LG Display (LPL) 6-K Current report (foreign)

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER

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

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of November 2020

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, 2020 to September 30, 2020)

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

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

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.	Credit rating	4
	C.	Capitalization	6
	D.	Voting rights (as of September 30, 2020)	6
	E.	Dividends	7
2.	Business		7
	A.	Business overview	7
	B.	Industry	8
	C.	New businesses	10
3.	Major Products and Raw Materials		10
	A.	Major products	10
	B.	Average selling price trend of major products	11
	C.	Major raw materials	11
4.	Production and Equipment		12
	A.	Production capacity and output	12
	B.	Production performance and utilization ratio	12
	C.	Investment plan	13
5.	Sales		13
	A.	Sales performance	13
	B.	Sales organization and sales route	13
	C.	Sales methods and sales terms	14
	D.	Sales strategy	14
	E.	Major customers	15
6.	Purchase Orders		15

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7.	Market Risks and Risk Management		15
	A.	Market risks	15
	B.	Risk management	15
8.	Derivative Contracts		15
	A.	Currency risks	15
	B.	Interest rate risks	16
9.	Major Contracts		16
10.	Research & Development		17
	A.	Summary of R&D-related expenditures	17
	B.	R&D achievements	17
11.	Intellectual Property		19
12.	Environmental and Safety Matters		19
13.	Financial Information		22
	A.	Financial highlights (Based on consolidated K-IFRS)	22
	B.	Financial highlights (Based on separate K-IFRS)	23
	C.	Consolidated subsidiaries as of September 30, 2020	24
	D.	Status of equity investments as of September 30, 2020	24
14.	Audit Information		26
	A.	Audit service	26
	B.	Non-audit service	26
15.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		26
16.	Board of Directors		26
	A.	Members of the board of directors	26
	B.	Committees of the board of directors	27
	C.	Independence of directors	27
17.	Information Regarding Shares		27
	A.	Total number of shares	27
	B.	Shareholder list	27
18.	Directors and Employees		28
	A.	Directors	28
	B.	Employees	29
19.	Other Matters		30
	A.	Legal proceedings	30
	B.	Material events subsequent to the reporting period	30
	C.	Material change in management	30

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

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1. Company

A. Name and contact information

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

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

B. Credit rating

(1) Corporate bonds (Domestic)

Subject instrument	Month of rating	Credit rating(1)	Rating agency (Rating range)
Corporate bonds	February 2018	AA	NICE Information Service Co., Ltd. (AAA ~ D)
	May 2018
	February 2019	AA-
	April 2019
	November 2019
	February 2020	A+
	June 2020
	May 2018	AA	Korea Investors Service, Inc. (AAA ~ D)
	February 2019	AA-
	June 2019
	October 2019
	February 2020	A+
	June 2020
	February 2018	AA	Korea Ratings Corporation (AAA ~ D)
	April 2018
	April 2019	AA-
	November 2019
	February 2020	A+
	May 2020

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

Subject instrument	Credit rating	Definition
Corporate bonds	AAA	Strongest capacity for timely repayment.
	AA+/AA/AA-	Very strong capacity for timely repayment. This capacity may, nevertheless, be slightly inferior than is the case for the highest rating category
	A+/A/A-	Strong capacity for timely repayment. This capacity may, nevertheless, be more vulnerable to adverse changes in circumstances or in economic conditions than is the case for higher rating categories.
	BBB+/BBB/BBB-	Capacity for timely repayment is adequate, but adverse changes in circumstances and in economic conditions are more likely to impair this capacity.
	BB+/BB/BB-	Capacity for timely repayment is currently adequate, but that there are some speculative characteristics that make the repayment uncertain over time.
	B+/B/B-	Lack of adequate capacity for repayment and speculative characteristics. Interest payment in time of unfavorable economic conditions is uncertain.
	CCC	Lack of capacity for even current repayment and high risk of default.
	CC	Greater uncertainties than higher ratings.
	C	High credit risk and lack of capacity for timely repayment.
	D	Insolvency.

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(2) Corporate bonds (Overseas)

Subject instrument	Month of rating	Credit rating(2)	Rating agency (Rating range)
Corporate bonds(1)	November 2018	AA	Standard & Poor’s Rating Services (AAA ~ D)

(2) Represents credit rating for our overseas corporate bonds guaranteed by the Korea Development Bank.

(3) Overseas corporate bond credit ratings are generally defined to indicate the following:

Subject instrument	Credit rating	Definition
Corporate bonds	AAA	Highest level of stability.
	AA+/AA/AA-	Very high level of stability. This stability may be slightly more risky than is the case for the highest rating category but presents no issues.
	A+/A/A-	High level of stability. There are no issues with repaying the principal, but there are characteristics that could be subject to future deterioration.
	BBB+/BBB/BBB-	Level of stability is adequate. Current level of stability and profitability is adequate, but requires special attention during times of economic downturns.
	BB+/BB/BB-	Speculative characteristics. There is no guarantee on future stability. Expected business performance is uncertain.
	B+/B/B-	Inadequate as an investment target. Ability to make principal repayments or comply with contractual terms and conditions is uncertain.
	CCC/CC/C	Very low level of stability. Ability to make payments of principal and interest is highly unlikely. Extremely speculative. Currently in default or undergoing a serious problem.
	D	Bankruptcy.

(3) Commercial paper

Subject instrument	Month of rating	Credit rating(1)	Rating agency (Rating range)
Commercial paper	May 2018	A1	Korea Investors Service, Inc. (A1 ~ D)
	May 2018	A1	NICE Information Service Co., Ltd. (A1 ~ D)
	November 2018	Cancelled(2)	Korea Investors Service, Inc. (A1 ~ D)
	November 2018	Cancelled(2)	NICE Information Service Co., Ltd. (A1 ~ D)

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(4) 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.

(5) Ratings have been cancelled due to repayment of our outstanding commercial paper on October 22, 2018 upon maturity.

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

C. Capitalization

(1) Change in capital stock (as of September 30, 2020)

There were no changes to our issued capital stock during the reporting period ended September 30, 2020.

(2) Convertible bonds (as of September 30, 2020)

Description	Issue Date		Maturity Date		Issue Amount (in Won)		Class of Shares Subject to Conversion		Conversion Period		Conditions for Conversion					Outstanding Bonds					Notes
											Conversion Ratio			Conversion Price		Issue Amount (in Won)			Number of Shares subject to conversion
Unsecured Foreign Convertible Bonds No. 3		Aug. 22, 2019		Aug. 22, 2024		813,426,670,000(1)(2)		Registered Common Shares		Aug. 23, 2020 ~ Aug. 12, 2024		100	%	W	19,845		813,426,670,000	(1)		40,988,998		Listed on Singapore Stock Exchange
Total		—		—		813,426,670,000		—		—		100	%	W	19,845		813,426,670,000			40,988,998		—

(6) The issue amount for Unsecured Foreign Convertible Bonds No. 3 is calculated based on the application of the mid-point of the relevant Won-US dollar exchange rates as of noon, July 30, 2019 (Korea Standard Time) quoted on Bloomberg, which wasW1,182.65 per U.S. dollar, to the actual issue amount of USD 687,800,000.

(7) The proceeds of our Unsecured Foreign Convertible Bonds No. 3 were used for general corporate purposes.

D. Voting rights (as of September 30, 2020)

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

(8) Authorized: 500,000,000 shares

E. Dividends

Dividends for the three most recent fiscal years

Description (unit)		2020 Q1~Q3			2019			2018
Par value (Won)			5,000			5,000			5,000
Profit (loss) for the year (million Won)(1)			(691,606	)		(2,829,705	)		(207,239	)
Earnings (loss) per share (Won)(2)			(1,838	)		(7,908	)		(579	)
Total cash dividend amount for the period (million Won)			—			—			—
Total stock dividend amount for the period (million Won)			—			—			—
Cash dividend payout ratio (%)(3)			—			—			—
Cash dividend yield (%)(4)	Common shares		—			—			—
	Preferred shares		—			—			—
Stock dividend yield (%)	Common shares		—			—			—
	Preferred shares		—			—			—
Cash dividend per share (Won)	Common shares		—			—			—
	Preferred shares		—			—			—
Stock dividend per share (share)	Common shares		—			—			—
	Preferred shares		—			—			—

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

(10) Earnings per share is based on par value ofW5,000 per share and is calculated by dividing net income by weighted average number of common shares.

(11) 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.

(12) 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

A. Business overview

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

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As of September 30, 2020, 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 September 30, 2020, 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.

Consolidated operating results highlights

	(Unit: In billions of Won)
	2020 Q1~Q3			2019			2018
Sales Revenue		16,769			23,476			24,337
Gross Profit		1,252			1,868			3,085
Operating Profit (loss)		(715	)		(1,359	)		93
Total Assets		35,497			35,575			33,176
Total Liabilities		23,323			23,086			18,289

B. Industry

(1) Industry characteristics

• From the supply perspective, the display panel industry is technology- and capital-intensive in nature and requires mass production through achieving an economy of scale.

• From the demand perspective, the display panel industry tends to demonstrate a high level of volatility depending on the global macroeconomic conditions, major regional sales events and/or seasonal factors.

• While the overall growth in the market for display panels for televisions in terms of quantity has become somewhat stagnant, there is emerging demand for premium products with high resolution and large-sized display panels in developed countries, while demand for lower-end products has sustained in developing countries.

• While the growth in the market for display panels for IT products, which include laptops, desktop monitors and tablet products, has slowed down or declined in terms of quantity, demand for high-end products has consistently sustained. In addition, there have been increased new opportunities from the demand side of IT products due to an expanding social tendency to avoid face-to-face contact resulting in increased instances of online classes and working from home in light of the COVID-19 pandemic.

• While the growth in the market for small- and medium-sized display panels, which is centered around smartphones, has somewhat slowed down, further growth is expected with the release of new products using plastic OLED panels and products that offer changes in form factors or new customer experiences such as foldable smartphones.

• As the scope of application of display panels gradually expand to products other than traditional IT devices, we also expect to see growth in the market for new and high value-added product segments such as display panels for industrial uses and automobiles.

(2) Growth Potential

• We are focusing on securing profitability through differentiated products such as “Cinematic Sound” OLED and “Wallpaper” display panels under our strategic plan to transition our business to center around OLED, which has a strong future growth potential. In the television business, we are expanding our offerings of premium products such as OLED and UHD products. In particular, with respect to large-sized OLED television display panels, we are continuing to secure additional production capacity of 8.5th generation OLED panels and are planning to further strengthen the fundamentals of our OLED business through building a successful line-up of new products and investments in the 8.5th and 10.5th generation OLED display panel production. In the IT business, we are increasing the proportion of premium products such as high resolution and wide screen products based on IPS and Oxide technologies. In the mobile business, we are continuously striving to secure mass production capabilities for 6th generation plastic OLED smartphones through additional investments. We are also strengthening the foundation for the expansion of small- and medium-sized OLED business.

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(3) 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.

(4) Market conditions

• Most display panel manufacturers are located in Asia as set forth below. Pursuant to the Chinese government’s initiative and support, Chinese panel manufacturers have continued to invest in new fabrication facilities and additional supplies, and the concern over intensification of a structural oversupply in the LCD industry continues to exist.

a. Korea: LG Display, Samsung Display, etc.

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

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

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

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

	2020 Q1~Q3			2019			2018
Panels for Televisions(1)(2)		21.4	%		28.1	%		28.3	%
Panels for Monitors(1)		24.5	%		27.5	%		30.7	%
Panels for Notebook and Tablet Computers(1)		21.7	%		23.0	%		25.8	%
Total(1)		21.9	%		27.2	%		28.8	%

(13) Source: Large-Area Display Market Tracker (OMDIA (formerly known as IHS Technology)). The relevant amounts for the first three quarters of 2020 reflect OMDIA Technology’s estimates only, as the actual results for such period have not yet been released.

(14) Includes panels for public displays.

(5) Competitiveness and competitive advantages

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

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• In order for us to compete effectively, it is critical to offer differentiated products that enable us to secure profit margins even during times of a mismatch in the market supply and demand, to maintain stable and long-term relationships with customers, and to be cost competitive.

• 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 WOLED/POLED, IPS, Oxide, 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 shown that we are technologically a step ahead of the competition by continuing to introduce differentiated products with a variety of unique features specific to OLED technology, such as our “Wallpaper,” “Cinematic Sound,” “Rollable” and “Transparent” large-sized OLED panels for televisions. Moreover, we have continually introduced differentiated plastic OLED products for smartphones, automotive products, wearable devices and foldable notebook computers, among others. With respect to TFT-LCD panels, we are leading the market with our competitive advantages in technology, including through our IPS and Oxide technology-based ultra-large and high-resolution ultra-high definition (“Ultra HD” or “UHD”) television panels, desktop and notebook monitors featuring differentiated designs and high frequency refresh rates, and specialized products for automotive, commercial and medical uses. Our production facilities are also equipped to produce products incorporating in-TOUCH technology.

• Moreover, we are maintaining and strengthening close long-term relationships with major global firms to secure customers and expand partnerships for technology development.

C. New businesses

For our continued growth, we are actively exploring and preparing for new business opportunities 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

A. Major products

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

(Unit: In billions of Won, except percentages)

2020 Q1~Q3

Business area

Sales type

Items (By product)

Usage

Major trademark

Sales Revenue

Percentages (%)

Display

Goods/ Products/ Services/ Other sales

Televisions

Panels for televisions

LG Display

4,580

27.31

%

Desktop monitors

Panels for monitors

LG Display

3,152

18.80

%

Notebook computers and tablet products

Panels for notebook computers and tablet products

LG Display

4,234

25.25

%

Mobile, etc.

Panels for smartphones, etc.

LG Display

4,802

28.64

%

Total

16,769

100.0

%

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B. Average selling price trend of major products

The average selling prices of display panels are subject to change based on market conditions and demand by product category. The average selling price of display panels per square meter of net display area shipped in the third quarter of 2020 increased by approximately 8% compared to the second quarter of 2020 in part due to an increase in sales of our IT products as a result of increased instances of online classes and working from home in light of the COVID-19 pandemic as well as an increase in the shipment of large-sized OLED and mobile POLED panels. There is no assurance that the average selling prices of display panels per square meter of net display area will not fluctuate in the future due to changes in market conditions.

(Unit: US$ / m²)

Period	Average Selling Price(1)(2) (in US$ / m2)
2020 Q3	706
2020 Q2	654
2020 Q1	567
2019 Q4	606
2019 Q3	513
2019 Q2	456
2019 Q1	528
2018 Q4	559
2018 Q3	500
2018 Q2	501
2018 Q1	522

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

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

C. 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	Printed circuit boards		Display panel manufacturing		1,921		21.8	%	Korea SMT Co., Ltd., etc.
			Polarizers				1,475		16.7	%	LG Chem, etc.
			Backlights				1,245		14.1	%	Heesung Electronics LTD., etc.
			Glass				615		7.0	%	Paju Electric Glass Co., Ltd., Asahi Electric Glass Co., Ltd., etc.
			Drive IC				802		9.1	%	Silicon Works Co., Ltd., MagnaChip Semiconductor Corporation, etc.
			Others				2,753		31.2	%	—
Total							8,811		100.0	%

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- Period: January 1, 2020 ~ September 30, 2020.

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

(18) Among our major suppliers, LG Chem and Silicon Works Co., Ltd. are member companies of the LG Group, and Paju Electric Glass Co., Ltd. is our affiliate.

• The average price of EGI (Electrolytic Galvanized Iron), which is the main raw material for BLU components, decreased by 8.6% from 2018 to 2019 and by 3.8% from 2019 to the third quarter of 2020. Such decrease in the third quarter of 2020 was mainly due to the effects of the COVID-19 pandemic. The average price of resin decreased by 38.2% from 2018 to 2019 and by 15.1% from 2019 to the third quarter of 2020. Such decrease in the third quarter of 2020 was also mainly due to the effects of the COVID-19 pandemic. The average price of copper, the main raw material for PCB components, decreased by 8.0% from 2018 to 2019 but increased by 8.8% from 2019 to the third quarter of 2020. Such increase in the third quarter of 2020 was also mainly due to the effects of the COVID-19 pandemic.

4. Production and Equipment

A. Production capacity and output

(1) Production capacity

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

					(Unit: 1,000 glass sheets)
Business area	Items		Location of facilities		2020 Q1~Q3(1)		2019(2)		2018(2)
Display		Display panel		Gumi, Paju, Guangzhou		6,687		9,408		10,161

(19) 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., 9 months). The production capacity for facilities with adjusted utilization rates have been calculated based on the maximum input capacity during the period.

(20) Calculated based on the maximum monthly input capacity (based on glass input substrate size for eighth-generation glass sheets) during the year multiplied by the number of months in a year (i.e., 12 months). The production capacity for facilities with adjusted utilization rates have been calculated based on the maximum input capacity during the period.

(2) Production output

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

					(Unit: 1,000 glass sheets)
Business area	Items		Location of facilities		2020 Q1~Q3(1)		2019(1)		2018(1)
Display		Display panel		Gumi, Paju, Guangzhou		4,937		8,373		9,428

(1) Based on the production results (input standard) of each plant converted into eighth-generation glass sheets.

B. Production performance and utilization ratio

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		(Unit: Hours, except percentages)
Production facilities	Available working hours in 2020 Q1~Q3	Actual working hours in 2020 Q1~Q3	Average utilization ratio
Gumi	6,576(1) (24 hours x 274  days)(2)	6,510(1) (24 hours x approximately 271 days)(2)		99.0	%
Paju	6,576(1) (24 hours x 274 days)(2)	6,548(1) (24 hours x approximately 273 days)(2)		99.6	%
Guangzhou	6,576(1) (24 hours x 274 days)(2)	6,576(1) (24 hours x 274 days)(2)		100.0	%

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

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

C. Investment plan

In 2019, our total capital expenditures on a cash out basis was approximatelyW7 trillion. Given that our significant capital expenditures centered on OLED technology were completed from 2017 to 2019, we have been investing within our EBITDA since 2020, and we expect our total capital expenditures on a cash out basis to be approximately slightly less thanW3 trillion for 2020.

5. Sales

A. Sales performance

				(Unit: In billions of Won)
Business area	Sales types	Items (Market)		2020 Q1~Q3		2019		2018
Display			Overseas(1)		15,991		22,180		22,722
	Products	Display panel	Korea(1)		746		1,255		1,572
			Total		16,736		23,435		24,294
	Royalty	LCD, OLED technology patent	Overseas(1)		11		14		18
			Korea(1)		0		0		0
			Total		11		14		18
	Others	Raw materials, components, etc.	Overseas(1)		18		17		13
			Korea(1)		5		10		1
			Total		22		26		25
	Total		Overseas(1)		16,019		22,211		22,747
			Korea(1)		750		1,265		1,590
			Total		16,769		23,476		24,337

(23) Based on ship-to-party.

B. Sales organization and sales route

• As of September 30, 2020, 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.

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

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

2) LG Display Headquarters and overseas manufacturing subsidiaries g System integrators and end-brand customers g End users

• Sales performance by sales route

Sales performance	Sales route	Ratio
Overseas	Overseas subsidiaries		95.2	%
	Headquarters		4.8	%
Overseas sales portion (overseas sales / total sales)			95.5	%
Korea	Overseas subsidiaries		2.2	%
	Headquarters		97.8	%
Korea sales portion (Korea sales / total sales)			4.5	%

C. Sales methods and sales terms

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

D. Sales strategy

• As part of our sales strategy, we have secured stable sales to major personal computer manufacturers and leading consumer electronics manufacturers globally.

• With respect to television products, we have led the premium television market with our OLED TVs and strengthened the differentiation of our OLED products through unique designs and integration of additional technologies (wallpaper, cinematic sound, rollable, etc.). We are also continuing to strengthen sales of high-resolution, IPS, narrow bezel and other high-end display panels in the monitor, notebook computer and tablet markets.

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

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E. Major customers

• Customers “A” and “B” each accounted for more than 10% of our sales revenue in each of the first three quarters of 2019 and 2020, and our sales revenue derived from our top ten customers comprised 84% of our total sales revenue in the first three quarters of 2020 and 79% in the first three quarters of 2019.

6. Purchase Orders

• We do not have purchase order contracts that recognize unbilled revenue by implementing the cost-based method.

7. Market Risks and Risk Management

A. Market risks

The display industry may experience fluctuations in the average selling prices of TFT-LCD and OLED panels that do not correlate with cyclical patterns in the industry. Our margins would be adversely impacted if our selling prices fall below our costs.

In addition, given that the display industry is highly competitive, it may be difficult to maintain our current market position. We have experienced pressure on the prices of our major products and our margins due largely to additional industry capacity from competitors in Korea, China, Taiwan and Japan coupled with changes in the production mix of such competitors.

Our ability to compete successfully depends on factors both within and outside our control, including the development of products with differentiated technologies, timely investments, adaptable production capabilities, executability and reliability, product pricing, supply costs of components and raw materials, the success of our end-brand customers’ marketing efforts and general economic and industry conditions.

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.

B. 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 eliminate such risk by matching foreign currency inflow and outflow by currency. We also 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.

8. Derivative Contracts

A. Currency risks

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

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• 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 have adopted a policy to maintain our net exposure within an acceptable level by buying or selling foreign currencies at spot rates, when necessary, to address short-term imbalances.

• As of the end of the reporting period, in order to avoid risks of interest rate fluctuations and exchange rate fluctuations on foreign currency denominated borrowings with floating interest rates, we entered into an aggregate of $2,125 million in Won/US dollar cross currency swap agreements with Standard Chartered Bank and others, for which we have not applied hedge accounting.

• Any rights or obligations arising from derivative contracts that do not apply hedge accounting are measured at fair value and are accounted for as assets and liabilities, whereas any resulting valuation gain or loss is recognized as profit or loss at the time such valuation gain or loss is incurred.

We recognized a net loss on valuation of derivative instruments in the amount ofW10,005 million with respect to our currency risk derivative instruments held during the reporting period.

B. Interest rate risks

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

• As of the end of the reporting period, in order to mitigate risks of interest rate fluctuations and exchange rate fluctuations on foreign currency denominated borrowings with floating interest rates, we have entered into interest rate swap and cross currency swap agreements.

• As of the end of the reporting period, we have entered into an aggregate ofW170 billion in interest rate swap agreements with Korean banks, including KB Kookmin Bank, for which we have not applied hedge accounting.

We recognized a net loss on valuation of derivative instruments in the amount ofW2,629 million with respect to our interest rate risk derivative instruments held during the reporting period.

9. 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

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10. Research & Development

A. Summary of R&D-related expenditures

		(Unit: In millions of Won, except percentages)
Items(1)		2020 Q1~Q3	2019			2018
Material Cost		270,434		388,444			496,789
Labor Cost		440,191		618,187			630,695
Depreciation Expense		427,145		523,631			351,936
Others		190,972		246,027			277,699
Total R&D-Related Expenditures		1,328,742		1,776,289			1,757,119
Accounting Treatment(2)	Selling & Administrative Expenses	608,399		924,020			918,512
	Manufacturing Cost	479,515		414,324			465,772
	Development Cost (Intangible Assets)	240,828		437,945			372,835
R&D-Related Expenditures / Revenue Ratio (Total R&D-Related Expenditures ÷ Revenue for the period × 100)		7.9%		7.6	%		7.2	%

(24) Calculated based on the total R&D-related expenditures before subtracting government subsidies (state subsidies).

(25) 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.

B. R&D achievements

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

(4) Developed the world’s first four-side borderless curved monitor with 1900R curvature radius

• Our first product applying glass 0.25T (etching) bezel printing/reverse bonding process technology

• Strengthened product competitiveness with our first shared design applying three-side/four-side borderless TFT Mask

• Achieved high-speed driving at 144Hz, high color recall (DCI 98%) and HDR (peak luminance 550nit)

(5) Developed the world’s first 34-inch large-screen monitor/high-resolution four-sided borderless HDR

• Pioneered HD Premium 21:9 monitor market through development of the world’s first WUHD(5K2K), four-side borderless monitor

• Delivered Ultra HD (DCI 98Z%, sRGB 135%) by applying Adv. KSF LED PKG technology

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• Achieved high luminance (HDR 600); typ. 450 nit, maximum 600nit

(6) Developed LGD 6.01QHD+M+ Full Screen Display (LG Electronics)

• Developed a full screen display concept smartphone product (G7) through strategic collaboration with other LG Group companies

• Implemented a full screen display product concept through achievement of our first 19.5:9 screen aspect ratio and lower bezel of 2.7mm

(7) Developed the world’s narrowest bezel videowall product (0.44mm bezel, 55-inch FHD)

• Achieved product competitiveness by developing the world’s narrowest bezel (originally 0.9mm ® 0.44mm, Even Bezel)

(8) Developed the world’s first automotive glassless 3D cluster product

• Developed FHD glassless barrier type 3D model (12.3 inches, 167 ppi level)

• Achieved customers’ eye-tracking movement by applying a top moving barrier panel at the top of the panel

• Improved adhesion accuracy of image panel and barrier panel by using OCA bonding technology

• Improved barrier contrast ratio by applying a copper-based metal barrier panel

(9) Developed the world’s first 6th generation a-Si Indirect DXD product (21.9-inch, 14 x 17 resolution, 14µm pixel pitches)

• Entered the DXD market through development of the world’s first 6th generation a-Si Indirect DXD product

• Set up infrastructure for DXD product development through the development of our first DXD product

(10) Developed the world’s first 17-inch large-sized and lightweight notebook monitor

• Developed large-sized (17-inch) product with a new screen aspect ratio (16:10)

• Developed light-weight product (268g) through securing 17-inch+ Slim Design model technology

Achievements in 2019

(1) Developed the world’s first ultra large-sized in-TOUCH product (50-inch UHD)

• World’s first to apply in-TOUCH technology on ultra large-sized products (50-inch and larger)

• World’s first to apply low temperature PAS to achieve in-TOUCH function

(2) Developed the world’s first transparent WOLED product (55-inch FHD)

• Developed WOLED-based Top Emission OLED device and process technology

(3) Developed the world’s first OLED 8K product (88-inch 8K)

• Developed gearing technology that secures and compensates aperture ratio for high resolution (8K) product implementation

(4) Developed the world’s first gaming monitor product applying OLED (55” UHD)

• Developed 55” UHD gaming monitor product using advantages of OLED (latency, gray to gray, color recall)

(5) Developed the world’s first curved gaming monitor product applying AH-IPS COT (37.5” WQ+)

• Developed and produced the world’s first monitor product applying AH-IPS COT

• Pioneered gaming/curved premium monitor product market

(6) Developed the world’s first monitor product applying Crystal Sound Display (“CSD”) (27.0” FHD)

• Developed and produced the world’s first monitor product applying CSD

• Developed large-sized, front-oriented stereo speaker through the application of exciter and piezo to the bottom cover of the liquid crystal module

(7) Developed the world’s first automotive product applying plastic OLED (16.9” + 7.2” / 14.2”)

• Developed and produced the world’s first 1CG multi-display product applying plastic OLED (16.9” + 7.2” / 14.2”)

Achievements in 2020

(1) Developed the first products in our Guangzhou OLED panel production facility (77” UHD, 48” UHD)

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• Completed the development of the first products in our Guangzhou OLED panel production facility (77” UHD, 48” UHD)

11. Intellectual Property

As of September 30, 2020, our cumulative patent portfolio (including patents that have already expired) included a total of 48,279 patents, consisting of 20,957 in Korea and 27,322 in other countries.

12. 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 and currently operate 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 2019 to the Korean government in April 2020 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	2019		2018		2017
Greenhouse gases		5,885		6,696		6,314
Energy		62,776		64,296		63,451

As we were designated as a target company for the greenhouse gas emission trading system in 2015, we submit a plan for allocating and monitoring our greenhouse gas emissions to the government every year. In order to continually promote the reduction of greenhouse gas emissions, we have set a short-term goal to reduce the emission level from 2014 to 2022 by 16.8% and a medium- to long-term goal to reduce the emission level from 2014 to 2045 by 65.1%. To achieve this, we are continually investing in facility improvements and monitoring our emission levels.

We are making extensive investments to replace SF6 gas, which is the main component of greenhouse gases, with NF3 gas. In addition, as a short-term strategy, we are actively implementing measures in compliance with the emission trading system. In 2019, we reduced our carbon dioxide greenhouse gas emission levels by 1.21 million tons, which was 0.40 million tons more than our initial target of 0.81 million tons. As our medium- to long-term goal, we plan to develop low-carbon production technologies in order to eliminate greenhouse gas emission during our manufacturing process and to conserve energy.

The increase in greenhouse gas emission in 2018 is due to the inclusion of certain other greenhouse gas emissions (N2O used in deposition facilities and CO2 in cleaning facilities) during the second planning period (2018 to 2020) that were not included during the first planning period (2015 to 2017) in the overall amount of greenhouse gas emissions in accordance with guidelines issued by the Korean government.

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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 the operation of our domestic panel and module production facilities and our overseas module production plants in Paju, Gumi, Nanjing, Yantai, Guangzhou and Vietnam, and in December 2013, we have obtained energy management system ISO 50001 certifications for the operation of our domestic panel and module production plants and our overseas module production plants in Nanjing and Guangzhou and are operating such facilities in accordance with such certifications.

In addition, in August 2014, GP1, our newest 8th 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 were first certified by the Ministry of Environment as a “Green Company” for P1 in 1997, and we currently continue to maintain such certification. 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 and 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.), 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. Since then, we have continued to maintain our excellence in water conservation activities in 2018 and 2019. In addition, our continued efforts to reduce greenhouse gas emissions have been recognized from 2017 to 2019 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 Trade, Industry and Energy in recognition of our energy management practices and energy saving measures. In May 2018, we received the CEM Insight Award, presented at the Clean Energy Ministerial Meetings, and also received certification for our energy business management (Energy Champion) presided by the Ministry of Trade, Industry and Energy and the Korea Energy Agency in November 2018. Since 2019, we have been carrying out forest development activities around our manufacturing facilities after signing an agreement with Gyeong-gi Province to surround our facilities with forests to reduce air pollutants such as fine dust and have received a commendation for such efforts.

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) have been added to the six already restricted substances, which additional restrictions became effective as of July 22, 2019. In order to address the latent risk elements of the four phthalate substances that became restricted in 2019 and to establish a more stable management system, we implemented in 2016 a preemptive response process with respect to such four phthalate substances. In implementing this process, we collaborated with external agencies to ascertain regulatory trends and establish our response strategy, and we formulated and applied effective management measures through the collaborative efforts of our development, procurement and quality teams. 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.

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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 have since continuously received the SGS Eco Label accreditation for our OLED television models. For the IPS Nano Color for LCD, we received the Quality & Performance Mark from Intertek, a global product testing/accreditation agency, by applying a technology to eliminate cadmium (Cd) and indium phosphide (InP). In 2018, we became the first display panel company to receive the “Green Technology Certification” from the Korean Ministry of Science and ICT for improving the light efficiency technology of OLED to promote energy use reduction.

In June 2017, we were assessed a fine ofW1 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 ofW2.4 million. In addition, the trial court ordered a fine ofW0.5 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. In relation to the same matter, in May 2018, the Prosecutor’s Office sought a fine ofW3.0 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. The trial court (Goyang Branch of Uijeongbu District Court) issued a summary order confirming the same fine ofW3.0 million on November 22, 2018. We and our chief production officer appealed the trial court’s decision, and the case is currently pending appeal at the Uijeongbu District Court. 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 ofW14.4 million. In relation to this matter, in January 2019, the trial court (Goyang Branch of Uijeongbu District Court) assessed a fine ofW1 million as a summary order on each of us and our chief production officer pursuant to certain other provisions of the Industrial Safety and Health Act. In addition, in January 2019, the trial court sought a fine ofW4 million andW2 million on us and the employee in charge of on-site safety management, respectively, on the basis of certain other 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.

Also in January 2018, the government of Gyeong-gi Province issued a warning and assessed a fine ofW1 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.

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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 ofW6.95 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.

In June 2019, the government of Gyeong-gi Province reviewed the operational history and the number of self-measurements of our emission outlets and confirmed that there were certain deficiencies in self-measurements for our reserve facilities. As a result, we were assessed a fine ofW1.6 million by the government of Gyeong-gi Province, which we subsequently paid, for the violation of Article 39 of the Air Quality Management Act. To prevent the recurrence, we have established a monthly self-measurement plan for our reserve facilities.

In May 2020, we were assessed a fine ofW1.4 million by the National Institute of Chemical Safety for our failure to conduct safety training on hazardous chemicals in violation of Article 33 of the Chemicals Control Act, which we subsequently paid. In order to prevent recurrence, we conducted safety training on hazardous chemicals for the relevant personnel and newly established a working process that complies with safety regulations.

13. Financial Information

A. Financial highlights (Based on consolidated K-IFRS).

	(Unit: In millions of Won)
Description	As of September 30, 2020		As of December 31, 2019			As of December 31, 2018
Current assets		10,920,675		10,248,315			8,800,127
Quick assets		8,520,951		8,197,160			6,108,924
Inventories		2,399,724		2,051,155			2,691,203
Non-current assets		24,576,733		25,326,248			24,375,583
Investments in equity accounted investees		115,714		109,611			113,989
Property, plant and equipment, net		21,129,880		22,087,645			21,600,130
Intangible assets		794,126		873,448			987,642
Other non-current assets		2,537,013		2,255,544			1,673,822
Total assets		35,497,408		35,574,563			33,175,710
Current liabilities		11,202,372		10,984,976			9,954,483
Non-current liabilities		12,120,657		12,101,306			8,334,981
Total liabilities		23,323,029		23,086,282			18,289,464
Share capital		1,789,079		1,789,079			1,789,079
Share premium		2,251,113		2,251,113			2,251,113
Retained earnings		6,841,972		7,503,312			10,239,965
Other equity		48,680		(203,021	)		(300,968	)
Non-controlling interest		1,243,535		1,147,798			907,057
Total equity		12,174,379		12,488,281			14,886,246

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(Unit: In millions of Won, except for per share data and number of consolidated entities)
Description	For the nine months ended September 30, 2020			For the year ended December 31, 2019			For the year ended December 31, 2018
Revenue		16,768,916			23,475,567			24,336,571
Operating profit (loss)		(714,582	)		(1,359,382	)		92,891
Operating profit (loss) from continuing operations		(691,606	)		(2,872,078	)		(179,443	)
Profit (loss) for the period		(691,606	)		(2,872,078	)		(179,443	)
Profit (loss) attributable to:
Owners of the Company		(657,735	)		(2,829,705	)		(207,239	)
Non-controlling interest		(33,871	)		(42,373	)		27,796
Basic earnings (loss) per share		(1,838	)		(7,908	)		(579	)
Diluted earnings (loss) per share		(1,838	)		(7,908	)		(579	)
Number of consolidated entities		21			22			22

B. Financial highlights (Based on separate K-IFRS).

	(Unit: In millions of Won)
Description	As of September 30, 2020		As of December 31, 2019		As of December 31, 2018
Current assets		6,949,608		7,081,228		6,378,339
Quick assets		5,371,060		5,554,929		4,427,184
Inventories		1,578,548		1,526,299		1,951,155
Non-current assets		19,473,535		20,301,452		20,683,767
Investments		4,770,666		4,958,308		3,602,214
Property, plant and equipment, net		11,950,791		12,764,175		14,984,564
Intangible assets		635,134		708,047		816,808
Other non-current assets		2,116,944		1,870,922		1,280,181
Total assets		26,423,143		27,382,680		27,062,106
Current liabilities		9,695,093		9,140,483		7,416,630
Non-current liabilities		6,929,032		7,576,104		6,432,895
Total liabilities		16,624,125		16,716,587		13,849,525
Share capital		1,789,079		1,789,079		1,789,079
Share premium		2,251,113		2,251,113		2,251,113
Retained earnings		5,758,826		6,625,901		9,172,389
Other equity		0		0		0
Total equity		9,799,018		10,666,093		13,212,581

	(Unit: In millions of Won, except for per share data)
Description	For the nine months ended September 30, 2020			For the year ended December 31, 2019			For the year ended December 31, 2018
Revenue		15,841,644			21,658,329			22,371,687
Operating profit (loss)		(1,082,477	)		(1,784,245	)		(472,995	)
Operating profit (loss) from continuing operations		(863,489	)		(2,639,893	)		(442,291	)
Profit (loss) for the period		(863,489	)		(2,639,893	)		(442,291	)
Basic earnings (loss) per share		(2,413	)		(7,378	)		(1,236	)
Diluted earnings (loss) per share		(2,413	)		(7,378	)		(1,236	)

23

C. Consolidated subsidiaries (as of September 30, 2020)

Company Interest	Primary Business	Location	Equity
LG Display America, Inc.	Sales	U.S.A.		100	%
LG Display Germany GmbH	Sales	Germany		100	%
LG Display Japan Co., Ltd.	Sales	Japan		100	%
LG Display Taiwan Co., Ltd.	Sales	Taiwan		100	%
LG Display Nanjing Co., Ltd.	Manufacturing	China		100	%
LG Display Shanghai Co., Ltd.	Sales	China		100	%
LG Display Guangzhou Co., Ltd.	Manufacturing	China		100	%
LG Display Shenzhen Co., Ltd.	Sales	China		100	%
LG Display Singapore Pte. Ltd.	Sales	Singapore		100	%
L&T Display Technology (Fujian) Limited	Manufacturing and sales	China		51	%
LG Display Yantai Co., Ltd.	Manufacturing	China		100	%
LG Display (China) Co., Ltd.	Manufacturing and sales	China		70	%
Nanumnuri Co., Ltd.	Workplace services	Korea		100	%
Unified Innovative Technology, LLC	Managing intellectual property	U.S.A.		100	%
Global OLED Technology LLC	Managing intellectual property	U.S.A.		100	%
LG Display Guangzhou Trading Co., Ltd.	Sales	China		100	%
LG Display Vietnam Haiphong Co., Ltd.	Manufacturing	Vietnam		100	%
Suzhou Lehui Display Co., Ltd.	Manufacturing and sales	China		100	%
LG Display Fund I LLC (1)	Investing in new emerging companies	U.S.A		100	%
LG Display High-Tech (China) Co., Ltd. (2)	Manufacturing and sales	China		72	%

(1) During the nine-month period ended September 30, 2020, we invested an additionalW6,119 million in LG Display Fund I LLC. There has been no change in our percentage equity interest in LG Display Fund I LLC due to such additional investment.

(2) During the nine-month period ended September 30, 2020, the non-controlling shareholders invested an additionalW84,829 million. Due to such additional investment, our interest in LG Display High-Tech (China) Co., Ltd. has decreased from 75% as of the end of 2019 to 72% as of the end of the reporting period.

In addition, the liquidation process of LG Display Poland Sp. z o.o., our former consolidated subsidiary, was completed during nine-month period ended September 30, 2020, and as a result, we have reclassifiedW72,654 million in accumulated other comprehensive losses due to foreign currency translation losses relating to such overseas operations to losses for the reporting period.

In addition to the subsidiaries listed above, we have invested an aggregate amount ofW1,300 million in money market trust accounts.

D. Status of equity investments (as of September 30, 2020)

(1) Consolidated subsidiaries

Company	Book Value of Investment Amount (in millions of Won)		Initial Equity Investment Date		Equity Interest
LG Display America, Inc.		36,815		September 24, 1999		100	%
LG Display Germany GmbH		19,373		November 5, 1999		100	%
LG Display Japan Co., Ltd.		15,686		October 12, 1999		100	%
LG Display Taiwan Co., Ltd.		35,230		April 12, 1999		100	%
LG Display Nanjing Co., Ltd.		593,726		July 15, 2002		100	%
LG Display Shanghai Co., Ltd.		9,093		January 16, 2003		100	%
LG Display Poland Sp. z o.o. (1)		—		September 6, 2005		—
LG Display Guangzhou Co., Ltd.		293,557		June 30, 2006		100	%

24

Company	Book Value of Investment Amount (in millions of Won)		Initial Equity Investment Date		Equity Interest
LG Display Shenzhen Co., Ltd.		3,467		August 28, 2007		100	%
LG Display Singapore Pte. Ltd.		1,250		January 12, 2009		100	%
L&T Display Technology (Fujian) Limited		10,123		January 5, 2010		51	%
LG Display Yantai Co., Ltd.		169,195		April 19, 2010		100	%
Nanumnuri Co., Ltd.		800		March 19, 2012		100	%
LG Display (China) Co., Ltd.		723,086		December 10, 2012		70	%
Unified Innovative Technology, LLC		9,489		March 12, 2014		100	%
LG Display Guangzhou Trading Co., Ltd.		218		April 28, 2015		100	%
Global OLED Technology LLC		164,322		December 18, 2009		100	%
LG Display Vietnam Haiphong Co., Ltd.		672,658		May 5, 2016		100	%
Suzhou Lehui Display Co., Ltd.		121,640		July 1, 2016		100	%
LG Display Fund I LLC (2)		12,441		May 1, 2018		100	%
LG Display High-Tech (China) Co., Ltd. (3)		1,794,547		July 11, 2018		72	%
MMT (Money Market Trust)		1,300		January 2, 2018		100	%

(1) The liquidation process of LG Display Poland Sp. z o.o., our former consolidated subsidiary, was completed during May 2020.

(2) During the nine-month period ended September 30, 2020, we invested an additionalW6,119 million in LG Display Fund I LLC. There has been no change in our interest in LG Display Fund I LLC due to such additional investment.

(3) During the nine-month period ended September 30, 2020, the non-controlling shareholders invested an additionalW84,829 million. Due to such additional investment, our interest in LG Display High-Tech (China) Co., Ltd. has decreased from 75% as of the end of 2019 to 72% as of the end of the reporting period.

(2) Affiliated companies

Company	Carrying Amount (in millions)		Date of Incorporation		Equity Interest
Paju Electric Glass Co., Ltd.	W	48,780		January 2005		40	%
Wooree E&L Co., Ltd.	W	7,538		June 2008		14	%
YAS Co., Ltd.	W	24,279		April 2002		15	%
Avatec Co., Ltd.	W	19,805		August 2000		14	%
Arctic Sentinel, Inc.		—		June 2008		10	%
Cynora GmbH (1)	W	4,714		March 2003		12	%
Material Science Co., Ltd.	W	5,320		January 2014		10	%
Nanosys Inc. (2)	W	4,828		July 2001		3	%

(1) We did not participate in Cynora GmbH’s paid-in capital increase during the nine-month period ended September 30, 2020, and as a result, our equity interest decreased from 12.2% as of December 31, 2019 to 11.6% as of September 30, 2020.

(2) We did not participate in Nanosys Inc.’s paid-in capital increase during the nine-month period ended September 30, 2020, and as a result, our equity interest decreased from 4% as of December 31, 2019 to 3% as of September 30, 2020.

For the nine-month periods ended September 30, 2019 and 2020, the aggregate amount of dividends we received from our affiliated companies wasW7,502 million andW8,239 million, respectively.

25

14. Audit Information

A. Audit service

	(Unit: In millions of Won)
			Audit contract details		Actual performance details
Period	Auditor	Description of service	Compensation	Hours of service(1)	Compensation	Hours of service(1)
2020 Q1~Q3	KPMG Samjong	Audit by independent auditor	1,410 (540)(2)	20,426	680 (140)(2)	11,659
2019	KPMG Samjong	Audit by independent auditor	1,280 (500)(2)	20,000	1,280 (500)(2)	21,194
2018	KPMG Samjong	Audit by independent auditor	1,170 (450)(2)	19,000	1,170 (450)(2)	17,269

(26) Total hours of service includes the number of hours for work related to the English audit and/or review reports and SOX 404 audit.

(27) Compensation amount in ( ) is for work related to the English audit and/or review reports (including Form 20-F and 6-K filings) and SOX 404 audit.

B. Non-audit service

	(Unit: In millions of Won, hours)
Period	Date of contract	Description of service	Period of service		Compensation
2020 Q1~Q3	—	—		—	—
2019	July 23, 2019	Issuance of comfort letters		July 23, 2019 ~ August 31, 2019	120
2018	September 11, 2018	Green bond verification		September 11, 2018 ~ October 9, 2018	45

15. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Omitted in quarterly and semi-annual reports in accordance with Korean disclosure rules.

16. Board of Directors

A. Members of the board of directors

As of September 30, 2020, our board of directors consisted of two non-outside directors, one non-standing director and four outside directors.

		(As of September 30, 2020)
Name	Position	Primary responsibility
James (Hoyoung) Jeong(1)	Representative Director (non-outside), Chief Executive Officer and President	Overall head of business management
Donghee Suh(2)	Director (non-outside), Chief Financial Officer and Senior Vice President	Overall head of finances
Young-Soo Kwon	Director (non-standing)	Chairman of the board of directors
Sung-Sik Hwang	Outside Director	Related to the overall management
Kun Tai Han	Outside Director	Related to the overall management
Byung Ho Lee	Outside Director	Related to the overall management
Chang-Yang Lee	Outside Director	Related to the overall management

26

(28) James (Hoyoung) Jeong was newly appointed as a non-outside director at the annual general meeting of shareholders and as the representative director at the board of directors’ meeting, both held on March 20, 2020.

(29) Donghee Suh was reappointed for another term as a non-outside director at the annual general meeting of shareholders held on March 20, 2020.

B. 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, James (Hoyoung) Jeong and Donghee Suh.

As of March 20, 2020, the composition of the Outside Director Nomination Committee was as follows.

		(As of March 20, 2020)
Committee	Composition	Member
Outside Director Nomination Committee(1)	1 non-standing director and 2 outside directors	Young-Soo Kwon, Kun Tai Han, Chang-Yang Lee

(30) Each of Young-Soo Kwon, Kun Tai Han, Chang-Yang Lee was appointed as a member of the outside director nomination committee of the board of directors at the board of directors’ meeting on March 20, 2020.

As of September 30, 2020, the composition of the Audit Committee was as follows.

		(As of September 30, 2020)
Committee	Composition	Member
Audit Committee	3 outside directors	Sung-Sik Hwang(1), Kun Tai Han, Chang-Yang Lee(2)

(31) Sung-Sik Hwang is the audit committee chairman.

(32) Chang-Yang Lee was newly appointed as an audit committee member at the annual general meeting of shareholders held on March 15, 2019.

C. Independence of directors

Directors are appointed in accordance with applicable procedures under the Commercial Act, other relevant laws and regulations, our articles of association and our other internal regulations, and we do not maintain separate independence standards for the election of directors. However, in order to ensure fairness and independence in appointing our directors, our non-outside directors and other non-executive directors are nominated by the board of directors, and our outside directors are nominated by our Outside Director Nomination Committee, in each case for appointment at our shareholders’ meeting, in accordance with the relevant laws and regulations, our articles of association, board regulations and standards governing our Outside Director Nomination Committee. As part of such process, our board of directors and our Outside Director Nomination Committee conducts a rigorous review of each candidate for his or her independence, expertise and suitability as a director, among other factors.

17. Information Regarding Shares

A. Total number of shares

(1) Total number of shares authorized to be issued (as of September 30, 2020): 500,000,000 shares.

(2) Total shares issued and outstanding (as of September 30, 2020): 357,815,700 shares.

B. Shareholder list

(1) Largest shareholder and related parties as of September 30, 2020:

Name(1)	Relationship	Number of shares of common stock		Equity interest
LG Electronics	Largest shareholder		135,625,000		37.9	%
James (Hoyoung) Jeong	Officer of member company		10,000		0.0	%
Donghee Suh(2)	Officer of member company		9,000		0.0	%

27

(2) Shareholders who are known to us that own 5% or more of our shares as of September 30, 2020:

Beneficial owner	Number of shares of common stock		Equity interest
LG Electronics		135,625,000		37.90	%
National Pension Service(1)		18,161,082		5.08	%

(33) As of May 2, 2020.

18. Directors and Employees

A. Directors

(1) Remuneration for directors in 2020 Q1~Q3:

(Unit: person, in millions of Won)
Classification	No. of directors(1)		Amount paid(2)			Per capita average remuneration paid(3)
Non-outside directors		3		1,699			566
Outside directors who are not audit committee members		1		59			59
Outside directors who are audit committee members		3		176			59
Total		7		1,934	(4)		276

(34) Number of directors as at September 30, 2020.

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

(36) Per capita average remuneration paid is calculated by dividing total amount paid by the average number of directors for the nine-month periods ended September 30, 2020.

(37) Due to Mr. Sang Beom Han’s resignation as a non-outside director and Mr. James (Hoyoung) Jeong’s nomination as a non-outside director at the annual general meeting of shareholders held on March 20, 2020, the total amount paid includes the remuneration paid to both directors.

(2) Standards of remuneration paid to non-outside and outside directors

• Non-outside directors (excluding outside directors and audit committee members)

The remuneration system for non-outside directors consists of base salary, position salary and performance-related pay. The remuneration for non-outside directors is measured in accordance with the standards established by the board of directors (within the amount approved at the annual general meeting of shareholders), including the non-outside director’s position and job responsibilities.

• Standards for base salary/position salary: relevant position and job responsibilities, among others

• Standards for performance-related pay: financial performance of the company and achievement of individual management goals, among others

• Outside directors, audit committee members and auditor

28

The remuneration for outside directors, audit committee members and auditor is measured in accordance with the standards established by the board of directors (within the amount approved at the annual general meeting of shareholders), including the individual’s job responsibilities, among others.

(3) Remuneration for individual directors and audit committee members

Not required for quarterly reports.

(4) Remuneration for the five highest paid individuals (among those paid overW500 million per year)

Not required for quarterly reports.

(5) Stock options

Not applicable.

B. Employees

As of September 30, 2020, we had 26,029 employees (excluding our directors). On average, our male employees have served 11.7 years and our female employees have served 9.7 years. The total amount of salary paid to our employees for the nine months ended September 30, 2020 based on income tax statements submitted to the Korean tax authority in accordance with Article 20 of the Income Tax Act wasW1,241,374 million for our male employees andW171,685 million for our female employees. The following table provides details of our employees as of September 30, 2020:

(Unit: person, in millions of Won, year)
	Number of employees(1)		Total salary in 2019(2)(3)(4)		Average salary per capita(5)		Average years of service
Male		21,969		1,241,374		56		11.7
Female		4,060		171,685		42		9.7
Total		26,029		1,413,059		54		11.4

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

(39) Welfare benefits and retirement expenses have been excluded. Total welfare benefit provided to our employees for the nine months ended September 30, 2020 wasW236,805 million and the per capita welfare benefit provided wasW9.0 million.

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

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

(42) Calculated using the cumulative salary and the average number of employees (male: 22,135, female: 4,085) for the nine months ended September 30, 2020.

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 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 ofW2,893 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 ofW2,166 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 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 ofW27 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.

29

19. Other Matters

A. Legal proceedings

We are a defendant in three separate civil lawsuits (comprising one damages claim in the United Kingdom filed by private plaintiffs, one damages claim in Israel filed by private plaintiffs and one unjust enrichment claim in the United States filed by the Commonwealth of Puerto Rico) filed against us and certain other TFT-LCD panel manufacturers in connection with alleged anticompetitive behavior of the defendants. In each of these cases, the amount being sought has not been determined, and no trial has been scheduled. While the expected outcome of each of these cases is unclear, we do not believe that any of these cases would have a material effect on our financial conditions.

We are also a defendant in three patent infringement lawsuits (one in the United States, one in Germany and one in China) filed against us by Solas OLED Ltd. In each of these cases, the amount being sought has not been determined. A pre-trial hearing for the case in the United States was held on May 22, 2020 and the case is currently in the discovery phase. A court hearing for the case in Germany was held on September 11, 2020 and the court ruled against us on November 9, 2020. We are currently planning to appeal the trial court’s decision. In addition, a nullity action seeking invalidation of the patent asserted by Solas OLED Ltd. in the infringement lawsuit in Germany is currently in progress at the German Federal Patent Court. A court trial for the case in China has been scheduled for November 2020. The expected outcome of each of these cases is currently unclear.

B. Material events subsequent to the reporting period

None.

C. Material change in management

At our annual general meeting of shareholders held on March 20, 2020, Mr. Sang Beom Han resigned as a non-outside director, Mr. James (Hoyoung) Jeong was newly appointed as a non-outside director and Donghee Suh was reappointed for another term as a non-outside director. At our meeting of the board of directors held on March 20, 2020, Mr. James (Hoyoung) Jeong was appointed as our Representative Director.

30

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Financial Statements

(Unaudited)

September 30, 2020 and 2019

(With Independent Auditors’ Review Report Thereon)

31

Table of Contents

	Page
Independent Auditors’ Review Report		33
Condensed Consolidated Interim Statements of Financial Position		35
Condensed Consolidated Interim Statements of Comprehensive Income (Loss)		36
Condensed Consolidated Interim Statements of Changes in Equity		37
Condensed Consolidated Interim Statements of Cash Flows		38
Notes to the Condensed Consolidated Interim Financial Statements		40

32

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 September 30, 2020, the condensed consolidated interim statements of comprehensive income (loss) for the three-month and nine-month periods ended September 30, 2020 and 2019, and statements of changes in equity and cash flows for the nine-month periods ended September 30, 2020 and 2019, 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, 2019 and the related consolidated statements of comprehensive loss, changes in equity and cash flows for the year then ended, which are not accompanying this review report, in accordance with Korean Standards on Auditing, and our report thereon, dated March 11, 2020, expressed an unmodified opinion. The accompanying condensed consolidated statement of financial position of the Group as of December 31, 2019, presented for comparative purposes, is not different from that audited by us from which it was derived in all material respects.

33

KPMG Samjong Accounting Corp.

Seoul, Korea

November 13, 2020

This report is effective as of November 13, 2020, 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.

34

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Statements of Financial Position

(Unaudited)

As of September 30, 2020 and December 31, 2019

(In millions of won)	Note		September 30, 2020		December 31, 2019
Assets
Cash and cash equivalents		4, 25	W	3,289,116		3,336,003
Deposits in banks		4, 25		78,252		78,757
Trade accounts and notes receivable, net		5, 14, 25, 27		3,769,138		3,154,080
Other accounts receivable, net		5, 25		160,106		474,048
Other current financial assets		6, 25		52,109		70,945
Inventories		7		2,399,724		2,051,155
Prepaid income tax				110,891		114,143
Other current assets		5		1,061,339		969,184
Total current assets				10,920,675		10,248,315
Deposits in banks		4, 25		11		11
Investments in equity accounted investees		8		115,714		109,611
Other non-current accounts receivable, net		5, 25		7,289		9,072
Other non-current financial assets		6, 25		139,269		111,510
Property, plant and equipment, net		9, 14, 17		21,129,880		22,087,645
Intangible assets, net		10, 17		794,126		873,448
Deferred tax assets		23		2,119,970		1,727,122
Defined benefits assets, net		12		10,118		127,252
Other non-current assets		5		260,356		280,577
Total non-current assets				24,576,733		25,326,248
Total assets			W	35,497,408		35,574,563
Liabilities
Trade accounts and notes payable		25, 27	W	4,037,188		2,618,261
Current financial liabilities		11, 25		2,591,746		1,977,084
Other accounts payable		25		3,120,624		4,397,121
Accrued expenses				637,189		675,270
Income tax payable				30,749		120,034
Provisions		13		183,538		189,525
Advances received		14		549,760		925,662
Other current liabilities		13		51,578		82,019
Total current liabilities				11,202,372		10,984,976
Non-current financial liabilities		11, 25		11,942,430		11,612,910
Non-current provisions		13		71,784		67,118
Defined benefit liabilities, net		12		1,596		1,338
Long-term advances received		14		—		320,582
Deferred tax liabilities		23		9,767		11,210
Other non-current liabilities		13		95,080		88,148
Total non-current liabilities				12,120,657		12,101,306
Total liabilities				23,323,029		23,086,282
Equity
Share capital		15		1,789,079		1,789,079
Share premium				2,251,113		2,251,113
Retained earnings				6,841,972		7,503,312
Reserves		15		48,680		(203,021	)
Total equity attributable to owners of the Controlling Company				10,930,844		11,340,483
Non-controlling interests				1,243,535		1,147,798
Total equity				12,174,379		12,488,281
Total liabilities and equity			W	35,497,408		35,574,563

See accompanying notes to the consolidated financial statements.

35

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Statements of Comprehensive Income (Loss)

(Unaudited)

For the three-month and nine-month periods ended September 30, 2020 and 2019

(In millions of won, except earnings per share)	Note		For the three-month period ended September 30						For the nine-month period ended September 30
			2020			2019			2020			2019
Revenue		16, 17, 27	W	6,737,646			5,821,681			16,768,916			17,053,872
Cost of sales		7, 18, 27		(5,892,303	)		(5,520,082	)		(15,517,233	)		(15,637,832	)
Gross profit				845,343			301,599			1,251,683			1,416,040
Selling expenses		19		(220,597	)		(247,756	)		(584,242	)		(722,564	)
Administrative expenses		19		(186,843	)		(272,799	)		(554,034	)		(655,805	)
Research and development expenses				(273,543	)		(217,782	)		(827,989	)		(975,171	)
Operating profit (loss)				164,360			(436,738	)		(714,582	)		(937,500	)
Finance income		22		117,458			143,943			354,300			267,229
Finance costs		22		(320,965	)		(177,376	)		(567,375	)		(359,005	)
Other non-operating income		21		332,243			308,549			1,055,997			975,549
Other non-operating expenses		21		(352,949	)		(441,893	)		(1,158,478	)		(1,127,397	)
Equity in income of equity accounted investees, net				5,524			3,306			11,989			9,859
Loss before income tax				(54,329	)		(600,209	)		(1,018,149	)		(1,171,265	)
Income tax benefit		23		(65,450	)		(158,005	)		(326,543	)		(116,241	)
Profit (loss) for the period				11,121			(442,204	)		(691,606	)		(1,055,024	)
Other comprehensive income (loss)
Items that will never be reclassified to profit or loss
Remeasurements of net defined benefit liabilities		12		(1,042	)		(1,355	)		(4,824	)		(6,203	)
Other comprehensive income from associates				—			107			40			240
Related income tax		12		266			332			1,238			(3,219	)
				(776	)		(916	)		(3,546	)		(9,182	)
Items that are or may be reclassified to profit or loss
Foreign currency translation differences for foreign operations				63,938			37,529			294,107			226,967
Other comprehensive income (loss) from associates				(678	)		2,957			2,314			7,063
				63,260			40,486			296,421			234,030
Other comprehensive income for the period, net of income tax				62,484			39,570			292,875			224,848
Total comprehensive income (loss) for the period			W	73,605			(402,634	)		(398,731	)		(830,176	)
Profit (loss) attributable to:
Owners of the Controlling Company				30,377			(419,354	)		(657,735	)		(1,028,664	)
Non-controlling interests				(19,256	)		(22,850	)		(33,871	)		(26,360	)
Profit (loss) for the period			W	11,121			(442,204	)		(691,606	)		(1,055,024	)
Total comprehensive income (loss) attributable to:
Owners of the Controlling Company				76,469			(379,060	)		(410,055	)		(834,801	)
Non-controlling interests				(2,864	)		(23,574	)		11,324			4,625
Total comprehensive income (loss) for the year			W	73,605			(402,634	)		(398,731	)		(830,176	)
Earnings (loss) per share (in won)
Basic and diluted earnings (loss) per share		24	W	85			(1,172	)		(1,838	)		(2,875	)

See accompanying notes to the consolidated financial statements.

36

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condesned Consolidated Interim Statements of Changes in Equity

For the nine-month periods ended September 30, 2020 and 2019

(Unaudited)

	Attributable to owners of the Controlling Company
(In millions of won)	Share capital		Share premium		Retained earnings			Reserves			Sub-total			Non-controlling interests			Total equity
Balances at January 1, 2019	W	1,789,079		2,251,113		10,239,965			(300,968	)		13,979,189			907,057			14,886,246
Total comprehensive income (loss) for the period
Loss for the period		—		—		(1,028,664	)		—			(1,028,664	)		(26,360	)		(1,055,024	)
Other comprehensive income (loss)
Remeasurements of net defined benefit liabilities, net of tax		—		—		(9,422	)		—			(9,422	)		—			(9,422	)
Foreign currency translation differences		—		—		—			195,982			195,982			30,985			226,967
Other comprehensive income from associates		—		—		240			7,063			7,303			—			7,303
Total other comprehensive income (loss)		—		—		(9,182	)		203,045			193,863			30,985			224,848
Total comprehensive income (loss) for the period	W	—		—		(1,037,846	)		203,045			(834,801	)		4,625			(830,176	)
Transaction with owners, recognized directly in equity
Subsidiaries’ dividends distributed to non-controlling interests		—		—		—			—			—			(6,541	)		(6,541	)
Capital contribution from non-controlling interests		—		—		(591	)		(1,167	)		(1,758	)		278,154			276,396
Balances at September 30, 2019	W	1,789,079		2,251,113		9,201,528			(99,090	)		13,142,630			1,183,295			14,325,925
Balances at January 1, 2020	W	1,789,079		2,251,113		7,503,312			(203,021	)		11,340,483			1,147,798			12,488,281
Total comprehensive income (loss) for the period
Loss for the period		—		—		(657,735	)		—			(657,735	)		(33,871	)		(691,606	)
Other comprehensive income (loss)
Remeasurements of net defined benefit liabilities, net of tax		—		—		(3,586	)		—			(3,586	)		—			(3,586	)
Foreign currency translation differences		—		—		—			248,912			248,912			45,195			294,107
Other comprehensive income from associates		—		—		40			2,314			2,354			—			2,354
Total other comprehensive income (loss)		—		—		(3,546	)		251,226			247,680			45,195			292,875
Total comprehensive income (loss) for the period	W	—		—		(661,281	)		251,226			(410,055	)		11,324			(398,731	)
Transaction with owners, recognized directly in equity
Capital contribution from non-controlling interests		—		—		(59	)		475			416			84,413			84,829
Balances at September 30, 2020	W	1,789,079		2,251,113		6,841,972			48,680			10,930,844			1,243,535			12,174,379

See accompanying notes to the consolidated financial statements.    

37

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Statements of Cash Flows

(Unaudited)

For the nine-month periods ended September 30, 2020 and 2019

(In millions of won)	Note		2020			2019
Cash flows from operating activities:
Loss for the period			W	(691,606	)		(1,055,024	)
Adjustments for:
Income tax benefit		23		(326,543	)		(116,241	)
Depreciation and amortization		18		3,045,977			2,686,784
Gain on foreign currency translation				(134,422	)		(100,605	)
Loss on foreign currency translation				135,228			196,923
Expenses related to defined benefit plans		12		120,467			147,814
Gain on disposal of property, plant and equipment				(13,334	)		(13,571	)
Loss on disposal of property, plant and equipment				29,328			31,726
Impairment loss on property, plant and equipment				8,611			36,371
Gain on disposal of intangible assets				(121	)		(552	)
Loss on disposal of intangible assets				28			139
Impairment loss on intangible assets				69,293			116,506
Reversal of impairment loss on intangible assets				(1,260	)		(480	)
Gain on disposal of non-current assets held for sale				—			(8,353	)
Expense on increase of provisions				211,576			286,970
Finance income				(181,678	)		(183,852	)
Finance costs				378,065			290,399
Equity in income of equity method accounted investees, net		8		(11,989	)		(9,860	)
Other income				(20,211	)		(18,926	)
Other expenses				72,654			4,114
				3,381,669			3,345,306
Changes in:
Trade accounts and notes receivable				(1,323,710	)		(1,138,581	)
Other accounts receivable				92,367			10,693
Inventories				(349,940	)		(51,755	)
Lease receivables				4,071			4,485
Other current assets				(37,587	)		(276,791	)
Other non-current assets				(52,315	)		(20,474	)
Trade accounts and notes payable				1,511,416			(452,958	)
Other accounts payable				(487,351	)		1,319,025
Accrued expenses				(18,679	)		285,349
Provisions				(201,117	)		(197,371	)
Advances received				(83,466	)		—
Other current liabilities				(36,835	)		(67,127	)
Defined benefit liabilities, net				(7,957	)		(23,345	)
Long-term advances received				—			63,672
Other non-current liabilities				9,013			9,343
				(982,090	)		(535,835	)
Cash generated from operating activities				1,707,973			1,754,447
Income taxes paid				(142,092	)		(251,372	)
Interests received				50,124			39,566
Interests paid				(428,308	)		(299,156	)
Net cash provided by operating activities			W	1,187,697			1,243,485

See accompanying notes to the consolidated interim financial statements.

38

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Statements of Cash Flows, Continued

(Unaudited)

For the nine-month periods ended September 30, 2020 and 2019

(In millions of won)	Note		2020			2019
Cash flows from investing activities:
Dividends received			W	8,239			7,502
Increase in deposits in banks				(78,052	)		(111,180	)
Proceeds from withdrawal of deposits in banks				78,557			111,580
Acquisition of financial assets at fair value through profit or loss				(3,226	)		(708	)
Proceeds from disposal of financial assets at fair value through profit or loss				100			213
Acquisition of financial assets at fair value through other comprehensive income				—			(21	)
Proceeds from disposal of financial assets at fair value through other comprehensive income				6			99
Proceeds from disposal of investments in equity accounted investees				1,800			7,039
Acquisition of property, plant and equipment				(2,167,458	)		(5,924,316	)
Proceeds from disposal of property, plant and equipment				310,539			281,167
Acquisition of intangible assets				(293,058	)		(424,142	)
Proceeds from disposal of intangible assets				1,550			2,349
Government grants received				30,046			248,124
Proceeds from disposal of non-current assets held for sale				—			81,351
Receipt from settlement of derivatives				25,482			22,852
Proceeds from collection of short-term loans				10,151			14,656
Increase in short-term loans				—			(8,725	)
Increase in long-term loans				—			(6,465	)
Increase in deposits				(1,470	)		(30,501	)
Decrease in deposits				1,285			5,205
Proceeds from disposal of other assets				11,000			20,416
Net cash used in investing activities				(2,064,509	)		(5,703,505	)
Cash flows from financing activities:		26
Proceeds from short-term borrowings				1,928,654			1,817,444
Repayments of short-term borrowings				(1,933,372	)		(1,131,464	)
Proceeds from issuance of bonds				49,949			1,323,239
Proceeds from long-term borrowings				1,709,775			3,765,753
Repayments of current portion of long-term borrowings and bonds				(1,036,847	)		(1,223,299	)
Repayment of lease liabilities				(50,702	)		(45,357	)
Capital contribution from non-controlling interests				84,829			276,396
Subsidiaries’ dividends distributed to non-controlling interests				—			(6,541	)
Net cash provided by financing activities				752,286			4,776,171
Net increase (decrease) in cash and cash equivalents				(124,526	)		316,151
Cash and cash equivalents at January 1				3,336,003			2,365,022
Effect of exchange rate fluctuations on cash held				77,639			78,519
Cash and cash equivalents at September 30			W	3,289,116			2,759,692

See accompanying notes to the consolidated interim financial statements.

39

1. Reporting Entity

(a) Description of the Controlling Company

LG Display Co., Ltd. (the “Controlling Company”) was incorporated in February 1985 and the Controlling Company is a public corporation listed in the Korea Exchange since 2004. The main business of the Controlling Company and its subsidiaries (the “Group”) is to manufacture and sell displays and its related products. As of September 30, 2020, the Group is operating Thin Film Transistor Liquid Crystal Display (“TFT-LCD”) and Organic Light Emitting Diode (“OLED”) panel manufacturing plants in Gumi, Paju and China and TFT-LCD and OLED module manufacturing plants in Gumi, Paju, China and Vietnam. The Controlling Company is domiciled in the Republic of Korea with its address at 128 Yeouidae-ro, Yeongdeungpo-gu, Seoul, the Republic of Korea. As of September 30, 2020, 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 September 30, 2020, 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 September 30, 2020, there are 23,297,750 ADSs outstanding.

40

1. Reporting Entity, Continued

(b) Consolidated Subsidiaries as of September 30, 2020

(In millions)
Subsidiaries	Location	Percentage of ownership			Fiscal year end		Date of incorporation	Business	Capital stocks
LG Display America, Inc.	San Jose, U.S.A.		100	%		December 31	September 24, 1999	Sell display products		USD 411
LG Display Germany GmbH	Eschborn, Germany		100	%		December 31	November 5, 1999	Sell display products		EUR 1
LG Display Japan Co., Ltd.	Tokyo, Japan		100	%		December 31	October 12, 1999	Sell display products		JPY 95
LG Display Taiwan Co., Ltd.	Taipei, Taiwan		100	%		December 31	April 12, 1999	Sell display products		NTD 116
LG Display Nanjing Co., Ltd.	Nanjing, China		100	%		December 31	July 15, 2002	Manufacture display products		CNY 3,020
LG Display Shanghai Co., Ltd.	Shanghai, China		100	%		December 31	January 16, 2003	Sell display products		CNY 4
LG Display Guangzhou Co., Ltd.	Guangzhou, China		100	%		December 31	June 30, 2006	Manufacture display products		CNY 1,655
LG Display Shenzhen Co., Ltd.	Shenzhen, China		100	%		December 31	August 28, 2007	Sell display products		CNY 4
LG Display Singapore Pte. Ltd.	Singapore		100	%		December 31	January 12, 2009	Sell display products		USD 1
L&T Display Technology (Fujian) Limited	Fujian, China		51	%		December 31	January 5, 2010	Manufacture and sell LCD module and LCD monitor sets		CNY 116
LG Display Yantai Co., Ltd.	Yantai, China		100	%		December 31	April 19, 2010	Manufacture display products		CNY 1,008
Nanumnuri Co., Ltd.	Gumi, South Korea		100	%		December 31	March 21, 2012	Janitorial services		KRW 800
LG Display (China) Co., Ltd.	Guangzhou, China		70	%		December 31	December 10, 2012	Manufacture and sell display products		CNY 8,232
Unified Innovative Technology, LLC	Wilmington, U.S.A.		100	%		December 31	March 12, 2014	Manage intellectual property		USD 9
LG Display Guangzhou Trading Co., Ltd.	Guangzhou, China		100	%		December 31	April 28, 2015	Sell display products		CNY 1
Global OLED Technology, LLC	Sterling, U.S.A.		100	%		December 31	December 18, 2009	Manage OLED intellectual property		USD 138
LG Display Vietnam Haiphong Co., Ltd.	Haiphong, Vietnam		100	%		December 31	May 5, 2016	Manufacture display products		USD 600
Suzhou Lehui Display Co., Ltd.	Suzhou, China		100	%		December 31	July 1, 2016	Manufacture and sell LCD module and LCD monitor sets		CNY 637
LG DISPLAY FUND I LLC(*1)	Wilmington, U.S.A.		100	%		December 31	May 1, 2018	Invest in venture business and acquire technologies		USD 11
LG Display High-Tech (China) Co., Ltd. (*2)	Guangzhou, China		72	%		December 31	July 11, 2018	Manufacture and sell display products		CNY 15,070

41

1. Reporting Entity, Continued

(*1) For the nine-month period ended September 30, 2020, the Controlling Company contributedW6,119 million in cash for the capital increase by LG DISPLAY FUND I LLC. There was no change in the Controlling Company’s ownership percentage in LG DISPLAY FUND I LLC as a result of this additional investment.

(*2) For the nine-month period ended September 30, 2020, non-controlling shareholders contributedW84,829 million in cash for the stocks issued by LG Display High-Tech (China) Co., Ltd. (“LGDCO”). The Group’s ownership percentage in LGDCO decreased from 75% to 72% as a result.

Meanwhile, the liquidation process of LG Display Poland Sp. z o.o., a subsidiary of the Controlling Company, was completed during the nine-month period ended September 30, 2020 and the Group reclassified the comprehensive loss amounting toW72,654 million from foreign currency translation differences to profit or loss.

In addition to the above subsidiaries, the Group has investedW1,300 million in MMT (Money Market Trust), which is controlled by the Group.

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-IFRS”) No.1034, Interim Financial Reporting. They do not include all of the information required for full annual consolidated financial statements and should be read in conjunction with the consolidated financial statements of the Group as of and for the year ended December 31, 2019.

(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 statement of financial position:

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

• net defined benefit liabilities (defined benefit assets) recognized at the present value of defined benefit obligations less the fair value of plan assets.

(c) Functional and Presentation Currency

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

42

2. Basis of Presenting Financial Statements, Continued

(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.

3. Summary of Significant Accounting Policies

The accounting policies applied in these condensed consolidated interim financial statements are the same as those applied in the Group’s consolidated financial statements as of and for the year ended December 31, 2019, except for the application of K-IFRS No.1034, Interim Financial Reporting. A number of amended standards are effective from January 1, 2020 but they do not have a material effect on the Group’s consolidated financial statements.

4. Cash and Cash Equivalents and Deposits in Banks

Cash and cash equivalents and deposits in banks as of September 30, 2020 and December 31, 2019 are as follows:

(In millions of won)	September 30, 2020		December 31, 2019
Current assets
Cash and cash equivalents
Demand deposits	W	3,289,116		3,336,003
Deposits in banks
Time deposits	W	1,400		1,500
Restricted deposits (*)		76,852		77,257
	W	78,252		78,757
Non-current assets
Deposits in banks
Restricted deposits (*)	W	11		11
	W	3,367,379		3,414,771

(*) Includes funds deposited under agreements on mutually beneficial cooperation to aid LG Group companies’ suppliers, restricted deposits pledged to enforce the Group’s investment plans upon the receipt of grants from Gumi city and Gyeongsangbuk-do, and others.

43

5. Receivables and Other Assets

(a) Trade accounts and notes receivable as of September 30, 2020 and December 31, 2019 are as follows:

(In millions of won)	September 30, 2020		December 31, 2019
Due from third parties	W	3,108,870		2,576,391
Due from related parties		660,268		577,689
	W	3,769,138		3,154,080

(b) Other accounts receivable as of September 30, 2020 and December 31, 2019 are as follows:

(In millions of won)	September 30, 2020		December 31, 2019
Current assets
Non-trade receivables, net	W	148,004		463,614
Accrued income		12,102		10,434
	W	160,106		474,048
Non-current assets
Long-term non-trade receivables		7,289		9,072
	W	167,395		483,120

Due from related parties included in other accounts receivable as of September 30, 2020 and December 31, 2019 areW19,370 million andW19,431 million, respectively.

44

5. Receivables and Other Assets, Continued

(c) The aging of trade accounts and notes receivable and other accounts receivable as of September 30, 2020 and December 31, 2019 are as follows:

	September 30, 2020
	Book value				Allowance for impairment
(In millions of won)	Trade accounts and notes receivable		Other accounts receivable		Trade accounts and notes receivable			Other accounts receivable
Current	W	3,762,930		118,397		(1,252	)		(1,863	)
1-15 days past due		5,336		197		(1	)		—
16-30 days past due		2,125		56		—			—
31-60 days past due		—		549		—			(3	)
More than 60 days past due		—		50,087		—			(25	)
	W	3,770,391		169,286		(1,253	)		(1,891	)
	December 31, 2019
	Book value				Allowance for impairment
(In millions of won)	Trade accounts and notes receivable		Other accounts receivable		Trade accounts and notes receivable			Other accounts receivable
Current	W	3,119,914		208,086		(454	)		(3,292	)
1-15 days past due		34,626		3,512		(6	)		(1	)
16-30 days past due		—		598		—			(4	)
31-60 days past due		—		61		—			—
More than 60 days past due		—		274,185		—			(25	)
	W	3,154,540		486,442		(460	)		(3,322	)

The movement in the allowance for impairment in respect of trade accounts and notes receivable and other accounts receivable for the nine-month period ended September 30, 2020 and the year ended December 31, 2019 are as follows:

	September 30, 2020					December 31, 2019
(In millions of won)	Trade accounts and notes receivable		Other accounts receivable			Trade accounts and notes receivable			Other accounts receivable
Balance at the beginning of the period	W	460		3,322			477			1,281
(Reversal of) bad debt expense		793		(367	)		(17	)		2,041
Write-off		—		(1,064	)		—			—
Balance at the end of the reporting period	W	1,253		1,891			460			3,322

45

5. Receivables and Other Assets, Continued

(d) Other assets as of September 30, 2020 and December 31, 2019 are as follows:

(In millions of won)	September 30, 2020		December 31, 2019
Current assets
Advanced payments	W	44,508		6,203
Prepaid expenses		165,051		114,145
Value added tax refundable		835,991		826,730
Right to recover returned goods		15,789		22,106
	W	1,061,339		969,184
Non-current assets
Long-term prepaid expenses	W	238,198		272,835
Long-term advanced payments		22,158		7,742
	W	260,356		280,577

46

6. Other Financial Assets

Other financial assets as of September 30, 2020 and December 31, 2019 are as follows:

(In millions of won)	September 30 2020		December 31, 2019
Current assets
Financial assets at fair value through profit or loss
Derivatives(*)	W	14,367		34,036
Financial assets at fair value through other comprehensive income
Debt instruments
Government bonds	W	24		6
Financial assets carried at amortized cost
Deposits	W	3,242		9,585
Short-term loans		28,414		21,623
Lease receivables		6,062		5,695
	W	37,718		36,903
	W	52,109		70,945
Non-current assets
Financial assets at fair value through profit or loss
Equity instruments
Intellectual Discovery, Ltd.	W	1,104		1,104
Kyulux, Inc.		168		1,889
Fineeva Co., Ltd.		4		4
Looksten Inc.		100		—
Star Pickers. Inc.		100		—
ARCH Venture Fund VIII, L.P		6,321		6,302
Sierra Ventures XII, L.P		2,347		580
	W	10,144		9,879
Convertible securities	W	2,718		1,544
Derivatives(*)		66,610		15,640
	W	79,472		27,063
Financial assets at fair value through other comprehensive income
Debt instruments
Government bonds	W	48		70
Financial assets carried at amortized cost
Deposits	W	21,631		21,451
Long-term loans		19,765		40,827
Lease receivables		18,353		22,099
	W	59,749		84,377
	W	139,269		111,510

(*) Represents currency interest rate swap contracts related to foreign currency denominated borrowings and bonds. The contracts are not designated as hedging instruments.

47

7. Inventories

Inventories as of September 30, 2020 and December 31, 2019 are as follows:

(In millions of won)	September 30, 2020		December 31, 2019
Finished goods	W	930,120		730,009
Work-in-process		779,288		756,744
Raw materials		520,387		405,854
Supplies		169,929		158,548
	W	2,399,724		2,051,155

For the nine-month periods ended September 30, 2020 and 2019, the amounts of inventories recognized as cost of sales including inventory write-downs and usage of inventory write-downs are as follows:

(In millions of won)	2020			2019
Inventories recognized as cost of sales	W	15,517,233			15,637,832
Inventory write-downs		397,045			493,486
Usage of inventory write-downs		(472,885	)		(313,180	)

48

8. Investments in Equity Accounted Investees

Associates as of September 30, 2020 and December 31, 2019 are as follows:

(In millions of won) Associates	Location	Fiscal year end	Date of incorporation	Business	September 30, 2020			December 31, 2019
					Percentage of ownership	Carrying amount		Percentage of ownership	Carrying amount
Paju Electric Glass Co., Ltd.	Paju, South Korea	December 31	January 2005	Manufacture glass for display	40%	W	48,780	40%	W	50,697
WooRee E&L Co., Ltd.	Ansan, South Korea	December 31	June 2008	Manufacture LED back light unit packages	14%		7,538	14%		7,310
YAS Co., Ltd.	Paju, South Korea	December 31	April 2002	Develop and manufacture deposition equipment for OLEDs	15%		24,729	15%		19,424
AVATEC Co., Ltd.	Daegu, South Korea	December 31	August 2000	Process and sell glass for display	14%		19,805	14%		19,929
Arctic Sentinel, Inc.	Los Angeles, U.S.A.	March 31	June 2008	Develop and manufacture tablet for kids	10%		—	10%		—
Cynora GmbH(*1)	Bruchsal, Germany	December 31	March 2003	Develop organic emitting materials for displays and lighting devices	12%		4,714	12%		4,714

49

8. Investments in Equity Accounted Investees, Continued

(In millions of won) Associates

Location

Fiscal year end

Date of incorporation

Business

September 30, 2020

December 31, 2019

Percentage of ownership

Carrying amount

Percentage of ownership

Carrying amount

Material Science Co., Ltd.

Seoul, South Korea

December 31

January 2014

Develop, manufacture, and sell materials for display

10%

W

5,320

10%

W

2,354

Nanosys Inc.(*2)

Milpitas, U.S.A.

December 31

July 2001

Develop, manufacture, and sell materials for display

3%

4,828

4%

5,183

W

115,714

W

109,611

(*1) For the nine-month period ended September 30, 2020, the Controlling Company’s ownership percentage in Cynora GmbH decreased from 12.2% to 11.6% as the Controlling Company did not participate in the rights issue.

(*2) For the nine-month period ended September 30, 2020, the Controlling Company’s ownership percentage in Nanosys Inc. decreased from 4% to 3% as the Controlling Company did not participate in the rights issue.

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

Dividends income recognized from equity method investees for the nine-month periods ended September 30, 2020 and 2019 amounted toW8,239 million andW7,502 million, respectively.

50

9. Property, Plant and Equipment

For the nine-month periods ended September 30, 2020 and 2019, the Group purchased property, plant and equipment ofW1,601,271 million andW4,865,409 million, respectively. The capitalized borrowing costs and the annualized capitalization rate wereW168,558 million and 3.89%, andW212,218 million and 3.53% for the nine-month periods ended September 30, 2020 and 2019, respectively. In addition, for the nine-month periods ended September 30, 2020 and 2019, the Group disposed of property, plant and equipment with carrying amounts ofW100,442 million andW572,664 million, respectively, and recognizedW13,334 million andW29,328 million, respectively, as gain and loss on disposal of property, plant and equipment for the nine-month period ended September 30, 2020 (gain and loss for the nine-month period ended September 30, 2019:W13,571 million andW31,726 million, respectively).

10. Intangible Assets

The Group capitalizes expenditures related to development activities, such as expenditures incurred on designing, manufacturing and testing of products after those related activities meet the capitalization criteria of development costs including technical feasibility, future economic benefits and others. The balances of capitalized development costs as of September 30, 2020 and December 31, 2019 areW329,825 million andW375,183 million, respectively. In addition, for the nine-month period ended September 30, 2020, the Group recognized an impairment loss amounting toW68,618 million in connection with development projects.

51

11. Financial Liabilities

(a) Financial liabilities as of September 30, 2020 and December 31, 2019 are as follows:

(In millions of won)	September 30, 2020		December 31, 2019
Current
Short-term borrowings	W	697,657		696,793
Current portion of long-term borrowings and bonds		1,832,888		1,242,904
Derivatives (*)		17,000		—
Lease liabilities		44,201		37,387
	W	2,591,746		1,977,084
Non-current
Won denominated borrowings	W	2,544,375		2,692,560
Foreign currency denominated borrowings		6,808,093		6,107,117
Bonds		2,490,657		2,741,516
Derivatives(*)		47,527		20,592
Lease liabilities		51,778		51,125
	W	11,942,430		11,612,910

(*) Represents currency interest rate swap contracts and others entered into by the Group to hedge currency and interest rate risks with respect to foreign currency denominated borrowings and bonds. The contracts are not designated as hedging instruments.

(b) Short-term borrowings as of September 30, 2020 and December 31, 2019 are as follows:

(In millions of won, USD and CNY) Lender	Annual interest rate as of September 30, 2020 (%)(*)	September 30, 2020		December 31, 2019
Standard Chartered Bank Korea Limited	12ML + 0.98	W	352,050		347,340
Bank of China	6ML + 1.50		80,981		—
Standard Chartered Bank Vietnam and others	3ML + 0.90		50,461		61,613
Standard Chartered Bank (China) Limited and others	LPR(1Y) + 0.05~0.45 3.71		214,165		287,840
Foreign currency equivalent		USD	412	USD	353
		CNY	1,246	CNY	1,737
		W	697,657		696,793

(*) ML represents Month LIBOR (London Inter-Bank Offered Rates) and LPR represents Loan Prime Rate of People’s Bank of China.

52

11. Financial Liabilities, Continued

(c) Won denominated long-term borrowings as of September 30, 2020 and December 31, 2019 are as follows:

(In millions of won) Lender	Annual interest rate as of September 30, 2020 (%)(*)		September 30, 2020			December 31, 2019
Woori Bank		2.75	W	120			608
Korea Development Bank and others		CD rate (91days) + 1.00~1.60, 2.21~3.40		3,281,875			3,330,000
Less current portion of long-term borrowings				(737,620	)		(638,048	)
			W	2,544,375			2,692,560

(*) CD represents certificate of deposit.

(d) Foreign currency denominated long-term borrowings as of September 30, 2020 and December 31, 2019 are as follows:

(In millions of won, USD and CNY) Lender	Annual interest rate as of September 30, 2020 (%)		September 30, 2020			December 31, 2019
The Export-Import Bank of Korea and others		3ML+0.75~2.20 6ML+1.25~1.35	W	1,730,913			1,696,177
China Construction Bank and others		USD: 3ML+0.65~1.43 CNY: LPR(5Y)+0.44, LPR(1Y)+0.00~0.50, 4.70		5,722,629			4,606,094
Foreign currency equivalent			USD	2,690		USD	2,767
			CNY	24,999		CNY	18,699
Less current portion of long-term borrowings				(645,449	)		(195,154	)
			W	6,808,093			6,107,117

53

11. Financial Liabilities, Continued

(e) Details of bonds issued and outstanding as of September 30, 2020 and December 31, 2019 are as follows:

(In millions of won and USD)	Maturity	Annual interest rate as of September 30, 2020 (%)		September 30, 2020			December 31, 2019
Won denominated bonds at amortized cost (*1)
Publicly issued bonds	October 2020 ~ February 2024		1.95~2.95	W	1,470,000			1,730,000
Privately issued bonds	May 2022 ~ May 2033		3.25~4.25		160,000			110,000
Less discount on bonds					(2,160	)		(3,404	)
Less current portion					(449,819	)		(409,702	)
				W	1,178,021			1,426,894
Foreign currency denominated bonds at amortized cost (*2)
Publicly issued bonds	November 2021		3.88	W	352,050			347,340
Privately issued bonds	April 2023		3ML+1.47		117,350			115,780
Foreign currency equivalent				USD	400		USD	400
Less discount on bonds					(4,327	)		(6,883	)
				W	465,073			456,237
Financial liabilities at fair value through profit or loss
Foreign currency denominated convertible bonds	August 2024		1.50	W	847,563			858,385
Foreign currency equivalent				USD	722		USD	741
				W	2,490,657			2,741,516

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

(*2) Principal of the foreign currency denominated bonds is to be repaid at maturity and interests are paid quarterly or semi-annually.

54

11. Financial Liabilities, Continued

(f) Details of convertible bonds issued and outstanding by the Controlling Company as of September 30, 2020 are as follows:

(In won, USD)	Description
Type	Unsecured foreign currency denominated convertible bonds
Issuance amount	USD 687,800,000
Annual interest rate (%)	1.50
Issuance date	August 22, 2019
Maturity date	August 22, 2024
Interest payment	Payable semi-annually in arrear until maturity date
Principal redemption	1.  Redemption at maturity: Redeemed on the maturity date, at their outstanding principal amount, which has not been early redeemed or converted.
	2.  Early redemption: The Controlling Company has a right to redeem before maturity (call option) and the bondholders have a right to require the Controlling Company to redeem before maturity (put option). At exercise of each option, the outstanding principal amount together with accrued but unpaid interest are to be redeemed.
Conversion price	W    19,845 per common share (subject to adjustment based on diluted effects of certain events)
Conversion period	From August 23, 2020 to August 12, 2024
Redemption at the option of the issuer (Call option)	- On or at any time after 3 years from the issuance, if the closing price of the shares for any 20 trading days out of the 30 consecutive trading days is at least 130% of the applicable conversion price - The aggregate principal amount of the convertible bonds outstanding is less than 10% of the aggregate principal amount originally issued, or - In the event of certain changes in laws and other directives resulting in additional taxes for the holders
Redemption at the option of the bondholders (Put option)	On the day of 3 years from the issuance

The Controlling Company designated the convertible bonds as financial liabilities at fair value through profit of loss and recognized the change in fair value in profit or loss. The Controlling Company measures the convertible bond at fair value using the market price of convertible bonds disclosed on Bloomberg. The number of convertible shares as of September 30, 2020 is as follows:

(In won and No. of shares)	September 30, 2020
Aggregate outstanding amount of the convertible bonds	W	813,426,670,000
Conversion price	W	19,845
Number of common shares to be issued at conversion		40,988,998

55

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 and certain subsidiaries.

(a) Net defined benefit liabilities (defined benefit assets) recognized as of September 30, 2020 and December 31, 2019 are as follows:

(In millions of won)	September 30, 2020			December 31, 2019
Present value of partially funded defined benefit obligations	W	1,522,899			1,481,339
Fair value of plan assets		(1,531,421	)		(1,607,253	)
	W	(8,522	)		(125,914	)
Defined benefit liabilities, net		1,596			1,338
Defined benefit assets, net		10,118			127,252

(b) Expenses recognized in profit or loss for the three-month and nine-month periods ended September 30, 2020 and 2019 are as follows:

	For the three-month periods ended September 30,					For the nine-month periods ended September 30,
(In millions of won)	2020			2019		2020			2019
Current service cost	W	40,969			49,012		122,796			146,903
Net interest cost		(776	)		303		(2,329	)		911
	W	40,193			49,315		120,467			147,814

(c) Plan assets as of September 30, 2020 and December 31, 2019 are as follows:

(In millions of won)	September 30, 2020		December 31, 2019
Guaranteed deposits in banks	W	1,531,421		1,607,253

As of September 30, 2020, the Group maintains the plan assets primarily with Mirae Asset Daewoo Co., Ltd., KB Insurance Co., Ltd. and others.

(d) Remeasurements of the net defined benefit liabilities (assets) included in other comprehensive income (loss) for the three-month and nine-month periods ended September 30, 2020 and 2019 are as follows:

	For the three-month periods ended September 30,						For the nine-month periods ended September 30,
(In millions of won)	2020			2019			2020			2019
Remeasurements of net defined benefit liabilities	W	(1,042	)		(1,355	)		(4,824	)		(6,203	)
Tax effect		266			332			1,238			(3,219	)
Remeasurements of net defined benefit liabilities, net of income tax	W	(776	)		(1,023	)		(3,586	)		(9,422	)

56

13.    Provisions and Other Liabilities

(a) Changes in provisions for the nine-month period ended September 30, 2020 are as follows:

(In millions of won)	Warranties (*)			Others			Total
Balance at January 1, 2020	W	230,262			26,381			256,643
Additions (reversal)		200,574			(6,498	)		194,076
Usage		(194,619	)		(778	)		(195,397	)
Balance at September 30, 2020	W	236,217			19,105			255,322
Current	W	164,433			19,105			183,538
Non-current	W	71,784			—			71,784

(*) Product warranties on defective products is normally applicable for 18~36 months from the date of customer’s purchase. The provision is calculated by using historical and anticipated rates of warranty claims, and costs per claim to satisfy the Group’s warranty obligation.

(b) Other liabilities as of September 30, 2020 and December 31, 2019 are as follows:

(In millions of won)	September 30, 2020		December 31, 2019
Current liabilities
Withholdings	W	34,018		28,376
Unearned revenue		11,710		44,333
Security deposits received		5,850		9,310
	W	51,578		82,019
Non-current liabilities
Long-term accrued expenses	W	84,758		78,537
Long-term other accounts payable		29		1,069
Long-term unearned revenue		3,923		6,852
Security deposits received		6,370		1,690
	W	95,080		88,148

57

14. Contingencies and Commitments

(a) Legal Proceedings

Anti-trust Litigations

Some individual claimants filed “follow-on” damages claims against the Group and other TFT-LCD manufacturers alleging violations of EU competition law. While the Group continues its vigorous defense of the various pending proceedings described above, as of September 30, 2020, the Group cannot reliably estimate the timing and amount of outflows of resources embodying economic benefits relating to the proceedings.

Solas OLED Ltd. Litigations

In April 2019, Solas OLED Ltd. filed patent infringement actions against the Controlling Company and television manufacturers in the United States District Court for the Western District of Texas as well as the Controlling Company and its subsidiary, LG Display Germany GmbH, and television manufacturers in the Mannheim District Court in Germany. In addition, in May 2019, Solas OLED Ltd. filed patent infringement actions against the Controlling Company, television manufacturers and others in the Beijing Intellectual Property Court in China. In November 2020, the Mannheim District Court issued a decision in favor of the plaintiff. The Group will appeal Mannheim District Court’s November decision. Furthermore, a nullity action is currently ongoing in the German Federal Patent Court against the asserted patent. As of September 30, 2020, the Group cannot reliably estimate the timing and amount of outflows of resources embodying economic benefits relating to the proceedings.

Others

The Group is involved in various disputes in addition to the pending proceedings described above. The Group cannot reliably estimate the timing and amount of outflows of resources embodying economic benefits relating to the disputes.

(b) Commitments

Factoring and securitization of accounts receivable

The Controlling Company has agreements with Korea Development Bank and several other banks for accounts receivable sales negotiating facilities of up to an aggregate of USD 1,115 million (W1,308,453 million) in connection with the Controlling Company’s export sales transactions with its subsidiaries. As of September 30, 2020, there are no short-term borrowings that are outstanding but past due in connection with these agreements. In connection with all of the contracts in this paragraph, the Controlling Company has sold its accounts receivable with recourse.

58

14. Contingencies and Commitments, Continued

The Controlling Company and overseas subsidiaries entered into agreements with financial institutions for accounts receivables sales negotiating facilities. The respective maximum amount of accounts receivables that could be sold under the agreements and the amount of sold but not yet due accounts receivables by contract are as follows:

		Credit limit				Not yet due
(In millions of USD and KRW) Classification	Financial institutions	Contractual amount		KRW equivalent		Contractual amount		KRW equivalent
Controlling Company	Shinhan Bank	KRW	90,000		90,000		—		—
		USD	60		70,410	USD	30		35,208
	Sumitomo Mitsui Banking Corporation	USD	20		23,470		—		—
	MUFG Bank	KRW	130,000		130,000	KRW	24,734		24,734
		USD	70		82,145		—		—
	BNP Paribas	USD	125		146,688	USD	15		17,630
	ING Bank	USD	150		176,025	USD	40		47,129
		USD	425		718,738	USD	85
		KRW	220,000			KRW	24,734		124,701
Subsidiaries
LG Display Singapore Pte. Ltd.	Standard Chartered Bank	USD	300		352,050	USD	117		137,655
LG Display Taiwan Co., Ltd.	BNP Paribas	USD	15		17,603		—		—
	Australia and New Zealand Banking Group Ltd.	USD	70		82,145	USD	44		51,634
	KGI Bank Co., Ltd.	USD	30		35,205	USD	6		7,042
LG Display Germany GmbH	BNP Paribas	USD	75		88,013	USD	45		53,032
	DZ Bank AG	USD	18		21,624	USD	10		11,258
	Commerzbank AG	USD	2		2,010	USD	0		9
LG Display America, Inc.	Hong Kong & Shanghai Banking Corp.	USD	400		469,400	USD	300		352,050
	Standard Chartered Bank	USD	600		704,100	USD	267		313,900
	Sumitomo Mitsui Banking Corporation	USD	200		234,700	USD	20		23,471
LG Display Japan Co., Ltd.	Chelsea Capital Corporation Tokyo Branch	USD	120		140,820	USD	1		1,159
		USD	1,830		2,147,670	USD	810		951,210
		USD	2,255		2,866,408	USD	895		1,075,911
		KRW	220,000			KRW	24,734

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

59

14. Contingencies and Commitments, Continued

Letters of credit

As of September 30, 2020, the Controlling Company has agreements in relation to the opening of letters of credit up to USD 150 million (W176,025 million) with KEB Hana Bank, USD 50 million (W58,675 million) with Sumitomo Mitsui Banking Corporation, USD 100 million (W117,350 million) with Industrial Bank of Korea, USD 100 million (W117,350 million) with Industrial and Commercial Bank of China, USD 200 million (W234,700 million) with Shinhan Bank, USD 100 million (W117,350 million) with KB Kookmin Bank, USD 50 million (W58,675 million) with MUFG Bank and USD 200 million (W234,700 million) with the Export-Import Bank of Korea.

Meanwhile, LG Display Guangzhou Co., Ltd. has an agreement in relation to the opening of letters of credit up to CNY 500 million (W85,950 million) with Bank of China.

Payment guarantees

The Controlling Company obtained payment guarantees amounting to USD 475 million (W557,413 million) from KEB Hana Bank and others for advances received related to the long-term supply agreements. The Controlling Company also obtained payment guarantees amounting to USD 306 million (W358,871 million) from Korea Development Bank for foreign currency denominated bonds.

LG Display (China) Co., Ltd. and other subsidiaries are provided with payment guarantees from the China Construction Bank and other various banks amounting to CNY 1,332 million (W228,971 million), JPY 900 million (W10,009 million), EUR 2.5 million (W3,424 million), VND 47,554 million (W2,406 million), and USD 0.5 million (W587 million), respectively, for their local tax payments and utility payments.

License agreements

As of September 30, 2020, the Group has technical license agreements with Hitachi Display, Ltd. and others in relation to its LCD business and patent cross license agreement with Universal Display Corporation in relation to its OLED business. Also, the Group has a trademark license agreement with LG Corp. and other intellectual properties agreements with various companies as of September 30, 2020.

Long-term supply agreement

As of September 30, 2020, in connection with long-term supply agreements with customers, the Controlling Company recognized USD 338 million (W396,056 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 475 million (W557,413 million) from KEB Hana Bank and other various banks relating to advances received (see note 14(b) payment guarantees).

Pledged Assets

Regarding the secured bank borrowing amounting to CNY 19,320 million (W3,321,108 million) from China Construction Bank and others, as of September 30, 2020, the Group provided its property, plant and equipment with carrying amount ofW678,863 million as pledged assets.

60

15. Capital and Reserves

(a) Share capital

The Controlling Company is authorized to issue 500,000,000 shares of capital stock (par valueW5,000), and as of September 30, 2020 and December 31, 2019, the number of issued common shares is 357,815,700. There have been no changes in the capital stock from January 1, 2019 to September 30, 2020.

(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 equity accounted investees.

Reserves as of September 30, 2020 and December 31, 2019 are as follows:

(In millions of won)	September 30, 2020			December 31, 2019
Foreign currency translation differences for foreign operations	W	70,935			(178,452	)
Other comprehensive loss from associates		(22,255	)		(24,569	)
	W	48,680			(203,021	)

61

16. Revenue

Details of revenue for the three-month and nine-month periods ended September 30, 2020 and 2019 are as follows:

	For the three-month periods ended September 30				For the nine-month periods ended September 30
(In millions of won)	2020		2019		2020		2019
Sales of goods	W	6,726,898		5,813,291		16,736,141		17,026,655
Royalties		2,967		3,012		10,666		9,661
Others		7,781		5,378		22,109		17,556
	W	6,737,646		5,821,681		16,768,916		17,053,872

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 and nine-month periods ended September 30, 2020 and 2019.

(a) Revenue by geography

(In millions of won)	For the three-month periods ended September 30				For the nine-month periods ended September 30
Region	2020		2019		2020		2019
Domestic	W	260,656		275,417		750,144		1,005,263
Foreign
China		4,591,991		3,848,616		11,438,314		10,971,875
Asia (excluding China)		555,275		609,797		1,638,955		1,847,276
United States		655,860		502,786		1,393,806		1,476,344
Europe (excluding Poland)		334,211		394,782		863,844		1,106,974
Poland		339,653		190,283		683,853		646,140
	W	6,476,990		5,546,264		16,018,772		16,048,609
	W	6,737,646		5,821,681		16,768,916		17,053,872

Sales to Company A and Company B amount toW6,868,453 million andW2,913,957 million, respectively, for the nine-month period ended September 30, 2020 (the nine-month period ended September 30, 2019:W5,695,420 million andW3,444,284 million). The Group’s top ten end-brand customers together accounted for 84% of revenue for the nine-month period ended September 30, 2020 (the nine-month period ended September 30, 2019: 79%).

62

17. Geographic and Other Information, Continued

(b) Non-current assets by geography

	September 30, 2020				December 31, 2019
(In millions of won) Region	Property, plant and equipment		Intangible assets		Property, plant and equipment		Intangible assets
Domestic	W	11,951,581		635,134		12,764,240		708,047
Foreign
China		7,283,929		39,597		7,391,279		34,337
Vietnam		1,876,609		8,393		1,923,765		7,630
Others		17,761		111,002		8,361		123,434
	W	9,178,299		158,992		9,323,405		165,401
	W	21,129,880		794,126		22,087,645		873,448

(c) Revenue by product and services

(In millions of won)	For the three-month periods ended September 30,				For the nine-month periods ended September 30,
Product	2020		2019		2020		2019
Televisions	W	1,901,974		1,888,747		4,580,438		6,183,831
Desktop monitors		1,132,246		1,052,998		3,152,401		3,006,075
Notebook computers & Tablet products		1,755,426		1,249,156		4,233,736		3,753,648
Mobile and others		1,948,000		1,630,780		4,802,341		4,110,318
	W	6,737,646		5,821,681		16,768,916		17,053,872

63

18. The Nature of Expenses and Others

The classification of expenses by nature for the three-month and nine-month periods ended September 30, 2020 and 2019 are as follows:

	For the three-month periods ended September 30,						For the nine-month periods ended September 30,
(In millions of won)	2020			2019			2020			2019
Changes in inventories	W	(360,339	)		(157,973	)		(348,569	)		(35,991	)
Purchases of raw materials, merchandise and others		3,780,160			3,367,883			9,266,342			9,297,391
Depreciation and amortization		1,124,049			973,612			3,045,977			2,686,784
Outsourcing		277,529			199,230			701,105			632,772
Labor		746,642			894,698			2,138,058			2,457,134
Supplies and others		238,696			175,535			608,997			623,799
Utility		247,062			246,219			651,418			679,073
Fees and commissions		175,656			175,613			478,695			532,586
Shipping		47,852			48,304			129,118			155,008
Advertising		26,158			49,915			95,616			84,401
Warranty		98,456			85,421			200,576			283,778
Travel		23,017			24,611			46,338			74,319
Taxes and dues		32,809			26,265			105,754			81,277
Impairment loss on property, plant, and equipment		—			26,606			8,611			36,371
Impairment loss on intangible assets		38,782			116,026			69,293			116,026
Others		131,975			161,474			483,732			481,814
	W	6,628,504			6,413,439			17,681,061			18,186,542

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

64

19. Selling and Administrative Expenses

Details of selling and administrative expenses for the three-month and nine-month periods ended September 30, 2020 and 2019 are as follows:

	For the three-month periods ended September 30,				For the nine-month periods ended September 30,
(In millions of won)	2020		2019		2020		2019
Salaries(*)	W	72,952		165,045		218,704		337,735
Expenses related to defined benefit plans		6,636		8,681		19,892		25,337
Other employee benefits		16,145		17,632		49,995		60,464
Shipping		38,637		39,952		101,665		129,540
Fees and commissions		57,593		54,157		163,126		164,970
Depreciation		50,481		60,520		160,975		169,386
Taxes and dues		17,764		10,576		62,540		35,513
Advertising		26,158		49,915		95,616		84,401
Warranty		98,456		85,421		200,576		283,778
Insurance		3,452		2,933		9,429		8,420
Travel		2,247		6,087		6,839		18,013
Training		2,368		3,613		5,423		10,363
Others		14,551		16,023		43,496		50,449
	W	407,440		520,555		1,138,276		1,378,369

(*) Expenses recognized in relation to employee termination benefits for the nine-month periods ended September 30, 2020 and 2019 amount toW1,139 million andW84,083 million, respectively.

20. Personnel Expenses

Details of personnel expenses for the three-month and nine-month periods ended September 30, 2020 and 2019 are as follows:

	For the three-month periods ended September 30,				For the nine-month periods ended September 30,
(In millions of won)	2020		2019		2020		2019
Salaries and wages	W	590,328		738,442		1,707,293		2,046,813
Other employee benefits		110,565		121,985		320,073		364,307
Contributions to National Pension plan		16,674		18,997		50,644		55,150
Expenses related to defined benefit plans and defined contribution plans		40,267		49,316		120,942		147,832
	W	757,834		928,740		2,198,952		2,614,102

65

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

(a) Details of other non-operating income for the three-month and nine-month periods ended September 30, 2020 and 2019 are as follows:

	For the three-month periods ended September 30,				For the nine-month periods ended September 30,
(In millions of won)	2020		2019		2020		2019
Foreign currency gain	W	304,286		286,581		1,000,386		928,925
Gain on disposal of property, plant and equipment		4,288		4,946		13,334		13,571
Gain on disposal of intangible assets		121		—		121		552
Reversal of impairment loss on intangible assets		660		279		1,260		480
Rental income		905		695		2,942		2,085
Gain on disposal of non-current assets held for sale		—		—		—		8,353
Others		21,983		16,048		37,954		21,583
	W	332,243		308,549		1,055,997		975,549

(b) Details of other non-operating expenses for the three-month and nine-month periods ended September 30, 2020 and 2019 are as follows:

	For the three-month periods ended September 30,				For the nine-month periods ended September 30,
(In millions of won)	2020		2019		2020		2019
Foreign currency loss	W	297,731		286,873		960,915		932,227
Other bad debt expense		—		643		—		1,041
Loss on disposal of property, plant and equipment		10,709		9,727		29,328		31,726
Loss on disposal of intangible assets		21		—		28		139
Impairment loss on property, plant and equipment		—		26,606		8,611		36,371
Impairment loss on intangible assets		38,782		116,506		69,293		116,506
Loss on disposal of investments in subsidiaries		—		—		72,654		—
Donations		327		180		753		605
Others		5,379		1,358		16,896		8,782
	W	352,949		441,893		1,158,478		1,127,397

66

22. Finance Income and Finance Costs

Finance income and costs recognized in profit and loss for the three-month and nine-month periods ended September 30, 2020 and 2019 are as follows:

	For the three-month periods ended September 30,				For the nine-month periods ended September 30,
(In millions of won)	2020		2019		2020			2019
Finance income
Interest income	W	16,669		14,089		52,719			36,016
Foreign currency gain		100,274		39,548		188,911			86,834
Gain on disposal of investments in equity accounted investees		—		4,531		—			4,531
Gain on transaction of derivatives		515		9,685		28,066			22,852
Gain on valuation of derivatives		—		76,090		50,970			116,990
Gain on valuation of financial assets at fair value through profit or loss		—		—		—			6
Gain on valuation of financial liabilities at fair value through profit or loss		—		—		33,634			—
	W	117,458		143,943		354,300			267,229
Finance costs
Interest expense	W	111,944		57,398		258,238			108,980
Foreign currency loss		57,875		97,782		234,870			206,095
Loss on repayment of borrowings		296		—		794			—
Loss on sale of trade accounts and notes receivable		1,194		3,713		4,135			15,937
Loss on transaction of derivatives		2,585		—		2,585			—
Loss on valuation of derivatives		46,550		—		63,603			3,564
Loss on valuation of financial assets at fair value through profit or loss		228		—		1,721	��		3,960
Loss on valuation of financial liabilities at fair value through profit or loss		99,945		9,059		—			9,059
Others		348		9,424		1,429			11,410
	W	320,965		177,376		567,375			359,005

67

23. Income Taxes

(a) Details of income tax expense (benefit) for the three-month and nine-month periods ended September 30, 2020 and 2019 are as follows:

	For the three-month periods ended September 30,						For the nine-month periods ended September 30,
(In millions of won)	2020			2019			2020			2019
Current tax expense (benefit)	W	(4,767	)		34,217			66,510			145,445
Deferred tax expense (benefit)		(60,683	)		(192,222	)		(393,053	)		(261,686	)
Income tax expense (benefit)	W	(65,450	)		(158,005	)		(326,543	)		(116,241	)

(b) Deferred Tax Assets and Liabilities

The carrying amount of deferred tax assets are reviewed at each reporting date and 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. The Group’s deferred tax assets and liabilities may differ from actual refundable or payable amount.

Deferred tax assets and liabilities as of September 30, 2020 and December 31, 2019 are attributable to the following:

	Assets				Liabilities						Total
(In millions of won)	September 30, 2020		December, 31, 2019		September 30, 2020			December,31, 2019			September 30, 2020			December, 31, 2019
Other accounts receivable, net	W	—		—		(689	)		(4,364	)		(689	)		(4,364	)
Inventories, net		114,997		89,522		—			—			114,997			89,522
Defined benefit liabilities, net		—		—		(13,766	)		—			(13,766	)		—
Investments in subsidiaries and associates		—		—		(75,817	)		(20,015	)		(75,817	)		(20,015	)
Accrued expenses		121,864		131,196		—			—			121,864			131,196
Property, plant and equipment		702,892		691,599		(76,384	)		(21,690	)		626,508			669,909
Intangible assets		19,686		21,886		(9,291	)		(10,759	)		10,395			11,127
Provisions		51,792		59,875		—			(4,446	)		51,792			55,429
Other temporary differences		117,559		137,667		(789	)		(328	)		116,770			137,339
Tax losses carryforwards		1,068,072		607,432		—			—			1,068,072			607,432
Tax credit carryforwards		90,077		38,337		—			—			90,077			38,337
Deferred tax assets (liabilities)	W	2,286,939		1,777,514		(176,736	)		(61,602	)		2,110,203			1,715,912

68

24. Earnings (Loss) Per Share

(a) Basic earnings (loss) per share for the three-month and nine-month periods ended September 30, 2020 and 2019 are as follows:

	For the three-month periods ended September 30,					For the nine-month periods ended September 30,
(In won and number of shares)	2020		2019			2020			2019
Profit (loss) attributable to owners of the Controlling Company	W	30,377,146,594		(419,353,052,881	)		(657,734,674,606	)		(1,028,663,506,656	)
Weighted-average number of common stocks outstanding		357,815,700		357,815,700			357,815,700			357,815,700
Earnings (loss) per share	W	85		(1,172	)		(1,838	)		(2,875	)

For the three-month and nine-month periods ended September 30, 2020 and 2019, 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 is not different from basic earnings (loss) per share as there is no dilution effects of potential common stocks for the nine-month period ended September 30, 2020. As of September 30, 2020, 40,988,998 shares of potential common stock to be issued from conversion were excluded from the calculation of weighted-average number of common stocks due to antidilution.

69

25. Financial Risk Management

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

(a) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices, will affect the 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 Controlling Company, Korean won (KRW). The currencies in which these transactions primarily are denominated are USD, CNY, JPY, etc.

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

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. Meanwhile, the Group entered into currency interest rate swap contracts to hedge currency risk with respect to foreign currency denominated borrowings and bonds.

70

25. Financial Risk Management, Continued

i) Exposure to currency risk

The Group’s exposure to foreign currency risk based on notional amounts as of September 30, 2020 and December 31, 2019 is as follows:

	September 30, 2020
(In millions)	USD			JPY			CNY			TWD			EUR			PLN		VND
Cash and cash equivalents		1,199			406			10,362			21			3			2		79,762
Trade accounts and notes receivable		3,048			2			509			—			—			—		—
Non-trade receivables		53			120			244			1			2			—		8,767
Other assets denominated in foreign currencies		—			207			54			6			—			—		4,538
Trade accounts and notes payable		(1,598	)		(9,808	)		(2,143	)		—			—			—		(436,319	)
Other accounts payable		(194	)		(5,748	)		(1,808	)		(3	)		(4	)		—		(498,873	)
Financial liabilities		(4,220	)		—			(26,245	)		—			—			—		—
		(1,712	)		(14,821	)		(19,027	)		25			1			2		(842,125	)
Currency interest rate swap contracts		2,125			—			—			—			—			—		—
Net exposure		413			(14,821	)		(19,027	)		25			1			2		(842,125	)

	December 31, 2019
(In millions)	USD			JPY			CNY			TWD			EUR			PLN		VND
Cash and cash equivalents		1,594			68			8,360			33			5			25		28,663
Trade accounts and notes receivable		2,485			19			550			—			—			—		—
Non-trade receivables		276			455			230			3			2			—		13,131
Other assets denominated in foreign currencies		29			526			5,668			369			5			503		4,032
Trade accounts and notes payable		(628	)		(9,043	)		(2,289	)		—			—			—		(291,891	)
Other accounts payable		(488	)		(12,396	)		(3,239	)		(4	)		(10	)		—		(786,356	)
Financial liabilities		(4,255	)		—			(20,436	)		—			—			—		—
		(987	)		(20,371	)		(11,156	)		401			2			528		(1,032,421	)
Currency interest rate swap contracts		2,085			—			—			—			—			—		—
Net exposure		1,098			(20,371	)		(11,156	)		401			2			528		(1,032,421	)

71

25. Financial Risk Management, Continued

Average exchange rates applied for the nine-month periods ended September 30, 2020 and 2019 and the exchange rates at September 30, 2020 and December 31, 2019 are as follows:

	Average rate				Reporting date spot rate
(In won)	2020		2019		September 30, 2020		December 31, 2019
USD	W	1,200.52		1,161.69	W	1,173.50		1,157.80
JPY		11.16		10.65		11.12		10.63
CNY		171.46		169.11		171.90		165.74
TWD		40.33		37.44		40.31		38.48
EUR		1,349.23		1,305.11		1,369.42		1,297.43
PLN		305.16		303.51		298.51		304.87
VND		0.0516		0.0500		0.0506		0.0500

ii) Sensitivity analysis

A weaker won, as indicated below, against the following currencies which comprise the Group’s assets or liabilities denominated in foreign currency as of September 30, 2020 and December 31, 2019, 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 reporting period. The analysis assumes that all other variables, in particular interest rates, would remain constant. The changes in equity and profit or loss would have been as follows:

	September 30, 2020						December 31, 2019
(In millions of won)	Equity			Profit or loss			Equity			Profit or loss
USD (5 percent weakening)	W	(6,521	)		81,041			23,570			105,398
JPY (5 percent weakening)		(6,311	)		(5,088	)		(8,397	)		(6,418	)
CNY (5 percent weakening)		(163,647	)		312			(92,454	)		11
TWD (5 percent weakening)		50			—			772			—
EUR (5 percent weakening)		(12	)		206			221			(278	)
PLN (5 percent weakening)		25			25			8,036			28
VND (5 percent weakening)		(1,545	)		(1,545	)		(1,871	)		(1,871	)

A stronger won against the above currencies as of September 30, 2020 and December 31, 2019 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.

72

25. Financial Risk Management, Continued

(ii) Interest rate risk

Interest rate risk arises principally from the Group’s variable interest-bearing bonds and borrowings. The Group establishes and applies its policy to reduce uncertainty arising from fluctuations in 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. Meanwhile, the Group entered into currency interest rate swap contracts amounting to USD 1,825 million (W2,141,638 million) and interest rate swap contracts amounting toW170,000 million in notional amount to hedge interest rate risk with respect to variable interest bearing borrowings.

i) Profile

The interest rate profile of the Group’s interest-bearing financial instruments as of September 30, 2020 and December 31, 2019 is as follows:

(In millions of won)	September 30, 2020			December 31, 2019
Fixed rate instruments
Financial assets	W	3,367,439			3,414,838
Financial liabilities		(6,368,500	)		(6,066,554	)
	W	(3,001,061	)		(2,651,716	)
Variable rate instruments
Financial liabilities	W	(8,005,170	)		(7,414,336	)

ii) Equity and profit or loss sensitivity analysis for variable rate instruments

As of September 30, 2020 and December 31, 2019, 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.

	Equity					Profit or loss
(In millions of won)	1%p increase			1%p decrease		1%p increase			1%p decrease
September 30, 2020
Variable rate instruments (*)	W	(43,833	)		43,833		(43,833	)		43,833
December 31, 2019
Variable rate instruments (*)	W	(38,774	)		38,774		(38,774	)		38,774

(*) Financial instruments related to non-hedging interest rate swaps are excluded.

73

25. Financial Risk Management, Continued

(b) Credit risk

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

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

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

In relation to the impairment of financial assets subsequent to initial recognition, the Group recognizes the changes in expected credit loss (“ECL”) in profit or loss at each reporting date.

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposures to credit risk as of September 30, 2020 and December 31, 2019 are as follows:

(In millions of won)	September 30, 2020		December 31, 2019
Financial assets carried at amortized cost
Cash and cash equivalents	W	3,289,116		3,336,003
Deposits in banks		78,263		78,768
Trade accounts and notes receivable, net		3,769,138		3,154,080
Non-trade receivables		148,004		463,614
Accrued income		12,102		10,434
Deposits		24,873		31,036
Short-term loans		28,414		21,623
Long-term loans		19,765		40,827
Long-term non-trade receivables		7,289		9,072
Lease receivables		24,415		27,794
	W	7,401,379		7,173,251
Financial assets at fair value through profit or loss
Convertible securities	W	2,718		1,544
Derivatives		80,977		49,676
	W	83,695		51,220
Financial assets at fair value through other comprehensive income
Debt instruments	W	72		76
	W	7,485,146		7,224,547

Trade accounts and notes receivable are insured in order for the Group to manage credit risk if they do not meet the Group’s internal credit ratings. Uninsured trade accounts and notes receivables are managed by continuous monitoring of internal credit rating standards established by the Group and seeking insurance coverage, if necessary.

74

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 other financial assets. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

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

The following are the contractual maturities of financial liabilities, including estimated interest payments, as of September 30, 2020.

			Contractual cash flows in
(In millions of won)	Carrying amount		Total		6 months or less		6-12 months		1-2 years		2-5 years		More than 5 years
Non-derivative financial liabilities
Borrowings	W	11,433,194		12,396,515		1,466,203		959,519		2,990,082		6,188,791		791,920
Bonds		2,940,476		3,057,276		383,964		129,863		1,952,914		497,505		93,030
Trade accounts and notes payable		4,037,188		4,037,188		3,651,538		385,650		—		—		—
Other accounts payable		1,223,104		1,223,104		1,222,027		1,077		—		—		—
Other accounts payable (enterprise procurement cards/tax payment cards)(*)		1,897,520		1,919,697		1,271,444		648,253		—		—		—
Long-term other accounts payable		29		29		—		—		29		—		—
Security deposits received		12,220		12,220		5,590		260		6,370		—		—
Lease liabilities		95,979		104,176		29,409		18,347		19,348		27,949		9,123
Derivative financial liabilities
Derivatives		64,527		26,630		7,662		8,175		5,932		4,861		—
	W	21,704,237		22,776,835		8,037,837		2,151,144		4,974,675		6,719,106		894,073

(*) Represents the amount of utility expenses and others paid by enterprise procurement cards and national taxes paid by tax payment cards and the outstanding payables are settled at the end of the billing cycle. The payments to the card company arise from operating activities of purchasing of goods and services thus the related cash flow is presented as operating activities.

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

75

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)	September 30, 2020			December 31, 2019
Total liabilities	W	23,323,029			23,086,282
Total equity		12,174,379			12,488,281
Cash and deposits in banks (*1)		3,367,368			3,414,760
Borrowings (including bonds)		14,373,670			13,480,889
Total liabilities to equity ratio		192	%		185	%
Net borrowings to equity ratio (*2)		90	%		81	%

(*1) Cash and deposits in banks consist of cash and cash equivalents and current deposits in banks.

(*2) Net borrowings to equity ratio is calculated by dividing total borrowings (including bonds and excluding lease liabilities) less cash and current deposits in banks by total equity.

76

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.

i) Current assets and liabilities

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

ii) Trade receivables and other receivables

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

iii) Investments in equity and debt instruments

The fair value of marketable financial assets at FVTPL and FVOCI is determined by reference to their quoted closing bid price at the reporting date. The fair value of non-marketable instruments is determined using the results of fair value assessment performed by external valuation institution and others.

iv) Non-derivative financial liabilities

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

77

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 as of September 30, 2020 and December 31, 2019 are as follows:

	September 30, 2020				December 31, 2019
(In millions of won)	Carrying amounts		Fair values		Carrying amounts		Fair values
Financial assets carried at amortized cost
Cash and cash equivalents	W	3,289,116		(*)		3,336,003		(*)
Deposits in banks		78,263		(*)		78,768		(*)
Trade accounts and notes receivable		3,769,138		(*)		3,154,080		(*)
Non-trade receivables		148,004		(*)		463,614		(*)
Accrued income		12,102		(*)		10,434		(*)
Deposits		24,873		(*)		31,036		(*)
Short-term loans		28,414		(*)		21,623		(*)
Long-term loans		19,765		(*)		40,827		(*)
Long-term non-trade receivables		7,289		(*)		9,072		(*)
Lease receivables		24,415		(*)		27,794		(*)
Financial assets at fair value through profit or loss
Equity instruments	W	10,144		10,144		9,879		9,879
Convertible securities		2,718		2,718		1,544		1,544
Derivatives		80,977		80,977		49,676		49,676
Financial assets at fair value through other comprehensive income
Debt instruments	W	72		72		76		76
Financial liabilities at fair value through profit or loss
Derivatives	W	64,527		64,527		20,592		20,592
Convertible bonds		847,563		847,563		858,385		858,385
Financial liabilities carried at amortized cost
Borrowings	W	11,433,194		11,452,786		10,329,671		10,394,498
Bonds		2,092,913		2,115,473		2,292,833		2,345,867
Trade accounts and notes payable		4,037,188		(*)		2,618,261		(*)
Other accounts payable		3,120,624		(*)		4,397,121		(*)
Long-term other accounts payable		29		(*)		1,069		(*)
Security deposits received		12,220		(*)		11,000		(*)
Lease liabilities		95,979		(*)		88,512		(*)

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

78

25. Financial Risk Management, Continued

(iii) Fair values of financial assets and liabilities

i) Fair value hierarchy

Financial instruments carried at fair value are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques. The levels have been defined as follows:

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

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

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

ii) Financial instruments measured at fair value

Fair value hierarchy classifications of the financial instruments that are measured at fair value as of September 30, 2020 and December 31, 2019 are as follows:

	September 30, 2020
(In millions of won)	Level 1		Level 2		Level 3		Total
Financial assets at fair value through profit or loss
Equity instruments	W	—		—		10,144		10,144
Convertible securities		—		—		2,718		2,718
Derivatives		—		—		80,977		80,977
Financial assets at fair value through other comprehensive income
Debt instruments	W	72		—		—		72
Financial liabilities at fair value through profit or loss
Derivatives	W	—		—		64,527		64,527
Convertible bonds		847,563		—		—		847,563

	December 31, 2019
(In millions of won)	Level 1		Level 2		Level 3		Total
Financial assets at fair value through profit or loss
Equity instruments	W	—		—		9,879		9,879
Convertible securities		—		—		1,544		1,544
Derivatives		—		—		49,676		49,676
Financial assets at fair value through other comprehensive income
Debt instruments	W	76		—		—		76
Financial liabilities at fair value through profit or loss
Derivatives	W	—		—		20,592		20,592
Convertible bonds		858,385		—		—		858,385

79

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 September 30, 2020 and December 31, 2019 are as follows:

(In millions of won)	September 30, 2020						Valuation technique		Input
Classification	Level 1		Level 2		Level 3
Liabilities
Borrowings	W	—		—		11,452,786		Discounted cash flow		Discount rate
Bonds		—		—		2,115,473		Discounted cash flow		Discount rate
(In millions of won)	December 31, 2019						Valuation technique		Input
Classification	Level 1		Level 2		Level 3
Liabilities
Borrowings	W	—		—		10,394,498		Discounted cash flow		Discount rate
Bonds		—		—		2,345,867		Discounted cash flow		Discount rate

iv) The interest rates applied for determination of the above fair value as of September 30, 2020 and December 31, 2019 are as follows:

	September 30, 2020			December 31, 2019
Borrowings, bonds and others		2.32~4.37	%		1.87~3.56	%

80

26. Changes in liabilities arising from financing activities

Changes in liabilities arising from financing activities for the nine-month period ended September 30, 2020 are as follows:

						Non-cash transactions
(In millions of won)	January 1, 2020		Cash flows from financing activities			Reclassification			Gain or loss on foreign currency translation		Effective interest adjustment		Others			September 30, 2020
Short-term borrowings	W	696,793		(4,718	)		—			5,582		—		—			697,657
Current portion of long-term borrowings and bonds		1,242,904		(1,036,847	)		1,605,014			20,526		497		794			1,832,888
Long-term borrowings		8,799,677		1,709,775			(1,305,394	)		148,410		—		—			9,352,468
Bonds(*)		2,741,516		49,949			(299,620	)		17,257		15,189		(33,634	)		2,490,657
Lease liabilities		88,512		(50,702	)		—			23,212		—		34,957			95,979
	W	13,569,402		667,457			—			214,987		15,686		2,117			14,469,649

(*) Others include gain on valuation of financial liabilities at fair value through profit or loss amounting toW33,634 million.

81

27. Related Parties and Others

(a) Related parties

Related parties as of September 30, 2020 are as follows:

Classification	Description
Associates(*)	Paju Electric Glass Co., Ltd. and others
Entity that has significant influence over the Controlling Company	LG Electronics Inc.
Subsidiaries of the entity that has significant influence over the Controlling Company	Subsidiaries of LG Electronics Inc.

(*) Details of associates are described in note 8.

82

27. Related Parties and Others, Continued

(b) Significant transactions such as sales of goods and purchases of raw material and outsourcing service and others, which occurred in the normal course of business with related parties for the three-month and nine-month periods ended September 30, 2020 and 2019 are as follows:

	For the three-month period ended September 30, 2020
					Purchase and others
(In millions of won)	Sales and others		Dividend income		Purchase of raw material and others		Acquisition of property, plant and equipment		Outsourcing fees		Other costs
Associates and their subsidiaries
AVATEC Co., Ltd.	W	—		—		—		—		21,054		360
Paju Electric Glass Co., Ltd.		—		—		79,426		—		—		495
WooRee E&L Co., Ltd.		—		—		4,852		—		—		13
YAS Co., Ltd.		—		—		1,935		3,495		—		395
Material Science Co., Ltd.		—		—		24		—		—		—
	W	—		—		86,237		3,495		21,054		1,263
Entity that has significant influence over the Controlling Company
LG Electronics Inc.	W	209,265		—		5,067		39,010		—		32,323
Subsidiaries of the entity that has significant influence over the Controlling Company
LG Electronics India Pvt. Ltd.	W	23,364		—		—		—		—		48
LG Electronics Vietnam Haiphong Co., Ltd.		110,146		—		—		—		—		379

83

27. Related Parties and Others, Continued

	For the three-month period ended September 30, 2020
	Sales and others				Purchase and others
(In millions of won)			Dividend income		Purchase of raw material and others		Acquisition of property, plant and equipment		Outsourcing fees		Other costs
LG Electronics Nanjing New Technology Co., Ltd.	W	128,090		—		—		—		—		420
LG Electronics RUS, LLC		30,885		—		—		—		—		80
LG Electronics do Brasil Ltda.		27,183		—		—		—		—		82
LG Innotek Co., Ltd.		1,402		—		6,308		—		—		17,776
Qingdao LG Inspur Digital Communication Co., Ltd.		400		—		—		—		—		—
LG Electronics Mexicali, S.A. DE C.V.		40,437		—		—		—		—		15
LG Electronics Mlawa Sp. z o.o.		219,908		—		—		—		—		188
LG Electronics Reynosa, S.A. DE C.V.		278,593		—		—		—		—		105
LG Electronics Egypt S.A.E.		12,541		—		—		—		—		50
LG Electronics Japan, Inc.		—		—		—		15		—		1,357
P.T. LG Electronics Indonesia		40,134		—		—		—		—		38
Others		1,270		—		28		—		—		2,194
	W	914,353		—		6,336		15		—		22,732
	W	1,123,618		—		97,640		42,520		21,054		56,318

84

27. Related Parties and Others, Continued

	For the nine-month period ended September 30, 2020
					Purchase and others
(In millions of won)	Sales and others		Dividend income		Purchase of raw material and others		Acquisition of property, plant and equipment		Outsourcing fees		Other costs
Associates and their subsidiaries
AVATEC Co., Ltd.	W	—		200		—		—		54,869		776
Paju Electric Glass Co., Ltd.		—		7,739		217,803		—		—		2,121
WooRee E&L Co., Ltd.		—		—		10,170		—		—		32
YAS Co., Ltd.		—		300		5,263		7,153		—		2,046
Material Science Co., Ltd.		—		—		93		—		—		—
	W	—		8,239		233,329		7,153		54,869		4,975
Entity that has significant influence over the Controlling Company
LG Electronics Inc.	W	539,537		—		15,436		194,085		—		100,086
Subsidiaries of the entity that has significant influence over the Controlling Company
LG Electronics India Pvt. Ltd.	W	40,369		—		—		—		—		113
LG Electronics Vietnam Haiphong Co., Ltd.		236,066		—		—		—		—		825
LG Electronics Nanjing New Technology Co., Ltd.		320,717		—		—		—		—		917
LG Electronics RUS, LLC		65,342		—		—		—		—		235
LG Electronics do Brasil Ltda.		84,728		—		—		—		—		166
LG Innotek Co., Ltd.		4,494		—		21,179		—		—		58,494

85

27. Related Parties and Others, Continued

	For the nine-month period ended September 30, 2020
	Sales and others				Purchase and others
(In millions of won)			Dividend income		Purchase of raw material and others		Acquisition of property, plant and equipment		Outsourcing fees		Other costs
Qingdao LG Inspur Digital Communication Co., Ltd.	W	7,299		—		—		—		—		—
LG Electronics Mexicali, S.A. DE C.V.		93,831		—		—		—		—		32
LG Electronics Mlawa Sp. z o.o.		426,470		—		—		—		—		994
LG Electronics Reynosa, S.A. DE C.V.		484,053		—		—		—		—		777
LG Electronics Egypt S.A.E		48,430		—		—		—		—		352
LG Electronics Japan, Inc.		—		—		—		23		—		4,218
P.T. LG Electronics Indonesia		74,667		—		—		—		—		160
Others		3,915		—		181		—		—		5,789
	W	1,890,381		—		21,360		23		—		73,072
	W	2,429,918		8,239		270,125		201,261		54,869		178,133

86

27. Related Parties and Others, Continued

	For the three-month period ended September 30, 2019
					Purchase and others
(In millions of won)	Sales and others		Dividend income		Purchase of raw material and others		Acquisition of property, plant and equipment		Outsourcing fees		Other costs
Associates and their subsidiaries
INVENIA Co., Ltd.(*1)	W	—		—		262		9,520		—		195
AVATEC Co., Ltd.		2,639		—		—		—		17,720		196
Paju Electric Glass Co., Ltd.		—		—		87,211		—		—		1,107
WooRee E&L Co., Ltd.		—		—		1,852		—		—		—
YAS Co., Ltd.		—		—		1,225		9,530		—		839
Material Science Co., Ltd.		—		—		21		—		—		—
	W	2,639		—		90,571		19,050		17,720		2,337
Entity that has significant influence over the Controlling Company
LG Electronics Inc.	W	211,026		—		2,950		63,498		—		36,903
Subsidiaries of the entity that has significant influence over the Controlling Company
LG Electronics India Pvt. Ltd.	W	31,515		—		—		—		—		79
LG Electronics Vietnam Haiphong Co., Ltd.		76,909		—		—		42		—		221

87

27. Related Parties and Others, Continued

	For the three-month period ended September 30, 2019
	Sales and others				Purchase and others
(In millions of won)			Dividend income		Purchase of raw material and others		Acquisition of property, plant and equipment		Outsourcing fees		Other costs
LG Electronics Nanjing New Technology Co., Ltd.	W	86,179		—		—		—		—		101
LG Electronics RUS, LLC		21,936		—		—		—		—		137
LG Electronics do Brasil Ltda.		38,672		—		—		—		—		47
LG Innotek Co., Ltd.		1,465		—		13,520		—		—		15,531
Qingdao LG Inspur Digital Communication Co., Ltd.		10,755		—		—		—		—		—
Inspur LG Digital Mobile Communications Co., Ltd.		1,452		—		—		—		—		—
LG Electronics Mexicali, S.A. DE C.V.		24,359		—		—		—		—		15
LG Electronics Mlawa Sp. z o.o.		93,527		—		—		—		—		784
LG Electronics Taiwan Taipei Co., Ltd.		533		—		—		—		—		104
LG Hitachi Water Solutions Co., Ltd.(*2)		—		—		—		29,011		—		—
LG Electronics Reynosa, S.A. DE C.V.		212,403		—		—		—		—		149
LG Electronics Air-Conditioning (Shandong) Co., Ltd.		—		—		286		10,394		—		13
HiEntech Co., Ltd.(*2)		11		—		—		1,251		—		7,385
HiEntech (Tianjin) Co., Ltd.(*2)		—		—		—		9,984		—		5,633
LG Electronics Egypt S.A.E.		22,027		—		—		—		—		2
LG Electronics Alabama Inc.		3,932		—		—		—		—		—
LG Electronics Japan, Inc.		—		—		—		—		—		1,610
Others		1,981		—		—		1		—		2,032
	W	627,656		—		13,806		50,683		—		33,843
	W	841,321		—		107,327		133,231		17,720		73,083

(*1) Represents transactions occurred prior to the Group’s disposal of the entire investments.

(*2) Represents transactions occurred prior to LG Electronics Inc.’s disposal of the entire investments.

88

27. Related Parties and Others, Continued

	For the nine-month period ended September 30, 2019
					Purchase and others
(In millions of won)	Sales and others		Dividend income		Purchase of raw material and others		Acquisition of property, plant and equipment		Outsourcing fees		Other costs
Associates and their subsidiaries
INVENIA Co., Ltd.(*1)	W	—		180		1,024		45,580		—		297
AVATEC Co., Ltd.		2,639		265		—		—		54,939		616
Paju Electric Glass Co., Ltd.		—		6,057		267,065		—		—		3,209
WooRee E&L Co., Ltd.		—		—		4,539		—		—		1
YAS Co., Ltd.		—		1,000		4,795		100,142		—		2,822
Material Science Co., Ltd.		—		—		21		—		—		313
	W	2,639		7,502		277,444		145,722		54,939		7,258
Entity that has significant influence over the Controlling Company
LG Electronics Inc.	W	743,075		—		10,730		677,932		—		109,505
Subsidiaries of the entity that has significant influence over the Controlling Company
LG Electronics India Pvt. Ltd.	W	76,950		—		—		—		—		119
LG Electronics Vietnam Haiphong Co., Ltd.		205,520		—		—		2,982		—		346
LG Electronics Nanjing New Technology Co., Ltd.		220,569		—		—		30		—		275
LG Electronics RUS, LLC		64,129		—		—		—		—		1,562
LG Electronics do Brasil Ltda.		118,900		—		—		—		—		178
LG Innotek Co., Ltd.		5,699		—		46,232		—		—		57,602

89

27. Related Parties and Others, Continued

	For the nine-month period ended September 30, 2019
	Sales and others				Purchase and others
(In millions of won)			Dividend income		Purchase of raw material and others		Acquisition of property, plant and equipment		Outsourcing fees		Other costs
Qingdao LG Inspur Digital Communication Co., Ltd.	W	13,551		—		—		—		—		—
Inspur LG Digital Mobile Communications Co., Ltd.		41,876		—		—		—		—		—
LG Electronics Mexicali, S.A. DE C.V.		93,095		—		—		—		—		65
LG Electronics Mlawa Sp. z o.o.		402,384		—		—		—		—		1,648
LG Electronics Taiwan Taipei Co., Ltd.		4,172		—		—		31		—		282
LG Hitachi Water Solutions Co., Ltd.(*2)		—		—		—		79,986		—		—
LG Electronics Reynosa, S.A. DE C.V.		557,029		—		—		—		—		672
LG Electronics Air-Conditioning (Shandong) Co., Ltd.		—		—		445		14,553		—		88
HiEntech Co., Ltd.(*2)		47		—		—		7,264		—		21,576
HiEntech (Tianjin) Co., Ltd.(*2)		—		—		—		32,335		—		15,423
LG Electronics Egypt S.A.E		80,553		—		—		—		—		2
LG Electronics Alabama Inc.		9,032		—		—		—		—		—
LG Electronics Japan, Inc.		—		—		—		14		—		4,672
Others		8,716		—		1		1		—		5,168
	W	1,902,222		—		46,678		137,196		—		109,678
	W	2,647,936		7,502		334,852		960,850		54,939		226,441

(*1) Represents transactions occurred prior to the Group’s disposal of the entire investments.

(*2) Represents transactions occurred prior to LG Electronics Inc.’s disposal of the entire investments.

90

27. Related Parties and Others, Continued

(c) Trade accounts and notes receivable and payable and others as of September 30, 2020 and December 31, 2019 are as follows:

	Trade accounts and notes receivable and others				Trade accounts and notes payable and others
(In millions of won)	September 30, 2020		December 31, 2019		September 30, 2020		December 31, 2019
Associates and their subsidiaries
AVATEC Co., Ltd.	W	—		—		4,942		1,029
Paju Electric Glass Co., Ltd.		—		—		64,544		62,853
WooRee E&L Co., Ltd.		—		—		4,696		1,888
YAS Co., Ltd.		—		—		5,624		27,489
Material Science Co., Ltd.		—		—		17		8
	W	—		—		79,823		93,267
Entity that has significant influence over the Controlling Company
LG Electronics Inc.	W	143,574		209,939		62,536		157,713
Subsidiaries of the entity that has significant influence over the Controlling Company
LG Electronics India Pvt. Ltd.	W	16,711		6,113		—		—
LG Electronics Vietnam Haiphong Co., Ltd.		39,662		47,740		1		75
LG Electronics Nanjing New Technology Co., Ltd.		109,041		55,343		183		49
LG Electronics RUS, LLC		20,883		17,600		—		83
LG Electronics do Brasil Ltda.		19,063		14,805		6		26
LG Innotek Co., Ltd.		241		267		31,278		36,426

91

27. Related Parties and Others, Continued

	Trade accounts and notes receivable and others				Trade accounts and notes payable and others
(In millions of won)	September 30, 2020		December 31, 2019		September 30, 2020		December 31, 2019
LG Electronics Mexicali, S.A. DE C.V.	W	20,028		11,195		5		17
LG Electronics Mlawa Sp. z o.o.		116,111		124,390		55		75
LG Electronics Reynosa, S.A. DE C.V.		161,100		82,927		45		62
P.T. LG Electronics Indonesia		29,043		7,696		7		16
Others		4,181		19,105		2,583		3,548
	W	536,064		387,181		34,163		40,377
	W	679,638		597,120		176,522		291,357

92

27. Related Parties and Others, Continued

(d) Details of significant financing transactions such as loans and collection of loans, which occurred in the normal course of business with related parties for the nine-month period ended September 30, 2019 are as follows:

(In millions of won)	2019
Associates	Loans		Collection of loans
INVENIA Co., Ltd.(*)	W	1,000		—

(*) Excluded from related parties due to disposal of equity investments during the year-ended December 31, 2019.

93

27. Related Parties and Others, Continued

(e) Conglomerate Transactions

Transactions, trade accounts and notes receivable and payable, and others between the Group and certain companies and their subsidiaries included in LG Group, one of conglomerates according to the Monopoly Regulation and Fair Trade Act for the three-month and nine-month periods ended September 30, 2020 and 2019 and as of September 30, 2020 and December 31, 2019 are as follows. These entities are not related parties according to K-IFRS No. 1024, Related Party Disclosures.

	For the three-month period ended September 30, 2020				For the nine-month period ended September 30, 2020				September 30, 2020
(In millions of won)	Sales and others		Purchase and others		Sales and others		Purchase and others		Trade accounts and notes receivable and others		Trade accounts and notes payable and others
LG International Corp. and its subsidiaries	W	101,824		62,526		273,839		205,992		91,864		31,862
LG Uplus Corp.		—		480		—		1,598		—		173
LG Chem Ltd. and its subsidiaries		92		230,536		1,231		637,212		162		185,933
S&I Corp. and its subsidiaries		79		86,356		246		169,451		21,307		97,828
Silicon Works Co., Ltd.		—		279,396		36		583,725		—		174,510
LG Corp.		—		15,705		—		40,122		8,483		5,110
LG Management Development Institute		—		2,078		—		5,662		3,480		363
LG CNS Co., Ltd. and its subsidiaries		6		42,575		19		101,873		2		28,042
LG Household & Health Care and its subsidiaries		—		162		—		246		—		132
LG Holdings Japan Co., Ltd.		—		545		—		1,631		2,367		—
G2R Inc. and its subsidiaries		—		11,850		—		22,357		—		9,498
Robostar Co., Ltd.		—		164		—		701		—		178
	W	102,001		732,373		275,371		1,770,570		127,665		533,629

94

27. Related Parties and Others, Continued

	For the three-month period ended September 30, 2019				For the nine-month period ended September 30, 2019				December 31, 2019
(In millions of won)	Sales and others		Purchase and others		Sales and others		Purchase and others		Trade accounts and notes receivable and others		Trade accounts and notes payable and others
LG International Corp. and its subsidiaries	W	146,375		96,796		498,204		321,579		93,623		77,721
LG Uplus Corp.		—		622		—		1,761		—		208
LG Chem Ltd. and its subsidiaries		65		288,422		82,400		877,573		97		128,636
S&I Corp. and its subsidiaries(*)		84		111,788		267		626,010		21,307		159,202
Silicon Works Co., Ltd.		—		209,633		92		516,189		—		126,856
LG Corp.		—		13,849		—		40,218		8,781		—
LG Management Development Institute		—		2,239		—		6,624		3,480		231
LG CNS Co., Ltd. and its subsidiaries		5		64,158		14		157,763		2		75,850
LG Hausys Ltd.		—		—		1		1		—		—
LG Household & Health Care and its subsidiaries		—		112		—		209		—		6
LG Holdings Japan Co., Ltd.		—		542		—		1,529		2,264		—
G2R Inc. and its subsidiaries		—		18,853		—		20,756		—		29,540
Robostar Co., Ltd.		—		196		—		7,096		—		2,332
Others(*)		1		71,251		5		191,014		—		—
	W	146,530		878,461		580,983		2,768,322		129,554		600,582

(*) Due to S&I Corp.’s disposal of partial interests in Serveone in May 2019, Serveone was reclassified from one of the S&I Corp.’s subsidiaries to associates. Accordingly, transactions with S&I Corp. after the disposal are classified as other.

95

27. Related Parties and Others, Continued

(f) Key management personnel compensation

Compensation costs of key management for the three-month and nine-month periods ended September 30, 2020 and 2019 are as follows:

	For the three-month periods ended September 30,				For the nine-month periods ended September 30,
(In millions of won)	2020		2019		2020		2019
Short-term benefits	W	530		769		1,629		2,590
Expenses related to the defined benefit plan		83		103		262		450
	W	613		872		1,891		3,040

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

96

LG DISPLAY CO., LTD.

Condensed Separate Interim Financial Statements

(Unaudited)

September 30, 2020 and 2019

(With Independent Auditors’ Review Report Thereon)

97

Table of Contents

	Page
Independent Auditors’ Review Report		99
Condensed Separate Interim Statements of Financial Position		101
Condensed Separate Interim Statements of Comprehensive Loss		102
Condensed Separate Interim Statements of Changes in Equity		103
Condensed Separate Interim Statements of Cash Flows		104
Notes to the Condensed Separate Interim Financial Statements		106

98

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 September 30, 2020, the condensed separate interim statements of comprehensive loss for the three-month and nine-month periods ended September 30, 2020 and 2019, and statements of changes in equity and cash flows for the nine-month periods ended September 30, 2020 and 2019, 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.

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

Conclusion

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

Other Matters    

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

We audited the separate statement of financial position as of December 31, 2019, and the related separate statements of comprehensive loss, changes in equity and cash flows for the year then ended, which are not accompanying this review report, in accordance with Korean Standards on Auditing, and our report thereon, dated March 11, 2020, expressed an unmodified opinion. The accompanying condensed separate statement of financial position of the Company as of December 31, 2019, presented for comparative purposes, is not different from that audited by us from which it was derived in all material respects.

99

KPMG Samjong Accounting Corp.

Seoul, Korea

November 13, 2020

This report is effective as of November 13, 2020, 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.

100

LG DISPLAY CO., LTD.

Condensed Separate Interim Statements of Financial Position

(Unaudited)

As of September 30, 2020 and December 31, 2019

(In millions of won)	Note		September 30, 2020		December 31, 2019
Assets
Cash and cash equivalents		4, 24	W	298,709		1,105,245
Deposits in banks		4, 24		76,852		77,257
Trade accounts and notes receivable, net		5, 14, 24, 26		4,433,619		3,565,860
Other accounts receivable, net		5, 24		144,257		439,940
Other current financial assets		6, 24		42,805		55,665
Inventories		7		1,578,548		1,526,299
Prepaid income tax				110,307		111,129
Other current assets		5		264,511		199,833
Total current assets				6,949,608		7,081,228
Deposits in banks		4, 24		11		11
Investments		8		4,770,666		4,958,308
Other non-current accounts receivable, net		5, 24		14,666		19,899
Other non-current financial assets		6, 24		101,640		74,203
Property, plant and equipment, net		9		11,950,791		12,764,175
Intangible assets, net		10		635,134		708,047
Deferred tax assets		22		1,730,397		1,367,714
Defined benefits assets, net		12		10,118		127,252
Other non-current assets		5		260,112		281,843
Total non-current assets				19,473,535		20,301,452
Total assets			W	26,423,143		27,382,680
Liabilities
Trade accounts and notes payable		24, 26	W	4,110,551		2,682,403
Current financial liabilities		11, 24		1,626,124		1,474,589
Other accounts payable		24		2,721,565		3,329,040
Accrued expenses				488,232		520,395
Provisions		13		182,101		188,238
Advances received		14		529,049		898,447
Other current liabilities		13		37,471		47,371
Total current liabilities				9,695,093		9,140,483
Non-current financial liabilities		11, 24		6,764,690		7,094,405
Non-current provisions		13		71,784		67,118
Long-term advances received		14		—		328,677
Other non-current liabilities		13		92,558		85,904
Total non-current liabilities				6,929,032		7,576,104
Total liabilities				16,624,125		16,716,587
Equity
Share capital		15		1,789,079		1,789,079
Share premium				2,251,113		2,251,113
Retained earnings				5,758,826		6,625,901
Total equity				9,799,018		10,666,093
Total liabilities and equity			W	26,423,143		27,382,680

See accompanying notes to the separate interim financial statements.

101

LG DISPLAY CO., LTD.

Condensed Separate Interim Statements of Comprehensive Loss

(Unaudited)

For the nine-month periods ended September 30, 2020 and 2019

(In millions of won, except earnings per share)	Note	For the three-month period ended September 30						For the nine-month period ended September 30
		2020			2019			2020			2019
Revenue	16, 26	W	6,469,115			5,432,573			15,841,644			15,752,138
Cost of sales	7, 17, 26		(5,921,321	)		(5,441,111	)		(15,414,857	)		(15,066,015	)
Gross profit (loss)			547,794			(8,538	)		426,787			686,123
Selling expenses	18		(142,397	)		(166,991	)		(372,164	)		(479,202	)
Administrative expenses	18		(114,257	)		(203,221	)		(322,400	)		(453,090	)
Research and development expenses			(268,640	)		(213,974	)		(814,700	)		(963,995	)
Operating income (loss)			22,500			(592,724	)		(1,082,477	)		(1,210,164	)
Finance income	21		88,132			106,117			174,096			201,120
Finance costs	21		(207,852	)		(186,379	)		(300,533	)		(308,941	)
Other non-operating income	20		153,327			199,365			733,412			645,078
Other non-operating expenses	20		(218,184	)		(296,702	)		(784,143	)		(734,043	)
Loss before income tax			(162,077	)		(770,323	)		(1,259,645	)		(1,406,950	)
Income tax benefit	22		(92,249	)		(195,277	)		(396,156	)		(310,198	)
Loss for the period			(69,828	)		(575,046	)		(863,489	)		(1,096,752	)
Other comprehensive loss
Items that will never be reclassified to profit or loss
Remeasurements of net defined benefit liabilities	12		(1,042	)		(1,355	)		(4,824	)		(6,203	)
Related income tax	12		266			332			1,238			(3,219	)
Other comprehensive loss for the period, net of income tax			(776	)		(1,023	)		(3,586	)		(9,422	)
Total comprehensive loss for the period		W	(70,604	)		(576,069	)		(867,075	)		(1,106,174	)
Loss per share (in won)
Basic and diluted loss per share	23	W	(195	)		(1,607	)		(2,413	)		(3,065	)

See accompanying notes to the separate interim financial statements.

102

LG DISPLAY CO., LTD.

Condensed Separate Interim Statements of Changes in Equity

(Unaudited)

For the nine-month periods ended September 30, 2020 and 2019

(In millions of won)	Share capital		Share premium		Retained earnings			Total equity
Balances at January 1, 2019	W	1,789,079		2,251,113		9,172,389			13,212,581
Total comprehensive loss for the period
Loss for the period		—		—		(1,096,752	)		(1,096,752	)
Other comprehensive loss
Remeasurements of net defined benefit liabilities, net of tax		—		—		(9,422	)		(9,422	)
Total comprehensive loss for the period	W	—		—		(1,106,174	)		(1,106,174	)
Balances at September 30, 2019	W	1,789,079		2,251,113		8,066,215			12,106,407
Balances at January 1, 2020	W	1,789,079		2,251,113		6,625,901			10,666,093
Total comprehensive loss for the period
Loss for the period		—		—		(863,489	)		(863,489	)
Other comprehensive loss
Remeasurements of net defined benefit liabilities, net of tax		—		—		(3,586	)		(3,586	)
Total comprehensive loss for the period	W	—		—		(867,075	)		(867,075	)
Balances at September 30, 2020	W	1,789,079		2,251,113		5,758,826			9,799,018

See accompanying notes to the separate interim financial statements.

103

LG DISPLAY CO., LTD.

Condensed Separate Interim Statements of Cash Flows

(Unaudited)

For the nine-month periods ended September 30, 2020 and 2019

(In millions of won)	Note	2020			2019
Cash flows from operating activities:
Loss for the period		W	(863,489	)		(1,096,752	)
Adjustments for:
Income tax benefit	22		(396,156	)		(310,198	)
Depreciation and amortization	17		1,916,165			1,866,814
Gain on foreign currency translation			(74,710	)		(73,717	)
Loss on foreign currency translation			100,866			140,748
Expenses related to defined benefit plans	12		119,095			146,330
Gain on disposal of property, plant and equipment			(16,758	)		(34,624	)
Loss on disposal of property, plant and equipment			28,525			16,408
Impairment loss on disposal of property, plant and equipment			4,871			18,047
Gain on disposal of intangible assets			—			(552	)
Loss on disposal of intangible assets			28			18
Impairment loss on intangible assets			69,293			116,506
Reversal of impairment loss on intangible assets			(1,260	)		(480	)
Expense on increase of provisions			188,031			247,826
Finance income			(149,321	)		(180,135	)
Finance costs			269,737			292,235
Other income			(19,836	)		(18,945	)
Other expenses			—			5,325
			2,038,570			2,231,606
Changes in
Trade accounts and notes receivable			(1,556,641	)		(1,468,471	)
Other accounts receivable			71,475			(47,051	)
Inventories			(52,249	)		(61,308	)
Other current assets			(16,456	)		(36,108	)
Other non-current assets			(50,807	)		(24,984	)
Trade accounts and notes payable			1,481,420			(204,078	)
Other accounts payable			(496,592	)		1,364,558
Accrued expenses			(17,895	)		244,276
Provisions			(177,724	)		(158,073	)
Advances received			(85,056	)		—
Other current liabilities			(16,295	)		(52,115	)
Defined benefit liabilities, net			(6,785	)		(21,997	)
Long-term advances received			—			63,672
Other non-current liabilities			8,733			9,893
			(914,872	)		(391,786	)
Cash generated from operating activities			260,209			743,068
Income taxes refunded			35,533			15,746
Interests received			8,732			9,070
Interests paid			(226,558	)		(169,711	)
Net cash provided by operating activities		W	77,916			598,173

See accompanying notes to the separate interim financial statements.

104

LG DISPLAY CO., LTD.

Condensed Separate Interim Statements of Cash Flows

(Unaudited)

For the nine-month periods ended September 30, 2020 and 2019

(In millions of won)	Note	2020			2019
Cash flows from investing activities:
Dividends received		W	8,239			18,622
Increase in deposits in banks			(76,851	)		(111,180	)
Proceeds from withdrawal of deposits in banks			77,257			111,180
Acquisition of financial asset at fair value through profit or loss			(200	)		—
Acquisition of financial assets at fair value through other comprehensive income			—			(21	)
Proceeds from disposal of financial assets at fair value through other comprehensive income			6			99
Acquisition of investments			—			(1,342,937	)
Proceeds from disposal of investments			197,834			7,039
Acquisition of property, plant and equipment			(930,233	)		(1,884,476	)
Proceeds from disposal of property, plant and equipment			314,120			327,652
Acquisition of intangible assets			(276,506	)		(404,429	)
Proceeds from disposal of intangible assets			1,260			2,349
Government grants received			—			3,979
Receipt from settlement of derivatives			25,482			22,852
Proceeds from collection of short-term loans			10,151			14,656
Increase in short-term loans			—			(8,725	)
Increase in long-term loans			—			(6,465	)
Increase in deposits			(358	)		(4,463	)
Decrease in deposits			1,285			5,242
Proceeds from disposal of other assets			11,000			20,416
Net cash used in investing activities			(637,514	)		(3,228,610	)
Cash flows from financing activities:	25
Proceeds from short-term borrowings			855,095			1,264,915
Repayments of short-term borrowings			(850,356	)		(928,335	)
Proceeds from issuance of bonds			49,949			1,323,239
Proceeds from long-term borrowings			628,256			1,569,148
Repayments of current portion of long-term borrowings and bonds			(926,316	)		(708,260	)
Payment guarantee fee received			5,717			5,043
Repayments of lease liabilities			(9,283	)		(10,415	)
Net cash provided by (used in) financing activities			(246,938	)		2,515,335
Net decrease in cash and cash equivalents			(806,536	)		(115,102	)
Cash and cash equivalents at January 1			1,105,245			473,283
Cash and cash equivalents at September 30		W	298,709			358,181

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 the Korea Exchange since 2004. The main business of the Company is to manufacture and sell displays and its related products. As of September 30, 2020, the Company is operating Thin Film Transistor Liquid Crystal Display (“TFT-LCD”) and Organic Light Emitting Diode (“OLED”) panel manufacturing plants in Gumi, Paju and China and TFT-LCD and OLED module manufacturing plants in Gumi, Paju, China and Vietnam. The Company is domiciled in the Republic of Korea with its address at 128 Yeouidae-ro, Yeongdeungpo-gu, Seoul, the Republic of Korea. As of September 30, 2020, 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 September 30, 2020, 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 September 30, 2020, there are 23,297,750 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-IFRS”) No.1034, Interim Financial Reporting. They do not include all of the information required for full annual financial statements and should be read in conjunction with the separate financial statements of the Company as of and for the year ended December 31, 2019.

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

(b) Basis of Measurement

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

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

• net defined benefit liabilities (defined benefit assets) recognized at the present value of defined benefit obligations less the fair value of plan assets

106

2. Basis of Presenting Financial Statements, Continued

(c) Functional and Presentation Currency

The condensed separate interim financial statements are presented in Korean won, which is the 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.

3. Summary of Significant Accounting Policies

The accounting policies applied in these condensed separate interim financial statements are the same as those applied in the Company’s separate financial statements as of and for the year ended December 31, 2019, except for the application of K-IFRS No.1034, Interim Financial Reporting. A number of amended standards are effective from January 1, 2020 but they do not have a material effect on the Company’s financial statements.

107

4. Cash and Cash Equivalents and Deposits in Banks

Cash and cash equivalents and deposits in banks as of September 30, 2020 and December 31, 2019 are as follows:

(In millions of won)	September 30, 2020		December 31, 2019
Current assets
Cash and cash equivalents
Demand deposits	W	298,709		1,105,245
Deposits in banks
Restricted deposits (*)	W	76,852		77,257
Non-current assets
Deposits in banks
Restricted deposits (*)	W	11		11
	W	375,572		1,182,513

(*) Includes funds deposited under agreements on mutually beneficial cooperation to aid LG Group companies’ suppliers, restricted deposits pledged to enforce the Company’s investment plans upon the receipt of grants from Gumi city and Gyeongsangbuk-do, and others.

5. Receivables and Other Assets

(a) Trade accounts and notes receivable as of September 30, 2020 and December 31, 2019 are as follows:

(In millions of won)	September 30, 2020		December 31, 2019
Due from third parties	W	217,403		221,243
Due from related parties		4,216,216		3,344,617
	W	4,433,619		3,565,860

(b) Other accounts receivable as of September 30, 2020 and December 31, 2019 are as follows:

(In millions of won)	September 30, 2020		December 31, 2019
Current assets
Non-trade receivables, net	W	136,536		438,659
Accrued income		7,721		1,281
	W	144,257		439,940
Non-current assets
Long-term non-trade receivables	W	14,666		19,899
	W	158,923		459,839

Due from related parties included in other accounts receivable as of September 30, 2020 and December 31, 2019 areW55,622 million andW45,518 million, respectively.

108

5. Receivables and Other Assets, Continued

(c) The aging of trade accounts and notes receivable and other accounts receivable as of September 30, 2020 and December 31, 2019 are as follows:

	September 30, 2020
	Book value				Allowance for impairment
(In millions of won)	Trade accounts and notes receivable		Other accounts receivable		Trade accounts and notes receivable			Other accounts receivable
Current	W	4,427,577		110,019		(11	)		(1,561	)
1-15 days past due		3,928		164		—			—
16-30 days past due		2,125		56		—			—
31-60 days past due		—		183		—			—
More than 60 days past due		—		50,087		—			(25	)
	W	4,433,630		160,509		(11	)		(1,586	)
	December 31, 2019
	Book value				Allowance for impairment
(In millions of won)	Trade accounts and notes receivable		Other accounts receivable		Trade accounts and notes receivable			Other accounts receivable
Current	W	3,565,795		184,991		(5	)		(2,952	)
1-15 days past due		70		3,488		—			(1	)
16-30 days past due		—		94		—			—
31-60 days past due		—		61		—			—
More than 60 days past due		—		274,183		—			(25	)
	W	3,565,865		462,817		(5	)		(2,978	)

The movement in the allowance for impairment in respect of trade accounts and notes receivable and other accounts receivable for the nine-month period ended September 30, 2020 and the year ended December 31, 2019 are as follows:

	September 30, 2020					December 31, 2019
(In millions of won)	Trade accounts and notes receivable		Other accounts receivable			Trade accounts and notes receivable		Other accounts receivable
Balance at the beginning of the period	W	5		2,978			5		989
(Reversal of) bad debt expense		6		(328	)		—		1,989
Write-off		—		(1,064	)		—		—
Balance at the end of the reporting period	W	11		1,586			5		2,978

109

5. Receivables and Other Assets, Continued

(d) Other assets as of September 30, 2020 and December 31, 2019 are as follows:

(In millions of won)	September 30, 2020		December 31, 2019
Current assets
Advanced payments	W	42,451		1,849
Prepaid expenses		147,199		100,561
Value added tax refundable		59,072		75,317
Right to recover returned goods		15,789		22,106
	W	264,511		199,833
Non-current assets
Long-term prepaid expenses	W	237,954		274,101
Long-term advanced payments		22,158		7,742
	W	260,112		281,843

110

6. Other Financial Assets

Other financial assets as of September 30, 2020 and December 31, 2019 are as follows:

(In millions of won)	September 30, 2020		December 31, 2019
Current assets
Financial assets at fair value through profit or loss
Derivatives(*)	W	14,367		34,036
Financial assets at fair value through other comprehensive income
Debt instruments
Government bonds	W	24		6
Financial assets carried at amortized cost
Short-term loans	W	28,414		21,623
	W	42,805		55,665
Non-current assets
Financial assets at fair value through profit or loss
Equity instruments
Intellectual Discovery, Ltd.	W	1,104		1,104
Kyulux, Inc.		168		1,889
Fineeva Co., Ltd.		4		4
Looksten Inc.		100		—
Star Pickers. Inc.		100		—
	W	1,476		2,997
Convertible bonds	W	1,544		1,544
Derivatives(*)		66,610		15,640
	W	69,630		20,181
Financial assets at fair value through other comprehensive income
Debt instruments
Government bonds	W	48		70
Financial assets carried at amortized cost
Deposits	W	12,197		13,125
Long-term loans		19,765		40,827
	W	31,962		53,952
	W	101,640		74,203

(*) Represents currency interest rate swap contracts related to foreign currency denominated borrowings and bonds. The contracts are not designated as hedging instruments.

111

7. Inventories

Inventories as of September 30, 2020 and December 31, 2019 are as follows:

(In millions of won)	September 30, 2020		December 31, 2019
Finished goods	W	434,226		394,069
Work-in-process		619,218		696,993
Raw materials		425,713		341,004
Supplies		99,391		94,233
	W	1,578,548		1,526,299

For the nine-month periods ended September 30, 2020 and 2019, the amounts of inventories recognized as cost of sales including inventory write-downs and usage of inventory write-downs are as follows:

(In millions of won)	2020			2019
Inventories recognized as cost of sales	W	15,414,857			15,066,015
Inventory write-downs		327,019			403,197
Usage of inventory write-downs		(408,567	)		(280,323	)

112

8. Investments

(a) Investments in subsidiaries consist of the following:

(In millions of won)					September 30, 2020					December 31, 2019
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.(*1)		Wroclaw, Poland		Manufacture display products		—			—		100	%		160,361
LG Display Guangzhou Co., Ltd.		Guangzhou, China		Manufacture display products		100	%		293,557		100	%		293,557
LG Display Shenzhen Co., Ltd.		Shenzhen, China		Sell display products		100	%		3,467		100	%		3,467
LG Display Singapore Pte. Ltd.		Singapore		Sell display products		100	%		1,250		100	%		1,250
L&T Display Technology (Fujian) Limited		Fujian, China		Manufacture and sell LCD module and LCD monitor sets		51	%		10,123		51	%		10,123
LG Display Yantai Co., Ltd.		Yantai, China		Manufacture display products		100	%		169,195		100	%		169,195
Nanumnuri Co., Ltd.		Gumi, South Korea		Provide janitorial services		100	%		800		100	%		800
LG Display (China) Co., Ltd.		Guangzhou, China		Manufacture and sell display products		51	%		723,086		51	%		723,086
Unified Innovative Technology, LLC		Wilmington, U.S.A.		Manage intellectual property		100	%		9,489		100	%		9,489
LG Display Guangzhou Trading Co., Ltd.		Guangzhou, China		Sell display products		100	%		218		100	%		218
Global OLED Technology LLC		Sterling, U.S.A		Manage OLED intellectual property		100	%		164,322		100	%		164,322
LG Display Vietnam Haiphong Co., Ltd.		Haiphong, Vietnam		Manufacture display products		100	%		672,658		100	%		672,658
Suzhou Lehui Display Co., Ltd.		Suzhou, China		Manufacture and sell LCD module and LCD monitor sets		100	%		121,640		100	%		121,640
LG DISPLAY FUND I LLC(*2)		Wilmington, U.S.A		Invest in venture business and acquire technologies		100	%		12,441		100	%		6,322
LG Display High-Tech (China) Co., Ltd.(*3)		Guangzhou, China		Manufacture and sell display products		71	%		1,794,547		74	%		1,794,547
Money Market Trust		Seoul, South Korea		Money market trust		100	%		1,300		100	%		34,700
								W	4,688,016				W	4,875,658

113

8. Investments, Continued

(*1) In May 2020, LG Display Poland Sp. z o.o. completed the liquidation process.

(*2) For the nine-month period ended September 30, 2020, the Company contributedW6,119 million in cash for the capital increase by LG DISPLAY FUND I LLC. There was no change in the Company’s ownership percentage in LG DISPLAY FUND I LLC as a result of this additional investment.

(*3) For the nine-month period ended September 30, 2020, non-controlling shareholders contributedW84,829 million in cash for the stocks issued by LG Display High-Tech (China) Co., Ltd. (“LGDCO”). The Company’s ownership percentage in LGDCO decreased from 74% to 71% as a result.

114

8. Investments, Continued

(b) Investments in associates consist of the following:

(In millions of won)			September 30, 2020					December 31, 2019
Associates	Location	Business	Percentage of ownership			Book Value		Percentage of ownership			Book Value
Paju Electric Glass Co., Ltd.	Paju, South Korea	Manufacture glass for display		40	%	W	45,089		40	%	W	45,089
WooRee E&L Co., Ltd.	Ansan, South Korea	Manufacture LED back light unit packages		14	%		7,310		14	%		7,310
YAS Co., Ltd.	Paju, South Korea	Develop and manufacture deposition equipment for OLEDs		15	%		10,000		15	%		10,000
AVATEC Co., Ltd.	Daegu, South Korea	Process and sell glass for display		14	%		8,000		14	%		8,000
Arctic Sentinel, Inc.	Los Angeles, U.S.A.	Develop and manufacture tablet for kids		10	%		—		10	%		—
Cynora GmbH(*1)	Bruchsal Germany	Develop organic emitting materials for displays and lighting devices		12	%		4,714		12	%		4,714
Material Science Co., Ltd.	Seoul, South Korea	Develop, manufacture and sell materials for display		10	%		2,354		10	%		2,354
Nanosys Inc.(*2)	Milpitas, U.S.A.	Develop, manufacture and sell materials for display		3	%		5,183		4	%		5,183
						W	82,650				W	82,650

(*1) For the nine-month period ended September 30, 2020, the Company’s ownership percentage in Cynora GmbH decreased from 12.2% to 11.6% as the Company did not participate in the rights issue.

(*2) For the nine-month period ended September 30, 2020, the Company’s ownership percentage in Nanosys Inc. decreased from 4% to 3% as the Company did not participate in the rights issue.

Dividends income recognized from subsidiaries and associates for the nine-month periods ended September 30, 2020 and 2019 amounted toW8,239 million andW18,622 million, respectively.

115

9. Property, Plant and Equipment

For the nine-month periods ended September 30, 2020 and 2019, the Company purchased property, plant and equipment ofW917,400 million andW1,378,503 million, respectively. The capitalized borrowing costs and the annualized capitalization rate wereW74,975 million and 2.90%, andW105,272 million and 2.77%, for the nine-month periods ended September 30, 2020 and 2019, respectively. In addition, for the nine-month periods ended September 30, 2020 and 2019, the Company disposed of property, plant and equipment with carrying amounts ofW99,573 million andW541,708 million, respectively, and recognizedW16,758 million andW28,525 million, respectively, as gain and loss on disposal of property, plant and equipment for the nine-month period ended September 30, 2020 (gain and loss for the nine-month period ended September 30, 2019:W34,624 million andW16,408 million, respectively).

10. Intangible Assets

The Company capitalizes expenditures related to development activities, such as expenditures incurred on designing, manufacturing and testing of products after those related activities meet the capitalization criteria of development costs including technical feasibility, future economic benefits and others. The balances of capitalized development costs as of September 30, 2020 and December 31, 2019 areW329,825 million andW375,183 million, respectively. In addition, for the nine-month period ended September 30, 2020, the Company recognized an impairment loss amounting toW68,618 million in connection with development projects.

116

11. Financial Liabilities

(a) Financial liabilities as of September 30, 2020 and December 31, 2019 are as follows:

(In millions of won)	September 30, 2020		December 31, 2019
Current
Short-term borrowings	W	352,050		347,340
Current portion of long-term borrowings and bonds		1,246,114		1,117,218
Current portion of payment guarantee liabilities		5,193		5,674
Derivatives(*)		17,000		—
Lease liabilities		5,767		4,357
	W	1,626,124		1,474,589
Non-current
Won denominated borrowings	W	2,544,375		2,692,560
Foreign currency denominated borrowings		1,672,238		1,626,709
Bonds		2,490,657		2,741,516
Payment guarantee liabilities		7,377		10,828
Derivatives(*)		47,527		20,592
Lease liabilities		2,516		2,200
	W	6,764,690		7,094,405

(*) Represents currency interest rate swap contracts and others entered into by the Company to hedge currency and interest rate risks with respect to foreign currency denominated borrowings and bonds. The contracts are not designated as hedging instruments.

(b) Short-term borrowings as of September 30, 2020 and December 31, 2019 are as follows:

(In millions of won and USD) Lender	Annual interest rate as of September 30, 2020 (%)(*)		September 30, 2020		December 31, 2019
Standard Chartered Bank Korea Limited		12ML + 0.98	W	352,050		347,340
Foreign currency equivalent				USD 300		USD 300
			W	352,050		347,340

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

117

11. Financial Liabilities, Continued

(c) Won denominated long-term borrowings as of September 30, 2020 and December 31, 2019 are as follows:

(In millions of won)
Lender	Annual interest rate as of September 30, 2020 (%)(*)		September 30, 2020			December 31, 2019
Woori Bank		2.75	W	120			608
Korea Development Bank and others		CD rate (91 days) + 1.00~1.60, 2.21~3.40		3,281,875			3,330,000
Less current portion of long-term borrowings				(737,620	)		(638,048	)
			W	2,544,375			2,692,560

(*) CD represents certificate of deposit.

(d) Foreign currency denominated long-term borrowings as of September 30, 2020 and December 31, 2019 are as follows:

(In millions of won and USD)
Lender	Annual interest rate as of September 30, 2020 (%)		September 30, 2020			December 31, 2019
The Export-Import Bank of Korea and others		3ML+0.75 ~2.20 6ML+1.25 ~1.35	W	1,730,913			1,696,177
Foreign currency equivalent				USD 1,475			USD 1,465
Less current portion of long-term borrowings				(58,675	)		(69,468	)
			W	1,672,238			1,626,709

118

11. Financial Liabilities, Continued

(e) Details of bonds issued and outstanding as of September 30, 2020 and December 31, 2019 are as follows:

(In millions of won and USD)	Maturity		Annual interest rate as of September 30, 2020 (%)		September 30, 2020			December 31, 2019
Won denominated bonds at amortized cost (*1)
Publicly issued bonds		October 2020~ February 2024		1.95~2.95	W	1,470,000			1,730,000
Privately issued bonds		May 2022~ May 2033		3.25~4.25		160,000			110,000
Less discount on bonds						(2,160	)		(3,404	)
Less current portion						(449,819	)		(409,702	)
					W	1,178,021			1,426,894
Foreign currency denominated bonds at amortized cost(*2)
Publicly issued bonds		November 2021		3.88	W	352,050			347,340
Privately issued bonds		April 2023		3ML+1.47		117,350			115,780
Foreign currency equivalent						USD 400			USD 400
Less discount on bonds						(4,327	)		(6,883	)
					W	465,073			456,237
Financial liabilities at fair value through profit or loss
Foreign currency denominated convertible bonds		August 2024		1.50	W	847,563			858,385
Foreign currency equivalent						USD 722			USD 741
					W	2,490,657			2,741,516

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

(*2) Principal of the foreign currency denominated bonds is to be repaid at maturity and interests are paid quarterly or semi-annually.

119

11. Financial Liabilities, Continued

(f) Details of convertible bonds issued and outstanding as of September 30, 2020 are as follows:

(In won, USD)
	Description
Type	Unsecured foreign currency denominated convertible bonds
Issuance amount	USD 687,800,000
Annual interest rate (%)	1.50
Issuance date	August 22, 2019
Maturity date	August 22, 2024
Interest payment	Payable semi-annually in arrear until maturity date
Principal redemption	1. Redemption at maturity: Redeemed on the maturity date, at their outstanding principal amount, which has not been early redeemed or converted.
	2. Early redemption: The Company has a right to redeem before maturity (call option) and the bondholders have a right to require the Company to redeem before maturity (put option). At exercise of each option, the outstanding principal amount together with accrued but unpaid interest are to be redeemed.
Conversion price	W 19,845 per common share (subject to adjustment based on diluted effects of certain events)
Conversion period	From August 23, 2020 to August 12, 2024
Redemption at the option of the issuer (Call option)	-  On or at any time after 3 years from the issuance, if the closing price of the shares for any 20 trading days out of the 30 consecutive trading days is at least 130% of the applicable conversion price -  The aggregate principal amount of the convertible bonds outstanding is less than 10% of the aggregate principal amount originally issued, or -  In the event of certain changes in laws and other directives resulting in additional taxes for the holders
Redemption at the option of the bondholders (Put option)	On the day of 3 years from the issuance

The Company designated the convertible bonds as financial liabilities at fair value through profit of loss and recognized the change in fair value in profit or loss. The Company measures the convertible bond at fair value using the market price of convertible bonds disclosed on Bloomberg. The number of convertible shares as of September 30, 2020 is as follows:

(In won and No. of shares)	September 30, 2020
Aggregate outstanding amount of the convertible bonds	W	813,426,670,000
Conversion price	W	19,845
Number of common shares to be issued at conversion		40,988,998

120

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.

(a) Net defined benefit liabilities (defined benefit assets) recognized as of September 30, 2020 and December 31, 2019 are as follows:

(In millions of won)	September 30, 2020			December 31, 2019
Present value of partially funded defined benefit obligations	W	1,517,642			1,476,866
Fair value of plan assets		(1,527,760	)		(1,604,118	)
	W	(10,118	)		(127,252	)

(b) Expenses recognized in profit or loss for the three-month and nine-month periods ended September 30, 2020 and 2019 are as follows:

	For the three-month periods ended September 30					For the nine-month periods ended September 30
(In millions of won)	2020			2019		2020			2019
Current service cost	W	40,475			48,473		121,424			145,419
Net interest cost		(777	)		303		(2,329	)		911
	W	39,698			48,776		119,095			146,330

(c) Plan assets as of September 30, 2020 and December 31, 2019 are as follows:

(In millions of won)	September 30, 2020		December 31, 2019
Guaranteed deposits in banks	W	1,527,760		1,604,118

As of September 30, 2020, the Company maintains the plan assets primarily with Mirae Asset Daewoo Co., Ltd., KB Insurance Co., Ltd. and others.

(d) Remeasurements of the net defined benefit liabilities (assets) included in other comprehensive income (loss) for the three-month and nine-month periods ended September 30, 2020 and 2019 are as follows:

	For the three-month periods ended September 30						For the nine-month periods ended September 30
(In millions of won)	2020			2019			2020			2019
Remeasurements of net defined benefit liabilities	W	(1,042	)		(1,355	)		(4,824	)		(6,203	)
Tax effect		266			332			1,238			(3,219	)
Remeasurements of net defined benefit liabilities, net of income tax	W	(776	)		(1,023	)		(3,586	)		(9,422	)

121

13. Provisions and Other Liabilities

(a) Changes in provisions for the nine-month period ended September 30, 2020 are as follows:

(In millions of won)	Warranties (*)			Others			Total
Balance at January 1, 2020	W	228,975			26,381			255,356
Additions (reversal)		177,031			(6,498	)		170,533
Usage		(171,226	)		(778	)		(172,004	)
Balance at September 30, 2020	W	234,780			19,105			253,885
Current	W	162,996			19,105			182,101
Non-current	W	71,784			—			71,784

(*) Product warranties on defective products is normally applicable for 18~36 months from the date of customer’s purchase. The provision is calculated by using historical and anticipated rates of warranty claims and costs per claim to satisfy the Company’s warranty obligation.

(b) Other liabilities as of September 30, 2020 and December 31, 2019 are as follows:

(In millions of won)	September 30, 2020		December 31, 2019
Current liabilities
Withholdings	W	23,347		13,049
Unearned revenue		8,274		25,012
Security deposits received		5,850		9,310
	W	37,471		47,371
Non-current liabilities
Long-term accrued expenses	W	82,265		76,300
Long-term other accounts payable		—		1,062
Long-term unearned revenue		3,923		6,852
Security deposits received		6,370		1,690
	W	92,558		85,904

122

14. Contingencies and Commitments

(a) Legal Proceedings

Anti-trust Litigations

Some individual claimants filed “follow-on” damages claims against the Company and other TFT-LCD manufacturers alleging violations of EU competition law. While the Company continues its vigorous defense of the various pending proceedings described above, as of September 30, 2020, the Company cannot reliably estimate the timing and amount of outflows of resources embodying economic benefits relating to the proceedings.

Solas OLED Ltd. Litigations

Solas OLED Ltd. filed patent infringement actions in the United States District Court for the Western District of Texas and the Mannheim District Court in Germany in April 2019 and in the Beijing Intellectual Property Court in China in May 2019 against the Company, television manufactures and others. In November 2020, the Mannheim District Court issued a decision in favor of the plaintiff. The Company will appeal Mannheim District Court’s November decision. Furthermore, a nullity action is currently ongoing in the German Federal Patent Court against the asserted patent. As of September 30, 2020, the Company cannot reliably estimate the timing and amount of outflows of resources embodying economic benefits relating to the proceedings.

Others

The Company is involved in various disputes in addition to the pending proceedings described above. The Company cannot reliably estimate the timing and amount of outflows of resources embodying economic benefits relating to the disputes.

(b) Commitments

Factoring and securitization of accounts receivable

The Company has agreements with Korea Development Bank and several other banks for accounts receivable sales negotiating facilities of up to an aggregate of USD 1,115 million (W1,308,453 million) in connection with the Company’s export sales transactions with its subsidiaries. As of September 30, 2020, there are no short-term borrowings that are outstanding but past due in connection with these agreements. In connection with all of the contracts in this paragraph, the Company has sold its accounts receivable with recourse.

The Company has credit facility agreements with Shinhan Bank and several other banks pursuant to which the Company could sell its accounts receivables up to an aggregate ofW718,738 million in connection with its domestic and export sales transactions and, as of September 30, 2020,W124,701 million accounts and notes receivable sold were outstanding in connection with the agreement. In connection with the contracts above, the Company has sold its accounts receivable without recourse.

123

14. Contingencies and Commitments, Continued

Letters of credit

As of September 30, 2020, the Company has agreements in relation to the opening of letters of credit up to USD 150 million (W176,025 million) with KEB Hana Bank, USD 50 million (W58,675 million) with Sumitomo Mitsui Banking Corporation, USD 100 million (W117,350 million) with Industrial Bank of Korea, USD 100 million (W117,350 million) with Industrial and Commercial Bank of China, USD 200 million (W234,700 million) with Shinhan Bank, USD 100 million (W117,350 million) with KB Kookmin Bank, USD 50 million (W58,675 million) with MUFG Bank and USD 200 million (W234,700 million) with the Export-Import Bank of Korea.

Payment guarantees

The Company provides payment guarantees to LG Display Vietnam Haiphong Co., Ltd. in connection with the principal amount of term loan credit facilities amounting to USD 1,215 million (W1,425,301 million).

In addition, the Company obtained payment guarantees amounting to USD 475 million (W557,413 million) from KEB Hana Bank and others for advances received related to the long-term supply agreements. The Company also obtained payment guarantees amounting to USD 306 million (W358,871 million) from Korea Development Bank for foreign currency denominated bonds.

License agreements

As of September 30, 2020, the Company has technical license agreements with Hitachi Display, Ltd. and others in relation to its LCD business and patent cross license agreement with Universal Display Corporation in relation to its OLED business. Also, the Company has a trademark license agreement with LG Corp. and other intellectual properties agreements with various companies as of September 30, 2020.

Long-term supply agreement

As of September 30, 2020, in connection with long-term supply agreements with customers, the Company recognized USD 338 million (W396,056 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 475 million (W557,413 million) from KEB Hana Bank and other various banks relating to advances received (see note 14(b) payment guarantees).

15. Share Capital

The Company is authorized to issue 500,000,000 shares of capital stock (par valueW5,000), and as of September 30, 2020 and December 31, 2019, the number of issued common shares is 357,815,700. There have been no changes in the capital stock from January 1, 2019 to September 30, 2020.

124

16. Revenue

Details of revenue for the three-month and nine-month periods ended September 30, 2020 and 2019 are as follows:

(In millions of won)	For the three-month periods ended September 30				For the nine-month periods ended September 30
	2020		2019		2020		2019
Sales of goods	W	6,447,529		5,417,502		15,785,453		15,707,148
Royalties		14,748		9,890		34,913		28,911
Others		6,838		5,181		21,278		16,079
	W	6,469,115		5,432,573		15,841,644		15,752,138

17. The Nature of Expenses and Others

The classification of expenses by nature for the three-month and nine-month periods ended September 30, 2020 and 2019 are as follows:

(In millions of won)	For the three-month periods ended September 30						For the nine-month periods ended September 30
	2020			2019			2020			2019
Changes in inventories	W	(129,955	)		(154,959	)		(52,249	)		(61,308	)
Purchases of raw materials, merchandise and others		2,557,901			2,297,856			6,098,010			6,410,588
Depreciation and amortization		619,678			657,755			1,916,165			1,866,814
Outsourcing		2,168,192			1,758,873			5,420,921			4,499,514
Labor		539,945			709,854			1,596,680			1,952,977
Supplies and others		153,968			124,969			438,937			472,819
Utility		176,639			196,821			495,626			540,738
Fees and commissions		88,903			120,862			275,988			372,146
Shipping		14,601			17,922			41,392			56,119
Advertising		26,087			49,836			94,911			84,147
Warranty		88,876			68,924			177,031			244,635
Travel		22,028			22,056			43,076			66,793
Taxes and dues		14,554			15,421			41,709			45,043
Impairment loss on property, plant and equipment		—			12,103			4,871			18,047
Impairment loss on intangible assets		38,782			116,506			69,293			116,506
Others		121,401			151,141			373,076			438,195
	W	6,501,600			6,165,940			17,035,437			17,123,773

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

125

18. Selling and Administrative Expenses

Details of selling and administrative expenses for the three-month and nine-month periods ended September 30, 2020 and 2019 are as follows:

(In millions of won)	For the three-month periods ended September 30				For the nine-month periods ended September 30
	2020		2019		2020		2019
Salaries(*)	W	47,529		137,368		142,830		254,359
Expenses related to defined benefit plans		6,204		7,798		18,519		23,851
Other employee benefits		9,972		10,812		31,113		38,147
Shipping		10,459		13,333		28,207		42,728
Fees and commissions		31,007		35,485		94,791		103,811
Depreciation		20,004		28,591		63,733		84,030
Taxes and dues		1,029		536		2,085		1,823
Advertising		26,087		49,836		94,911		84,147
Warranty		88,876		68,924		177,031		244,635
Insurance		2,127		1,551		5,690		4,418
Travel		1,792		4,529		5,125		13,226
Training		1,827		2,933		4,358		8,287
Others		9,741		8,516		26,171		28,830
	W	256,654		370,212		694,564		932,292

(*) Expenses recognized in relation to employee termination benefits for the nine-month periods ended September 30, 2020 and 2019 amount toW1,139 million andW84,083 million, respectively.

19. Personnel Expenses

Details of personnel expenses for the three-month and nine-month periods ended September 30, 2020 and 2019 are as follows:

(In millions of won)	For the three-month periods ended September 30				For the nine-month periods ended September 30
	2020		2019		2020		2019
Salaries and wages	W	435,081		602,331		1,300,338		1,682,577
Other employee benefits		59,545		73,780		187,022		225,860
Contributions to National Pension plan		16,674		18,997		50,644		55,150
Expenses related to defined benefit plans and defined contribution plans		39,836		48,776		119,570		146,346
	W	551,136		743,884		1,657,574		2,109,933

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

(a) Details of other non-operating income for the three-month and nine-month periods ended September 30, 2020 and 2019 are as follows:

(In millions of won)	For the three-month periods ended September 30				For the nine-month periods ended September 30
	2020		2019		2020		2019
Foreign currency gain	W	138,419		186,288		702,441		600,310
Gain on disposal of property, plant and equipment		4,610		6,661		16,758		34,624
Gain on disposal of intangible assets		—		—		—		552
Reversal of impairment loss on intangible assets		660		279		1,260		480
Rental income		411		402		1,259		1,412
Others		9,227		5,735		11,694		7,700
	W	153,327		199,365		733,412		645,078

(b) Details of other non-operating expenses for the three-month and nine-month periods ended September 30, 2020 and 2019 are as follows:

(In millions of won)	For the three-month periods ended September 30				For the nine-month periods ended September 30
	2020		2019		2020		2019
Foreign currency loss	W	163,199		156,059		672,827		572,572
Other bad debt expense		—		1,188		—		1,198
Loss on disposal of property, plant and equipment		10,639		9,661		28,525		16,408
Impairment loss on property, plant and equipment		—		12,103		4,871		18,047
Loss on disposal of intangible assets		21		—		28		18
Impairment loss on intangible assets		38,782		116,506		69,293		116,506
Donations		—		138		318		520
Others		5,543		1,047		8,281		8,774
	W	218,184		296,702		784,143		734,043

127

21. Finance Income and Finance Costs

Finance income and costs recognized in profit and loss for the three-month and nine-month periods ended September 30, 2020 and 2019 are as follows:

(In millions of won)	For the three-month periods ended September 30				For the nine-month periods ended September 30
	2020		2019		2020		2019
Finance income
Interest income	W	1,398		3,784		8,061		9,053
Dividend income		—		—		8,239		18,622
Foreign currency gain		84,679		9,807		31,948		24,259
Gain on disposal of investments		—		5,408		8,392		5,408
Gain on transaction of derivatives		515		9,685		28,066		22,852
Gain on valuation of derivatives		—		76,090		50,970		116,990
Gain on valuation of financial liabilities at fair value through profit or loss		—		—		33,634		—
Others		1,540		1,343		4,786		3,936
	W	88,132		106,117		174,096		201,120
Finance costs
Interest expense	W	45,874		45,941		152,949		85,630
Foreign currency loss		11,487		92,739		75,686		164,606
Loss on repayment of borrowings		296		—		794		—
Impairment loss on investments		—		28,938		—		28,938
Loss on sale of trade accounts and notes receivable		563		269		1,768		1,716
Loss on valuation of financial assets at fair value through profit or loss		229		—		1,721		3,960
Loss on valuation of financial liabilities at fair value through profit or loss		99,945		9,059		—		9,059
Loss on transaction of derivatives		2,585		—		2,585		—
Loss on valuation of derivatives		46,550		—		63,603		3,564
Others		323		9,433		1,427		11,468
	W	207,852		186,379		300,533		308,941

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22. Income Taxes

(a) Details of income tax expense (benefit) for the three-month and nine-month periods ended September 30, 2020 and 2019 are as follows:

(In millions of won)	For the three-month periods ended September 30						For the nine-month periods ended September 30
	2020			2019			2020			2019
Current tax expense (benefit)	W	(34,964	)		1,569			(34,711	)		(123,389	)
Deferred tax expense (benefit)		(57,285	)		(196,846	)		(361,445	)		(186,809	)
Income tax expense (benefit)	W	(92,249	)		(195,277	)		(396,156	)		(310,198	)

(b) Deferred Tax Assets and Liabilities

The carrying amount of deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that the deferred tax assets at the reporting date will be realized with the Company’s estimated future taxable income. The Company’s deferred tax assets and liabilities may differ from actual refundable or payable amount.

Deferred tax assets and liabilities as of September 30, 2020 and December 31, 2019 are attributable to the following:

(In millions of won)	Assets				Liabilities						Total
	September 30, 2020		December 31, 2019		September 30, 2020			December 31, 2019			September 30, 2020			December 31, 2019
Other accounts receivable, net	W	—		—		(689	)		(4,364	)		(689	)		(4,364	)
Inventories, net		78,174		78,730		—			—			78,174			78,730
Defined benefit liabilities, net		—		—		(13,767	)		—			(13,767	)		—
Accrued expenses		112,036		120,854		—			—			112,036			120,854
Property, plant and equipment		494,087		465,883		—			—			494,087			465,883
Intangible assets		16,278		19,422		—			—			16,278			19,422
Provisions		59,603		59,875		—			—			59,603			59,875
Other temporary differences		42,135		52,293		—			—			42,135			52,293
Tax losses carryforwards		852,463		536,684		—			—			852,463			536,684
Tax credit carryforwards		90,077		38,337		—			—			90,077			38,337
Deferred tax assets (liabilities)	W	1,744,853		1,372,078		(14,456	)		(4,364	)		1,730,397			1,367,714

129

23. Loss Per Share

(a) Basic loss per share for the three-month and nine-month periods ended September 30, 2020 and 2019 are as follows:

(In won and number of shares)	For the three-month periods ended September 30						For the nine-month periods ended September 30
	2020			2019			2020			2019
Loss for the period	W	(69,828,838,537	)		(575,046,871,311	)		(863,489,424,163	)		(1,096,752,176,951	)
Weighted-average number of common stocks outstanding		357,815,700			357,815,700			357,815,700			357,815,700
Loss per share	W	(195	)		(1,607	)		(2,413	)		(3,065	)

For the three-month and nine-month periods ended September 30, 2020 and 2019, there were no events or transactions that resulted in changes in the number of common stocks used for calculating loss per share.

(b) Diluted loss per share is not different from basic loss per share due to loss for the nine-month period ended September 30, 2020. As of September 30, 2020, 40,988,998 shares of potential common stock to be issued from conversion were excluded from the calculation of weighted-average number of common stocks due to antidilution.

24. Financial Risk Management

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

(a) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the 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.

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

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. Meanwhile, the Company entered into currency interest rate swap contracts to hedge currency risk with respect to foreign currency denominated borrowings and bonds.

130

24. Financial Risk Management, Continued

i) Exposure to currency risk

The Company’s exposure to foreign currency risk based on notional amounts as of September 30, 2020 and December 31, 2019 is as follows:

(In millions)	September 30, 2020
	USD			JPY			CNY		EUR
Cash and cash equivalents		178			88			8		—
Trade accounts and notes receivable		3,660			2,290			—		—
Non-trade receivables		75			119			42		2
Trade accounts and notes payable		(1,992	)		(8,982	)		—		—
Other accounts payable		(157	)		(4,474	)		—		—
Financial liabilities		(2,894	)		—			—		—
		(1,130	)		(10,959	)		50		2
Currency interest rate swap contracts		2,125			—			—		—
Net exposure		995			(10,959	)		50		2

(In millions)	December 31, 2019
	USD			JPY			CNY		PLN		EUR
Cash and cash equivalents		907			3			2		1		2
Trade accounts and notes receivable		2,880			3,974			—		—		—
Non-trade receivables		306			452			—		—		—
Trade accounts and notes payable		(1,035	)		(7,346	)		—		—		—
Other accounts payable		(145	)		(3,619	)		—		—		(9	)
Financial liabilities		(2,900	)		—			—		—		—
		13			(6,536	)		2		1		(7	)
Currency interest rate swap contracts		2,085			—			—		—		—
Net exposure		2,098			(6,536	)		2		1		(7	)

131

24. Financial Risk Management, Continued

Average exchange rates applied for the nine-month periods ended September 30, 2020 and 2019 and the exchange rates at September 30, 2020 and December 31, 2019 are as follows:

(In won)	Average rate				Reporting date spot rate
	2020		2019		September 30, 2020		December 31, 2019
USD	W	1,200.52		1,161.69		1,173.50		1,157.80
JPY		11.16		10.65		11.12		10.63
CNY		171.46		169.11		171.90		165.74
PLN		305.16		303.51		298.51		304.87
EUR		1,349.23		1,305.11		1,369.42		1,297.43

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 September 30, 2020 and December 31, 2019, 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)	September 30, 2020						December 31, 2019
	Equity			Profit or loss			Equity			Profit or loss
USD (5 percent weakening)	W	42,327			42,327			88,054			88,054
JPY (5 percent weakening)		(4,418	)		(4,418	)		(2,520	)		(2,520	)
CNY (5 percent weakening)		312			312			12			12
PLN (5 percent weakening)		—			—			11			11
EUR (5 percent weakening)		99			99			(329	)		(329	)

A stronger won against the above currencies as of September 30, 2020 and December 31, 2019 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.

132

24. Financial Risk Management, Continued

(ii) Interest rate risk

Interest rate risk arises principally from the Company’s variable interest-bearing bonds 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. Meanwhile, the Company entered into currency interest rate swap contracts amounting to USD 1,825 million (W2,141,638 million) and interest rate swap contracts amounting toW170,000 million in notional amount to hedge interest rate risk with respect to variable interest bearing borrowings.

i) Profile

The interest rate profile of the Company’s interest-bearing financial instruments as of September 30, 2020 and December 31, 2019 is as follows:

(In millions of won)	September 30, 2020			December 31, 2019
Fixed rate instruments
Financial assets	W	375,633			1,182,579
Financial liabilities		(5,987,576	)		(6,066,554	)
	W	(5,611,943	)		(4,883,975	)
Variable rate instruments
Financial liabilities	W	(2,317,858	)		(2,458,789	)

ii) Equity and profit or loss sensitivity analysis for variable rate instruments

As of September 30, 2020 and December 31, 2019, 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
September 30, 2020
Variable rate instruments (*)	W	(2,600	)		2,600		(2,600	)		2,600
December 31, 2019
Variable rate instruments (*)	W	(2,847	)		2,847		(2,847	)		2,847

(*) Financial instruments related to non-hedging interest rate swaps are excluded.

133

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 default risk of the country in which each customer operates do not have a significant influence on credit risk since the majority of the customers are global electronic appliance manufacturers operating in global markets.

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

In relation to the impairment of financial assets subsequent to initial recognition, the Company recognizes the changes in expected credit loss (“ECL”) in profit or loss at each reporting date.

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposures to credit risk as of September 30, 2020 and December 31, 2019 are as follows:

(In millions of won)	September 30, 2020		December 31, 2019
Financial assets carried at amortized cost
Cash and cash equivalents	W	298,709		1,105,245
Deposits in banks		76,863		77,268
Trade accounts and notes receivable, net		4,433,619		3,565,860
Non-trade receivables		136,536		438,659
Accrued income		7,721		1,281
Deposits		12,197		13,125
Short-term loans		28,414		21,623
Long-term loans		19,765		40,827
Long-term non-trade receivables		14,666		19,899
	W	5,028,490		5,283,787
Financial assets at fair value through profit or loss
Convertible bonds	W	1,544		1,544
Derivatives		80,977		49,676
	W	82,521		51,220
Financial assets at fair value through other comprehensive income
Debt instruments	W	72		76
	W	5,111,083		5,335,083

134

24. Financial Risk Management, Continued

In addition to the financial assets above, as of September 30, 2020, the Company provides payment guarantees in connection with the principal amount of credit facilities amounting to USD 1,215 million (W1,425,301 million) (see note 14).

Trade accounts and notes receivable are insured in order for the Company to manage credit risk if they do not meet the Company’s internal credit ratings. Uninsured trade accounts and notes receivable are managed by continuous monitoring of internal credit rating standards established by the Company and seeking insurance coverage, if necessary.

(c) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or other financial assets. The 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 financing activities, such as external long-term borrowings and offerings of debt instruments, equity-linked and other debt securities. In addition, the Company maintains a line of credit with various banks.

135

24. Financial Risk Management, Continued

The following are the contractual maturities of financial liabilities, including estimated interest payments, as of September 30, 2020.

			Contractual cash flows in
(In millions of won)	Carrying amount		Total		6 months or less		6-12 months		1-2 years		2-5 years		More than 5 years
Non-derivative financial liabilities
Borrowings	W	5,364,958		5,642,788		875,067		393,193		1,599,263		2,775,265		—
Bonds		2,940,476		3,057,276		383,964		129,863		1,952,914		497,505		93,030
Trade accounts and notes payable		4,110,551		4,110,551		3,724,901		385,650		—		—		—
Other accounts payable		824,046		824,046		822,969		1,077		—		—		—
Other accounts payable (enterprise procurement cards/tax payment cards)(*1)		1,897,519		1,919,697		1,271,444		648,253		—		—		—
Payment guarantee(*2)		12,570		1,470,494		108,355		120,843		445,343		795,953		—
Security deposits received		12,220		12,220		5,590		260		6,370		—		—
Lease liabilities		8,283		8,496		4,512		1,412		1,889		683		—
Derivative financial liabilities
Derivatives	W	64,527		26,630		7,662		8,175		5,932		4,861		—
	W	15,235,150		17,072,198		7,204,464		1,688,726		4,011,711		4,074,267		93,030

(*1) Represents the amount of utility expenses and others paid by enterprise procurement cards and national taxes paid by tax payment cards and the outstanding payables are settled at the end of the billing cycle. The payments to the card company arise from operating activities of purchasing of goods and services thus the related cash flow is presented as operating activities.

(*2) Contractual cash flows of payment guarantee is identical to timing of principal and interest payment and represent the maximum amount that the Company could be required to pay the guarantee amount.

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

136

24. 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)	September 30, 2020			December 31, 2019
Total liabilities	W	16,624,125			16,716,587
Total equity		9,799,018			10,666,093
Cash and deposits in banks (*1)		375,561			1,182,502
Borrowings (including bonds)		8,305,434			8,525,343
Total liabilities to equity ratio		170	%		157	%
Net borrowings to equity ratio (*2)		81	%		69	%

(*1) Cash and deposits in banks consist of cash and cash equivalents and current deposits in banks.

(*2) Net borrowings to equity ratio is calculated by dividing total borrowings (including bonds and excluding lease liabilities) less cash and current deposits in banks by total equity.

137

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.

i) Current assets and liabilities

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

ii) Trade receivables and other receivables

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

iii) Investments in equity and debt instruments

The fair value of marketable financial assets at FVTPL and FVOCI is determined by reference to their quoted closing bid price at the reporting date. The fair value of non-marketable instruments is determined using the results of fair value assessment performed by external valuation institution and others.

iv) Non-derivative financial liabilities

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

138

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 September 30, 2020 and December 31, 2019 are as follows:

	September 30, 2020				December 31, 2019
(In millions of won)	Carrying amounts		Fair values		Carrying amounts		Fair values
Financial assets carried at amortized cost
Cash and cash equivalents	W	298,709		(*)		1,105,245		(*)
Deposits in banks		76,863		(*)		77,268		(*)
Trade accounts and notes receivable		4,433,619		(*)		3,565,860		(*)
Non-trade receivables		136,536		(*)		438,659		(*)
Accrued income		7,721		(*)		1,281		(*)
Deposits		12,197		(*)		13,125		(*)
Short-term loans		28,414		(*)		21,623		(*)
Long-term loans		19,765		(*)		40,827		(*)
Long-term non-trade receivables		14,666		(*)		19,899		(*)
Financial assets at fair value through profit or loss
Equity instruments	W	1,476		1,476		2,997		2,997
Convertible bonds		1,544		1,544		1,544		1,544
Derivatives		80,977		80,977		49,676		49,676
Financial assets at fair value through other comprehensive income
Debt instruments	W	72		72		76		76
Financial liabilities at fair value through profit or loss
Derivatives	W	64,527		64,527		20,592		20,592
Convertible bonds		847,563		847,563		858,385		858,385
Financial liabilities carried at amortized cost
Borrowings	W	5,364,958		5,384,550		5,374,125		5,438,952
Bonds		2,092,913		2,115,473		2,292,833		2,345,867
Trade accounts and notes payable		4,110,551		(*)		2,682,403		(*)
Other accounts payable		2,721,565		(*)		3,329,040		(*)
Long-term other accounts payable		—		(*)		1,062		(*)
Payment guarantee liabilities		12,570		(*)		16,502		(*)
Security deposits received		12,220		(*)		11,000		(*)
Lease liabilities		8,283		(*)		6,557		(*)

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

139

24. Financial Risk Management, Continued

(iii) Fair values of financial assets and liabilities

i) Fair value hierarchy

Financial instruments carried at fair value are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques. The levels have been defined as follows:

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

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

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

ii) Financial instruments measured at fair value

Fair value hierarchy classifications of the financial instruments that are measured at fair value as of September 30, 2020 and December 31, 2019 are as follows:

	September 30, 2020
(In millions of won)	Level 1		Level 2		Level 3		Total
Financial assets at fair value through profit or loss
Equity instruments	W	—		—		1,476		1,476
Convertible bonds		—		—		1,544		1,544
Derivatives		—		—		80,977		80,977
Financial assets at fair value through other comprehensive income
Debt instruments	W	72		—		—		72
Financial liabilities at fair value through profit or loss
Derivatives	W	—		—		64,527		64,527
Convertible bonds		847,563		—		—		847,563

	December 31, 2019
(In millions of won)	Level 1		Level 2		Level 3		Total
Financial assets at fair value through profit or loss
Equity instruments	W	—		—		2,997		2,997
Convertible bonds		—		—		1,544		1,544
Derivatives		—		—		49,676		49,676
Financial assets at fair value through other comprehensive income
Debt instruments	W	76		—		—		76
Financial liabilities at fair value through profit or loss
Derivatives	W	—		—		20,592		20,592
Convertible bonds		858,385		—		—		858,385

140

24 Financial Risk Management, Continued

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

Fair value hierarchy classifications, valuation technique and inputs for fair value measurements of the financial instruments not measured at fair value but for which the fair value is disclosed as of September 30, 2020 and December 31, 2019 are as follows:

(In millions of won)	September 30, 2020						Valuation technique		Input
Classification	Level 1		Level 2		Level 3
Liabilities
Borrowings	W	—		—		5,384,550		Discounted cash flow		Discount rate
Bonds		—		—		2,115,473		Discounted cash flow		Discount rate
(In millions of won)	December 31, 2019						Valuation technique		Input
Classification	Level 1		Level 2		Level 3
Liabilities
Borrowings	W	—		—		5,438,952		Discounted cash flow		Discount rate
Bonds		—		—		2,345,867		Discounted cash flow		Discount rate

iv) The interest rates applied for determination of the above fair value as of September 30, 2020 and December 31, 2019 are as follows:

	September 30, 2020			December 31, 2019
Borrowings, bonds and others		2.32~4.37	%		1.87~3.56	%

141

25. Changes in liabilities arising from financing activities

Changes in liabilities arising from financing activities for the nine-month period ended September 30, 2020 are as follows:

						Non-cash transactions
(In millions of won)	January 1, 2020		Cash flows from financing activities			Reclassification			Gain or loss on foreign currency translation			Effective interest adjustment		Others			September 30, 2020
Short-term borrowings	W	347,340		4,739			—			(29	)		—		—			352,050
Current portion of long-term borrowings and bonds		1,117,218		(926,316	)		1,050,961			2,960			497		794			1,246,114
Payment guarantee liabilities		16,502		5,717			—			—			—		(9,649	)		12,570
Long-term borrowings		4,319,269		628,256			(751,341	)		20,429			—		—			4,216,613
Bonds (*)		2,741,516		49,949			(299,620	)		17,257			15,189		(33,634	)		2,490,657
Lease liabilities		6,557		(9,283	)		—			—			—		11,009			8,283
	W	8,548,402		(246,938	)		—			40,617			15,686		(31,480	)		8,326,287

(*) Others include gain on valuation of financial liabilities at fair value through profit or loss amounting toW33,634 million.

142

26. Related Parties and Others

(a) Related parties

Related parties as of September 30, 2020 are as follows:

Classification	Description
Subsidiaries(*)	LG Display America, Inc. and others
Associates(*)	Paju Electric Glass Co., Ltd. and others
Entity that has significant influence over the Company	LG Electronics Inc.
Subsidiaries of the entity that has significant influence over the Company	Subsidiaries of LG Electronics Inc.

(*) Details of subsidiaries and associates are described in note 8.

143

26. Related Parties and Others, Continued

(b) Significant transactions such as sales of goods and purchases of raw material and outsourcing service and others, which occurred in the normal course of business with related parties for the three-month and nine-month periods ended September 30, 2020 and 2019 are as follows:

	For the three-month period ended September 30, 2020
					Purchase and others
(In millions of won)	Sales and others		Dividend income		Purchase of raw material and others		Acquisition of property, plant and equipment		Outsourcing fees		Other costs
Subsidiaries
LG Display America, Inc.	W	3,304,064		—		—		—		—		—
LG Display Japan Co., Ltd.		523,284		—		—		—		—		—
LG Display Germany GmbH		465,923		—		—		—		—		128
LG Display Taiwan Co., Ltd.		497,471		—		—		—		—		416
LG Display Nanjing Co., Ltd.		2,225		—		2,447		650		408,889		9,025
LG Display Shanghai Co., Ltd.		70,793		—		—		—		—		—
LG Display Guangzhou Co., Ltd.		3,274		—		1,980		—		486,754		8,706
LG Display Shenzhen Co., Ltd.		119,712		—		—		—		—		—
LG Display Yantai Co., Ltd.		39		—		3,405		—		278,512		5,399
LG Display (China) Co., Ltd.		1,743		—		439,613		—		—		653
LG Display Singapore Pte. Ltd.		258,503		—		—		—		—		131
L&T Display Technology (Fujian) Limited		100,342		—		—		—		—		92
Nanumnuri Co., Ltd.		52		—		—		—		—		2,585
Global OLED Technology LLC		—		—		—		—		—		1,408
LG Display Guangzhou Trading Co., Ltd.		417,277		—		—		—		—		—
LG Display Vietnam Haiphong Co., Ltd.		4,246		—		12,641		—		485,098		6,821
Suzhou Lehui Display Co., Ltd.		96,522		—		876		—		—		—
LG Display High-Tech (China) Co., Ltd.		12,821		—		499		—		438,128		1,653
	W	5,878,291		—		461,461		650		2,097,381		37,017

144

26. Related Parties and Others, Continued

	For the three-month period ended September 30, 2020
					Purchase and others
(In millions of won)	Sales and others		Dividend income		Purchase of raw material and others		Acquisition of property, plant and equipment		Outsourcing fees		Other costs
Associates and their subsidiaries
WooRee E&L Co., Ltd.	W	—		—		3		—		—		13
AVATEC Co., Ltd.		—		—		—		—		21,054		360
Paju Electric Glass Co., Ltd.		—		—		79,426		—		—		495
YAS Co., Ltd.		—		—		1,935		3,157		—		395
Material Science Co., Ltd.		—		—		24		—		—		—
	W	—		—		81,388		3,157		21,054		1,263
Entity that has significant influence over the Company
LG Electronics Inc.	W	208,388		—		2,323		16,238		—		31,290
Subsidiaries of the entity that has significant influence over the Company
LG Electronics India Pvt. Ltd.	W	23,364		—		—		—		—		48
LG Electronics Vietnam Haiphong Co., Ltd.		110,146		—		—		—		—		379
LG Electronics Reynosa S.A. DE C.V.		—		—		—		—		—		105
LG Electronics Mexicali S.A.DE C.V.		6,044		—		—		—		—		15
LG Electronics RUS, LLC		—		—		—		—		—		80

145

26. Related Parties and Others, Continued

	For the three-month period ended September 30, 2020
					Purchase and others
(In millions of won)	Sales and others		Dividend income		Purchase of raw material and others		Acquisition of property, plant and equipment		Outsourcing fees		Other costs
Subsidiaries of the entity that has significant influence over the Company
LG Electronics Egypt S.A.E.	W	12,541		—		—		—		—		50
LG Innotek Co., Ltd.		1,164		—		4		—		—		17,776
Qingdao LG Inspur Digital Communication Co., Ltd.		400		—		—		—		—		—
Others		45,799		—		3		—		—		2,946
	W	199,458		—		7		—		—		21,399
	W	6,286,137		—		545,179		20,045		2,118,435		90,969

146

26. Related Parties and Others, Continued

	For the nine-month period ended September 30, 2020
					Purchase and others
(In millions of won)	Sales and others		Dividend income		Purchase of raw material and others		Acquisition of property, plant and equipment		Outsourcing fees		Other costs
Subsidiaries
LG Display America, Inc.	W	7,525,931		—		—		—		—		—
LG Display Japan Co., Ltd.		1,394,688		—		—		—		—		—
LG Display Germany GmbH		1,002,627		—		—		—		—		5,877
LG Display Taiwan Co., Ltd.		1,042,811		—		—		—		—		731
LG Display Nanjing Co., Ltd.		5,851		—		3,740		650		1,038,176		20,888
LG Display Shanghai Co., Ltd.		587,262		—		—		—		—		—
LG Display Poland Sp. z o.o.		8,392		—		—		—		—		—
LG Display Guangzhou Co., Ltd.		12,980		—		7,039		—		1,420,299		22,641
LG Display Shenzhen Co., Ltd.		508,945		—		—		—		—		—
LG Display Yantai Co., Ltd.		145		—		7,240		—		741,379		25,280
LG Display (China) Co., Ltd.		3,541		—		1,101,726		—		—		1,864
LG Display Singapore Pte. Ltd.		827,192		—		—		—		—		369
L&T Display Technology (Fujian) Limited		259,824		—		—		—		—		369
Nanumnuri Co., Ltd.		156		—		—		—		—		14,000
Global OLED Technology LLC		—		—		—		—		—		4,076
LG Display Guangzhou Trading Co., Ltd.		860,819		—		—		—		—		—
LG Display Vietnam Haiphong Co., Ltd.		14,221		—		54,374		—		1,226,621		20,246
Suzhou Lehui Display Co., Ltd.		191,373		—		1,023		—		—		—
LG Display High-Tech (China) Co., Ltd.		24,885		—		1,792		—		782,234		4,523
	W	14,271,643		—		1,176,934		650		5,208,709		120,864

147

26. Related Parties and Others, Continued

	For the nine-month period ended September 30, 2020
					Purchase and others
(In millions of won)	Sales and others		Dividend income		Purchase of raw material and others		Acquisition of property, plant and equipment		Outsourcing fees		Other costs
Associates and their subsidiaries
WooRee E&L Co., Ltd.	W	—		—		33		—		—		32
AVATEC Co., Ltd.		—		200		—		—		54,869		776
Paju Electric Glass Co., Ltd.		—		7,739		217,803		—		—		2,121
YAS Co., Ltd.		—		300		5,263		5,509		—		2,046
Material Science Co., Ltd.		—		—		93		—		—		—
	W	—		8,239		223,192		5,509		54,869		4,975
Entity that has significant influence over the Company
LG Electronics Inc.	W	534,837		—		7,301		49,127		—		97,131
Subsidiaries of the entity that has significant influence over the Company
LG Electronics India Pvt. Ltd.	W	40,369		—		—		—		—		113
LG Electronics Vietnam Haiphong Co., Ltd.		236,066		—		—		—		—		825
LG Electronics Reynosa S.A. DE C.V.		—		—		—		—		—		777
LG Electronics Mexicali S.A.DE C.V.		22,081		—		—		—		—		32
LG Electronics RUS, LLC		—		—		—		—		—		235

148

26. Related Parties and Others, Continued

	For the nine-month period ended September 30, 2020
					Purchase and others
(In millions of won)	Sales and others		Dividend income		Purchase of raw material and others		Acquisition of property, plant and equipment		Outsourcing fees		Other costs
Subsidiaries of the entity that has significant influence over the Company
LG Electronics Egypt S.A.E.	W	48,430		—		—		—		—		352
LG Innotek Co., Ltd.		3,925		—		657		—		—		58,494
Qingdao LG Inspur Digital Communication Co., Ltd.		7,065		—		—		—		—		—
Others		94,466		—		10		—		—		8,539
	W	452,402		—		667		—		—		69,367
	W	15,258,882		8,239		1,408,094		55,286		5,263,578		292,337

149

26. Related Parties and Others, Continued

	For the three-month period ended September 30, 2019
					Purchase and others
(In millions of won)	Sales and others		Dividend income		Purchase of raw material and others		Acquisition of property, plant and equipment		Outsourcing fees		Other costs
Subsidiaries
LG Display America, Inc.	W	2,422,394		—		—		—		—		—
LG Display Japan Co., Ltd.		581,374		—		—		—		—		—
LG Display Germany GmbH		397,136		—		—		—		—		4,997
LG Display Taiwan Co., Ltd.		424,667		—		—		—		—		91
LG Display Nanjing Co., Ltd.		1,063		—		1,025		—		377,658		5,786
LG Display Shanghai Co., Ltd.		268,607		—		—		—		—		—
LG Display Poland Sp. z o.o.		—		—		—		—		—		418
LG Display Guangzhou Co., Ltd.		28,045		—		2,966		—		545,512		9,556
LG Display Shenzhen Co., Ltd.		81,253		—		—		—		—		—
LG Display Yantai Co., Ltd.		186		—		4,866		—		394,088		1,150
LG Display (China) Co., Ltd.		4		—		386,990		—		—		1,609
LG Display Singapore Pte. Ltd.		288,844		—		—		—		—		779
L&T Display Technology (Fujian) Limited		86,349		—		2		—		—		457
Nanumnuri Co., Ltd.		47		—		—		—		—		5,519
Global OLED Technology LLC		—		—		—		—		—		1,475
LG Display Guangzhou Trading Co., Ltd.		191,060		—		—		—		—		—
LG Display Vietnam Haiphong Co., Ltd.		2,449		—		57,528		—		364,306		4,711
Suzhou Lehui Display Co., Ltd.		45,647		—		101		—		—		—
LG Display High-Tech (China) Co., Ltd.		7,299		—		883		—		—		—
	W	4,826,424		—		454,361		—		1,681,564		36,548

150

26. Related Parties and Others, Continued

	For the three-month period ended September 30, 2019
					Purchase and others
(In millions of won)	Sales and others		Dividend income		Purchase of raw material and others		Acquisition of property, plant and equipment		Outsourcing fees		Other costs
Associates and their subsidiaries
WooRee E&L Co., Ltd.	W	—		—		11		—		—		—
INVENIA Co., Ltd.(*1)		—		—		262		1,018		—		195
AVATEC Co., Ltd.		2,639		—		—		—		17,720		196
Paju Electric Glass Co., Ltd.		—		—		87,211		—		—		1,107
YAS Co., Ltd.		—		—		1,225		—		—		839
Material Science Co., Ltd.		—		—		21		—		—		—
	W	2,639		—		88,730		1,018		17,720		2,337
Entity that has significant influence over the Company
LG Electronics Inc.	W	209,998		—		2,036		17,972		—		37,867
Subsidiaries of the entity that has significant influence over the Company
LG Electronics India Pvt. Ltd.	W	31,515		—		—		—		—		79
LG Electronics Vietnam Haiphong Co., Ltd.		76,909		—		—		—		—		219
LG Electronics Reynosa S.A. DE C.V.		—		—		—		—		—		149
LG Electronics S.A. (Pty) Ltd.		267		—		—		—		—		6
LG Electronics Mexicali S.A.DE C.V.		—		—		—		—		—		15
LG Electronics RUS, LLC		85		—		—		—		—		137

151

26. Related Parties and Others, Continued

	For the three-month period ended September 30, 2019
					Purchase and others
(In millions of won)	Sales and others		Dividend income		Purchase of raw material and others		Acquisition of property, plant and equipment		Outsourcing fees		Other costs
Subsidiaries of the entity that has significant influence over the Company
LG Electronics Egypt S.A.E.	W	22,027		—		—		—		—		2
LG Innotek Co., Ltd.		1,314		—		9,600		—		—		15,531
LG Hitachi Water Solutions Co., Ltd.(*2)		—		—		—		22,023		—		—
Inspur LG Digital Mobile Communications Co., Ltd.		924		—		—		—		—		—
Qingdao LG Inspur Digital Communication Co., Ltd.		10,346		—		—		—		—		—
HiEntech Co., Ltd.(*2)		11		—		—		—		—		7,385
Others		13,278		—		—		—		—		3,669
	W	156,676		—		9,600		22,023		—		27,192
	W	5,195,737		—		554,727		41,013		1,699,284		103,944

(*1) Represents transactions occurred prior to the Company’s disposal of the entire investments

(*2) Represents transactions occurred prior to LG Electronics Inc.’s disposal of the entire investments

152

26. Related Parties and Others, Continued

	For the nine-month period ended September 30, 2019
					Purchase and others
(In millions of won)	Sales and others		Dividend income		Purchase of raw material and others		Acquisition of property, plant and equipment		Outsourcing fees		Other costs
Subsidiaries
LG Display America, Inc.	W	6,449,061		—		—		—		—		5
LG Display Japan Co., Ltd.		1,736,365		—		—		—		—		5
LG Display Germany GmbH		1,231,933		—		—		—		—		11,557
LG Display Taiwan Co., Ltd.		1,065,101		—		—		—		—		373
LG Display Nanjing Co., Ltd.		9,004		—		3,650		—		1,087,038		20,911
LG Display Shanghai Co., Ltd.		748,674		—		—		—		—		—
LG Display Poland Sp. z o.o.		47		—		—		—		7,535		1,717
LG Display Guangzhou Co., Ltd.		80,978		—		9,640		—		1,553,397		24,251
LG Display Shenzhen Co., Ltd.		280,046		—		—		—		—		—
LG Display Yantai Co., Ltd.		2,065		—		12,444		—		789,084		7,238
LG Display (China) Co., Ltd.		4		11,120		1,064,552		—		—		2,094
LG Display Singapore Pte. Ltd.		830,889		—		—		—		—		1,139
L&T Display Technology (Fujian) Limited		272,499		—		2		—		—		1,037
Nanumnuri Co., Ltd.		144		—		—		—		—		16,848
Global OLED Technology LLC		—		—		—		—		—		4,384
LG Display Guangzhou Trading Co., Ltd.		916,136		—		—		—		—		—
LG Display Vietnam Haiphong Co., Ltd.		16,340		—		100,541		—		716,768		18,891
Suzhou Lehui Display Co., Ltd.		117,519		—		101		—		—		—
LG Display High-Tech (China) Co., Ltd.		33,637		—		883		—		—		—
	W	13,790,442		11,120		1,191,813		—		4,153,822		110,450

153

26. Related Parties and Others, Continued

	For the nine-month period ended September 30, 2019
					Purchase and others
(In millions of won)	Sales and others		Dividend income		Purchase of raw material and others		Acquisition of property, plant and equipment		Outsourcing fees		Other costs
Associates and their subsidiaries
WooRee E&L Co., Ltd.	W	—		—		23		—		—		1
INVENIA Co., Ltd.(*1)		—		180		1,024		8,700		—		297
AVATEC Co., Ltd.		2,639		265		—		—		54,939		616
Paju Electric Glass Co., Ltd.		—		6,057		267,065		—		—		3,209
YAS Co., Ltd.		—		1,000		4,795		11,908		—		2,822
Material Science Co., Ltd.		—		—		21		—		—		313
	W	2,639		7,502		272,928		20,608		54,939		7,258
Entity that has significant influence over the Company
LG Electronics Inc.	W	739,773		—		8,580		150,797		—		102,164
Subsidiaries of the entity that has significant influence over the Company
LG Electronics India Pvt. Ltd.	W	76,950		—		—		—		—		119
LG Electronics Vietnam Haiphong Co., Ltd.		205,520		—		—		—		—		344
LG Electronics Reynosa S.A. DE C.V.		—		—		—		—		—		672
LG Electronics S.A. (Pty) Ltd.		2,384		—		—		—		—		15
LG Electronics Mexicali S.A.DE C.V.		1,266		—		—		—		—		65
LG Electronics RUS, LLC		361		—		—		—		—		1,562

154

26. Related Parties and Others, Continued

	For the nine-month period ended September 30, 2019
	Sales and others		Dividend income		Purchase and others
(In millions of won)					Purchase of raw material and others		Acquisition of property, plant and equipment		Outsourcing fees		Other costs
Subsidiaries of the entity that has significant influence over the Company
LG Electronics Egypt S.A.E.	W	80,553		—		—		—		—		2
LG Electronics (Kunshan) Computer Co., Ltd.		385		—		—		—		—		—
LG Innotek Co., Ltd.		5,347		—		32,636		—		—		57,602
LG Hitachi Water Solutions Co., Ltd.(*2)		—		—		—		68,282		—		—
Inspur LG Digital Mobile Communications Co., Ltd.		36,182		—		—		—		—		—
Qingdao LG Inspur Digital Communication Co., Ltd.		13,142		—		—		—		—		—
HiEntech Co., Ltd.(*2)		47		—		—		—		—		21,576
Others		22,614		—		—		—		—		9,245
	W	444,751		—		32,636		68,282		—		91,202
	W	14,977,605		18,622		1,505,957		239,687		4,208,761		311,074

(*1) Represents transactions occurred prior to the Company’s disposal of the entire investments.

(*2) Represents transactions occurred prior to LG Electronics Inc.’s disposal of the entire investments.

155

26. Related Parties and Others, Continued

(c) Trade accounts and notes receivable and payable and others as of September 30, 2020 and December 31, 2019 are as follows:

	Trade accounts and notes receivable and others				Trade accounts and notes payable and others
(In millions of won)	September 30, 2020		December 31, 2019		September 30, 2020		December 31, 2019
Subsidiaries
LG Display America, Inc.	W	1,643,145		937,409		—		—
LG Display Japan Co., Ltd.		450,479		274,964		—		5
LG Display Germany GmbH		410,520		382,463		5		2,794
LG Display Taiwan Co., Ltd.		252,594		454,563		67		104
LG Display Nanjing Co., Ltd.		915		1,358		271,484		220,327
LG Display Shanghai Co., Ltd.		372,796		172,259		1		3
LG Display Guangzhou Co., Ltd.		5,603		12,465		206,496		313,756
LG Display Guangzhou Trading Co., Ltd.		500,189		351,322		—		—
LG Display Shenzhen Co., Ltd.		99,221		116,494		3		2
LG Display Yantai Co., Ltd.		41		—		157,289		149,715
LG Display (China) Co., Ltd.		1,741		22		161,303		112,053
LG Display Singapore Pte. Ltd.		123,440		298,132		42		21
L&T Display Technology (Fujian) Limited		69,884		46,375		169,212		199,349
Nanumnuri Co., Ltd.		—		—		1,807		3,866
LG Display Vietnam Haiphong Co., Ltd.		21,075		24,385		434,083		395,429
Suzhou Lehui Display Co., Ltd.		67,714		24,830		551		46
LG Display High-Tech (China) Co., Ltd.		12,658		1,722		197,485		54,662
	W	4,032,015		3,098,763		1,599,828		1,452,132

156

26. Related Parties and Others, Continued

	Trade accounts and notes receivable and others				Trade accounts and notes payable and others
(In millions of won)	September 30, 2020		December 31, 2019		September 30, 2020		December 31, 2019
Associates and their subsidiaries
WooRee E&L Co., Ltd.	W	—		—		9		8
AVATEC Co., Ltd.		—		—		4,942		1,029
Paju Electric Glass Co., Ltd.		—		—		64,544		62,853
YAS Co., Ltd.		—		—		5,124		4,533
Material Science Co., Ltd.		—		—		17		8
	W	—		—		74,636		68,431
Entity that has significant influence over the Company
LG Electronics Inc.	W	143,090		208,870		51,346		110,784

157

26. Related Parties and Others, Continued

	Trade accounts and notes receivable and others				Trade accounts and notes payable and others
(In millions of won)	September 30, 2020		December 31, 2019		September 30, 2020		December 31, 2019
Subsidiaries of the entity that has significant influence over the Company
LG Innotek Co., Ltd.	W	6		4		24,532		29,613
LG Electronics Reynosa S.A. DE C.V		—		—		45		62
LG Electronics India Pvt. Ltd.		16,711		6,113		—		—
LG Electronics Vietnam Haiphong Co., Ltd.		39,662		47,740		1		29
LG Electronics RUS, LLC		—		—		—		67
LG Electronics Egypt S.A.E		3,827		9,432		—		—
Qingdao LG Inspur Digital Communication Co., Ltd.		317		6,456		—		—
Others		36,210		12,757		1,696		1,768
	W	96,733		82,502		26,274		31,539
	W	4,271,838		3,390,135		1,752,084		1,662,886

158

26. Related Parties and Others, Continued

Details of significant financing transactions such as loans and collection of loans, which occurred in the normal course of business with related parties for the nine-month period ended September 30, 2019 are as follows:

	2019
(In millions of won) Associates	Loans		Collection of loans
INVENIA Co., Ltd.(*)	W	1,000		—

(*) Excluded from related parties due to disposal of equity investments during the year ended December 31, 2019.

159

26. Related Parties and Others, Continued

(e) Conglomerate Transactions

Transactions, trade accounts and notes receivable and payable, and others between the Company and certain companies and their subsidiaries included in LG Group, one of conglomerates according to the Monopoly Regulation and Fair Trade Act, for the three-month and nine-month periods ended September 30, 2020 and 2019 and as of September 30, 2020 and December 31, 2019 are as follows. These entities are not related parties according to K-IFRS No. 1024, Related Party Disclosures.

	For the three-month period ended September 30, 2020				For the nine-month period ended September 30, 2020				September 30, 2020
(In millions of won)	Sales and others		Purchase and others		Sales and others		Purchase and others		Trade accounts and notes receivable and others		Trade accounts and notes payable and others
LG International Corp. and its subsidiaries	W	101,775		23,138		273,790		67,796		91,864		14,849
LG Uplus Corp.		—		478		—		1,593		—		173
LG Chem Ltd. and its subsidiaries		38		115,580		1,071		342,451		29		93,835
S&I Corp. and its subsidiaries		79		58,544		246		127,579		21,307		60,717
Silicon Works Co., Ltd		—		174,979		36		372,172		—		162,989
LG Corp.		—		15,705		—		40,122		8,483		5,110
LG Management Development Institute		—		2,078		—		5,662		3,480		363
LG CNS Co., Ltd. and its subsidiaries		—		28,691		—		63,365		—		22,056
G2R Inc. and its subsidiaries		—		11,826		—		21,833		—		9,472
Robostar Co., Ltd.		—		130		—		253		—		135
	W	101,892		431,149		275,143		1,042,826		125,163		369,699

160

26. Related Parties and Others, Continued

(In millions of won)	For the three-month period ended September 30, 2019				For the nine-month period ended September 30, 2019				December 31, 2019
	Sales and others		Purchase and others		Sales and others		Purchase and others		Trade accounts and notes receivable and others		Trade accounts and notes payable and others
LG International Corp. and its subsidiaries	W	146,375		26,478		498,170		91,019		93,622		45,363
LG Uplus Corp.		—		621		—		1,756		—		208
LG Chem Ltd. and its subsidiaries		65		160,262		131		460,489		23		53,428
S&I Corp. and its subsidiaries(*)		84		58,504		251		304,372		21,307		85,312
Silicon Works Co., Ltd		—		207,055		92		513,561		—		88,355
LG Corp.		—		13,849		—		40,218		8,781		—
LG Management Development Institute		—		2,239		—		6,624		3,480		231
LG CNS Co., Ltd. and its subsidiaries		—		40,795		—		99,111		—		58,967
LG Hausys Ltd		—		—		1		1		—		—
G2R Inc. and its subsidiaries		—		17,364		—		19,251		—		29,540
Robostar Co., Ltd.		—		155		—		2,143		—		—
Others(*)		—		29,573		—		86,549		—		—
	W	146,524		556,895		498,645		1,625,094		127,213		361,404

(*) Due to S&I Corp.’s disposal of partial interests in Serveone in May 2019, Serveone was reclassified from one of the S&I Corp.’s subsidiaries to associates. Accordingly, transactions with S&I Corp. after the disposal are classified as other.

161

26. Related Parties and Others, Continued

(f) Key management personnel compensation

Compensation costs of key management for the three-month and nine-month periods ended September 30, 2020 and 2019 are as follows:

	For the three-month periods ended September 30				For the nine-month periods ended September 30
(In millions of won)	2020		2019		2020		2019
Short-term benefits	W	530		769		1,629		2,590
Expenses related to the defined benefit plan		83		103		262		450
	W	613		872		1,891		3,040

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

162

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	LG Display Co., Ltd.
	(Registrant)
Date: November 16, 2020	By:	/s/ Heeyeon Kim
		(Signature)
	Name:	Heeyeon Kim
	Title:	Head of IR / Vice President

163