☐ |
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 |
☐ |
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 |
Title of each class |
Trading Symbol |
Name of each exchange on which registered | ||
American Depositary Shares, each representing one-half of one share of Common Stock |
LPL |
New York Stock Exchange | ||
Common Stock, par value 5,000 per share |
LPL |
New York Stock Exchange* |
* |
Not for trading, but only in connection with the registration of the American Depositary Shares. |
| Large accelerated filer | ☒ |
Accelerated filer |
☐ | |||
Non-accelerated filer |
☐ |
Emerging growth company |
☐ | |||
U.S. GAAP ☐ |
International Financial Reporting Standards as issued |
Other ☐ | ||||||
by the International Accounting Standards Board |
☒ |
Page |
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PART I |
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Item 4. |
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Item 4A. |
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Item 5. |
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Item 8. |
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Item 10. |
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Item 11. |
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Item 12. |
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PART II |
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Item 13. |
85 |
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Item 14. |
86 |
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Item 15. |
86 |
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Item 16. |
86 |
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Item 16A. |
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Item 16B. |
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Item 16C. |
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Item 16D. |
87 |
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Item 16E. |
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Item 16F. |
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Item 16G. |
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Item 16H. |
89 |
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Item 16I. |
89 |
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PART III |
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Item 17. |
90 |
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Item 18. |
90 |
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Item 19. |
91 |
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| • | the cyclical nature of our 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. |
Item 1. |
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS |
Item 2. |
OFFER STATISTICS AND EXPECTED TIMETABLE |
Item 3. |
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 |
| • | 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 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. |
| • | In August 2021, we announced plans to make investments in an aggregate amount of up to W 3.3 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 W 6 trillion in capital expenditures for the joint venture 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 W 7.8 trillion in new large-sized and plastic OLED production lines in Paju, Korea. In July 2019, we announced plans to make additional investments of W 3.0 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. |
| • | 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, |
| • | 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. |
| • | declines in consumer confidence and a slowdown in consumer spending, including as a result of the ongoing global COVID-19 pandemic; |
| • | 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 resulting from the United Kingdom’s exit from the European Union; |
| • | 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, such as the 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; |
| • | 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; |
| • | 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. |
| • | 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 continued to conduct missile tests, including ballistic missiles launched from submarines and intercontinental ballistic missiles that it claims can reach the United States mainland. 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 Gaesong 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, most recently in December 2017 in response to North Korea’s intercontinental ballistic missile test in November 2017. 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. |
Item 4. |
INFORMATION ON THE COMPANY |
Item 4.A. |
History and Development of the Company |
Item 4.B. |
Business Overview |
| • | TFT array process TFT-LCDs. Once the TFT array process on glass substrates is completed, the substrates are cut into panel-sized pieces; |
| • | Color filter process |
| • | Cell process |
| • | Module assembly process |
| • | IT products, which comprise notebook computers (utilizing display panels ranging from 11.6 inches to 17.3 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. |
| (1) | Pursuant to our early adoption of certain amendments to “IAS No. 16 Property, Plant and Equipment: Proceeds before Intended Use |
| (2) | Includes Oceania, Africa and the Middle East. |
| (3) | Includes other countries in North and South America. |
| (4) | For convenience, the Korean Won amounts are expressed in U.S. dollars at the rate of W 1,188.59 to US$1.00, the noon buying rate in effect on December 31, 2021 as certified by the Federal Reserve Bank of New York for customs purposes. This translation should not be construed as a representation that the Korean Won amounts represent, have been or could be converted to U.S. dollars at that rate or any other rate. |
| • | product portfolio range and availability; |
| • | product specifications and performance; |
| • | price; |
| • | capacity allocation and reliability; |
| • | customer service, including product design support; and |
| • | logistics support and proximity of regional stocking facilities. |
| • | Samsung Display in Korea; |
| • | Innolux, AU Optronics and Hannstar in Taiwan; |
| • | Japan Display, Sharp and Panasonic in Japan; and |
| • | BOE, China Star Optoelectronics Technology, CEC Panda and HKC in China. |
| • | incoming quality control with respect to components and raw materials; |
| • | in-process quality control, which is conducted at a series of control points in the manufacturing process; and |
| • | outgoing quality control, which focuses on packaging, delivery and post-delivery services to customers. |
| Subsidiary |
Main Activities |
Jurisdiction of Organization |
Date of Organization |
Capital Stock (in millions of the applicable currency) |
Percentage of Our Ownership Interest |
Percentage of Our Voting Power |
||||||||||||
| LG Display Taiwan Co., Ltd. |
Sales |
Taiwan |
April 1999 |
NT$ |
116 |
100 |
% |
100 |
% | |||||||||
| LG Display America, Inc. |
Sales |
U.S.A. |
September 1999 |
US$ |
411 |
100 |
% |
100 |
% | |||||||||
| LG Display Japan Co., Ltd. |
Sales |
Japan |
October 1999 |
¥ |
95 |
100 |
% |
100 |
% | |||||||||
| LG Display Germany GmbH |
Sales |
Germany |
October 1999 |
€ |
1 |
100 |
% |
100 |
% | |||||||||
| LG Display Nanjing Co., Ltd. |
Manufacturing |
China |
July 2002 |
CNY |
3,020 |
100 |
% |
100 |
% | |||||||||
| LG Display Shanghai Co., Ltd. |
Sales |
China |
January 2003 |
CN |
Y4 |
100 |
% |
100 |
% | |||||||||
| LG Display Guangzhou Co., Ltd. |
Manufacturing |
China |
June 2006 |
CNY |
1,655 |
100 |
% |
100 |
% | |||||||||
| LG Display Shenzhen Co., Ltd. |
Sales |
China |
July 2007 |
CNY |
4 |
100 |
% |
100 |
% | |||||||||
| LG Display Singapore Pte. Ltd. |
Sales |
Singapore |
November 2008 |
US$ |
1 |
100 |
% |
100 |
% | |||||||||
| LG Display Yantai Co., Ltd. |
Manufacturing |
China |
March 2010 |
CNY |
1,008 |
100 |
% |
100 |
% | |||||||||
| L&T Display Technology (Fujian) Ltd. |
Manufacturing and sales |
China |
December 2009 |
CNY |
116 |
51 |
% |
51 |
% | |||||||||
| Subsidiary |
Main Activities |
Jurisdiction of Organization |
Date of Organization |
Capital Stock (in millions of the applicable currency) |
Percentage of Our Ownership Interest |
Percentage of Our Voting Power |
||||||||||||
| Nanumnuri Co., Ltd. |
Workplace services |
Korea |
March 2012 |
W |
800 |
100 |
% |
100 |
% | |||||||||
| LG Display (China) Co., Ltd. |
Manufacturing and sales |
China |
December 2012 |
CNY |
8,232 |
70 |
% |
70 |
% | |||||||||
| Unified Innovative Technology, LLC |
Managing intellectual property |
U.S.A. |
March 2014 |
US$ |
9 |
100 |
% |
100 |
% | |||||||||
| Global OLED Technology LLC |
Managing intellectual property |
U.S.A. |
December 2009 |
US$ |
138 |
100 |
% |
100 |
% | |||||||||
| LG Display Guangzhou Trading Co., Ltd. |
Sales |
China |
April 2015 |
CNY |
1 |
100 |
% |
100 |
% | |||||||||
| LG Display Vietnam Haiphong Co., Ltd. |
Manufacturing |
Vietnam |
May 2016 |
US$ |
600 |
100 |
% |
100 |
% | |||||||||
| Suzhou Lehui Display Co., Ltd. |
Manufacturing and sales |
China |
July 2016 |
CNY |
637 |
100 |
% |
100 |
% | |||||||||
| LG Display Fund I LLC |
Investing in new emerging companies |
U.S.A. |
May 2018 |
US$ |
45 |
100 |
% |
100 |
% | |||||||||
| LG Display High-Tech (China) Co., Ltd |
Manufacturing and sales |
China |
July 2018 |
CNY |
15,600 |
70 |
% |
70 |
% | |||||||||
Item 4.C. |
Organizational Structure |
Item 4.D. |
Property, Plants and Equipment |
| Fabrication Facility |
Generation (1) |
Mass Production Commencement |
Location |
Gross Floor Area (in square meters) |
Primary Types of Panels Produced | |||||
| Korea |
||||||||||
| P5 (2) |
5 | May 2003 | Gumi, Korea | 93,227 | TFT-LCD for notebook computer, mobile and other applications | |||||
| P62 |
6 | April 2009 | Gumi, Korea | 101,617 | TFT-LCD for notebook computer and desktop monitor | |||||
| AP3 (3) |
6 | February 2014 | Gumi, Korea | 288,634 | Plastic OLED for mobile and other applications | |||||
| P7 |
7 | January 2006 | Paju, Korea | 310,134 | TFT-LCD for television | |||||
| P8 (4) |
8 | March 2009 | Paju, Korea | 506,895 | TFT-LCD for television, desktop monitor and notebook computer | |||||
| OP1 (5) |
8 | January 2013 | Paju, Korea | See P8 above |
OLED for television | |||||
| P9 (6) |
8 | June 2012 | Paju, Korea | 500,408 | TFT-LCD for desktop monitor, notebook computer, tablet computer | |||||
| AP4 (7) |
6 | July 2019 | Paju, Korea | See P9 above |
Plastic OLED for mobile and other applications | |||||
| Overseas |
||||||||||
| CA (8) |
8 | September 2014 | Guangzhou, China | 244,592 | TFT-LCD for television and desktop monitor | |||||
| CO |
8 | July 2020 | Guangzhou, China | 426,139 | OLED for television |
| (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 |
Gen 6 |
Gen 7 |
Gen 8 | ||||
| 1,000 x 1,200 1,100 x 1,250 1,100 x 1,300 1,200 x 1,300 |
1,500 x 1,800 1,500 x 1,850 |
1,870 x 2,200 1,950 x 2,250 |
2,200 x 2,500 |
| (2) | Gross floor area of P5 fabrication facility includes gross floor area of OLED light production lines. |
| (3) | Includes the production line formerly referred to as E5, which began mass production in August 2017. |
| (4) | Gross floor area of P8 fabrication facility includes the gross floor area of OP1 fabrication facility, which is located in the same complex. |
| (5) | Includes the production lines formerly referred to as E3 and E4. The gross floor area of this fabrication facility is included within the P8 fabrication facility. |
| (6) | Gross floor area of P9 fabrication facility includes the gross floor area of AP4 fabrication facility, which is located in the same complex. |
| (7) | Includes the production line formerly referred to as E6. The gross floor area of this fabrication facility is included within the P9 fabrication facility. |
| (8) | Gross floor area of CA fabrication facility includes the gross floor area of GP1, GP2 and extended facilities. |
| Facility |
Gross Floor Area (in square meters) |
Mass Production Commencement | ||||
| R&D Center |
69,871 | Not applicable (opened in April 2012) | ||||
| Gumi assembly facility |
301,779 | January 1995 | ||||
| Nanjing assembly facility |
159,448 | May 2003 | ||||
| Paju assembly facility |
225,093 | January 2006 | ||||
| Guangzhou assembly facility |
158,817 | December 2007 | ||||
| Yantai assembly facility |
45,170 | May 2010 | ||||
| Haiphong assembly facility |
358,787 | July 2017 | ||||
Item 4A. |
UNRESOLVED STAFF COMMENTS |
Item 5. |
OPERATING AND FINANCIAL REVIEW AND PROSPECTS |
Item 5.A. |
Operating Results |
| Facility |
Primary Input Substrates Size (in millimeters) |
Year-end Input Capacity (1) |
||||||||||||||
2019 |
2020 |
2021 |
||||||||||||||
(in thousands of input substrates per month) |
||||||||||||||||
| AP3 |
1,500 x 1,850 | 7 | 24 | 17 | ||||||||||||
| AP4 |
1,500 x 1,850 | 11 | 31 | 31 | ||||||||||||
| OP1 |
2,200 x 2,500 | 81 | 86 | 86 | ||||||||||||
| P5 |
1,100 x 1,250 | 72 | 44 | 45 | ||||||||||||
| P62 |
1,500 x 1,850 | 46 | 46 | 44 | ||||||||||||
| P7 |
1,950 x 2,250 | 223 | 142 | 150 | ||||||||||||
| P8 |
2,200 x 2,500 | 217 | 100 | 124 | ||||||||||||
| P9 |
2,200 x 2,500 | 83 | 82 | 81 | ||||||||||||
| CA |
2,200 x 2,500 | 216 | 216 | 211 | ||||||||||||
| CO (2) |
2,200 x 2,500 | N/A | 56 | 89 | ||||||||||||
| (1) | Year-end input capacity is the total input substrates for the month that had the highest monthly input substrates during the fiscal year. |
| (2) | Commenced operation in July 2020. |
Year ended December 31, |
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2019 (1) |
2020 (1) |
2021 (1) |
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Sales |
% |
Sales |
% |
Sales |
Sales (2) |
% |
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Panels for: |
(in billions of Won and millions of US$, except for percentages) |
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| Televisions |
W |
7,998 | 34.1 | % | W |
6,738 | 27.8 | % | W |
9,466 | US$ | 7,964 | 31.7 | % | ||||||||||||||
| IT Products (3) |
9,063 | 38.6 | 10,121 | 41.7 | 12,459 | 10,482 | 41.7 | |||||||||||||||||||||
| Mobile and other applications (4) |
6,374 | 27.1 | 7,359 | 30.3 | 7,900 | 6,647 | 26.4 | |||||||||||||||||||||
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| Sales of goods |
W |
23,435 | 99.8 | % | W |
24,218 | 99.8 | % | W |
29,825 | US$ | 25,093 | 99.8 | % | ||||||||||||||
| Royalties and others |
41 | 0.2 | 44 | 0.2 | 53 | 45 | 0.2 | |||||||||||||||||||||
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| Revenue |
W |
23,476 | 100.0 | % | W |
24,262 | 100.0 | % | W |
29,878 | US$ | 25,137 | 100.0 | % | ||||||||||||||
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| (1) | Pursuant to our early adoption of certain amendments to “IAS No. 16 Property, Plant and Equipment: Proceeds before Intended Use |
| (2) | For convenience, the Korean Won amounts are expressed in U.S. dollars at the rate of W 1,188.59 to US$1.00, the noon buying rate in effect on December 30, 2021 as certified by the Federal Reserve Bank of New York for customs purposes. This translation should not be construed as a representation that the Korean Won amounts represent, have been or could be converted to U.S. dollars at that rate or any other rate. |
| (3) | Comprises notebook computers, desktop monitors and tablet computers. |
| (4) | Includes, among others, panels for mobile devices, including smartphones and other types of mobile phones, and industrial and other applications, including entertainment systems, automotive displays, portable navigation devices and medical diagnostic equipment. |
Year ended December 31, |
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2019 |
2020 |
2021 |
||||||||||||||||||||||
| Panels for |
Number of Panels |
% |
Number of Panels |
% |
Number of Panels |
% |
||||||||||||||||||
(in thousands, except for percentages) |
||||||||||||||||||||||||
| Televisions |
44,833 | 19.4 | % | 27,747 | 12.2 | % | 30,214 | 12.0 | % | |||||||||||||||
| IT Products (1) |
86,957 | 37.6 | 97,728 | 42.8 | 107,943 | 43.0 | ||||||||||||||||||
| Mobile and other applications (2) |
99,569 | 43.0 | 102,884 | 45.1 | 112,758 | 45.0 | ||||||||||||||||||
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| Total |
231,359 | 100.0 | % | 228,359 | 100.0 | % | 250,915 | 100.0 | % | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (1) | Comprises notebook computers, desktop monitors and tablet computers. |
| (2) | Includes, among others, panels for mobile devices, including smartphones and other types of mobile phones, and industrial and other applications, including entertainment systems, automotive displays, portable navigation devices and medical diagnostic equipment. |
Average Selling Price (1) |
||||||||||||||||
Year ended December 31, |
||||||||||||||||
2019 (2) |
2020 (2) |
2021 (2)(3) |
||||||||||||||
| Televisions |
W |
178,395 | W |
242,837 | W |
313,308 | US$ | 264 | ||||||||
| IT Products (4) |
104,224 | 103,563 | 115,419 | 97 | ||||||||||||
| Mobile and other applications (5) |
64,016 | 71,537 | 70,086 | 59 | ||||||||||||
| All panels |
101,293 | 106,048 | 118,865 | 100 | ||||||||||||
| (1) | Average selling price for each market represents revenue per market divided by unit sales per market. |
| (2) | Pursuant to our early adoption of certain amendments to “IAS No. 16 Property, Plant and Equipment: Proceeds before Intended Use |
| (3) | For convenience, the Korean Won amounts are expressed in U.S. dollars at the rate of W 1,188.59 to US$1.00, the noon buying rate in effect on December 30, 2021 as certified by the Federal Reserve Bank of New York for customs purposes. This translation should not be construed as a representation that the Korean Won amounts represent, have been or could be converted to U.S. dollars at that rate or any other rate. |
| (4) | Comprises notebook computers, desktop monitors and tablet computers. |
| (5) | Includes, among others, panels for mobile devices, including smartphones and other types of mobile phones, and industrial and other applications, including entertainment systems, automotive displays, portable navigation devices and medical diagnostic equipment. |
Year ended December 31, |
||||||||||||||||||||||||||||
2019 |
% |
2020 |
% |
2021 |
2021 (1) |
% |
||||||||||||||||||||||
(in billions of Won and in millions of US$, except for percentages) |
||||||||||||||||||||||||||||
| Revenue |
W |
23,476 | 100.0 | % | W |
24,262 | 100.0 | % | W |
29,878 | US$ | 25,137 | 100.0 | % | ||||||||||||||
| Cost of sales |
(21,607 | ) | 92.0 | (21,626 | ) | 89.1 | (24,573 | ) | (20,674 | ) | 82.2 | |||||||||||||||||
| Gross profit |
1,868 | 8.0 | 2,636 | 10.9 | 5,305 | 4,463 | 17.8 | |||||||||||||||||||||
| Selling expenses |
(1,058 | ) | 4.5 | (818 | ) | 3.4 | (933 | ) | (785 | ) | 3.1 | |||||||||||||||||
| Administrative expenses |
(948 | ) | 4.0 | (755 | ) | 3.1 | (919 | ) | (773 | ) | 3.1 | |||||||||||||||||
| Research and development expenses |
(1,222 | ) | 5.2 | (1,099 | ) | 4.5 | (1,222 | ) | (1,028 | ) | 4.1 | |||||||||||||||||
| Other income |
1,267 | 5.4 | 1,785 | 7.4 | 1,252 | 1,053 | 4.2 | |||||||||||||||||||||
| Other expenses |
(3,098 | ) | 13.2 | (1,999 | ) | 8.2 | (1,281 | ) | (1,078 | ) | 4.3 | |||||||||||||||||
| Finance income |
277 | 1.2 | 439 | 1.8 | 426 | 358 | 1.4 | |||||||||||||||||||||
| Finance costs |
(443 | ) | 1.9 | (803 | ) | 3.3 | (917 | ) | (771 | ) | 3.1 | |||||||||||||||||
| Equity income on investments, net |
12 | 0.1 | 12 | 0.1 | 8 | 7 | 0.0 | |||||||||||||||||||||
| Profit (loss) before income tax |
(3,344 | ) | (14.2 | ) | (602 | ) | (2.5 | ) | 1,719 | 1,446 | 5.8 | |||||||||||||||||
| Income tax benefit (expense) |
472 | 2.0 | 526 | 2.2 | (385 | ) | (324 | ) | (1.3 | ) | ||||||||||||||||||
| Profit (loss) for the year |
(2,872 | ) | (12.2 | ) | (76 | ) | (0.3 | ) | 1,334 | 1,122 | 4.5 | |||||||||||||||||
| (1) | For convenience, the Korean Won amounts are expressed in U.S. dollars at the rate of W 1,188.59 to US$1.00, the noon buying rate in effect on December 30, 2021 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. |
| • | 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; |
| • | salaries, resulting primarily from an increase in general wage levels and the number of our employees. |
Year ended December 31, |
||||||||
2020 |
2021 |
|||||||
(in billions of Won) |
||||||||
| Salaries |
W |
294 | W |
387 | ||||
| Expenses related to defined benefit plan |
26 | 23 | ||||||
| Other employee benefits |
68 | 87 | ||||||
| Shipping costs |
148 | 299 | ||||||
| Fees and commissions |
222 | 248 | ||||||
| Depreciation |
215 | 267 | ||||||
| Taxes and dues |
83 | 75 | ||||||
| Advertising |
114 | 126 | ||||||
| Warranty expenses |
309 | 217 | ||||||
| Insurance |
13 | 17 | ||||||
| Travel |
8 | 7 | ||||||
| Training |
8 | 16 | ||||||
| Others |
65 | 83 | ||||||
| |
|
|
|
|||||
| Total |
W |
1,573 | W |
1,852 | ||||
| |
|
|
|
|||||
| • | net foreign currency loss of W 300 billion (US$252 million) in 2021 compared to net foreign currency gain of W 142 billion in 2020, primarily due to higher exchange rate volatility in 2021 compared to 2020; and |
| • | a 17.3% increase in interest expense from W 370 billion in 2020 to W 434 billion (US$365 million) in 2021, which was mainly due to a decrease in capitalized interest in 2021 compared to 2020. |
| • | Salaries, as temporary increases in salaries in 2019 due to the retirement allowance incurred in connection with the implementation of voluntary retirement programs for our employees during 2019 was not repeated in 2020; |
| • | warranty expenses, resulting mainly from an improvement in the stability of our manufacturing processes for OLED display panels; and |
| • | advertising expenses, resulting primarily from decrease in the level of our higher-cost offline marketing activities and a corresponding increase in the level of our online marketing activities in 2020 compared to 2019. |
Year ended December 31, |
||||||||
2019 |
2020 |
|||||||
(in billions of Won) |
||||||||
| Salaries |
W |
515 | W |
294 | ||||
| Expenses related to defined benefit plan |
29 | 26 | ||||||
| Other employee benefits |
78 | 68 | ||||||
| Shipping costs |
163 | 148 | ||||||
| Fees and commissions |
220 | 222 | ||||||
| Depreciation |
226 | 215 | ||||||
| Taxes and dues |
50 | 83 | ||||||
| Advertising |
193 | 114 | ||||||
| Warranty expenses |
419 | 309 | ||||||
| Rent |
3 | 2 | ||||||
| Insurance |
11 | 13 | ||||||
| Travel |
24 | 8 | ||||||
| Training |
12 | 8 | ||||||
| Others |
64 | 62 | ||||||
| |
|
|
|
|||||
| Total |
W |
2,006 | W |
1,573 | ||||
| |
|
|
|
|||||
| • | a 113.9% increase in interest expense from W 173 billion in 2019 to W 370 billion in 2020, which was mainly due to an increase in the average amount of our long-term borrowings outstanding as well as a decrease in capitalized interest in 2020 compared to 2019; and |
| • | net loss on valuation of derivatives of W 187 billion in 2020 compared to net gain on valuation of derivatives of W 42 billion in 2019, as the U.S. dollar generally depreciated against the Korean Won during the second half of 2020 and significantly fluctuated over these periods as a whole. Against such fluctuations, we also recognized net foreign currency gain of W 142 billion in 2020 compared to net foreign currency loss of W 19 billion in 2019, as well as net gains on transaction of derivatives of W 22 billion in 2019 and W 24 billion in 2020. |
2019 |
2020 |
2021 |
2021 (1) |
|||||||||||||
(in billions of Won) |
(in millions of US$) |
|||||||||||||||
| Profit (loss) for the year |
W |
(2,872 | ) | W |
(76 | ) | W |
1,334 | US$ | 1,122 | ||||||
| Interest income |
(53 | ) | (70 | ) | (89 | ) | (75 | ) | ||||||||
| Interest expense |
173 | 370 | 434 | 365 | ||||||||||||
| Income tax expense (benefit) |
(472 | ) | (526 | ) | 385 | 324 | ||||||||||
| Depreciation and amortization |
3,695 | 4,134 | 4,501 | 3,787 | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| EBITDA |
W |
471 | W |
3,832 | W |
6,565 | US$ | 5,523 | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
| (1) | For convenience, the Korean Won amounts are expressed in U.S. dollars at the rate of W 1,188.59 to US$1.00, the noon buying rate in effect on December 30, 2021 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. |
Item 5.B. |
Liquidity and Capital Resources |
(in billions of Won) |
||||
| Korean Won |
W |
129 | ||
| Chinese Yuan |
2,053 | |||
| U.S. Dollar |
1,351 | |||
| Other currencies |
9 | |||
| |
|
|||
| Total |
W |
3,542 | ||
| |
|
|||
| (1) | For convenience, the Korean Won amounts are expressed in U.S. dollars at the rate of W 1,188.59 to US$1.00, the noon buying rate in effect on December 30, 2021, 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. |
Payments Due by Period |
||||||||||||||||||||
| (in billions of Won) |
Total |
Less than 1 year |
1-3 years |
3-5 years |
More than 5 years |
|||||||||||||||
| Unsecured bank borrowings |
7,634 | 2,194 | 4,797 | 643 | — | |||||||||||||||
| Secured bank borrowings |
3,060 | 471 | 1,419 | 1,170 | — | |||||||||||||||
| Unsecured bond issues |
2,532 | 1,461 | 715 | 267 | 89 | |||||||||||||||
| Trade accounts and notes payable |
4,814 | 4,814 | — | — | — | |||||||||||||||
| Other accounts payable |
2,330 | 2,330 | — | — | — | |||||||||||||||
| Other accounts payable (enterprise procurement cards) (1) |
1,074 | 1,074 | — | — | — | |||||||||||||||
| Long-term other accounts payable |
586 | — | 226 | 161 | 199 | |||||||||||||||
| Securities deposits received |
11 | 8 | 3 | — | — | |||||||||||||||
| Lease Liabilities |
91 | 44 | 32 | 7 | 8 | |||||||||||||||
| Derivatives |
8 | 7 | 1 | — | — | |||||||||||||||
| Derivatives for cash flow hedge |
13 | 13 | — | — | — | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Total contractual cash obligations |
22,153 | 12,416 | 7,193 | 2,248 | 296 | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| (1) | Represents the amount of utility expenses and other expenses paid using the enterprise procurement cards. For further information, please see Note 25 of the notes to our financial statements. |
Item 5.C. |
Research and Development, Patents and Licenses, etc. |
| • | In 2019, we commenced mass production of display panels for 88-inch 8K OLED TV products. We also produced 55-inch FHD transparent commercial OLED display panels and 55-inch UHD OLED gaming monitor display panels. In addition, we developed OLED panels for automotive products with a 7.2-inch control pad, 14.2-inch cluster and 16.9-inch infotainment screen. For TFT-LCD commercial products, we produced a 50-inch Ultra HD in-TOUCH panel (equipped with touch sensors inside the LCD cells for a thinner and lighter design), which is the first in-TOUCH panel that is 50-inches or larger. |
| • | 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 developed the world’s first “2K” zone mini-LED and ultra-slim UHD desktop monitor product. |
| • | In 2021, we produced 65-inch UHD bendable OLED television display products and 83-inch UHD OLED television display products. In addition, we developed the world’s first 42-inch OLED television display product. For TFT-LCD commercial products, we developed the world’s first 15.6-inch QHD 240Hz gaming notebook products, the world’s first 27-inch and 31.5-inch UHD high contrast ratio monitor products and our first LCD 750R extreme curvature automotive display product. |
| • | 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. |
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 |
| Name |
Date of Birth |
Position |
First Elected/ Appointed |
Term Expires |
Principal Occupation Outside of LG Display | |||||
| Byoung Ho Lee | July 6, 1964 | Director | March 2018 | March 2024 | Professor, Electrical and Computer Engineering, Seoul National University | |||||
| Doocheol Moon | November 5, 1967 | Director | March 2021 | March 2024 | Professor, School of Business, Yonsei University | |||||
| Chung Hae Kang | May 20, 1964 | Director | March 2022 | March 2025 | Professor, University of Seoul Law School | |||||
| Jungsuk Oh (1) |
September 30, 1970 | Director | April 2022 | March 2023 | Professor, Operations Management, Seoul National University | |||||
| (1) | Pursuant to the rules of the Korean Commercial Code, Mr. Jungsuk Oh has been appointed as our temporary outside director by the Seoul Southern District Court to replace Mr. Chang-Yang Lee, our former outside director, who resigned from his position on April 8, 2022. |
| Name |
Date of Birth |
Position |
First Elected/ Appointed |
Term Expires |
Principal Occupation Outside of LG Display | |||||
| Hoyoung Jeong | November 2, 1961 | President, Chief Executive Officer, Representative Director | March 2020 | March 2023 | — | |||||
| Sunghyun Kim | December 12, 1967 | Senior Vice President, Chief Financial Officer, Director | March 2022 | March 2025 | — | |||||
| Beom Jong Ha | July 16, 1968 | Director | March 2022 | March 2025 | — | |||||
| Name |
Position |
Responsibility and Division |
Age |
|||||
| Myoung Kyu Kim | President | Head of Medium-Small Display Business Unit | 59 | |||||
| Yong Min Ha | Executive Vice President | Head of Precedence Technology Laboratory | 55 | |||||
| Chang Ho Oh | Executive Vice President | Head of Large Display Business Unit | 56 | |||||
| Jong Woo Kim | Executive Vice President | Chief Production Officer | 56 | |||||
| Soo Young Yoon | Executive Vice President | Chief Technology Officer | 55 | |||||
| Yoong Ki Min | Executive Vice President | Head of Medium Display Business Group | 56 | |||||
| Byeong Koo Kim | Senior Vice President | Head of Auto Business Group | 54 | |||||
| Kang Yeol Oh | Senior Vice President | Head of Small Display Sales/Marketing Group | 57 | |||||
| Tae Seung Kim | Senior Vice President | Leader of P10 Infra Set-up Task Force |
57 | |||||
| Won Ho Cho | Senior Vice President | Head of Small Display Manufacture Center | 58 | |||||
| Hyun Chul Choi | Senior Vice President | Head of Small Display Business Group | 54 | |||||
| Young Sang Byun | Senior Vice President | Head of Medium Display Manufacture Center | 56 | |||||
| Jin Hyo Lee | Senior Vice President | Head of Legal Group | 49 | |||||
| J. Kenneth Oh | Senior Vice President | Head of Intellectual Property Division | 54 | |||||
| Han Seop Kim | Senior Vice President | Head of Large Display Development Group | 56 | |||||
| Sang Ho Song | Senior Vice President | Chief of Human Resource Officer | 53 | |||||
| Jeong Ki Park | Senior Vice President | Head of Medium Display Development Group | 53 | |||||
| Young Seok Choi | Senior Vice President | Head of Production Technology Center | 53 | |||||
| Hyeon Woo Lee | Senior Vice President | Head of Life Display Business Group | 54 | |||||
| Hee Yeon Kim | Senior Vice President | Head of Corporate Strategy Group | 52 | |||||
| Jin Kyu Lee | Senior Vice President | Head of DX Group | 52 | |||||
| Woo Sup Shin | Senior Vice President | Head of Large Display Manufacture Center | 52 | |||||
| Seong Hee Kim | Senior Vice President | Chief Safety Environment Officer | 53 | |||||
| Yoo Seok Park | Senior Vice President | Head of Quality Management Center | 51 | |||||
| Jeom Jae Kim | Vice President | Head of Foundation Technology Laboratory | 53 | |||||
| Seung Min Lim | Vice President | Head of Corporate Planning & Management Group | 54 | |||||
| Je Bong Kim | Vice President | Head of Medium-Small Display Planning & Management Division | 56 | |||||
| Jae Hong Park | Vice President | Head of Small Display Product Development Group | 52 | |||||
| Kwang Jin Kim | Vice President | Head of Large Display Sales & Marketing Group | 52 | |||||
| Soon Kwang Hong | Vice President | Head of Small Display Product Development Division 2 | 51 | |||||
| Chang Han Kim | Vice President | Head of Gaming Display Business Division | 52 | |||||
| Keuk Sang Kwon | Vice President | Head of Auto Product Development Division 1 | 51 | |||||
| Kwon Shik Park | Vice President | Head of Device Process Research Division | 52 | |||||
| Dong Eun Lee | Vice President | Head of China Business Management Division | 54 | |||||
| Chang Sub Choi | Vice President | Head of Japan Office | 55 | |||||
| Dong Hoon Lee | Vice President | Head of Auditing & Management Consulting Division | 50 | |||||
| Jin Nam Park | Vice President | Head of Purchasing Group | 50 | |||||
| Doo Jong Jin | Vice President | Leader of Module Strategy Task Force | 54 | |||||
| Bu Yeol Lee | Vice President | Head of R&D Strategy Division | 50 | |||||
| Chang Mog Jo | Vice President | Head of Equipment Technology Division | 56 | |||||
| Jin Gu Jeung | Vice President | Head of GuangZhou Complex Group | 52 | |||||
| Chae Woo Choi | Vice President | Head of Commercial Business Division | 52 | |||||
| Sang Yoon Park | Vice President | Head of Medium Display Product Development Division 2 | 52 | |||||
| Hong Sung Song | Vice President | Head of Large Display Product Development Division 1 | 53 | |||||
| Eun Kuk Kyung | Vice President | Head of Accounting Division | 52 | |||||
| Young Dall Park | Vice President | Head of Vietnam HR & Business Suppoprt Division | 51 | |||||
| Yong In Park | Vice President | Head of POLED Panel Research Division | 52 | |||||
| Seung Jun Han | Vice President | Head of Convergence Technology Research Division | 52 | |||||
| Hoon Jeong | Vice President | Head of Medium Display Panel Development Division | 49 | |||||
| Myung Su Suk | Vice President | Head of Vietnam Complex Group | 51 | |||||
| Jong Seo Yoon | Vice President | Head of Medium Display Product Planning Division | 50 | |||||
| Han Wook Hwang | Vice President | Head of Small Display Panel Development Group | 46 | |||||
| Seung Ho Kwon | Vice President | Head of Large Display Cell Division | 50 | |||||
| Tae Rim Lee | Vice President | Leader of Large Display Performance Improvement Task Force | 46 | |||||
| In Hyuk Song | Vice President | Head of Medium OLED Panel Development Division | 44 | |||||
| Tae Shick Kim | Chief Research Fellow | Leader of Large Display Device Development Task Force | 53 | |||||
| Seong Hoon Chun | Vice President | Leader of Plate Task Force | 51 | |||||
| Sung Chun Kang | Vice President | Head of Medium Display Factory 2 | 52 | |||||
| Joon Young Yang | Vice President | Head of OLED Panel Research Division | 51 | |||||
| Tae Hyung Lim | Vice President | Head of Medium Display Sales Division 1 | 52 | |||||
| Kyung Joon Kwon | Vice President | Head of Small Display Driving Technology Division | 46 | |||||
| Jae Young Kwon | Vice President | Head of Medium-Small Display Sales/Marketing Group | 52 | |||||
| Sung Joon Bae | Vice President | Head of Large Display Panel Development Division | 50 | |||||
| Hae Won Lee | Vice President | Head of Production Technology Division | 51 | |||||
| Won Gyun Youn | Vice President | Head of Medium Display Product Development Division 3 | 50 | |||||
| Ki Young Kim | Vice President | Head of Medium-Small Display Quality Division | 50 | |||||
| Ji Ho Baek | Vice President | Head of OC Research/Development Division | 50 | |||||
| Seung Do Kim | Vice President | Head of Nanjing Factory | 50 | |||||
| Heung Soo Kim | Vice President | Head of Small Display Factory 2 | 51 | |||||
| In Kwan Choi | Vice President | Head of Small Display Module Technology Division | 50 | |||||
| Jong Suk Jeon | Vice President | Head of Large Display Sales Division 3 | 47 | |||||
| Sang Hyun Ahn | Vice President | Head of Auto Sales Division | 51 | |||||
| Won Seok Kang | Vice President | Leader of Life Display Product Planning Task Force | 50 | |||||
| Whan Woo Park | Vice President | Head of Small Display Sales Division 2 | 49 | |||||
| Byung Seung Lee | Vice President | Head of SCM DX Division | 45 | |||||
| Hoon Choi | Vice President | Head of Product Technology Division | 50 | |||||
| Han Koo Lee | Vice President | Head of Business Support Group | 54 | |||||
| Han Yong Nam | Vice President | Head of Purchasing Division 2 | 53 | |||||
| Hu Kag Lee | Vice President | Head of LGDCO Subsidiary | 51 | |||||
| Jong Uk Bae | Vice President | Head of Large Display Process Development Division | 51 | |||||
| Jong Duck Kim | Vice President | Head of Large Display Planning & Management Division | 51 | |||||
| Chun Ho Yeo | Vice President | Head of Business Development Division | 52 | |||||
| Hyung Jung Lee | Vice President | Head of Large Display SCM Division | 52 | |||||
| Pan Youl Kim | Vice President | Head of Small Display Product Development Division 3 | 50 | |||||
| In Keun Jeong | Vice President | Head of Advanced Quality Division | 50 | |||||
| Jae Jun Ahn | Vice President | Head of Small Display Process Integration Division | 48 | |||||
| Ki Hwan Son | Vice President | Head of Auto Marketing Product Planning Division | 43 | |||||
| Gwang Tae Kim | Vice President | Head of Medium Display Precedence Development Division | 49 | |||||
| Joon Hyeok Jang | Vice President | Head of Large Display Sales Division 2 | 48 | |||||
| Ui Jin Chung | Vice President | Leader of EXO Task Force | 50 | |||||
| Jae Hyeob Seo | Vice President | Head of Gumi Complex Group | 51 | |||||
| Tae Wook Kang | Vice President | Head of Customer Insight Division | 45 | |||||
| Juhn Suk Yoo | Chief Research Fellow | Leader of Small Display Advanced Technology Development Task Force | 50 | |||||
| Woo Nam Jeong | Chief Research Fellow | Leader of MTB Task Force | 55 | |||||
| Seong Gon Kim | Vice President | Head of Medium Display Sales Division 3 | 44 | |||||
| Sang Hoon Jung | Vice President | Leader of Next Generation Display Research Task Force | 45 | |||||
| Jong Seob Choi | Vice President | Head of Global HR Division | 44 | |||||
| Jun Hyuk Choi | Vice President | Head of Public Relations Division | 48 | |||||
| Kyu Dong Kim | Vice President | Head of Finance & Risk Management Division | 44 | |||||
| Seong Pil Shin | Vice President | Head of Public Affairs Division | 48 | |||||
Item 6.B. |
Compensation |
| Name |
Position |
Composition of Total Compensation |
Total Compensation |
|||||||||||||||
Salary |
Bonus (1) |
Retirement Benefits |
||||||||||||||||
(in millions of Won) |
||||||||||||||||||
| In Byeong Kang (2) |
Advisory Officer | W |
325 | — | W |
1,458 | W |
1,783 | ||||||||||
| Yeong Giu Hong (2) |
Advisory Officer | W |
225 | — | W |
1,146 | W |
1,371 | ||||||||||
| Hoyoung Jeong |
Chief Executive Officer | W |
1,340 | — | — | W |
1,340 | |||||||||||
| Yung Keun Choi (2) |
Advisory Officer | W |
282 | — | W |
954 | W |
1,236 | ||||||||||
| Jung Sik Shin (2) |
Advisory Officer | W |
278 | — | W |
895 | W |
1,173 | ||||||||||
| (1) | Based on our performance in 2020. |
| (2) | Former officer who retired from his position as of March 31, 2021. |
Item 6.C. |
Board Practices |
| • | Audit Committee; |
| • | Outside Director Nomination Committee; |
| • | Management Committee; |
| • | Related Party Transaction Committee; and |
| • | ESG Committee; |
| • | 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; |
| • | assessing compliance with disclosure and filing obligations; |
| • | considering significant changes in accounting practices; and |
| • | examining improprieties or suspected improprieties. |
Item 6.D. |
Employees |
As of December 31, |
||||||||||||
| Employees (1) |
2019 |
2020 |
2021 |
|||||||||
| Production | 49,575 | 53,336 | 59,976 | |||||||||
| Technical(2) | 8,198 | 7,541 | 8,018 | |||||||||
| Sales & Marketing | 1,615 | 1,432 | 1,526 | |||||||||
| Management & Administration | 1,041 | 1,051 | 1,187 | |||||||||
| |
|
|
|
|
|
|||||||
| Total |
60,429 | 63,360 | 70,707 | |||||||||
| |
|
|
|
|
|
|||||||
| (1) | Includes employees of our subsidiaries. |
| (2) | Includes research and development and engineering personnel. |
Item 6.E. |
Share Ownership |
Item 7. |
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS |
Item 7.A. |
Major Shareholders |
| Beneficial Owner |
Number of Shares of Common Stock |
Percentage |
||||||
| LG Electronics |
135,625,000 | 37.9 | % | |||||
| National Pension Service |
23,811,048 | 6.7 | % | |||||
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 |
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 |
| • | 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; |
| • | 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. |
| • | 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. |
Item 10.C. |
Material Contracts |
Item 10.D. |
Exchange Controls |
| • | 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. |
| (1) | 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 |
| (2) | the number of shares of our common stock on deposit with the depositary at the time of such proposed deposit. |
| • | 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 |
| • | 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. |
Item 10.E . |
Taxation |
| • | 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. |
| • | a dealer in securities or currencies; |
| • | a trader in securities that elects to use a mark-to-market |
| • | 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). |
| • | 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. |
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 11. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Expected Maturity Dates |
Fair Value at December 31, 2021 |
|||||||||||||||||||||||||||||||
2022 |
2023 |
2024 |
2025 |
2026 |
Thereafter |
Total |
||||||||||||||||||||||||||
(in billions of Won, except for interest rate percentages) |
||||||||||||||||||||||||||||||||
Interest rate swaps |
||||||||||||||||||||||||||||||||
Variable to fixed ( W ) (1) |
W |
20.0 | W |
90.0 | W |
40.0 | W |
20.0 | — | — | W |
170.0 | W |
170.0 | ||||||||||||||||||
Average pay rate |
2.95 | % | 2.65 | % | 2.95 | % | 2.95 | % | — | — | ||||||||||||||||||||||
Average receive rate |
2.95 | % | 3.16 | % | 3.53 | % | 3.52 | % | — | — | ||||||||||||||||||||||
| (1) | Average pay rates and average receive rates are applicable to the total notional amounts outstanding until maturity. |
Expected Maturity Dates |
Fair Value at December 31, 2021 |
|||||||||||||||||||||||||||||||
2022 |
2023 |
2024 |
2025 |
2026 |
Thereafter |
Total |
||||||||||||||||||||||||||
(in billions of Won, except for interest rate percentages) |
||||||||||||||||||||||||||||||||
Debt obligations |
||||||||||||||||||||||||||||||||
Fixed rate ( W ) |
W |
1,191.5 | W |
1,241.5 | W |
1,006.0 | W |
176.0 | W |
210.0 | W |
70.0 | W |
3,895.0 | W |
3,907.5 | ||||||||||||||||
Average interest rate |
2.7 | % | 3.0 | % | 2.4 | % | 3.1 | % | 2.8 | % | 4.2 | % | ||||||||||||||||||||
Variable rate ( W ) |
— | W |
250.0 | — | W |
120.0 | — | — | W |
370.0 | W |
370.0 | ||||||||||||||||||||
Average interest rate |
— | 2.3 | % | — | 2.6 | % | — | — | ||||||||||||||||||||||||
Fixed rate (CNY) |
W |
0.4 | W |
92.0 | — | — | — | — | W |
92.4 | W |
94.1 | ||||||||||||||||||||
Average interest rate |
4.2 | % | 4.2 | % | — | — | — | — | ||||||||||||||||||||||||
Variable rate (CNY) |
W |
437.0 | W |
1,088.7 | W |
620.2 | W |
620.2 | W |
497.3 | — | W |
3,263.4 | W |
3,263.4 | |||||||||||||||||
Average interest rate |
4.8 | % | 4.5 | % | 5.0 | % | 5.0 | % | 5.0 | % | — | |||||||||||||||||||||
Fixed rate (US$) |
— | — | W |
1,252.9 | — | — | — | W |
1,252.9 | W |
1,249.9 | |||||||||||||||||||||
Average interest rate |
— | — | 0.2 | % | — | — | — | |||||||||||||||||||||||||
Variable rate (US$) |
W |
1,342.8 | W |
847.6 | W |
1,103.2 | W |
440.0 | W |
59.3 | — | W |
3,792.9 | W |
3,792.9 | |||||||||||||||||
Average interest rate |
1.2 | % | 1.6 | % | 1.7 | % | 2.0 | % | 1.6 | % | — | |||||||||||||||||||||
Outstanding contract amount |
US$ |
1,545 million | ||
Average contractual exchange rate |
(Won) |
1,150.4/US$ | ||
Change in fair value |
(Won) |
209.8 billion |
Outstanding contract amount |
US$ |
1,200 million | ||
Average contractual exchange rate |
(Won) |
1,177.8/US$ | ||
Change in fair value |
(Won) |
(12.5) billion |
Item 12. |
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES |
Services |
Fees | |
Issuance of ADSs |
Up to US$0.05 per ADS issued | |
Cancellation of ADSs |
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$0.02 per ADS held | |
| • | Fees for the transfer and registration of shares charged by the registrar and transfer agent for the shares in Korea (i.e., upon deposit and withdrawal of shares). |
| • | Expenses incurred for converting foreign currency into U.S. dollars. |
| • | Expenses for cable, telex and fax transmissions and for delivery of securities. |
| • | Taxes and duties upon the transfer of securities (i.e., when shares are deposited or withdrawn from deposit). |
| • | Fees and expenses incurred in connection with the delivery or servicing of shares on deposit. |
Reimbursement of proxy process expenses (printing, postage and distribution) (1) |
US$ — | |
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 2020 (1) |
US$ — |
| (1) | Under discussions with the depositary for the amount of applicable payment with respect to 2021. |
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 |
Year ended December 31, |
||||||||
2020 |
2021 |
|||||||
(in millions of Won) |
||||||||
Audit fees |
W |
4,369 | W |
4,603 | ||||
Audit-related fees |
— | — | ||||||
Tax fees |
98 | 147 | ||||||
All other fees |
— | 341 | ||||||
Total fees |
W |
4,467 | W |
5,091 | ||||
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 |
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. | |
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. | 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. | |
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. | 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. | |
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. |
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. | |
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. |
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. | ||
| 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. | ||
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. | 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). | |
Corporate Governance Guidelines |
||
| Listed companies must adopt and disclose corporate governance guidelines. | We do not maintain formal corporate governance guidelines. Our board of directors is responsible for overseeing our policies, practices and procedures in the area of corporate governance. | |
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. | 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 | |
Item 19. |
EXHIBITS |
| * | Filed previously. |
| LG DISPLAY CO., LTD. (Registrant) | ||
| /s/ H OYOUNG JEONG | ||
| (Signature) | ||
| Name: | Hoyoung Jeong | |
| Title: | Representative Director, President and Chief Executive Officer | |
| /s/ S UNGHYUN KIM | ||
| (Signature) | ||
| Name: | Sunghyun Kim | |
| Title: | Senior Vice President and Chief Financial Officer | |
Page |
||||
| F-2 | ||||
| F-5 | ||||
| F-7 | ||||
| F-9 | ||||
| F-11 | ||||
| F-15 | ||||
| - | testing discount rate by comparing it against independently developed rate using publicly available market data for comparable entities; and |
| - | testing revenue and operating expenditures forecasts by comparing them against analyst reports and industry reports. |
(In millions of won) |
Note |
December 31, 2020 |
December 31, 2021 |
|||||||
| Assets |
||||||||||
| Cash and cash equivalents |
4, 25 | W |
4,218,099 | 3,541,597 | ||||||
| Deposits in banks |
4, 25 | 78,652 | 743,305 | |||||||
| Trade accounts and notes receivable, net |
5, 14, 25, 28 | 3,517,512 | 4,574,789 | |||||||
| Other accounts receivable, net |
5, 25 | 144,480 | 121,899 | |||||||
| Other current financial assets |
6, 25, 26 | 52,403 | 68,203 | |||||||
| Inventories |
7 | 2,170,656 | 3,350,375 | |||||||
| Prepaid income taxes |
23 | 114,202 | 58,536 | |||||||
| Other current assets |
5 | 803,466 | 728,363 | |||||||
| |
|
|
|
|||||||
| Total current assets |
11,099,470 | 13,187,067 | ||||||||
| Deposits in banks |
4, 25 | 11 | 11 | |||||||
| Investments in equity accounted investees |
8 | 114,551 | 126,719 | |||||||
| Other non-current accounts receivable, net |
5, 25 | — | 2,376 | |||||||
| Other non-current financial assets |
6, 25, 26 | 68,231 | 156,211 | |||||||
| Property, plant and equipment, net |
9, 16, 26 | 20,139,703 | 20,558,446 | |||||||
| Intangible assets, net |
10, 16 | 1,020,088 | 1,644,898 | |||||||
| Deferred tax assets |
23 | 2,275,514 | 2,307,692 | |||||||
| Defined benefit assets, net |
12 | 224,997 | 68,276 | |||||||
| Other non-current assets |
123,447 | 102,819 | ||||||||
| |
|
|
|
|||||||
| Total non-current assets |
23,966,542 | 24,967,448 | ||||||||
| |
|
|
|
|||||||
| Total assets |
W |
35,066,012 | 38,154,515 | |||||||
| |
|
|
|
|||||||
(In millions of won) |
Note |
December 31, 2020 |
December 31, 2021 |
|||||||
| Liabilities |
||||||||||
| Trade accounts and notes payable |
25, 28 | W |
3,779,290 | 4,814,055 | ||||||
| Current financial liabilities |
11, 25, 26 | 3,195,024 | 4,069,712 | |||||||
| Other accounts payable |
25 | 2,781,941 | 3,401,346 | |||||||
| Accrued expenses |
651,880 | 1,218,456 | ||||||||
| Income tax payable |
25,004 | 179,335 | ||||||||
| Provisions |
13 | 197,468 | 173,431 | |||||||
| Advances received |
333,821 | 67,046 | ||||||||
| Other current liabilities |
42,520 | 71,436 | ||||||||
| |
|
|
|
|||||||
| Total current liabilities |
11,006,948 | 13,994,817 | ||||||||
| Non-current financial liabilities |
11, 25, 26 | 11,124,846 | 8,702,745 | |||||||
| Non-current provisions |
13 | 89,633 | 92,942 | |||||||
| Defined benefit liabilities, net |
12 | 1,498 | 1,589 | |||||||
| Deferred tax liabilities |
23 | 9,530 | 6,636 | |||||||
| Other non-current liabilities |
25 | 102,129 | 593,285 | |||||||
| |
|
|
|
|||||||
| Total non-current liabilities |
11,327,636 | 9,397,197 | ||||||||
| |
|
|
|
|||||||
| Total liabilities |
22,334,584 | 23,392,014 | ||||||||
| |
|
|
|
|||||||
| Equity |
||||||||||
| Share capital |
15 | 1,789,079 | 1,789,079 | |||||||
| Share premium |
15 |
2,251,113 | 2,251,113 | |||||||
| Retained earnings |
15 | 7,518,786 | 8,541,521 | |||||||
| Reserves |
15 | (163,446 | ) | 537,142 | ||||||
| |
|
|
|
|||||||
| Total equity attributable to owners of the Controlling Company |
11,395,532 | 13,118,855 | ||||||||
| |
|
|
|
|||||||
| Non-controlling interests |
1,335,896 | 1,643,646 | ||||||||
| |
|
|
|
|||||||
| Total equity |
12,731,428 | 14,762,501 | ||||||||
| |
|
|
|
|||||||
| Total liabilities and equity |
W |
35,066,012 | 38,154,515 | |||||||
| |
|
|
|
|||||||
(In millions of won, except earnings per share) |
Note |
2019 |
2020 |
2021 |
||||||||||
| Revenue |
16, 28 | W |
23,475,567 | 24,261,561 | 29,878,043 | |||||||||
| Cost of sales |
7, 17, 28 | (21,607,240 | ) | (21,626,339 | ) | (24,572,939 | ) | |||||||
| |
|
|
|
|
|
|||||||||
| Gross profit |
1,868,327 | 2,635,222 | 5,305,104 | |||||||||||
| Selling expenses |
17,18 | (1,057,753 | ) | (817,611 | ) | (933,043 | ) | |||||||
| Administrative expenses |
17,18 | (947,978 | ) | (755,340 | ) | (919,409 | ) | |||||||
| Research and development expenses |
17 | (1,221,978 | ) | (1,098,736 | ) | (1,222,044 | ) | |||||||
| Other income |
20 | 1,267,251 | 1,784,646 | 1,252,135 | ||||||||||
| Other expenses |
17,20 | (3,097,743 | ) | (1,999,280 | ) | (1,280,859 | ) | |||||||
| Finance income |
21 | 276,732 | 438,786 | 425,835 | ||||||||||
| Finance costs |
21 | (443,247 | ) | (802,678 | ) | (916,614 | ) | |||||||
| Equity in income of equity accounted investees, net |
8 | 12,147 | 12,545 | 7,780 | ||||||||||
| |
|
|
|
|
|
|||||||||
| Profit (loss) before income tax |
(3,344,242 | ) | (602,446 | ) | 1,718,885 | |||||||||
| Income tax expense (benefit) |
22 | (472,164 | ) | (526,299 | ) | 385,341 | ||||||||
| |
|
|
|
|
|
|||||||||
| Profit (loss) for the year |
(2,872,078 | ) | (76,147 | ) | 1,333,544 | |||||||||
| |
|
|
|
|
|
|||||||||
| Other comprehensive income (loss) |
||||||||||||||
| Items that will never be reclassified to profit or loss |
||||||||||||||
| Remeasurements of net defined benefit liabilities |
12, 22 | 93,405 | 110,404 | (163,363 | ) | |||||||||
| Other comprehensive income (loss) from associates |
8 | 238 | 39 | (84 | ) | |||||||||
| |
|
|
|
|
|
|||||||||
| 93,643 | 110,443 | (163,447 | ) | |||||||||||
(In millions of won, except earnings per share) |
Note |
2019 |
2020 |
2021 |
||||||||||
| Items that are or may be reclassified to profit or loss |
||||||||||||||
| Loss on valuation of derivative |
15,22 | W |
— | — | (9,227 | ) | ||||||||
| Foreign currency translation differences for foreign operations |
22 | 106,690 | 48,181 | 869,789 | ||||||||||
| Other comprehensive income (loss) from associates |
8, 22 | 3,925 | (210 | ) | 4,497 | |||||||||
| |
|
|
|
|
|
|||||||||
| 110,615 | 47,971 | 865,059 | ||||||||||||
| Other comprehensive income for the year, net of income tax |
204,258 | 158,414 | 701,612 | |||||||||||
| |
|
|
|
|
|
|||||||||
| Total comprehensive income (loss) for the year |
W |
(2,667,820 | ) | 82,267 | 2,035,156 | |||||||||
| |
|
|
|
|
|
|||||||||
| Profit (loss) attributable to: |
||||||||||||||
| Owners of the Controlling Company |
(2,829,705 | ) | (94,853 | ) | 1,186,182 | |||||||||
| Non-controlling interests |
(42,373 | ) | 18,706 | 147,362 | ||||||||||
| |
|
|
|
|
|
|||||||||
| Profit (loss) for the year |
W |
(2,872,078 | ) | (76,147 | ) | 1,333,544 | ||||||||
| |
|
|
|
|
|
|||||||||
| Total comprehensive income (loss) attributable to: |
||||||||||||||
| Owners of the Controlling Company |
(2,636,948 | ) | 54,219 | 1,723,323 | ||||||||||
| Non-controlling interests |
(30,872 | ) | 28,048 | 311,833 | ||||||||||
| |
|
|
|
|
|
|||||||||
| Total comprehensive income (loss) for the year |
W |
(2,667,820 | ) | 82,267 | 2,035,156 | |||||||||
| |
|
|
|
|
|
|||||||||
| Earnings (loss) per share (in won) |
||||||||||||||
| Basic earnings (loss) per share |
24 | W |
(7,908 | ) | (265 | ) | 3,315 | |||||||
| Diluted earnings (loss) per share |
24 | W |
(7,908 | ) | (265 | ) | 3,130 | |||||||
| |
|
|
|
|
|
|||||||||
Attributable to owners of the Controlling Company |
||||||||||||||||||||||||||||
(In millions of won) |
Share capital |
Share premium |
Retained earnings |
Reserves |
Sub-total |
Non-controlling interests |
Total equity |
|||||||||||||||||||||
| Balances at January 1, 2019 |
W |
1,789,079 | 2,251,113 | 10,239,965 | (300,968 | ) | 13,979,189 | 907,057 | 14,886,246 | |||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total comprehensive income (loss) for the year |
||||||||||||||||||||||||||||
| Loss for the year |
— | — | (2,829,705 | ) | — | (2,829,705 | ) | (42,373 | ) | (2,872,078 | ) | |||||||||||||||||
| Other comprehensive income |
— | — | 93,643 | 99,114 | 192,757 | 11,501 | 204,258 | |||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
W |
— | — | (2,736,062 | ) | 99,114 | (2,636,948 | ) | (30,872 | ) | (2,667,820 | ) | |||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Transaction with owners, recognized directly in equity |
||||||||||||||||||||||||||||
| Subsidiaries’ dividends distributed to non-controlling interests |
— | — | — | — | — | (6,541 | ) | (6,541 | ) | |||||||||||||||||||
| Capital contribution from non-controlling interests |
— | — | (591 | ) | (1,167 | ) | (1,758 | ) | 278,154 | 276,396 | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Balances at December 31, 2019 |
W |
1,789,079 | 2,251,113 | 7,503,312 | (203,021 | ) | 11,340,483 | 1,147,798 | 12,488,281 | |||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Balances at January 1, 2020 |
W |
1,789,079 | 2,251,113 | 7,503,312 | (203,021 | ) | 11,340,483 | 1,147,798 | 12,488,281 | |||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total comprehensive income (loss) for the year (Restated) |
||||||||||||||||||||||||||||
| Profit (loss) for the year |
— | — | (94,853 | ) | — | (94,853 | ) | 18,706 | (76,147 | ) | ||||||||||||||||||
| Other comprehensive income |
— | — | 110,443 | 38,629 | 149,072 | 9,342 | 158,414 | |||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
W |
— | — | 15,590 | 38,629 | 54,219 | 28,048 | 82,267 | |||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Transaction with owners, recognized directly in equity |
||||||||||||||||||||||||||||
| Subsidiaries’ dividends distributed to non-controlling interests |
— | — | — | — | — | (12,086 | ) | (12,086 | ) | |||||||||||||||||||
| Capital contribution from non-controlling interests |
— | — | (116 | ) | 946 | 830 | 172,136 | 172,966 | ||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Balances at December 31, 2020 |
W |
1,789,079 | 2,251,113 | 7,518,786 | (163,446 | ) | 11,395,532 | 1,335,896 | 12,731,428 | |||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Attributable to owners of the Controlling Company |
||||||||||||||||||||||||||||
(In millions of won) |
Share capital |
Share premium |
Retained earnings |
Reserves |
Sub-total |
Non-controlling interests |
Total equity |
|||||||||||||||||||||
| Balances at January 1, 2021 |
W |
1,789,079 | 2,251,113 | 7,518,786 | (163,446 | ) | 11,395,532 | 1,335,896 | 12,731,428 | |||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total comprehensive income (loss) for the year |
||||||||||||||||||||||||||||
| Profit for the year |
— | — | 1,186,182 | — | 1,186,182 | 147,362 | 1,333,544 | |||||||||||||||||||||
| Other comprehensive income (loss) |
— | — | (163,447 | ) | 700,588 | 537,141 | 164,471 | 701,612 | ||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
W |
— | — | 1,022,735 | 700,588 | 1,723,323 | 311,833 | 2,035,156 | |||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Transaction with owners, recognized directly in equity |
||||||||||||||||||||||||||||
| Subsidiaries’ dividends distributed to non-controlling i nterests |
— | — | — | — | — | (4,083 | ) | (4,083 | ) | |||||||||||||||||||
| Capital contribution from non-controlling interests |
— | — | — | — | — | — | — | |||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Balances at December 31, 2021 |
W |
1,789,079 | 2,251,113 | 8,541,521 | 537,142 | 13,118,855 | 1,643,646 | 14,762,501 | ||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(In millions of won) |
Note |
2019 |
2020 |
2021 |
||||||||||
Cash flows from operating activities: |
||||||||||||||
Profit (loss) for the year |
W |
(2,872,078 | ) | (76,147 | ) | 1,333,544 | ||||||||
Adjustments for: |
||||||||||||||
Income tax expense (benefit) |
22 | (472,164 | ) | (526,299 | ) | 385,341 | ||||||||
Depreciation and amortization |
9,10,17 | 3,695,051 | 4,134,027 | 4,500,701 | ||||||||||
Gain on foreign currency translation |
(103,460 | ) | (296,870 | ) | (74,125 | ) | ||||||||
Loss on foreign currency translation |
171,966 | 217,287 | 193,095 | |||||||||||
Expenses related to defined benefit plans |
12,19 | 162,997 | 160,669 | 144,241 | ||||||||||
Gain on disposal of property, plant and equipment |
(35,788 | ) | (37,835 | ) | (19,367 | ) | ||||||||
Loss on disposal of property, plant and equipment |
40,897 | 60,294 | 64,350 | |||||||||||
Impairment loss on property, plant and equipment |
1,550,430 | 38,494 | 19,085 | |||||||||||
Impairment loss on inventories |
472,885 | 213,932 | 224,576 | |||||||||||
Bad debt expense (reversal) |
(17 | ) | 587 | 157 | ||||||||||
Reversal of impairment loss on property, plant and equipment |
— | — | (1,121 | ) | ||||||||||
Gain on disposal of intangible assets |
(552 | ) | (111 | ) | (196 | ) | ||||||||
Loss on disposal of intangible assets |
139 | 368 | — | |||||||||||
Impairment loss on intangible assets |
249,450 | 79,593 | 29,488 | |||||||||||
Reversal of impairment loss on intangible assets |
(960 | ) | (1,110 | ) | (1,152 | ) | ||||||||
Impairment loss on other assets |
3,602 | — | — | |||||||||||
Gain on disposal of non-current assets held for sale |
(8,353 | ) | — | — | ||||||||||
Expense on increase of provisions |
419,720 | 308,334 | 216,873 | |||||||||||
Finance income |
(186,707 | ) | (331,723 | ) | (352,423 | ) | ||||||||
Finance costs |
338,419 | 612,164 | 832,596 | |||||||||||
Equity in income of equity method accounted investees, net |
8 | (12,147 | ) | (12,545 | ) | (7,780 | ) | |||||||
Loss on liquidation of investments in subsidiaries |
— | 72,654 | — | |||||||||||
Other income |
(20,416 | ) | (11,485 | ) | — | |||||||||
Other expenses |
4,451 | — | 15,538 | |||||||||||
| 3,397,365 | 4,604,278 | 7,503,421 | ||||||||||||
(In millions of won) |
Note |
2019 |
2020 |
2021 |
||||||||||||
Changes in: |
||||||||||||||||
Trade accounts and notes receivable |
W |
(1,007,356 | ) | (936,475 | ) | (964,287 | ) | |||||||||
Other accounts receivable |
(49,443 | ) | 63,192 | 20,395 | ||||||||||||
Inventories |
159,474 | (342,427 | ) | (1,347,815 | ) | |||||||||||
Lease receivables |
6,617 | 6,428 | 4,765 | |||||||||||||
Other current assets |
(288,770 | ) | 175,486 | 107,679 | ||||||||||||
Other non-current assets |
(38,608 | ) | (58,641 | ) | (58,821 | ) | ||||||||||
Trade accounts and notes payable |
(394,564 | ) | 1,387,084 | 1,037,950 | ||||||||||||
Other accounts payable |
2,035,750 | (1,152,786 | ) | 72,640 | ||||||||||||
Accrued expenses |
11,787 | (9,704 | ) | 580,404 | ||||||||||||
Provisions |
(294,096 | ) | (277,876 | ) | (237,601 | ) | ||||||||||
Advances received |
(242,365 | ) | (408,900 | ) | (268,074 | ) | ||||||||||
Other current liabilities |
27,690 | (40,200 | ) | 9,100 | ||||||||||||
Defined benefit liabilities, net |
(65,681 | ) | (109,801 | ) | (208,199 | ) | ||||||||||
Long-term advances received |
63,672 | — | — | |||||||||||||
Other non-current liabilities |
7,045 | 12,973 | 11,144 | |||||||||||||
Cash generated from operating activities |
3,328,517 | 2,912,631 | 6,262,701 | |||||||||||||
Income taxes paid |
(252,812 | ) | (156,997 | ) | (118,305 | ) | ||||||||||
Interests received |
47,276 | 75,424 | 79,188 | |||||||||||||
Interests paid |
(416,436 | ) | (552,274 | ) | (470,138 | ) | ||||||||||
Net cash provided by operating activities |
W |
2,706,545 | 2,278,784 | 5,753,446 | ||||||||||||
(In millions of won) |
Note |
2019 |
2020 |
2021 |
||||||||||||
| Cash flows from investing activities: |
||||||||||||||||
| Dividends received |
W |
7,502 | 8,239 | 4,068 | ||||||||||||
| Increase in deposits in banks |
(114,557 | ) | (78,452 | ) | (694,313 | ) | ||||||||||
| Proceeds from withdrawal of deposits in banks |
114,200 | 78,557 | 77,152 | |||||||||||||
| Acquisition of financial assets at fair value through profit or loss |
(708 | ) | (3,227 | ) | (34,418 | ) | ||||||||||
| Proceeds from disposal of financial asset s at fair value through profit or loss |
452 | 99 | 5,226 | |||||||||||||
| Acquisition of financial assets at fair value through other comprehensive income |
(21 | ) | — | — | ||||||||||||
| Proceeds from disposal of financial assets at fair value through other comprehensive income |
107 | 6 | 24 | |||||||||||||
| Proceeds from disposal of investments in equity accounted investees |
16,738 | 2,400 | 4,363 | |||||||||||||
| Acquisition of property, plant and equipment |
(6,926,985 | ) | (2,595,381 | ) | (3,141,430 | ) | ||||||||||
| Proceeds from disposal of property, plant and equipment |
335,446 | 446,193 | 65,711 | |||||||||||||
| Acquisition of intangible assets |
(540,996 | ) | (353,313 | ) | (635,805 | ) | ||||||||||
| Proceeds from disposal of intangible assets |
2,468 | 16,996 | 2,946 | |||||||||||||
| Government grants received |
248,124 | 118,341 | 85,983 | |||||||||||||
| Proceeds from disposal of non-current assets held for sale |
81,351 | — | — | |||||||||||||
| Receipt from settlement of derivatives |
21,752 | 24,468 | 8,344 | |||||||||||||
| Increase in short-term loans |
(8,725 | ) | — | — | ||||||||||||
| Proceeds from collection of short-term loans |
19,881 | 13,720 | 14,533 | |||||||||||||
| Increase in long-term loans |
(6,465 | ) | — | (26,473 | ) | |||||||||||
| Increase in deposits |
(30,680 | ) | (2,084 | ) | (7,145 | ) | ||||||||||
| Decrease in deposits |
5,307 | 1,286 | 8,154 | |||||||||||||
| Proceeds from disposal of other assets |
20,416 | 11,000 | — | |||||||||||||
| |
|
|
|
|
|
|||||||||||
| Net cash used in investing activities |
W |
(6,755,393 | ) | (2,311,152 | ) | (4,263,080 | ) | |||||||||
| |
|
|
|
|
|
|||||||||||
(In millions of won) |
Note |
2019 |
2020 |
2021 |
||||||||||
| Cash flows from financing activities: |
27 | |||||||||||||
| Proceeds from short-term borrowings |
W |
1,841,008 | 2,238,806 | 2,573,757 | ||||||||||
| Repayments of short-term borrowings |
(1,154,911 | ) | (2,506,420 | ) | (2,425,117 | ) | ||||||||
| Proceeds from issuance of bonds |
1,323,251 | 49,949 | 498,027 | |||||||||||
| Proceeds from long-term borrowings |
4,341,087 | 2,329,013 | 1,298,346 | |||||||||||
| Repayments of current portion of long-term borrowings and bonds |
(1,567,818 | ) | (1,278,199 | ) | (4,344,208 | ) | ||||||||
| Payment of lease liabilities |
(64,570 | ) | (62,200 | ) | (66,941 | ) | ||||||||
| Capital contribution from non-controlling interests |
276,396 | 172,966 | — | |||||||||||
| Subsidiaries’ dividends distributed to non-controlling interests |
(6,541 | ) | (12,086 | ) | — | |||||||||
| |
|
|
|
|
|
|||||||||
| Net cash provided by (used in) financing activities |
4,987,902 | 931,829 | (2,466,136 | ) | ||||||||||
| |
|
|
|
|
|
|||||||||
| Net increase (decrease) in cash and cash equivalents |
939,054 | 899,461 | (975,770 | ) | ||||||||||
| Cash and cash equivalents at January 1 |
2,365,022 | 3,336,003 | 4,218,099 | |||||||||||
| Effect of exchange rate fluctuations on cash held |
31,927 | (17,365 | ) | 299,268 | ||||||||||
| |
|
|
|
|
|
|||||||||
| Cash and cash equivalents at December 31 |
W |
3,336,003 | 4,218,099 | 3,541,597 | ||||||||||
| |
|
|
|
|
|
|||||||||
| 1. | Reporting Entity |
| (a) | Description of the Controlling Company |
| 1. | Reporting Entity, Continued |
| (b) | Consolidated Subsidiaries as of December 31, 2021 |
(In millions) |
||||||||||||||||
Subsidiaries |
Location |
Percentage of ownership |
Fiscal year end |
Date of incorporation |
Business |
Capital stocks |
||||||||||
LG Display America, Inc. |
San Jose, U.S.A. | 100 | % | December 31 | September 24, 1999 | Sell display products | USD | 411 | ||||||||
LG Display Germany GmbH |
Eschborn, Germany | 100 | % | December 31 | October 15, 1999 | Sell display products | EUR | 1 | ||||||||
LG Display Japan Co., Ltd. |
Tokyo, Japan | 100 | % | December 31 | October 12, 1999 | Sell display products | JPY | 95 | ||||||||
LG Display Taiwan Co., Ltd. |
Taipei, Taiwan | 100 | % | December 31 | April 12, 1999 | Sell display products | NTD | 116 | ||||||||
LG Display Nanjing Co., Ltd. |
Nanjing, China | 100 | % | December 31 | July 15, 2002 | Manufacture display products | CNY | 3,020 | ||||||||
LG Display Shanghai Co., Ltd. |
Shanghai, China | 100 | % | December 31 | January 16, 2003 | Sell display products | CNY | 4 | ||||||||
LG Display Guangzhou Co., Ltd. |
Guangzhou, China | 100 | % | December 31 | June 30, 2006 | Manufacture display products | CNY | 1,655 | ||||||||
LG Display Shenzhen Co., Ltd. |
Shenzhen, China | 100 | % | December 31 | July 27, 2007 | Sell display products | CNY | 4 | ||||||||
LG Display Singapore Pte. Ltd. |
Singapore | 100 | % | December 31 | November 4, 2008 | Sell display products | USD | 1 | ||||||||
L&T Display Technology (Fujian) Limited |
Fujian, China | 51 | % | December 31 | December 7, 2009 | Manufacture and sell LCD module and LCD monitor sets | CNY | 116 | ||||||||
LG Display Yantai Co., Ltd. |
Yantai, China | 100 | % | December 31 | March 17, 2010 | Manufacture display products | CNY | 1,008 | ||||||||
Nanumnuri Co., Ltd. |
Gumi, South Korea | 100 | % | December 31 | March 21, 2012 | Provide janitorial services | KRW | 800 | ||||||||
LG Display (China) Co., Ltd. |
Guangzhou, China | 70 | % | December 31 | December 10, 2012 | Manufacture and sell display products | CNY | 8,232 | ||||||||
Unified Innovative Technology, LLC |
Wilmington, U.S.A. | 100 | % | December 31 | March 12, 2014 | Manage intellectual property | USD | 9 | ||||||||
LG Display Guangzhou Trading Co., Ltd. |
Guangzhou, China | 100 | % | December 31 | April 28, 2015 | Sell display products | CNY | 1 | ||||||||
Global OLED Technology, LLC |
Sterling, U.S.A. | 100 | % | December 31 | December 18, 2009 | Manage OLED intellectual property | USD | 138 | ||||||||
LG Display Vietnam Haiphong Co., Ltd. |
Haiphong, Vietnam | 100 | % | December 31 | May 5, 2016 | Manufacture display products | USD | 600 | ||||||||
Suzhou Lehui Display Co., Ltd. |
Suzhou, China | 100 | % | December 31 | July 1, 2016 | Manufacture and sell LCD module and LCD monitor sets | CNY | 637 | ||||||||
LG DISPLAY FUND I LLC(*) |
Wilmington, U.S.A. | 100 | % | December 31 | May 1, 2018 | Invest in venture business and acquire technologies | USD | 45 | ||||||||
LG Display High-Tech (China) Co., Ltd. |
Guangzhou, China | 70 | % | December 31 | July 11, 2018 | Manufacture and sell display products | CNY | 15,600 | ||||||||
| (*) | For the year ended December 31, 2021, the Controlling Company contributed W 38,565 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. |
| 1. | Reporting Entity, Continued |
| (c) | Information of subsidiaries (be which have significant fore eliminati on of intercomp any transactions) non-controlling interests as of and for the years ended December 31, 2019, 2020 and 2021 are as follows: |
(In millions of won) |
||||||||
2019 |
||||||||
LG Display (China) Co., Ltd. |
LG Display High-Tech (China) Co., Ltd. |
|||||||
Percentage of ownership in non-controlling interest(%) |
30 | 25 | ||||||
Current assets |
W |
817,702 | 1,022,736 | |||||
Non-current assets |
1,208,840 | 5,584,138 | ||||||
Current liabilities |
327,049 | 1,248,446 | ||||||
Non-current liabilities |
2,084 | 2,940,320 | ||||||
Net assets |
1,697,409 | 2,418,108 | ||||||
Book value of non-controlling interests |
509,718 | 603,799 | ||||||
Revenue |
W |
1,978,487 | 40,766 | |||||
Profit |
(164,764 | ) | 12,503 | |||||
Profit non-controlling interests |
(49,429 | ) | 3,126 | |||||
Cash flows from operating activities |
W |
427,324 | (453,784 | ) | ||||
Cash flows from investing activities |
380,331 | (3,520,965 | ) | |||||
Cash flows from financing activities |
(518,529 | ) | 3,487,367 | |||||
Effect of exchange rate fluctuations on cash held |
(3,077 | ) | 19,862 | |||||
Net increase (decrease) in cash and cash equivalents |
286,049 | (467,520 | ) | |||||
Cash and cash equivalents at January 1 |
96,145 | 639,471 | ||||||
Cash and cash equivalents at December 31 |
382,194 | 171,951 | ||||||
Dividends distributed to non-controlling interests |
W |
6,541 | — | |||||
| 1. | Reporting Entity, Continued |
(In millions of won) |
||||||||
2020 |
||||||||
LG Display (China) Co., Ltd. |
LG Display High-Tech (China) Co., Ltd. |
|||||||
| Percentage of ownership in non-controlling interest(%) |
30 | 30 | ||||||
| Current assets |
W |
1,573,028 | 1,544,816 | |||||
| Non-current assets |
851,262 | 5,461,116 | ||||||
| Current liabilities |
326,785 | 1,588,688 | ||||||
| Non-current liabilities |
410,677 | 2,757,499 | ||||||
| Net assets |
1,686,828 | 2,659,745 | ||||||
| Book value of non-controlling interests |
498,084 | 796,537 | ||||||
| Revenue |
W |
1,907,421 | 1,280,924 | |||||
| Profit |
(12,279 | ) | 51,489 | |||||
| Profit non-controlling interests |
(3,684 | ) | 15,447 | |||||
| Cash flows from operating activities |
W |
138,692 | 134,484 | |||||
| Cash flows from investing activities |
(686,387 | ) | (841,413 | ) | ||||
| Cash flows from financing activities |
436,936 | 826,940 | ||||||
| Effect of exchange rate fluctuations on cash held |
5,367 | (1,501 | ) | |||||
| Net increase (decrease) in cash and cash equivalents |
(105,392 | ) | 118,510 | |||||
| Cash and cash equivalents at January 1 |
382,194 | 171,951 | ||||||
| Cash and cash equivalents at December 31 |
276,802 | 290,461 | ||||||
| Dividends distributed to non-controlling interests |
W |
12,086 | — | |||||
| 1. | Reporting Entity, Continued |
(In millions of won) |
||||||||
2021 |
||||||||
LG Display (China) Co., Ltd. |
LG Display High-Tech (China) Co., Ltd. |
|||||||
| Percentage of ownership in non-controlling interest(%) |
30 | 30 | ||||||
| Current assets |
W |
1,987,880 | 1,551,346 | |||||
| Non-current assets |
663,181 | 5,252,614 | ||||||
| Current liabilities |
324,075 | 1,261,412 | ||||||
| Non-current liabilities |
31,466 | 2,452,327 | ||||||
| Net assets |
2,295,520 | 3,090,221 | ||||||
| Book value of non-controlling interests |
680,757 | 925,848 | ||||||
| Revenue |
W |
2,175,878 | 2,817,308 | |||||
| Profit for the year |
380,788 | 125,446 | ||||||
| Profit attributable to non-controlling interests |
114,301 | 37,803 | ||||||
| Cash flows from operating activities |
W |
890,435 | 709,243 | |||||
| Cash flows from investing activities |
(619,615 | ) | (315,176 | ) | ||||
| Cash flows from financing activities |
(439,390 | ) | (665,170 | ) | ||||
| Effect of exchange rate fluctuations on cash held |
23,538 | 19,972 | ||||||
| Net decrease in cash and cash equivalents |
(145,032 | ) | (251,131 | ) | ||||
| Cash and cash equivalents at January 1 |
276,802 | 290,461 | ||||||
| Cash and cash equivalents at December 31 |
131,770 | 39,330 | ||||||
| Dividends distributed to non-controlling interests |
W |
— | — | |||||
| 2. | Basis of Presenting Financial Statements |
| (a) | Statement of Compliance |
| (b) | Basis of Measurement |
| • | 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 |
| (d) | Use of Estimates and Judgments |
| • | Financial instruments (note 3(f)) |
| • | Impairment assessment of non-financial assets (notes 3(k), 10) |
| • | Deferred tax assets and liabilities (notes 3(s), 23) |
| 2. | Basis of Presenting Financial Statements, Continued |
| (d) | Use of Estimates and Judgments, Continued |
| • | Provisions (notes 3(m), 13) |
| • | Inventories (notes 3(e), 7) |
| • | Property, plant and equipment (note 9) |
| • | Intangible assets (Impairment assessment of non-financial assets) (note 10) |
| • | Employee benefits (note 12) |
| • | Deferred tax assets and liabilities (note 23) |
| 3. | Summary of Significant Accounting Policies |
| (a) | Changes in Accounting Policies |
| (i) | Retrospective application of changes in accounting policies |
| 3. | Summary of Significant Accounting Policies, Continued |
| (a) | Changes in Accounting Policies, Continued |
| (ii) | Impact on the consolidated financial statements |
| i) | Impacts on the consolidated statement of financial position as of December 31, 2020 |
(In millions of won) |
||||||||||||
As previously reported |
Adjustments |
As restated |
||||||||||
Assets |
||||||||||||
Property, plant and equipment |
W |
20,147,051 | (7,348 | ) | 20,139,703 | |||||||
Deferred tax assets |
2,273,677 | 1,837 | 2,275,514 | |||||||||
W |
22,420,728 | (5,511 | ) | 22,415,217 | ||||||||
Equity |
||||||||||||
Retained earnings |
W |
7,524,297 | (5,511 | ) | 7,518,786 | |||||||
| ii) | Impacts on the consolidated statement of financial position as of December 31, 2021 |
(In millions of won) |
||||||||||||
Amounts before adoption of change |
Adjustments |
As reported |
||||||||||
Assets |
||||||||||||
Property, plant and equipment |
W |
20,564,161 | (5,715 | ) | 20,558,446 | |||||||
Deferred tax assets |
2,306,263 | 1,429 | 2,307,692 | |||||||||
W |
22,870,424 | (4,286 | ) | 22,866,138 | ||||||||
Equity |
||||||||||||
Retained earnings |
W |
8,545,807 | (4,286 | ) | 8,541,521 | |||||||
| 3. | Summary of Significant Accounting Policies, Continued |
| (a) | Changes in Accounting Policies, Continued |
| (ii) | Impact on the consolidated financial statements, Continued |
| iii) | Impacts on the consolidated statement of comprehensive income for the year ended December 31, 2020 |
(In millions of won, except earnings per share) |
||||||||||||
As previously reported |
Adjustments |
As restated |
||||||||||
Revenue |
W |
24,230,124 | 31,437 | 24,261,561 | ||||||||
Cost of sales |
(21,587,554 | ) | (38,785 | ) | (21,626,339 | ) | ||||||
Gross profit |
W |
2,642,570 | (7,348 | ) | 2,635,222 | |||||||
Operating loss |
W |
(29,117 | ) | (7,348 | ) | (36,465 | ) | |||||
Loss before income tax |
W |
(595,098 | ) | (7,348 | ) | (602,446 | ) | |||||
Income tax benefit |
(524,462 | ) | (1,837 | ) | (526,299 | ) | ||||||
Loss for the year |
W |
(70,636 | ) | (5,511 | ) | (76,147 | ) | |||||
Basic and diluted loss per share (in won) |
W |
(250 | ) | (15 | ) | (265 | ) | |||||
| iv) | Impacts on the consolidated statement of comprehensive income for the year ended December 31, 2021 |
(In millions of won, except earnings per share) |
||||||||||||
Amounts before adoption of change |
Adjustments |
As reported |
||||||||||
Revenue |
W |
29,878,043 | — | 29,878,043 | ||||||||
Cost of sales |
(24,574,572 | ) | 1,633 | (24,572,939 | ) | |||||||
Gross profit |
W |
5,303,471 | 1,633 | 5,305,104 | ||||||||
Operating income |
W |
2,228,975 | 1,633 | 2,230,608 | ||||||||
Profit before income tax |
W |
1,717,252 | 1,633 | 1,718,885 | ||||||||
Income tax expense |
384,933 | 408 | 385,341 | |||||||||
Profit for the year |
W |
1,332,319 | 1,225 | 1,333,544 | ||||||||
Basic earnings per share (in won) |
W |
3,312 | 3 | 3,315 | ||||||||
Diluted earnings per share (in won) |
W |
3,126 | 4 | 3,130 | ||||||||
3. |
Summary of Significant Accounting Policies, Continued |
(a) |
Changes in Accounting Policies, Continued |
(ii) |
Impact on the consolidated financial statements, Continued |
v) |
Impacts on the consolidated statement of changes in equity for the year ended December 31, 2020 |
- As previously reported |
||||||||||||
(In millions of won) |
||||||||||||
Attributable to owners of the Controlling Company |
||||||||||||
Retained earnings |
Sub-total |
Total equity |
||||||||||
Balances at January 1, 2020 |
W |
7,503,312 |
11,340,483 |
12,488,281 |
||||||||
Loss for the year |
(89,342 |
) |
(89,342 |
) |
(70,636 |
) | ||||||
Balances at December 31, 2020 |
W |
7,524,297 |
11,401,043 |
12,736,939 |
||||||||
- Adjustments |
||||||||||||
(In millions of won) |
||||||||||||
Attributable to owners of the Controlling Company |
||||||||||||
Retained earnings |
Sub-total |
Total equity |
||||||||||
Balances at January 1, 2020 |
W |
— |
— |
— |
||||||||
Loss for the year |
(5,511 |
) |
(5,511 |
) |
(5,511 |
) | ||||||
Balances at December 31, 2020 |
W |
(5,511 |
) |
(5,511 |
) |
(5,511 |
) | |||||
- As restated |
||||||||||||
(In millions of won) |
||||||||||||
Attributable to owners of the Controlling Company |
||||||||||||
Retained earnings |
Sub-total |
Total equity |
||||||||||
Balances at January 1, 2020 |
W |
7,503,312 |
11,340,483 |
12,488,281 |
||||||||
Loss for the year |
(94,853 |
) |
(94,853 |
) |
(76,147 |
) | ||||||
Balances at December 31, 2020 |
W |
7,518,786 |
11,395,532 |
12,731,428 |
||||||||
| 3. | Summary of Significant Accounting Policies, Continued |
| (a) | Changes in Accounting Policies, Continued |
| (ii) | Impact on the consolidated financial statements, Continued |
vi) |
Impacts on the consolidated statement of cash flows for the year ended December 31, 2020 |
(In millions of won) |
||||||||||||
As reported |
Adjustments |
Restated |
||||||||||
Net cash provided by operating activities(*) |
W |
2,286,948 | (8,164 | ) | 2,278,784 | |||||||
Net cash used in investing activities(*) |
(2,319,316 | ) | 8,164 | (2,311,152 | ) | |||||||
(*) |
The net proceeds from selling items produced during the test are reclassified from net cash used in investing activity to net cash provided by operating activity. |
| 3. | Summary of Significant Accounting Policies, Continued |
| (b) | Consolidation |
| (i) | Business Combinations |
| (ii) | Subsidiaries |
| (iii) | Non-controlling interests |
| (iv) | Loss of Control |
| 3. | Summary of Significant Accounting Policies, Continued |
| (b) | Consolidation, Continued |
| (v) | Associates and joint ventures (equity method investees) |
| (vi) | Transactions eliminated on consolidation |
| 3. | Summary of Significant Accounting Policies, Continued |
| (c) | Foreign Currency Transaction and Translation |
| 3. | Summary of Significant Accounting Policies, Continued |
| (d) | Cash and cash equivalents |
| (e) | Inventories |
| (f) | Financial Instruments |
| (i) | Non-derivative financial assets |
| i) | Financial assets |
| 3. | Summary of Significant Accounting Policies, Continued |
| (f) | Financial Instruments, Continued |
| • | 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. |
| • | 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. |
| ii) | Financial assets: business model |
| • | 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. |
| 3. | Summary of Significant Accounting Policies, Continued |
| (f) | Financial Instruments, Continued |
| iii) | Financial assets: Assessment whether contractual cash flows are solely payments of principal and interest |
| • | 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) |
| iv) | Financial assets: Subsequent measurement and gains and losses |
Financial assets at FVTPL |
These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss. | |
Financial assets at amortized cost |
These assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss. | |
Debt investments at FVOCI |
These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss. | |
| 3. | Summary of Significant Accounting Policies, Continued |
| (f) | Financial Instruments, Continued |
| • | 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. |
| (ii) | Non-derivative financial liabilities |
| 3. | Summary of Significant Accounting Policies, Continued |
(f) |
Financial Instruments, Continued |
(ii) |
Non-derivative financial liabilities, Continued |
| (iii) | Share Capital |
| 3. | Summary of Significant Accounting Policies, Continued |
| (f) | Financial Instruments, Continued |
| (iv) | Derivative financial instruments |
| i) | Fair value hedges |
| ii) | Cash flow hedges |
| 3. | Summary of Significant Accounting Policies, Continued |
| (f) | Financial Instruments, Continued |
| (g) | Property, Plant and Equipment |
| (i) | Recognition and measurement |
| (ii) | Subsequent costs |
| (iii) | Depreciation |
Estimated useful lives (years) | ||
Buildings and structures |
20 ~ 40 | |
Machinery |
4, 5 | |
Furniture and fixtures |
4 | |
Equipment, tools and vehicles |
2, 4, 12 | |
Right-of-use |
(*) |
| (*) | The Group depreciates the right-of-use right-of-use |
| 3. | Summary of Significant Accounting Policies, Continued |
| (h) | Borrowing Costs |
| (i) | Government Grants |
| (i) | Grants related to the purchase or construction of assets |
| (ii) | Grants for compensating the Group’s expenses incurred |
| (iii) | Other government grants |
| (j) | Intangible Assets |
| (i) | Goodwill |
| 3. | Summary of Significant Accounting Policies, Continued |
| (j) | Intangible Assets, Continued |
| (ii) | Research and development |
| • | 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. |
| (iii) | Other intangible assets |
| (iv) | Subsequent costs |
| 3. | Summary of Significant Accounting Policies, Continued |
| (j) | Intangible Assets, Continued |
| (v) | Amortization |
| (*1) | Software license and patent royalty 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). |
| (k) | Impairment |
| (i) | Financial assets |
| • | 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. |
| 3. | Summary of Significant Accounting Policies, Continued |
| (k) | Impairment, Continued |
| • | 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. |
| 3. | Summary of Significant Accounting Policies, Continued |
| (k) | Impairment, Continued |
| (ii) | Non-financial assets |
| 3. | Summary of Significant Accounting Policies, Continued |
| (l) | Leases |
| (i) | As a lessee |
| 3. | Summary of Significant Accounting Policies, Continued |
| (l) | Lease, Continued |
| • | 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. |
| (ii) | As a lessor |
| 3. | Summary of Significant Accounting Policies, Continued |
| (l) | Lease, Continued |
| (m) | Provisions |
| 3. | Summary of Significant Accounting Policies, Continued |
| (n) | Non-current Assets Held for Sale |
| (o) | Employee Benefits |
| (i) | Short-term employee benefits |
| (ii) | Other long-term employee benefits |
| (iii) | Defined contribution plan |
| 3. | Summary of Significant Accounting Policies, Continued |
| (o) | Employee Benefits, Continued |
| (iv) | Defined benefit plan |
| (v) | Termination benefits |
| 3. | Summary of Significant Accounting Policies, Continued |
| (p) | Revenue from contracts with customers |
| (q) | Operating Segments |
| 3. | Summary of Significant Accounting Policies, Continued |
| (r) | Finance Income and Finance Costs |
| (s) | Income Tax |
| (i) | Current tax |
| (ii) | Deferred tax |
| 3. | Summary of Significant Accounting Policies, Continued |
| (s) | Income Tax, Continued |
| (t) | Earnings (Loss) Per Share |
(u) |
Standards issued but not yet effective |
(i) |
Amendment of Reference to the Definition of an Asset and a Liability in the Conceptual Framework (Amendments to IFRS 3, Business Combinations |
(ii) |
Classification of Liabilities as Current or Non-current (Amendments to IAS 1, Presentation of Financial Statements |
| 3. | Summary of Significant Accounting Policies, Continued |
| (u) | Standards issued but not yet effective, Continued |
(iii) |
Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37, Provisions, Liabilities and Contingent Assets) |
| (iv) | Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12 , Income Taxes |
(v) |
Definition of Material ity (Amendments to IAS 1, Presentation of Financial Statement ) |
(vi) |
Definition of Accounting Estimates (Amendments to IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors ) |
| 3. | Summary of Significant Accounting Policies, Continued |
(u) |
Standards issued but not yet effective, Continued |
(vii) |
Annual Improvements to IFRSs 2018-2020 Cycle |
• |
IAS 1, First-time Adoption of International Financial Reporting Standards: Subsidiary as a First-time Adopter |
• |
IAS 1, Financial Instruments: Fees in the ‘10 percent’ Test for Derecognition of Financial Liabilities |
• |
IFRS 16, Leases: Lease Incentives |
• |
IAS 41, Agriculture: Taxation in Fair Value Measurements |
| 4. | Cash and Cash Equivalents and Deposits in Banks |
| (*) | 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 Gumi city and Gyeongsangbuk-do, restricted deposits pledged to guarantee a subsidiary’s borrowings and others. |
| 5. | Trade Accounts and Notes Receivable, Other Accounts Receivable and Other Current Assets |
| (a) | Trade accounts and notes receivable as of December 31, 2020 and December 31, 2021 are as follows: |
( In millions of won ) |
||||||||
December 31, 2020 |
December 31, 2021 |
|||||||
Due from third parties |
W |
3,054,471 | 3,818,980 | |||||
Due from related parties |
463,041 | 755,809 | ||||||
W |
3,517,512 | 4,574,789 | ||||||
| (b) | Other accounts receivable as of December 31, 2020 and December 31, 2021 are as follows: |
5. |
Trade Accounts and Notes Receivable, Other Accounts Receivable and Other Current Assets, Continued |
| (c) | The aging of trade accounts and notes receivable, and other accounts receivable as of December 31, 2020 and December 31, 2021 are as follows: |
(In millions of won) |
December 31, 2020 |
|||||||||||||||
Book value |
Allowance for impairment |
|||||||||||||||
Trade accounts and notes receivable |
Other accounts receivable |
Trade accounts and notes receivable |
Other accounts receivable |
|||||||||||||
Current |
W |
3,516,891 | 143,674 | (1,047 | ) | (1,740 | ) | |||||||||
1-15 days past due |
1,638 | 1,023 | — | (8 | ) | |||||||||||
16-30 days past due |
30 | 522 | — | — | ||||||||||||
31-60 days past due |
— | 782 | — | (8 | ) | |||||||||||
More than 60 days past due |
— | 257 | — | (22 | ) | |||||||||||
W |
3,518,559 | 146,258 | (1,047 | ) | (1,778 | ) | ||||||||||
(In millions of won) |
December 31, 2021 |
|||||||||||||||
Book value |
Allowance for impairment |
|||||||||||||||
Trade accounts and notes receivable |
Other accounts receivable |
Trade accounts and notes receivable |
Other accounts receivable |
|||||||||||||
Current |
W |
4,575,354 | 124,877 | (1,204 | ) | (1,932 | ) | |||||||||
1-15 days past due |
566 | 822 | — | (6 | ) | |||||||||||
16-30 days past due |
10 | 44 | — | — | ||||||||||||
31-60 days past due |
61 | 16 | — | — | ||||||||||||
More than 60 days past due |
2 | 521 | — | (67 | ) | |||||||||||
W |
4,575,993 | 126,280 | (1,204 | ) | (2,005 | ) | ||||||||||
(In millions of won) |
Trade accounts and notes receivable |
|||||||||||
2019 |
2020 |
2021 |
||||||||||
Balance at the beginning of the year |
W |
477 | 460 | 1,047 | ||||||||
(Reversal of) bad debt expense |
(17 | ) | 587 | 157 | ||||||||
Balance at the end of the year |
W |
460 | 1,047 | 1,204 | ||||||||
(In millions of won) |
Other accounts receivable |
|||||||||||
2019 |
2020 |
2021 |
||||||||||
Balance at the beginning of the year |
W |
1,281 | 3,322 | 1,778 | ||||||||
(Reversal of) bad debt expense |
2,041 | (480 | ) | 227 | ||||||||
Write-off |
— | (1,064 | ) | — | ||||||||
Balance at the end of the year |
W |
3,322 | 1,778 | 2,005 | ||||||||
| 5. | Trade Accounts and Notes Receivable, Other Accounts Receivable and Other Current Assets, Continued |
| (d) | Other current assets as of December 31, 2020 and December 31, 2021 are as follows: |
(In millions of won) |
December 31, 2020 |
December 31, 2021 |
||||||
Advanced payments |
W |
34,808 | 44,907 | |||||
Prepaid expenses |
63,972 | 67,540 | ||||||
Value added tax refundable |
693,623 | 608,476 | ||||||
Right to recover returned goods |
11,063 | 7,440 | ||||||
W |
803,466 | 728,363 | ||||||
| 6. | Other Financial Assets |
(In millions of won) |
December 31, 2020 |
December 31, 2021 |
||||||
Current assets |
||||||||
Financial assets at fair value through profit or loss |
||||||||
Convertible securities |
W |
— | 1,573 | |||||
Derivatives(*1) |
9,252 | 12,741 | ||||||
W |
9,252 | 14,314 | ||||||
Cash flow hedging derivatives |
||||||||
Derivatives(*2) |
W |
— | 905 | |||||
Financial assets at fair value through other comprehensive income |
||||||||
Debt instruments |
||||||||
Government bonds |
W |
24 | 27 | |||||
Financial assets carried at amortized cost |
||||||||
Deposits |
W |
8,696 | 23,581 | |||||
Short-term loans |
28,491 | 22,518 | ||||||
Lease receivables |
5,940 | 6,858 | ||||||
W |
43,127 | 52,957 | ||||||
W |
52,403 | 68,203 | ||||||
Non-current assets |
||||||||
Financial assets at fair value through profit or loss |
||||||||
Equity instruments |
W |
13,223 | 48,805 | |||||
Convertible securities |
2,377 | 1,185 | ||||||
Derivatives(*1) |
111 | 52,871 | ||||||
W |
15,711 | 102,861 | ||||||
Financial assets at fair value through other comprehensive income |
||||||||
Debt instruments |
||||||||
Government bonds |
W |
48 | 21 | |||||
Financial assets carried at amortized cost |
||||||||
Deposits |
W |
22,251 | 22,039 | |||||
Long-term loans |
13,899 | 19,939 | ||||||
Lease receivables |
16,322 | 11,351 | ||||||
W |
52,472 | 53,329 | ||||||
W |
68,231 | 156,211 | ||||||
| (*1) | Represents cross currency interest rate swap contracts and others entered into by the Group to hedge currency and interest rate risks with respect to foreign currency denominated borrowings and bonds. The contracts are not designated as hedging instruments. |
| (*2) | Represents forward exchange contracts entered into by the Group to hedge exchange rate risks with respect to forecast sales in foreign currency. The contracts are designated as hedging instruments. |
| 7. | Inventories |
(In millions of won) |
||||||||
December 31, 2020 |
December 31, 2021 |
|||||||
Finished goods |
W |
785,282 | 1,180,329 | |||||
Work-in-process |
733,071 | 1,202,548 | ||||||
Raw materials |
491,432 | 786,739 | ||||||
Supplies |
160,871 | 180,759 | ||||||
W |
2,170,656 | 3,350,375 | ||||||
(In millions of won) |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
Inventories recognized as cost of sales |
W |
21,607,240 | 21,626,339 | 24,572,939 | ||||||||
Inventory write-downs |
472,885 | 213,932 | 224,576 | |||||||||
8. |
Investments in Equity Accounted Investees |
(a) |
Associates as of December 31, 2020 and 2021 are as follows: |
(In millions of won) |
||||||||||||||||||||||||||
| Associates |
Location |
Fiscal year end |
Date of incorporation |
Business |
2020 |
2021 |
||||||||||||||||||||
Percentage of ownership |
Carrying amount |
Percentage of ownership |
Carrying amount |
|||||||||||||||||||||||
| Paju Electric Glass Co., Ltd. |
Paju, South Korea | December 31 | y 2005 |
Manufacture glass for display | 40 | % | W |
47,262 | 40 | % | W |
48,398 | ||||||||||||||
| WooRee E&L Co., Ltd. |
Ansan, South Korea | December 31 | e 2008 |
Manufacture LED back light unit packages | 14 | % | 10,540 | 13 | % | 11,947 | ||||||||||||||||
| YAS Co., Ltd. |
Paju, South Korea | December 31 | l 2002 |
Develop and manufacture deposition equipment for OLEDs | 15 | % | 24,493 | 15 | % | 27,337 | ||||||||||||||||
| AVATEC Co., Ltd. |
Daegu, South Korea | December 31 | t 2000 |
Process and sell glass for display | 14 | % | 20,196 | 15 | % | 20,708 | ||||||||||||||||
| Arctic Sentinel, Inc. |
Los Angeles, U.S.A. | March 31 | e 2008 |
Develop and manufacture tablet for kids | 10 | % | — | 10 | % | — | ||||||||||||||||
| Cynora GmbH(*1) |
Bruchsal, Germany | December 31 | h 2003 |
Develop organic emitting materials for displays and lighting devices | 12 | % | 2,609 | 11 | % | — | ||||||||||||||||
| Material Science Co., Ltd.(*2) |
Seoul, South Korea | December 31 | y 2014 |
Develop, manufacture, and sell materials for display | 10 | % | W |
3,791 | 10 | % | W |
3,679 | ||||||||||||||
| Nanosys Inc.(*3) |
Milpitas, U.S.A. | December 31 | y 2001 |
Develop, manufacture, and sell materials for display | 3 | % | 5,660 | 4 | % | 14,650 | ||||||||||||||||
| |
|
|
|
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W |
114,551 | W |
126,719 | |||||||||||||||||||||||
| |
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|
|
|||||||||||||||||||||||
8. |
Investments in Equity Accounted Investees, Continued |
(*1) |
During 2021, the Controlling Company recognized an impairment loss of W 2,609 million as finance cost for the investments in Cynora GmbH. |
(*2) |
During 2021, the Controlling Company recognized a reversal of impairment loss of W 636 million as finance income for the difference between the carrying amount and the recoverable amount of investments in Material Science Co., Ltd. |
(*3) |
During 2021, the Controlling Company recognized a reversal of impairment loss of W 4,065 million as finance income for the difference between the carrying amount and the recoverable amount of investments in Nanosys Inc. |
| 8. | Investments in Equity Accounted Investees, Continued |
| 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, 2020 and 2021 and for the years ended December 31, 2019, 2020 and 2021 is as follows: |
(In millions of won) |
December 31, 2020 |
December 31, 2021 |
||||||
Total assets |
W |
204,880 | 227,616 | |||||
Current assets |
143,086 | 175,730 | ||||||
Non-current assets |
61,794 | 51,886 | ||||||
Total liabilities |
85,224 | 105,023 | ||||||
Current liabilities |
64,921 | 93,561 | ||||||
Non-current liabilities |
20,303 | 11,462 | ||||||
(In millions of won) |
2019 |
2020 |
2021 |
|||||||||
Revenue |
W |
346,434 | 307,756 | 425,516 | ||||||||
Profit for the year |
13,672 | 9,615 | 13,364 | |||||||||
Other comprehensive income (loss) |
9,933 | (409 | ) | (1,258 | ) | |||||||
Total comprehensive income |
23,605 | 9,206 | 12,106 | |||||||||
| (c) | Reconciliation from financial information of the significant associate to its carrying value in the consolidated financial statements as of December 31, 2020 and 2021 is as follows: |
| (i) | As of December 31, 2020 |
(In millions of won) |
||||||||||||||||||||||||||||
Company |
Net asset |
Ownership interest |
Net asset (applying ownership interest) |
Goodwill |
Intra-group transaction |
Impairment loss |
Book value |
|||||||||||||||||||||
Paju Electric Glass Co., Ltd. |
W |
119,656 | 40 | % | 47,862 | — | (600 | ) | — | 47,262 | ||||||||||||||||||
| (ii) | As of December 31, 2021 |
(In millions of won) |
||||||||||||||||||||||||||||
Company |
Net asset |
Ownership interest |
Net asset (applying ownership interest) |
Goodwill |
Intra-group transaction |
Impairment loss |
Book value |
|||||||||||||||||||||
Paju Electric Glass Co., Ltd. |
W |
122,593 | 40 | % | 49,037 | — | (639 | ) | — | 48,398 | ||||||||||||||||||
| 8. | Investments in Equity Accounted Investees, Continued |
| (d) | Book value of other associates, in aggregate, as of December 31, 2020 and 2021 is as follows: |
| (i) | As of December 31, 2020 |
(In millions of won) |
||||||||||||||||
Book value |
Net profit (loss) of associates (applying ownership interest) |
|||||||||||||||
Profit for the year |
Other comprehensive loss |
Total comprehensive income |
||||||||||||||
Other associates |
W |
67,289 | 8,510 | (7 | ) | 8,503 | ||||||||||
| (ii) | As of December 31, 2021 |
(In millions of won) |
||||||||||||||||
Book value |
Net profit of associates (applying ownership interest) |
|||||||||||||||
Profit for the year |
Other comprehensive income |
Total comprehensive income |
||||||||||||||
Other associates |
W |
78,321 | 2,473 | 6,867 | 9,340 | |||||||||||
| 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, 2020 and 2021 are as follows: |
(In millions of won) |
2020 |
|||||||||||||||||||||||||
Company |
January 1 |
Dividends received |
Equity income on investments |
Other comprehensive loss |
Other gain |
December 31 |
||||||||||||||||||||
Associates |
Paju Electric Glass Co., Ltd. | W |
50,697 | (7,739 | ) | 4,035 | (164 | ) | 433 | 47,262 | ||||||||||||||||
| Others | 58,914 | (500 | ) | 8,510 | (7 | ) | 372 | 67,289 | ||||||||||||||||||
W |
109,611 | (8,239 | ) | 12,545 | (171 | ) | 805 | 114,551 | ||||||||||||||||||
(In millions of won) |
2021 |
|||||||||||||||||||||||||
Company |
January 1 |
Dividends received |
Equity income on investments |
Other comprehensive income (loss) |
Other gain |
December 31 |
||||||||||||||||||||
Associates |
Paju Electric Glass Co., Ltd. | W |
47,262 | (3,668 | ) | 5,307 | (503 | ) | — | 48,398 | ||||||||||||||||
| Others | 67,289 | (400 | ) | 2,473 | 6,867 | 2,092 | 78,321 | |||||||||||||||||||
W |
114,551 | (4,068 | ) | 7,780 | 6,364 | 2,092 | 126,719 | |||||||||||||||||||
| 9. | Property, Plant and Equipment |
| (a) | Changes in property, plant and equipment for the year ended December 31, 2020 are as follows: |
(In millions of won) |
||||||||||||||||||||||||||||||||
Land |
Buildings and structures |
Machinery and equipment |
Furniture and fixtures |
Construction -in-progress (*1) |
Right-of- use asset |
Others |
Total |
|||||||||||||||||||||||||
| Acquisition cost as of January 1, 2020 |
W |
454,035 | 7,381,156 | 43,604,721 | 899,053 | 9,618,256 | 169,133 | 823,101 | 62,949,455 | |||||||||||||||||||||||
| Accumulated depreciation as of January 1, 2020 |
— | (3,154,387 | ) | (34,810,300 | ) | (753,987 | ) | — | (51,581 | ) | (534,013 | ) | (39,304,268 | ) | ||||||||||||||||||
| Accumulated impairment loss as of January 1, 2020 |
— | (120,876 | ) | (1,223,648 | ) | (8,278 | ) | (171,929 | ) | (4,302 | ) | (28,509 | ) | (1,557,542 | ) | |||||||||||||||||
| |
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|
|
|
|
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|
|
|
|
|
|||||||||||||||||
| Book value as of January 1, 2020 |
W |
454,035 | 4,105,893 | 7,570,773 | 136,788 | 9,446,327 | 113,250 | 260,579 | 22,087,645 | |||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Additions |
— | — | — | — | 2,090,747 | 51,754 | — | 2,142,501 | ||||||||||||||||||||||||
| Depreciation |
— | (332,058 | ) | (3,035,681 | ) | (67,391 | ) | — | (54,069 | ) | (236,986 | ) | (3,726,185 | ) | ||||||||||||||||||
| Disposals |
(11,266 | ) | (31,936 | ) | (117,538 | ) | (2,963 | ) | — | — | (38,345 | ) | (202,048 | ) | ||||||||||||||||||
| Impairment loss |
— | 1,074 | (30,815 | ) | 8 | (3,801 | ) | — | (4,960 | ) | (38,494 | ) | ||||||||||||||||||||
| Others(*2) |
53 | 117,900 | 4,976,266 | 59,758 | (5,473,330 | ) | — | 319,353 | — | |||||||||||||||||||||||
| Government grants received |
— | (12,647 | ) | (93,825 | ) | — | (11,869 | ) | — | — | (118,341 | ) | ||||||||||||||||||||
| Effect of movements in exchange rates |
— | (1,020 | ) | (1,882 | ) | (33 | ) | (2,347 | ) | (28 | ) | (65 | ) | (5,375 | ) | |||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
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|
|||||||||||||||||
| Book value as of December 31, 2020 |
W |
442,822 | 3,847,206 | 9,267,298 | 126,167 | 6,045,727 | 110,907 | 299,576 | 20,139,703 | |||||||||||||||||||||||
| |
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|
|
|
|
|
|||||||||||||||||
| Acquisition cost as of December 31, 2020 |
W |
442,822 | 7,420,854 | 48,166,361 | 735,329 | 6,122,364 | 184,036 | 1,021,641 | 64,093,407 | |||||||||||||||||||||||
| |
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|
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|
|
|
|
|
|||||||||||||||||
| Accumulated depreciation as of December 31, 2020 |
W |
— | (3,457,052 | ) | (37,581,293 | ) | (600,912 | ) | — | (69,130 | ) | (697,134 | ) | (42,405,521 | ) | |||||||||||||||||
| |
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|
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|
|
|
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|
|||||||||||||||||
| Accumulated impairment loss as of December 31, 2020 |
W |
— | (116,596 | ) | (1,317,770 | ) | (8,250 | ) | (76,637 | ) | (3,999 | ) | (24,931 | ) | (1,548,183 | ) | ||||||||||||||||
| |
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|
|||||||||||||||||
(*1) |
As of December 31, 2020, construction-in-progress mainly relates to construction of manufacturing facilities. |
(*2) |
Others mainly represent the reclassification of construction-in-progress |
| 9. | Property, Plant and Equipment, Continued |
| (b) | Changes in property, plant and equipment for the year ended December 31, 2021 are as follows: |
(In millions of won) |
||||||||||||||||||||||||||||||||
Land |
Buildings and structures |
Machinery and equipment |
Furniture and fixtures |
Construction -in-progress (*1) |
Right-of- use asset |
Others |
Total |
|||||||||||||||||||||||||
| Acquisition cost as of January 1, 2021 |
W |
442,822 | 7,420,854 | 48,166,361 | 735,329 | 6,122,364 | 184,036 | 1,021,641 | 64,093,407 | |||||||||||||||||||||||
| Accumulated depreciation as of January 1, 2021 |
— | (3,457,052 | ) | (37,581,293 | ) | (600,912 | ) | — | (69,130 | ) | (697,134 | ) | (42,405,521 | ) | ||||||||||||||||||
| Accumulated impairment loss as of January 1, 2021 |
— | (116,596 | ) | (1,317,770 | ) | (8,250 | ) | (76,637 | ) | (3,999 | ) | (24,931 | ) | (1,548,183 | ) | |||||||||||||||||
| |
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|
|||||||||||||||||
| Book value as of January 1, 2021 |
W |
442,822 | 3,847,206 | 9,267,298 | 126,167 | 6,045,727 | 110,907 | 299,576 | 20,139,703 | |||||||||||||||||||||||
| |
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|
|||||||||||||||||
| Additions |
— | — | — | — | 3,651,064 | 63,655 | — | 3,714,719 | ||||||||||||||||||||||||
| Depreciation |
— | (394,416 | ) | (3,188,694 | ) | (72,065 | ) | — | (62,983 | ) | (259,095 | ) | (3,977,253 | ) | ||||||||||||||||||
| Disposals |
(8,975 | ) | (17,655 | ) | (30,046 | ) | (44 | ) | (6,899 | ) | (7 | ) | (40,501 | ) | (104,127 | ) | ||||||||||||||||
| Impairment loss |
— | 3,897 | (15,287 | ) | (3 | ) | 620 | — | (7,191 | ) | (17,964 | ) | ||||||||||||||||||||
| Others(*2) |
— | 704,753 | 1,784,733 | 110,083 | (2,910,055 | ) | — | 299,534 | (10,952 | ) | ||||||||||||||||||||||
| Government grants received |
— | (5,491 | ) | (80,432 | ) | (60 | ) | — | — | — | (85,983 | ) | ||||||||||||||||||||
| Effect of movements in exchange rates |
— | 167,236 | 682,295 | 15,041 | 11,141 | 8,294 | 16,296 | 900,303 | ||||||||||||||||||||||||
| |
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|||||||||||||||||
| Book value as of December 31, 2021 |
W |
433,847 | 4,305,530 | 8,419,867 | 179,119 | 6,791,598 | 119,866 | 308,619 | 20,558,446 | |||||||||||||||||||||||
| |
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|
|||||||||||||||||
| Acquisition cost as of December 31, 2021 |
W |
433,847 | 8,583,015 | 50,288,095 | 863,241 | 6,867,667 | 235,436 | 1,184,889 | 68,456,190 | |||||||||||||||||||||||
| |
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|
|||||||||||||||||
| Accumulated depreciation as of December 31, 2021 |
W |
— | (4,068,333 | ) | (40,637,254 | ) | (675,638 | ) | — | (111,382 | ) | (853,778 | ) | (46,346,385 | ) | |||||||||||||||||
| |
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|
|||||||||||||||||
| Accumulated impairment loss as of December 31, 2021 |
W |
— | (209,152 | ) | (1,230,974 | ) | (8,484 | ) | (76,069 | ) | (4,188 | ) | (22,492 | ) | (1,551,359 | ) | ||||||||||||||||
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|||||||||||||||||
(*1) |
As of December 31, 2021, construction-in-progress mainly relates to construction of manufacturing facilities. |
(*2) |
Others mainly represent the reclassification of construction-in-progress |
| (c) | Capitalized borrowing costs and capitalization rate for the years ended December 31, 2019, 2020 and 2021 are as follows: |
(In millions of won) |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
| Capitalized borrowing costs |
W |
283,525 | 191,876 | 64,606 | ||||||||
| Capitalization rate |
3.74 | % | 4.14 | % | 3.69 | % | ||||||
| 10. | Intangible Assets and Non-financial Assets Impairment |
| (a) | Changes in intangible assets for the year ended December 31, 2020 are as follows: |
(In millions of won) |
||||||||||||||||||||||||||||||||||||||||
Intellectual property rights |
Software |
Member- ships |
Development costs |
Construction- in-progress |
Customer relationships |
Technology |
Good- will |
Others (*2) |
Total |
|||||||||||||||||||||||||||||||
Acquisition cost as of January 1, 2020 |
W |
959,683 | 1,097,290 | 56,612 | 2,580,777 | 15,245 | 59,176 | 11,074 | 105,414 | 13,080 | 4,898,351 | |||||||||||||||||||||||||||||
Accumulated amortization as of January 1, 2020 |
(739,498 | ) | (890,281 | ) | — | (2,073,881 | ) | — | (37,491 | ) | (10,705 | ) | — | (13,079 | ) | (3,764,935 | ) | |||||||||||||||||||||||
Accumulated impairment loss as of January 1, 2020 |
(29,151 | ) | (8,864 | ) | (10,560 | ) | (131,713 | ) | — | (21,685 | ) | — | (57,995 | ) | — | (259,968 | ) | |||||||||||||||||||||||
Book value as of January 1, 2020 |
W |
191,034 | 198,145 | 46,052 | 375,183 | 15,245 | — | 369 | 47,419 | 1 | 873,448 | |||||||||||||||||||||||||||||
Additions - internally developed |
— | — | — | 284,487 | — | — | — | — | — | 284,487 | ||||||||||||||||||||||||||||||
Additions - external purchases |
291,405 | 27,789 | — | — | 51,520 | — | — | — | 3 | 370,717 | ||||||||||||||||||||||||||||||
Amortization(*1) |
(42,205 | ) | (86,466 | ) | — | (278,799 | ) | — | — | (369 | ) | — | (3 | ) | (407,842 | ) | ||||||||||||||||||||||||
Disposals |
— | — | (17,252 | ) | — | — | — | — | — | — | (17,252 | ) | ||||||||||||||||||||||||||||
Impairment loss(*3) |
— | (675 | ) | — | (78,918 | ) | — | — | — | — | — | (79,593 | ) | |||||||||||||||||||||||||||
Reversal of impairment loss |
— | — | 1,110 | — | — | — | — | — | — | 1,110 | ||||||||||||||||||||||||||||||
Transfer from construction-in-progress |
— | 54,753 | — | — | (54,753 | ) | — | — | — | — | — | |||||||||||||||||||||||||||||
Effect of movements in exchange rates |
(4,031 | ) | 887 | (10 | ) | — | 55 | — | — | (1,888 | ) | — | (4,987 | ) | ||||||||||||||||||||||||||
Book value as of December 31, 2020 |
W |
436,203 | 194,433 | 29,900 | 301,953 | 12,067 | — | — | 45,531 | 1 | 1,020,088 | |||||||||||||||||||||||||||||
Acquisition cost as of December 31, 2020 |
W |
1,247,057 | 1,180,719 | 39,350 | 2,865,264 | 12,067 | 59,176 | 11,074 | 103,526 | 13,083 | 5,531,316 | |||||||||||||||||||||||||||||
Accumulated amortization as of December 31, 2020 |
W |
(781,703 | ) | (976,747 | ) | — | (2,352,680 | ) | — | (37,491 | ) | (11,074 | ) | — | (13,082 | ) | (4,172,777 | ) | ||||||||||||||||||||||
Accumulated impairment loss as of December 31, 2020 |
W |
(29,151 | ) | (9,539 | ) | (9,450 | ) | (210,631 | ) | — | (21,685 | ) | — | (57,995 | ) | — | (338,451 | ) | ||||||||||||||||||||||
| (*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 W 78,918 million for development projects which are not likely to generate revenue. |
| 10. | Intangible Assets and Non-financial Assets Impairment, Continued |
| (b) | Changes in intangible assets for the year ended December 31, 2021 are as follows: |
(In millions of won) |
||||||||||||||||||||||||||||||||||||||||
Intellectual property rights |
Software |
Member- ships |
Development costs |
Construction -in-progress |
Customer relationships |
Technology |
Good- will |
Others (*2) |
Total |
|||||||||||||||||||||||||||||||
| Acquisition cost as of January 1, 2021 |
W |
1,247,057 | 1,180,719 | 39,350 | 2,865,264 | 12,067 | 59,176 | 11,074 | 103,526 | 13,083 | 5,531,316 | |||||||||||||||||||||||||||||
| Accumulated amortization as of January 1, 2021 |
(781,703 | ) | (976,747 | ) | — | (2,352,680 | ) | — | (37,491 | ) | (11,074 | ) | — | (13,082 | ) | (4,172,777 | ) | |||||||||||||||||||||||
| Accumulated impairment loss as of January 1, 2021 |
(29,151 | ) | (9,539 | ) | (9,450 | ) | (210,631 | ) | — | (21,685 | ) | — | (57,995 | ) | — | (338,451 | ) | |||||||||||||||||||||||
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|
|||||||||||||||||||||
| Book value as of January 1, 2021 |
W |
436,203 | 194,433 | 29,900 | 301,953 | 12,067 | — | — | 45,531 | 1 | 1,020,088 | |||||||||||||||||||||||||||||
| Additions - internally developed |
— | — | — | 362,897 | — | — | — | — | — | 362,897 | ||||||||||||||||||||||||||||||
| Additions - external purchases |
681,222 | 23,240 | 742 | — | 127,621 | — | 1,689 | — | — | 834,514 | ||||||||||||||||||||||||||||||
| Amortization(*1) |
(190,842 | ) | (101,545 | ) | — | (230,891 | ) | — | — | (169 | ) | — | (1 | ) | (523,448 | ) | ||||||||||||||||||||||||
| Disposals |
— | — | (2,750 | ) | — | — | — | — | — | — | (2,750 | ) | ||||||||||||||||||||||||||||
| Impairment loss(*3) |
(90 | ) | (2 | ) | — | (29,396 | ) | — | — | — | — | — | (29,488 | ) | ||||||||||||||||||||||||||
| Reversal of impairment loss |
— | — | 1,152 | — | — | — | — | — | — | 1,152 | ||||||||||||||||||||||||||||||
| Transfer from construction-in-progress |
— | 119,543 | — | (15,348 | ) | (119,543 | ) | — | — | — | — | (15,348 | ) | |||||||||||||||||||||||||||
| Effect of movements in exchange rates |
1,825 | (6,808 | ) | 39 | — | (583 | ) | — | — | 2,808 | — | (2,719 | ) | |||||||||||||||||||||||||||
| |
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Book value as of December 31, 2021 |
W |
928,318 | 228,861 | 29,083 | 389,215 | 19,562 | — | 1,520 | 48,339 | — | 1,644,898 | |||||||||||||||||||||||||||||
| |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Acquisition cost as of December 31, 2021 |
W |
1,873,027 | 1,261,232 | 30,742 | 1,771,383 | 19,562 | 59,176 | 12,763 | 106,334 | 13,081 |
5,147,300 | |||||||||||||||||||||||||||||
| |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Accumulated amortization as of December 31, 2021 |
W |
(915,764 | ) | (1,023,062 | ) | — | (1,318,476 | ) | — | (37,491 | ) | (11,243 | ) | — | (13,081 |
) |
(3,319,117 | ) | ||||||||||||||||||||||
| |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Accumulated impairment loss as of December 31, 2021 |
W |
(28,945 | ) | (9,309 | ) | (1,659 |
) |
(63,692 | ) | — | (21,685 | ) | — | (57,995 |
) |
— | (183,285 | ) | ||||||||||||||||||||||
| |
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
(*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 W 29,396 million for development projects which are not likely to generate revenue. |
| 10. | Intangible Assets and Non-financial Assets Impairment, Continued |
| (c) | Development costs as of December 31, 2020 and 2021 are as follows: |
| (i) | As of December 31, 2020 |
(In millions of won) |
||||||||
| Classification |
Product type |
Book Value |
||||||
| Development completed | TV | W |
20,803 | |||||
| IT | 51,784 | |||||||
| Mobile and others | 33,097 | |||||||
| |
|
|||||||
W |
105,684 | |||||||
| |
|
|||||||
| Development in process | TV | W |
49,773 | |||||
| IT | 42,762 | |||||||
| Mobile and others | 103,734 | |||||||
| |
|
|||||||
W |
196,269 | |||||||
| |
|
|||||||
W |
301,953 | |||||||
| |
|
|||||||
| (ii) | As of December 31, 2021 |
(In millions of won) |
||||||||
| Classification |
Product type |
Book Value |
||||||
| Development completed | TV | W |
27,371 | |||||
| IT | 31,935 | |||||||
| Mobile and others | 76,644 | |||||||
| |
|
|||||||
W |
135,950 | |||||||
| |
|
|||||||
| Development in process | TV | W |
73,667 | |||||
| IT | 66,904 | |||||||
| Mobile and others | 112,694 | |||||||
| |
|
|||||||
W |
253,265 | |||||||
| |
|
|||||||
W |
389,215 | |||||||
| |
|
|||||||
| 10. | Intangible Assets and Non-financial Assets Impairment, Continued |
| (d) | Impairment assessment on CGU with allocated goodwill |
(In millions of won) |
||||||||
December 31, 2021 |
December 31, 2020 |
|||||||
Display CGU |
W |
48,339 | 45,531 | |||||
Pre-tax discount rate(*) |
Post-tax discount rate(*) |
Terminal growth rate |
||||||||||
Display CGU |
10.5 |
% |
8.4 | % | 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 the CGU using post-tax cash flows and a post-tax discount which is not significantly different from the value in use calculated using pre-tax cash flows and pre-tax discount rate. |
| 11. | Financial Liabilities |
| (a) | Financial liabilities as of December 31, 2020 and 2021 are as follows: |
December 31, 2020 |
December 31, 2021 |
|||||||
Current |
||||||||
Short-term borrowings |
W |
394,906 | 613,733 | |||||
Current portion of long-term borrowings and bonds |
2,705,709 | 3,393,506 | ||||||
Derivatives(*1) |
58,875 | 8,594 | ||||||
Cash flow hedging derivatives(*2) |
— | 13,400 | ||||||
Lease liabilities |
35,534 | 40,479 | ||||||
W |
3,195,024 | 4,069,712 | ||||||
Non-current |
||||||||
Won denominated borrowings |
W |
2,435,000 | 2,173,500 | |||||
Foreign currency denominated borrowings |
6,584,658 | 5,487,091 | ||||||
Bonds |
1,948,541 | 995,976 | ||||||
Derivatives(*1) |
108,750 | 2,331 | ||||||
Lease liabilities |
47,897 | 43,847 | ||||||
W |
11,124,846 | 8,702,745 | ||||||
| (*1) | Represents cross currency interest rate swap contracts and others entered into by the Group to hedge currency and interest rate risks with respect to foreign currency denominated borrowings and bonds. The contracts are not designated as hedging instruments. |
| (*2) | Represents forward exchange contracts entered into by the Group to hedge |
| (b) | Short-term borrowings as of December 31, 2020 and 2021 are as follows. |
(In millions of won, USD) |
||||||||||||
Lender |
Annual interest rate as of December 31, 2021 (%)(*) |
December 31, 2020 |
December 31, 2021 |
|||||||||
Standard Chartered Bank Korea Limited |
— | W |
326,400 | — | ||||||||
Standard Chartered Bank Vietnam and others |
3ML + 0.80 | 68,506 | 613,733 | |||||||||
Foreign currency equivalent |
USD | 363 | USD | 518 | ||||||||
W |
394,906 | 613,733 | ||||||||||
| (*) | ML represents Month LIBOR (London Inter-Bank Offered Rates). |
| 11. | Financial Liabilities, Continued |
| (c) | Won denominated long-term borrowings as of December 31, 2020 and 2021 are as follows: |
(In millions of won) |
||||||||||||
| Lender |
Annual interest rate as of December 31, 2021 (%)(*) |
December 31, 2020 |
December 31, 2021 |
|||||||||
| Woori Bank |
— | W |
60 | — | ||||||||
| Korea Development Bank and others |
CD rate (91days) + 1.00~1.60, 1.90~3.25 | |
3,272,500 | 2,785,000 | ||||||||
| Less current portion of long-term borrowings |
(837,560 | ) | (611,500 | ) | ||||||||
| |
|
|
|
|||||||||
W |
2,435,000 | 2,173,500 | ||||||||||
| |
|
|
|
|||||||||
(*) |
CD represents certificate of deposit. |
(d) |
Foreign currency denominated long-term borrowings as of December 31, 2020 and 2021 are as follows: |
(In millions of won and USD, CNY) |
||||||||||||
| Lender |
Annual interest rate as of December 31, 2021 (%)(*) |
December 31, 2020 |
December 31, 2021 |
|||||||||
| The Export-Import Bank of Korea and others |
|
3ML+1.20~2.40 6ML+1.25~1.43, 1.82~2.46 | |
W |
1,680,960 | 2,163,538 |
||||||
| China Construction Bank and others |
|
USD: 3ML+0.65~1.43 CNY: LPR(5Y)+0.34, LPR(1Y)-0.15~+0.15, 4.20 |
5,948,472 |
4,489,974 |
||||||||
| |
|
|
|
|||||||||
| Foreign currency equivalent |
USD |
2,742 |
USD |
2,782 |
||||||||
CNY |
27,825 |
CNY |
18,017 |
|||||||||
| Less current portion of long-term borrowings |
W |
(1,044,774 | ) |
(1,166,421 |
) | |||||||
| |
|
|
|
|||||||||
W |
6,584,658 | 5,487,091 |
||||||||||
| |
|
|
|
|||||||||
| (*) | LPR represents Loan Prime Rate of People’s Bank of China. |
| 11. | Financial Liabilities, Continued |
| (e) | Details of bonds issued and outstanding as of December 31, 2020 and 2021 are as follows: |
(In millions of won and USD) |
||||||||||||||||
Maturity |
Annual interest rate as of December 31, 2021 (%) |
December 31, 2020 |
December 31, 2021 |
|||||||||||||
| Won denominated bonds at amortized cost(*1) |
||||||||||||||||
| Publicly issued bonds |
February 2022 ~ September 2026 |
|
2.29~2.95 | W |
1,320,000 | 1,320,000 | ||||||||||
| Privately issued bonds |
May 2022 ~ May 2033 |
|
3.25~4.25 | 160,000 | 160,000 | |||||||||||
| Less discount on bonds |
(1,798 | ) | (2,534 | ) | ||||||||||||
| Less current portion |
(499,796 | ) | (599,825 | ) | ||||||||||||
| |
|
|
|
|||||||||||||
W |
978,406 | 877,641 | ||||||||||||||
| |
|
|
|
|||||||||||||
| Foreign currency denominated bonds at amortized cost(*2) |
||||||||||||||||
| Publicly issued bonds |
November 2021 | — | W |
326,400 | — | |||||||||||
| Privately issued bonds |
April 2023 | 3ML + 1.47 | 108,800 | 118,550 | ||||||||||||
| Foreign currency equivalent |
USD | 400 | USD | 100 | ||||||||||||
| Less discount on bonds |
(3,161 | ) | (215 | ) | ||||||||||||
| Less current portion |
(323,579 | ) | — | |||||||||||||
| |
|
|
|
|||||||||||||
W |
108,460 | 118,335 | ||||||||||||||
| Financial liabilities at fair value through profit or loss |
||||||||||||||||
| Foreign currency denominated convertible bonds(*3) |
August 2024 | 1.50 | W |
861,675 | 1,015,760 | |||||||||||
| Foreign currency equivalent |
USD | 792 | USD | 857 | ||||||||||||
| Less current portion |
— | (1,015,760 | ) | |||||||||||||
| |
|
|
|
|||||||||||||
W |
861,675 | — | ||||||||||||||
| |
|
|
|
|||||||||||||
W |
1,948,541 | 995,976 | ||||||||||||||
| |
|
|
|
|||||||||||||
| (*1) | Principal of the won denominated bonds is to be repaid at maturity and interests are paid quarterly. |
| (*2) | Principal of the foreign currency denominated bonds is to be repaid at maturity and interests are paid quarterly or semi-annually. |
| (*3) | Reclassified to current considering the bondholders’ right to redeem before maturity (put option). |
| 11. | Financial Liabilities, Continued |
| (f) | Details of the convertible bonds issued by the Controlling Company and outstanding as of December 31, 2021 are as follows: |
(In won, USD) | ||||
| Description | ||||
| Type | Unsecured foreign currency denominated convertible bonds | |||
| Issuance amount | USD 687,800,000 | |||
| Annual interest rate (%) | 1.50 | |||
| Issuance date | August 22, 2019 | |||
| Maturity date | August 22, 2024 | |||
| Interest payment | Payable semi-annually in arrear until maturity date | |||
| Principal redemption | 1. : Redeemed on the maturity date, at their outstanding principal amount, which has not been early redeemed or converted. | |||
| 2. Early redemption: The Controlling Company has a right to redeem before maturity (call option) or the bondholders have a right to require the Controlling Company to redeem before maturity (put option). At exercise of each option, the outstanding principal amount together with accrued but unpaid interest are to be redeemed. | ||||
| Conversion price | W 19,845 per common share (subject to adjustment based on diluted of certain events) | |||
| Conversion period | From August 23, 2020 to August 12, 2024 | |||
| Redemption at the option of the issuer (Call option) | • On or at any time after 3 years from the issuance, if the closing price of the shares for any 20 trading days out of the 30 consecutive trading days is at least 130% of the applicable conversion price • The aggregate principal amount of the convertible bonds outstanding is less than 10% of the aggregate principal amount originally issued, or • In the event of certain changes in laws and other directives resulting in additional taxes for the holders | |||
| Redemption at the option of the bondholders (Put option) | On the third anniversary from the issuance date | |||
(In won and No. of shares) |
||||
December 31, 2021 |
||||
| Aggregate outstanding amount of the convertible bonds |
W |
813,426,670,000 | ||
| Conversion price |
W |
19,845 | ||
| Number of common shares to be issued at conversion |
40,988,998 | |||
| 12. | Employee Benefits |
| (a) | Net defined benefit liabilities (defined benefit assets) recognized as of December 31, 2020 and 2021 are as follows: |
(In millions of won) |
||||||||
December 31, 2020 |
December 31, 2021 |
|||||||
| Present value of partially funded defined benefit obligations |
W |
1,397,542 | 1,684,096 | |||||
| Fair value of plan assets |
(1,621,041 | ) | (1,750,783 | ) | ||||
| |
|
|
|
|||||
W |
(223,499 | ) | (66,687 | ) | ||||
| |
|
|
|
|||||
| Defined benefit liabilities, net |
W |
1,498 | 1,589 | |||||
| Defined benefit assets, net |
W |
224,997 | 68,276 | |||||
| (b) | Changes in the present value of the defined benefit obligations for the years ended December 31, 2020 and 2021 are as follows: |
(In millions of won) |
||||||||
2020 |
2021 |
|||||||
| Defined benefit obligations at January 1 |
W |
1,481,339 | 1,397,542 | |||||
| Current service cost |
163,652 | 150,136 | ||||||
| Interest cost |
35,614 | 35,902 | ||||||
| Remeasurements (before tax) |
(155,700 | ) | 205,318 | |||||
| Benefit payments |
(124,701 | ) | (101,973 | ) | ||||
| Net transfers from (to) related parties |
(2,645 | ) | (2,798 | ) | ||||
| Others |
(17 | ) | (31 | ) | ||||
| |
|
|
|
|||||
| Defined benefit obligations at December 31 |
W |
1,397,542 | 1,684,096 | |||||
| |
|
|
|
|||||
| (c) | Changes in fair value of plan assets for the years ended December 31, 2020 and 2021 are as follows: |
(In millions of won) |
||||||||
2020 |
2021 |
|||||||
| Fair value of plan assets at January 1 |
W |
1,607,253 | 1,621,041 | |||||
| Expected return on plan assets |
38,597 | 41,797 | ||||||
| Remeasurements (before tax) |
(7,264 | ) | (15,483 | ) | ||||
| Contributions by employer directly to plan assets |
101,462 | 201,417 | ||||||
| Benefit payments |
(119,007 | ) | (97,989 | ) | ||||
| |
|
|
|
|||||
| Fair value of plan assets at December 31 |
W |
1,621,041 | 1,750,783 | |||||
| |
|
|
|
|||||
| 12. | Employee Benefits, Continued |
| (d) | Plan assets as of December 31, 2020 and 2021 are as follows: |
(In millions of won) |
||||||||
December 31, 2020 |
December 31, 2021 |
|||||||
| Guaranteed deposits in banks |
W |
1,621,041 | 1,750,783 | |||||
| (e) | Expenses rel recognized in profit or loss for the years ended December 31, 2019, 2020 and 2021 are as follows: ated to defined benefit plans |
(In millions of won) |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
| Current service cost |
W |
194,469 | 163,652 | 150,136 | ||||||||
| Past service cost |
(32,006 | ) | — | — | ||||||||
| Net interest cost |
534 | (2,983 | ) | (5,895 | ) | |||||||
| |
|
|
|
|
|
|||||||
W |
162,997 | 160,669 | 144,241 | |||||||||
| |
|
|
|
|
|
|||||||
(In millions of won) |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
| Cost of sales |
W |
119,147 | 122,369 | 110,750 | ||||||||
| Selling expenses |
10,600 | 8,505 | 6,631 | |||||||||
| Administrative expenses |
18,360 | 17,875 | 16,496 | |||||||||
| Research and development expenses |
14,890 | 11,920 | 10,364 | |||||||||
| |
|
|
|
|
|
|||||||
W |
162,997 | 160,669 | 144,241 | |||||||||
| |
|
|
|
|
|
|||||||
| (f) | Remeasurements of net defined benefit liabilities (assets) included in other comprehensive income (loss) for the years ended December 31, 2019, 2020 and 2021 are as follows: |
(In millions of won) |
2019 |
2020 |
2021 |
|||||||||
| Balance at January 1 |
W |
(165,969 | ) | (72,326 | ) | 38,117 | ||||||
| Remeasurements |
||||||||||||
| Actuarial profit or loss arising from: |
||||||||||||
| Experience adjustment |
43,644 | 36,769 | (124,974 | ) | ||||||||
| Demographic assumptions |
(19,952 | ) | (2,584 | ) | (7,206 | ) | ||||||
| Financial assumptions |
113,772 | 121,515 | (73,138 | ) | ||||||||
| Return on plan assets |
(8,824 | ) | (7,264 | ) | (15,483 | ) | ||||||
| Group’s share of associates regarding remeasurements |
238 | 39 | (84 | ) | ||||||||
| |
|
|
|
|
|
|||||||
W |
128,878 | 148,475 | (220,885 | ) | ||||||||
| |
|
|
|
|
|
|||||||
| Income tax |
W |
(35,235 | ) | (38,032 | ) | 57,438 | ||||||
| |
|
|
|
|
|
|||||||
| Balance at December 31 |
W |
(72,326 | ) | 38,117 | (125,330 | ) | ||||||
| |
|
|
|
|
|
|||||||
| 12. | Employee Benefits, Continued |
| (g) | Principal actuarial assumptions as of December 31, 2020 and 2021 (expressed as weighted averages) are as follows: |
December 31, 2020 |
December 31, 2021 |
|||||||
| Expected rate of salary increase |
2.9 | % | 3.7 | % | ||||
| Discount rate for defined benefit obligations |
2.6 | % | 3.1 | % | ||||
December 31, 2020 |
December 31, 2021 |
|||||||||
| Teens |
Males | 0.00 | % | 0.00 | % | |||||
| Females | 0.00 | % | 0.00 | % | ||||||
| Twenties |
Males | 0.01 | % | 0.01 | % | |||||
| Females | 0.00 | % | 0.00 | % | ||||||
| Thirties |
Males | 0.01 | % | 0.01 | % | |||||
| Females | 0.00 | % | 0.00 | % | ||||||
| Forties |
Males | 0.02 | % | 0.02 | % | |||||
| Females | 0.01 | % | 0.01 | % | ||||||
| Fifties |
Males | 0.04 | % | 0.04 | % | |||||
| Females | 0.02 | % | 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, 2021: |
(In millions of won) |
Defined benefit obligations |
|||||||
1% increase |
1% decrease |
|||||||
| Discount rate for defined benefit obligations |
W |
(226,772 | ) | 275,402 | ||||
| Expected rate of salary increase |
270,635 | (227,488 | ) | |||||
| 13. | Provisions |
| (a) | Changes in provisions for the year ended December 31, 2020 are as follows: |
(In millions of won) |
||||||||||||
Warranties(*) |
Others |
Total |
||||||||||
| Balance at January 1, 2020 |
W |
230,262 | 26,381 | 256,643 | ||||||||
| Additions (reversal) |
309,112 | (10,697 | ) | 298,415 | ||||||||
| Usage |
(267,179 | ) | (778 | ) | (267,957 | ) | ||||||
| |
|
|
|
|
|
|||||||
| Balance at December 31, 2020 |
W |
272,195 | 14,906 | 287,101 | ||||||||
| |
|
|
|
|
|
|||||||
| Current |
W |
182,562 | 14,906 | 197,468 | ||||||||
| Non-current |
W |
89,633 | — | 89,633 | ||||||||
| (b) | Changes in provisions for the year ended December 31, 2021 are as follows: |
(In millions of won) |
||||||||||||
Warranties(*) |
Others |
Total |
||||||||||
| Balance at January 1, 2021 |
W |
272,195 | 14,906 | 287,101 | ||||||||
| Additions (reversal) |
216,873 | (5,659 | ) | 211,214 | ||||||||
| Usage |
(231,942 | ) | — | (231,942 | ) | |||||||
| |
|
|
|
|
|
|||||||
| Balance at December 31, 2021 |
W |
257,126 | 9,247 | 266,373 | ||||||||
| |
|
|
|
|
|
|||||||
| Current |
W |
164,184 | 9,247 | 173,431 | ||||||||
| Non-current |
W |
92,942 | — | 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. |
| 14. | Contingent Liabilities and Commitments |
| (a) | Legal Proceedings |
| (b) | Commitments |
| 14. | Contingent Liabilities and Commitments, Continued |
(In millions of USD and KRW) |
||||||||||||||||||
Classification |
Financial institutions |
Credit limit |
Not yet due |
|||||||||||||||
Contractual amount |
KRW equivalent |
Contractual amount |
KRW equivalent |
|||||||||||||||
Controlling Company |
Shinhan Bank |
KRW USD |
90,000 10 |
|
90,000 11,855 |
|
USD |
— 7 |
|
— 8,334 |
||||||||
Sumitomo Mitsui Banking Corporation |
USD | 20 | 23,710 | — | — | |||||||||||||
MUFG Bank |
USD | 180 | 213,390 | USD | 20 | 23,757 | ||||||||||||
BNP Paribas |
USD | 65 | 77,058 | USD | 9 | 10,839 | ||||||||||||
ING Bank |
USD | 90 | 106,695 | — | — | |||||||||||||
| USD | 365 | USD | 36 | |||||||||||||||
| KRW | 90,000 | 522,708 | — | 42,930 | ||||||||||||||
Subsidiaries |
||||||||||||||||||
LG Display Singapore Pte. Ltd. |
Standard Chartered Bank |
USD | 330 | 391,215 | USD | 110 | 130,400 | |||||||||||
United Overseas Bank Limited |
USD | 100 | 118,550 | USD | 70 | 82,983 | ||||||||||||
JPMorgan Chase Bank, N.A., Singapore Branch |
USD | 50 | 59,275 | — | — | |||||||||||||
LG Display Taiwan Co., Ltd. |
BNP Paribas |
USD | 15 | 17,783 | — | — | ||||||||||||
Australia and New Zealand Banking Group Ltd. |
USD | 70 | 82,985 | USD | 22 | 26,081 | ||||||||||||
KGI Bank Co., Ltd. |
USD | 30 | 35,565 | — | — | |||||||||||||
LG Display Germany GmbH |
BNP Paribas |
USD | 135 | 160,043 | USD | 50 | 59,289 | |||||||||||
Commerzbank AG |
USD | 12 | 14,262 | USD | 5 | 6,141 | ||||||||||||
DZ Bank AG |
USD | 12 | 14,007 | USD | 9 | 10,103 | ||||||||||||
UniCredit Bank |
USD | 19 | 22,196 | USD | 8 | 10,012 | ||||||||||||
LG Display America, Inc. |
Hong Kong & Shanghai Banking Corp. |
USD | 400 | 474,200 | USD | 400 | 474,200 | |||||||||||
Standard Chartered Bank |
USD | 600 | 711,300 | USD | 285 | 337,868 | ||||||||||||
Sumitomo Mitsui Banking Corporation |
USD | 150 | 177,825 | USD | 5 | 5,928 | ||||||||||||
LG Display Japan Co., Ltd. |
Chelsea Capital Corporation Tokyo Branch |
USD | 120 | 142,260 | — | — | ||||||||||||
LG Display Guangzhou Trading Co., Ltd. |
KEB Hana Bank (China) Company Limited |
USD | 30 | 35,565 | — | — | ||||||||||||
| USD | 2,073 | 2,457,031 | USD | 964 | 1,143,005 | |||||||||||||
| USD | 2,438 | USD | 1,000 | |||||||||||||||
| KRW | 90,000 | 2,979,739 | — | 1,185,935 | ||||||||||||||
| 14. | Contingent Liabilities and Commitments, Continued |
(In millions of won and USD ) |
||||||||
Contractual amount |
KRW equivalent |
|||||||
KEB Hana Bank |
USD | 250 | W |
296,375 | ||||
Sumitomo Mitsui Banking Corporation |
USD | 50 | 59,275 | |||||
Industrial Bank of Korea |
USD | 100 | 118,550 | |||||
Industrial and Commercial Bank of China |
USD | 200 | 237,100 | |||||
Shinhan Bank |
USD | 400 | 474,200 | |||||
KB Kookmin Bank |
USD | 100 | 118,550 | |||||
MUFG Bank |
USD | 100 | 118,550 | |||||
The Export–Import Bank of Korea |
USD | 200 | 237,100 | |||||
Standard Chartered Bank |
USD | 400 | 474,200 | |||||
USD |
1,800 |
W |
2,133,900 |
|||||
15. |
Share Capital, Share Premium and Reserves |
(a) |
Share capital and Share p remium |
| (b) | Reserves |
(In millions of won) |
||||||||
December 31, 2020 |
December 31, 2021 |
|||||||
Loss on valuation of derivatives |
W |
— | (9,227 | ) | ||||
Foreign currency translation differences for foreign operations |
(138,667 | ) | 566,651 | |||||
Other comprehensive loss from associates |
(24,779 | ) | (20,282 | ) | ||||
W |
(163,446 | ) | 537,142 | |||||
15. |
Share Capital, Share Premium and Reserves, Continued |
(c) |
Dividend |
| 16. | Geographic and Other Information |
| (a) | Revenue by geography |
(In millions of won) |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
| Domestic |
W |
1,264,639 | 912,049 | 632,531 | ||||||||
| Foreign |
||||||||||||
| China |
15,432,503 | 16,685,746 | 19,866,707 | |||||||||
| Asia (excluding China) |
2,404,739 | 2,297,290 | 3,256,126 | |||||||||
| United States |
1,940,321 | 2,070,944 | 3,263,055 | |||||||||
| Europe (excluding Poland) |
1,475,942 | 1,215,345 | 1,159,669 | |||||||||
| Poland |
957,423 | 1,080,187 | 1,699,955 | |||||||||
| |
|
|
|
|
|
|||||||
W |
22,210,928 | 23,349,512 | 29,245,512 | |||||||||
| |
|
|
|
|
|
|||||||
W |
23,475,567 | 24,261,561 | 29,878,043 | |||||||||
| |
|
|
|
|
|
|||||||
| (b) | Non-current assets by geography |
(In millions of won) |
||||||||||||||||
December 31, 2020 |
December 31, 2021 |
|||||||||||||||
Property, plant and equipment |
Intangible assets |
Property, plant and equipment |
Intangible assets |
|||||||||||||
| Domestic |
W |
11,736,856 | 874,849 | 12,006,204 | 1,452,823 | |||||||||||
| Foreign |
||||||||||||||||
| China |
6,723,704 | 39,396 | 6,393,129 | 83,655 | ||||||||||||
| Vietnam |
1,663,807 | 7,688 | 2,146,652 | 19,954 | ||||||||||||
| Others |
15,336 | 98,155 | 12,461 | 88,466 | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
W |
8,402,847 | 145,239 | 8,552,242 | 192,075 | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
W |
20,139,703 | 1,020,088 | 20,558,446 | 1,644,898 | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| (c) | Revenue by product and services |
(In millions of won) |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
| TV |
W |
7,998,137 | 6,737,654 | 9,466,192 | ||||||||
| IT(*) |
9,062,774 | 10,120,668 | 12,458,740 | |||||||||
| Mobile and others |
6,414,656 | 7,403,239 | 7,953,111 | |||||||||
| |
|
|
|
|
|
|||||||
W |
23,475,567 | 24,261,561 | 29,878,043 | |||||||||
| |
|
|
|
|
|
|||||||
(*) |
IT consists of Monitor, Notebook and Tablet products and revenue by products and services for the years ended December 31, 2019 are reclassified to conform to the classification for the year ended December 31, 2021. |
| 17. | The Nature of Expenses and Others |
(In millions of won) |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
| Changes in inventories |
W |
640,048 | (119,501 | ) | (1,179,232 | ) | ||||||
| Purchases of raw materials, merchandise and others |
12,580,796 | 12,636,633 | 15,207,659 | |||||||||
| Depreciation and amortization |
3,695,051 | 4,134,027 | 4,500,701 | |||||||||
| Outsourcing |
865,935 | 988,899 | 776,755 | |||||||||
| Labor |
3,072,877 | 2,866,055 | 3,795,943 | |||||||||
| Supplies and others |
813,262 | 900,019 | 1,235,473 | |||||||||
| Utility |
896,112 | 885,972 | 1,029,953 | |||||||||
| Fees and commissions |
695,245 | 679,475 | 789,885 | |||||||||
| Shipping |
196,002 | 184,105 | 345,204 | |||||||||
| Advertising |
193,436 | 113,547 | 126,335 | |||||||||
| Warranty |
418,942 | 309,113 | 216,873 | |||||||||
| Travel |
95,074 | 61,520 | 59,519 | |||||||||
| Taxes and dues |
109,473 | 141,669 | 141,131 | |||||||||
| Impairment loss on property, plant, and equipment |
1,550,430 | 38,494 | 19,085 | |||||||||
| Impairment loss on intangible assets |
249,450 | 79,593 | 29,488 | |||||||||
| Others |
625,504 | 666,983 | 671,894 | |||||||||
| |
|
|
|
|
|
|||||||
W |
26,697,637 | 24,566,603 | 27,766,666 | |||||||||
| |
|
|
|
|
|
|||||||
| 18. | Selling and Administrative Expenses |
(In millions of won) |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
| Salaries(*) |
W |
514,736 | 294,055 | 387,414 | ||||||||
| Expenses related to defined benefit plans |
29,018 | 26,449 | 22,859 | |||||||||
| Other employee benefits |
77,690 | 68,402 | 86,757 | |||||||||
| Shipping |
162,509 | 147,711 | 298,684 | |||||||||
| Fees and commissions |
219,784 | 221,922 | 248,478 | |||||||||
| Depreciation |
225,909 | 215,479 | 267,042 | |||||||||
| Taxes and dues |
49,826 | 82,708 | 74,542 | |||||||||
| Advertising |
193,436 | 113,547 | 126,335 | |||||||||
| Warranty |
418,942 | 309,113 | 216,873 | |||||||||
| Insurance |
11,386 | 12,985 | 16,654 | |||||||||
| Travel |
23,594 | 8,296 | 6,935 | |||||||||
| Training |
12,215 | 8,463 | 15,556 | |||||||||
| Others |
66,686 | 63,821 | 84,323 | |||||||||
| |
|
|
|
|
|
|||||||
W |
2,005,731 | 1,572,951 | 1,852,452 | |||||||||
| |
|
|
|
|
|
|||||||
| (*) | Expenses recognized in relation to employee termination benefits for the years ended December 31, 2019, 2020 and 2021 amount to W 218,826 million, W 1,417 million and W 2,854 million, respectively. |
| 19. | Personnel Expenses |
(In millions of won) |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
| Salaries and wages |
W |
2,553,485 | 2,326,792 | 3,138,798 | ||||||||
| Other employee benefits |
473,916 | 444,090 | 589,598 | |||||||||
| Contributions to National Pension plan |
73,148 | 67,241 | 68,962 | |||||||||
| Expenses related to defined benefit plans and defined contribution plans |
163,757 | 161,285 | 144,739 | |||||||||
| |
|
|
|
|
|
|||||||
W |
3,264,306 | 2,999,408 | 3,942,097 | |||||||||
| |
|
|
|
|
|
|||||||
| 20. | Other Income and Other Expenses |
| (a) | Details of other income for the years ended December 31, 2019, 2020 and 2021 are as follows: |
(In millions of won) |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
| Foreign currency gain |
W |
1,174,376 | 1,688,838 | 1,210,689 | ||||||||
| Gain on disposal of property, plant and equipment |
35,788 | 37,835 | 19,367 | |||||||||
| Gain on disposal of intangible assets |
552 | 111 | 196 | |||||||||
| Reversal of impairment loss on property, plant and equipment |
— | — | 1,121 | |||||||||
| Reversal of impairment loss on intangible assets |
960 | 1,110 | 1,152 | |||||||||
| Rental income |
3,098 | 3,629 | 1,978 | |||||||||
| Gain on disposal of non-current assets held for sales |
8,353 | — | — | |||||||||
| Others |
44,124 | 53,123 | 17,632 | |||||||||
| |
|
|
|
|
|
|||||||
W |
1,267,251 | 1,784,646 | 1,252,135 | |||||||||
| |
|
|
|
|
|
|||||||
| (b) | Details of other expenses for the years ended December 31, 2019, 2020 and 2021 are as follows: |
(In millions of won) |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
| Foreign currency loss |
W |
1,235,054 | 1,730,703 | 1,161,628 | ||||||||
| Other bad debt expenses |
1,379 | — | — | |||||||||
| Loss on disposal of property, plant and equipment |
40,897 | 60,294 | 64,350 | |||||||||
| Impairment loss on property, plant and equipment |
1,550,430 | 38,494 | 19,085 | |||||||||
| Loss on disposal of intangible assets |
139 | 368 | — | |||||||||
| Impairment loss on intangible assets |
249,450 | 79,593 | 29,488 | |||||||||
| Donations |
693 | 934 | 1,099 | |||||||||
| Loss on liquidation of investments in subsidiaries |
— | 72,654 | — | |||||||||
| Others |
19,701 | 16,240 | 5,209 | |||||||||
| |
|
|
|
|
|
|||||||
W |
3,097,743 | 1,999,280 | 1,280,859 | |||||||||
| |
|
|
|
|
|
|||||||
| 21. | Finance Income and Finance Costs |
| (a) | Finance income and costs recognized in profit or loss for the years ended December 31, 2019, 2020 and 2021 are as follows: |
(In millions of won) |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
| Finance income |
||||||||||||
| Interest income |
W |
53,378 | 69,651 | 88,888 | ||||||||
| Foreign currency gain |
135,006 | 336,155 | 81,600 | |||||||||
| Gain on disposal of investments in equity accounted investees |
4,531 | — | — | |||||||||
| Reversal of impairment loss on investments in equity accounted investees |
1,744 | 4,149 | 4,701 | |||||||||
| Gain on transaction of derivatives |
21,752 | 24,759 | 9,393 | |||||||||
| Gain on valuation of derivatives |
59,781 | — | 234,742 | |||||||||
| Gain on disposal of financial assets at fair value through profit or loss |
138 | — | — | |||||||||
| Gain on valuation of financial assets at fair value through profit or loss |
402 | 4,072 | 6,511 | |||||||||
| |
|
|
|
|
|
|||||||
W |
276,732 | 438,786 | 425,835 | |||||||||
| |
|
|
|
|
|
|||||||
| Finance costs |
||||||||||||
| Interest expense |
W |
172,750 | 370,479 | 434,089 | ||||||||
| Foreign currency loss |
154,421 | 194,384 | 381,132 | |||||||||
| Impairment loss on investments in equity accounted investees |
5,123 | 3,344 | 2,609 | |||||||||
| Loss on repayment of borrowings |
— | 794 | 250 | |||||||||
| Loss on sale of trade accounts and notes receivable |
19,728 | 5,258 | 4,877 | |||||||||
| Loss on transaction of derivatives |
— | 291 | 1,049 | |||||||||
| Loss on valuation of derivatives |
17,999 | 187,344 | 21,795 | |||||||||
| Loss on valuation of financial assets at fair value through profit or loss |
4,630 | 2,311 | 704 | |||||||||
| Loss on valuation of financial liabilities at fair value through profit or loss |
56,384 | 36,798 | 68,421 | |||||||||
| Others |
12,212 | 1,675 | 1,688 | |||||||||
| |
|
|
|
|
|
|||||||
W |
443,247 | 802,678 | 916,614 | |||||||||
| |
|
|
|
|
|
|||||||
| 22. | Income Tax Expense (Benefit) |
| (a) | Details of income tax expense (benefit) for the years ended December 31, 2019, 2020 and 2021 are as follows: |
(In millions of won) |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
| Current tax expense (benefit) |
||||||||||||
| Current year |
W |
193,691 | 117,215 | 199,591 | ||||||||
| Adjustment for prior years(*1) |
(35,787 | ) | (55,410 | ) | 163,570 | |||||||
| |
|
|
|
|
|
|||||||
W |
157,904 | 61,805 | 363,161 | |||||||||
| |
|
|
|
|
|
|||||||
| Deferred tax expense (benefit) |
||||||||||||
| Origination and reversal of temporary differences and others |
W |
(963,385 | ) | (321,333 | ) | 60,233 | ||||||
| Change in unrecognized deferred tax assets(*2) |
333,317 | (266,771 | ) | (38,053 | ) | |||||||
| |
|
|
|
|
|
|||||||
W |
(630,068 | ) | (588,104 | ) | 22,180 | |||||||
| |
|
|
|
|
|
|||||||
| Income tax expense (benefit) |
W |
(472,164 | ) | (526,299 | ) | 385,341 | ||||||
| |
|
|
|
|
|
|||||||
(*1) |
Consist of taxable income adjustments related to the transfer price investigation and others and significant portion of such amounts were adjusted in deferred tax expense (see Note 22(d)). |
(*2) |
Change in unrecognized deferred tax assets consist of tax effect from recognizing previously unrecognized deferred tax assets in relation to tax credit carryforwards. |
| 22. | Income Tax Expense (Benefit), Continued |
| (b) | Income taxes recognized directly in other comprehensive income or loss for the years ended December 31, 2019, 2020, and 2021 are as follows: |
(In millions of won) |
||||||||||||
2019 |
||||||||||||
Before tax |
Tax expense |
Net of tax |
||||||||||
| Remeasurements of net defined benefit liabilities (assets) |
W |
128,640 | (35,235 | ) | 93,405 | |||||||
| Foreign currency translation differences for foreign operations |
106,690 | — | 106,690 | |||||||||
| Change in equity of equity method investee |
4,163 | — | 4,163 | |||||||||
| |
|
|
|
|
|
|||||||
W |
239,493 | (35,235 | ) | 204,258 | ||||||||
| |
|
|
|
|
|
|||||||
(In millions of won) |
||||||||||||
2020 |
||||||||||||
Before tax |
Tax expense |
Net of tax |
||||||||||
| Remeasurements of net defined benefit liabilities (assets) |
W |
148,436 | (38,032 | ) | 110,404 | |||||||
| Foreign currency translation differences for foreign operations |
48,181 | — | 48,181 | |||||||||
| Change in equity of equity method investee |
(171 | ) | — | (171 | ) | |||||||
| |
|
|
|
|
|
|||||||
W |
196,446 | (38,032 | ) | 158,414 | ||||||||
| |
|
|
|
|
|
|||||||
(In millions of won) |
||||||||||||
2021 |
||||||||||||
Before tax |
Tax benefit (expense) |
Net of tax |
||||||||||
| Remeasurements of net defined benefit liabilities (assets) |
W |
(220,801 | ) | 57,438 | (163,363 | ) | ||||||
| Gain (loss) on valuation of derivatives |
(12,495 | ) | 3,268 | (9,227 | ) | |||||||
| Foreign currency translation differences for foreign operations |
871,292 | (1,503 | ) | 869,789 | ||||||||
| Change in equity of equity method investee |
6,364 | (1,951 | ) | 4,413 | ||||||||
| |
|
|
|
|
|
|||||||
W |
644,360 | 57,252 | 701,612 | |||||||||
| |
|
|
|
|
|
|||||||
| 22. | Income Tax Expense (Benefit), Continued |
| (c) | Reconciliation of the actual effective tax rate for the years ended December 31, 2019, 2020, and 2021 is as follows: |
(In millions of won) |
||||||||||||||||||||||||
2019 |
2020 |
2021 |
||||||||||||||||||||||
| Profit (loss) for the year |
(2,872,078 | ) | (76,147 | ) | 1,333,544 | |||||||||||||||||||
| Income tax expense (benefit) |
(472,164 | ) | (526,299 | ) | 385,341 | |||||||||||||||||||
| |
|
|
|
|
|
|||||||||||||||||||
| Profit (loss) before income tax |
W |
(3,344,242 | ) | (602,446 | ) | 1,718,885 | ||||||||||||||||||
| |
|
|
|
|
|
|||||||||||||||||||
| Income tax expense (benefit) using the statutory tax rate of each country |
23.94 | % | (800,660 | ) | 31.55 | % | (190,072 | ) | 30.37 | % | 521,954 | |||||||||||||
| Non-deductible expenses |
(0.95 | %) | 31,649 | (2.29 | %) | 13,789 | 1.01 | % | 17,354 | |||||||||||||||
| Tax credits |
1.47 | % | (49,269 | ) | 12.46 | % | (75,051 | ) | (3.28 | %) | (56,439 | ) | ||||||||||||
| Change in unrecognized deferred tax assets(*1) |
(9.97 | %) | 333,318 | 44.28 | % | (266,771 | ) | (2.21 | %) | (38,053 | ) | |||||||||||||
| Adjustment for prior years(*2) |
1.07 | % | (35,787 | ) | 9.20 | % | (55,410 | ) | (0.49 | %) | (8,349 | ) | ||||||||||||
| Effect on change in tax rate |
(0.40 | %) | 13,353 | (1.23 | %) | 7,386 | (2.29 | %) | (39,338 | ) | ||||||||||||||
| Others |
(1.05 | %) | 35,232 | (6.61 | %) | 39,830 | (0.69 | %) | (11,788 | ) | ||||||||||||||
| |
|
|
|
|
|
|||||||||||||||||||
| Income tax expense (benefit) |
W |
(472,164 | ) | (526,299 | ) | 385,341 | ||||||||||||||||||
| |
|
|
|
|
|
|||||||||||||||||||
| Effective tax rate |
(*3 | ) | (*3 | ) | 22.42 | % | ||||||||||||||||||
(*1) |
Change in unrecognized deferred tax assets consist of tax effect from recognizing previously unrecognized deferred tax assets in relation to tax credit carryforwards. |
(*2) |
Adjustment for prior years in 2021 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. |
(d) |
Tax uncertainties |
| 23. | Deferred Tax Assets and Liabilities |
| (a) | Unrecognized deferred tax liabilities |
| (b) | Unused tax credit carryforwards for which no deferred tax asset is recognized |
(In millions of won) |
||||||||||||||||||||||||||||
Total |
December 31, 2026 |
December 31, 2027 |
December 31, 2028 |
December 31, 2029 |
December 31, 2030 |
December 31, 2031 |
||||||||||||||||||||||
| Tax credit carryforwards |
W |
182,617 | 16,710 | 75,626 | 40,824 | 40,965 | 4,593 | 3,899 | ||||||||||||||||||||
| 23. | 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, 2020 |
December 31, 2021 |
December 31, 2020 |
December 31, 2021 |
December 31, 2020 |
December 31, 2021 |
|||||||||||||||||||
| Other accounts receivable, net |
W |
— | — | (13 | ) | (17 | ) | (13 | ) | (17 | ) | |||||||||||||
| Inventories, net |
60,539 | 68,679 | — | — | 60,539 | 68,679 | ||||||||||||||||||
| Defined benefit liabilities, net |
— | — | (35,617 | ) | (26,642 | ) | (35,617 | ) | (26,642 | ) | ||||||||||||||
| Investments in subsidiaries and associates |
— | — | (79,301 | ) | (233,552 | ) | (79,301 | ) | (233,552 | ) | ||||||||||||||
| Accrued expenses |
123,106 | 250,582 | — | — | 123,106 | 250,582 | ||||||||||||||||||
| Property, plant and equipment |
671,286 | 632,378 | (63,971 | ) | (28,886 | ) | 607,315 | 603,492 | ||||||||||||||||
| Intangible assets |
19,469 | 17,450 | (8,000 | ) | (6,636 | ) | 11,469 | 10,814 | ||||||||||||||||
| Provisions |
63,943 | 68,893 | — | — | 63,943 | 68,893 | ||||||||||||||||||
| Other temporary differences |
173,166 | 130,274 | (3,601 | ) | (19,596 | ) | 169,565 | 110,678 | ||||||||||||||||
| Tax loss carryforwards |
953,209 | 958,624 | — | — | 953,209 | 958,624 | ||||||||||||||||||
| Tax credit carryforwards |
391,769 | 489,505 | — | — | 391,769 | 489,505 | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Deferred tax assets (liabilities) |
W |
2,456,487 | 2,616,385 | (190,503 | ) | (315,329 | ) | 2,265,984 | 2,301,056 | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (d) | Changes in deferred tax assets and liabilities for the years ended December 31, 2020 and 2021 are as follows: |
| 24. | Earnings ( L oss) p er Share Attributable to Owners of the Controlling Company |
| (a) | Basic earnings (loss) per share for the years ended December 31, 2019, 2020 and 2021 are as follows: |
(In won and number of shares) |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
Profit (loss) attributable to owners of the Controlling Company for the year |
W |
(2,829,705,069,665 | ) | (94,852,991,844 | ) | 1,186,182,126,952 | ||||||
Weighted-average number of common stocks outstanding |
357,815,700 | 357,815,700 | 357,815,700 | |||||||||
Basic earnings (loss) per share |
W |
(7,908 | ) | (265 | ) | 3,315 | ||||||
| (b) | Diluted earnings per share for the year ended December 31, 2021 are as follows: |
(In won and number of shares) |
||||
2021 |
||||
Profit attributable to owners of the Controlling Company |
W |
1,186,182,126,952 | ||
Adjustments: Interest expenses of convertible bond, net of income tax |
11,382,390,353 | |||
Loss on fair value valuation of convertible bond, net of income tax |
50,521,798,972 | |||
Diluted profit attributable to owners of the Controlling Company |
1,248,086,316,277 | |||
Weighted-average number of common stocks outstanding, after adjustment |
398,804,698 | |||
Diluted earnings per share |
W |
3,130 | ||
(Number of shares) |
||||
2021 |
||||
Weighted-average number of common stocks outstanding |
357,815,700 | |||
Adjustment : Number of common stocks to be issued from conversion |
40,988,998 | |||
Weighted-average number of common stocks outstanding, after adjustment |
398,804,698 | |||
| 25. | Financial Risk Management |
| (a) | Market risk |
| (i) | Currency risk |
| 25. | Financial Risk Management, Continued |
| i) | Exposure to currency risk |
(In millions) |
December 31, 2020 |
|||||||||||||||||||||||||||||||
USD |
JPY |
CNY |
TWD |
EUR |
PLN |
VND |
GBP |
|||||||||||||||||||||||||
Cash and cash equivalents |
1,795 | 164 | 13,382 | 34 | 7 | 4 | 33,843 | — | ||||||||||||||||||||||||
Trade accounts and notes receivable |
3,093 | 13 | 585 | — | — | — | — | — | ||||||||||||||||||||||||
Other accounts receivables |
52 | 93 | 222 | 3 | 6 | — | 9,773 | — | ||||||||||||||||||||||||
Other assets denominated in foreign currencies |
— | 208 | 51 | 6 | 1 | — | 4,586 | — | ||||||||||||||||||||||||
Trade accounts and notes payable |
(1,948 | ) | (9,831 | ) | (2,037 | ) | — | — | — | (357,149 | ) | — | ||||||||||||||||||||
Other accounts payable |
(268 | ) | (6,239 | ) | (2,018 | ) | (4 | ) | (8 | ) | — | (997,204 | ) | (2 | ) | |||||||||||||||||
Financial liabilities |
(4,294 | ) | — | (27,825 | ) | — | — | — | — | — | ||||||||||||||||||||||
| (1,570 | ) | (15,592 | ) | (17,640 | ) | 39 | 6 | 4 | (1,306,151 | ) | (2 | ) | ||||||||||||||||||||
Cross currency interest rate swap contracts |
2,225 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Net exposure |
655 | (15,592 | ) | (17,640 | ) | 39 | 6 | 4 | (1,306,151 | ) | (2 | ) | ||||||||||||||||||||
(In millions) |
December 31, 2021 |
|||||||||||||||||||||||||||||||
USD |
JPY |
CNY |
TWD |
EUR |
PLN |
VND |
GBP |
|||||||||||||||||||||||||
Cash and cash equivalents |
1,138 | 195 | 11,024 | 29 | 3 | 3 | 44,525 | — | ||||||||||||||||||||||||
Deposits in banks |
— | — | 3,564 | — | — | — | — | ———— — |
||||||||||||||||||||||||
Trade accounts and notes receivable |
3,708 | 221 | 568 | — | — | — | — | — | ||||||||||||||||||||||||
Other accounts receivables |
24 | 71 | 297 | 4 | — | — | 15,828 | — | ||||||||||||||||||||||||
Other assets denominated in foreign currencies |
— | 176 | 167 | 6 | — | — | 6,481 | — | ||||||||||||||||||||||||
Trade accounts and notes payable |
(2,170 | ) | (8,850 | ) | (2,343 | ) | — | — | — | (465,390 | ) | — | ||||||||||||||||||||
Other accounts payable |
(1,227 | ) | (4,630 | ) | (2,203 | ) | (5 | ) | (5 | ) | — | (1,610,640 | ) | — | ||||||||||||||||||
Financial liabilities |
(4,257 | ) | — | (18,017 | ) | — | — | — | — | — | ||||||||||||||||||||||
| (2,784 | ) | (12,817 | ) | (6,943 | ) | 34 | (2 | ) | 3 | (2,009,196 | ) | — | ||||||||||||||||||||
Cross currency interest rate swap contracts(*) |
1,545 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Net exposure |
(1,239 | ) | (12,817 | ) | (6,943 | ) | 34 | (2 | ) | 3 | (2,009,196 | ) | — | |||||||||||||||||||
(*) |
Of cross currency interest rate swap contracts, USD 100 million were entered into to hedge currency risk with respect to foreign currency denominated borrowings and USD 1,445 million were entered into to hedge currency risk and interest rate risk with respect to foreign currency denominated borrowings and bonds. |
| 25. | Financial Risk Management, Continued |
(In won) |
||||||||||||||||||||
Average rate (year-to-date) |
Reporting date spot rate |
|||||||||||||||||||
2019 |
2020 |
2021 |
December 31, 2020 |
December 31, 2021 |
||||||||||||||||
USD |
W |
1,165.46 | 1,180.46 | 1,144.10 | 1,088.00 | 1,185.50 | ||||||||||||||
JPY |
10.70 | 11.05 | 10.42 | 10.54 | 10.30 | |||||||||||||||
CNY |
168.56 | 170.90 | 177.36 | 166.96 | 186.26 | |||||||||||||||
TWD |
37.74 | 40.07 | 40.99 | 38.67 | 42.84 | |||||||||||||||
EUR |
1,304.52 | 1,345.71 | 1,353.25 | 1,338.24 | 1,342.34 | |||||||||||||||
PLN |
303.62 | 302.95 | 296.51 | 292.02 | 292.11 | |||||||||||||||
VND |
0.0502 | 0.0508 | 0.0499 | 0.0471 | 0.0521 | |||||||||||||||
GBP |
1,487.46 | 1,513.48 | 1,573.89 | 1,482.40 | 1,600.25 | |||||||||||||||
| ii) | Sensitivity analysis |
(In millions of won) |
||||||||||||||||
December 31, 2020 |
December 31, 2021 |
|||||||||||||||
Equity |
Profit or loss |
Equity |
Profit or loss |
|||||||||||||
USD (5 percent weakening) |
W |
12,438 | 73,186 | (74,214 | ) | 2,339 | ||||||||||
JPY (5 percent weakening) |
(6,250 | ) | (5,194 | ) | (5,437 | ) | (3,288 | ) | ||||||||
CNY (5 percent weakening) |
(147,294 | ) | 93 | (64,732 | ) | 172 | ||||||||||
TWD (5 percent weakening) |
75 | — | 70 | 5 | ||||||||||||
EUR (5 percent weakening) |
250 | 377 | 178 | (858 | ) | |||||||||||
PLN (5 percent weakening) |
43 | 43 | 29 | 29 | ||||||||||||
VND (5 percent weakening) |
(2,230 | ) | (2,230 | ) | (3,865 | ) | (3,865 | ) | ||||||||
GBP (5 percent weakening) |
(107 | ) | (107 | ) | — | — | ||||||||||
| 25. | Financial Risk Management, Continued |
| iii) | Derivatives for cash flow hedge |
| (ii) | Interest rate risk |
| i) | Profile |
(In millions of won) |
||||||||
December 31, 2020 |
December 31, 2021 |
|||||||
Fixed rate instruments |
||||||||
Financial assets |
W |
4,296,823 | 4,284,950 | |||||
Financial liabilities |
(5,875,729 | ) | (5,237,711 | ) | ||||
W |
(1,578,906 | ) | (952,761 | ) | ||||
Variable rate instruments |
||||||||
Financial liabilities |
W |
(8,193,085 | ) | (7,426,095 | ) | |||
| ii) | Equity and profit or loss sensitivity analysis for variable rate instruments |
(In millions of won) |
||||||||||||||||
Equity |
Profit or loss |
|||||||||||||||
1%p increase |
1%p decrease |
1%p increase |
1%p decrease |
|||||||||||||
December 31, 2020 |
||||||||||||||||
Variable rate instruments(*) |
W |
(45,352 | ) | 45,352 | (45,352 | ) | 45,352 | |||||||||
December 31, 2021 |
||||||||||||||||
Variable rate instruments(*) |
W |
(40,931 | ) | 40,931 | (40,931 | ) | 40,931 | |||||||||
(*) |
Financial instruments related to non-hedging interest rate swap are excluded from the calculation. |
| 25. | Financial Risk Management, Continued |
| (iii) | Managing interest rate benchmark reform and associated risks |
(In millions of won) |
||||||||
Total amount of not transitioned contracts |
Amount with appropriate fallback clause |
|||||||
Non-derivative financial liabilities |
||||||||
Borrowings |
W |
2,562,656 | 1,635,990 | |||||
Derivative assets |
||||||||
Cross currency interest rate swap contracts |
W |
43,406 | 43,406 | |||||
Derivative liabilities |
||||||||
Cross currency interest rate swap contracts |
W |
7,820 | 7,820 | |||||
| 25. | Financial Risk Management, Continued |
| (b) | Credit risk |
(In millions of won) |
||||||||
December 31, 2020 |
December 31, 2021 |
|||||||
| Financial assets carried at amortized cost |
||||||||
| Cash |
W |
4,217,943 | 3,540,475 | |||||
| Deposits in banks |
78,663 | 743,316 | ||||||
| Trade accounts and notes receivable, net |
3,517,512 | 4,574,789 | ||||||
| Non-trade receivables |
140,616 | 108,875 | ||||||
| Accrued income |
3,864 | 13,024 | ||||||
| Deposits |
30,947 | 45,620 | ||||||
| Short-term loans |
28,491 | 22,518 | ||||||
| Long-term loans |
13,899 | 19,939 | ||||||
| Long-term non-trade receivables |
— | 2,376 | ||||||
| Lease receivables |
22,262 | 18,209 | ||||||
| |
|
|
|
|||||
W |
8,054,197 | 9,089,141 | ||||||
| |
|
|
|
|||||
| Financial assets at fair value through profit or loss |
||||||||
| Convertible securities |
W |
2,377 | 2,758 | |||||
| Derivatives |
9,363 | 65,612 | ||||||
| |
|
|
|
|||||
W |
11,740 | 68,370 | ||||||
| |
|
|
|
|||||
| Financial assets effective for cash flow hedging |
||||||||
| Derivatives |
W |
— | 905 | |||||
| |
|
|
|
|||||
| Financial assets at fair value through other comprehensive income |
||||||||
| Debt instruments |
W |
72 | 48 | |||||
| |
|
|
|
|||||
W |
8,066,009 | 9,158,464 | ||||||
| |
|
|
|
|||||
| 25. | Financial Risk Management, Continued |
| (c) | Liquidity risk |
(In millions of won) |
||||||||||||||||||||||||||||
Contractual cash flows in |
||||||||||||||||||||||||||||
Carrying amount |
Total |
6 months or less |
6-12 months |
1-2 years |
2-5 years |
More than 5 years |
||||||||||||||||||||||
| Non-derivative financial liabilities |
||||||||||||||||||||||||||||
| Borrowings |
W |
10,052,245 | 10,693,994 | 1,554,233 | 1,110,193 | 3,466,945 | 4,562,623 | — | ||||||||||||||||||||
| Bonds |
2,611,561 | 2,531,468 | 575,029 | 884,996 | 329,661 | 652,467 | 89,315 | |||||||||||||||||||||
| Trade accounts and notes payable |
4,814,055 | 4,814,055 | 4,468,682 | 345,373 | — | — | — | |||||||||||||||||||||
| Other accounts payable |
2,327,257 | 2,329,820 | 2,201,225 | 128,595 | — | — | — | |||||||||||||||||||||
| Other accounts payable (enterprise procurement cards ) (*) |
1,074,089 | 1,074,089 | 1,023,130 | 50,959 | — | — | — | |||||||||||||||||||||
| Long-term other accounts payable |
496,083 | 586,104 | — | — | 113,222 | 273,718 | 199,164 | |||||||||||||||||||||
| Security deposits received |
11,199 | 11,199 | 2,860 | 5,592 | 2,747 | — | — | |||||||||||||||||||||
| Lease liabilities |
84,326 | 90,920 | 28,216 | 16,116 | 22,959 | 16,241 | 7,388 | |||||||||||||||||||||
| Derivative financial liabilities |
||||||||||||||||||||||||||||
| Derivatives |
W |
10,925 | 8,378 | 5,473 | 2,364 | 541 | — | — | ||||||||||||||||||||
| Derivatives for cash flow hedge |
13,400 | 13,400 | 13,400 | — | — | — | — | |||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
W |
21,495,140 | 22,153,427 | 9,872,248 | 2,544,188 | 3,936,075 | 5,505,049 | 295,867 | |||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 25. | Financial Risk Management, Continued |
| (*) | Represents liabilities payable to credit card companies for utility expenses and others paid using enterprise procurement cards. The Group presented the payable to credit card companies as other accounts payable and 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, 2021 is as follows: |
(In millions of won) |
||||||||||||
January 1, 2021 |
Change (Cash flows from operation activities) |
December 31, 2021 |
||||||||||
| Other accounts payable (enterprise procurement cards) |
W |
1,078,150 | (4,061 | ) | 1,074,089 | |||||||
| (d) | Capital management |
(In millions of won) |
||||||||
December 31, 2020 |
December 31, 2021 |
|||||||
| Total liabilities |
W |
22,334,584 | 23,392,014 | |||||
| Total equity |
12,731,428 | 14,762,501 | ||||||
| Cash and deposits in banks(*1) |
4,296,751 | 4,284,902 | ||||||
| Borrowings (including bonds) |
14,068,814 | 12,663,806 | ||||||
| Total liabilities to equity ratio |
175 | % | 158 | % | ||||
| Net borrowings to equity ratio(*2) |
77 | % | 57 | % | ||||
| (*1) | Cash and deposits in banks consist of cash and cash equivalents and current deposits in banks. |
| (*2) | Net borrowings to equity ratio is calculated by dividing total borrowings (including bonds and excluding lease liabilities and others) less cash and current deposits in banks by total equity. |
| 25. | Financial Risk Management, Continued |
| (e) | Determination of fair value |
| (i) | Measurement of fair value |
| i) | Current assets and liabilities |
| ii) | Trade receivables and other receivables |
iii) |
Investments in equity and debt securities |
| iv) | Non-derivative financial liabilities |
| v) | Derivatives |
| 25. | Financial Risk Management, Continued |
| (ii) | Fair values versus carrying amounts |
(In millions of won) |
||||||||||||||||
December 31, 2020 |
December 31, 2021 |
|||||||||||||||
Carrying amounts |
Fair values |
Carrying amounts |
Fair values |
|||||||||||||
Financial assets carried at amortized cost |
||||||||||||||||
Cash and cash equivalents |
W |
4,218,099 | (*) | 3,541,597 | (*) | |||||||||||
Deposits in banks |
78,663 | (*) | 743,316 | (*) | ||||||||||||
Trade accounts and notes receivable |
3,517,512 | (*) | 4,574,789 | (*) | ||||||||||||
Non-trade receivables |
140,616 | (*) | 108,875 | (*) | ||||||||||||
Accrued income |
3,864 | (*) | 13,024 | (*) | ||||||||||||
Deposits |
30,947 | (*) | 45,620 | (*) | ||||||||||||
Short-term loans |
28,491 | (*) | 22,518 | (*) | ||||||||||||
Long-term loans |
13,899 | (*) | 19,939 | (*) | ||||||||||||
Long-term non-trade receivables |
— | (*) | 2,376 | (*) | ||||||||||||
Lease receivables |
22,262 | (*) | 18,209 | (*) | ||||||||||||
Financial assets at fair value through profit or loss |
||||||||||||||||
Equity instruments |
W |
13,223 | 13,223 | 48,805 | 48,805 | |||||||||||
Convertible securities |
2,377 | 2,377 | 2,758 | 2,758 | ||||||||||||
Derivatives |
9,363 | 9,363 | 65,612 | 65,612 | ||||||||||||
Financial assets effective for cash flow hedging |
||||||||||||||||
Derivatives |
W |
— | — | 905 | 905 | |||||||||||
Financial assets at fair value through other comprehensive income |
||||||||||||||||
Debt instruments |
W |
72 | 72 | 48 | 48 | |||||||||||
Financial liabilities at fair value through profit or loss |
||||||||||||||||
Derivatives |
W |
167,625 | 167,625 | 10,925 | 10,925 | |||||||||||
Convertible bonds |
861,675 | 861,675 | 1,015,760 | 1,015,760 | ||||||||||||
Financial liabilities effective for cash flow hedging |
||||||||||||||||
Derivatives |
— | — | 13,400 | 13,400 | ||||||||||||
Financial liabilities carried at amortized cost |
||||||||||||||||
Borrowings |
W |
11,296,898 | 11,328,418 | 10,052,245 | 10,064,068 | |||||||||||
Bonds |
1,910,241 | 1,923,517 | 1,595,801 | 1,596,044 | ||||||||||||
Trade accounts and notes payable |
3,779,290 | (*) | 4,814,055 | (*) | ||||||||||||
Other accounts payable |
2,781,941 | (*) | 3,401,346 | (*) | ||||||||||||
Long-term other accounts payable |
30 | (*) | 496,083 | (*) | ||||||||||||
Security deposits received |
12,539 | (*) | 11,199 | (*) | ||||||||||||
Lease liabilities |
83,431 | (*) | 84,326 | (*) | ||||||||||||
| (*) | Excluded from disclosures as the carrying amount approximates fair value. |
| . |
25. |
Financial Risk Management, Continued |
| (iii) | Fair values of financial assets and liabilities |
| i) | Fair value hierarchy |
| • | 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 |
(In millions of won) |
||||||||||||||||
December 31, 2020 |
||||||||||||||||
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||
Financial assets at fair value through profit or loss |
||||||||||||||||
Equity instruments |
W |
— | — | 13,223 | 13,223 | |||||||||||
Convertible securities |
— | — | 2,377 | 2,377 | ||||||||||||
Derivatives |
— | 9,363 | — | 9,363 | ||||||||||||
Financial assets at fair value through other comprehensive income |
||||||||||||||||
Debt instruments |
W |
72 | — | — | 72 | |||||||||||
Financial liabilities at fair value through profit or loss |
||||||||||||||||
Derivatives |
W |
— | 167,625 | — | 167,625 | |||||||||||
Convertible bonds |
861,675 | — | — | 861,675 | ||||||||||||
(In millions of won) |
||||||||||||||||
December 31, 2021 |
||||||||||||||||
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||
Financial assets at fair value through profit or loss |
||||||||||||||||
Equity instruments |
W |
— | — | 48,805 | 48,805 | |||||||||||
Convertible securities |
— | — | 2,758 | 2,758 | ||||||||||||
Derivatives |
— | 65,612 | — | 65,612 | ||||||||||||
Financial assets effective for cash flow hedging |
||||||||||||||||
Derivatives |
W |
— | 905 | — | 905 | |||||||||||
Financial assets at fair value through other comprehensive income |
||||||||||||||||
Debt instruments |
W |
48 | — | — | 48 | |||||||||||
Financial liabilities at fair value through profit or loss |
||||||||||||||||
Derivatives |
W |
— | 10,925 | — | 10,925 | |||||||||||
Convertible bonds |
1,015,760 | — | — | 1,015,760 | ||||||||||||
Financial liabilities effective for cash flow hedging |
||||||||||||||||
Derivatives |
W |
— | 13,400 | — | 13,400 | |||||||||||
| 25. | Financial Risk Management, Continued |
| iii) | Financial instruments not measured at fair value but for which the fair value is disclosed |
(In millions of won) |
December 31, 2020 |
Valuation technique |
Input |
|||||||||||||||||
| Classification |
Level 1 |
Level 2 |
Level 3 |
|||||||||||||||||
| Liabilities |
||||||||||||||||||||
| Borrowings |
W |
— | — | 11,328,418 | Discounted cash flow | Discount rate | | |||||||||||||
| Bonds |
— | — | 1,923,517 | Discounted cash flow | |
Discount rate | | |||||||||||||
(In millions of won) |
December 31, 2021 |
Valuation technique |
Input |
|||||||||||||||||
| Classification |
Level 1 |
Level 2 |
Level 3 |
|||||||||||||||||
| Liabilities |
||||||||||||||||||||
| Borrowings |
W |
— | — | 10,064,068 | Discounted cash flow | |
Discount rate | | ||||||||||||
| Bonds |
— | — | 1,596,044 | Discounted cash flow | |
Discount rate | | |||||||||||||
| iv) | The interest rates applied for determination of the above fair value as of December 31, 2020 and 2021 are as follows: |
December 31, 2020 |
December 31, 2021 |
|||||||
| Borrowings, bonds and others |
2.15~4.46 | % | 2.21~4.38 | % | ||||
| 26. | Leases |
| (a) | Leases as lessee |
| (i) | Right-of-use |
(In millions of won) |
||||||||||||||||||||||||
2020 |
||||||||||||||||||||||||
Buildings and structures |
Land |
Machinery and equipment |
Vehicles |
Others |
Total |
|||||||||||||||||||
| Balance at January 1, 2020 |
W |
53,213 | 49,754 | 2,147 | 7,848 | 288 | 113,250 | |||||||||||||||||
| Additions and others |
44,900 | 607 | 1,197 | 4,459 | 591 | 51,754 | ||||||||||||||||||
| Depreciation |
(42,923 | ) | (2,947 | ) | (1,485 | ) | (6,336 | ) | (378 | ) | (54,069 | ) | ||||||||||||
| Gain or loss on foreign currency translation |
(24 | ) | (3 | ) | — | (1 | ) | — | (28 | ) | ||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Balance at December 31, 2020 |
W |
55,166 | 47,411 | 1,859 | 5,970 | 501 | 110,907 | |||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
(In millions of won) |
||||||||||||||||||||||||
2021 |
||||||||||||||||||||||||
Buildings and structures |
Land |
Machinery and equipment |
Vehicles |
Others |
Total |
|||||||||||||||||||
| Balance at January 1, 2021 |
W |
55,166 | 47,411 | 1,859 | 5,970 | 501 | 110,907 | |||||||||||||||||
| Additions and others |
54,728 | 39 | 870 | 7,620 | 398 | 63,655 | ||||||||||||||||||
| Depreciation |
(51,368 | ) | (2,985 | ) | (1,469 | ) | (6,745 | ) | (416 | ) | (62,983 | ) | ||||||||||||
| Disposals |
(7 | ) | — | — | — | — | (7 | ) | ||||||||||||||||
| Gain or loss on foreign currency translation |
(2,352 | ) | 9,952 | 70 | 217 | 407 | 8,294 | |||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Balance at December 31, 2021 |
W |
56,167 | 54,417 | 1,330 | 7,062 | 890 | 119,866 | |||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 26. | 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, 2019, 2020 and 2021 are as follows: |
(In millions of won) |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
| Interest on lease liabilities |
W |
(4,085 |
) |
|
(4,456 | ) | (3,664 | ) | ||||
| Income from sub-leasing right-of-use assets |
|
1,079 |
|
|
896 | 712 | ||||||
| Expenses relating to short-term leases |
|
(1,783 | ) |
|
(977 | ) | (824 | ) | ||||
| Expenses relating to leases of low-value assets |
|
(1,188 |
) |
|
(231 | ) | (577 | ) | ||||
| (iii) | Changes in lease liabilities for the years ended December 31, 2020 and 2021 are as follows: |
(In millions of won) |
||||||||
2020 |
2021 |
|||||||
| Balance at January 1 |
W |
88,512 | 83,431 | |||||
| Additions and others |
52,663 | 64,172 | ||||||
| Interest expense |
4,456 | 3,664 | ||||||
| Repayment of liabilities |
(62,200 | ) | (66,941 | ) | ||||
| |
|
|
|
|||||
| Balance at December 31 |
W |
83,431 | 84,326 | |||||
| |
|
|
|
|||||
| (b) | Leases as lessor |
(In millions of won) |
||||||||
December 31, 2020 |
December 31, 2021 |
|||||||
| 6 months or less |
W |
3,306 | 3,688 | |||||
| 6-12 months |
3,306 | 3,688 | ||||||
| 1-2 years |
6,612 | 7,376 | ||||||
| 2-5 years |
10,469 | 4,303 | ||||||
| Total undiscounted lease receivable |
23,693 | 19,055 | ||||||
| Unearned finance income |
(1,431 | ) | (846 | ) | ||||
| Net Investment in the lease |
22,262 | 18,209 | ||||||
| 27. | Changes in liabilities arising from financing activities |
(In millions of won) |
||||||||||||||||||||||||||||
January 1, 2021 |
Non-cash transactions |
|||||||||||||||||||||||||||
Cash flows from financing activities |
Reclassification |
Gain or loss on foreign currency translation |
Effective interest adjustment |
Others |
December 31, 2021 |
|||||||||||||||||||||||
| Short-term borrowings |
W |
394,906 | 148,640 | — | 70,187 | — | — | 613,733 | ||||||||||||||||||||
| Current portion of long-term borrowings and bonds(*) |
2,705,709 | (4,344,208 | ) | 4,582,430 | 370,826 | 10,078 | 68,671 | 3,393,506 | ||||||||||||||||||||
| Long-term borrowings |
9,019,658 | 1,298,346 | (3,112,568 | ) | 455,155 | — | — | 7,660,591 | ||||||||||||||||||||
| Bonds |
1,948,541 | 498,027 | (1,469,862 | ) | 9,732 | 9,538 | — | 995,976 | ||||||||||||||||||||
| Lease liabilities |
83,431 | (66,941 | ) | — | 4,181 | — | 63,655 | 84,326 | ||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
W |
14,152,245 | (2,466,136 | ) | — | 910,081 | 19,616 | 132,326 | 12,748,132 | ||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| (*) | Others include W 68,421 million of loss on valuation of financial liabilities at fair value through profit or loss. |
| 28. | Related Parties and Others |
| (a) | Related parties |
Classification |
Description | |
| Associates(*) | Paju Electric Glass Co., Ltd. and others | |
| Entity that has significant influence over the Controlling Company | LG Electronics Inc. | |
Subsidiaries of the entity that has significant influence over the Controlling Company |
Subsidiaries of LG Electronics Inc. | |
| (*) | Details of associates are described in note 8. |
| 28. | Related Parties and Others, Continued |
| (b) | Significant transactions such as sales of goods and purchases of raw material and outsourcing service and others, which occurred in the normal course of business with related parties for the years ended December 31, 2019, 2020 and 2021 are as follows: |
(In millions of won) |
2019 |
|||||||||||||||||||||||
Sales and others |
Purchase and others |
|||||||||||||||||||||||
Dividend income |
Purchase of raw material and others |
Acquisition of property, plant and equipment |
Outsourcing fees |
Other costs |
||||||||||||||||||||
Associates |
||||||||||||||||||||||||
INVENIA Co., Ltd.(*1) |
W |
— | 180 | 1,024 | 45,580 | — | 297 | |||||||||||||||||
AVATEC Co., Ltd. |
2,639 | 265 | — | — | 73,323 | 891 | ||||||||||||||||||
Paju Electric Glass Co., Ltd. |
— | 6,057 | 342,958 | — | — | 4,416 | ||||||||||||||||||
WooRee E&L Co., Ltd. |
— | — | 6,441 | — | — | 5 | ||||||||||||||||||
YAS Co., Ltd. |
— | 1,000 | 6,764 | 102,316 | — | 3,655 | ||||||||||||||||||
Material Science Co., Ltd. |
— | — | 59 | — | — | 313 | ||||||||||||||||||
W |
2,639 | 7,502 | 357,246 | 147,896 | 73,323 | 9,577 | ||||||||||||||||||
Entity that has significant influence over the Controlling Company |
||||||||||||||||||||||||
LG Electronics Inc. |
W |
947,409 | — | 13,240 | 815,629 | — | 153,212 | |||||||||||||||||
Subsidiaries of the entity that has significant influence over the Controlling Company |
||||||||||||||||||||||||
LG Electronics India Pvt. Ltd. |
W |
87,116 | — | — | — | — | 194 | |||||||||||||||||
LG Electronics Vietnam Haiphong Co., Ltd. |
277,743 | — | — | 3,019 | — | 924 | ||||||||||||||||||
LG Electronics Nanjing New Technology Co., Ltd. |
297,033 | — | — | 31 | — | 486 | ||||||||||||||||||
LG Electronics RUS, LLC |
100,894 | — | — | — | — | 1,972 | ||||||||||||||||||
| 28. | Related Parties and Others, Continued |
(In millions of won) |
2019 |
|||||||||||||||||||||||
Purchase and others |
||||||||||||||||||||||||
Sales and others |
Dividend income |
Purchase of raw material and others |
Acquisition of property, plant and equipment |
Outsourcing fees |
Other costs |
|||||||||||||||||||
LG Electronics do Brasil Ltda. |
W |
145,546 | — | — | — | — | 289 | |||||||||||||||||
LG Innotek Co., Ltd. |
7,572 | — | 53,886 | — | — | 79,162 | ||||||||||||||||||
Qingdao LG Inspur Digital Communication Co., Ltd. |
22,563 | — | — | — | — | — | ||||||||||||||||||
Inspur LG Digital Mobile Communications Co., Ltd. |
41,858 | — | — | — | — | — | ||||||||||||||||||
LG Electronics Mexicalli, S.A. DE C.V. |
114,520 | — | — | — | — | 85 | ||||||||||||||||||
LG Electronics Mlawa Sp. z o.o. |
618,715 | — | — | — | — | 1,967 | ||||||||||||||||||
LG Hitachi Water Solutions Co., Ltd.(*2) |
— | — | — | 79,986 | — | — | ||||||||||||||||||
LG Electronics Reynosa, S.A. DE C.V. |
722,194 | — | — | — | — | 1,155 | ||||||||||||||||||
LG Electronics Air-Conditioning (Shandong) Co., Ltd. |
— | — | 444 | 14,527 | — | 88 | ||||||||||||||||||
HiEntech Co., Ltd.(*2) |
47 | — | — | 7,264 | — | 21,576 | ||||||||||||||||||
HiEntech (Tianjin) Co., Ltd.(*2) |
— | — | — | 32,335 | — | 15,423 | ||||||||||||||||||
LG Electronics Egypt S.A.E. |
97,359 | — | — | — | — | 241 | ||||||||||||||||||
LG Electronics Alabama Inc. |
12,869 | — | — | — | — | — | ||||||||||||||||||
LG Electronics Japan, Inc. |
— | — | — | 14 | — | 6,236 | ||||||||||||||||||
P.T. LG Electronics Indonesia |
11,200 | — | — | — | — | 176 | ||||||||||||||||||
Others |
12,564 | — | — | 33 | — | 6,996 | ||||||||||||||||||
W |
2,569,793 | — | 54,330 | 137,209 | — | 136,970 | ||||||||||||||||||
W |
3,519,841 | 7,502 | 424,816 | 1,100,734 | 73,323 | 299,759 | ||||||||||||||||||
| (*1) | Represents transactions occurred prior to the Group’s disposal of the entire investments |
| (*2) | Represents transactions occurred prior to LG Electronics Inc.’s disposal of the entire investments. |
| 28. | Related Parties and Others, Continued |
2020 |
||||||||||||||||||||||||
Sales and others |
Purchase and others |
|||||||||||||||||||||||
(In millions of won) |
Dividend income |
Purchase of raw material and others |
Acquisition of property, plant and equipment |
Outsourcing fees |
Other costs |
|||||||||||||||||||
Associates and their subsidiaries |
||||||||||||||||||||||||
AVATEC Co., Ltd. |
W |
22 | 200 | 80 | — | 74,070 | 1,112 | |||||||||||||||||
Paju Electric Glass Co., Ltd. |
— | 7,739 | 299,737 | — | — | 2,862 | ||||||||||||||||||
WooRee E&L Co., Ltd. |
— | — | 13,857 | — | — | 35 | ||||||||||||||||||
YAS Co., Ltd. |
— | 300 | 6,648 | 22,603 | — | 3,790 | ||||||||||||||||||
Material Science Co., Ltd. |
— | — | 93 | — | — | — | ||||||||||||||||||
W |
22 | 8,239 | 320,415 | 22,603 | 74,070 | 7,799 | ||||||||||||||||||
Entity that has significant influence over the Controlling Company |
||||||||||||||||||||||||
LG Electronics Inc. |
W |
647,329 | — | 19,810 | 233,504 | — | 141,191 | |||||||||||||||||
Subsidiaries of the entity that has significant influence over the Controlling Company |
||||||||||||||||||||||||
LG Electronics India Pvt. Ltd. |
W |
53,441 | — | — | — | — | 173 | |||||||||||||||||
LG Electronics Vietnam Haiphong Co., Ltd. |
332,977 | — | — | — | — | 1,138 | ||||||||||||||||||
LG Electronics Nanjing New Technology Co., Ltd. |
439,674 | — | — | — | — | 1,333 | ||||||||||||||||||
LG Electronics RUS, LLC |
95,465 | — | — | — | — | 303 | ||||||||||||||||||
| 28. | Related Parties and Others, Continued |
2020 |
||||||||||||||||||||||||
Purchase and others |
||||||||||||||||||||||||
| ( In millions of won |
Sales and others |
Dividend income |
Purchase of raw material and others |
Acquisition of property, plant and equipment |
Outsourcing fees |
Other costs |
||||||||||||||||||
| LG Electronics do Brasil Ltda. |
W |
111,710 | — | — | — | — | 230 | |||||||||||||||||
| LG Innotek Co., Ltd. |
5,321 | — | 25,012 | — | — | 76,530 | ||||||||||||||||||
| Qingdao LG Inspur Digital Communication Co., Ltd. |
7,298 | — | — | — | — | — | ||||||||||||||||||
| LG Electronics Mexicalli, S.A. DE C.V. |
145,032 | — | — | — | — | 52 | ||||||||||||||||||
| LG Electronics Mlawa Sp. z o.o. |
729,135 | — | — | — | — | 1,188 | ||||||||||||||||||
| LG Electronics Reynosa, S.A. DE C.V. |
780,710 | — | — | — | — | 1,044 | ||||||||||||||||||
| LG Electronics Egypt S.A.E. |
69,853 | — | — | — | — | 375 | ||||||||||||||||||
| LG Electronics Japan, Inc. |
— | — | — | 33 | — | 5,635 | ||||||||||||||||||
| P.T. LG Electronics Indonesia |
157,820 | — | — | — | — | 164 | ||||||||||||||||||
| Others |
5,030 | — | 229 | — | — | 7,632 | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
W |
2,933,466 | — | 25,241 | 33 | — | 95,797 | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
W |
3,580,817 | 8,239 | 365,466 | 256,140 | 74,070 | 244,787 | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 28. | Related Parties and Others, Continued |
2021 |
||||||||||||||||||||||||
Sales and others |
Purchase and others |
|||||||||||||||||||||||
| ( In millions of won |
Dividend income |
Purchase of raw material and others |
Acquisition of property, plant and equipment |
Outsourcing fees |
Other costs |
|||||||||||||||||||
| Associates |
||||||||||||||||||||||||
| AVATEC Co., Ltd. |
W |
— | 200 | 713 | — | 72,156 | 1,485 | |||||||||||||||||
| Paju Electric Glass Co., Ltd. |
— | 3,668 | 365,400 | — | — | 2,734 | ||||||||||||||||||
| WooRee E&L Co., Ltd. |
— | — | 13,541 | — | — | 79 | ||||||||||||||||||
| YAS Co., Ltd. |
— | 200 | 10,337 | 54,071 | — | 9,824 | ||||||||||||||||||
| Cynora GmbH |
— | — | 10 | — | — | — | ||||||||||||||||||
| Material Science Co., Ltd. |
— | — | 187 | — | — | — | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
W |
— | 4,068 | 390,188 | 54,071 | 72,156 | 14,122 | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Entity that has significant influence over the Controlling Company |
||||||||||||||||||||||||
| LG Electronics Inc. |
W |
270,396 | — | 19,805 | 395,654 | — | 130,924 | |||||||||||||||||
| Subsidiaries of the entity that has significant influence over the Controlling Company |
||||||||||||||||||||||||
| LG Electronics India Pvt. Ltd. |
W |
97,475 | — | — | — | — | 418 | |||||||||||||||||
| LG Electronics Vietnam Haiphong Co., Ltd. |
414,806 | — | — | 607 | — | 1,445 | ||||||||||||||||||
| LG Electronics Nanjing New Technology Co., Ltd. |
449,390 | — | — | — | — | 1,263 | ||||||||||||||||||
| LG Electronics RUS, LLC |
98,812 | — | — | — | — | 1,141 | ||||||||||||||||||
| 28. | Related Parties and Others, Continued |
2021 |
||||||||||||||||||||||||
Sales and others |
Purchase and others |
|||||||||||||||||||||||
| ( In millions of won |
Dividend income |
Purchase of raw material and others |
Acquisition of property, plant and equipment |
Outsourcing fees |
Other costs |
|||||||||||||||||||
| LG Electronics do Brasil Ltda. |
W |
154,565 | — | — | — | — | 543 | |||||||||||||||||
| LG Innotek Co., Ltd. |
3,753 | — | 26,874 | 451 | — | 85,471 | ||||||||||||||||||
| HI-M Solutek Co., Ltd |
— | — | 44 | — | — | 5,662 | ||||||||||||||||||
| LG Electronics Mexicalli, S.A. DE C.V. |
269,305 | — | — | — | — | 89 | ||||||||||||||||||
| LG Electronics Mlawa Sp. z o.o. |
1,254,164 | — | — | — | — | 577 | ||||||||||||||||||
| LG Electronics Reynosa, S.A. DE C.V. |
1,256,107 | — | — | — | — | 1,011 | ||||||||||||||||||
| LG Electronics Egypt S.A.E. |
106,469 | — | — | — | — | 159 | ||||||||||||||||||
| LG Electronics Japan, Inc. |
— | — | — | 10 | — | 5,334 | ||||||||||||||||||
| P.T. LG Electronics Indonesia |
537,944 | — | — | — | — | 574 | ||||||||||||||||||
| LG Electronics Taiwan Taipei Co., Ltd. |
5,046 | — | — | — | — | 659 | ||||||||||||||||||
| LG Electronics Nanjing Vehicle Components Co.,Ltd. |
2,009 | — | — | — | — | — | ||||||||||||||||||
| LG Technology Ventures LLC |
— | — | — | — | — | 4,411 | ||||||||||||||||||
| Others |
5 | — | 739 | 602 | — | 968 | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
W |
4,649,850 | — | 27,657 | 1,670 | — | 109,725 | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
W |
4,920,246 | 4,068 | 437,650 | 451,395 | 72,156 | 254,771 | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 28. | Related Parties and Others, Continued |
| (c) | Trade accounts and notes receivable and payable as of December 31, 2020 and 2021 are as follows: |
Trade accounts and notes receivable and others |
Trade accounts and notes payable and others |
|||||||||||||||
(In millions of won) |
December 31, 2020 |
December 31, 2021 |
December 31, 2020 |
December 31, 2021 |
||||||||||||
| Associates |
||||||||||||||||
| AVATEC Co., Ltd. |
— | 3 | 2,714 | 2,748 | ||||||||||||
| Paju Electric Glass Co., Ltd. |
— | — | 84,095 | 79,302 | ||||||||||||
| WooRee E&L Co., Ltd. |
— | 878 | 3,637 | 2,915 | ||||||||||||
| YAS Co., Ltd. |
— | — | 18,126 | 20,116 | ||||||||||||
| Material Science Co., Ltd. |
— | — | — | 99 | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
W |
— | 881 | 108,572 | 105,180 | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Entity that has significant influence over the Controlling Company |
||||||||||||||||
| LG Electronics Inc. |
W |
94,193 | 67,629 | 88,629 | 105,918 | |||||||||||
| Subsidiaries of the entity that has significant influence over the Controlling Company |
||||||||||||||||
| LG Electronics Vietnam Haiphong Co., Ltd. |
36,417 | 52,327 | 16 | 252 | ||||||||||||
| LG Electronics Nanjing New Technology Co., Ltd. |
88,075 | 102,691 | 83 | 155 | ||||||||||||
| LG Electronics RUS, LLC |
10,295 | 13,276 | — | — | ||||||||||||
| LG Electronics do Brasil Ltda. |
7,481 | 5,910 | 14 | — | ||||||||||||
| LG Innotek Co., Ltd. |
227 | 767 | 31,309 | 40,135 | ||||||||||||
| LG Electronics Mexicali, S.A. DE C.V. |
20,969 | 17,795 | 15 | — | ||||||||||||
| 28. | Related Parties and Others, Continued |
| 28. | 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) |
||||||||
2021 |
||||||||
Associates |
Loans |
Collection of loans |
||||||
WooRee E&L Co., Ltd. |
W |
878 | — | |||||
| 28. | Related Parties and Others, Continued |
| (e) | Key management personnel compensation |
(In millions of won) |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
Short-term benefits |
W |
2,664 | 2,233 | 3,747 | ||||||||
Expenses related to the defined benefit plan |
553 | 346 | 366 | |||||||||
W |
3,217 | 2,579 | 4,113 | |||||||||
| 29. | Supplemental Cash Flow Information |
(In millions of won) |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
Non-cash investing and financing activities: |
||||||||||||
Changes in other accounts payable arising from the purchase of property, plant and equipment |
W |
(1,333,967 | ) | (662,164 | ) | 445,028 | ||||||
Changes in other accounts payable arising from the purchase of intangible assets |
(12,328 | ) | 98,068 | 529,826 | ||||||||
Recognition of right-of-use |
29,733 | 51,757 | 63,655 | |||||||||
Exhibit 1.1
ARTICLES OF INCORPORATION
OF
LG DISPLAY CO., LTD.
Amended on August 11, 2000
Amended on March 21, 2001
Amended on March 19, 2004
Amended on May 4, 2004
Amended on June 23, 2004
Amended on March 23, 2005
Amended on February 28, 2007
Amended on February 29, 2008
Amended on March 13, 2009
Amended on March 12, 2010
Amended on March 11, 2011
Amended on March 8, 2013
Amended on March 15, 2019
Amended on March 23, 2021
Amended on March 23, 2022
CHAPTER I. GENERAL PROVISIONS
| Article 1. | (Trade Name) |
The name of the company shall be “EL-GI DISPLAY CHUSIK HOESA” (hereinafter referred to as the “Company”), which shall be written in English as “LG Display Co., Ltd.”
| Article 2. | (Objectives) |
The objectives of the Company shall be as follows:
| (1) | research, development, manufacturing, sales and marketing of displays and other related products utilizing the technologies, including, without limitation, thin-film transistor liquid crystal display (“TFT-LCD”), low-temperature poly-silicon liquid crystal display (“LTPS-LCD”) and organic light emitting display (“OLED”) technologies; |
| (2) | research, development, manufacturing, sales and marketing of products utilizing solar energy; |
| (3) | research, development, manufacturing, sales and marketing of certain components and equipments required for the development and manufacturing of the products and technologies described in the foregoing Paragraphs; |
| (4) | real estate transaction and lease business; and |
| (5) | any business and/or investment ancillary or incidental to the foregoing business. |
| Article 3. | (Location) |
The Company shall have its principal office in Seoul, Korea, and may establish branch offices, sub-branch offices, and other offices and factories at places necessary by a resolution of the Board of Directors.
| Article 4. | (Duration of Company) |
The Company will continuously exist unless it is dissolved by a resolution of a General Meeting of Shareholders.
| Article 5. | (Method of Public Notice) |
Public notice by the Company shall be given on the Company’s website (http://www.lgdisplay.com). However, if public notice cannot be given on the Company’s website due to technical difficulties or other unavoidable circumstances, it shall be published in “Maeil Business Newspaper” and “The Chosun Ilbo”, both daily newspapers of general circulation published in Seoul.
CHAPTER II. SHARES
| Article 6. | (Total Number of Authorized Shares) |
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The total number of shares authorized to be issued by the Company shall be 500,000,000 shares.
| Article 7. | (Face Value) |
The face value per share to be issued by the Company is 5,000 Won.
| Article 8. | (Electronic Registration of Shares and Rights that would otherwise be Indicated on Certificates of Preemptive Rights) |
In lieu of issuing share certificates or certificates of preemptive rights, the Company shall electronically register the shares and rights that would otherwise be indicated on certificates of preemptive rights on an electronic registry of an electronic registration institution.
| Article 9. | (Classes of Shares) |
All shares to be issued by the Company shall be common shares in non-bearer form and preferred shares in non-bearer form.
| Article 9-2. | (Number and Characteristics of Preferred Shares) |
| (1) | Preferred shares to be issued by the Company shall be non-voting and the number thereof shall be 40,000,000. |
| (2) | The dividend on a preferred share shall be not less than one percent (1%) per annum but not more than ten percent (10%) per annum of the par value of the share as determined by the Board of Directors at the time of issuance. |
| (3) | In case the dividend ratio of the common shares exceeds that of the preferred shares, the additional dividend on preferred shares shall be declared by participating in distribution of dividend at same ratio of dividend on common shares with respect to such excess, at the time of distribution of dividend on common shares. |
| (4) | If dividends on preferred shares for a fiscal year are not paid as prescribed above, such unpaid and accumulated amount shall be preferentially paid to the holders of preferred shares at the time of distribution of dividends for the following fiscal year. |
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| (5) | Preferred shares may be issued, by a resolution of the Board of Directors at the time of issuance, as convertible to common shares (“convertible preferred shares”). The conversion price shall be determined by the Board of Directors at the time of issuance, and shall not be lower than the par value of the shares nor higher than the issue price of the convertible preferred shares. If a conversion period or a duration of the convertible preferred shares (upon expiration of which convertible preferred shares are automatically converted) is to be set, such period or duration shall be determined by the Board of Directors at the time of issuance, and shall end within one (1) to ten (10) years from the issuance of the convertible preferred shares. With respect to the dividends on the shares issued upon conversion of the convertible preferred shares, the provisions of Article 11 and Article 43-2, Paragraph (4) shall apply mutatis mutandis. |
| (6) | Preferred shares may be issued, by a resolution of the Board of Directors at the time of issuance, as redeemable within certain period of time with earnings (“redeemable preferred shares”). The redemption period shall be determined by the Board of Directors at the time of issuance and shall end within one (1) to ten (10) years from the issuance of the redeemable preferred shares. The Board of Directors shall determine the redemption price and the method of redemption, the source of which shall be earnings. |
| (7) | Preferred shares may be issued, by a resolution of the Board of Directors at the time of issuance, with any or all of the features set forth above in Paragraphs (5) and (6). |
| (8) | If the resolution not to pay the prescribed dividends on preferred shares is adopted at a General Meeting of Shareholders, the preferred shares shall have voting rights, starting with the first General Meeting of Shareholders following the General Meeting of Shareholders at which the resolution not to pay dividends on preferred shares was adopted, until the end of a General Meeting of Shareholders at which a resolution to pay dividends for such preferred shares is adopted. |
| (9) | In case the Company issues new shares by rights issue or bonus issue, then the new shares issued with respect to the preferred shares shall be common shares in the case of rights issues and shall be the shares of the same class in the case of bonus issues. |
| Article 10. | (Preemptive Rights) |
| (1) | The Company may issue additional shares with the resolution of the Board of Directors setting forth the detailed terms of the issue within the authorized share capital. |
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| (2) | The Company’s shareholders shall have preemptive rights to subscribe to new shares in proportion to their respective shareholding ratios; provided that the names and addresses of such shareholders shall be registered in the Register of Shareholders as of the date designated by the Company in the public notice made two (2) weeks prior thereto. |
| (3) | Notwithstanding Paragraph (2) above, the Company may allocate new shares to persons other than existing shareholders of the Company by a resolution of the Board of Directors in any of the following cases, provided that the aggregate number of shares issued pursuant to items 1 through 7 below shall not exceed 20% of the total number of issued and outstanding shares: |
| 1. | Where the Company invites or cause underwriters to invite subscriptions for new shares; |
| 2. | Where the Company issues new shares through a method of general public offering under Article 165-6 of the Financial Investment Services and Capital Market Act (the “Capital Market Act”); |
| 3. | Where the Company allocates new shares to any member of its Employee Stockownership Association pursuant to Article 165-7 of the Capital Market Act or pursuant to the Employee Welfare Basic Act; |
| 4. | Where the Company issues new shares by exercise of stock options under Article 340-2 of the Commercial Code; |
| 5. | Where the Company issues new shares for the issuance of a depositary receipt (DR) under Article 165-16 of the Capital Market Act; |
| 6. | Where the Company issues new shares to corporations, institutional investors or domestic or overseas financial institutions, etc. for the achievement of the company’s operational objectives, such as improvement of financial structure, etc.; or |
| 7. | Where the Company issues new shares for the purpose of drawing foreign investment, when it deems necessary for its management; or |
| 8. | Where the Company issues new shares through a public offering or cause underwriters to underwrite the new shares and/or DR for the purpose of initial listing on the Korea Exchange and/or the New York Stock Exchange. |
| (4) | If shares are not subscribed for as the result of a shareholder waiving or losing his/her pre-emptive right, or if fractional shares result from the allocation of new shares, such shares shall be disposed of in accordance with a resolution of the Board of Directors. |
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| (5) | The recipient of the new shares shall become a shareholder of the Company the succeeding day of the payment date. |
| Article 10-2 | (Stock Options) |
| (1) | The Company may grant stock options to its officers and employees (including the officers and employees of its affiliated company as defined in Article 542-3, Paragraph (1) of the Commercial Code; the same shall apply hereinafter) by a special resolution of the General Meeting of Shareholders pursuant to Article 340-2 of the Commercial Code, to the extent of not more than 15% of the total number of issued and outstanding shares; provided, however, that the Company may grant stock options to its officers and employees by a resolution of the Board of Directors to the extent of not more than 1% of the total number of issued and outstanding shares in accordance with the relevant laws and regulations. In this case, the shareholders or the Board of Directors may resolve to grant performance-linked stock options, linked with the Company’s performance or market index. |
| (2) | The officers and employees, who have contributed, or have the capacity to contribute, to the establishment, management, overseas sales or technical improvement of the Company, may be granted stock options; provided, however, that those who are prohibited from being granted stock options under the applicable law and regulation may not be granted stock options. |
| (3) | The shares to be issued by the Company to its officers or employees by the exercise of their stock options (which shall refer to the shares being the basis for calculation in case the Company pays the difference, either in cash or shares, between the exercise price of stock options and the market price) shall be common shares in non-bearer form. |
| (4) | The terms and conditions, including features, exercise price, etc., of stock options shall be determined by a special resolution of the General Meeting of Shareholders or a resolution of the Board of Directors, pursuant to the applicable law and these Articles of Incorporation. The matters that are not set out to be decided by a resolution of the General Meeting of Shareholders or the Board of Directors under the applicable law or these Articles of Incorporation may be determined by the Board of Directors or a committee designated by the Board of Directors. |
| (5) | Stock options may be exercised after at least 3 years, but not more than the number of years set by the relevant resolution of the General Meeting of Shareholders or the Board of Directors within 7 years, have elapsed from the date of the relevant resolution of the General Meeting of Shareholders or the Board of Directors. Any person with a stock option may exercise such stock option only if he/she has served the Company for at least two (2) years from the date of the relevant resolution of the General Meeting of Shareholders or the Board of Directors, unless otherwise specified in the relevant law. |
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| (6) | With respect to distribution of dividends for shares issued upon the exercise of stock options, Article 11 and Article 43-2, Paragraph (4) shall apply mutatis mutandis. |
| (7) | The Company may cancel the grant of stock options by a resolution of the Board of Directors in any of the following cases: |
| 1. | Where an officer/employee of the Company voluntarily retires or resigns from his/her office after being granted stock options; |
| 2. | Where an officer/employee of the Company incurs substantial damages to the Company due to his/her willful misconduct or negligence; |
| 3. | Where the Company cannot respond to the exercise of an officer/employee’s stock options due to the Company’s liquidation or dissolution; or |
| 4. | Where any cause for cancellation set forth in the stock option agreement occurs. |
| Article 11. | (Record Date for Dividends on New Shares) |
In case the Company issues new shares through rights issues, bonus issues or stock dividends, the new shares shall be deemed to have been issued at the end of the fiscal year immediately prior to the fiscal year during which the new shares are issued for purposes of distribution of annual dividends for such new shares.
| Article 12. | (Suspension of Alteration of Register of Shareholders and Record Date) |
| (1) | The Company shall suspend entry of any alterations into its register of shareholders with respect to shareholders’ rights from January 1 to January 15 of each year. |
| (2) | The Company shall allow the shareholders who are registered in its register of shareholders as of December 31 of each year, to exercise their rights at an ordinary General Meeting of Shareholders held concerning the relevant fiscal year. |
| (3) | When convening an extraordinary General Meeting of Shareholders or in any other necessary cases, in order to determine the person who shall exercise the right as shareholder, the Company may suspend entry of any alteration in the register of shareholders for a period not exceeding three (3) months as determined by a resolution of the Board of Directors or it may deem any shareholder whose name appears in the register of shareholders on a specified date, as determined by a resolution of the Board of Directors, to be the shareholder who shall be entitled to exercise such rights. The Company should give public notice thereof two weeks in advance. |
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| Article 13. | (Transfer Agent) |
| (1) | The Company shall retain a transfer agent for shares. |
| (2) | The transfer agent, the location where its services are rendered and the scope of a transfer agent’s duties shall be determined by a resolution of the Board of Directors of the Company and shall be publicly notified. |
| (3) | The Company shall keep the shareholders registry, or a duplicate thereof, at a location where a transfer agent renders its services. In addition, the Company shall cause the transfer agent to handle activities such as the electronic registration of shares, management of the shareholders registry and other related businesses. |
| (4) | Those activities of a transfer agent set forth in Paragraph (3) above shall be performed in accordance with the Regulations for Securities Agency Business of the Transfer Agent. |
| Article 14. | [Deleted] |
| Article 15. | [Deleted] |
CHAPTER II-2. BONDS
| Article 15-2. | (Issuance of Convertible Bonds) |
| (1) | The Company may issue convertible bonds to persons other than its shareholders by a resolution of the Board of Directors in any of the following cases, to the extent that the aggregate par value amount of the convertible bonds (plus any previously issued and outstanding convertible bonds and bonds with warrants) does not exceed two trillion five hundred billion Won (2.5 trillion Won): |
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| 1. | Where the Company issues convertible bonds through a general public offering; |
| 2. | Where the Company issues convertible bonds for the purpose of drawing foreign investment, when it deems necessary for its management; |
| 3. | Where the Company issues convertible bonds to a domestic or overseas financial institution for an urgent need for funds; or |
| 4. | Where the Company issues convertible bonds in foreign countries in accordance with Article 165-16 of the Capital Market Act. |
| (2) | The convertible bonds referred to in Paragraph (1) above may be issued by the Board of Directors with partial conversion rights under which the right of the bondholders to demand conversion may be limited to a certain percentage of the total amount of convertible bonds. |
| (3) | The classes of shares to be issued upon conversion shall be common shares. The conversion price shall not be lower than the par value of the Company’s shares as determined by the Board of Directors at the time of issuance of the relevant convertible bonds. |
| (4) | The period during which conversion may be requested shall be from the date one (1) month after the date of issuance of the relevant convertible bonds to the date one day prior to the redemption date of the bonds; provided, that the Board of Directors may, by its resolution, adjust the exercise period for convertible bonds within the above period. |
| (5) | With respect to the dividends on the shares to be issued upon conversion, Article 11 and Article 43-2, Paragraph (4) shall apply mutatis mutandis. |
| Article 15-3. | (Issuance of Bonds with Warrants) |
| (1) | The Company may issue bonds with warrant to persons other than its shareholders by a resolution of the Board of Directors in any of the following cases, to the extent that the aggregate par value amount of the bonds with warrant (plus any previously issued and outstanding convertible bonds and bonds with warrants) does not exceed two trillion five hundred billion Won (2.5 trillion Won): |
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| 1. | Where the Company issues bonds with warrant through a general public offering; |
| 2. | Where the Company issues bonds with warrant for the purpose of drawing foreign investment, when it deems necessary for its management; |
| 3. | Where the Company issues bonds with warrant to a domestic or overseas financial institution for an urgent need for funds; or |
| 4. | Where the Company issues bonds with warrant in foreign countries in accordance with Article 165-16 of the Capital Market Act. |
| (2) | The aggregate price of new shares which may be subscribed for by the holders of warrants shall be determined by the Board of Directors, but shall not exceed the aggregate par value of the bonds with warrants. |
| (3) | The classes of shares to be issued upon exercise of warrant shall be common shares. The exercise price shall not be lower than the par value of the Company’s shares as determined by the Board of Directors at the time of issuance of the relevant bonds with warrant. |
| (4) | The period during which warrant may be exercised shall be from the date one (1) month after the date of issuance of the relevant bonds with warrant to the date one day prior to the redemption date of the bonds; provided, that the Board of Directors may, by its resolution, adjust the exercise period for bonds with warrant within the above period. |
| (5) | With respect to the dividends on the shares to be issued upon exercise of warrant, Article 11 and Article 43-2, Paragraph (4) shall apply mutatis mutandis. |
| Article 15-4. | (Electronic Registration of Bonds and Warrant Rights that would otherwise be Indicated on Certificates) |
In lieu of issuing bond or warrant certificates, the Company shall electronically register the bonds and warrant rights that would otherwise be indicated on certificates on an electronic registry of an electronic registration institution.
| Article 15-5. | (Provisions Applicable to Bond Issuance) |
Article 13 shall apply mutatis mutandis to issuance of bonds.
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CHAPTER III. GENERAL MEETINGS OF SHAREHOLDERS
| Article 16. | (Time for convening of General Meetings of Shareholders) |
| (1) | General Meetings of the Shareholders of the Company shall be of two kinds: ordinary and extraordinary. |
| (2) | Ordinary General Meetings of Shareholders shall be held within three (3) months after the end of each fiscal year and Extraordinary General Meetings of Shareholders may be convened whenever deemed necessary. |
| Article 17. | (Convening of General Meetings of Shareholders) |
| (1) | Unless otherwise provided for in the relevant laws and regulations, a General Meeting of Shareholders shall be convened by the Company’s Representative Director pursuant to a resolution of the Board of Directors. On the occurrence of a vacancy or absence of the Representative Director, Article 29, Paragraph (3) hereof shall apply, mutatis mutandis. |
| (2) | A General Meeting of Shareholders may be held at the head office of the Company, Paju plant or at any other place as designated by the Board of Directors. |
| (3) | A notice for convening a General Meeting of Shareholders, which sets forth the time, date, place and agenda of the meeting, shall be sent to each shareholder, either in a written or an electronic form, at least two (2) weeks prior to the date of the meeting. |
| (4) | A notice to shareholders holding not more than one percent of the total number of issued and outstanding shares with voting rights may be replaced by public notices made two weeks prior to the General Meeting of Shareholders, either made at least twice in the “Maeil Business Newspaper” and “The Chosun Ilbo”, both published in Seoul, or in the electronic disclosure system operated by the Financial Supervisory Service or the Korea Exchange. The public notice of a meeting shall include a statement that the General Meeting of Shareholders will be held and the venue, date and the agenda of such meeting. |
| Article 18. | (Chairman of Meeting) |
The Representative Director or a Director designated by the Representative Director shall serve as Chairman of the General Meeting of Shareholders. On the occurrence of a vacancy or absence of the Representative Director, Article 29, Paragraph (3) hereof shall apply, mutatis mutandis.
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| Article 18-2. | (Maintenance of Order by the Chairman) |
| (1) | The chairman of a General Meeting of Shareholders may order persons who intentionally speak or behave obstructively or who disturb the proceedings of the meeting to stop a speech or to leave the place of the meeting. |
| (2) | The chairman of a General Meeting of Shareholders may restrict the time and number of speeches of a shareholder as deemed necessary for the purpose of efficient progress in the proceeding of the meeting. |
| Article 19. | (Method of Resolution) |
Except as otherwise provided in the applicable laws and the Articles of Incorporation of the Company, all resolutions of a General Meeting of Shareholders shall be adopted by the affirmative votes of the majority of shareholders present at the meeting; provided that, such votes shall represent at least one fourth (1/4) of total number of issued and outstanding shares of the Company.
| Article 20. | (Exercise of Voting Rights) |
| (1) | Each share shall have one (1) voting right. |
| (2) | A shareholder may exercise his/her vote through a proxy. In this case, the proxy holder shall file with the Company document evidencing authority to act as a proxy no later than the beginning of the General Meeting of Shareholders. |
| (3) | The Company shall not adopt the cumulative voting system provided under Article 382-2 of the Commercial Code. |
| Article 21. | (Restrictions on the Exercise of Voting Rights by Cross Ownership) |
If the Company, its parent company and subsidiaries, or any of its subsidiaries hold shares exceeding one-tenth (1/10) of the total number of issued shares of another company, such other company may not exercise any voting rights with respect to the shares of the Company which it holds.
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| Article 22. | (Split Exercise of Votes) |
| (1) | A shareholder, holding two (2) or more votes, who wishes to split his/her votes, shall notify the Company to that effect and the reasons thereof by writing no later than the third day preceding the date set for the General Meeting of Shareholders. |
| (2) | The Company may refuse to allow the shareholder to split his/her votes unless the shareholder acquired the shares in trust or otherwise holds the shares for and on behalf of some other person. |
| Article 23. | (Minutes of the Meeting) |
The substance of the course of the proceedings of the General Meeting of Shareholders and the results thereof shall be recorded in the minutes and shall be kept at the head office and branches of the Company, after being affixed with the names and seal impressions or signatures of the chairman of the General Meeting of Shareholders as well as the Directors present.
| Article 24. | [Deleted] |
CHAPTER IV. DIRECTORS AND BOARD OF DIRECTORS
| Article 25. | (General Authority) |
Except as otherwise required by mandatory provisions of Korean law, the responsibility for the management, direction and control of the Company will be vested in the Board of Directors of the Company.
| Article 26. | (Number of Directors) |
The Company shall have at least five (5) and up to seven (7) Directors, more than half of whom must be outside1 Directors.
| 1 | The term “Outside Director” used throughout the AOI has the meaning given by the Capital Market Act of Korea. The qualifications required of an “independent director” by the NYSE listing codes do not have to be set forth in word in the AOI, as long as a person(s) with such qualifications sits on the board. |
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| Article 27. | (Election of Directors) |
Directors shall be elected at a General Meeting of Shareholders of the Company.
| Article 27-2. | (Nomination of Candidates for Outside Directors) |
| (1) | The Company’s Outside Director Nomination Committee shall recommend candidates for outside Directors, from those who are qualified under the Korean Commercial Code (“KCC”) and other applicable provisions. |
| (2) | Any details concerning the nomination of candidates for outside Directors and deliberation on requirements of such candidates shall be determined by the Company’s Outside Director Nomination Committee. |
| Article 28. | (Terms of Directors) |
Starting from the appointment, the term of office of Directors shall not exceed the close of the ordinary General Meeting of Shareholders that is convened for the period for the settlement of accounts for the third (3rd) year from the appointment.
| Article 29. | (Appointment of Representative Director and Duties) |
| (1) | The Representative Director of the Company shall be appointed by a resolution of the Board of Directors’ meeting and the Representative Director shall represent the Company and manage all matters of the Company. |
| (2) | If two (2) or more Representative Directors are appointed, each shall represent the Company. |
| (3) | On the occurrence of a vacancy or absence of the Representative Director, the person authorized in such order of priority as determined by the Regulations of the Board of Directors or the person separately determined by the Board of Directors shall perform his/her duties. |
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| Article 30. | (Meetings of the Board of Directors) |
| (1) | Meetings of the Board of Directors shall be convened by the Chairman of the Board of Directors or the person designated by the Regulation of the Board of Directors. |
| (2) | Meetings of the Board of Directors shall be convened no less frequently than on a quarterly basis. The persons entitled to convene a Meeting of the Board of Directors shall decide the meeting date and send a notice thereof to the Directors in writing, through electronic communication or orally at least twelve(12) hours prior to such meeting; provided that, when the consent of all the Directors has been obtained, a meeting of the Board of Directors may be held anytime without conforming to these procedures. |
| (3) | Meetings of the Board of Directors may be conducted in the English language and shall be translated into the Korean language by an interpreter, if necessary. |
| (4) | The Chairman of the Board of Directors shall be elected by the Board of Directors. |
| (5) | Meetings of the Board of Directors shall be held in Korea, unless otherwise determined by the Board of Directors. |
| Article 31. | (Resolutions of the Board of Directors) |
| (1) | The quorum for the Meeting of the Board of Directors of the Company shall require the presence of the majority of Directors in office. |
| (2) | Resolutions of a meeting of the Board of Directors shall be adopted by the affirmative votes of a majority of the Directors present. |
| (3) | The Board of Directors may allow all or part of the Directors in office to exercise his/her and/or their voting rights by telecommunication means through which they may transmit and receive voices at the same time without attending a meeting of the Board of Directors in person. In such case, the concerned Director(s) shall be deemed as having attended the meeting of the Board of Directors in person. |
| (4) | Each member of the Board of Directors shall have one (1) voting right; provided, however, that any person who has special interests concerning a resolution of the Board of Directors may not exercise his/her voting right. |
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| Article 32. | (Filling of Vacancy) |
| (1) | Any vacancy in the office of Director shall be filled by resolution of a General Meeting of Shareholders; provided, however, that if the number of Directors required by Article 26 hereof is met and there is no difficulty in the administration of business, the vacancy may be left un-filled. |
| (2) | In case where the number of outside Directors required by Article 26 hereof is not met for reasons of resignation, death, etc., the vacancy should be filled at the first General Meeting of Shareholders to be convened after occurrence of such reason. |
| Article 33. | (Minutes of the Board of Directors’ Meeting) |
| (1) | The proceedings of a Board of Directors’ meeting shall be recorded in the minutes. |
| (2) | The minutes shall set forth the agenda, the course of the proceedings and the results thereof, the opposing person(s) and the reasons for such opposition, and the chairman and all Directors present shall affix their names and seals or signatures to the minutes. The minutes shall be kept in the head office of the Company. |
| Article 34. | (Committees) |
| (1) | The Company shall establish following committees within the Board of Directors. |
| 1. | Audit Committee |
| 2. | Outside Director Nomination Committee |
| 3. | Other committees as deemed necessary by the Board of Directors |
| (2) | Details on composition, power and operation of each committee shall be determined by a resolution of the Board of Directors. |
| (3) | Articles 30 (2), 31 and 33 shall apply mutatis mutandis in respect of the foregoing committees. |
| Article 35. | (Remuneration and Severance Pay of Directors) |
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| (1) | The total amount of remuneration for the Directors shall be determined by a resolution of the General Meeting of Shareholders. |
| (2) | The severance pay for the Directors shall be made in accordance with the Regulations of Severance Payment to Directors as separately determined by a resolution of the General Meeting of Shareholders. |
| Article 36. | [Deleted] |
CHAPTER IV-II. AUDIT COMMITTEE
| Article 36-2. | (Composition of Audit Committee) |
| (1) | The Company shall have an Audit Committee in lieu of the statutory auditors in accordance with Article 34 hereof. |
| (2) | The Audit Committee shall consist of four (4) outside Directors. |
| (3) | The Company shall appoint the members of the Audit Committee from the Directors of the Company, after having appointed such Directors as Directors of the Company at a General Meeting of Shareholders; provided, however, that, one (1) of the members of the Audit Committee shall be a Director appointed as a Director to be appointed as a member of the Audit Committee, separate from other Directors appointed, at the General Meeting of Shareholders. |
| (4) | When the shareholders appoint a member of the Audit Committee at a General Meeting of Shareholders, any shareholder who holds more than 3% of the total number of voting shares issued by the Company shall not exercise the voting rights of the shares in excess thereof. |
| (5) | The Audit Committee shall appoint, by its resolution, a person to represent the committee. |
| Article 36-3. | (Duties of Audit Committee) |
| (1) | The Audit Committee shall examine the accounts and businesses of the Company. |
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| (2) | The Audit Committee may request the Board of Directors to convene an extraordinary General Meeting of Shareholders by submitting documents stating the agenda and reasons for such convocation. |
| (3) | The Audit Committee may request the Company’s subsidiary to report the details of the operation, if deemed necessary for performance of its duties. In such a case, if the subsidiary fails to immediately report the details or if it is necessary to confirm the contents of the report, the Audit Committee may investigate the subsidiary’s business operation and financial status. |
| (4) | The Audit Committee shall dispose any matters delegated by the Board of Directors, as provided in the Audit Committee Charter resolved by the Board of Directors, other than those set forth in Paragraphs (1) through (3) above. |
| Article 36-4. | (Auditor’s Records) |
The Audit Committee shall prepare an auditor’s record with respect to auditing and shall record the substance and results of the audit in the auditors’ record, on which the names and seals or signatures of the members of the Audit Committee who have performed such audit shall be affixed.
CHAPTER V. ACCOUNTING
| Article 37. | (Fiscal Year) |
The fiscal year of the Company shall commence on January 1 of each year and end on December 31 (of the same year).
| Article 38. | [Deleted] |
| Article 39. | [Deleted] |
| Article 40. | [Deleted] |
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| Article 41. | (Preparation and Maintenance of Financial Statements and Business Report) |
| (1) | The Representative Director shall prepare the following documents, supplementary documents thereto and the business report, and submit such documents to the Audit Committee for audit six (6) weeks prior to the day set for the ordinary General Meeting of Shareholders. The Representative Director, or if the Company has Joint Representative Directors, the Chief Executive Officer and Joint Representative Director, shall submit the following documents and the business report to the ordinary General Meeting of Shareholders for approval: |
| 1. | Balance sheet; |
| 2. | Profit and loss statement; and |
| 3. | Other documents prescribed by the Enforcement Decree of the KCC that present the Company’s financial position and business performance. |
| (2) | If the Company is required to prepare consolidated financial statements under the Enforcement Decree of the KCC, the documents under Paragraph (1) above shall include those prepared on a consolidated basis, respectively. |
| (3) | The Audit Committee shall submit the auditors’ report to all Directors one (1) week prior to the day set for the ordinary General Meeting of Shareholders. |
| (4) | The Representative Director shall keep on file, from one (1) week before the day set for the ordinary General Meeting of Shareholders, the documents described in Paragraph (1) above and supplementary documents together with the business report and the auditors’ report at the head office of the Company for five (5) years and certified copies of all of such documents at the branches of the Company for three (3) years. |
| (5) | The Representative Director shall give public notice of the balance sheet and the external auditor’s opinion immediately after the documents referred to in Paragraph (1) above have been approved at the General Meeting of Shareholders. |
| Article 41-2. | (Appointment of External Auditor) |
The Company shall appoint an external auditor pursuant to the Act on External Audit of Stock Companies, Etc. and shall report such fact at the first ordinary General Meeting of Shareholders to be convened after the appointment or shall otherwise notify or publicly announce such fact to the shareholders as prescribed in the Enforcement Decree of the Act on External Audit of Stock Companies, Etc.
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| Article 42 | (Appropriation of Earnings) |
The Company shall dispose of the unappropriated retained earnings as of the end of each fiscal year as follows:
| 1. | Legal reserve; |
| 2. | Other statutory reserves; |
| 3. | Dividends; |
| 4. | Discretionary reserve; and |
| 5. | Other appropriation of retained earnings. |
| Article 42-2. | [Delete] |
| Article 43. | (Dividends) |
| (1) | Dividends may be paid in either cash or shares. |
| (2) | In case dividends are distributed in shares, if the Company has issued several classes of shares, such distribution may be made through shares of different classes by a resolution of a General Meeting of Shareholders. |
| (3) | Dividends in Paragraph (1) above shall be paid to the shareholders or pledgees registered in the shareholders registry of the Company as of the end of each fiscal year. |
| Article 43-2. | (Interim Dividends) |
| (1) | The Company may pay interim dividends in accordance with Article 462-3 of the Commercial Code to its shareholders who are registered in the shareholder’s registry as of 00:00 a.m. on July 1 of the relevant fiscal year. Such interim dividends shall be made in cash. |
| (2) | The interim dividends mentioned in Paragraph (1) above shall be decided by a resolution of the Board of Directors, which resolution shall be made within forty-five (45) days from the date mentioned in Paragraph (1) above. |
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| (3) | The maximum amount to be paid as interim dividends shall be calculated by deducting the following amounts from the net asset amounts recorded in the balance sheet of the fiscal year immediately prior to the fiscal year concerned: |
| 1. | Paid in capital of the company for the fiscal year immediately prior to the fiscal year concerned; |
| 2. | The aggregate amount of capital reserves and legal reserves which had been accumulated up until the fiscal year immediately prior to the fiscal year concerned; |
| 3. | The amount which was resolved to be distributed as dividends at an ordinary General Meeting of Shareholders of the fiscal year immediately prior to the fiscal year concerned; |
| 4. | Voluntary reserves which had been accumulated for specific purposes in accordance with the relevant provisions of the Articles of Incorporation or by resolution of the General Meetings of Shareholders until the fiscal year immediately prior to the fiscal year concerned; |
| 5. | Aggregate earned surplus reserves to be accumulated for the fiscal year concerned as a result of the interim dividends; and |
| (4) | If the Company has issued new shares (including those shares issued by way of conversion of reserves into capital stock, stock dividends, request of conversion of convertible bonds or exercise of warrants) prior to the date set forth in Paragraph (1) above, but after the commencement date of the fiscal year concerned, the new shares shall be deemed to have been issued at the end of the fiscal year immediately prior to the fiscal year concerned for the purpose of interim dividends. |
| (5) | When distributing interim dividends, the same dividend ratio as that of the common shares of the Company shall be applied to the preferred shares. |
| Article 44. | (Prescription Period for Claim for Payment of Dividends) |
| (1) | The right to dividends shall be extinguished by prescription if the right is not exercised for five (5) years. |
| (2) | After the expiration of the prescription period set forth in Paragraph (1), unclaimed dividends shall revert to the Company. |
ADDENDA
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1. These Articles of Incorporation shall be effective from June 23, 2004, except for the Article 17, Paragraph (4), Article 41, Paragraph (2), Article 42-2, Article 43-2 which shall be effective upon the shares of the Company being listed on the Korea Exchange.
2. Notwithstanding Addudum 1. above, the Company shall satisfy the requirements under latter part of Article 26, Article 34 and Chapter IV-II of these amended Articles of Incorporation by the close of the first Annual (Ordinary) General Meeting of Shareholders to be convened after the amendment of these Articles of Incorporation. Until the composition of the Audit Committee under these amended Articles of Incorporation, the Company shall have at least one (1) statutory auditor and the current statutory auditor(s) of the Company shall have the same duty and rights as the statutory auditor(s) pursuant to the Commercial Code and the Articles of Incorporation prior to the amendment.
3. The outside Directors to be elected until the close of the first Annual (Ordinary) General Meeting of Shareholders to be convened after the amendment of these Articles of Incorporation, shall be deemed to have been nominated by the Outside Director Nomination and Corporate Governance Committee pursuant to Article 27-2; provided, however, that the outside Directors shall be nominated by the Outside Director Nomination and Corporate Governance Committee once such Committee has been composed of even before the close of such General Meeting of Shareholders.
ADDENDA (as of March 23, 2005)
These Articles of Incorporation shall be effective from March 23, 2005.
ADDENDA (as of February 28, 2007)
These Articles of Incorporation shall be effective from February 28, 2007.
ADDENDA (as of February 29, 2008)
These Articles of Incorporation shall be effective from March 3, 2008.
ADDENDA (as of March 13, 2009)
These Articles of Incorporation shall be effective from March 13, 2009.
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ADDENDA (as of March 12, 2010)
These Articles of Incorporation shall be effective from March 12, 2010.
ADDENDA (as of March 11, 2011)
These Articles of Incorporation shall be effective from March 11, 2011.
ADDENDA (as of March 8, 2013)
These Articles of Incorporation shall be effective from March 8, 2013.
ADDENDA (as of March 15, 2019)
These Articles of Incorporation shall be effective from March 15, 2019, except for the amended provisions of Article 8, Article 13, Article 14, Article 15-4 and Article 15-5, which shall be effective from the date the Act on Electronic Registration of Stocks, Bonds, Etc. takes effect.
ADDENDA (as of March 23, 2021)
These Articles of Incorporation shall be effective from March 23, 2021.
ADDENDA (as of March 23, 2022)
These Articles of Incorporation shall be effective from March 23, 2022.
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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 20, 2022. 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, 2021.
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, 2021.
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 |
Up to US$0.05 per ADS issued | |
| Cancellation of ADSs |
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.
Exhibit 12.1
I, Hoyoung Jeong, certify that:
| 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 28, 2022
| /s/ HOYOUNG JEONG |
| Hoyoung Jeong Representative Director, President and Chief Executive Officer |
Exhibit 12.2
I, Sunghyun Kim, certify that:
| 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 28, 2022
| /s/ SUNGHYUN KIM |
| Sunghyun Kim Senior Vice President and Chief Financial Officer |
Exhibit 13.1
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)
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, 2021 (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 28, 2022
| /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.
Exhibit 13.2
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)
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, 2021 (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 28, 2022
| /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.