yeouidae-ro, Yeongdeungpo-gu, Seoul, the Republic of Korea. As of September 30, 2022, LG Electronics Inc., a major shareholder of the Company, owns 37.9% (135,625,000 shares) of the Companys common stock.
The Companys common stock is listed on the Korea Exchange under the identifying code 034220. As of September 30, 2022, there are 357,815,700 shares of common stock outstanding. The Companys 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 September 30, 2022, there are 17,232,298 ADSs outstanding.
2. | Basis of Presenting Financial Statements |
(a) | Statement of Compliance |
The condensed separate interim financial statements have been prepared in accordance with Korean International Financial Reporting Standard (K-IFRS) No.1034, Interim Financial Reporting. They do not include all of the information required for full annual financial statements and should be read in conjunction with the separate financial statements of the Company as of and for the year ended December 31, 2021.
These condensed interim financial statements are separate interim financial statements prepared in accordance with K-IFRS No.1027, Separate Financial Statements, presented by a parent, an investor in an associate, in which the investments are accounted for on the basis of the direct equity interest rather than on the basis of the reported results and net assets of the investees.
(b) | Basis of Measurement |
The condensed separate interim financial statements have been prepared on the historical cost basis except for the following material items in the statement of financial position:
| derivative financial instruments at fair value, financial assets at fair value through profit or loss (FVTPL), financial assets at fair value through other comprehensive income (FVOCI), financial liabilities at fair value through profit or loss (FVTPL), and |
| net defined benefit liabilities (defined benefit assets) recognized at the present value of defined benefit obligations less the fair value of plan assets |
115
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
2. | Basis of Presenting Financial Statements, Continued |
(c) | Functional and Presentation Currency |
The condensed separate interim financial statements are presented in Korean won, which is the Companys functional currency.
(d) | Use of Estimates and Judgments |
The preparation of the condensed separate interim financial statements in conformity with K-IFRSs requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
3. | Summary of Significant Accounting Policies |
The significant accounting policies followed by the Company in the preparation of its condensed separate interim financial statements are the same as those followed by the Company in its preparation of the separate financial statements as of and for the year ended December 31, 2021, except for the application of K-IFRS No. 1034, Interim Financial Reporting.
(a) | Changes in Accounting Policies |
The Company early adopted the amendments to K-IFRS No. 1016, Property, Plant and Equipment: Proceeds before Intended Use, in the annual separate financial statements from January 1, 2021.
Before the application of the amendments to K-IFRS No. 1016, directly attributable costs of acquiring property, plant and equipment included the costs of testing whether it is functioning properly, after deducting the net proceeds from selling items produced using the property, plant and equipment. However, after the application of the amendments, the proceeds from selling any such produced items and the cost of producing those items are recognized in profit or loss. The amendments also clarify that testing whether an item of property, plant and equipment is functioning properly means assessing its technical and physical performance rather than assessing its financial performance e.g. assessing whether the property, plant and equipment has achieved a certain level of operating margin.
The Company applied amendments retrospectively, but only to items of property, plant and equipment that were brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2020. There is no impact on the Companys condensed separate financial statements as a result of the retrospective application of the amendments
116
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
4. | Cash and Cash Equivalents and Deposits in Banks |
Cash and cash equivalents and deposits in banks as of September 30, 2022 and December 31, 2021 are as follows:
(In millions of won) | September 30, 2022 | December 31, 2021 | ||||||
Current assets |
||||||||
Cash and cash equivalents |
||||||||
Demand deposits |
950,847 | |||||||
Deposits in banks |
||||||||
Restricted deposits (*) |
76,913 | |||||||
Non-current assets |
||||||||
Deposits in banks |
||||||||
Restricted deposits (*) |
11 |
(*) | Includes funds deposited under agreements on mutually beneficial cooperation to aid LG Group companies suppliers, restricted deposits pledged to enforce the Companys investment plans upon the receipt of grants from Gyeongsangbuk-do. |
117
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
5. | Trade Accounts and Notes Receivable, Other Accounts Receivable and Others |
(a) | Trade accounts and notes receivable as of September 30, 2022 and December 31, 2021 are as follows: |
(In millions of won) | September 30, 2022 | December 31, 2021 | ||||||
Due from third parties |
203,963 | |||||||
Due from related parties |
3,462,081 | 4,847,873 | ||||||
|
|
|
|
|||||
5,051,836 | ||||||||
|
|
|
|
(b) | Other accounts receivable as of September 30, 2022 and December 31, 2021 are as follows: |
(In millions of won) | September 30, 2022 | December 31, 2021 | ||||||
Current assets |
||||||||
Non-trade receivables, net(*) |
77,147 | |||||||
Accrued income |
653 | 2,792 | ||||||
|
|
|
|
|||||
79,939 | ||||||||
|
|
|
|
|||||
Non-current assets |
||||||||
Long-term non-trade receivables |
5,122 | |||||||
|
|
|
|
|||||
85,061 | ||||||||
|
|
|
|
(*) | On May 16, 2022, in connection with the Groups patent contract with Sharp, Singapore International Arbitration Centre ruled in favor of the Company. Accordingly, compensation receivable in the amount of USD 95 million (KRW 136,645 million) was recognized as non-trade receivables and reduction to cost of sales and other non-operating incomes and others. |
Due from related
parties included in other accounts receivable as of September 30, 2022 and December 31, 2021 are W40,816 million and W24,618 million, respectively.
(c) | The aging of trade accounts and notes receivable and other accounts receivable as of September 30, 2022 and December 31, 2021 are as follows: |
September 30, 2022 | ||||||||||||||||
Book value | Allowance for impairment | |||||||||||||||
(In millions of won) | Trade accounts and notes receivable |
Other accounts receivable |
Trade accounts and notes receivable |
Other accounts receivable |
||||||||||||
Current |
242,648 | (4 | ) | (1,417 | ) | |||||||||||
1-15 days past due |
| 3,587 | | (36 | ) | |||||||||||
16-30 days past due |
2,542 | 58 | | | ||||||||||||
31-60 days past due |
| 227 | | (2 | ) | |||||||||||
More than 60 days past due |
13,987 | 823 | (32 | ) | (41 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
247,343 | (36 | ) | (1,496 | ) | ||||||||||||
|
|
|
|
|
|
|
|
118
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
5. | Trade Accounts and Notes Receivable, Other Accounts Receivable and Others, Continued |
December 31, 2021 | ||||||||||||||||
Book value | Allowance for impairment | |||||||||||||||
(In millions of won) | Trade accounts and notes receivable |
Other accounts receivable |
Trade accounts and notes receivable |
Other accounts receivable |
||||||||||||
Current |
85,154 | (11 | ) | (1,423 | ) | |||||||||||
1-15 days past due |
6 | 822 | | (6 | ) | |||||||||||
16-30 days past due |
| 44 | | | ||||||||||||
31-60 days past due |
61 | 16 | | | ||||||||||||
More than 60 days past due |
2 | 521 | | (67 | ) | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
86,557 | (11 | ) | (1,496 | ) | ||||||||||||
|
|
|
|
|
|
|
|
The movements in the allowance for impairment in respect of trade accounts and notes receivable and other accounts receivable for the nine-month period ended September 30, 2022 and for the year ended December 31, 2021 are as follows:
September 30, 2022 | December 31, 2021 | |||||||||||||||
(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 |
1,496 | 27 | 1,503 | |||||||||||||
(Reversal of) bad debt expense |
25 | | (16 | ) | (7 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance at the end of the reporting period |
1,496 | 11 | 1,496 | |||||||||||||
|
|
|
|
|
|
|
|
(d) | Other current assets as of September 30, 2022 and December 31, 2021 are as follows: |
(In millions of won) | September 30, 2022 | December 31, 2021 | ||||||
Advanced payments |
44,536 | |||||||
Prepaid expenses |
109,194 | 46,720 | ||||||
Value added tax refundable |
148,725 | 81,942 | ||||||
Right to recover returned goods |
8,052 | 7,440 | ||||||
|
|
|
|
|||||
180,638 | ||||||||
|
|
|
|
119
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
6. | Other Financial Assets |
Other financial assets as of September 30, 2022 and December 31, 2021 are as follows:
(In millions of won) | September 30, 2022 | December 31, 2021 | ||||||
Current assets |
||||||||
Financial assets at fair value through profit or loss |
||||||||
Convertible bonds |
1,573 | |||||||
Derivatives(*1) |
300,313 | 12,741 | ||||||
|
|
|
|
|||||
14,314 | ||||||||
|
|
|
|
|||||
Cash flow hedging derivatives |
||||||||
Derivatives(*2) |
905 | |||||||
Financial assets at fair value through other comprehensive income |
||||||||
Debt instruments |
||||||||
Government bonds |
27 | |||||||
Financial assets carried at amortized cost |
||||||||
Short-term loans |
22,518 | |||||||
|
|
|
|
|||||
37,764 | ||||||||
|
|
|
|
|||||
Non-current assets |
||||||||
Financial assets at fair value through profit or loss |
||||||||
Equity instruments |
3,096 | |||||||
Derivatives(*1) |
355,125 | 52,871 | ||||||
|
|
|
|
|||||
55,967 | ||||||||
|
|
|
|
|||||
Financial assets at fair value through other comprehensive income |
||||||||
Debt instruments |
||||||||
Government bonds |
21 | |||||||
Financial assets carried at amortized cost |
||||||||
Deposits |
11,542 | |||||||
Long-term loans |
63,807 | 19,939 | ||||||
|
|
|
|
|||||
31,481 | ||||||||
|
|
|
|
|||||
87,469 | ||||||||
|
|
|
|
(*1) | Represents cross currency interest rate swap contracts and others entered into by the Company to hedge currency and interest rate risks with respect to foreign currency denominated borrowings and bonds. The contracts are not designated as hedging instruments. |
(*2) | Represents forward exchange contracts entered into by the Company to hedge exchange rate risks with respect to forecast sales in foreign currency. The contracts are designated as hedging instruments. |
120
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
7. | Inventories |
Inventories as of September 30, 2022 and December 31, 2021 are as follows:
(In millions of won) | September 30, 2022 | December 31, 2021 | ||||||
Finished goods |
450,520 | |||||||
Work-in-process |
1,593,137 | 943,586 | ||||||
Raw materials |
708,127 | 641,047 | ||||||
Supplies |
104,570 | 95,844 | ||||||
|
|
|
|
|||||
2,130,997 | ||||||||
|
|
|
|
For the nine-month periods ended September 30, 2022 and 2021, the amount of inventories recognized as cost of sales and inventory write-downs and usage of inventory write-downs included in cost of sales are as follows:
(In millions of won) | 2022 | 2021 | ||||||
Inventories recognized as cost of sales |
17,891,257 | |||||||
Including: inventory write-downs |
210,801 | 145,139 | ||||||
Including: usage of inventory write-downs |
(169,870 | ) | (178,155 | ) |
There were no significant reversals of inventory write-downs recognized during the nine-month periods ended September 30, 2022 and 2021.
121
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
8. | Investments |
(a) | Investments in subsidiaries consist of the following: |
(In millions of won) | September 30, 2022 | December 31, 2021 | ||||||||||||||||||||||
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 | % | 100 | % | ||||||||||||||||
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 Guangzhou Co., Ltd. |
|
Guangzhou, China |
|
|
Manufacture display products |
|
100 | % | 293,557 | 100 | % | 293,557 | ||||||||||||
LG Display Shenzhen Co., Ltd. |
|
Shenzhen, China |
|
Sell display products | 100 | % | 3,467 | 100 | % | 3,467 | ||||||||||||||
LG Display Singapore Pte. Ltd. |
Singapore | Sell display products | 100 | % | 1,250 | 100 | % | 1,250 | ||||||||||||||||
L&T Display Technology (Fujian) Limited |
|
Fujian, China |
|
|
Manufacture and sell LCD module and LCD monitor sets |
|
51 | % | 10,123 | 51 | % | 10,123 | ||||||||||||
LG Display Yantai Co., Ltd. |
|
Yantai, China |
|
|
Manufacture display products |
|
100 | % | 169,195 | 100 | % | 169,195 | ||||||||||||
Nanumnuri Co., Ltd. |
|
Gumi, South Korea |
|
|
Provide janitorial services |
|
100 | % | 800 | 100 | % | 800 | ||||||||||||
LG Display (China) Co., Ltd. |
|
Guangzhou, China |
|
|
Manufacture and sell display products |
|
51 | % | 723,086 | 51 | % | 723,086 | ||||||||||||
Unified Innovative Technology, LLC |
|
Wilmington, U.S.A. |
|
|
Manage intellectual property |
|
100 | % | 9,489 | 100 | % | 9,489 | ||||||||||||
LG Display Guangzhou Trading Co., Ltd. |
|
Guangzhou, China |
|
Sell display products | 100 | % | 218 | 100 | % | 218 | ||||||||||||||
Global OLED Technology, LLC |
|
Sterling, U.S.A |
|
|
Manage OLED intellectual property |
|
100 | % | 164,322 | 100 | % | 164,322 | ||||||||||||
LG Display Vietnam Haiphong Co., Ltd. |
|
Haiphong, Vietnam |
|
|
Manufacture display products |
|
100 | % | 672,658 | 100 | % | 672,658 | ||||||||||||
Suzhou Lehui Display Co., Ltd. |
|
Suzhou, China |
|
|
Manufacture and sell LCD module and LCD monitor sets |
|
100 | % | 121,640 | 100 | % | 121,640 | ||||||||||||
LG DISPLAY FUND I LLC(*) |
|
Wilmington, U.S.A |
|
|
Invest in venture business and acquire technologies |
|
100 | % | 82,440 | 100 | % | 52,129 | ||||||||||||
LG Display High-Tech (China) Co., Ltd. |
|
Guangzhou, China |
|
|
Manufacture and sell display products |
|
69 | % | 1,794,547 | 69 | % | 1,794,547 | ||||||||||||
Money Market Trust |
|
Seoul, South Korea |
|
Money market trust | | | 100 | % | 127,400 | |||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
|
122
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
8. | Investments, Continued |
(*) | For the nine-month period ended September 30, 2022, the Company contributed
|
(b) | Associates as of September 30, 2022 and December 31, 2021 are as follows: |
(In millions of won) | September 30, 2022 | December 31, 2021 | ||||||||||||||||||
Associates |
Location |
Business |
Percentage of ownership |
Carrying amount |
Percentage of ownership |
Carrying amount |
||||||||||||||
Paju Electric Glass Co., Ltd. |
Paju, South Korea |
Manufacture glass for display | 40 | % | 40 | % | ||||||||||||||
WooRee E&L Co., Ltd. |
Ansan, South Korea |
Manufacture LED back light unit packages | 13 | % | 11,424 | 13 | % | 11,424 | ||||||||||||
YAS Co., Ltd. |
Paju, South Korea |
Develop and manufacture deposition equipment for OLEDs | 15 | % | 10,000 | 15 | % | 10,000 | ||||||||||||
AVATEC Co., Ltd. |
Daegu, South Korea |
Process and sell glass for display | 14 | % | 8,000 | 15 | % | 8,000 | ||||||||||||
Arctic Sentinel, Inc. |
Los Angeles, U.S.A. | Develop and manufacture tablet for kids | 10 | % | | 10 | % | | ||||||||||||
Cynora GmbH |
Bruchsal Germany |
Develop organic emitting materials for displays and lighting devices | 11 | % | | 11 | % | | ||||||||||||
Material Science Co., Ltd. |
Seoul, South Korea |
Develop, manufacture and sell materials for display | 10 | % | 3,680 | 10 | % | 3,680 | ||||||||||||
Nanosys Inc.(*) |
Milpitas, U.S.A. |
Develop, manufacture and sell materials for display | | | 4 | % | 10,732 | |||||||||||||
|
|
|
|
|||||||||||||||||
|
|
|
|
(*) | For the nine-month period ended September 30, 2022, Nanosys Inc. was reclassified into the financial asset at fair value through profit or loss as the Company losses its right to appoint members of the board of directors due to the changes in contractual arrangement. |
Dividends income recognized from subsidiaries and associates for the nine-month periods ended September 30, 2022 and 2021 amounted to
W122,303 million and W4,068 million, respectively.
123
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
9. | Property, Plant and Equipment |
For the nine-month periods ended September 30, 2022 and 2021, the Company purchased property, plant and equipment of
W3,487,252million and W1,476,912 million, respectively. The capitalized borrowing costs and the annualized capitalization rate were W97,680 million and 3.03%, and
W11,098 million and 2.76%, for the nine-month periods ended September 30, 2022 and 2021, respectively. Also, for the nine-month periods ended September 30, 2022 and 2021, the Company disposed of property, plant and equipment
with carrying amounts of W93,662 million and W75,268 million, respectively, and recognized W14,063 million and W35,801 million, respectively, as gain and loss on
disposal of property, plant and equipment for the nine-month period ended September 30, 2022 (gain and loss on disposal of property, plant and equipment for the nine-month period ended September 30, 2021: W18,328 million and
W39,830 million, respectively).
10. | Intangible Assets |
The Company capitalizes expenditures related to development activities, such as expenditures incurred on designing, manufacturing and testing
of products after those related activities meet the capitalization criteria of development costs including technical feasibility, future economic benefits and others. The balances of capitalized development costs as of September 30, 2022 and
December 31, 2021, are W598,032 million and W389,215 million, respectively. For the nine-month periods ended September 30, 2022 and 2021, the Company recognized an impairment loss amounting to
W11,273 million and W13,835 million, respectively, in connection with development projects.
124
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
11. | Financial Liabilities |
(a) | Financial liabilities as of September 30, 2022 and December 31, 2021 are as follows: |
(In millions of won) | September 30, 2022 | December 31, 2021 | ||||||
Current |
||||||||
Short-term borrowings |
| |||||||
Current portion of long-term borrowings and bonds |
2,098,703 | 2,529,388 | ||||||
Current portion of payment guarantee liabilities |
5,992 | 3,462 | ||||||
Derivatives(*1) |
| 8,594 | ||||||
Cash flow hedging derivatives(*2) |
104,656 | 13,400 | ||||||
Lease liabilities |
5,700 | 2,852 | ||||||
|
|
|
|
|||||
2,557,696 | ||||||||
|
|
|
|
|||||
Non-current |
||||||||
Won denominated borrowings |
2,173,500 | |||||||
Foreign currency denominated borrowings |
2,532,422 | 1,861,235 | ||||||
Bonds |
1,131,816 | 995,976 | ||||||
Payment guarantee liabilities |
11,986 | 2,746 | ||||||
Derivatives(*1) |
| 2,331 | ||||||
Lease liabilities |
3,186 | 2,367 | ||||||
|
|
|
|
|||||
5,038,155 | ||||||||
|
|
|
|
(*1) | Represents cross currency interest rate swap contracts and others entered into by the Company to hedge currency and interest rate risks with respect to foreign currency denominated borrowings and bonds. The contracts are not designated as hedging instruments. |
(*2) | Represents forward exchange contracts entered into by the Company to hedge exchange rate risks with respect to forecast sales in foreign currency. The contracts are designated as hedging instruments. |
(b) | Short-term borrowings as of September 30, 2022 and December 31, 2021 are as follows: |
(In millions of won and USD)
Lender |
Annual interest rate as of September 30, 2022(%) |
September 30, 2022 |
December 31, 2021 |
|||||||
The Export-Import Bank of Korea and others |
2.13 ~ 4.75 | | ||||||||
|
|
|
|
|||||||
Foreign currency equivalent |
| USD | 800 | | ||||||
|
|
|
|
125
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
11. | Financial Liabilities, Continued |
(c) | Won denominated long-term borrowings as of September 30, 2022 and December 31, 2021 are as follows: |
(In millions of won) | ||||||||||||
Lender |
Annual interest rate as of September 30, 2022 (%) |
September 30, 2022 |
December 31, 2021 |
|||||||||
Korea Development Bank and others |
1.90 ~ 4.54 | 2,785,000 | ||||||||||
Less current portion of long-term borrowings |
(1,341,500 | ) | (611,500 | ) | ||||||||
|
|
|
|
|||||||||
2,173,500 | ||||||||||||
|
|
|
|
(d) | Foreign currency denominated long-term borrowings as of September 30, 2022 and December 31, 2021 are as follows: |
(In millions of won and USD) | ||||||||||||
Lender |
Annual interest rate as of September 30, 2022 (%) |
September 30, 2022 |
December 31, 2021 |
|||||||||
KEB Hana Bank and others |
1.82 ~ 5.40 | 2,163,538 | ||||||||||
Foreign currency equivalent |
USD | 2,005 | USD | 1,825 | ||||||||
Less current portion of long-term borrowings |
(344,352 | ) | (302,303 | ) | ||||||||
|
|
|
|
|||||||||
1,861,235 | ||||||||||||
|
|
|
|
126
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
11. | Financial Liabilities, Continued |
(e) | Details of bonds issued and outstanding as of September 30, 2022 and December 31, 2021 are as follows: |
(In millions of won and USD) | Maturity | Annual interest rate as of September 30, 2022(%) |
September 30, 2022 |
December 31, 2021 |
||||||||||||
Won denominated bonds at amortized cost (*1) |
||||||||||||||||
Publicly issued bonds |
|
October 2022~ February 2027 |
|
2.29 ~ 3.66 | 1,320,000 | |||||||||||
Privately issued bonds |
|
May 2025~ May 2033 |
|
3.25 ~ 4.25 | 110,000 | 160,000 | ||||||||||
|
|
|
|
|||||||||||||
Less discount on bonds |
(3,251 | ) | (2,534 | ) | ||||||||||||
Less current portion |
(239,933 | ) | (599,825 | ) | ||||||||||||
|
|
|
|
|||||||||||||
877,641 | ||||||||||||||||
|
|
|
|
|||||||||||||
Foreign currency denominated bonds at amortized cost (*2) |
||||||||||||||||
Privately issued bonds |
April 2023 | 4.28 | 118,550 | |||||||||||||
Foreign currency equivalent |
USD | 100 | USD | 100 | ||||||||||||
Less discount on bonds |
(115 | ) | (215 | ) | ||||||||||||
Less current portion |
(143,365 | ) | | |||||||||||||
|
|
|
|
|||||||||||||
118,335 | ||||||||||||||||
|
|
|
|
|||||||||||||
Financial liabilities at fair value through profit or loss |
||||||||||||||||
Foreign currency denominated convertible bonds (*3) |
August 2024 | 1.50 | 1,015,760 | |||||||||||||
Foreign currency equivalent |
USD | 21 | USD | 857 | ||||||||||||
Less current portion |
(29,553 | ) | (1,015,760 | ) | ||||||||||||
| | |||||||||||||||
|
|
|
|
|||||||||||||
995,976 | ||||||||||||||||
|
|
|
|
(*1) | Principal of the won denominated bonds is to be repaid at maturity and interests are paid quarterly. |
(*2) | Principal of the foreign currency denominated bonds is to be repaid at maturity and interests are paid quarterly or semi-annually. |
(*3) | For the nine-month period ended September 30, 2022, USD 667 million was redeemed upon the bondholders exercise of their put option, and the remaining outstanding balance was fully redeemed subsequent to September 30, 2022 upon the Companys exercise of it early redemption right. |
127
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
11. | Financial Liabilities, Continued |
(f) | Details of the convertible bonds issued by the Company and outstanding as of September 30, 2022 are as follows: |
(In won, USD) | ||
Description | ||
Type |
Unsecured foreign currency denominated convertible bonds | |
Issuance amount |
USD 687,800,000 | |
Annual interest rate (%) |
1.50 | |
Issuance date |
August 22, 2019 | |
Maturity date |
August 22, 2024 | |
Interest payment |
Payable semi-annually in arrear until maturity date | |
Principal redemption |
1. Redemption at maturity: Redeemed on the maturity date, at their outstanding principal amount, which has not been early redeemed or converted. | |
2. Early redemption: The Company has a right to redeem before maturity (call option) or the bondholders have a right to require the Company to redeem before maturity (put option). At exercise of each option, the outstanding principal amount together with accrued but unpaid interest are to be redeemed. | ||
Conversion price |
||
Conversion period |
From August 23, 2020 to August 12, 2024 | |
Redemption at the option of the issuer |
- On or at any time after 3 years from the issuance, if the closing price of the shares for any 20 trading days out of the 30 consecutive trading days is at least 130% of the applicable conversion price - The aggregate principal amount of the convertible bonds outstanding is less than 10% of the aggregate principal amount originally issued, or - In the event of certain changes in laws and other directives resulting in additional taxes for the holders | |
Redemption at the option of the bondholders (Put option) |
On the third anniversary from the issuance date |
The Company designated the convertible bonds as financial liabilities at fair value through profit or loss and recognized the change in fair value in profit or loss. The Company measures the convertible bond at fair value using the market price of convertible bonds disclosed on Bloomberg. The number of convertible shares as of September 30, 2022 is as follows:
(In won and number of shares) | September 30, 2022 | |||
Aggregate outstanding amount of the convertible bonds |
||||
Conversion price |
||||
Number of common shares to be issued at conversion |
1,283,543 |
128
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
12. | Employee Benefits |
The Companys defined benefit plans provide a lump-sum payment to an employee based on final salary rates and length of service at the time the employee leaves the Company.
(a) | Net defined benefit liabilities (defined benefit assets) recognized as of September 30, 2022 and December 31, 2021 are as follows: |
(In millions of won) | September 30, 2022 | December 31, 2021 | ||||||
Present value of partially funded defined benefit obligations |
1,678,148 | |||||||
Fair value of plan assets |
(1,687,206 | ) | (1,746,424 | ) | ||||
|
|
|
|
|||||
(68,276 | ) | |||||||
|
|
|
|
(b) | Expenses related to defined benefit plans recognized in profit or loss for the three-month and nine-month periods ended September 30, 2022 and 2021 are as follows: |
For the three-month periods ended September 30 |
For the nine-month periods ended September 30 |
|||||||||||||||
(In millions of won) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
Current service cost |
37,108 | 131,903 | 111,322 | |||||||||||||
Net interest cost |
(1,318 | ) | (1,474 | ) | (2,380 | ) | (4,421 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
35,634 | 129,523 | 106,901 | ||||||||||||||
|
|
|
|
|
|
|
|
(c) | Plan assets as of September 30, 2022 and December 31, 2021 are as follows: |
(In millions of won) | September 30, 2022 | December 31, 2021 | ||||||
Guaranteed deposits in banks |
1,746,424 |
As of September 30, 2022, the Company maintains the plan assets primarily with Mirae Asset Securities Co., Ltd., KB Insurance Co., Ltd. and others.
(d) | Remeasurements of the net defined benefit liabilities (assets) included in other comprehensive income (loss) for the three-month and nine-month periods ended September 30, 2022 and 2021 are as follows: |
For the three-month periods ended September 30 |
For the nine-month periods ended September 30 |
|||||||||||||||
(In millions of won) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
Remeasurements of net defined benefit liabilities |
(2,914 | ) | 194,367 | (10,855 | ) | |||||||||||
Tax effect |
1,758 | 743 | (50,846 | ) | 2,771 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Remeasurements of net defined benefit liabilities, net of income tax |
(2,171 | ) | 143,521 | (8,084 | ) | |||||||||||
|
|
|
|
|
|
|
|
129
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
13. | Provisions |
Changes in provisions for the nine-month period ended September 30, 2022 are as follows:
(In millions of won) | Litigation and claims |
Warranties (*) | Others | Total | ||||||||||||
Balance at January 1, 2022 |
255,560 | 9,247 | 264,807 | |||||||||||||
Additions (reversal) |
1,758 | 147,979 | (737 | ) | 149,000 | |||||||||||
Usage |
| (156,291 | ) | | (156,291 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance at September 30, 2022 |
247,248 | 8,510 | 257,516 | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Current |
160,065 | 8,510 | 170,333 | |||||||||||||
Non-current |
87,183 | | 87,183 |
(*) | Product warranties on defective products are normally applicable for warranty periods from the date of customers purchase. The provision is calculated by using historical and anticipated rates of warranty claims and costs per claim to satisfy the Companys warranty obligation. |
130
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
14. | Contingent Liabilities and Commitments |
(a) | Legal Proceedings |
Anti-trust litigations
Certain individual claimants filed follow-on damages claims against the Company and other TFT-LCD manufacturers alleging violations of EU competition law. While the Company continues its vigorous defense of the various pending proceedings described above, as of September 30, 2022, the Company cannot reliably estimate the timing and amount of outflows of resources embodying economic benefits relating to the proceedings.
Others
The Company is involved in various lawsuits and disputes in addition to pending proceedings described above. The Company cannot reliably estimate the timing and amount of outflows of resources embodying economic benefits relating to the disputes.
(b) | Commitments |
Factoring and securitization of accounts receivable
The Company has agreements with Korea Development Bank and several other banks for accounts receivable sales negotiating facilities of up to an
aggregate of USD 1,070 million (W1,535,236 million) in connection with the Companys export sales transactions with its subsidiaries. As of September 30, 2022, there are no short-term borrowings that are outstanding
but past due in connection with these agreements. In connection with all of the contracts in this paragraph, the Company has sold its accounts receivable with recourse.
The Company has credit facility agreements with Shinhan Bank and several other banks pursuant to which the Company could sell its accounts
receivables up to an aggregate of W613,702 million in connection with its domestic and export sales transactions and, as of September 30, 2022, W43,047 million accounts and notes receivable sold were
outstanding in connection with the agreement. In connection with the contracts above, the Company has sold its accounts receivable without recourse.
131
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
14. | Contingent Liabilities and Commitments, Continued |
(b) | Commitments, Continued |
Letters of credit
As of September 30, 2022, the Company entered into agreements with financial institutions in relation to the opening of letters of credit and the respective credit limits under the agreements are as follows:
(In millions of won and USD) | Contractual amount | KRW equivalent | ||||||
KEB Hana Bank |
USD | 350 | ||||||
Sumitomo Mitsui Banking Corporation |
USD | 100 | 143,480 | |||||
Industrial Bank of Korea |
USD | 200 | 286,960 | |||||
Industrial and Commercial Bank of China |
USD | 200 | 286,960 | |||||
Shinhan Bank |
USD | 270 | 387,396 | |||||
KB Kookmin Bank |
USD | 100 | 143,480 | |||||
MUFG Bank |
USD | 150 | 215,220 | |||||
The ExportImport Bank of Korea |
USD | 100 | 143,480 | |||||
Citibank Korea |
USD | 100 | 143,480 | |||||
|
|
|
|
|||||
USD | 1,570 | |||||||
|
|
|
|
Payment guarantees
The Company provides payment guarantees to LG Display Vietnam Haiphong Co., Ltd. in connection with the principal amount of term loan credit
facilities amounting to USD 1,267 million (W1,818,210 million).
In addition, the Company obtained payment guarantees
amounting to USD 2 million (W2,870 million) from Shinhan Bank for value added tax payments in Poland.
License agreements
As of September 30, 2022, the Company has technical license agreements with Hitachi Display, Ltd. and others in relation to its LCD business and patent license agreement with Universal Display Corporation in relation to its OLED business. Also, the Company has a trademark license agreement with LG Corp. and other intellectual property license agreements with various companies as of September 30, 2022.
132
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
15. | Share Capital, Share Premium and Reserves |
(a) | Share capital and Share premium |
The Company is authorized to issue 500,000,000 shares of capital stock (par value W5,000), and as of September 30, 2022 and
December 31, 2021, the number of issued common shares is 357,815,700. There have been no changes in the capital stock from January 1, 2021 to September 30, 2022.
The Companys capital surplus consists of share premium. There have been no changes in share premium from January 1, 2021 to September 30, 2022.
(b) | Reserves |
Reserves as of September 30, 2022 and December 31, 2021 are as follows:
(In millions of won) | September 30, 2022 | December 31, 2021 | ||||||
Loss on valuation of derivatives(*) |
) | (9,227 | ) |
(*) | Gain or loss on valuation of derivatives is the effective portion of the gains or losses from derivatives to which cash flow hedging accounting has been applied. |
133
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
16. | Revenue |
Details of revenue for the three-month and nine-month periods ended September 30, 2022 and 2021 are as follows:
(In millions of won) | For the three-month periods ended September 30 |
For the nine-month periods ended September 30 |
||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Sales of goods |
6,962,279 | 17,835,753 | 20,152,255 | |||||||||||||
Royalties |
2,319 | 8,904 | 7,380 | 46,246 | ||||||||||||
Others |
4,998 | 6,816 | 13,466 | 22,701 | ||||||||||||
Hedging loss |
(83,371 | ) | | (152,656 | ) | | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
6,977,999 | 17,703,943 | 20,221,202 | ||||||||||||||
|
|
|
|
|
|
|
|
17. | The Nature of Expenses and Others |
The classification of expenses by nature for the three-month and nine-month periods ended September 30, 2022 and 2021 are as follows:
(In millions of won) | For the three-month periods ended September 30 |
For the nine-month periods ended September 30 |
||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Changes in inventories |
(538,208 | ) | (710,221 | ) | (933,558 | ) | ||||||||||
Purchases of raw materials, merchandise and others |
2,134,370 | 2,391,343 | 5,916,474 | 6,981,395 | ||||||||||||
Depreciation and amortization |
574,713 | 662,736 | 1,797,931 | 1,894,735 | ||||||||||||
Outsourcing |
2,754,166 | 2,754,222 | 8,278,454 | 7,410,439 | ||||||||||||
Labor |
654,753 | 784,104 | 1,934,459 | 2,036,030 | ||||||||||||
Supplies and others |
220,402 | 217,122 | 652,116 | 592,851 | ||||||||||||
Utility |
209,334 | 192,760 | 585,647 | 528,199 | ||||||||||||
Fees and commissions |
139,990 | 138,062 | 399,216 | 333,871 | ||||||||||||
Shipping |
15,776 | 19,276 | 43,277 | 56,833 | ||||||||||||
Advertising |
28,545 | 32,006 | 84,528 | 105,613 | ||||||||||||
Warranty |
45,167 | 40,997 | 147,979 | 148,902 | ||||||||||||
Travel |
17,214 | 14,924 | 43,540 | 40,127 | ||||||||||||
Taxes and dues |
17,611 | 15,725 | 55,683 | 47,173 | ||||||||||||
Others |
232,687 | 124,047 | 596,745 | 423,899 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
6,849,116 | 19,825,828 | 19,666,509 | ||||||||||||||
|
|
|
|
|
|
|
|
Total expenses consist of cost of sales, selling, administrative, research and development expenses and other non-operating expenses, excluding foreign exchange differences.
134
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
18. | Selling and Administrative Expenses |
Details of selling and administrative expenses for the three-month and nine-month periods ended September 30, 2022 and 2021 are as follows:
(In millions of won) | For the three-month periods ended September 30 |
For the nine-month periods ended September 30 |
||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Salaries |
71,873 | 176,521 | 192,199 | |||||||||||||
Expenses related to defined benefit plans |
6,333 | 5,337 | 19,477 | 16,267 | ||||||||||||
Other employee benefits |
14,635 | 13,887 | 40,716 | 37,546 | ||||||||||||
Shipping |
7,761 | 13,414 | 21,005 | 39,988 | ||||||||||||
Fees and commissions |
67,254 | 61,150 | 178,352 | 129,802 | ||||||||||||
Depreciation |
29,634 | 37,044 | 89,248 | 105,739 | ||||||||||||
Taxes and dues |
873 | 753 | 3,000 | 2,418 | ||||||||||||
Advertising |
28,545 | 32,006 | 84,528 | 105,613 | ||||||||||||
Warranty |
45,167 | 40,997 | 147,979 | 148,902 | ||||||||||||
Insurance |
2,367 | 2,324 | 6,482 | 6,951 | ||||||||||||
Travel |
3,902 | 1,183 | 9,889 | 2,817 | ||||||||||||
Training |
4,423 | 3,587 | 9,918 | 8,733 | ||||||||||||
Others |
23,405 | 15,110 | 58,488 | 38,935 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
298,665 | 845,603 | 835,910 | ||||||||||||||
|
|
|
|
|
|
|
|
19. | Personnel Expenses |
Details of personnel expenses for the three-month and nine-month periods ended September 30, 2022 and 2021 are as follows:
(In millions of won) | For the three-month periods ended September 30 |
For the nine-month periods ended September 30 |
||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Salaries and wages |
675,847 | 1,651,685 | 1,751,399 | |||||||||||||
Other employee benefits |
88,916 | 91,347 | 242,292 | 235,499 | ||||||||||||
Contributions to National Pension plan |
20,082 | 17,423 | 56,325 | 50,473 | ||||||||||||
Expenses related to defined benefit plans and defined contribution plans |
41,992 | 35,868 | 130,484 | 107,547 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
820,485 | 2,080,786 | 2,144,918 | ||||||||||||||
|
|
|
|
|
|
|
|
135
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
20. | Other Non-operating Income and Other Non-operating Expenses |
(a) | Details of other non-operating income for the three-month and nine-month periods ended September 30, 2022 and 2021 are as follows: |
(In millions of won) | For the three-month periods ended September 30 |
For the nine-month periods ended September 30 |
||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Foreign currency gain |
413,557 | 1,455,455 | 795,672 | |||||||||||||
Gain on disposal of property, plant and equipment |
4,043 | 11,032 | 14,063 | 18,328 | ||||||||||||
Gain on disposal of intangible assets |
| 196 | | 196 | ||||||||||||
Reversal of impairment loss on intangible assets |
| | 5,571 | 640 | ||||||||||||
Rental income |
518 | 450 | 1,536 | 1,306 | ||||||||||||
Others |
15,082 | 4,537 | 37,795 | 7,583 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
429,772 | 1,514,420 | 823,725 | ||||||||||||||
|
|
|
|
|
|
|
|
(b) | Details of other non-operating expenses for the three-month and nine-month periods ended September 30, 2022 and 2021 are as follows: |
(In millions of won) | For the three-month periods ended September 30 |
For the nine-month periods ended September 30 |
||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Foreign currency loss |
383,326 | 1,870,823 | 733,407 | |||||||||||||
Loss on disposal of property, plant and equipment |
11,524 | 21,840 | 35,801 | 39,830 | ||||||||||||
Impairment loss on property, plant and equipment |
| 994 | 3,351 | 9,480 | ||||||||||||
Loss on disposal of intangible assets |
7 | | 163 | | ||||||||||||
Impairment loss on intangible assets |
12,686 | 5,306 | 19,388 | 13,835 | ||||||||||||
Donations |
97 | 42 | 1,119 | 227 | ||||||||||||
Others |
956 | 1,236 | 3,511 | 1,883 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
412,744 | 1,934,156 | 798,662 | ||||||||||||||
|
|
|
|
|
|
|
|
136
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
21. | Finance Income and Finance Costs |
Finance income and costs recognized in profit or loss for the three-month and nine-month periods ended September 30, 2022 and 2021 are as follows:
(In millions of won) | For the three-month periods ended September 30 |
For the nine-month periods ended September 30 |
||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Finance income |
||||||||||||||||
Interest income |
983 | 7,431 | 1,884 | |||||||||||||
Dividend income |
| | 122,303 | 4,068 | ||||||||||||
Foreign currency gain |
32,825 | 11,043 | 55,602 | 24,820 | ||||||||||||
Gain on transaction of derivatives |
6,098 | | 19,754 | | ||||||||||||
Gain on valuation of derivatives |
383,839 | 121,639 | 600,752 | 242,352 | ||||||||||||
Gain on valuation of financial assets at fair value through profit or loss |
| | 310 | 1,254 | ||||||||||||
Gain on valuation of financial liabilities at fair value through profit or loss |
2,967 | 208,557 | 220,355 | 60,838 | ||||||||||||
Others |
1,668 | 1,244 | 3,899 | 3,709 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
343,466 | 1,030,406 | 338,925 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Finance costs |
||||||||||||||||
Interest expense |
67,292 | 126,774 | 185,097 | |||||||||||||
Foreign currency loss |
432,540 | 173,881 | 759,733 | 305,133 | ||||||||||||
Loss on early repayment of borrowings and bonds |
2,540 | | 2,540 | 250 | ||||||||||||
Loss on disposal of investments |
113 | | 113 | | ||||||||||||
Loss on sale of trade accounts and notes receivable |
196 | 53 | 287 | 88 | ||||||||||||
Loss on valuation of financial assets at fair value through profit or loss |
97 | | 1,514 | 63 | ||||||||||||
Loss on transaction of derivatives |
38 | 4,657 | 376 | 26,446 | ||||||||||||
Others |
1,612 | 15 | 1,656 | 182 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
245,898 | 892,993 | 517,259 | ||||||||||||||
|
|
|
|
|
|
|
|
137
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
22. | Income Tax Expense (Benefit) |
(a) | Details of income tax expense (benefit) for the three-month and nine-month periods ended September 30, 2022 and 2021 are as follows: |
(In millions of won) | For the three-month periods ended September 30 |
For the nine-month periods ended September 30 |
||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Current tax expense (benefit) |
549 | (3,322 | ) | (5,357 | ) | |||||||||||
Deferred tax expense (benefit) |
(417,611 | ) | 27,625 | (641,841 | ) | 52,048 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Income tax expense (benefit) |
28,174 | (645,163 | ) | 46,691 | ||||||||||||
|
|
|
|
|
|
|
|
(b) | Deferred Tax Assets and Liabilities |
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that the deferred tax assets at each reporting date will be realized with the Companys estimated future taxable income. The Companys deferred tax assets and liabilities may differ from actual refundable or payable amount.
Deferred tax assets and liabilities as of September 30, 2022 and December 31, 2021 are attributable to the following:
(In millions of won) | Assets | Liabilities | Total | |||||||||||||||||||||
September 30, 2022 |
December 31, 2021 |
September 30, 2022 |
December 31, 2021 |
September 30, 2022 |
December 31, 2021 |
|||||||||||||||||||
Other accounts receivable, net |
| (2,048 | ) | (16 | ) | (2,048 | ) | (16 | ) | |||||||||||||||
Inventories, net |
41,310 | 34,248 | | | 41,310 | 34,248 | ||||||||||||||||||
Defined benefit liabilities, net |
| | | (26,642 | ) | | (26,642 | ) | ||||||||||||||||
Accrued expenses |
122,599 | 241,238 | | | 122,599 | 241,238 | ||||||||||||||||||
Property, plant and equipment |
389,016 | 462,577 | | | 389,016 | 462,577 | ||||||||||||||||||
Intangible assets |
25,095 | 15,886 | | | 25,095 | 15,886 | ||||||||||||||||||
Provisions |
64,800 | 68,893 | | | 64,800 | 68,893 | ||||||||||||||||||
Other temporary differences |
13,669 | 68,349 | (17,847 | ) | (2,095 | ) | (4,178 | ) | 66,254 | |||||||||||||||
Tax loss carryforwards |
1,656,549 | 886,467 | | | 1,656,549 | 886,467 | ||||||||||||||||||
Tax credit carryforwards |
560,371 | 489,505 | | | 560,371 | 489,505 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Deferred tax assets (liabilities) |
2,267,163 | (19,895 | ) | (28,753 | ) | 2,853,514 | 2,238,410 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
138
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
23. | Earnings (Loss) Per Share |
(a) | Basic earnings (loss) per share for the three-month and nine-month periods ended September 30, 2022 and 2021 are as follows: |
(In won and number of shares) | For the three-month periods ended September 30 |
For the nine-month periods ended September 30 |
||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Profit (loss) for the period |
244,722,623,797 | (1,695,712,491,611 | ) | 419,985,745,801 | ||||||||||||
Weighted-average number of common stocks outstanding |
357,815,700 | 357,815,700 | 357,815,700 | 357,815,700 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Basic earnings (loss) per share |
684 | (4,739 | ) | 1,174 | ||||||||||||
|
|
|
|
|
|
|
|
For the three-month and nine-month periods ended September 30, 2022 and 2021, there were no events or transactions that resulted in changes in the number of common stocks used for calculating basic earnings (loss) per share.
139
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
23. | Earnings (Loss) Per Share, Continued |
(b) | Diluted earnings (loss) per share is not different from basic earnings (loss) per share as there is no dilution effects of potential common stocks for the three-month and nine-month periods ended September 30,2022. As of September 30, 2022, 1,283,543 shares of potential common stock to be issued from conversion were not considered from the calculation of weighted-average number of common stocks due to antidilution. |
Diluted earnings per share for the three-month and nine-month periods ended September 30, 2021 are as follows:
(In won and number of shares) | For the three-month periods ended September 30, 2021 |
For the nine-month periods ended September 30, 2021 |
||||||
Profit attributable to owners of the Controlling Company |
419,985,745,801 | |||||||
Adjustments: |
||||||||
Interest expenses of convertible bond, net of income tax |
2,907,409,095 | 8,533,633,457 | ||||||
Gain on valuation of convertible bond, net of income tax |
(155,312,239,309 | ) | (45,305,824,343 | ) | ||||
Diluted loss attributable to owners of the Controlling Company |
92,317,793,583 | 383,213,554,915 | ||||||
Weighted-average number of common stocks outstanding, after adjustment |
398,804,698 | 398,804,698 | ||||||
|
|
|
|
|||||
Diluted earnings per share |
961 | |||||||
|
|
|
|
Weighted-average number of common stocks outstanding, after adjustment, for measurement of diluted earnings per share is determined as follows:
(No. of shares) | For the three-month periods ended September 30, 2021 |
For the nine-month periods ended September 30, 2021 |
||||||
Weighted-average number of common stocks outstanding |
357,815,700 | |||||||
Adjustment: Number of common stocks to be issued from conversion |
40,988,998 | 40,988,998 | ||||||
|
|
|
|
|||||
Weighted-average number of common stocks outstanding, after adjustment |
398,804,698 | |||||||
|
|
|
|
140
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
24. | Financial Risk Management |
The Company is exposed to credit risk, liquidity risk and market risks. The Company identifies and analyzes such risks, and controls are implemented under a risk management system to monitor and manage these risks at below an acceptable level.
(a) | Market risk |
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Companys 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 accrued in the currency of the borrowing. Generally, borrowings are denominated in currencies that match the cash flows generated by the underlying operations of the Company, primarily KRW and USD.
The Company adopts policies to ensure that its net exposure is kept to a manageable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances. In respect of monetary assets and liabilities denominated in foreign currencies, the Company manages currency risk through continuously managing the position of foreign currencies, measuring the currency risk and, if necessary, using derivatives such as currency forwards, currency swap and others.
141
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
24. | Financial Risk Management, Continued |
i) | Exposure to currency risk |
The Companys exposure to foreign currency risk based on notional amounts as of September 30, 2022 and December 31, 2021 is as follows:
(In millions) | September 30, 2022 | |||||||||||||||
USD | JPY | PLN | EUR | |||||||||||||
Cash and cash equivalents |
40 | 857 | 1 | | ||||||||||||
Trade accounts and notes receivable |
2,527 | 1,959 | | | ||||||||||||
Non-trade receivables |
143 | 429 | | 3 | ||||||||||||
Other assets denominated in foreign currencies |
27 | | | | ||||||||||||
Trade accounts and notes payable |
(4,633 | ) | (4,190 | ) | | | ||||||||||
Other accounts payable |
(655 | ) | (16,645 | ) | | (4 | ) | |||||||||
Financial liabilities |
(2,926 | ) | | | | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
(5,477 | ) | (17,590 | ) | 1 | (1 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Cross currency interest rate swap contracts(*) |
2,525 | | | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net exposure |
(2,952 | ) | (17,590 | ) | 1 | (1 | ) | |||||||||
|
|
|
|
|
|
|
|
(*) | Of cross currency interest rate swap contracts, USD 900 million were entered into to hedge currency risk with respect to foreign currency denominated borrowings and USD 1,625 million were entered into to hedge currency risk and interest rate risk with respect to foreign currency denominated borrowings and bonds. |
142
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
24. | Financial Risk Management, Continued |
(In millions) | December 31, 2021 | |||||||||||||||||||
USD | JPY | CNY | PLN | EUR | ||||||||||||||||
Cash and cash equivalents |
800 | 80 | 4 | 1 | | |||||||||||||||
Trade accounts and notes receivable |
4,167 | 4,462 | | | | |||||||||||||||
Non-trade receivables |
47 | 70 | 22 | | | |||||||||||||||
Trade accounts and notes payable |
(4,014 | ) | (8,296 | ) | | | | |||||||||||||
Other accounts payable |
(1,144 | ) | (4,274 | ) | | | (3 | ) | ||||||||||||
Financial liabilities |
(2,782 | ) | | | | | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
(2,926 | ) | (7,958 | ) | 26 | 1 | (3 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Cross currency interest rate swap contracts(*) |
1,545 | | | | | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net exposure |
(1,381 | ) | (7,958 | ) | 26 | 1 | (3 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
(*) | Of cross currency interest rate swap contracts, USD 100 million were entered into to hedge currency risk with respect to foreign currency denominated borrowings and USD 1,445 million were entered into to hedge currency risk and interest rate risk with respect to foreign currency denominated borrowings and bonds. |
Average exchange rates applied for the nine-month periods ended September 30, 2022 and 2021 and the exchange rates at September 30, 2022 and December 31, 2021 are as follows:
(In won) | Average exchange rate | Exchange rate on reporting date | ||||||||||||||
2022 | 2021 | September 30, 2022 | December 31, 2021 | |||||||||||||
USD |
1,130.99 | 1,434.80 | 1,185.50 | |||||||||||||
JPY |
9.92 | 10.43 | 9.93 | 10.30 | ||||||||||||
CNY |
191.75 | 174.82 | 199.66 | 186.26 | ||||||||||||
PLN |
288.55 | 297.68 | 290.22 | 292.11 | ||||||||||||
EUR |
1,347.18 | 1,353.22 | 1,408.83 | 1,342.34 |
143
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
24. | Financial Risk Management, Continued |
ii) | Sensitivity analysis |
A weaker won, as indicated below, against the following currencies which comprise the Companys assets or liabilities denominated in a foreign currency as of September 30, 2022 and December 31, 2021, 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 at 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) | September 30, 2022 | December 31, 2021 | ||||||||||||||
Equity | Profit or loss | Equity | Profit or loss | |||||||||||||
USD (5 percent weakening) |
(156,376 | ) | (60,445 | ) | (60,445 | ) | ||||||||||
JPY (5 percent weakening) |
(6,450 | ) | (6,450 | ) | (3,027 | ) | (3,027 | ) | ||||||||
CNY (5 percent weakening) |
| | 179 | 179 | ||||||||||||
PLN (5 percent weakening) |
11 | 11 | 11 | 11 | ||||||||||||
EUR (5 percent weakening) |
(52 | ) | (52 | ) | (149 | ) | (149 | ) |
A stronger won against the above currencies as of September 30, 2022 and December 31, 2021 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.
iii) | Derivatives for cash flow hedge |
In relation to forecast export transactions, the Company uses derivative instruments to hedge fluctuations in future cash flows due to foreign
currency exchange rate changes. As of September 30, 2022, there is no ineffective portion of the loss on valuation of derivatives to which cash flow hedging accounting has been applied and loss on valuation amounting to
W104,656 million, (contracted selling amount: USD 600 million, contracted exchange rate: W1,212.3 ~ 1,293.4) are recognized in accumulated other comprehensive income (loss). The expected settlement dates
of derivative instrument contracts are within three months from September 30, 2022. The amount which have been reclassified from reserve to profit (revenue) for the nine-month period ended September 30, 2022 is W152,656 million
as a result of realization of forecast export transactions.
144
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
24. | Financial Risk Management, Continued |
(ii) | Interest rate risk |
Interest rate risk arises principally from the Companys variable interest-bearing bonds and borrowings. The Company establishes and
applies its policy to reduce uncertainty arising from fluctuations in interest rates and to minimize finance cost and manages interest rate risk by monitoring of trends of fluctuations in interest rate and establishing plan for countermeasures.
Meanwhile, the Company entered into cross currency interest rate swap contracts amounting to USD 1,625 million (W2,331,550 million) and interest rate swap contracts amounting to W480,000 million in
notional amount to hedge interest rate risk with respect to variable interest bearing borrowings.
i) | Profile |
The interest rate profile of the Companys interest-bearing financial instruments as of September 30, 2022 and December 31, 2021 is as follows:
(In millions of won) | September 30, 2022 | December 31, 2021 | ||||||
Fixed rate instruments |
||||||||
Financial assets |
1,027,808 | |||||||
Financial liabilities |
(5,838,976 | ) | (5,145,326 | ) | ||||
|
|
|
|
|||||
(4,117,518 | ) | |||||||
|
|
|
|
|||||
Variable rate instruments |
||||||||
Financial liabilities |
(2,414,773 | ) |
ii) | Equity and profit or loss sensitivity analysis for variable rate instruments |
As of September 30, 2022 and December 31, 2021, 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 12-month periods. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.
(In millions of won) | Equity | Profit or loss | ||||||||||||||
1%p increase |
1%p decrease |
1%p increase |
1%p decrease |
|||||||||||||
September 30, 2022 |
||||||||||||||||
Variable rate instruments (*) |
4,443 | (4,443 | ) | 4,443 | ||||||||||||
December 31, 2021 |
||||||||||||||||
Variable rate instruments (*) |
3,928 | (3,928 | ) | 3,928 |
(*) | Financial instruments related to non-hedging interest rate swap are excluded from the calculation. |
145
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
24. | Financial Risk Management, Continued |
(iii) | Managing interest rate benchmark reform and associated risks |
A fundamental reform of major interest rate benchmarks is being undertaken globally, including the replacement of some interbank offered rates (IBORs) with alternative risk-free rates (referred to as IBOR reform). The publication of LIBOR, except overnight, 1-month, 3-month, 6-month, and 12-month USD LIBORs, was terminated as of December 31, 2021 and the five LIBORs, as mentioned above, will be discontinued by June 30, 2023.
The Company does not have financial instruments affected by already discontinued LIBORs. The Company plans to change benchmark interest rate applied to some of its financial instruments from LIBORs to Secured Overnight Financing Rates (SOFRs), an alternative indicator interest rate. For these LIBOR-related financial instruments, the LIBORs are continued to be published. Meanwhile, in the case of the CD rate, an alternative reference rate was selected as the Korea Overnight Financing Repo Rate (KOFR) as part of the reform of the interest rate benchmark. However, unlike LIBOR, the termination of the publication of the CD rate is not scheduled, and the Company does not have plan to change to KOFR.
The Company is exposed to the legal risk of changing the contract of financial instruments due to the reform of the interest rate indicator, as well as the process and operational risks to deal with such changes. In addition, the Company is also exposed to the risk of monitoring the market trend on the alternative index interest rate and establishing a risk management strategy accordingly to manage the risk of the new alternative index interest rate. The Company manages and monitors the transition to alternative interest rate benchmark by evaluating the extent to which a contract references IBOR cash flows, whether such contracts will need to be amended as a result of IBOR reform and how to manage communication about IBOR reform with counterparties.
The Company monitors the transition to an alternative interest rate benchmark by reviewing the total amounts of contracts that have yet to transition to an alternative benchmark rate and the amounts of such contracts that include an appropriate fallback clause. The Company considers that a contract is not yet transitioned to an alternative benchmark rate when interest rate under the contract is indexed to a benchmark rate that is still subject to IBOR reform, even if it includes a fallback clause that deals with the cessation of the existing IBOR. As of September 30, 2022, the total amounts of contracts not yet transitioned and those with appropriate fallback language are as follows, and the financial instruments that will be settled before June 30, 2023 are excluded:
(In millions of won) | Total amount of not transitioned contracts |
Amount with appropriate fallback clause |
||||||
Non-derivative financial liabilities |
||||||||
Borrowings |
1,944,154 | |||||||
Derivative assets |
||||||||
Cross currency interest rate swap contracts |
356,219 |
146
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
24. | Financial Risk Management, Continued |
(b) | Credit risk |
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Companys receivables from customers.
The Companys exposure to credit risk of trade and other receivables is influenced mainly by the individual characteristics of each customer. However, management believes that the default risk of the country in which each customer operates do not have a significant influence on credit risk since the majority of the customers are global electronic appliance manufacturers operating in global markets.
The Company establishes credit limits for each customer and each new customer is analyzed quantitatively and qualitatively before determining whether to utilize third party guarantees, insurance or factoring as appropriate.
In relation to the impairment of financial assets subsequent to initial recognition, the Company recognizes the changes in expected credit loss (ECL) in profit or loss at each reporting date.
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk as of September 30, 2022 and December 31, 2021 is as follows:
(In millions of won) | September 30, 2022 | December 31, 2021 | ||||||
Financial assets carried at amortized cost |
||||||||
Cash equivalents |
950,847 | |||||||
Deposits in banks |
42,815 | 76,924 | ||||||
Trade accounts and notes receivable, net |
3,708,413 | 5,051,836 | ||||||
Non-trade receivables |
233,208 | 77,147 | ||||||
Accrued income |
653 | 2,792 | ||||||
Deposits |
8,292 | 11,542 | ||||||
Short-term loans |
30,463 | 22,518 | ||||||
Long-term loans |
63,807 | 19,939 | ||||||
Long-term non-trade receivables |
11,986 | 5,122 | ||||||
|
|
|
|
|||||
6,218,667 | ||||||||
|
|
|
|
|||||
Financial assets at fair value through profit or loss |
||||||||
Convertible bonds |
1,573 | |||||||
Derivatives |
655,438 | 65,612 | ||||||
|
|
|
|
|||||
67,185 | ||||||||
|
|
|
|
|||||
Financial assets effective for cash flow hedging |
||||||||
Derivatives |
905 | |||||||
Financial assets at fair value through other comprehensive income |
||||||||
Debt instruments |
48 | |||||||
|
|
|
|
|||||
6,286,805 | ||||||||
|
|
|
|
In addition to the financial assets above, as of September 30, 2022, the Company provides payment guarantees in
connection with the principal amount of credit facilities amounting to USD 1,267 million (W1,818,210 million) (see note 14).
147
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
24. | Financial Risk Management, Continued |
Trade accounts and notes receivable are insured in order for the Company to manage credit risk if they do not meet the Companys internal credit ratings. Uninsured trade accounts and notes receivable are managed by continuous monitoring of internal credit rating standards established by the Company and seeking insurance coverage, if necessary.
(c) | Liquidity risk |
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or other financial assets. The Companys 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 Companys 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 instruments, equity-linked and other debt instruments. In addition, the Company maintains a line of credit with various banks.
148
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
24. | Financial Risk Management, Continued |
The following are the contractual maturities of financial liabilities, including estimated interest payments, as of September 30, 2022.
Contractual cash flows in | ||||||||||||||||||||||||||||
(In millions of won) | Carrying amount |
Total | 6 months or less |
6-12 months |
1-2 years |
2-5 years |
More than 5 years |
|||||||||||||||||||||
Non-derivative financial liabilities |
||||||||||||||||||||||||||||
Borrowings |
8,176,406 | 2,846,436 | 887,817 | 1,634,353 | 2,807,800 | | ||||||||||||||||||||||
Bonds |
1,544,667 | 1,678,416 | 293,109 | 161,970 | 402,921 | 733,330 | 87,086 | |||||||||||||||||||||
Trade accounts and notes payable |
8,848,901 | 8,848,901 | 8,848,901 | | | | | |||||||||||||||||||||
Other accounts payable |
2,500,419 | 2,502,629 | 2,442,353 | 60,276 | | | | |||||||||||||||||||||
Other accounts payable (enterprise procurement cards)(*1) |
433,942 | 433,942 | 433,942 | | | | | |||||||||||||||||||||
Long-term other accounts payable |
499,970 | 586,900 | | | 120,553 | 255,431 | 210,916 | |||||||||||||||||||||
Payment guarantee(*2) |
17,978 | 1,966,771 | 209,039 | 315,011 | 339,661 | 806,927 | 296,133 | |||||||||||||||||||||
Security deposits received |
10,719 | 10,719 | 1,820 | 1,090 | 7,809 | | | |||||||||||||||||||||
Lease liabilities |
8,886 | 9,280 | 4,353 | 1,560 | 2,040 | 905 | 422 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Derivative financial liabilities |
||||||||||||||||||||||||||||
Derivatives for cash flow hedge |
104,656 | 104,656 | 104,656 | | | | | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
24,318,620 | 15,184,609 | 1,427,724 | 2,507,337 | 4,604,393 | 594,557 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
149
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
24. Financial Risk Management, Continued
(*1) | Represents liabilities payable to credit card companies for utility expenses and others paid using enterprise procurement cards. The Company presented the payable to credit card companies as other accounts payable and presented related cash flows as operating activities since the Company is using the enterprise procurement cards through agreements with suppliers for transactions arising from purchasing of goods and services, the payment term is within a year from the purchase, as part of the normal operating cycle, and no security is provided. Change in liabilities related to procurement cards for the nine-month period ended September 30, 2022 is as follows: |
(In millions of won) | January 1, 2022 | Change (Cash flows from operation activities) |
September 30, 2022 | |||||||||
Other accounts payable (enterprise procurement cards) |
(640,147 | ) | 433,942 |
(*2) | Contractual cash flows of payment guarantee is identical to timing of principal and interest payment and represent the maximum amount that the Company could be required to pay the guarantee amount. |
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts.
(d) | Capital management |
Managements 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) | September 30, 2022 | December 31, 2021 | ||||||
Total liabilities |
18,835,304 | |||||||
Total equity |
8,789,996 | 10,642,818 | ||||||
Cash and deposits in banks (*1) |
128,334 | 1,027,760 | ||||||
Borrowings (including bonds) |
9,252,156 | 7,560,099 | ||||||
Total liabilities to equity ratio |
258 | % | 177 | % | ||||
Net borrowings to equity ratio (*2) |
104 | % | 61 | % |
(*1) | Cash and deposits in banks consist of cash and cash equivalents and current deposits in banks. |
(*2) | Net borrowings to equity ratio is calculated by dividing total borrowings (including bonds and excluding lease liabilities and others) less cash and current deposits in banks by total equity. |
150
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
24. | Financial Risk Management, Continued |
(e) | Determination of fair value |
(i) Measurement of fair value
A number of the Companys accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.
i) Current assets and liabilities
The carrying amounts approximate their fair value because of the short maturity of these instruments.
ii) Trade receivables and other receivables
The fair value of trade and other receivables is estimated as the present value of future cash flows, discounted at the market rate of interest at the reporting date. This fair value is determined for disclosure purposes. The carrying amounts of current receivables approximate their fair value.
iii) Investments in equity and debt securities
The fair value of marketable financial assets at FVTPL and FVOCI is determined by reference to their quoted closing bid price at the reporting date. The fair value of non-marketable instruments is determined using the results of fair value assessment performed by external valuation institutions and others.
iv) Non-derivative financial liabilities
Fair value, which is determined for disclosure purposes, except for the liabilities at FVTPL, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date.
v) Derivatives
The inputs used to measure the fair value of currency forward and cross currency interest rate swap are calculated based on the exchange rates and interest rates observable in the market at the reporting date.
151
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
24. | Financial Risk Management, Continued |
(ii) | Fair values versus carrying amounts |
The fair values of financial assets and liabilities, together with the carrying amounts shown in the separate interim statements of financial position as of September 30, 2022 and December 31, 2021 are as follows:
September 30, 2022 | December 31, 2021 | |||||||||||||||
(In millions of won) | Carrying amounts | Fair values | Carrying amounts | Fair values | ||||||||||||
Financial assets carried at amortized cost |
||||||||||||||||
Cash and cash equivalents |
(*) | 950,847 | (*) | |||||||||||||
Deposits in banks |
42,815 | (*) | 76,924 | (*) | ||||||||||||
Trade accounts and notes receivable |
3,708,413 | (*) | 5,051,836 | (*) | ||||||||||||
Non-trade receivables |
233,208 | (*) | 77,147 | (*) | ||||||||||||
Accrued income |
653 | (*) | 2,792 | (*) | ||||||||||||
Deposits |
8,292 | (*) | 11,542 | (*) | ||||||||||||
Short-term loans |
30,463 | (*) | 22,518 | (*) | ||||||||||||
Long-term loans |
63,807 | (*) | 19,939 | (*) | ||||||||||||
Long-term non-trade receivables |
11,986 | (*) | 5,122 | (*) | ||||||||||||
Financial assets at fair value through profit or loss |
||||||||||||||||
Equity instruments |
12,661 | 3,096 | 3,096 | |||||||||||||
Convertible bonds |
1,573 | 1,573 | 1,573 | 1,573 | ||||||||||||
Derivatives |
655,438 | 655,438 | 65,612 | 65,612 | ||||||||||||
Financial assets effective for cash flow hedging |
||||||||||||||||
Derivatives |
| 905 | 905 | |||||||||||||
Financial assets at fair value through other comprehensive income |
||||||||||||||||
Debt instruments |
| 48 | 48 | |||||||||||||
Financial liabilities at fair value through profit or loss |
||||||||||||||||
Derivatives |
| 10,925 | 10,925 | |||||||||||||
Convertible bonds |
29,553 | 29,553 | 1,015,760 | 1,015,760 | ||||||||||||
Financial liabilities effective for cash flow hedging |
||||||||||||||||
Derivatives |
104,656 | 13,400 | 13,400 | |||||||||||||
Financial liabilities carried at amortized cost |
||||||||||||||||
Borrowings |
7,633,854 | 4,948,538 | 4,960,360 | |||||||||||||
Bonds |
1,515,114 | 1,441,065 | 1,595,801 | 1,596,044 | ||||||||||||
Trade accounts and notes payable |
8,848,901 | (*) | 6,528,451 | (*) | ||||||||||||
Other accounts payable |
2,934,361 | (*) | 2,800,823 | (*) | ||||||||||||
Long-term other accounts payable |
499,970 | (*) | 460,995 | (*) | ||||||||||||
Payment guarantee liabilities |
17,978 | (*) | 6,208 | (*) | ||||||||||||
Security deposits received |
10,719 | (*) | 11,180 | (*) | ||||||||||||
Lease liabilities |
8,886 | (*) | 5,219 | (*) |
(*) | Excluded from disclosures as the carrying amount approximates fair value |
152
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
24. | Financial Risk Management, Continued |
(iii) | Fair values of financial assets and liabilities |
i) Fair value hierarchy
Financial instruments carried at fair value are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques. The levels have been defined as follows:
| Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities |
| Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly |
| Level 3: inputs for the asset or liability that are not based on observable market data |
ii) Financial instruments measured at fair value
Fair value hierarchy classifications of the financial instruments that are measured at fair value as of September 30, 2022 and December 31, 2021 are as follows:
September 30, 2022 | ||||||||||||||||
(In millions of won) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Financial assets at fair value through profit or loss |
||||||||||||||||
Equity instruments |
| 12,661 | 12,661 | |||||||||||||
Convertible bonds |
| | 1,573 | 1,573 | ||||||||||||
Derivatives |
| 655,438 | | 655,438 | ||||||||||||
Financial liabilities at fair value through profit or loss |
||||||||||||||||
Convertible bonds |
| | 29,553 | |||||||||||||
Financial liabilities effective for cash flow hedging |
||||||||||||||||
Derivatives |
104,656 | | 104,656 | |||||||||||||
December 31, 2021 | ||||||||||||||||
(In millions of won) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Financial assets at fair value through profit or loss |
||||||||||||||||
Equity instruments |
| 3,096 | 3,096 | |||||||||||||
Convertible bonds |
| | 1,573 | 1,573 | ||||||||||||
Derivatives |
| 65,612 | | 65,612 | ||||||||||||
Financial assets effective for cash flow hedging |
||||||||||||||||
Derivatives |
905 | | 905 | |||||||||||||
Financial assets at fair value through other comprehensive income |
||||||||||||||||
Debt instruments |
| | 48 | |||||||||||||
Financial liabilities at fair value through profit or loss |
||||||||||||||||
Derivatives |
10,925 | | 10,925 | |||||||||||||
Convertible bonds |
1,015,760 | | | 1,015,760 | ||||||||||||
Financial liabilities effective for cash flow hedging |
||||||||||||||||
Derivatives |
13,400 | | 13,400 |
153
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
24. | 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 September 30, 2022 and December 31, 2021 are as follows:
(In millions of won) | September 30, 2022 | Valuation technique |
Input | |||||||||||||||||
Classification |
Level 1 | Level 2 | Level 3 | |||||||||||||||||
Liabilities |
||||||||||||||||||||
Borrowings |
| 7,633,854 | |
Discounted cash flow |
|
|
Discount rate |
| ||||||||||||
Bonds |
| | 1,441,065 | |
Discounted cash flow |
|
|
Discount rate |
| |||||||||||
(In millions of won) | December 31, 2021 | Valuation technique |
Input | |||||||||||||||||
Classification |
Level 1 | Level 2 | Level 3 | |||||||||||||||||
Liabilities |
||||||||||||||||||||
Borrowings |
| 4,960,360 | |
Discounted cash flow |
|
|
Discount rate |
| ||||||||||||
Bonds |
| | 1,596,044 | |
Discounted cash flow |
|
|
Discount rate |
|
iv) | The interest rates applied for determination of the above fair value as of September 30, 2022 and December 31, 2021 are as follows: |
September 30, 2022 |
December 31, 2021 |
|||||||
Borrowings, bonds and others |
3.92 ~ 6.46 | % | 2.21 ~ 4.38 | % |
154
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
25. | Changes in liabilities arising from financing activities |
Changes in liabilities arising from financing activities for the nine-month period ended September 30, 2022 are as follows:
Non-cash transactions | ||||||||||||||||||||||||||||
(In millions of won) | January 1, 2022 |
Cash flows from financing activities |
Reclassification | Gain or loss on foreign currency translation |
Effective interest adjustment |
Others | September 30, 2022 |
|||||||||||||||||||||
Short-term borrowings |
1,677,280 | | 140,560 | | | 1,817,840 | ||||||||||||||||||||||
Current portion of long-term borrowings and bonds(*) |
2,529,388 | (2,310,478 | ) | 1,885,210 | 200,965 | 11,433 | (217,815 | ) | 2,098,703 | |||||||||||||||||||
Payment guarantee liabilities |
6,208 | 3,403 | | | | 8,367 | 17,978 | |||||||||||||||||||||
Long-term borrowings |
4,034,735 | 1,338,723 | (1,577,008 | ) | 407,347 | | | 4,203,797 | ||||||||||||||||||||
Bonds |
995,976 | 443,230 | (308,202 | ) | | 812 | | 1,131,816 | ||||||||||||||||||||
Lease liabilities |
5,219 | (10,013 | ) | | 13 | | 13,667 | 8,886 | ||||||||||||||||||||
Accrued Dividends |
| (232,580 | ) | | | | 232,580 | | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
909,565 | | 748,885 | 12,245 | 36,799 | 9,279,020 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*) | Others include |
155
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
26. | Related Parties and Others |
(a) | Related parties |
Related parties as of September 30, 2022 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. |
156
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
26. | Related Parties and Others, Continued |
(b) | Significant transactions such as sales of goods and purchases of raw material and outsourcing service and others, which occurred in the normal course of business with related parties for the three-month and nine-month periods ended September 30, 2022 and 2021 are as follows: |
For the three-month period ended September 30, 2022 | ||||||||||||||||||||||||
Purchase and others | ||||||||||||||||||||||||
(In millions of won) | Sales and others |
Dividend income |
Purchase of raw material and others |
Acquisition of property, plant and equipment |
Outsourcing fees |
Other costs | ||||||||||||||||||
Subsidiaries |
||||||||||||||||||||||||
LG Display America, Inc. |
| | | | 17 | |||||||||||||||||||
LG Display Japan Co., Ltd. |
432,034 | | | | | | ||||||||||||||||||
LG Display Germany GmbH |
486,800 | | | | | 31,273 | ||||||||||||||||||
LG Display Taiwan Co., Ltd. |
426,551 | | | | | 333 | ||||||||||||||||||
LG Display Nanjing Co., Ltd. |
19,743 | | 1,269 | | 578,759 | 10,862 | ||||||||||||||||||
LG Display Shanghai Co., Ltd. |
66,522 | | | | | | ||||||||||||||||||
LG Display Guangzhou Co., Ltd. |
4,007 | | 20,116 | | 380,731 | 7,034 | ||||||||||||||||||
LG Display Shenzhen Co., Ltd. |
166,153 | | | | | | ||||||||||||||||||
LG Display Yantai Co., Ltd. |
3 | | 6,890 | | 164,298 | 628 | ||||||||||||||||||
LG Display (China) Co., Ltd. |
406 | | 426,178 | | | 734 | ||||||||||||||||||
LG Display Singapore Pte. Ltd. |
303,837 | | | | | 69 | ||||||||||||||||||
L&T Display Technology (Fujian) Limited |
45,309 | | | | | 89 | ||||||||||||||||||
Nanumnuri Co., Ltd. |
56 | | | | | 5,702 | ||||||||||||||||||
LG Display Guangzhou Trading Co., Ltd. |
101,532 | | | | | | ||||||||||||||||||
LG Display Vietnam Haiphong Co., Ltd. |
2,867 | | 19,864 | | 744,268 | 19,283 | ||||||||||||||||||
Suzhou Lehui Display Co., Ltd. |
44,767 | | 20,715 | | | | ||||||||||||||||||
LG Display High-Tech (China) Co., Ltd. |
659 | | 2,196 | | 639,159 | 819 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 497,228 | | 2,507,215 | 76,843 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
157
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
26. | Related Parties and Others, Continued |
For the three-month period ended September 30, 2022 | ||||||||||||||||||||||||
Purchase and others | ||||||||||||||||||||||||
(In millions of won) | Sales and others |
Dividend income |
Purchase of raw material and others |
Acquisition of property, plant and equipment |
Outsourcing fees |
Other costs | ||||||||||||||||||
Associates and their subsidiaries |
||||||||||||||||||||||||
WooRee E&L Co., Ltd. |
| 108 | | | | |||||||||||||||||||
AVATEC Co., Ltd. |
| | | | 17,324 | 1,245 | ||||||||||||||||||
Paju Electric Glass Co., Ltd. |
| | 47,187 | | | 798 | ||||||||||||||||||
YAS Co., Ltd. |
| | 2,400 | 5,930 | | 2,408 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 49,695 | 5,930 | 17,324 | 4,451 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Entity that has significant influence over the Company |
||||||||||||||||||||||||
LG Electronics Inc. |
| 3,164 | 116,801 | | 29,923 | |||||||||||||||||||
Subsidiaries of the entity that has significant influence over the Company |
||||||||||||||||||||||||
LG Electronics India Pvt. Ltd. |
| | | | 101 | |||||||||||||||||||
LG Electronics Vietnam Haiphong Co., Ltd. |
139,145 | | | | | 112 | ||||||||||||||||||
LG Electronics Reynosa S.A. DE C.V. |
7,935 | | | | | 296 | ||||||||||||||||||
LG Electronics U.S.A., Inc. |
| | | | | 581 | ||||||||||||||||||
LG Electronics RUS, LLC |
| | | | | 16 |
158
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
26. | Related Parties and Others, Continued |
For the three-month period ended September 30, 2022 | ||||||||||||||||||||||||
Purchase and others | ||||||||||||||||||||||||
(In millions of won) | Sales and others |
Dividend income |
Purchase of raw material and others |
Acquisition of property, plant and equipment |
Outsourcing fees |
Other costs | ||||||||||||||||||
Subsidiaries of the entity that has significant influence over the Company |
||||||||||||||||||||||||
LG Electronics Egypt S.A.E. |
| | | | 179 | |||||||||||||||||||
LG Innotek Co., Ltd. |
1,816 | | 2 | | | 18,689 | ||||||||||||||||||
P.T. LG Electronics Indonesia |
6,529 | | | | | 227 | ||||||||||||||||||
Others |
6,420 | | 36 | | | 6,538 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 38 | | | 26,739 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 550,125 | 122,731 | 2,524,539 | 137,956 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
159
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
26. | Related Parties and Others, Continued |
For the nine-month period ended September 30, 2022 | ||||||||||||||||||||||||
Purchase and others | ||||||||||||||||||||||||
(In millions of won) | Sales and others |
Dividend income |
Purchase of raw material and others |
Acquisition of property, plant and equipment |
Outsourcing fees |
Other costs | ||||||||||||||||||
Subsidiaries |
||||||||||||||||||||||||
LG Display America, Inc. |
| | | | 28 | |||||||||||||||||||
LG Display Japan Co., Ltd. |
1,439,952 | | | | | | ||||||||||||||||||
LG Display Germany GmbH |
1,339,032 | | | | | 65,232 | ||||||||||||||||||
LG Display Taiwan Co., Ltd. |
1,635,727 | | | | | 1,148 | ||||||||||||||||||
LG Display Nanjing Co., Ltd. |
46,124 | | 2,774 | | 1,329,714 | 20,361 | ||||||||||||||||||
LG Display Shanghai Co., Ltd. |
340,454 | | | | | 3 | ||||||||||||||||||
LG Display Guangzhou Co., Ltd. |
9,864 | | 48,281 | | 1,773,825 | 16,297 | ||||||||||||||||||
LG Display Shenzhen Co., Ltd. |
610,036 | | | | | | ||||||||||||||||||
LG Display Yantai Co., Ltd. |
13 | | 16,102 | | 362,205 | 2,716 | ||||||||||||||||||
LG Display (China) Co., Ltd. |
834 | 115,842 | 1,227,842 | | | 1,436 | ||||||||||||||||||
LG Display Singapore Pte. Ltd. |
1,563,004 | | | | | 398 | ||||||||||||||||||
L&T Display Technology (Fujian) Limited |
187,638 | | | | | 361 | ||||||||||||||||||
Nanumnuri Co., Ltd. |
169 | 2,000 | | | | 19,746 | ||||||||||||||||||
LG Display Guangzhou Trading Co., Ltd. |
416,659 | | | | | | ||||||||||||||||||
LG Display Vietnam Haiphong Co., Ltd. |
8,986 | | 35,743 | | 2,002,234 | 29,316 | ||||||||||||||||||
Suzhou Lehui Display Co., Ltd. |
250,922 | | 52,445 | | | 12 | ||||||||||||||||||
LG Display High-Tech (China) Co., Ltd. |
1,686 | | 5,291 | | 2,171,774 | 2,971 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
117,842 | 1,388,478 | | 7,639,752 | 160,025 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
160
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
26. | Related Parties and Others, Continued |
For the nine-month period ended September 30, 2022 | ||||||||||||||||||||||||
Purchase and others | ||||||||||||||||||||||||
(In millions of won) | Sales and others |
Dividend income |
Purchase of raw material and others |
Acquisition of property, plant and equipment |
Outsourcing fees |
Other costs | ||||||||||||||||||
Associates and their subsidiaries |
||||||||||||||||||||||||
WooRee E&L Co., Ltd. |
| 458 | | | 2 | |||||||||||||||||||
AVATEC Co., Ltd. |
| | 58 | | 49,007 | 2,114 | ||||||||||||||||||
Paju Electric Glass Co., Ltd. |
| 4,361 | 208,133 | | | 2,306 | ||||||||||||||||||
YAS Co., Ltd. |
| 100 | 12,182 | 7,219 | | 6,299 | ||||||||||||||||||
Material Science Co., Ltd. |
| | 17 | | | | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
4,461 | 220,848 | 7,219 | 49,007 | 10,721 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Entity that has significant influence over the Company |
||||||||||||||||||||||||
LG Electronics Inc. |
| 8,237 | 241,199 | | 83,002 | |||||||||||||||||||
Subsidiaries of the entity that has significant influence over the Company |
||||||||||||||||||||||||
LG Electronics India Pvt. Ltd. |
| | | | 393 | |||||||||||||||||||
LG Electronics Vietnam Haiphong Co., Ltd. |
325,101 | | | | | 674 | ||||||||||||||||||
LG Electronics Reynosa S.A. DE C.V. |
31,475 | | | | | 692 | ||||||||||||||||||
LG Electronics U.S.A., Inc. |
| | | | | 1,426 | ||||||||||||||||||
LG Electronics RUS, LLC |
| | | | | 260 |
161
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
26. | Related Parties and Others, Continued |
For the nine-month period ended September 30, 2022 | ||||||||||||||||||||||||
Purchase and others | ||||||||||||||||||||||||
(In millions of won) | Sales and others |
Dividend income |
Purchase of raw material and others |
Acquisition of property, plant and equipment |
Outsourcing fees |
Other costs |
||||||||||||||||||
Subsidiaries of the entity that has significant influence over the Company |
||||||||||||||||||||||||
LG Electronics Egypt S.A.E. |
| | | | 210 | |||||||||||||||||||
LG Innotek Co., Ltd. |
4,560 | | 40 | | | 61,979 | ||||||||||||||||||
P.T. LG Electronics Indonesia |
34,407 | | | | | 979 | ||||||||||||||||||
Others |
32,962 | | 45 | | | 15,299 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 85 | | | 81,912 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
122,303 | 1,617,648 | 248,418 | 7,688,759 | 335,660 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
162
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
26. | Related Parties and Others, Continued |
For the three-month period ended September 30, 2021 | ||||||||||||||||||||||||
Purchase and others | ||||||||||||||||||||||||
(In millions of won) | Sales and others |
Dividend income |
Purchase of raw material and others |
Acquisition of property, plant and equipment |
Outsourcing fees |
Other costs | ||||||||||||||||||
Subsidiaries |
||||||||||||||||||||||||
LG Display America, Inc. |
| | | | 15 | |||||||||||||||||||
LG Display Japan Co., Ltd. |
551,448 | | | | | | ||||||||||||||||||
LG Display Germany GmbH |
539,728 | | | | | 4,086 | ||||||||||||||||||
LG Display Taiwan Co., Ltd. |
612,901 | | | | | 238 | ||||||||||||||||||
LG Display Nanjing Co., Ltd. |
12,634 | | 1,431 | | 436,168 | 5,066 | ||||||||||||||||||
LG Display Shanghai Co., Ltd. |
209,753 | | | | | | ||||||||||||||||||
LG Display Guangzhou Co., Ltd. |
1,986 | | 1,682 | | 626,407 | 4,716 | ||||||||||||||||||
LG Display Shenzhen Co., Ltd. |
166,548 | | | | | | ||||||||||||||||||
LG Display Yantai Co., Ltd. |
| | 4,753 | | 112,622 | 186 | ||||||||||||||||||
LG Display (China) Co., Ltd. |
80 | | 337,379 | 3,108 | | 358 | ||||||||||||||||||
LG Display Singapore Pte. Ltd. |
569,579 | | | | | 122 | ||||||||||||||||||
L&T Display Technology (Fujian) Limited |
116,193 | | | | | 118 | ||||||||||||||||||
Nanumnuri Co., Ltd. |
52 | | | | | 5,713 | ||||||||||||||||||
LG Display Guangzhou Trading Co., Ltd. |
294,702 | | | | | | ||||||||||||||||||
LG Display Vietnam Haiphong Co., Ltd. |
5,617 | | 10,188 | | 765,246 | 3,783 | ||||||||||||||||||
Suzhou Lehui Display Co., Ltd. |
90,658 | | 17,214 | | | 3 | ||||||||||||||||||
LG Display High-Tech (China) Co., Ltd. |
6,403 | | 638 | | 643,865 | 1,755 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 373,285 | 3,108 | 2,584,308 | 26,159 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
163
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
26. | Related Parties and Others, Continued |
For the three-month period ended September 30, 2021 | ||||||||||||||||||||||||
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 |
||||||||||||||||||||||||
WooRee E&L Co., Ltd. |
| 155 | | | 18 | |||||||||||||||||||
AVATEC Co., Ltd. |
| | 137 | | 18,220 | 257 | ||||||||||||||||||
Paju Electric Glass Co., Ltd. |
| | 99,663 | | | 623 | ||||||||||||||||||
YAS Co., Ltd. |
| | 3,057 | 655 | | 2,047 | ||||||||||||||||||
Material Science Co., Ltd. |
| | 54 | | | | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 103,066 | 655 | 18,220 | 2,945 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Entity that has significant influence over the Company |
||||||||||||||||||||||||
LG Electronics Inc. |
| 3,750 | 52,524 | | 28,546 | |||||||||||||||||||
Subsidiaries of the entity that has significant influence over the Company |
||||||||||||||||||||||||
LG Electronics India Pvt. Ltd. |
| | | | 58 | |||||||||||||||||||
LG Electronics Vietnam Haiphong Co., Ltd. |
109,793 | | | | | 153 | ||||||||||||||||||
LG Electronics Reynosa S.A. DE C.V. |
| | | | | 259 | ||||||||||||||||||
LG Electronics Mexicali S.A.DE C.V. |
15,619 | | | | | 12 | ||||||||||||||||||
LG Electronics RUS, LLC |
| | | | | 19 |
164
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
26. | Related Parties and Others, Continued |
For the three-month period ended September 30, 2021 | ||||||||||||||||||||||||
Purchase and others | ||||||||||||||||||||||||
(In millions of won) | Sales and others |
Dividend income |
Purchase of raw material and others |
Acquisition of property, plant and equipment |
Outsourcing fees |
Other costs | ||||||||||||||||||
Subsidiaries of the entity that has significant influence over the Company |
||||||||||||||||||||||||
LG Electronics Egypt S.A.E. |
| | | | 24 | |||||||||||||||||||
LG Innotek Co., Ltd. |
691 | | 46 | | | 20,999 | ||||||||||||||||||
P.T. LG Electronics Indonesia |
37,215 | | | | | 48 | ||||||||||||||||||
Others |
8,868 | | 20 | | | 3,006 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 66 | | | 24,578 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 480,167 | 56,287 | 2,602,528 | 82,228 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
165
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
26. | Related Parties and Others, Continued |
For the nine-month period ended September 30, 2021 | ||||||||||||||||||||||||
Purchase and others | ||||||||||||||||||||||||
(In millions of won) | Sales and others |
Dividend income |
Purchase of raw material and others |
Acquisition of property, plant and equipment |
Outsourcing fees |
Other costs | ||||||||||||||||||
Subsidiaries |
||||||||||||||||||||||||
LG Display America, Inc. |
| | | | 17 | |||||||||||||||||||
LG Display Japan Co., Ltd. |
1,618,669 | | | | | | ||||||||||||||||||
LG Display Germany GmbH |
1,599,079 | | | | | 4,288 | ||||||||||||||||||
LG Display Taiwan Co., Ltd. |
1,566,109 | | | | | 733 | ||||||||||||||||||
LG Display Nanjing Co., Ltd. |
24,538 | | 4,636 | | 1,250,813 | 17,341 | ||||||||||||||||||
LG Display Shanghai Co., Ltd. |
550,939 | | | | | | ||||||||||||||||||
LG Display Guangzhou Co., Ltd. |
10,159 | | 5,398 | | 1,706,674 | 16,806 | ||||||||||||||||||
LG Display Shenzhen Co., Ltd. |
279,779 | | | | | | ||||||||||||||||||
LG Display Yantai Co., Ltd. |
148 | | 10,064 | | 433,184 | 8,653 | ||||||||||||||||||
LG Display (China) Co., Ltd. |
2,498 | | 1,499,415 | 3,108 | | 1,532 | ||||||||||||||||||
LG Display Singapore Pte. Ltd. |
1,412,811 | | | | | 338 | ||||||||||||||||||
L&T Display Technology (Fujian) Limited |
295,526 | | | | | 277 | ||||||||||||||||||
Nanumnuri Co., Ltd. |
156 | | | | | 16,159 | ||||||||||||||||||
LG Display Guangzhou Trading Co., Ltd. |
1,281,345 | | | | | | ||||||||||||||||||
LG Display Vietnam Haiphong Co., Ltd. |
17,434 | | 37,828 | | 1,848,950 | 10,243 | ||||||||||||||||||
Suzhou Lehui Display Co., Ltd. |
239,832 | | 38,810 | | | 3 | ||||||||||||||||||
LG Display High-Tech (China) Co., Ltd. |
38,984 | | 1,690 | | 1,770,303 | 4,385 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 1,597,841 | 3,108 | 7,009,924 | 80,775 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
166
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
26. | Related Parties and Others, Continued |
For the nine-month period ended September 30, 2021 | ||||||||||||||||||||||||
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 |
||||||||||||||||||||||||
WooRee E&L Co., Ltd. |
| 317 | | | 73 | |||||||||||||||||||
AVATEC Co., Ltd. |
| 200 | 242 | | 54,394 | 733 | ||||||||||||||||||
Paju Electric Glass Co., Ltd. |
| 3,668 | 275,351 | | | 1,969 | ||||||||||||||||||
YAS Co., Ltd. |
| 200 | 6,912 | 7,442 | | 5,298 | ||||||||||||||||||
Cynora GmbH |
| | 10 | | | | ||||||||||||||||||
Material Science Co., Ltd. |
| | 96 | | | | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
4,068 | 282,928 | 7,442 | 54,394 | 8,073 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Entity that has significant influence over the Company |
||||||||||||||||||||||||
LG Electronics Inc. |
| 7,882 | 129,688 | | 84,523 | |||||||||||||||||||
Subsidiaries of the entity that has significant influence over the Company |
||||||||||||||||||||||||
LG Electronics India Pvt. Ltd. |
| | | | 222 | |||||||||||||||||||
LG Electronics Vietnam Haiphong Co., Ltd. |
326,031 | | | | | 991 | ||||||||||||||||||
LG Electronics Reynosa S.A. DE C.V. |
| | | | | 639 | ||||||||||||||||||
LG Electronics Mexicali S.A.DE C.V. |
28,747 | | | | | 64 | ||||||||||||||||||
LG Electronics RUS, LLC |
| | | | | 138 |
167
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
26. | Related Parties and Others, Continued |
For the nine-month period ended September 30, 2021 | ||||||||||||||||||||||||
Purchase and others | ||||||||||||||||||||||||
(In millions of won) | Sales and others |
Dividend income |
Purchase of raw material and others |
Acquisition of property, plant and equipment |
Outsourcing fees |
Other costs | ||||||||||||||||||
Subsidiaries of the entity that has significant influence over the Company |
||||||||||||||||||||||||
LG Electronics Egypt S.A.E. |
| | | | 119 | |||||||||||||||||||
LG Innotek Co., Ltd. |
1,987 | | 140 | 451 | | 63,730 | ||||||||||||||||||
P.T. LG Electronics Indonesia |
251,924 | | | | | 124 | ||||||||||||||||||
Others |
27,678 | | 44 | | | 9,654 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 184 | 451 | | 75,681 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
4,068 | 1,888,835 | 140,689 | 7,064,318 | 249,052 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
168
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
26. | Related Parties and Others, Continued |
(c) | Trade accounts and notes receivable and payable and others as of September 30, 2022 and December 31, 2021 are as follows: |
Trade accounts and notes receivable and others |
Trade accounts and notes payable and others |
|||||||||||||||
(In millions of won) | September 30, 2022 | December 31, 2021 | September 30, 2022 | December 31, 2021 | ||||||||||||
Subsidiaries |
||||||||||||||||
LG Display America, Inc. |
1,851,411 | 18 | 25 | |||||||||||||
LG Display Japan Co., Ltd. |
237,671 | 462,618 | 34 | 5 | ||||||||||||
LG Display Germany GmbH |
559,566 | 586,120 | 56,107 | 23,593 | ||||||||||||
LG Display Taiwan Co., Ltd. |
285,369 | 445,830 | 96 | 151 | ||||||||||||
LG Display Nanjing Co., Ltd. |
386 | 334 | 985,822 | 613,161 | ||||||||||||
LG Display Shanghai Co., Ltd. |
331,824 | 499,770 | 7 | 5 | ||||||||||||
LG Display Guangzhou Co., Ltd. |
4,598 | 691 | 1,288,776 | 774,672 | ||||||||||||
LG Display Guangzhou Trading Co., Ltd. |
301,323 | 418,302 | | | ||||||||||||
LG Display Shenzhen Co., Ltd. |
120,496 | 97,129 | | 15 | ||||||||||||
LG Display Yantai Co., Ltd. |
| | 334,756 | 76,722 | ||||||||||||
LG Display (China) Co., Ltd. |
3,013 | 3,805 | 454,282 | 215,709 | ||||||||||||
LG Display Singapore Pte. Ltd. |
32,115 | 172,755 | 33 | 1 | ||||||||||||
L&T Display Technology (Fujian) Limited |
29,276 | 72,298 | 154,210 | 224,941 | ||||||||||||
Nanumnuri Co., Ltd. |
| | 2,789 | 5,261 | ||||||||||||
LG Display Vietnam Haiphong Co., Ltd. |
28,581 | 9,088 | 1,122,785 | 993,392 | ||||||||||||
Suzhou Lehui Display Co., Ltd. |
32,680 | 76,396 | 17,183 | 8,863 | ||||||||||||
LG Display High-Tech (China) Co., Ltd. |
3,628 | 4,914 | 1,194,605 | 715,930 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
4,701,461 | 5,611,503 | 3,652,446 | ||||||||||||||
|
|
|
|
|
|
|
|
169
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
26. | Related Parties and Others, Continued |
Trade accounts and notes receivable and others |
Trade accounts and notes payable and others |
|||||||||||||||
(In millions of won) | September 30, 2022 | December 31, 2021 | September 30, 2022 | December 31, 2021 | ||||||||||||
Associates |
||||||||||||||||
WooRee E&L Co., Ltd. |
878 | 72 | 157 | |||||||||||||
AVATEC Co., Ltd. |
| 3 | 4,032 | 2,748 | ||||||||||||
Paju Electric Glass Co., Ltd. |
| | 28,166 | 79,302 | ||||||||||||
YAS Co., Ltd. |
| | 4,267 | 14,773 | ||||||||||||
Material Science Co., Ltd. |
| | | 99 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
881 | 36,537 | 97,079 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Entity that has significant influence over the Company |
||||||||||||||||
LG Electronics Inc. |
66,247 | 151,182 | 92,323 |
170
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
26. | Related Parties and Others, Continued |
Trade accounts and notes receivable and others |
Trade accounts and notes payable and others |
|||||||||||||||
(In millions of won) | September 30, 2022 | December 31, 2021 | September 30, 2022 | December 31, 2021 | ||||||||||||
Subsidiaries of the entity that has significant influence over the Company |
||||||||||||||||
LG Innotek Co., Ltd. |
711 | 23,172 | 31,184 | |||||||||||||
LG Electronics Reynosa S.A. DE C.V. |
4,098 | | 58 | 10 | ||||||||||||
LG Electronics India Pvt. Ltd. |
14,367 | 7,319 | 764 | 111 | ||||||||||||
LG Electronics Vietnam Haiphong Co., Ltd. |
83,120 | 52,327 | 77 | 243 | ||||||||||||
LG Electronics Egypt S.A.E |
20,195 | 19,489 | 166 | | ||||||||||||
P.T. LG Electronics Indonesia |
4,560 | 15,555 | 89 | 32 | ||||||||||||
Others |
4,853 | 9,379 | 4,217 | 3,155 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
104,780 | 28,543 | 34,735 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
4,873,369 | 5,827,765 | 3,876,583 | ||||||||||||||
|
|
|
|
|
|
|
|
171
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
26. | Related Parties and Others, Continued |
(d) | There were no significant financing transactions with related parties for the nine-month period ended September 30, 2022, and details of significant financing transactions with related parties for the nine-month period ended September 30, 2021, are as follows: |
2021 | ||||||||
(In millions of won) Associates |
Loans | Collection of loans |
||||||
WooRee E&L Co., Ltd. |
|
172
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
26. | Related Parties and Others, Continued |
(e) | Conglomerate Transactions |
Transactions, trade accounts and notes receivable and payable, and others between the Company and certain companies and their subsidiaries included in LG Group, one of the conglomerates in the Republic of Korea according to the Monopoly Regulation and Fair Trade Act, for the three-month and nine-month periods ended September 30, 2022 and 2021 and as of September 30, 2022 and December 31, 2021 are as follows. These entities are not related parties according to K-IFRS No. 1024, Related Party Disclosures.
For the three-month period ended September 30, 2022 |
For the nine-month period ended September 30, 2022 |
September 30, 2022 | ||||||||||||||||||||||
(In millions of won) | Sales and others |
Purchase and others |
Sales and others |
Purchase and others |
Trade accounts and notes receivable and others |
Trade accounts and notes payable and others |
||||||||||||||||||
LX International Corp. and its subsidiaries(*1) |
| 180,596 | 57,629 | | | |||||||||||||||||||
LG Uplus Corp. |
| 618 | | 1,852 | | 145 | ||||||||||||||||||
LG Chem Ltd. and its subsidiaries |
53 | 86,121 | 237 | 268,656 | 12 | 59,726 | ||||||||||||||||||
D&O Corp. and its subsidiaries |
77 | 178,853 | 230 | 580,162 | 21 | 193,102 | ||||||||||||||||||
LX Semicon Co., Ltd.(*1) |
| | | 241,683 | | | ||||||||||||||||||
LG Corp. |
| 15,577 | | 43,775 | 14,448 | | ||||||||||||||||||
LG Management Development Institute |
| 8,532 | | 26,263 | | 859 | ||||||||||||||||||
LG CNS Co., Ltd. and its subsidiaries |
| 49,009 | | 114,402 | | 43,112 | ||||||||||||||||||
G2R Inc. and its subsidiaries |
| 9,536 | | 28,217 | | 8,400 | ||||||||||||||||||
Robostar Co., Ltd. |
| 294 | | 1,137 | | 324 | ||||||||||||||||||
LG Household & Health Care |
| | | 28 | | | ||||||||||||||||||
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348,540 | 181,063 | 1,363,804 | 14,481 | 305,668 | ||||||||||||||||||||
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(*1) | The separation of LX affiliates was approved by the Fair Trade Commission on June 21, 2022. |
(*2) | S&I Corp. renamed its name as D&O Corp. on April 1, 2022. |
173
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
26. | Related Parties and Others, Continued |
For the three-month period ended September 30, 2021 |
For the nine-month period ended September 30, 2021 |
December 31, 2021 | ||||||||||||||||||||||
(In millions of won) | Sales and others |
Purchase and others |
Sales and others |
Purchase and others |
Trade accounts and notes receivable and others |
Trade accounts and notes payable and others |
||||||||||||||||||
LX International Corp. and its subsidiaries (formerly, LG International Corp.)(*1) |
24,958 | 473,305 | 74,952 | 27,279 | 13,892 | |||||||||||||||||||
LG Uplus Corp. |
| 576 | | 1,731 | | 163 | ||||||||||||||||||
LG Chem Ltd. and its subsidiaries |
37 | 97,438 | 102 | 281,251 | 2,944 | 66,535 | ||||||||||||||||||
S&I Corp. and its subsidiaries |
78 | 63,847 | 235 | 144,907 | 5,862 | 121,637 | ||||||||||||||||||
LX Semicon Co., Ltd. |
2,434 | 125,252 | 2,434 | 336,424 | 117 | 86,346 | ||||||||||||||||||
LG Corp. |
| 16,606 | | 48,818 | 6,754 | 11,193 | ||||||||||||||||||
LG Management Development Institute |
| 6,108 | | 16,245 | 3,480 | 205 | ||||||||||||||||||
LG CNS Co., Ltd. and its subsidiaries |
| 28,752 | | 91,503 | 98 | 143,367 | ||||||||||||||||||
LG Household & Health Care and its subsidiaries |
| | | 26 | | 50 | ||||||||||||||||||
G2R Inc. and its subsidiaries |
| 6,504 | | 10,563 | | 11,931 | ||||||||||||||||||
Robostar Co., Ltd. |
| 235 | | 666 | | 1,675 | ||||||||||||||||||
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|
|||||||||||||
370,276 | 476,076 | 1,007,086 | 46,534 | 456,994 | ||||||||||||||||||||
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(*1) | LG International Corp. renamed its name as LX International Corp. on July 1, 2021. |
(*2) | Silicon Work Co., Ltd. renamed its name as LX Semicon Co., Ltd. on July 1, 2021. |
174
LG DISPLAY CO., LTD.
Notes to the Condensed Separate Interim Financial Statements
September 30, 2022 and 2021
(Unaudited)
26. | Related Parties and Others, Continued |
(f) | Key management personnel compensation |
Compensations to key management for the three-month and nine-month periods ended September 30, 2022 and 2021 are as follows:
For the three-month periods ended September 30 |
For the nine-month periods ended September 30 |
|||||||||||||||
(In millions of won) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
Short-term benefits |
961 | 1,734 | 2,663 | |||||||||||||
Expenses related to the defined benefit plan |
89 | 86 | 329 | 289 | ||||||||||||
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1,047 | 2,063 | 2,952 | ||||||||||||||
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Key management refers to the registered directors who have significant control and responsibilities over the Companys operations and business.
175
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: November 14, 2022 | By: | /s/ Suk Heo |
||||
(Signature) | ||||||
Name: | Suk Heo |
|||||
Title: | Director / Head of IR Division |
176