As filed with the Securities and Exchange Commission on April 27, 2023
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
(Mark One)
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
EXCHANGE ACT OF 1934
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
OR
For the fiscal year ended December 31, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of event requiring this shell company report
OR
For the transition period from to
Commission file number 1-32238
LG Display Co., Ltd.
(Exact name of Registrant as specified in its charter)
LG Display Co., Ltd.
(Translation of Registrant’s name into English)
The Republic of Korea
(Jurisdiction of incorporation or organization)
LG Twin Towers, 128 Yeoui-daero, Yeongdeungpo-gu, Seoul 07336, Republic of Korea
(Address of principal executive offices)
Gihwa Kim
LG Twin Towers, 128 Yeoui-daero, Yeongdeungpo-gu, Seoul 07336, Republic of Korea
Telephone No.: +82-2-3777-1010
Facsimile No.: +82-2-3777-0793
(Name, telephone, e-mail and/or facsimile number and address of company contact person)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
Title of each class
Trading Symbol
American Depositary
Shares, each representing
one-half of one share of
Common Stock
Common Stock, par value
W5,000 per share
LPL
LPL
Name of each exchange on
which registered
New York Stock
Exchange
New York Stock
Exchange*
* Not for trading, but only in connection with the registration of the American Depositary Shares.
Securities registered or to be registered pursuant to Section 12(g) of the Act.
None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the
close of the period covered by the annual report.
357,815,700 shares of common stock, par value W5,000 per share
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934. Yes No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to
be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for
such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and
“emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
Accelerated filer
Emerging growth company
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☐
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by
check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.
† The term “new or revised financial accounting standard” refers to any update issued by the Financial
Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment
of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15
Yes No
U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial
statements of the registrant included in the filing reflect the correction of an error to previously issued financial
statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of
incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period
pursuant to § 240.10D-1(b).
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included
in this filing:
U.S. GAAP
International Financial Reporting Standards as issued by
the International Accounting Standards Board
Other
Auditor Name: KPMG Samjong Accounting Corp.
Auditor Location: Seoul, Korea
Auditor Firm ID:
1357
If “Other” has been checked in response to the previous question, indicate by check mark which financial
statement item the registrant has elected to follow. Item 17 Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes No
TABLE OF CONTENTS
Presentation of Financial and Other Information ...............................................................................................................
Forward-Looking Statements .............................................................................................................................................
PART I
Item 1.
Item 2.
Item 3.
Identity of Directors, Senior Management and Advisers..................................................................................
Offer Statistics and Expected Timetable...........................................................................................................
Key Information................................................................................................................................................
Item 3.A. [RESERVED] ...................................................................................................................................
Item 3.B. Capitalization and Indebtedness .......................................................................................................
Item 3.C. Reasons for the Offer and Use of Proceeds ......................................................................................
Item 3.D. Risk Factors ......................................................................................................................................
Item 4.
Information on the Company ............................................................................................................................
Item 4.A. History and Development of the Company ......................................................................................
Item 4.B. Business Overview............................................................................................................................
Item 4.C. Organizational Structure ...................................................................................................................
Item 4.D. Property, Plants and Equipment .......................................................................................................
Item 4A. Unresolved Staff Comments .............................................................................................................................
Item 5.
Operating and Financial Review and Prospects................................................................................................
Item 5.A. Operating Results..............................................................................................................................
Item 5.B. Liquidity and Capital Resources.......................................................................................................
Item 5.C. Research and Development, Patents and Licenses, etc.....................................................................
Item 5.D. Trend Information.............................................................................................................................
Item 5.E. Critical Accounting Estimates...........................................................................................................
Item 6.
Directors, Senior Management and Employees................................................................................................
Item 6.A. Directors and Senior Management ...................................................................................................
Item 6.B. Compensation ...................................................................................................................................
Item 6.C. Board Practices .................................................................................................................................
Item 6.D. Employees.........................................................................................................................................
Item 6.E. Share Ownership ...............................................................................................................................
Item 6.F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation....................
Item 7. Major Shareholders and Related Party Transactions ........................................................................................
Item 7.A. Major Shareholders...........................................................................................................................
Item 7.B. Related Party Transactions ...............................................................................................................
Item 7.C. Interests of Experts and Counsel.......................................................................................................
Item 8.
Financial Information........................................................................................................................................
Item 8.A. Consolidated Statements and Other Financial Information..............................................................
Item 8.B. Significant Changes ..........................................................................................................................
Item 9.
The Offer and Listing........................................................................................................................................
Item 9.A. Offer and Listing Details ..................................................................................................................
Item 9.B. Plan of Distribution...........................................................................................................................
Item 9.C. Markets .............................................................................................................................................
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(i)
Item 9.D. Selling Shareholders .........................................................................................................................
Item 9.E. Dilution .............................................................................................................................................
Item 9.F. Expenses of the Issue ........................................................................................................................
Item 10. Additional Information .....................................................................................................................................
Item 10.A. Share Capital...................................................................................................................................
Item 10.B. Memorandum and Articles of Association .....................................................................................
Item 10.C. Material Contracts...........................................................................................................................
Item 10.D. Exchange Controls..........................................................................................................................
Item 10.E. Taxation...........................................................................................................................................
Item 10.F. Dividends and Paying Agents .........................................................................................................
Item 10.G. Statements by Experts.....................................................................................................................
Item 10.H. Documents on Display....................................................................................................................
Item 10.I. Subsidiary Information.....................................................................................................................
Item 10.J. Annual Report to Security Holders..................................................................................................
Item 11. Quantitative and Qualitative Disclosures about Market Risk...........................................................................
Item 12. Description of Securities Other than Equity Securities ....................................................................................
PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies...........................................................................................
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds ..............................................
Item 15. Controls and Procedures ...................................................................................................................................
Item 16.
[RESERVED] ...................................................................................................................................................
Item 16A. Audit Committee Financial Expert ...................................................................................................................
Item 16B. Code of Ethics...................................................................................................................................................
Item 16C. Principal Accountant Fees and Services ..........................................................................................................
Item 16D. Exemptions from the Listing Standards for Audit Committees .......................................................................
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers ..........................................................
Item 16F. Change in Registrant’s Certifying Accountant .................................................................................................
Item 16G. Corporate Governance .....................................................................................................................................
Item 16H. Mine Safety Disclosure ....................................................................................................................................
Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections .............................................................
PART III
Item 17. Financial Statements .........................................................................................................................................
Item 18. Financial Statements .........................................................................................................................................
Item 19. Exhibits .............................................................................................................................................................
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(ii)
PRESENTATION OF FINANCIAL AND OTHER INFORMATION
In this annual report, the terms “we,” “us,” “our” and “LG Display” refer to LG Display Co., Ltd. and, unless
otherwise indicated or required by context, our consolidated subsidiaries. Notwithstanding the foregoing, in the context of
any legal proceedings or governmental investigations, “LG Display” refers to LG Display Co., Ltd. and does not include any
of its subsidiaries, or any other entities or persons.
The financial statements included in this annual report are prepared in accordance with International Financial
Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB. As such, we make an
explicit and unreserved statement of compliance with IFRS, as issued by the IASB, with respect to our consolidated financial
statements as of December 31, 2021 and 2022 and for each of the years ended in the three-year period ended December 31,
2022 included in this annual report.
In addition to preparing financial statements in accordance with IFRS as issued by the IASB included in this annual
report, we also prepare financial statements in accordance with Korean International Financial Reporting Standards, or K-
IFRS, as adopted by the Korean Accounting Standards Board, or KASB, which we are required to file with the Financial
Services Commission and the Korea Exchange under the Financial Investment Services and Capital Markets Act of Korea.
See “Item 10.B. Memorandum and Articles of Association—Business Report.” English translations of such financial
statements are furnished to the SEC on Form 6-K, which are not incorporated by reference to this or any of our previous
annual reports on Form 20-F. The operating profit or loss presented in the consolidated statements of comprehensive income
or loss prepared in accordance with K-IFRS for the years ended December 31, 2021 and 2022 included in the Form 6-K
furnished to the SEC on March 3, 2023 is a profit of W2,231 billion and a loss of W2,085 billion, respectively. For further
information, please see the Form 6-K furnished to the SEC on March 3, 2023, which is not incorporated by reference to this
annual report.
Pursuant to the IFRS as issued by the IASB, we are not required to separately present operating profit or loss in our
consolidated statements of comprehensive income or loss prepared in accordance with IFRS. Therefore, the financial
statements included in this annual report, which are prepared in accordance with IFRS as issued by the IASB, do not present
operating profit or loss as a separate line item.
Unless expressly stated otherwise, all financial data included in this annual report are presented on a consolidated
basis.
All references to “Korean Won,” “Won” or “W” in this annual report are to the currency of the Republic of Korea,
all references to “U.S. dollars” or “US$” are to the currency of the United States, all references to “Japanese Yen,” “Yen” or
“¥” are to the currency of Japan, all references to “CNY” or “Chinese Yuan” are to the currency of the People’s Republic of
China, all references to “Vietnamese Dong” or “VND” are to the currency of Vietnam, all references to “NT$” are to the
currency of Taiwan, all references to “Euro” or “€” are to the official currency of the European Economic and Monetary
Union, and all references to “R$” are to the currency of Brazil.
Any discrepancies in any table between the totals and the sums of the amounts listed are due to rounding.
For your convenience, this annual report contains translations of Won amounts into U.S. dollars at the noon buying
rate in New York City for cable transfers in Korean Won as certified by the Federal Reserve Bank of New York for customs
purposes in effect on December 31, 2022, which was W1,260.18 = US$1.00.
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FORWARD-LOOKING STATEMENTS
We have made forward-looking statements in this annual report. Our forward-looking statements contain
information regarding, among other things, our financial condition, future plans and business strategy. Words such as
“contemplate,” “seek to,” “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan” and similar expressions, as they
relate to us, are intended to identify a number of these forward-looking statements. These forward-looking statements reflect
management’s present expectations and projections about future events and are not a guarantee of future performance.
Although we believe that these expectations and projections are reasonable, such forward-looking statements are inherently
subject to risks, uncertainties and assumptions about us, including, among other things:
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the cyclical nature of our industry;
adverse developments in the global financial markets and industry;
our dependence on introducing new products on a timely basis;
our dependence on growth in the demand for our products;
our ability to compete effectively;
our dependence on a select group of key customers;
our ability to successfully manage our capacity expansion and allocation in response to changing industry and
market conditions;
our dependence on key personnel;
general economic and political conditions, including those related to the display panel industry;
possible disruptions in commercial activities caused by events such as natural disasters, health epidemics,
terrorist activity and armed conflict;
fluctuations in foreign currency exchange rates; and
those other risks identified in the “Risk Factors” section of this annual report.
Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the
events discussed in the forward-looking statements in this annual report might not occur and our actual results could differ
materially from those anticipated in these forward-looking statements.
All subsequent forward-looking statements attributable to us or any person acting on our behalf are expressly
qualified in their entirety by the cautionary statements contained or referred to in this section.
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PART I
Item 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
Item 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
Item 3. KEY INFORMATION
Item 3.A. [RESERVED]
Item 3.B. Capitalization and Indebtedness
Not applicable.
Item 3.C. Reasons for the Offer and Use of Proceeds
Not applicable.
Item 3.D. Risk Factors
You should carefully consider the risks described below.
Risks Relating to Our Industry
The display panel industry is subject to cyclical fluctuations, including recurring periods of capacity increases, that may
adversely affect our results of operations.
The current global supply of display panels is manufactured primarily based on thin-film transistor liquid crystal
display, or TFT-LCD, technology, and to a lesser but increasing extent, organic light-emitting diode, or OLED, technology.
Display panel manufacturers are vulnerable to cyclical market conditions. Intense competition and expectations of growth in
demand across the display panel industry may cause manufacturers to make additional investments in manufacturing capacity
on similar schedules, resulting in a surge in capacity when production is ramped up at new fabrication facilities. During such
surges in capacity growth, as evidenced by past experiences, customers can exert strong downward pricing pressure, resulting
in sharp declines in average selling prices and significant fluctuations in the panel manufacturers’ gross margins. Conversely,
demand surges and fluctuations in the supply chain can lead to price increases.
From time to time, we have been affected by overcapacity in the display panel industry relative to the general demand
for such panels which, together with uncertainties in the current global economic environment, has contributed to a general
decline in the average selling prices of a number of our display panel products. We attempt to counteract, at least in part, the
effects of overcapacity in the industry by increasing the proportion of high margin, differentiated specialty products based on
newer technologies in our product mix, including products that utilize OLED technology, which accounted for approximately
40% of our revenues in 2022 and are relatively less affected by the industry-wide overcapacity problems, while also engaging
in cost reduction efforts. We also address overcapacity issues by, in the short-term, adjusting the utilization rates of our
existing fabrication facilities based on our assessment of industry inventory levels and demand for our products and, in the
mid- to long-term, by fine-tuning our investment strategies relating to product development and capacity growth in light of
our assessment of future market conditions.
Our average revenue per square meter of net display area, which is derived by dividing our total revenue by total
square meters of net display area shipped, increased by 7.3% from W792 thousand in 2020 to W849 thousand in 2021, which
primarily reflected our ongoing efforts to continue increasing in our product mix the proportion of higher-priced OLED
panels and differentiated TFT-LCD panels as well as a stronger global demand for both OLED and TFT-LCD panel products
reflecting increased levels of working remotely, online schooling and social distancing in light of the ongoing global
pandemic of a new strain of coronavirus referred to as “COVID-19,” an infectious disease caused by severe acute respiratory
syndrome coronavirus 2 that is known to have been first transmitted to humans in November 2019 and has spread globally.
However, our average revenue per square meter of net display area decreased by 2.4% to W829 thousand (US$658) in 2022,
5
which was largely the result of weakening demand for our television and IT products in part due to rising inflation and
interest rates and increasing economic volatility and uncertainty globally, which contributed to downward pricing pressure.
While we believe that overcapacity and other cyclical issues in the industry are best addressed by increasing the
proportion of high margin, differentiated specialty products based on newer technologies (such as OLED technology) in our
product mix that are tailored to our customers’ evolving needs, we cannot provide any assurance that an increase in demand,
which has helped to mitigate the impact of industry-wide overcapacity in the past, will recur or be sustained in future periods.
We will therefore continue to closely monitor any overcapacity issues in the industry and respond accordingly. However,
construction of new fabrication facilities and other capacity expansion projects in the display panel industry are undertaken
with a multi-year time horizon based on expectations of future market trends. Therefore, even if overcapacity issues persist in
the industry, there may be continued capacity expansion in the near future due to pre-committed capacity expansion projects
in the industry that were undertaken in past years. Any significant industry-wide capacity increases that are not accompanied
by a sufficient increase in demand could further drive down the average selling price of our panels, which would negatively
affect our gross margin. Any decline in prices may be further compounded by a seasonal weakening in demand growth for
end products such as personal computer products, consumer electronics products and mobile and other application products.
Furthermore, once the differentiated products that had a positive impact on our performance mature in their technology cycle,
if we are not able to develop and commercialize newer products to offset the price erosion of such maturing products in a
timely manner, our ability to counter the impact of cyclical market conditions on our gross margins would be further limited.
We cannot provide assurance that any future downturns resulting from any large increases in capacity or other factors
affecting the industry would not have a material adverse effect on our business, financial condition and results of operations.
In addition, we may recognize impairment losses on our property, plant and equipment and intangible assets in
connection with deteriorating market conditions. For example, in 2022, partly due to less favorable industry outlook in light
of continued and exacerbated uncertainty in the prospects of the global economy, we recognized impairment losses of
W1,331 billion (US$1,056 million) attributable to a decrease in the estimated recovery value of our property, plant and
equipment and intangible assets relating to our large-sized OLED display panel business. See “Item 5.A. Operating Results—
Comparison of 2022 to 2021” and Note 10(d) of the notes to our financial statements for further discussion of our assessment
of impairment with respect to our large-sized OLED display panel business. We cannot provide assurance that any future
downturns will not result in additional recognition of impairment losses on our property, plant and equipment and intangible
assets, which may have a material adverse effect on our financial condition and results of operations.
A global economic downturn may result in reduced demand for our products and adversely affect our profitability.
In recent years, adverse conditions and volatility in the worldwide financial markets, fluctuations in oil and commodity
prices and the general weakness of the global economy have contributed to the uncertainty of global economic prospects in
general and have adversely affected, and may continue to adversely affect, the Korean economy. Global economic downturns
in the past have adversely affected demand for consumer products manufactured by our customers in Korea and overseas,
including IT products (which term is used by us to collectively refer to notebook computers, desktop monitors and tablet
computers), televisions and mobile and other application products utilizing display panels, which in turn led them to reduce
or plan reductions of their production.
The overall prospects for the global economy remain uncertain, especially in light of the ongoing global pandemic of
COVID-19, which has had debilitating effects on the Korean economy and the economies of Korea’s major trading partners,
and the economic indicators in Korea have shown mixed signs of deterioration and uncertain recovery since the outbreak of
the COVID-19 pandemic. See “—Risks Relating to Our Company—Earthquakes, tsunamis, floods, severe health epidemics
(including the ongoing global COVID-19 pandemic and any possible recurrence of other types of widespread infectious
diseases) and other natural calamities could materially adversely affect our business, results of operations or financial
condition.” Such uncertainties have been, and continue to be, exacerbated by, among other things, deterioration in economic
and trade relations between major economies (particularly between the United States and China), the invasion of Ukraine by
Russia in February 2022 that has destabilized the global energy sector, the slowdown of economic growth in China and other
major emerging market economies, as well as rising inflation globally followed by higher interest rates to combat such
inflation. We cannot provide any assurance that demand for our products can be sustained at current levels in future periods
or that the demand for our products will not decrease in the future due to such economic downturns, which may adversely
affect our profitability.
We may decide to adjust our production levels in the future subject to market demand for our products, the production
outlook of the global display panel industry, any significant disruptions in our supply chain and global economic conditions
in general. For example, as part of our continued efforts to increase the proportion of higher-margin OLED panels in our
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product mix, we have been reducing the production level of TFT-LCD panels in recent years. In particular, in 2020, we
significantly reduced the production level of TFT-LCD television display panels by substantially ceasing the production of
most types of such panels in Korea, in light of continued overcapacity in the market and our increased focus on producing
OLED panels and higher margin TFT-LCD panels for IT products. In 2021, we increased our production capacity of larger-
sized eighth-generation OLED panels and high-end TFT-LCD panels for IT products in light of increased market demand. In
2022, we reduced our production capacity of TFT-LCD panels for televisions at our manufacturing facilities in China. In
addition, we ceased production at, and closed, our P5 fabrication facility (where we had produced TFT-LCD panels for
notebook computers and mobile and other applications) in June 2022 and our P7 facility (where we had produced TFT-LCD
panels for televisions) in December 2022, in light of our continued efforts to increase the proportion of OLED television
panels in our product mix and the production capacity for such panels and further reduce our production level of TFT-LCD
panels, which we believe to be relatively more sensitive to market conditions and generally allow for fewer opportunities for
product differentiation. Any decline in demand for display panel products may adversely affect our business, results of
operations and/or financial condition.
Our industry continues to experience steady declines in the average selling prices of display panels irrespective of cyclical
fluctuations in the industry, and our margins would be adversely impacted if prices decrease faster than we are able to
reduce our costs.
The average selling prices of display panels have declined in general and are expected to continually decline with time
irrespective of industry-wide cyclical fluctuations as a result of, among other factors, technological advancements and cost
reductions. Although we may be able to take advantage of the higher selling prices typically associated with new products
and technologies when they are first introduced in the market, such prices decline over time, and in certain cases, very
rapidly, as a result of market competition or otherwise. If we are unable to effectively anticipate and counter the price erosion
that accompanies our products, or if the average selling prices of our display panels decrease faster than the speed at which
we are able to reduce our manufacturing costs, our gross margin would decrease and our results of operations and financial
condition may be materially and adversely affected.
We operate in a highly competitive environment and we may not be able to sustain our current market position.
The display panel industry is highly competitive. We have experienced pressure on the prices and margins of our major
products due largely to additional capacity from panel makers in Asia, particularly in China. Our main competitors in the
industry include leading display manufacturers in China, Korea, Taiwan, and Japan. See “Item 4.B. Business Overview—
Competition.”
Some of our competitors may currently, or at some point in the future, have greater financial, sales and marketing,
manufacturing, research and development or technological resources than we do. In addition, our competitors may be able to
manufacture panels on a larger scale or with greater cost efficiencies than we do, and we anticipate increases in production
capacity in the future by other display panel manufacturers using similar display panel technologies as ours. Any price
erosion resulting from strong global competition or additional industry capacity may materially adversely affect our financial
condition and results of operations.
Mergers or consolidations within the industry in which we operate may result in increased competition as the entities
emerging from such consolidation may have greater financial, manufacturing, research and development and other resources
than we do, especially if such mergers or consolidations result in vertical integration and operational efficiencies. Increased
competition resulting from such mergers or consolidations may lead to decreased margins, which may have a material
adverse effect on our financial condition and results of operations.
Our ability to compete successfully also depends on factors both within and outside our control, including product
pricing, performance and reliability, our relationship with customers, successful and timely investment and product
development, success or failure of our end-brand customers in marketing their brands and products, newly established
industry standards, component and raw material supply costs, and general economic and industry conditions. We cannot
provide assurance that we will be able to maintain a competitive advantage with respect to all these factors and, as a result,
we may be unable to sustain our current market position.
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Our operating results fluctuate from period to period, so you should not rely on period-to-period comparisons to predict
our future performance.
Our industry is affected by market conditions that are often outside the control of manufacturers. Our results of
operations may fluctuate significantly from period to period due to a number of factors, including seasonal variations in
consumer demand, capacity ramp-up by competitors, industry-wide technological changes, the loss of a key customer and the
postponement, rescheduling or cancellation of large orders by a key customer, any of which may or may not reflect a
continued trend from one period to the next. As a result of these factors and other risks discussed in this section, you should
not rely on period-to-period comparisons to predict our future performance.
Risks Relating to Our Company
Our financial condition may be adversely affected if we cannot introduce new products to adapt to rapidly evolving
customer needs on a timely basis.
Our success will depend greatly on our ability to respond quickly to rapidly evolving customer requirements and to
develop and efficiently manufacture new and differentiated products in anticipation of future demand. A failure or delay on
our part to develop and efficiently manufacture products of such quality and technical specifications that meet our customers’
evolving needs may adversely affect our business.
Close cooperation with our customers to gain insights into their product needs and to understand general trends in the
end-product market is a key component of our strategy to produce successful products. In addition, when developing new
products, we often work closely with equipment suppliers to design equipment that will make our production processes for
such new products more efficient. If we are unable to work together effectively with our customers and equipment suppliers,
or to sufficiently understand their respective needs and capabilities or general market trends, we may not be able to introduce
or efficiently manufacture new products in a timely manner, which may have a material adverse effect on our financial
situation.
In addition, product differentiation, especially the ability to develop and market differentiated specialty products that
command higher premiums in a timely manner, has become a key competitive strategy in the display panel market. This is in
part due to trends in consumer electronics and other markets, such as IT products, televisions and mobile and other
applications, where the growth in demand is led by end products employing newer technologies with specifications tailored
to deliver enhanced performance, convenience and user experience in a cost-efficient and timely manner. Accordingly, we
have focused our efforts on developing and marketing differentiated specialty products, such as OLED display panels for
televisions and commercial displays including our next-generation “OLED.Ex” display panels (which apply advanced
technologies to offer brighter and more stable images while further reducing the bezel size), “CSO (Cinematic Sound
OLED)” sound integrated panels, rollable OLED display panels, transparent OLED display panels as well as OLED display
panels for gaming monitors. We also strive to deliver differentiated values to meet our consumers’ demand for various
display panels including (i) panels utilizing ultra-high definition, or Ultra HD, technology and low power consumption with
oxide TFT backplanes, (ii) Advanced High-Performance In-Plane Switching, or AH-IPS, panels for IT products and
televisions, and (iii) plastic OLED display panels for smartphones, automotive products and wearable devices. We have also
focused our efforts on cost reductions in the production process, in particular of our OLED display panels, in order to
improve or maintain our profit margins while offering competitive prices to our customers.
We have developed differentiated sales and marketing strategies to promote our panels for differentiated specialty
products as part of our strategy to grow our operations to meet increasing demand for new applications in consumer
electronics and other markets. However, we cannot provide assurance that the differentiated products we develop and market
will be responsive to our end customers’ needs nor that our products will be successfully incorporated into end products or
new applications that lead market growth in consumer electronics or other markets.
Problems with product quality, including defects, in our products could result in a decrease in customers and sales,
unexpected expenses and loss of market share.
Our products are manufactured using advanced, and often new, technology and must meet stringent quality
requirements. Products manufactured using more advanced and newer technology, such as our OLED technology, may
contain undetected errors or defects, especially when first introduced. For example, our latest display panels may contain
defects that are not detected until after they are shipped or installed because we cannot test for all possible scenarios. Such
defects could cause us to incur significant re-designing costs, divert the attention of our technology personnel from product
8
development efforts and significantly affect our customer relations and business reputation. In addition, future product
failures could cause us to incur substantial expense to repair or replace defective products. We recognize a provision for
warranty obligations based on the estimated costs that we expect to incur under our basic limited warranty for our products,
which covers defective products and is valid for a period of time mutually agreed between us and the relevant customer from
the date of purchase by such customer. The warranty provision is largely based on historical and anticipated rates of warranty
claims, and therefore we cannot provide assurance that the provision would be sufficient to cover any surge in future
warranty expenses that significantly exceed historical and anticipated rates of warranty claims. In addition, if we deliver
products with errors or defects, or if there is a perception that our products contain errors or defects, our credibility and the
market acceptance and sales of our products could be harmed. Widespread product failures may damage our market
reputation, and/or reduce our market share and cause our sales to decline.
We sell our products to a select group of key customers, including our largest shareholder and its affiliates, and any
significant decrease in their order levels or material deterioration in their financial condition will negatively affect our
financial condition and results of operations.
A substantial portion of our sales is attributable to a limited group of end-brand customers and their designated system
integrators. Sales attributed to our end-brand customers are for their end-brand products and do not include sales to these
customers for their system integration activities for other end-brand products, if any. Our top ten end-brand customers,
including LG Electronics Inc., our largest shareholder, together accounted for a substantial majority of our sales in each of
2020, 2021 and 2022.
We benefit from the strong collaborative relationships we maintain with our end-brand customers by participating in
the development of their products and gaining insights about levels of future demand for our products and other industry
trends. Customers look to us for a dependable supply of quality products, even during downturns in the industry, and we
benefit from the brand recognition of our customers’ end products. The loss of these end-brand customers, as a result of their
entering into strategic supplier arrangements with our competitors or otherwise, would thus result not only in reduced sales,
but also in the loss of these benefits. We cannot provide assurance that a select group of key end-brand customers, including
our largest shareholder, will continue to place orders with us in the future at the same levels as in prior periods, or at all.
We expect that we will continue to be dependent upon LG Electronics and its affiliates for a significant portion of our
revenue for the foreseeable future. See “Item 7.B. Related Party Transactions” for a description of these related party
transactions with LG Electronics and its affiliates. Our results of operations and financial condition could therefore be
affected by the overall performance of LG Electronics and its affiliates.
Furthermore, although we have not experienced any material problems relating to customer payments to date, as a
result of our significant dependence on a concentrated group of end-brand customers and their designated system integrators,
we are exposed to credit risks associated with these entities.
Consolidation and other changes at our end-brand customers could cause sales of our products to decline.
Mergers, acquisitions, divestments or consolidations involving our end-brand customers can present risks to our
business, as management at the new entity may change the way they do business, including their transactions with us, or may
decide not to use us as one of their suppliers of display panels. In addition, we cannot provide assurance that a combined
entity resulting from a merger, acquisition or consolidation or a newly formed entity resulting from a divestment will
continue to purchase display panels from us at the same level, if at all, as each entity purchased in the aggregate when they
were separate companies or that a divested company will purchase panels from us at the same level, if at all, as prior to the
divestment.
Our results of operations depend on our ability to keep pace with changes in technology.
Advances in technology typically lead to rapid declines in sales volumes for products made with older technologies and
may lead to these products becoming less competitive in the marketplace, or even obsolete. As a result, we have made, and
will likely be required to continue to make, significant expenditures to develop or acquire new process and product
technologies, along with corresponding manufacturing capabilities. For example, we commenced mass production of large-
sized OLED panels at our CO fabrication facility, located in Guangzhou, China, in July 2020. In August 2021, we announced
plans to make investments in an aggregate amount of up to W3.3 trillion in a new small- to mid-sized OLED fabrication
facility in Paju, Korea.
9
With the addition of 97-inch OLED televisions to the line-up of available products in 2022, following the prior launch
of 48-inch, 55-inch, 65-inch, 77-inch, 83-inch and 88-inch OLED televisions, we are continuing to deploy greater resources
into large-sized OLED panel fabrication capabilities in order to maintain our competitive edge in the OLED television panel
market. We have deployed and are continuing to deploy significant resources into plastic OLED panels for mobile and other
applications (especially automotive products) in order to expand our market presence. Our ability to develop differentiated
products with new display technologies and utilize advanced manufacturing processes to increase production yields while
lowering production cost will be critical to our sustained competitiveness. However, we cannot provide assurance that we
will be able to continue to successfully develop new products or manufacturing processes through our research and
development efforts or through obtaining technology licenses, or that we will keep pace with technological changes in the
marketplace.
Our revenue depends on continuing demand for IT products, televisions and mobile and other application products with
panels of the type we produce. Our sales may not grow at the rate we expect if consumers do not purchase these products.
Currently, our total sales are derived principally from customers who use our products in IT products, televisions and
mobile and other application products with display devices. In particular, a substantial percentage of our sales is derived from
end-brand customers, or their designated system integrators, who use our panels in their IT products, which accounted for
41.7%, 41.7% and 42.5% of our total revenue in 2020, 2021 and 2022 (prior to deduction of forward exchange hedging loss,
which had previously been treated as accumulated other comprehensive loss but was reclassified to a deduction from revenue
in 2022, when the sales from the hedged forecast transactions were recognized), respectively. A substantial portion of our
sales is also derived from end-brand customers, or their designated system integrators, who use our panels in their televisions,
which accounted for 27.8%, 31.7% and 26.4% of our total revenue in 2020, 2021 and 2022 (in the case of 2022, adjusted as
described above), respectively, and those who use our panels in their mobile and other applications, which accounted for
30.3%, 26.4% and 30.9% of our total revenue in 2020, 2021 and 2022 (in the case of 2022, adjusted as described above),
respectively. As each of these product segments significantly contributes to our total sales, we will continue to be dependent
on continuing demand from each of the IT products industry, the television industry and the mobile device industry for a
substantial portion of our sales. Any downturn in any of those industries in which our customers operate would result in
reduced demand for our products, which may in turn result in reduced revenue, lower average selling prices and/or reduced
margins.
Earthquakes, tsunamis, floods, severe health epidemics (including the global COVID-19 pandemic and any possible
recurrence of other types of widespread infectious diseases) and other natural calamities could materially adversely affect
our business, results of operations or financial condition.
If earthquakes, tsunamis, floods, severe health epidemics or any other natural calamities were to occur in the future in
any area where any of our assets, suppliers or customers are located, our business, results of operations or financial condition
could be adversely affected. A number of suppliers of our raw materials, components and manufacturing equipment, as well
as certain of our manufacturing facilities, are located in countries which have historically suffered natural calamities from
time to time, such as China, Japan, Taiwan and Vietnam, as well as Korea. Any occurrence of such natural calamities in
countries where our suppliers are located may lead to shortages or delays in the supply of raw materials, components or
manufacturing equipment. In addition, natural calamities in areas where our customers are located, including China, the
United States, Europe, Korea and Japan, may cause disruptions in their businesses, which in turn could adversely impact their
demand for our products.
In particular, COVID-19, which was declared a “pandemic” by the World Health Organization in March 2020,
materially and adversely affected the global economy and caused significant volatility in the global financial markets since
the first quarter of 2020 as well as minor disruptions in our business operations in 2020, including temporary suspension of
operations at certain of our manufacturing facilities, and it has continued to cause significant volatility and uncertainty in the
global economy and financial markets in 2021 and 2022. See “—If we cannot maintain high capacity utilization rates, our
profitability will be adversely affected.”
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While we believe that the overall impact of COVID-19 on our business and results of operations to date has generally
been mixed, as the increase in demand that ensued in 2020 and 2021 for certain types of our products, including IT products,
due to increased levels of working remotely, online schooling and social distancing, helped offset the negative effects of such
pandemic, including those listed below, risks associated with a prolonged outbreak of COVID-19 or other types of
widespread infectious diseases include:
•
•
•
•
•
•
•
•
•
an increase in unemployment among, and/or decrease in disposable income of, consumers who purchase the
products manufactured by our end-brand customers and a decline in overall consumer confidence and
spending levels, which in turn may decrease demand for our products;
disruption in the normal operations of the businesses of our customers, which in turn may decrease demand
for our products;
disruption in the supply of raw materials, components and equipment, including semiconductors, from our
suppliers and vendors;
disruption in the delivery of our products to our customers;
disruption in the normal operations of our business resulting from contraction of COVID-19 by our
employees, which may necessitate our employees to be quarantined and/or our manufacturing facilities or
offices to be temporarily shut down;
disruption resulting from the necessity for social distancing, including implementation of temporary
adjustment of work arrangements requiring employees to work remotely and restriction on overseas and
domestic business travel, which may lead to a reduction in labor productivity;
fluctuations of the Won against major foreign currencies (see “—Our results of operations are subject to
exchange rate fluctuations”);
unstable global and Korean financial markets, which may adversely affect our ability to meet our funding
needs on a timely and cost-effective basis; and
decreases in the fair value of our investments in companies that may be adversely affected by the pandemic.
While demand for certain types of our products increased in 2020 and 2021 as a result of social distancing caused by
COVID-19, demand for such products generally decreased in 2022 due in part to a general decrease in consumer
consumption levels in light of rising inflation and interest rates and economic volatility and uncertainty globally, which in
turn was attributable to, and exacerbated by, among other things, the invasion of Ukraine by Russia in February 2022. See
“Item 5.A. Operating Results — Overview — Market Conditions.” It is not possible to predict the duration or full magnitude
of harm from COVID-19. In the event that COVID-19 or other types of widespread infectious diseases cannot be effectively
and timely contained, our business, financial condition and results of operations may be materially adversely affected.
The emergence of OLED technology as an alternative to panels with TFT-LCD technology may erode sales of our TFT-
LCD panels, which may have a material adverse effect on our financial condition and results of operations.
While our revenue and sales volume have historically been predominantly derived from the sale of display panels with
TFT-LCD technology, OLED technology is widely seen in the display industry as a successor technology to TFT-LCD
technology and is gaining wider market acceptance for use in display panels for IT products, televisions and mobile and other
applications, including commercial displays, entertainment systems, automotive displays, portable navigation devices and
medical diagnostic equipment, and the proportion of our sales derived from our panel products utilizing OLED technology
have been increasing in recent years. For example, all of our display panels for mobile devices and certain of our display
panels for televisions utilize OLED technology. We have recognized the importance and potential of OLED technology and
have in recent years engaged in research and development and invested in production facilities to develop and commercialize
OLED panels for small-, medium- and large-sized products. We have been producing OLED panels for televisions and
smartphones since 2013. We also began production of plastic OLED panels at our AP3 and AP4 fabrication facilities in
August 2017 and July 2019, respectively, in each case for mobile and other applications. In July 2020, we commenced mass
production of large-sized OLED panels at our CO fabrication facility, located in Guangzhou, China.
Our early efforts in developing and commercializing OLED technology have been recognized by various display panel
industry groups since 2018. In November 2020, our OLED television panels received an “Eco Product” certification from
SGS S.A., a Switzerland-based global inspection and verification company, and in December 2020, our 88-inch “8K” OLED
television panels received the Prime Minister’s Award at the 2020 Korea Tech Show. In June 2021, our 65-inch rollable
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OLED television panels received the Display of the Year Award by the Society for Information Display and in November
2021, our plastic OLED panels for automotive products received the Presidential Award at the 2021 Korea Tech Show. In
November 2022, our newly launched large-sized OLED.Ex television panels received the Technology Award at the HiVi
Grand Prix 2022. While we strive to maintain our early competitive edge in the market for OLED panels, the market for
OLED panels is still relatively small compared to the market for TFT-LCD panels, and we expect competition will continue
to intensify in the future. In addition, the speed at which we achieve cost reduction for our OLED technology-based new
products or at which significant demand for such products develops may be slower than our current expectations.
As OLED panels continue to gain market acceptance as an alternative to TFT-LCD panels, if we are unable to continue
to develop and commercialize OLED technology in a commercially viable and timely manner to offset declining sales of our
TFT-LCD panels, or if customers prefer panels developed and manufactured by our competitors utilizing competing
technologies to OLED technology, this would have a material adverse effect on our financial condition and results of
operations. See also “—We operate in a highly competitive environment and we may not be able to sustain our current
market position.” above.
We will have significant capital requirements in connection with our business strategy and if capital resources are not
available we may not be able to implement our strategy and future plans.
In connection with our strategy to further enhance the diversity and capacity of our display panel production, we
anticipate that we will continue to incur significant capital expenditures for the construction of new production facilities and
the maintenance and enhancement of existing production facilities, particularly in connection with our continued investments
in OLED technology. Our significant recent and pending capital expenditures include the following:
•
•
•
In August 2021, we announced plans to make investments in an aggregate amount of up to W3.3 trillion in a
new fabrication facility in Paju, Korea, which would be used for the production of small- to mid-sized OLED
panels. We have begun construction in August 2021, which is expected to continue until the first quarter of
2024. The exact completion date is subject to change based on market conditions and any changes to our
investment timetable.
In response to and in anticipation of growing demand in the China market, we established a joint venture with
the government of Guangzhou to construct a new fabrication facility to manufacture next generation large-
sized OLED panels, which was established under the name of LG Display High-Tech (China) Co., Ltd., in
July 2018. We currently hold a 70% ownership interest in the joint venture and the government of Guangzhou
holds the remaining 30% ownership interest. We have invested approximately W7 trillion in capital
expenditures for the joint venture as of December 31, 2022 and commenced mass production of large-sized
OLED panels at such fabrication facility in July 2020.
In July 2017, we announced plans to make investments in an aggregate amount of up to W7.8 trillion in new
large-sized and plastic OLED production lines in Paju, Korea. In July 2019, we announced plans to make
additional investments of W3.0 trillion in the previously announced new large-sized OLED production lines.
We are in the process of developing and assessing the specifics of such planned investments, including the
timing.
In 2022, our total cash outflows for capital expenditure, consisting of cash used in acquisition of property, plant and
equipment, amounted to W5.1 trillion. We currently expect that, in 2023, our total cash outflows for capital expenditure will
be lower compared to 2022 and will be used primarily to continue to fund our previously announced investments related to
facilities for OLED panels. Such expected capital expenditures are subject to periodic assessment, and we cannot provide any
assurance that such expected capital expenditures may not change materially after assessment.
These capital expenditures will be made well in advance of any additional sales that will be generated from these
expenditures. However, in the event of adverse market conditions, or if our actual expenditures significantly exceed our
planned expenditures, our external financing activities combined with our internal sources of liquidity may not be sufficient
to carry out our current and future operational plans, and we may decide not to expand the capacity of certain of our facilities
or construct new production facilities as scheduled or at all. Our ability to obtain additional financing will depend upon a
number of factors outside our control, including general economic, financial, competitive, regulatory and other
considerations.
In the past, difficulties affecting the global financial sectors, adverse conditions and volatility in the worldwide credit
and financial markets, fluctuations in oil and commodity prices and the general weakness of the global economy have
12
increased the uncertainty of global economic prospects in general and have adversely affected the global and Korean
economies. Because we rely on financing both within and outside of Korea from time to time, difficulties affecting the global
and Korean economies, including any increase in market volatility and their lingering effects (including those in relation to
the ongoing global COVID-19 pandemic and, more recently, rapid increases in interest rates globally to combat inflation),
could adversely affect our ability to obtain sufficient financing on commercially reasonable terms. The failure to obtain
sufficient financing on commercially reasonable terms to complete our expansion plans could delay or impair our ability to
pursue our business strategy, which could materially and adversely affect our business and results of operations.
Our manufacturing processes are complex and periodic improvements to increase efficiency can expose us to potential
disruptions in operations.
The manufacturing processes for TFT-LCD, OLED and other display products are highly complex, requiring
sophisticated and costly equipment that is periodically modified and upgraded to improve manufacturing yields and product
performance, and reduce unit manufacturing costs. These updates expose us to the risk that from time to time production
difficulties will arise that could cause delivery delays, reduced output or both. We cannot provide assurance that we will not
experience manufacturing problems in achieving acceptable output, product delivery delays or both as a result of, among
other factors, construction delays, difficulties in upgrading or modifying existing production lines or building new plants,
difficulties in modifying existing or adopting new manufacturing line technologies or processes or delays in equipment
deliveries, any of which could constrain our capacity and adversely affect our results of operations.
We may be unable to successfully execute our growth strategy or manage and sustain our growth on a timely basis, if at
all, and, as a result, our business may be harmed.
We have experienced, and expect to continue to experience, rapid growth in the scope and complexity of our operations
due to the building of new fabrication facilities and the expansion and conversion of existing fabrication facilities to meet the
evolving and anticipated demands of our customers. For example, we established our AP4 fabrication facility to increase our
production capacity of plastic OLED panels for mobile and other applications in July 2019. See “Item 4.D. Property, Plants
and Equipment—Current Facilities.” With respect to our overseas facilities in recent years, in response to and in anticipation
of growing demand in the China market, in July 2018, we established and acquired a majority ownership interest in, a joint
venture with the government of Guangzhou to construct our new CO fabrication facility to manufacture next generation
large-sized OLED panels in Guangzhou, China. We have invested approximately W7 trillion in capital expenditures for the
joint venture as of December 31, 2022 and commenced mass production of large-sized OLED panels at the CO fabrication
facility in July 2020. See also “—We will have significant capital requirements in connection with our business strategy and
if capital resources are not available we may not be able to implement our strategy and future plans.” above.
Sustained growth in the scope and complexity of our operations may strain our managerial, financial, manufacturing
and other resources. We may experience manufacturing difficulties in starting new production lines, upgrading existing
facilities or building new plants as a result of cost overruns, construction delays or shortages of, or quality problems with,
materials, labor or equipment, any of which could result in a loss of future revenue. We may also incur opportunity costs if
we misjudge the anticipated demand for certain display panel products and allocate our limited resources in increasing
production capacity for such display panel products at the cost of maintaining existing or increasing production capacity of
other display panel products that turn out to be more popular. In addition, failure to keep up with our competitors in future
investments in next-generation panel fabrication facilities or in the upgrading of manufacturing capacity of existing facilities
would impair our ability to effectively compete within the display panel industry. Failure to obtain intended economic
benefits from expansion projects could adversely affect our business, financial condition and results of operations.
If we cannot maintain high capacity utilization rates, our profitability will be adversely affected.
The production of display panels entails high fixed costs resulting from considerable expenditures for the construction
of complex fabrication and assembly facilities and the purchase of costly equipment, particularly for productions involving
new technologies, such as OLED. We aim to maintain high capacity utilization rates so that we can allocate these fixed costs
over a greater number of panels produced and realize a higher gross margin. However, due to any number of reasons,
including fluctuating demand for our products, overcapacity in the display industry or a significant disruption in the supply
chain of raw materials, equipment and labor, we may need to reduce or delay the production of our products, resulting in
lower-than-optimal capacity utilization rates. For example, the high degree of uncertainty regarding global economic
prospects resulting from the global COVID-19 pandemic and, more recently, rapid increases in interest rates globally to
combat inflation, may adversely impact global demand for our products. In addition, as a result of the pandemic, we have
experienced minor temporary suspensions in production at certain of our manufacturing facilities during 2020, and we may
13
experience further disruptions in our production or supply chain in the future if the pandemic continues for a prolonged
period of time. See “—Earthquakes, tsunamis, floods, severe health epidemics (including the ongoing global COVID-19
pandemic and any possible recurrence of other types of widespread infectious diseases) and other natural calamities could
materially adversely affect our business, results of operations or financial condition.” In November 2022, we temporarily
reduced the production of large-sized OLED television display panels in one of our manufacturing facilities as part of our
efforts to further optimize our inventory levels as well as due to the weakening demand for our products as a result of
economic volatility and uncertainty. As such, we cannot provide assurance that we will be able to sustain our capacity
utilization rates in the future nor can we provide assurance that we will not reduce our utilization rates in the future as market
and industry conditions change.
Limited availability of raw materials, components and manufacturing equipment could materially and adversely affect our
business, results of operations or financial condition.
Our production operations depend on obtaining adequate supplies of quality raw materials and components on a timely
basis. As a result, it is important for us to control our raw material and component costs and reduce the effects of fluctuations
in price and availability. In general, we source most of our raw materials as well as key components, such as glass substrates,
driver integrated circuits and polarizers used in both our TFT-LCD and OLED products, backlight units and liquid crystal
materials used in our TFT-LCD products and hole transport materials and emission materials used in our OLED products,
from two or more suppliers for each key component. However, we may establish a working relationship with a single
supplier if we believe it is advantageous to do so due to performance, quality, support, delivery, capacity, price or other
considerations. We may experience shortages in the supply of these key components, as well as other components or raw
materials, as a result of, among other things, anticipated capacity expansion in the display industry, our dependence on a
limited number of suppliers or temporary disruptions in the supply chain thereof due to factors outside of our control (such as
the ongoing global COVID-19 pandemic or natural calamities). Our results of operations would be adversely affected if we
were unable to obtain adequate supplies of high-quality raw materials or components in a timely manner or make alternative
arrangements for such supplies in a timely manner.
Furthermore, we may be limited in our ability to pass on increases in the cost of raw materials and components to our
customers. We do not typically enter into binding long-term contracts with our customers, and even in those cases where we
do enter into long-term agreements with certain of our major end-brand customers, the price terms are contained in the
purchase orders which are generally placed by them several weeks in advance of delivery. Except under certain special
circumstances, the price terms in the purchase orders are not subject to change. Prices for our products are generally
determined through negotiations with our customers, based generally on the complexity of the product specifications and the
labor and technology involved in the design or production processes. However, if we become subject to any significant
increase in the cost of raw materials or components that were not anticipated when negotiating the price terms after the
purchase orders have been placed, we may be unable to pass on such cost increases to our customers.
We have purchased, and expect to purchase, a substantial portion of our equipment from a limited number of qualified
foreign and local suppliers. From time to time, increased demand for new equipment may cause lead times to extend beyond
those normally required by the equipment vendors. The unavailability of equipment, delays in the delivery of equipment, or
the delivery of equipment that does not meet our specifications, could delay implementation of our expansion plans and
impair our ability to meet customer orders. This could result in a loss of revenue and cause financial stress on our operations.
Advance purchase orders from our customers vary in volume from period to period, and we operate with a modest level of
inventory, which may make it difficult for us to efficiently allocate capacity on a timely basis in response to changes in
demand.
While we have been actively seeking, and plan to continue, to increase the proportion of our products that are
manufactured pursuant to binding, “order-based” supply projects as part of our efforts to better manage our inventory levels,
enhance profitability and reduce volatility in our production levels, a majority of our sales have historically been, and
continue to be, generated from products that are not subject to binding supply contracts with our customers. See “Item 4.B.
Business Overview—Sales.” With respect to our products that are not subject to binding supply contracts, our major
customers and their designated system integrators provide us with advance rolling forecasts of their product requirements.
However, firm orders are typically not placed until negotiations on purchase prices are subsequently finalized a few weeks
prior to delivery. As a result, firm orders may be less than anticipated based on these prior forecasts. Due to the cyclicality of
the display industry, purchase order levels from our customers have varied from period to period. Although we typically
operate with an inventory level estimated for several weeks, it may be difficult for us to adjust production costs or to allocate
14
production capacity in a timely manner to compensate for any such volatility in order volumes. Our inability to respond
quickly to changes in overall demand for display products as well as changes in product mix and specifications may result in
lost revenue, which would adversely affect our results of operations.
We may experience losses on inventories.
Frequent new product introductions in the consumer electronics industries can result in a decline in the average selling
prices of our display panels and the obsolescence of our existing display panel inventory. This can result in a decrease in the
stated value of our panel inventory, which we value at the lower of cost or net realizable value.
We manage our inventory based on our customers’ and our own forecasts and typically operate with an inventory level
estimated for several weeks. Although adjustments are regularly made based on market conditions, we typically deliver our
goods to the customers within several weeks after a firm order has been placed. While we maintain open channels of
communication with our major customers to avoid unexpected decreases in firm orders or subsequent changes to placed
orders, and try to minimize our inventory levels, such actions by our customers may have an adverse effect on our inventory
management.
Unfavorable outcomes in investigations and proceedings against us and other TFT-LCD panel producers for possible
anti-competitive activities may have a direct and indirect material impact on our operations.
Since 2006, we and certain other TFT-LCD panel producers have been subject to an investigation by the U.S.
Department of Justice, various and separate claims brought by direct and indirect purchasers, and a number of legal
proceedings brought by attorneys general of various states in the United States, with respect to possible anti-competitive
activities in the TFT-LCD industry. We have since settled and resolved the investigation and various subsequent legal
proceedings, with the exception of the attorney general of the Commonwealth of Puerto Rico. The settlements were duly
approved by the applicable courts and, in the case of the state attorneys general actions, by their respective state governments.
In October 2022, the United States District Court for the District of Puerto Rico dismissed the case without prejudice for
failure to prosecute.
We have also been subject to investigations outside of the United States, including by the European Commission, with
respect to the same subject matter. We have since settled, resolved, and/or paid fines for such actual investigations brought
by the relevant competition authorities. Following the European Commission’s decision, various follow-on claims were
initiated in the United Kingdom by various claimants alleging damages as a result of violation of European competition laws.
We have since reached settlements with each of the claimants, with the exception of a follow-on damages claim filed by
Granville Technology Group and others (“Granville”) in the U.K. in December 2016. As of April 18, 2023, we are vigorously
defending ourselves against claims by Granville.
In addition, in December 2013, a class action complaint was filed by Hatzlacha, a consumer organization, on behalf of
Israeli consumers against LG Display and other defendants in the Central District in Israel. As of April 18, 2023, we have not
been served with the complaint from Hatzlacha.
See “Item 8.A. Consolidated Statements and Other Financial Information—Legal Proceedings—Antitrust and Others”
for a more detailed description of these matters as well as other material legal proceedings that we are involved in.
In each of the foregoing matters that are ongoing, we are continually evaluating the merits of the respective claims and
vigorously defending ourselves. Irrespective of the validity or the successful assertion of the claims described above, we may
incur significant costs with respect to litigating or settling any or all of the asserted claims. While we continue to vigorously
defend the various ongoing proceedings that we are involved in, it is possible that one or more proceedings may result in cash
outflow to settle or resolve these claims, which may have an adverse effect on our operating results or financial condition.
We need to observe certain financial and other covenants under the terms of our debt obligations, the failure to comply
with which would put us in default under such debt obligations.
We are subject to financial and other covenants, including maintenance of credit ratings and debt-to-equity ratios,
under certain of our debt obligations. The documentation for such debt also contains negative pledge provisions limiting our
ability to provide liens on our assets as well as cross-default and cross-acceleration clauses, which give related creditors the
right to accelerate the amounts due under such debt if an event of default or acceleration has occurred with respect to our
existing or future indebtedness, or if any material part of our indebtedness or indebtedness of our subsidiaries is capable of
being declared payable before the stated maturity date. In addition, such covenants restrict our ability to raise future debt
financing.
15
If we breach the financial or other covenants contained in the documentation governing our debt obligations, our
financial condition will be adversely affected to the extent we are not able to cure such breaches, obtain a waiver from the
relevant lenders or debtholders or repay the relevant debt.
Uncertainties regarding the transition away from the London Interbank Offered Rate, or LIBOR, or any other interest
rate benchmark could have adverse consequences for market participants, including us.
Certain financings extended to us are made at variable rates that use London Interbank Offered Rate (“LIBOR”) as a
benchmark for establishing the applicable interest rates. The ICE Benchmark Administration, the administrator of LIBOR,
ceased publication of short-term U.S. dollar LIBOR settings and all non-U.S. dollar LIBOR settings on a representative basis
after December 31, 2021, with plans to cease publication of all other U.S. dollar LIBOR settings after June 30, 2023.
Given the extensive use of LIBOR across financial markets, the transition away from LIBOR presents various risks and
challenges to financial markets and institutions, including us. As of December 31, 2022, we had W2,347 billion (US$1,862
million) of outstanding borrowings and W169 billion (US$134 million) of outstanding currency interest swap obligations that
were indexed to LIBOR settings, in each case with maturities after June 30, 2023. While none of our financial instruments
currently outstanding are indexed to LIBOR settings that have been ceased to date, we plan to complete the ongoing
transition of the benchmark interest rate applied to our U.S. dollar-denominated financial instruments from LIBOR to the
Secured Overnight Financing Rate (“SOFR”), which has been identified by the Alternative Reference Rates Committee
convened by the Board of Governors of the U.S. Federal Reserve System and the Federal Reserve Bank of New York as the
preferred alternative benchmark reference rate for LIBOR, by June 30, 2023. See Note 26 of the notes to our financial
statements for a further discussion of our exposure to LIBOR.
The ongoing transition away from LIBOR or any other interest rate benchmark could result in increased financial,
operational, legal, reputational and/or compliance risks. For example, a significant challenge in our benchmark transition has
been managing the impact of the LIBOR transition on the contractual mechanics of LIBOR-based financial instruments and
contracts that mature after the announced deadlines. Certain of the remaining instruments and contracts do not provide for
alternative reference rates, and even if such instruments and contracts provide for alternative reference rates, such alternative
reference rates are likely to differ from the prior benchmark rates and may require us to pay interest at higher rates on the
related obligations, which could adversely impact our interest expense, results of operations and cash flows. While there are a
number of international working groups focused on transition plans and the provision of fallback contract language that seek
to minimize market disruption, replacement of LIBOR or any other benchmark, such as SOFR, with a new benchmark rate
could adversely impact the value of and return on existing instruments and contracts. Moreover, replacement of LIBOR or
other benchmark rates could result in market dislocations and have other adverse consequences for market participants,
including the potential for increased costs, and litigation risks stemming from potential disputes with customers and
counterparties regarding the interpretation and enforceability of fallback contract language in the LIBOR-based financial
instruments and contracts.
Our results of operations are subject to exchange rate fluctuations.
There has been considerable volatility in foreign exchange rates in recent years, including rates between the Korean
Won and the U.S. dollar, between the Korean Won and the Chinese Yuan and between the Korean Won and the Japanese
Yen. To the extent that we incur costs in one currency and make sales in another, our profit margins may be affected by
changes in the exchange rates between the two currencies.
Our sales of display panels are denominated mainly in U.S. dollars, while our purchases of raw materials are
denominated mainly in U.S. dollars and, to a much lesser extent, Japanese Yen and Chinese Yuan. The largest proportion of
our expenditures on capital equipment are denominated in Korean Won and, to a lesser extent, U.S. dollars, Japanese Yen
and Chinese Yuan. Accordingly, fluctuations in exchange rates, in particular between the U.S. dollar and the Korean Won,
between the Chinese Yuan and the Korean Won as well as between the Japanese Yen and the Korean Won, affect our pre-tax
income, and in recent years, the value of the Won relative to the U.S. dollar, Chinese Yuan and Japanese Yen has fluctuated
widely. Although a depreciation of the Korean Won against the U.S. dollar increases the Korean Won value of our export
sales and enhances the price-competitiveness of our products in foreign markets in U.S. dollar terms, it also increases the cost
of imported raw materials and components in Korean Won terms and our cost in Korean Won of servicing our U.S. dollar
denominated debt. A depreciation of the Korean Won against the Chinese Yuan or Japanese Yen increases the Korean Won
cost of our Chinese Yuan- or Japanese Yen-denominated purchases of equipment, raw materials or components, as
applicable, and, to the extent we have any debt denominated in Chinese Yuan or Japanese Yen, our cost in Korean Won of
servicing such debt, but has relatively little impact on our sales as most of our sales are denominated in U.S. dollars. In
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addition, continued exchange rate volatility may also result in foreign exchange losses for us. Although a depreciation of the
Korean Won against the U.S. dollar, in general, has a net positive impact on our results of operations that more than offsets
the net negative impact caused by a depreciation of the Korean Won against the Chinese Yuan or Japanese Yen, we cannot
provide assurance that the exchange rate of the Korean Won against foreign currencies will not be subject to significant
fluctuations, or that the impact of such fluctuations will not adversely affect the results of our operations.
Our business relies on our patent rights which may be narrowed in scope or found to be invalid or otherwise
unenforceable.
Our success will depend, to a significant extent, on our ability to obtain and enforce our patent rights both in Korea and
worldwide. The coverage claimed in a patent application can be significantly reduced before a patent is issued, either in
Korea or abroad. Consequently, we cannot provide assurance that any of our pending or future patent applications will result
in the issuance of patents. Patents issued to us may be subjected to further proceedings limiting their scope and may not
provide significant proprietary protection or competitive advantage. Our patents also may be challenged, circumvented,
invalidated or deemed unenforceable. In addition, because patent applications in certain countries generally are not published
until more than 18 months after they are first filed, and because publication of discoveries in scientific or patent literature
often lags behind actual discoveries, we cannot be certain that we were, or any of our licensors was, the first creator of
inventions covered by pending patent applications, that we or any of our licensors will be entitled to any rights in purported
inventions claimed in pending or future patent applications, or that we were, or any of our licensors was, the first to file
patent applications on such inventions.
Furthermore, pending patent applications or patents already issued to us or our licensors may become subject to
dispute, and any dispute could be resolved against us. For example, we may become involved in re-examination, reissue or
interference proceedings and the result of these proceedings could be the invalidation or substantial narrowing of our patent
claims. We also could be subject to court proceedings that could find our patents invalid or unenforceable or could
substantially narrow the scope of our patent claims. In addition, depending on the jurisdiction, statutory differences in
patentable subject matter may limit the protection we can obtain on some of our inventions.
Failure to protect our intellectual property rights could impair our competitiveness and harm our business and future
prospects.
We believe that developing new products and technologies that can be differentiated from those of our competitors is
critical to the success of our business. We take active measures to obtain international protection of our intellectual property
by obtaining patents and undertaking monitoring activities in our major markets. However, we cannot assure you that the
measures we are taking will effectively deter competitors from improper use of our proprietary technologies. Our competitors
may misappropriate our intellectual property, disputes as to ownership of intellectual property may arise and our intellectual
property may otherwise become known or independently developed by our competitors.
Any failure to protect our intellectual property could impair our competitiveness and harm our business and future
prospects.
Our rapid introduction of new technologies and products may increase the likelihood that third parties will assert claims
that our products infringe upon their proprietary rights.
The rapid technological changes that characterize our industry require that we quickly implement new processes and
components with respect to our products. Often with respect to recently developed processes and components, a degree of
uncertainty exists as to who may rightfully claim ownership rights in such processes and components. Uncertainty of this
type increases the risk that claims alleging that such components or processes infringe upon third party rights may be brought
against us. Although we take and will continue to take steps to ensure that our new products do not infringe upon third party
rights, if our products or manufacturing processes are found to infringe upon third party rights, we may be subject to
significant liabilities and be required to change our manufacturing processes or be prohibited from manufacturing certain
products, which could have a material adverse effect on our operations and financial condition.
We may be required to defend against charges of infringement of patent or other proprietary rights of third parties.
Although patent and other intellectual property disputes in our industry have often been settled through licensing or similar
arrangements, such defense could require us to incur substantial expense and to divert significant resources of our technical
and management personnel, and could result in our loss of rights to develop or make certain products or require us to pay
monetary damages or royalties to license proprietary rights from third parties. Furthermore, we cannot be certain that the
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necessary licenses would be available to us on acceptable terms, if at all. Accordingly, an adverse determination in a judicial
or administrative proceeding or failure to obtain necessary licenses could prevent us from manufacturing and selling certain
of our products. Any such litigation, whether successful or unsuccessful, could result in substantial costs to us and diversions
of our resources, either of which could adversely affect our business.
We were a defendant in four patent infringement lawsuits (two in the United States, one in Germany and one in China)
filed against us by Solas OLED Ltd. between April 2019 and September 2020. In December 2020, we entered into a
settlement and license agreement with the plaintiff with respect to each of the four cases, and the plaintiff subsequently
withdrew its claim in each of these cases between January and March 2021.
We rely on technology provided by third parties and our business will suffer if we are unable to renew our licensing
arrangements with them.
From time to time, we have obtained licenses for patent, copyright, trademark and other intellectual property rights to
process and device technologies used in the production of our display panels. We have entered into key licensing
arrangements with third parties, for which we have made, and continue to make, periodic license fee payments. In addition,
we also have cross-license agreements with certain other third parties. These agreements terminate upon the expiration of the
respective terms of the patents. See “Item 5.C. Research and Development, Patents and Licenses, etc.—Intellectual
Property—License Agreements.”
If we are unable to renew our technology licensing arrangements on acceptable terms, we may lose the legal protection
to use certain of the processes we employ to manufacture our products and be prohibited from using those processes, which
may prevent us from manufacturing and selling certain of our products, including our key products. In addition, we could be
at a disadvantage if our competitors obtain licenses for protected technologies on more favorable terms than we do.
In the future, we may also need to obtain additional patent licenses for new or existing technologies. We cannot
provide assurance that these license agreements can be obtained or renewed on acceptable terms or at all, and if not, our
business and operating results could be adversely affected.
We rely upon trade secrets and other unpatented proprietary know-how to maintain our competitive position in the display
panel industry and any loss of our rights to, or unauthorized disclosure of, our trade secrets or other unpatented
proprietary know-how could negatively affect our business.
We also rely upon trade secrets, unpatented proprietary know-how and information, as well as continuing technological
innovation in our business. The information we rely upon includes price forecasts, core technology and key customer
information. We enter into confidentiality agreements with each of our employees and consultants upon the commencement
of an employment or consulting relationship. These agreements generally provide that all inventions, ideas, discoveries,
improvements and copyrightable material made or conceived by the individual arising out of the employment or consulting
relationship and all confidential information developed or made known to the individual during the term of the relationship is
our exclusive property. We cannot provide assurance that these types of agreements will be fully enforceable, or that they
will not be breached. We also cannot be certain that we will have adequate remedies for any such breach. The disclosure of
our trade secrets or other know-how as a result of such a breach could adversely affect our business. Also, our competitors
may come to know about or determine our trade secrets and other proprietary information through a variety of methods.
Disputes may arise concerning the ownership of intellectual property or the applicability or enforceability of our
confidentiality agreements, and there can be no assurance that any such disputes would be resolved in our favor. Furthermore,
others may acquire or independently develop similar technology, or if patents are not issued with respect to technologies
arising from our research, we may not be able to maintain information pertinent to such research as proprietary technology or
trade secrets and that could have an adverse effect on our competitive position within the display panel industry.
If our cybersecurity is breached, we may incur significant legal and financial exposure, damage to our reputation and a
loss of confidence of our customers.
Our business involves the storage and transmission of confidential information relating to us as well as our customers
and suppliers, and any breach in our cybersecurity could expose us to a risk of loss, the improper use or disclosure of such
information, ensuing potential liability or litigation, any of which could harm our reputation and adversely affect our
business. Although there has been no material instance where an unauthorized party was able to obtain access to our data or
our customers’ data, there can be no assurance that we will not be vulnerable to cyber-attacks in the future.
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Our cybersecurity measures may also fail due to employee error, malfeasance or otherwise. Instituting appropriate
access controls and safeguards across our information technology infrastructure is challenging. Furthermore, outside parties
may attempt to fraudulently induce employees to disclose sensitive information in order to gain access to our data or our
customers’ data or accounts or may otherwise obtain access to such data or accounts. Because the techniques used to obtain
unauthorized access, disable or degrade service or sabotage systems change frequently and often are not recognized until
launched against a target, we may be unable to anticipate these techniques or implement adequate preventative measures. If
an actual or perceived breach of our cybersecurity occurs or the market perception of the effectiveness of our cybersecurity
measures is adversely affected, we may incur significant legal and financial exposure, including legal claims and regulatory
fines and penalties, damage to our reputation and a loss of confidence of our customers, which could have an adverse effect
on our business, financial condition and results of operations.
We rely on key researchers and engineers, senior management and production facility operators, and the loss of the
services of any such personnel or the inability to attract and retain them may negatively affect our business.
Our success depends to a significant extent upon the continued service of our research and development and
engineering personnel, and on our ability to continue to attract, retain and motivate qualified researchers and engineers,
especially during periods of rapid growth. In particular, our focus on leading the market in introducing new products and
advanced manufacturing processes has meant that we must aggressively recruit research and development personnel and
engineers with expertise in cutting-edge technologies.
We also depend on the services of experienced key senior management, and if we lose their services, it would be
difficult to find and integrate replacement personnel in a timely manner, if at all. We also employ highly skilled line operators
at our various production facilities.
The loss of the services of any of our key research and development and engineering personnel, senior management or
skilled operators without adequate replacement, or the inability to attract new qualified personnel, would have a material
adverse effect on our operations.
The interests of LG Electronics, our largest shareholder, and any directors or officers nominated by it, may differ from or
conflict with those of us or our other shareholders.
When exercising its rights as our largest shareholder, LG Electronics may take into account not only our interests but
also its interests and the interests of its affiliates. LG Electronics’ interests may at times conflict with ours in a number of
areas relating to our business, including potential acquisitions of businesses or properties, incurrence of indebtedness,
financial commitments, sales and marketing functions, indemnity arrangements, service arrangements and the exercise by LG
Electronics of significant influence over our management and affairs. See “Item 6.A. Directors and Senior Management” for
a description of the composition of our current board of directors and senior management.
Labor unrest may disrupt our operations.
As of December 31, 2022, more than half of our employees based in Korea were union members, and production
employees accounted for substantially all of these members. We have a collective bargaining arrangement with our labor
union, which is negotiated once a year. Any deterioration in our relationship with our employees or labor unrest resulting in a
work stoppage or strike may have a material adverse effect on our financial condition and results of operations.
We are subject to strict safety and environmental regulations and we may be subject to fines or restrictions that could
cause our operations to be interrupted.
Our manufacturing processes involve hazardous materials and generate chemical waste, waste water and other
industrial waste at various stages in the manufacturing process, and we are subject to a variety of laws and regulations
relating to the use, storage, discharge and disposal of such chemical by-products and waste substances. We have enacted
safety measures, engaged in employee education on handling such materials and installed various types of safety and anti-
pollution equipment, consistent with industry standards, for the treatment of chemical waste and equipment for the recycling
of treated waste water at our various facilities. See “Item 4.B. Business Overview—Environmental Matters” for a description
of the anti-pollution equipment that we have installed in our various facilities. However, we cannot provide assurance that
our protocols will always be followed and safety or environmental related claims will not be brought against us or that the
local or national governments will not take steps toward adopting more stringent safety or environmental standards.
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Any failure on our part to comply with any present or future safety and environmental regulations could result in the
assessment of damages or imposition of fines and penalties against us, suspension of production or a cessation of operations.
From January 1, 2020 to December 31, 2022, we and certain of our current and former employees have received and paid
aggregate fines and penalties of approximately W161 million in connection with violations of applicable safety and
environmental regulations under Korean law. We have also implemented certain measures to facilitate future compliance
with such regulations. In addition, in January 2021, there was an incident involving a leakage of tetramethylammonium
hydroxide chemicals, which occurred during refurbishment of equipment at one of our production facilities in Paju, Korea,
causing casualties to several of the workers performing such task. In connection with such incident, we and our employees
involved in the incident were prosecuted for violating the Industrial Safety and Health Act and the Chemicals Control Act. In
January 2023, the Goyang Branch of the Uijeongbu District Court ordered a fine of W20 million on us, which we have paid
in full. The prosecution has filed an appeal with respect to several of the prosecuted employees, which process is currently
pending. In March 2022, an accident occurred at our contracted construction site in Paju, Korea, resulting in injuries to
several contracted workers. We are cooperating with the government authorities on such investigations and are implementing
various measures to further enhance our safety management standards. Furthermore, safety and environmental regulations
could require us to acquire costly equipment or to incur other significant compliance expenses that may materially and
negatively affect our financial condition and results of operations.
Risks Relating to our American Depositary Shares, or ADSs, or our Common Stock
Future sales of shares of our common stock or convertible securities in the public market may depress our stock price and
make it difficult for you to recover the full value of your investment in our common stock or our ADSs.
We cannot predict the effect, if any, that market sales of shares of our common stock or other securities that may be
converted into shares of our common stock or the availability of such shares or securities for sale will have on the market
price of our common stock prevailing from time to time. Our largest shareholder, LG Electronics, currently owns 37.9% of
our voting stock. There is no assurance that LG Electronics will not sell all or a part of its ownership interest in us.
Any future sales by LG Electronics or any future issuance by us of a significant number of shares of our common stock
or other securities that may be converted into shares of our common stock in the public market, or the perception that any of
these events may occur, could cause the market price of our common stock to decrease or to be lower than it might be in the
absence of these events or perceptions.
Our public shareholders may have more difficulty protecting their interests than they would as shareholders of a U.S.
corporation.
Our corporate affairs are governed by our articles of incorporation and by the laws governing Korean corporations. The
rights and responsibilities of our shareholders and members of our board of directors under Korean law may be different from
those that apply to shareholders and directors of a U.S. corporation. For example, minority shareholder rights afforded under
Korean law often require the minority shareholder to meet minimum shareholding requirements in order to exercise certain
rights. In the case of public companies, a shareholder must own, individually or collectively with other shareholders, at least
1% of our common stock, or 0.01% of our common stock for at least six consecutive months, in order to file a derivative suit
on our behalf. While the facts and circumstances of each case will differ, the duty of care required of a director under Korean
law may not be the same as the fiduciary duty of a director of a U.S. corporation. Therefore, holders of our common stock or
our ADSs may have more difficulty protecting their interests against actions of our management, members of our board of
directors or largest shareholders than they would as shareholders of a U.S. corporation.
You may be limited in your ability to deposit or withdraw the common stock underlying the ADSs, which may adversely
affect the value of your investment.
Under the terms of our deposit agreement, holders of common stock may deposit such common stock with the
depositary’s custodian in Korea and obtain ADSs, and holders of ADSs may surrender ADSs to the depositary and receive
common stock. However, to the extent that a deposit of common stock exceeds the difference between:
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the aggregate number of shares of common stock we have consented to allow to be deposited for the issuance
of ADSs (including deposits in connection with offerings of ADSs and stock dividends or other distributions
relating to ADSs); and
the number of shares of common stock on deposit with the custodian for the benefit of the depositary at the
time of such proposed deposit,
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such common stock will not be accepted for deposit unless (1) our consent, subject to governmental authorization, with
respect to such deposit has been obtained or (2) such consent is no longer required under Korean laws and regulations.
Under the terms of the deposit agreement, no consent is required if the shares of common stock are obtained through a
dividend, free distribution, rights offering or reclassification of such stock. The current limit on the number of shares that
may be deposited into our ADR facility is 68,095,700 as of April 18, 2023. The number of shares issued or sold in any
subsequent offering by us or our major shareholders, subject to government authorization, raises the limit on the number of
shares that may be deposited into the ADR facility, except to the extent such deposit is prohibited by applicable laws or
violates our articles of incorporation, or we decide with the ADR depositary to limit the number of shares of common stock
so offered that would be eligible for deposit under the deposit agreement in order to maintain liquidity for the shares in Korea
as may be requested by the relevant Korean authorities. We might not consent to the deposit of any additional shares of
common stock. As a result, if a holder surrenders ADSs and withdraws common stock, it may not be able to deposit the
common stock again to obtain ADSs.
Holders of ADSs will not have preemptive rights in some circumstances.
The Korean Commercial Code, as amended, and our articles of incorporation require us, with some exceptions, to offer
shareholders the right to subscribe for new shares of our common stock in proportion to their existing shareholding ratio
whenever new shares are issued, except under certain circumstances as provided in our articles of incorporation. Accordingly,
if we issue new shares to non-shareholders based on such exception, a holder of our ADSs may experience dilution in its
holdings. Furthermore, if we offer any right to subscribe for additional shares of our common stock or any rights of any other
nature to existing shareholders subject to their preemptive rights, the depositary, after consultation with us, may make the
rights available to holders of our ADSs or use reasonable efforts to dispose of the rights on behalf of such holders and make
the net proceeds available to such holders. The depositary, however, is not required to make available to holders any rights to
purchase any additional shares of our common stock unless it deems that doing so is lawful and feasible and
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a registration statement filed by us under the U.S. Securities Act of 1933, as amended, is in effect with respect
to those shares; or
the offering and sale of those shares is exempt from or is not subject to the registration requirements of the
Securities Act.
We are under no obligation to file any registration statement with the SEC or to endeavor to cause such a registration
statement to be declared effective. Moreover, we may not be able to establish an exemption from registration under the
Securities Act. Accordingly, a holder of our ADSs may be unable to participate in our rights offerings and may experience
dilution in its holdings. If a registration statement is required for a holder of our ADSs to exercise preemptive rights but is not
filed by us or is not declared effective, the holder will not be able to exercise its preemptive rights for additional ADSs and it
will suffer dilution of its equity interest in us. If the depositary is unable to sell rights that are not exercised or not distributed
or if the sale is not lawful or feasible, it will allow the rights to lapse, in which case the holder will receive no value for these
rights.
Holders of ADSs will not be able to exercise dissent and appraisal rights unless they have withdrawn the underlying
shares of our common stock and become our direct shareholders.
In some limited circumstances, including the transfer of the whole or any significant part of our business and our
merger or consolidation with another company, dissenting shareholders have the right to require us to purchase their shares
under Korean law. However, a holder of our ADSs will not be able to exercise such dissent and appraisal rights if the
depositary refuses to do so on their behalf. Our deposit agreement does not require the depositary to take any action in respect
of exercising dissent and appraisal rights. In such a situation, holders of our ADSs must initiate the withdrawal of the
underlying common stock from the ADS facility (and incur charges relating to that withdrawal) by the day immediately
following the date of public disclosure of our board of directors’ resolution of a merger or other events triggering appraisal
rights and become our direct shareholder prior to the record date of the shareholders’ meeting at which the relevant
transaction is to be approved, in order to exercise dissent and appraisal rights.
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Dividend payments and the amount you may realize upon a sale of our common stock or ADSs that you hold will be
affected by fluctuations in the exchange rate between the U.S. dollar and the Korean Won.
Cash dividends, if any, in respect of the shares represented by our ADSs will be paid to the depositary in Korean Won
and then converted by the depositary into U.S. dollars, subject to certain conditions. Accordingly, fluctuations in the
exchange rate between the Korean Won and the U.S. dollar will affect, among other things, the amounts a holder will receive
from the depositary in respect of dividends, the U.S. dollar value of the proceeds that a holder would receive upon sale in
Korea of the shares of our common stock obtained upon surrender of ADSs and the secondary market price of ADSs. Such
fluctuations will also affect the U.S. dollar value of dividends and sales proceeds received by holders of our common stock.
Risks Relating to Korea
If economic conditions in Korea deteriorate, our current business and future growth could be materially and adversely
affected.
We are incorporated in Korea, and a substantial portion of our operations and assets are located in Korea. As a result,
we are subject to political, economic, legal and regulatory risks specific to Korea, and our performance and successful
fulfillment of our operational strategies are dependent in large part on the overall Korean economy. Due to the debilitating
effects of the COVID-19 pandemic on the Korean economy and the economies of Korea’s major trading partners, the
economic indicators in Korea have shown mixed signs of deterioration and uncertain recovery since the outbreak of the
COVID-19 pandemic. See “— Earthquakes, tsunamis, floods, severe health epidemics (including the ongoing global
COVID-19 pandemic and any possible recurrence of other types of widespread infectious diseases) and other natural
calamities could materially adversely affect our business, results of operations or financial condition.” As a result, future
growth of the Korean economy is subject to many factors beyond our control, including developments in the global economy.
In recent years, adverse conditions and volatility in the worldwide financial markets, fluctuations in oil and commodity
prices, supply chain disruptions and the increasing weakness of the global economy, mainly due to the COVID-19 pandemic,
Russia’s invasion of Ukraine and ensuing sanctions against Russia and more recently, difficulties faced by several banks in
the United States and Europe as well as rapid increases in policy interest rates globally to combat rising inflationary
pressures, have contributed to the uncertainty of global economic prospects in general and have adversely affected, and may
continue to adversely affect, the Korean economy. The value of the Won relative to major foreign currencies has fluctuated
significantly and, as a result of uncertain global and Korean economic conditions, there has been significant volatility in the
stock prices of Korean companies recently. Future declines in the Korea Composite Stock Price Index (the “KOSPI”), and
large amounts of sales of Korean securities by foreign investors and subsequent repatriation of the proceeds of such sales
may adversely affect the value of the Won, the foreign currency reserves held by financial institutions in Korea, and the
ability of Korean companies to raise capital. Any future deterioration of the Korean or global economy could adversely
affect our business, financial condition and results of operations.
Developments that could have an adverse impact on Korea’s economy include:
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declines in consumer confidence and a slowdown in consumer spending, including as a result of the ongoing
global COVID-19 pandemic and increases in market interest rates;
adverse conditions or developments in the economies of countries and regions that are important export
markets for Korea, such as China, the United States, Europe and Japan, or in emerging market economies in
Asia or elsewhere, including as a result of deteriorating economic and trade relations between the United
States and China and increased uncertainties in the global financial markets and industry;
adverse changes or volatility in foreign currency reserve levels, commodity prices (including oil prices),
exchange rates (including fluctuation of the U.S. dollar, the Euro or the Japanese Yen exchange rates or
revaluation of the Chinese Yuan), interest rates, inflation rates or stock markets;
the occurrence of severe health epidemics in Korea or other parts of the world, in addition to the ongoing
COVID-19 pandemic;
deterioration in economic or diplomatic relations between Korea and its trading partners or allies, including
deterioration resulting from territorial or trade disputes or disagreements in foreign policy;
increased sovereign default risk in select countries and the resulting adverse effects on the global financial
markets;
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a deterioration in the financial condition or performance of small- and medium-sized enterprises and other
companies in Korea due to the Korean government’s policies to increase minimum wages and limit working
hours of employees;
investigations of large Korean business groups and their senior management for possible misconduct;
a continuing rise in the level of household debt and increasing delinquencies and credit defaults by retail and
small- and medium-sized enterprise borrowers in Korea;
shortages of imported raw materials, natural resources, rare earth minerals or component parts, including
semiconductors, due to disruptions to the global supply chain;
the economic impact of any pending or future free trade agreements or of any changes to existing free trade
agreements;
social and labor unrest;
substantial changes in the market prices of Korean real estate;
a substantial decrease in tax revenues and a substantial increase in the Korean government’s expenditures for
fiscal stimulus measures, unemployment compensation and other economic and social programs, in particular
in light of the Korean government’s ongoing efforts to provide emergency relief payments to households and
emergency loans to corporations in need of funding in light of COVID-19, which, together, would likely lead
to a national budget deficit as well as an increase in the Korean government’s debt;
financial problems or lack of progress in the restructuring of Korean business groups, other large troubled
companies, their suppliers or the financial sector;
loss of investor confidence arising from corporate accounting irregularities or corporate governance issues
concerning certain Korean companies;
increases in social expenditures to support an aging population in Korea or decreases in economic productivity
due to the declining population size in Korea;
geopolitical uncertainty and the risk of further attacks by terrorist groups around the world;
political uncertainty or increasing strife among or within political parties in Korea;
hostilities or political or social tensions involving oil producing countries in the Middle East (including a
potential escalation of hostilities between the United States and Iran) and Northern Africa and any material
disruption in the global supply of oil or sudden increase in the price of oil;
natural or man-made disasters that have a significant adverse economic or other impact on Korea or its major
trading partners;
hostilities, political or social tensions involving Russia (including the invasion of Ukraine by Russia and
ensuing actions that the United States and other countries have taken or may take in the future) and the
resulting adverse effects on the global supply of oil and other natural resources and the global financial
markets; and
an increase in the level of tensions or an outbreak of hostilities between North Korea and Korea or the United
States.
Escalations in tensions with North Korea could have an adverse effect on us and the market value of our common stock
and ADSs.
Relations between Korea and North Korea have been tense throughout Korea’s modern history. The level of tension
between the two Koreas has fluctuated and may increase abruptly as a result of current and future events. In particular, there
have been heightened security concerns in recent years stemming from North Korea’s nuclear weapon and ballistic missile
programs as well as its hostile military actions against Korea. Some of the significant incidents in recent years include the
following:
•
North Korea renounced its obligations under the Nuclear Non-Proliferation Treaty in January 2003 and
conducted six rounds of nuclear tests since October 2006, including claimed detonations of hydrogen bombs,
and warheads that can be mounted on ballistic missiles. Over the years, North Korea has also conducted a
series of ballistic missile tests, including missiles launched from submarines and intercontinental ballistic
23
missiles that it claims can reach the United States mainland. North Korea has increased the frequency of its
missile tests in 2022, firing over 60 ballistic missiles, including eight intercontinental ballistic missiles. In
response, the Korean government has repeatedly condemned the provocations and flagrant violations of
relevant United Nations Security Council resolutions. In February 2016, the Korean government also closed
the inter-Korea Gaeseong Industrial Complex in response to North Korea’s fourth nuclear test in January
2016. Internationally, the United Nations Security Council has passed a series of resolutions condemning
North Korea’s actions and significantly expanding the scope of sanctions applicable to North Korea. Over the
years, the United States and the European Union have also expanded their sanctions applicable to North
Korea.
•
In March 2010, a Korean naval vessel was destroyed by an underwater explosion, killing many of the
crewmen on board. The Korean government formally accused North Korea of causing the sinking, while
North Korea denied responsibility. Moreover, in November 2010, North Korea fired more than one hundred
artillery shells that hit Korea’s Yeonpyeong Island near the Northern Limit Line, which acts as the de facto
maritime boundary between Korea and North Korea on the west coast of the Korean peninsula, causing
casualties and significant property damage. The Korean government condemned North Korea for the attack
and vowed stern retaliation should there be further provocation.
North Korea’s economy also faces severe challenges, which may further aggravate social and political pressures within
North Korea.
Although bilateral summit meetings were held between Korea and North Korea in April, May and September 2018 and
between the United States and North Korea in June 2018, February 2019 and June 2019, there can be no assurance that the
level of tensions affecting the Korean peninsula will not escalate in the future. Any increase in tensions, which may occur,
for example, if North Korea experiences a leadership crisis, high-level contacts between Korea or the United States and North
Korea break down or further military hostilities occur, could have a material adverse effect on the Korean economy and on
our business, financial condition and results of operations and the market value of our common stock and ADSs.
If the Korean government deems that emergency circumstances are likely to occur, it may restrict holders of our ADSs
and the depositary from converting and remitting dividends and other amounts in U.S. dollars.
Under the Korean Foreign Exchange Transaction Law, if the Korean government deems that certain emergency
circumstances, including sudden fluctuations in interest rates or exchange rates, extreme difficulty in stabilizing the balance
of payments or substantial disturbance in the Korean financial and capital markets, are likely to occur, it may impose any
necessary restrictions as requiring Korean or foreign investors to obtain prior approval from the Minister of Strategy and
Finance for the acquisition of Korean securities or the repatriation of interest, dividends or sales proceeds arising from
disposition of such securities or other transactions involving foreign exchange. See “Item 10.D. Exchange Controls.”
Item 4. INFORMATION ON THE COMPANY
Item 4.A. History and Development of the Company
We are a leading innovator of TFT-LCD, OLED and other display panel technologies. We manufacture display
panels in a broad range of sizes and specifications primarily for use in IT products (comprising notebook computers, desktop
monitors and tablet computers), televisions and various other applications, including mobile devices and automotive displays.
The origin of our display business, which first started with TFT-LCD panels, can be traced to the TFT-LCD research
that began in 1987 at the Goldstar R&D Center, which was then part of LG Electronics Inc. TFT-LCD research continued at
the Anyang R&D Center, a research and development center established by LG Electronics in 1990 in Anyang, Korea, which
was subsequently moved to our Paju Display Cluster in 2008, and which today continues to lead our technology innovation
efforts. In 1993, the TFT-LCD business division was launched within LG Electronics, and in September 1995 mass
production of TFT-LCD panels began at P1, its first fabrication facility, producing mainly TFT-LCD panels for notebook
computers and other applications. In December 1997, LG Semicon Inc., a subsidiary of LG Electronics, began mass
production at P2, producing mainly TFT-LCD panels for notebook computers.
24
We were incorporated in 1985 under the laws of the Republic of Korea under the original name of Goldstar
Software Co., Ltd., a subsidiary of LG Electronics whose main business was the development and marketing of software,
which changed its name to LG Software, Ltd. in January 1995 and subsequently to LG Soft, Ltd. in January 1997. At the end
of 1998, LG Electronics and LG Semicon transferred their respective TFT-LCD-related businesses to LG Soft, which, as part
of the business transfer, changed its name to LG LCD Co., Ltd.
In July 1999, LG Electronics entered into a joint venture agreement with Koninklijke Philips Electronics N.V.,
pursuant to which Philips Electronics acquired a 50% interest in LG LCD. In connection with this transaction, LG LCD
transferred its existing software-related business to LG Electronics in order to focus solely on the TFT-LCD business. The
joint venture, which was renamed LG.Philips LCD Co., Ltd., was officially launched in August 1999. In July 2004, we
completed our initial public offering and listed shares of our common stock on the Korea Exchange under the identifying
code “034220” and our ADSs on the New York Stock Exchange under the symbol “LPL”. Prior to the listings, LG
Electronics and Philips Electronics terminated the joint venture agreement and entered into a shareholders’ agreement to
reflect new arrangements between them as controlling shareholders. The shareholders’ agreement automatically terminated
upon Philips Electronics’ sale of all of its remaining ownership interest in us in March 2009. Effective March 3, 2008, we
changed our name from LG.Philips LCD Co., Ltd. to LG Display Co., Ltd. in order to reflect the expansion of our business
scope and shift in business model, fully expressing our commitment to the future.
We launched our OLED Business Unit in June 2008 in anticipation of future growth of the OLED business. The
origin of our OLED business began with our acquisition of LG Electronics’ active matrix OLED, or AMOLED, business in
January 2008 by way of taking over its inventory, intellectual property rights and employees related to the AMOLED
business. In 2012, partly in recognition of the growing importance of OLED to the future of our business, especially in
connection with large-sized products, we restructured our internal organization relating to our OLED business, breaking up
the OLED Business Unit and transferring our mobile-related business (including OLED products for mobile and other
applications) to the newly created IT/Mobile Business Division and transferring our OLED television panel business to the
Television Business Division. We were the first in the world to commence mass production of 55-inch OLED television
panels in 2013. In December 2014, we established a separate OLED Business Division to strengthen our OLED business and
solidify our competitive advantages. In December 2016, partly in an effort to expand our OLED business across our display
panel applications (including mobile products and other applications), we restructured our internal organization by product
type, and integrated the capabilities of our OLED business into the Television Business Division, the IT Business Division
and the Mobile Business Division. In December 2021, as part of our efforts to increase the synergies between our products,
we integrated our Television Business Division into a new Large Display Business Unit and combined our IT Business
Division and the Mobile Business Division into a new Medium-Small Display Business Unit. In order to secure and maintain
competitiveness of our overall business and facilitate our sustainable growth, we are continuing to engage in various
activities to accelerate the transition of the focus of our overall business to OLEDs and restructure our TFT-LCD business. In
2022, we reduced our production capacity of TFT-LCD panels for televisions at our manufacturing facilities in China. In
addition, we ceased production at, and closed, our P5 fabrication facility (where we had produced TFT-LCD panels for
notebook computers and mobile and other applications) in June 2022 and our P7 facility (where we had produced TFT-LCD
panels for televisions) in December 2022, in light of our continued efforts to increase the proportion of OLED television
panels in our product mix and the production capacity for such panels and further reduce our production level of TFT-LCD
panels, which we believe to be relatively more sensitive to market conditions and generally allow for fewer opportunities for
product differentiation. Our principal executive offices are located at LG Twin Towers, 128 Yeoui-daero, Yeongdeungpo-gu,
Seoul 07336 and our telephone number is +82-2-3777-1010. Our website address is http://www.lgdisplay.com.
We have continued to develop our manufacturing process technologies and expand our production facilities. Each
successive generation of our fabrication facilities has been designed to process increasingly larger-size glass substrates,
which allows us to cut a larger number of panels, sometimes with larger sizes, from each glass substrate. The ability to
process larger glass substrates allows us to produce a larger variety of display sizes to accommodate evolving business and
consumer demands. In addition, due to the large number of fabrication facilities we operate, we have the flexibility to make
strategic decisions based on market demand to convert existing production lines housed within a fabrication facility to
manufacture display panels based on newer technologies.
As part of our ongoing expansion plans, we have constructed several manufacturing facilities for OLED panels in
Korea in recent years, including our AP4 fabrication facility for plastic OLED panels for mobile and other applications,
which commenced mass production in July 2019. Furthermore, in response to and in anticipation of growing demand in the
China market, we established a joint venture with the government of Guangzhou to construct our new CO fabrication facility
to manufacture next generation large-sized OLED panels, which was established under the name of LG Display High-Tech
25
(China) Co., Ltd., in July 2018. We currently hold a 70% ownership interest in the joint venture and the government of
Guangzhou holds the remaining 30% ownership interest. We have invested approximately W7 trillion in capital expenditures
for the joint venture as of December 31, 2022, and we commenced mass production of large-sized OLED panels at the CO
fabrication facility in July 2020. Each of our on-going expansion projects are generally subject to market conditions and any
changes in our investment timetable. See “Item 4.D. Property, Plants and Equipment—Capital Expenditures.”
With respect to our assembly facilities, from 1995 to early 2003, we assembled all panels in our Gumi assembly
facility adjacent to our P1 facility. Since 2003, in order to better serve the needs of our global customers, we have
commenced operations at various assembly facilities in Korea and several other countries. For more information on our
module assembly facilities, see “Item 4.D. Property, Plants and Equipment—Current Facilities.”
For a description of cash outflows relating to our capital expenditures in the past three fiscal years, see “Item 5.A.
Operating Results—Overview—Manufacturing Productivity and Costs.”
The U.S. Securities and Exchange Commission, or the SEC, maintains a website (http://www.sec.gov), which
contains reports, proxy and information statements and other information regarding issuers that file electronically with the
SEC.
Item 4.B. Business Overview
Overview
We manufacture TFT-LCD and OLED technology-based display panels in a broad range of sizes and specifications
primarily for use in IT products (comprising notebook computers, desktop monitors and tablet computers), televisions and
mobile devices, including smartphones, and we are one of the world’s leading suppliers of large-sized OLED television
panels. We also manufacture display panels for industrial and other applications, including entertainment systems,
automotive displays, portable navigation devices and medical diagnostic equipment. In 2022, we sold a total of 126.0 million
display panels that are nine inches or larger. According to OMDIA, we had a global market share for display panels of nine
inches or larger of approximately 20% based on sales revenue in 2022.
We currently operate fabrication facilities, which include separately designated sets of fabrication production lines
housed in certain facilities, located in our Display Clusters in Gumi and Paju, Korea and in Guangzhou, China. We also
operate module assembly facilities in Korea and abroad. For a full description of our current facilities, see “Item 4.D.
Property, Plants and Equipment—Current Facilities.”
We seek to build our market position based on collaborative relationships with our customers and suppliers, a focus
on high-end differentiated specialty display products and manufacturing productivity. Our end-brand customers include many
of the world’s leading manufacturers of IT products, televisions and mobile phones such as LG Electronics. For a description
of our sales to LG Electronics, our largest shareholder, see “Item 7.B. Related Party Transactions.”
At the direction of our end-brand customers, we typically ship our display panels to their original equipment
manufacturers, known as “system integrators,” who use our display panels in products they assemble on a contract basis for
our end-brand customers. We engage in direct sales (including through our overseas subsidiaries), as well as indirect sales
through trading companies, including our formerly affiliated trading company, LX International (formerly known as “LG
International Corp.”) and its subsidiaries, to end-brand customers and their system integrators. Pursuant to the separation of
certain companies, including LX International, from the LG Group to form a separate business group named the LX Group,
which separation was approved by the Korea Fair Trade Commission in June 2022, LX International is no longer our
affiliated company.
Our sales were W24,262 billion in 2020, W29,878 billion in 2021 and W26,152 billion (US$20,753 million) in
2022.
Technology Description
TFT-LCD Technology
A TFT-LCD panel consists of two thin glass substrates and polarizer films between which a layer of liquid crystals
is deposited and behind which a light source called a backlight unit is mounted. The frontplane glass substrate is fitted with a
color filter, while the backplane glass substrate, also called a TFT array, has many thin film transistors, or TFT, formed on its
26
surface. The liquid crystals are normally aligned to allow the polarized light from the backlight unit to pass through the two
glass panels. When voltage is applied to the transistors on the TFT array, the liquid crystals change their alignment and alter
the amount of light that passes through them. Meanwhile, the color filter on the frontplane glass substrate gives each pixel its
own color. The combination of these pixels in different colors and levels of brightness forms the image on the panel.
The process for manufacturing a TFT-LCD panel consists of four steps:
•
•
•
•
TFT array process – involves fabricating a large number of thin film transistors on the backplane glass
substrate. The number of transistors corresponds to the number of pixels on the screen. The process is similar
to the process for manufacturing semiconductor chips, except that transistors are fabricated on large glass
substrates instead of silicon wafers. Unlike in the semiconductor industry, however, the number of transistors
per glass substrate is not a primary driver of the manufacturing costs for TFT-LCDs;
Color filter process – involves fabricating a large number of color regions on the frontplane glass substrate
that will overlay the TFT array prior to the cell process. The colored dots of red, green and blue combine to
form various colors. The process is similar to the TFT array process but involves depositing colored pigments
instead of transistors;
Cell process – involves joining together the backplane glass substrate that is arrayed with transistors and the
frontplane glass substrate that is patterned with a color filter. The space between the two glass substrates is
filled with liquid crystal materials. The resulting adjoined substrate is called a cell; and
Module assembly process – involves connecting additional components, such as driver integrated circuits and
backlight units, to the cell.
The TFT array, color filter and cell processes are capital-intensive and require highly automated production
equipment and are the primary determinants of fixed manufacturing cost. In contrast, the module assembly process involves
semi-automated production equipment and manual labor to assemble the various components. Materials are the primary
drivers of variable manufacturing cost.
IPS Technology
In-Plane Switching, or IPS, is a liquid crystal switching technology that was developed to address commonly faced
problems with TFT-LCD panels that utilized other liquid crystal technologies, namely narrow viewing angles, inconsistent
picture uniformity and slow response times. Unlike other liquid crystal technologies where the liquid crystals are aligned
vertically or at an angle in relation to the glass substrate, with IPS technology, the liquid crystals are aligned horizontally in
parallel to the glass substrate, which allows for wider viewing angles, greater picture uniformity and faster response times.
Our TFT-LCD display panels, including our TFT-LCD television panels, utilize IPS technology.
Advanced High Performance IPS, or AH-IPS, is an IPS technology that integrates ultra-fine pitch technology and
high transmittance technology, which allows for ultra-high resolution imagery, increased luminance and greater energy
efficiency. AH-IPS is currently utilized in our panels for certain types of IT products, smartphones and other mobile display
products.
OLED Technology
An OLED panel consists of a thin film of organic material encased between anode and cathode electrodes. When a
current is applied, light is emitted directly from the organic material. Because a separate backlight is not needed, OLED
panels can be lighter and thinner compared to TFT-LCD panels, which require a separate backlight. In addition, images
projected on OLED panels have higher contrast ratios and more realistic color reproduction compared to images projected on
TFT-LCD panels.
We utilize different types of sub-pixel and backplane technologies in our OLED panels. Under the RGB sub-pixel
structure, a combination of red, green and blue sub-pixels without color filters or white sub-pixels are used to produce a range
of colors. While we, along with most of our competitors, utilize RGB sub-pixel technology for small- and medium-sized
products, there are various technical challenges in scaling RGB sub-pixel technology for large-sized products, such as
television panels. For our OLED television panels, we have overcome these challenges by opting to utilize our WRGB sub-
pixel structure, whereby red, green and blue color filters are placed over white OLED sub-pixels to produce a range of colors
and began production of OLED television panels at our OP1 fabrication facility in 2013. Mass production of our plastic
OLED panels for mobile and other applications began at our AP3 and AP4 fabrication facilities in August 2017 and July
27
2019, respectively. In July 2020, we commenced mass production of large-sized OLED panels at our CO fabrication facility,
located in Guangzhou, China. As for backplane technology, our large-sized OLED products are produced using oxide TFT
backplane technology as compared to our smaller-sized OLED products which utilize low-temperature polycrystalline silicon
(“LTPS”), or low-temperature polycrystalline oxide (“LTPO”), backplane technology, as described in greater detail below.
Backplane Technology
Oxide TFT
We use oxide TFT technology to produce backplanes for use in our large-sized OLED panels, such as the panels
used in OLED television products. The traditional amorphous silicon-based TFT, or a-Si TFT, backplane technology has
certain limitations that render it unsuitable for producing backplanes for use in large-sized OLED panels with high
resolutions and fast refresh rates. For example, in larger and higher-resolution display panels, a-Si TFT backplanes consume
increased rates of power and experience a decrease in the rate at which each transistor is able to switch between images, or
the rate of mobility.
As an alternative to a-Si TFT backplane technology, we have successfully adopted a metal oxide-based TFT, or
simply oxide TFT, backplane technology. In place of the amorphous silicon-based semiconductors used in a-Si TFT
backplanes, oxide TFT backplanes utilize metal oxide-based semiconductors, which consume less energy, have a higher rate
of mobility and allow for construction of display panels with narrower bezels as compared to display panels with traditional
a-Si TFT backplanes.
We were the first company in the display industry to successfully adopt oxide TFT technology in large-sized OLED
products, which has been a key factor in reducing the costs of manufacturing large-sized OLED panels in large quantities.
Because the manufacturing process of oxide TFT-based OLED panels is similar to the process used to manufacture TFT-
LCD panels, we are able to use our existing TFT-based production lines with relatively little modification to mass produce
large-sized OLED panels.
LTPS and LTPO
LTPS backplanes are suitable for use in the production of high-resolution display panels due to their higher mobility
rates compared to a-Si TFT or oxide TFT backplanes. However, due to a complex manufacturing process, LTPS backplanes
have relatively higher production costs compared to a-Si TFT or oxide TFT backplanes, making it uneconomical to use in the
production of large-sized panels. As a result, we generally utilize LTPS backplanes in the production of small- and medium-
sized TFT-LCD panels and OLED smartphone and other applications.
We also use LTPO backplane technology in our wearable devices and smartphones, which combines elements of
both LTPS and oxide TFT technologies to produce backplanes with greater energy savings than LTPS backplanes.
Products
We manufacture display panels of various specifications that are integrated by our customers into principally the
following products:
•
•
•
IT products, which comprise notebook computers (utilizing display panels ranging from 12 inches to 18
inches in size), desktop monitors (utilizing display panels ranging from 15.6 inches to 49 inches in size) and
tablet computers (utilizing display panels ranging from 7.85 inches to 12.9 inches in size);
Televisions, which utilize large-sized display panels ranging from 23 inches to 98 inches in size, including
“8K” Ultra HD television panels, which have four times the number of pixels compared to conventional HD
television panels; and
Mobile and other applications, which utilize a wide array of display panel sizes, including smartphones and
other types of mobile phones and industrial and other applications, such as entertainment systems, automotive
displays, portable navigation devices and medical diagnostic equipment.
Unless otherwise specified, when we refer to panels in this annual report, we mean assembled cells with added
components, such as driver integrated circuits and backlight units.
28
We design and manufacture our panels to meet the various size and performance specifications of our customers,
including specifications relating to thinness, weight, resolution, color quality, power consumption, response times and
viewing angles. The specifications vary from product to product. For television panels, a premium is placed on faster
response times, wider viewing angles, higher resolution and greater color fidelity. Notebook computer panels require an
emphasis on thinness, light weight and power efficiency, while desktop monitor panels demand a greater focus on brightness,
color brilliance, faster response times and wide viewing angles. For mobile panels, particularly smartphones, an emphasis is
placed on brightness and power efficiency.
In addition to manufacturing and selling display panels, we also manufacture and sell desktop monitors through our
joint venture companies. See “—Joint Ventures.”
IT Products
Our panels for IT products comprise display panels for notebook computers (ranging from 12 inches to 18 inches in
size), desktop monitors (ranging from 15.6 inches to 49 inches in size) and tablet computers (display panels ranging from
7.85 inches to 12.9 inches in size). Revenue from sales of our IT product panels was W10,121 billion, or 41.7% of our total
revenue, in 2020, W12,459 billion, or 41.7% of our total revenue, in 2021 and W11,198 billion (US$8,886 million), or 42.5%
of our total revenue (prior to deduction of forward exchange hedging loss, which had previously been treated as accumulated
other comprehensive loss but was reclassified to a deduction from revenue in 2022, when the sales from the hedged forecast
transactions were recognized), in 2022. In 2022, our principal products in terms of sales revenue in this category included
panels of various sizes ranging from 13.3 inches to 16.0 inches for notebook computers, 23.5 inches to 27 inches for desktop
monitors and 8.32 inches to 12.9 inches for tablet computers.
During 2020 and 2021, increased levels of working remotely, online schooling and social distancing mainly
resulting from the ongoing global pandemic of the COVID-19 contributed to a significant increase in global demand for IT
products. However, such demand for IT products generally declined in 2022 due in part to a general decrease in consumer
consumption levels due to rising inflation and interest rates and economic volatility and uncertainty globally. In addition,
there has been an increase in demand in recent years for products with higher specifications such as desktop monitors with
increased color brilliance and faster response times, as specialized market segments such as gaming monitors continue to
grow, and notebook computers with higher resolution displays.
Televisions
Our television display panels range from 23 inches to 98 inches in size. We began mass production of television
display panels in 2001. Our sales of display panels for televisions were W6,738 billion, or 27.8% of our total revenue, in
2020, W9,466 billion, or 31.7% of our total revenue, in 2021 and W6,975 billion (US$5,535 million), or 26.4% of our total
revenue (prior to deduction of forward exchange hedging loss, which had previously been treated as accumulated other
comprehensive loss but was reclassified to a deduction from revenue in 2022, when the sales from the hedged forecast
transactions were recognized), in 2022. In 2022, our principal products in this category in terms of sales revenue consisted of
55-inch and 65-inch display panels. Our sales of television display panels, which had historically been our largest product
category by revenue in prior years, have declined in recent years, as we have reduced, and continue to reduce, our production
level of TFT-LCD panels (which have historically comprised a substantial majority of our television display panels) in light
of the weakening demand for our television products in part due to rising inflation and interest rates and increasing economic
volatility and uncertainty globally, which contributed to downward pricing pressure. In 2022, we reduced our production
capacity of TFT-LCD panels for televisions at our manufacturing facilities in China and ceased production at, and closed, our
P7 facility (where we had produced TFT-LCD panels for televisions) in December 2022, in light of our continued efforts to
increase the proportion of OLED television panels in our product mix and the production capacity for such panels and further
reduce our production level of TFT-LCD panels, which we believe to be relatively more sensitive to market conditions and
generally allow for fewer opportunities for product differentiation. Consumer demand for both TFT-LCD and OLED
televisions generally became more robust in 2020 and 2021 since the outbreak of the ongoing global COVID-19 pandemic in
light of increased levels of social distancing. However, during 2022, demand for both TFT-LCD and OLED televisions
decreased due in part to a general decrease in consumer consumption levels due to rising inflation and interest rates and
economic volatility and uncertainty globally.
Brand manufacturers of televisions and their distribution channels prefer long-term arrangements with a limited
number of display panel suppliers that can offer a full product line, and we believe that we will continue to be well positioned
to meet their requirements with our strengths in technology, manufacturing scale and efficiency as well as the breadth of our
product portfolio.
29
Mobile and Other Applications
Our product portfolio also includes panels for mobile and other applications, which utilize a wide array of display
panel sizes, including smartphones and other types of mobile phones and industrial and other applications, including
automotive displays, entertainment systems, portable navigation devices and medical diagnostic equipment. Display panels
that are nine inches and smaller are referred to as small- and medium-sized panels.
The market for smartphones recorded positive growth in 2021 compared to 2020, in part due to an increase in
demand for 5G smartphones, according to data published by Strategy Analytics Inc., but recorded negative growth in 2022
compared to 2021, mainly due to a decline in demand for smartphones as a result of geopolitical conflicts, rising inflation and
interest rates and economic volatility and uncertainty globally, according to Counterpoint Technology Market Research.
Revenue from sales of our display panels for mobile and other applications were W7,359 billion, or 30.3% of our total
revenue, in 2020 and W7,900 billion, or 26.4% of our total revenue, in 2021 and W8,146 billion (US$6,464 million), or
30.9% of our total revenue (prior to deduction of forward exchange hedging loss, which had previously been treated as
accumulated other comprehensive loss but was reclassified to a deduction from revenue in 2022, when the sales from the
hedged forecast transactions were recognized), in 2022. In 2022, sales of panels for smartphones constituted a majority in
terms of both sales revenue and sales volume in the mobile and other applications category. In recent years, we have
increased the proportion of OLED panels (including plastic OLED panels) for mobile and other applications that command
relatively higher prices in our product mix.
Some of the panels we produce for industrial products, such as medical diagnostic equipment and automotive
products, are highly specialized niche products manufactured and designed to the specifications of our clients, while others,
such as industrial controllers, may be manufactured by slightly modifying a standard product design for our other products,
such as desktop monitors. Display panels for these other applications broaden our sales base and product mix. They are also
often a good channel through which we can commercialize a particular technology that we have developed. We generally
determine the production level and specification of our display panels for mobile and other applications by assessing various
business opportunities as they arise. In recent years, we have been focusing on developing large-sized OLED automotive
display panels in light of the rapid growth of the electric vehicle market and the development of autonomous driving
technology.
Sales and Marketing
Customer Profile
Our display panels are included primarily in IT products, televisions and mobile and other applications sold by our
global end-brand customers, including LG Electronics. LG Electronics is our largest shareholder, and the terms of our sales
to LG Electronics are negotiated based on then-prevailing market prices as adjusted for LG Electronics’ requirements,
including volume and specifications. See “Item 7.B. Related Party Transactions” for further description of our sales to LG
Electronics.
We negotiate directly with our end-brand customers concerning the terms and conditions of the sales, but typically
ship our display panels to designated system integrators at the direction of these end-brand customers. Sales data to end-
brand customers include direct sales to these end-brand customers as well as sales to their designated system integrators,
including through our formerly affiliated trading company, LX International, and its subsidiaries, as further discussed below
under “—Sales.”
A substantial portion of our sales is attributable to a limited number of our end-brand customers. Our top ten
end-brand customers together accounted for a significant majority of our sales in each of 2020, 2021 and 2022. Of our top ten
end-brand customers, two of them each accounted for more than 10% of our sales on an individual basis for each of the past
three years. For example, sales to LG Electronics, including as a system integrator, amounted to approximately 17%, 20%
and 18% of our sales in 2020, 2021 and 2022, respectively.
In addition to our top ten end-brand customers, we sell a portion of our display panels to a variety of other
manufacturers of computers and electronic products.
30
The following table sets forth for the years indicated the geographic breakdown of our sales based on the location of
our customers. The figures below reflect orders from our end-brand customers, their system integrators and our formerly
affiliated trading company, LX International, and its subsidiaries:
Korea
China
Asia (excluding China) (1)
United States (2)
Europe (excluding Poland)
Poland
Total (3)
2020
Year ended December 31,
2021
Sales
%
Sales
%
Sales
2022 (4)
Sales (3)
(in billions of Won and millions of US$, except for percentages)
₩
912
16,686
2,298
2,071
1,215
1,080
₩ 24,262
3.8% ₩
68.8
9.5
8.5
5.0
4.5
632
19,867
3,256
3,263
1,160
1,700
100.0% ₩ 29,878
2.1% ₩
66.5
10.9
10.9
3.9
5.7
678 US$
17,434
2,797
3,079
989
1,388
100.0% ₩ 26,365 US$
538
13,835
2,220
2,443
785
1,101
US$20,922
%
2.6%
66.1
10.6
11.7
3.7
5.3
100.0%
(1)
(2)
(3)
(4)
Includes Oceania, Africa and the Middle East.
Includes other countries in North and South America.
For convenience, the Korean Won amounts are expressed in U.S. dollars at the rate of W1,260.18 to US$1.00, the noon buying rate in effect on December 31,
2022 as certified by the Federal Reserve Bank of New York for customs purposes. This translation should not be construed as a representation that the Korean
Won amounts represent, have been or could be converted to U.S. dollars at that rate or any other rate.
Prior to deduction of forward exchange hedging loss of W213 billion (US$169 million), which had previously been treated as accumulated other
comprehensive loss but was reclassified to a deduction from revenue in 2022, when the sales from the hedged forecast transactions were recognized.
Sales
Our sales and marketing departments seek to maintain and strengthen relationships with our current customers in
existing markets as well as expand our business in new markets and with new customers. We currently have wholly-owned
sales subsidiaries in the United States, Japan, Germany, Taiwan, China and Singapore.
The focus of our sales activities is on strengthening our relationships with large end-brand customers, with whom
we maintain strong collaborative relationships. Customers look to us for a reliable supply of a wide range of display products.
We believe our reliability and scale as a supplier helps support our customers’ product positions. We view our relationships
with our end-brand customers as important to their product development strategies, and we collaborate with our end-brand
customers in the design and development stages of their new products. In addition, our sales teams coordinate closely with
our end-brand customers’ designated system integrators to ensure timely delivery. For each key customer, we appoint an
account manager who is primarily responsible for our relationship with that specific customer, complemented by a product
development team consisting of engineers who participate in meetings with that customer to understand the customer’s
specific needs.
While a majority of our sales in 2022 were generated from products that are not subject to binding supply contracts
with our customers, we have been actively seeking, and plan to continue, to increase the proportion of our products that are
manufactured pursuant to binding order-based projects as part of our efforts to better manage our inventory levels, enhance
profitability and reduce volatility in our production levels. For such binding order-based projects, which typically have
durations of a year or longer, we and our end-brand customers generally agree on the volume, price and delivery terms in
advance, in each case subject to any future adjustments as may be contemplated under the terms of each contract, for the
development and production of our display products on a product-by-product basis. By entering into such binding order-
based projects, we are able to mitigate our exposure to the risk of market price fluctuations of our display products. In
addition, we have in place relatively longer-term non-binding supply and purchase agreements with certain major end-brand
customers, whereby we and our end-brand customers agree on general volume parameters and, in some cases, product
specifications and delivery terms. These agreements serve as an indication of the size and key components of a customer’s
order, and neither party is committed to supply or purchase any products until a firm purchase order is issued.
With respect to our products that are not subject to binding supply contracts, our end-brand customers or their
system integrators generally place purchase orders with us a few weeks prior to delivery based on our non-binding supply
and purchase agreements with them. Generally, the head office of an end-brand customer provides us with advance rolling
forecasts, which, together with our own forecasts, enable us to plan our production schedule in advance. Our customers
usually issue monthly purchase orders containing prices we have negotiated with the end-brand customer a few weeks prior
to delivery, at which point the customer becomes committed to the order at the volumes and prices indicated in the purchase
orders. Under certain special circumstances, however, a negotiated price may be subject to change during the committed
period prior to delivery. Pricing of our display panel products that are not subject to binding supply contracts is generally
31
market-driven, based on the complexity of the product specifications and the labor and technology involved in the design or
production processes.
We primarily engage in direct sales (including through our overseas subsidiaries), and to a lesser extent, indirect
sales through trading companies and its subsidiaries, to end-brand customers and their system integrators. Our sales
subsidiaries procure purchase orders from, and distribute our products to, system integrators and end-brand customers located
in their region. In regions where we do not have a sales subsidiary, or where doing so is consistent with local market
practices, we sell our products to trading companies and its subsidiaries. These subsidiaries of trading companies process
orders from and distribute products to customers located in their region.
We generally provide a limited warranty to our end-brand customers, including the provision of replacement parts
and warranty services for our products. Costs incurred under our warranty liabilities consist primarily of repairs. We set aside
a warranty reserve based on our historical experience and future expectations as to the rate and cost of claims under our
warranties.
Where system integrators located in certain regions are invoiced directly, we have established certain measures, such
as factoring arrangements and accounts receivable insurance programs, to protect us from excessive exposure to credit risks.
Competition
The display panel industry is highly competitive. Due to the capital intensive nature of the display panel industry
and the high production volumes required to achieve economies of scale, the international market for display devices is
characterized by significant barriers to entry, but the competition among the relatively small number of major producers is
intense. In the case of TFT-LCD panel manufacturers, currently almost all of them are located in Asia, and we compete
principally with manufacturers from Korea, Taiwan, China and Japan.
The principal elements of competition for customers in the display panel market include:
•
•
•
•
•
•
product portfolio range and availability;
product specifications and performance;
price;
capacity allocation and reliability;
customer service, including product design support; and
logistics support and proximity of regional stocking facilities.
Our principal competitors are:
•
•
•
•
Samsung Display in Korea;
Innolux, AU Optronics and Hannstar in Taiwan;
Japan Display and Sharp in Japan; and
BOE, China Star Optoelectronics Technology, CEC Panda and HKC in China.
According to OMDIA, in 2022, Korean display panel manufacturers had a market share of 23% of the 9-inch or
larger panel market based on revenue, Chinese manufacturers had 51%, Taiwanese manufacturers had 18% and Japanese
manufacturers had 7%. Our market share of the 9-inch or larger panel market based on revenue was approximately 20%.
Components, Raw Materials and Suppliers
Components and raw materials accounted for approximately 61%, 60% and 59% of our cost of sales in 2020, 2021
and 2022, respectively. The key components and raw materials of our display products include glass substrates, driver
integrated circuits and polarizers used in both our TFT-LCD and OLED products, backlight units and liquid crystal materials
used in our TFT-LCD products, and hole transport materials and emission materials used in our OLED products. We source
these components and raw materials from outside sources, although, unlike many other display panel manufacturers, we
produce a substantial portion of the color filters we use. With respect to glass substrates, Paju Electric Glass Co., Ltd., a joint
venture company in which we own a 40% equity interest, provides us with a stable supply at competitive prices.
32
We generally negotiate non-binding master supply agreements with our suppliers several times a year, but pricing
terms are negotiated on a quarterly basis, or if necessary, on a monthly basis. Firm purchase orders are issued generally six
weeks prior to the scheduled delivery, except in the case of purchase orders for driver integrated circuits, which are issued
generally several months prior to the scheduled delivery. We purchase our components and raw materials based on forecasts
from our end-brand customers as well as our own assessments of our end-brand customers’ needs.
In order to reduce our component and raw material costs and our dependence on any one supplier, we generally
develop compatible components and raw materials and purchase our components and raw materials from more than one
source. However, we source certain key components and raw materials from a limited group of suppliers in order to ensure
timely supply and consistent quality. Also, in order to facilitate implementation of our cost reduction strategies, we
continually review for potential cost savings in sourcing our components and raw materials from suppliers based in Korea
and those based abroad, including competitiveness of the prices offered by such suppliers and any potential for reduction in
logistics and transportation costs. We perform periodic evaluations of our component and raw material suppliers based on a
number of factors, including the quality and price of the components, delivery and response time, the quality of the services
and the financial health of the suppliers. We reassess our supplier pool accordingly.
We maintain a strategic relationship with many of our material suppliers, and from time to time, we make equity
investments in our material suppliers as part of our efforts to secure a stable supply of key components and raw materials.
In addition to components and raw materials, the manufacturing of our products requires significant quantities of
electricity and water. In order to obtain and maintain reliable electric power and water supplies, we have our own back-up
power generation facilities and water storage tanks as well as easy access to nearby water sources.
Equipment, Suppliers and Third Party Processors
We depend on a limited number of equipment manufacturers for equipment tailored to specific requirements. Since
our manufacturing processes depend on the quality and technological capacity of our equipment, we work closely with the
equipment manufacturers in the design process to ensure that the equipment meets our specifications. The principal types of
equipment we use to manufacture display panels include deposition equipment, steppers, developers and coaters.
We purchase equipment from a small number of qualified vendors to ensure consistent quality, timely delivery and
performance. We maintain strategic relationships with many equipment manufacturers as part of our efforts to ensure quality
while reducing costs.
Historically, we have relied on a small number of overseas vendors for equipment purchases, but in recent years, we
have diversified and localized our equipment purchases by shifting some of our purchases to Korean vendors. As a result of
such efforts, most of our equipment for our facilities in Korea in 2022 was purchased from Korean vendors on an invoiced
basis.
Our engineers begin discussions with equipment manufacturers far in advance of the planned installation of
equipment in a new fabrication facility, and we typically execute a letter of intent with the vendors in advance of our planned
installation to ensure timely delivery of main equipment with long-term delivery schedules. Engineers from our vendors
typically accompany the new equipment to our fabrication facilities to assist in the installation process to ensure proper
operation. In addition, we outsource certain manufacturing processes to third party processers from time to time to
supplement our processing capacity, and in certain cases, we maintain strategic relationships with such third party processors.
Quality Control
We believe that our advanced production capabilities and our reputation for high quality and reliable products have
been important factors in attracting and retaining key customers. We have implemented quality inspection and testing
procedures at all of our fabrication facilities and assembly facilities. Our quality control procedures are carried out at three
stages of the manufacturing process:
•
•
•
incoming quality control with respect to components and raw materials;
in-process quality control, which is conducted at a series of control points in the manufacturing process; and
outgoing quality control, which focuses on packaging, delivery and post-delivery services to customers.
33
With respect to incoming quality control, we perform quality control procedures for the raw materials and
components that we purchase. These procedures include testing samples of large batches, obtaining vendor testing reports
and testing to ensure compatibility with other components and raw materials, as well as vendor qualification and vendor
rating. Our in-process quality control includes various programs designed to detect, as well as prevent, quality deviations,
reduce manufacturing costs, ensure on-time delivery, increase in-process yields and improve field reliability of our products.
We perform outgoing quality control based on burn-in testing and final visual inspection of our products and accelerated life
testing of samples. We inspect and test our completed display panels to ensure that they meet our high production standards.
We also provide post-delivery services to our customers, and maintain warranty exchange inventories in regional hubs to
meet our customers’ needs.
Our quality assurance team works to ensure effective and consistent application of our quality control procedures,
which include six-sigma quality control procedures, and to introduce new methodologies that could further enhance our
quality control procedures. Our quality assurance programs have received accredited ISO/IATF 16949 certifications. The
ISO/IATF certification process involves subjecting our manufacturing processes and quality management systems to reviews
and observation for various fixed periods. ISO/IATF certification is required by certain European countries and the United
States in connection with sales of industrial products in those countries, and provides independent verification to our
customers regarding the quality control measures employed in our manufacturing and assembly processes.
Insurance
We currently have property insurance coverage, including business interruption coverage, for our production
facilities in Gumi and Paju, Korea, for up to W2.3 trillion in the aggregate, and for our panel fabrication facilities located in
Guangzhou, China for up to CNY 12.2 billion in the aggregate. We also have insurance coverage for work-related injuries to
our employees, accidents during overseas business travel, damage during construction, damage to products and equipment
during shipment, damage to equipment during installation at our fabrication facilities, automobile accidents, bodily injury and
property damage from gas accidents, as well as mandatory unemployment insurance for our workers and director and officer
liability insurance. In addition, we maintain general and product liability, employment practice liability, aviation product
liability and world-wide cargo insurance. Our dormitories in Gumi and Paju, Korea, have fire insurance coverage for up to
approximately W0.5 trillion in the aggregate. Our subsidiaries also have insurance coverage for damage to office fixtures and
equipment and life and disability insurance for their employees. All of our overseas manufacturing subsidiaries also carry
property insurance, business interruption insurance and commercial general liability insurance.
Environmental Matters
Our production processes generate various forms of chemical and other industrial waste, waste water and
greenhouse gas emissions at various stages in the manufacturing process. We have installed various types of anti-pollution
equipment for the treatment and recycling of such waste products and aggressively engage in greenhouse gas emission
reduction and energy conservation efforts.
As a member of the World Display device Industry Cooperation Committee, or WDICC, a display industry
organization focusing on environmental issues, we have voluntarily agreed to reduce emission of greenhouse gases, such as
nitrogen trifluoride, or NF3, sulfur hexafluoride, or SF6, and carbon tetrafluoride, or CF4, gases, by developing and adopting
cost-effective abatement technologies and systems and increasing the number of abatement systems installed in our facilities.
We installed NF3 abatement systems at all of our production lines when the production facilities were being constructed. In
addition, we have installed SF6 and CF4 abatement systems, and developed and applied processes that utilize substitute gases
with lower global warming potential than SF6, in each of our facilities in Gumi and Paju, Korea.
In the case of the European Union’s Restriction of Hazardous Substances (RoHS) Directive 2011/65/EU, with the
adoption of Directive (EU) 2015/863 in 2016, four additional substances (four phthalate substances) were added to the six
already restricted substances, which additional restrictions became effective as of July 22, 2019. In order to address the latent
risk elements of the four phthalate substances that became restricted in 2019 and to establish a more stable management
system, we implemented in 2016 a preemptive response process with respect to such four phthalate substances. In
implementing this process, we collaborated with external agencies to ascertain regulatory trends and establish our response
strategy, and we formulated and applied effective management measures through the collaborative efforts of our
development, procurement and quality teams. Beryllium (Be) was not designated internationally as a mandatorily restricted
substance but has continued to be the subject of discussion for restriction, and certain of our customers have designated it as a
restricted substance not to be used in products. Accordingly, we have completed verification of the parts used in products for
customers who have banned the use of beryllium. We have also conducted verification of the parts used in products for all
34
customers who are expected to implement a ban and we have established a beryllium verification process for parts in
development. Through such efforts, we have established a voluntary hazardous substance response process that can be
expanded to products for all customers, not only those who have requested a response. For the more efficient operation of our
waste water treatment equipment, we have also entered into an agreement with Techcross Environmental Services Inc. for the
operation of our water treatment system.
Operations at our manufacturing plants are subject to regulation and periodic scheduled and unscheduled on-site
inspections by the Korean Ministry of Environment and local environmental protection authorities. We believe that we have
adopted adequate anti-pollution measures for the effective maintenance of environmental protection standards consistent with
local industry practice, and that we are in compliance in all material respects with the applicable environmental laws and
regulations in Korea, including the Framework Act on Low Carbon, Green Growth, the Korean government, under which we
are required to submit periodic greenhouse gas emission and energy usage statements, performance reports and greenhouse
gas emission and energy usage reduction plans to the Korean government. Expenditures related to such compliance may be
substantial and are generally included in capital expenditures. As required by Korean law, we employ licensed environmental
specialists for each environmental area, including air quality, water quality, toxic materials and radiation.
As part of our efforts to establish and operate environmental-friendly energy management systems at our domestic
and overseas fabrication facilities and production plants, we have received from the International Organization for
Standardization ISO 14001 certification for each of our domestic and overseas production sites and ISO 50001 certification
for all of our domestic and several of our overseas subsidiaries with respect to our energy management systems. Our overseas
subsidiary in Yantai earned Platinum Zero Waste to Landfill (“ZWTL”) validation in 2021, and all of our domestic
production facilities earned Gold ZWTL validation, and our overseas subsidiary in Nanjing earned Platinum ZWTL
validation in 2022. Also, in 2022, we introduced a resource recirculation recognition program in accordance with the Korean
government’s waste management policy and received circular resource certification on eight types of our discarded trays and
vinyl. We plan to continue our efforts to reinforce our resource circulation program by minimizing waste and maximizing
recycling rates.
In addition, in line with the global trend for environmental, social and governance (“ESG”) management, we earned
a Gold rating in the ESG assessment conducted by the global research center EcoVadis in 2022. We are continually pursuing
ESG management activities based on the spirit of “value creation for consumers” and “human-first management,” and we
plan to obtain further recognitions for our eco-friendly management and share relevant information with our stakeholders.
Moreover, in 2016, we attained the highest level for water management, Leadership A, and received the Best Water
Management Award at the CDP Water Korea Awards from the Carbon Disclosure Project Korea Committee in recognition of
our continued water reduction activities (investment in reuse systems, etc.). In addition, we have also received the Carbon
Management Sector Honors for seven consecutive years since 2016 in recognition of our continued greenhouse gas emission
reduction activities (process greenhouse gas and energy reduction, etc.). In 2017, in recognition of efficient control,
management and operating systems implemented in our manufacturing facilities, we received the top-level certification,
Level 1, under the Factory Energy Management System evaluation presided by the Korea Energy Agency, and we also
obtained the SGS Eco Label, an eco-friendly certification program, from the Société Générale de Surveillance, a global
certification company, for our OLED television panels, and we have since maintained the SGS Eco Label for all of our
OLED television panels. Furthermore, in November 2017, we received the highest commendation, the Presidential Award, in
the Korean Energy Efficiency Awards presided by the Korean Ministry of Industry, Trade and Energy in recognition of our
energy management practices and energy saving measures, and we also obtained a certificate of excellence in the Energy
Management System Evaluation from the same ministry. Additionally, in 2018, we became the first display panel company
to receive the “Green Technology Certification” from the Korean Ministry of Science and ICT for improving the light
efficiency technology of OLED to promote energy savings. More recently, in 2021, we received the “Green Technology
Certification” from the Korean Ministry of Science and ICT for our advanced incell touch display technology, an eco-
friendly technology, which reduces carbon emissions and the use of rare metals, and we also obtained an eco-friendly
certification from TUV SUD, a globally recognized accreditation agency based in Germany, for excellence in resource
circulation and non-use of specific hazardous substances in our OLED television and plastic OLED mobile display products.
In 2022, we became the first company in the industry to receive the SGS Eco Mark accreditation for our automotive display
products utilizing plastic OLED and low-temperature polycrystalline silicon LCD, in recognition for the reduction of their
power consumption by increasing the luminous efficiency of their organic elements, improving their liquid crystal
transmittance rates, and minimizing hazardous substances. We also obtained the SGS performance accreditation for our IT
display products applying antibacterial films.
35
Joint Ventures
We consider joint ventures an important part of our business, both operationally and strategically. We have used
joint ventures to enter into new geographic markets, in particular China, to gain new customers and/or strengthen positions
with existing customers and to procure certain components and raw materials. When entering new geographic markets where
we do not have substantial local experience and infrastructure, teaming up with a local partner can reduce capital investment
by leveraging the pre-existing infrastructure of local partners. In addition, local partners in these markets can provide
knowledge and insight into local customs and practices and access to local suppliers of raw materials and components. All of
these advantages can reduce the risk, and thereby enhance the prospects for the success, of an entry into a new geographic
market. If the partner of the joint venture already has an established customer base, it can also be an effective means to
acquire such new customers. Joint venture arrangements also allow us to access technology we would otherwise have to
develop independently, thereby reducing the time and cost of development. They can also provide the opportunity to create
synergies and applications of technology that would not otherwise be possible.
From time to time, we have pursued a number of joint venture initiatives. For example, in September 2012, we
entered into a joint venture agreement with Guangzhou GET Technologies Development Co., Ltd., or GET Tech, and
Shenzhen SKYWORTH-RGB Electronic Co., Ltd., or Skyworth, establishing LG Display (China) Co., Ltd., which owns and
operates our CA fabrication facility in Guangzhou, China. See “Item 4.D. Property, Plants and Equipment— Current
Facilities.” We acquired a 70.0% equity interest in LG Display (China) and invested a total of approximately US$927 million
over a period of two years from the date of incorporation of LG Display (China). Each of GET Tech and Skyworth owns a
20.0% and 10.0% equity interest in LG Display (China), respectively. In addition, in July 2018, we established and acquired
a 69% ownership interest in a joint venture with the government of Guangzhou, LG Display High-Tech (China) Co., Ltd., to
construct our new CO fabrication facility to manufacture next generation large-sized OLED panels in Guangzhou, China. We
currently own a 70% equity interest in LG Display High-Tech (China) and have invested approximately W7 trillion in capital
expenditures for the joint venture as of December 31, 2022, and we commenced mass production of large-sized OLED panels
at the CO fabrication facility in July 2020.
We intend to continue to seek strategic acquisition and joint venture opportunities and conduct feasibility studies
with respect to establishing new manufacturing subsidiaries in strategic locations to deepen our market penetration, achieve
economies of scale, increase our customer base, expand our geographical reach and reduce costs.
36
Subsidiaries
The following table sets forth summary information for our subsidiaries as of December 31, 2022:
Jurisdiction of
Organization
Date
of
Organization
Capital Stock (in
millions of the
applicable
currency)
Percentage of
Our
Ownership
Interest
Percentage of
Our Voting
Power
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
51%
100%
70%
100%
100%
100%
100%
100%
100%
70%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
51%
100%
70%
100%
100%
100%
100%
100%
100%
70%
Subsidiary
LG Display Taiwan Co., Ltd.
LG Display America, Inc.
LG Display Japan Co., Ltd.
LG Display Germany GmbH
LG Display Nanjing Co., Ltd.
LG Display Shanghai Co., Ltd.
LG Display Guangzhou Co., Ltd.
LG Display Shenzhen Co., Ltd.
LG Display Singapore Pte. Ltd.
LG Display Yantai Co., Ltd.
L&T Display Technology (Fujian)
Ltd.
Nanumnuri Co., Ltd.
LG Display (China) Co., Ltd.
Unified Innovative Technology,
LLC
Global OLED Technology LLC
LG Display Guangzhou Trading Co.,
Ltd.
LG Display Vietnam Haiphong Co.,
Ltd.
Suzhou Lehui Display Co., Ltd.
LG Display Fund I LLC
LG Display High-Tech (China) Co.,
Ltd
Main
Activities
Sales
Sales
Sales
Sales
Manufacturing
Sales
Manufacturing
Sales
Sales
Manufacturing
Manufacturing
and sales
Taiwan
U.S.A.
Japan
Germany
China
China
China
China
Singapore
China
China
Workplace services Korea
China
U.S.A.
U.S.A.
China
Manufacturing
and sales
Managing intellectual
property
Managing intellectual
property
Sales
Manufacturing
Manufacturing
and sales
Investing in new
emerging companies U.S.A.
Manufacturing and
sales
China
NT$
April 1999
September 1999 US$
¥
October 1999
€
October 1999
CNY
July 2002
CNY
January 2003
CNY
June 2006
July 2007
CNY
November 2008 US$
CNY
March 2010
December 2009 CNY
March 2012
₩
116
411
95
1
3,020
4
1,655
4
1
1,008
116
800
December 2012 CNY
8,232
March 2014
US$
December 2009 US$
April 2015
9
138
1
600
637
71
CNY
US$
CNY
US$
July 2018
CNY
15,600
Vietnam
May 2016
China
July 2016
May 2018
N.B. See Note 1(b) of the notes to our financial statements for changes to our subsidiaries during the year ended December 31, 2022.
Item 4.C. Organizational Structure
These matters are discussed under Item 4.B. where relevant.
37
Item 4.D. Property, Plants and Equipment
Current Facilities
The following table sets forth the size, location and primary use of our current fabrication facilities.
Fabrication Facility
Korea
Generation(1)
Mass Production
Commencement
Location
Gross Floor
Area
(in square
meters)
Primary Types of Panels Produced
P5 (2)
P62
AP3
P7 (3)
P8 (4)
OP1 (5)
P9 (6)
AP4 (7)
Overseas
CA (8)
CO
May 2003
April 2009
February 2014
January 2006
Gumi, Korea
Gumi, Korea
Gumi, Korea
Paju, Korea
—
101,617
288,634
TFT-LCD for notebook computer, mobile and other
applications
TFT-LCD for notebook computer and desktop monitor
Plastic OLED for mobile and other applications
— TFT-LCD for television
March 2009
January 2013
Paju, Korea
Paju, Korea
506,895
See P8 above
June 2012
July 2019
Paju, Korea
Paju, Korea
534,545
See P9 above
TFT-LCD for television, desktop monitor and notebook
computer
OLED for television
TFT-LCD for desktop monitor, notebook computer, tablet
computer
Plastic OLED for mobile and other applications
September 2014 Guangzhou, China
Guangzhou, China
July 2020
244,592
426,139 OLED for television
TFT-LCD for television and desktop monitor
5
6
6
7
8
8
8
6
8
8
(1)
Based on internal reference to evolutions in facility design, material flows and input substrate sizes. There are several definitions of “generations” in the
display industry. There has been no consensus in the display industry on a uniform definition. References to generations made in this annual report are based
on our current definition of generations as indicated in the table below.
Substrate Sizes (in millimeters)
Gen 5
1,000 x 1,200
1,100 x 1,250
1,100 x 1,300
1,200 x 1,300
Gen 6
1,500 x 1,800
1,500 x 1,850
Gen 7
1,870 x 2,200
1,950 x 2,250
Gen 8
2,200 x 2,500
(2)
(3)
(4)
(5)
(6)
(7)
(8)
We ceased production at, and closed, the P5 fabrication facility in June 2022.
We ceased production at, and closed, the P7 fabrication facility in December 2022.
Gross floor area of P8 fabrication facility includes the gross floor area of OP1 fabrication facility, which is located in the same complex.
The gross floor area of this fabrication facility is included within the P8 fabrication facility.
Gross floor area of P9 fabrication facility includes the gross floor area of AP4 fabrication facility, which is located in the same complex.
The gross floor area of this fabrication facility is included within the P9 fabrication facility.
Gross floor area of CA fabrication facility includes the gross floor area of GP1, GP2 and extended facilities.
For input substrate size, initial design capacity and year-end input capacity as a result of ramp-up for each of our
fabrication facilities, please see “Item 5.A. Operating Results—Overview—Manufacturing Productivity and Costs.”
We also operate module assembly facilities in China (Nanjing, Guangzhou and Yantai), Korea (Gumi and Paju) and
Vietnam (Haiphong). In addition, we operate a research and development facility in Paju, Korea, which we refer to as the
R&D Center. We opened the R&D Center in April 2012 to consolidate our research and development efforts for next-
generation display technologies. The following table sets forth the size of our R&D Center and module assembly facilities.
Gross Floor Area
(in square meters)
Mass Production Commencement
January 1995
69,871 Not applicable (opened in April 2012)
301,779
159,448 May 2003
225,093
158,817 December 2007
45,170 May 2010
July 2017
358,787
January 2006
Facility
R&D Center
Gumi assembly facility
Nanjing assembly facility
Paju assembly facility
Guangzhou assembly facility
Yantai assembly facility
Haiphong assembly facility
38
Capital Expenditures
As part of our ongoing expansion plans, we have commenced mass production of plastic OLED panels at our AP3
and AP4 fabrication facilities beginning in August 2017 and July 2019, respectively. In July 2017, we announced plans to
make investments in an aggregate amount of up to W7.8 trillion in new large-sized OLED and plastic OLED fabrication
facilities in Paju, Korea, and in July 2019, we further announced plans to make additional investments of W3.0 trillion in the
previously announced new large-sized OLED production lines. We are in the process of developing and assessing the
specifics of such planned investments, including the timing. More recently, in August 2021, we announced plans to make
investments in an aggregate amount of up to W3.3 trillion in a new small- to mid-sized OLED fabrication facility in Paju,
Korea. We have begun construction in August 2021, which is expected to continue until the first quarter of 2024. In response
to and in anticipation of growing demand in the China market, in July 2018, we established and acquired a majority
ownership interest in, a joint venture with the government of Guangzhou to construct our new CO fabrication facility to
manufacture next generation large-sized OLED panels in Guangzhou, China. We currently hold a 70% ownership interest in
the joint venture and the government of Guangzhou holds the remaining 30% ownership interest. We have invested
approximately W7 trillion in capital expenditures for the joint venture as of December 31, 2022 and commenced mass
production of large-sized OLED panels at the CO fabrication facility in July 2020.
We currently expect that, in 2023, our total cash outflows for capital expenditures will be lower compared to 2022
and will be used primarily to continue to fund our previously announced investments related to facilities for OLED panels.
Such expected capital expenditures are subject to periodic assessment, and we cannot provide any assurance that such
expected capital expenditures may not change materially after assessment. We may undertake further expansion projects in
the future with respect to our existing facilities as our overall business strategy may require.
Item 4A. UNRESOLVED STAFF COMMENTS
We do not have any unresolved comments from the SEC staff regarding our periodic reports under the Exchange
Act.
Item 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
Item 5.A. Operating Results
Overview
Our results of operations are affected principally by overall market conditions, our manufacturing productivity and
costs, and our product mix.
Market Conditions
The display industry in which we operate is affected by market conditions that are often outside the control of
individual manufacturers. Our results of operations might fluctuate significantly from period to period due to market factors,
such as seasonal variations in demand, global economic conditions, external factors that impact the supply chain, surges in
production capacity by competitors and changes in technology. Over the past decade, the display industry has been
undergoing a transition from TFT-LCD panels to alternative display panels based on new technologies, primarily OLED
panels. While TFT-LCD panels are still predominant in the display industry, OLED technology is widely seen in the display
industry as the successor technology to TFT-LCD technology and is gaining wider market acceptance for use in display
panels. With respect to the TFT-LCD industry, sales volume decreased from 2,706 million units in 2012 to 2,412 million
units in 2022, and market revenue decreased from US$92 billion to US$79 billion during the same period according to
OMDIA. With respect to the OLED industry, sales volume significantly increased from 188 million units in 2012 to 751
million units in 2022, and market revenue also significantly increased from US$7 billion to US$42 billion during the same
period, also according to OMDIA.
Currently, small-sized panels for use in mobile devices such as smartphones make up the bulk of the OLED panel
market, accounting for approximately 86% of industry revenue from global sales of OLED panels in 2022. However, as of
the end of 2022, the OLED market was relatively small compared to the TFT-LCD market. We believe, however, that the
market is changing rapidly as a growing array of OLED panels for various applications and sizes have been, and continue to
be, introduced to the market and advances in the related technology and manufacturing processes enable mass production in a
cost-efficient manner. We first commenced mass production of OLED panels for televisions in 2014 and plastic OLED
39
panels for mobile and other applications in 2017. In July 2019, we commenced mass production of plastic OLED panels for
mobile and other applications at our AP4 fabrication facility, and in July 2020, we commenced mass production of large-
sized OLED panels at our CO fabrication facility, located in Guangzhou, China. In August 2021, we announced plans to
make investments in an aggregate amount of up to W3.3 trillion in a new small- to mid-sized OLED fabrication facility in
Paju, Korea.
While the display industry has shown periods of rapid growth in the past, it has also experienced business cycles
with significant and rapid price declines from time to time. Historically, display panel manufacturers have increased display
area fabrication capacity rapidly. Capacity expansion occurs especially rapidly when several manufacturers ramp-up new
factories at the same time. During such surges in the rate of supply growth, our customers are able to exert downward pricing
pressure, leading to sharp declines in average selling prices and significant fluctuations in our gross margin. In addition,
regardless of relative capacity expansion, we expect average selling prices of our existing products to decline as the cost of
manufacturing declines due to technology advances and component cost reductions. Conversely, constraints in the industry
supply chain or increased demand for new technology products have led to increased prices for display panels in some past
periods.
According to OMDIA, the display industry for panels that are nine inches or larger contracted in 2022 compared to
2021, with total market revenue decreasing from US$94 billion in 2021 to US$66 billion in 2022. The average selling price
of those panels decreased during the same period by approximately 24% from approximately US$96 in 2021 to US$74 in
2022.
We strive to mitigate the effect of industry cyclicality and the resulting price fluctuations by planning capacity
expansions and capacity allocations, or shifting our product mix, to capture premium prices in specific emerging product
categories. As part of our strategy, we have been proceeding with the construction of new fabrication facilities and additional
investments to upgrade and convert existing facilities and production lines to produce differentiated specialty display panels
based on OLED technology that command higher premiums. See “Item 4.D. Property, Plants and Equipment—Capital
Expenditures.”
In addition, we are vigorously pursuing our strategy to develop differentiated specialty products and technologies
that better address our customers’ needs, thereby delivering greater value to our customers. In many cases, these efforts go
hand-in-hand with our efforts to develop products based on new technologies that allow us to realize greater premiums. For
example, we have allocated significant resources to the development and production of specialized OLED panels for
television and public displays (such as our next-generation “OLED.Ex” display panels (which apply advanced technologies
to offer brighter and more stable images while further reducing the bezel size), “CSO (Cinematic Sound OLED)” sound
integrated panels, rollable OLED display panels, transparent OLED display panels as well as OLED display panels for
gaming monitors), display panels utilizing Ultra HD technology, low power consumption and AH-IPS technology for various
IT products and televisions and plastic OLED technology for smartphones, automotive products and wearable devices. In
particular, we are deploying greater resources into large-sized OLED television panels in order to maintain our early
competitive edge in such market, and into small- and medium-sized plastic OLED panels for various applications in order to
expand our market presence.
Another key aspect of our strategy is to foster close cooperation with our customers and build on our strategic
relationships with many of our key suppliers. Success of a new product depends on, among other things, working closely
with our customers to gain insights into their product needs and to understand general trends in the market. At the same time,
we often work with our equipment suppliers to design equipment that can enhance the efficiency of our production processes
for such new products.
The overall prospects for the global economy and, in turn, the market conditions for the display panel industry,
remain uncertain, and the economic indicators in Korea and globally have shown mixed signs of deterioration and uncertain
recovery since the outbreak of the COVID-19. Such uncertainties have been, and continue to be, exacerbated by, among other
things, Russia’s invasion of Ukraine and ensuing sanctions against Russia and more recently, difficulties faced by several
banks in the United States and Europe as well as rapid increases in policy interest rates globally to combat rising inflationary
pressures. See “Item 3.D. Risk Factors—Risks Relating to Our Industry—A global economic downturn may result in reduced
demand for our products and adversely affect our profitability” and “Item 3.D. Risk Factors—Risks Relating to Our
Company—Earthquakes, tsunamis, floods, severe health epidemics (including the global COVID-19 pandemic and any
possible recurrence of other types of widespread infectious diseases) and other natural calamities could materially adversely
affect our business, results of operations or financial condition.” While demand for certain types of our products, particularly
display panels for IT products, increased in 2020 and 2021 partly as a result of increased levels of working remotely, online
40
schooling and social distancing caused by COVID-19, demand for display panel products generally decreased in 2022 in light
of the increasing economic uncertainty globally as described above. We cannot provide any assurance that an increase in
demand for our products will recur or be sustained in future periods or that demand for our products will not decrease in the
future due to such economic downturns, which may adversely affect our profitability.
Manufacturing Productivity and Costs
We seek to continually enhance our manufacturing productivity and thereby reduce the cost of producing each
panel. We have significantly expanded our production capacity by investing in fabrication facilities that can process
increasingly larger-size glass substrates. The following table shows the input substrate size, initial design capacity and year-
end input capacity as a result of ramp-up for each of our fabrication facilities as of the dates indicated:
Facility
AP3
AP4
OP1
P5(2)
P62
P7(3)
P8
P9
CA
CO
Primary Input
Substrates Size
(in millimeters)
1,500 x 1,850
1,500 x 1,850
2,200 x 2,500
1,100 x 1,250
1,500 x 1,850
1,950 x 2,250
2,200 x 2,500
2,200 x 2,500
2,200 x 2,500
2,200 x 2,500
Year-end Input Capacity (1)
2020
2021
2022
(in thousands of input substrates per month)
29
28
70
N/A(4)
40
155(5)
126
71
199
90
24
31
86
44
46
142
100
82
216
56
17
31
86
45
44
150
124
81
211
89
(1)
(2)
(3)
(4)
(5)
Year-end input capacity is the total input substrates for the month that had the highest monthly input substrates during the fiscal year.
We ceased production at, and closed, the P5 fabrication facility in June 2022.
We ceased production at, and closed, the P7 fabrication facility in December 2022.
N/A means not applicable.
Includes input capacity prior to the closure of the P7 fabrication facility in December 2022.
Our cash outflows for capital expenditures amounted to W2,595 billion in 2020, W3,141 billion in 2021 and
W5,079 billion (US$4,030 million) in 2022. Such capital expenditures relate mainly to investments in production facilities
for mid-sized and plastic OLED panels in 2022, continued investments in our CO fabrication facility in 2021 and
investments in Guangzhou, China (primarily the construction of the CO fabrication facility for the production of large-
sized OLED display panels in a joint venture with the government of Guangzhou) in 2020. Capital expenditures were also
incurred for the acquisition of new equipment during the same period. Our depreciation expense as a percentage of
revenue decreased from 15.4% in 2020 to 13.3% in 2021 but increased to 15.2% in 2022. Such increase in 2022 compared
to 2021 was a result of a decrease in our revenue coupled with a slight increase in our depreciation expense. We currently
expect that, in 2023, our total capital expenditures on a cash out basis will be lower compared to 2022 and will be used
primarily to continue to fund our previously announced investments related to facilities for OLED panels. Such expected
capital expenditures are subject to periodic assessment, and we cannot provide any assurance that such expected capital
expenditures may not change materially after assessment.
Since our inception, we have designed our fabrication facilities in-house and co-developed most equipment sets with
our suppliers. These efforts have enabled us to gain valuable experience in designing and operating next-generation
fabrication facilities capable of processing increasingly larger-size glass substrates. We have been able to leverage this
experience to achieve and maintain high production output and yields at our fabrication facilities, thereby lowering costs. In
addition, in recent years, we have substituted a portion of our equipment purchased from overseas vendors with purchases
from local vendors to diversify our supply source and reduce costs.
We also continue to make various process improvements at our fabrication facilities, including enhancing the
performance of process equipment, efficiency of material flows and quality of process and product designs. For example, we
have reduced the number of mask steps in the TFT process from four to three with respect to certain models, thereby enabling
us to process a higher number of substrates in a given period of time. Such process improvements result in increased unit
output of our fabrication facilities without significant capital investment, thus enabling us to reduce fixed costs on a per panel
basis. In addition, in commencing mass production of large-sized OLED products, we have made modifications to certain of
41
our existing TFT-LCD production lines to convert them into OLED panel production lines. Because our large-sized OLED
panels employ oxide TFT backplane technology, which can be produced using manufacturing processes similar to the
processes used to manufacture TFT-LCD panels, relatively little modification has been necessary, thereby reducing the costs
of additional investments needed for the conversion of our production lines. The size of our operations has also expanded
considerably in recent years, enabling us to benefit from economies of scale.
Raw materials comprise the largest component of our costs. We monitor the prices at which we can procure raw
materials from suppliers and to the extent overseas suppliers are able to provide raw materials at competitive prices, we have
diversified our supplier base by procuring raw materials from such overseas suppliers. We have also been able to leverage
our scale and leading industry position to obtain competitive prices from our suppliers.
As a result of the above factors, we have historically been able to reduce our cost of sales per square meter of net
display area, which is derived by dividing total costs of sales by total square meters of net display area shipped. However, our
cost of sales per square meter of net display area increased by 13.6% in 2022 compared to 2021 mainly due to the overall
depreciation of the Korean Won against the U.S. dollar during 2022, in which a significant portion of our purchases of raw
materials and components are denominated, as well as an overall increase in the market prices of key raw materials and
components, which in turn were partly attributable to a global supply shortage of semiconductors during parts of 2022. Our
cost of sales per square meter of net display area decreased slightly by 1.0% in 2021 compared to 2020, mainly due to the
appreciation of the average value of the Korean Won against the U.S. dollar in 2021 compared to 2020.
Our cost reduction efforts in recent years also include our decision to substantially reduce the production of TFT-
LCD panels in Korea and China. In 2022, we reduced our production capacity of TFT-LCD panels for televisions at our
manufacturing facilities in China. In addition, we ceased production at, and closed, our P5 fabrication facility (where we had
produced TFT-LCD panels for notebook computers and mobile and other applications) in June 2022 and our P7 facility
(where we had produced TFT-LCD panels for televisions) in December 2022, in light of our continued efforts to increase the
proportion of OLED television panels in our product mix and the production capacity for such panels and further reduce our
production level of TFT-LCD panels, which we believe to be relatively more sensitive to market conditions and generally
allow for fewer opportunities for product differentiation.
Product Mix
Our product mix reflects our strategic capacity allocation among various product markets, and is continually
reviewed and adjusted based on the demand for, and our assessment of the profitability of, display panels in different markets
and size categories. In recent years, we believe market demand has been shaped by a shift toward larger-sized panels and a
shift toward differentiated specialty products based on newer technologies, including OLED technology, especially in the
display panel markets for Ultra HD televisions, ultra-thin notebooks, tablet computers and mobile and other applications. In
response to such market trends, we have increased our production capacity and sales of OLED panels, which accounted for
approximately 40% of our revenues in 2022, and have also developed and commercialized differentiated specialty products
for a variety of applications. For example, with respect to our television display panel product portfolio, the proportion of
sales of our television panels that are 65 inches or larger in our product mix increased between 2020 and 2022. In addition,
with respect to our IT products, we have expanded our product portfolio to offer desktop panels with Full HD resolution
primarily ranging from 21.5 inches to 49 inches in a variety of screen aspect ratios, including 21:9 screen aspect ratio for
ultra-widescreen monitors, and additional features such as borderless bezels and curved displays, in order to capture the
market for large-size desktop monitors. We have also introduced in our product portfolio display panels for gaming monitors
with high resolutions, rapid response times and fast refresh rates, and increased our production capacity of mobile panels for
large-screen smartphones, which constitutes a part of our mobile and other applications segment, with specialty features and
newer technologies, including full screen displays, flexible displays and Ultra HD technology utilizing WRGB sub-pixel
structure. At the same time, in response to increasing market demand for differentiated specialty products, we have developed
and commercialized, for example, panels for tablet computers utilizing AH-IPS technology with increasingly higher
resolution and other features, panels for smartphones, automotive products and wearable devices utilizing plastic OLED
technology and panels for large-sized television utilizing our Ultra HD and OLED technologies.
As part of our continued efforts to increase the proportion of higher-margin OLED panels in our product mix, we
have been reducing the production level of less profitable types of TFT-LCD panels in recent years, by reducing our TFT-
LCD production capacity in China as well as closing some of our fabrication facilities (where we had produced TFT-LCD
panels) in Korea, as described above.
42
The following table sets forth our revenue by product category for the years indicated and revenue in each product
category as a percentage of our total revenue:
Panels for:
Televisions
IT Products (3)
Mobile and other
applications (4)
Sales of goods
Royalties and others
Revenue
2020
Sales
₩ 6,738
10,121
7,359
₩ 24,218
44
₩ 24,262
Year ended December 31,
2021
2022 (1)
%
Sales (2)
%
(in billions of Won and millions of US$, except for percentages)
Sales
Sales
27.8% ₩ 9,466
12,459
41.7
31.7% ₩
41.7
6,975 US$
11,198
5,535
8,886
30.3
7,900
99.8% ₩ 29,825
53
0.2
100.0% ₩ 29,878
8,146
26.4
99.8% ₩ 26,319 US$
0.2
46
100.0% ₩ 26,365 US$
6,464
20,885
37
20,922
%
26.4%
42.5
30.9
99.8%
0.2
100.0%
(1)
(2)
(3)
(4)
Prior to deduction of forward exchange hedging loss of W213 billion (US$169 million), which had previously been treated as accumulated other
comprehensive loss but was reclassified to a deduction from revenue in 2022, when the sales from the hedged forecast transactions were recognized.
For convenience, the Korean Won amounts are expressed in U.S. dollars at the rate of W1,260.18 to US$1.00, the noon buying rate in effect on December 31,
2022 as certified by the Federal Reserve Bank of New York for customs purposes. This translation should not be construed as a representation that the Korean
Won amounts represent, have been or could be converted to U.S. dollars at that rate or any other rate.
Comprises notebook computers, desktop monitors and tablet computers.
Includes, among others, panels for mobile devices, including smartphones and other types of mobile phones, and industrial and other applications, including
entertainment systems, automotive displays, portable navigation devices and medical diagnostic equipment.
The following table sets forth our sales volume by product category for the years indicated and as a percentage of
our total panels sold:
Panels for
Televisions
IT Products (1)
Mobile and other
applications (2)
Total
2020
Number of
Panels
%
Year ended December 31,
2021
Number of
Panels
%
2022
Number of
Panels
%
27,747
97,728
102,884
228,359
(in thousands, except for percentages)
12.0%
43.0
30,214
107,943
12.2%
42.8
29,305
87,376
45.1
100.0%
112,758
250,915
45.0
100.0%
103,115
219,796
13.3%
39.8
46.9
100.0%
(1)
(2)
Comprises notebook computers, desktop monitors and tablet computers.
Includes, among others, panels for mobile devices, including smartphones and other types of mobile phones, and industrial and other applications, including
entertainment systems, automotive displays, portable navigation devices and medical diagnostic equipment.
Average Selling Prices
Our product mix has an impact on our average selling prices. In addition to business cycles, industry-wide supply
and demand balances and other market- or industry-wide variables, our product cost and price vary with the product display
area, as well as the technology and specification of such product. Therefore, the average selling price of our products can
vary over time as a result of business cycles and the choices we make in capacity allocation for specific products. The overall
average selling price of our display panels can fluctuate significantly. Our average selling price per panel, which is derived by
dividing total sales of goods by the total number of panels sold, increased by 12.3% from W106 thousand in 2020 to W119
thousand in 2021 and further increased by 0.8% to W120 thousand (US$95) in 2022. In 2021 compared to 2020, our average
selling price increased primarily due to an increase in the average selling price for televisions and IT products, in particular
desktop monitors, which in turn was mainly attributable to an increase in the proportion of OLED television panels and
higher-end desktop monitor panel units, which generally have higher selling prices, in our product mix. In 2022 compared to
2021, our average selling price increased slightly due to an increase in the average selling price for IT products and mobile
and other applications, which in turn was mainly attributable to our continued strategic focus to increase the proportion of
higher-end and differentiated products in our product mix as well as the overall depreciation of the Korean won against the
U.S. dollar during 2022, in which substantially all of our sales are denominated, partly offset by downward pricing pressure
for display panels resulting from a general decrease in consumer consumption levels due to rising inflation and interest rates
and economic volatility and uncertainty globally. Such increase in our average selling price for IT products and mobile and
other applications was partially offset by a significant decrease in the average selling price for television products, which in
43
turn was also mainly due to downward pricing pressure resulting from a general decrease in consumer consumption levels
due to rising inflation and interest rates and economic volatility and uncertainty globally.
The following table sets forth our average selling price per panel by markets for the years indicated:
Average Selling Price (1)
Year ended December 31,
2020
2021
2022 (2)
Televisions
IT Products (3)
Mobile and other applications (4)
All panels
₩
(in thousands, except for US$)
313 ₩
115
70
119
243 ₩
104
72
106
238 US$
128
79
120
189
102
63
95
(1)
(2)
(3)
(4)
Average selling price for each market represents revenue per market divided by unit sales per market.
For convenience, the Korean Won amounts are expressed in U.S. dollars at the rate of W1,260.18 to US$1.00, the noon buying rate in effect on December 31,
2022 as certified by the Federal Reserve Bank of New York for customs purposes. This translation should not be construed as a representation that the Korean
Won amounts represent, have been or could be converted to U.S. dollars at that rate or any other rate.
Comprises notebook computers, desktop monitors and tablet computers.
Includes, among others, panels for mobile devices, including smartphones and other types of mobile phones, and industrial and other applications, including
entertainment systems, automotive displays, portable navigation devices and medical diagnostic equipment.
Our average revenue per square meter of net display area, which is derived by dividing our total revenue by total
square meters of net display area shipped, increased by 7.3% from W792 thousand in 2020 to W849 thousand in 2021. In
2022, our average revenue per square meter of net display area shipped decreased by 2.4% to W829 thousand (US$658).
Recent Accounting Changes
For a discussion of new standards, interpretations and amendments to existing standards that have been published,
see Note 2(d) of the notes to our financial statements.
Operating Results
The following presents our consolidated results of operation information and as a percentage of our revenue for the
years indicated:
Revenue
Cost of sales
Gross profit
Selling expenses
Administrative expenses
Research and development
expenses
Other income
Other expenses
Finance income
Finance costs
Equity income on investments,
net
Profit (loss) before income tax
Income tax benefit (expense)
Profit (loss) for the year
2020
₩ 24,262
(21,626)
2,636
(818)
(755)
2022
2021
Year ended December 31,
%
%
(in billions of Won and in millions of US$, except for percentages)
100.0% ₩ 29,878
(24,573)
89.1
5,305
10.9
(933)
3.4
(919)
3.1
100.0% 26,365 (2) US$20,922 (2)
(19,861)
82.2
892
17.8
(711)
3.1
(739)
3.1
(25,028)
1,124
(896)
(931)
2022 (1)
(1,099)
1,785
(1,999)
439
(803)
12
(602)
526
(76)
4.5
7.4
8.2
1.8
3.3
0.1
(2.5)
2.2
(0.3)
(1,222)
1,252
(1,281)
426
(917)
8
1,719
(385)
1,334
4.1
4.2
4.3
1.4
3.1
0.0
5.8
(1.3)
4.5
(1,382)
3,186
(4,446)
873
(966)
5
(3,433)
238
(3,195)
(1,097)
2,528
(3,528)
693
(766)
4
(2,724)
189
(2,535)
%
100.0%
94.9
4.3
3.4
3.5
5.2
12.1
16.9
3.3
3.7
0.0
(13.0)
0.9
(12.1)
(1)
(2)
For convenience, the Korean Won amounts are expressed in U.S. dollars at the rate of W1,260.18 to US$1.00, the noon buying rate in effect on December 31,
2022 as certified by the Federal Reserve Bank of New York for customs purposes. This translation should not be construed as a representation that the Korean
Won amounts represent, have been or could be converted to U.S. dollars at that rate or any other rate.
Prior to deduction of forward exchange hedging loss of W213 billion (US$169 million), which had previously been treated as accumulated other
comprehensive loss but was reclassified to a deduction from revenue in 2022, when the sales from the hedged forecast transactions were recognized.
44
Comparison of 2022 to 2021
Revenue
Our revenue decreased by 11.8% from W29,878 billion in 2021 to W26,365 billion (US$20,922 million) in 2022.
The decrease in revenue primarily resulted from decreases in revenue derived from sales of panels for televisions and IT
products, which were in turn mainly due to a decrease in the number of those panels sold for IT products and a decrease in
the average selling prices of panels for televisions, offset in part by an increase in revenue derived from sales of panels for
mobile and other applications.
Revenue attributable to sales of panels for televisions decreased by 26.3% from W9,466 billion in 2021 to W6,975
billion (US$5,535 million) in 2022, resulting from a significant decrease in the average selling price of panels in this category
in 2022 compared to 2021, accompanied by a small decrease in the number of units sold of panels in this category in 2022
compared to 2021. The average selling price of panels for televisions decreased by 24.0% from W313 thousand in 2021 to
W238 thousand (US$189) in 2022, and the total unit sales of panels in this category decreased by 3.0% from 30.2 million
panels in 2021 to 29.3 million panels in 2022. The decrease in the average selling price of television panels was mainly due
to downward pricing pressure resulting from a decrease in market demand for both TFT-LCD and OLED televisions due in
part to a general decrease in consumer consumption levels due to rising inflation and interest rates and economic volatility
and uncertainty globally, which more than offset the positive effects of the depreciation of the Korean won against the U.S.
dollar on average selling price during 2022. The negative effects of such factors were partially offset by an increase in the
proportion of OLED television panels, which generally command higher selling prices than TFT-LCD television panels, in
our product mix. The decrease in the sales volume of panels for televisions reflected a decrease in the sales volume of our
TFT-LCD television panels, primarily reflecting our continued strategic focus to increase the proportion of higher-value
OLED television panels while decreasing the proportion of TFT-LCD television panels in our product mix, as well as a
decrease in market demand for both TFT-LCD and OLED televisions as described above.
Revenue attributable to sales of panels for IT products decreased by 10.1% from W12,459 billion in 2021 to
W11,198 billion (US$8,886 million) in 2022, resulting from a significant decrease in the number of units sold of panels in
this category in 2022 compared to 2021, partially offset by an increase in the average selling price of panels in this category
in 2022 compared to 2021. The total unit sales of panels for IT products decreased by 19.0% from 107.9 million panels in
2021 to 87.4 million panels in 2022, while the average selling price of panels in this category increased by 11.3% from W115
thousand in 2021 to W128 thousand (US$102) in 2022. The decrease in the sales volume of panels for IT products primarily
reflected a decrease in market demand for IT products due in part to a general decrease in consumer consumption levels due
to rising inflation and interest rates and economic volatility and uncertainty globally. The increase in the average selling price
of our panels for IT products was mainly attributable to the depreciation of the Korean Won against the U.S. dollar during
2022, the continued increase in the proportion of panels with differentiated specialty features that command higher selling
prices in our product mix for panels for IT products, reflecting the continued solidification of our position in the high-end IT
product market as well as the further strengthening of our collaboration with our end-brand customers.
Revenue attributable to sales of panels for mobile and other applications increased by 3.1% from W7,900 billion in
2021 to W8,146 billion (US$6,464 million) in 2022, resulting from an increase in the average selling price of panels in this
category in 2022 compared to 2021, partially offset by a decrease in the number of units sold of panels in this category in
2022 compared to 2021. The average selling price of panels in this category increased by 12.9% from W70 thousand in 2021
to W79 thousand (US$63) in 2022, whereas the total unit sales of panels for mobile and other applications decreased by 8.6%
from 112.8 million in 2021 to 103.1 million in 2022. The increase in the average selling price of panels in this category was
mainly due to the depreciation of the Korean Won against the U.S. dollar during 2022, the further increase in the proportion
of panels with differentiated specialty features and larger panels, as well as an increase in the proportion of higher-margin
OLED panels for smartphones, automotive products and wearable devices, in our product mix for panels in this category. The
decrease in the sales volume of panels for mobile and other applications was attributable to a decrease in market demand for
smartphones and other mobile devices due in part to a general decrease in consumer consumption levels due to rising
inflation and interest rates and economic volatility and uncertainty globally, as well as our continued strategic focus to
increase the proportion of higher-end OLED products and reduce the production output of lower-end TFT-LCD products.
In addition, our revenue attributable to royalty and others decreased by 13.2% from W53 billion in 2021 to W46
billion (US$37 million) in 2022. The decrease was due to a 12.8% decrease in other revenue, consisting primarily of sales of
sample products and certain raw materials and components, from W39 billion in 2021 to W34 billion (US$27 million) in
2022 and a 14.3% decrease in royalty from W14 billion in 2021 to W12 billion (US$10 million) in 2022.
45
Cost of Sales
Cost of sales increased by 1.9% from W24,573 billion in 2021 to W25,028 billion (US$19,861 million) in 2022. The
increase in our cost of sales in 2022 compared to 2021 was attributable primarily to a change in the value of our inventories
due in part to the strengthening of the U.S. dollar, in which 87.8% of our raw materials and component part purchases were
denominated in 2022, against the Korean Won in 2022 as a whole, compared to 2021 as a whole, as well as an increase in
overhead costs, which were offset in part by decreases in labor costs and raw materials and component costs related to selling
fewer panel units overall in 2022 compared to 2021.
As a percentage of our total cost of sales, raw materials and component costs, labor costs, overhead costs,
depreciation and amortization costs and change in inventory costs constituted 60.2%, 11.5%, 13.5%, 15.4% and (0.6)%,
respectively, in 2021 and 59.0%, 11.1%, 13.5%, 15.2% and 1.2%, respectively, in 2022.
As a percentage of revenue, cost of sales increased from 82.2% in 2021 to 94.9% in 2022. The increase in our cost
of sales as a percentage of revenue in 2022 compared to 2021 was attributable mainly to the continued increase in downward
pricing pressure in the global display panel industry, particularly in relation to TFT-LCD panels and weaker overall market
demand for display panels, as well as an increase in our raw materials and component costs, which in turn was mainly due to
the overall depreciation of the Korean Won against the U.S. dollar during 2022, in which a significant portion of our
purchases of raw materials and components are denominated, as well as an overall increase in the market prices of key raw
materials and components in part due to a global supply shortage of semiconductors during parts of 2022.
Cost of sales per square meter of net display area, which is derived by dividing total cost of sales by total square
meters of net display area shipped, increased by 13.6% from W699 thousand in 2021 to W794 thousand (US$630) in 2022.
Cost of sales per panel sold, which is derived by dividing total cost of sales by total number of panels sold, increased by
16.3% from W98 thousand in 2021 to W114 thousand (US$90) in 2022. Such increase was due mainly to increases in the
proportion within each of our product categories of panel units with differentiated specialty features and newer technologies,
which generally have higher cost of sales per panel relative to other panel units within each product category, sold in our
product mix, as well as the strengthening of the U.S. dollar against the Korean Won, during the same period.
Gross Profit and Gross Margin
As a result of the cumulative effect of the reasons explained above, our gross profit decreased by 78.8% from
W5,305 billion in 2021 to W1,124 billion (US$892 million) in 2022, and our gross margin decreased from 17.8% in 2021 to
4.3% in 2022. The continued shift in our product mix toward higher-end products and the strengthening of the U.S. dollar
against the Korean Won in 2022 resulted in increases in both the average selling price and cost of sales per panel sold in 2022
compared to 2021, but the increase in cost of sales per panel sold outpaced the increase in average selling price mainly due to
weaker market demand that applied downward pricing pressure.
Selling and Administrative Expenses
Selling and administrative expenses decreased by 1.3% from W1,852 billion in 2021 to W1,827 billion (US$1,450
million) in 2022. As a percentage of revenue, our selling and administrative expenses increased from 6.2% in 2021 to 6.9% in
2022. The decrease in selling and administrative expenses in 2022 compared to 2021 was attributable primarily to a decrease
in shipping costs, resulting mainly from a general decrease in our overall sales volume in 2022 compared to 2021, as well as
a decrease in salaries, resulting primarily from a decrease in performance-based incentive payments. The effects of such
decreases were partially offset by increases in other expenses relating to our overseas market development, resulting from our
increased efforts to further develop our overseas markets in light of the easing of COVID-19 pandemic-related social
distancing and travel measures, as well as warranty expenses, resulting from an increase in the proportion of OLED panel
products sold during 2022, which entail higher repair and replacement costs.
46
The following are the major components of our selling and administrative expenses for each of the years in the two-
year period ended December 31, 2022:
Salaries
Expenses related to defined benefit plan
Other employee benefits
Shipping costs
Fees and commissions
Depreciation
Taxes and dues
Advertising
Warranty expenses
Insurance
Travel
Training
Others
Total
Research and Development Expenses
Year ended December 31,
2022
2021
(in billions of Won)
387 ₩
23
87
299
248
267
75
126
217
17
7
16
83
1,852 ₩
355
27
91
214
272
264
70
108
251
15
18
15
127
1,827
₩
₩
Research and development expenses increased by 13.1% from W1,222 billion in 2021 to W1,382 billion (US$1,097
million) in 2022. As a percentage of revenue, our research and development expenses increased from 4.1% in 2021 to 5.2%
in 2022. Such increase in research and development expenses was mainly attributable to an increase in our research and
development activities related to OLED and next generation technologies and products.
Other Income (Expense), Net
Other income includes primarily foreign currency gains from operating activities, and other expenses include
primarily foreign currency losses from operating activities, impairment loss on property, plant and equipment and impairment
loss on intangible assets. Our total net other expense increased significantly from W29 billion in 2021 to W1,260 billion
(US$1,000 million) in 2022. Such increase was primarily due to a significant increase in net impairment loss on property,
plant and equipment from W18 billion in 2021 to W1,257 billion (US$998 million) in 2022, as well as an increase in net
impairment loss on intangible assets from W28 billion in 2021 to W134 billion (US$107 million) in 2022. Such significant
increases in impairment losses on property, plant and equipment and on intangible assets in 2022 were primarily attributable
to impairment losses we incurred on our property, plant and equipment and intangible assets relating to our large-sized
OLED display panel business, which we newly distinguished as a separate cash-generating unit ("CGU") from our existing
Display CGU in 2022 following our decision to terminate our TFT-LCD television display panel manufacturing operations in
Korea and the resulting reorganization of the related businesses. Such impairment losses on our property, plant and
equipment and intangible assets relating to our large-sized OLED display panel business in 2022 were mainly attributable to
weaker market demand for premium televisions and less favorable industry outlook resulting from continued and exacerbated
uncertainty in the prospects of the global economy. See Note 10(d) of the notes to our financial statements for a further
discussion of our assessment of impairment with respect to our large-sized OLED display panel business.
Finance Income (Costs), Net
Our total net finance costs decreased by 81.1% from W491 billion in 2021 to W93 billion (US$74 million) in 2022.
Such decrease was mainly attributable to a 56.0% decrease in net foreign currency loss from W300 billion in 2021 to W132
billion (W105 million) in 2022, primarily due to an overall depreciation of the Korean Won against major foreign currencies
and higher exchange rate volatility in 2022 compared to 2021, which was offset in part by a 39.9% decrease in net gain on
valuation of derivatives from W213 billion in 2021 to W128 billion (US$102 million) in 2022, also as a result of an overall
depreciation of the Korean Won against the U.S. dollar and higher exchange rate volatility in 2022 compared to 2021.
Against such fluctuations, we recognized net gains on transaction of derivatives of W8 billion in 2021 and W49 billion
(US$39 million) in 2022.
47
Income Tax Expense (Benefit)
We recognized income tax benefit of W238 billion (US$189 million) in 2022 compared to income tax expense of
W385 billion in 2021, primarily due to recording loss before income tax of W3,433 billion (US$2,724 million) in 2022
compared to profit before income tax of W1,719 billion in 2021, which led to a decrease in current tax expense to W147
billion (US$117 million) in 2022 from W363 billion in 2021, and the recognition of deferred tax benefit of W385 billion
(US$305 million) in 2022 compared to a deferred tax expense of W22 billion in 2021. Furthermore, due to applicable
amendments to Korean tax laws in 2022 and changes in our estimates of future taxable income, we recognized a change in
unrecognized deferred tax assets of W458 billion (US$363 million) in 2022, which reflected the effect of reducing previously
recognized deferred tax assets in relation to tax credit carry forwards. See "Item 5.B. Liquidity and Capital Resources—
Taxation". In addition, we recognized an effect on change in tax rate of W168 billion (US$141 million) in 2022 in light of
such tax law amendments. However, due to the loss before income tax we recorded in such year, our effective tax rate was
not calculated in 2022, whereas our effective tax rate was 22.4% in 2021. See Notes 23 and 24 of the notes to our financial
statements.
Profit (Loss) for the Year
As a result of the cumulative effect of the reasons explained above, we recorded a profit for the year of W1,334
billion in 2021 but recorded a loss for the year of W3,195 billion (US$2,535 million) in 2022. Our profit for the year as a
percentage of revenue was 4.5% in 2021 and loss for the year as a percentage of revenue was (12.1)% in 2022.
Comparison of 2021 to 2020
Revenue
Our revenue increased by 23.1% from W24,262 billion in 2020 to W29,878 billion in 2021. The increase in revenue
resulted from increases in revenue derived from sales of panels for televisions, IT products and mobile and other applications,
which were in turn mainly due to an increase in the number of those panels sold and an increase in the average selling prices
of panels for televisions and IT products.
Revenue attributable to sales of panels for televisions increased by 40.5% from W6,738 billion in 2020 to W9,466
billion in 2021, resulting from an increase in the average selling price of panels in this category in 2021 compared to 2020,
accompanied by an increase in the number of units sold of panels in this category in 2021 compared to 2020. The average
selling price of panels for televisions increased by 28.8% from W243 thousand in 2020 to W313 thousand in 2021, and the
total unit sales of panels in this category increased by 9.0% from 27.7 million panels in 2020 to 30.2 million panels in 2021.
The increase in the average selling price of television panels was mainly due to an overall increase in the price of TFT-LCD
television panels in 2021 and continued increase in the proportion of larger-sized OLED television panels, which generally
command higher selling prices than TFT-LCD television panels, in our product mix. The increase in the sales volume of
panels for televisions reflected an increase in the sales volume of our large-sized OLED panels in the premium television
market, primarily reflecting our continued strategic focus to increase the proportion of higher-value OLED television panels
while decreasing the proportion of TFT-LCD television panels in our product mix.
Revenue attributable to sales of panels for IT products increased by 23.1% from W10,121 billion in 2020 to
W12,459 billion in 2021, resulting from an increase in the average selling price of panels in this category in 2021 compared
to 2020, accompanied by an increase in the number of units sold of panels in this category in 2021 compared to 2020. The
average selling price of panels for IT products increased by 10.6% from W104 thousand in 2020 to W115 thousand in 2021,
and the total unit sales of panels in this category increased by 10.4% from 97.7 million panels in 2020 to 107.9 million panels
in 2021. The increase in the average selling price of our panels for IT products was mainly attributable to the continued
increase in the proportion of panels with differentiated specialty features that command higher selling prices in our product
mix for panels for IT products, reflecting the continued solidification of our position in the high-end IT product market as
well as the further strengthening of our collaboration with our end-brand customers. The increase in the sales volume of
panels for IT products primarily reflected stronger global demand for such products due mainly to increased levels of
working remotely, online schooling and social distancing in light of the ongoing global COVID-19 pandemic.
Revenue attributable to sales of panels for mobile and other applications increased by 7.4% from W7,359 billion in
2020 to W7,900 billion in 2021, resulting from an increase in the number of units sold of panels in this category in 2021
compared to 2020, partially offset by a slight decrease in the average selling price of panels in this category in 2021
compared to 2020. The total unit sales of panels for mobile and other applications increased by 9.6% from 102.9 million in
48
2020 to 112.8 million in 2021, whereas the average selling price of panels in this category decreased by 2.8% from W72
thousand in 2020 to W70 thousand in 2021. The increase in the sales volume of panels for mobile and other applications was
attributable to our timely development of new panels and our achievement of increased stability in the mass production of our
panels in this category, which together led to the strengthening of our collaboration with our end-brand customers. The
decrease in the average selling price of panels in this category was mainly due to downward pricing pressures in the
smartphone market resulting from capacity expansion and increased competition by our competitors.
In addition, our revenue attributable to royalty and others increased by 20.5% from W44 billion in 2020 to W53
billion in 2021. The increase was due to a 30.0% increase in other revenue, consisting primarily of sales of sample products
and certain raw materials and components, from W30 billion in 2020 to W39 billion in 2021, while royalties remained
constant at W14 billion in each of 2020 and 2021.
Cost of Sales
Cost of sales increased by 13.6% from W21,626 billion in 2020 to W24,573 billion in 2021. The increase in our cost
of sales in 2021 compared to 2020 was attributable primarily to an increase in raw materials and component costs due to an
increase in the number of panels sold in 2021 compared to 2020, as well as the increased share of high-end products in our
product mix which contributed to the increase in costs on a per unit basis during the same period.
As a percentage of our total cost of sales, raw materials and component costs, labor costs, overhead costs,
depreciation and amortization costs and change in inventory costs constituted 60.7%, 9.9%, 13.4%, 15.7% and 0.3%,
respectively, in 2020 and 60.2%, 11.5%, 13.5%, 15.4% and (0.6)%, respectively, in 2021.
As a percentage of revenue, cost of sales decreased from 89.1% in 2020 to 82.2% in 2021. The decrease in our cost
of sales as a percentage of revenue in 2021 compared to 2020 was attributable mainly to our continued efforts to increase the
proportion of higher value-added products with higher margins in our product mix.
Cost of sales per square meter of net display area, which is derived by dividing total cost of sales by total square
meters of net display area shipped, decreased slightly by 1.0% from W706 thousand in 2020 to W699 thousand in 2021. Cost
of sales per panel sold, which is derived by dividing total cost of sales by total number of panels sold, increased by 3.2%
from W95 thousand in 2020 to W98 thousand in 2021. Such increase was due mainly to increases in the proportion within
our television category as well as certain parts of our IT product category of larger panel units with differentiated specialty
features and newer technologies, which generally have higher cost of sales per panel relative to other panel units within each
product category, sold in our product mix during the same period.
Gross Profit and Gross Margin
As a result of the cumulative effect of the reasons explained above, our gross profit increased by 101.3% from
W2,636 billion in 2020 to W5,305 billion in 2021, and our gross margin increased from 10.9% in 2020 to 17.8% in 2021.
The continued shift in our product mix toward higher-end products in 2021 resulted in increases in both the average selling
price and cost of sales per panel sold in 2021 compared to 2020, but the increase in average selling price outpaced the
increase in cost of sales per panel sold mainly due to an increase in the proportion of higher margin products with
differentiated technologies (such as OLED) in our product mix, as well as stronger global demand for consumer electronics
products in light of the increased levels of working remotely, home schooling and social distancing caused by the COVID-19
pandemic.
Selling and Administrative Expenses
Selling and administrative expenses increased by 17.7% from W1,573 billion in 2020 to W1,852 billion in 2021. As
a percentage of revenue, our selling and administrative expenses decreased from 6.5% in 2020 to 6.2% in 2021. The increase
in selling and administrative expenses in 2021 compared to 2020 was attributable primarily to increases in:
•
•
shipping costs, resulting mainly from an increase in costs relating to our increased usage of air freight and an
increase in ocean freight rates primarily caused by the COVID-19 pandemic as well as a general increase in
our overall sales volume in 2021 compared to 2020; and
salaries, resulting primarily from an increase in general wage levels and the number of our employees.
49
The effects of such increases were partially offset by a decrease in our warranty expenses, resulting from a reduction
in defects in our products equipped with newer technologies (such as OLED) during such period.
The following are the major components of our selling and administrative expenses for each of the years in the two-
year period ended December 31, 2021:
Salaries
Expenses related to defined benefit plan
Other employee benefits
Shipping costs
Fees and commissions
Depreciation
Taxes and dues
Advertising
Warranty expenses
Insurance
Travel
Training
Others
Total
Year ended December 31,
2021
2020
(in billions of Won)
294 ₩
26
68
148
222
215
83
114
309
13
8
8
65
1,573 ₩
387
23
87
299
248
267
75
126
217
17
7
16
83
1,852
₩
₩
Research and Development Expenses
Research and development expenses increased by 11.2% from W1,099 billion in 2020 to W1,222 billion in 2021. As
a percentage of revenue, our research and development expenses decreased from 4.5% in 2020 to 4.1% in 2021. The research
and development expenses in 2021 were incurred mainly in relation to research and development activities related to OLED
and next generation technologies and products.
Other Income (Expense), Net
Other income includes primarily foreign currency gains from operating activities, and other expenses include
primarily foreign currency losses from operating activities, impairment loss on property, plant and equipment and impairment
loss on intangible assets. Our total net other expense decreased by 86.6% from W215 billion in 2020 to W29 billion in 2021.
Such decrease was primarily due to a net foreign currency gain of W49 billion in 2021 compared to a net foreign currency
loss of W42 billion in 2020, reflecting the strengthening of the U.S. dollar against the Korean Won in 2021 compared to
2020, as well as a 63.9% decrease in net impairment loss on intangible assets from W78 billion in 2020 to W28 billion in
2021, primarily due to a decrease in impairment loss associated with our development costs.
Such decreases were partially offset by a 100.3% increase in net loss on disposal of property, plant and equipment
from W22 billion in 2020 to W45 billion in 2021, mainly reflecting an increase in the volume of manufacturing equipment no
longer in use that we disposed of in 2021 compared to 2020.
Finance Income (Costs), Net
Our total net finance costs increased by 34.9% from W364 billion in 2020 to W491 billion in 2021. Such increase
was mainly attributable to:
•
•
net foreign currency loss of W300 billion in 2021 compared to net foreign currency gain of W142 billion in
2020, primarily due to higher exchange rate volatility in 2021 compared to 2020; and
a 17.3% increase in interest expense from W370 billion in 2020 to W434 billion in 2021, which was mainly
due to a decrease in capitalized interest in 2021 compared to 2020.
Such increases were offset in part by net gain on valuation of derivatives of W213 billion in 2021 compared to net
loss on valuation of derivatives of W187 billion in 2020, as the U.S. dollar generally appreciated against the Korean Won
50
during the second half of 2021 and significantly fluctuated over these periods as a whole. Against such fluctuations, we also
recognized net gains on transaction of derivatives of W24 billion in 2020 and W8 billion in 2021.
Income Tax Expense (Benefit)
We recognized income tax expense of W385 billion in 2021 compared to income tax benefit of W526 billion in
2020, primarily due to recording profit before income tax of W1,719 billion in 2021 compared to loss before income tax of
W602 billion in 2020, which led to a significant increase in current tax expense from W62 billion in 2020 to W363 billion in
2021, and the recognition of deferred tax expense of W22 billion in 2021 compared to a deferred tax benefit of W588 billion
in 2020. As a result, our effective tax rate was 22.4% in 2021, whereas our effective tax rate was not calculated in 2020 due
to the loss before income tax we recorded in such year. See Notes 22 and 23 of the notes to our financial statements.
Profit (Loss) for the Year
As a result of the cumulative effect of the reasons explained above, we recorded a loss for the year of W76 billion in
2020 but recorded a profit for the year of W1,334 billion in 2021. Our loss for the year as a percentage of revenue was (0.3)%
in 2020 and our profit for the year as a percentage of revenue was 4.5% in 2021.
Item 5.B. Liquidity and Capital Resources
Our principal sources of liquidity have been net cash flows generated from our operating activities and debt
financing activities. We had cash and cash equivalents of W4,218 billion, W3,542 billion and W1,825 billion (US$1,448
million) as of December 31, 2020, 2021 and 2022, respectively.
Our cash and cash equivalents was held in the following currencies as at December 31, 2022:
Korean Won
Chinese Yuan
U.S. Dollar
Other currencies
Total
₩
₩
(in billions of Won)
134
360
1,318
13
1,825
We also had short-term deposits in banks of W79 billion, W743 billion and W1,723 billion (US$1,367 million),
respectively, as of December 31, 2020, 2021 and 2022. The significant increases in short-term deposits in 2022 compared to
2021, and 2021 compared to 2020, were mainly due to an increase in restricted cash deposits in connection with secured
borrowings from our subsidiaries. Our primary use of cash has been to fund capital expenditures related to the expansion and
improvement of our production capacity with respect to existing and newly developed products, including the construction
and ramping-up of new, or in certain cases, expansion or conversion of existing, fabrication facilities and production lines
and the acquisition of new equipment. We also use cash flows from operations for our working capital requirements and
servicing our debt payments. We expect our cash requirements for 2023 to be primarily for capital expenditures and
repayment of maturing debt.
As of December 31, 2020, we had current assets of W11,099 billion and current liabilities of W11,007 billion,
resulting in a working capital surplus of W92 billion. As of December 31, 2021, we had current assets of W13,187 billion
and current liabilities of W13,995 billion, resulting in a working capital deficit of W808 billion. As of December 31, 2022,
we had current assets of W9,444 billion (US$7,494 million) and current liabilities of W13,962 billion (US$11,079 million),
resulting in a working capital deficit of W4,518 billion (US$3,585 million). The working capital deficit as of December 31,
2021, compared to a working capital surplus as of December 31, 2020, was primarily attributable to a W1,035 billion
increase in trade accounts and notes payable mainly due to increases in purchases of raw materials and components in 2021
compared to 2020 in anticipation of stronger demand for our products in light of the increased levels of working remotely,
home schooling and social distancing caused by the COVID-19 pandemic, a W875 billion increase in our current financial
liabilities, which mainly reflected an increase in the current portion of long-term liabilities payable as of the end of 2021
compared to the end of 2020, and a W676 billion decrease in cash and cash equivalents due to a decrease in demand deposits,
the effects of which were partially offset by a W1,180 billion increase in inventory as a result of inventory stocking in light of
supply chain uncertainties in part due to the COVID-19 pandemic as discussed above and a W1,057 billion increase in net
trade accounts and notes receivable, which was mainly caused by increases in our revenue and sales of trade accounts and
receivable in 2021. The increase in working capital deficit as of December 31, 2022, compared to the working capital deficit
51
as of December 31, 2021, was primarily attributable to a W2,216 billion decrease in net trade accounts and notes receivable,
which was mainly caused by a decrease in our sales revenue as described above, a W1,717 billion decrease in cash and cash
equivalents, which was primarily due to a decrease in demand deposits, and a W1,420 billion increase in our current financial
liabilities, which mainly reflected an increase in our short-term borrowings payable as of the end of 2022 compared to the
end of 2021, the effects of which were partially offset by a W979 billion increase in deposits in banks and a W752 billion
decrease in net trade accounts and notes payable mainly as a result of a decrease in our purchases of raw materials,
components and equipment in light of weaker market demand for our products.
Our management constantly monitors our working capital, and we have historically been able to satisfy our cash
requirements from cash flows from operations and debt financing. We believe that we have sufficient sources of working
capital, including in the form of debt financing, for at least the next 12 months following the date of this annual report. In
2022, we issued domestic bonds in the aggregate principal amount of W445 billion (US$353 million), and we entered into a
number of short-term and long-term facility loan agreements, from which we have drawn down the full aggregate principal
amount of W810 billion (US$643 million), US$1,252 million and CNY 1,000 million as of December 31, 2022 in short-term
loans and W820 billion (US$651 million), US$1,350 million and CNY 8,295 million in long-term loans, in each case as of
December 31, 2022, primarily to fund our capital expenditures and refinance our existing borrowings maturing in 2022.
Our ability to satisfy our cash requirements from cash flows from operations and financing activities will be affected
by our ability to maintain and improve our margins and, in the case of external financing, market conditions, which in turn
may be affected by various factors outside of our control. Therefore, we re-evaluate our capital requirements regularly in
light of our cash flows from operations, the progress of our expansion plans and market conditions. To the extent that we do
not generate sufficient cash flows from our operations to meet our capital requirements, we may rely on other financing
activities, such as external borrowings and securities offerings, including the issuance of equity, equity-linked and other debt
securities.
Our net cash provided by operating activities amounted to W2,279 billion in 2020, W5,753 billion in 2021 and
W3,011 billion (US$2,389 million) in 2022. The increase in net cash provided by operating activities in 2021 compared to
2020 was mainly due to an increase in cash collected from our customers, primarily as a result of an increase in our sales
revenue. The increase in net cash provided by our operating activities in 2021 compared to 2020 was offset in part by an
increase in inventory as a result of inventory stocking in light of supply chain uncertainties in part due to the COVID-19
pandemic as discussed above. The decrease in net cash provided by operating activities in 2022 compared to 2021 was
mainly due to a decrease in cash collected from our customers primarily a result of a decrease in our sales revenue, as well as
a decrease in trade accounts and notes payable of W282 billion (US$224 million) in 2022 compared to an increase of W1,038
billion in 2021, which principally reflected a decrease in our purchases of raw materials and components in light of weaker
market demand for our products. The decrease in net cash provided by operating activities in 2022 compared to 2021 was
offset in part by a decrease in trade accounts and notes receivable of W1,833 billion (US$1,455 million) in 2022 compared to
an increase of W964 billion in 2021, which primarily reflected an increase in the amount of trade accounts and notes
receivable sold to financial institutions without recourse towards the end of 2022 compared to the end of 2021 as well as a
decrease in our sales revenue.
The cyclical market conditions that are characteristic of our industry, as well as the regular ramp-up of our new
fabrication facilities and production lines and our cost reduction measures, contribute to the fluctuations in our inventory
levels from period to period. In 2021, our inventory levels increased by 54.3% from year-end 2020. In 2022, our inventory
levels decreased by 14.2% from year-end 2021.
Inventories consisted of the following for the dates indicated:
2020
2021
2022
2022 (1)
As of December 31,
Finished goods
Work in process
Raw materials
Supplies
Total
₩
(in billions of Won and millions of US$)
822 US$
785 ₩ 1,180 ₩
733
492
161
1,202
787
181
₩ 2,171 ₩ 3,350 ₩ 2,873 US$
1,235
652
164
653
980
517
130
2,280
(1)
For convenience, the Korean Won amounts are expressed in U.S. dollars at the rate of W1,260.18 to US$1.00, the noon buying rate in effect on December 31,
2022, as certified by the Federal Reserve Bank of New York for customs purposes. This translation should not be construed as a representation that the Korean
Won amounts represent, have been or could be converted to U.S. dollars at that rate or any other rate.
52
Our net cash used in investing activities amounted to W2,311 billion in 2020, W4,263 billion in 2021 and W6,700
billion (US$5,317 million) in 2022. Net cash used in investing activities primarily reflected the substantial capital
expenditures we have made in connection with the expansion and improvement of our OLED-focused production capacity in
recent years, mainly relating to construction of our new, or in certain cases, expansion or conversion of existing, fabrication
and module assembly facilities and acquisition of new equipment. These cash outflows from capital expenditures amounted
to W2,595 billion, W3,141 billion and W5,079 billion (US$4,030 million) in 2020, 2021 and 2022, respectively. We intend
to fund our capital requirements associated with our expansion and construction projects with cash flows from operations and
financing activities, such as external long-term borrowings and bond issuances.
We currently expect that, in 2023, our total capital expenditures on a cash out basis will be lower compared to 2022
and will be used primarily to continue to fund our previously announced investments related to facilities for OLED panels.
However, our overall expenditure levels and our allocation among projects are subject to many uncertainties. We review the
amount of our capital expenditures and may make adjustments from time to time based on cash flows from operations, the
progress of our expansion plans and market conditions.
Our net cash provided by financing activities amounted to W932 billion in 2020, our net cash used in financing
activities amounted to W2,466 billion in 2021 and our net cash provided by financing activities amounted to W1,946 billion
(US$1,544 million) in 2022. The net cash used in financing activities in 2021 compared to net cash provided by financing
activities in 2020 reflects primarily an increase in our repayment of current portion of long-term borrowings and bonds in
2021 compared to 2020 as well as a decrease in net proceeds from issuance of long-term borrowings in 2021 compared to
2020, partially offset by an increase in proceeds from short-term borrowings and issuance of bonds in 2021 compared to
2020. The net cash provided by financing activities in 2022 compared to net cash used in financing activities in 2021 reflects
primarily an increase in net proceeds from long-term and short-term borrowings in 2022 compared to 2021.
At our annual general meetings of shareholders on March 20, 2020 and March 23, 2021, we did not declare any cash
dividend to our shareholders. At our annual general meeting of shareholders that was held on March 23, 2022, we declared a
cash dividend of W650 per share of common stock, amounting to a total cash dividend of W232.6 billion to our shareholders
of record as of December 31, 2021. At our annual general meeting of shareholders that was held on March 21, 2023, we did
not declare any cash dividend to our shareholders.
We had a total of W395 billion, W614 billion and W2,579 billion (US$2,047 million) of short-term borrowings
outstanding as of December 31, 2020, 2021 and 2022, respectively. Approximately 17% of our outstanding short-term
borrowings as of December 31, 2022 were subject to floating interest rates. For further information regarding our short-term
borrowings, including their interest rate and currency structure, please see Note 12 of the notes to our financial statements.
As of December 31, 2022, we maintained accounts receivable sales negotiating facilities with several banks for up to
an aggregate amount of US$950 million at the parent company level in connection with our export sales transaction with our
subsidiaries. In addition, we and our subsidiaries have also entered into various other accounts receivable sales negotiating
facilities for up to an aggregate amount of US$2,935 million. For further information regarding these facilities, please see
Note 15 of the notes to our financial statements.
As of December 31, 2022, we had outstanding long-term debt including current portion in the amount of W12,416
billion (US$9,853 million) and prior to deducting discounts on bonds, consisting of W1,325 billion of Korean Won
denominated bonds, US$100 million of U.S. dollar denominated bonds, US$3,494 million of U.S. dollar denominated long-
term loans, CNY19,569 million of CNY denominated long-term loans and W2,986 billion of Korean Won denominated long-
term loans. As of December 31, 2022, 31% of our outstanding long-term debt were subject to fixed interest rates.
The terms of some of our long-term debt contain provisions that would trigger a requirement for early repayment.
The principal and interest under these obligations may be accelerated if there is a default, including defaults triggered by
failure to comply with financial covenants and cross defaults triggered under our other debt obligations. We believe we were
in compliance with the covenants under our debt obligations at December 31, 2022. For further information about our short-
and long-term debt obligations as of December 31, 2022, including their interest rate and currency structure, see Note 12 of
the notes to our financial statements.
As of December 31, 2022, we have entered into six agreements to guarantee the payment obligations in the
aggregate amount of US$1,407 million of our subsidiary LG Display Vietnam Haiphong Co., Ltd. under credit facilities and
payables facilities with various financial institutions, including Sumitomo Mitsui Banking Corporation, Standard Chartered
Bank, Citibank, Export-Import Bank of Korea and Bank of Australia and New Zealand, among other lenders.
53
We also utilize cross-currency swap contracts and foreign currency forward contracts to hedge our foreign currency
risk. See “Item 11. Quantitative and Qualitative Disclosures about Market Risk – Foreign Currency Risk.”
The following table summarizes our material short- and long-term cash requirements as of December 31, 2022:
(in billions of Won)
Unsecured bank borrowings
Secured bank borrowings
Unsecured bond issues
Trade accounts and notes payable
Other accounts payable
Other accounts payable (enterprise procurement cards)(1)
Long-term other accounts payable
Securities deposits received
Lease Liabilities
Derivatives
Total contractual cash obligations
Payments Due by Period
Less than
1 year
1-3 years
3-5 years
More than
5 years
5,180
415
356
4,062
2,310
936
—
2
44
9
13,314
6,076
1,320
778
—
—
—
242
9
24
20
8,469
832
499
351
—
—
—
106
181
5
—
1,974
352
—
86
—
—
—
160
—
5
—
603
Total
12,440
2,234
1,571
4,062
2,310
936
508
192
78
29
24,360
(1)
Represents the amount of utility expenses and other expenses paid using the enterprise procurement cards. For further information, please see Note 26 of the
notes to our financial statements.
We intend to fund our cash commitments with cash flows generated from our operations as well as debt financing
activities. In addition, we also have continuing obligations to make cash royalty payments under our technology license
agreements, the amount of which are generally determined based on a percentage of sales of our display products.
Expenses relating to our license fees and royalty payments under existing license agreements were W136 billion in
2020, W150 billion in 2021 and W152 billion (US$120 million) in 2022, representing 7.8%, 7.1% and 6.3% of our research
and development related expenditures in 2020, 2021 and 2022, respectively. We expect to make additional license fee
payments as we enter into new technology license agreements from time to time with third parties.
Taxation
In 2022, the statutory corporate income tax rate applicable to us was 11.0% (including local income surtax) for the
first W200 million of our taxable income, 22.0% (including local income surtax) for our taxable income between W200
million and W20 billion, 24.2% (including local income surtax) for our taxable income between W20 billion and W300
billion, and 27.5% (including local income surtax) for our taxable income in excess of W300 billion.
Pursuant to applicable amendments made to the Korean tax laws in 2022, the statutory corporate income tax rate
applicable to us for 2023 will be 9.9% (including local income surtax) for the first W200 million of our taxable income,
20.9% (including local income surtax) for our taxable income between W200 million and W20 billion, 23.1% (including
local income surtax) for our taxable income between W20 billion and W300 billion, and 26.4% (including local income
surtax) for our taxable income in excess of W300 billion.
Tax Credits
We are entitled to a number of tax credits relating to certain investments in tangible assets for business use
(excluding certain assets for which tax credits are not permitted under Korean tax laws) and facilities used for research and
development and human resources development. For example, in 2022, under the Restriction of Special Taxation Act, we
were entitled to a basic tax credit of 1% of our qualifying capital investments in 2022. Under the same law, we are also
entitled to a tax credit on a percentage of our research and development expenses incurred for procuring certain “new growth
engine and source technologies,” which include OLED display technology. The applicable amount of such tax credit is
calculated by multiplying the applicable research and development expenses by the sum of (x) 20% and (y) three times the
proportion of such research and development expenses as a percentage of revenue.
Tax credits may be utilized for an amount up to the tax payable using the minimum tax rate for a given fiscal year.
Tax credits not utilized in the fiscal year during which the relevant investment was made may be carried forward over the
next ten years. As of December 31, 2022, we had recognized deferred tax assets related to these credits of W171 billion
(US$136 million), which may be utilized against future income tax liabilities through 2032. In addition, we also had unused
54
tax credit carryforwards of W661 billion (US$524 million) as of December 31, 2022 for which no deferred tax asset was
recognized. See Note 24 of the notes to our financial statements.
Item 5.C. Research and Development, Patents and Licenses, etc.
Research and Development
The display panel industry is subject to rapid technological changes. We believe that effective research and
development is essential to maintaining our position as one of the industry’s leading technology innovators.
To meet the demands of the future trends, we have formulated a long-term research and development strategy aimed
at improving the process, performance and design of the existing products and diversifying the use of display panels as new
opportunities arise with the development of communication systems and information technology. The following are examples
of products and technologies that have been developed through our research and development activities in recent years:
•
•
•
In 2020, we commenced mass production of the first OLED products at our new CO fabrication facility in
Guangzhou, China, including 48-inch and 77-inch UHD display panels. In addition, we produced the world’s
first “2K” zone mini-LED and ultra-slim UHD desktop monitor products.
In 2021, we produced a 65-inch UHD bendable OLED television display product and an 83-inch UHD OLED
television display product. In addition, we developed the world’s first 42-inch OLED television display
product. For TFT-LCD products, we produced the world’s first 15.6-inch QHD 240Hz gaming notebook
products and the world’s first 27-inch and 31.5-inch UHD high contrast ratio monitor products. We also
produced our first LCD 750R extreme curvature automotive display product.
In 2022, we produced the world’s first 97-inch OLED television display product as well as the world’s first
large-sized (55-inch, 65-inch and 77-inch) television display products applying META OLED technology. In
addition, we produced our first notebook display panel with a borderless design, which applies variable refresh
rate technology with low power consumption, and we also produced the world’s first 27.6-inch multi-tasking
monitor display product with a 16:18 screen ratio as well as the world’s first 34-inch 1900R IPS Black
monitor product. For gaming display products, we developed the world’s first 24.5-inch 480Hz FHD gaming
monitor display that applies high-performance oxide-TFT, and we produced the world’s first 27-inch and 45-
inch gaming display panel applying META OLED technology. For automotive display products, we produced
the world’s first 12.3-inch automotive co-driver display panel that applies double LGP control technology as
well as the world’s first 12.3-inch automotive cluster display panel that applies glassless 3D technology.
As the product life cycle of display panels using certain of the existing TFT-LCD technology is approaching
maturity, we plan to continue to focus on OLED and other newer display technologies, while also exploring new growth
opportunities in the application of display panels, such as automotive displays and life displays. Life displays include gaming
displays and transparent displays, among others.
In order to maintain our position as one of the industry’s technology leaders, we believe it is important not only to
increase direct spending on research and development, but also to manage our research and development capability
effectively in order to successfully implement our long-term strategy. In connection with our efforts to enhance our research
and development capability with respect to next-generation display technologies, we opened the R&D Center in Paju, Korea
in April 2012. In addition, we have further expanded our research and development resources by allocating some of our
research and development personnel to the newly-opened LG Science Park, which is located in western Seoul and
commenced its operations in December 2017. LG Science Park accommodates researchers from various LG Group-affiliated
companies with expertise in a broad range of disciplines, including electronics, chemistry, nanotechnology, display,
fabrication, life sciences and new materials, to focus on developing and testing innovative new technologies.
We complement our in-house research and development capability through collaborations with universities and
other third parties. For example, we provide project-based funding to both domestic and overseas universities as a means to
recruit promising engineering students and to research and develop new technologies. As part of our such efforts, we have
established cooperation centers within various universities, including Seoul National University and Korea Advanced
Institute of Science and Technology, in order to promote the research and development of various technologies for use in
future display panels. Recently, in December 2021, we entered into an agreement with Yonsei University to establish a
“Display Fusion Engineering Department” that offers specialized classes in technical fields such as electronics, electricity,
physics, chemistry and materials with the aim to cultivate next-generation talents. We also enter into joint research and
55
development agreements from time to time with third parties for the development of technologies in specific fields. In
addition, we belong to several display industry consortia, and we receive annual government funding to support our research
and development efforts.
While we primarily rely on our own capacity for the development of new technologies in the display panel design
and manufacturing process, we rely on third parties for certain key technologies to enhance our technology leadership, as
further described in “—Intellectual Property” below.
Intellectual Property
Overview
Our business has benefited from our patent portfolio, which includes patents for display technologies, manufacturing
processes, products and applications related to the production of TFT-LCD and OLED panels. We hold a large number of
patents in Korea and in other countries, including in the United States, China, Japan, Germany, France, Great Britain,
Taiwan, India and Vietnam. These patents will expire at various dates upon the expiration of their respective terms ranging
from 2023 to 2042. In March 2014, we formed Unified Innovative Technology, LLC in the United States, a limited liability
company solely owned by us for the purpose of patent portfolio management.
As part of our ongoing efforts to prevent infringements on our intellectual property rights and to keep abreast of
critical technology developments by our competitors, we closely monitor patent applications in Korea and various other
countries in which we sold our products. We intend to continue to file patent applications, where appropriate, to protect our
proprietary technologies. We also enter into confidentiality agreements with each of our employees and consultants upon the
commencement of an employment or consulting relationship. These agreements generally provide that all inventions, ideas,
discoveries, improvements and copyrightable material made or conceived by the individual arising out of the employment or
consulting relationship and all confidential information developed or made known to the individual during the term of the
relationship are our exclusive property. In addition, we have increased our efforts to safeguard our propriety information by
engaging in in-house information protection awareness activities with our employees.
License Agreements
We enter into license or cross-license agreements from time to time with third parties with respect to various device
and process technologies to complement our in-house research and development. We engage in regular discussions with third
parties to identify potential areas for additional licensing of key technologies.
Expenses relating to our license fees and royalty payments under existing license agreements were W136 billion in
2020, W150 billion in 2021 and W152 billion (US$120 million) in 2022 representing 7.8%, 7.1% and 6.3% of our research
and development related expenditures in 2020, 2021 and 2022, respectively. We recognized royalty income in the amount of
W14 billion in 2020, W14 billion in 2021 and W12 billion (US$10 million) in 2022. The following are examples of license
agreements we have entered into:
•
•
•
•
We have a license agreement with each of Columbia University, Penn State University, Honeywell
International, Honeywell Intellectual Properties, Plasma Physics Corporation and Fergason Patent Properties.
Each license agreement provides for a non-exclusive license under certain patents relating to TFT-LCD
technologies.
We have a cross-license agreement with each of Hitachi, HannStar and Hydis for a non-exclusive license
under certain patents relating to display technologies.
We have separate cross-license agreements with each of NEC and AU Optronics in connection with the
settlement of certain patent infringement lawsuits. Under the agreements, each party grants the other party a
license under certain patents relating to TFT-LCD technologies.
We are licensed to use certain patents for our TFT-LCD products pursuant to a cross-license agreement
between Philips Electronics and Toshiba Corporation.
In addition to the above, we have also entered into license or cross-license agreements with other third parties in the
course of our business operations in connection with certain patents, which such third parties own or control.
56
As well as licensing key technologies from third parties, we aim to benefit from our own patents and other
intellectual property rights by granting licenses to third parties from time to time in return for royalty payments. We have also
entered into certain patent purchase and license agreements with third parties, where we receive a portion of the license
payments.
Item 5.D. Trend Information
These matters are discussed under Item 5.A. and Item 5.B. above where relevant.
Item 5.E. Critical Accounting Estimates
Our financial statements are prepared in accordance with IFRS as issued by the IASB. See Note 2(d) of the notes to
our financial statements for a discussion on the accounting policies critical to an understanding of our consolidated financial
statements.
Item 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
Item 6.A. Directors and Senior Management
Board of Directors
Our board of directors has the ultimate responsibility for the management of our business affairs. Our articles of
incorporation provide for a board consisting of between five and seven directors, more than half of whom must be outside
directors. Our shareholders elect all directors at a general meeting of shareholders. Under the Korean Commercial Code, a
representative director of a company established in Korea is authorized to represent and act on behalf of such company and
has the power to bind such company. Hoyoung Jeong is currently our sole representative director.
The term of office for our directors shall not exceed the closing of the annual general meeting of shareholders
convened in respect of the last fiscal year within three years after they take office. Our board must meet at least once every
quarter, and may meet as often as the chairman of the board of directors or the person designated by the regulation of the
board of directors deem necessary or advisable.
The tables below set forth information regarding our current directors and executive officers. The business address
of all of the directors and executive officers is LG Twin Towers, 128 Yeoui-daero, Yeongdeungpo-gu, Seoul 07336, Korea.
Our Outside Directors
Our current outside directors are set out in the table below. Each of our outside directors meets the applicable
independence standards set forth under the rules of the Korean Commercial Code and also meets the applicable independence
criteria set forth under Rule 10A-3 of the Exchange Act.
Name
Doocheol Moon
Date of Birth
November 5, 1967
First Elected/
Appointed
Position
Director March 2021
Term Expires
March 2024
Chung Hae Kang
May 20, 1964
Director March 2022
March 2025
Jungsuk Oh
September 30, 1970
Director March 2023(1) March 2026
Sang-Hee Park
December 2, 1965
Director March 2023
March 2026
Principal Occupation Outside of
LG Display
Professor, School of
Business, Yonsei University
Professor, University of
Seoul Law School
Professor, Operations
Management, Seoul
National University
Professor, Materials Science
and Engineering, Korea
Advanced Institute of
Science and Technology
(1)
Prior to his election to our board of directors at our annual general meeting of shareholders in March 2023, Mr. Oh previously served as a court-
appointed temporary outside director and member of the Audit Committee since April 2022.
57
Our Non-Outside Directors
Our current non-outside directors are set out in the table below:
Name
Hoyoung Jeong
Date of Birth
Position
November 2, 1961 President, Chief Executive
Officer, Representative
Director
First Elected/
Appointed
Term Expires
March 2020 March 2026
Principal
Occupation
Outside of
LG Display
—
Sunghyun Kim
December 12, 1967 Senior Vice President,
March 2022 March 2025
Beom Jong Ha
July 16, 1968
Our Non-Director Executive Officers
Chief Financial Officer,
Director
Director
March 2022 March 2025
Our current non-director executive officers are set out in the table below:
Name
Myoung Kyu Kim
Yong Min Ha
Jong Woo Kim
Soo Young Yoon
Yoong Ki Min
Byeong Koo Kim
Kang Yeol Oh
Hyun Chul Choi
Young Sang Byun
Jin Hyo Lee
J. Kenneth Oh
Han Seop Kim
Sang Ho Song
Jeong Ki Park
Young Seok Choi
Hyeon Woo Lee
Hee Yeon Kim
Woo Sup Shin
Seong Hee Kim
Yoo Seok Park
Seung Min Lim
Kwang Jin Kim
Jin Nam Park
Lee Han Koo
Keuk Sang Kwon
Kwon Shik Park
Position
President
Executive Vice
President
Executive Vice
President
Executive Vice
President
Executive Vice
President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Responsibility and Division
Head of Medium-Small Display Business Unit
Head of Quality Management Center
Chief Production Officer
Chief Technology Officer
Head of Medium Display Business Group
Head of Auto Business Group
Head of Small Display Sales/Marketing Group
Head of Small Display Business Group
Head of EXO Infra Task Force
Head of Legal Group
Head of Intellectual Property Division
Head of Large Display Development Group
Chief of Human Resource Officer
Head of Medium Display Development Group
Head of Production Technology Center
Head of Large Display Business Unit
Chief Strategy Officer
Head of Large Display Manufacture Center
Chief Safety Environment Officer
Leader of Large Display Competitiveness Innovation Task
Force
Senior Vice President
Senior Vice President
Senior Vice President
Vice President
Vice President
Vice President
Head of Corporate Planning & Management Group
Head of Large Display Sales Group
Head of Purchasing Group
Head of Business Support Group
Head of Auto Product Development Division 1
Head of Foundation Technology Laboratory
58
—
—
Age
60
56
57
56
57
55
58
55
57
50
55
57
58
54
54
55
53
53
54
52
55
53
51
55
52
53
Dong Hoon Lee
Chang Mog Jo
Jin Gu Jeung
Chae Woo Choi
Sang Yoon Park
Eun Kuk Kyung
Young Dall Park
Yong In Park
Hoon Jeong
Myung Su Suk
Jong Seo Yoon
Han Wook Hwang
Seung Ho Kwon
Tae Rim Lee
In Hyuk Song
Sung Chun Kang
Joon Young Yang
Tae Hyung Lim
Kyung Joon Kwon
Jae Young Kwon
Sung Joon Bae
Won Gyun Youn
Ki Young Kim
Ji Ho Baek
Seung Do Kim
Heung Soo Kim
In Kwan Choi
Jong Suk Jeon
Sang Hyun Ahn
Won Seok Kang
Whan Woo Park
Byung Seung Lee
Han Yong Nam
Hu Kag Lee
Jong Uk Bae
Jong Duck Kim
Chun Ho Yeo
Hyung Jung Lee
Pan Youl Kim
In Keun Jeong
Jae Jun Ahn
Ki Hwan Son
Gwang Tae Kim
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Head of Auditing & Management Consulting Division
Head of Equipment Development Division
Head of GuangZhou Complex Group
Head of Solution Customer Experience Division 1
Head of Medium Display Product Development Division 2
Head of Accounting Division
Head of Vietnam HR & Business Support Division
Head of Medium-Small Display Advanced Research
Division
Head of Medium Display Panel Development Division
Head of Vietnam Complex Group
Leader of Austin Branch
Head of Small Display Development Group
Head of Large Display Panel Division
Leader of Large Display Performance Improvement Task
Force
Head of Medium OLED Panel Development Division
Head of Medium Display Manufacture Center
Head of Precedence Technology Laboratory
Head of Medium Display Sales Division 2
Head of Small Display Product Development Division 1
Head of Medium Display Sales/Marketing Group
Head of Large Display Panel Development Division
Head of Medium Display Product Development Division 3
Head of Medium-Small Display Quality Division
Head of OC Research/Development Division
Head of Nanjing Factory
Head of Small Display Manufacture Center
Head of Small Display Module Technology Division
Head of Medium Display Customer Experience Group
Head of Auto Sales Division
Head of Large Display Product Planning Division
Head of Small Display Sales Division 2
Head of DX Division
Head of Purchasing Division 2
Head of LGDCO Subsidiary
Head of Large Display Process Development Division
Head of Large Display Planning & Management Division
Head of Solution Customer Experience Group
Head of Large Display SCM Division
Head of Small Display Product Development Division 3
Head of Advanced Quality Division
Head of Small Display Process Integration Group
Head of Auto Marketing Product Planning Division
Head of Medium Display Precedence Development
Division
59
51
57
53
53
53
53
52
53
50
52
51
47
51
47
45
53
52
53
47
53
51
51
51
51
51
52
51
48
52
51
50
46
54
52
52
52
53
53
51
51
49
44
50
Joon Hyeok Jang
Ui Jin Chung
Jae Hyeob Seo
Tae Wook Kang
Juhn Suk Yoo
Woo Nam Jeong
Seong Gon Kim
Sang Hoon Jung
Jong Seob Choi
Jun Hyuk Choi
Kyu Dong Kim
Seong Pil Shin
Dong Hee Kim
Ki Sang Lee
Pyung Hun Kim
Jae Won Jang
Heung Lyul Cho
Nak Jin Seong
Yunseon Kang
Sang Goon Whang
Jun Tak Oh
Suk Hyun Lee
Woong Gi Jun
Vice President
Vice President
Vice President
Vice President
Chief Research
Fellow
Chief Research
Fellow
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Head of Large Display Sales Division 2
Leader of EXO Task Force
Head of Gumi Complex Group
Head of Customer Insight Division
Leader of Small Display Advanced Technology
Development Task Force
Leader of MTB Task Force
Head of Medium Display Sales Division 3
Leader of Large Display Advanced Research Division
Head of HRM Division
Head of Public Relations Division
Head of Finance & Risk Management Division
Head of Public Affairs/ESG Division
Head of Medium OLED Factory
Head of Labor Management Division
Head of Auto Product Development Division 2
Head of Medium-Small Display Product Planning
Division
Head of Business Innovation Division
Head of Large Display Product Development Division 1
Head of Equipment Technology Division
Head of Large Display Sales Division 1
Head of Manufacture DX Division
Head of Infra Technology Division
Head of R&D Strategy Division
49
51
52
46
51
56
45
46
45
49
45
49
51
52
49
48
49
45
52
48
46
50
46
Item 6.B. Compensation
The aggregate remuneration and benefits-in-kind we paid in 2022 to our directors was W3.7 billion (US$2.9
million). This included W2.4 billion (US$1.9 million) in salary paid to Hoyoung Jeong, our chief executive officer, and
W637 million (US$0.5 million) in salary paid to Sunghyun Kim, our chief financial officer, in each case for the period during
which each such person served on our board of directors in 2022.
The aggregate remuneration and benefits-in-kind we paid in 2022 to our non-director executive officers was W49.4
billion (US$39.2 million).
The compensation of the five individuals who received the highest compensation among those who received total
annual compensation exceeding W500 million in 2022 was as follows:
Name
Hoyoung Jeong
Hyung Seok Choi (2)
Sang-Mun Shin (2)
Ju Hong Lee (2)
Young-Kwon Song (2)
Composition of Total Compensation
Position
Salary
Bonus(1)
Retirement
Benefits
(in millions of Won)
Total
Compensation
Chief Executive Officer
Advisor
Advisor
Advisory Officer
Advisory Officer
₩
₩
₩
₩
₩
1,392 ₩
332 ₩
332 ₩
238 ₩
227 ₩
1,011
262 ₩
251 ₩
166 ₩
166 ₩
— ₩
1,617 ₩
1,422 ₩
1,084 ₩
1,067 ₩
2,403
2,211
2,005
1,488
1,460
(1)
(2)
Based on our performance in 2021.
Former officer who retired from his position as of March 31, 2022.
Our articles of incorporation provide for a stock option plan to aid retention of executives and key staff and to
provide an incentive to meet strategic objectives. All of the stock options we have previously granted have expired and none
are currently outstanding. In addition, remuneration for our directors is determined by shareholder resolution, and severance
60
payments to our directors are made in accordance with our regulations on severance payments adopted by our shareholders.
We also maintain a cash-based incentive plan for our executive officers and other key managerial employees adopted by our
board of directors. Incentive payments are determined based on various long-term performance criteria and paid annually,
subject to our cash resources and performance in such year. In addition, our executive officers and other key managerial
employees are also eligible for bonuses payable under our employee profit sharing plan if certain performance criteria are
met.
We carry liability insurance for the benefit of our directors and officers against certain liabilities incurred by them in
their official capacities. This insurance covers our directors and officers, as well as those of our subsidiaries, against certain
claims, damages, judgments and settlements, including related legal costs, arising from a covered individual’s actual or
alleged breaches of duty, neglect or other errors, arising in connection with such individual’s performance of his or her
official duties. The insurance protection also extends to claims, damages, judgments and settlements, including related legal
costs, arising out of shareholders’ derivative actions or otherwise relating to our securities. Policy exclusions include, but are
not limited to, claims relating to fraud, willful misconduct or criminal acts, as well as the payment of punitive damages. In
2022, we paid a premium of approximately US$1.4 million in respect of this insurance policy.
Item 6.C. Board Practices
See “Item 6.A. Directors and Senior Management” above for information concerning the terms of office and
contractual employment arrangements with our directors and executive officers.
Committees of the Board of Directors
We currently have five committees that serve under our board of directors:
•
•
•
•
•
Audit Committee;
Outside Director Nomination Committee;
Management Committee;
Related Party Transaction Committee; and
ESG Committee;
Under our articles of incorporation, our board of directors may establish other committees if they deem them
necessary. Our board of directors appoint each member of these committees except that candidates for the Audit Committee
will first be elected by our shareholders at the general meeting of shareholders.
Audit Committee
Under Korean law and our articles of incorporation, we are required to have an Audit Committee. Our Audit
Committee is currently comprised of four outside directors: Doocheol Moon, Chung Hae Kang, Jungsuk Oh and Sang-Hee
Park. The chairman is Doocheol Moon. Members of the Audit Committee are elected by our shareholders at the annual
general meeting of shareholders and all members must meet the applicable independence criteria set forth under the rules and
regulations of the Sarbanes-Oxley Act of 2002 and the Korean Commercial Code. The committee reviews all audit and
compliance-related matters and makes recommendations to our board of directors. The Audit Committee’s primary
responsibilities include the following:
•
•
•
•
•
•
engaging or dismissing independent auditors;
approving independent audit fees;
approving audit and non-audit services;
reviewing annual and interim financial statements;
reviewing audit results and reports, including management comments and recommendations;
reviewing our system of controls and policies, including those covering conflicts of interest and business
ethics;
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•
•
•
assessing compliance with disclosure and filing obligations;
considering significant changes in accounting practices; and
examining improprieties or suspected improprieties.
In addition, in connection with general meetings of shareholders, the committee examines the agenda for, and
financial statements and other reports to be submitted by, the board of directors at each general meeting of shareholders. Our
external auditor reports directly to the Audit Committee. Our external auditor is invited to attend meetings of this committee
when needed or when matters pertaining to the audit are discussed.
The committee holds regular meetings at least once each quarter, and more frequently as needed.
Outside Director Nomination Committee
Under Korean law and our articles of incorporation, we are required to have an Outside Director Nomination
Committee for the nomination of outside directors. Our Outside Director Nomination Committee is currently comprised of
two outside directors, Chung Hae Kang and Jungsuk Oh, and one non-outside director, Beom Jong Ha. The chairman’s seat
is currently vacant due to changes in the existing members of our board of directors, and a new chairman will be elected at a
future meeting of the committee. The Outside Director Nomination Committee reviews the qualifications of potential
candidates for outside directors and proposes nominees to serve on our board of directors.
The committee holds meetings as necessary for the nomination of outside directors.
Management Committee
The Management Committee is comprised of two non-outside directors, Hoyoung Jeong and Sunghyun Kim. The
chairman is Hoyoung Jeong. The committee’s primary responsibilities include making recommendations regarding matters
relating to our operation and other matters delegated to the committee by our board of directors.
The committee holds meetings from time to time as needed.
Related Party Transaction Committee
The Related Party Transaction Committee, which was newly created in July 2021, is comprised of three outside
directors, Chung Hae Kang, Doocheol Moon and Jungsuk Oh, and our chief financial officer and non-outside director,
Sunghyun Kim. The chairman is Chung Hae Kang. The committee reviews related party and other internal transactions to
ensure compliance with the Monopoly Regulation and Fair Trade Act and makes recommendations to our board of directors.
The committee holds regular meetings at least once each half-year, and more frequently as needed.
ESG Committee
The ESG Committee, which was newly created in April 2021, is comprised of four outside directors, Doocheol
Moon, Chung Hae Kang, Jungsuk Oh and Sang-Hee Park, and our chief executive officer and non-outside director, Hoyoung
Jeong. The chairman is Doocheol Moon. The committee is responsible for reviewing and establishing policies and strategies
relating to the environment and safety, social responsibility, customer value, shareholder value and corporate governance, and
making recommendations to our board of directors.
The committee holds regular meetings at least once each half-year, and more frequently as needed.
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Item 6.D. Employees
As of December 31, 2022, we had 69,656 employees, including 40,382 employees in our overseas subsidiaries. The
following table provides a breakdown of our employees by function as of December 31, 2020, 2021 and 2022:
Employees(1)
Production
Technical(2)
Sales & Marketing
Management & Administration
Total
(1)
(2)
Includes employees of our subsidiaries.
Includes research and development and engineering personnel.
2020
As of December 31,
2021
2022
53,336
7,541
1,432
1,051
63,360
59,976
8,018
1,526
1,187
70,707
58,050
8,612
1,700
1,294
69,656
To recruit promising engineering students at leading Korean universities, we work with these universities on
research projects where these students can gain exposure to our research and development efforts. We also provide on-the-job
training for our new employees and develop training programs to identify and promote new leaders.
As of December 31, 2022, more than half of our employees based in Korea were union members, and production
employees accounted for substantially all of these members. We have a collective bargaining arrangement with our labor
union, which is negotiated once a year. We consider our relationship with our employees to be good.
The salaries of our employees are reviewed annually. Salaries are adjusted based on individual and team
performance, industry standards and inflation. As an incentive, discretionary bonuses may be paid based on the performance
of individuals, and a portion of our profits may be paid to our employees under our profit sharing plan if certain performance
criteria are achieved. We also provide a wide range of benefits to our employees including medical insurance, employment
insurance, workers compensation, free medical examinations, child tuition and education fee reimbursements and low-cost
housing for certain employees.
Under the Guarantee of Workers’ Retirement Benefits Act, employees with one year or more of service are entitled
to receive, upon termination of their employment, a lump-sum severance payment based on the length of their service and
their average wage during the last three months of employment. As of December 31, 2022, the present value of our defined
benefit obligations amounted to W1,603 billion (US$1,272 million), while the fair value of our benefit plan assets amounted
to W2,049 billion (US$1,626 million), including amounts relating to employees of our foreign subsidiaries. See Note 13 of
the notes to our financial statements for a discussion on the method of calculating our recognized liabilities for defined
benefit obligations.
As of December 31, 2022, our employee stock ownership association owned approximately 0.00001% of our
common stock.
Item 6.E. Share Ownership
Common Stock
The persons who are currently our executive officers held, as a group, 110,446 shares of our common stock as of
April 18, 2023, the most recent date for which this information is available. Our executive officers acquired our shares of
common stock through our employee stock ownership association and pursuant to open market purchases on the Korea
Exchange. Due to Korean law restrictions, our registered executive officers, including our chief executive officer and chief
financial officer do not participate in the employee stock ownership association. Each of our directors and executive officers
beneficially owns less than one percent of our common stock on an individual basis.
In addition, our articles of incorporation provide for a stock option plan to aid retention of executives and key staff
and to provide an incentive to meet strategic objectives. All of the stock options we have previously granted have expired and
none are currently outstanding.
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Item 6.F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation
Not applicable.
Item 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
Item 7.A. Major Shareholders
The following table sets forth information regarding beneficial ownership of our common stock by each person or
entity known to us as of April 18, 2023 to own beneficially more than 5% of our outstanding shares:
Beneficial Owner
LG Electronics
National Pension Service
Number of Shares of
Common Stock
135,625,000
17,952,226
Percentage
37.9%
5.0%
Other than as set forth above, no other person or entity known by us to be acting in concert, directly or indirectly,
jointly or severally, owned more than 5% or more of our outstanding common stock or exercised control or could exercise
control over us as of April 18, 2023. None of our major shareholders identified above has voting rights different from those
of our other shareholders.
Item 7.B. Related Party Transactions
We engage from time to time in a variety of transactions with related parties, including the sale of our products to,
and the purchase of raw materials and components from, such related parties. See Notes 8 and 29 of the notes to our financial
statements. More recently, in March 2023, we entered into a long-term borrowings agreement with LG Electronics, our
largest shareholder. See “— Long-Term Borrowings Agreement with LG Electronics.” We have conducted our transactions
with related parties based on arm’s length negotiations taking into account such considerations as we would in comparable
transactions with a non-related party.
From time to time, we provide payment guarantees for the benefit of certain of our subsidiaries. For a discussion of
such payment guarantee obligations, please see “Item 5.B. Liquidity and Capital Resources.”
Transactions with Companies in the LG Group
Sales to LG Electronics
We sell display panels, primarily large-sized panels for televisions, notebook computers and desktop monitors and
small-sized panels for tablet computers and mobile and other applications, to LG Electronics and its subsidiaries on a regular
basis, as both an end-brand customer and as a system integrator for use in products they assemble on a contract basis for
other end-brand customers. Pricing and other principal terms of the sales to LG Electronics are negotiated based on then-
prevailing market terms and prices as adjusted for LG Electronics’ requirements such as volume and product specifications
and our internal projections regarding market trends, which are the same considerations that we take into account when
negotiating pricing and principal terms of sales to our non-affiliated end-brand customers.
Sales to LG Electronics and its subsidiaries, which include sales to LG Electronics as an end-brand customer and
system integrator, amounted to W4,699 billion (US$3,729 million), or 18.0% of our sales, in 2022.
Purchases from LG Electronics
We purchase equipment, photo masks, components and certain services, such as transportation, warehousing and
other related logistics services, from LG Electronics and its subsidiaries. Our purchases from LG Electronics and its
subsidiaries amounted to W798 billion (US$633 million), or 4.2% of our total purchases, in 2022.
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Other Purchases
Under a master purchase agreement, we procure, on an “as-needed” basis, certain of the raw materials, components
and other materials necessary for our production process from other companies in the LG Group. Our purchases of raw
materials, such as polarizers, from LG Chem, an affiliate of LG Corp., amounted to W556 billion (US$441 million), or 3.0%
of our total purchases, in 2022.
Our total purchases, including purchases of materials, supplies and services, from companies in the LG Group,
excluding LG Electronics and LG Chem and their respective subsidiaries, amounted to W1,533 billion (US$1,216 million),
or 8.1% of our total purchases, in 2022.
Intellectual Property Related Agreements with LG Corp. and LG Electronics
We have entered into successive trademark license agreements with LG Corp., the holding company of the LG
Group, for use of the “LG” name. Under the terms of the current agreement, we are required to make monthly payments to
LG Corp. in the aggregate amount per year of 0.2% of our sales after deducting advertising expenses. As of April 18, 2023,
we have made all monthly payments required to be made to LG Corp. in accordance with the terms of the current agreement.
In addition, we benefit from certain licenses extended to us from license or cross-license agreements between LG
Electronics and third parties. Under the terms of the joint venture agreement establishing LG.Philips LCD Co., Ltd., LG
Electronics had assigned most of its patents relating to the development, manufacture and sale of TFT-LCD products to us
and we had agreed to maintain joint ownership of those patents that were not assigned to us.
Long-Term Borrowings Agreement with LG Electronics
In March 2023, we entered into an agreement to obtain a long-term borrowing from LG Electronics, our largest
shareholder, in the aggregate amount of W1 trillion with an interest rate of 6.06% per year. We received W0.65 trillion of the
principal amount of such borrowing on March 30, 2023 and the remaining W0.35 trillion on April 20, 2023. We are
responsible only for interest payments during the first two years of the borrowing term, while the principal amount is subject
to repayment on a quarterly basis during the final year, until its maturity on March 30, 2026. We obtained such borrowing in
order to strengthen the competitiveness of our OLED business as well as for general corporate purposes.
Transactions with Directors and Officers
Certain of our directors and executive officers also serve as executive officers of companies with which we do
business. None of our directors or executive officers has or had any interest in any of our business transactions that are or
were unusual in their nature or conditions or significant to our business.
Item 7.C. Interests of Experts and Counsel
Not applicable.
Item 8. FINANCIAL INFORMATION
Item 8.A. Consolidated Statements and Other Financial Information
See “Item 18. Financial Statements” and pages F-1 through F-98.
Legal Proceedings
We are involved from time to time in certain routine legal actions incidental to our business. However, except for
the ongoing proceedings described below, we are not currently involved in any material litigation or other proceedings the
outcome of which we believe might, individually or taken as a whole, have a material adverse effect on our results of
operations or financial condition. In addition, except as described below, we are not aware of any other material pending or
threatened litigation against us.
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Antitrust and Others
In December 2006, LG Display received notices of investigation by the U.S. Department of Justice, the European
Commission, the Korea Fair Trade Commission and the Japan Fair Trade Commission with respect to possible anti-
competitive activities in the TFT-LCD industry. Subsequently, the Competition Bureau of Canada, the Secretariat of
Economic Law of Brazil, the Taiwan Fair Trade Commission, and the Federal Competition Commission of Mexico
announced investigations regarding the same. Between November 2008 and June 2014, each of such investigations and
subsequent legal proceedings brought by the relevant competition authorities was settled or resolved, and we have paid fines
of US$400 million pursuant to our November 2008 settlement agreement with the U.S. Department of Justice, €210 million
pursuant to a December 2010 decision by the European Commission and R$33.9 million pursuant to an August 2014
settlement agreement with the Secretariat of Economic Law of Brazil.
After the commencement of the U.S. Department of Justice investigation, various class action complaints and
separate claims by direct and indirect purchasers of our products were filed against us and other TFT-LCD panel
manufacturers in the United States and Canada, alleging violations of respective antitrust and related laws. In addition, from
2010 to 2012, the attorneys general of Arkansas, California, Florida, Illinois, Michigan, Mississippi, Missouri, New York,
Oklahoma, Oregon, South Carolina, Washington, West Virginia and Wisconsin filed complaints against us, alleging similar
antitrust violations. In June 2018, the attorney general of the Commonwealth of Puerto Rico filed a complaint against us and
other TFT-LCD panel manufacturers alleging unjust enrichment in connection with the aforementioned U.S. Department of
Justice investigation. Since then, we have reached settlements with each of the plaintiff classes and separate plaintiffs, as well
as with the aforementioned state attorneys general, with the exception of the attorney general of the Commonwealth of Puerto
Rico, which settlements were duly approved by the applicable courts and, in the case of the state attorneys general actions, by
their respective state governments. In October 2022, the United States District Court for the District of Puerto Rico dismissed
the case without prejudice for failure to prosecute.
A number of claims alleging damages were filed against LG Display and other entities in the United Kingdom as
follow-on claims from the above-described European Commission’s decision in December 2010. We have since reached
settlements with each of the claimants, with the exception of a follow-on damages claim filed by Granville in December
2016. As of April 18, 2023, we are vigorously defending ourselves against claims by Granville.
In December 2013, a class action complaint was filed by Hatzlacha, a consumer organization, on behalf of Israeli
consumers against LG Display and other defendants in the Central District in Israel. As of April 18, 2023, we have not been
served with the complaint from Hatzlacha.
We were a defendant in four patent infringement lawsuits (two in the United States, one in Germany and one in
China) filed against us by Solas OLED Ltd. between April 2019 and September 2020. In December 2020, we entered into a
settlement and license agreement with the plaintiff with respect to each of the four cases, and the plaintiff subsequently
withdrew its claim in each of these cases between January and March 2021.
In each of the foregoing matters that are ongoing, we are continually evaluating the merits of the respective claims
and vigorously defending ourselves. Irrespective of the validity or the successful assertion of the claims described above, we
may incur significant costs with respect to litigating or settling any or all of the asserted claims. While we continue to
vigorously defend the various ongoing proceedings that we are involved in, it is possible that one or more proceedings may
result in cash outflow to settle or resolve these claims, which may have an adverse effect on our operating results or financial
condition.
Dividends
Annual dividends must be approved by the shareholders at the annual general meeting of shareholders and interim
dividends must be approved by the board of directors. Cash dividends may be paid out of retained earnings that have not been
appropriated to statutory reserves.
At our annual general meetings of shareholders on March 20, 2020 and March 23, 2021, we did not declare any cash
dividend to our shareholders. At our annual general meeting of shareholders that was held on March 23, 2022, we declared a
cash dividend of W650 per share of common stock, amounting to a total cash dividend of W232.6 billion to our shareholders
of record as of December 31, 2021. At our annual general meeting of shareholders that was held on March 21, 2023, we did
not declare any cash dividend to our shareholders.
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Item 8.B. Significant Changes
Except as disclosed elsewhere in this annual report, we have not experienced any significant changes since the date
of our audited consolidated financial statements included in this annual report.
Item 9. THE OFFER AND LISTING
Item 9.A. Offer and Listing Details.
Principal Trading Market
The principal trading market for our common stock is the Korea Exchange. Our common stock, which is in
registered form and has a par value of W5,000 per share of common stock, has been listed on the Korea Exchange since July
23, 2004 under the identifying code 034220. As of December 31, 2022, 357,815,700 shares of common stock were
outstanding. Our common stock is also listed on the New York Stock Exchange in the form of ADSs. The ADSs have been
issued by Citibank as ADS depositary and have been listed on the New York Stock Exchange under the ticker symbol “LPL”
since July 22, 2004. One ADS represents one-half of one share of common stock. As of December 31, 2022, 16,674,488
ADSs were outstanding.
Item 9.B. Plan of Distribution
Not applicable.
Item 9.C. Markets
See “Item 9.A. Offering and Listing Details.”
Item 9.D. Selling Shareholders
Not applicable.
Item 9.E. Dilution
Not applicable.
Item 9.F. Expenses of the Issue
Not applicable.
Item 10. ADDITIONAL INFORMATION
Item 10.A. Share Capital
Not applicable.
Item 10.B. Memorandum and Articles of Association
Description of Capital Stock
This section provides information relating to our capital stock, including brief summaries of material provisions of
our current articles of incorporation, the Financial Investment Services and Capital Markets Act and the Korean Commercial
Code. The following summaries are subject to, and are qualified in their entirety by reference to, our articles of incorporation
and the applicable provisions of the Financial Investment Services and Capital Markets Act and the Korean Commercial
Code.
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General
Under our articles of incorporation, which was last amended in March 2022, the total number of shares authorized to
be issued by us is 500,000,000 shares, which consists of shares of common stock and non-voting preferred stock, both with
par value of W5,000 per share. We are authorized to issue preferred stock of up to 40,000,000 shares. As of December 31,
2022, 357,815,700 shares of common stock were issued. All of the issued and outstanding shares are fully-paid and non-
assessable and are in registered form.
Our articles of incorporation reflect the adoption of the electronic securities system that launched in September
2019, pursuant to the Act on Electronic Registration of Stocks, Bonds, Etc. (the “Electronic Registration Act”). Accordingly,
following the launch of such system, in lieu of issuing share certificates or certificates of preemptive rights, we electronically
register the shares that would otherwise be indicated on certificates of preemptive rights on an electronic registry of an
electronic registration institution.
Dividends
We distribute dividends to our shareholders in proportion to the number of shares owned by each shareholder. The
shares represented by the ADSs have the same dividend rights as other outstanding shares.
Holders of preferred shares are entitled to receive dividends in priority to the holders of common stock. The amount
of dividends for preferred shares is determined by our board of directors within a range of 1% to 10% of par value at the time
the shares are issued, provided that if the dividend amount on the shares of common stock exceeds that on the preferred
shares, holders of preferred shares will also participate in the distribution of the excess dividend amount in the same
proportion as holders of common stock. If the amount available for dividends is less than the aggregate amount of such
minimum dividend, the holders of preferred shares will be entitled to receive the accumulated unpaid dividends in priority to
the holders of common stock from the dividends payable in respect of the next fiscal year.
We declare dividends annually at the annual general meeting of shareholders which is held within three months after
the end of the fiscal year. We pay the annual dividend shortly after the annual general meeting to the shareholders of record
as of the end of the preceding fiscal year. We may distribute the annual dividend in cash or in shares. However, a dividend of
shares must be distributed at par value. If the market price of the shares is less than their par value, dividends in shares may
not exceed one-half of the annual dividend. We have no obligation to pay any annual dividend unclaimed for five years from
the payment date.
Under the Korean Commercial Code, we may pay an annual dividend only out of the excess of our net assets, on a
non-consolidated basis, over the sum of (1) our stated capital and (2) the total amount of our capital surplus reserve and legal
reserve accumulated up to the end of the relevant dividend period. We may not pay an annual dividend unless we have set
aside a legal reserve in an amount equal to at least 10% of the cash portion of the annual dividend or unless we have
accumulated a legal reserve of not less than one-half of our stated capital. We may not use legal reserves to pay cash
dividends but may transfer amounts from legal reserves to capital stock or use legal reserves to reduce an accumulated
deficit.
Also, we may pay an interim dividend in accordance with a resolution of the board of directors to our shareholders
who are registered in the shareholders’ register as of July 1 of the relevant fiscal year, and such an interim dividend shall be
made in cash.
Distribution of Free Shares
In addition to paying dividends in shares out of our retained or current earnings, we may also distribute to our
shareholders an amount transferred from our capital surplus or legal reserve to our stated capital in the form of free shares.
Free shares are shares newly issued to existing shareholders without consideration, much like stock dividends, except that in
the case of free shares a portion of the reserves, as opposed to earnings, is transferred to capital. We must distribute such free
shares to all of our shareholders in proportion to their existing shareholdings. We may distribute free shares when we
determine that our capital surplus or legal reserves are too large relative to our paid-in capital.
Preemptive Rights and Issuance of Additional Shares
We may issue authorized but unissued shares at the times and, unless otherwise provided in the Korean Commercial
Code, on the terms our board of directors may determine. All of our shareholders are generally entitled to subscribe for any
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newly issued shares in proportion to their existing shareholdings. We must offer new shares on uniform terms to all
shareholders who have preemptive rights and are listed on our shareholders’ register as of the relevant record date. However,
under the Korean Commercial Code, we may vary the specific terms of these preemptive rights for different classes of shares
without shareholder approval. To the extent that such different terms result in placing any particular class of shareholders at a
disadvantage relative to other classes, a special resolution by that disadvantaged class of shareholders is necessary.
We must give public notice of the preemptive rights regarding new shares and their transferability at least two weeks
before the relevant record date. Our board of directors may determine how to distribute shares for which preemptive rights
have not been exercised or where fractions of shares occur.
Under our articles of incorporation, we may issue new shares pursuant to a board resolution to persons other than
existing shareholders, who however will not have preemptive rights, if the new shares are, among others:
•
•
•
•
•
•
publicly offered pursuant to the Financial Investment Services and Capital Markets Act;
issued to members of our employee stock ownership association;
represented by depositary receipts;
issued upon exercise of stock options granted to our officers and employees;
issued to corporations, institutional investors or domestic or overseas financial institutions to achieve our
operational objectives; or
issued for the purpose of drawing foreign investment when we deem it necessary for our business needs;
provided that the aggregate number of shares so issued do not exceed 20% of the total number of issued and
outstanding shares.
In addition, we may issue convertible bonds or bonds with warrants, respectively, up to an aggregate face amount of
W2.5 trillion to persons other than existing shareholders. The classes of shares to be issued upon conversion of bonds or
exercise of warrants shall be common stock. In addition, since September 2019, pursuant to the Electronic Registration Act,
in lieu of issuing bond or warrant certificates, we electronically register the bonds and warrant rights that would otherwise be
indicated on warrant certificates on an electronic registry of an electronic registration institution.
Members of our employee stock ownership association, whether or not they are our shareholders, generally have a
preemptive right to subscribe for up to 20% of the shares publicly offered pursuant to the Financial Investment Services and
Capital Markets Act. As of December 31, 2022, approximately 0.00001% of our common stock was held by our employee
stock ownership association.
General Meeting of Shareholders
We hold the annual general meeting of shareholders within three months after the end of each fiscal year. Subject to
a board resolution or court approval, we may hold an extraordinary general meeting of shareholders:
•
•
•
•
as necessary;
at the request of holders of an aggregate of 3% or more of our outstanding shares;
at the request of shareholders holding an aggregate of 1.5% or more of our outstanding shares for at least six
consecutive months; or
at the request of our audit committee.
Holders of preferred shares may request a general meeting of shareholders only after the preferred shares become
entitled to vote or are enfranchised, as described under “—Voting Rights” below.
We must give shareholders written notice setting out the date, place and agenda of the meeting at least two weeks
before the date of the general meeting of shareholders. However, for holders of less than 1% of the total number of issued and
outstanding voting shares, we may provide such notice by public notice, either to be made at least twice in Maeil Business
Newspaper and The Chosun Ilbo, both daily newspapers of general circulation published in Seoul, or through the electronic
disclosure system operated by the Financial Supervisory Service of Korea or the Korea Exchange.
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Shareholders not on the shareholders’ register as of the record date are not entitled to receive notice of the general
meeting of shareholders, attend or vote at the meeting. Holders of non-voting preferred shares, unless enfranchised, are not
entitled to receive notice of general meetings of shareholders.
The place of our general meetings of shareholders is decided by our board of directors, which can be held in our
head office, our Paju Display Cluster or any other place as designated by our board of directors.
Directors
Under the Korean Commercial Code and our articles of incorporation, any director wishing to enter into a
transaction with us or our subsidiaries in his or her capacity is required to obtain prior approval from the board of directors,
and any director with an interest in the transaction may not vote at the meeting of the board of directors to approve the
transaction.
Voting Rights
Holders of our common stock are entitled to one vote for each share of common stock, except that voting rights may
not be exercised with respect to shares of common stock held by us or by a corporate shareholder in which we own, directly
or indirectly, more than 10% of its voting stock. The Korean Commercial Code permits cumulative voting, under which
voting method each shareholder would have multiple voting rights corresponding to the number of directors to be appointed
in the voting and may exercise all voting rights cumulatively to elect one director. However, our articles of incorporation
prohibit cumulative voting.
According to our current articles of incorporation, our shareholders may adopt resolutions at a general meeting by an
affirmative majority vote of the voting shares present or represented at the meeting, where the affirmative votes also represent
at least one-fourth of our total voting shares then issued and outstanding. However, under the Korean Commercial Code and
our articles of incorporation, the following matters, among others, require approval by the holders of at least two-thirds of the
shares present or represented at a meeting, where the affirmative votes also represent at least one-third of our total voting
shares then issued and outstanding:
•
•
•
•
•
•
•
amending our articles of incorporation;
removing a director;
effecting any dissolution, merger or consolidation of us;
transferring the whole or any significant part of our business;
effecting our acquisition of all of the business of any other company;
effecting our acquisition of a part of the business of any other company that has a material effect on our
business; or
issuing any new shares at a price lower than their par value.
In general, holders of preferred shares are not entitled to vote on any resolution or receive notice of any general
meeting of shareholders. However, in the case of amendments to our articles of incorporation, any merger or consolidation
involving us, capital reductions or in certain other cases in which the rights or interests of the preferred shares are affected,
approval of the holders of preferred shares is required. We may obtain such approval by a resolution of holders of at least
two-thirds of the preferred shares present or represented at a class meeting of the holders of preferred shares, where the
affirmative votes also represent at least one-third of our total issued and outstanding preferred shares. In addition, if we are
unable to pay dividends on preferred shares as provided in our articles of incorporation, the holders of preferred shares will
become enfranchised and will be entitled to exercise voting rights until those dividends are paid. The holders of enfranchised
preferred shares have the same rights as holders of common stock to request, receive notice of, attend and vote at a general
meeting of shareholders.
Shareholders may exercise their voting rights by proxy.
Holders of ADRs exercise their voting rights through the ADR depositary, an agent of which is the record holder of
the underlying shares. Subject to the provisions of the deposit agreement, ADR holders are entitled to instruct the ADR
depositary how to vote the shares underlying their ADSs.
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Rights of Dissenting Shareholders
In some limited circumstances, including the transfer of all or any significant part of our business and our merger or
consolidation with another company, dissenting shareholders have the right to require us to purchase their shares. To exercise
this right, shareholders must submit to us a written notice of their intention to dissent before the general meeting of
shareholders. Within 20 days after the relevant resolution is passed at such meeting, the dissenting shareholders must make a
request to us in writing to purchase their shares. We are obligated to purchase the shares of dissenting shareholders no later
than one month after the end of such 20-day period. The purchase price for the shares is required to be determined through
negotiation between the dissenting shareholders and us. If we cannot agree on a price through negotiation, the purchase price
will be the average of (1) the weighted average of the daily closing prices of shares on the Korea Exchange for the two-month
period before the date of the adoption of the relevant board resolution, (2) the weighted average of the daily closing price of
shares on the Korea Exchange for the one-month period before the date of the adoption of the relevant board resolution and
(3) the weighted average of the daily closing price of shares on the Korea Exchange for the one-week period before the date
of the adoption of the relevant board resolution. If we or the dissenting shareholders that had requested the purchase of their
shares do not accept the purchase price, we or the dissenting shareholders may request a court to determine the purchase
price. Holders of ADSs will not be able to exercise dissenter’s rights unless they have withdrawn the underlying common
stock and become our direct shareholders.
Register of Shareholders and Record Dates
Our transfer agent, Korea Securities Depository, maintains the register of our shareholders at its office in Seoul,
Korea. It will register transfers of shares on the register of shareholders on presentation of the share certificates.
The record date for annual dividends is December 31. For the purpose of determining the shareholders entitled to
annual dividends, the register of shareholders may be closed for the period from January 1 to January 15 of each year.
Further, for the purpose of determining the shareholders entitled to some other rights pertaining to the shares, we may, on at
least two weeks’ public notice, set a record date and/or close the register of shareholders for not more than three months.
Business Report
At least one week before the annual general meeting of shareholders, we must make our business report and audited
consolidated Korean IFRS financial statements available for inspection at our principal office and at all of our branch offices.
In addition, copies of business reports, the audited consolidated Korean IFRS financial statements and any resolutions
adopted at the general meeting of shareholders will be available to our shareholders.
Under the Financial Investment Services and Capital Markets Act, we must file with the Financial Services
Commission and the Korea Exchange (1) a yearly report (including audited non-consolidated financial statements and
audited consolidated financial statements) within 90 days after the end of our fiscal year and (2) interim reports with respect
to the three-month period, six-month period and nine-month period from the beginning of each fiscal year within 45 calendar
days following the end of each such period. Copies of these reports will be available for public inspection at the Financial
Services Commission and the Korea Exchange.
Transfer of Shares
Under the Korean Commercial Code, the transfer of shares is effected by delivery of share certificates. However, to
assert shareholders’ rights against us, the transferee must have his name and address registered on our register of
shareholders. For this purpose, a shareholder is required to file his name, address and seal with us. A non-Korean shareholder
may file a specimen signature in place of a seal, unless he is a citizen of a country with a sealing system similar to that of
Korea. In addition, a non-resident shareholder must appoint an agent authorized to receive notices on his behalf in Korea and
file a mailing address in Korea. The above requirements do not apply to the holders of ADSs.
However, the Electronic Registration Act requires listed securities to be automatically converted into electronic
securities as of the business day immediately preceding the effective date of the Electronic Registration Act. The Electronic
Registration Act also provides that, with respect to the transfer of electronically registered shares, the effect of transfer will
occur upon the completion of the electronic registration of such transfer, and therefore, no entry of change will be required.
Under current Korean regulations, the Korea Securities Depository, foreign exchange banks (including domestic
branches of foreign banks), financial investment companies with a dealing, brokerage or collective investment license and
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internationally recognized custodians may act as agents and provide related services for foreign shareholders. Certain foreign
exchange controls and securities regulations apply to the transfer of shares by non-residents or non-Koreans. See “Item 10.D.
Exchange Controls.”
Acquisition of Shares by Us
Under the Korean Commercial Code, we may acquire our own shares pursuant to a resolution adopted at a general
meeting of shareholders through either (i) purchases on a stock exchange or (ii) with respect to shares other than any
redeemable shares as set forth in Article 345, Paragraph (1) of the Korean Commercial Code, purchases from each
shareholder in proportion to such shareholder’s existing shareholding ratio through the methods set forth in the Presidential
Decree, provided that the aggregate purchase price does not exceed the amount of our profit that may be distributed as
dividends in respect of the immediately preceding fiscal year.
In addition, pursuant to the Financial Investment Services and Capital Markets Act, we may acquire shares through
purchases on the Korea Exchange or through a tender offer. We may also acquire interests in our own shares through
agreements with trust companies or retrieve our own shares from a trust company upon termination of the trust agreement.
The aggregate purchase price for shares purchased through such means may not exceed the total amount available for
distribution of dividends at the end of the preceding fiscal year, subject to certain procedural requirements.
Liquidation Rights
In the event of our liquidation, after payment of all debts, liquidation expenses and taxes, our remaining assets will
be distributed among shareholders in proportion to their shareholdings. Holders of preferred shares have no preference in
liquidation.
Item 10.C. Material Contracts
We have not entered into any material contracts during the two years immediately preceding the date of this annual
report, other than in the ordinary course of our business. For information regarding our agreements and transactions with
certain related parties, see “Item 7.B. Related Party Transactions.” For descriptions of certain agreements related to our
capital commitments and obligations and certain agreements related to our joint ventures, which we believe were not material
to our results of operations and financial condition in the periods in which such agreements were entered, see “Item 5.B.
Liquidity and Capital Resources” and “Item 4.B. Business Overview—Joint Ventures”, respectively.
Item 10.D. Exchange Controls
The Foreign Exchange Transaction Act of Korea and the Presidential Decree and regulations under that Act and
Decree, which we refer to collectively as the Foreign Exchange Transaction Laws, regulate investments in Korean securities
by non-residents and issuances of securities outside Korea by Korean companies. Non-residents may invest in Korean
securities pursuant to the Foreign Exchange Transaction Laws. The Financial Services Commission has also adopted,
pursuant to its authority under the Financial Investment Services and Capital Markets Act, regulations that restrict
investments by foreigners in Korean securities and regulate issuances of securities outside Korea by Korean companies.
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Subject to certain limitations, the Ministry of Economy and Finance has the authority to take the following actions
under the Foreign Exchange Transaction Laws:
•
•
if the government deems it necessary on account of war, armed conflict, natural disaster or grave and sudden
and significant changes in domestic or foreign economic circumstances or similar events or circumstances, the
Ministry of Economy and Finance may temporarily suspend performance under any or all foreign exchange
transactions, in whole or in part, to which the Foreign Exchange Transaction Laws apply (including
suspension of payment and receipt of foreign exchange) or impose an obligation to deposit, safe-keep or sell
any means of payment to The Bank of Korea or certain other governmental agencies, foreign exchange
equalization funds or financial institutions; and
if the government concludes that the international balance of payments and international financial markets are
experiencing or are likely to experience significant disruption or that the movement of capital between Korea
and other countries is likely to adversely affect the Korean Won, exchange rates or other macroeconomic
policies, the Ministry of Economy and Finance may take action to require any person who intends to effect a
capital transaction to obtain permission or to require any person who effects a capital transaction to deposit a
portion of the means of payment acquired in such transactions with The Bank of Korea, foreign exchange
equalization funds or financial institutions.
Government Review of Issuance of ADSs
In order for us to issue ADSs outside Korea, we are required to submit a report to the Ministry of Economy and
Finance or our designated foreign exchange bank (depending on the aggregate issue amount) with respect to the issuance of
the ADSs. No further governmental approval is necessary for the offering and issuance of the ADSs.
Under current Korean laws and regulations and the terms of the deposit agreement, the depositary is required to
obtain our consent for the number of shares of common stock to be deposited in any given proposed deposit that exceeds the
difference between:
(1)
(2)
the aggregate number of shares of our common stock deposited by us for the issuance of our ADSs (including
deposits in connection with the initial issuance and all subsequent offerings of our ADSs and stock dividends
or other distributions related to these ADSs); and
the number of shares of our common stock on deposit with the depositary at the time of such proposed
deposit.
We can give no assurance that we would, subject to governmental authorization, grant our consent, if our consent is
required. Therefore, a holder of ADRs who surrenders ADRs and withdraws shares may not be permitted subsequently to
deposit those shares and obtain ADRs.
Reporting Requirements for Holders of Substantial Interests
Under the Financial Investment Services and Capital Markets Act, any person whose direct or beneficial ownership
of our common stock with voting rights, whether in the form of shares of common stock or ADSs, certificates representing
the rights to subscribe for shares and equity-related debt securities including convertible bonds, bonds with warrants and
exchangeable bonds, which we refer to collectively as equity securities, together with the equity securities directly or
beneficially owned by certain related persons or by any person acting in concert with the person, accounts for 5% or more of
our total outstanding equity securities, is required to report the status and purpose (in terms of whether the purpose of the
shareholding is to influence corporate management of the issuer, to implement active shareholder engagement without an
intent to influence corporate management or to exercise voting and other rights that are irrespective of the shareholding ratio)
of the holdings to the Financial Services Commission and the Korea Exchange within five business days after reaching the
5% ownership interest. In addition, any change (i) in the ownership interest subsequent to the report that equals or exceeds
1% of the total outstanding equity securities from the previous report or (ii) in the shareholding purpose is required to be
reported to the Financial Services Commission and the Korea Exchange within five business days from the date of the change
(or, if the purpose of shareholding is to implement active shareholder engagement without an intent to influence corporate
management, within ten days from the date of the change, or if the purpose is to exercise voting and other rights that are
irrespective of the shareholding ratio, within ten days of the end of the month in which the change occurred).
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Violation of these reporting requirements may subject a person to criminal sanctions such as fines or imprisonment
and/or prohibition on the exercise of voting rights with respect to the ownership of equity securities exceeding the reported
number of shares. Furthermore, the Financial Services Commission may order the disposal of the unreported equity
securities.
When a person’s shareholding ratio reaches or exceeds ten percent or more of the company’s issued and outstanding
shares with voting rights, the person must file a report to the Securities and Futures Commission and to the Korea Exchange
within five business days following the date on which the person reached such shareholding limit. In addition, such person
must file a report to the Securities and Futures Commission and to the Korea Exchange regarding any subsequent change in
his/her shareholding. These subsequent reports on changes in shareholding are required within five business days after the
relevant change has occurred. Violation of these reporting requirements may subject a person to criminal sanctions such as
fines or imprisonment.
Restrictions Applicable to ADSs
No Korean governmental approval is necessary for the sale and purchase of our ADSs in the secondary market
outside Korea or for the withdrawal of shares of our common stock underlying the ADSs and the delivery inside Korea of
shares in connection with the withdrawal, provided, that a foreigner who intends to acquire the shares must obtain an
investment registration card from the Financial Supervisory Service as described below. The acquisition of the shares by a
foreigner must be immediately reported to the governor of the Financial Services Commission, either by the foreigner or by
his standing proxy in Korea.
Persons who have acquired shares of our common stock as a result of the withdrawal of shares underlying our ADSs
may exercise their preemptive rights for new shares, participate in free distributions and receive dividends on shares without
any further Korean governmental approval.
Restrictions Applicable to Shares
As a result of amendments to the Foreign Exchange Transaction Laws and Financial Services Commission
regulations, adopted in connection with the stock market opening from January 1992, which we refer to collectively as the
Investment Rules, after that date, foreigners may invest, with limited exceptions and subject to procedural requirements, in
shares of all Korean companies listed on the KRX KOSPI Market or the KRX KOSDAQ Market unless prohibited by
specific laws. Foreign investors may trade shares listed on the KRX KOSPI Market or the KRX KOSDAQ Market only
through the KRX KOSPI Market or the KRX KOSDAQ Market, except in limited circumstances, including:
•
•
•
•
•
•
•
•
•
•
odd-lot trading of shares;
acquisition of shares, which we refer to as converted shares, by exercise of warrants, conversion rights or
exchange rights under bonds with warrants, convertible bonds or exchangeable bonds or withdrawal rights
under depositary receipts issued outside of Korea by a Korean company;
acquisition of shares as a result of inheritance, donation, bequest or exercise of shareholders’ rights, including
preemptive rights or rights to participate in free distributions and receive dividends;
subject to certain exceptions, over-the-counter transactions between foreigners of a class of shares for which
the ceiling on aggregate acquisition by foreigners, as explained below, has been reached or exceeded;
shares acquired by way of direct investment and/or the disposal of such shares by the investor;
the disposal of shares pursuant to the exercise of appraisal rights of dissenting shareholders;
the disposal of shares in connection with a tender offer;
the acquisition of shares by a foreign depositary in connection with the issuance of depositary receipts;
the acquisition and disposal of shares through an overseas stock exchange market if such shares are
simultaneously listed on the KRX KOSPI Market or the KRX KOSDAQ Market and such overseas stock
exchange; and
arm’s-length transactions between foreigners, if all of such foreigners belong to the investment group
managed by the same person.
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For over-the-counter transactions of shares between foreigners outside the KRX KOSPI Market or the KRX
KOSDAQ Market for shares with respect to which the limit on aggregate foreign ownership has been reached or exceeded, a
financial investment company with a brokerage license in Korea must act as an intermediary. Odd-lot trading of shares
outside the KRX KOSPI Market or the KRX KOSDAQ Market must involve a financial investment company with a dealing
license in Korea as the other party. Foreign investors are prohibited from engaging in margin transactions by borrowing
shares from financial investment companies with respect to shares that are subject to a foreign ownership limit.
The Investment Rules require a foreign investor who wishes to invest in shares on the KRX KOSPI Market or the
KRX KOSDAQ Market (including converted shares and shares being issued for initial listing on the KRX KOSPI Market or
the KRX KOSDAQ Market) to register its identity with the Financial Supervisory Service prior to making any such
investment unless it has previously registered. However, the registration requirement does not apply to foreign investors who
acquire converted shares (including upon conversion of ADSs into shares and upon exercise of conversion rights of
convertible bonds) with the intention of selling such converted shares within three months from the date of acquisition of the
converted shares. Upon registration, the Financial Supervisory Service will issue to the foreign investor an investment
registration card, which must be presented each time the foreign investor opens a brokerage account with a financial
investment company with a brokerage license. Foreigners eligible to obtain an investment registration card include foreign
nationals who have not been residing in Korea for a consecutive period of six months or more, foreign governments, foreign
municipal authorities, foreign public institutions, international financial institutions or similar international organizations,
corporations incorporated under foreign laws and any person in any additional category designated by a decree promulgated
under the Financial Investment Services and Capital Markets Act. All Korean branch offices of a foreign corporation as a
group are treated as a separate foreigner from the offices of the corporation located outside of Korea for the purpose of
investment registration. However, a foreign corporation or depositary issuing depositary receipts may obtain one or more
investment registration cards in its name in certain circumstances as described in the relevant regulations.
Upon a foreign investor’s purchase of shares through the KRX KOSPI Market or the KRX KOSDAQ Market, no
separate report by the investor is required because the investment registration card system is designed to control and oversee
foreign investment through a computer system. However, a foreign investor’s acquisition or sale of shares outside the KRX
KOSPI Market or the KRX KOSDAQ Market (as discussed above) must be reported by the foreign investor or his standing
proxy to the governor of the Financial Supervisory Service at the time of each such acquisition or sale; provided, however,
that a foreign investor must ensure that any acquisition or sale by it of shares outside the KRX KOSPI Market or the KRX
KOSDAQ Market in the case of trades in connection with a tender offer, odd-lot trading of shares or trades of a class of
shares for which the aggregate foreign ownership limit has been reached or exceeded, is reported to the governor of the
Financial Supervisory Service by the financial investment company engaged to facilitate such transaction. A foreign investor
may appoint a standing proxy from among the Korea Securities Depository, foreign exchange banks (including domestic
branches of foreign banks), financial investment companies with a dealing, brokerage or collective investment license and
internationally recognized custodians which will act as a standing proxy to exercise shareholders’ rights or perform any
matters related to the foregoing activities if the foreign investor does not perform these activities itself. Generally, a foreign
investor may not permit any person, other than its standing proxy, to exercise rights relating to its shares or perform any tasks
related thereto on its behalf. However, a foreign investor may be exempted from complying with these standing proxy rules
with the approval of the governor of the Financial Supervisory Service in cases deemed inevitable by reason of conflict
between the laws of Korea and the home country of the foreign investor.
Certificates evidencing shares of Korean companies must be kept in custody with an eligible custodian in Korea.
Only the Korea Securities Depository, foreign exchange banks (including domestic branches of foreign banks), financial
investment companies with a dealing, brokerage or collective investment license and internationally recognized custodians
are eligible to act as a custodian of shares for a non-resident or foreign investor; provided, however, that a foreign investor
may have the certificate evidencing shares released from such custody when it is necessary to exercise its rights to such
shares or to inspect and confirm the presence of the certificate(s) of such shares. A foreign investor must ensure that its
custodian deposits its shares with the Korea Securities Depository. However, a foreign investor may be exempted from
complying with this deposit requirement with the approval of the governor of the Financial Supervisory Service in
circumstances where compliance with that requirement is made impracticable, including cases where compliance would
contravene the laws of the home country of such foreign investor.
Under the Investment Rules, with certain exceptions, foreign investors may acquire shares of a Korean company
without being subject to any foreign investment ceiling. As one such exception, unless otherwise stated in their articles of
incorporation, designated public corporations are subject to a 40% ceiling on the acquisition of shares by foreigners in the
aggregate. Furthermore, an investment by a foreign investor in 10% or more of the outstanding shares with voting rights of a
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Korean company is defined as a foreign direct investment under the Foreign Investment Promotion Act of Korea. Generally,
a foreign direct investment must be reported to the foreign exchange bank designated by the Ministry of Trade, Industry &
Energy or the Korea Trade-Investment Promotion Agency prior to such investment (within 30 days from the date of such
investment, if the company is listed on the Korea Exchange). The acquisition of shares of a Korean company by a foreign
investor may also be subject to certain foreign or other shareholding restrictions in the event that the restrictions are
prescribed in a specific law that regulates the business of the Korean company.
Under the Foreign Exchange Transaction Laws, a foreign investor who intends to acquire shares must designate a
foreign exchange bank at which he must open a foreign currency account and a Korean Won account exclusively for stock
investments. No approval is required for remittance into Korea and deposit of foreign currency funds in the foreign currency
account. Foreign currency funds may be transferred from the foreign currency account at the time required to place a deposit
for, or settle the purchase price of, a stock purchase transaction to a Korean Won account opened at a financial investment
company with a securities dealing or brokerage license. Funds in the foreign currency account may be remitted abroad
without any Korean governmental approval.
Dividends on shares of Korean companies are paid in Korean Won. No Korean governmental approval is required
for foreign investors to receive dividends on, or the Korean Won proceeds of the sale of, any shares to be paid, received and
retained in Korea. Dividends paid on, and the Korean Won proceeds of the sale of, any shares held by a non-resident of
Korea must be deposited either in a Korean Won account with the investor’s financial investment company or in his Korean
Won account. Funds in the investor’s Korean Won account may be transferred to his foreign currency account or withdrawn
for local living expenses, provided that any withdrawal of local living expenses in excess of a certain amount is reported to
the Financial Supervisory Service by the foreign exchange bank at which the Won account is maintained. Funds in the
Korean Won account may also be used for future investment in shares or for payment of the subscription price of new shares
obtained through the exercise of preemptive rights.
Financial investment companies with a securities dealing, brokerage or collective investment license are allowed to
open foreign currency accounts with foreign exchange banks exclusively for accommodating foreign investors’ stock
investments in Korea. Through these accounts, such financial investment companies may enter into foreign exchange
transactions on a limited basis, such as conversion of foreign currency funds and Korean Won funds, either as a counterparty
to or on behalf of foreign investors, without the investors having to open their own accounts with foreign exchange banks.
Item 10.E. Taxation
The following summary is based upon the tax laws of the United States and the Republic of Korea as in effect on the
date of this annual report, and is subject to any change in U.S. or Korean law that may come into effect after such date.
Investors in the shares of common stock or ADSs are advised to consult their own tax advisers as to the United States,
Korean or other tax consequences of the purchase, ownership and disposition of such securities, including the effect of any
national, state or local tax laws.
Korean Taxation
The following summary of Korean tax considerations applies to you so long as you are not:
•
•
•
a resident of Korea;
a corporation having its head office, principal place of business or place of effective management in Korea
(i.e., a Korean corporation); or
engaged in a trade or business in Korea through a permanent establishment or a fixed base to which the
relevant income is attributable or with which the relevant income is effectively connected.
Taxation of Dividends on Shares of Common Stock or ADSs
We will deduct Korean withholding tax from dividends (whether in cash or in shares) paid to you at a rate of 22%
(including local income surtax). If you are a beneficial owner of the dividends and a qualified resident in a country that has
entered into a tax treaty with Korea, you may qualify for a reduced rate of Korean withholding tax. See “—Tax Treaties”
below for a discussion of treaty benefits. If we distribute to you free shares representing a transfer of certain capital reserves
or certain asset revaluation reserves into paid-in capital, that distribution may be subject to Korean withholding tax.
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Taxation of Capital Gains from Transfer of Shares of Common Stock or ADSs
As a general rule, capital gains earned by non-residents upon transfer of shares of our common stock or ADSs are
subject to Korean withholding tax at the lower of (1) 11% (including local income surtax) of the gross proceeds realized or
(2) subject to the production of satisfactory evidence of acquisition costs and certain direct transaction costs of the shares or
ADSs, 22% (including local income surtax) of the net realized gain, unless exempt from Korean income taxation under the
applicable Korean tax treaty with the non-resident’s country of tax residence. See “—Tax Treaties” below for a discussion on
treaty benefits. Even if you do not qualify for an exemption under a tax treaty, you will not be subject to the foregoing
withholding tax on capital gains if you qualify under the relevant Korean domestic tax law exemptions discussed in the
following paragraphs.
With respect to shares of our common stock, you will not be subject to Korean income taxation on capital gains
realized upon the transfer of such shares through the Korea Exchange if you (1) have no permanent establishment in Korea
and (2) did not own or have not owned (together with any shares owned by any entity with which you have a certain special
relationship and possibly including the shares represented by the ADSs) 25% or more of our total issued and outstanding
shares at any time during the calendar year in which the sale occurs and during the five calendar years prior to the calendar
year in which the sale occurs.
Under the Korean tax laws for capital gains recognized or to be recognized from disposition of ADSs, ADSs are
viewed as shares of stock for capital gains tax purposes. Accordingly, capital gains from sale or disposition of ADSs are
taxed (if taxable) as if such gains are from sale or disposition of shares of our common stock. It should be noted that (i)
capital gains earned by you (regardless of whether you have a permanent establishment in Korea) from a transfer of ADSs
outside Korea will generally be exempt from Korean income taxation by virtue of the Special Tax Treatment Control Law of
Korea, or the STTCL, provided that the issuance of ADSs is deemed to be an overseas issuance under the STTCL, but (ii) in
the case where an owner of the underlying shares of stock transfers ADSs after conversion of the underlying shares into
ADSs, the exemption under the STTCL described in (i) will not apply. In the case where an owner of the underlying shares of
stock transfers the ADSs after conversion of the underlying shares of stock into ADSs, such person is obligated to file income
tax returns and pay tax unless a purchaser or a financial investment company with a brokerage license, as applicable,
withholds and pays the tax on capital gains derived from transfer of ADSs, as discussed below.
If you are subject to tax on capital gains with respect to the sale of ADSs, or of shares of common stock which you
acquired as a result of a withdrawal, the purchaser or, in the case of the sale of shares of common stock on the Korea
Exchange or through a financial investment company with a brokerage license in Korea, the financial investment company, is
required to withhold Korean tax from the sales price in an amount equal to the lower of (i) 11% (including local income
surtax) of the gross realization proceeds and (ii) subject to the production of satisfactory evidence of acquisition costs and
certain direct transaction costs of the shares or ADSs, 22% (including local income surtax) of the net realized gain, and to
make payment of these amounts to the Korean tax authority, unless you establish your entitlement to an exemption under an
applicable tax treaty or domestic tax law. See the discussion under “—Tax Treaties” below for an additional explanation of
claiming treaty benefits.
Tax Treaties
Korea has entered into a number of income tax treaties with other countries, including the United States, which
reduce or exempt Korean withholding tax on dividend income and capital gains on transfer of shares of common stock or
ADSs. For example, under the Korea-U.S. income tax treaty, reduced rates of Korean withholding tax on dividends of 16.5%
or 11%, respectively (including local income surtax), depending on your shareholding ratio, and an exemption from Korean
withholding tax on capital gains are available to residents of the United States that are beneficial owners of the relevant
dividend income or capital gains. However, under Article 17 (Investment or Holding Companies) of the Korea-U.S. income
tax treaty, such reduced rates and exemption do not apply if (1) you are a U.S. corporation, (2) by reason of any special
measures, the tax imposed on you by the United States with respect to such dividends or capital gains is substantially less
than the tax generally imposed by the United States on corporate profits, and (3) 25% or more of your capital is held of
record or is otherwise determined, after consultation between competent authorities of the United States and Korea, to be
owned directly or indirectly by one or more persons who are not individual residents of the United States. Also, under Article
16 (Capital Gains) of the Korea-U.S. income tax treaty, the exemption on capital gains does not apply if you are an
individual, and (a) you maintain a fixed base in Korea for a period or periods aggregating 183 days or more during the
taxable year and your ADSs or shares of common stock giving rise to capital gains are effectively connected with such fixed
base or (b) you are present in Korea for a period or periods of 183 days or more during the taxable year. You should inquire
for yourself whether you are entitled to the benefit of an income tax treaty with Korea. It is the responsibility of the party
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claiming the benefits of an income tax treaty in respect of dividend payments or capital gains to submit to us, the purchaser or
the financial investment company, as applicable, a certificate as to his tax residence. In the absence of sufficient proof, we,
the purchaser or the financial investment company, as applicable, must withhold tax at the normal rates.
Furthermore, in order for you to claim the benefit of a tax rate reduction or tax exemption on certain Korean source
income (e.g., dividends and capital gains) under an applicable tax treaty, subject to certain exceptions, Korean tax law
requires you (or your agent) as the beneficial owner of such Korean source income to submit the relevant application
(Application for Entitlement to Reduced Tax Rate or Application for Tax Exemption, as the case may be) along with a
certificate of your tax residency issued by a competent authority of your country of tax residence (“BO Application”). Such
application should be submitted to the withholding agent prior to the payment date of such Korean source income. Subject to
certain exceptions, where the Korean source income is paid to an overseas investment vehicle that is not the beneficial owner
of such income (“OIV”), a beneficial owner claiming the benefit of an applicable tax treaty with respect to the Korean source
income must submit its BO Application to such OIV, which must submit an OIV report and a schedule of beneficial owners
(and the BO Applications collected from each beneficial owner, if such beneficial owner is applying for tax exemption) to the
withholding agent prior to the payment date of such Korean source income. Effective from January 1, 2022, an OIV is
deemed to be a beneficial owner of the Korean source income if (i) under the applicable tax treaty, the OIV bears tax
liabilities in the country in which it is established and (ii) the Korean source income is eligible for the treaty benefits under
the tax treaty. The benefits under a tax treaty between Korea and the country of such OIV’s residence will apply with respect
to the relevant income paid to such OIV, subject to certain application requirements as prescribed by the Corporate Income
Tax or Individual Income Tax Law. In the case of an application for tax exemption, the withholding agent is required to
submit the application (together with the applicable OIV report in the case of income paid to an OIV) to the relevant district
tax office by the ninth day of the month following the date of the payment of such income.
Inheritance Tax and Gift Tax
If you die while holding an ADS or donate an ADS, it is unclear whether, for Korean inheritance and gift tax
purposes, you will be treated as the owner of the shares of common stock underlying the ADSs. If the tax authority interprets
depositary receipts as the underlying share certificates, you may be treated as the owner of the shares of common stock and
your heir or the donee (or in certain circumstances, you as the donor) will be subject to Korean inheritance or gift tax
presently at the rate of 10% to 50% based on the value of the ADSs or shares of common stock and the identity of the
individual against whom the tax is assessed.
If you die while holding a share of common stock or donate a share of common stock, your heir or donee (or in
certain circumstances, you as the donor) will be subject to Korean inheritance or gift tax at the same rate as indicated above.
At present, Korea has not entered into any tax treaty relating to inheritance or gift taxes.
Securities Transaction Tax
If you transfer shares of common stock on the Korea Exchange in 2023, you will be subject to securities transaction
tax at the rate of 0.05% (which rate is planned to be reduced to 0.03% if the transfer is made in 2024, and eliminated entirely
beginning on January 1, 2025) and an agriculture and fishery special surtax at the rate of 0.15% of the sale price of the shares
of common stock. If your transfer of the shares of common stock is not made on the Korea Exchange, subject to certain
exceptions, you will be subject to a securities transaction tax at the rate of 0.35% and will not be subject to an agriculture and
fishery special surtax.
Depositary receipts, which the ADSs constitute, are included in the scope of securities the transfers of which are
subject to securities transaction tax. However, transfer of depositary receipts listed on a foreign securities exchange similar to
that of Korea (e.g., the New York Stock Exchange or the Nasdaq Stock Market) will not be subject to the securities
transaction tax.
In principle, the securities transaction tax, if applicable, must be paid by the transferor of the shares or certain rights
including rights to subscribe to each shares. When the transfer is effected through a securities settlement company in Korea,
such settlement company is generally required to withhold and pay the tax to the tax authorities. When such transfer is made
through a financial investment company only, such financial investment company is required to withhold and pay the tax.
Where the transfer is effected by a non-resident without a permanent establishment in Korea, other than through a securities
settlement company or a financial investment company, the transferee is required to withhold the securities transaction tax.
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Non-reporting or under-reporting of securities transaction tax will generally result in penalties equal to 20% to 60%
of the non-reported tax amount or 10% to 60% of the under-reported tax amount, respectively. Also, a failure to timely pay
securities transaction tax will result in a penalty equal to 8.03% per annum of the due but unpaid tax amount. The penalties
are imposed on the party responsible for paying the securities transaction tax or, if such tax is required to be withheld, on the
party that has the obligation to withhold.
United States Taxation
This summary describes certain material U.S. federal income tax consequences for a U.S. holder (as defined below)
of acquiring, owning, and disposing of shares of common stock or ADSs. This summary applies to you only if you hold
shares of common stock or ADSs as capital assets for tax purposes. This summary does not apply to you if you are a member
of a class of holders subject to special rules, such as:
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•
•
•
•
•
•
•
•
•
a dealer in securities or currencies;
a trader in securities that elects to use a mark-to-market method of accounting for securities holdings;
a bank or financial institution;
a life insurance company;
a tax-exempt organization;
an entity treated as a partnership (and partners therein) or other pass-through entity for U.S. federal income tax
purposes;
a person that holds shares of common stock or ADSs that are a hedge or that are hedged against interest rate or
currency risks;
a person that holds shares of common stock or ADSs as part of a straddle or conversion transaction for tax
purposes;
a person whose functional currency for tax purposes is not the U.S. dollar; or
a person that owns or is deemed to own 10% or more of our stock (by vote or by value).
This summary is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and
proposed regulations promulgated thereunder, published rulings and court decisions, all as currently in effect and the United
States – Republic of Korea Income Tax Convention (the “Treaty”). These laws are subject to change, possibly on a
retroactive basis.
In addition, this summary does not discuss the application of the Medicare net investment income tax or the
alternative minimum tax. Please consult your own tax advisers concerning the consequences of purchasing, owning, and
disposing of shares of common stock or ADSs in your particular circumstances, including the possible application of state,
local, non-U.S. or other tax laws.
For purposes of this summary, you are a “U.S. holder” if you are a beneficial owner of a share of common stock or
an ADS and you are:
•
•
•
a citizen or resident of the United States;
a U.S. domestic corporation; or
otherwise subject to U.S. federal income tax on a net income basis with respect to income from the share of
common stock or ADS.
In general, if you are the beneficial owner of ADSs, you will be treated as the beneficial owner of the common stock
represented by those ADSs for U.S. federal income tax purposes, and no gain or loss will be recognized if you exchange an
ADS for the common stock represented by that ADS.
Dividends
The gross amount of cash dividends that you receive (prior to deduction of Korean taxes) generally will be subject to
U.S. federal income taxation as foreign source dividend income. Dividends paid in Korean Won will be included in your
income in a U.S. dollar amount calculated by reference to the exchange rate in effect on the date that you receive the dividend
79
(or the date of the depositary’s receipt of the dividend, in the case of ADSs), regardless of whether the payment is in fact
converted into U.S. dollars. If such a dividend is converted into U.S. dollars on the date of receipt, you generally should not
be required to recognize foreign currency gain or loss in respect of the dividend income.
Subject to certain exceptions for short-term (60 days or less) and hedged positions, the U.S. dollar amount of
“qualified dividends” received by an individual U.S. holder in respect of shares of common stock or ADSs generally will be
subject to taxation at a lower rate than other ordinary income. Dividends paid on the common stock or ADSs will be treated
as qualified dividends if (i) we are eligible for the benefits of a comprehensive income tax treaty with the United States that
the Internal Revenue Service (the “IRS”) has approved for purposes of the qualified dividend income rules or the dividends
are paid with respect to ADSs that are readily tradable on an established securities market in the United States and (ii) we
were not, in the year prior to the year in which the dividend was paid, and are not, in the year in which the dividend is paid, a
passive foreign investment company (a “PFIC”). The Treaty has been approved for purposes of the qualified dividend rules.
The ADSs are listed on the New York Stock Exchange and will qualify as readily tradable on an established securities market
in the United States so long as they are so listed. Based on our audited financial statements and relevant market and
shareholder data, we believe that we were not treated as a PFIC for U.S. federal income tax purposes with respect to our 2022
taxable year. In addition, based on our current expectations regarding the value and nature of our assets, the sources and
nature of our income, and relevant market and shareholder data, we do not anticipate becoming a PFIC for our 2023 taxable
year.
Distributions of additional shares in respect of shares of common stock or ADSs that are made as part of a pro-rata
distribution to all of our shareholders generally will not be subject to U.S. federal income tax, unless you have the right to
receive cash or property, in which case you will be treated as if you received cash equal to the fair market value of the
distribution.
Sale or Other Disposition
For U.S. federal income tax purposes, gain or loss you realize on the sale or other disposition of shares of common
stock or ADSs will be treated as U.S. source capital gain or loss, and will be long-term capital gain or loss if the shares of
common stock or ADSs were held for more than one year. Your ability to offset capital losses against ordinary income is
limited. Long-term capital gain recognized by an individual U.S. holder generally is subject to taxation at a reduced rate.
Foreign Tax Credit Considerations
Subject to generally applicable limitations and conditions, Korean dividend withholding tax paid at the appropriate
rate applicable to the U.S. holder may be eligible for a credit against such U.S. holder’s U.S. federal income tax liability.
These generally applicable limitations and conditions include new requirements recently adopted by the IRS and any Korean
tax will need to satisfy these requirements in order to be eligible to be a creditable tax for a U.S. holder. In the case of a U.S.
holder that is eligible for, and properly elects, the benefits of the Treaty, the Korean tax may be treated as meeting the new
requirements and therefore as a creditable tax. The application of these requirements to the Korean tax on dividends is
uncertain, and we have not determined whether these requirements are met, including requirements applicable to the Treaty.
If the Korean tax is not a creditable tax for a U.S. holder or the U.S. holder does not elect to claim a foreign tax credit for any
foreign income taxes, the U.S. holder may be able to deduct the Korean tax in computing such U.S. holder’s taxable income
for U.S. federal income tax purposes. Dividends will constitute income from sources without the United States and, if the
withholding tax is a creditable tax for a U.S. holder that elects to claim foreign tax credits, generally will constitute “passive
category income” for foreign tax credit purposes.
Additionally, under the new foreign tax credit requirements recently adopted by the IRS, any Korean tax imposed on
the sale or other disposition of the shares of common stock or ADSs generally will not be treated as a creditable tax for U.S.
foreign tax credit purposes except in the case of a U.S. holder that is eligible for, and properly elects to claim, the benefits of
the Treaty. If the Korean tax is not a creditable tax, the tax would reduce the amount realized on the sale or other disposition
of the shares of common stock or ADSs even if the U.S. Holder has elected to claim a foreign tax credit for other taxes in the
same year. U.S. Holders should consult their own tax advisors regarding the application of the foreign tax credit rules to a
sale or other disposition of the shares of common stock or ADSs and any Korean tax imposed on such sale or disposition.
Any Korean securities transaction tax or agriculture and fishery special surtax that you pay will not be creditable for
foreign tax credit purposes.
80
The availability and calculation of foreign tax credits and deductions for foreign taxes depend upon a U.S. holder’s
particular circumstances and involve the application of complex rules to those circumstances. U.S. holders should consult
their own tax advisors regarding the application of these rules to their particular situations.
Specified Foreign Financial Assets
Certain U.S. holders that own “specified foreign financial assets” with an aggregate value in excess of US$50,000
on the last day of the taxable year or US$75,000 at any time during the taxable year are generally required to file an
information statement along with their tax returns, currently on IRS Form 8938, with respect to such assets. “Specified
foreign financial assets” include any financial accounts held at a non-U.S. financial institution, as well as securities issued by
a non-U.S. issuer (which would include shares of common stock or ADSs) that are not held in accounts maintained by
financial institutions. Higher reporting thresholds apply to certain individuals living abroad and to certain married
individuals. Regulations extend this reporting requirement to certain entities that are treated as formed or availed of to hold
direct or indirect interests in specified foreign financial assets based on certain objective criteria. U.S. holders who fail to
report the required information could be subject to substantial penalties. Prospective investors should consult their own tax
advisors concerning the application of these rules to their investment in shares of common stock or ADSs, including the
application of the rules to their particular circumstances.
U.S. Information Reporting and Backup Withholding Rules
Payments of dividends and sales proceeds that are made within the United States or through certain U.S. related
financial intermediaries are subject to information reporting and may be subject to backup withholding unless the holder (i)
establishes that it is a corporation or other exempt recipient or (ii) provides a taxpayer identification number and certifies that
no loss of exemption from backup withholding has occurred.
Holders that are not U.S. persons generally are not subject to information reporting or backup withholding.
However, such a holder may be required to provide a certification of its non-U.S. status in connection with payments
received within the United States or through a U.S. related financial intermediary.
Item 10.F. Dividends and Paying Agents
Not applicable.
Item 10.G. Statements by Experts
Not applicable.
Item 10.H. Documents on Display
We are subject to the information requirements of the Exchange Act and, in accordance therewith, are required to
file reports, including annual reports on Form 20-F, and other information with the SEC. These materials, including this
annual report and the exhibits thereto, may be inspected and copied at the SEC’s public reference rooms in Washington,
D.C., New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. As a foreign private issuer, we are also required to make filings with the SEC by electronic means.
Any filings we make electronically will be available to the public over the Internet at the SEC’s web site at
http://www.sec.gov.
Item 10.I. Subsidiary Information
Not applicable.
Item 10.J. Annual Report to Security Holders
Not applicable.
81
Item 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Overview
Market risk is the risk of loss related to adverse changes in market prices, including interest rates and foreign
exchange rates, of financial instruments. We are exposed to various financial market risks in our ordinary course of business
transactions, primarily from changes in interest rates and foreign exchange rates, and we utilize financial derivatives to
mitigate these risks. We also used various derivative instruments, principally forward contracts with maturities of one year or
less, to manage our exposure associated with net asset and liability positions and cash flows denominated in foreign
currencies. We have used, and intend to continue to use, these financial derivatives only for hedging purposes and not for
speculative purposes.
Our primary market risk exposures relate to interest rate movements on floating rate borrowings and exchange rate
movements on foreign currency denominated accounts receivable, as well as foreign currency denominated future cash flows
from sales, mostly denominated in U.S. dollars and foreign currency denominated accounts payable for purchases of raw
materials and supplies, primarily denominated in U.S. dollars and, to a lesser extent, Chinese Yuan and Japanese Yen. The
fair value of our financial instruments has been determined as the price, as of the applicable measurement date, that we would
receive when selling an asset or that we would pay when transferring a liability, in an orderly transaction between market
participants. Fair value is based on quoted market prices where available.
For a further discussion of our market risk and fair value of our financial assets and liabilities, see Note 26 of the
notes to our financial statements.
Interest Rate Risks
Our exposure to interest rate risks relates primarily to our short-term and long-term debt obligations, which are
typically incurred to fund capital expenditures and repay maturing debt, as well as for working capital and other general
corporate purposes. As of December 31, 2022, we had outstanding short-term and long-term debt, including current portion
and prior to deducting discounts on bonds, in the aggregate amount of W14,994 billion (US$11,899 million).
From time to time, we may enter into interest rate swap contracts to hedge against the effects of interest rate
fluctuations of certain of our floating rate long-term debt. As of December 31, 2022, W470 billion (US$373 million) of our
Korean Won denominated floating rate long-term borrowings were hedged against interest rate fluctuations using variable-to-
fixed interest rate swap contracts that expire in between 2023 and 2026. In connection with such contracts, we recognized a
gain on valuation of derivatives of W7.3 billion (US$5.8 million) in 2022. The table below provides information about our
interest rate swap contracts. The table presents notional amounts used to calculate the contractual payments to be exchanged
under such contracts.
Expected Maturity Dates
2023
2024
2025
2026
2027 Thereafter
Total
(in billions of Won, except for interest rate percentages)
Fair Value at
December 31,
2022
Interest rate swaps
Variable to fixed (₩)(1)
Average pay rate
Average receive rate
₩
90 ₩
40 ₩
90 ₩ 250
2.65%
5.24%
2.95%
5.35%
3.34%
4.57%
—
4.65% —
4.96% —
— ₩ 470.0 ₩ 470.0
—
—
(1) Average pay rates and average receive rates are applicable to the total notional amounts outstanding until maturity.
We may be exposed to interest rate risks on additional debt financing that we may periodically undertake to fund
capital expenditures required for our capacity expansion. Upward fluctuations in interest rates increase the cost of new debt.
The interest rate that we will be able to obtain in a new debt financing will depend on market conditions at that time and may
differ from the rates we have secured on our current debt.
As of December 31, 2022, we had US$1,252 million aggregate principal amount of U.S. dollar denominated short-
term loans, CNY1,000 million aggregate principal amount of CNY denominated short-term loans, W810 billion aggregate
principal amount of Korean Won denominated short-term loans, US$3,494 million aggregate principal amount of U.S. dollar
denominated long-term loans, CNY19,569 million aggregate principal amount of CNY denominated long-term loans and
W2,986 billion aggregate principal amount of Korean Won denominated long-term loans. As of December 31, 2022, the
82
interest rates for our U.S. dollar denominated loans ranged from 1.82% to 6.86%, the interest rates for our CNY denominated
loans ranged from 3.00% to 4.46%, and the interest rates for our Korean Won denominated loans ranged from 1.90% to
5.96%.
If interest rates on borrowings with floating rates had been 1% higher or lower with all other variables held constant,
the impact on the profit or loss of the applicable period would be as follows:
Increase or decrease in annual profit and net
equity
2020
For the Years Ended December 31,
2021
2022
Increase
Decrease
Increase
(In billions of Won)
Decrease
Increase
Decrease
₩
(45) ₩
45 ₩
(41) ₩
41 ₩
(50) ₩
50
The table below provides information about our financial instruments that are sensitive to changes in interest rates.
2023
2024
2025
2026
2027
Thereafter
Total
(in billions of Won, except for interest rate percentages)
Fair Value at
December 31,
2022
Expected Maturity Dates
Debt obligations
Fixed rate (₩)
Average interest rate
Variable rate (₩)
Average interest rate
Variable rate (CNY)
Average interest rate
Fixed rate (US$)
Average interest rate
₩ 1,644.1 ₩ 1,006.0 ₩
₩
₩
3.4%
690.0 ₩
5.3%
574.1 ₩
3.9%
2.4%
40.0 ₩
4.6%
4.4%
₩ 1,167.6 ₩
253.5
(4.4)%
2.1%
996.0 ₩
3.7%
90.0 ₩
4.6%
3.5%
—
—
627.0 ₩ 2,046.6 ₩
Variable rate (US$)
₩ 1,321.6 ₩ 1,179.3 ₩ 1,431.1 ₩
Average interest rate
5.9%
6.1%
5.9%
210.0 ₩
2.8%
250.0
5.3%
484.4 ₩
4.5%
—
—
256.6 ₩
5.0%
125.0 ₩
3.7%
—
—
—
—
—
—
193.3 ₩
5.0%
70.0 ₩ 4,051.1 ₩ 4,236.8
4.2%
— ₩ 1,070.0 ₩ 1,070.0
—
— ₩ 3,732.1 ₩ 3,732.1
—
— ₩ 1,421.1 ₩ 1,410.9
—
338.2 ₩ 4,720.1 ₩ 4,720.1
5.0%
For a further discussion of our interest rate risk exposures, including a further sensitivity analysis on our interest rate
risk exposures, see Notes 12 and 26 of the notes to our financial statements.
Foreign Currency Risk
The primary foreign currency to which we are exposed is the U.S. dollar. We are also exposed, to a lesser extent, to
other foreign currencies, including the Chinese Yuan, the Japanese Yen and the Euro. As of December 31, 2022, we had U.S.
dollar denominated sales-related trade accounts and notes receivable, net of US$1,725 million, which represented
approximately 92% of our trade accounts and notes receivable, and U.S. dollar denominated sales-related trade accounts
payable of US$1,824 million, which represented approximately 57% of our trade accounts payable, net. See Note 26 of the
notes to our financial statements.
As of December 31, 2022, we also had CNY denominated sales-related trade accounts and notes receivable of
CNY703 million, which represented approximately 5% of our trade accounts and notes receivable, net, and Japanese Yen
denominated sales-related trade accounts and notes receivable of ¥103 million. In addition, we had CNY denominated sales-
related trade accounts payable of CNY1,306 million and Japanese Yen denominated sales-related trade accounts payable of
¥4,987 million, which represented approximately 6% and 1% of our trade accounts and notes payable, net, respectively.
From time to time, we hedge against the effect of exchange rate fluctuations of the U.S. dollar against the Korean
Won on our U.S. dollar debt exposure using cross-currency swap contracts. As of December 31, 2022, US$2,430 million of
our US$2,810 million aggregate principal amount of U.S dollar denominated bonds, short-term borrowings and long-term
borrowings were hedged against foreign exchange rate and interest rate fluctuations through cross-currency swap contracts.
83
Cross Currency Interest Rate Swap Contracts:
Contracts to sell Korean (Won)/buy US$:
Outstanding contract amount
Average contractual exchange rate
Change in fair value
US$
(Won)
(Won)
2,430 million
1,217.8/US$
121 billion
Our foreign currency exposure and changes in equity and profit or loss resulting from a 5% foreign exchange rate
change against the Korean Won are as follows:
2020
For the Years Ended December 31,
2021
U.S. Dollars (5% weakening)
U.S. Dollars (5% strengthening)
Chinese Yuan (5% weakening)
Chinese Yuan (5% strengthening)
Japanese Yen (5% weakening)
Japanese Yen (5% strengthening)
Vietnamese Dong (5% weakening)
Vietnamese Dong (5% strengthening)
Equity
Profit or
loss
₩
12 ₩
(12)
(147)
147
(6)
6
(2)
2
73 ₩
(73)
0
0
(5)
5
(2)
2
Profit or
Equity
loss
(In billions of Won)
(74) ₩
74
(65)
65
(5)
5
(4)
4
2 ₩ (114) ₩
(2)
0
0
(3)
3
(4)
4
114
(106)
106
(9)
9
(6)
6
(23)
23
0
0
(9)
9
(6)
6
2022
Equity
Profit or
loss
For a further discussion of our foreign currency risk exposures, including a sensitivity analysis on our currency risk
exposures, see Note 26 of the notes to our financial statements.
Other Risks
We are exposed to credit risk in the event of non-performance by the counterparties under our foreign currency
forward contracts at maturity. In order to minimize this risk, we limit the transaction amount with any one party and
continually monitor the credit quality of the counterparties to these financial instruments. We do not anticipate any material
losses from these contracts, and we believe the risk of non-performance by the counterparties under these contracts is remote.
A substantial portion of our sales is attributable to a limited number of our end-brand customers. Our top ten end-
brand customers, including our largest shareholder as an end-brand customer, together accounted for a substantial majority of
our sales in each of 2020, 2021 and 2022. While we negotiate directly with our end-brand customers concerning the price and
quantity of the sales, for some sales transactions we invoice the end-brand customers’ designated system integrators. As a
result of our significant dependence on a concentrated group of end-brand customers and their designated system integrators,
we are exposed to credit risks associated with these entities. We have established certain measures, such as factoring
arrangements and requirement of credit insurance from customers, to protect us from excessive exposure to such credit risks.
We manage our accounts receivable and credit exposure to customers by establishing credit limits for each customer
to whom we supply products on an open account basis in accordance with our internal credit guidelines. We assess credit risk
through quantitative and qualitative analysis, and based on this analysis, we establish credit limits and determine whether we
will seek to use one or more credit support devices, such as obtaining some form of third-party guaranty or stand-by letter of
credit, obtaining credit insurance or through factoring of all or part of accounts receivables. Our credit policy does not require
credit limits on accounts receivable created on letters of credit. To date, we have not experienced any material problems
relating to customer payments. For a further discussion of our credit risk exposures, see Note 26 of the notes to our financial
statements.
84
Item 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Fees and Charges
Under the terms of the deposit agreement, as a holder of our ADSs, you are required to pay the following service fees
to the depositary:
Services
Fees
Issuance of ADSs
Cancellation of ADSs
Up to US$0.05 per ADS issued
Up to US$0.05 per ADS canceled
Distribution of cash dividends or other cash distributions
Up to US$0.02 per ADS held
Distribution of ADSs pursuant to (i) stock dividends or
other free stock distributions or (ii) exercise of rights to
purchase additional ADSs
Up to US$0.02 per ADS held
Distribution of securities other than ADSs or rights to
purchase additional ADSs
Up to US$0.05 per ADS held
Other ADS services
Up to US$0.02 per ADS held
As a holder of our ADSs, you are also responsible for paying certain fees and expenses incurred by the depositary and
certain taxes and governmental charges such as the following:
•
•
•
•
•
Fees for the transfer and registration of shares charged by the registrar and transfer agent for the shares in Korea
(i.e., upon deposit and withdrawal of shares).
Expenses incurred for converting foreign currency into U.S. dollars.
Expenses for cable, telex and fax transmissions and for delivery of securities.
Taxes and duties upon the transfer of securities (i.e., when shares are deposited or withdrawn from deposit).
Fees and expenses incurred in connection with the delivery or servicing of shares on deposit.
Depositary fees payable upon the issuance and cancellation of ADSs are typically paid to the depositary by the brokers
(on behalf of their clients) receiving the newly issued ADSs from the depositary and by the brokers (on behalf of their
clients) delivering the ADSs to the depositary for cancellation. The brokers in turn charge these fees to their clients.
Depositary fees payable in connection with distributions of cash or securities to ADS holders and the depositary services fee
are charged by the depositary to the holders of record of ADSs as of the applicable ADS record date.
The depositary fees payable for cash distributions are deducted from the cash being distributed. In the case of
distributions other than cash (i.e., stock dividend, rights), the depositary charges the applicable fee to the ADS record date
holders concurrent with the distribution. In the case of ADSs registered in the name of the investor (whether certificated or
uncertificated in direct registration), the depositary sends invoices to the applicable record date ADS holders. In the case of
ADSs held in brokerage and custodian accounts (via the Depository Trust Company, or DTC), the depositary collects its fees
through the systems provided by DTC (whose nominee is the registered holder of the ADSs held in DTC) from the brokers
and custodians holding ADSs in their DTC accounts. The brokers and custodians who hold their clients’ ADSs in DTC
accounts in turn charge their clients’ accounts the amount of the fees paid to the depositary.
In the event of refusal to pay the depositary fees, the depositary may, under the terms of the deposit agreement, refuse
the requested service until payment is received or may set off the amount of the depositary fees from any distribution to be
made to such holder of ADSs.
Note that the fees and charges you may be required to pay may vary over time and may be changed by us and by the
depositary. You will receive prior notice of such changes.
85
Fees and Payments from the Depositary to Us
In 2022, we received the following payments, after deduction of applicable U.S. taxes, from the depositary:
Reimbursement of proxy process expenses (printing, postage and distribution)(1)
Contributions towards our investor relations efforts (i.e. non-deal roadshows, investor
conferences and IR agency fees) and legal expenses incurred in connection with the
preparation of our Form 20-F for the fiscal year 2021(1)
US$
US$
644,119
644,119
(1)
Under discussions with the depositary for the amount of applicable payment with respect to 2022.
86
Item 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Not applicable.
PART II
Item 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS
Not applicable.
Item 15. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Our management has evaluated, with the participation of our chief executive officer and chief financial officer, the
effectiveness of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act, as of December 31, 2022. There are inherent limitations to the effectiveness of any system of disclosure
controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and
procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of
achieving their control objectives. Based upon our evaluation, our chief executive officer and chief financial officer
concluded that our disclosure controls and procedures were effective as of such date. Our disclosure controls and procedures
are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange
Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms,
and that it is accumulated and communicated to our management, including our chief executive officer and chief financial
officer, as appropriate to allow timely decisions regarding required disclosure.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting,
as such term is defined in Rules 13a-15(f) under the Exchange Act. Because of its inherent limitations, internal control over
financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be
prevented or detected. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate. Under the supervision and with the participation of our management, including our chief
executive officer and chief financial officer, we conducted an evaluation of the effectiveness of our internal control over
financial reporting based on the framework in Internal Control – Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Based on our evaluation, our management concluded that our
internal control over financial reporting was effective as of December 31, 2022. The effectiveness of our internal control over
financial reporting as of December 31, 2022 has been audited by our independent registered public accounting firm, as stated
in its attestation report which is included in Item 18 of this Form 20-F.
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting during 2022 that has materially affected, or
is reasonably likely to materially affect, our internal control over financial reporting.
Item 16. [RESERVED]
Item 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Our board of directors has determined that Doocheol Moon qualifies as an “audit committee financial expert” and is
independent within the meaning of this Item 16A.
Item 16B. CODE OF ETHICS
We have adopted a code of ethics, as defined in Item 16B of Form 20-F under the Exchange Act. Our Code of
Ethics applies to our chief executive officer, chief financial officer and persons performing similar functions as well as to our
non-executive directors and other officers and employees. Our Code of Ethics is available on our website at
87
www.lgdisplay.com. If we amend the provisions of our Code of Ethics that apply to our chief executive officer and chief
financial officer and persons performing similar functions, or if we grant any waiver of such provisions, we will disclose such
amendment or waiver on our website at the same address.
Item 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table sets forth the fees billed to us by our independent registered public accounting firm, KPMG
Samjong Accounting Corp., a member firm of KPMG International, and their respective affiliates, which we collectively
refer to as KPMG, during the fiscal years ended December 31, 2021 and 2022:
Audit fees
Tax fees
All other fees
Total fees
Year ended December 31,
2021
2022
(in millions of Won)
₩
₩
4,603 ₩
147
77
4,827 ₩
4,987
169
—
5,156
Audit fees in the above table are the aggregate fees billed or expected to be billed by KPMG in connection with the
audit of our annual financial statements and the review of our interim financial statements.
Tax fees in the above table are fees billed by KPMG for tax compliance services.
All other fees in the above table are fees billed by KPMG for consulting services related to the establishment of an
operational technology security management system for our production sites.
Audit Committee Pre-Approval Policies and Procedures
Under our Audit Committee’s pre-approval policies and procedures, all audit and non-audit services to be provided
to us by our independent auditors must be pre-approved by our Audit Committee on a case-by-case basis. Our Audit
Committee does not pre-approve any audit or non-audit services that are prohibited from being provided to us by an
independent registered public accounting firm under the rules of the SEC and applicable law. In 2022, no fees were approved
pursuant to the de minimis exception.
Item 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not applicable.
Item 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
Neither we nor any “affiliated purchaser,” as defined in Rule 10b-18(a)(3) of the Exchange Act, purchased any of
our equity securities during the period covered by this annual report.
Item 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
Not applicable.
Item 16G. CORPORATE GOVERNANCE
The following is a summary of the significant differences between the New York Stock Exchange’s corporate
governance standards and those that we follow under Korean law.
NYSE Corporate Governance Standards
LG Display’s Corporate Governance Practice
Director Independence
Listed companies must have a majority of independent
directors.
The majority of our board of directors is independent (as
defined in accordance with the New York Stock
Exchange’s standards), as four out of seven directors are
outside directors.
88
Nomination/Corporate Governance Committee
Listed companies must have a nomination/corporate
governance committee composed entirely of independent
directors. The committee must have a charter that
addresses the purpose, responsibilities (including
development of corporate governance guidelines) and
annual performance evaluation of the committee.
Compensation Committee
Listed companies must have a compensation committee
composed entirely of independent directors. The
committee must have a charter that addresses the purpose,
responsibilities and annual performance evaluation of the
committee. The charter must be made available on the
company’s website. In addition, in accordance with the
U.S. Securities and Exchange Commission rules adopted
pursuant to Section 952 of the Dodd-Frank Act, the New
York Stock Exchange listing standards were amended to
expand the factors relevant in determining whether a
committee member has a relationship with the company
that will materially affect that member’s duties to the
compensation committee.
Executive Session
Non-management directors of listed companies must meet
in regularly scheduled executive sessions without
management. Independent directors should meet alone in
an executive session at least once a year.
Audit Committee
Listed companies must have an audit committee that
satisfies the requirements of Rule 10A-3 under the
Exchange Act. All members must be independent. The
committee must have a charter addressing the
committee’s purpose, an annual performance evaluation
of the committee, and the duties and responsibilities of
the committee. The charter must be made available on the
company’s website.
Although we have not established a separate
nomination/corporate governance committee, we
maintain an Outside Director Nomination Committee,
which is composed of two outside directors and one non-
outside director, and an ESG Committee, which is
composed of four outside directors and one non-outside
director.
Under Korean law, we are not required to establish a
compensation committee. Accordingly, we do not
currently have a compensation committee, and our board
of directors is directly responsible for matters relating to
salaries and incentive compensation for our directors and
executive officers.
We do not normally hold executive sessions solely
attended by non-management directors as that is not
required under Korean law but we may elect to do so at
the discretion of the directors.
We maintain an Audit Committee composed of four
outside directors who meet the applicable independence
criteria set forth under Rule 10A-3 of the Exchange Act.
Audit Committee Additional Requirements
Listed companies must have an audit committee that is
composed of at least three directors.
Our Audit Committee has four directors, as described
above.
Shareholder Approval of Equity Compensation Plan
Listed companies must allow its shareholders to exercise
their voting rights with respect to any material revision to
the company’s equity compensation plan.
We currently have two equity compensation plans: one
providing for the grant of stock options to officers and
key employees and an Employee Stock Ownership Plan,
or ESOP.
Stock options to officers and key employees may be
granted pursuant to a resolution of the shareholders in an
amount not to exceed 15% of the total number of our
issued and outstanding shares. However, the board of
directors may grant stock options to non-director officers
and employees up to 1% of the total number of our
issued and outstanding shares, which grant must be
approved by a resolution of the subsequent general
meeting of shareholders.
89
All material matters related to the granting of stock
options are provided in our articles of incorporation, and
any amendments to the articles of incorporation are
subject to shareholders’ approval. Matters related to the
ESOP are not subject to shareholders’ approval under
Korean law.
The Korean Commercial Code and our articles of
incorporation provide that any and all terms and
conditions for the issuance of new shares of the company
shall be determined by a resolution of the board of
directors. The company may allot new shares by a
resolution of the board of directors to persons other than
its shareholders when certain requirements are satisfied,
including where new shares are issued by way of general
public offering, and are issued to corporations,
institutional investors, domestic and foreign financial
institutions and others to further a management objective
such as strengthening the company’s financials
(provided, however, that such allotment of new shares to
persons other than shareholders may only be made up to
20% of the total number of issued and outstanding shares
of the company).
We maintain a corporate governance charter as well as
corporate governance guidelines for our board of
directors. Our board of directors is responsible for
overseeing our policies, practices and procedures in the
area of corporate governance.
We have adopted a Code of Ethics for all directors,
officers and employees. A copy of our Code of Ethics is
available on our website at www.lgdisplay.com.
Shareholder Approval of Equity Offerings
Listed companies must allow its shareholders to exercise
their voting rights with respect to equity offerings that do
not qualify as public offerings for cash, and offerings of
equity of related parties.
Corporate Governance Guidelines
Listed companies must adopt and disclose corporate
governance guidelines.
Code of Business Conduct and Ethics
Listed companies must adopt and disclose a code of
business conduct and ethics for directors, officers and
employees, and promptly disclose any waivers of the code
for directors or executive officers.
Item 16H. MINE SAFETY DISCLOSURE
Not applicable.
Item 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
90
PART III
Item 17. FINANCIAL STATEMENTS
Not applicable.
Item 18. FINANCIAL STATEMENTS
Report of independent Registered Public Accounting Firm
Consolidated statements of financial position as of December 31, 2021 and 2022
Consolidated statements of comprehensive income (loss) for the years ended December 31, 2020, 2021 and 2022
Consolidated statements of changes in equity for the years ended December 31, 2020, 2021 and 2022
Consolidated statements of cash flows for the years ended December 31, 2020, 2021 and 2022
Notes to the consolidated financial statements
Page
F-2
F-5
F-7
F-9
F-11
F-15
91
Item 19. EXHIBITS
Number
Description
1.1*
2.1*
2.2*
2.3*
2.4*
2.5
2.6
8.1
12.1
12.2
13.1
13.2
Amended and Restated Articles of Incorporation (translation in English)
Form of Common Stock Certificate (translation in English) (incorporated by reference to Exhibit 4.1 to the
Registrant’s Registration Statement (No. 333-116819) on Form F-1, filed on July 13, 2004)
Deposit Agreement (including Form of American Depositary Receipt) (incorporated by reference to Exhibit
(a) to the Registrant’s Registration Statement (No. 333-147661) on Form F-6, filed on November 28, 2007)
Form of Amendment No. 1 to Deposit Agreement (including Form of American Depositary Receipt)
(incorporated by reference to Exhibit (a)(i) to the Registration Statement (No. 333-147661) on Post
Effective Amendment No. 1 to Form F-6, filed on July 30, 2014)
Letter from Citibank, N.A., as depositary, dated as of November 29, 2007, to the Registrant relating to the
direct registration system for the American depositary receipts (incorporated by reference to Exhibit 2.3 to
the Registrant’s Annual Report (No. 001-32238) on Form 20-F, filed on April 16, 2008)
Description of LG Display Co., Ltd.’s Capital Stock (see Item 10.B. Memorandum and Articles of
Association)
Description of LG Display Co., Ltd.’s American Depositary Shares
List of subsidiaries of LG Display Co., Ltd. (see Note 1(b) of the notes to the consolidated financial
statements of LG Display Co., Ltd. included in this annual report)
Section 302 certification of the Chief Executive Officer
Section 302 certification of the Chief Financial Officer
Section 906 certification of the Chief Executive Officer
Section 906 certification of the Chief Financial Officer
101.INS
Inline XBRL Instance Document
101.SCH
Inline XBRL Taxonomy Extension Schema
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase
104
The cover page for the Company’s Annual Report on Form 20-F for the year ended December 31, 2021 has
been formatted in Inline XBRL
* Filed previously.
92
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly
caused and authorized the undersigned to sign this annual report on its behalf.
SIGNATURES
LG DISPLAY CO., LTD.
(Registrant)
/s/ HOYOUNG JEONG
(Signature)
Name: Hoyoung Jeong
Title: Representative Director, President and
Chief Executive Officer
/s/ SUNGHYUN KIM
(Signature)
Name: Sunghyun Kim
Title: Senior Vice President and
Chief Financial Officer
Date: April 27, 2023
INDEX TO FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm
Consolidated Statements of Financial Position
Consolidated Statements of Comprehensive Income (Loss)
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements
Page
F-2
F-5
F-7
F-9
F-11
F-15
F-1
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
LG Display Co., Ltd.:
Opinions on the Consolidated Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated statements of financial position of LG Display Co., Ltd. and
subsidiaries (the Group) as of December 31, 2021 and 2022, the related consolidated statements of comprehensive
income (loss), changes in equity and cash flows for each of the years in the three-year period ended December 31, 2022,
and the related notes (collectively, the consolidated financial statements). We also have audited the Group’s internal
control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of the Group as of December 31, 2021 and 2022, and the results of its operations and its cash flows for each of
the years in the three-year period ended December 31, 2022, in conformity with International Financial Reporting
Standards as issued by the International Accounting Standards Board. Also in our opinion, the Group maintained, in all
material respects, effective internal control over financial reporting as of December 31, 2022 based on criteria established
in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission.
Basis for Opinions
The Group’s management is responsible for these consolidated financial statements, for maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting,
included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our
responsibility is to express an opinion on the Group’s consolidated financial statements and an opinion on the Group’s
internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public
Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the
Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material
misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was
maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the consolidated
financial statements. Our audit of internal control over financial reporting included obtaining an understanding of
internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the
design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing
such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable
basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies
and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.
F-2
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated
financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate
to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially
challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way
our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical
audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which
they relate.
(i)
Determination of cash generating unit (CGU) and impairment assessment for Display (Large OLED) CGU
As discussed in Notes 3(k)(ii), 9(b), 10(b) and 10(d) to the consolidated financial statements, the Group’s non-financial
assets which consist of property, plant and equipment and intangible assets amount to W22,699,890 million as of
December 31, 2022. The Group changed its identification of CGU from Display CGU and Display (AD PO) CGU to
Display (Large OLED) CGU, Display CGU and Display (AD PO) CGU due to withdrawal of the domestic LCD TV
business and the reorganization of the related businesses in 2022. During the year ended December 31, 2022, the Group
recognized impairment loss of W1,330,529 million relating to the Display (Large OLED) CGU. The recoverable amount
used by the Group in impairment assessment of the Display (Large OLED) CGU is value in use based on discounted cash
flow model.
We identified determination of CGU and impairment assessment for Display (Large OLED) CGU as a critical audit
matter. Determination of CGU requires subjective and challenging auditor judgment in assessing the smallest
identifiable group of assets that generates cash inflows that are largely independent of those from other assets or group of
assets. In addition, estimation of key assumptions used in impairment assessment involved significant measurement
uncertainty and therefore involved a high degree challenging and complex auditor judgement. Specifically, revenue and
operating expenditures for the forecast period, discount rate and terminal growth rate used to estimate value in use for
impairment assessment of Display (Large OLED) CGU were challenging to test as minor changes to those assumptions
would have a significant effect on the results of the Group’s impairment assessment of Display (Large OLED) CGU.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design
and tested the operating effectiveness of certain internal controls related to the Group’s non-financial assets impairment
assessment process, including controls related to determination of CGU, and development of revenue and operating
expenditures forecasts, discount rate and terminal growth rate assumptions for Display (Large OLED) CGU. We
evaluated the Group’s determination of CGU by assessing the basis for identifying the smallest identifiable group of
assets that generates cash inflows that are largely independent of those from other assets or group of assets. We tested
the Group’s businesses inter-dependencies analysis, by inspection of documents as to how the Group monitors operations
and makes decisions about continuing or disposing of assets and operations. For the impairment assessment of Display
(Large OLED) CGU, we compared the Group’s historical revenue and operating expenditures forecasts to actual results
to assess the Group’s ability to accurately forecast. We evaluated the revenue and operating expenditures forecasts used
to determine the value in use by comparison with the financial budgets approved by the board of directors. We
performed sensitivity analysis over discount rate and terminal growth rate assumptions used to estimate value in use for
impairment assessment of Display (Large OLED) CGU to assess the impact of changes in those assumptions on the
Group’s impairment assessment. We involved our valuation professionals with specialized skills and knowledge who
assisted us in the following.
-
-
testing discount rate by comparing it against independently developed rate using publicly available market data for
comparable entities; and
testing revenue, operating expenditures forecasts and terminal growth rate by comparing them against industry
reports and historical performance of the Group.
F-3
(ii)
Assessment of recognition of deferred tax assets
As discussed in Notes 3(s) and 24 to the consolidated financial statements, the Group had W2,645,077 million of
deferred tax assets and W660,670 million of unrecognized tax credit carryforwards, as of December 31, 2022, primarily
related to Korea. The deferred tax assets are recognized to the extent that it is probable that future taxable income will be
available against which the deductible temporary differences, unused tax losses and unrecognized tax credit
carryforwards can be utilized.
We identified the assessment of the recognition of deferred tax assets as a critical audit matter. The evaluation of the
recoverability of deferred tax assets involves a high degree of judgment to assess the significant assumptions that are
reflected in the forecast of future taxable income. The significant assumptions include revenue and operating expenditures,
evaluation of which also required subjective auditor judgement because of the sensitivity of the amount of recognized
deferred tax assets to minor changes in these assumptions.
The following are the primary procedures we performed to address the critical audit matter. We evaluated the design and
tested the operating effectiveness of certain internal controls related to the Group’s deferred tax assets recognition process,
including controls related to the development of assumptions in determining the future taxable income for each year. We
analyzed the Group’s estimates of future taxable income, including analyzing the Group’s forecasted revenue and operating
expenditures by comparing them with the financial budgets approved by the board of directors and historical performance.
We compared the historical forecasts of taxable income to actual results to assess the Group’s ability to accurately forecast.
/s/ KPMG Samjong Accounting Corp.
We have served as the Group’s auditor since 2008.
Seoul, Korea
April 27, 2023
F-4
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Consolidated Statements of Financial Position
As of December 31, 2021 and 2022
(In millions of won)
Assets
Cash and cash equivalents
Deposits in banks
Trade accounts and notes receivable, net
Other accounts receivable, net
Other current financial assets
Inventories
Prepaid income taxes
Other current assets
Total current assets
Deposits in banks
Investments in equity accounted investees
Other non-current accounts receivable, net
Other non-current financial assets
Property, plant and equipment, net
Intangible assets, net
Investment property
Deferred tax assets
Defined benefit assets, net
Other non-current assets
Total non-current assets
Total assets
See accompanying notes to the consolidated financial statements.
Note
December 31,
2021
December 31,
2022
4, 26
4, 26
5, 15, 26, 29
5, 26
6, 26, 27
7
5
4, 26
8
5, 26
6, 26, 27
9, 17, 28
10, 17
11
24
13
₩ 3,541,597
743,305
4,574,789
121,899
68,203
3,350,375
58,536
728,363
13,187,067
11
126,719
2,376
156,211
20,558,446
1,644,898
—
2,307,692
68,276
102,819
24,967,448
₩ 38,154,515
1,824,649
1,722,607
2,358,914
169,426
165,355
2,872,918
5,275
324,891
9,444,035
11
109,119
—
289,098
20,946,933
1,752,957
28,269
2,645,077
447,521
22,999
26,241,984
35,686,019
F-5
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Consolidated Statements of Financial Position, Continued
As of December 31, 2021 and 2022
(In millions of won)
Liabilities
Trade accounts and notes payable
Current financial liabilities
Other accounts payable
Accrued expenses
Income tax payable
Provisions
Advances received
Other current liabilities
Total current liabilities
Non-current financial liabilities
Non-current provisions
Defined benefit liabilities, net
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
Equity
Share capital
Share premium
Retained earnings
Reserves
Total equity attributable to owners of the
Controlling Company
Non-controlling interests
Total equity
Total liabilities and equity
See accompanying notes to the consolidated financial statements.
Note
December 31,
2021
December 31,
2022
26, 29
12, 26, 28
26
14
12, 26, 28
14
13
24
26
16
16
16
₩ 4,814,055
4,069,712
3,401,346
1,218,456
179,335
173,431
67,046
71,436
13,994,817
8,702,745
92,942
1,589
6,636
593,285
9,397,197
23,392,014
1,789,079
2,251,113
8,541,521
537,142
4,061,684
5,489,254
3,242,929
729,193
112,429
173,322
65,069
87,640
13,961,520
9,622,352
86,157
1,531
4,346
690,886
10,405,272
24,366,792
1,789,079
2,251,113
5,359,769
479,628
13,118,855
9,879,589
1,643,646
14,762,501
1,439,638
11,319,227
₩ 38,154,515
35,686,019
F-6
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income (Loss)
For the years ended December 31, 2020, 2021 and 2022
(In millions of won, except earnings per share)
Revenue
Cost of sales
Gross profit
Selling expenses
Administrative expenses
Research and development expenses
Other income
Other expenses
Finance income
Finance costs
Equity in income of equity accounted investees, net
Profit (loss) before income tax
Income tax expense (benefit)
Profit (loss) for the year
Other comprehensive income (loss)
Items that will never be reclassified to profit
or loss
Remeasurements of net defined benefit liabilities
Other comprehensive income (loss) from associates
2020
Note
17, 29 ₩ 24,261,561
(21,626,339)
2,635,222
7, 18, 29
2021
29,878,043
(24,572,939)
5,305,104
2022
26,151,781
(25,027,703)
1,124,078
18, 19
18, 19
18
21
18, 21
22
22
8
23
13, 23
8
(817,611)
(755,340)
(1,098,736)
1,784,646
(1,999,280)
438,786
(802,678)
12,545
(933,043)
(919,409)
(1,222,044)
1,252,135
(1,280,859)
425,835
(916,614)
7,780
(895,602)
(931,117)
(1,382,406)
3,185,837
(4,446,414)
873,059
(966,363)
5,558
(602,446)
(526,299)
1,718,885
385,341
(3,433,370)
(237,785)
(76,147)
1,333,544
(3,195,585)
110,404
39
110,443
(163,363)
(84)
(163,447)
122,361
32
122,393
See accompanying notes to the consolidated financial statements.
F-7
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income (Loss), Continued
For the years ended December 31, 2020, 2021 and 2022
(In millions of won, except earnings per share)
Items that are or may be reclassified to profit
or loss
Foreign currency translation differences for foreign
operations
Gain (loss) on valuation of derivative
Other comprehensive income (loss) from associates
Other comprehensive income for the year, net of
income tax
Total comprehensive income (loss) for the year
Profit (loss) attributable to:
Owners of the Controlling Company
Non-controlling interests
Profit (loss) for the year
Total comprehensive income (loss) attributable to:
Owners of the Controlling Company
Non-controlling interests
Total comprehensive income (loss) for the year
Earnings (loss) per share (in won)
Basic earnings (loss) per share
Diluted earnings (loss) per share
Note
2020
2021
2022
23
16, 23
8, 23
₩ 48,181
—
(210)
47,971
869,789
(9,227)
4,497
865,059
(80,963)
9,227
(9,710)
(81,446)
158,414
₩ 82,267
701,612
2,035,156
40,947
(3,154,638)
(94,853)
18,706
₩ (76,147)
1,186,182
147,362
1,333,544
(3,071,565)
(124,020)
(3,195,585)
54,219
28,048
₩ 82,267
1,723,323
311,833
2,035,156
(3,006,686)
(147,952)
(3,154,638)
25
25
₩
₩
(265)
(265)
3,315
3,130
(8,584)
(8,584)
See accompanying notes to the consolidated financial statements.
F-8
Share
capital
Attributable to owners of the Controlling Company
Retained
earnings
Share
premium
Reserves
₩
1,789,079
2,251,113
7,503,312
(203,021)
Sub-total
11,340,483
Non-controlling
interests
Total
equity
1,147,798
12,488,281
(94,853)
149,072
54,219
18,706
9,342
28,048
(76,147)
158,414
82,267
—
(12,086)
(12,086)
830
11,395,532
1,186,182
537,141
1,723,323
172,136
1,335,896
1,335,896
147,362
164,471
311,833
172,966
12,731,428
12,731,428
1,333,544
701,612
2,035,156
(94,853)
110,443
15,590
—
(116)
7,518,786
—
38,629
38,629
—
946
(163,446)
1,186,182
(163,447)
1,022,735
—
700,588
700,588
—
537,142
7,518,786
(163,446)
11,395,532
—
1,789,079
—
2,251,113
—
8,541,521
—
13,118,855
(4,083)
1,643,646
(4,083)
14,762,501
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Consolidated Statements of Changes in Equity
For the years ended December 31, 2020, 2021 and 2022
(In millions of won)
Balances at January 1, 2020
Total comprehensive income (loss) for the
year (Restated)
Profit (loss) for the year
Other comprehensive income
Transaction with owners, recognized
directly in equity
Subsidiaries' dividends distributed to
non-controlling interests
Capital contribution from non-controlling
interests
Balances at December 31, 2020
Balances at January 1, 2021
Total comprehensive income (loss) for
the year
Profit for the year
Other comprehensive income (loss)
Transaction with owners, recognized
directly in equity
Subsidiaries' dividends distributed to
non-controlling Interests
Balances at December 31, 2021
₩
₩
₩
₩
₩
—
—
—
—
—
1,789,079
1,789,079
—
—
—
—
—
—
—
—
2,251,113
2,251,113
—
—
—
See accompanying notes to the consolidated financial statements.
F-9
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Consolidated Statements of Changes in Equity, Continued
For the years ended December 31, 2020, 2021 and 2022
(In millions of won)
Balances at January 1, 2022
Total comprehensive income (loss) for the
year
Loss for the year
Other comprehensive income (loss)
Transaction with owners, recognized
directly in equity
Subsidiaries' dividends distributed to
non-controlling Interests
Dividends to equity holders
Balances at December 31, 2022
Attributable to owners of the Controlling Company
Share
capital
Share
premium
Retained
earnings
₩
1,789,079
2,251,113
8,541,521
Reserves
537,142
Sub-total
13,118,855
Non-controlling
interests
1,643,646
Total
equity
14,762,501
—
—
—
—
—
—
—
—
1,789,079
—
—
2,251,113
₩
₩
(3,071,565)
122,393
(2,949,172)
—
(232,580)
5,359,769
—
(57,514)
(57,514)
—
—
479,628
(3,071,565)
64,879
(3,006,686)
—
(232,580)
9,879,589
(124,020)
(23,932)
(147,952)
(3,195,585)
40,947
(3,154,638)
(56,056)
—
1,439,638
(56,056)
(232,580)
11,319,227
See accompanying notes to the consolidated financial statements.
F-10
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the years ended December 31, 2020, 2021 and 2022
(In millions of won)
Note
2020
2021
2022
Cash flows from operating activities:
Profit (loss) for the year
Adjustments for:
Income tax expense (benefit)
Depreciation and amortization
Gain on foreign currency translation
Loss on foreign currency translation
Expenses related to defined benefit plans
Gain on disposal of property, plant and equipment
Loss on disposal of property, plant and equipment
Impairment loss on property, plant and equipment
Reversal of impairment loss on property, plant and equipment
Gain on disposal of intangible assets
Loss on disposal of intangible assets
Impairment loss on intangible assets
Reversal of impairment loss on intangible assets
Impairment loss on investments property
Expense on increase of provisions
Finance income
Finance costs
Equity in income of equity method accounted investees,
net
Loss on liquidation of investments in subsidiaries
Other income
Other expenses
₩
(76,147)
1,333,544
(3,195,585)
23
9,10,11,18
13,20
8
(526,299)
4,134,027
(296,870)
217,287
160,669
(37,835)
60,294
38,494
0
(111)
368
79,593
(1,110)
—
308,334
(331,723)
612,164
(12,545)
72,654
(11,485)
—
4,389,759
385,341
4,500,701
(74,125)
193,095
144,241
(19,367)
64,350
19,085
(1,121)
(196)
—
29,488
(1,152)
—
216,873
(352,423)
832,596
(7,780)
—
—
15,538
7,278,688
(237,785)
4,557,457
(702,144)
449,980
168,260
(25,737)
54,432
1,260,436
(3,181)
—
193
136,372
(1,975)
7,736
253,075
(607,501)
781,205
(5,558)
—
(1,681)
—
2,887,999
See accompanying notes to the consolidated financial statements.
F-11
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Consolidated Statements of Cash Flows, Continued
For the years ended December 31, 2020, 2021 and 2022
(In millions of won)
Changes in:
Trade accounts and notes receivable
Other accounts receivable
Inventories
Lease receivables
Other current assets
Other non-current assets
Trade accounts and notes payable
Other accounts payable
Accrued expenses
Provisions
Advances received
Other current liabilities
Defined benefit liabilities, net
Other non-current liabilities
Cash generated from operating activities
Income taxes paid
Interests received
Interests paid
Note
2020
2021
2022
₩ (935,888)
63,192
(128,495)
6,428
175,486
(58,641)
1,387,084
(1,152,786)
(9,704)
(277,876)
(408,900)
(40,200)
(109,801)
12,973
2,912,631
(964,130)
20,395
(1,123,239)
4,765
107,679
(58,821)
1,037,950
72,640
580,404
(237,601)
(268,074)
9,100
(208,199)
11,144
6,262,701
(156,997)
75,424
(552,274)
(118,305)
79,188
(470,138)
1,833,491
(55,073)
390,672
7,684
435,838
(10,125)
(282,082)
(625,606)
(514,500)
(259,969)
(1,977)
(4,188)
(381,405)
167,868
3,588,627
(153,969)
77,219
(500,857)
Net cash provided by operating activities
₩ 2,278,784
5,753,446
3,011,020
See accompanying notes to the consolidated financial statements.
F-12
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Consolidated Statements of Cash Flows, Continued
For the years ended December 31, 2020, 2021 and 2022
(In millions of won)
Note
2020
2021
2022
Cash flows from investing activities:
Dividends received
Increase in deposits in banks
Proceeds from withdrawal of deposits in banks
Acquisition of financial assets at fair value through profit
or loss
Proceeds from disposal of financial assets at fair value
through profit or loss
Acquisition of financial assets at fair value through other
comprehensive income
Proceeds from disposal of financial assets at fair value
through other comprehensive income
Proceeds from disposal of investments in equity accounted
investees
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Acquisition of intangible assets
Proceeds from disposal of intangible assets
Asset-related government grants received
Proceeds from settlement of derivatives
Increase in short-term loans
Proceeds from collection of short-term loans
Increase in long-term loans
Increase in deposits
Decrease in deposits
Proceeds from disposal of other assets
₩
8,239
(78,452)
78,557
4,068
(694,313)
77,152
4,461
(1,769,668)
756,267
(3,227)
(34,418)
(27,100)
99
—
6
2,400
(2,595,381)
446,193
(353,313)
16,996
118,341
24,468
—
13,720
—
(2,084)
1,286
11,000
5,226
412
—
24
4,363
(3,141,430)
65,711
(635,805)
2,946
85,983
8,344
—
14,533
(26,473)
(7,145)
8,154
—
(3,934)
3,547
4,800
(5,079,279)
171,421
(830,583)
11,392
57,503
49,145
(9,643)
9,608
(54,033)
(2,676)
6,727
1,464
Net cash used in investing activities
₩ (2,311,152)
(4,263,080)
(6,700,169)
See accompanying notes to the consolidated financial statements.
F-13
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Consolidated Statements of Cash Flows, Continued
For the years ended December 31, 2020, 2021 and 2022
(In millions of won)
Cash flows from financing activities:
Proceeds from short-term borrowings
Repayments of short-term borrowings
Proceeds from issuance of bonds
Proceeds from long-term borrowings
Repayments of current portion of long-term borrowings
and bonds
Repayment of lease liabilities
Dividends paid
Capital contribution from non-controlling interests
Subsidiaries' dividends distributed to non-controlling
interests
2020
2021
2022
Note
28
₩ 2,238,806
(2,506,420)
49,949
2,329,013
(1,278,199)
(62,200)
—
172,966
2,573,757
(2,425,117)
498,027
1,298,346
(4,344,208)
(66,941)
—
—
4,487,824
(2,565,541)
443,230
4,165,508
(4,209,915)
(82,296)
(232,580)
—
(12,086)
—
(60,206)
Net cash provided by (used in) financing activities
931,829
(2,466,136)
1,946,024
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at January 1
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at December 31
899,461
3,336,003
(17,365)
₩ 4,218,099
(975,770)
4,218,099
299,268
3,541,597
(1,743,125)
3,541,597
26,177
1,824,649
See accompanying notes to the consolidated financial statements.
F-14
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
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, 2022, the Group is operating Thin Film Transistor Liquid Crystal Display
(“TFT-LCD”) and Organic Light Emitting Diode (“OLED”) panel manufacturing plants in Gumi, Paju and
China and TFT-LCD and OLED module manufacturing plants in Gumi, Paju, China and Vietnam. The
Controlling Company is domiciled in the Republic of Korea with its address at 128 Yeouidae-ro,
Yeongdeungpo-gu, Seoul, the Republic of Korea. As of December 31, 2022, 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, 2022, 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, 2022, there are 16,674,488 ADSs outstanding.
F-15
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
1.
Reporting Entity, Continued
(b) Consolidated Subsidiaries as of December 31, 2022
(In millions)
Subsidiaries
LG Display America, Inc.
LG Display Germany GmbH
LG Display Japan Co., Ltd.
LG Display Taiwan Co., Ltd.
LG Display Nanjing Co., Ltd.
LG Display Shanghai Co., Ltd.
LG Display Guangzhou
Co., Ltd.
LG Display Shenzhen Co., Ltd.
LG Display Singapore Pte. Ltd.
L&T Display Technology
(Fujian) Limited
LG Display Yantai Co., Ltd.
Nanumnuri Co., Ltd.
LG Display (China) Co., Ltd.
Unified Innovative
Technology, LLC
LG Display Guangzhou
Trading Co., Ltd.
Global OLED Technology,
LLC
LG Display Vietnam Haiphong
Co., Ltd.
Suzhou Lehui Display
Co., Ltd.
LG DISPLAY FUND I LLC(*)
Location
San Jose,
U.S.A.
Eschborn,
Germany
Tokyo, Japan
Taipei, Taiwan
Nanjing, China
Shanghai, China
Guangzhou, China
Shenzhen, China
Singapore
Fujian,
China
Yantai,
China
Gumi,
South Korea
Guangzhou, China
Wilmington,
U.S.A.
Guangzhou, China
Sterling, U.S.A.
Haiphong,
Vietnam
Suzhou, China
Wilmington,
U.S.A.
LG Display High-Tech (China)
Co., Ltd.
Guangzhou, China
Percentage
of ownership
Fiscal
year end
Date of
incorporation
Business
Capital stocks
100%
100%
100%
100%
100%
100%
100%
100%
100%
51%
100%
100%
70%
100%
100%
100%
100%
100%
100%
70%
December 31
December 31
December 31
December 31
December 31
December 31
December 31
December 31
December 31
December 31
December 31
December 31
December 31
December 31
December 31
December 31
December 31
December 31
December 31
December 31
September 24, 1999
Sell display products
October 15, 1999
Sell display products
October 12, 1999
April 12,1999
July 15, 2002
January 16, 2003
Sell display products
Sell display products
Manufacture display products
Sell display products
June 30, 2006
Manufacture display products
July 27, 2007
November 4, 2008
December 7, 2009
Sell display products
Sell display products
Manufacture and sell LCD
module and LCD monitor sets
March 17, 2010
Manufacture display products
March 21, 2012
Provide janitorial services
December 10, 2012
Manufacture and sell display
products
March 12, 2014
Manage intellectual property
April 28, 2015
Sell display products
December 18, 2009
Manage OLED intellectual
property
May 5, 2016
Manufacture display products
July 1, 2016
May 1, 2018
July 11, 2018
Manufacture and sell LCD
module and LCD monitor sets
Invest in venture business and
acquire technologies
Manufacture and sell display
products
USD
EUR
JPY
NTD
CNY
CNY
CNY
CNY
USD
CNY
411
1
95
116
3,020
4
1,655
4
1
116
CNY
1,008
KRW
800
CNY
8,232
USD
CNY
USD
USD
CNY
USD
9
1
138
600
637
71
CNY
15,600
(*) For the year ended December 31, 2022, the Controlling Company contributed W33,137 million in cash for the capital
increase of LG DISPLAY FUND I LLC. There was no change in the Controlling Company’s percentage of ownership in
LG DISPLAY FUND I LLC as a result of this additional investment.
F-16
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
1.
Reporting Entity, Continued
(c)
Information of subsidiaries (before elimination of intercompany transactions) which have significant non-
controlling interests as of and for the years ended December 31, 2020, 2021 and 2022 are as follows:
(In millions of won)
Percentage of ownership in non-controlling interest(%)
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Book value of non-controlling interests
Revenue
Profit (Loss) for the year
Profit (Loss) attributable to non-controlling interests
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Effect of exchange rate fluctuations on cash held
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at January 1
Cash and cash equivalents at December 31
2020
LG Display (China)
Co., Ltd.
LG Display High-Tech
(China) Co., Ltd.
₩
₩
₩
30
1,573,028
851,262
326,785
410,677
1,686,828
498,084
1,907,421
(12,279)
(3,684)
138,692
(686,387)
436,936
5,367
(105,392)
382,194
276,802
30
1,544,816
5,461,116
1,588,688
2,757,499
2,659,745
796,537
1,280,924
51,489
15,447
134,484
(841,413)
826,940
(1,501)
118,510
171,951
290,461
—
Dividends distributed to non-controlling interests
₩
12,086
(In millions of won)
2021
LG Display (China)
Co., Ltd.
LG Display High-Tech
(China) Co., Ltd.
Percentage of ownership in non-controlling interest(%)
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Book value of non-controlling interests
Revenue
Profit for the year
Profit attributable to non-controlling interests
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Effect of exchange rate fluctuations on cash held
Net decrease in cash and cash equivalents
Cash and cash equivalents at January 1
Cash and cash equivalents at December 31
₩
₩
₩
30
1,987,880
663,181
324,075
31,466
2,295,520
680,757
2,175,878
380,788
114,301
890,435
(619,615)
(439,390)
23,538
(145,032)
276,802
131,770
Dividends distributed to non-controlling interests
₩
—
30
1,551,346
5,252,614
1,261,412
2,452,327
3,090,221
925,848
2,817,308
125,446
37,803
709,243
(315,176)
(665,170)
19,972
(251,131)
290,461
39,330
—
F-17
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
1.
Reporting Entity, Continued
(In millions of won)
Percentage of ownership in non-controlling interest(%)
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Book value of non-controlling interests
Revenue
Profit(Loss) for the year
Profit(Loss) attributable to non-controlling interests
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Effect of exchange rate fluctuations on cash held
Net increase(decrease) in cash and cash equivalents
Cash and cash equivalents at January 1
Cash and cash equivalents at December 31
2022
LG Display (China)
Co., Ltd.
LG Display High-Tech
(China) Co., Ltd.
₩
₩
₩
30
1,916,867
575,020
336,575
1,419
2,153,893
646,199
1,921,939
133,486
39,981
486,103
(371,454)
(223,222)
2,347
(106,226)
131,770
25,544
30
2,112,295
3,546,253
820,041
2,323,249
2,515,258
753,191
2,766,043
(561,016)
(168,474)
153,043
424,405
(455,746)
(7,471)
114,231
39,330
153,561
—
Dividends distributed to non-controlling interests
₩
56,056
F-18
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
2.
Basis of Presenting Financial Statements
(a)
Statement of Compliance
These consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards (“IFRSs”) as issued by the International Accounting Standards Board.
The consolidated financial statements were authorized for issuance by the Group’s management on April 18,
2023.
(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 statement of financial position:
•
•
derivative financial instruments at fair value, financial assets at fair value through profit or loss
(“FVTPL”), financial assets at fair value through other comprehensive income (“FVOCI”), financial
liabilities at fair value through profit or loss (“FVTPL”), and
net defined benefit liabilities (defined benefit assets) recognized at the present value of defined benefit
obligations less the fair value of plan assets
(c)
Functional and Presentation Currency
Each subsidiary’s financial statements within the Group are presented in the subsidiary’s functional currency,
which is the currency of the primary economic environment in which each subsidiary operates. The
consolidated financial statements are presented in Korean won, which is the Controlling Company’s
functional currency.
F-19
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
2.
Basis of Presenting Financial Statements. Continued
(d) Use of Estimates and Judgments
The preparation of the consolidated financial statements in conformity with 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.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognized in the period in which the estimates are revised and in any future periods affected.
Information about judgments made applying accounting policies that have the most significant effects on the
amounts recognized in the consolidated financial statements is included in the following notes:
•
•
•
Financial instruments (Note 3(e))
Intangible assets (Impairment assessment of non-financial assets, including determination of cash
generating unit) (Notes 3(k), 10)
Deferred tax assets and liabilities (recognition of deferred tax assets) (Notes 3(s), 24)
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a
material adjustment to the carrying amounts of assets and liabilities within the next 12 months is included in
the following notes:
•
•
•
•
•
Provisions (Notes 3(m), 14)
Inventories (Notes 3(d), 7)
Intangible assets (Impairment assessment of non-financial assets) (Note 10)
Employee benefits (Note 13)
Deferred tax assets and liabilities (estimation of future taxable income) (Note 3(s), 24)
F-20
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
3.
Summary of Significant Accounting Policies
The significant accounting policies applied in these consolidated financial statements are as follows and they have
been consistently applied for all periods presented, except if mentioned otherwise:
(a)
Consolidation
(i)
Business Combinations
The Group accounts for business combinations using the acquisition method except for a combination of
entities or businesses under common control. The consideration transferred in the acquisition is generally
measured at fair value, as are the identifiable net assets acquired. If the aggregate sum of consideration
transferred and non-controlling interest exceeds the fair value of identifiable net asset, the Group recognizes
goodwill; if not, then the Group recognizes gain on a bargain purchase. Any goodwill that arises is tested
annually for impairment. Transaction costs are expensed as incurred, except if related to the issue of debt or
equity instruments in accordance with IAS 32 and IFRS 9. 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
dassets at the acquisition date. Profit or loss and other comprehensive income (loss) of subsidiaries are
attributed to owners of the Controlling Company and non-controlling interests.
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.
(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 parties have joint
control, whereby the parties have 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 a joint venture 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.
F-21
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
3.
Summary of Significant Accounting Policies. Continued
(a)
Consolidation. Continued
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.
(b)
Foreign Currency Transaction and Translation
Transactions in foreign currencies are translated to the respective functional currencies of the Group entities
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 an investment in equity instruments designated as at FVOCI and a financial asset and
liability designated as a cash flow hedge, which are recognized in other comprehensive income. 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 borrowings, bonds and cash and cash equivalents are recognized in finance
income (costs) in the consolidated statement of comprehensive income (loss) and foreign currency
differences arising from assets and liabilities in relation to activities other than investing and financing
activities are recognized in other income (expenses) in the consolidated statement of comprehensive income
(loss). Foreign currency differences are presented in gross amounts in the consolidated statement of
comprehensive income (loss).
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 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 and foreign currency
differences are recognized in other comprehensive income (loss). Relevant proportionate shares of foreign
currency differences are allocated to the controlling interests and 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.
F-22
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
3.
Summary of Significant Accounting Policies. Continued
(c)
Cash and cash equivalents
Cash and cash equivalents include all cash balances and short-term highly liquid investments with an original
maturity of three months or less that are readily convertible into known amounts of cash.
(d)
Inventories
Inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on the
weighted-average method, and includes expenditures incurred in acquiring the inventories, production or
conversion costs and other costs incurred in bringing them to their existing location and condition. Net
realizable value is the estimated selling price in the ordinary course of business less the estimated costs of
completion and the estimated selling expenses. In the case of manufactured inventories and work-in-process,
cost includes an appropriate share of production overheads based on the actual capacity of production
facilities. However, the normal capacity is used for the allocation of fixed production overheads if the actual
level of production is lower than the normal capacity.
The Group make adjustments to reduce the cost of inventory to its net realizable value, for estimated excess,
obsolescence or impaired balances. Factors influencing these adjustments include changes in demand,
technological changes, product life cycle, component cost trends, product pricing. Revisions to these
adjustments would be required if these factors differ from our estimates.
(e)
Financial Instruments
(i)
Non-derivative financial assets
Recognition and initial measurement
Trade receivables and debt instruments issued are initially recognized when they are originated. All other
financial assets are recognized in statement of financial position when, and only when, the Group becomes a
party to the contractual provisions of the instrument.
A financial asset (unless it is a trade receivable without a significant financing component) is initially
measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its
acquisition or issue. A trade receivable without a significant financing component is initially measured at the
transaction price.
Classification and subsequent measurement
i)
Financial assets
On initial recognition, a financial asset is classified as measured at: amortized cost; FVOCI – debt
investment; FVOCI – equity investments; or FVTPL. Financial assets are not reclassified subsequent to their
initial recognition unless the Group changes its business model for managing financial assets, in which case
all affected financial assets are reclassified on the first day of the subsequent reporting period following the
change in the business model.
A financial asset is measured as 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 flows;
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.
F-23
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
3.
Summary of Significant Accounting Policies. Continued
(e)
Financial Instruments. Continued
A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as
at FVTPL:
•
•
it is held within a business model whose objective is achieved by both collecting contractual cash
flows and selling financial assets; and
the 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 investments 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
as at FVTPL. This includes all derivative financial assets. At 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.
ii)
Financial assets: business model
The Group makes an assessment of the objective of the business model in which a financial asset is held at a
portfolio level because this best reflects the way the business is managed and information is provided to
management. The information considered includes:
•
•
•
•
the stated policies and objectives for the portfolio and the operation of those policies in practice (these
include whether management’s strategy focuses on earning contractual interest income, maintaining a
particular interest rate profile, matching the duration of the financial assets to the duration of any
related liabilities or expected cash outflows or realizing cash flows through the sale of the assets);
how the performance of the portfolio is evaluated and reported to the Group’s management;
the risks that affect the performance of the business model (and the financial assets held within that
business model) and how those risks are managed; and
the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales
and expectations about future sales activity.
Transfers of financial assets to third parties in transaction that do not qualify for derecognition are not
considered sale for this purpose.
A financial asset that is held for trading or is managed and whose performance is evaluated on a fair value
basis is measured at FVTPL.
iii)
Financial assets: Assessment whether contractual cash flows are solely payments of principal and
interest
For the purpose of the assessment, “principal” is defined as the fair value of the financial asset on initial
recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk
associated with the principal amount outstanding during a particular period of time and for other basic
lending risks and cost (e.g. liquidity risk and administrative costs), as well as profit margin.
F-24
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
3.
Summary of Significant Accounting Policies. Continued
(e)
Financial Instruments. Continued
In assessing whether the contractual cash flows are solely payments of principal and interest, the Group
considers the contractual terms of the instrument. This includes assessing whether the financial asset
contains a contractual term that could change the timing or amount of contractual cash flows such that it
would not meet this condition. In making this assessment, the Group considers:
•
•
•
•
contingent events that would change the amount or timing of cash flows:
terms that may adjust the contractual coupon rate, including variable-rate features;
prepayment and extension features; and
terms that limit the Group’s claim to cash flows from specified assets (e.g. non-recourse features)
A prepayment feature is consistent with the solely payments of principal and interest criterion if the
prepayment amount substantially represents unpaid amounts of principal and interest or the principal amount
outstanding, which may include reasonable additional compensation for early termination of the contract.
Additionally, for a financial asset acquired at a discount or premium to its contractual par amount, a feature
that permits or requires prepayment at an amount that substantially represents the contractual par amount
plus accrued but unpaid contractual interest (which may also include reasonable additional compensation for
early termination) is treated as consistent with this criterion if the fair value of the prepayment feature is
insignificant at initial recognition.
iv)
Financial assets: Subsequent measurement and gains and losses
Financial assets at
FVTPL
Financial assets at
amortized cost
Debt investments at
FVOCI
Derecognition
These assets are subsequently measured at fair value. Net gains and losses,
including any interest or dividend income, are recognized in profit or loss.
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.
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.
The Group derecognizes a financial asset when the contractual rights to the cash flows from the asset expire,
it transfers the rights to receive the contractual cash flows of the financial asset in a transaction in which
substantially all the risks and rewards of ownership of the financial asset are transferred, or it transfers or
does not retain substantially all the risks and rewards of ownership of a transferred asset, and does not retain
control of the transferred asset.
If the Group has retained substantially all the risks and rewards of ownership of the transferred asset, the
Group continues to recognize the transferred asset.
F-25
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
3.
Summary of Significant Accounting Policies. Continued
(e)
Financial Instruments. Continued
Interest rate benchmark reform
In case the basis for determining the contractual cash flows of a financial asset or financial liability measured
at amortized cost changed as a result of interest rate benchmark reform, the Group updates the effective
interest rate of the financial asset or financial liability to reflect the change that is required by the reform if
both of the following conditions are met:
•
•
the change is necessary as a direct consequence of the reform; and
the new basis for determining the contractual cash flows is economically equivalent to the previous
basis – i.e. the basis immediately before the change.
When changes were made to a financial asset or financial liability in addition to changes to the basis for
determining the contractual cash flows required by interest rate benchmark reform, the Group first updates
the effective interest rate of the financial asset or financial liability to reflect the change that is required by
interest rate benchmark reform. After that, the Group applies the policies on accounting for modifications to
the additional changes.
Offset
Financial assets and liabilities are offset and the net amount is presented in the consolidated statement of
financial position when, and only when, the Group has a legal right to offset the amounts and intends either
to settle them on a net basis or to realize the asset and settle the liability simultaneously.
(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 at 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, 2022, non-derivative
financial liabilities comprise borrowings, bonds, trade accounts and notes payable, other accounts payable
and others.
The Group derecognizes a financial liability when its contractual obligations are discharged, cancelled or
expired.
(iii)
Share Capital
The Group 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.
F-26
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
3.
Summary of Significant Accounting Policies. Continued
(e)
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 (loss). 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; if the hedging instrument expires or is sold, terminated or
exercised; or if the hedge no longer meets the criteria for hedge accounting.
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 anymore; 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.
The Group is applying cash flow hedge accounting by designating expected foreign currency denominated
sales arising from forecast export transactions as hedging items and the derivative instruments related to
forward exchange as hedging instruments. The effective portion of changes in the fair value of the derivative
is recognized in equity and the amount accumulated in equity is reclassified to revenue in the same period
which forecast sales occur.
Embedded derivative
Embedded derivatives are separated from the host contract and accounted for separately if the host contract is
not a financial asset and certain criteria are met.
Other derivative financial instruments
Other derivative financial instruments are measured at fair value and changes of their fair value are
recognized in profit or loss.
F-27
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
3.
Summary of Significant Accounting Policies. Continued
(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 income or other 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
Land is not depreciated and depreciation of other items of property, plant and equipment is recognized in
profit or loss on a straight-line basis, reflecting the pattern in which the asset's future economic benefits are
expected to be consumed by the Group. The residual value of property, plant and equipment is zero.
Estimated useful lives of the assets are as follows:
Buildings and structures
Machinery
Furniture and fixtures
Equipment, tools and vehicles
Right-of-use assets
Estimated useful lives (years)
20~40
4, 5
4
2, 4, 12
(*)
(*) The Group depreciates the right-of-use assets from the commencement date to the earlier of the end of the
useful life of the right-of-use asset or the end of the lease term.
Depreciation methods, useful lives and residual values are reviewed at each financial year-end and adjusted
if appropriate and any changes are accounted for as changes in accounting estimates.
(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:
F-28
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
3.
Summary of Significant Accounting Policies. Continued
(h) Government Grants, Continued
(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 a business
over the net fair value of the identifiable assets acquired and liabilities assumed. Any deficit is a bargain
purchase that is recognized in profit or loss. Goodwill is measured at cost less accumulated impairment
losses.
(ii)
Research and development
Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical
knowledge and understanding, is recognized in profit or loss as incurred. Development activities involve a
plan or design of the production of new or substantially improved products and processes. Development
expenditure is capitalized as intangible assets 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 usefulness of the intangible asset by existence of a market for the output of
the intangible asset or the intangible asset itself if it is to be used internally),
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.
Development projects are divided into research activities and development activities. Expenditures on
research activities are recognized in profit or loss and qualifying development expenditures on development
activities are capitalized.
The expenditure capitalized includes the cost of materials, direct labor and overhead costs that are directly
attributable to preparing the asset for its intended use, and borrowing costs on qualifying assets.
F-29
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
3.
Summary of Significant Accounting Policies. Continued
(i)
Intangible Assets. Continued
(iii)
Other intangible assets
Other intangible assets include intellectual property rights, software, customer relationships, technology,
memberships and others. The Group currently has a number of patent license agreements related to product
production. When the amount of payments for the entire contract period can be reliably determined, the total
undiscounted amount is recognized as intangible assets as intellectual property rights and other account
payables, respectively, and the intangible assets are amortized on a straight-line basis over the patent license
period.
(iv)
Subsequent costs
Subsequent expenditures are capitalized only when they increase the future economic benefits embodied in
the specific intangible asset to which they relate. All other expenditures, including expenditures on internally
generated goodwill and brands, are recognized in profit or loss as incurred.
(v)
Amortization
Amortization is calculated on a straight-line basis over the estimated useful lives of intangible assets, other
than goodwill, from the date that they are available for use. The residual value of intangible assets is zero.
However, as there are no foreseeable limits to the periods over which condominium and golf club
memberships are expected to be available for use, these intangible assets are regarded as having indefinite
useful lives and not amortized.
Intellectual property rights
Rights to use electricity, water and gas supply facilities
Software
Customer relationships
Technology
Development costs
Condominium and golf club memberships
Estimated useful
lives (years)
5, 10, (*1)
10
4(*1)
7, 10
10
(*2)
Indefinite
(*1) Patent royalty (included in intellectual property rights) and software license are amortized over the
useful lives considering the contract period.
(*2) Capitalized development costs are amortized over the useful lives considering the life cycle of the
developed products. Amortization of capitalized development costs are recognized in research and
development expenses in the consolidated statement of comprehensive income (loss).
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 with indefinite useful lives are reviewed at
each financial year-end 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)
Investment property
Property held to earn rentals or for capital appreciation or both is classified as investment property.
Investment properties are initially measured at cost, including transaction costs incurred at the time of
acquisition, and subsequently, measured at cost less accumulated depreciation and accumulated impairment
loss.
Subsequent expenditure on an item of investment property 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 carrying amount of those parts that are replaced is derecognized. All
other subsequent expenditures are expensed in the period in which it is incurred.
F-30
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
3.
Summary of Significant Accounting Policies. Continued
(j)
Investment property. Continued
Among investment properties, land is not depreciated, and investment properties except land are depreciated
on a straight-line basis by applying 20 years of the building according to the economic depreciation period.
Depreciation methods, useful lives and residual values of investment properties are reviewed at each
reporting period-end and if appropriate, the changes are accounted for as changes in accounting estimates.
(k)
Impairment
(i)
Financial assets
Financial instruments and contract assets
The Group recognizes loss allowance for financial assets measured at amortized cost and debt investments at
FVOCI at the ‘expected credit loss’ (ECL).
The Group recognizes a loss allowance for the life-time expected credit losses except for following, which
are measured at 12-month ECLs:
•
•
debt instruments that are determined to have low credit risk at the reporting date; and
other debt instruments and bank deposits for which credit risk (i.e. the risk of default occurring over
the expected life of the financial instrument) has not increased significantly since initial recognition.
When determining whether the credit risk of a financial asset has increased significantly since initial
recognition and when estimating ECLs, the Group considers reasonable and supportable information that is
relevant and available without undue cost or effort. This includes both qualitative and quantitative
information and analysis, based on the Group’s historical experience and informed credit assessment
including forward-looking information.
Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial
instrument.
12-month ECLs are the portion of the ECLs that result from default events that are possible within the 12
months after the reporting date (or a shorter period if the expected life of the instrument is less than 12
months).
The maximum period considered when estimating ECLs is the maximum contractual period over which the
Group is exposed to credit risk.
F-31
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
3.
Summary of Significant Accounting Policies. Continued
(k)
Impairment. Continued
Estimation of expected credit losses
Expected credit losses are a probability-weighted estimate of credit losses. Credit losses are measured using
the present value of the difference between the contractual cash flows and the expected contractual cash
flows. The expected credit losses are discounted using effective interest rate of the financial assets.
Credit-impaired financial assets
At each reporting period-end, 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.
Evidence that a financial asset is credit-impaired includes the following observable data:
•
•
•
•
significant financial difficulty of the issuer or the borrower;
the lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s financial
difficulty, having granted to the borrower a concession(s) that the lender(s) would not otherwise
consider;
it is probable that the borrower will enter bankruptcy or other financial reorganization; or
the disappearance of an active market for a security because of financial difficulties.
F-32
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
3.
Summary of Significant Accounting Policies. Continued
(k)
Impairment. Continued
Presentation of loss allowance for ECL in the consolidated statement of financial position
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 charged to profit or loss and is
recognized in OCI instead of reducing the carrying amount of financial assets in the consolidated statement
of financial position.
Write-off
The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations
for recovering the financial asset in its entirety or a portion thereof. The Group assess whether there are
reasonable expectations of recovering the contractual cash flows from customers and individually assess the
timing and amount of write-off. The Group expects no significant recovery from the amount written-off.
However, financial assets that are written off could still be subject to enforcement activities in order to
comply with the Group’s procedures for recovery of amounts due.
(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.
Recoverable amount is estimated for the individual asset. If it is not possible to estimate the recoverable
amount of the individual asset, the Group determines the recoverable amount of the cash-generating unit to
which the asset belongs. The cash-generating unit (“CGU”) is the smallest identifiable group of assets that
includes the asset and generates cash inflows that are largely independent of the cash inflows from other
assets or groups of assets. In identifying whether cash inflows from an asset or group of assets are largely
independent of the cash inflows from other assets or groups of assets, the Group considers various factors
including how management monitors the entity’s operations or how management makes decisions about
continuing or disposing of the entity’s assets and operations. Goodwill arising from a business combination
is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination.
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 discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset or CGU. 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. 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 assets other than goodwill, 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 from the acquisition cost. An impairment loss in respect of goodwill is not
reversed.
F-33
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
3.
Summary of Significant Accounting Policies. Continued
(l)
Leases
A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for
a period of time in exchange for consideration.
(i)
As a lessee
At commencement or on modification of a contract that contains a lease component, the Group allocates the
consideration in the contract to each lease and non-lease component on the basis of its relative stand-alone
price. For certain leases, the Group accounts for the lease and non-lease components as a single lease
component by applying the practical expedient not to separate non-lease components.
The Group recognizes a right-of-use asset and lease liability at the lease commencement date. The right-of-
use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for
any lease payments made at of before the commencement date, plus any initial direct costs incurred and an
estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on
which it is located less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement
date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by
the end of the lease term or the cost of the right-of-use asset reflects that the Group will exercise a purchase
option. In that case, the right-of-use asset will be depreciated over the useful life of the underlying asset,
which is determined on the same basis as those of property and equipment. In addition, the right-of-use asset
is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease
liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily
determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing
rate as the discount rate.
The Group determines its incremental borrowing rate by obtaining interest rates from various external
financing sources and makes certain adjustments to reflect the terms of the lease and type of the asset leased.
Lease payments included in the measurement of the lease liability comprise the following:
•
•
•
•
fixed payments, including in-substance fixed payments;
variable lease payments that depend on an index or a rate, initially measured using the index or rate as
at the commencement date;
amounts expected to be payable under a residual value guarantee; and
the exercise price under a purchase option that the Group is reasonably certain to exercise, lease
payments in an optional renewal period if the Group is reasonably certain to exercise an extension
option, and penalties for early termination of a lease unless the Group is reasonably certain not to
terminate early.
The lease liability is measured at amortized cost using the effective interest method. It is remeasured when
there is a change in future lease payments arising from a change in an index or rate, if there is a change in the
Group’s estimate of the amount expected to be payable under a residual value guarantee, if the Group
changes its assessment of whether it will exercise a purchase, extension or termination option or if there is a
revised in-substance fixed lease payment.
When the lease liability is remeasured, the Group recognizes the amount of the remeasurement of the lease
liability as an adjustment to the right-of-use asset. However, if the carrying amount of the right-of-use asset
is reduced to zero and there is a further reduction in the measurement of the lease liability, the Group
recognizes any remaining amount of the remeasurement in profit or loss.
F-34
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
3.
Summary of Significant Accounting Policies. Continued
(l)
Leases. Continued
The Group presents right-of-use assets that do not meet the definition of investment property in ‘property,
plant and equipment’ and lease liabilities in ‘financial liabilities’ in the consolidated statement of financial
position.
The Group has elected not to recognize right-of-use assets and lease liabilities for leases of low-value assets
and short-term leases. The Group recognizes the lease payments associated with these leases as an expense
on a straight-line basis over the lease term.
(ii)
As a lessor
When the Group acts as a lessor, it determines at lease inception whether each lease is a finance lease or an
operating lease.
To classify each lease, the Group makes an overall assessment of whether the lease transfers substantially all
of the risks and rewards incidental to ownership of the underlying asset. If the lease transfers substantially
all of the risks and rewards incidental to ownership of the underlying asset, then the lease is a finance lease;
if not, then it is an operating lease. As part of this assessment, the Group considers certain indicators such as
whether the lease is for the major part of the economic life of the asset.
When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease
separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising
from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which
the Group applies the exemption described above, then it classifies the sub-lease as an operating lease.
If an arrangement contains lease and non-lease components, then the Group applies IFRS 15 to allocate the
consideration in the contract.
At the commencement date, the Group recognizes assets held under a finance lease in its statement of
financial position and present them as a receivable at an amount equal to the net investment in the lease and
recognize finance income over the lease term, based on a pattern reflecting a constant periodic rate of return
on the lessor’s net investment in the lease.
The Group recognizes lease payments received under operating leases as income on a straight-line basis over
the lease term as part of ‘other revenue’.
F-35
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
3.
Summary of Significant Accounting Policies. Continued
(m) Provisions
A provision is recognized as a result of a past event, if 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 a warranty period from the date of purchase. These liabilities are recognized 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
provisions and adjusts the amounts as necessary. Warranty provisions are included in the current and non-
current provisions.
Liabilities for loss contingencies arising from claims, assessments, litigation, fines, 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.
(n) Non-current Assets Held for Sale
Non-current assets, or disposal groups comprising assets and liabilities, are classified as held-for-sale if it is
highly probable that they will be recovered primarily from sale rather than through continuing use. In order
to be classified as held for sale, the asset (or disposal group) is available for immediate sale in its present
condition and its sale is highly probable. The assets (or disposal groups) that are classified as non-current
assets held for sale are measured at the lower of their carrying amount and fair value less costs to sell on
initial classification. The Group recognizes an impairment loss for any subsequent decrease in fair value of
the asset (or disposal group) for which an impairment loss was recognized on initial classification as held-
for-sale and a gain for any subsequent increase in fair value in profit or losses, up to the cumulative
impairment loss previously recognized.
The Group does not depreciate a non-current asset while it is classified as held for sale or while it is part of a
disposal group classified as held for sale.
(o)
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.
F-36
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
3.
Summary of Significant Accounting Policies. Continued
(o)
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 period 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 underlying key assumptions may differ from actual developments
due to changing market and economic conditions, and may lead to significant changes in our defined benefit
plan. 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.
(v)
Termination benefits
The Group recognizes expense for termination benefits at the earlier of the date when the entity can no
longer withdraw the offer of those benefits and when the entity recognizes costs for a restructuring involving
the payment of termination benefits. If the termination benefits are not expected to be settled wholly before
twelve months after the end of the annual reporting period, the Group measures the termination benefit with
present value of future cash payments.
F-37
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
3.
Summary of Significant Accounting Policies. Continued
(p) Revenue from contracts with customers
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, trade discounts, volume rebates and other cash
incentives paid to customers.
The Group recognizes revenue according to the five stage revenue recognition model (①Identifying the
contract→②Identifying performance obligations→③Determining transaction price→④Allocating the
transaction price to performance obligations →⑤Recognizing revenue for performance obligations).
The Group generates revenue primarily from sale of display panels. Product revenue is recognized when a
customer obtains control over the Group’s products, which typically occurs upon shipment or delivery
depending on the terms of the contracts with the customer.
The Group includes return option in the sales contract of display panels with its customers and the
consideration receivable from the customer is subject to change due to returns. The Group estimates an
amount of variable consideration by using the expected value method which the Group expects to better
predict the amount of consideration. The Group includes in the transaction price an amount of variable
consideration estimated only to the extent that it is highly probable that a significant reversal in the amount
of cumulative revenue recognized will not occur during the return period when the uncertainty associated
with the variable consideration is subsequently resolved. The Group recognizes a refund liability and an
asset for its right to recover products from customers if the Group receives consideration from a customer
and expects to refund some or all of that consideration to the customer. Sales taxes or value-added taxes
collected from customers and remitted to governmental authorities are accounted for on a net basis and are
excluded from revenues in the consolidated statement of comprehensive income (loss).
(q) 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.
F-38
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
3.
Summary of Significant Accounting Policies. Continued
(r)
Finance Income and Finance Costs
Finance income comprises interest income on funds invested (including debt instruments measured at
FVOCI), dividend income, gains on disposal of debt instruments measured at FVOCI and changes in fair
value of financial instruments at FVTPL. Interest income is recognized as it accrues in profit or loss, using
the effective interest method. Dividend income is recognized in profit or loss on the date that the Group’s
right to receive payment is established.
Finance costs comprise interest expense on borrowings, unwinding of the discount on provisions, gain and
losses from financial instruments measured at FVTPL and impairment losses recognized on financial assets.
Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are
capitalized as part of the cost of that asset.
(s)
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 comprises 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 amount of current tax payable or receivable is the best estimate of the tax amount
expected to be paid or received that reflects uncertainty related to income taxes, if any. The taxable profit is
different from the accounting profit for the period since the taxable profit is calculated excluding the
temporary differences, which will be taxable or deductible in determining taxable profit (tax loss) of future
periods, and non-taxable or non-deductible items from the accounting profit.
(ii)
Deferred tax
Deferred tax is recognized, using the asset and 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.
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.
F-39
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
3.
Summary of Significant Accounting Policies. Continued
(s)
Income Tax. Continued
The changes in estimates of the ability to realize the deferred tax assets are generally recognized in profit or
loss as a component of the income tax expense. At each reporting date, the Group reviews the deferred tax
assets for recoverability considering historical profitability, projected future taxable income, the expected
timing of reversals of existing temporary differences and expiration of unused tax losses and tax credits.
(t)
Earnings (Loss) Per Share
The Controlling Company presents basic and diluted earnings (loss) 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.
(u)
Standards issued but not yet effective
A number of amended standards are effective for annual periods beginning after January 1, 2022 and earlier
application is permitted; however, the Group has not early adopted the amended standards in preparing these
consolidated financial statements.
(i)
Classification of Liabilities as Current or Non-current (Amendments to IAS 1, Presentation of
Financial Statements)
The amendments clarify that in order for the borrower to have the right to defer payment of liabilities, it must
fulfil the conditions of complying with all contractual compliance at the end of the reporting period.
Additionally, the possibility of the borrower exercising the right to defer settlement of liabilities for more
than 12 months after the reporting period does not affect the liquidity classification of liabilities. In addition,
when the settlement of liabilities includes the transfer of equity instruments, where compound financial
instrument has a liability and equity portion separately recognized, it does not affect the classification for
liquidity purposes. The amendments are effective for reporting periods beginning on or after January 1, 2024.
The Group is currently assessing the potential impact on its consolidated financial statements resulting from
the application of the amendments.
(ii)
The following new and amended standards are not expected to have a significant impact on the
Group’s consolidated financial statements.
•
•
•
•
Definition of materiality (Amendments to IAS 1, Presentation of Financial Statement)
Definition of Accounting estimate (Amendments to IAS 8, Accounting Policies, Changes in
Accounting Estimates and Errors)
Deferred taxes on assets and liabilities arising from a single transaction (Amendments to IAS 12,
Income Taxes)
IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance Contracts
F-40
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
4.
Cash and Cash Equivalents and Deposits in Banks
Cash and cash equivalents and deposits in banks as of December 31, 2021 and December 31, 2022 are as follows:
(In millions of won)
Current assets
Cash and cash equivalents
Cash
Deposits
Deposits in banks
Time deposits
Restricted deposits(*)
Non-current assets
Deposits in banks
Restricted deposits(*)
December 31, 2021
December 31, 2022
₩
₩
₩
₩
1,122
3,540,475
3,541,597
2,600
740,705
743,305
1,076
1,823,573
1,824,649
267,163
1,455,444
1,722,607
11
11
(*) Includes funds deposited under agreements on mutually beneficial cooperation to aid LG Group companies’
suppliers, restricted deposits pledged to enforce the Group’s investment plans upon the receipt of grants from
Gyeongsangbuk-do, restricted deposits pledged to guarantee a subsidiary’s borrowings and others.
F-41
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
5.
Trade Accounts and Notes Receivable, Other Accounts Receivable and Others
(a)
Trade accounts and notes receivable as of December 31, 2021 and December 31, 2022 are as follows:
(In millions of won)
Due from third parties
Due from related parties
December 31,
2021
₩ 3,818,980
755,809
₩ 4,574,789
December
31, 2022
2,042,746
316,168
2,358,914
(b) Other accounts receivable as of December 31, 2021 and December 31, 2022 are as follows:
(In millions of won)
Current assets
Non-trade receivables, net(*)
Accrued income
Non-current assets
Long-term non-trade receivables
December 31,
2021
December 31,
2022
₩ 108,875
13,024
₩ 121,899
₩
2,376
₩ 124,275
146,921
22,505
169,426
—
169,426
(*) On May 16, 2022, Singapore International Arbitration Centre ruled related to Sharp’s patent contract in favor of
the Group. Accordingly, compensation receivable in the amount of USD 95 million (W120,394 million) was
recognized as non-trade receivables and reduction to cost of sales and other income. The balances of compensation
receivable as of December 31, 2022 are USD 25 million (W31,982 million).
Due from related parties included in other accounts receivable, as of December 31, 2021 and 2022 are W2,846
million and W12,957 million, respectively.
F-42
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
5.
Trade Accounts and Notes Receivable, Other Accounts Receivable and Others. Continued
(c)
The aging of trade accounts and notes receivable, and other accounts receivable as of December 31, 2021 and
December 31, 2022 are as follows:
(In millions of won)
December 31, 2021
Current
1-15 days past due
16-30 days past due
31-60 days past due
More than 60 days past due
Book value
Trade
accounts
and notes
receivable
₩ 4,575,354
566
10
61
2
₩ 4,575,993
Other
accounts
receivable
124,877
822
44
16
521
126,280
Allowance for
impairment
Trade
accounts
and notes
receivable
Other
accounts
receivable
(1,204)
—
—
—
—
(1,204)
(1,932)
(6)
—
—
(67)
(2,005)
(In millions of won)
December 31, 2022
Current
1-15 days past due
16-30 days past due
31-60 days past due
More than 60 days past due
Book value
Trade
accounts
and notes
receivable
₩ 2,332,769
12,019
2,256
391
12,354
₩ 2,359,789
Other
accounts
receivable
166,067
1,000
—
201
3,936
171,204
Allowance for
impairment
Trade
accounts
and notes
receivable
Other
accounts
receivable
(841)
(4)
(1)
—
(29)
(875)
(1,721)
(9)
—
(1)
(47)
(1,778)
The movement in the allowance for impairment in respect of trade accounts and notes receivable and other
accounts receivable for the years ended December 31, 2020, 2021 and 2022 are as follows:
(In millions of won)
Balance at the beginning of the year
(Reversal of) bad debt expense
Balance at the end of the year
(In millions of won)
Balance at the beginning of the year
(Reversal of) bad debt expense
Write-off
Balance at the end of the year
Trade accounts and notes receivable
2022
2021
2020
₩
460
587
₩ 1,047
1,047
157
1,204
1,204
(329)
875
Other accounts receivable
2021
2020
2022
₩ 3,322
(480)
(1,064)
₩ 1,778
1,778
227
—
2,005
2,005
(227)
—
1,778
F-43
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
5.
Trade Accounts and Notes Receivable, Other Accounts Receivable and Others. Continued
(d) Other current assets as of December 31, 2021 and December 31, 2022 are as follows:
(In millions of won)
Advanced payments
Prepaid expenses
Value added tax refundable
Right to recover returned goods
December 31,
2021
₩ 44,907
67,540
608,476
7,440
₩ 728,363
December 31,
2022
22,134
74,420
220,182
8,155
324,891
F-44
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
6.
Other Financial Assets
Other financial assets as of December 31, 2021 and 2022 are as follows:
(In millions of won)
Current assets
Financial assets at fair value through profit or loss
Convertible securities
Derivatives(*1)
Cash flow hedging derivatives
Derivatives(*2)
Financial assets at fair value through other
comprehensive income
Debt instruments
Government bonds
Financial assets carried at amortized cost
Deposits
Short-term loans
Lease receivables
Non-current assets
Financial assets at fair value through profit or loss
Equity instruments
Convertible securities
Derivatives(*1)
Financial assets at fair value through other
comprehensive income
Debt instruments
Government bonds
Financial assets carried at amortized cost
Deposits
Long-term loans
Lease receivables
December 31, 2021
December 31, 2022
₩
₩
₩
₩
₩
₩
₩
₩
₩
₩
₩
₩
₩
1,573
12,741
14,314
905
27
23,581
22,518
6,858
52,957
68,203
48,805
1,185
52,871
102,861
—
119,417
119,417
—
—
8,962
30,062
6,914
45,938
165,355
96,064
1,797
110,663
208,524
21
—
22,039
19,939
11,351
53,329
156,211
17,624
58,806
4,144
80,574
289,098
(*1) Represents cross currency interest rate swap contracts and others entered into by the Group to hedge currency and
interest rate risks with respect to foreign currency denominated borrowings and bonds. The contracts are not designated
as hedging instruments.
(*2) Represents forward exchange contracts entered into by the Group to hedge exchange rate risks with respect to
forecast sales in foreign currency. The contracts are designated as hedging instruments.
F-45
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
7.
Inventories
Inventories as of December 31, 2021 and 2022 are as follows:
(In millions of won)
Finished goods
Work-in-process
Raw materials
Supplies
December 31, 2021
₩
₩
1,180,329
1,202,548
786,739
180,759
3,350,375
December 31, 2022
822,177
1,235,363
651,602
163,776
2,872,918
For the years ended December 31, 2020, 2021 and 2022, the amount of inventories recognized as cost of sales and
inventory write-downs included in cost of sales and usage of inventory write-downs are as follows:
(In millions of won)
Inventories recognized as cost of sales
Including: Inventory write-downs
Usage of inventory write-downs
2020
₩ 21,626,339
213,932
472,885
2021
24,572,939
224,576
213,932
2022
25,027,703
245,619
224,576
There were no significant reversals of inventory write-downs recognized during the years ended December 31,
2020, 2021 and 2022.
F-46
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
8.
Investments in Equity Accounted Investees
(a) Associates as of December 31, 2021 and 2022 are as follows:
(In millions of won)
Associates
Paju Electric
Glass Co.,
Ltd.
WooRee E&L
Co., Ltd.
Location
Paju,
South Korea
Ansan,
South Korea
Fiscal year end
December 31
December 31
YAS Co., Ltd.
Paju,
South Korea
December 31
AVATEC Co.,
Ltd.
Daegu,
South Korea
December 31
Arctic Sentinel,
Inc.
Los Angeles,
U.S.A.
March 31
Cynora GmbH
Bruchsal,
Germany
December 31
Date of
incorporation
January
2005
June
2008
April
2002
August
2000
June
2008
March
2003
Business
Manufacture
glass for
display
Manufacture
LED back
light unit
packages
Develop and
manufacture
deposition
equipment
for OLEDs
Process and
sell glass for
display
Develop and
manufacture
tablet for kids
Develop
organic
emitting
materials for
displays and
lighting
devices
2021
2022
Percentage of
ownership
Carrying
amount
Percentage of
ownership
Carrying
amount
40% ₩ 48,398
40% ₩
42,784
13%
11,947
13%
13,576
15%
27,337
15%
28,976
15%
20,708
14%
20,133
10%
—
10%
—
11%
—
11%
—
(In millions of
won)
Associates
Material
Science Co.,
Ltd.(*1)
Location
Seoul,
South Korea
Fiscal year end
December 31
Date of
incorporation
January
2014
Nanosys
Inc.(*2)
Milpitas,
U.S.A.
December 31
July
2001
Business
Develop,
manufacture,
and sell
materials for
display
Develop,
manufacture,
and sell
materials for
display
2021
2022
Percentage of
ownership
Carrying
amount
Percentage of
ownership
Carrying
amount
10% ₩
3,679
10% ₩
3,650
4%
14,650
₩ 126,719
—
—
₩ 109,119
(*1) During 2022, the Controlling Company recognized a reversal of impairment loss of W613 million as finance income
for the difference between the carrying amount and the recoverable amount of investments in Material Science Co., Ltd.
(*2) During 2022, Nanosys Inc. was reclassified into the financial asset at fair value through profit or loss as the Group
losses its right to appoint members of the board of directors due to the changes in contractual arrangement.
Although the Controlling Company’s respective share interests in WooRee E&L Co., Ltd., YAS Co., Ltd.,
AVATEC Co., Ltd., Arctic Sentinel, Inc., Cynora GmbH and Material Science Co., Ltd. are below 20%, the
Controlling Company is able to exercise significant influence through its right to appoint a director to the board of
directors of each investee. Accordingly, the investments in these investees have been accounted for using the
equity method.
As of December 31, 2022, the market value of the Group’s share in WooRee E&L Co., Ltd., YAS Co., Ltd., and
AVATEC Co., Ltd., all of which are listed in KOSDAQ, are W6,868 million, W15,680 million and W30,000
million, respectively.
Dividends income recognized from equity method investees for the years ended December 31, 2020, 2021 and
2022 amounted to W8,239 million, W4,068 million and W4,461 million, respectively.
F-47
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
8.
Investments in Equity Accounted Investees. Continued
(b)
Summary of financial information of Paju Electric Glass Co., Ltd., a significant associate of the Group, as of
December 31, 2021 and 2022 and for the years ended December 31, 2020, 2021 and 2022 is as follows:
(In millions of won)
Total assets
Current assets
Non-current assets
Total liabilities
Current liabilities
Non-current liabilities
(In millions of won)
Revenue
Profit for the year
Other comprehensive income (loss)
Total comprehensive income
December 31, 2021
227,616
₩
175,730
51,886
105,023
93,561
11,462
December 31, 2022
136,784
98,490
38,294
29,118
28,332
786
₩
2020
307,756
9,615
(409)
9,206
2021
425,516
13,364
(1,258)
12,106
2022
319,264
6,192
(10,216)
(4,024)
(c)
Reconciliation from financial information of the significant associate to its carrying value in the consolidated
financial statements as of December 31, 2021 and 2022 is as follows:
(i)
As of December 31, 2021
(In millions of won)
Company
Paju Electric
Glass Co., Ltd. ₩
Net asset
Ownership
interest
Net asset
(applying
ownership
interest)
Goodwill
Intra-group
transaction
Impairment
loss
Book
value
122,593
40%
49,037
—
(639)
— 48,398
(ii)
As of December 31, 2022
(In millions of won)
Company
Paju Electric
Glass Co., Ltd. ₩ 107,666
Net asset
Ownership
interest
Net asset
(applying
ownership
interest)
Goodwill
Intra-group
transaction
Impairment
loss
Book value
40%
43,066
—
(282)
—
42,784
(d) Book value of other associates, in aggregate, as of December 31, 2021 and 2022 is as follows:
(i)
As of December 31, 2021
(In millions of won)
Net profit (loss) of associates (applying ownership
interest)
Other
comprehensive
income
Total
comprehensive
income
Profit for the
year
Book value
Other associates
₩
78,321
2,473
6,867
9,340
(ii)
As of December 31, 2022
(In millions of won)
Other associates
Net profit (loss) of associates (applying ownership interest)
Book value
Profit for the
year
₩
66,335
2,724
Other
comprehensive loss
(7,516)
Total
comprehensive
loss
(4,792)
F-48
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
8.
Investments in Equity Accounted Investees. Continued
(e)
Changes in investments in associates accounted for using the equity method for the years ended December
31, 2021 and 2022 are as follows:
(In millions of won)
Company
January 1
2021
Dividends
received
Equity income
on
investments
Other
comprehensive
income (loss)
Other gain
December 31
Associates
Paju Electric Glass
Co., Ltd.
Others
(In millions of won)
₩
47,262
67,289
₩ 114,551
(3,668)
(400)
(4,068)
5,307
2,473
7,780
(503)
6,867
6,364
—
2,092
2,092
48,398
78,321
126,719
Company
January 1
Reclassification(*)
2022
Equity
income on
investments
Other
comprehensive
loss
Dividends
received
Associates
Paju Electric Glass
Co., Ltd.
Others
₩ 48,398
78,321
₩ 126,719
—
(10,620)
(10,620)
(4,361)
(100)
(4,461)
2,834
2,724
5,558
(4,087)
(7,516)
(11,603)
Other
gain
—
3,526
3,526
December 31
42,784
66,335
109,119
(*) During 2022, it was reclassified into the financial asset at fair value through profit or loss as the Group losses its right
to appoint members of the board of directors due to the changes in contractual arrangement.
F-49
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
9.
Property, Plant and Equipment
(a)
Changes in property, plant and equipment for the year ended December 31, 2021 are as follows:
(In millions of won)
Acquisition cost
as of January 1, 2021
Accumulated depreciation
as of January 1, 2021
Accumulated impairment
loss as of January 1, 2021
Book value as
of January 1, 2021
Additions
Depreciation
Disposals
Impairment loss
Others(*3)
Government grants received
Effect of movements
in exchange rates
Book value as of
December 31, 2021
Acquisition cost as of
December 31, 2021
Accumulated depreciation
as of December 31, 2021
Accumulated impairment
loss as of December 31, 2021
Land
Buildings and
structures
Machinery
and
equipment
Furniture
and
fixtures
Construction-
in-
progress
(*1)
Right-of-use
asset
Others
(*2)
Total
₩ 442,822
7,420,854
48,166,361
735,329
6,122,364
184,036
1,021,641
64,093,407
—
—
₩ 442,822
—
—
(8,975)
—
—
—
(3,457,052)
(37,581,293)
(600,912)
—
(69,130)
(697,134)
(42,405,521)
(116,596)
(1,317,770)
(8,250)
(76,637)
(3,999)
(24,931)
(1,548,183)
3,847,206
—
(394,416)
(17,655)
3,897
704,753
(5,491)
9,267,298
—
(3,188,694)
(30,046)
(15,287)
1,784,733
(80,432)
126,167
—
(72,065)
(44)
(3)
110,083
(60)
6,045,727
3,651,064
—
(6,899)
620
(2,910,055)
—
110,907
63,655
(62,983)
(7)
—
—
—
299,576
—
(259,095)
(40,501)
(7,191)
299,534
—
20,139,703
3,714,719
(3,977,253)
(104,127)
(17,964)
(10,952)
(85,983)
—
167,236
682,295
15,041
11,141
8,294
16,296
900,303
₩ 433,847
4,305,530
8,419,867
179,119
6,791,598
119,866
308,619
20,558,446
₩ 433,847
8,583,015
50,288,095
863,241
6,867,667
235,436
1,184,889
68,456,190
₩
₩
—
—
(4,068,333)
(40,637,254)
(675,638)
—
(111,382)
(853,778)
(46,346,385)
(209,152)
(1,230,974)
(8,484)
(76,069)
(4,188)
(22,492)
(1,551,359)
(*1) As of December 31, 2021, construction-in-progress mainly relates to construction of manufacturing facilities.
(*2) Others mainly consist of tools and equipment
(*3) Others mainly represent the reclassification of construction-in-progress to other property, plant and equipment.
F-50
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
9.
Property, Plant and Equipment. Continued
(b) Changes in property, plant and equipment for the year ended December 31, 2022 are as follows:
(In millions of won)
Acquisition cost
as of January 1, 2022
Accumulated depreciation
as of January 1, 2022
Accumulated impairment
loss as of January 1, 2022
Book value
as of January 1, 2022
Additions
Depreciation
Disposals
Impairment loss(*3)
Others(*4)
Government grants received
Effect of movements
in exchange rates
Book value as of
December 31, 2022
Acquisition cost as of
December 31, 2022
Accumulated depreciation
as of December 31, 2022
Accumulated impairment
loss as of December 31, 2022
Land
Buildings and
structures
Machinery
and
equipment
Furniture
and
fixtures
Construction-
in-
progress
(*1)
Right-of-use
asset
Others
(*2)
Total
₩ 433,847
8,583,015
50,288,095
863,241
6,867,667
235,436
1,184,889
68,456,190
—
—
₩ 433,847
—
—
(3,573)
—
45,771
—
(4,068,333)
(40,637,254)
(675,638)
—
(111,382)
(853,778)
(46,346,385)
(209,152)
(1,230,974)
(8,484)
(76,069)
(4,188)
(22,492)
(1,551,359)
4,305,530
—
(373,089)
—
(252,997)
196,747
-
8,419,867
—
(3,182,783)
(172,547)
(672,061)
1,732,712
(57,503)
179,119
—
(83,747)
(477)
(6,912)
78,497
-
6,791,598
5,709,828
—
—
(292,564)
(2,425,047)
-
119,866
72,567
(76,370)
—
(3,439)
(420)
-
308,619
—
(269,796)
(36,958)
(29,282)
334,931
-
20,558,446
5,782,395
(3,985,785)
(213,555)
(1,257,255)
(36,809)
(57,503)
—
27,755
116,514
2,738
5,895
454
3,643
156,999
₩ 476,045
3,903,946
6,184,199
169,218
9,789,710
112,658
311,157
20,946,933
₩ 476,045
8,699,292
50,722,745
902,477
10,145,865
271,761
1,299,892
72,518,077
₩
₩
—
—
(4,348,201)
(42,744,139)
(719,862)
—
(151,550)
(962,598)
(48,926,350)
(447,145)
(1,794,407)
(13,397)
(356,155)
(7,553)
(26,137)
(2,644,794)
(*1) As of December 31, 2022, construction-in-progress mainly relates to construction of manufacturing facilities.
(*2) Others mainly consist of tools and equipment
(*3) During 2022, Display(Large OLED) CGU was assessed for impairment, and impairment losses amounting to W1,236,563 million are recognized as other expenses. Details of
the impairment loss is explained in Note 10(d).
(*4) Others mainly represent the reclassification of construction-in-progress to other property, plant and equipment.
F-51
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
9.
Property, Plant and Equipment. Continued
(c)
Capitalized borrowing costs and capitalization rate for the years ended December 31, 2020, 2021 and 2022 are as follows:
(In millions of won)
Capitalized borrowing costs
Capitalization rate
2020
2021
2022
₩
191,876
4.14%
64,606
3.69%
152,074
3.11%
(d)
The Group provides a portion of property, plant and equipment as an operating lease. During 2022, rental income from property, plant and equipment was W2,806
million (2020: W3,629 million, 2021: W1,978 million).
F-52
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
10.
Intangible Assets and Non-financial Assets Impairment
(a)
Changes in intangible assets for the year ended December 31, 2021 are as follows:
(In millions of won)
Acquisition cost as of January 1, 2021
Accumulated amortization as of
January 1, 2021
Accumulated impairment loss as of
January 1, 2021
Book value as of January 1, 2021
Additions - internally developed
Additions - external purchases
Amortization(*1)
Disposals
Impairment loss(*3)
Reversal of impairment loss
Transfer from construction-in-progress
Effect of movements in exchange rates
Book value as of December 31, 2021
Acquisition cost as of December 31, 2021
Accumulated amortization as of
December 31, 2021
Accumulated impairment loss as of
December 31, 2021
Intellectual
property
rights
₩ 1,247,057
Software
1,180,719
Member-ships
39,350
Development
costs
2,865,264
(781,703)
(976,747)
—
(2,352,680)
(29,151)
₩ 436,203
—
681,222
(190,842)
—
(90)
—
—
1,825
₩ 928,318
₩ 1,873,027
(9,539)
194,433
—
23,240
(101,545)
—
(2)
—
119,543
(6,808)
228,861
1,261,232
(9,450)
29,900
—
742
—
(2,750)
—
1,152
—
39
29,083
30,742
(210,631)
301,953
362,897
—
(230,891)
—
(29,396)
—
(15,348)
—
389,215
1,771,383
₩ (915,764)
(1,023,062)
—
(1,318,476)
₩
(28,945)
(9,309)
(1,659)
(63,692)
Construction-
in-progress
Customer
relationships
Technology
Good-will
12,067
—
—
12,067
—
127,621
—
—
—
—
(119,543)
(583)
19,562
19,562
—
—
59,176
(37,491)
(21,685)
—
—
—
—
—
—
—
—
—
—
59,176
11,074
(11,074)
—
—
—
1,689
(169)
—
—
—
—
—
1,520
12,763
103,526
—
(57,995)
45,531
—
—
—
—
—
—
—
2,808
48,339
106,334
Others
(*2)
13,083
(13,082)
—
1
—
—
(1)
—
—
—
—
—
—
13,081
Total
5,531,316
(4,172,777)
(338,451)
1,020,088
362,897
834,514
(523,448)
(2,750)
(29,488)
1,152
(15,348)
(2,719)
1,644,898
5,147,300
(37,491)
(11,243)
—
(13,081)
(3,319,117)
(21,685)
—
(57,995)
—
(183,285)
(*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.
(*3) The Group recognized an impairment loss amounting to W29,396 million for development projects which are not likely to generate revenue.
F-53
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
10.
Intangible Assets and Non-financial Assets Impairment. Continued
(b) Changes in intangible assets for the year ended December 31, 2022 are as follows:
(In millions of won)
Acquisition cost as of January 1, 2022
Accumulated amortization as of
January 1, 2022
Accumulated impairment loss as of
January 1, 2022
Book value as of January 1, 2022
Additions - internally developed
Additions - external purchases
Amortization(*1)
Disposals
Impairment loss(*3)(*4)
Transfer from construction-in-progress
Effect of movements in exchange rates
Book value as of December 31, 2022
Acquisition cost as of December 31, 2022
Accumulated amortization as of
December 31, 2022
Accumulated impairment loss as of
December 31, 2022
Intellectual
property rights
₩
1,873,027
Software
1,261,232
Member-ships
30,742
Development
costs
1,771,383
Construction-
in-progress
19,562
Customer
relationships
59,176
Technology
Good-will
Others
(*2)
106,334
13,081
Total
5,147,300
(915,764)
(1,023,062)
—
(1,318,476)
(28,945)
928,318
—
187,114
(192,983)
—
(34,901)
—
10,108
897,656
(9,309)
228,861
—
24,741
(105,615)
(977)
(17,799)
85,319
(2,957)
211,573
2,074,083
1,340,637
(1,659)
29,083
—
7,004
—
(10,608)
(42)
—
33
25,470
27,170
(63,692)
389,215
502,755
—
(272,102)
—
(54,649)
—
—
565,219
2,016,477
(1,115,014)
(1,108,459)
—
(1,358,446)
(61,413)
(20,605)
(1,700)
(92,812)
₩
₩
₩
₩
₩
—
—
19,562
—
95,179
—
—
—
(85,319)
(1,253)
28,169
28,169
—
—
(37,491)
(21,685)
—
—
—
—
—
—
—
—
—
59,176
12,763
(11,243)
—
1,520
—
—
(168)
—
(43)
—
—
1,309
12,763
—
(13,081)
(3,319,117)
(57,995)
48,339
—
—
—
—
(26,963)
—
2,185
23,561
108,519
—
—
—
—
—
—
—
—
—
—
13,081
(183,285)
1,644,898
502,755
314,038
(570,868)
(11,585)
(134,397)
—
8,116
1,752,957
5,680,075
(37,491)
(11,411)
—
(13,081)
(3,643,902)
(21,685)
(43)
(84,958)
—
(283,216)
(*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.
(*3) During 2022, Display (Large OLED) CGU was assessed for impairment, and impairment losses amounting to W93,966 million are recognized as other
expenses. The impairment amount first reduces goodwill allocated to the CGU, and then allocated to the other assets in the CGU after goodwill balance is reduced
to zero. Details of the impairment loss are explained in Note 10(d).
(*4) The Group recognized an impairment loss amounting to W33,386 million for development projects which are not likely to generate revenue.
F-54
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
10.
Intangible Assets and Non-financial Assets Impairment. Continued
(c) Development costs and Intellectual property rights as of December 31, 2021 and 2022 are as follows:
Development costs
(i)
As of December 31, 2021
(In millions of won)
Classification
Development completed
Development in process
(ii)
As of December 31, 2022
(In millions of won)
Classification
Development completed
Development in process
TV
IT
Mobile and others
TV
IT
Mobile and others
Product type
Book Value
₩
₩
₩
₩
₩
27,371
31,935
76,644
135,950
73,667
66,904
112,694
253,265
389,215
Product type
Book Value
₩
₩
₩
₩
₩
55,187
24,684
199,552
279,423
60,376
100,380
125,040
285,796
565,219
TV
IT
Mobile and others
TV
IT
Mobile and others
F-55
10.
Intangible Assets and Non-financial Assets Impairment. Continued
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
Intellectual property rights
(i)
As of December 31, 2021
(In millions of won and in years)
Classification
Patent
Other
Category
Book Value
Remaining
amortization period (*1)
Direct additions
Licenses agreement(*2)
₩
₩
₩
121,976
805,480
927,456
862
928,318
5.3
6.2
3.5
(*1) Weighted average of the remaining useful life at the end of the reporting period as each patent has a different remaining amortization period.
(*2) The Group’s rights under contracts with the patent company.
(ii)
As of December 31, 2022
(In millions of won and in years)
Classification
Patent
Other
Category
Book Value
Direct additions
Licenses agreement(*2)
₩
₩
₩
198,136
697,605
895,741
1,915
897,656
Remaining
amortization period
(*1)
7.2
6.0
3.6
(*1) Weighted average of the remaining useful life at the end of the reporting period as each patent has a different remaining amortization period.
(*2) The Group’s rights under contracts with the patent company.
F-56
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
10.
Intangible Assets and Non-financial Assets Impairment. Continued
(d)
Impairment assessment on CGU
(i)
Changes in Cash Generating Unit (“CGU”)
During 2022, the Group distinguished Display (Large OLED) CGU as a separate CGU from the existing Display CGU due to withdrawal of the
domestic LCD TV business and the reorganization of the related businesses. As of December 31, 2022, the Group’s cash-generating units consist of
Display CGU, Display (Large OLED) CGU and Display (AD PO) CGU. Changes in the carrying amount of goodwill allocated to the related CGUs
are as follows:
(In millions of won)
Display CGU
Display (Large OLED) CGU
₩
December 31, 2021
Effect of movements
in exchange rates
48,339
—
48,339
2,185
—
2,185
Changes in CGU (*)
(26,963)
26,963
—
Impairment
—
(26,963)
(26,963)
December 31, 2022
23,561
—
23,561
2022
(*) During 2022, a portion of goodwill allocated to Display CGU as of December 31, 2021 was allocated to Display (Large OLED) CGU.
(ii)
Impairment assessment on CGU
As of December 31, 2022, the Group performed impairment tests for Display CGU and Display (Large OLED) CGU. No impairment test was
performed for Display (AD PO) CGU, impairment loss for which was initially recognized in 2019, as there was no indicator of impairment or reversal
identified during 2022.
F-57
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
10.
Intangible Assets and Non-financial Assets Impairment. Continued
The recoverable amount of each CGU is determined based on its value in use. Value in use is calculated using the estimated cash flow based on 5-year
business plan approved by management. The estimated revenue and operating expenditures of the Group’s products used in the forecast was
determined considering external sources and the Group’s past experience. Management estimated the future cash flows based on its past performance
and forecasts on market growth. The key assumptions used in the estimation of value in use for Display CGU and Display (Large OLED) CGU include
revenue and operating expenditures for the forecast period, growth rates for subsequent years (“terminal growth rate”), and discount rate. Terminal
growth rate and the discount rate used in the estimation of value in use are as follows.
2022
Display CGU
Display (Large OLED) CGU
2021
Display CGU
Pre-tax
discount rate(*)
Post-tax
discount rate(*)
Terminal growth
rate
10.8%
10.5%
10.5%
9.0%
9.0%
8.4%
1.0%
1.0%
1.0%
(*) The discount rate was calculated using the weighted average cost of equity capital and debt and the beta of equity capital was calculated as the
average of five global listed companies in the same industry and the Group. Cost of debt was calculated using the yield rate of non-guaranteed
corporate bond considering the Group's credit rating and debt ratio was determined using the average of the debt ratios of the five global listed
companies in the same industry and the Group. The Group calculates the value in use of each CGU using post-tax cash flows and a post-tax
discount rate, and the result is not significantly different from the value in use calculated using pre-tax cash flows and pre-tax discount rate.
As a result of the impairment test for Display CGU, the recoverable amount exceeded its carrying amount by W365,774 million. Management has
identified that a reasonably possible change in two key assumptions could cause the carrying amount to exceed the recoverable amount. The value in
use determined for this CGU is sensitive to the discount rate and terminal growth rate used in the discounted cash flow model. Specifically, the
discount rate and terminal growth rate would need to increase by 0.28% and decrease by 0.31%, individually (holding all the other assumptions
constant) for the estimated recoverable amount to be equal to the carrying amount.
As a result of the impairment test, due to unfavorable changes in the business environment, the carrying amount of Display (Large OLED) CGU
exceeded the recoverable amount of W2,999,393 million and an impairment loss of W1,330,529 million was recognized as other expenses. If the
discount rate increases by 0.5%, the value in use would have decreased by W262,590 million (8.8%) and if the terminal growth rate decreases by 0.5%,
the value in use would have decreased by W201,256 million (6.7%).
F-58
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
11.
Investment Property
(a)
Changes in investment property for the year ended December 31, 2022 are as follows:
(In millions of won)
Book value as of January 1, 2022
Transfer from property, plant and equipment
Depreciation
Impairment loss
Book value as of December 31, 2022
2022
—
36,809
(804)
(7,736)
28,269
₩
₩
(b) During 2022, rental income from investment property is W358 million.
12.
Financial Liabilities
(a)
Financial liabilities as of December 31, 2021 and 2022 are as follows:
(In millions of won)
Current
Short-term borrowings
Current portion of long-term borrowings
and bonds
Derivatives(*1)
Cash flow hedging derivatives(*2)
Lease liabilities
Non-current
Won denominated borrowings
Foreign currency denominated
borrowings
Bonds
Derivatives(*1)
Lease liabilities
December 31, 2021
December 31, 2022
₩
613,733
2,578,552
3,393,506
8,594
13,400
40,479
4,069,712
2,855,565
14,443
—
40,694
5,489,254
2,173,500
1,644,602
5,487,091
995,976
2,331
43,847
8,702,745
6,780,593
1,132,098
32,965
32,094
9,622,352
₩
₩
₩
(*1) Represents cross currency interest rate swap contracts and others entered into by the Group to hedge currency and
interest rate risks with respect to foreign currency denominated borrowings and bonds. The contracts are not designated
as hedging instruments.
(*2) Represents forward exchange contracts entered into by the Group to hedge exchange rate risks with respect to
forecast sales in foreign currency. The contracts are designated as hedging instruments.
(b)
Short-term borrowings as of December 31, 2021 and 2022 are as follows.
(In millions of won and USD)
Lender
The Export-Import Bank of Korea and others
Standard Chartered Bank Vietnam and others
Foreign currency equivalent
Annual interest rate
as of
December 31, 2022
(%)
2.13~6.01 ₩
3.10~5.59
December 31,
2021
—
613,733
USD 518
December 31,
2022
1,952,289
626,263
USD 1,252
— CNY 1,000
2,578,552
₩ 613,733
F-59
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
12.
Financial Liabilities. Continued
(c) Won denominated long-term borrowings as of December 31, 2021 and 2022 are as follows:
(In millions of won)
Lender
Korea Development Bank and others
Less current portion of long-term borrowings
Annual
interest rate
as of
December 31,
2022 (%)
December 31, 2021
1.90~5.30 ₩ 2,785,000
(611,500)
₩ 2,173,500
December 31,
2022
2,986,102
(1,341,500)
1,644,602
(d)
Foreign currency denominated long-term borrowings as of December 31, 2021 and 2022 are as follows:
(In millions of won, USD and CNY)
Lender
KEB Hana Bank and others
China Construction Bank and others
Foreign currency equivalent
Less current portion of long-term borrowings
Annual interest
rate
as of
December 31,
2022 (%)
December 31, 2021
1.82~6.86 ₩ 2,163,538
4,489,974
3.00~6.34
USD 2,782
December 31,
2022
2,674,003
5,304,007
USD 3,494
CNY 18,017 CNY 19,569
(1,197,417)
6,780,593
₩ (1,166,421)
₩ 5,487,091
F-60
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
12.
Financial Liabilities. Continued
(e) Details of bonds issued and outstanding as of December 31, 2021 and 2022 are as follows:
(In millions of won and USD)
Won denominated bonds at
amortized cost(*1)
Publicly issued bonds
Privately issued bonds
Less discount on bonds
Less current portion
Foreign currency denominated
bonds at amortized cost(*2)
Privately issued bonds
Foreign currency equivalent
Less discount on bonds
Less current portion
Financial liabilities at fair value
through profit or loss
Foreign currency denominated
convertible bonds(*3)
Foreign currency equivalent
Less current portion
Annual interest rate
as of
December 31, 2022
(%)
December 31,
2021
December 31,
2022
2.29~3.66
3.25~4.25
₩
1,320,000
1,215,000
Maturity
February 2023 ~
February 2027
May 2025 ~
May 2033
₩
April 2023
5.88 ₩
August 2024
1.50
₩
₩
₩
₩
160,000
(2,534)
(599,825)
877,641
118,550
USD 100
(215)
—
118,335
110,000
(2,927)
(189,975)
1,132,098
126,730
USD 100
(57)
(126,673)
—
1,015,760
USD 857
(1,015,760)
—
995,976
—
—
—
—
1,132,098
(*1) Principal of the won denominated bonds is to be repaid at maturity and interests are paid quarterly.
(*2) Principal of the foreign currency denominated bonds is to be repaid at maturity and interests are paid quarterly
or semi-annually.
(*3) USD 667 million was redeemed upon the bondholders’ exercise of their put option, and the remaining
outstanding balance (USD 21 million) was fully redeemed upon the Group’s exercise of its early redemption right.
F-61
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
12.
Financial Liabilities. Continued
(f)
Details of the convertible bonds issued in 2019 and early deemed during the year ended December 31, 2022
are as follows:
Type
Issuance amount
Annual interest rate (%)
Issuance date
Maturity date
Interest payment
Principal redemption
Conversion price
Conversion period
Redemption at the option of the issuer (Call
option)
Description
Unsecured foreign currency denominated convertible bonds
USD 687,800,000
1.50
August 22, 2019
August 22, 2024
Payable semi-annually in arrear until maturity date
1. Redemption at maturity:
Redeemed on the maturity date, at their outstanding principal
amount, which has not been early redeemed or converted.
2. Early redemption:
The Controlling Company has a right to redeem before maturity
(call option) or the bondholders have a right to require the
Controlling Company to redeem before maturity (put option). At
exercise of each option, the outstanding principal amount
together with accrued but unpaid interest are to be redeemed.
W19,165 per common share (subject to adjustment based on diluted
effects of certain events)
From August 23, 2020 to August 12, 2024
- On or at any time after 3 years from the issuance, if the closing
price of the shares for any 20 trading days out of the 30 consecutive
trading days is at least 130% of the applicable conversion price
- The aggregate principal amount of the convertible bonds
outstanding is less than 10% of the aggregate principal amount
originally issued, or
- In the event of certain changes in laws and other directives
resulting in additional taxes for the holders
Redemption at the option of the bondholders (Put
option)
On the third anniversary from the issuance date
The Group designated the convertible bonds as financial liabilities at fair value through profit or loss and
recognized the change in fair value in profit or loss.
F-62
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
13. 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 (defined benefit assets) recognized as of December 31, 2021 and 2022 are as
follows:
(In millions of won)
Present value of partially funded defined benefit obligations
Fair value of plan assets
Defined benefit liabilities, net
Defined benefit assets, net
December 31, 2021
December 31, 2022
₩
₩
₩
₩
1,684,096
(1,750,783)
(66,687)
1,589
68,276
1,602,697
(2,048,687)
(445,990)
1,531
447,521
(b) Changes in the present value of the defined benefit obligations for the years ended December 31, 2021 and
2022 are as follows:
(In millions of won)
Defined benefit obligations at January 1
Current service cost
Interest cost
Remeasurements (before tax)
Benefit payments
Net transfers from (to) related parties
Others
Defined benefit obligations at December 31
2021
2022
₩
₩
1,397,542
150,136
35,902
205,318
(101,973)
(2,798)
(31)
1,684,096
1,684,096
173,534
59,104
(195,908)
(116,472)
(1,363)
(294)
1,602,697
Weighted average remaining maturity of defined benefit obligations as of December 31, 2021 and 2022 are
15.63 years and 12.95 years, respectively.
(c)
Changes in fair value of plan assets for the years ended December 31, 2021 and 2022 are as follows:
(In millions of won)
Fair value of plan assets at January 1
Expected return on plan assets
Remeasurements (before tax)
Contributions by employer directly to plan assets
Benefit payments
Fair value of plan assets at December 31
2021
2022
₩
₩
1,621,041
41,797
(15,483)
201,417
(97,989)
1,750,783
1,750,783
64,378
(30,044)
371,398
(107,828)
2,048,687
The estimated contributions payable in the following financial year W204,867 million.
(d)
Plan assets as of December 31, 2021 and 2022 are as follows:
(In millions of won)
Guaranteed deposits in banks
December 31, 2021
December 31, 2022
₩
1,750,783
2,048,687
As of December 31, 2022, the Group maintains the plan assets primarily with Mirae Asset Securities Co.,
Ltd., KB Insurance Co., Ltd. and others.
F-63
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
13. Employee Benefits. Continued
(e)
Expenses related to defined benefit plans recognized in profit or loss for the years ended December 31, 2020,
2021 and 2022 are as follows:
(In millions of won)
Current service cost
Net interest cost
2020
2021
2022
₩
₩
163,652
(2,983)
160,669
150,136
(5,895)
144,241
173,534
(5,274)
168,260
Expenses are recognized in the consolidated statements of comprehensive income (loss) as follows:
(In millions of won)
Cost of sales
Selling expenses
Administrative expenses
Research and development expenses
2020
2021
2022
₩
₩
122,369
8,505
17,875
11,920
160,669
110,750
6,631
16,496
10,364
144,241
128,706
8,017
18,780
12,757
168,260
(f)
Remeasurements of net defined benefit liabilities (assets) included in other comprehensive income (loss) for
the years ended December 31, 2020, 2021 and 2022 are as follows:
(In millions of won)
Balance at January 1
Remeasurements
Actuarial profit or loss arising from:
Experience adjustment
Demographic assumptions
Financial assumptions
Return on plan assets
Group’s share of associates regarding remeasurements
Income tax
Balance at December 31
2020
₩
(72,289)
2021
38,154
2022
(125,293)
36,769
(2,584)
121,515
(7,264)
39
148,475
(38,032)
38,154
₩
₩
₩
(124,974)
(7,206)
(73,138)
(15,483)
(84)
(220,885)
57,438
(125,293)
(83,376)
(8,020)
287,304
(30,044)
32
165,896
(43,503)
(2,900)
F-64
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
13. Employee Benefits. Continued
(g)
Principal actuarial assumptions as of December 31, 2021 and 2022 (expressed as weighted averages) are as
follows:
Expected rate of salary increase
Discount rate for defined benefit obligations
December 31, 2021
December 31, 2022
3.7%
3.1%
4.7%
5.4%
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:
Teens
Twenties
Thirties
Forties
Fifties
Males
Females
Males
Females
Males
Females
Males
Females
Males
Females
December 31, 2021
December 31, 2022
0.00%
0.00%
0.01%
0.00%
0.01%
0.00%
0.02%
0.01%
0.04%
0.02%
0.00%
0.00%
0.01%
0.00%
0.01%
0.00%
0.02%
0.01%
0.04%
0.02%
(h) Reasonably possible changes to respective relevant actuarial assumptions would have affected the defined
benefit obligations by the following amounts as of December 31, 2022:
(In millions of won)
Discount rate for defined benefit obligations
Expected rate of salary increase
Defined benefit obligations
1% increase
1% decrease
₩
(178,526)
220,949
211,370
(188,732)
F-65
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
14.
Provisions
(a)
Changes in provisions for the year ended December 31, 2021 are as follows:
(In millions of won)
Balance at January 1, 2021
Additions (reversal)
Usage
Balance at December 31, 2021
Current
Non-current
Warranties(*)
₩ 272,195
216,873
(231,942)
₩ 257,126
₩ 164,184
92,942
₩
Others
14,906
(5,659)
—
9,247
9,247
—
Total
287,101
211,214
(231,942)
266,373
173,431
92,942
(*) Product warranties on defective products are normally applicable for warranty periods from the date of
customer’s purchase. The provision is calculated by using historical and anticipated rates of warranty claims, and
costs per claim to satisfy the Group’s warranty obligation.
(b) Changes in provisions for the year ended December 31, 2022 are as follows:
(In millions of won)
Balance at January 1, 2022
Additions (reversal)
Usage
Balance at December 31, 2022
Current
Non-current
Litigation
and claims
Warranties
(*)
Others
₩
—
1,680
257,126
251,395
— (259,153)
249,368
163,211
86,157
₩ 1,680
₩ 1,680
—
₩
9,247
(816)
Total
266,373
252,259
— (259,153)
259,479
173,322
86,157
8,431
8,431
—
(*) Product warranties on defective products are normally applicable for warranty periods from the date of
customer’s purchase. The provision is calculated by using historical and anticipated rates of warranty claims, and
costs per claim to satisfy the Group’s warranty obligation.
F-66
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
15. Contingent Liabilities and Commitments
(a)
Legal Proceedings
Anti-trust litigations
Some individual claimants filed “follow-on” damages claims against the Group and other TFT-LCD
manufacturers alleging violations of EU competition law. While the Group continues its vigorous defense of
the various pending proceedings described above, as of December 31, 2022, the Group cannot reliably
estimate the timing and amount of outflows of resources embodying economic benefits relating to the
proceedings.
Others
The Group is involved in various lawsuits and disputes in addition to pending proceedings described above.
The Group cannot reliably estimate the timing and amount of outflows of resources embodying economic
benefits relating to the disputes.
(b) Commitments
Factoring and securitization of accounts receivable
The Controlling Company has agreements with Korea Development Bank and several other banks for
accounts receivable sales negotiating facilities of up to an aggregate of USD 950 million (W1,203,935
million) in connection with the Controlling Company’s export sales transactions with its subsidiaries. As of
December 31, 2022, the short-term borrowings that are outstanding but past due in connection with these
agreements is W380,877 million. In connection with all of the contracts in this paragraph, the Controlling
Company has sold its accounts receivable with recourse.
F-67
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
15. Contingent Liabilities and Commitments. Continued
The Controlling Company and overseas subsidiaries have agreements with financial institutions for accounts
receivables sales negotiating facilities. The respective maximum amount of accounts receivables that could be sold
under the agreement and the amount of sold, but not yet due, accounts receivables by contract are as follows:
(In millions of USD and KRW)
Classification
Financial institutions
Credit limit
Not yet due
Controlling Company
Subsidiaries
LG Display Singapore
Pte. Ltd.
LG Display Taiwan
Co., Ltd.
Shinhan Bank
Sumitomo Mitsui Banking
Corporation
MUFG Bank
BNP Paribas
ING Bank
Standard Chartered Bank
United Overseas Bank
Limited
JPMorgan Chase Bank,
N.A., Singapore Branch
Credit Agricole Corporate
& Investment Bank,
Singapore Branch
BNP Paribas
Australia and New
Zealand Banking Group
Ltd.
LG Display Germany
GmbH
LG Display America, Inc. Hong Kong & Shanghai
BNP Paribas
Banking Corp.
Standard Chartered Bank
ING Bank
LG Display Japan Co., Ltd. Standard Chartered Bank
LG Display Guangzhou
Trading Co., Ltd.
Chelsea Capital
Corporation
KEB Hana Bank (China)
Company Limited
KRW
equivalent
Contractual
amount
KRW
equivalent
Contractual
amount
USD
10
USD
USD
USD
USD
USD
20
180
65
40
315
12,673
USD
25,346
228,114
82,375
50,692
399,200
USD
USD
USD
USD
100
126,730
USD
USD
200
253,460
USD
USD
50
63,365
10
—
29
—
7
46
32
90
—
12,578
—
36,973
—
8,292
57,843
40,120
113,831
—
USD
300
380,190
USD
30
37,875
USD
15
19,010
USD —
—
USD
120
152,076
USD
7
8,872
USD
135
171,086
USD
125
158,412
USD
USD
USD
USD
400
800
150
200
506,920
1,013,840
190,095
253,460
USD
USD
USD
USD
USD
120
152,076
400
717
72
42
—
506,917
908,604
91,134
53,234
—
USD
30
USD 2,620
USD 2,935
38,019
3,320,327
3,719,527
USD
12
USD 1,527
USD 1,573
15,235
1,934,234
1,992,077
In connection with all of the contracts in the above table, the Group has sold its accounts receivable without
recourse.
F-68
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
15. Contingent Liabilities and Commitments. Continued
Letters of credit
As of December 31, 2022, the Group entered into agreements with financial institutions in relation to the opening
of letters of credit and the respective credit limits under the agreements are as follows:
(In millions of won, USD and CNY)
KEB Hana Bank
Sumitomo Mitsui Banking Corporation
Industrial Bank of Korea
Industrial and Commercial Bank of China
Shinhan Bank
KB Kookmin Bank
MUFG Bank
The Export–Import Bank of Korea
Citibank of Korea
Standard Chartered Bank
Contractual
amount
KRW equivalent
150 ₩
USD
1,800
CNY
100
USD
200
USD
150
USD
USD
270
KRW 300,000
400
USD
150
USD
100
USD
100
USD
400
USD
2,020
USD
1,800
CNY
KRW 300,000 ₩
190,095
326,592
126,730
253,460
190,095
342,171
300,000
506,920
190,095
126,730
126,730
506,920
3,186,538
Payment guarantees
LG Display (China) Co., Ltd. and other subsidiaries are provided with payment guarantees from the China
Construction Bank and other various banks amounting to CNY 900 million (W163,296 million), JPY 900 million
(W8,579 million), EUR 2.5 million (W3,378 million), VND 65,094 million (W3,496 million), and USD 0.5 million
(W634 million), respectively, for their local tax payments and utility payments.
License agreements
As of December 31, 2022, the Group has technical license agreements with Hitachi Display, Ltd. and others in
relation to its LCD business and patent license agreement with Universal Display Corporation and others in
relation to its OLED business. Also, the Group has a trademark license agreement with LG Corp. and other
intellectual property license agreements with various companies as of December 31, 2022.
Pledged Assets
In connection with the borrowings amounting to CNY 11,164 million (W2,025,596 million) from China
Construction Bank and others, as of December 31, 2022, the Group is providing its property, plant and equipment
with carrying amount of W758,097 million as pledged assets.
Commitments for asset acquisition
The Group’s commitments in relation to capital expenditures on property, plant and equipment and intangible
assets as of December 31, 2022 are W1,200,041million.
F-69
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
16.
Share Capital, Share Premium and Reserves
(a)
Share capital and Share premium
The Controlling Company is authorized to issue 500,000,000 shares of capital stock (par value W5,000), and as of
December 31, 2021 and December 31, 2022, the number of issued common shares is 357,815,700. There have
been no changes in the capital stock from January 1, 2021 to December 31, 2022.
The Group’s capital surplus consists of share premium. There have been no changes in share premium from
January 1, 2021 to December 31, 2022.
(b) Reserves
Reserves consist mainly of the following:
Translation reserve
The translation reserve comprises all foreign currency differences arising from the translation of the financial
statements of foreign operations.
Other comprehensive income (loss) from associates
The other comprehensive income (loss) from associates comprises the amount related to change in equity of
investments in equity accounted investees.
Gain or loss on valuation of derivatives
Gain or loss on valuation of derivatives is the effective portion of the gains or losses from derivatives to which cash
flow hedging accounting has been applied.
Reserves as of December 31, 2021 and 2022 are as follows:
(In millions of won)
Loss on valuation of derivatives
Foreign currency translation differences for
foreign operations
Other comprehensive loss from associates
December 31,
2021
December 31,
2022
₩
(9,227)
—
566,651
(20,282)
537,142
509,620
(29,992)
479,628
₩
The movement in reserves for the years ended December 31, 2020, 2021 and 2022 are as follows:
(In millions of won)
January 1, 2020
Change in reserves
December 31, 2020
January 1, 2021
Change in reserves
December 31, 2021
January 1, 2022
Change in reserves
December 31, 2022
Foreign
currency
translation
differences for
foreign
operations
Other comprehensive
income (loss) from
associates (excluding
remeasurements)
Loss on
valuation of
derivatives
₩
₩
—
—
—
—
(9,227)
(9,227)
(9,227)
9,227
—
(178,452)
39,785
(138,667)
(138,667)
705,318
566,651
566,651
(57,031)
509,620
(24,569)
(210)
(24,779)
(24,779)
4,497
(20,282)
(20,282)
(9,710)
(29,992)
Total
(203,021)
39,575
(163,446)
(163,446)
700,588
537,142
537,142
(57,514)
479,628
F-70
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
17. Geographic and Other Information
The following is a summary of the Group’s operation by region based on the location of customers for the years
ended December 31, 2020, 2021 and 2022.
(a)
Revenue by geography
(In millions of won)
Domestic
Foreign
China
Asia (excluding China)
United States
Europe (excluding Poland)
Poland
2020
₩
912,049
2021
632,531
2022(*)
678,246
16,685,746
2,297,290
2,070,944
1,215,345
1,080,187
₩ 23,349,512
₩ 24,261,561
19,866,707
3,256,126
3,263,055
1,159,669
1,699,955
29,245,512
29,878,043
17,434,407
2,796,648
3,078,924
988,566
1,387,946
25,686,491
26,364,737
Total revenue in 2022 excludes W212,956 million of forward exchange hedging loss which was reclassified from
accumulated other comprehensive income to revenue when the sales from the hedged forecast transactions are
recognized.
Sales to Company A and Company B amount to W11,731,702 million and W4,699,282 million, respectively, for
the year ended December 31, 2022 (2020: W10,380,138 million and W4,252,696 million, 2021: W12,019,534
million and W5,924,262 million). The Group’s top ten end-brand customers together accounted for 86% of sales
for the year ended December 31, 2022 (2020: 85%, 2021: 86%).
(b) Non-current assets by geography
(In millions of won)
Domestic
Foreign
China
Vietnam
Others
(c)
Revenue by product and services
(In millions of won)
TV
IT
Mobile and others
December 31, 2021
December 31, 2022
Property, plant
and equipment
₩ 12,006,204
Intangible
assets
1,452,823
6,393,129
2,146,652
12,461
₩
8,552,242
₩ 20,558,446
83,655
19,954
88,466
192,075
1,644,898
Property,
plant and
equipment
14,042,794
4,302,527
2,590,438
11,174
6,904,139
20,946,933
Intangible
assets
1,633,866
53,388
20,315
45,388
119,091
1,752,957
2020
₩
6,737,654
10,120,668
7,403,239
₩ 24,261,561
2021
9,466,192
12,458,740
7,953,111
29,878,043
2022(*)
6,975,269
11,197,954
8,191,514
26,364,737
(*) Total revenue in 2022 excludes W212,956 million of forward exchange hedging loss which was reclassified
from accumulated other comprehensive income to revenue when the sales from the hedged forecast transactions are
recognized.
F-71
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
18. The Nature of Expenses and Others
The classification of expenses by nature for the years ended December 31, 2020, 2021 and 2022 are as follows:
(In millions of won)
Changes in inventories
Purchases of raw materials, merchandise
and others
Depreciation and amortization
Outsourcing
Labor
Supplies and others
Utility
Fees and commissions
Shipping
Advertising
Warranty
Travel
Taxes and dues
Impairment loss on property, plant,
and equipment
Impairment loss on intangible assets
Others
2020
₩
(119,501)
2021
(1,179,232)
2022
477,457
12,636,633
4,134,027
988,899
2,866,055
900,019
885,972
679,475
184,105
113,547
309,113
61,520
141,669
38,494
79,593
666,983
₩ 24,566,603
15,207,659
4,500,701
776,755
3,795,943
1,235,473
1,029,953
789,885
345,204
126,335
216,873
59,519
141,131
19,085
29,488
671,894
27,766,666
13,521,132
4,557,457
1,096,681
3,669,275
1,212,142
1,189,105
834,449
276,253
108,315
251,395
66,428
144,038
1,260,436
136,372
925,259
29,726,194
Total expenses consist of cost of sales, selling, administrative expenses, research and development expenses and
other expenses, excluding foreign exchange differences.
19.
Selling and Administrative Expenses
Details of selling and administrative expenses for the years ended December 31, 2020, 2021 and 2022 are as
follows:
(In millions of won)
Salaries
Expenses related to defined benefit plans
Other employee benefits
Shipping
Fees and commissions
Depreciation
Taxes and dues
Advertising
Warranty
Insurance
Travel
Training
Others
20.
Personnel Expenses
2020
₩
294,055
26,449
68,402
147,711
221,922
215,479
82,708
113,547
309,113
12,985
8,296
8,463
63,821
₩ 1,572,951
2021
387,414
22,859
86,757
298,684
248,478
267,042
74,542
126,335
216,873
16,654
6,935
15,556
84,323
1,852,452
2022
354,709
26,872
91,396
213,613
272,337
263,739
69,851
108,315
251,395
15,100
17,912
15,458
126,022
1,826,719
Details of personnel expenses for the years ended December 31, 2020, 2021 and 2022 are as follows:
(In millions of won)
Salaries and wages
Other employee benefits
Contributions to National Pension plan
Expenses related to defined benefit plans
and defined contribution plans
2020
2,326,792
444,090
67,241
161,285
2,999,408
₩
₩
2021
3,138,798
589,598
68,962
144,739
3,942,097
2022
2,975,325
652,915
77,062
169,362
3,874,664
F-72
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
21. Other Income and Other Expenses
(a) Details of other income for the years ended December 31, 2020, 2021 and 2022 are as follows:
(In millions of won)
Foreign currency gain
Gain on disposal of property, plant and
equipment
Gain on disposal of intangible assets
Reversal of impairment loss on property, plant
and equipment
Reversal of impairment loss on intangible assets
Rental income
Others
2020
₩ 1,688,838
2021
1,210,689
2022
3,098,553
37,835
111
—
1,110
3,629
53,123
₩ 1,784,646
19,367
196
1,121
1,152
1,978
17,632
1,252,135
25,737
—
3,181
1,975
2,806
53,585
3,185,837
(b) Details of other expenses for the years ended December 31, 2020, 2021 and 2022 are as follows:
(In millions of won)
Foreign currency loss
Loss on disposal of property, plant and
equipment
Impairment loss on property, plant and
equipment
Loss on disposal of intangible assets
Impairment loss on intangible assets
Impairment loss on investments
Donations
Loss on liquidation of investments in
subsidiaries
Others
2020
₩ 1,730,703
2021
1,161,628
2022
2,957,048
60,294
64,350
54,432
38,494
368
79,593
—
934
19,085
—
29,488
—
1,099
72,654
16,240
₩ 1,999,280
—
5,209
1,280,859
1,260,436
193
136,372
7,736
1,767
—
28,430
4,446,414
F-73
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
22.
Finance Income and Finance Costs
(a)
Finance income and costs recognized in profit or loss for the years ended December 31, 2020, 2021 and 2022
are as follows:
(In millions of won)
Finance income
Interest income
Foreign currency gain
Gain on disposal of investments in equity
accounted investees
Reversal of impairment loss on investments in
equity accounted investees
Gain on transaction of derivatives
Gain on valuation of derivatives
Gain on disposal of financial assets at fair value
through profit or loss
Gain on valuation of financial assets at fair value
through profit or loss
Gain on valuation of financial liabilities at fair
value through profit or loss
Finance costs
Interest expense
Foreign currency loss
Loss on disposal of investments in equity
accounted investees
Impairment loss on investments in equity
accounted investees
Loss on repayment of borrowings
Loss on sale of trade accounts and notes receivable
Loss on transaction of derivatives
Loss on valuation of derivatives
Loss on disposal of financial assets at fair value
through profit or loss
Loss on valuation of financial assets at fair value
through profit or loss
Loss on valuation of financial liabilities at fair
value through profit or loss
Others
2020
2021
2022
₩ 69,651
336,155
88,888
81,600
85,624
308,665
—
—
2,993
4,149
24,759
—
4,701
9,393
234,742
613
49,503
193,570
—
—
173
4,072
6,511
11,678
—
₩ 438,786
—
425,835
220,240
873,059
₩ 370,479
194,384
434,089
381,132
414,521
440,604
—
—
80
3,344
794
5,258
291
187,344
2,609
250
4,877
1,049
21,795
—
2,672
37,087
359
65,585
—
1,242
2
2,311
704
5,205
36,798
1,675
₩ 802,678
68,421
446
916,614
—
248
966,363
F-74
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
23.
Income Tax Expense (Benefit)
(a) Details of income tax expense (benefit) for the years ended December 31, 2020, 2021 and 2022 are as
follows:
(In millions of won)
Current tax expense (benefit)
Current year
Adjustment for prior years
Deferred tax expense (benefit)
Origination and reversal of temporary differences and
others
Change in unrecognized deferred tax assets(*)
Income tax expense (benefit)
2020
2021
2022
₩ 117,215
(55,410)
61,805
₩
199,591
163,570
363,161
206,465
(59,484)
146,981
₩ (321,333)
(266,771)
₩ (588,104)
₩ (526,299)
60,233
(38,053)
22,180
385,341
(842,529)
457,763
(384,766)
(237,785)
(*) Due to the impact of the 2022 tax law amendments in Korea and changes in estimates of future taxable income,
change in unrecognized deferred tax assets consist of effect from reducing previously recognized deferred tax
assets in relation to tax credit carry forwards.
(b)
Income taxes recognized directly in other comprehensive income or loss for the years ended December 31,
2020, 2021, and 2022 are as follows:
(In millions of won)
Remeasurements of net defined benefit liabilities (assets)
Foreign currency translation differences for foreign
operations
Change in equity of equity method investee
(In millions of won)
Remeasurements of net defined benefit liabilities (assets)
Gain (loss) on valuation of derivatives
Foreign currency translation differences for foreign
operations
Change in equity of equity method investee
(In millions of won)
Remeasurements of net defined benefit liabilities (assets)
Gain (loss) on valuation of derivatives
Foreign currency translation differences for foreign
operations
Change in equity of equity method investee
Before tax
₩ 148,436
48,181
(171)
₩ 196,446
2020
Tax expense
Net of tax
(38,032)
110,404
—
—
(38,032)
48,181
(171)
158,414
Before tax
₩ (220,801)
(12,495)
871,292
6,364
₩ 644,360
Before tax
₩ 165,864
12,495
(80,718)
(11,603)
86,038
₩
2021
Tax benefit
(expense)
57,438
3,268
(1,503)
(1,951)
57,252
2022
Tax benefit
(expense)
(43,503)
(3,268)
(245)
1,925
(45,091)
Net of tax
(163,363)
(9,227)
869,789
4,413
701,612
Net of tax
122,361
9,227
(80,963)
(9,678)
40,947
F-75
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
23.
Income Tax Expense (Benefit). Continued
(c)
Reconciliation of the actual effective tax rate for the years ended December 31, 2020, 2021, and 2022 is as
follows:
(In millions of won)
Profit (loss) for the year
Income tax expense (benefit)
Profit (loss) before income tax ₩
Income tax expense (benefit)
using the statutory tax rate of
each country
Non-deductible expenses
Tax credits
Change in unrecognized
deferred tax assets(*1)
Adjustment for prior years(*2)
Effect on change in tax rate
Others
Income tax expense (benefit)
Effective tax rate
₩
2020
2021
2022
(76,147)
(526,299)
(602,446)
31.55% (190,072)
13,789
(2.29)%
(75,051)
12.46%
44.28% (266,771)
(55,410)
9.20%
7,386
(1.23)%
39,830
(6.61)%
(526,299)
(*3)
1,333,544
385,341
1,718,885
521,954
17,354
(56,439)
(38,053)
(8,349)
(39,338)
(11,788)
385,341
22.42%
(3,195,585)
(237,785)
(3,433,370)
(738,403)
18,742
(145,189)
457,763
(2,072)
168,372
3,002
(237,785)
(*3)
21.51%
(0.55)%
4.23%
(13.33)%
0.06%
(4.90)%
(0.09)%
30.37%
1.01%
(3.28)%
(2.21)%
(0.49)%
(2.29)%
(0.69)%
(*1) Due to the impact of the 2022 tax law amendments in Korea and changes in estimates of future taxable income,
change in unrecognized deferred tax assets consist of effect from reducing previously recognized deferred tax assets in
relation to tax credit carry forwards.
(*2) Adjustment for prior years in 2021 and 2022 consist of expected amount adjusted for transfer price investigation for
prior periods and others.
(*3) Actual effective tax rate is not calculated due to income tax benefit.
F-76
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
24. Deferred Tax Assets and Liabilities
(a) Unrecognized deferred tax liabilities
As of December 31, 2022, in relation to the taxable temporary differences on investments in subsidiaries
amounting to W619,258 million, the Controlling Company did not recognize deferred tax liabilities since the
Controlling Company is able to control the timing of the reversal of the temporary difference and it is
probable that the temporary differences will not reverse in the foreseeable future.
(b) Unused tax credit carryforwards for which no deferred tax asset is recognized
As of December 31, 2022, the amount of unused tax credit carryforwards for which no deferred tax asset is
recognized and their expiration dates are as follows:
(In millions of won)
Tax credit
carryforwards
Total
December 31,
2025
December 31,
2026
December 31,
2027
December 31,
2028
December 31,
2029
December 31,
2030
December 31,
2031
December 31,
2032
₩ 660,670
7,302
18,511
143,815
88,847
106,762
61,506
77,721
156,206
24. Deferred Tax Assets and Liabilities. Continued
(c) Deferred tax assets and liabilities are attributable to the following:
(In millions of won)
Assets
Liabilities
Total
December 31, 2021
December 31,
2022
December 31,
2021
December 31,
2022
December 31,
2021
December 31,
2022
Other accounts
receivable, net
Inventories, net
Defined benefit
liabilities, net
Investments in
subsidiaries and
associates
Accrued expenses
Property, plant and
equipment
Intangible assets
Provisions
Other temporary
differences
Tax loss carryforwards
Tax credit
carryforwards
Deferred tax assets
(liabilities)
₩
—
68,679
—
62,014
(17)
—
(2,009)
—
(17)
68,679
(2,009)
62,014
—
—
(26,642)
(95,850)
(26,642)
(95,850)
—
250,582
632,378
17,450
68,893
130,274
958,624
—
111,293
704,117
25,340
57,210
112,771
1,795,132
(233,552)
—
(252,375)
—
(233,552)
250,582
(252,375)
111,293
(28,886)
(6,636)
—
(19,596)
—
(17,322)
(4,042)
—
(26,519)
—
603,492
10,814
68,893
110,678
958,624
686,795
21,298
57,210
86,252
1,795,132
489,505
170,971
—
—
489,505
170,971
₩
2,616,385
3,038,848
(315,329)
(398,117)
2,301,056
2,640,731
Realization of deferred tax assets related to unused tax losses and tax credit carryforwards which are primarily
related to Korea is affected by estimates in future taxable profits before they expire. The estimation uncertainty is
primarily driven by the Group’s assumptions in revenue and operating expenditures.
(d) Changes in deferred tax assets and liabilities for the years ended December 31, 2021 and 2022 are as follows:
F-77
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
(In millions of won)
Other accounts
receivable, net
Inventories, net
Defined benefit
liabilities, net
Subsidiaries and
associates
Accrued expenses
Property, plant and
equipment
Intangible assets
Provisions
Other temporary
differences
Tax loss
carryforwards
Tax credit
carryforwards
Deferred tax assets
(liabilities)
January 1, 2021
Profit or loss
Other
comprehensive
income
December 31,
2021
Profit or loss
Other
comprehensive
loss
December 31,
2022
₩
(13)
60,539
(4)
8,140
—
—
(17)
68,679
(1,992)
(6,665)
—
—
(2,009)
62,014
(35,617)
(48,463)
57,438
(26,642)
(25,705)
(43,503)
(95,850)
(79,301)
123,106
(150,797)
127,476
(3,454)
—
(233,552)
250,582
(20,503)
(139,289)
1,680
—
(252,375)
111,293
607,315
11,469
63,943
(3,823)
(655)
4,950
—
—
—
603,492
10,814
68,893
83,303
10,484
(11,683)
—
—
—
686,795
21,298
57,210
169,565
(62,155)
3,268
110,678
(21,158)
(3,268)
86,252
953,209
5,415
391,769
97,736
—
—
958,624
836,508
489,505
(318,534)
—
—
1,795,132
170,971
₩
2,265,984
(22,180)
57,252
2,301,056
384,766
(45,091)
2,640,731
25. Earnings (Loss) per Share Attributable to Owners of the Controlling Company
(a)
Basic earnings (loss) per share for the years ended December 31, 2020, 2021 and 2022 are as follows:
(In won and number of shares)
Profit (loss) attributable to owners of the
Controlling Company for the year
Weighted-average number of common stocks
outstanding
Basic earnings (loss) per share
2020
2021
2022
₩ (94,852,991,844)
1,186,182,126,952
(3,071,564,667,651)
₩
357,815,700
(265)
357,815,700
3,315
357,815,700
(8,584)
For the years ended December 31, 2020, 2021 and 2022, there were no events or transactions that resulted in
changes in the number of common stocks used for calculating basic earnings (loss) per share.
(b) Diluted earnings (loss) per share
Diluted loss per share is not different from basic loss per share as there is no dilution effects of potential
common stocks for the year ended December 31, 2020 and 2022. In 2020, 40,988,998 shares of potential
common stock to be issued from conversion were not considered from the calculation of weighted-average
number of common stocks due to antidilution. As of December 31, 2022, the convertible bonds have been
redeemed in full.
Diluted earnings per share for the year ended December 31, 2021 are determined as follows:
(In won and number of shares)
Profit attributable to owners of the Controlling Company
Adjustments:
Interest expenses of convertible bond, net of income tax
Loss on fair value valuation of convertible bond, net of income tax
Diluted profit attributable to owners of the Controlling Company
Weighted-average number of common stocks outstanding, after adjustment
Diluted earnings per share
2021
₩ 1,186,182,126,952
11,382,390,353
50,521,798,972
1,248,086,316,277
398,804,698
3,130
₩
Weighted-average number of common stocks outstanding, after adjustment, for measurement of diluted
earnings per share is determined as follows:
F-78
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
(Number of shares)
Weighted-average number of common stocks outstanding
Adjustment : Number of common stocks to be issued from conversion
Weighted-average number of common stocks outstanding, after adjustment
₩
₩
2021
357,815,700
40,988,998
398,804,698
26.
Financial Risk Management
The Group is exposed to credit risk, liquidity risk and market risks. The Group identifies and analyzes such risks,
and controls are implemented under a risk management system to monitor and manage these risks at below an
acceptable level.
(a) Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity
prices, will affect the Group’s income or the value of its holdings of financial instruments. The objective of market
risk management is to manage and control market risk exposures within acceptable parameters, while optimizing
the return.
F-79
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
26.
Financial Risk Management. Continued
(i)
Currency risk
The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other
than the functional currency of the Controlling Company, Korean won (KRW). The currencies in which these
transactions primarily are denominated are USD, CNY, JPY, etc.
Interest on borrowings is accrued in the currency of the borrowing. Generally, borrowings are denominated in
currencies that match the cash flows generated by the underlying operations of the Group, primarily KRW, USD
and CNY.
The Group adopts policies to ensure that its net exposure is kept to a manageable level by buying or selling foreign
currencies at spot rates when necessary to address short-term imbalances. In respect of monetary assets and
liabilities denominated in foreign currencies, the Group manages currency risk through continuously managing the
position of foreign currencies, measuring the currency risk and, if necessary, using derivatives such as currency
forwards, currency swap and others.
i)
Exposure to currency risk
The Group’s exposure to foreign currency risk based on notional amounts as of December 31, 2021 and 2022
is as follows:
(In millions)
Cash and cash equivalents
Deposits in banks
Trade accounts and notes
receivable
Other accounts receivables
Other assets denominated in foreign
currencies
Trade accounts and notes payable
Other accounts payable
Financial liabilities
Cross currency interest rate swap
contracts(*)
Net exposure
USD
JPY
1,138
—
3,708
24
—
(2,170)
(1,227)
(4,257)
(2,784)
1,545
(1,239)
195
—
221
71
176
(8,850)
(4,630)
—
(12,817)
—
(12,817)
December 31, 2021
CNY
11,024
3,564
TWD
29
—
EUR
568
297
167
(2,343)
(2,203)
(18,017)
(6,943)
—
(6,943)
—
4
6
—
(5)
—
34
—
34
PLN
3
—
—
—
—
—
—
—
3
—
3
3
—
—
—
—
—
(5)
—
(2)
—
(2)
VND
44,525
—
—
15,828
6,481
(465,390)
(1,610,640)
—
(2,009,196)
—
(2,009,196)
(*) Of cross currency interest rate swap contracts, USD 100 million were entered into to hedge currency risk with respect
to foreign currency denominated borrowings and USD 1,445 million were entered into to hedge currency risk and interest
rate risk with respect to foreign currency denominated borrowings and bonds.
F-80
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
26.
Financial Risk Management. Continued
(In millions)
Cash and cash equivalents
Deposits in banks
Trade accounts and notes
receivable
Other accounts receivables
Other assets denominated in foreign
currencies
Trade accounts and notes payable
Other accounts payable
Financial liabilities
Cross currency interest rate swap
contracts(*)
Net exposure
USD
1,040
69
1,725
26
30
(1,824)
(565)
(4,846)
(4,345)
December 31, 2022
JPY
CNY
228
—
103
114
1,984
8,888
703
253
TWD
25
—
EUR
PLN
1
1
— —
—
10
— —
21 —
191
(4,987)
(19,084)
82
7
(1,306) —
(1,711)
(8)
— (20,569) —
34
(11,676)
(23,435)
— —
— —
(10) —
— —
1
12
VND
151,912
—
—
15,800
11,353
(478,926)
(2,681,508)
—
(2,981,369)
2,430
(1,915)
—
(23,435)
—
(11,676)
—
34
— —
1
12
—
(2,981,369)
(*) Of cross currency interest rate swap contracts, USD 700 million were entered into to hedge currency risk with respect
to foreign currency denominated borrowings and USD 1,730 million were entered into to hedge currency risk and interest
rate risk with respect to foreign currency denominated borrowings and bonds.
Average exchange rates applied for the years ended December 31, 2020, 2021 and 2022 and the exchange rates at
December 31, 2021 and 2022 are as follows:
(In won)
USD
JPY
CNY
TWD
EUR
PLN
VND
Average rate (year-to-date)
Reporting date spot rate
2020
₩ 1,180.46
11.05
170.90
40.07
1,345.71
302.95
0.0508
2021
1,144.10
10.42
177.36
40.99
1,353.25
296.51
0.0499
2022
1,291.15
9.85
191.60
43.36
1,357.29
289.78
0.0551
December 31,
2021
1,185.50
10.30
186.26
42.84
1,342.34
292.11
0.0521
December 31, 2022
1,267.30
9.53
181.44
41.27
1,351.20
288.70
0.0537
F-81
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
26.
Financial Risk Management. Continued
ii)
Sensitivity analysis
A weaker won, as indicated below, against the following currencies which comprise the Group’s assets or
liabilities denominated in a foreign currency as of December 31, 2021 and 2022, would have increased (decreased)
equity and profit or loss by the amounts shown below. This analysis is based on foreign currency exchange rate
variances that the Group considers to be reasonably possible at the end of the reporting period. The analysis
assumes that all other variables, in particular interest rates, would remain constant. The changes in equity and
profit or loss would have been as follows:
(In millions of won)
USD (5 percent weakening)
JPY (5 percent weakening)
CNY (5 percent weakening)
TWD (5 percent weakening)
EUR (5 percent weakening)
PLN (5 percent weakening)
VND (5 percent weakening)
December 31, 2021
December 31, 2022
Equity
₩ (74,214)
(5,437)
(64,732)
70
178
29
(3,865)
Profit or loss
2,339
(3,288)
172
5
(858)
29
(3,865)
Equity
(114,317)
(8,614)
(105,926)
68
896
11
(6,161)
Profit or loss
(23,215)
(8,541)
(5)
3
(281)
11
(6,161)
A stronger won against the above currencies as of December 31, 2021 and 2022 would have had the equal but
opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain
constant.
(iii)
Derivatives for cash flow hedge
In relation to forecast export transactions, the Group uses derivative instruments to hedge fluctuations in
future cash flows due to foreign currency exchange rate changes. There is no derivative with cash flow
hedging accounting as of December 31, 2022. The amount which has been reclassified from reserve to profit
(revenue) for the year ended December 31, 2022 is W212,956 million as a result of realization of forecast
export transactions.
(ii)
Interest rate risk
Interest rate risk arises principally from the Group’s variable interest-bearing bonds and borrowings. The
Group establishes and applies its policy to reduce uncertainty arising from fluctuations in interest rates and to
minimize finance cost and manages interest rate risk by monitoring of trends of fluctuations in interest rate
and establishing plan for countermeasures. Meanwhile, the Group entered into cross currency interest rate
swap contracts amounting to USD 1,730 million (W2,192,429 million) and interest rate swap contracts
amounting to W470,000 million in notional amount to hedge interest rate risk with respect to variable
interest bearing borrowings.
i)
Profile
The interest rate profile of the Group’s interest-bearing financial instruments as of December 31, 2021
and 2022 is as follows:
(In millions of won)
Fixed rate instruments
Financial assets
Financial liabilities
Variable rate instruments
Financial liabilities
December 31, 2021
December 31, 2022
₩
₩
₩
4,284,950
(5,237,711)
(952,761)
3,547,256
(6,025,365)
(2,478,109)
(7,426,095)
(8,966,045)
F-82
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
26.
Financial Risk Management. Continued
ii)
Equity and profit or loss sensitivity analysis for variable rate instruments
As of December 31, 2021 and 2022 a change of 100 basis points in interest rates at the reporting date
would have increased (decreased) equity and profit or loss by the amounts shown below for the
respective following 12-month periods. This analysis assumes that all other variables, in particular
foreign currency rates, remain constant.
(In millions of won)
December 31, 2021
Variable rate instruments(*)
December 31, 2022
Variable rate instruments(*)
Equity
Profit or loss
1%p
increase
1%p
decrease
1%p
increase
1%p
decrease
₩ (40,931)
40,931
(40,931)
40,931
₩ (49,885)
49,885
(49,885)
49,885
(*) Financial instruments related to non-hedging interest rate swap are excluded from the calculation.
(iii)
Managing interest rate benchmark reform and associated risks
A fundamental reform of major interest rate benchmarks is being undertaken globally, including the replacement of
some interbank offered rates (IBORs) with alternative risk-free rates (referred to as ‘IBOR reform’). The
publication of LIBOR, except overnight, 1-month, 3-month, 6-month, and 12-month USD LIBORs, was terminated
as of December 31, 2021 and the five LIBORs, as mentioned above, will be discontinued by June 30, 2023.
The Group does not have financial instruments affected by already discontinued LIBORs. The Group plans to
change benchmark interest rate applied to some of its financial instruments from LIBORs to Secured Overnight
Financing Rates (SOFRs), an alternative indicator interest rate. For these LIBOR-related financial instruments, the
LIBORs are continued to be published. Meanwhile, in the case of the CD rate, an alternative reference rate was
selected as the Korea Overnight Financing Repo Rate (KOFR) as part of the reform of the interest rate benchmark.
However, unlike LIBOR, the termination of the publication of the CD rate is not scheduled, and the Group does not
have plan to change to KOFR.
The Group is exposed to the legal risk of changing the contract of financial instruments due to the reform of the
interest rate indicator, as well as the process and operational risks to deal with such changes. In addition, the
Group is also exposed to the risk of monitoring the market trend on the alternative index interest rate and
establishing a risk management strategy accordingly to manage the risk of the new alternative index interest rate.
The Group manages and monitors the transition to alternative interest rate benchmark by evaluating the extent to
which a contract references IBOR cash flows, whether such contracts will need to be amended as a result of IBOR
reform and how to manage communication about IBOR reform with counterparties.
The Group monitors the transition to an alternative interest rate benchmark by reviewing the total amounts of
contracts that have yet to transition to an alternative benchmark rate and the amounts of such contracts that include
an appropriate fallback clause. The Group considers that a contract is not yet transitioned to an alternative
benchmark rate when interest rate under the contract is indexed to a benchmark rate that is still subject to IBOR
reform, even if it includes a fallback clause that deals with the cessation of the existing IBOR(“unreformed
contracts”). As of December 31, 2022, the total amounts of unreformed contracts and those with appropriate
fallback language are as follows, and the financial instruments that will be settled before June 30, 2023 are
excluded:
F-83
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
26.
Financial Risk Management. Continued
(In millions of won)
Non-derivative financial liabilities
Borrowings
Derivative assets
Cross currency interest rate swap contracts
(b) Credit risk
Total amount of
unreformed contracts
Amount with
appropriate fallback
clause
₩
₩
2,346,617
2,002,334
168,730
168,730
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument
fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers.
The Group’s exposure to credit risk of trade and other receivables is influenced mainly by the individual
characteristics of each customer. However, management believes that the default risk of the country in
which each customer operates, do not have a significant influence on credit risk since the majority of the
customers are global electronic appliance manufacturers operating in global markets.
The Group establishes credit limits for each customer and each new customer is analyzed quantitatively and
qualitatively before determining whether to utilize third party guarantees, insurance or factoring as
appropriate.
In relation to the impairment of financial assets subsequent to initial recognition, the Group recognizes the
changes in expected credit loss (“ECL”) in profit or loss at each reporting date.
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to
credit risk as of December 31, 2021 and 2022 are as follows:
(In millions of won)
Financial assets carried at amortized cost
Cash equivalents
Deposits in banks
Trade accounts and notes receivable, net
Non-trade receivables
Accrued income
Deposits
Short-term loans
Long-term loans
Long-term non-trade receivables
Lease receivables
Financial assets at fair value through profit or loss
Convertible securities
Derivatives
Financial assets effective for cash flow hedging
Derivatives
Financial assets at fair value through other comprehensive income
Debt instruments
December 31, 2021
December 31, 2022
₩
₩
₩
₩
₩
₩
₩
3,540,475
743,316
4,574,789
108,875
13,024
45,620
22,518
19,939
2,376
18,209
9,089,141
2,758
65,612
68,370
905
48
9,158,464
1,823,573
1,722,618
2,358,914
146,921
22,505
26,586
30,062
58,806
—
11,058
6,201,043
1,797
230,080
231,877
—
—
6,432,920
Trade accounts and notes receivable are insured in order for the Group to manage credit risk if they do not
meet the Group’s internal credit ratings. Uninsured trade accounts and notes receivable are managed by
continuous monitoring of internal credit rating standards established by the Group and seeking insurance
coverage, if necessary.
F-84
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
26.
Financial Risk Management. Continued
(c)
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with
its financial liabilities that are settled by delivering cash or other financial assets. The Group’s approach to
managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or
risking damage to the Group’s reputation.
The Group has historically been able to satisfy its cash requirements from cash flows from operations and
debt and equity financing. To the extent that the Group does not generate sufficient cash flows from
operations to meet its capital requirements, the Group may rely on other financing activities, such as external
long-term borrowings and offerings of debt instruments, equity-linked and other debt instruments. In
addition, the Group maintains a line of credit with various banks.
The following are the contractual maturities of financial liabilities, including estimated interest payments, as
of December 31, 2022.
(In millions of won)
Non-derivative
financial liabilities
Borrowings
Bonds
Trade accounts and
notes payable
Other accounts
payable
Other accounts
payable (enterprise
procurement
cards(*)
Long-term other
accounts payable
Security deposits
received
Lease liabilities
Derivative financial
liabilities
Derivatives
Carrying amount
Total
6 months or less
6-12 months
1-2 years
2-5 years
More than 5
years
Contractual cash flows in
₩ 13,542,664
1,448,746
14,674,463
1,570,630
4,329,345
338,815
1,266,247
16,956
3,135,925
400,764
5,591,303
727,752
351,643
86,343
4,061,684
4,061,684
3,523,098
538,586
2,307,190
2,309,929
2,231,832
78,097
—
—
—
—
—
—
—
—
—
103,450
245,064
159,680
935,739
935,739
935,739
435,232
508,194
146,788
72,788
191,735
77,803
—
—
26,733
—
—
2,262
16,995
8,463
18,552
181,010
10,743
—
4,780
47,408
₩
₩ 22,998,239
29,418
24,359,595
(1,637)
11,383,925
10,741
1,929,884
3,024
3,670,178
17,290
6,773,162
—
602,446
(*) Represents liabilities payable to credit card companies for utility expenses and others paid using enterprise
procurement cards. The Group presented the payable to credit card companies as other accounts payable and disclosed
related cash flows as operating activities since the Group is using the enterprise procurement cards through agreements
with suppliers for transactions arising from purchasing of goods and services, the payment term is within a year from the
purchase, as part of the normal operating cycle, and no security is provided. Change in liabilities related to procurement
cards for the year ended December 31, 2022 is as follows:
(In millions of won)
Other accounts payable (enterprise procurement cards)
Change (Cash
flows
from operation
activities)
(138,350)
December 31,
2022
935,739
January 1, 2022
₩ 1,074,089
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at
significantly different amounts.
F-85
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
26.
Financial Risk Management. Continued
(d) Capital management
Management’s policy is to maintain a capital base so as to maintain investor, creditor and market confidence
and to sustain future development of the business. Liabilities to equity ratio, net borrowings to equity ratio
and other financial ratios are used by management to achieve an optimal capital structure. Management also
monitors the return on capital as well as the level of dividends to ordinary shareholders.
(In millions of won)
Total liabilities
Total equity
Cash and deposits in banks(*1)
Borrowings (including bonds)
Total liabilities to equity ratio
Net borrowings to equity ratio(*2)
December 31, 2021
December 31, 2022
₩
23,392,014
14,762,501
4,284,902
12,663,806
158%
57%
24,366,792
11,319,227
3,547,256
14,991,410
215%
101%
(*1) Cash and deposits in banks consist of cash and cash equivalents and current deposits in banks.
(*2) Net borrowings to equity ratio is calculated by dividing total borrowings (including bonds and excluding lease
liabilities and others) less cash and current deposits in banks by total equity.
(e) Determination of fair value
(i) Measurement of fair value
A number of the Group’s accounting policies and disclosures require the determination of fair value, for both
financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or
disclosure purposes based on the following methods. When applicable, further information about the
assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.
i)
Current assets and liabilities
The carrying amounts approximate their fair value because of the short maturity of these instruments.
ii)
Trade receivables and other receivables
The fair value of trade and other receivables is estimated as the present value of future cash flows, discounted
at the market rate of interest at the reporting date. This fair value is determined for disclosure purposes. The
carrying amounts of current receivables approximate their fair value.
iii)
Investments in equity and debt securities
The fair value of marketable financial assets at FVTPL and FVOCI is determined by reference to their
quoted closing bid price at the reporting date. The fair value of non-marketable instruments is determined
using the results of fair value assessment performed by external valuation institutions and others.
iv)
Non-derivative financial liabilities
Fair value, which is determined for disclosure purposes, except for the liabilities at FVTPL, is calculated
based on the present value of future principal and interest cash flows, discounted at the market rate of interest
at the reporting date.
v)
Derivatives
The inputs used to measure the fair value of currency forward and cross currency interest rate swap are
calculated based on the exchange rates and interest rates observable in the market at the reporting date.
F-86
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
26.
Financial Risk Management. Continued
(ii)
Fair values versus carrying amounts
The fair values of financial assets and liabilities, together with the carrying amounts shown in the
consolidated statements of financial position as of December 31, 2021 and 2022 are as follows:
(In millions of won)
Financial assets carried at amortized cost
Cash and cash equivalents
Deposits in banks
Trade accounts and notes receivable
Non-trade receivables
Accrued income
Deposits
Short-term loans
Long-term loans
Long-term non-trade receivables
Lease receivables
Financial assets at fair value through profit or loss
Equity instruments
Convertible securities
Derivatives
Financial assets effective for cash flow hedging
Derivatives
Financial assets at fair value through other
comprehensive income
Debt instruments
Financial liabilities at fair value through profit or
loss
Derivatives
Convertible bonds
Financial liabilities effective for cash flow hedging
Derivatives
Financial liabilities carried at amortized cost
Borrowings
Bonds
Trade accounts and notes payable
Other accounts payable
Long-term other accounts payable
Security deposits received
Lease liabilities
December 31, 2021
December 31, 2022
Carrying
amounts
Fair values
Carrying
amounts
Fair values
₩
₩
₩
₩
₩
₩
3,541,597
743,316
4,574,789
108,875
13,024
45,620
22,518
19,939
2,376
18,209
48,805
2,758
65,612
905
48
(*)
(*)
(*)
(*)
(*)
(*)
(*)
(*)
(*)
(*)
48,805
2,758
65,612
905
48
10,925
1,015,760
10,925
1,015,760
13,400
13,400
10,052,245
1,595,801
4,814,055
3,401,346
496,083
11,199
84,326
10,064,068
1,596,044
(*)
(*)
(*)
(*)
(*)
1,824,649
1,722,618
2,358,914
146,921
22,505
26,586
30,062
58,806
—
11,058
96,064
1,797
230,080
—
—
47,408
—
—
13,542,664
1,448,746
4,061,684
3,242,929
435,232
146,788
72,788
(*)
(*)
(*)
(*)
(*)
(*)
(*)
(*)
(*)
(*)
96,064
1,797
230,080
—
—
47,408
—
—
13,521,494
1,377,696
(*)
(*)
(*)
(*)
(*)
(*) Excluded from disclosures as the carrying amount approximates fair value.
F-87
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
26.
Financial Risk Management. Continued
(iii) Fair values of financial assets and liabilities
i)
Fair value hierarchy
Financial instruments carried at fair value are categorized into different levels in a fair value hierarchy
based on the inputs used in the valuation techniques. The different levels have been defined as
follows:
•
•
•
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset
or liability, either directly or indirectly
Level 3: inputs for the asset or liability that are not based on observable market data
ii)
Financial instruments measured at fair value
Fair value hierarchy classifications of the financial instruments that are measured at fair value as of
December 31, 2021 and 2022 are as follows:
(In millions of won)
Financial assets at fair value through profit or loss
Level 1
Level 2
Level 3
Total
December 31, 2021
Equity instruments
Convertible securities
Derivatives
Financial assets effective for cash flow hedging
Derivatives
Financial assets at fair value through other
comprehensive income
Debt instruments
Financial liabilities at fair value through profit or loss
Derivatives
Convertible bonds
Financial liabilities effective for cash flow hedging
Derivatives
(In millions of won)
Financial assets at fair value through profit or loss
Equity instruments
Convertible securities
Derivatives
Financial liabilities at fair value through profit or loss
Derivatives
₩
₩
₩
₩
₩
₩
₩
—
—
—
—
48
—
—
65,612
905
—
—
1,015,760
10,925
—
—
13,400
48,805
2,758
—
—
—
—
—
—
48,805
2,758
65,612
905
48
10,925
1,015,760
13,400
Level 1
Level 2
Level 3
Total
December 31, 2022
—
—
—
—
—
—
230,080
47,408
96,064
1,797
—
96,064
1,797
230,080
—
47,408
F-88
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
26.
Financial Risk Management. Continued
iii) Valuation techniques and inputs for Assets and Liabilities measured by the fair value hierarchy Level 2 and
Level 3
(In millions of won)
Classification
Financial assets at fair value
through profit or loss
Equity instruments
Convertible securities
Derivatives
Financial assets effective for cash
flow hedging
Derivatives
Financial liabilities at fair value
through profit or loss
Derivatives
Financial liabilities effective for
cash flow hedging
Derivatives
(In millions of won)
Classification
Financial assets at fair value
through profit or loss
Equity instruments
Convertible securities
Level 1
December 31, 2021
Level 2
Level 3
Valuation technique
Input
₩
—
—
48,805
—
2,758
—
—
65,612
₩
—
905
₩
—
10,925
₩
—
13,400
Level 1
December 31, 2022
Level 2
Discounted cash
flow, etc.
Blended discount
model and
binominal option
pricing model
Discounted cash
flow
Discount rate and
estimated cash flow,
etc.
Discount rate, stock
price and volatility
Discount rate and
exchange rate
Discounted cash
flow
Discount rate and
exchange rate
Discounted cash
flow
Discount rate and
exchange rate
Discounted cash
flow
Discount rate and
exchange rate
—
—
—
—
Level 3
Valuation technique
Input
Discounted cash
flow, etc.
Blended discount
model and
binominal option
pricing model
Discounted cash
flow
Discount rate and
estimated cash flow,
etc.
Discount rate, stock
price and volatility
Discount rate and
exchange rate
Discounted cash
flow
Discount rate and
exchange rate
₩
—
—
96,064
Derivatives
Financial liabilities at fair value
through profit or loss
Derivatives
—
—
1,797
— 230,080
₩
—
47,408
—
—
F-89
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
26.
Financial Risk Management. Continued
iv)
Financial instruments not measured at fair value but for which the fair value is disclosed
Fair value hierarchy classifications, valuation technique and inputs for fair value measurements of the
financial instruments not measured at fair value but for which the fair value is disclosed as of December 31,
2021 and December 31, 2022 are as follows:
(In millions of won)
Classification
Liabilities
Borrowings
Bonds
(In millions of won)
Classification
Liabilities
Borrowings
Bonds
Level 1
December 31, 2021
Level 2
Level 3
Valuation technique
Input
₩
₩
Level 1
—
—
—
—
— 10,064,068
1,596,044
—
Discounted cash flow Discount rate
Discounted cash flow Discount rate
December 31, 2022
Level 2
Level 3
Valuation technique
Input
—
—
13,521,494 Discounted cash flow Discount rate
1,377,696 Discounted cash flow Discount rate
v)
The interest rates applied for determination of the above fair value as of December 31, 2021 and 2022 are as
follows:
Borrowings, bonds and others
December 31, 2021
2.21~4.38%
December 31, 2022
5.11~6.68%
vi)
There is no substitution between Level 1, Level 2 and Level 3 for the years ended December 31, 2022, and
the changes in financial assets classified as Level 3 of fair value measurements for the years ended December
31, 2022 are as follows:
(In millions of won)
Classification
Equity securities
Convertible securities
January 1,
2022
₩
48,805
2,758
Acquisition
Disposal
Valuation
27,261
—
(775)
—
6,248
224
(f)
Net gains and losses by category of financial instruments
Changes in
Foreign
Exchange
Rates
2,720
—
Replacement
11,805
(1,185)
December 31,
2022
96,064
1,797
The net gains and losses by category of financial instruments as of December 31, 2022 and 2021 are as
follows:
(In millions of won)
Interest income
Interest expense
Foreign currency differences
(Reversal of) Bad debt expense
Gain or loss on disposal
Gain or loss on valuation
Gain or loss on derivative
Others
Financial assets
at amortized cost
88,888
₩
—
668,140
(273)
(4,877)
—
—
—
751,878
₩
2021
Financial
liabilities at
amortized cost
Financial
assets at
FVTPL
Financial
liabilities at
FVTPL
—
(418,674)
(848,072)
—
—
(250)
—
—
(1,266,996)
—
—
—
—
(1,242)
5,808
—
—
4,566
—
(15,415)
(70,249)
—
—
(68,421)
—
(14)
(154,099)
Other financial
instruments (*)
—
—
—
—
—
—
221,292
—
221,292
Total
88,888
(434,089)
(250,181)
(273)
(6,119)
(62,863)
221,292
(14)
(443,359)
(*) Other financial instruments exclude cash flow hedging derivatives.
F-90
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
26.
Financial Risk Management. Continued
(In millions of won)
Interest income
Interest expense
Foreign currency differences
(Reversal of) Bad debt expense
Gain or loss on disposal
Gain or loss on valuation
Gain or loss on derivative
Others
2022
Financial assets at
amortized cost
Financial
liabilities at
amortized cost
Financial
assets at
FVTPL
Financial
liabilities at
FVTPL
₩
₩
85,624
—
1,061,416
569
(37,087)
—
—
—
1,110,522
—
(403,415)
(946,650)
—
—
—
—
—
(1,350,065)
—
—
—
—
171
6,473
—
—
6,644
—
(11,106)
(105,492)
—
(2,672)
220,240
—
(43)
100,927
Other
financial
instruments
(*)
—
—
—
—
—
—
177,130
—
177,130
Total
85,624
(414,521)
9,274
569
(39,588)
226,713
177,130
(43)
45,158
(*) Other financial instruments exclude cash flow hedging derivatives.
27. Leases
(a)
Leases as lessee
The Group leases buildings, vehicles, machinery and equipment and others. Information about leases for
which the Group is a lessee is presented below.
(i)
Right-of-use assets
Right-of-use assets related to leased properties that do not meet the definition of investment property are
presented as property, plant and equipment as of December 31, 2021 and 2022 (see Note 9(a)).
Changes in right-of-use assets for the years ended December 31, 2021 and 2022 are as follows:
(In millions of won)
Balance at January 1, 2021
Additions and others
Depreciation
Disposals
Gain or loss on foreign currency translation
Balance at December 31, 2021
(In millions of won)
Balance at January 1, 2022
Additions and others
Depreciation
Impairments
Others
Gain or loss on foreign currency translation
Balance at December 31, 2022
Buildings and
structures
₩ 55,166
54,728
(51,368)
(7)
(2,352)
₩ 56,167
Land
47,411
39
(2,985)
—
9,952
54,417
Buildings
and
structures
$
$
56,167
60,515
(63,494)
(2,175)
-
20
51,033
Land
54,417
460
(3,014)
(721)
(420)
1,082
51,804
2021
Machinery
and
equipment
1,859
870
(1,469)
—
70
1,330
2022
Machinery
and
equipment
1,330
456
(1,136)
(3)
-
(49)
598
Vehicles
Others
5,970
7,620
(6,745)
—
217
7,062
501
398
(416)
—
407
890
Total
110,907
63,655
(62,983)
(7)
8,294
119,866
Vehicles
Others
7,062
11,033
(8,288)
(501)
-
(804)
8,502
890
103
(438)
(39)
-
205
721
Total
119,866
72,567
(76,370)
(3,439)
(420)
454
112,658
F-91
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
27. Leases. Continued
(ii)
Amounts recognized in profit or loss from leases other than leases recorded as right-of-use assets for
the years ended December 31, 2020, 2021 and 2022 are as follows:
(In millions of won)
Interest on lease liabilities
Income from sub-leasing right-of-use assets
Expenses relating to short-term leases
Expenses relating to leases of low-value assets
2020
2021
2022
₩
(4,456)
896
(977)
(231)
(3,664)
712
(824)
(577)
(3,656)
541
(785)
(632)
(iii)
Changes in lease liabilities for the years ended December 31, 2021 and 2022 are as follows:
(In millions of won)
Balance at January 1
Additions and others
Interest expense
Repayment of liabilities
Balance at December 31
(b)
Leases as lessor
(i)
Finance lease
2021
2022
₩
₩
83,431
64,172
3,664
(66,941)
84,326
84,326
67,102
3,656
(82,296)
72,788
During the years ended December 31, 2021 and 2022, the Group recognized interest income on lease
receivables of W712 million and W533 million, respectively.
The following table sets out a maturity analysis of lease receivables, showing the undiscounted lease
payments to be received after the reporting date.
(In millions of won)
6 months or less
6-12 months
1-2 years
2-5 years
Total undiscounted lease receivable
Unearned finance income
Net Investment in the lease
(ii)
Operating lease
December 31, 2021
3,688
3,688
7,376
4,303
19,055
(846)
18,209
December 31, 2022
3,593
3,593
4,191
—
11,377
(319)
11,058
The Group leases out investment property and a portion of property, plant and equipment as operating leases
(see Note 9 and 11).
F-92
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
28. Changes in liabilities arising from financing activities
Changes in liabilities arising from financing activities for the year ended December 31, 2022 are as follows:
(In millions of won)
Short-term borrowings
Current portion of long-term
borrowings and bonds(*)
Long-term borrowings
Bonds
Lease liabilities
Dividend payables
January 1,
2022
₩
613,733
3,393,506
7,660,591
995,976
84,326
3,679
₩ 12,751,811
Cash flows from
financing
activities
1,922,283
Reclassification
—
(4,209,915)
4,165,508
443,230
(82,296)
(292,786)
1,946,024
3,626,345
(3,318,143)
(308,202)
—
—
—
Non-cash transactions
Gain or loss on
foreign currency
translation
Effective interest
adjustment
Others
December 31,
2022
42,536
251,645
(78,321)
—
(1,806)
—
214,054
—
11,550
—
1,094
—
—
12,644
—
2,578,552
(217,566)
(4,440)
—
72,564
289,107
139,665
2,855,565
8,425,195
1,132,098
72,788
—
15,064,198
(*) Others include W220,240 million of gain on valuation of financial liabilities at fair value through profit or loss and
W2,672 million of loss on early repayment of borrowings and bonds.
29. Related Parties and Others
(a)
Related parties
Related parties as of December 31, 2022 are as follows:
Classification
Associates(*)
Entity that has significant influence over the
Controlling Company
Subsidiaries of the entity that has significant
influence over the Controlling Company
(*) Details of associates are described in Note 8.
Paju Electric Glass Co., Ltd. and others
Description
LG Electronics Inc.
Subsidiaries of LG Electronics Inc.
(b)
Significant transactions such as sales of goods and purchases of raw material and outsourcing service and
others, which occurred in the normal course of business with related parties for the years ended December
31, 2020, 2021 and 2022 are as follows:
F-93
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
29. Related Parties and Others. Continued
(In millions of won)
Sales
and others
Dividend
income
Purchase of
raw material
and others
Acquisition of
property, plant
and equipment
Outsourcing
fees
Other costs
2020
Purchase and others
Associates and their subsidiaries
AVATEC Co., Ltd.
Paju Electric Glass Co., Ltd.
WooRee E&L Co., Ltd.
YAS Co., Ltd.
Material Science Co., Ltd.
Entity that has significant influence
over the Controlling Company
LG Electronics Inc.
Subsidiaries of the entity that has
significant influence over the
Controlling Company
LG Electronics India Pvt. Ltd.
LG Electronics Vietnam Haiphong
Co., Ltd.
LG Electronics Nanjing New
Technology Co., Ltd.
LG Electronics RUS, LLC
(In millions of won)
LG Electronics do Brasil Ltda.
LG Innotek Co., Ltd.
Qingdao LG Inspur Digital
Communication Co., Ltd.
LG Electronics Mexicalli, S.A. DE
C.V.
LG Electronics Mlawa Sp. z o.o.
LG Electronics Reynosa, S.A. DE
C.V.
LG Electronics Egypt S.A.E.
LG Electronics Japan, Inc.
P.T. LG Electronics Indonesia
Others
₩
₩
22
—
—
—
—
22
₩
647,329
₩
53,441
332,977
439,674
95,465
200
7,739
—
300
—
8,239
—
—
—
—
—
80
299,737
13,857
6,648
93
320,415
—
—
—
22,603
—
22,603
74,070
—
—
—
—
74,070
1,112
2,862
35
3,790
—
7,799
19,810
233,504
—
141,191
—
—
—
—
—
—
—
—
—
—
—
—
173
1,138
1,333
303
2020
Purchase and others
Sales
and others
Dividend
income
₩
₩
₩
111,710
5,321
7,298
145,032
729,135
780,710
69,853
—
157,820
5,030
2,933,466
3,580,817
—
—
—
—
—
—
—
—
—
—
—
8,239
Purchase of
raw material
and others
—
25,012
Acquisition of
property, plant
and equipment
—
—
—
—
—
—
—
—
—
229
25,241
365,466
—
—
—
—
—
33
—
—
33
256,140
Outsourcing
fees
—
—
—
—
—
—
—
—
—
—
—
74,070
Other costs
230
76,530
—
52
1,188
1,044
375
5,635
164
7,632
95,797
244,787
F-94
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
29. Related Parties and Others. Continued
(In millions of won)
Associates
AVATEC Co., Ltd.
Paju Electric Glass Co., Ltd.
WooRee E&L Co., Ltd.
YAS Co., Ltd.
Cynora GmbH
Material Science Co., Ltd.
Entity that has significant influence
over the Controlling Company
LG Electronics Inc.
Subsidiaries of the entity that has
significant influence over the
Controlling Company
LG Electronics India Pvt. Ltd.
LG Electronics Vietnam Haiphong
Co., Ltd.
LG Electronics Nanjing New
Technology Co., Ltd.
LG Electronics RUS, LLC
(In millions of won)
LG Electronics do Brasil Ltda.
LG Innotek Co., Ltd.
HI-M Solutek Co., Ltd
LG Electronics Mexicalli, S.A. DE
C.V.
LG Electronics Mlawa Sp. z o.o.
LG Electronics Reynosa, S.A. DE
C.V.
LG Electronics Egypt S.A.E.
LG Electronics Japan, Inc.
P.T. LG Electronics Indonesia
LG Electronics Taiwan Taipei Co., Ltd.
LG Electronics Nanjing Vehicle
Components Co.,Ltd.
LG Technology Ventures LLC
Others
2021
Purchase and others
Sales
and others
Dividend
income
Purchase of
raw material
and others
Acquisition of
property,
plant and
equipment
Outsourcing
fees
Other costs
₩
₩
—
—
—
—
—
—
—
₩
270,396
₩
97,475
414,806
449,390
98,812
200
3,668
—
200
—
—
4,068
—
—
—
—
—
713
365,400
13,541
10,337
10
187
390,188
—
—
—
54,071
—
—
54,071
72,156
—
—
—
—
—
72,156
1,485
2,734
79
9,824
—
—
14,122
19,805
395,654
—
130,924
—
607
—
—
—
—
—
—
418
1,445
1,263
1,141
—
—
—
—
2021
Sales
and others
Dividend
income
₩
₩
₩
154,565
3,753
—
269,305
1,254,164
1,256,107
106,469
—
537,944
5,046
2,009
—
5
4,649,850
4,920,246
—
—
—
—
—
—
—
—
—
—
—
—
—
—
4,068
Purchase of
raw material
and others
—
26,874
44
—
—
—
—
—
—
—
—
—
739
27,657
437,650
Purchase and others
Acquisition of
property,
plant and
equipment
Outsourcing
fees
—
451
—
—
—
—
—
10
—
—
—
—
602
1,670
451,395
—
—
—
—
—
—
—
—
—
—
—
—
—
—
72,156
Other costs
543
85,471
5,662
89
577
1,011
159
5,334
574
659
—
4,411
968
109,725
254,771
F-95
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
29. Related Parties and Others. Continued
(In millions of won)
Associates
AVATEC Co., Ltd.
Paju Electric Glass Co., Ltd.
WooRee E&L Co., Ltd.
YAS Co., Ltd.
Material Science Co., Ltd.
Entity that has significant influence
over the Controlling Company
LG Electronics Inc.
Subsidiaries of the entity that has
significant influence over the
Controlling Company
LG Electronics India Pvt. Ltd.
LG Electronics Vietnam Haiphong
Co., Ltd.
LG Electronics Nanjing New
Technology Co., Ltd.
LG Electronics RUS, LLC
(In millions of won)
LG Electronics do Brasil Ltda.
LG Innotek Co., Ltd.
LG Electronics Mlawa Sp. z o.o.
LG Electronics Reynosa, S.A. DE C.V.
LG Electronics Egypt S.A.E.
LG Electronics Japan, Inc.
P.T. LG Electronics Indonesia
LG Electronics Taiwan Taipei Co., Ltd.
LG Technology Ventures LLC
HI-M Solutek Co., Ltd
LG Electronics U.S.A. Inc.
Others
2022
Purchase and others
Sales
and others
Dividend
income
Purchase of
raw material
and others
Acquisition of
property,
plant and
equipment
Outsourcing
fees
Other costs
₩
₩
—
—
—
—
—
—
₩
238,358
₩
70,514
468,380
334,099
23,458
—
4,361
—
100
—
4,461
—
—
—
—
—
58
245,962
12,321
14,291
17
272,649
—
—
—
29,951
—
29,951
64,492
—
—
—
—
64,492
3,617
2,942
2
8,038
—
14,599
19,808
517,476
—
137,703
—
—
—
—
—
—
—
—
519
882
1,178
414
—
—
—
—
2022
Sales
and others
Dividend
income
Purchase and others
Purchase of
raw material
and others
Acquisition of
property,
plant and
equipment
Outsourcing
fees
₩
₩
₩
88,835
27,698
1,178,140
1,195,146
72,055
—
531,543
3,433
—
—
—
572
3,993,873
4,232,231
—
—
—
—
—
—
—
—
—
—
—
—
—
4,461
—
10,122
—
—
—
—
—
—
—
58
—
592
10,772
303,229
—
—
—
—
—
16
—
—
—
—
—
608
624
548,051
—
—
—
—
—
—
—
—
—
—
—
64,492
Other costs
200
79,515
1,089
958
372
7,307
1,415
615
4,922
9,258
2,315
913
111,872
264,174
(c)
Trade accounts and notes receivable and payable as of December 31, 2021 and 2022 are as follows:
F-96
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
29. Related Parties and Others. Continued
(In millions of won)
Associates
AVATEC Co., Ltd.
Paju Electric Glass Co., Ltd.
WooRee E&L Co., Ltd.
YAS Co., Ltd.
Material Science Co., Ltd.
Entity that has significant influence over the
Controlling Company
LG Electronics Inc.
Subsidiaries of the entity that has significant
influence over the Controlling Company
LG Electronics India Pvt. Ltd.
LG Electronics Vietnam Haiphong Co., Ltd.
LG Electronics Nanjing New Technology Co., Ltd.
LG Electronics do Brasil Ltda.
LG Innotek Co., Ltd.(*)
(In millions of won)
LG Electronics Mlawa Sp. z o.o.
LG Electronics Reynosa, S.A. DE C.V.
LG Electronics Japan, Inc.
P.T. LG Electronics Indonesia
LG Electronics Taiwan Taipei Co., Ltd.
Others
Trade accounts and notes
receivable
and others
Trade accounts and notes
payable
and others
December 31,
2021
December 31,
2022
December 31,
2021
December 31,
2022
3
—
878
—
—
881
₩
—
—
878
—
—
878
2,748
79,302
2,915
20,116
99
105,180
3,756
30,431
1,502
7,680
—
43,369
₩ 67,629
69,447
105,918
99,934
7,319
52,327
102,691
5,910
767
5,669
50,173
30,018
10,997
3,838
111
252
155
—
40,135
15
53
—
—
209,032
Trade accounts and notes
receivable
and others
Trade accounts and notes
payable
and others
December 31,
2021
₩ 218,206
195,093
—
73,732
2,046
32,932
₩ 691,023
₩ 759,533
December 31,
2022
December 31,
2021
December 31,
2022
94,346
16,760
—
45,617
—
2,260
259,678
330,003
22
10
471
32
53
3,921
45,162
256,260
155
167
566
195
77
4,574
214,834
358,137
(*) Including deposits received amount W180,000 million from lease agreement.
F-97
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020, 2021 and 2022
29. Related Parties and Others. Continued
(d) Details of significant financing transactions such as granting and collecting loans, which occurred in the
normal course of business with related parties for the year ended December 31, 2021 are as follows.
(In millions of won)
WooRee E&L Co., Ltd.
Associates
2021
Loans
Collection of loans
—
878
₩
There were no significant financing transactions with related parties for the years ended December 31, 2020
and 2022.
(e) Key management personnel compensation
Compensation costs of key management for the years ended December 31, 2020, 2021 and 2022 are as
follows:
(In millions of won)
Short-term benefits
Expenses related to the defined benefit plan
2020
2021
2022
₩
₩
2,233
346
2,579
3,747
366
4,113
2,305
417
2,722
Key management refers to the registered directors who have significant control and responsibilities over the
Controlling Company’s operations and business.
30.
Supplemental Cash Flow Information
Supplemental cash flow information for the years ended December 31, 2020, 2021 and 2022 is as follows:
(In millions of won)
Non-cash investing and financing activities:
Changes in other accounts payable arising from the
purchase of property, plant and equipment
Changes in other accounts payable arising from the
purchase of intangible assets
Recognition of right-of-use assets and lease liabilities
2020
2021
2022
₩ (662,164)
445,028
480,322
98,068
51,757
529,826
63,655
(113,185)
54,927
F-98
Exhibit 2.6
Description of LG Display Co., Ltd.’s American Depositary Shares
Citibank N.A. serves as the depositary for American depositary shares of LG Display Co., Ltd., pursuant to the
deposit agreement among LG Display Co., Ltd., Citibank, N.A., as ADR depositary, and all holders and beneficial owners
of American depositary shares of LG Display Co., Ltd., dated as of July 22, 2004, as amended by the Amendment No. 1
thereto dated September 2, 2014 and supplemented by the side letter agreement dated as of November 29, 2007. Unless
otherwise indicated, all references in this exhibit to the terms “we,” “us,” “our” and “LG Display” refer to LG Display Co.,
Ltd., all references in this exhibit to “ADSs” are to our American depositary shares, and all references to “ADRs” are to the
American depositary receipts issued under our ADSs.
The following is a summary description of the material terms of our ADSs and of your material rights as an owner
of such ADSs. Because it is a summary, this description does not contain all the information that may be important to you.
Your rights and obligations as an owner of ADSs are determined by reference to the terms of the deposit agreement and side
letter agreement and not this summary. Statements printed in italics in this description are provided for your information and
either reflect the current state of Korean law or are not contained in the deposit agreement. For more complete information,
you should read the entire deposit agreement and the ADR. The original deposit agreement was filed with the United States
Securities and Exchanges Commission (the “SEC”) as an exhibit to the registration statement on Form F-6 on November 28,
2007, a form of the Amendment No. 1 thereto was filed with the SEC as an exhibit to the registration statement on Form F-6
on July 30, 2014, and the side letter agreement was filed with the SEC as an exhibit to the annual report on Form 20-F on
April 16, 2008. You may obtain a copy of such filings from the SEC’s Public Reference Room at 100 F Street, N.E.,
Washington, D.C. 20549 and from the SEC’s website at http://www.sec.gov. Copies of the deposit agreement are also
available for inspection at the principal New York office of the ADR depositary, currently located at 388 Greenwich Street,
New York, New York 10013.
American Depositary Receipts
ADSs represent ownership interests in securities that are on deposit with the ADR depositary. ADSs may be
represented by certificates that are commonly known as ADRs. The ADR depositary typically appoints a custodian to
safekeep the securities on deposit. The ADR depositary’s custodian in this case is the Korea Securities Depository, located
at 4 Gil 23 Yoinaru, Yeongdeungpo-gu, Seoul, Republic of Korea. Korea Securities Depository is also the institution
authorized under applicable law to effect book-entry transfers of shares of our common stock. Each ADS represents the
right to receive shares of our common stock on deposit with the custodian. An ADS also represents the right to receive any
other property received by the ADR depositary or the custodian on behalf of the owner of the ADS but that has not been
distributed to the owners of ADSs because of legal restrictions or practical considerations. An ADR may represent any
number of ADSs. We and the ADR depositary treat only persons in whose names ADRs are registered on the books of the
registrar as holders of ADRs.
As an owner of our ADSs, you are a party to the deposit agreement and therefore are bound to its terms and to the
terms of the ADR that represents your ADSs. The deposit agreement and the ADR specify our rights and obligations as well
as your rights and obligations as owner of ADSs and those of the ADR depositary. As an ADS holder you appoint the ADR
depositary to act on your behalf in certain circumstances. The deposit agreement and the ADRs are governed by New York
law. However, our obligations to the holders of shares of common stock are governed by the laws of Korea, which may be
different from the laws in the United States.
As an owner of ADSs, you may hold your ADSs either by means of an ADR registered in your name or through a
brokerage or safekeeping account. If you hold your ADSs through your brokerage or safekeeping account, you must rely on
the procedures of your broker or bank to assert your rights as ADS owner. Banks and brokers typically hold securities such
as the ADSs through clearing and settlement systems such as The Depository Trust Company (“DTC”). The procedures of
such clearing and settlement systems may limit your ability to exercise your rights as an owner of ADSs. Please consult with
your broker or bank if you have any questions concerning these limitations and procedures. This summary description
assumes you own the ADSs directly by means of an ADS registered in your name and, as such, we refer to you as the
“holder.” When we refer to “you,” we assume the reader owns ADSs.
Uncertificated form of ADSs
Pursuant to the side letter agreement, the ADR depositary may also issue ADSs that are not evidenced by ADRs (the
“uncertificated ADSs”) on its direct registration system, unless otherwise specifically instructed in writing by the applicable
holder. The uncertificated ADSs are not represented by any instrument(s) but are evidenced only by the registration of
“uncertificated securities” on the books and records of the ADR depositary maintained for such purpose. Uncertificated
ADSs are in all material respects identical to certificated ADSs of the same type and class, except that (i) no ADR(s) are, nor
need to be, issued to evidence uncertificated ADSs, (ii) uncertificated ADSs are, subject to the terms of the deposit agreement
(as supplemented by the side letter agreement), transferable upon the same terms and conditions as uncertificated securities
under New York law, (iii) each holder’s ownership of uncertificated ADSs are recorded on the books and records of the ADR
depositary maintained for such purpose and evidence of such holder’s ownership are reflected in periodic statements
provided by the ADR depositary to each such holder in accordance with applicable law, (iv) the ADR depositary may from
time to time, upon notice to the holders of uncertificated ADSs affected thereby, establish rules and amend or supplement
existing rules, as may be deemed reasonably necessary to maintain the direct registration system for the ADSs and for the
issuance of uncertificated ADSs on behalf of holders, provided that such rules do not conflict with the terms of the deposit
agreement (as supplemented by the side letter agreement) and applicable law, (v) the holder of uncertificated ADSs are not
entitled to any benefits under the deposit agreement (as supplemented by the side letter agreement) and such holder’s
uncertificated ADSs shall not be valid or enforceable for any purpose against the ADR depositary or us unless such holder is
registered on the books and records of the ADR depositary maintained for such purpose, (vi) the ADR depositary may, in
connection with any deposit of shares resulting in the issuance of uncertificated ADSs and with any transfer, pledge, release
and cancellation of uncertificated ADSs, require the prior receipt of such documentation as the ADR depositary may
reasonably request, and (vii) upon termination of the deposit agreement (as supplemented by the side letter agreement), the
ADR depositary does not require holders of uncertificated ADSs to affirmatively instruct the ADR depositary or to take other
action before remitting proceeds from the sale of the deposited securities represented by such holders’ uncertificated ADSs
under the terms of the deposit agreement.
Holders of uncertificated ADSs that are not subject to any registered pledges, liens, restrictions or adverse claims, of
which the ADR depositary has written notice at such time, may exchange the uncertificated ADSs (or any portion thereof) for
ADRs of the same type and class, subject in each case to applicable laws and any rules the ADR depositary may establish
from time to time in respect of the uncertificated ADSs. In addition, so long as the ADR depositary maintains its direct
registration system for the ADSs, the holders of ADRs have the right to exchange the ADRs (or any portion thereof) for
uncertificated ADSs upon (i) the due surrender of the ADRs to the ADR depositary for such purpose, and (ii) the presentation
of a written request to such effect to the ADR depositary, subject in each case to all liens and restrictions noted on the ADR
evidencing the ADS(s) and all adverse claims of which the ADR depositary then has written notice, the terms of the deposit
agreement (as supplemented by the side letter agreement) and the rules that the ADR depositary may establish from time to
time for such purposes thereunder, and applicable law. Moreover, holders of uncertificated ADSs may also request the sale
of ADSs through the ADR depositary, subject to the terms and conditions generally applicable to the sale of ADSs through
the ADR depositary from time to time (which may be changed by the ADR depositary).
Deposit and Withdrawal of Shares of Common Stock
The shares of common stock underlying the ADSs are delivered to the ADR depositary’s custodian in book-entry
form. Accordingly, no share certificates are issued for them, and the ADR depositary holds the shares of common stock in
book-entry form through the custodian. The delivery of the shares of common stock pursuant to the deposit agreement takes
place through the facilities of the custodian.
The ADR depositary will create ADSs if you or your broker deposit shares of common stock with the custodian.
Upon payment of its issuance fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or
fees, the ADR depositary will register the appropriate number of ADSs in the names you designate. Your ability to deposit
shares of common stock and receive ADSs may be limited by U.S. and Korean legal considerations applicable at the time of
deposit. The current limit on the number of shares that may be deposited into our ADR facility is 68,095,700 as of April 18,
2023. The number of shares issued or sold in any subsequent offering by us or our affiliates, subject to government
authorization, raises the limit on the number of shares that may be deposited into the ADR facility, except to the extent such
deposit is prohibited by applicable laws or violates our articles of incorporation, or we determine with the ADR depositary to
limit the number of shares of common stock so offered that would be eligible for deposit under the deposit agreement in order
to maintain liquidity for the shares in Korea as may be requested by the relevant Korean authorities.
The issuance of ADSs may be delayed until the ADR depositary or the custodian receives confirmation that all
required approvals have been given and that the shares have been duly transferred to the custodian. The ADR depositary will
only issue ADSs in whole numbers.
When you make a deposit of shares, you will be responsible for transferring good and valid title to these shares to
the ADR depositary and you will be deemed to represent and warrant that:
•
The shares are duly authorized, validly issued, fully paid, non-assessable and legally obtained.
• All preemptive (and similar) rights, if any, with respect to such shares have been validly waived or exercised.
• You are duly authorized to deposit the shares of common stock.
•
•
The shares of common stock presented for deposit are free and clear of any lien, encumbrance, security interest,
charge, mortgage or adverse claim, and are not, and the ADSs issuable upon such deposit will not be, “restricted
securities” (as defined in the deposit agreement).
The shares of common stock presented for deposit have not been stripped of any rights or entitlements.
If any of the representations or warranties are incorrect in any way, we and the ADR depositary may, at your cost
and expense, take any and all actions necessary to correct the consequences of the misrepresentations.
The ADR depositary will arrange for the acceptance of the ADSs into DTC. A single ADR in the form of a “Balance
Certificate” will evidence all ADSs held through DTC and will represent the aggregate number of ADSs that have been
issued from time to time. That ADR will be registered in the name of the nominee for DTC (currently “Cede & Co.”). As
such, Cede & Co., or any subsequent nominee for DTC, will be the only holder of the ADR evidencing all ADSs held
through DTC. Each beneficial owner of ADSs held through DTC must rely upon the procedures of DTC and the DTC
participants to exercise, effect transfer of or be entitled to any rights attributable to such ADSs.
The ADR depositary and the ADR depositary’s custodian will refuse to accept shares of common stock for deposit
whenever we restrict transfer of shares of common stock to comply with our articles of incorporation or applicable law.
You may surrender your ADRs to the ADR depositary for cancellation and withdraw the underlying shares of our
common stock. Upon payment of the cancellation fees provided in the deposit agreement and any governmental charges and
taxes, subject to applicable laws and regulations of Korea and our articles of incorporation, you are entitled to physical
delivery or electronic delivery to an account in Korea or, if permissible under applicable Korean law, outside Korea, of the
shares of common stock evidenced by the ADSs and any other property at the time represented by ADRs you surrendered.
You assume the risk for delivery of all funds and securities upon withdrawal. Once canceled, the ADSs will not have
any rights under the deposit agreement.
If you hold ADSs registered in your name, the ADR depositary may ask you to provide proof of identity and
genuineness of any signature and such other documents as the ADR depositary may deem appropriate before it will cancel
your ADSs. The withdrawal of the shares of common stock represented by your ADSs may be delayed until the ADR
depositary receives satisfactory evidence of compliance with all applicable laws and regulations. Please keep in mind that the
ADR depositary will only accept ADSs for cancellation that represent a whole number of securities on deposit and will only
be permitted to deliver shares of common stock that have been listed for trading on the Korea Exchange. The ADR
depositary will process ADSs presented for withdrawal of the shares of common stock they represent on a first come, first
served basis.
You have the right to withdraw the securities represented by your ADSs at any time except for:
•
Temporary delays that may arise because (1) the transfer books for the shares of common stock or ADSs are
closed, or (2) shares of common stock are immobilized on account of a shareholders’ meeting or a payment of
dividends.
• Obligations to pay fees, taxes and similar charges.
•
Restrictions imposed because of laws or regulations applicable to ADSs or the withdrawal of securities on
deposit.
The deposit agreement may not be modified to impair your right to withdraw the securities represented by your
ADSs except to comply with mandatory provisions of law.
If you want to withdraw the shares of common stock from the depositary facility, you must register your identity with
the Financial Supervisory Service of Korea before you acquire the shares of common stock unless you intend to sell the
shares of common stock within three months of acquisition. See “Item 10.D. Exchange Controls and Securities Regulations—
Restrictions Applicable to Shares” in our Annual Report on Form 20-F for the year ended December 31, 2022.
Pre-Release Transactions
Under the provisions of the deposit agreement, the ADR depositary may not lend shares of common stock or ADSs.
However, subject to the provisions of the deposit agreement and to the extent permitted by applicable Korean law, the ADR
depositary may issue ADSs before deposit of the underlying shares of common stock. The ADR depositary may also deliver
shares of common stock prior to receiving ADS for cancellation. These transactions are commonly called pre-release
transactions. The ADR depositary may execute a pre-release transaction only under the following circumstances:
•
•
•
•
•
before or at the time of the pre-release transaction, the person to whom the pre-release transaction is being made
must represent to the ADR depositary in writing that it or its customer owns the shares of common stock to be
deposited or the ADSs to be cancelled and show evidence of ownership of those securities to the ADR
depositary’s satisfaction;
before or at the time of such pre-release transaction, the person to whom the pre-release transaction is being
made must agree in writing with the ADR depositary that he will hold the shares of common stock or ADSs in
trust for the ADR depositary until their delivery to the ADR depositary or custodian, reflect on his records the
ADR depositary as owner of such shares of common stock or ADSs and unconditionally guarantee to deliver
such shares of common stock or ADSs to the ADR depositary or custodian and agrees to any additional
requirements or restrictions that the ADR depositary may impose;
the pre-release transaction must be fully collateralized with cash or U.S. government securities or such other
collateral as the ADR depositary deems appropriate;
the ADR depositary must be able to terminate the pre-release transaction on not more than five business days’
notice; and
the pre-release transaction would be subject to further indemnities and credit regulations as the ADR depositary
deems appropriate.
The deposit agreement limits the aggregate size of the pre-release transactions. The ADR depositary may retain for
its own account any compensation received by it in connection with the pre- release transactions, such as earnings on the
collateral.
Dividends, Other Distributions and Rights
As a holder, you generally have the right to receive the distributions we make on the securities deposited with the
custodian bank. Your receipt of these distributions may be limited, however, by practical considerations and legal limitations.
Holders receive such distributions under the terms of the deposit agreement in proportion to the number of ADSs held as of a
specified record date.
Distributions of Cash
If the ADR depositary can, in its reasonable judgment and pursuant to applicable law, convert Korean Won (or any
other foreign currency) into U.S. dollars on a reasonable basis and transfer the resulting U.S. dollars to the United States, the
ADR depositary will as promptly as practicable convert all cash dividends and other cash distributions received by it on the
deposited shares of common stock into U.S. dollars and distribute the U.S. dollars to you in proportion to the number of
ADSs representing shares of common stock held by you, after deduction of the fees and expenses of the ADR depositary and
any applicable taxes and governmental charges payable by the holder pursuant to the deposit agreement.
Other Distributions
In the event that the ADR depositary or the ADR depositary’s custodian receives any distribution upon any
deposited shares of common stock in property or securities (other than cash, shares of common stock or rights to receive
shares of common stock), the ADR depositary will distribute the property or securities to you after deduction of the fees and
expenses of the ADR depositary in proportion to your holdings in any manner that the ADR depositary deems, after
consultation with us, commercially feasible. If the ADR depositary determines that any distribution of property or securities
(other than cash, shares of common stock or rights to receive shares of common stock) cannot be made proportionally, or if
for any other reason the ADR depositary deems the distribution not to be commercially feasible, the ADR depositary may,
after consultation with us, dispose of all or a portion of the property or securities in such amounts and in such manner,
including by public or private sale, as the ADR depositary deems equitable or practicable. The ADR depositary will distribute
to you the net proceeds of any such sale, or the balance of the property or securities, after the deduction of the fees and
expenses of the ADR depositary.
Distribution of Shares
If a distribution by us consists of a dividend in, or free distribution of, our shares of common stock, the ADR
depositary may, with our approval, and will, if we request, deposit the shares of common stock and either (1) distribute to
you, in proportion to your holdings, additional ADSs representing those shares of common stock, or (2) reflect on the records
of the ADR depositary the increase in the aggregate number of ADSs representing the aggregate number of shares of
common stock received, in both cases, after the deduction of the fees and expenses of the ADR depositary. No such
distribution of new ADSs will be made if it would violate law (i.e., U.S. securities laws) or if it would not be operationally
practicable. If the ADR depositary deems that such distribution for any reason is not commercially feasible, the ADR
depositary may adopt, after consultation with us, any method as it may deem commercially feasible to effect such
distribution, including by public or private sale of all or part of the shares of common stock received. The ADR depositary
will distribute to you the net proceeds of any such sale as with a cash distribution. The ADR depositary will only distribute
whole numbers of ADSs. Fractional entitlements to ADSs will be sold, and the proceeds of such sale will be distributed as in
the case of a cash distribution.
Distribution of Rights
If we offer holders of our shares of common stock any rights to subscribe for additional shares of common stock or
any other rights, the ADR depositary may make these rights available to you. The ADR depositary will first consult with us
to determine whether it is lawful and commercially feasible to distribute those rights to you.
The ADR depositary will establish procedures to distribute rights to purchase additional ADSs to holders and to
enable such holders to exercise such rights if it is lawful and reasonably practicable to make the rights available to holders of
ADSs, and if we provide the ADR depositary with all of the documentation contemplated in the deposit agreement (such as
opinions to address the lawfulness of the transaction). You may have to pay fees, expenses, taxes and other governmental
charges to subscribe for the new ADSs upon the exercise of your rights. The ADR depositary is not obligated to establish
procedures to facilitate the distribution and exercise by holders of rights to purchase new shares of common stock other than
shares of common stock to be held in the form of ADSs. The ADR depositary will not distribute the rights to you if:
• We do not timely request that the rights be distributed to you or we request that the rights not be distributed to
you;
• We fail to deliver satisfactory documents to the ADR depositary; or
•
It is not reasonably practicable to distribute the rights to you.
If the ADR depositary determines in consultation with us that it is not lawful or commercially feasible to make these
rights available to you, then upon our request, the ADR depositary will sell the rights and distribute the proceeds in the same
way as it would do with a cash distribution. The ADR depositary may allow these rights that are not distributed or sold to
lapse. In that case, you will receive no value for these rights.
If a registration statement under the Securities Act with respect to the securities to which any rights relate is required
in order for us to offer the rights to you and to sell the securities represented by these rights, the ADR depositary will not
offer such rights to you until such a registration statement is in effect, or unless the offering and sale of such securities and
such rights to you are exempt from the registration requirements of the Securities Act or any required filing, report, approval
or consent has been submitted, obtained or granted. Neither we nor the ADR depositary will be obligated to register the rights
or securities under the Securities Act or to submit, obtain or request any filing, report, approval or consent.
Elective Distributions
Whenever we intend to distribute a dividend payable at the election of shareholders either in cash or in additional
shares, we will give prior notice thereof to the ADR depositary and will indicate whether we wish the elective distribution to
be made available to you. In such case, we will assist the ADR depositary in determining whether such distribution is lawful
and commercially feasible. The ADR depositary will make the election available to you only if it is commercially feasible
and if we have provided all of the documentation contemplated in the deposit agreement. In such case, the ADR depositary
will establish procedures to enable you to elect to receive either cash or additional ADSs, in each case as described in the
deposit agreement.
If the election is not made available to you, you will receive either cash or additional ADSs, depending on what a
shareholder in Korea would receive upon failing to make an election, as more fully described in the deposit agreement.
Transfer, Combination and Split Up of ADRs
As an ADR holder, you are entitled to transfer, combine or split up your ADRs and the ADSs evidenced thereby.
For transfers of ADRs, you will have to surrender the ADRs to be transferred to the ADR depositary and also must:
•
•
•
•
ensure that the surrendered ADR certificate is properly endorsed or otherwise in proper form for transfer;
provide such proof of identity and genuineness of signatures as the ADR depositary deems appropriate;
provide any transfer stamps required by the State of New York or the United States; and
pay all applicable fees, charges, expenses, taxes and other government charges payable by ADR holders
pursuant to the terms of the deposit agreement, upon the transfer of ADRs.
To have your ADRs either combined or split up, you must surrender the ADRs in question to the ADR depositary
with your request to have them combined or split up, and you must pay all applicable fees, charges and expenses payable by
ADR holders, pursuant to the terms of the deposit agreement, upon a combination or split up of ADRs.
Record Dates
The ADR depositary will fix a record date, after consultation with us, in each of the following situations:
• we make any cash dividend or other cash distribution upon our shares of common stock;
• we make any distribution other than cash upon our shares of common stock;
• we issue rights with respect to our shares of common stock;
•
•
the ADR depositary causes a change in the number of shares of common stock that are represented by each
ADS; or
the ADR depositary receives notice of any shareholders’ meeting.
The record date will be, to the extent practicable, established as near as practicable to the record date fixed by us for
the shares of common stock. The record date will determine (1) the ADR holders who are entitled to receive the dividend,
distribution or rights, or the net proceeds of the sale of the rights; or (2) the ADR holders who are entitled to receive notices
of meetings or to exercise rights.
Voting of the Underlying Shares of Common Stock
As a holder, you generally have the right under the deposit agreement to instruct the ADR depositary to exercise the
voting rights for the shares of common stock represented by your ADSs. The voting rights of holders of shares of common
stock are described in the section titled “Item 10.B. Memorandum and Articles of Association – Description of Capital
Stock – Voting Rights” in our Annual Report on Form 20-F for the year ended December 31, 2022.
We will give the ADR depositary a notice of any meeting or solicitation of shareholder proxies immediately after we
finalize the form and substance of such notice sufficiently in advance of the meeting or solicitation of shareholder proxies to
provide holders with a reasonable opportunity to take all actions requested, the ADR depositary having no obligation to
provide holders with notice, voting or proxy solicitation materials if it does not timely receive such materials from us. As
soon as practicable after it receives our notice, the ADR depositary will fix a record date, and upon our written request, the
ADR depositary will mail to you a notice that will contain the following:
•
•
•
the information contained in our notice to the ADR depositary including an English translation, or, if requested
by us, a summary of the information provided by us;
a statement that the ADR holders as of the close of business on a specified record date will be entitled to
instruct the ADR depositary as to how to exercise their voting rights for the number of shares of deposited
shares of common stock, subject to the provisions of applicable Korean law and our articles of incorporation,
which provisions, if any, will be summarized in the notice to the extent that they are material; and
a statement as to the manner in which the ADR holders may give their instructions.
Upon your written request received on or before the date set by the ADR depositary for this purpose, the ADR
depositary will endeavor, in so far as practicable, to vote or cause to be voted the deposited shares of common stock in
accordance with the instructions set forth in your written requests. To the extent the ADR depositary does not timely receive
voting instructions from a holder of ADSs, it will endeavor to vote the shares of common stock represented by those ADSs in
the same proportion as the holders of all other outstanding shares of common stock vote their shares of common stock at the
meeting. The ADR depositary will not, and will ensure that the custodian bank does not, vote the shares of common stock
represented by ADSs at any meeting for which we have not timely provided voting materials to the ADR depositary.
Please note that the ability of the ADR depositary to carry out voting instructions may be limited by practical and
legal limitations and the terms of the securities on deposit. We cannot assure you that you will receive voting materials in
time to enable you to return voting instructions to the ADR depositary in a timely manner.
The ADR depositary may not itself exercise any voting discretion over any deposited shares of common stock. You
may only exercise the voting rights in respect of whole numbers of ADSs. ADR holders may not be entitled to give
instructions to vote the shares of common stock represented by the ADSs if, and to the extent that, the total number of shares
of common stock represented by the ADSs of an ADR holder exceeds any limit set under applicable law. We can give no
assurance to you, however, that we will notify the ADR depositary sufficiently in advance of the scheduled date of a meeting
or solicitation of consents or proxies to enable the ADR depositary to make a timely mailing of notices to you, or that you
will receive the notices sufficiently in advance of a meeting or solicitation of consents or proxies to give instructions to the
ADR depositary.
Inspection of Transfer Books
The ADR depositary keeps books at its principal New York office which is currently located at 388 Greenwich
Street, New York, New York 10013, for the registration and transfer of ADRs. You may inspect the books of the ADR
depositary during regular business hours as long as the inspection is not for the purpose of communicating with holders in the
interest of a business or object other than our business or a matter related to the deposit agreement or the ADSs.
Reports and Notices
On or before the first date on which we give notice, by publication or otherwise, of any meeting of shareholders, or
of any adjourned meeting of shareholders, or of the taking of any action in respect of any distribution of cash or other
distribution or the offering of any rights in respect of the shares of common stock, we will transmit to the custodian and the
ADR depositary sufficient copies of the applicable notice in English in the form given or to be given to shareholders. We will
furnish to the ADR depositary English language versions of any reports, notices and other communications that we generally
transmit to holders of our common stock. The ADR depositary will arrange for the prompt mailing of copies of these
documents, or, if we request, a summary of any such notice provided by us to you or, at our request, make notices, reports
(other than the annual reports and semiannual financial statements) and other communications available to you on a basis
similar to that for the holders of our common stock or on such other basis as we may advise the ADR depositary according to
any applicable law, regulation or stock exchange requirement.
Notices delivered to you under the deposit agreement will be deemed to be effective three days (in the case of
domestic mail or air courier) or seven days (in the case of overseas mail) from the date when a duly addressed letter
containing the same is deposited, postage prepaid, in a post-office letter box or delivered to an air courier service or at the
time when a confirmation thereof is produced in the case of a cable, telex or facsimile transmission, without regard for the
actual receipt or time of actual receipt of the notice by you.
In addition, the ADR depositary will make available for inspection by holders at its principal New York office any
notices, reports or communications, including any proxy soliciting materials, received from us that we generally transmit to
the holders of our common stock or other deposited securities, including the ADR depositary. The ADR depositary will also
send to you copies of reports and communications we will provide to it as described in the deposit agreement.
Changes Affecting Deposited Shares of Common Stock
In case of a change in the par value, or a split-up, consolidation or any other reclassification of shares of our
common stock or upon any recapitalization, reorganization, merger or consolidation or sale of assets affecting us, any
securities received by the ADR depositary or the custodian in exchange for, in conversion of or in respect of deposited shares
of our common stock will be treated as new deposited shares of common stock under the deposit agreement. In that case,
ADSs will represent, subject to the terms of the deposit agreement and applicable laws and regulations, including any
registration requirements under the Securities Act, the right to receive the new deposited shares of common stock, unless
additional ADSs are issued, as in the case of a stock dividend, or unless the ADR depositary calls for the surrender of
outstanding ADRs to be exchanged for new ADRs.
If the ADR depositary may not lawfully distribute such property to you, the ADR depositary may sell such property
and distribute the net proceeds to you as in the case of a cash distribution.
Amendment and Termination of the Deposit Agreement
We may agree with the ADR depositary to amend or supplement the deposit agreement and the ADSs without your
consent for any reason. If the amendment or supplement adds or increases fees or charges, except for taxes and other
governmental charges or certain expenses of the ADR depositary, or prejudices any substantial existing right of ADR
holders, it will only become effective 30 days after the ADR depositary notifies you of the amendment or supplement. We do
not consider to be materially prejudicial to your substantial rights any modifications or supplements that are reasonably
necessary for the ADSs to be registered under the Securities Act or to be eligible for book-entry settlement, in each case
without imposing or increasing the fees and charges you are required to pay. In addition, we may not be able to provide you
with prior notice of any modifications or supplements that are required to accommodate compliance with applicable
provisions of law. If you continue to hold your ADSs at the time an amendment or supplement becomes effective, you are
considered to have agreed to the amendment or supplement and are bound by the deposit agreement as amended. Except as
otherwise required by any mandatory provisions of applicable law, no amendment may impair your right to surrender your
ADSs and to receive the underlying deposited securities.
The ADR depositary will terminate the deposit agreement if we ask it to do so with 90 days’ prior written notice.
The ADR depositary may also terminate the deposit agreement if the ADR depositary has notified us at least 90 days in
advance that it would like to resign and we have not appointed a new depositary. In both cases, the ADR depositary must
notify you at least 30 days before the termination date.
If any ADSs remain outstanding after the date of termination, the ADR depositary will stop performing any further
acts under the deposit agreement, except:
•
•
•
to collect dividends and other distributions pertaining to the deposited shares of common stock;
to sell property and rights and the conversion of deposited shares of common stock into cash as provided in the
deposit agreement; and
to deliver deposited shares of common stock, together with any dividends or other distributions received with
respect to the deposited shares of common stock and the net proceeds of the sale of any rights or other property
represented by those ADSs in exchange for surrendered ADSs.
At any time after the expiration of six months from the date of termination, the ADR depositary may sell any
remaining deposited shares of common stock and hold uninvested the net proceeds in an unsegregated account, together with
any other cash or property then held, without liability for interest, for the pro rata benefit of the holders of ADSs that have not
been surrendered by then.
Charges of ADR Depositary
As an ADS holder, you are required to pay the following service fees to the ADR depositary:
Services
Fees
Issuance of ADSs
Cancellation of ADSs
Up to US$0.05 per ADS issued
Up to US$0.05 per ADS canceled
Distribution of cash dividends or other cash distributions
Up to US$0.02 per ADS held
Distribution of ADSs pursuant to (i) stock dividends or
other free stock distributions or (ii) exercise of rights to
purchase additional ADSs
Up to US$0.02 per ADS held
Distribution of securities other than ADSs or rights to
purchase additional ADSs
Up to US$0.05 per ADS held
Other ADS services
Up to US$0.02 per ADS held
As an ADS holder you are also responsible to pay certain fees and expenses incurred by the ADR depositary and
certain taxes and governmental charges such as:
•
•
•
•
•
•
taxes (including applicable interest and penalties) and other governmental charges;
registration fees applicable to transfers of shares of common stock on our shareholders’ register, or that of any
entity acting as registrar for the shares, to the name of the ADR depositary or its nominee, or the custodian or its
nominee, when making deposits or withdrawals under the deposit agreement;
cable, telex and facsimile transmission expenses that are expressly provided in the deposit agreement;
expenses incurred by the ADR depositary in the conversion of foreign currency into U.S. dollars under the
deposit agreement;
such fees and expenses as are incurred by the ADR depositary in connection with compliance with exchange
control regulations and other regulatory requirements applicable to shares of common stock, shares of common
stock on deposit, ADSs and ADRs; and
the fees and expenses incurred by the ADR depositary, the custodian or any nominee in connection with the
servicing or delivery of shares of common stock on deposit.
Limitations on Obligations and Liabilities
The deposit agreement limits our obligations and the ADR depositary’s obligations to you. Please note the
following:
• We and the ADR depositary are obligated only to take the actions specifically stated in the deposit agreement
without negligence or bad faith.
•
•
The ADR depositary disclaims any liability for any failure to carry out voting instructions, for any manner in
which a vote is cast or for the effect of any vote, provided it acts in good faith and in accordance with the terms
of the deposit agreement.
The ADR depositary disclaims any liability for any failure to determine the lawfulness or practicality of any
action, for the content of any document forwarded to you on our behalf or for the accuracy of any translation of
such a document, for the investment risks associated with investing in shares of common stock, for the validity
or worth of the shares of common stock, for any tax consequences that result from the ownership of ADSs, for
the credit-worthiness of any third party, for allowing any rights to lapse under the terms of the deposit
agreement, for the timeliness of any of our notices or for our failure to give notice.
• We and the ADR depositary are not obligated to perform any act that is inconsistent with the terms of the
deposit agreement.
• We and the ADR depositary disclaim any liability if we are prevented or forbidden from acting on account of
any law or regulation, any provision of our articles of incorporation, any provision of any securities on deposit
or by reason of any act of God or war or other circumstances beyond our control.
• We and the ADR depositary disclaim any liability by reason of any exercise of, or failure to exercise, any
discretion provided for the deposit agreement or in our articles of incorporation or in any provisions of
securities on deposit with the ADR depositary.
• We and the ADR depositary further disclaim any liability for any action taken or inaction in reliance on the
advice or information received from legal counsel, accountants, any person presenting shares of common stock
for deposit, any holder of ADSs or authorized representatives thereof, or any other person believed by either of
us in good faith to be competent to give such advice or information.
• We and the ADR depositary also disclaim liability for the inability by a holder to benefit from any distribution,
offering, right or other benefit which is made available to holders of shares of common stock but is not, under
the terms of the deposit agreement, made available to you.
• We and the ADR depositary may rely without any liability upon any written notice, request or other document
believed to be genuine or to have been signed or presented by the proper parties.
• We and the ADR depositary also disclaim liability for any consequential or punitive damages for any breach of
the terms of the deposit agreement.
General
The ADSs are transferable on the books of the ADR depositary; provided, however, that the ADR depositary may,
after consultation with us, close the transfer books at any time or from time to time, when deemed expedient by it in
connection with the performance of its duties. As a condition precedent to the execution and delivery of any ADSs,
registration of transfer, split-up, combination of any ADR or surrender of any ADS for the purpose of withdrawal of
deposited shares of common stock, the ADR depositary or the custodian may require payment from the depositor of the
shares of common stock or holder of ADSs of a sum sufficient to reimburse the ADR depositary for any tax or other
governmental charge and any stock transfer or registration fee and payment of any applicable fees payable by the holders of
ADSs.
Any person depositing shares of common stock, any holder of an ADS or any beneficial owner may be required
from time to time to file with the ADR depositary or the custodian a proof of citizenship, residence, exchange control
approval, payment of applicable Korean or other taxes or governmental charges, or legal or beneficial ownership and the
nature of their interest, to provide information relating to the registration on our shareholders’ register (or our appointed agent
for the transfer and registration of shares of common stock) of the shares of common stock presented for deposit or other
information, to execute certificates and to make representations and warranties as we or the ADR depositary may deem
necessary or proper or to enable us or the ADR depositary to perform our and its obligations under the deposit agreement.
The ADR depositary may withhold the execution or delivery or registration of transfer of all or part of any ADR or the
distribution or sale of any dividend or other distribution of rights or of the proceeds from their sale or the delivery of any
shares deposited under the deposit agreement and any other securities, property and cash received by the ADR depositary or
the custodian until the proof or other information is filed or the certificates are executed or the representations and warranties
are made. The ADR depositary shall provide us, unless otherwise instructed by us, in a timely manner, with copies of any of
these proofs and certificates and these written representations and warranties.
The delivery and surrender of ADSs and transfer of ADSs generally may be suspended during any period when our
or the ADR depositary’s transfer books are closed, or if that action is deemed necessary or advisable by us or the ADR
depositary at any time or from time to time in accordance with the deposit agreement. We may restrict, in a manner as we
deem appropriate, transfers of shares of common stock where the transfers may result in ownership of shares of common
stock in excess of limits under applicable law.
Taxes
You are responsible for the taxes and other governmental charges payable on the ADSs and the securities
represented by the ADSs. We, the ADR depositary and the custodian may deduct from any distribution the taxes and
governmental charges payable by holders and may sell any and all property on deposit to pay the taxes and governmental
charges payable by holders. You will be liable for any deficiency if the sale proceeds do not cover the taxes that are due.
The ADR depositary may refuse to issue ADSs, to deliver, transfer, split and combine ADRs or to release securities
on deposit until all taxes and charges are paid by the applicable holder. The ADR depositary and the custodian may take
reasonable administrative actions to obtain tax refunds and reduced tax withholding for any distributions on your behalf.
However, you may be required to provide to the ADR depositary and to the custodian proof of taxpayer status and residence
and such other information as the ADR depositary and the custodian may require to fulfill legal obligations. You are required
to indemnify us, the ADR depositary and the custodian for any claims with respect to taxes based on any tax benefit obtained
for you.
Foreign Currency Conversion
The ADR depositary will arrange for the conversion of all foreign currency received into U.S. dollars if such
conversion is practical, and it will distribute the U.S. dollars in accordance with the terms of the deposit agreement. You may
have to pay fees and expenses incurred in converting foreign currency, such as fees and expenses incurred in complying with
currency exchange controls and other governmental requirements.
If the conversion of foreign currency is not practical or lawful, or if any required approvals are denied or not
obtainable at a reasonable cost or within a reasonable period, the ADR depositary may take the following actions in its
discretion:
•
Convert the foreign currency to the extent practical and lawful and distribute the U.S. dollars to the holders for
whom the conversion and distribution is lawful and practical.
• Distribute the foreign currency to holders for whom the distribution is lawful and practical.
• Hold the foreign currency (without liability for interest) for the applicable holders.
Governing Law
The deposit agreement, side letter agreement and the ADRs are interpreted under, and all rights under the deposit
agreement, side letter agreement or the ADRs are governed by, the laws of the State of New York.
We have irrevocably submitted to the non-exclusive jurisdiction of New York State or United States Federal Courts
located in New York City and waived any objection to legal actions or proceedings in these courts whether on the ground of
venue or on the ground that the proceedings have been brought in an inconvenient forum.
This submission was made for the benefit of the ADR depositary and the holders and shall not limit the right of any
of them to take legal actions or proceedings in any other court of competent jurisdiction nor shall the taking of legal actions
or proceedings in one or more jurisdictions preclude the taking of legal actions or proceedings in any other jurisdiction
(whether concurrently or not), to the extent permitted under applicable law.
I, Hoyoung Jeong, certify that:
Exhibit 12.1
1.
I have reviewed this annual report on Form 20-F of LG Display Co., Ltd.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the company as
of, and for, the periods presented in this report;
4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to the company,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the company’s internal control over financial reporting that
occurred during the period covered by the annual report that has materially affected, or is reasonably
likely to materially affect, the company’s internal control over financial reporting; and
5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the company’s auditors and the audit committee of the company’s board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the company’s ability to record,
process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the company’s internal control over financial reporting.
Date: April 27, 2023
/s/ HOYOUNG JEONG
Hoyoung Jeong
Representative Director, President and Chief
Executive Officer
I, Sunghyun Kim, certify that:
Exhibit 12.2
1.
I have reviewed this annual report on Form 20-F of LG Display Co., Ltd.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the company as
of, and for, the periods presented in this report;
4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to the company,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the company’s internal control over financial reporting that
occurred during the period covered by the annual report that has materially affected, or is reasonably
likely to materially affect, the company’s internal control over financial reporting; and
5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the company’s auditors and the audit committee of the company’s board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the company’s ability to record,
process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the company’s internal control over financial reporting.
Date: April 27, 2023
/s/ SUNGHYUN KIM
Sunghyun Kim
Senior Vice President and
Chief Financial Officer
Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Subsection (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)
Exhibit 13.1
Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsection (a) and (b) of section 1350, chapter 63 of
title 18, United States Code), the undersigned officer of LG Display Co., Ltd., a corporation organized under the laws of the
Republic of Korea (the “Company”), does hereby certify, to such officer’s knowledge, that:
The annual report on Form 20-F for the year ended December 31, 2022 (the “Form 20-F”) fully complies with the
requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in the Form 20-
F fairly presents, in all material respects, the financial condition and results of operation of the Company.
Date: April 27, 2023
/s/ HOYOUNG JEONG
Hoyoung Jeong
Representative Director, President and Chief
Executive Officer
A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been
provided to LG Display Co., Ltd. and will be retained by LG Display Co., Ltd. and furnished to the Securities and Exchange
Commission or its staff upon request.
Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Subsection (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)
Exhibit 13.2
Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsection (a) and (b) of section 1350, chapter 63 of
title 18, United States Code), the undersigned officer of LG Display Co., Ltd., a corporation organized under the laws of the
Republic of Korea (the “Company”), does hereby certify, to such officer’s knowledge, that:
The annual report on Form 20-F for the year ended December 31, 2022 (the “Form 20-F”) fully complies with the
requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in the Form 20-
F fairly presents, in all material respects, the financial condition and results of operation of the Company.
Date: April 27, 2023
/s/ SUNGHYUN KIM
Sunghyun Kim
Senior Vice President and
Chief Financial Officer
A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been
provided to LG Display Co., Ltd. and will be retained by LG Display Co., Ltd. and furnished to the Securities and Exchange
Commission or its staff upon request.