6-K 1 d706464d6k.htm FORM 6-K Form 6-K

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

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

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of February 2019

 

 

LG Display Co., Ltd.

(Translation of Registrant’s name into English)

 

 

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

(Address of principal executive offices)

 

 

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

Form 20-F  ☒            Form 40-F  ☐

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

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

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

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

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

Yes  ☐            No  ☒

 

 

 


I. Activities and Remuneration of Outside Directors, etc.

 

  1.

Attendance and Voting Record of Outside Directors, etc.

 

     Date   

Agenda

  

Remark

  

Name of Outside Directors

  

Non-
standing

Director

  

Jin

Jang

(Attend

ance
rate:
100%)

  

Joon
Park

(Attend

ance
rate:
88%)

  

Sung

Sik
Hwang

(Attend

ance
rate:
100%)

  

Kun

Tai Han

(Attend

ance
rate:
100%)

  

Byoun

gho

Lee

(Attend

ance

rate:

100%)

  

Hyun-

Hwoi Ha

(Attend

ance
rate:
88%)

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

Newly

appointed at FY2017 AGM

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

Retired

at FY2017 AGM

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

 

2


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

Approval of transactions with the largest shareholder and

special persons concerned

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

 

  2.

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

 

     Date   

Agenda

  

Remarks

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

 

3


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

 

  3.

Remuneration of Outside Directors & Non-Standing Directors

 

               (KRW Million)
    

Number of

Persons

  

Remuneration Limit*

  

Results

  

Average Payment per Person

  

Remarks

Outside Director

   4    8,500    319    79.8   
Non-standing Director    1         

 

*

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

 

4


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

 

(KRW Million)

 

Transaction Type

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

Sales/Purchase

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

Sales/Purchase

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

Sales/Purchase

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

Sales/Purchase

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

Sales/Purchase

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

Sales/Purchase

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

Sales/Purchase

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

Sales/Purchase

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

Sales/Purchase

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

 

 

    

 

 

   

 

 

 

Sales/Purchase

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

 

 

    

 

 

   

 

 

 

Sales/Purchase.

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

 

 

    

 

 

   

 

 

 

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

    

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

(KRW 100 Million)

 

Transaction Type

  

Counterpart (Relationship)

  

Transaction Period

  

Transaction Amount

  

Ratio*(%)

           

III. Reference Relating to AGM

 

  1.

Matters Relating to the Annual General Meeting

 

  A.

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

 

  B.

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

 

  2.

Agenda for Meeting

 

  A.

For Reporting

(1) Audit Committee’s Audit Report

(2) Fiscal Year 2018 Business Report

(3) Report on operation of internal accounting controls

 

  B.

For Approval

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

(2)  Amendment to the Articles of Incorporation

(3)  Appointment of Directors

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

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

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

 

5


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

(4)  Appointment of Audit Committee Member

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

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

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

 

  3.

Details of Agenda for Approval

 

  A.

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

(1) Business Performance in FY 2018

A. Business overview

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

As of December 31, 2018, in Korea we operated TFT-LCD and OLED production facilities and a research center in Paju and TFT-LCD production facilities in Gumi. We have also established subsidiaries in the Americas, Europe and Asia.

As of December 31, 2018, our business consisted of the manufacture and sale of display and display related products utilizing TFT-LCD, OLED and other technologies under a single reporting business segment.

 

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

2018

   Display Business  

Sales

     243,336  

Gross Profit

     30,853  

Operating Profit (Loss)

     929  

B. Major products

 

We manufacture TFT-LCD panels, of which a significant majority is exported overseas.

(Unit: In billions of Won, except percentages)

 

Business

area

  

Sales

Type

  

Items

(Market)

  

Usage

  

Major

trademark

   Sales in 2018 (%)
Display   

Product/

Service/

Other Sales

  

Display Panel

(Overseas (1))

  

Panels for notebook computers, monitors, televisions,

smartphones, tablets, etc.

   LG Display    22,747 (93%)
  

Display Panel

(Korea (1))

  

Panels for notebook computers, monitors, televisions,

smartphones, tablets, etc.

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

 

(1)

Based on ship-to-party.

 

6


(C) Consolidated Financial Statements

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Financial Position

As of December 31, 2018 and 2017

 

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

Assets

        

Cash and cash equivalents

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

Deposits in banks

   4, 26      78,400      758,078

Trade accounts and notes receivable, net

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

Other accounts receivable, net

   5, 26      169,313      164,827

Other current financial assets

   6, 26      46,301      27,252

Inventories

   7      2,691,203      2,350,084

Prepaid income taxes

        4,516      3,854

Other current assets

   5      546,048      241,928

Non-current Assets Held for Sale

        70,161   
     

 

 

    

 

 

 

Total current assets

        8,800,127      10,473,703

Deposits in banks

   4, 26      11      11

Investments in equity accounted investees

   8      113,989      122,507

Other non-current accounts receivable, net

        11,448      8,738

Other non-current financial assets

   6, 26      144,214      59,836

Property, plant and equipment, net

   9      21,600,130      16,201,960

Intangible assets, net

   10      987,642      912,821

Deferred tax assets

   24      1,136,166      985,352

Other non-current assets

   5      381,983      394,759
     

 

 

    

 

 

 

Total non-current assets

        24,375,583      18,685,984
     

 

 

    

 

 

 

Total assets

      W 33,175,710      29,159,687
     

 

 

    

 

 

 

Liabilities

        

Trade accounts and notes payable

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

Current financial liabilities

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

Other accounts payable

   26      3,566,629      3,169,937

Accrued expenses

        633,346      812,615

Income tax payable

        105,900      321,978

Provisions

   13      98,254      76,016

Advances received

   14      834,010      194,129

Other current liabilities

   13      74,976      75,991
     

 

 

    

 

 

 

 

7


Total current liabilities

        9,954,483     8,978,682

Non-current financial liabilities

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

Non-current provisions

   13      32,764     28,312

Defined benefit liabilities, net

   12      45,360     95,447

Long-term advances received

   14      1,114,316     830,335

Deferred tax liabilities

   24      15,087     24,646

Other non-current liabilities

   13      96,826     70,563
     

 

 

   

 

 

 

Total non-current liabilities

        8,334,981     5,199,495
     

 

 

   

 

 

 

Total liabilities

        18,289,464     14,178,177
     

 

 

   

 

 

 

Equity

       

Share capital

   15      1,789,079     1,789,079

Share premium

        2,251,113     2,251,113

Retained earnings

        10,239,965     10,621,571

Reserves

   15      (300,968     (288,280
     

 

 

   

 

 

 

Total equity attributable to owners of the Controlling Company

        13,979,189     14,373,483
     

 

 

   

 

 

 

Non-controlling interests

        907,057     608,027
     

 

 

   

 

 

 

Total equity

        14,886,246     14,981,510
     

 

 

   

 

 

 

Total liabilities and equity

      W 33,175,710     29,159,687
     

 

 

   

 

 

 

See accompanying notes to the consolidated financial statements.

 

8


b. Consolidated Statements of Comprehensive Income

For the years ended December 31, 2018 and 2017

 

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

Revenue

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

Cost of sales

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

 

 

   

 

 

 

Gross profit

        3,085,266     5,365,555

Selling expenses

   19      (832,963     (994,483

Administrative expenses

   19      (938,214     (696,022

Research and development expenses

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

 

 

   

 

 

 

Operating profit

        92,891     2,461,618
     

 

 

   

 

 

 

Finance income

   22      254,131     279,019

Finance costs

   22      (326,893     (268,856

Other non-operating income

   21      1,003,038     1,081,746

Other non-operating expenses

   21      (1,115,233     (1,230,455

Equity in income of equity accounted investees, net

   8      700     9,560
     

 

 

   

 

 

 

Profit before income tax

        (91,366     2,332,632

Income tax expense

   23      (88,077     (395,580
     

 

 

   

 

 

 

Profit for the year

        (179,443     1,937,052
     

 

 

   

 

 

 

Other comprehensive income (loss)

       

Items that will never be reclassified to profit or loss

       

Remeasurements of net defined benefit liabilities

   12, 23      5,690     (16,260

Other comprehensive income from associates and joint ventrues

        20     441

Related income tax

   12, 23      (1,169     9,259
     

 

 

   

 

 

 
        4,541     (6,560

Items that are or may be reclassified to profit or loss

       

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

   22, 23      —       —  

Foreign currency translation differences for foreign operations

   22, 23      (19,987     (231,738

Other comprehensive income (loss) from associates and joint ventures

   23      37     905

Related income tax

   23      —       —  
     

 

 

   

 

 

 
        (19,950     (230,833
     

 

 

   

 

 

 

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

        (15,409     (237,393
     

 

 

   

 

 

 

Total comprehensive income for the year

      W (194,852     1,699,659
     

 

 

   

 

 

 

Profit attributable to:

       

Owners of the Controlling Company

        (207,239     1,802,756

Non-controlling interests

        27,796     134,296
     

 

 

   

 

 

 

Profit for the year

      W (179,443     1,937,052
     

 

 

   

 

 

 

Total comprehensive income attributable to:

       

Owners of the Controlling Company

        (215,386     1,596,394

Non-controlling interests

        20,534     103,265
     

 

 

   

 

 

 

Total comprehensive income for the year

      W (194,852     1,699,659
     

 

 

   

 

 

 

Earnings per share (In won)

       

Basic earnings per share

   25    W (579     5,038
     

 

 

   

 

 

 

Diluted earnings per share

   25    W (579     5,038
     

 

 

   

 

 

 

See accompanying notes to the consolidated financial statements.

 

9


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

D. Consolidated Statements of Cash Flows

For the years ended December 31, 2018 and 2017

 

(In millions of won)    Note      2018     2017  

Cash flows from operating activities:

       

Profit for the year

      W (179,443     1,937,052

Adjustments for:

       

Income tax expense

     23        88,077     395,580

Depreciation

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

Amortization of intangible assets

     10,18        430,906     422,693

Gain on foreign currency translation

        (84,643     (187,558

Loss on foreign currency translation

        138,452     174,919

Expenses related to defined benefit plans

     12,20        179,880     198,241

Gain on disposal of property, plant and equipment

        (6,620     (101,227

Loss on disposal of property, plant and equipment

        15,048     20,030

Impairment loss on property, plant and equipment

        43,601     —    

Gain on disposal of intangible assets

        (239     (308

Loss on disposal of intangible assets

        —         30

Impairment loss on intangible assets

        82     1,809

Reversal of impairment loss on intangible assets

        (348     (35

Warranty expense

        234,928     251,131

Finance income

        (101,313     (202,591

Finance costs

        173,975     142,591

Equity in income of equity method accounted investees, net

     8        (701     (9,560

Other income

        (3,310     (16,812

Other expenses

        593     1,870
     

 

 

   

 

 

 
        4,232,027     3,882,686

Changes in

       

Trade accounts and notes receivable

        1,304,963     484,592

Other accounts receivable

        (56,870     (3,004

Inventories

        (449,901     (55,979

Other current assets

        (249,968     180,844

Other non-current assets

        (61,164     (119,002

Trade accounts and notes payable

        267,358     113,590

 

10


Other accounts payable

        (111,053     106,930

Accrued expenses

        (194,394     181,509

Provisions

        (217,984     (210,973

Other current liabilities

        78,849     (585

Defined benefit liabilities, net

        (224,335     (261,966

Long-term advances received

        948,276     1,020,470

Other non-current liabilities

        24,510     5,974
     

 

 

   

 

 

 
        1,058,287     1,442,400

Cash generated from operating activities

        5,110,871     7,262,138

Income taxes paid

        (486,549     (416,794

Interests received

        71,819     55,340

Interests paid

        (212,019     (136,483
     

 

 

   

 

 

 

Net cash provided by operating activities

      W 4,484,122     6,764,201
     

 

 

   

 

 

 

 

11


Consolidated Statements of Cash Flows, Continued

 

For the years ended December 31, 2018 and 2017

 

(In millions of won)    Note      2018     2017  

Cash flows from investing activities:

       

Dividends received

      W 5,272     8,639

Proceeds from withdrawal of deposits in banks

        1,454,561     2,206,148

Increase in deposits in banks

        (775,239     (1,803,718

Acquisition of available-for-sale financial assets

          (273

Proceeds from disposal of available-for-sale financial assets

          917

Acquisition of financial assets at fair value through profit or loss

        (431  

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

 

     6  

Acquisition of investments in equity accounted investees

        (14,732     (20,309

Proceeds from disposal of investments in equity accounted investees

        4,527     13,128

Acquisition of property, plant and equipment

        (7,942,209     (6,592,435

Proceeds from disposal of property, plant and equipment

        142,088     160,252

Acquisition of intangible assets

        (480,607     (454,448

Proceeds from disposal of intangible assets

        960     1,674

Government grants received

        1,210     1,859

Receipt from settlement of derivatives

        2,026     2,592

Increase in short-term loans

        (7,700     —  

Proceeds from collection of short-term loans

        15,968     1,118

Increase in long-term loans

        (36,580     (13,930

Decrease in deposits

        4,136     4,272

Increase in deposits

        (58,794     (2,648

Proceeds from disposal of emission rights

        10,200     6,090
     

 

 

   

 

 

 

Net cash used in investing activities

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

 

 

   

 

 

 

Cash flows from financing activities:

     27       

Proceeds from short-term borrowings

        552,163     —  

Repayments of short-term borrowings

        (552,884     (105,864

Proceeds from issuance of debentures

        828,169     497,959

Proceeds from long-term debt

        3,882,959     1,195,415

Repayments of long-term debt

        —         —  

Repayments of current portion of long-term debt and debentures

        (1,859,098     (544,731

Capital contribution from non-controlling interests

        331,603     4,300

Subsidiaries’ dividends distributed to non-controlling interests

        (51,085     (5,929

Dividends paid

        (178,908     (178,908
     

 

 

   

 

 

 

Net cash provided by financing activities

        2,952,919     862,242
     

 

 

   

 

 

 

Net increase in cash and cash equivalents

        (238,297     1,145,371

Cash and cash equivalents at January 1

        2,602,560     1,558,696

Effect of exchange rate fluctuations on cash held

        759     (101,507
     

 

 

   

 

 

 

Cash and cash equivalents at December 31

      W 2,365,022     2,602,560
     

 

 

   

 

 

 

See accompanying notes to the consolidated financial statements.

 

12


e. Notes to the Consolidated Financial Statements

 

1.

Reporting Entity

 

  (a)

Description of the Controlling Company

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

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

 

13


1.

Reporting Entity, Continued

 

  (b)

Consolidated Subsidiaries as of December 31, 2017

(In millions)

 

Subsidiaries

   Location    Percentage
of
ownership
    Fiscal
year end
     Date of
incorporation
  

Business

   Capital
stocks
 

LG Display America, Inc.

   San Jose,

U.S.A.

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

LG Display Japan Co., Ltd.

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

LG Display Germany GmbH

   Eschborn,

Germany

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

LG Display Taiwan Co., Ltd.

   Taipei,
Taiwan
     100     December 31      April 12,

1999

   Sell Display products    NTD 116  

LG Display Nanjing Co., Ltd.

   Nanjing,
China
     100     December 31      July 15,

2002

   Manufacture Display products    CNY 3,020  

LG Display Shanghai Co., Ltd.

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

LG Display Poland Sp. z o.o.

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

LG Display Guangzhou Co., Ltd.

   Guangzhou,
China
     100     December 31      June 30,

2006

   Manufacture Display products    CNY 1,655  

LG Display Shenzhen Co., Ltd.

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

LG Display Singapore Pte. Ltd.

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

L&T Display Technology (Fujian) Limited

   Fujian,

China

     51     December 31      January 5,

2010

   Manufacture and sell LCD module and LCD monitor sets    CNY 116  

LG Display Yantai Co., Ltd.

   Yantai,

China

     100     December 31      April 19,

2010

   Manufacture Display products    CNY 1,008  

Nanumnuri Co., Ltd.

   Gumi,

South Korea

     100     December 31      March 21,

2012

   Janitorial services    KRW 800  

LG Display (China) Co., Ltd.

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

Unified Innovative Technology, LLC

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

2014

   Manage intellectual property    USD 9  

LG Display Guangzhou Trading Co., Ltd.

   Guangzhou,
China
     100     December 31      April 28,

2015

   Sell Display products    CNY 1.2  

Global OLED Technology, LLC

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

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

   Haiphong,
Vietnam
     100     December 31      May 5,

2016

   Manufacture Display products    USD 100  

Suzhou Lehui Display Co., Ltd.

   Suzhou,
China
     100     December 31      July 1,

2016

   Manufacture and sell LCD module and LCD monitor sets    CNY 637  

LG DISPLAY FUND I LLC(*2)

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

2018

   Invest in venture business and obtain technologies    USD 2-  

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

   Guangzhou,
China
     69     December 31      July 11,

2018

   Manufacture Display products    CNY 6,517  

Money Market Trust(*4)

   Seoul,

South Korea

     100     December 31      —      Money market trust    KRW 24,501  

 

14


1.

Reporting Entity, Continued

 

  (b)

Consolidated Subsidiaries as of December 31, 2018, Continued

 

(*1)

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

(*2)

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

(*3)

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

(*4)

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

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

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

 

(In millions of won)    December 31, 2018      2018  

Subsidiaries

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

LG Display America, Inc.

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

LG Display Japan Co., Ltd.

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

LG Display Germany GmbH

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

LG Display Taiwan Co., Ltd.

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

LG Display Nanjing Co., Ltd.

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

LG Display Shanghai Co., Ltd.

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

LG Display Poland Sp. z o.o.

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

LG Display Guangzhou Co., Ltd.

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

LG Display Shenzhen Co., Ltd.

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

LG Display Singapore Pte. Ltd.

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

L&T Display Technology (Fujian) Limited

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

LG Display Yantai Co., Ltd.

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

Nanumnuri Co., Ltd.

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

LG Display (China) Co., Ltd.

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

Unified Innovative Technology, LLC

     4,898        3        4,895        —          (986

LG Display Guangzhou Trading Co., Ltd.

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

Global OLED Technology, LLC

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

LG Display Vietnam Haiphong Co., Ltd.

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

Suzhou Lehui Display Co., Ltd

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

LG DISPLAY FUND I LLC

     7        —          7        —          (2,242

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

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

 

 

    

 

 

    

 

 

    

 

 

    

 

 

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

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

15


1.

Reporting Entity, Continued

 

(In millions of won)    December 31, 2017      2017  

Subsidiaries

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

LG Display America, Inc.

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

LG Display Japan Co., Ltd.

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

LG Display Germany GmbH

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

LG Display Taiwan Co., Ltd.

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

LG Display Nanjing Co., Ltd.

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

LG Display Shanghai Co., Ltd.

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

LG Display Poland Sp. z o.o.

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

LG Display Guangzhou Co., Ltd.

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

LG Display Shenzhen Co., Ltd.

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

LG Display Singapore Pte. Ltd.

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

L&T Display Technology (Fujian) Limited

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

LG Display Yantai Co., Ltd.

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

Nanumnuri Co., Ltd.

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

LG Display (China) Co., Ltd.

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

Unified Innovative Technology, LLC

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

LG Display Guangzhou Trading Co., Ltd.

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

Global OLED Technology, LLC

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

LG Display Vietnam Haiphong Co., Ltd.

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

Suzhou Lehui Display Co., Ltd

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

 

 

    

 

 

    

 

 

    

 

 

    

 

 

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

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

2.

Basis of Presenting Financial Statements

 

  (a)

Statement of Compliance

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

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

 

16


2.

Basis of Presenting Financial Statements, Continued

 

  (b)

Basis of Measurement

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

 

   

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

 

   

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

 

  (c)

Functional and Presentation Currency

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

 

  (d)

Use of Estimates and Judgments

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

In preparing these condensed consolidated interim financial statements, the significant judgments made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those applied in the last annual financial statements, except for new significant judgments and key sources of estimation uncertainty related to the application of K-IFRS No. 1109, K-IFRS No. 1115 in Note 3 and the change in useful life of Mask and Mold.

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

 

   

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

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

 

   

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

 

   

Measurement of defined benefit obligations (note 12)

 

   

Deferred tax assets and liabilities (note 24)

 

17


3.

Summary of Significant Accounting Policies

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

 

  (a)

Consolidation

(i) Business Combinations

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

(ii) Subsidiaries

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

(iii) Non-controlling interests

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

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

(iv) Loss of Control

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

 

18


3.

Summary of Significant Accounting Policies, Continued

 

  (a)

Consolidation, Continued

 

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

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

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

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

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

(vi) Transactions eliminated on consolidation

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

 

19


3.

Summary of Significant Accounting Policies, Continued

 

  (b)

Foreign Currency Transactions and Translation

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

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

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

 

  (c)

Cash and cash equivalents

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

 

20


3.

Summary of Significant Accounting Policies, Continued

 

  (d)

Inventories

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

 

  (e)

Financial Instruments

(i) Non-derivative financial assets

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

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

 

   

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

 

   

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

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

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

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

 

21


3.

Summary of Significant Accounting Policies, Continued

 

  (e)

Financial Instruments, Continued

 

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

 

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

(ii) Non-derivative financial liabilities

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

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

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

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

(iii) Share Capital

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

(iv) Derivative financial instruments

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

 

22


3.

Summary of Significant Accounting Policies, Continued

 

  (e)

Financial Instruments, Continued

(iv) Derivative financial instruments, Continued

 

Hedge Accounting

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

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

i) Fair value hedges

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

ii) Cash flow hedges

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

Embedded derivative

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

 

23


3.

Summary of Significant Accounting Policies, Continued

 

Other derivative financial instruments

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

 

  (f)

Property, Plant and Equipment

(i) Recognition and measurement

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

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

(ii) Subsequent costs

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

(iii) Depreciation

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

Estimated useful lives of the assets are as follows:

 

     Useful lives (years)

Buildings and structures

   20, 40

Machinery

   4, 5

Furniture and fixtures

   4

Equipment, tools and vehicles

   4, 12

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

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

 

24


3.

Summary of Significant Accounting Policies, Continued

 

  (g)

Borrowing Costs

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

 

  (h)

Government Grants

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

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

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

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

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

(iii) Other government grants

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

 

  (i)

Intangible Assets

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

(i) Goodwill

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

 

25


3.

Summary of Significant Accounting Policies, Continued

 

  (i)

Intangible Assets, Continued

 

(ii) Research and development

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

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

 

   

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

 

   

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

 

   

its ability to use or sell the intangible asset,

 

   

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

 

   

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

 

   

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

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

(iii) Other intangible assets

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

(iv) Subsequent costs

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

 

26


3.

Summary of Significant Accounting Policies, Continued

 

  (i)

Intangible Assets, Continued

 

(v) Amortization

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

 

     Estimated useful lives (years)

Intellectual property rights

   5, 10

Rights to use electricity, water and gas supply facilities

   10

Software

   4

Customer relationships

   7, 10

Technology

   10

Development costs

   (*)

Condominium and golf club memberships

   Not amortized

 

(*)

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

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

 

  (j)

Impairment

(i) Financial assets

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

 

   

Financial assets at amortized cost

 

   

Financial assets at fair value through other comprehensive income

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

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

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

 

27


3.

Summary of Significant Accounting Policies, Continued

 

  (j)

Impairment, Continued

 

(ii) Non-financial assets

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

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

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

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

 

28


3.

Summary of Significant Accounting Policies, Continued

 

  (k)

Provisions

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

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

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

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

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

 

  (l)

Employee Benefits

(i) Short-term employee benefits

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

(ii) Other long-term employee benefits

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

 

29


3.

Summary of Significant Accounting Policies, Continued

 

  (l)

Employee Benefits, Continued

 

(iii) Defined contribution plan

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

(iv) Defined benefit plan

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

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

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

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

 

  (m)

Revenue

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

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

The steps in five-step model are as follows:

a) Identify the contract with a customer.

b) Identify the performance obligations in the contract.

c) Determine the transaction price.

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

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

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

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

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

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

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

 

30


3.

Summary of Significant Accounting Policies, Continued

 

  (n)

Operating Segments

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

 

  (o)

Finance Income and Finance Costs

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

 

   

interest income

 

   

Interest expenses

 

   

Dividend income

 

   

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

 

   

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

 

   

Foreign exchange gains and losses on financial assets and financial liabilities

 

   

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

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

 

  (p)

Income Tax

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

 

  (i)

Current tax

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

 

31


3.

Summary of Significant Accounting Policies, Continued

 

  (p)

Income Tax, Continued

 

(ii) Deferred tax

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

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

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

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

 

  (q)

Earnings Per Share

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

 

32


3.

Summary of Significant Accounting Policies, Continued

 

  (r)

Change in Accounting Policies

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

 

  (i)

K-IFRS No. 1109, Financial Instruments

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

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

i) Classification and measurement of financial assets and financial liabilities

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

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

 

(In millions of won)

   Classification
under
K-IFRS No. 1039
     Classification
under

K-IFRS No. 1109
     Carrying amount
under

K-IFRS No. 1039
     Carrying amount
under

K-IFRS No. 1109
     Difference  

Financial assets

              

Cash and cash equivalents

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

Deposits

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

Trade receivables

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

Other receivables

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

Debt instrument

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

Equity instrument

     Available-for-sale       

Mandatorily at

FVTPL

 

 

     4,980        4,980        —    

Convertible bonds

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

Derivatives

     Designated as at FVTPL       
Mandatorily at
FVTPL
 
 
     842        842        —    

Others

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

 

 

    

 

 

    

 

 

 

Total financial assets

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

 

 

    

 

 

    

 

 

 

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

ii) Impairment of financial assets

 

33


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

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

iii) Hedge Accounting

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

 

  (ii)

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

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

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

 

  (i)

Variable Consideration

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

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

 

(in millions won)       

Categories

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

Current Assets

        

Other current assets

   W 616,209        (7,489      608,720  

Current Liabilities

        

Provisions

   W 98,254        (7,489      90,765  

 

34


  (ii)

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

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

 

35


3.

Summary of Significant Accounting Policies, Continued

 

  (b)

New Standards and Amendments Not Yet Adopted

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

 

  (i)

K-IFRS No. 1116, Leases

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

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

 

36


4.

Cash and Cash Equivalents and Deposits in Banks

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

 

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

Current assets

     

Cash and cash equivalents

     

Demand deposits

   W 2,365,022        2,602,560  

Deposits in banks

     

Time deposits

   W 4,318        685,238  

Restricted cash (*)

     74,082        72,840  
  

 

 

    

 

 

 
   W 78,400        758,078  
  

 

 

    

 

 

 

Non-current assets

     

Deposits in banks

     

Restricted cash (*)

   W 11        11  
  

 

 

    

 

 

 
   W 2,443,433        3,360,649  
  

 

 

    

 

 

 

 

(*)

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

 

5.

Receivables and Other Current Assets

 

  (a)

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

 

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

Trade, net

   W 2,305,368        3,275,902  

Due from related parties

     523,795        1,049,218  
  

 

 

    

 

 

 
   W 2,829,163        4,325,120  
  

 

 

    

 

 

 

 

  (b)

Other accounts receivable at the reporting date are as follows:

 

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

Current assets

     

Non-trade receivable, net

   W 159,238        150,554  

Accrued income

     10,075        14,273  
  

 

 

    

 

 

 
   W 169,313        164,827  
  

 

 

    

 

 

 

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

 

37


5.

Receivables and Other Current Assets, Continued

 

  (c)

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

 

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

Not past due

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

Past due 1-15 days

     21,558        3,148        (4      (26

Past due 16-30 days

     454        441        —          (4

Past due 31-60 days

     30        96        —          (1

Past due more than 60 days

            668        —          (434
  

 

 

    

 

 

    

 

 

    

 

 

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

 

 

    

 

 

    

 

 

    

 

 

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

Not past due

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

Past due 1-15 days

     2,652        488        (1      (3

Past due 16-30 days

     631        65        —          (1

Past due 31-60 days

     —          208        —          (2

Past due more than 60 days

     4        622        —          (400
  

 

 

    

 

 

    

 

 

    

 

 

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

 

 

    

 

 

    

 

 

    

 

 

 

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

 

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

Balance at the beginning of the period

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

(Reversal of) bad debt expense

    (1,155     (30     144       195  
 

 

 

   

 

 

   

 

 

   

 

 

 

Balance at the reporting date

  W 477       1,281       1,632       1,311  
 

 

 

   

 

 

   

 

 

   

 

 

 

 

38


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

 

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

Current assets

     

Advance payments

   W 13,259        7,973  

Prepaid expenses

     89,110        83,626  

Value added tax refundable

     436,190        148,351  

Emission rights

     —          1,978  

Right to recover returned goods

     7,489        —    
  

 

 

    

 

 

 
   W 70,161        241,928  
  

 

 

    

 

 

 

Non-current assets

     

Long-term prepaid expenses

   W 381,983        394,759  
  

 

 

    

 

 

 
   W 381,983        394,759  
  

 

 

    

 

 

 

 

6.

Other Financial Assets

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

 

(In millions of won)    December 31, 2018  

Current assets

  

Financial asset at fair value through profit or loss

  

Derivatives(*1)

   W 13,059  

Financial asset at fair value through other comprehensive income

  

Debt instrument

  

Government bonds

   W 106  

Financial asset carried at amortized cost

  

Deposits

   W 17,020  

Short-term loans

     16,116  
  

 

 

 
   W 46,301  
  

 

 

 

Non-current assets

  

Financial asset at fair value through profit or loss

  

Equity instrument

  

Intellectual Discovery, Ltd.

   W 4,598  

Kyulux, Inc.

     2,460  

Fineeva Co., Ltd.

     286  

ARCH Venture Fund Vill, L.P.

     6,338  
  

 

 

 
   W 13,682  
  

 

 

 

Convertible bonds

   W 1,327  

Derivatives(*2)

  

Financial asset at fair value through other comprehensive income

  

Debt instrument

  

Government bonds

   W 54  

Financial asset carried at amortized cost

  

Deposits

   W 74,103  

Long-term loans

     55,048  
  

 

 

 
   W 144,214  
  

 

 

 

 

(*1)

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

(*2)

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

 

39


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

 

(In millions of won)    December 31, 2017  

Current assets

  

Available-for-sale financial assets

  

Debt instrument

  

Government bonds

   W 6  

Deposits

     10,480  

Short-term loans

     16,766  
  

 

 

 
   W 27,252  
  

 

 

 

Non-current assets

  

Financial asset at fair value through profit or loss

   W 1,552  

Available-for-sale financial assets

  

Debt instrument

  

Government bonds

   W 156  

Equity instrument

  

Intellectual Discovery, Ltd.

   W 729  

Kyulux, Inc.

     1,968  

ARCH Venture Fund Vill, LP.

     2,283  
  

 

 

 
   W 4,980  
  

 

 

 

Deposits

   W 19,898  

Long-term loans

     32,408  

Derivatives(*)

     842  
  

 

 

 
   W 59,836  
  

 

 

 

 

(*)

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

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

 

40


7.

Inventories

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

 

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

Finished goods

   W 1,084,297        965,643  

Work-in-process

     856,388        748,592  

Raw materials

     554,720        344,997  

Supplies

     195,798        290,852  
  

 

 

    

 

 

 
   W 2,691,203        2,350,084  
  

 

 

    

 

 

 

For the years ended December 31, 2018 and 2017, the amount of inventories recognized as cost of sales, inventory write-downs and reversal and usage of inventory write-downs included in cost of sales are as follows:

 

(In millions of won)    2018      2017  

Inventories recognized as cost of sales

   W 21,251,305        22,424,661  

Including: inventory write-downs

     313,180        206,127  

Including: reversal and usage of inventory write downs

     (206,127      (204,123

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

 

41


8.

Investments in Equity Accounted Investees

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

 

(In millions of won)  

Associates

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

Paju Electric Glass Co., Ltd.

   Paju,

South Korea

   December 31    January

2005

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

INVENIA Co., Ltd.

   Seongnam,

South Korea

   December 31    January

2001

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

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

   Ansan,

South Korea

   December 31    June

2008

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

LB Gemini New Growth Fund No. 16 (*1)

   Seoul,

South Korea

   December 31    December

2009

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

YAS Co., Ltd.

   Paju,

South Korea

   December 31    April

2002

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

AVATEC Co., Ltd.

   Daegu,

South Korea

   December 31    August

2000

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

Arctic Sentinel, Inc.

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

2008

   Develop and manufacture

tablet for kids

     10     —          10     —    

CYNORA GmbH(*5)

   Bruchsal,

Germany

   December 31    March

2003

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

 

42


8.

Investments in Equity Accounted Investees, Continued

 

(In millions of won)  
                                 2018      2017  

Associates

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

Material Science Co., Ltd. (*2)

    

Seoul,

South Korea

 

 

     December 31       

January

2014


 

    

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

Nanosys Inc. (*3)

    

Milpitas,

U.S.A.

 

 

     December 31       

July

2001

 

 

    

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

 

 

       

 

 

 
                 W 113,989         W 122,507  
                

 

 

       

 

 

 

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

 

43


8.

Investments in Equity Accounted Investees, Continued

 

  (*1)

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

 

  (*2)

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

 

  (*3)

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

 

  (*4)

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

 

  (*5)

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

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

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

 

44


8.

Investments in Equity Accounted Investees, Continued

 

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

(i) Paju Electric Glass Co., Ltd.

 

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

Total assets

   W 194,020        193,584  

Current assets

     128,788        146,702  

Non-current assets

     65,233        46,882  

Total liabilities

     72,686        77,174  

Current liabilities

     66,797        71,973  

Non-current liabilities

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

Revenue

   W 384,144        408,846  

Profit for the year

     12,744        12,132  

Other comprehensive income (loss)

     2,612        (9,171

Total comprehensive income

     15,356        2,961  

 

(c)

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

(i) As of December 31, 2018

 

(In millions of won)                                        

Company

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

Paju Electric Glass Co., Ltd.

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

(ii) As of December 31, 2017

 

(In millions of won)                                        

Company

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

Paju Electric Glass Co., Ltd.

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

 

45


8.

Investments in Equity Accounted Investees, Continued

 

  (d)

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

(i) As of December 31, 2018

 

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

Other associates

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

(ii) As of December 31, 2017

 

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

Other associates

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

 

46


8.

Investments in Equity Accounted Investees, Continued

 

  (e)

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

 

(In millions of won)             
         2018  

Company

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

Associates

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

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

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

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
(In millions of won)             
         2017  

Company

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

Associates

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

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

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

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

47


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

9.

Property, Plant and Equipment

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

 

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

Acquisition cost as of January 1, 2018

  

W

460,511

 

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

Accumulated depreciation as of January 1, 2018

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

Accumulated impairment loss as of January 1, 2018

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Book value as of January 1, 2018

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

Additions

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

Depreciation

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

Disposals

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

Impairment loss

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

Others (*2)

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

Effect of movements in exchange rates

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

Government grants Received

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

Classified Assets Held for Sale

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Book value as of December 31, 2018

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Acquisition cost as of December 31, 2018

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated depreciation as of December 31, 2018

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated impairment loss as of December 31, 2018

  

W

—  

 

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(*1)

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

(*2)

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

 

48


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

9.

Property, Plant and Equipment, Continued

 

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

 

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

Acquisition cost as of January 1, 2017

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

Accumulated depreciation as of January 1, 2017

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

Accumulated impairment loss as of January 1, 2017

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Book value as of January 1, 2017

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

Additions

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

Depreciation

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

Disposals

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

Others (*2)

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

Effect of movements in exchange rates

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

Government grants received

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Book value as of December 31, 2017

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Acquisition cost as of December 31, 2017

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated depreciation as of December 31, 2017

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated impairment loss as of December 31, 2017

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(*1)

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

(*2)

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

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

 

(In millions of won)             
     2018     2017  

Capitalized borrowing costs

   W 146,607       47,686  

Capitalization rate

     2.80     1.92

 

F-49


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

10.

Intangible Assets

 

  (a)

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

 

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

Acquisition cost as of January 1, 2018

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

Accumulated amortization as of January 1, 2018

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

Accumulated impairment loss as of January 1, 2018

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Book value as of January 1, 2018

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

Additions - internally developed

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

Additions - external purchases

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

Amortization (*1)

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

Disposals

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

Impairment loss

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

Reversal of Impairment loss

    —         —         313       —         —         —         —         —         —         313  

Transfer from construction-in-progress

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

Effect of movements in exchange rates

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Book value as of December 31, 2018

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Acquisition cost as of December 31, 2018

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated amortization as of December 31, 2018

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated impairment loss as of December 31, 2018

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(*1)

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

(*2)

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

 

50


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

10.

Intangible Assets, Continued

 

 

  (b)

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

 

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

Acquisition cost as of January 1, 2017

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

Accumulated amortization as of January 1, 2017

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

Accumulated impairment loss as of January 1, 2017

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Book value as of January 1, 2017

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

Additions - internally developed

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

Additions - external purchases

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

Amortization (*1)

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

Disposals

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

Impairment loss

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

Reversal of Impairment loss

     —         —         35       —         —         —         —         —         —         35  

Transfer from construction-in-progress

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

Effect of movements in exchange rates

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Book value as of December 31, 2017

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Acquisition cost as of December 31, 2017

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated amortization as of December 31, 2017

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated impairment loss as of December 31, 2017

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

51


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

10.

Intangible Assets, Continued

 

  (*1)

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

  (*2)

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

  (*3)

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

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

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

 

  (i)

As of December 31, 2018

 

(In millions of won and in years)  

Classification

  

Product

   Book Value      Remaining
Useful life
 

Development completed

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

 

 

    
  

Sub-Total

   W 150,402     
     

 

 

    

Development in process

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

 

 

    
  

Sub-Total

   W 216,508     
     

 

 

    
  

Total

   W 366,910     
     

 

 

    

 

52


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

(ii)

As of December 31, 2017

 

(In millions of won and in years)  

Classification

  

Product

   Book Value      Remaining
Useful life
 

Development completed

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

 

 

    
  

Sub-Total

   W 142,165     
     

 

 

    

Development in process

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

 

 

    
  

Sub-Total

   W 154,595     
     

 

 

    
  

Total

   W 296,760     
     

 

 

    

 

53


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

11.

Financial Liabilities

 

  (a)

Financial liabilities at the reporting date are as follows:

 

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

Current

     

Short-term borrowings

   W —          —    

Current portion of long-term debt

     1,553,907        1,452,926  
  

 

 

    

 

 

 
   W 1,553,907        1,452,926  
  

 

 

    

 

 

 

Non-current

     

Won denominated borrowings

   W 2,700,608        1,251,258  

Foreign currency denominated borrowings

     2,531,664        1,392,931  

Bonds

     1,772,599        1,506,003  

Derivatives(*)

     25,758        —    
  

 

 

    

 

 

 
   W 7,030,629        4,150,192  
  

 

 

    

 

 

 

 

  (*)

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

 

  (b)

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

 

(In millions of won)                   

Lender

  

Annual interest rate

as of

December 31, 2018 (%)

   December 31,
2018
     December 31,
2017
 

Woori Bank

   0.0275    W 1,258        1,922  

Shinhan Bank

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

Korea Development Bank and others

  

CD rate (91days) + 0.64%

2.43~3.25%

     2,850,000        1,250,000  

Less current portion of long-term borrowings

        (150,651      (200,664
     

 

 

    

 

 

 
      W 2,700,608        1,251,258  
     

 

 

    

 

 

 

 

  (c)

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

 

(In millions of won and USD, CNY)  

Lender

  

Annual interest rate

as of

December 31, 2018 (%)(*)

   December 31,
2018
     December 31,
2017
 

The ExportImport Bank of Korea

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

China Construction Bank and others

  

USD: 3ML+0.80~2.00

CNY: PBOC*(0.90~1.05)

     2,419,286        1,385,097  
     

 

 

    

 

 

 

Foreign currency equivalent

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

Less current portion of long-term borrowings

      W (843,598)        (747,503
     

 

 

    

 

 

 
      W 2,531,664        1,392,931  
     

 

 

    

 

 

 

 

  (*)

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

 

(e)

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

 

54


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

(In millions of won)                        
    

Maturity

  

Annual interest rate

as of

December 31, 2018 (%)

   December 31,
2018
     December 31,
2017
 

Won denominated bonds (*)

           

Publicly issued bonds

  

April 2019 ~

February 2023

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

Privately issued bonds

  

May 2025 ~

May 2033

   3.25~4.25      110,000     

Less discount on bonds

           (3,949      (4,238

Less current portion

           (559,658      (504,759
        

 

 

    

 

 

 
         W 1,446,393        1,506,003  
        

 

 

    

 

 

 

Foreign currency denominated bonds (*)

           

Publicly issued bonds

  

November 2021

   3.875    W 335,430        —    

Foreign currency equivalent

         USD 300        —    

Less discount on bonds

           (9,224      —    

Less current portion

           —          —    
        

 

 

    

 

 

 
         W 326,206     
        

 

 

    

 

 

 
         W 1,772,599        1,506,003  
        

 

 

    

 

 

 

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

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

 

55


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

12.

Employee Benefits

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

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

 

  (a)

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

 

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

Present value of partially funded defined benefit obligations

   W 1,595,423        1,562,424  

Fair value of plan assets

     (1,550,063      (1,466,977
  

 

 

    

 

 

 
   W 45,360        95,447  
  

 

 

    

 

 

 

 

  (b)

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

 

(In millions of won)              
     2018      2017  

Opening defined benefit obligations

   W 1,562,424        1,401,396  

Current service cost

     204,667        195,850  

Past service cost

     (25,749      —    

Interest cost

     49,145        40,844  

Remeasurements (before tax)

     (27,886      (114

Benefit payments

     (88,560      (76,011

Transfers from (to) related parties

     (4,217      534  

Liquidation of plans

     (74,459   

Others

     58        (75
  

 

 

    

 

 

 

Closing defined benefit obligations

   W  1,595,423        1,562,424  
  

 

 

    

 

 

 

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

 

  (c)

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

 

(In millions of won)              
     2018      2017  

Opening fair value of plan assets

   W  1,466,977        1,258,409  

Expected return on plan assets

     48,183        38,453  

Remeasurements (before tax)

     (22,195      (16,374

Contributions by employer directly to plan assets

     212,246        250,998  

Benefit payments

     (80,689      (64,509

Liquidation of plans

     (74,459      —    
  

 

 

    

 

 

 

Closing fair value of plan assets

   W  1,550,063        1,466,977  
  

 

 

    

 

 

 

 

56


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

12.

Employee Benefits, Continued

 

 

  (d)

Plan assets at the reporting date are as follows:

 

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

Guaranteed deposits in banks

   W  1,550,063        1,466,977  

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

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

 

(e)

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

 

(In millions of won)    2018      2017  

Current service cost

   W  204,667        195,850  

Past service cost

     (25,749      —    

Net interest cost

     962        2,391  
  

 

 

    

 

 

 
   W 179,880        198,241  
  

 

 

    

 

 

 

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

 

(In millions of won)    2018      2017  

Cost of sales

   W 134,728        158,418  

Selling expenses

     11,097        11,114  

Administrative expenses

     19,531        16,287  

Research and development expenses

     14,524        12,422  
  

 

 

    

 

 

 
   W  179,880        198,241  
  

 

 

    

 

 

 

 

(f)

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

 

(In millions of won)    2018      2017  

Balance at January 1

   W (170,510)        (163,950

Remeasurements

     

Actuarial profit or loss arising from:

     

Experience adjustment

     56,224        (48,890

Demographic assumptions

     (15,379      (7,702

Financial assumptions

     (12,961      56,706  

Return on plan assets

     (22,195      (16,374

Share of associates regarding remeasurements

     20        441  
  

 

 

    

 

 

 
   W  5,709        (15,819
  

 

 

    

 

 

 

Income tax

   W  (1,169)        9,259  
  

 

 

    

 

 

 

Balance at December 31

   W (165,970)        (170,510
  

 

 

    

 

 

 

 

57


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

12.

Employee Benefits, Continued

 

  (g)

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

 

     December 31, 2018     December 31, 2017  

Expected rate of salary increase

     4.7     4.7

Discount rate for defined benefit obligations

     2.8     3.2

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

 

          December 31, 2018     December 31, 2017  

Teens

   Males      0.01     0.01
   Females      0.00     0.00

Twenties

   Males      0.01     0.01
   Females      0.00     0.00

Thirties

   Males      0.01     0.01
   Females      0.01     0.01

Forties

   Males      0.03     0.03
   Females      0.02     0.02

Fifties

   Males      0.05     0.05
   Females      0.02     0.02

 

  (h)

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

 

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

Discount rate for defined benefit obligations

   W  (199,750)        241,608  

Expected rate of salary increase

     236,002        (199,363

 

58


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

13.

Provisions and Other Liabilities

 

  (a)

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

 

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

Balance at January 1, 2018

   W 43       102,450       1,835       104,328  
  

 

 

   

 

 

   

 

 

   

 

 

 

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

     —         —         9,789       9,789  

Additions

     —         234,928       (2,694     232,234  

Usage and reclassification

     (43     (215,290     —         (215,333
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance at December 31, 2018

   W —         122,088       8,930       131,018  
  

 

 

   

 

 

   

 

 

   

 

 

 

Current

   W —         89,324       8,930       98,254  

Non-current

   W —         32,764       —         32,764  

 

(*)

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

 

  (b)

Other liabilities at the reporting date are as follows:

 

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

Current liabilities

     

Withholdings

   W 30,970        60,766  

Unearned revenues

     43,841        12,225  

Rent Deposits

     165        —    
  

 

 

    

 

 

 
   W 74,976        75,991  
  

 

 

    

 

 

 

Non-current liabilities

     

Long-term accrued expenses

   W 80,816        70,561  

Long-term Unearned Income

     2,117        —    

Long-term other accounts payable

     3,103        2  

Rent Deposits

     10,790        —    
  

 

 

    

 

 

 
   W 96,826        70,563  
  

 

 

    

 

 

 

 

59


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

14.

Contingent Liabilities and Commitments

 

  (a)

Legal Proceedings

Anti-trust litigations

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

Others

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

 

60


LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

 

14.

Contingent Liabilities and Commitments, Continued

 

  (b)

Commitments

Factoring and securitization of accounts receivable

The Controlling Company has agreements with Korea Development Bank and several other banks for accounts receivable sales negotiating facilities of up to an aggregate of USD 1,670 million (W1,867,227 million) in connection with the Controlling Company’s export sales transactions with its subsidiaries. As of December 31, 2018, no short-term borrowings were outstanding in connection with these agreements. In connection with all of the contracts in this paragraph, the Controlling Company has sold its accounts receivable with recourse.

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

 

(In millions of USD and KRW)

Classification

  

Financial institutions

   Maximum    Not yet due
          Contractual
amount
    

KRW
equivalent

   Contractual
amount
    

KRW
equivalent