Edgar Filing: LG Display Co., Ltd.

Form 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER

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

THE SECURITIES EXCHANGE ACT OF 1934

For the month of May 2018

LG Display Co., Ltd.

(Translation of Registrant’s name into English)

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

(Address of principal executive offices)

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

Form 20-F ☒ Form 40-F ☐

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

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

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

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

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

Yes ☐ No ☒

QUARTERLY REPORT

(From January 1, 2018 to March 31, 2018)

THIS IS A TRANSLATION OF THE QUARTERLY REPORT ORIGINALLY PREPARED IN KOREAN AND IS IN SUCH FORM AS REQUIRED BY THE KOREAN FINANCIAL SUPERVISORY COMMISSION.

IN THE TRANSLATION PROCESS, SOME PARTS OF THE REPORT WERE REFORMATTED, REARRANGED OR SUMMARIZED AND CERTAIN NUMBERS WERE ROUNDED FOR THE CONVENIENCE OF READERS. REFERENCES TO “Q1”, “Q2”, “Q3” AND “Q4” OF A FISCAL YEAR ARE REFERENCES TO THE THREE-MONTH PERIODS ENDED MARCH 31, JUNE 30, SEPTEMBER 30 AND DECEMBER 31, RESPECTIVELY, OF SUCH FISCAL YEAR.

UNLESS EXPRESSLY STATED OTHERWISE, ALL INFORMATION CONTAINED HEREIN IS PRESENTED ON A CONSOLIDATED BASIS IN ACCORDANCE WITH KOREAN INTERNATIONAL FINANCIAL REPORTING STANDARDS, OR K-IFRS, WHICH DIFFER IN CERTAIN RESPECTS FROM GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CERTAIN OTHER COUNTRIES, INCLUDING THE UNITED STATES. K-IFRS ALSO DIFFERS IN CERTAIN RESPECTS FROM THE INTERNATIONAL FINANCIAL REPORTING STANDARDS AS ISSUED BY THE INTERNATIONAL ACCOUNTING STANDARDS BOARD. WE HAVE MADE NO ATTEMPT TO IDENTIFY OR QUANTIFY THE IMPACT OF THESE DIFFERENCES IN THIS DOCUMENT.

Contents


1.	Company		4
	A.	Name and contact information	4
	B.	Domestic credit rating	4
	C.	Capitalization	6
	D.	Voting rights	6
	E.	Dividends	6

2.	Business		7
	A.	Business overview	7
	B.	Industry	7
	C.	New businesses	9

3.	Major Products and Raw Materials		9
	A.	Major products	9
	B.	Average selling price trend of major products	9
	C.	Major raw materials	9

4.	Production and Equipment		10
	A.	Production capacity and output	10
	B.	Production performance and utilization ratio	10
	C.	Investment plan	11

5.	Sales		11
	A.	Sales performance	11
	B.	Sales route and sales method	11

6.	Market Risks and Risk Management		12
	A.	Market risks	12
	B.	Risk management	12

7.	Derivative Contracts		13
	A.	Currency risks	13
	B.	Interest rate risks	13


8.	Major Contracts		13

9.	Research & Development		14
	A.	Summary of R&D-related expenditures	14
	B.	R&D achievements	14

10.	Intellectual Property		16

11.	Environmental and Safety Matters		17

12.	Financial Information		19
	A.	Financial highlights (Based on consolidated K-IFRS)	19
	B.	Financial highlights (Based on separate K-IFRS)	20
	C.	Consolidated subsidiaries	21
	D.	Status of equity investment	21

13.	Audit Information		22
	A.	Audit service	22
	B.	Non-audit service	22

14.	Board of Directors		23
	A.	Members of the board of directors	23
	B.	Committees of the board of directors	23
	C.	Independence of directors	24

15.	Information Regarding Shares		24
	A.	Total number of shares	24
	B.	Shareholder list	24

16.	Directors and Employees		24
	A.	Directors	24
	B.	Employees	25

17.	Other Matters		26
	A.	Material Events Subsequent to the Reporting Period	26

Attachment: 1. Financial Statements in accordance with K-IFRS

1.	Company

Name and contact information

The name of our company is “EL-GI DISPLAY CHUSIK HOESA,” which shall be “LG Display Co., Ltd.” in English.

Our principal executive office is located at LG Twin Towers, 128 Yeoui-daero, Yeongdeungpo-gu, Seoul 07336, Republic of Korea, and our telephone number is +82-2-3777-1010. Our website address is http://www.lgdisplay.com.

Domestic credit rating

(1)

Corporate bonds


Subject instrument	Month of rating	Credit rating⁽¹⁾	Rating agency (Rating range)
Corporate bonds	June 2016	AA	NICE Information Service Co., Ltd. (AAA ~ D)
	September 2016
	May 2017
	February 2018
	April 2016	AA	Korea Investors Service, Inc. (AAA ~ D)
	May 2017
	October 2017
	April 2016	AA	Korea Ratings Corporation (AAA ~ D)
	September 2016
	May 2017
	October 2017
	February 2018

(1)	Domestic corporate bond credit ratings are generally defined to indicate the following:


Subject instrument	Credit rating	Definition
	AAA	Strongest capacity for timely repayment.

	AA+/AA/AA-	Very strong capacity for timely repayment. This capacity may, nevertheless, be slightly inferior than is the case for the highest rating category

	A+/A/A-	Strong capacity for timely repayment. This capacity may, nevertheless, be more vulnerable to adverse changes in circumstances or in economic conditions than is the case for higher rating categories.

	BBB+/BBB/BBB-	Capacity for timely repayment is adequate, but adverse changes in circumstances and in economic conditions are more likely to impair this capacity.

Corporate bonds	BB+/BB/BB-	Capacity for timely repayment is currently adequate, but that there are some speculative characteristics that make the repayment uncertain over time.

	B+/B/B-	Lack of adequate capacity for repayment and speculative characteristics. Interest payment in time of unfavorable economic conditions is uncertain.

	CCC	Lack of capacity for even current repayment and high risk of default.

	CC	Greater uncertainties than higher ratings.

	C	High credit risk and lack of capacity for timely repayment.

	D	Insolvency.

(2)

Commercial paper


Subject instrument	Month of rating	Credit rating⁽¹⁾	Rating agency (Rating range)
	June 2016	A1	Korea Ratings Corporation (A1 ~ D)

	June 2016	A1	NICE Information Service Co., Ltd. (A1 ~ D)

	September 2016	A1	NICE Information Service Co., Ltd. (A1 ~ D)

Commercial paper	September 2016	A1	Korea Ratings Corporation (A1 ~ D)

	May 2017	A1	Korea Investors Service, Inc. (A1 ~ D)

	May 2017	A1	Korea Ratings Corporation (A1 ~ D)

	October 2017	A1	Korea Investors Service, Inc. (A1 ~ D)

	December 2017	A1	Korea Ratings Corporation (A1 ~ D)

(1)	Domestic commercial paper credit ratings are generally defined to indicate the following:


Subject instrument	Credit rating	Definition
Commercial paper	A1	Timely repayment capability is at the highest level with extremely low investment risk and is stable such that it will not be influenced by any reasonably foreseeable changes in external factors.
	A2	Strong capacity for timely repayment with very low investment risk. This capacity may, nevertheless, be slightly inferior than is the case for the highest rating category.
	A3	Capacity for timely repayment is adequate with low investment risk. This capacity may, nevertheless, be somewhat influenced by sudden changes in external factors.
	B	Capacity for timely repayment is acknowledged, but there are some speculative characteristics.
	C	Capacity for timely repayment is questionable.
	D	Insolvency.

LOGO ‘+’ or ‘-’ modifier can be attached to ratings A2 through B to differentiate ratings within broader rating categories.

Capitalization

(1)

Change in capital stock (as of March 31, 2018)

There were no changes to our issued capital stock during the annual reporting period ended March 31, 2018.

(2)

Convertible bonds

Not applicable.

Voting rights (as of March 31, 2018)


			(Unit: share)
Description			Number of shares
A. Total number of shares issued⁽¹⁾:	Common shares	⁽¹⁾		357,815,700
A. Total number of shares issued⁽¹⁾:
	Preferred shares			—
B. Shares without voting rights:	Common shares			—
B. Shares without voting rights:	Preferred shares			—
C. Shares subject to restrictions on voting rights pursuant to our articles of incorporation:	Common shares			—
	Preferred shares			—
D. Shares subject to restrictions on voting rights pursuant to regulations:	Common shares			—
	Preferred shares			—
E. Shares with restored voting rights:	Common shares			—
E. Shares with restored voting rights:	Preferred shares			—
Total number of issued shares with voting rights (=A – B – C – D + E):	Common shares			357,815,700

	Preferred shares			—

(1)	Authorized: 500,000,000 shares

Dividends

Dividends for the three most recent fiscal years


Description (unit)		2018 Q1			2017			2016
Par value (Won)			5,000			5,000			5,000
Profit (loss) for the year (million Won)⁽¹⁾			(59,454	)		1,802,756			906,713
Earnings (loss) per share (Won)⁽²⁾			(166	)		5,038			2,534

Total cash dividend amount for the period (million Won)			—			178,908			178,908

Total stock dividend amount for the period (million Won)			—			—			—

Cash dividend payout ratio (%)⁽³⁾			—			9.92	%		19.73	%
Cash dividend yield (%)⁽⁴⁾	Common shares		—			1.69	%		1.58	%
Cash dividend yield (%)⁽⁴⁾	Preferred shares		—			—			—
Stock dividend yield (%)	Common shares		—			—			—
Stock dividend yield (%)	Preferred shares		—			—			—
Cash dividend per share (Won)	Common shares		—			500			500
Cash dividend per share (Won)	Preferred shares		—			—			—
Stock dividend per share (share)	Common shares		—			—			—
Stock dividend per share (share)	Preferred shares		—			—			—

(1)	Based on profit for the year attributable to the owners of the controlling company.

(2)	Earnings per share is based on par value of W5,000 per share and is calculated by dividing net income by weighted average number of common shares.

(3)	Cash dividend payout ratio is the percentage that is derived by dividing total cash dividend by profit for the year attributable to the owners of the controlling company.

(4)

Cash dividend yield is the percentage that is derived by dividing cash dividend by the arithmetic average of the daily closing prices of our common shares during the one-week period ending two trading days prior to the closing of the register of shareholders for the purpose of determining the shareholders entitled to receive annual dividends.

2.	Business

Business overview

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

As of March 31, 2018, in order to support our business activities, we operated TFT-LCD and OLED production and research facilities in Paju and Gumi in Korea, and we have also established subsidiaries in the Americas, Europe and Asia.

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

2018 Q1 consolidated operating results highlights


	(Unit: In billions of Won)
2018 Q1	Display business
Sales Revenue		5,675
Gross Profit		542
Operating Profit (loss)		(98	)

Industry

(1)

Industry characteristics and growth potential

•

The entry barriers to manufacture display panels are relatively high due to the technology and capital intensive nature of the mass manufacturing process that is required to achieve economies of scale, among other factors.

•

While growth in the market for displays used in notebook computer, monitor and other traditional IT products has stagnated or declined, the market for small- and medium-sized displays (including those used in smartphones) in the rapidly evolving IT environment has shown steady growth. The display market for televisions has also shown steady growth mainly due to growing demand from developing countries as well as from consumers in general for larger sized display panels. As for displays used in industrial, automobile and other value added products, we expect to see growth in these markets.

(2)

Cyclicality

•

The display panel business is highly cyclical and sensitive to fluctuations in the general economy. The industry experiences recurring volatility caused by imbalances between supply and demand due to capacity expansion and changing production utilization rates within the industry.

•

Macroeconomic factors and other causes of business cycles can affect the rate of growth in demand for display panels. Accordingly, if supply exceeds demand, average selling prices of display panels may decrease. Conversely, if growth in demand outpaces growth in supply, average selling prices may increase.

(3)

Market conditions

•

There is a concern over excessive competition and resulting adverse effects on supply and demand in the LCD industry amidst continued increases in new investments in manufacturing facilities and supply of panels. In particular, Chinese manufacturers have continued to make further investments, which have been driven by local governments, despite concerns of over-investment in the LCD industry.

•

Most display panel manufacturers are located in Asia.

Korea: LG Display, Samsung Display, etc.

Taiwan: AU Optronics, Innolux, CPT, HannStar, etc.

Japan: Japan Display, Sharp, Panasonic LCD, etc.

China: BOE, CSOT, CEC Panda, HKC, etc.

(4)

Market shares

•

Our worldwide market share of large-sized display panels (i.e., panels that are 9 inches or larger) based on revenue is as follows:


	2018 Q1			2017			2016
Panels for Televisions⁽¹⁾		26.8	%		28.1	%		28.2	%
Panels for Monitors		37.2	%		36.3	%		36.6	%
Panels for Notebook Computers		24.7	%		21.3	%		27.8	%
Panels for Tablet Computers		36.5	%		29.1	%		24.1	%

Total		29.8	%		29.2	%		29.4	%

Source: Large-Area Display Market Tracker (IHS Technology)

(1)	Includes panels for public displays.

(5)

Competitiveness

•

Our ability to compete successfully depends on factors both within and outside our control, including product pricing, our relationship with customers, timely investments, adaptable production capabilities, development of new and premium products through technological advances, competitive production costs, success in marketing to our end-brand customers, component and raw material supply costs, foreign exchange rates and general economic and industry conditions.

•

In order to compete effectively, it is critical to be cost competitive and maintain stable and long-term relationships with customers which will enable us to be profitable even in a buyer’s market.

•

A substantial portion of our sales is attributable to a limited number of end-brand customers and their designated system integrators. The loss of these end-brand customers, as a result of customers entering into strategic supplier arrangements with our competitors or otherwise, would result in reduced sales.

•

Developing new products and technologies that can be differentiated from those of our competitors is critical to the success of our business. It is important that we take active measures to protect our intellectual property internationally by obtaining patents and undertaking monitoring activities in our major markets. It is also necessary to recruit and retain experienced key managerial personnel and skilled line operators.

•

As a leading technology innovator in the display industry, we continue to focus on delivering differentiated value to our customers by developing various technologies and products, including display panels with OLED, IPS, in-TOUCH and other technologies. With respect to OLED panels, following our supply of the world’s first 55-inch OLED 3D panels for televisions in January 2013, we have supplied ultra-high definition (“Ultra HD” or “UHD”) OLED panels as well as “Wallpaper” and “Crystal Sound” OLED panels for televisions, flexible plastic OLED panels for smartphones, round OLED panels for wearable devices among others and have shown that we are technologically a step ahead of the competition. With respect to TFT-LCD panels, we are leading the market with our differentiated products with IPS technology, such as our ultra-large and high definition UHD television panels and 21:9 screen aspect ratio ultra-wide IPS curved monitors, and have prepared our production facilities to produce products with in-TOUCH technology.

•

Moreover, we entered into long-term sales contracts with major global firms to secure customers and expand partnerships for technology development.

New businesses

For our continued growth, we are actively exploring and preparing for new business opportunities that may arise in the changing market environment. As such, we are continually reviewing and looking at opportunities in the display and promising new industries.

3.	Major Products and Raw Materials

Major products

We manufacture TFT-LCD and OLED panels, of which a significant majority is sold overseas.


			(Unit: In billions of Won, except percentages)
Business area	Sales type	Items (Market)	Usage	Major trademark	Sales in 2018 Q1 (%)
Display	Product/ Service/ Other sales	Display panel (Overseas⁽¹⁾)	Panels for notebook computers, monitors, televisions, smartphones, tablets, etc.	LG Display	5,241 (92.4%)
		Display panel (Korea⁽¹⁾)	Panels for notebook computers, monitors, televisions, smartphones, tablets, etc.	LG Display	434 (7.6%)

Total					5,675 (100.0%)

•

Period: January 1, 2018 ~ March 31, 2018.

(1)	Based on ship-to-party.

Average selling price trend of major products

While average selling prices of LCD panels exhibited varying trends according to demand by product category, the average selling price of LCD panels per square meter of net display area shipped in the first quarter of 2018 decreased by approximately 11% compared to the fourth quarter of 2017 due to a continued decline in average selling prices and a decrease in the proportion of small- and medium-sized panels for mobile products, which generally have higher selling prices per square meter of net display area, in our product mix. There is no assurance that the average selling prices of LCD panels will not fluctuate in the future due to changes in market conditions.

(Unit: US$ / m²)

Description

2018 Q1

2017 Q4

2017 Q3

2017 Q2

Display panel⁽¹⁾⁽²⁾

522

589

600

574

(1)	Quarterly average selling price per square meter of net display area shipped.

(2)	Excludes semi-finished products in the cell process.

Major raw materials

Prices of major raw materials depend on fluctuations in supply and demand in the market as well as on change in size and quantity of raw materials due to the increased production of large-sized panels.


			(Unit: In billions of Won, except percentages)
Business area	Purchase type	Items	Usage	Cost⁽¹⁾		Ratio (%)			Suppliers
Display	Raw materials	Backlights	Display panel manufacturing		560		17.8	%	HeeSung Electronics, etc.
		Polarizers			509		16.2	%	LG Chem, etc.
		Glass			312		9.9	%	NEG, Asahi Glass, etc.
		Printed circuit boards			376		12.0	%	Korea SMT, etc.
		Others			1,385		44.1	%	—

Total					3,141		100.0	%

•

Period: January 1, 2018 ~ March 31, 2018.

(1)

Based on total cost for purchase of raw materials which includes manufacturing and development costs, etc.

4.	Production and Equipment

Production capacity and output

(1)

Production capacity

The table below sets forth the production capacity of our Gumi, Paju, Guangzhou and Ochang facilities in the periods indicated.

(Unit: 1,000 glass sheets)

Business area

Items

Location of facilities

2018 Q1⁽¹⁾

2017⁽²⁾

2016⁽²⁾

Display

Display panel

Gumi, Paju,
Guangzhou,
Ochang

2,422

10,538

9,906

(1)	Calculated based on the maximum monthly input capacity (based on glass input substrate size for eighth generation glass sheets) during the period multiplied by the number of months in the period (i.e., 3 months).

(2)	Calculated based on the maximum monthly input capacity (based on glass input substrate size for eighth-generation glass sheets) during the year multiplied by the number of months in a year (i.e., 12 months).

(2)

Production output

The table below sets forth the production output of our Gumi, Paju and Guangzhou facilities in the periods indicated.

(Unit: 1,000 glass sheets)

Business area

Items

Location of facilities

2018 Q1

2017

2016

Display

Display panel

Gumi, Paju,
Guangzhou, Ochang

2,291

9,262

8,996

•

Based on glass input substrate size for eighth-generation glass sheets.

Production performance and utilization ratio


		(Unit: Hours, except percentages)
Production facilities	Available working hours in 2018 Q1	Actual working hours in 2018 Q1	Average utilization ratio
Gumi	1,968⁽¹⁾ (82 days)⁽²⁾	1,968⁽¹⁾ (82 days)⁽²⁾	100.0%
Paju	2,160⁽¹⁾ (90 days)⁽²⁾	2,160⁽¹⁾ (90 days)⁽²⁾	100.0%
Guangzhou	2,160⁽¹⁾ (90 days)⁽²⁾	2,160⁽¹⁾ (90 days)⁽²⁾	100.0%

(1)	Based on the assumption that all 24 hours in a day have been fully utilized.

(2)	Number of days is calculated by averaging the number of working days for each facility.

Investment plan

In 2017, our total capital expenditures on a cash out basis was W6.6 trillion. In 2018, we plan to continue capital expenditures to invest in new OLED and oxide technologies and respond to increases in demand for large-sized panels.

Sales

Sales performance


					(Unit: In billions of Won)
Business area	Sales types	Items (Market)		2018 Q1	2017		2016
Display	Products, etc.	Display panel	Overseas⁽¹⁾	5,241		25,794		24,679
			Korea⁽¹⁾	434		1,996		1,825

			Total	5,675		27,790		26,504

(1)	Based on ship-to-party.

Sales route and sales method

(1)

Sales organization

•

As of March 31, 2018, each of our television, IT, mobile and OLED businesses had individual sales and customer support functions.

•

Sales subsidiaries in the United States, Germany, Japan, Taiwan, China and Singapore perform sales activities and provide local technical support to customers.

(2)

Sales route

Sales

of our products take place through one of the following two routes:

•

LG Display HQ and overseas manufacturing subsidiaries g Overseas sales subsidiaries (USA/Germany/Japan/Taiwan/China/Singapore), etc. g System integrators and end-brand customers g End users

•

LG Display HQ and overseas manufacturing subsidiaries g System integrators and end-brand customers g End users

(3)

Sales methods and sales terms

•

Direct sales and sales through overseas subsidiaries, etc. Sales terms are subject to change depending on the fluctuation in the supply and demand of LCD panels.

(4)

Sales strategy

•

As part of our sales strategy, we have secured stable sales to major personal computer manufacturers and leading consumer electronics manufacturers globally, led the television market with our OLED and other market leading television panels, increased the proportion of sales of our differentiated television panels, such as our Ultra HD and large television panels, in our product mix and strengthened sales of high-resolution, IPS, narrow bezel and other high-end display panels in the monitor, notebook computer and tablet markets.

•

In the smartphone, commercial products (including interactive whiteboards and video wall displays), industrial products (including aviation and medical equipment) and automobile displays segment, we have continued to build a strong and diversified business portfolio by expanding our business with customers with a global reach on the strength of our differentiated products applying IPS, plastic OLED, high-resolution, high-reliability, Super Narrow bezel, in-TOUCH and other technologies.

(5)

Purchase orders

•

Customers generally place purchase orders with us one month prior to delivery. Our customary practice for procuring orders from our customers and delivering our products to such customers is as follows:

•

Receive order from customer (overseas sales subsidiaries, etc.) g Headquarter is notified g Manufacture product g Ship product (overseas sales subsidiaries, etc.) g Sell product (overseas sales subsidiaries, etc.)

6.	Market Risks and Risk Management

Market risks

The display industry continues to experience continued declines in the average selling prices of TFT-LCD and OLED panels irrespective of cyclical fluctuations in the industry, and our margins would be adversely impacted if prices decrease faster than we are able to reduce our costs.

The display industry is highly competitive. We have experienced pressure on the prices and margins of our major products due largely to additional industry capacity from panel manufacturers in Korea, Taiwan, China and Japan coupled with changes in the production mix of such manufacturers.

Our ability to compete successfully depends on factors both within and outside our control, including product pricing, performance and reliability, timely investments, adaptable production capabilities, utilization of differentiated technologies in product development, success or failure of our end-brand customers in marketing their brands and products, component and raw material supply costs, and general economic and industry conditions. We cannot provide assurance that we will be able to compete successfully with our competitors on these fronts and, as a result, we may be unable to sustain our current market position.

Our results of operations are subject to exchange rate fluctuations. To the extent that we incur costs in one currency and generate sales in a different currency, our profit margins may be affected by changes in the exchange rates between the two currencies. Our sales of display panels are denominated mainly in U.S. dollars, whereas our foreign currency denominated purchases of raw materials are denominated mainly in U.S. dollars and Japanese Yen. Seeking to achieve stable management, we take every precaution in our foreign currency risk management to minimize the risk of foreign currency fluctuations on our foreign currency denominated assets and liabilities.

Risk management

As the average selling prices of TFT-LCD and OLED panels can continue to decline over time irrespective of industry-wide cyclical fluctuations, we may find it hard to manage risks associated with certain factors that are outside our control. However, we counteract such declines in average selling prices by increasing the proportion of high value added panels in our product mix while also implementing various cost reduction measures. In addition, in order to manage our risk against foreign currency fluctuations, we continually monitor our currency position and risk, and when needed, we may from time to time enter into cross-currency interest rate swap contracts and foreign currency forward contracts.

7.	Derivative Contracts

Currency risks

•

We are exposed to currency risks on sales, purchases and borrowings that are denominated in currencies other than in Won, our functional currency. These currencies are primarily the U.S. dollar, the Japanese Yen and the Chinese Yuan.

•

Interest on borrowings is denominated in the currency of the borrowing. Generally, borrowings are denominated in currencies that match the cash flows generated by our underlying operations, primarily in Won, the U.S. dollar and the Chinese Yuan.

•

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

•

As of March 31, 2018, we had no outstanding amounts to be settled under any foreign currency derivative instruments.

Interest rate risks

•

Our exposure to interest rate risks relates primarily to our floating rate long term loan obligations. We have established and are managing interest rate risk policies to minimize uncertainty and costs associated with interest rate fluctuations by monitoring cyclical interest rate fluctuations and enacting countermeasures.

•

As of March 31, 2018, we have entered into an aggregate of W350 billion in interest rate swap agreements with Shinhan Bank and NongHyup Bank, for which we have not applied hedge accounting.

We recognized a loss on valuation of derivative instruments in the amount of W242 million with respect to interest rate derivative instruments held as of March 31, 2018.

8.	Major contracts

Our material contracts, other than contracts entered into in the ordinary course of business, are set forth below:


Type of agreement	Name of party	Term	Content
Technology licensing agreement	Semiconductor Energy Laboratory	October 2005 ~	Patent licensing of LCD and OLED related technology

	Hewlett-Packard	January 2011 ~	Patent licensing of semi-conductor device technology

	Ignis Innovation, Inc.	July 2016 ~	Patent licensing of OLED related technology

Technology licensing/supply agreement	HannStar Display Corporation	December 2013 ~	Patent cross-licensing of LCD technology

	AU Optronics Corporation	August 2011~	Patent cross-licensing of LCD technology

	Innolux Corporation	July 2012 ~	Patent cross-licensing of LCD technology

	Universal Display Corporation	January 2015 ~ December 2022	Patent cross-licensing of OLED related technology

9.	Research & Development

Summary of R&D-related expenditures


	(Unit: In millions of Won, except percentages)
Items		2018 Q1	2017			2016
Material Cost		119,419		646,622			677,423
Labor Cost		186,872		668,429			479,650
Depreciation Expense		95,172		298,383			136,826
Others		87,637		298,256			129,348

Total R&D-Related Expenditures		489,100		1,911,690			1,423,247

	Selling & Administrative Expenses	215,169		917,645			880,794
Accounting Treatment⁽¹⁾	Manufacturing Cost	183,827		786,494			220,165
	Development Cost (Intangible Assets)	90,104		207,551			322,288

R&D-Related Expenditures / Revenue Ratio (Total R&D-Related Expenditures ÷ Revenue for the period × 100)		8.6%		6.9	%		5.4	%

(1)	For accounting treatment purposes, selling & administrative expenses are presented as research and development expenses in our statements of comprehensive income, net of amortization of capitalized intangible asset development costs.

R&D achievements

Achievements in 2016

(1)

Developed the world’s narrowest, at the time, bezel videowall product (55-inch/49-inch FHD, bezel to bezel 1.8mm)

•

Delivered 0.9mm even bezel, four-sided borderless product (bezel to bezel 1.8mm)

(2)

Developed the world’s first ultra-stretch format display product (86-inch, 58:9 screen aspect ratio)

•

Developed new display panel size and screen aspect ratio (86-inch, 58:9 screen aspect ratio)

•

Applied next-generation stain (per pixel) offset technology

(3)

Developed the world’s first ultra-large display product utilizing data single bank and GIP technology (86-inch Ultra HD)

•

Achieved cost-competitiveness by developing world’s first ultra-large display product utilizing data single bank and GIP technology

(4)

Developed the world’s first in-TOUCH monitor product (23-inch)

•

Improved touch functionality and strengthened cost-competitiveness by applying the world’s first in-TOUCH technology to monitor display products

•

Simplified customer software configuration management by providing touch total solution

(5)

Developed ultra-slim OLED television display product applying high dynamic range (65-inch, 800 nit luminance, 2.52 mm module thickness)

•

Applied high dynamic range (HDR) technology to achieve 800 nit peak luminance and improved display quality

•

Achieved module thickness of 2.52mm (without back cover) and 5.92mm (with back cover)

(6)

Developed combined 5.3-inch QHD in-TOUCH + 3D cover glass product for LG Electronics

•

Developed world class smartphone product (G5) through collaboration with other LG Group companies

•

Strengthened competitiveness of design by achieving processability and productivity for 0.4t 3D cover glass

•

Improved power consumption of AoD Mode from Self Font Generation technology and operation optimization

(7)

Developed the world’s first large-scale outdoor high luminance 3000 nit product (75-inch Ultra HD)

•

Developed the world’s first large-scale outdoor 75-inch Ultra HD, high luminance 3000 nit product

•

Achieved cost competitiveness and power consumption reduction through utilization of high transmittance M+ panel

(8)

Developed the world’s first FHD/Ultra HD multi-input Interactive Whiteboard product (75-inch Ultra HD)

•

Strengthened product competitiveness through delivery of customer FHD/Ultra HD selective input functionality

(9)

Developed 4.9mm depth Art Slim2 Ultra HD television (55-inch/65-inch Ultra HD)

•

Strengthened design competitiveness through delivery of ultra-slim product with application of Glass Light Guide Plate

(10)

Developed the world’s largest 21:9 screen aspect ratio curved monitor (37.5-inch UltraWide Quad HD (“WQHD”)+)

•

Continued pioneering of the market with the world’s largest 21:9 screen aspect ratio IPS curved monitor lineup (37.5-inch, 2300R curvature radius, 44mm curvature depth)

•

Established flagship line through application of new high definition technology (WQHD+, 3840 x 1600 resolution)

•

Improved panel transmittance and backlight bleeding through our first-time application of a Super-IPS COT panel structure to monitor models

(11)

Developed the world’s first in-TOUCH GIP/DRD notebook product (15.6-inch FHD)

•

Strengthened competitiveness through application of GIP/DRD technology to FHD-quality notebook in-TOUCH products

(12)

Developed a transparent 32-inch FHD product

•

Achieved high transmittance of transparent panel through application of RGBW(M+) panel technology

(13)

Developed the world’s first Light Absorption Polarizer (“LAP”) product (65-inch/60-inch Ultra HD)

•

Developed differentiated wide color gamut solution

(14)

Developed the world’s first UHD DRD product (50-inch UHD)

•

Utilized UHD RGBW(M+) pixel structure-based DRD technology to strengthen product competitiveness and optimize picture quality (high definition, high luminance, low energy consumption and HDR)

(15)

Developed a 5.7-inch QHD flexible display product

•

Developed a flexible display smartphone product through collaboration with other LG Group companies

•

Reduced the lower bezel size by 0.59mm and improved power consumption by applying VESA Display Stream Compression 1.1

(16)

Developed the world’s first wallpaper OLED television product (65-inch Ultra HD)

•

Achieved an ultra-slim wallpaper-style design that completely sticks to walls (65-inch, 3.9 mm hindmost thickness, 7.4 kg)

•

Achieved long-distance signal and power transmission technology for the separation of the driver circuit

Achievements in 2017

(1)

Developed 5.7-inch QHD+ full vision display (LG Electronics)

•

Developed a full vision display smartphone product (G6) through strategic collaboration with other LG Group companies

•

Applied first 18:9 screen aspect ratio with 4-corner round display

(2)

Developed mobile LTPS 30Hz product (SH 5.1-inch FHD)

•

Secured 30Hz low-frequency drive technology based on LTPS TFT-LCD

•

Reduced logic power consumption through 30Hz low-frequency drive (reduced from 96mW to 69mW on 5.1-inch FHD)

(3)

Developed and released the world’s first Crystal Sound OLED, or CSO, television product

•

Released product with a new platform concept through development of OLED panel product with integrated speakers

•

Delivered OLED television product that achieves differentiated value not only in picture quality and design, but also sound quality

(4)

Developed notebook oxide product (13.9-inch, Ultra HD)

•

Achieved high definition/narrow bezel product through application of oxide BCE GIP technology

•

Delivered low power consumption product through application of low refresh rate, or LRR, technology

(5)

Developed medical monitor product for surgical endoscope (27.0-inch, Ultra HD)

•

Newly entered the medical devices market through development and production of medical monitor product for surgical endoscope

•

Achieved high definition (3,840 x 2,160), high luminance (800 nit) and high contrast ratio (1,300:1)

•

Implemented coverglass direct bonding applying our own manufacturing processes (M6 line)

(6)

Developed the world’s first four-side borderless monitor with a resolution of 8K4K (31.5-inch 8K4K oxide)

•

Pioneered Ultra HD Premium MNT market through development of the world’s first four-side borderless monitor with a resolution of 8K4K

•

Delivered Ultra HD based on oxide GIP (280 PPI with a resolution of 7680x4320)

•

Delivered wide color gamut (Adobe RGB 100%/DCI 98%), four-side borderless

(7)

Developed the world’s largest automotive Center Information Display (“CID”) product (15.4-inch Widescreen Ultra Extended Graphics Array (“WUXGA”))

•

Developed the world’s largest auto component display in the automotive industry

•

Guaranteed the first 1000hr reliability in the automotive industry

(8)

Developed the world’s first 88-inch Ultra Stretch display product

•

Strengthened competitiveness through application of smart (digital) stepper

(9)

Developed products utilizing U-IPS (75-inch/65-inch/55-inch/49-inch, Ultra HD)

•

Utilized U-IPS technology to strengthen product competitiveness by improving panel transmittance rate and reflectivity

(10)

Developed the world’s first 65-inch UHD OLED television product utilizing GIP

•

Strengthened product competitiveness through application of the world’s first oxide based UHD GIP technology

Achievements in 2018

(1)

Developed the world’s first glass-integrated LCD television product (Art Glass Series)

•

Achieved LCD modular appearance and simplicity in design by using glass material throughout product (including the panel, light guide plate and back cover)

•

Strengthened competitiveness of frameless design by decreasing bezel size from 7.8mm to 5.9mm

(2)

Developed our first 5.8-inch Ultra HD Mobile 4K product

•

Developed our first Ultra HD mobile product

•

Achieved high luminance, low power consumption and HD resolution by applying Ultra HD RGBW (M+) pixel structure

(3)

Developed the world’s first 5.8-inch mobile FHD product applying M+

•

Our first product applying camera notch concept technology

10.

Intellectual Property

As of March 31, 2018, our cumulative patent portfolio (including patents that have already expired) included a total of 35,195 patents, consisting of 16,394 in Korea and 18,801 in other countries.

11.

Environmental and Safety Matters

We are subject to a variety of environmental laws and regulations, and we may be subject to fines or restrictions that could cause our operations to be interrupted. Our manufacturing processes generate worksite waste, including water and air pollutants, at various stages in the manufacturing process, and we are subject to relevant laws and regulations in each area of the environment, including with respect to the treatment of chemical by-products. We have installed various types of anti-pollution equipment, consistent with environmental standards, for the treatment of chemical waste and equipment for the recycling of treated waste water at our various facilities. However, we cannot provide assurance that environmental claims will not be brought against us or that the local or national governments will not take steps toward adopting more stringent environmental standards. Any failure on our part to comply with any present or future environmental regulations could result in the assessment of damages or imposition of fines against us, suspension of production or a cessation of operations. In addition, environmental regulations could require us to acquire costly equipment or to incur other significant compliance expenses that may materially and negatively affect our financial condition and results of operations.

In accordance with the Framework Act on Low Carbon, Green Growth, we implemented the greenhouse gas emission and energy consumption target system from 2012 to 2014. In 2015, we implemented the greenhouse gas trading system, under which we are responsible to meet our emission targets based on the emission credits allocated to us by the Ministry of Environment of the Korean government. As a result, we have been investing in additional equipment and there may be other costs associated with meeting reduction targets, which may have a negative effect on our profitability or production activities.

In connection with the greenhouse gas emission and energy reduction target system, we submitted a statement of our domestic emissions and energy usage for 2017 to the Korean government in March 2018 after it was certified by BSI Korea, a government-designated certification agency. The table below sets forth yearly levels of our greenhouse gases emissions and energy usage in the statement submitted to the Korean government:


	(Unit: thousand tonnes of CO₂ equivalent; Tetra Joules)
Category	2017		2016		2015
Greenhouse gases		6,303		5,851		7,348
Energy		63,451		60,423		60,146

Operations at our manufacturing plants are subject to regulation and periodic scheduled and unscheduled on-site inspections by the Ministry of Environment and local environmental protection authorities. We believe that we have adopted adequate anti-pollution measures and have minimized our impact on the environment by improving existing and developing new technologies for the effective maintenance of environmental protection standards consistent with local industry practice. In addition, we have continually monitored, and we believe that we are in compliance in all material respects with, the applicable environmental laws and regulations in Korea. Expenditures related to such compliance may be substantial. Such expenditures are generally included in capital expenditures. As required by Korean law, we employ licensed environmental specialists to manage our water and air pollution, toxic materials and waste. In December 2013, to ensure safe water quality and reduce costs, we entered into a contract with a specialist company to operate our waste water treatment facilities. In stages beginning in November 1997, we have obtained environmental management system ISO 14001 certifications for our domestic panel and module production facilities and our overseas module production plants in Nanjing, Yantai and Guangzhou, China, and with respect to our domestic panel and module production plants, we received ISO 50001 certification in December 2013 for our energy management system.

In addition, in August 2014, GP1, our newest eighth-generation panel fabrication facility located in Guangzhou, China, was the first electronics plant in China to receive the “Green Plant” designation under China’s Green China Policy, in addition to receiving ISO 14001, ISO 50001, OHSAS 18001, ISO 9001, PAS 2050 and ISO 14064-1 certifications. Furthermore, with respect to our production facilities in Gumi, we have been certified by the Ministry of Environment as a “Green Company” for P1 and our Gumi module production plant since 1997, P2 and P3 since 2006 and P4, P5 and P6 since 2008. In recognition of our efforts to reduce greenhouse gas emissions, we were awarded a commendation from the Minister of Environment in the efforts against climate change category in the 2013 Green Management Awards, which was jointly hosted by the Ministry of Environment and the Ministry of Trade, Industry & Energy. In addition, in recognition of our efforts to improve recycling and reduce waste, we received a citation in 2014 for being a leading recycling company from the Prime Minister of Korea and, in recognition of our continued water conservation activities (reuse system investments, etc.) and greenhouse gas emission reduction activities (process gas and energy reduction, etc.), we attained the highest level, Leadership A, and received the grand prize award at the CDP Water Korea Best Awards in 2016 from the Carbon Disclosure Project, which was presided over by the Carbon Disclosure Project Korea Committee. We also attained a Leadership A in the climate change information technology sector and received a carbon management honors award. Our continued efforts to reduce greenhouse gas emissions was recognized again in 2017 by becoming the only domestic information technology company to attain the Leadership A level and again receiving carbon management honors by ranking in the top five among all eligible companies. In May 2017, we were awarded a commendation from the Minister of Environment for having scored the highest grade among companies in the low- and medium-volume pollutant emitters category that had entered into voluntary agreements with the Metropolitan Air Quality Management Office, in recognition of having successfully met our voluntary targets for reduction of air pollutants as well as our overall efforts to enhance our relevant facilities and operational systems. In addition, in recognition of efficient control, management and operating systems implemented in our manufacturing facilities, we received the top-level certification, Level 1, in 2017 under the Factory Energy Management System evaluation presided by the Korea Energy Agency. Furthermore, in November 2017, we received the highest commendation, the Presidential Award, in the Korean Energy Efficiency Awards presided by the Ministry of Industry, Trade and Energy in recognition of our energy management practices and energy saving measures, and we also obtained a certificate of excellence in the Energy Management System Evaluation.

In the case of the European Union’s Restriction of Hazardous Substances (RoHS) Directive 2011/65/EU, with the adoption of Directive (EU) 2015/863 in 2016, four additional substances (four phthalate substances) will be added to the six already restricted substances and the additional restrictions are scheduled to come into effect on July 22, 2019. In order to address the latent risk elements of the four phthalate substances scheduled to be restricted in 2019 and to establish a more stable management system, we implemented in 2016 a preemptive response process with respect to such four phthalate substances. In implementing this process, we collaborated with external agencies to ascertain regulatory trends and establish our response strategy, and we formulated and applied effective management measures through the collaborative efforts of our development, procurement and quality teams. Beryllium (Be) was not designated internationally as a mandatorily restricted substance but has continued to be the subject of discussion for restriction, and certain of our customers have designated it as a restricted substance not to be used in products. Accordingly, we have completed verification of the parts used in products for customers who have banned the use of Beryllium. We have also conducted verification of the parts used in products for all customers who are expected to implement a ban and we have established a Beryllium verification process for parts in development. Through such efforts, we have established a voluntary hazardous substance response process that can be expanded to products for all customers, not only those who have requested a response.

In October 2005, we became the first display panel company to receive accreditation as an International Accredited Testing Laboratory by the Korea Laboratory Accreditation Scheme, which is operated by the Korean Ministry of Trade, Industry & Energy. In September 2006, we received international accreditation from TUV SUD, EU’s German accreditation agency, as a RoHS testing laboratory. Our efforts to keep pace with the increasingly stringent accreditation standards and to receive and maintain such accreditations are part of our on-going efforts to systematically monitor environmentally controlled substances in our component parts inventory. Moreover, we participated in reforming IEC 62321, an international testing standard published by the International Electrotechnical Commission and used by RoHS, and the commission adopted our halogen-free combustion ion chromatography method in as IEC 62321-3-2, which was published in June 2013. In 2017, in a joint effort with the global product testing/accreditation agency SGS, we became the first display panel company to develop Eco Label, an environmentally friendly accreditation program for television display modules, and received the SGS Eco Label accreditation for our OLED, IPS Nano Color and Art Glass television models. For the IPS Nano Color for LCD, we received the Quality & Performance Mark from Intertek, a global product testing/accreditation agency, by applying a technology to eliminate cadmium (Cd) and indium phosphide (InP).

In December 2016, we were assessed a fine of W0.2 million, which we subsequently paid, for failure to meet certain reporting obligations under the Industrial Safety and Health Act. To prevent such violations from occurring again, we have strengthened our monitoring process and management and employee education training initiatives.

In June 2017, we were assessed a fine of W1 million, which we subsequently paid, for failure to meet certain waste disposal subcontractor requirements under the Waste Management Act. To prevent such violations from occurring again, we are strengthening the periodic evaluation process for our waste management subcontractors.

In June 2017, we were audited by the Ministry of Employment and Labor in connection with the occurrence of a safety accident and found to be in violation of certain provisions of the Industrial Safety and Health Act relating to supervisory obligations. As a result, we were issued a corrective order and assessed a fine of W2.4 million. In addition, the trial court assessed a fine of W0.5 million on each of us and our chief production officer on the basis of certain other applicable provisions of the Industrial Safety and Health Act. Relevant authorities are currently conducting further investigations. In order to prevent such accidents from occurring again, we are strengthening our safety management standards and training for our employees.

In January 2018, we were audited by the Ministry of Employment and Labor in connection with the occurrence of another safety accident and found to be in violation of certain provisions of the Industrial Safety and Health Act relating to supervisory obligations. As a result, we were issued a corrective order and assessed a fine of W14.4 million. Relevant authorities are currently conducting further investigations. In order to prevent such accidents from occurring again, we are strengthening our safety management standards and training for our employees.

Also in January 2018, the government of Gyeong-gi Province issued a warning and assessed a fine of W1 million on us, which we subsequently paid, for the failure to comply with certain requirements relating to air pollutant emission and prevention facilities under the Air Quality Management Act. To prevent such violations from occurring again, we have shortened the air pollutant emission maintenance reporting period and strengthened the verification process for relevant data.

In March 2018, we were audited by the Ministry of Employment and Labor in connection with our health and safety training practices, and we were found to have omitted requisite health and safety training sessions for certain employees in our P9 facilities in 2016 and 2017. As a result, we were assessed a fine of W6.95 million, which we subsequently paid, and have strengthened our efforts to promote health and safety training programs in advance as well as our management and supervision activities to ensure such programs are conducted.

12.

Financial Information

Financial highlights (Based on consolidated K-IFRS)


	(Unit: In millions of Won)
Description	As of March 31, 2018			As of December 31, 2017			As of December 31, 2016
Current assets		9,898,586			10,473,703			10,484,186
Quick assets		7,548,201			8,123,619			8,196,401
Inventories		2,350,385			2,350,084			2,287,785
Non-current assets		20,096,685			18,685,984			14,400,150
Investments in equity accounted investees		119,698			122,507			172,683
Property, plant and equipment, net		17,525,116			16,201,960			12,031,449
Intangible assets		912,202			912,821			894,937
Other non-current assets		1,539,669			1,448,696			1,301,081

Total assets		29,995,271			29,159,687			24,884,336

Current liabilities		9,548,591			8,978,682			7,058,219
Non-current liabilities		5,621,044			5,199,495			4,363,729

Total liabilities		15,169,635			14,178,177			11,421,948

Share capital		1,789,079			1,789,079			1,789,079
Share premium		2,251,113			2,251,113			2,251,113
Retained earnings		10,379,127			10,621,571			9,004,283
Other equity		(182,040	)		(288,280	)		(88,478	)
Non-controlling interest		588,357			608,027			506,391

Total equity		14,825,636			14,981,510			13,462,388


	(Unit: In millions of Won, except for per share data and number of consolidated entities)
Description	For the three months ended March 31, 2018			For the year ended December 31, 2017		For the year ended December 31, 2016
Revenue		5,675,164			27,790,216		26,504,074
Operating profit (loss)		(98,323	)		2,461,618		1,311,416
Operating profit (loss) from continuing operations		(48,982	)		1,937,052		931,508
Profit (loss) for the period		(48,982	)		1,937,052		931,508
Profit (loss) attributable to:
Owners of the Company		(59,454	)		1,802,756		906,713
Non-controlling interest		10,472			134,296		24,795
Basic earnings (loss) per share		(166	)		5,038		2,534
Diluted earnings (loss) per share		(166	)		5,038		2,534
Number of consolidated entities		20			20		19

Financial highlights (Based on separate K-IFRS)


	(Unit: In millions of Won)
Description	As of March 31, 2018		As of December 31, 2017		As of December 31, 2016
Current assets		7,279,054		8,381,074		8,712,575
Quick assets		5,628,998		6,698,829		7,005,592
Inventories		1,650,056		1,682,245		1,706,983
Non-current assets		18,874,489		17,028,341		13,100,175
Investments		3,269,871		2,683,941		2,656,026
Property, plant and equipment, net		13,669,128		12,487,001		8,757,973
Intangible assets		738,473		731,373		673,966
Other non-current assets		1,197,017		1,126,026		1,012,210

Total assets		26,153,543		25,409,415		21,812,750

Current liabilities		7,825,127		7,394,605		6,176,344
Non-current liabilities		4,762,552		4,185,551		3,400,959

Total liabilities		12,587,679		11,580,156		9,577,303

Share capital		1,789,079		1,789,079		1,789,079
Share premium		2,251,113		2,251,113		2,251,113
Retained earnings		9,525,672		9,789,067		8,195,255
Other equity		0		0		0

Total equity		13,565,864		13,829,259		12,235,447


	(Unit: In millions of Won, except for per share data)
Description	For the three months ended March 31, 2018			For the year ended December 31, 2017		For the year ended December 31, 2016
Revenue		5,154,261			24,419,295		25,856,426
Operating profit (loss)		(253,621	)		709,138		770,856
Operating profit (loss) from continuing operations		(80,364	)		967,078		968,209
Profit (loss) for the period		(80,364	)		967,078		968,209
Basic earnings (loss) per share		(225	)		2,703		2,706
Diluted earnings (loss) per share		(225	)		2,703		2,706

Consolidated subsidiaries (as of March 31, 2018)


Company Interest	Primary Business	Location	Equity
LG Display America, Inc.	Sales	U.S.A.		100	%
LG Display Japan Co., Ltd.	Sales	Japan		100	%
LG Display Germany GmbH	Sales	Germany		100	%
LG Display Taiwan Co., Ltd.	Sales	Taiwan		100	%
LG Display Nanjing Co., Ltd.	Manufacturing	China		100	%
LG Display Shanghai Co., Ltd.	Sales	China		100	%
LG Display Poland Sp. zo.o.	Manufacturing	Poland		100	%
LG Display Guangzhou Co., Ltd.	Manufacturing	China		100	%
LG Display Shenzhen Co., Ltd.	Sales	China		100	%
LG Display Singapore Pte. Ltd.	Sales	Singapore		100	%
L&T Display Technology (Fujian) Limited	Manufacturing and sales	China		51	%
LG Display Yantai Co., Ltd.	Manufacturing	China		100	%
LG Display (China) Co., Ltd.	Manufacturing and sales	China		70	%
Nanumnuri Co., Ltd.	Workplace services	Korea		100	%
Unified Innovative Technology, LLC	Managing intellectual property	U.S.A.		100	%
Global OLED Technology LLC	Managing intellectual property	U.S.A.		100	%
LG Display Guangzhou Trading Co., Ltd.	Sales	China		100	%
LG Display Vietnam Haiphong Co., Ltd.	Manufacturing	Vietnam		100	%
Suzhou Lehui Display Co., Ltd.	Manufacturing and sales	China		100	%
MMT (Money Market Trust)	Money market trust	Korea		100	%

Status of equity investments (as of March 31, 2018)

(1)

Consolidated subsidiaries


Company	Investment Amount (in millions)		Initial Equity Investment Date		Equity Interest
LG Display America, Inc.	US$	411		September 24, 1999		100	%
LG Display Japan Co., Ltd.	¥	95		October 12, 1999		100	%
LG Display Germany GmbH	EUR	1		November 5, 1999		100	%
LG Display Taiwan Co., Ltd.	NT$	116		May 19, 2000		100	%
LG Display Nanjing Co., Ltd.	CNY	3,020		July 15, 2002		100	%
LG Display Shanghai Co., Ltd.	CNY	4		January 16, 2003		100	%
LG Display Poland Sp. zo.o.	PLN	511		September 6, 2005		100	%
LG Display Guangzhou Co., Ltd.	CNY	1,655		August 7, 2006		100	%
LG Display Shenzhen Co., Ltd.	CNY	4		August 28, 2007		100	%
LG Display Singapore Pte. Ltd.	US$	1.1		January 12, 2009		100	%
L&T Display Technology (Fujian) Limited	CNY	116		January 5, 2010		51	%
LG Display Yantai Co., Ltd.	CNY	1,008		April 19, 2010		100	%
Nanumnuri Co., Ltd.	W	800		March 19, 2012		100	%
LG Display (China) Co., Ltd.	CNY	8,232		December 27, 2012		70	%
Unified Innovative Technology, LLC	US$	9		March 21, 2014		100	%


Company	Investment Amount (in millions)		Initial Equity Investment Date		Equity Interest
LG Display Guangzhou Trading Co., Ltd.	CNY	1.2		May 27, 2015		100	%
Global OLED Technology LLC	US$	138		May 7, 2015		100	%
LG Display Vietnam Haiphong Co., Ltd.⁽¹⁾	US$	300		May 13, 2016		100	%
Suzhou Lehui Display Co., Ltd.	CNY	637		July 1, 2016		100	%
MMT (Money Market Trust) ⁽²⁾	W	430,801		March 31, 2017		100	%

Changes since December 31, 2017:

(1)	During the reporting period, we invested an additional W212,600 million in LG Display Vietnam Haiphong Co., Ltd.

(2)	As a result of our money market trust acquisition and disposal transactions conducted during the reporting period, the amount outstanding in our money market trust accounts as of March 31, 2018 is W430,801 million.

(2)

Affiliated companies


Company	Carrying Amount (in millions)		Date of Incorporation		Equity Interest
Paju Electric Glass Co., Ltd.	W	44,179		January 2005		40	%
Invenia Co., Ltd.	W	3,125		January 2001		13	%
Wooree E&L Co., Ltd.	W	3,506		June 2008		14	%
LB Gemini New Growth Fund No. 16⁽¹⁾	W	5,282		December 2009		31	%
YAS Co., Ltd.	W	16,045		April 2002		15	%
Avatec Co., Ltd.	W	23,252		August 2000		17	%
Arctic Sentinel, Inc.		—		June 2008		10	%
CYNORA GmbH	W	20,309		March 2003		14	%
Material Science Co., Ltd.⁽²⁾	W	4,000		January 2014		10	%

Changes since December 31, 2017:

(1)	We participate as a limited member in LB Gemini New Growth Fund No. 16. Upon a general meeting, the members have decided to dissolve the fund, which is currently under liquidation.

(2)	In March 2018, we acquired 10,767 voting common shares of Material Science Co., Ltd. for W4,000 million. As of March 31, 2018, our percentage ownership interest in Material Science Co., Ltd. is 10%, and we are entitled to appoint one director of Material Science Co., Ltd.

13.

Audit Information

Audit service


	(Unit: In millions of Won, hours)
Description	2018 Q1	2017	2016
Auditor	KPMG Samjong	KPMG Samjong	KPMG Samjong
Activity	Audit by independent auditor	Audit by independent auditor	Audit by independent auditor
Compensation⁽¹⁾	1,170 (450)⁽²⁾	1,040 (450)⁽²⁾	1,020 (440)⁽²⁾
Time required	1,710	17,909	18,291

(1)	Compensation amount is the contracted amount for the full fiscal year.

(2)	Compensation amount in ( ) is for Form 20-F filing and SOX 404 audit.

Non-audit service

None.

14.

Board of Directors

Members of the board of directors

As of March 31, 2018, our board of directors consisted of two non-outside directors, one non-standing director and four outside directors.


		(As of March 31, 2018)
Name	Position	Primary responsibility
Sang Beom Han⁽¹⁾	Representative Director (non-outside), Chief Executive Officer and Vice Chairman	Chairman of the board of directors

Sang Don Kim	Director (non-outside), Chief Financial Officer and Senior Vice President	Overall head of finances

Hyun-Hwoi Ha⁽²⁾	Director (non-standing)	Related to the overall management

Joon Park⁽³⁾	Outside Director	Related to the overall management

Sung-Sik Hwang⁽⁴⁾	Outside Director	Related to the overall management

Kun Tai Han⁽⁵⁾	Outside Director	Related to the overall management

Byoung Ho Lee⁽⁶⁾	Outside Director	Related to the overall management

(1)	Sang Beom Han was reappointed for another term as a non-outside director at the annual general meeting of shareholders held on March 15, 2018.

(2)	Hyun Hwoi Ha is also a standing director of LG Corp., a non-standing director of LG Hausys, Ltd., a non-standing director of LG International Corp., a non-standing director of LG Uplus Corp., a non-standing director of LG Economic Research Institute and a non-standing director of LG CNS Co., Ltd.

(3)	Joon Park is also an outside director of Green Cross Holdings Corp .

(4)	Sung-Sik Hwang was reappointed for another term as an outside director at the annual general meeting of shareholders held on March 15, 2018. Mr. Hwang is also an outside director of Kyobo Life Insurance Co., Ltd.

(5)	Kun Tai Han is also the chief executive officer of Hans Consulting.

(6)	Byoung Ho Lee was appointed as an outside director at the annual general meeting of shareholders held on March 15, 2018.

Committees of the board of directors

We have the following committees that serve under our board of directors: Audit Committee, Outside Director Nomination Committee and Management Committee. The Management Committee consists of two non-outside directors, Sang Beom Han and Sang Don Kim.

During the reporting period, one meeting of the Outside Director Nomination Committee was held and the composition of the Outside Director Nomination Committee was as follows:


	(As of January 22, 2018)
Committee	Composition	Member
Outside Director Nomination Committee⁽¹⁾	1 non-standing director and 2 outside directors	Hyun-Hwoi Ha,Joon Park, Sung-Sik Hwang

(1)	Each of Hyun-Hwoi Ha, Joon Park and Sung-Sik Hwang was appointed as a member of the outside director nomination committee of the board of directors by the board of directors on January 22, 2018.

As of the March 31, 2018, the composition of the Audit Committee is as follows.


	(As of March 31, 2018)
Committee	Composition	Member
Audit Committee	3 outside directors	Sung-Sik Hwang⁽¹⁾, Joon Park, Kun Tai Han

(1)	Sung-Sik Hwang is the audit committee chairman. He was reappointed for another term as an Audit Committee member at the annual general meeting of shareholders held on March 15, 2018.

Independence of directors

Directors are appointed in accordance with the procedures of the Commercial Act and other relevant laws and regulations. Our board of directors is independent as four out of the seven directors that comprise the board are outside directors. Outside directors candidates are nominated for appointment at a shareholders’ meeting after undergoing rigorous review by the Outside Director Nomination Committee.

All of our current outside directors were nominated by the Outside Director Nomination Committee, and all of our current non-outside directors were nominated by the board of directors.

15.

Information Regarding Shares

Total number of shares

(1)

Total number of shares authorized to be issued (as of March 31, 2018): 500,000,000 shares.

(2)

Total shares issued and outstanding (as of March 31, 2018): 357,815,700 shares.

Shareholder list

(1)

Largest shareholder and related parties as of March 31, 2018:


Name	Relationship	Number of shares of common stock		Equity interest
LG Electronics	Largest Shareholder		135,625,000		37.9	%
Sang Beom Han	Related Party		31,355		0.0	%
Sang Don Kim	Related Party		4,000		0.0	%

(2)

Shareholders who are known to us to own 5% or more of our shares as of March 31, 2018:


Beneficial owner	Number of shares of common stock		Equity interest
LG Electronics		135,625,000		37.9	%
National Pension Service		31,075,124		8.68	%

16.

Directors and Employees

Directors

(1)

Remuneration for directors in 2018 Q1:


	(Unit: person, in millions of Won)
Classification	No. of directors⁽¹⁾		Amount paid⁽²⁾			Per capita average remuneration paid⁽³⁾
Non-outside directors		3		2,017			672
Outside directors who are not audit committee members		1		26			26
Outside directors who are audit committee members		3		59			20

Total		7		2,102	⁽⁴⁾		300

(1)	Number of directors as at March 31, 2018.

(2)	Amount paid is calculated on the basis of amount of cash actually paid.

(3)	Per capita average remuneration paid is calculated by dividing total amount paid by the average number of directors for the three months ended March 31, 2018.

(4)	As Jin Jang resigned as an outside director on March 14, 2018 and Byoung Ho Lee was appointed as an outside director at the annual general meeting of shareholders held on March 15, 2018, the total amount paid includes remuneration paid to both Mr. Jang and Mr. Lee.

(2)

Remuneration for individual directors and audit committee members

Not required for quarterly reports.

(3)

Stock options

Not applicable.

Employees

As of March 31, 2018, we had 33,525 employees (excluding our directors). On average, our male employees have served 9.2 years and our female employees have served 7.8 years. The total amount of salary paid to our employees for the three months ended March 31, 2018 based on income tax statements submitted to the Korean tax authority in accordance with Article 20 of the Income Tax Act was W820,970 million for our male employees and W182,105 million for our female employees. The following table provides details of our employees as of March 31, 2018:


	(Unit: person, in millions of Won, year)
	Number of employees⁽¹⁾		Total salary in 2018 Q1^(2)(3)(4)		Total salary per capita⁽⁵⁾		Average years of service
Male		25,373		820,970		32.6		9.2
Female		8,152		182,105		22.2		7.8

Total		33,525		1,003,076		30.1		8.9

(1)	Includes part-time employees hired for temporary needs or to serve as temporary replacements for employees on parental leave.

(2)	Welfare benefits and retirement expenses have been excluded. Total welfare benefit provided to our employees for the three months ended March 31, 2018 was W106,892 million and the per capita welfare benefit provided was W3.2 million.

(3)	Based on income tax statements, which are submitted to the Korean tax authority in accordance with Article 20 of the Income Tax Act.

(4)	Includes incentive payments to employees who have transferred from our affiliated companies.

(5)	Calculated using the average number of employees (male: 25,146 , female: 8,189) for the three months ended March 31, 2018.

In December 2017, we were audited by the Ministry of Employment and Labor regarding our human resource practices (including in relation to employment contracts, hours of work, outsourcing and employees in pregnancy), and we were found to be in violation of certain provisions of the Labor Standard Act relating to overtime, night and holiday work. As a result, we were issued a corrective order in January 2018 and paid additional overtime wages of W2,893 million to 16,106 administrative employees of our Paju facilities for their nighttime work between January 1, 2015 to December 31, 2017. In addition, we reviewed nighttime work records of our administrative employees outside of our Paju facilities during the same period and paid additional overtime wages of W2,166 million to eligible employees. In order to prevent such violation from occurring again, we are periodically monitoring the nighttime work records of our employees.

From December 2017 to January 2018, we were audited by the Ministry of Employment and Labor regarding our human resource practices relating to temporary and part-time employees, and we were found to have omitted certain required information (including the number of break hours and vacation days) in the employment contracts of 82 temporary employees. As a result, we were assessed a fine of W27 million, which we subsequently paid. In order to prevent such violation from occurring again, we have amended the relevant provisions of the applicable employment contracts.

17.

Other Matters

Material Events Subsequent to the Reporting Period

(1)

Advance Received Pursuant to Long-term Supply Agreement

In April 2018, we received an advance of US$300 million (equivalent to W320,670 million) from a major customer pursuant to the terms of a long-term supply agreement. Such advance will be offset in time by payments for applicable products after a certain initial period of deferral.

(2)

Credits Extended to Affiliated Parties

Subsequent to the reporting period, we provided guarantees relating to certain payment obligations of our subsidiary, LG Display Vietnam Haiphong Co., Ltd., in connection with its bank borrowings as further described below:


Lender	Date of Agreement	Term of Borrowing/Guarantee	Interest Rate	Principal Amount	Guaranteed Amount
Citibank Taiwan Limited	March 12, 2018	April 13, 2018 ~ April 13, 2023	3 month LIBOR + 1.20%	US$ 100 million	US$ 100 million
Sumitomo Mitsui Banking Corporation	April 5, 2018	April 26, 2018 ~ April 26, 2025	3 month LIBOR + 1.20%	US$ 100 million	US$ 100 million

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Financial Statements

(Unaudited)

March 31, 2018 and 2017

(With Independent Auditors’ Review Report Thereon)

Table of Contents


	Page
Independent Auditors’ Review Report		29

Condensed Consolidated Interim Statements of Financial Position		31

Condensed Consolidated Interim Statements of Comprehensive Income		32

Condensed Consolidated Interim Statements of Changes in Equity		33

Condensed Consolidated Interim Statements of Cash Flows		34

Notes to the Condensed Consolidated Interim Financial Statements		36

Independent Auditors’ Review Report

Based on a report originally issued in Korean

To the Board of Directors and Shareholders

LG Display Co., Ltd.:

Reviewed Financial Statements

We have reviewed the accompanying condensed consolidated interim financial statements of LG Display Co., Ltd. and subsidiaries (the “Group”) which comprise the condensed consolidated interim statement of financial position as of March 31, 2018, the condensed consolidated interim statements of comprehensive income, changes in equity and cash flows for the three-month periods ended March 31, 2018 and 2017, and notes comprising a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Condensed Consolidated Interim Financial Statements

Management is responsible for the preparation and fair presentation of these condensed consolidated interim financial statements in accordance with Korean International Financial Reporting Standards No. 1034, Interim Financial Reporting, and for such internal controls as management determines necessary to enable the preparation of condensed consolidated interim financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to issue a report on these condensed consolidated interim financial statements based on our reviews.

We conducted our reviews in accordance with the Review Standards for Quarterly and Semiannual Financial Statements established by the Security and Futures Commission of the Republic of Korea. A review of interim financial information consists principally of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Korean Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our reviews, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial statements referred to above are not presented fairly, in all material respects, in accordance with Korean International Financial Reporting Standards No. 1034, Interim Financial Reporting.

Other Matters

The procedures and practices utilized in the Republic of Korea to review such condensed consolidated interim financial statements may differ from those generally accepted and applied in other countries.

We audited the consolidated statement of financial position as of December 31, 2017 and the related consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended, which are not accompanying this review report, in accordance with Korean Standards on Auditing, and our report thereon, dated February 22, 2018, expressed an unqualified opinion. The accompanying condensed consolidated statement of financial position of the Group as of December 31, 2017, presented for comparative purposes, is not different from that audited by us from which it was derived in all material respects.

/s/ KPMG Samjong Accounting Corp.

Seoul, Korea

May 14, 2018

This report is effective as of May 14, 2018 the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying condensed consolidated interim financial statements and notes thereto. Accordingly, the readers of the review report should understand that the above review report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Financial Position

(Unaudited)

As of March 31, 2018 and December 31, 2017


(In millions of won)	Note	March 31, 2018			December 31, 2017
Assets
Cash and cash equivalents	4, 25	W	2,626,689			2,602,560
Deposits in banks	4, 25		870,272			758,078
Trade accounts and notes receivable, net	5, 14, 25, 27		3,496,163			4,325,120
Other accounts receivable, net	5, 25		126,369			164,827
Other current financial assets	6, 25		17,392			27,252
Inventories	7		2,350,385			2,350,084
Prepaid income taxes			6,281			3,854
Other current assets	5		405,035			241,928

Total current assets			9,898,586			10,473,703
Deposits in banks	4, 25		11			11
Investments in equity accounted investees	8		119,698			122,507
Other non-current financial assets	6, 25		64,919			68,574
Property, plant and equipment, net	9, 17		17,525,116			16,201,960
Intangible assets, net	10, 17		912,202			912,821
Deferred tax assets	23		1,082,835			985,352
Other non-current assets	5		391,904			394,759

Total non-current assets			20,096,685			18,685,984

Total assets		W	29,995,271			29,159,687

Liabilities
Trade accounts and notes payable	25, 27	W	2,802,837			2,875,090
Current financial liabilities	11, 25		2,148,016			1,452,926
Other accounts payable	25		3,273,185			3,169,937
Accrued expenses			551,725			812,615
Income tax payable			145,549			321,978
Provisions	13		74,220			76,016
Advances received	14, 28		249,765			194,129
Other current liabilities	13		303,294			75,991

Total current liabilities			9,548,591			8,978,682
Non-current financial liabilities	11, 25		4,583,674			4,150,192
Non-current provisions	13		22,635			28,312
Defined benefit liabilities, net	12		150,979			95,447
Long-term advances received	14, 28		759,881			830,335
Deferred tax liabilities	23		23,657			24,646
Other non-current liabilities	13		80,218			70,563

Total non-current liabilities			5,621,044			5,199,495

Total liabilities			15,169,635			14,178,177

Equity
Share capital	15		1,789,079			1,789,079
Share premium			2,251,113			2,251,113
Retained earnings			10,379,127			10,621,571
Reserves	15		(182,040	)		(288,280	)

Total equity attributable to owners of the Controlling Company			14,237,279			14,373,483

Non-controlling interests			588,357			608,027

Total equity			14,825,636			14,981,510

Total liabilities and equity		W	29,995,271			29,159,687

See accompanying notes to the consolidated interim financial statements.

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

(Unaudited)

For the three-month periods ended March 31, 2018 and 2017


(In millions of won, except earnings per share)	Note	2018			2017
Revenue	16, 17, 27	W	5,675,164			7,062,162
Cost of sales	7, 18, 27		(5,133,080	)		(5,342,882	)

Gross profit			542,084			1,719,280
Selling expenses	19		(172,958	)		(243,203	)
Administrative expenses	19		(182,330	)		(164,950	)
Research and development expenses			(285,119	)		(284,250	)

Operating profit (loss)			(98,323	)		1,026,877

Finance income	22		120,997			115,134
Finance costs	22		(130,361	)		(88,037	)
Other non-operating income	21		227,642			384,389
Other non-operating expenses	21		(212,837	)		(580,493	)
Equity in income (loss) of equity accounted investees, net			(2,893	)		250

Profit (loss) before income tax			(95,775	)		858,120
Income tax expense(benefit)	23		(46,793	)		178,623

Profit (loss) for the period			(48,982	)		679,497

Other comprehensive income (loss)
Items that will never be reclassified to profit or loss
Remeasurements of net defined benefit liabilities	12		(6,419	)		(4,725	)
Other comprehensive income (loss) from associates			41			(243	)
Related income tax	12		2,296			1,143

			(4,082	)		(3,825	)
Items that are or may be reclassified to profit or loss
Foreign currency translation differences for foreign operations			127,890			(249,677	)
Other comprehensive income (loss) from associates			1,315			(552	)
Related income tax			—			—

			129,205			(250,229	)

Other comprehensive income (loss) for the period, net of income tax			125,123			(254,054	)

Total comprehensive income for the period		W	76,141			425,443

Profit (loss) attributable to:
Owners of the Controlling Company			(59,454	)		633,490
Non-controlling interests			10,472			46,007

Profit (loss) for the period		W	(48,982	)		679,497

Total comprehensive income attributable to:
Owners of the Controlling Company			42,704			412,932
Non-controlling interests			33,437			12,511

Total comprehensive income for the period		W	76,141			425,443

Earnings (loss) per share (In won)
Basic earnings (loss) per share	24	W	(166	)		1,770

Diluted earnings (loss) per share	24	W	(166	)		1,770

See accompanying notes to the consolidated interim financial statements.

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

(Unaudited)

For the three-month periods ended March 31, 2018 and 2017


	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, 2017	W	1,789,079		2,251,113		9,004,283			(88,478	)		12,955,997			506,391			13,462,388

Total comprehensive income (loss) for the period
Profit for the period		—		—		633,490			—			633,490			46,007			679,497

Other comprehensive income (loss)
Remeasurements of net defined benefit liabilities, net of tax		—		—		(3,582	)		—			(3,582	)		—			(3,582	)
Foreign currency translation differences for foreign operations, net of tax		—		—		—			(216,181	)		(216,181	)		(33,496	)		(249,677	)
Other comprehensive loss from asssociates		—		—		(243	)		(552	)		(795	)		—			(795	)

Total other comprehensive loss		—		—		(3,825	)		(216,733	)		(220,558	)		(33,496	)		(254,054	)

Total comprehensive income (loss) for the period	W	—		—		629,665			(216,733	)		412,932			12,511			425,443

Transaction with owners, recognized directly in equity
Dividends to equity holders		—		—		(178,908	)		—			(178,908	)		—			(178,908	)

Balances at March 31, 2017	W	1,789,079		2,251,113		9,455,040			(305,211	)		13,190,021			518,902			13,708,923

Balances at January 1, 2018	W	1,789,079		2,251,113		10,621,571			(288,280	)		14,373,483			608,027			14,981,510

Total comprehensive income (loss) for the period
Profit (loss) for the period		—		—		(59,454	)		—			(59,454	)		10,472			(48,982	)

Other comprehensive income (loss)
Remeasurements of net defined benefit liabilities, net of tax		—		—		(4,123	)		—			(4,123	)		—			(4,123	)
Foreign currency translation differences for foreign operations, net of tax		—		—		—			104,925			104,925			22,965			127,890
Other comprehensive income from associates		—		—		41			1,315			1,356			—			1,356

Total other comprehensive income (loss)		—		—		(4,082	)		106,240			102,158			22,965			125,123

Total comprehensive income (loss) for the period	W	—		—		(63,536	)		106,240			42,704			33,437			76,141

Transaction with owners, recognized directly in equity
Dividends to equity holders		—		—		(178,908	)		—			(178,908	)		—			(178,908	)
Subsidiaries’ dividends distributed to non-controlling interests		—		—		—			—			—			(53,107	)		(53,107	)

Balances at March 31, 2018	W	1,789,079		2,251,113		10,379,127			(182,040	)		14,237,279			588,357			14,825,636

See accompanying notes to the consolidated interim financial statements.

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)

For the three-month periods ended March 31, 2018 and 2017


(In millions of won)	Note		2018			2017
Cash flows from operating activities:
Profit (loss) for the period			W	(48,982	)		679,497
Adjustments for:
Income tax expense (benefit)		23		(46,793	)		178,623
Depreciation		18		807,736			610,553
Amortization of intangible assets		18		102,339			105,311
Gain on foreign currency translation				(62,852	)		(79,725	)
Loss on foreign currency translation				53,141			161,901
Expenses related to defined benefit plans		12		51,801			49,349
Gain on disposal of property, plant and equipment				(4,006	)		(11,560	)
Loss on disposal of property, plant and equipment				8,405			2,231
Gain on disposal of intangible assets				(239	)		—
Impairment loss on intangible assets				37			1,689
Reversal of impairment loss on intangible assets				(130	)		—
Warranty expense				35,647			75,850
Finance income				(35,238	)		(97,974	)
Finance costs				23,395			49,057
Equity in loss (income) of equity method accounted investees, net		8		2,893			(250	)
Other income				(489	)		(261	)
Other expenses				634			98

				936,281			1,044,892
Changes in
Trade accounts and notes receivable				783,501			383,054
Other accounts receivable				18,759			6,370
Inventories				(114,588	)		4,350
Other current assets				(131,364	)		(123,822	)
Other non-current assets				(15,822	)		(20,980	)
Trade accounts and notes payable				(46,042	)		(380,460	)
Other accounts payable				(174,431	)		(44,954	)
Accrued expenses				(262,999	)		(184,853	)
Provisions				(52,910	)		(52,670	)
Other current liabilities				(15,138	)		(37	)
Defined benefit liabilities, net				(2,734	)		(1,740	)
Other non-current liabilities				7,622			1,207

				(6,146	)		(414,535	)
Cash generated from operating activities				881,153			1,309,854
Income taxes paid				(55,851	)		(46,986	)
Interests received				17,487			10,377
Interests paid				(40,574	)		(31,204	)

Net cash provided by operating activities			W	802,215			1,242,041

See accompanying notes to the consolidated interim financial statements.

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows, Continued

(Unaudited)

For the three-month periods ended March 31, 2018 and 2017


(In millions of won)	Note		2018			2017
Cash flows from investing activities:
Dividends received			W	4,712			8,109
Proceeds from withdrawal of deposits in banks				518,363			487,131
Increase in deposits in banks				(630,913	)		(281,635	)
Acquisition of available-for-sale financial assets				(39	)		—
Acquisition of investments in equity accounted investees				(4,000	)		—
Proceeds from disposal of investments in equity accounted investees				—			5,157
Acquisition of property, plant and equipment				(1,815,515	)		(1,609,628	)
Proceeds from disposal of property, plant and equipment				102,496			70,003
Acquisition of intangible assets				(130,638	)		(113,878	)
Proceeds from disposal of intangible assets				960			—
Receipt from settlement of derivatives				(2	)		(101	)
Proceeds from collection of short-term loans				7,351			—
Increase in long-term loans				(12,300	)		—
Decrease in deposits				294			2,991
Increase in deposits				(517	)		(933	)
Proceeds from disposal of emission rights				4,160			—

Net cash used in investing activities				(1,955,588	)		(1,432,784	)

Cash flows from financing activities:		26
Proceeds from issuance of bonds				388,447			—
Proceeds from long-term borrowings				907,850			119,741
Repayments of current portion of long-term borrowings and bonds				(180,168	)		(63,216	)

Net cash provided by financing activities				1,116,129			56,525

Net decrease in cash and cash equivalents				(37,244	)		(134,218	)
Cash and cash equivalents at January 1				2,602,560			1,558,696
Effect of exchange rate fluctuations on cash held				61,373			(79,755	)

Cash and cash equivalents at March 31			W	2,626,689			1,344,723

See accompanying notes to the consolidated interim financial statements.

1.	Reporting Entity

(a)

Description of the Controlling Company

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

The Controlling Company’s common stock is listed on the Korea Exchange under the identifying code 034220. As of March 31, 2018, there are 357,815,700 shares of common stock outstanding. The Controlling Company’s common stock is also listed on the New York Stock Exchange in the form of American Depository Shares (“ADSs”) under the symbol “LPL”. One ADS represents one-half of one share of common stock. As of March 31, 2018, there are 23,730,762 ADSs outstanding.

1.	Reporting Entity, Continued

(b)

Consolidated Subsidiaries as of March 31, 2018

(In millions)

Subsidiaries

Location

Percentage of
ownership

Fiscal year
end

Date of
incorporation

Business

Capital stocks

LG Display America, Inc.

San Jose,

U.S.A.

100%

December 31

September 24, 1999

Sell Display products

USD

411

LG Display Japan Co., Ltd.

Tokyo, Japan

100%

December 31

October 12, 1999

Sell Display products

JPY

LG Display Germany GmbH

Eschborn, Germany

100

December 31

November 5, 1999

Sell Display products

EUR

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

LG Display Poland Sp. z o.o.

Wroclaw, Poland

100%

December 31

September 6, 2005

Manufacture Display
products

PLN

511

LG Display Guangzhou Co., Ltd.

Guangzhou, China

100%

December 31

June 30, 2006

Manufacture Display
products

CNY

1,655

LG Display Shenzhen Co., Ltd.

Shenzhen, China

100%

December 31

August 28, 2007

Sell Display products

CNY

LG Display Singapore Pte. Ltd.

Singapore

100%

December 31

January 12, 2009

Sell Display products

USD

1.1

L&T Display Technology (Fujian) Limited

Fujian, China

51%

December 31

January 5, 2010

Manufacture and sell
LCD module and
LCD monitor sets

CNY

116

LG Display Yantai Co., Ltd.

Yantai, China

100%

December 31

April 19, 2010

Manufacture Display
products

CNY

1,008

Nanumnuri Co., Ltd.

Gumi,

South Korea

100%

December 31

March 21, 2012

Janitorial services

KRW

800

LG Display (China) Co., Ltd.

Guangzhou, China

70%

December 31

December 10, 2012

Manufacture and sell
Display products

CNY

8,232

Unified Innovative Technology, LLC

Wilmington, U.S.A.

100%

December 31

March 12, 2014

Manage intellectual
property

USD

LG Display Guangzhou Trading Co., Ltd.

Guangzhou, China

100%

December 31

April 28, 2015

Sell Display products

CNY

1.2

Global OLED Technology, LLC

Herndon, U.S.A.

100%

December 31

December 18, 2009

Manage OLED
intellectual property

USD

138

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

Haiphong,

Vietnam

100%

December 31

May 5, 2016

Manufacture Display
products

USD

300

Suzhou Lehui Display Co., Ltd.

Suzhou, China

100%

December 31

July 1, 2016

Manufacture and sell
LCD module and
LCD monitor sets

CNY

637

Money Market Trust(*2)

Seoul,

South Korea

100%

December 31

—

Money market trust

KRW

430,801

(*1)

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

1.	Reporting Entity, Continued

(*2)

For the three-month period ended March 31, 2018, the Controlling Company acquired and disposed Money Market Trust (“MMT”) and the MMT amount as of March 31, 2018 is W430,801 million.

W90,281 million is attributable to the Controlling Company over the distributed dividends from consolidated subsidiaries for the three-month period ended March 31, 2018.

2.	Basis of Presenting Financial Statements

(a)

Statement of Compliance

The condensed consolidated interim financial statements have been prepared in accordance with Korean International Financial Reporting Standards (“K-IFRSs”) No.1034, Interim Financial Reporting. They do not include all of the information required for full annual consolidated financial statements and should be read in conjunction with the consolidated financial statements of the Group as of and for the year ended December 31, 2017.

This is the first set of the Group’s financial statements where K-IFRS No. 1109, K-IFRS No. 1115, and K-IFRS No. 2122 have been applied. Changes to significant accounting policies are described in Note 3.

(b)

Basis of Measurement

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

•

financial assets at fair value through profit or loss (“FVTPL) and financial asset at fair value through other comprehensive income (“FVOCI”) , and

•

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

(c)

Functional and Presentation Currency

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

(d)

Use of Estimates and Judgments

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

2.	Basis of Presenting Financial Statements, Continued

(d)

Use of Estimates and Judgments, Continued

In result of the Group utilizing the past accumulated usage information to reassess the economic useful life of the Mask and Mold which has been classified as inventory, the Group expected the useful lives of Mask and Mold to exceed one year; therefore, the Group changed useful lives of Mask and Mold to two years and treated it as a change in accounting estimate. The Group also changed the classification of Mask and Mold to property, plant and equipment. As a result, W111,456 million of Inventory (supplies) at December 31, 2017 is classified as property, plant and equipment (tools) during the three-month period ended March 31, 2018..

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

3.	Summary of Significant Accounting Policies

The significant accounting policies followed by the Group in the preparation of its condensed consolidated interim financial statements are the same as those followed by the Group in its preparation of the consolidated financial statements as of and for the year ended December 31, 2017, except for the application of K-IFRS No. 1034, Interim Financial Reporting and the changes in accounting standards explained below. The changes in accounting policies are also expected to be reflected in the Group’s consolidated financial statements as at and for the year ending December 31, 2018.

(a)

Changes in Accounting Policies

The Group has initially adopted K-IFRS No. 1115, Revenue from Contracts with Customers, K-IFRS No. 1109, Financial Instruments, and K-IFRS No. 2122, Foreign Currency Transactions and Advance Consideration from January 1, 2018.

(i) K-IFRS No. 1109, Financial Instruments

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

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

3.	Summary of Significant Accounting Policies, Continued

(a)

Changes in Accounting Policies, Continued

Classification and measurement of financial assets and financial liabilities

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

The adoption K-IFRS No. 1109 has not had a significant effect on the Group’s accounting policies related to financial liabilities and derivative financial instruments. The impact of K-IFRS No. 1109 on the classification and measurement of financial assets is set out below.

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

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

•

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

•

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

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

•

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

•

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

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

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

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

3.	Summary of Significant Accounting Policies, Continued

(a)

Changes in Accounting Policies, Continued

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


		Financial assets at FVTPL		These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.

		Financial assets at amortized cost		These assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

		Debt investments at FVOCI		These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.

The following table below explain the original measurement categories under K-IFRS No. 1039 and the changes in measurement categories under K-IFRS No. 1109 for each class of the Group’s financial assets as at January 1, 2018 are as below.


(In millions of won)
	Original classification under K-IFRS No. 1039		New classification under K-IFRS No. 1109		Original carrying amount under K-IFRS No. 1039		New carrying amount under K-IFRS No. 1109		Difference
Financial Assets
Cash and cash equivalents		Loans and receivables		Amortized cost	W	2,602,560		2,602,560		—
Deposits		Loans and receivables		Amortized cost		758,089		758,089		—
Trade receivables		Loans and receivables		Amortized cost		4,325,120		4,325,120		—
Other receivables		Loans and receivables		Amortized cost		164,827		164,827		—
Debt instrument		Available-for-sale		FVOCI-debt instrument		162		162		—
Equity instrument		Available-for-sale		Mandatorily at FVTPL		4,980		4,980		—
Convertible bonds		Designated as at FVTPL		Mandatorily at FVTPL		1,552		1,552		—
Derivatives		Designated as at FVTPL		Mandatorily at FVTPL		842		842		—
Others		Loans and receivables		Amortized cost		88,290		88,290		—

Total financial assets					W	7,946,422		7,946,422		—

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

3.	Summary of Significant Accounting Policies, Continued

(a)

Changes in Accounting Policies, Continued

ii)

Impairment of financial assets

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

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

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

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

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

iii)

Hedge Accounting

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

(ii)

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

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

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

3.	Summary of Significant Accounting Policies, Continued

(a)

Changes in Accounting Policies, Continued

Variable Consideration

The consideration received from customers may be variable as the Group allows its customers to return their products according to the contracts. For the year-ended December 31, 2017, the Group recognizes a provision measured at the gross profit for products sold which are expected to be returned. Under K-IFRS No. 1115, the Group shall estimate an amount of variable consideration by using the expected value or the most likely amount, depending on which method the entity expects to better predict the amount of consideration to which it will be entitled and include in the transaction price some or all of an amount of variable consideration estimated only to the extent that is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur when return period expires. The Group shall recognize refund liability measured at the amount of consideration received (or receivable) to which the Group does not expect to be entitled and a new asset for the right to recover returned goods. As a result of this change, the refund liability and a new asset for the right to recover returned goods increased by W9,789 million, respectively, as of January 1, 2018. There is no impact on the opening balance of retained earnings at January 1, 2018. (Note 5(d), 13(a))

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


(in millions won)
Categories	Adoption of K-IFRS No. 1115		Adjustments			Adoption of K-IFRS No. 1018
Current Assets Other current assets	W	405,035		(6,923	)		398,112
Current Liabilities Provisions	W	74,220		(6,923	)		67,297

(iii)

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

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

3.	Summary of Significant Accounting Policies, Continued

(b)

New Standards and Amendments Not Yet Adopted

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

(i)

K-IFRS No. 1116, Leases

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

4.	Cash and Cash Equivalents and Deposits in Banks

Cash and cash equivalents and deposits in banks as of March 31, 2018 and December 31, 2017 are as follows:


(In millions of won)
	March 31, 2018		December 31, 2017
Current assets
Cash and cash equivalents
Demand deposits	W	2,626,689		2,602,560
Deposits in banks
Time deposits	W	797,217		685,238
Restricted cash (*)		73,055		72,840

	W	870,272		758,078

Non-current assets
Deposits in banks
Restricted cash (*)	W	11		11

	W	3,496,972		3,360,649

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

5.	Receivables and Other Assets

(a)

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


(In millions of won)
	March 31, 2018		December 31, 2017
Trade, net	W	2,631,374		3,275,902
Due from related parties		864,789		1,049,218

	W	3,496,163		4,325,120

(b)

Other accounts receivable as of March 31, 2018 and December 31, 2017 are as follows:


(In millions of won)
	March 31, 2018		December 31, 2017
Current assets
Non-trade receivable, net	W	112,335		150,554
Accrued income		14,034		14,273

	W	126,369		164,827

Due from related parties included in other accounts receivable, as of March 31, 2018 and December 31, 2017 are W9,945 million and W10,821 million, respectively.

5.	Receivables and Other Assets, Continued

(c)

The aging of trade accounts and note receivable, other accounts receivable and long-term non-trade receivable as of March 31, 2018 and December 31, 2017 are as follows:


(In millions of won)	March 31, 2018
	Book value						Impairment loss
	Trade accounts and notes receivable		Other accounts *receivable()**		Long-term non-trade receivable		Trade accounts and notes receivable			Other accounts *receivable()**			Long-term non-trade receivable
Not past due	W	3,487,064		119,671		185		(1,401	)		(539	)		(2	)
Past due 1-15 days		9,529		478		—		(30	)		(3	)		—
Past due 16-30 days		995		707		—		—			(4	)		—
Past due 31-60 days		6		125		—		—			(1	)		—
Past due more than 60 days		—		6,412		—		—			(477	)		—

	W	3,497,594		127,393		185		(1,431	)		(1,024	)		(2	)

(*)	Other accounts receivable includes non-trade receivable and accrued income.

5.	Receivables and Other Assets, Continued


(In millions of won)	December 31, 2017
	Book value						Impairment loss
	Trade accounts and notes receivable		Other accounts *receivable()**		Long-term non-trade receivable		Trade accounts and notes receivable			Other accounts *receivable()**			Long-term non-trade receivable
Not past due	W	4,323,465		164,755		8,738		(1,631	)		(905	)		—
Past due 1-15 days		2,652		488		—		(1	)		(3	)		—
Past due 16-30 days		631		65		—		—			(1	)		—
Past due 31-60 days		—		208		—		—			(2	)		—
Past due more than 60 days		4		622		—		—			(400	)		—

	W	4,326,752		166,138		8,738		(1,632	)		(1,311	)		—

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


(In millions of won)	2018								2017
	Trade accounts and notes receivable			Other accounts receivable			Long-term non-trade receivable		Trade accounts and notes receivable		Other accounts receivable		Long-term non-trade receivable
Balance at the beginning of the period	W	1,632			1,311			—		1,488		1,093		23
(Reversal of) bad debt expense		(201	)		(287	)		2		144		218		(23	)

Balance at the reporting date	W	1,431			1,024			2		1,632		1,311		—

5.	Receivables and Other Assets, Continued

(d)

Other assets as of March 31, 2018 and December 31, 2017 are as follows:


(In millions of won)	March 31, 2018		December 31, 2017
Current assets
Advance payments	W	12,372		7,973
Prepaid expenses		239,234		83,626
Value added tax refundable		146,506		148,351
Emission rights		—		1,978
Right to recover returned goods(*)		6,923		—

	W	405,035		241,928

Non-current assets
Long-term prepaid expenses	W	391,904		394,759

	W	391,904		394,759

(*)	As a result from the initial application of K-IFRS No. 1115, the Group recognized an asset for right to recover returned goods returned by the customer.

6.	Other Financial Assets

(a)

Other financial assets as of March 31, 2018 and December 31, 2017 are as follows:

(i)

As of March 31, 2018


(In millions of won)	March 31, 2018
Current assets
Financial Asset at Fair Value through Other Comprehensive Income
Debt instrument
Government bonds	W	6
Financial Asset Carried at Amortized Cost
Deposits	W	2,292
Short-term loans		15,094

Total	W	17,392

Non-current assets
Financial Asset at Fair Value through Profit or Loss
Equity instrument
Intellectual Discovery, Ltd.	W	729
Kyulux, Inc		1,968
ARCH Venture Fund Vill, L.P.		2,311

Sub-Total		5,008
Convertible bonds		1,552
Derivatives(*)		600
Financial Asset at Fair Value through Other Comprehensive Income
Debt instrument
Government bonds	W	157
Financial Asset Carried at Amortized Cost
Deposits	W	20,123
Long-term loans		37,296
Long-term non-trade receivable		183

Total	W	64,919

(*)	Represents interest rate swap contracts related to borrowings with variable interest rate.

6.	Other Financial Assets, Continued

(ii)

As of December 31, 2017


(In millions of won)	December 31, 2017
Current assets
Available-for-sale financial assets
Debt instrument
Government bonds	W	6
Deposits		10,480
Short-term loans		16,766

Total	W	27,252

Non-current assets
Financial Asset at Fair Value through Profit or Loss	W	1,552
Available-for-sale financial assets
Debt instrument
Government bonds	W	156
Equity instrument
Intellectual Discovery, Ltd.	W	729
Kyulux, Inc		1,968
ARCH Venture Fund Vill, LP.		2,283

Sub-Total	W	4,980
Deposits	W	19,898
Long-term loans		32,408
Long-term non-trade receivable		8,738
Derivatives(*)		842

Total	W	68,574

(*)	Represents interest rate swap contracts related to borrowings with variable interest rate.

Other financial assets of related parties as of March 31, 2018 and December 31, 2017 are W2,500 million and W2,750 million, respectively.

7.	Inventories

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


(In millions of won)	March 31, 2018		December 31, 2017
Finished goods	W	1,041,615		965,643
Work-in-process		760,491		748,592
Raw materials		367,924		344,997
Supplies		180,355		290,852

	W	2,350,385		2,350,084

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


(In millions of won)	2018			2017
Inventories recognized as cost of sales	W	5,133,080			5,342,882
Including: inventory write-downs		210,188			215,228
Including: reversal and usage of inventory write-downs		(206,127	)		(204,123	)

8.	Investments in Equity Accounted Investees

Associates as of March 31, 2018 and December 31, 2017 are as follows:


(In millions of won)
Associates	Location	Fiscal year end	Date of incorporation	Business	March 31, 2018					December 31, 2017
Associates	Location	Fiscal year end	Date of incorporation	Business	Percentage of ownership			Carrying amount		Percentage of ownership			Carrying amount
Paju Electric Glass Co., Ltd.	Paju, South Korea	December 31	January 2005	Manufacture electric glass for FPDs		40	%	W	44,179		40	%	W	46,511
INVENIA Co., Ltd.	Seongnam, South Korea	December 31	January 2001	Develop and manufacture equipment for FPDs		13	%		3,125		13	%		2,887
WooRee E&L Co., Ltd.	Ansan, South Korea	December 31	June 2008	Manufacture LED back light unit packages		14	%		3,506		14	%		7,270
LB Gemini New Growth Fund No. 16 (*1)	Seoul, South Korea	December 31	December 2009	Invest in small and middle sized companies and benefit from M&A opportunities		31	%		5,282		31	%		5,910
YAS Co., Ltd.	Paju, South Korea	December 31	April 2002	Develop and manufacture deposition equipment for OLEDs		15	%		16,045		15	%		15,888
AVATEC Co., Ltd.	Daegu, South Korea	December 31	August 2000	Process and sell electric glass for FPDs		17	%		23,252		17	%		23,732
Arctic Sentinel, Inc.	Los Angeles, U.S.A.	March 31	June 2008	Develop and manufacture tablet for kids		10	%		—		10	%		—

8.	Investments in Equity Accounted Investees, Continued

(In millions of won)

Associates

Location

Fiscal
year end

Date of
incorporation

Business

2018

2017

Percentage
of
ownership

Carrying
amount

Percentage
of
ownership

Carrying
amount

CYNORA GmbH

Bruchsal,

Germany

December 31

March

2003

Develop organic emitting materials for displays and lighting devices

20,309

Material Science (*2)

Seoul,

South
Korea

December 31

January

2014

Develop, manufacture, and sales of OLED materials

4,000

—

119,698

122,507

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

8.	Investments in Equity Accounted Investees, Continued

(*1)

The Controlling Company is a member of a limited partnership in the LB Gemini New Growth Fund No.16 (“the Fund”). On the other hand, a resolution to dissolve the fund was approved at the general meeting and the fund is in process of liquidation as of March 31, 2018.

(*2)

In March 2018, the Controlling Company invested W4,000 million and acquired 10,767 shares of common stock with voting rights in Material Science. As of March 31, 2018, the Controlling Company‘s ownership percentage in Material Science is 10% and the Controlling Company has the right to appoint a director to the board of directors of the investee.

Dividends received from equity method investees for the three-month periods ended March 31, 2018 and 2017 amounted to W5,272 million and W8,639 million, respectively.

9.	Property, Plant and Equipment

For the three-month periods ended March 31, 2018 and 2017, the Group purchased property, plant and equipment of W1,974,223 million and W1,767,834 million, respectively. The capitalized borrowing costs and the annualized capitalization rate were W19,912 million and 2.23%, and W6,260 million and 1.84% for the three-month periods ended March 31, 2018 and 2017, respectively. Also, for the three-month periods ended March 31, 2018 and 2017, the Group disposed of property, plant and equipment with carrying amounts of W61,868 million and W22,596 million, respectively, and recognized W4,006 million and W8,405 million, respectively, as gain and loss, on disposal of property, plant and equipment for the three-month period ended March 31, 2018 (gain and loss for the three-month period ended March 31, 2017: W11,560 million and W2,231 million, respectively).

10.	Intangible Assets

(a)

The Group capitalizes expenditures related to development activities, such as expenditures incurred on designing, manufacturing and testing of products after those related activities meet the capitalization criteria of development costs including technical feasibility, future economic benefits and others. The balances of capitalized development costs as of March 31, 2018 and December 31, 2017 are W316,914 million and W296,760 million, respectively.

(b)

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

11.	Financial Liabilities

(a)

Financial liabilities as of March 31, 2018 and December 31, 2017 are as follows:


(In millions of won)	March 31, 2018		December 31, 2017
Current
Current portion of long-term borrowings and bonds	W	2,148,016		1,452,926
Non-current
Won denominated borrowings	W	1,701,096		1,251,258
Foreign currency denominated borrowings		987,714		1,392,931
Bonds		1,894,864		1,506,003

	W	4,583,674		4,150,192

(b)

Won denominated long-term borrowings as of March 31, 2018 and December 31, 2017 are as follows:


(In millions of won)
Lender	Annual interest rate as of March 31, 2018 (%)		March 31, 2018			December 31, 2017
Woori Bank		3-year Korean Treasury Bond rate - 1.25, 2.75	W	1,753			1,922
Shinhan Bank		CD rate (91days) + 0.30		200,000			200,000
Korea Development Bank and others		CD rate (91days) + 0.64~0.74 2.28~3.25		2,050,000			1,250,000
Less current portion of long-term borrowings				(550,657	)		(200,664	)

			W	1,701,096			1,251,258

11.	Financial Liabilities, Continued

(c)

Foreign currency denominated long-term borrowings as of March 31, 2018 and December 31, 2017 are as follows:


(In millions of won, USD and CNY)
Lender	Annual interest rate as of *March 31, 2018 (%)()**		March 31, 2018			December 31, 2017
The Export—Import Bank of Korea and others		3ML+0.55~1.04	W	751,882			755,337
China Construction Bank and others		USD: 3ML+0.80~2.00 CNY: 4.28		1,508,289			1,385,097
Foreign currency equivalent			USD	1,600		USD	1,500
			CNY	3,263		CNY	3,263
Less current portion of long-term borrowings				(1,272,457	)		(747,503	)

			W	987,714			1,392,931

(*)

ML represents Month LIBOR (London Inter-Bank Offered Rates).

(d)

Details of bonds issued and outstanding as of March 31, 2018 and December 31, 2017 are as follows:


(In millions of won)
	Maturity		Annual interest rate as of March 31, 2018 (%)		March 31, 2018			December 31, 2017
*Won denominated bonds()**
Publicly issued bonds		May 2018 ~ February 2023		1.73~3.73	W	2,225,000			2,015,000
Less discount on bonds						(5,234	)		(4,238	)
Less current portion						(324,902	)		(504,759	)

					W	1,894,864			1,506,003

(*)

Principal of the won denominated bonds is to be repaid at maturity and interests are paid quarterly.

12.	Employee Benefits

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

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

(a)

Net defined benefit liabilities recognized as of March 31, 2018 and December 31, 2017 are as follows:


(In millions of won)	March 31, 2018			December 31, 2017
Present value of partially funded defined benefit obligations	W	1,595,490			1,562,424
Fair value of plan assets		(1,444,511	)		(1,466,977	)

	W	150,979			95,447

(b)

Expenses recognized in profit or loss for the three-month periods ended March 31, 2018 and 2017 are as follows:


(In millions of won)
	2018		2017
Current service cost	W	51,559		48,751
Net interest cost		242		598

	W	51,801		49,349

(c)

Plan assets as of March 31, 2018 and December 31, 2017 are as follows:


(In millions of won)
	March 31, 2018		December 31, 2017
Guaranteed deposits in banks	W	1,444,511		1,466,977

As of March 31, 2018, the Controlling Company maintains the plan assets primarily with Mirae Asset Daewoo Co., Ltd., Shinhan Bank and others.

(d)

Remeasurements of the net defined benefit liabilities (assets) included in other comprehensive income (loss) for the three-month periods ended March 31, 2018 and 2017 are as follows:


(In millions of won)	2018			2017
Remeasurements of the net defined benefit liabilities	W	(6,419	)		(4,725	)
Tax effect		2,296			1,143

Remeasurements of the net defined benefit liabilities, net of income tax	W	(4,123	)		(3,582	)

13.	Provisions and Other Liabilities

(a)

Changes in provisions for the three-month period ended March 31, 2018 are as follows:


(In millions of won)
	Litigations and claims		*Warranties ()**			Others			Total
Balance at January 1, 2018	W	43		102,450			1,835			104,328
Adjustment from adoption of K-IFRS 1115		—		—			9,789			9,789
Additions (reversals)		—		35,647			(3,834	)		31,813
Usage		—		(49,075	)		—			(49,075	)

Balance at March 31, 2018	W	43		89,022			7,790			96,855

Current	W	43		66,387			7,790			74,220
Non-current	W	—		22,635			—			22,635

(*)

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

(b)

Other liabilities as of March 31, 2018 and December 31, 2017 are as follows:


(In millions of won)
	March 31, 2018		December 31, 2017
Current liabilities
Withholdings	W	57,920		63,766
Unearned revenues		10,536		12,225
Security deposits		3,230		—
Dividends payable		231,608		—

	W	303,294		75,991

Non-current liabilities
Long-term accrued expenses	W	77,671		70,561
Security deposits		2,545		—
Long-term other accounts payable		2		2

	W	80,218		70,563

14.	Contingencies and Commitments

(a)

Legal Proceedings

Anti-trust Litigations

Argos Limited and affiliated companies (“Argos”) filed a Notice of Claim against the Controlling Company and LG Display Taiwan Co., Ltd. in the High Court of Justice in London alleging infringement of Treaty on the Functioning of the European Union and Agreement on the European Economic Area. Prior to Argos’ filing of Particulars of Claim and service, the Controlling Company and LG Display Taiwan Co., Ltd. reached a settlement in principle with Argos in December 2017. The parties expect to execute a settlement agreement in 2018.

Others

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

(b)

Commitments

Factoring and securitization of accounts receivable

The Controlling Company has agreements with Korea Development Bank and several other banks for accounts receivable sales negotiating facilities of up to an aggregate of USD 1,743 million (W1,859,421 million) in connection with the Controlling Company’s export sales transactions with its subsidiaries. As of March 31, 2018, no short-term borrowings were outstanding in connection with these agreements. In connection with all of the contracts in this paragraph, the Controlling Company has sold its accounts receivable with recourse.

14.	Contingencies and Commitments, Continued

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


(In millions of USD and KRW)
Classification	Financial institutions	Maximum				Not yet due
		Contractual amount		KRW equivalent		Contractual amount		KRW equivalent
Controlling Company	Shinhan Bank	KRW	90,000		90,000		—		—
	Sumitomo Mitsui Banking Corporation	USD	20		21,330		—		—
	Bank of Tokyo-Mitsubishi UFJ	USD	70		74,655		—		—
	BNP Paribas	USD	150		159,975		—		—

		USD	240				—
		KRW	90,000		345,960		—		—

Subsidiaries
LG Display Singapore Pte. Ltd.	Standard Chartered Bank	USD	300		319,950		—		—

LG Display Taiwan Co., Ltd.	BNP Paribas	USD	82		87,453		—		—
	Hongkong & Shanghai Banking Corp.	USD	60		63,990		—		—
	Taishin International Bank	USD	280		298,620		—		—

LG Display Germany GmbH	Citibank	USD	160		170,640		—		—
LG Display Germany GmbH	BNP Paribas	USD	75		79,988		—		—

LG Display America, Inc.	Hongkong & Shanghai Banking Corp.	USD	400		426,600	USD	150		159,975
	Standard Chartered Bank	USD	400		426,600		—		—
	Sumitomo Mitsui Banking Corporation	USD	250		266,625		—		—

LG Display Japan Co., Ltd.	Sumitomo Mitsui Banking Corporation	USD	90		95,985		—		—

LG Display Guangzhou Trading Co., Ltd.	Industrial and Commercial Bank of China	USD	64		68,256		—		—

		USD	2,161		2,304,707	USD	150		159,975

		USD	2,401			USD	150
		KRW	90,000		2,650,667		—		159,975

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

14.	Contingencies and Commitments, Continued

Letters of credit

As of March 31, 2018, the Controlling Company has agreements in relation to the opening of letters of credit up to USD 30 million (W31,995 million) with KEB Hana Bank, USD 80 million (W85,320 million) with Bank of China and USD 50 million (W53,325 million) with Sumitomo Mitsui Banking Corporation.

Payment guarantees

The Controlling Company obtained payment guarantees amounting to USD 900 million (W959,850 million) from KEB Hana Bank and others for advance received related to the long-term supply agreements and USD 8.5 million (W9,065 million) from Shinhan Bank for value added tax payments in Poland.

LG Display (China) Co., Ltd. and other subsidiaries are provided with payment guarantees from the China Construction Bank Corporation and other various banks amounting to CNY 1,065 million (W180,709 million), JPY 900 million (W9,013million), EUR 2.5 million (W3,280 million), VND 41,902 million (W1,961 million), USD 0.5 million (W533 million), PLN 0.2 million (W62 million) and, respectively, for their local tax payments and utility payments.

Credit facility

LG Display Vietnam Co., Ltd. and other subsidiary have entered into long-term credit facility agreements of up to USD 650 million (W693,225 million) with Sumitomo Mitsui Banking Corporation and other various banks and borrowings as of March 31, 2018 amounting to USD 595 million (W634,568 million).

License agreements

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

Long-term supply agreement

As of March 31, 2018, in connection with long-term supply agreements with customers, the Controlling Company recognized USD 900 million (W959,850 million) in advances received. The advances received will be offset against outstanding accounts receivable balances after a given period of time, as well as those arising from the supply of products thereafter. The Controlling Company received payment guarantees amounting to USD 900 million (W959,850 million) from KEB Hana Bank and other various banks relating to advances received.

Pledged Assets

Regarding the secured bank borrowing amounting to USD 300 million (W320,089 million) and CNY 1,964 million (W333,218 million) from China Construction Bank, as of March 31, 2018, the Group provided its property, plant and equipment and others with carrying amount of W297,720 million as pledged assets.

15.	Capital and Reserves

(a)

Share capital

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

(b)

Reserves

Reserves consist mainly of the following:

Translation reserve

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

Other comprehensive income (loss) from associates

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

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


(In millions of won)
	March 31, 2018			December 31, 2017
Foreign currency translation differences for foreign operations	W	(154,824	)		(259,749	)
Other comprehensive income (loss) from associates (excluding remeasurements)		(27,216	)		(28,531	)

	W	(182,040	)		(288,280	)

16.

Revenue

Details of revenue for the three-month periods ended March 31, 2018 and 2017 are as follows:


(In millions of won)
	2018		2017
Sales of goods	W	5,664,450		7,050,908
Royalties		5,408		6,544
Others		5,306		4,710

	W	5,675,164		7,062,162

17.	Geographic and Other Information

The following is a summary of sales by region based on the location of the customers for the three-month periods ended March 31, 2018 and 2017.

(a)

Revenue by geography


(In millions of won)
	Revenue
Region	2018		2017
Domestic	W	434,113		543,211
Foreign
China		3,596,291		4,649,492
Asia (excluding China)		402,274		577,719
United States		613,913		647,877
Europe (excluding Poland) 685,232		346,052		282,313
Poland		282,521		361,550

Sub-total	W	5,241,051		6,518,951

Total	W	5,675,164		7,062,162

Sales to Company A and Company B amount to W1,746,536 million and W1,376,329 million, respectively, for the three-month period ended March 31, 2018 (the three-month period ended March 31, 2017: W2,192,166 million and W1,750,828 million). The Group’s top ten end-brand customers together accounted for 78% of sales for the three-month period ended March 31, 2018 (the three-month period ended March 31, 2017: 81%).

17.	Geographic and Other Information, Continued

(b)

Non-current assets by geography


(In millions of won)
	March 31, 2018				December 31, 2017
Region	Property, plant and equipment		Intangible assets		Property, plant and equipment		Intangible assets
Domestic	W	13,669,229		738,473		12,487,111		731,373
Foreign
China		2,884,856		15,138		2,929,739		17,244
Others		971,031		158,591		785,110		164,204

Sub-total		3,855,887		173,729		3,714,849		181,448

Total	W	17,525,116		912,202		16,201,960		912,821

(c)

Revenue by product and services


(In millions of won)
	Revenue
Product	2018		2017
Televisions	W	2,413,750		2,999,624
Desktop monitors		936,031		1,073,092
Tablet products		476,129		584,843
Notebook computers		589,699		575,622
Mobile and others		1,259,555		1,828,981

	W	5,675,164		7,062,162

18.	The Nature of Expenses and Others

The classification of expenses by nature for the three-month periods ended March 31, 2018 and 2017 are as follows:


(In millions of won)
	2018			2017
Changes in inventories	W	(301	)		4,616
Purchases of raw materials, merchandise and others		2,748,830			3,333,784
Depreciation and amortization		910,075			715,864
Outsourcing fees		269,017			182,800
Labor costs		857,684			770,690
Supplies and others		244,164			251,715
Utility		221,269			200,501
Fees and commissions		191,706			161,733
Shipping costs		54,425			56,327
Advertising		14,944			44,489
Warranty expenses		35,647			75,850
Travel		26,130			18,939
Taxes and dues		28,687			21,100
Others		181,613			203,507

	W	5,783,890			6,041,915

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

19.	Selling and Administrative Expenses

Details of selling and administrative expenses for the three-month periods ended March 31, 2018 and 2017 are as follows:


(In millions of won)
	2018		2017
Salaries	W	91,063		81,250
Expenses related to defined benefit plans		7,484		6,884
Other employee benefits		23,072		22,707
Shipping costs		45,871		48,589
Fees and commissions		48,697		46,984
Depreciation		39,795		34,769
Taxes and dues		13,107		8,961
Advertising		14,944		44,489
Warranty expenses		35,647		75,850
Rent		6,649		8,023
Insurance		2,883		2,895
Travel		6,178		6,485
Training		2,567		3,546
Others		17,331		16,721

	W	355,288		408,153

20.	Personnel Expenses

Details of personnel expenses for the three-month periods ended March 31, 2018 and 2017 are as follows:


(In millions of won)
	2018		2017
Salaries and wages	W	713,434		630,335
Other employee benefits		138,184		119,744
Contributions to National Pension plan		18,807		17,917
Expenses related to defined benefit plan		51,801		49,349

	W	922,226		817,345

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

(a)

Details of other non-operating income for the three-month periods ended March 31, 2018 and 2017 are as follows:


(In millions of won)
	2018		2017
Foreign currency gain	W	220,470		366,959
Gain on disposal of property, plant and equipment		4,006		11,560
Gain on disposal of intangible assets		239		—
Reversal of impairment loss on intangible assets		130		—
Rental income		333		1,413
Others		2,464		4,457

	W	227,642		384,389

(b)

Details of other non-operating expenses for the three-month periods ended March 31, 2018 and 2017 are as follows:


(In millions of won)
	2018		2017
Foreign currency loss	W	202,434		573,863
Loss on disposal of property, plant and equipment		8,405		2,231
Impairment loss on intangible assets		37		1,689
Donations		1,866		2,374
Other bad debt expenses		45		—
Expenses related to legal proceedings or claims and others		50		336

	W	212,837		580,493

22.	Finance Income and Finance Costs

(a)

Finance income and costs recognized in profit and loss for the three-month periods ended March 31, 2018 and 2017 are as follows:


(In millions of won)
	2018		2017
Finance income
Interest income	W	19,469		12,108
Foreign currency gain		101,492		102,228
Gain on transaction of derivatives		36		—
Gain on valuation of derivatives		—		798

	W	120,997		115,134

Finance costs
Interest expense	W	22,759		25,757
Foreign currency loss		106,304		38,721
Loss on disposal of investments in equity accounted investees		—		23,200
Loss on sale of trade accounts and notes receivable		345		30
Loss on transaction of derivatives		38		101
Loss on valuation of derivatives		242		—
Others		673		228

	W	130,361		88,037

(b)

Finance income and costs recognized in other comprehensive income or loss for the three-month periods ended March 31, 2018 and 2017 are as follows:


(In millions of won)
	2018		2017
Foreign currency translation differences for foreign operations	W	127,890		(249,677	)

Finance income (costs) recognized in other comprehensive income or loss after tax	W	127,890		(249,677	)

23.	Income Taxes

(a)

Details of income tax expense for the three-month periods ended March 31, 2018 and 2017 are as follows:


(In millions of won)
	2018			2017
Current tax expense	W	49,384			123,970
Deferred tax expense (benefit)		(96,177	)		54,653

Income tax expense (benefit)	W	(46,793	)		178,623

(b)	Deferred Tax Assets and Liabilities

Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the deferred tax assets at the reporting date will be realized with the Group’s estimated future taxable income.

Deferred tax assets and liabilities as of March 31, 2018 and December 31, 2017 are attributable to the following:


(In millions of won)	Assets				Liabilities						Total
	March, 31, 2018		December, 31, 2017		March, 31, 2018			December, 31, 2017			March, 31, 2018			December, 31, 2017
Other accounts receivable, net	W	—		—		(827	)		(1,441	)		(827	)		(1,441	)
Inventories, net		36,822		34,550		—			—			36,822			34,550
Defined benefit liabilities, net		18,232		2,375		—			—			18,232			2,375
Investments in subsidiaries and associates		21,389		29,061		—			—			21,389			29,061
Accrued expenses		110,888		183,903		—			—			110,888			183,903
Property, plant and equipment		410,560		409,928		—			—			410,560			409,928
Intangible assets		3,251		3,457		(23,656	)		(24,646	)		(20,405	)		(21,189	)
Provisions		23,371		27,018		—			—			23,371			27,018
Gain or loss on foreign currency translation, net		13		13		—			—			13			13
Others		25,581		27,562		—			—			25,581			27,562
Tax losses		110,880		—		—			—			110,880			—
Tax credit carryforwards		322,674		268,926		—			—			322,674			268,926

Deferred tax assets (liabilities)	W	1,083,661		986,793		(24,483	)		(26,087	)		1,059,178			960,706

23.	Income Taxes, Continued

(b)

Deferred Tax Assets and Liabilities, Continued

Statutory tax rate applicable to the Controlling Company was 24.2% for the year ended December 31, 2017. During the year ended December 31, 2017, certain amendments to corporate income tax rules in Korea were enacted and effective on January 1, 2018 that resulted in application of 27.5% for taxable income in excess of W300,000 million. Deferred taxes as of December 31, 2017 and March 31, 2018 have been measured using the applicable tax rates from the amendment.

24.	Earnings (loss) Per Share

(a)

Basic earnings (loss) per share for the three-month periods ended March 31, 2018 and 2017 are as follows:


(In won and No. of shares)	2018			2017
Profit (loss) attributable to owners of the Controlling Company	W	(59,453,887,501	)		633,489,694,225
Weighted-average number of common stocks outstanding		357,815,700			357,815,700

Earnings (loss) per share	W	(166	)		1,770

For the three-month periods ended March 31, 2018 and 2017, there were no events or transactions that resulted in changes in the number of common stocks used for calculating earnings (loss) per share.

(b)

Diluted earnings (loss) per share for the three-month periods ended March 31, 2018 and 2017 are not calculated since there was no potential common stock.

25.	Financial Risk Management

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

(a)

Market risk

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

(i)

Currency risk

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

25.	Financial Risk Management, Continued

(i)

Currency risk, Continued

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

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

i) Exposure to currency risk

The Group’s exposure to foreign currency risk based on notional amounts as of March 31, 2018 and December 31, 2017 is as follows:


(In millions)	March 31, 2018
	USD			JPY			CNY			TWD			EUR			PLN			VND
Cash and cash equivalents		347			697			7,892			85			2			170			2,054,324
Deposits in banks		—			—			2,900			—			—			—			—
Trade accounts and notes receivable		2,726			8			1,138			—			—			10			—
Non-trade receivable		101			791			3,412			3			2			—			3,291
Other assets denominated in foreign currencies		64			1,147			1,314			588			—			46			2,673
Trade accounts and notes payable		(1,076	)		(13,168	)		(2,626	)		—			—			—			(93,646	)
Other accounts payable		(605	)		(15,269	)		(1,831	)		(5	)		(8	)		(3	)		(1,336,576	)
Debt		(1,600	)		—			(3,263	)		—			—			—			—

Net exposure		(43	)		(25,794	)		8,936			671			(4	)		223			630,066

25.	Financial Risk Management, Continued


(In millions)	December 31, 2017
	USD			JPY			CNY			TWD			EUR			PLN			VND
Cash and cash equivalents		1,228			152			6,940			16			3			165			342,063
Deposits in banks		—			—			750			—			—			—			—
Trade accounts and notes receivable		3,316			11			1,453			—			—			—			—
Non-trade receivable		62			1,340			136			2			9			—			13,405
Other assets denominated in foreign currencies		1			206			596			7			—			—			1,882
Trade accounts and notes payable		(1,345	)		(14,898	)		(2,843	)		—			—			—			(102,398	)
Other accounts payable		(285	)		(14,653	)		(2,403	)		(11	)		(8	)		(4	)		(2,138,370	)
Debt		(1,500	)		—			(3,263	)		—			—			—			—

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

Average exchange rates applied for the three-month periods ended March 31, 2018 and 2017 and the exchange rates at March 31, 2018 and December 31, 2017 are as follows:


(In won)	Average rate				Reporting date spot rate
	2018		2017		March 31, 2018		December 31, 2017
USD	W	1,072.66		1,154.65		1,066.50		1,071.40
JPY		9.90		10.15		10.01		9.49
CNY		168.62		168.15		169.68		163.65
TWD		36.59		37.11		36.63		35.92
EUR		1,317.33		1,230.16		1,311.95		1,279.25
PLN		315.20		284.48		311.79		306.07
VND		0.0472		0.0508		0.0468		0.0472

25.	Financial Risk Management, Continued

ii)

Sensitivity analysis

A weaker won, as indicated below, against the following currencies which comprise the Group’s assets or liabilities denominated in a foreign currency as of March 31, 2018 and 2017, would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Group considers to be reasonably possible as of the end of the reporting period. The analysis assumes that all other variables, in particular interest rates, would remain constant. The changes in equity and profit or loss would have been as follows:


(In millions of won)	March 31, 2018						December 31, 2017
	Equity			Profit or loss			Equity			Profit or loss
USD (5 percent weakening)	W	(15,765	)		35,538			50,040			91,238
JPY (5 percent weakening)		(9,678	)		(8,535	)		(10,294	)		(9,141	)
CNY (5 percent weakening)		64,386			30,140			13,212			(6,396	)
TWD (5 percent weakening)		1,229			—			23			1
EUR (5 percent weakening)		(272	)		(47	)		16			594
PLN (5 percent weakening)		3,500			(74	)		2,515			(120	)
VND (5 percent weakening)		1,474			—			(4,445	)		—

A stronger won against the above currencies as of March 31, 2018 and December 31, 2017 would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.

(ii)

Interest rate risk

Interest rate risk arises principally from the Group’s debentures and borrowings. The Group establishes and applies its policy to reduce uncertainty arising from fluctuations in the interest rate and to minimize finance cost and manages interest rate risk by monitoring of trends of fluctuations in interest rate and establishing plan for countermeasures.

Profile

The interest rate profile of the Group’s interest-bearing financial instruments as of March 31, 2018 and December 31, 2017 is as follows:


(In millions of won)
	March 31, 2018			December 31, 2017
Fixed rate instruments
Financial assets	W	3,497,125			3,360,800
Financial liabilities		(3,971,512	)		(2,962,671	)

	W	(474,387	)		398,129

Variable rate instruments
Financial liabilities	W	(2,760,178	)		(2,640,447	)

25.	Financial Risk Management, Continued

ii)

Equity and profit or loss sensitivity analysis for variable rate instruments

As of March 31, 2018 and December 31, 2017, a change of 100 basis points in interest rates at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown below for each 12-month period following the reporting dates. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.


(In millions of won)	Equity					Profit or loss
	1%p increase			1%p decrease		1%p increase			1%p decrease
March 31, 2018
Variable rate instruments(*)	W	(17,474	)		17,474		(17,474	)		17,474
December 31, 2017
Variable rate instruments(*)	W	(17,362	)		17,362		(17,362	)		17,362

(*)

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

(b)

Credit risk

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

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

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

In relation to the impairment of financial assets, the Group recognizes expected credit loss and its changes at each reporting date subsequent to initial recognition of financial asset according to an expected credit loss impairment model.

The Group does not establish allowances for receivables under insurance or receivables from customers with a high credit rating. Trade accounts and notes receivables are insured in order to manage credit risk and uninsured trade accounts and notes receivables are managed in accordance with the Group’s management policy.

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

25.	Financial Risk Management, Continued

(b)

Credit risk, Continued

As of March 31, 2018


(In millions of won)
	March 31, 2018
	Carrying amounts
Financial Assets Carried at Amortized Cost
Cash and cash equivalents	W	2,626,689
Deposits in banks		870,283
Trade accounts and notes receivable		3,496,163
Non-trade receivable		112,335
Accrued income		14,034
Deposits		22,415
Short-term loans		15,094
Long-term loans		37,297
Long-term non-trade receivable		183

Sub-Total	W	7,194,493
Financial Assets at Fair Value through Profit or Loss
Convertible bonds	W	1,552
Derivatives		600

Sub-Total	W	2,152
Financial Assets at Fair Value through Other Comprehensive Income
Debt instrument	W	163

Total	W	7,196,808

25.	Financial Risk Management, Continued

As of December 31, 2017


(In millions of won)
	December 31, 2017
	Carrying amounts
Cash and cash equivalents	W	2,602,560
Deposits in banks		758,089
Trade accounts and notes receivable		4,325,120
Non-trade receivable		150,554
Accrued income		14,273
Available-for-sale financial assets		162
Financial assets at fair value through profit or loss		1,552
Deposits		30,378
Short-term loans		16,766
Long-term loans		32,408
Long-term non-trade receivable		8,738
Derivatives		842

Total	W	7,941,442

25.	Financial Risk Management, Continued

(c)

Liquidity risk

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

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

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


(In millions of won)			Contractual cash flows
	Carrying amount		Total		6 months or less		6-12 months		1-2 years		2-5 years		More than 5 years
Non-derivative financial liabilities :
Secured bank borrowings	W	653,307		665,734		295,300		370,434		—		—		—
Unsecured bank borrowings		3,858,617		4,125,262		375,091		897,570		546,001		2,174,856		131,744
Unsecured bond issues		2,219,766		2,365,526		236,301		139,176		599,441		1,390,608		—
Trade accounts and notes payable		2,802,837		2,802,837		2,802,837		—		—		—		—
Other accounts payable		3,273,185		3,273,185		3,273,185		—		—		—		—
Long-term other accounts payable		2		2		—		—		2		—		—
Security deposits		5,775		5,775		3,145		85		2,545		—		—

	W	12,813,489		13,238,321		6,985,859		1,407,265		1,147,989		3,565,464		131,744

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

25.	Financial Risk Management, Continued

(d)

Capital management

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


(In millions of won)
	March 31, 2018			December 31, 2017
Total liabilities	W	15,169,635			14,178,177
Total equity		14,825,636			14,981,510
Cash and deposits in banks (*1)		3,496,961			3,360,638
Borrowings (including bonds)		6,731,690			5,603,118
Total liabilities to equity ratio		102	%		95	%
Net borrowings to equity ratio (*2)		22	%		15	%

(*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) 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

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

Current Assets and Liabilities

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

ii)

Trade Receivables and Other Receivables

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

iii)

Investments in Equity and Debt Instruments

Marketable financial assets at fair value through profit or loss and at fair value through other comprehensive income is determined by reference to their quoted closing bid price at the reporting date. The fair value of non-marketable instruments is determined using valuation methods.

iv)

Non-derivative Financial Liabilities

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

25.	Financial Risk Management, Continued

(ii)

Fair values versus carrying amounts

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

As of March 31, 2018


(In millions of won)
	March 31, 2018
	Carrying amounts		Fair Values
Financial Assets carried at amortized cost
Cash and cash equivalents	W	2,626,689		(*)
Deposits in banks		870,283		(*)
Trade accounts and notes receivable		3,496,163		(*)
Non-trade receivable		112,335		(*)
Accrued income		14,034		(*)
Deposits		22,414		(*)
Short-term loans		15,094		(*)
Long-term loans		37,297		(*)
Long-term non-trade receivable		183		(*)
Financial Assets at Fair Value through Profit or Loss
Equity instrument	W	5,008		5,008
Convertible bonds		1,552		1,552
Derivatives		600		600
Financial Assets at Fair Value through Other Comprehensive Income
Debt instrument	W	163		163
Liabilities carried at amortized cost
Secured bank borrowings	W	653,307		653,307
Unsecured bank borrowings		3,858,617		3,869,834
Unsecured bond issues		2,219,766		2,225,927
Trade accounts and notes payable		2,802,837		(*)
Other accounts payable		3,273,185		3,273,318
Long-term other accounts payable		2		(*)
Security deposits		5,775		(*)

25.	Financial Risk Management, Continued

As of December 31, 2017


(In millions of won)
	December 31, 2017
	Carrying amounts		Fair Values
Assets carried at fair value
Available-for-sale financial assets	W	162		162
Financial asset at fair value through profit or loss		1,552		1,552
Derivatives		842		842
Assets carried at amortized cost
Cash and cash equivalents	W	2,602,560		(*)
Deposits in banks		758,089		(*)
Trade accounts and notes receivable		4,325,120		(*)
Non-trade receivable		150,554		(*)
Accrued income		14,273		(*)
Deposits		30,378		(*)
Short-term loans		16,766		(*)
Long-term loans		32,408		(*)
Long-term non-trade receivable		8,738		(*)
Liabilities carried at amortized cost
Secured bank borrowings	W	642,172		642,172
Unsecured bank borrowings		2,950,184		2,955,399
Unsecured bond issues		2,010,762		2,016,086
Trade accounts and notes payable		2,875,090		(*)
Other accounts payable		3,169,937		3,170,147
Long-term other accounts payable		2		(*)

(*)	Excluded from disclosures as the carrying amount approximates fair value.

25.	Financial Risk Management, Continued

(iii)

Fair values of financial assets and liabilities

Fair value hierarchy

The table below analyzes financial instruments carried at fair value based on the input variables used in the valuation method to measure fair value of assets and liabilities. The different levels have been defined as follows:

•

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities

•

Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

•

Level 3: inputs for the asset or liability that are not based on observable market data

ii)

Financial instruments measured at fair value

Fair value hierarchy classifications of the financial instruments that are measured at fair value as of March 31, 2018 and December 31, 2017 are as follows:


(In millions of won)	Level 1		Level 2		Level 3		Total
March 31, 2018
Financial Asset at Fair Value through Profit or Loss
Equity instrument	W	—		—		5,008		5,008
Convertible bonds		—		—		1,552		1,552
Derivatives		—		—		600		600
Financial Asset at Fair Value through Other Comprehensive Income
Debt instrument	W	163		—		—		163


(In millions of won)	Level 1		Level 2		Level 3		Total
December 31, 2017
Available-for-sale financial assets	W	162		—		—		162
Financial assets at fair value through profit or loss		—		—		1,552		1,552
Derivatives		—		—		842		842

25.	Financial Risk Management, Continued

iii)

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

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

(In millions of won)

March 31, 2018

Valuation
technique

Input

Classification

Level 1

Level 2

Level 3

Liabilities

Secured bank borrowings

—

653,307

Discounted
cash flow

Discount rate

Unsecured bank borrowings

—

3,869,834

Discounted
cash flow

Discount rate

Unsecured bond issues

—

2,225,927

Discounted
cash flow

Discount rate

Other accounts payable

—

3,273,318

Discounted
cash flow

Discount rate

Long-term other accounts payable

—

Discounted
cash flow

Discount rate

(In millions of won)

December 31, 2017

Valuation
technique

Input

Classification

Level 1

Level 2

Level 3

Liabilities

Secured bank borrowings

—

642,172

Discounted
cash flow

Discount rate

Unsecured bank borrowings

—

2,955,399

Discounted
cash flow

Discount rate

Unsecured bond issues

—

2,016,086

Discounted
cash flow

Discount rate

Other accounts payable

—

3,170,147

Discounted
cash flow

Discount rate

Long-term other accounts payable

—

Discounted
cash flow

Discount rate

iv)

The interest rates applied for determination of the above fair value as of March 31, 2018 and December 31, 2017 are as follows:


	March 31, 2018	December 31, 2017
Debentures, loans and others	1.52~2.95%	1.57~2.92%

26.	Changes in liabilities arising from financing activities

Changes in liabilities arising from financing activities for the three-month period ended March 31, 2018 are as follows:


(In millions of won)						Non-cash transactions
	January 1, 2018		Cash flows from financing activities			Dividends declared		Reclassification			Gain or loss on foreign currency translation			Others		March 31, 2018
Current portion of long-term borrowings and bonds	W	1,452,926		(180,168	)		—		867,790			7,327			141		2,148,016
Long-term borrowings		2,644,189		907,850			—		(867,790	)		4,561			—		2,688,810
Bonds		1,506,003		388,447			—		—			—			414		1,894,864
Dividends payable		—		—			232,014		—			(406	)		—		231,608

	W	5,603,118		1,116,129			232,014		—			11,482			555		6,963,298

27.	Related Parties and Others

(a)

Related parties

Related parties as of March 31, 2018 are as follows:


Classification		Description
Associates(*)		Paju Electric Glass Co., Ltd. and others

Subsidiaries of Associates		AVATEC Electronics Yantai 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.

27.	Related Parties and Others, Continued

(b)

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


(In millions of won)	2018
					Purchase and others
	Sales and others		Dividend income		Purchase of raw material and others		Acquisition of property, plant and equipment		Outsourcing fees		Other costs
Associates and their subsidiaries
INVENIA Co., Ltd.		—		30		270		7,902		—		72
AVATEC Co., Ltd.		—		530		—		—		17,773		119
Paju Electric Glass Co., Ltd.		—		4,172		92,497		—		—		920
WooRee E&L Co., Ltd.		—		—		—		—		—		47
YAS Co., Ltd.		—		—		760		12,417		—		794
LB Gemini New Growth Fund No. 16		—		540		—		—		—		—

	W	—		5,272		93,527		20,319		17,773		1,952

Entity that has significant influence over the Controlling Company
LG Electronics Inc.	W	363,699		—		11,113		221,371		—		19,114
Subsidiaries of the entity that has significant influence over the Controlling Company
LG Electronics India Pvt. Ltd.	W	8,355		—		—		—		—		13
LG Electronics Vietnam Haiphong Co., Ltd.		32,988		—		—		1,214		—		2
LG Electronics Nanjing New Technology Co., Ltd.		71,483		—		—		18		—		125

27.	Related Parties and Others, Continued


(In millions of won)	2018
					Purchase and others
	Sales and others		Dividend income		Purchase of raw material and others		Acquisition of property, plant and equipment		Outsourcing fees		Other costs
LG Electronics RUS, LLC	W	15,328		—		—		—		—		320
LG Electronics do Brasil Ltda.		86,005		—		—		—		—		104
LG Innotek Co., Ltd.		6,950		—		39,616		—		—		11,082
Qingdao LG Inspur Digital Communication Co., Ltd.		7,656		—		—		—		—		—
Inspur LG Digital Mobile Communications Co., Ltd.		33,987		—		—		—		—		—
LG Electronics Mexicalli S.A. DE C.V.		55,028		—		—		—		—		54
LG Electronics Mlawa Sp. z o.o.		172,622		—		—		—		—		72
LG Hitachi Water Solutions Co., Ltd.		—		—		—		119,537		—		491
LG Electronics Reynosa S.A. DE C.V.		246,928		—		—		—		—		898
HiEntech Co., Ltd.		—		—		—		5,230		—		7,935
HiEntech (Tianjin) Co., Ltd.		—		—		—		7,541		—		10,243
Others		8,537		—		6		—		—		2,867

	W	745,867		—		39,622		133,540		—		34,206

	W	1,109,566		5,272		144,262		375,230		17,773		55,272

27.	Related Parties and Others, Continued


(In millions of won)	2017
					Purchase and others
	Sales and others		Dividend income		Purchase of raw material and others		Acquisition of property, plant and equipment		Outsourcing fees		Other costs
Associates and their subsidiaries
New Optics Ltd.(*)	W	1		—		—		—		4		6
INVENIA Co., Ltd.		—		—		454		20,090		—		113
AVACO Co., Ltd.(*)		—		—		—		—		—		66
AVATEC Co., Ltd.		—		530		—		—		19,816		251
Paju Electric Glass Co., Ltd.		—		8,109		98,763		—		—		1,097
Shinbo Electric Co., Ltd.(*)		15,812		—		—		—		—		21
Narenanotech Corporation(*)		—		—		226		16,875		—		225
WooRee E&L Co., Ltd.		—		—		—		—		—		76
YAS Co., Ltd.		—		—		830		19,208		—		392

	W	15,813		8,639		100,273		56,173		19,820		2,247

Entity that has significant influence over the Controlling Company
LG Electronics Inc.	W	476,921		—		7,485		231,879		—		35,053
Subsidiaries of the entity that has significant influence over the Controlling Company
LG Innotek Co., Ltd.	W	4,274		—		45,295		—		—		3,480
LG Hitachi Water Solutions Co., Ltd.		—		—		—		27,619		—		3,495

27.	Related Parties and Others, Continued


(In millions of won)	2017
					Purchase and others
	Sales and others		Dividend income		Purchase of raw material and others		Acquisition of property, plant and equipment		Outsourcing fees		Other costs
HiEntech Co., Ltd.	W	—		—		—		—		—		12,511
HiEntech (Tianjin) Co., Ltd.		—		—		—		4,682		—		6,600
Qingdao LG Inspur Digital Communication Co., Ltd.		15,963		—		—		—		—		—
Inspur LG Digital Mobile Communications Co., Ltd.		71,964		—		—		—		—		—
LG Electronics India Pvt. Ltd.		22,276		—		—		—		—		29
LG Electronics Vietnam Haiphong Co., Ltd.		52,956		—		—		343		—		4,563
LG Electronics Nanjing New Technology Co., Ltd.		76,894		—		—		—		—		107
LG Electronics RUS, LLC		28,975		—		—		—		—		286
LG Electronics do Brasil Ltda.		62,616		—		—		—		—		91
LG Electronics Mexicalli S.A. DE C.V.		77,450		—		—		—		—		51
LG Electronics Mlawa Sp. z o.o.		290,737		—		—		—		—		302
LG Electronics Taiwan Taipei Co., Ltd.		3,598		—		—		—		—		23
LG Electronics Reynosa S.A. DE C.V.		304,510		—		—		—		—		325
LG Electronics Almaty Kazakhstan		4,043		—		—		—		—		—
LG Electronics S.A. (Pty) Ltd.		5,182		—		—		—		—		3
Others		898		—		—		509		—		1,666

	W	1,022,336		—		45,295		33,153		—		33,532

	W	1,515,070		8,639		153,053		321,205		19,820		70,832

(*)	Represents transactions occurred prior to disposal of the entire investments.

27.	Related Parties and Others, Continued

(c)

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


(In millions of won)
	Trade accounts and notes receivable and others				Trade accounts and notes payable and others
	March 31, 2018		December 31, 2017		March 31, 2018		December 31, 2017
Associates
INVENIA Co., Ltd.	W	2,280		2,375		8,972		18,662
AVATEC Co., Ltd.		530		—		4,682		2,949
Paju Electric Glass Co., Ltd.		—		—		64,375		60,141
WooRee E&L Co., Ltd.		—		—		52		61
YAS Co., Ltd.		250		375		16,700		6,474

	W	3,060		2,750		94,781		88,287

Entity that has significant influence over the Controlling Company
LG Electronics Inc.	W	401,787		550,335		271,079		257,071
Subsidiaries of the entity that has significant influence over the Controlling Company
LG Electronics India Pvt. Ltd.	W	5,751		3,030		5		—
LG Electronics Vietnam Haiphong Co., Ltd.		25,033		36,017		1,597		3,917
LG Electronics Nanjing New Technology Co., Ltd.		48,471		46,373		332		699
LG Electronics RUS, LLC		13,496		25,102		—		80
LG Electronics do Brasil Ltda.		48,873		19,091		28		10
LG Innotek Co., Ltd.		4,266		407		61,441		62,675
Qingdao LG Inspur Digital Communication Co., Ltd.		5,140		13,061		—		—
Inspur LG Digital Mobile Communications Co., Ltd.		36,808		55,278		—		—

27.	Related Parties and Others, Continued


(In millions of won)
	Trade accounts and notes receivable and others				Trade accounts and notes payable and others
	March 31, 2018		December 31, 2017		March 31, 2018		December 31, 2017
LG Electronics Mexicalli S.A. DE C.V.	W	29,350		29,440		—		—
LG Electronics Mlawa Sp. z o.o.		112,980		136,874		—		25
LG Hitachi Water Solutions Co., Ltd.		—		—		213,164		154,864
LG Electronics Reynosa S.A. DE C.V.		136,737		137,413		154		82
HiEntech Co., Ltd.		—		—		9,463		6,679
HiEntech (Tianjin) Co., Ltd.		—		—		14,033		5,600
Others		5,482		7,618		2,968		1,715

	W	472,387		509,704		303,185		236,346

	W	877,234		1,062,789		669,045		581,704

27.	Related Parties and Others, Continued

(d)

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


(In millions of won)
	2018				2017
Associates	Loans		Collection of loans		Loans		Collection of loans
INVENIA Co., Ltd.	W	—		125		—		83
YAS Co., Ltd.		—		125		—		83

	W	—		250		—		166

27.	Related Parties and Others, Continued

(e)

Conglomerate Transactions

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


(In millions of won)
	For the three-month period ended March 31, 2018				March 31, 2018
	Sales and others		Purchase and others		Trade accounts and notes receivable and others		Trade accounts and notes payable and others
LG Chem Ltd. and its subsidiaries	W	1,564		296,701		6,148		222,759
LG Household & Health Care and its subsidiaries		—		12		—		2
LG Hausys Ltd.		1,110		1		—		—
Serveone Co., Ltd. and its subsidiaries		104		475,968		21,677		645,714
Silicon Works Co., Ltd.		—		143,295		—		148,397
LG CNS Co., Ltd. and its subsidiaries		—		37,813		6		41,211
LG Holdings Japan Co., Ltd.		—		456		2,013		—
LG International Corp. and its subsidiaries		200,628		413,836		131,491		261,563
LG Management Development Institute		—		2,813		3,480		607
G2R Inc. and its subsidiaries		—		4,041		—		5,301
LG Corp.		—		12,791		6,794		6,951
LG Uplus Corp.		—		224		—		33

	W	203,406		1,387,951		171,609		1,332,538

27.	Related Parties and Others, Continued


(In millions of won)
	For the three-month period ended March 31, 2017				December 31, 2017
	Sales and others		Purchase and others		Trade accounts and notes receivable and others		Trade accounts and notes payable and others
LG Chem Ltd. and its subsidiaries	W	5		330,222		8,684		246,491
LG Household & Health Care and its subsidiaries		—		62		—		3
LG Hausys Ltd.		418		44		—		374
Serveone Co., Ltd. and its subsidiaries		115		371,400		21,568		645,847
Silicon Works Co., Ltd.		—		147,017		—		120,031
SK Siltron Co., Ltd. (formerly, SIltron Co., Ltd.) (*)		10		—		—		—
LG CNS Co., Ltd. and its subsidiaries		37		30,630		4		115,899
LG Holdings Japan Co., Ltd.		—		468		1,908		—
LG International Corp. and its subsidiaries		176,066		396,022		112,200		230,179
LG Management Development Institute		—		2,010		3,480		699
G2R Inc. and its subsidiaries		—		829		—		14,785
LG Corp.		—		15,699		4,700		1,523
Lusem Co., Ltd. (*)		6		499		1		53
LG Uplus Corp.		51		186		—		1,506

	W	176,708		1,295,088		152,545		1,377,390

(*)	Represents transactions occurred prior to disposal of the entire investments.

27.	Related Parties and Others, Continued

(f)

Key management personnel compensation

Compensation costs of key management for the three-month periods ended March 31, 2018 and 2017 are as follows:


(In millions of won)
	2018		2017
Short-term benefits	W	888		1,317
Expenses related to the defined benefit plan		273		93

	W	1,161		1,410

Key management refers to the registered directors who have significant control and responsibilities over the Controlling Company’s operations and business.

28.	Subsequent Event

(a)

In April 2018, the Controlling Company received advances from a customer amounting to USD 300 million (W320,670 million) in aggregate in connection with long-term supply agreements. The advances received will be offset against outstanding accounts receivable balances after a given period of time, as well as those arising from the sale of products thereafter. The Controlling Company received a payment guarantee from the Export-Import Bank of Korea amounting to USD 300 million (W320,670 million) relating to advances received.

(b)

In April 2018, the Group obtained additional borrowings amounting to USD 200 million (W214,740 million).

LG DISPLAY CO., LTD.

Condensed Separate Interim Financial Statements

(Unaudited)

March 31, 2018 and 2017

(With Independent Auditors’ Review Report Thereon)

Table of Contents


	Page
Independent Auditors’ Review Report		98

Condensed Separate Interim Statements of Financial Position		100

Condensed Separate Interim Statements of Comprehensive Income		101

Condensed Separate Interim Statements of Changes in Equity		102

Condensed Separate Interim Statements of Cash Flows		103

Notes to the Condensed Separate Interim Financial Statements		105

Independent Auditors’ Review Report

Based on a report originally issued in Korean

To the Board of Directors and Shareholders

LG Display Co., Ltd.:

Reviewed Financial Statements

We have reviewed the accompanying condensed separate interim financial statements of LG Display Co., Ltd. (the “Company”) which comprise the condensed separate interim statement of financial position as of March 31, 2018, the condensed separate interim statements of comprehensive income, changes in equity and cash flows for the three-month periods ended March 31, 2018 and 2017, and notes, comprising a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Condensed Separate Interim Financial Statements

Management is responsible for the preparation and fair presentation of these condensed separate interim financial statements in accordance with Korean International Financial Reporting Standards No. 1034, Interim Financial Reporting, and for such internal controls as management determines necessary to enable the preparation of condensed separate interim financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to issue a report on these condensed separate interim financial statements based on our reviews.

Conclusion

Based on our reviews, nothing has come to our attention that causes us to believe that the condensed separate interim financial statements referred to above are not presented fairly, in all material respects, in accordance with Korean International Financial Reporting Standards No. 1034, Interim Financial Reporting.

Other Matters

The procedures and practices utilized in the Republic of Korea to review such condensed separate interim financial statements may differ from those generally accepted and applied in other countries.

We audited the separate statement of financial position as of December 31, 2017, and the related separate statements of comprehensive income, changes in equity and cash flows for the year then ended, which are not accompanying this review report, in accordance with Korean Standards on Auditing, and our report thereon, dated February 22, 2018, expressed an unqualified opinion. The accompanying condensed separate statement of financial position of the Company as of December 31, 2017, presented for comparative purposes, is not different from that audited by us from which it was derived in all material respects.

/s/ KPMG Samjong Accounting Corp.

Seoul, Korea

May 14, 2018

This report is effective as of May 14, 2018, the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying condensed separate interim financial statements and notes thereto. Accordingly, the readers of the review report should understand that the above review report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

LG DISPLAY CO., LTD.

Condensed Separate Interim Statements of Financial Position

(Unaudited)

As of March 31, 2018 and December 31, 2017


(In millions of won)	Note		March 31, 2018		December 31, 2017
Assets
Cash and cash equivalents		4, 24	W	434,823		566,408
Deposits in banks		4, 24		377,200		580,770
Trade accounts and notes receivable, net		5, 14, 24, 26		3,769,860		4,673,570
Other accounts receivable, net		5, 24		708,905		687,109
Other current financial assets		6, 24		11,707		13,499
Inventories		7		1,650,056		1,682,245
Other current assets		5		326,503		177,473

Total current assets				7,279,054		8,381,074
Deposits in banks		4, 24		11		11
Investments		8		3,269,871		2,683,941
Other non-current financial assets		6, 24		63,316		64,772
Property, plant and equipment, net		9		13,669,128		12,487,001
Intangible assets, net		10		738,473		731,373
Deferred tax assets		22		800,123		727,248
Other non-current assets		5		333,567		333,995

Total non-current assets				18,874,489		17,028,341

Total assets			W	26,153,543		25,409,415

Liabilities
Trade accounts and notes payable		24, 26	W	2,507,732		2,391,493
Current financial liabilities		11, 24		1,480,285		1,060,735
Other accounts payable		24		2,816,545		2,701,823
Accrued expenses				472,280		755,062
Income tax payable				51,053		235,593
Provisions		13		71,701		73,685
Advances received		14, 27		209,102		142,700
Other current liabilities		13		216,429		33,514

Total current liabilities				7,825,127		7,394,605
Non-current financial liabilities		11, 24		3,752,343		3,165,413
Non-current provisions		13		22,635		28,312
Defined benefit liabilities, net		12		149,957		94,535
Long-term advances received		14, 27		759,881		830,335
Other non-current liabilities		13		77,736		66,956

Total non-current liabilities				4,762,552		4,185,551

Total liabilities				12,587,679		11,580,156

Equity
Share capital		15		1,789,079		1,789,079
Share premium				2,251,113		2,251,113
Retained earnings				9,525,672		9,789,067

Total equity				13,565,864		13,829,259

Total liabilities and equity			W	26,153,543		25,409,415

See accompanying notes to the separate interim financial statements.

100

LG DISPLAY CO., LTD.

Condensed Separate Interim Statements of Comprehensive Income (Loss)

(Unaudited)

For the three-month periods ended March 31, 2018 and 2017


(In millions of won, except earnings per share)	Note		2018			2017
Revenue		16, 26	W	5,154,261			6,542,947
Cost of sales		7, 17, 26		(4,902,524	)		(5,218,933	)

Gross profit				251,737			1,324,014
Selling expenses		18		(99,213	)		(166,905	)
Administrative expenses		18		(124,655	)		(117,802	)
Research and development expenses				(281,490	)		(280,296	)

Operating profit (loss)				(253,621	)		759,011

Finance income		21		105,695			107,768
Finance costs		21		(16,910	)		(32,843	)
Other non-operating income		20		117,004			304,161
Other non-operating expenses		20		(112,415	)		(489,551	)

Profit (loss) before income tax				(160,247	)		648,546
Income tax expense (benefit)		22		(79,883	)		134,434

Profit (loss) for the period				(80,364	)		514,112

Other comprehensive loss
Items that will never be reclassified to profit or loss
Remeasurements of net defined benefit liabilities		12		(6,419	)		(4,725	)
Related income tax		12		2,296			1,143

				(4,123	)		(3,582	)

Other comprehensive loss for the period, net of income tax				(4,123	)		(3,582	)

Total comprehensive income (loss) for the period			W	(84,487	)		510,530

Earnings (loss) per share (In Won)
Basic earnings (loss) per share		23	W	(225	)		1,437

Diluted earnings (loss) per share		23	W	(225	)		1,437

See accompanying notes to the separate interim financial statements.

101

LG DISPLAY CO., LTD.

Condensed Separate Interim Statements of Changes in Equity

(Unaudited)

For the three-month periods ended March 31, 2018 and 2017


	Share		Share		Retained					Total
(In millions of won)	capital		premium		earnings			Reserves		equity
Balances at January 1, 2017	W	1,789,079		2,251,113		8,195,255			—		12,235,447

Total comprehensive income for the period
Profit for the period		—		—		514,112			—		514,112
Other comprehensive income (loss)
Remeasurements of net defined benefit liabilities, net of tax		—		—		(3,582	)		—		(3,582	)

Total other comprehensive loss		—		—		(3,582	)		—		(3,582	)

Total comprehensive income for the period	W	—		—		510,530			—		510,530

Transaction with owners, recognized directly in equity
Dividends to equity holders		—		—		(178,908	)		—		(178,908	)

Balances at March 31, 2017	W	1,789,079		2,251,113		8,526,877			—		12,567,069

Balances at January 1, 2018	W	1,789,079		2,251,113		9,789,067			—		13,829,259

Total comprehensive loss for the period
Loss for the period		—		—		(80,364	)		—		(80,364	)
Other comprehensive income (loss)
Remeasurements of net defined benefit liabilities, net of tax		—		—		(4,123	)		—		(4,123	)

Total other comprehensive loss		—		—		(4,123	)		—		(4,123	)

Total comprehensive loss for the period	W	—		—		(84,487	)		—		(84,487	)

Transaction with owners, recognized directly in equity
Dividends to equity holders		—		—		(178,908	)		—		(178,908	)

Balances at March 31, 2018	W	1,789,079		2,251,113		9,525,672			—		13,565,864

See accompanying notes to the separate interim financial statements.

102

LG DISPLAY CO., LTD.

Condensed Separate Interim Statements of Cash Flows

(Unaudited)

For the three-month periods ended March 31, 2018 and 2017 .


(In millions of won)	Note	2018			2017
Cash flows from operating activities:
Profit (loss) for the period		W	(80,364	)		514,112
Adjustments for:
Income tax expense (benefit)	22		(79,883	)		134,434
Depreciation	17		479,483			392,838
Amortization of intangible assets	17		93,967			97,781
Gain on foreign currency translation			(39,949	)		(55,662	)
Loss on foreign currency translation			38,035			139,210
Expenses related to defined benefit plans	12		51,351			49,213
Gain on disposal of property, plant and equipment			(13,715	)		(30,314	)
Loss on disposal of property, plant and equipment			3,826			1,957
Gain on disposal of intangible assets			(239	)		—
Impairment loss on intangible assets			37			1,689
Reversal of impairment loss on intangible assets			(130	)		—
Warranty expenses			29,340			68,177
Finance income			(104,342	)		(103,596	)
Finance costs			11,621			16,023
Other income			(364	)		(154	)
Other expenses			592			46

			469,630			711,642
Changes in
Trade accounts and notes receivable			872,945			250,322
Other accounts receivable			60,025			(15,510	)
Inventories			(58,766	)		100,076
Other current assets			(125,476	)		(140,908	)
Other non-current assets			(18,249	)		(25,413	)
Trade accounts and notes payable			131,583			(590,469	)
Other accounts payable			(153,854	)		(2,488	)
Accrued expenses			(284,578	)		(160,928	)
Provisions			(46,791	)		(45,195	)
Other current liabilities			6,959			5,841
Defined benefit liabilities, net			(2,348	)		(1,734	)
Other non-current liabilities			8,747			1,366

			390,197			(625,040	)
Cash generated from operating activities			779,463			600,714
Income taxes paid			(2,955	)		(15,394	)
Interests received			7,151			5,660
Interests paid			(27,837	)		(21,636	)

Net cash provided by operating activities		W	755,822			569,344

See accompanying notes to the separate interim financial statements.

103

LG DISPLAY CO., LTD.

Condensed Separate Interim Statements of Cash Flows, Continued

(Unaudited)

For the three-month periods ended March 31, 2018 and 2017


(In millions of won)	Note		2018			2017
Cash flows from investing activities:
Dividends received			W	23,576			315,939
Increase in deposits in banks				(200,500	)		(200,500	)
Proceeds from withdrawal of deposits in banks				403,715			400,501
Acquisition of investments				(585,930	)		(46,500	)
Proceeds from disposal of investments				—			5,157
Acquisition of property, plant and equipment				(1,509,104	)		(1,036,604	)
Proceeds from disposal of property, plant and equipment				102,923			87,220
Acquisition of intangible assets				(129,298	)		(111,593	)
Proceeds from disposal of intangible assets				960			—
Receipt from settlement of derivatives				(2	)		(101	)
Proceeds from collection of short-term loans				5,714			—
Increase in long-term loans				(12,300	)		—
Increase in deposits				(118	)		(933	)
Decrease in deposits				—			566
Proceeds from disposal of emission rights				4,160			—

Net cash used in investing activities				(1,896,204	)		(586,848	)

Cash flows from financing activities:		25
Proceeds from issuance of bonds				388,447			—
Proceeds from long-term borrowings				800,000			—
Repayments of current portion of long-term borrowings and bonds				(180,169	)		(63,216	)
Payment guarantee fee received				519			—

Net cash provided by (used in) financing activities				1,008,797			(63,216	)

Net decrease in cash and cash equivalents				(131,585	)		(80,720	)
Cash and cash equivalents at January 1				566,408			259,467

Cash and cash equivalents at March 31			W	434,823			178,747

See accompanying notes to the separate interim financial statements.

105

1.	Organization and Description of Business

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

The Company’s common stock is listed on the Korea Exchange under the identifying code 034220. As of March 31, 2018, there are 357,815,700 shares of common stock outstanding. The Company’s common stock is also listed on the New York Stock Exchange in the form of American Depository Shares (“ADSs”) under the symbol “LPL”. One ADS represents one-half of one share of common stock. As of March 31, 2018, there are 23,730,762 ADSs outstanding.

2.	Basis of Presenting Financial Statements

(a)

Statement of Compliance

The condensed separate interim financial statements have been prepared in accordance with Korean International Financial Reporting Standards (“K-IFRSs”) No.1034, Interim Financial Reporting. They do not include all of the information required for full annual financial statements and should be read in conjunction with the separate financial statements of the Company as of and for the year ended December 31, 2017.

These condensed interim financial statements are separate interim financial statements prepared in accordance with K-IFRS No.1027, Separate Financial Statements, presented by a parent, an investor in an associate, in which the investments are accounted for on the basis of the direct equity interest rather than on the basis of the reported results and net assets of the investees.

This is the first set of the Company’s financial statements where K-IFRS No. 1109, K-IFRS No. 1115, and K-IFRS No. 2122 have been applied. Changes to significant accounting policies are described in Note 3.

105

2.	Basis of Presenting Financial Statements, Continued

(b)

Basis of Measurement

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

•

financial assets at fair value through profit or loss (“FVTPL”) and financial asset at fair value through other comprehensive income (“FVOCI”) and

•

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

(c)

Functional and Presentation Currency

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

(d)

Use of Estimates and Judgments

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

In result of the Company utilizing the past accumulated usage information to reassess the economic useful life of the Mask and Mold which has been classified as inventory, the Company expected the useful lives of Mask and Mold to exceed one year; therefore, the Company changed useful lives of Mask and Mold to two years and treated it as a change in accounting estimate. The Company also changed the classification of Mask and Mold to property, plant and equipment. As a result, W90,955 million of inventory (supplies) at December 31, 2017 is classified as property, plant and equipment (tools) during the three-month period ended March 31, 2018.

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

106

3.	Summary of Significant Accounting Policies

The significant accounting policies followed by the Company in the preparation of its condensed separate interim financial statements are the same as those followed by the Company in its preparation of the separate financial statements as of and for the year ended December 31, 2017, except for the application of K-IFRS No. 1034, Interim Financial Reporting and the changes in accounting standards explained below. The changes in accounting policies are also expected to be reflected in the Company’s separate financial statements as at and for the year ending December 31, 2018.

(a)

Changes in Accounting Policies

The Company has initially adopted K-IFRS No. 1115, Revenue from Contracts with Customers, K-IFRS No. 1109, Financial Instruments, and K-IFRS No. 2122, Foreign Currency Transactions and Advance Consideration, from January 1, 2018.

(i)

K-IFRS No. 1109, Financial Instruments

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

Classification and measurement of financial assets and financial liabilities

The adoption K-IFRS No. 1109 has not had a significant effect on the Company’s accounting policies related to financial liabilities and derivative financial instruments. The impact of K-IFRS No. 1109 on the classification and measurement of financial assets is set out below.

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

•

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

•

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

107

3.	Summary of Significant Accounting Policies, Continued

(a)

Changes in Accounting Policies, Continued

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

•

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

•

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

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

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

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


		Financial assets at FVTPL		These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.

		Financial assets at amortized cost		These assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

		Debt investments at FVOCI		These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.

108

3.	Summary of Significant Accounting Policies, Continued

(a)

Changes in Accounting Policies, Continued

The following table below explain the original measurement categories under K-IFRS No. 1039 and the changes in measurement categories under K-IFRS No. 1109 for each class of the Company’s financial assets as at January 1, 2018 are as below.


(In millions of won)	Original classification under K-IFRS No. 1039		New classification under K-IFRS No. 1109		Original carrying amount under K-IFRS No. 1039		New carrying amount under K-IFRS No. 1109		Difference
Financial Assets
Cash and cash equivalents		Loans and receivables		Amortized cost	W	566,408		566,408		—
Deposits		Loans and receivables		Amortized cost		580,781		580,781		—
Trade receivables		Loans and receivables		Amortized cost		4,673,570		4,673,570		—
Other receivables		Loans and receivables		Amortized cost		687,109		687,109		—
Debt instrument		Available-for-sale		FVOCI-debt instrument		162		162		—
Equity instrument		Available-for-sale		Mandatorily at FVTPL		2,697		2,697		—
Convertible bonds		Designated as at FVTPL		Mandatorily at FVTPL		1,552		1,552		—
Derivatives		Designated as at FVTPL		Mandatorily at FVTPL		842		842		—
Others		Loans and receivables		Amortized cost		73,018		73,018		—

Total financial assets					W	6,586,139		6,586,139		—

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

ii)

Impairment of financial assets

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

109

3.	Summary of Significant Accounting Policies, Continued

(a)

Changes in Accounting Policies, Continued

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

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

iii)

Hedge Accounting

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

(ii)

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

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

Variable Consideration

The consideration received from customers may be variable as the Company allows its customers to return their products according to the contracts. For the year-ended December 31, 2017, the Company recognizes a provision measured at the gross profit for products sold which are expected to be returned. Under K-IFRS No. 1115, the Company shall estimate an amount of variable consideration by using the expected value or the most likely amount, depending on which method the entity expects to better predict the amount of consideration to which it will be entitled and include in the transaction price some or all of an amount of variable consideration estimated only to the extent that is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur when return period expires. The Company shall recognize refund liability measured at the amount of consideration received (or receivable) to which the Company does not expect to be entitled and a new asset for the right to recover returned goods. As a result of this change, the refund liability and a new asset for the right to recover returned goods increased by W9,789 million, respectively, as of January 1, 2018. There is no impact on the opening balance of retained earnings at January 1, 2018. (Note 5(d), 13(a))

110

3.	Summary of Significant Accounting Policies, Continued

(a)

Changes in Accounting Policies, Continued

The effect of the application of K-IFRS No. 1115 on the Company’s separate interim statement of financial position as of March 31, 2018 is as follows. There is no impact on the separate interim statement of comprehensive income and the cash flows for the three-month period ended March 31, 2018.


(in millions won)
Categories	Adoption of K-IFRS No. 1115		Adjustments			Adoption of K-IFRS No. 1018
Current Assets
Other current assets	W	326,503		(6,923	)		319,580
Current Liabilities
Provisions	W	71,701		(6,923	)		64,778

(iii)

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

(b)

New Standards and Amendments Not Yet Adopted

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

(i)

K-IFRS No. 1116, Leases

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

111

4.	Cash and Cash Equivalents and Deposits in Banks

Cash and cash equivalents and deposits in banks as of March 31, 2018 and December 31, 2017 are as follows:


(In millions of won)
	March 31, 2018		December 31, 2017
Current assets
Cash and cash equivalents
Demand deposits	W	434,823		566,408
Deposits in banks
Time deposits	W	304,145		507,930
Restricted cash (*)		73,055		72,840

	W	377,200		580,770

Non-current assets
Deposits in banks
Restricted cash (*)	W	11		11

	W	812,034		1,147,189

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

112

5.	Receivables and Other Assets

(a)

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


(In millions of won)
	March 31, 2018		December 31, 2017
Trade, net	W	332,442		355,332
Due from related parties		3,437,418		4,318,238

	W	3,769,860		4,673,570

(b)

Other accounts receivable as of March 31, 2018 and December 31, 2017 are as follows:


(In millions of won)
	March 31, 2018		December 31, 2017
Current assets
Non-trade receivable, net	W	704,604		678,454
Accrued income		4,301		8,655

	W	708,905		687,109

Due from related parties included in other accounts receivable, as of March 31, 2018 and December 31, 2017 are W630,881 million and W567,996 million, respectively.

113

5.	Receivables and Other Assets, Continued

(c)

The aging of trade accounts and note receivable, other accounts receivable and long-term non-trade receivable as of March 31, 2018 and December 31, 2017 are as follows:


(In millions of won)	March 31, 2018
	Book value						Impairment loss
	Trade accounts and notes receivable		Other accounts *receivable()**		Long-term non-trade receivable		Trade accounts and notes receivable			Other accounts *receivable()**			Long-term non-trade receivable
Not past due	W	3,766,617		702,577		7,258		(601	)		(395	)		(2	)
Past due 1-15 days		3,872		404		—		(28	)		(2	)		—
Past due 16-30 days		—		296		—		—			(2	)		—
Past due 31-60 days		—		92		—		—			—			—
Past due more than 60 days		—		6,412		—		—			(477	)		—

	W	3,770,489		709,781		7,258		(629	)		(876	)		(2	)

(*)	Other accounts receivable includes non-trade receivable and accrued income.

114

5.	Receivables and Other Assets, Continued


(In millions of won)	December 31, 2017
	Book value						Impairment loss
	Trade accounts and notes receivable		Other accounts *receivable()**		Long-term non-trade receivable		Trade accounts and notes receivable			Other accounts *receivable()**			Long-term non-trade receivable
Not past due	W	4,673,660		686,837		15,115		(570	)		(686	)		—
Past due 1-15 days		341		482		—		—			(3	)		—
Past due 16-30 days		135		53		—		—			(1	)		—
Past due 31-60 days		—		207		—		—			(2	)		—
Past due more than 60 days		4		622		—		—			(400	)		—

	W	4,674,140		688,201		15,115		(570	)		(1,092	)		—

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


(In millions of won)	2018							2017
	Trade accounts and notes receivable		Other accounts receivable			Long-term non-trade receivable		Trade accounts and notes receivable		Other accounts receivable		Long-term non-trade receivable
Balance at the beginning of the period	W	570		1,092			—		520		804		23
(Reversal of) bad debt expense		59		(216	)		2		50		288		(23	)

Balance at the reporting date	W	629		876			2		570		1,092		—

115

5.	Receivables and Other Assets, Continued

(d)

Other assets as of March 31, 2018 and December 31, 2017 are as follows:


(In millions of won)
	March 31, 2018		December 31, 2017
Current assets
Advance payments	W	5,211		3,597
Prepaid expenses		225,130		76,129
Value added tax refundable		89,239		95,769
Emission rights		—		1,978
Right to recover returned goods(*)		6,923		—

	W	326,503		177,473

Non-current assets
Long-term prepaid expenses	W	333,567		333,995

	W	333,567		333,995

(*)	As a result from the initial application of K-IFRS No. 1115, the Company recognized an asset for right to recover returned goods returned by the customer.

116

6.	Other Financial Assets

(a)

Other financial assets as of March 31, 2018 and December 31, 2017 are as follows:

(i)

As of March 31, 2018


(In millions of won)	March 31, 2018
Current assets
Financial Asset at Fair Value through Other Comprehensive Income
Debt instrument
Government bonds	W	6
Financial Asset Carried at Amortized Cost
Short-term loans	W	11,701

Total	W	11,707

Non-current assets
Financial Asset at Fair Value through Profit or Loss
Equity instrument
Intellectual Discovery, Ltd.	W	729
Kyulux, Inc		1,968

Sub-Total		2,697
Convertible bonds		1,552
Derivatives(*)		600
Financial Asset at Fair Value through Other Comprehensive Income
Debt instrument
Government bonds	W	157
Financial Asset Carried at Amortized Cost
Deposits	W	13,757
Long-term loans		37,297
Long-term non-trade receivable		7,256

Total	W	63,316

(*)	Represents interest rate swap contracts related to borrowings with variable interest rate.

117

6.	Other Financial Assets, Continued

(ii)

As of December 31, 2017


(In millions of won)	December 31, 2017
Current assets
Available-for-sale financial assets
Debt instrument
Government bonds	W	6
Short-term loans		13,493

Total	W	13,499

Non-current assets
Financial Asset at Fair Value through Profit or Loss	W	1,552
Available-for-sale financial assets
Debt instrument
Government bonds	W	156
Equity instrument
Intellectual Discovery, Ltd.	W	729
Kyulux, Inc		1,968

Sub-Total	W	2,697
Deposits	W	13,638
Long-term loans		30,772
Long-term non-trade receivable		15,115
Derivatives(*)		842

Total	W	64,772

(*)	Represents interest rate swap contracts related to borrowings with variable interest rate.

Other financial assets of related parties as of March 31, 2018 and December 31, 2017 are W2,500 million and W2,750 million, respectively.

118

7.	Inventories

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


(In millions of won)	March 31, 2018		December 31, 2017
Finished goods	W	525,081		491,330
Work-in-process		685,694		675,324
Raw materials		306,989		286,934
Supplies		132,292		228,657

	W	1,650,056		1,682,245


(In millions of won)	2018			2017
Inventories recognized as cost of sales	W	4,902,524			5,218,933
Including: inventory write-downs		190,761			194,154
Including: reversal and usage of inventory write-downs		(184,139	)		(185,454	)

119

8.	Investments

(a)

Investments in subsidiaries consist of the following:


(In millions of won)				March 31, 2018					December 31, 2017
Overseas Subsidiaries	Location		Business	Percentage of ownership			Book value		Percentage of ownership			Book Value
LG Display America, Inc.		San Jose, U.S.A.	Sell Display products		100	%	W	36,815		100	%	W	36,815
LG Display Germany GmbH		Eschborn, Germany	Sell Display products		100	%		19,373		100	%		19,373
LG Display Japan Co., Ltd.		Tokyo, Japan	Sell Display products		100	%		15,686		100	%		15,686
LG Display Taiwan Co., Ltd.		Taipei, Taiwan	Sell Display products		100	%		35,230		100	%		35,230
LG Display Nanjing Co., Ltd.		Nanjing, China	Manufacture Display products		100	%		593,726		100	%		593,726
LG Display Shanghai Co., Ltd.		Shanghai, China	Sell Display products		100	%		9,093		100	%		9,093
LG Display Poland Sp. z o.o.		Wroclaw, Poland	Manufacture Display products		100	%		194,992		100	%		194,992
LG Display Guangzhou Co., Ltd.		Guangzhou, China	Manufacture Display products		100	%		293,557		100	%		293,557
LG Display Shenzhen Co., Ltd.		Shenzhen, China	Sell Display products		100	%		3,467		100	%		3,467
LG Display Singapore Pte. Ltd.		Singapore	Sell Display products		100	%		1,250		100	%		1,250
L&T Display Technology (Fujian) Limited		Fujian, China	Manufacture and sell LCD module and LCD monitor sets		51	%		10,123		51	%		10,123
LG Display Yantai Co., Ltd.		Yantai, China	Manufacture Display products		100	%		169,195		100	%		169,195
Nanumnuri Co., Ltd.		Gumi, South Korea	Janitorial services		100	%		800		100	%		800
LG Display (China) Co., Ltd.		Guangzhou,China	Manufacture and Sell Display products		51	%		723,086		51	%		723,086
Unified Innovative Technology, LLC		Wilmington, U.S.A.	Manage intellectual property		100	%		9,489		100	%		9,489
LG Display Guangzhou Trading Co., Ltd.		Guangzhou, China	Sell Display products		100	%		218		100	%		218
Global OLED Technology LLC		Herndon, U.S.A	Manage OLED intellectual property		100	%		164,322		100	%		164,322
LG Display Vietnam Haiphong Co., Ltd.(*1)		Haiphong, Vietnam	Manufacture Display Products		100	%		329,978		100	%		117,378
Suzhou Lehui Display Co., Ltd.		Suzhou, China	Manufacture and sell LCD module and LCD monitor sets		100	%		121,640		100	%		121,640
Money Market Trust(*2)		Seoul, South Korea	Money market trust		100	%		430,801		100	%		61,471

							W	3,162,841				W	2,580,911

120

8.	Investments, Continued

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

(*2)	For the three-month period ended March 31, 2018, the Company acquired and disposed Money Market Trust (“MMT”) and the MMT amount as of March 31, 2018 is W430,801 million.

(b)

Investments in associates consist of the following:


(In millions of won)
			March 31, 2018					December 31, 2017
Associates	Location	Business	Percentage of ownership			Book Value		Percentage of ownership			Book Value
Paju Electric Glass Co., Ltd.	Paju, South Korea	Manufacture electric glass for FPDs		40	%	W	45,089		40	%	W	45,089
INVENIA Co., Ltd.	Seongnam, South Korea	Develop and manufacture the equipment for FPDs		13	%		6,330		13	%		6,330
WooRee E&L Co., Ltd.	Ansan, South Korea	Manufacture LED back light unit packages		14	%		10,268		14	%		10,268
LB Gemini New Growth Fund No.16 (*1)	Seoul, South Korea	Invest in small and middle sized companies and benefit from M&A opportunities		31	%		434		31	%		434
YAS Co., Ltd.	Paju, South Korea	Develop and manufacture deposition equipment for OLEDs		15	%		10,000		15	%		10,000
AVATEC Co., Ltd.	Daegu, South Korea	Process and sell electric glass for FPDs		17	%		10,600		17	%		10,600
Arctic Sentinel, Inc.	Los Angeles, U.S.A.	Develop and manufacture tablet for kids		10	%		—		10	%		—
CYNORA Gmbh	Bruchsal, Germany	Develop organic emitting materials for displays and lighting devices		14	%		20,309		14	%		20,309
Material science(*2)	Seoul, South Korea	Develop, manufacture and sales OLED material		10	%		4,000		—			—

						W	107,030				W	103,030

121

8.	Investments, Continued

(*1)	The Company is a member of a limited partnership in the LB Gemini New Growth Fund No.16 (“the Fund”). On the other hand, a resolution to dissolve the fund was approved at the general meeting and the fund is in process of liquidation as of March 31, 2018.

(*2)

In March 2018, the Company invested W4,000 million and acquired 10,767 shares of common stock with voting rights in Material science. As of March 31, 2018, the Company‘s ownership percentage in Material science is 10% and the Company has the right to appoint a director to the board of directors of the investee.

For the three-month periods ended March 31, 2018 and 2017, the aggregate amount of received dividends from subsidiaries and associates are W95,553 million and W8,639 million, respectively.

9.	Property, Plant and Equipment

For the three-month periods ended March 31, 2018 and 2017, the Company purchased property, plant and equipment of W1,656,048 million and W1,113,774 million, respectively. The capitalized borrowing costs and the annualized capitalization rate were W18,633 million and 2.23%, and W6,260 million and 1.84% for the three-month periods ended March 31, 2018 and 2017, respectively. Also, for the three-month periods ended March 31, 2018 and 2017, the Company disposed of property, plant and equipment with carrying amounts of W85,393 million and W20,785 million, respectively, and recognized W13,715 million and W3,826 million, respectively, as gain and loss on disposal of property, plant and equipment for the three-month period ended March 31, 2018 (gain and loss for the three-month period ended March 31, 2017: W30,314 million and W1,957 million, respectively).

10.	Intangible Assets

(a)

The Company capitalizes expenditures related to development activities, such as expenditures incurred on designing, manufacturing and testing of products after those related activities meet the capitalization criteria of development costs including technical feasibility, future economic benefits and others. The balances of capitalized development costs as of March 31, 2018 and December 31, 2017, are W316,914 million and W296,760 million, respectively.

(b)

122

11.	Financial Liabilities

(a)

Financial liabilities as of March 31, 2018 and December 31, 2017 are as follows:


(In millions of won)	March 31, 2018		December 31, 2017
Current
Current portion of long-term borrowings and bonds	W	1,478,132		1,058,985
Current portion of Payment guarantee liabilities		2,153		1,750

	W	1,480,285		1,060,735

Non-current
Won denominated borrowings	W	1,701,096		1,251,258
Foreign currency denominated borrowings		149,310		401,775
Bonds		1,894,864		1,506,003
Payment guarantee liabilities		7,073		6,377

	W	3,752,343		3,165,413

(b)

Won denominated long-term borrowings as of March 31, 2018 and December 31, 2017 are as follows:


(In millions of won)
Lender	Annual interest rate as of March 31, 2018 (%)	March 31, 2018			December 31, 2017
Woori Bank	3-year Korean Treasury Bond rate - 1.25, 2.75	W	1,753			1,922
Shinhan Bank	CD rate (91days) + 0.30		200,000			200,000
Korea Development Bank and others	CD rate (91days) + 0.64~0.74, 2.28~3.25		2,050,000			1,250,000
Less current portion of long-term borrowings			(550,657	)		(200,664	)

		W	1,701,096			1,251,258

(c)

Foreign currency denominated long-term borrowings as of March 31, 2018 and December 31, 2017 are as follows:


(In millions of won and USD)
Lender	Annual interest rate as of *March 31, 2018 (%)()**	March 31, 2018			December 31, 2017
The Export-Import Bank of Korea and Others	3ML+0.55 ~1.04	W	751,883			755,337

Foreign currency equivalent		USD	705		USD	705

Less current portion of long-term borrowings			(602,573	)		(353,562	)

		W	149,310			401,775

(*)	ML represents Month LIBOR (London Inter-Bank Offered Rates)

123

11.	Financial Liabilities, Continued

(d)

Details of bonds issued and outstanding as of March 31, 2018 and December 31, 2017 are as follows:


(In millions of won)
	Maturity	Annual interest rate as of March 31, 2018 (%)		March 31, 2018			December 31, 2017
*Won denominated bonds()**
Publicly issued bonds	May 2018 ~ February 2023		1.73~3.73	W	2,225,000			2,015,000
Less discount on bonds					(5,234	)		(4,238	)
Less current portion					(324,902	)		(504,759	)

				W	1,894,864			1,506,003

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

124

12.	Employee Benefits

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

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

(a)

Net defined benefit liabilities recognized as of March 31, 2018 and December 31, 2017 are as follows:


(In millions of won)	March 31, 2018			December 31, 2017
Present value of partially funded defined benefit obligations	W	1,593,210			1,560,525
Fair value of plan assets		(1,443,253	)		(1,465,990	)

	W	149,957			94,535

(b)

Expenses recognized in profit or loss for the three-month periods ended March 31, 2018 and 2017 are as follows:


(In millions of won)
	2018		2017
Current service cost	W	51,109		48,615
Net interest cost		242		598

	W	51,351		49,213

(c)

Plan assets as of March 31, 2018 and December 31, 2017 are as follows:


(In millions of won)
	March 31, 2018		December 31, 2017
Guaranteed deposits in banks	W	1,443,253		1,465,990

As of March 31, 2018, the Company maintains the plan assets primarily with Mirae Asset Daewoo Co., Ltd., Shinhan Bank and others.

(d)

Remeasurements of the net defined benefit liabilities (assets) included in other comprehensive income (loss) for the three-month periods ended March 31, 2018 and 2017 are as follows:


(In millions of won)	2018			2017
Remeasurements of the net defined benefit liabilities	W	(6,419	)		(4,725	)
Tax effect		2,296			1,143

Remeasurements of the net defined benefit liabilities, net of income tax	W	(4,123	)		(3,582	)

125

13.	Provisions and Other Liabilities

(a)

Changes in provisions for the three-month period ended March 31, 2018 are as follows:


(In millions of won)
	Litigations and claims		*Warranties ()**			Others			Total
Balance at January 1, 2018	W	43		100,119			1,835			101,997
Adjustment from adoption of K-IFRS 1115		—		—			9,789			9,789
Additions (reversals)		—		29,340			(3,834	)		25,506
Usage		—		(42,956	)		—			(42,956	)

Balance at March 31, 2018	W	43		86,503			7,790			94,336

Current	W	43		63,868			7,790			71,701
Non-current	W	—		22,635			—			22,635

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

(b)

Other liabilities as of March 31, 2018 and December 31, 2017 are as follows:


(In millions of won)
	March 31, 2018		December 31, 2017
Current liabilities
Withholdings	W	26,375		23,948
Unearned revenues		7,916		9,566
Security deposits		3,230		—
Dividends payable		178,908		—

	W	216,429		33,514

Non-current liabilities
Long-term accrued expenses	W	75,191		66,956
Security deposits		2,545		—

	W	77,736		66,956

126

14.	Contingencies and Commitments

(a)

Legal Proceedings

Anti-trust litigations

Argos Limited and affiliated companies (“Argos”) filed a Notice of Claim against the Company and LG Display Taiwan Co., Ltd. in the High Court of Justice in London alleging infringement of Treaty on the Functioning of the European Union and Agreement on the European Economic Area. Prior to Argos’ filing of Particulars of Claim and service, the Company and LG Display Taiwan Co., Ltd. reached a settlement in principle with Argos in December 2017. The parties expect to execute a settlement agreement in 2018.

Others

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

(b)

Commitments

Factoring and securitization of accounts receivable

The Company has agreements with Korea Development Bank and several other banks for accounts receivable sales negotiating facilities of up to an aggregate of USD 1,743 million (W1,859,421 million) in connection with the Company’s export sales transactions with its subsidiaries. As of March 31, 2018, no short-term borrowings were outstanding in connection with these agreements. In connection with all of the contracts in this paragraph, the Company has sold its accounts receivable with recourse.

The Company has a credit facility agreement with Shinhan Bank and several other banks pursuant to which the Company could sell its accounts receivables up to an aggregate of W345,960 million in connection with its domestic and export sales transactions and, as of March 31, 2018, no accounts and notes receivable sold to Shinhan Bank were outstanding in connection with the agreement. In connection with the contract above, the Company has sold its accounts receivable without recourse.

Letters of credit

As of March 31, 2018, the Company has agreements in relation to the opening of letters of credit up to USD 30 million (W31,995 million) with KEB Hana Bank, USD 80 million (W85,320 million) with Bank of China and USD 50 million (W53,325 million) with Sumitomo Mitsui Banking Corporation.

Payment guarantees

The Company provides a payment guarantee in connection with the term loan credit facilities of LG Display Vietnam Haiphong, Co., Ltd. amounting to USD 595 million (W634,568 million) for principals.

In addition, the Company obtained payment guarantees amounting to USD 900 million (W959,850 million) from KEB Hana Bank and others for advances received related to the long-term supply agreements and USD 8.5 million (W9,065 million) from Shinhan bank for value added tax payments in Poland.

127

14.	Contingencies and Commitments, Continued

License agreements

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

Long-term supply agreement

As of March 31, 2018, in connection with long-term supply agreements with customers, the Company recognized USD 900 million (W959,850 million) in advances received. The advances received will be offset against outstanding accounts receivable balances after a given period of time, as well as those arising from the supply of products thereafter. The Company received payment guarantees amounting to USD 900 million (W959,850 million) from KEB Hana Bank and other various banks relating to advances received.

15.	Share capital

The Company is authorized to issue 500,000,000 shares of capital stock (par value W 5,000), and as of March 31, 2018 and December 31, 2017, the number of issued common shares is 357,815,700. There have been no changes in the capital stock from January 1, 2017 to March 31, 2018.

16.

Revenue

Details of revenue for the three-month periods ended March 31, 2018 and 2017 are as follows:


(In millions of won)
	2018		2017
Sales of goods	W	5,144,426		6,528,896
Royalties		3,726		4,600
Others		6,109		9,451

	W	5,154,261		6,542,947

128

17.	The Nature of Expenses and Others

The classification of expenses by nature for the three-month periods ended March 31, 2018 and 2017 are as follows:


(In millions of won)
	2018		2017
Changes in inventories	W	32,189		100,076
Purchases of raw materials, merchandise and others		1,986,586		2,362,566
Depreciation and amortization		573,450		490,619
Outsourcing fees		1,338,767		1,363,182
Labor costs		696,245		633,135
Supplies and others		191,168		208,206
Utility		179,812		169,395
Fees and commissions		140,527		117,361
Shipping costs		27,308		27,174
Advertising		14,929		44,489
Warranty expenses		29,340		68,177
Travel		24,024		16,487
Taxes and dues		15,772		12,396
Others		163,529		176,967

	W	5,413,646		5,790,230

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

129

18.	Selling and Administrative Expenses

Details

of selling and administrative expenses for the three-month periods ended March 31, 2018 and 2017 are as follows:


(In millions of won)
	2018		2017
Salaries	W	62,795		53,096
Expenses related to defined benefit plans		7,034		6,555
Other employee benefits		12,081		14,648
Shipping costs		20,554		21,626
Fees and commissions		27,365		30,973
Depreciation		26,424		22,725
Taxes and dues		793		314
Advertising		14,929		44,489
Warranty expenses		29,340		68,177
Rent		2,638		2,507
Insurance		1,535		1,361
Travel		4,550		4,559
Training		2,201		3,167
Others		11,629		10,510

	W	223,868		284,707

19.	Personnel Expenses

Details

of personnel expenses for the three-month periods ended March 31, 2018 and 2017 are as follows:


(In millions of won)
	2018		2017
Salaries and wages	W	598,556		535,368
Other employee benefits		92,072		77,293
Contributions to National Pension plan		18,807		17,917
Expenses related to defined benefit plan		51,351		49,213

	W	760,786		679,791

130

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

(a)

Details of other non-operating income for the three-month periods ended March 31, 2018 and 2017 are as follows:


(In millions of won)
	2018		2017
Foreign currency gain	W	100,719		269,086
Gain on disposal of property, plant and equipment		13,715		30,314
Gain on disposal of intangible assets		239		—
Reversal of impairment loss on intangible assets		130		—
Rental income		448		869
Others		1,753		3,892

	W	117,004		304,161

(b)

Details of other non-operating expenses for the three-month periods ended March 31, 2018 and 2017 are as follows:


(In millions of won)
	2018		2017
Foreign currency loss	W	106,651		483,257
Loss on disposal of property, plant and equipment		3,826		1,957
Impairment loss on intangible assets		37		1,689
Donations		1,850		2,364
Other bad debt expense		4		46
Expenses related to legal proceedings or claims and others		47		238

	W	112,415		489,551

131

21.	Finance Income and Finance Costs

(a)

Finance income and costs recognized in profit and loss for the three-month periods ended March 31, 2018 and 2017 are as follows:


(In millions of won)
	2018		2017
Finance income
Interest income	W	4,783		6,038
Dividend income		95,553		8,639
Foreign currency gain		4,807		87,210
Gain on disposal of investments		—		5,083
Gain on transaction of derivatives		36		—
Gain on valuation of derivatives		—		798
Others		516		—

	W	105,695		107,768

Finance costs
Interest expense	W	10,987		15,922
Foreign currency loss		4,966		16,470
Loss on transaction of derivatives		38		101
Loss on valuation of derivatives		242		—
Others		677		350

	W	16,910		32,843

132

22.	Income Taxes

(a)

Details of income tax expense for the three-month periods ended March 31, 2018 and 2017 are as follows:


(In millions of won)
	2018			2017
Current tax expense	W	(9,304	)		96,105
Deferred tax expense (benefit)		(70,579	)		38,329

Income tax expense (benefit)	W	(79,883	)		134,434

(b)

Deferred Tax Assets and Liabilities

Deferred tax assets and liabilities as of March 31, 2018 and December 31, 2017 are attributable to the following:


(In millions of won)	Assets				Liabilities						Total
	March 31, 2018		December 31, 2017		March 31, 2018			December 31, 2017			March 31, 2018			December 31, 2017
Other accounts receivable, net	W	—		—		(816	)		(1,378	)		(816	)		(1,378	)
Inventories, net		33,282		30,688		—			—			33,282			30,688
Defined benefit liabilities, net		18,232		2,375		—			—			18,232			2,375
Accrued expenses		106,786		179,112		—			—			106,786			179,112
Property, plant and equipment		179,672		206,900		—			—			179,672			206,900
Intangible assets		856		1,249		—			—			856			1,249
Provisions		23,371		27,018		—			—			23,371			27,018
Gain or loss on foreign currency translation, net		13		13		—			—			13			13
Others		11,714		12,345		—			—			11,714			12,345
Tax losses		104,339		—		—			—			104,339			—
Tax credit carryforwards		322,674		268,926		—			—			322,674			268,926

Deferred tax assets (liabilities)	W	800,939		728,626		(816	)		(1,378	)		800,123			727,248

Statutory tax rate applicable to the Company was 24.2% for the year ended December 31, 2017. During the year-ended December 31, 2017, certain amendments to income tax rules in Korea were enacted and effective on January 1, 2018 that resulted in application of 27.5% for taxable income in excess of W300,000 million. Deferred taxes as of December 31, 2017 and March 31, 2018 have been measured using the applicable tax rates from the amendment.

133

23.	Earnings (Loss) Per Share

(a)

Basic earnings (loss) per share for the three-month periods ended March 31, 2018 and 2017 are as follows:


(In won and No. of shares)	2018			2017
Profit (Loss) for the period	W	(80,364,446,331	)		514,111,732,552
Weighted-average number of common stocks outstanding		357,815,700			357,815,700

Earnings (Loss) per share	W	(225	)		1,437

For the three-month periods ended March 31, 2018 and 2017, there were no events or transactions that resulted in changes in the number of common stocks used for calculating earnings (loss) per share.

(b)

Diluted earnings (loss) per share for the three-month periods ended March 31, 2018 and 2017 are not calculated since there was no potential common stock.

134

24.	Financial Risk Management

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

(a)

Market risk

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

(i)

Currency risk

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

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

Exposure to currency risk

The Company’s exposure to foreign currency risk based on notional amounts as of March 31, 2018 and December 31, 2017 is as follows:


(In millions)	March 31, 2018
	USD			JPY			CNY			PLN			EUR
Cash and cash equivalents		118			658			—			2			—
Trade accounts and notes receivable		3,138			3,050			—			—			—
Non-trade receivable		80			788			3,358			—			1
Trade accounts and notes payable		(1,196	)		(12,162	)		—			—			—
Other accounts payable		(97	)		(14,768	)		(733	)		(10	)		(1	)
Debt		(705	)		—			—			—			—

Net exposure		1,338			(22,434	)		2,625			(8	)		—

135

24.	Financial Risk Management, Continued


(In millions)	December 31, 2017
	USD			JPY			CNY			PLN			EUR
Cash and cash equivalents		482			77			—			2			—
Trade accounts and notes receivable		3,840			1,960			—			—			—
Non-trade receivable		73			1,674			1,085			—			9
Trade accounts and notes payable		(1,337	)		(13,659	)		—			—			—
Other accounts payable		(170	)		(12,582	)		(1,059	)		(10	)		(2	)
Debt		(705	)		—			—			—			—

Net exposure		2,183			(22,530	)		26			(8	)		7

Average exchange rates applied for the three-month periods ended March 31, 2018 and 2017 and the exchange rates at March 31, 2018 and December 31, 2017 are as follows:


(In won)	Average rate				Reporting date spot rate
	2018		2017		March 31, 2018		December 31, 2017
USD	W	1,072.66		1,154.65		1,066.50		1,071.40
JPY		9.90		10.15		10.01		9.49
CNY		168.62		168.15		169.68		163.65
PLN		315.20		284.48		311.79		306.07
EUR		1,317.33		1,230.16		1,311.95		1,279.25

136

24.	Financial Risk Management, Continued

ii)

Sensitivity analysis

A weaker won, as indicated below, against the following currencies which comprise the Company’s assets or liabilities denominated in foreign currency as of March 31, 2018 and December 31, 2017, would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Company considers to be reasonably possible as of the end of reporting period. The analysis assumes that all other variables, in particular interest rates, would remain constant. The changes in equity and profit or loss would have been as follows:


(In millions of won)	March 31, 2018						December 31, 2017
	Equity			Profit or loss			Equity			Profit or loss
USD (5 percent weakening)	W	51,728			51,728			88,643			88,643
JPY (5 percent weakening)		(8,144	)		(8,144	)		(8,104	)		(8,104	)
CNY (5 percent weakening)		16,146			16,146			161			161
PLN (5 percent weakening)		(90	)		(90	)		(93	)		(93	)
EUR (5 percent weakening)		—			—			339			339

137

24.	Financial Risk Management, Continued

(ii)

Interest rate risk

Interest rate risk arises principally from the Company’s debentures and borrowings. The Company establishes and applies its policy to reduce uncertainty arising from fluctuations in the interest rate and to minimize finance cost and manages interest rate risk by monitoring of trends of fluctuations in interest rate and establishing plan for countermeasures.

Profile

The interest rate profile of the Company’s interest-bearing financial instruments as of March 31, 2018 and December 31, 2017 is as follows:


(In millions of won)	March 31, 2018			December 31, 2017
Fixed rate instruments
Financial assets	W	812,186			1,147,340
Financial liabilities		(3,971,512	)		(2,962,671	)

	W	(3,159,326	)		(1,815,331	)

Variable rate instruments
Financial liabilities	W	(1,251,890	)		(1,255,350	)

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
March 31, 2018
Variable rate instruments(*)	W	(6,539	)		6,539		(6,539	)		6,539
December 31, 2017
Variable rate instruments(*)	W	(6,863	)		6,863		(6,863	)		6,863

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

138

24.	Financial Risk Management, Continued

(b)

Credit risk

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

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

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

In relation to the impairment of financial assets, the Company recognizes expected credit loss and its changes at each reporting date subsequent to initial recognition of financial asset according to an expected credit loss impairment model.

The Company does not establish allowances for receivables under insurance or receivables from customers with a high credit rating. Trade accounts and notes receivables are insured in order to manage credit risk and uninsured trade accounts and notes receivables are managed in accordance with the Company’s management policy.

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

139

24.	Financial Risk Management, Continued

As of March 31, 2018


(In millions of won)	March 31, 2018
	Carrying amounts
Financial Assets Carried at Amortized Cost
Cash and cash equivalents	W	434,823
Deposits in banks		377,211
Trade accounts and notes receivable		3,769,860
Non-trade receivable		704,604
Accrued income		4,301
Deposits		13,757
Short-term loans		11,701
Long-term loans		37,297
Long-term non-trade receivable		7,256

Sub-Total		5,360,810
Financial Assets at Fair Value through Profit or Loss
Convertible bonds		1,552
Derivatives		600

Sub-Total		2,152
Financial Assets at Fair Value through Other Comprehensive Income
Debt instrument		163

Total		5,363,125

(*)	Excluded from disclosures as the carrying amount approximates fair value.

ii)

As of December 31, 2017


(In millions of won)	December 31, 2017
	Carrying amounts
Cash and cash equivalents	W	566,408
Deposits in banks		580,781
Trade accounts and notes receivable		4,673,570
Non-trade receivable		678,454
Accrued income		8,655
Available-for-sale financial assets		162
Financial assets at fair value through profit or loss		1,552
Deposits		13,638
Short-term loans		13,493
Long-term loans		30,772
Long-term non-trade receivable		15,115
Derivatives		842

Total		6,583,442

In addition to the financial assets above, as of March 31, 2018, the Company provides a payment guarantee of USD 595 million (W634,568 million), for its subsidiary.

140

24.	Financial Risk Management, Continued

(c)

Liquidity risk

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

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

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


(In millions of won)			Contractual cash flows
	Carrying amount		Total		6 months or less		6-12 months		1-2 years		2-5 years		More than 5 years
Non-derivative financial liabilities
Unsecured bank borrowings	W	3,003,636		3,187,977		361,140		867,529		271,090		1,659,716		28,502
Unsecured bond issues		2,219,766		2,365,526		236,301		139,176		599,441		1,390,608		—
Trade accounts and notes payable		2,507,732		2,507,732		2,507,732		—		—		—		—
Other accounts payable		2,816,545		2,816,545		2,816,545		—		—		—		—
Payment guarantee(*)		9,226		702,639		8,991		25,281		49,985		515,140		103,242
Security deposits		5,775		5,775		3,145		85		2,545		—		—

	W	10,562,680		11,586,194		5,933,854		1,032,071		923,061		3,565,464		131,744

(*)	Contractual cash flows of payment guarantee is identical to timing of principal payment and represent the maximum amount that the Company could be required to pay the guarantee amount.

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

141

24.	Financial Risk Management, Continued

(d)

Capital management


(In millions of won)
	March 31, 2018			December 31, 2017
Total liabilities	W	12,587,679			11,580,156
Total equity		13,565,864			13,829,259
Cash and deposits in banks (*1)		812,023			1,147,178
Borrowings (including bonds)		5,223,402			4,218,021
Total liabilities to equity ratio		93	%		84	%
Net borrowings to equity ratio (*2)		33	%		22	%

(*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) less cash and current deposits in banks by total equity.

142

24.	Financial Risk Management, Continued

(e)

Determination of fair value

(i)

Measurement of fair value

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

Current Assets and Liabilities

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

ii)

Trade Receivables and Other Receivables

iii)

Investments in Equity and Debt Instruments

Marketable financial assets at fair value through profit or loss and at fair value through other comprehensive income are determined by reference to their quoted closing bid price at the reporting date. The fair value of non-marketable instruments is determined using valuation methods.

iv)

Non-derivative Financial Liabilities

143

24.	Financial Risk Management, Continued

(ii)

Fair values versus carrying amounts

The fair values of financial assets and liabilities, together with the carrying amounts shown in the condensed separate interim statements of financial position as of March 31, 2018 and December 31, 2017 are as follows:

As of March 31, 2018


(In millions of won)
	March 31, 2018
	Carrying amounts		Fair Values
Financial Assets Carried at Amortized Cost
Cash and cash equivalents	W	434,823		(*	)
Deposits in banks		377,211		(*	)
Trade accounts and notes receivable		3,769,860		(*	)
Non-trade receivable		704,604		(*	)
Accrued income		4,301		(*	)
Deposits		13,757		(*	)
Short-term loans		11,701		(*	)
Long-term loans		37,297		(*	)
Long-term non-trade receivable		7,256		(*	)
Financial Assets at Fair Value through Profit or Loss
Equity instrument	W	2,697		2,697
Convertible bonds		1,552		1,552
Derivatives		600		600
Financial Assets at Fair Value through Other Comprehensive Income
Debt instrument	W	163		163
Liabilities carried at amortized cost
Unsecured bank borrowings		3,003,636		3,014,852
Unsecured bond issues		2,219,766		2,225,927
Trade accounts and notes payable		2,507,732		(*	)
Other accounts payable		2,816,545		2,816,678
Long-term other accounts payable		9,226		(*	)
Security deposits		5,775		(*	)

(*)	Excluded from disclosures as the carrying amount approximates fair value.

144

24.	Financial Risk Management, Continued

ii)

As of December 31, 2017


(In millions of won)
	December 31, 2017
	Carrying amounts		Fair Values
Assets carried at fair value
Available-for-sale financial assets	W	162		162
Financial asset at fair value through profit or loss		1,552		1,552
Derivatives		842		842
Assets carried at amortized cost
Cash and cash equivalents	W	566,408		(*	)
Deposits in banks		580,781		(*	)
Trade accounts and notes receivable		4,673,570		(*	)
Non-trade receivable		678,454		(*	)
Accrued income		8,655		(*	)
Deposits		13,638		(*	)
Short-term loans		13,493		(*	)
Long-term loans		30,772		(*	)
Long-term non-trade receivable		15,115		(*	)
Liabilities carried at amortized cost
Unsecured bank borrowings	W	2,207,259		2,212,474
Unsecured bond issues		2,010,762		2,016,086
Trade accounts and notes payable		2,391,493		(*	)
Other accounts payable		2,701,823		2,702,033
Long-term other accounts payable		8,127		(*	)

(*)	Excluded from disclosures as the carrying amount approximates fair value.

145

24.	Financial Risk Management, Continued

(iii)

Fair values of financial assets and liabilities

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

146

24.	Financial Risk Management, Continued

ii)

Financial instruments measured at fair value

Fair value hierarchy classifications of the financial instruments that are measured at fair value as of March 31, 2018 and December 31, 2017 are as follows:


(In millions of won)	Level 1		Level 2		Level 3		Total
March 31, 2018
Financial Asset at Fair Value through Profit or Loss
Equity instrument	W	—		—		2,697		2,697
Convertible bonds		—		—		1,552		1,552
Derivatives		—		—		600		600
Financial Asset at Fair Value through Other Comprehensive Income
Debt instrument		163		—		—		163

(In millions of won)	Level 1		Level 2		Level 3		Total
December 31, 2017
Available-for-sale financial assets	W	162		—		—		162
Financial assets at fair value through profit or loss		—		—		1,552		1,552
Derivatives		—		—		842		842

147

24.	Financial Risk Management, Continued

iii)

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

(In millions of won)

March 31, 2018

Valuation
technique

Input

Classification

Level 1

Level 2

Level 3

Liabilities

Unsecured bank borrowings

—

3,014,852

Discounted
cash flow

Discount rate

Unsecured bond issues

—

2,225,927

Discounted
cash flow

Discount rate

Other accounts payable

—

2,816,678

Discounted
cash flow

Discount rate

(In millions of won)

December 31, 2017

Valuation
technique

Input

Classification

Level 1

Level 2

Level 3

Liabilities

Unsecured bank borrowings

—

2,212,474

Discounted
cash flow

Discount rate

Unsecured bond issues

—

2,016,086

Discounted
cash flow

Discount rate

Other accounts payable

—

2,702,033

Discounted
cash flow

Discount rate

iv)

The interest rates applied for determination of the above fair value as of March 31, 2018 and December 31, 2017 are as follows:


	March 31, 2018	December 31, 2017
Debentures, loans and others	1.52~2.95%	1.57~2.92%

148

25.	Changes in liabilities arising from financing activities

Changes in liabilities arising from financing activities for the three-month period ended March 31, 2018 are as follows:


(In millions of won)						Non-cash transactions
	January 1, 2018		Cash flows from financing activities			Dividends declared		Reclassification			Exchange rate effect			Effective interest adjustment		Others		March 31, 2018
Current portion of long-term borrowings and bonds	W	1,058,985		(180,169	)		—		601,942			(2,769	)		143		—		1,478,132
Payment Guarantee		8,127		519			—		—			—			—		580		9,226
Long-term borrowings		1,653,033		800,000			—		(601,942	)		(685	)		—		—		1,850,406
Bonds		1,506,003		388,447			—		—			—			414		—		1,894,864
Dividends payable		—		—			178,908		—			—			—		—		178,908

	W	4,226,148		1,008,797			178,908		—			(3,454	)		557		580		5,411,536

149

26.	Related Parties and Others

(a)

Related parties

Related parties as of March 31, 2018 are as follows:


Classification		Description
Subsidiaries(*)		LG Display America, Inc. and others
Associates(*)		Paju Electric Glass Co., Ltd. and others
Subsidiaries of Associates		AVATEC Electronics Yantai Co., Ltd. and others
Entity that has significant influence over the Company		LG Electronics Inc.
Subsidiaries of the entity that has significant influence over the Company		Subsidiaries of LG Electronics Inc.

(*)	Details of subsidiaries and associates are described in note 8.

150

26.	Related Parties and Others, Continued

(b)


(In millions of won)	2018
					Purchase and others
	Sales and others		Dividend income		Purchase of raw material and others		Acquisition of property, plant and equipment		Outsourcing fees		Other costs
Subsidiaries
LG Display America, Inc.	W	2,148,447		—		—		—		—		—
LG Display Japan Co., Ltd.		436,684		—		—		—		—		2,151
LG Display Germany GmbH		425,156		—		—		—		—		329
LG Display Taiwan Co., Ltd.		341,212		—		—		—		—		171
LG Display Nanjing Co., Ltd.		4,865		—		268		—		262,288		1,385
LG Display Shanghai Co., Ltd.		223,520		—		—		—		—		10
LG Display Poland Sp. z o.o.		141		—		—		—		9,589		2
LG Display Guangzhou Co., Ltd.		5,449		—		2,579		—		441,631		3,468
LG Display Shenzhen Co., Ltd.		388,276		—		—		—		—		—
LG Display Yantai Co., Ltd.		7,659		—		5,480		—		395,945		5,543
LG Display (China) Co., Ltd.		—		90,281		359,221		—		—		424
LG Display Singapore Pte. Ltd.		194,264		—		—		—		—		13
L&T Display Technology (Fujian) Limited		82,017		—		—		—		8		5
Nanumnuri Co., Ltd.		45		—		—		—		—		6,123
Global OLED Technology LLC		—		—		—		—		—		1,494
LG Display Guangzhou Trading Co., Ltd.		89,520		—		—		—		—		—
LG Display Vietnam Haiphong Co., Ltd.		35,740		—		4,165		—		111,669		69
Suzhou Lehui Display Co., Ltd.		35,723		—		—		—		—		—

	W	4,418,718		90,281		371,713		—		1,221,130		21,187

151

26.	Related Parties and Others, Continued


(In millions of won)	2018
					Purchase and others
	Sales and others		Dividend income		Purchase of raw material and others		Acquisition of property, plant and equipment		Outsourcing fees		Other costs
Associates and their subsidiaries
WooRee E&L Co., Ltd.		—		—		—		—		—		47
INVENIA Co., Ltd.		—		30		270		7,749		—		72
AVATEC Co., Ltd.		—		530		—		—		17,773		119
Paju Electric Glass Co., Ltd.		—		4,172		92,497		—		—		920
LB Gemini New Growth Fund No.16		—		540		—		—		—		—
YAS Co., Ltd.		—		—		760		12,417		—		794

	W	—		5,272		93,527		20,166		17,773		1,952

Entity that has significant influence over the Company
LG Electronics Inc.	W	361,044		—		10,186		152,490		—		17,466
Subsidiaries of the entity that has significant influence over the Company
LG Electronics India Pvt. Ltd.	W	8,355		—		—		—		—		13
LG Electronics Vietnam Haiphong Co., Ltd.		32,988		—		—		—		—		2
LG Electronics Reynosa S.A. DE C.V.		4,843		—		—		—		—		898
LG Electronics Almaty Kazakhstan		2,425		—		—		—		—		8
LG Electronics S.A. (Pty) Ltd		2,397		—		—		—		—		2
LG Electronics Mexicalli S.A.DE C.V.		1,281		—		—		—		—		54
LG Electronics RUS, LLC		603		—		—		—		—		320

152

26. Related Parties and Others, Continued


(In millions of won)	2018
					Purchase and others
	Sales and others		Dividend income		Purchase of raw material and others		Acquisition of property, plant and equipment		Outsourcing fees		Other costs
Subsidiaries of the entity that has significant influence over the Company
LG Innotek Co., Ltd.	W	6,950		—		34,626		—		—		11,082
LG Hitachi Water Solutions Co., Ltd.		—		—		—		117,814		—		491
Inspur LG Digital Mobile Communications Co., Ltd.		12,177		—		—		—		—		—
Qingdao LG Inspur Digital Communication Co., Ltd.		7,656		—		—		—		—		—
HiEntech Co., Ltd.		—		—		—		—		—		7,935
Others		730		—		—		—		—		1,913

	W	80,405		—		34,626		117,814		—		22,718

	W	4,860,167		95,553		510,052		290,470		1,238,903		63,323

153

26.	Related Parties and Others, Continued


(In millions of won)	2017
					Purchase and others
	Sales and others		Dividend income		Purchase of raw material and others		Acquisition of property, plant and equipment		Outsourcing fees		Other costs
Subsidiaries
LG Display America, Inc.	W	2,771,857		—		—		—		—		—
LG Display Japan Co., Ltd.		564,061		—		—		—		—		12
LG Display Germany GmbH		518,689		—		—		—		—		8,913
LG Display Taiwan Co., Ltd.		410,048		—		—		—		—		351
LG Display Nanjing Co., Ltd.		3,509		—		—		—		116,663		—
LG Display Shanghai Co., Ltd.		335,235		—		—		—		—		25
LG Display Poland Sp. z o.o.		1,746		—		—		—		8,408		31
LG Display Guangzhou Co., Ltd.		18,436		—		1,831		—		599,453		2,803
LG Display Shenzhen Co., Ltd.		427,984		—		—		—		—		1
LG Display Yantai Co., Ltd.		6,292		—		4,594		—		528,656		9,099
LG Display (China) Co., Ltd.		11,823		—		—		—		216,106		—
LG Display Singapore Pte. Ltd.		293,412		—		—		—		—		3
L&T Display Technology (Fujian) Limited		103,199		—		—		—		12		295
Nanumnuri Co., Ltd.		24		—		—		—		—		4,620
Global OLED Technology LLC		—		—		—		—		—		1,477
LG Display Guangzhou Trading Co., Ltd.		140,155		—		—		—		—		—
LG Display Vietnam Haiphong Co., Ltd.		112		—		—		—		—		—
Suzhou Lehui Display Co., Ltd.		51,214		—		—		—		—		—

	W	5,657,796		—		6,425		—		1,469,298		27,630

154

26.	Related Parties and Others, Continued


(In millions of won)	2017
					Purchase and others
	Sales and others		Dividend income		Purchase of raw material and others		Acquisition of property, plant and equipment		Outsourcing fees		Other costs
Associates and their subsidiaries
New Optics Ltd.(*)	W	1		—		—		—		4		6
WooRee E&L Co., Ltd.		—		—		—		—		—		76
INVENIA Co., Ltd.		—		—		454		2,758		—		111
AVATEC Co., Ltd.		—		530		—		—		19,816		251
Paju Electric Glass Co., Ltd.		—		8,109		98,763		—		—		1,097
Narenanotech Corporation(*)		—		—		226		10,453		—		169
YAS Co., Ltd.		—		—		829		19,208		—		392

	W	1		8,639		100,272		32,419		19,820		2,102

Entity that has significant influence over the Company
LG Electronics Inc.	W	472,705		—		7,046		186,346		—		35,053
Subsidiaries of the entity that has significant influence over the Company
LG Electronics India Pvt. Ltd.	W	22,276		—		—		—		—		29
LG Electronics Vietnam Haiphong Co., Ltd.		52,956		—		—		—		—		37
LG Electronics Reynosa S.A. DE C.V.		36,801		—		—		—		—		325
LG Electronics Almaty Kazakhstan		4,043		—		—		—		—		—
LG Electronics S.A. (Pty) Ltd		5,182		—		—		—		—		3
LG Electronics Mexicalli S.A.DE C.V.		14,190		—		—		—		—		51
LG Electronics RUS, LLC		1,283		—		—		—		—		286

155

26.	Related Parties and Others, Continued


(In millions of won)	2017
					Purchase and others
	Sales and others		Dividend income		Purchase of raw material and others		Acquisition of property, plant and equipment		Outsourcing fees		Other costs
Subsidiaries of the entity that has significant influence over the Company
LG Innotek Co., Ltd.	W	4,274		—		41,118		—		—		3,143
LG Hitachi Water Solutions Co., Ltd.		—		—		—		26,898		—		—
Inspur LG Digital Mobile Communications Co., Ltd.		39,544		—		—		—		—		—
Qingdao LG Inspur Digital Communication Co., Ltd.		15,634		—		—		—		—		—
HiEntech Co., Ltd.		—		—		—		—		—		6,982
Others		1,589		—		3		—		—		1,713

	W	197,772		—		41,121		26,898		—		12,569

	W	6,328,274		8,639		154,864		245,663		1,489,118		77,354

(*)	Represents transactions occurred prior to disposal of the entire investments.

156

26. Related Parties and Others, Continued

(c)

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


(In millions of won)
	Trade accounts and notes receivable and others				Trade accounts and notes payable and others
	March 31, 2018		December 31, 2017		March 31, 2018		December 31, 2017
Subsidiaries
LG Display America, Inc.	W	1,264,899		1,795,757		—		—
LG Display Japan Co., Ltd.		232,634		230,804		4		2
LG Display Germany GmbH		358,991		497,677		3		—
LG Display Taiwan Co., Ltd.		493,476		436,943		98		106
LG Display Nanjing Co., Ltd.		4,792		176		164,908		85,646
LG Display Shanghai Co., Ltd.		149,239		176,816		1		74
LG Display Poland Sp. z o.o.		136		73		6,375		5,480
LG Display Guangzhou Co., Ltd.		358,089		345,212		63,987		189,996
LG Display Guangzhou Trading Co., Ltd.		111,195		88,876		—		—
LG Display Shenzhen Co., Ltd.		97,444		217,542		—		—
LG Display Yantai Co., Ltd.		127,269		123,059		216,296		30,397
LG Display (China) Co., Ltd.		85,149		55,309		133,109		150,933
LG Display Singapore Pte. Ltd.		200,285		187,420		5		1
L&T Display Technology (Fujian) Limited		53,716		57,545		164,976		177,487
Nanumnuri Co., Ltd.		—		—		2,397		2,453
LG Display Vietnam Haiphong Co., Ltd.		44,482		9,119		138,042		58,666
Suzhou Lehui Display Co., Ltd.		22,608		21,110		27,783		36,919

	W	3,604,404		4,243,438		917,984		738,160

157

26.	Related Parties and Others, Continued


(In millions of won)
	Trade accounts and notes receivable and others				Trade accounts and notes payable and others
	March 31, 2018		December 31, 2017		March 31, 2018		December 31, 2017
Associates and their subsidiaries
WooRee E&L Co., Ltd.		—		—		52		61
INVENIA Co., Ltd.		2,280		2,375		8,817		18,523
AVATEC Co., Ltd.		530		—		4,682		2,949
Paju Electric Glass Co., Ltd.		—		—		64,375		60,141
YAS Co., Ltd.		250		375		16,700		6,474

	W	3,060		2,750		94,626		88,148

Entity that has significant influence over the Company
LG Electronics Inc.	W	400,849		550,101		202,405		206,616

158

26. Related Parties and Others, Continued


(In millions of won)
	Trade accounts and notes receivable and others				Trade accounts and notes payable and others
	March 31, 2018		December 31, 2017		March 31, 2018		December 31, 2017
Subsidiaries of the entity that has significant influence over the Company
LG Innotek Co., Ltd.	W	4,266		407		55,586		58,741
LG Hitachi Water Solutions Co., Ltd.		—		—		210,998		154,079
HiEntech Co., Ltd.		—		—		5,672		4,854
Inspur LG Digital Mobile Communications Co., Ltd.		12,111		20,953		—		—
LG Electronics Reynosa S.A. DE C.V.		3,948		11,494		154		82
LG Electronics India Pvt. Ltd.		5,751		3,030		5		—
LG Electronics Vietnam Haiphong Co., Ltd.		25,033		36,017		1		1
LG Electronics S.A. (Pty) Ltd		2,326		2,400		2		4
Qingdao LG Inspur Digital Communication Co., Ltd.		5,140		9		—		80
Others		3,911		18,385		1,139		1,309

	W	62,486		92,695		273,557		219,150

	W	4,070,799		4,888,984		1,488,572		1,252,074

159

26.	Related Parties and Others, Continued

(d)

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


(In millions of won)
	2018				2017
Associates	Loans		Collection of loans		Loans		Collection of loans
INVENIA Co., Ltd.	W	—		125		—		83
YAS Co., Ltd.		—		125		—		83

	W	—		250		—		166

160

26.	Related Parties and Others, Continued

(e)

Conglomerate Transactions

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


(In millions of won)	For the three-month period ended March 31, 2018				March 31, 2018
	Sales and others		Purchase and others		Trade accounts and notes receivable and others		Trade accounts and notes payable and others
LG International Corp.and its subsidiaries	W	184,257		264,777		131,321		191,030
LG Uplus Corp.		—		223		—		33
LG Chem Ltd. and its subsidiaries		1,564		193,552		6,067		114,821
Serveone Co., Ltd. and its subsidiaries		97		336,299		21,543		497,437
Silicon Works Co., Ltd.		—		143,295		—		148,397
LG Corp.		—		12,791		6,794		6,951
LG Management Development Institute		—		2,813		3,480		607
LG CNS Co., Ltd. and its subsidiaries		—		30,771		—		34,145
LG Hausys Ltd.		1,110		1		—		—
G2R Inc. and its subsidiaries		—		4,041		—		5,301

	W	187,028		988,563		169,205		998,722

161

26.	Related Parties and Others, Continued


(In millions of won)	For the three-month period ended March 31, 2017				December 31, 2017
	Sales and others		Purchase and others		Trade accounts and notes receivable and others		Trade accounts and notes payable and others
LG International Corp.and its subsidiaries	W	130,914		277,908		110,786		186,799
LG Household & Health Care, Ltd. and its subsidiaries		1		1		—		—
LG Uplus Corp.		51		185		—		1,505
LG Chem Ltd. and its subsidiaries		5		205,512		8,659		127,416
SK Siltron Co., Ltd. ( formerly, Siltron Co., Ltd.)(*)		10		—		—		—
Lusem Co., Ltd.(*)		5		499		1		53
Serveone Co., Ltd. and its subsidiaries		115		281,368		21,565		491,719
Silicon Works Co., Ltd.		—		147,017		—		120,031
LG Corp.		—		15,699		4,700		1,523
LG Management Development Institute		—		2,009		3,480		699
LG CNS Co., Ltd. and its subsidiaries		37		22,183		—		90,374
LG Hausys Ltd.		418		44		—		374
G2R Inc. and its subsidiaries		—		829		—		14,275

	W	131,556		953,254		149,191		1,034,768

(*)	Represents transactions occurred prior to disposal of the entire investments.

162

26.	Related Parties and Others, Continued

(f)

Key management personnel compensation

Compensation costs of key management for the three-month periods ended March 31, 2018 and 2017 are as follows:


(In millions of won)
	2018		2017
Short-term benefits	W	888		1,317
Expenses related to the defined benefit plan		273		93

	W	1,161		1,410

Key management refers to the registered directors who have significant control and responsibilities over the Company’s operations and business.

27.	Subsequent Event

(a)

In April 2018, the Company received advances from a customer amounting to USD 300 million (W320,670 million) in aggregate in connection with long-term supply agreements. The advances received will be offset against outstanding accounts receivable balances after a given period of time, as well as those arising from the sale of products thereafter. The Company received a payment guarantee from the Export-Import Bank of Korea amounting to USD 300 million (W320,670 million) relating to advances received.

(b)

In April 2018, LG Display Vietnam Haiphong, Co., Ltd. take out the term loan credit facilities, and the Company provides a payment guarantee in connection with that term loan amounting to USD 200 million (W214,740 million) for principals.

163

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	LG Display Co., Ltd.

	(Registrant)

Date: May 15, 2018	By:	/s/ Heeyeon Kim

		(Signature)

	Name:	Heeyeon Kim
	Title:	Head of IR / Vice President