Edgar Filing: LG Display Co., Ltd.

Form 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER

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

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of May 2016

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 x 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 x

QUARTERLY REPORT

(From January 1, 2016 to March 31, 2016)

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

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

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

Contents


1.	Company		4
	A.	Name and contact information	4
	B.	Domestic credit rating	4
	C.	Capitalization	5
	D.	Voting rights	5
	E.	Dividends	6

2.	Business		6
	A.	Business overview	6
	B.	Industry	7
	C.	New businesses	8

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

4.	Production and Equipment		9
	A.	Production capacity and output	9
	B.	Production performance and utilization ratio	10
	C.	Investment plan	10

5.	Sales		10
	A.	Sales performance	10
	B.	Sales route and sales method	11

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

7.	Derivative Contracts		12
	A.	Currency risks	12
	B.	Interest rate risks	13



8.	Major Contracts		13

9.	Research & Development		13
	A.	Summary of R&D-related expenditures	13
	B.	R&D achievements	14

10.	Intellectual Property		19

11.	Environmental and Safety Matters		19

12.	Financial Information		20
	A.	Financial highlights (Based on consolidated K-IFRS)	20
	B.	Financial highlights (Based on separate K-IFRS)	21
	C.	Consolidated subsidiaries	22
	D.	Status of equity investment	22

13.	Audit Information		23
	A.	Audit service	23
	B.	Non-audit service	23

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

15.	Information Regarding Shares		25
	A.	Total number of shares	25
	B.	Shareholder list	25

16.	Directors and Employees		25
	A.	Directors	25
	B.	Employees	26

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

1.	Company

Name and contact information

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

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

Domestic credit rating

(1)

Corporate bonds


Subject instrument	Month of rating	Credit rating⁽¹⁾	Rating agency (Rating range)
Corporate bonds	April 2014	AA	NICE Information Service Co., Ltd. (AAA ~ D)
	September 2014
	April 2015
	March 2014	AA	Korea Investors Service, Inc. (AAA ~ D)
	April 2015
	May 2016
	March 2014	AA	Korea Ratings Corporation (AAA ~ D)
	September 2014
	May 2015
	May 2016

(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.

(2)

Commercial paper


Subject instrument	Month of rating	Credit rating⁽¹⁾	Rating agency (Rating range)
Commercial paper	October 2015	A1	Korea Investors Service, Inc. (A1 ~ D)
Commercial paper	October 2015	A1	NICE Information Service Co., Ltd. (A1 ~ D)

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


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

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

Capitalization

(1)

Change in capital stock (as of March 31, 2016)

There were no changes to our issued capital stock during the quarterly reporting period ended March 31, 2016.

(2)

Convertible bonds

Not applicable.

Voting rights (as of March 31, 2016)


		(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		—

(1)	Authorized: 500,000,000 shares

Dividends

Dividends for the three most recent fiscal years


Description (unit)		2015			2014			2013
Par value (Won)			5,000			5,000			5,000
Profit for the year (million Won) ⁽¹⁾			966,553			904,268			426,118
Earnings per share (Won) ⁽²⁾			2,701			2,527			1,191

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

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

Cash dividend payout ratio (%)			18.51	%		19.78	%		—
Cash dividend yield (%) ⁽³⁾	Common shares		1.97	%		1.47	%		—
	Preferred shares		—			—			—
Stock dividend yield (%)	Common shares		—			—			—
	Preferred shares		—			—			—
Cash dividend per share (Won)	Common shares		500			500			—
	Preferred shares		—			—			—
Stock dividend per share (share)	Common shares		—			—			—
	Preferred shares		—			—			—

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

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

(3)

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

2.	Business

Business overview

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

As of March 31, 2016, in Korea we operated TFT-LCD and OLED production facilities and a research center in Paju and TFT-LCD production facilities in Gumi. We have also established subsidiaries in the Americas, Europe and Asia.

As of March 31, 2016, 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.

2016 Q1 consolidated operating results highlights


	(Unit: In billions of Won)
2016 Q1	Display business
Sales Revenue		5,989
Gross Profit		626
Operating Profit		40

Industry

(1)

Industry characteristics and growth potential

•

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

•

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

(2)

Cyclicality

•

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

•

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

(3)

Market conditions

•

Overall, while there have been some variations in rates of production capacity growth among individual display panel manufacturers, display panel manufacturers have generally slowed their respective rates of production capacity growth since 2011 due to a slowdown in growth of the display panel industry.

•

Most display panel manufacturers are located in Asia.

Korea: LG Display, Samsung Display, etc.

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

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

China: BOE, CSOT, CEC Panda, etc.

(4)

Market shares

•

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


	2016 Q1			2015			2014
Panels for Televisions⁽¹⁾		26.1	%		25.4	%		25.0	%
Panels for Monitors		35.2	%		39.0	%		32.7	%
Panels for Notebook Computers		28.1	%		27.3	%		27.5	%
Panels for Tablet Computers		24.3	%		22.5	%		27.0	%

Total		27.8	%		27.7	%		26.9	%

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

(1)	Includes panels for public displays.

(5)

Competitiveness

•

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

•

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

•

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

•

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

•

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

•

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

New businesses

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

3.	Major Products and Raw Materials

Major products

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


			(Unit: In billions of Won, except percentages)
Business area	Sales type	Items (Market)	Usage	Major trademark	Sales in 2016 Q1 (%)
Display	Product/ Service/ Other sales	Display panel (Overseas⁽¹⁾)	Panels for notebook computers, monitors, televisions, smartphones, tablets, etc.	LG Display	5,458 (91.1%)
		Display panel (Korea ⁽¹⁾)	Panels for notebook computers, monitors, televisions, smartphones, tablets, etc.	LG Display	531 (8.9%)

Total					5,989 (100.0%)

• Period: January 1, 2016 ~ March 31, 2016.

(1)	Based on ship-to-party.

Average selling price trend of major products

The average selling price of LCD panels per square meter of net display area shipped in the first quarter of 2016 decreased by approximately 17% from the fourth quarter of 2015, largely as a result of a decrease in the shipment of panels for mobile devices, which generally have higher average selling prices per square meter of net display area compared to other products, reflecting seasonal factors. There is no assurance that the average selling prices of LCD panels will not fluctuate in the future due to changes in market conditions.

(Unit: US$ / m²)

Description

2016 Q1

2015 Q4

2015 Q3

2015 Q2

Display panel⁽¹⁾⁽²⁾

525

632

622

620

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

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

Major raw materials

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


				(Unit: In billions of Won, except percentages)
Business area	Purchase type		Items	Usage		Cost⁽¹⁾		Ratio (%)			Suppliers
Display		Raw materials	Backlights		Display panel manufacturing		715		21	%	HeeSung Electronics, etc.
			Polarizers				553		16	%	LG Chem, etc.
			Glass				385		11	%	NEG, Asahi Glass, etc.
			Printed circuit boards				381		11	%	Korea SMT, etc.
			Others				1,440		41	%

Total							3,475		100	%

• Period: January 1, 2016 ~ March 31, 2016.

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

4.	Production and Equipment

Production capacity and output

(1)

Production capacity

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

(Unit: 1,000 glass sheets)

Business area

Items

Location of facilities

2016 Q1⁽¹⁾

2015⁽²⁾

2014⁽²⁾

Display

Display panel

Gumi, Paju, Guangzhou, Ochang

2,243

9,781

9,573

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

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

(2)

Production output

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

(Unit: 1,000 glass sheets)

Business area

Items

Location of facilities

2016 Q1

2015

2014

Display

Display panel

Gumi, Paju, Guangzhou, Ochang

2,104

8,609

8,425

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

Production performance and utilization ratio


		(Unit: Hours, except percentages)
Production facilities	Available working hours in 2016 Q1	Actual working hours in 2016 Q1	Average utilization ratio
Gumi	2,184⁽¹⁾ (91 days) ⁽²⁾	2,102⁽¹⁾ (88 days) ⁽²⁾	96.2%
Paju	2,184⁽¹⁾ (91 days) ⁽²⁾	2,160⁽¹⁾ (90 days) ⁽²⁾	98.9%
Guangzhou	2,184⁽¹⁾ (91 days) ⁽²⁾	2,184⁽¹⁾ (91 days) ⁽²⁾	100.0%
Ochang	2,184⁽¹⁾ (91 days) ⁽²⁾	1,896⁽¹⁾ (79 days) ⁽²⁾	86.8%

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

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

Investment plan

In 2015, our total capital expenditures on a cash out basis was W2.4 trillion. In 2016, we currently expect that our total capital expenditures on a cash out basis will be higher than in 2015, in order to fund the construction of our P10 fabrication facility in Paju, Korea and expansion of our OLED panel production capacities, while maintaining and making improvements to our existing facilities. Such amount is subject to change depending on business conditions and market environment.

Sales

Sales performance


					(Unit: In billions of Won)
Business area	Sales types		Items (Market)			2016 Q1		2015		2014
Display		Products, etc.		Display panel	Overseas ⁽¹⁾		5,458		23,847		24,341
Display		Products, etc.		Display panel	Korea ⁽¹⁾		531		2,609		2,692
					Total		5,989		26,456		27,033

(1)	Based on ship-to-party.

Sales route and sales method

(1)

Sales organization

•

As of March 31, 2016, each of our television, IT, mobile and OLED businesses had individual sales and customer support functions.

•

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

(2)

Sales route

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

•

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

•

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

(3)

Sales methods and sales terms

•

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

(4)

Sales strategy

•

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

•

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

(5)

Purchase orders

•

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

•

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

6.	Market Risks and Risk Management

Market risks

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

The display industry is highly competitive. We have experienced pressure on the prices and margins of our major products due largely to additional industry capacity from panel manufacturers in Korea, Taiwan, China and Japan coupled with changes in the production mix of such manufacturers. Our main competitors in the industry include Samsung Display, AU Optronics, Innolux, Sharp, BOE, CSOT, Japan Display, CPT, HannStar, Panasonic LCD and CEC Panda.

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

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

Risk management

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

7.	Derivative Contracts

Currency risks

•

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

•

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

•

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

•

As of March 31, 2016, we have entered into an aggregate of US$100 million in Won/US$ forward foreign exchange contracts with Crédit Agricole and NongHyup Bank, for which we have not applied hedge accounting.

We recognized a gain on valuation of derivative instruments in the amount of W1,917 million with respect to currency derivative instruments held as of March 31, 2016.

Interest rate risks

•

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

•

As of March 31, 2016, we have entered into an aggregate of W350 billion in interest rate swap agreements with Shinhan Bank and NongHyup Bank, for which we have not applied hedge accounting.

We recognized a loss on valuation of derivative instruments in the amount of W1,236 million with respect to interest rate derivative instruments held as of March 31, 2016.

8.	Major contracts

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


Type of agreement	Name of party	Term	Content
Technology licensing agreement	Semiconductor Energy Laboratory	October 2005 ~	Patent licensing of LCD and OLED related technology
Technology licensing agreement	Hewlett-Packard	January 2011 ~	Patent licensing of semi-conductor device 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, etc.

9.	Research & Development

Summary of R&D-related expenditures


	(Unit: In millions of Won, except percentages)
Items		2016 Q1			2015			2014
Material Cost			153,965			679,603			762,008
Labor Cost			121,619			510,455			542,857
Depreciation Expense			33,856			196,799			249,306
Others			32,755			159,983			233,422

Total R&D-Related Expenditures			342,195			1,546,840			1,787,593

	Selling & Administrative Expenses		216,488			995,336			987,594
Accounting Treatment⁽¹⁾	Manufacturing Cost		54,439			324,437			532,918
	Development Cost (Intangible Assets)		71,268			227,067			267,081

R&D-Related Expenditures / Revenue Ratio (Total R&D-Related Expenditures ÷ Revenue for the period × 100)			5.7	%		5.4	%		6.8	%

(1)	For accounting treatment purposes, selling & administrative expenses are presented as research and development expenses in our statements of comprehensive income, net of amortization of capitalized intangible asset development costs, and the amounts for 2014 and 2015 have been restated.

R&D achievements

Achievements in 2014

(1)

Developed the world’s first green plus structure television panel products (42-inch, 49-inch and 55-inch Ultra HD)

•

Added white pixels to increase transmittance by 55% compared to conventional display panels

•

Developed energy conservation technology for Ultra HD products

(2)

Developed the world’s narrowest, at the time, bezel (BtB 3.5 mm) videowall product (55-inch FHD)

•

The world’s narrowest, at the time, bezel (BtB 3.5 mm) videowall product

•

Reduced panel PAD parts and minimized bezel size

(3)

Developed our first 79-inch Ultra HD product

•

New size in our product lineup

•

Achieved narrow bezel (On 9.9 mm) and slim depth (13.9 mm)

(4)

Developed the world’s first 4 sided borderless like product (49-inch, 55-inch and 60-inch FHD)

•

Removed front case top and narrowed gap between the panel and front deco cabinet (set side reduced from 2.0 mm to 0.5 mm)

(5)

Developed the world’s first a-Si AF-IPS 5Mask panel product for smartphones (5.0 WVGA)

•

Reduced production cost and simplified manufacturing process by reducing the number of mask steps from 6 to 5

•

Same level of performance as 6Mask panels

(6)

Developed the world’s first LTPS AH-IPS photo alignment and negative LC panel product for smartphones (5.0-inch FHD)

•

LTPS AH-IPS photo alignment and negative LC panel product for smartphones developed in March 2014

•

Improved luminance and contrast ratio through improvement in panel transmittance (450 nit to 515 nit; 1,000:1 to 1500:1).

(7)

Developed the world’s first 23.8-inch FHD ultra slim and light monitor product

•

Achieved ultra-light design (reduced LCM weight from 2,270g to 1,280g compared to conventional LCMs)

•

Achieved ultra slim design by using slim component parts (7.6t reduced to 5.5t)

(8)

Developed LTPS AH-IPS Quad HD (“QHD”) smartphone product (5.5-inch QHD, 538 ppi, LG Electronics’ G3 model smartphone)

•

LTPS AH-IPS QHD smartphone product developed in April 2014

•

Width of panel bezel: 0.95 mm (L/R); luminance: 500 nit; G1F Touch Direct Bonded LCM

(9)

Developed our first curved Ultra HD product (65-inch and 55-inch Ultra HD)

•

The curved LCM retains the same panel transmissivity as a conventional flat LCM through application of BM-less COT structure with a double pigment lamination

•

Realized curved LCM technology by applying Frame (Horizontal / Vertical / Center) Structure and Curved C/T & Guide Panel Technologies

(10)

Developed the world’s first 6-inch plastic OLED product

•

Developed the world’s first curved display with a curvature radius (“R”) of 700

•

Precursor to the development of future bendable, foldable and rollable display products

(11)

Developed the world’s first 34-inch curved monitor product (3,800R)

•

Launched the world’s first blade type 21:9 screen aspect ratio 34-inch wide QHD 3,800R curved monitor product and created a new market and standard for curved monitor products

•

Achieved curvature of 3,800R by using annealing process and setting up assembly equipment utilizing 0.4t glass for curved panels and pol edge type curved backlight

(12)

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

•

The world’s first AH-IPS FHD (more than 142 ppi) GIP/DRD product developed in September 2014

•

Increased cost competitiveness by developing GIP/DRD technology

(13)

Developed the world’s first in-TOUCH LTPS smartphone product (4.5-inch HD product)

•

Completed development of an AH-IPS LTPS product applying LG Display’s own in-cell touch technology, which utilizes the AH-IPS Vcom electrodes in an all point sensing self-capacitive manner in July 2014 (450 nit luminance; L/R panel bezel of 1.00 mm; module thickness of 2.28 mm)

•

Simplified SCM and provided a cost competitive and differentiated valued product with touch functionality

(14)

Developed the world’s first in-TOUCH a-Si smartphone product (4.5-inch WVGA product)

•

Completed development of an AH-IPS a-Si product applying LG Display’s own in-cell touch technology, which utilizes the AH-IPS Vcom electrodes in an all point sensing self-capacitive manner in August 2014 (450 nit luminance; L/R panel bezel of 1.35 mm; module thickness of 2.6 mm)

•

Simplified SCM and provided a cost competitive and differentiated valued product with touch functionality

(15)

Developed the world’s first Ultra HD+ curved (6,000R) product (105-inch Ultra HD)

•

The world’s first large 105-inch 21:9 screen aspect ratio Ultra HD curved (6,000R) display product

(16)

Developed our first 98-inch Ultra HD product

•

Our new line of 98-inch Ultra HD products

•

Achieved ultra-high definition through utilizing the direct BLU local dimming and FCIC circuit compensation algorithm.

(17)

Developed four sided product with even bezels (5.9 mm) for commercial use (42-inch, 49-inch and 55-inch FHD product)

•

Developed our first 4 sided even bezel product (off bezel: 5.9 mm)

•

Reduced panel PAD and lower bezel thickness

•

Improved PAC transmittance and after image reliability

(18)

Developed our first 60-inch Ultra HD product

•

Our new line of 60-inch Ultra HD products

•

Achieved narrow panel bezel of 7.8 mm

(19)

Developed the world’s first circular plastic OLED product (1.3 F)

•

Developed the world’s first circular plastic OLED product in September 2014

•

Developed ultrathin display module of 559 µm (without cover window)

•

Lowered power consumption by developing Power Save Mode algorithm

•

Display can be turned on without powering the P-IC

(20)

Developed the world’s first four sided borderless OLED television product (55-inch)

•

Product developed using the world’s first four sided borderless technology utilizing reverse tab bonding manufacturing process in September 2014

(21)

Developed the world’s first ultra-slim OLED television products (49-inch, 55-inch and 65-inch Ultra HD)

•

Achieved LCM thickness of 7.5 mm

•

Reduced thickness by combining exterior set with LCM parts (B/cover, M/cabinet)

(22)

Developed the world’s first 1:1 screen aspect ratio New Platform Monitor (26.5-inch; 1920 x 1920 resolution)

•

Creation of new market through the development of new 1:1 screen aspect ratio platform display

•

Development of high resolution display with four sided even bezels (on bezel: 8 mm)

(23)

Development of 14-inch FHD notebook product with three sided even bezels (3.9 mm)

•

World’s first notebook panel with three sided narrow bezels (top and side bezels: 3.9 mm)

•

Reduced GIP area by 50% compared to conventional GIP area

(24)

Development of 12.3-inch new display size UXGA tablet product

•

Developed new display panel size for tablet products: 12.3-inch UXGA (4:3 screen aspect ratio)

•

Increased yield of glass panel area per glass substrate by cutting glass substrates at 12.3 inches

Achievements in 2015

(1)

Developed the world’s narrowest, at the time, module bezel (0.7mm) LTPS smartphone display (5.3-inch FHD in-TOUCH)

•

Developed the world’s first FHD in-TOUCH display (LTPS 5.3-inch FHD) applying the “Neo Edge” module process (new manufacturing technology) in January 2015

•

Set-up glue & laser cutting process, 0.6mm panel bezel (L/R)

(2)

Developed the world’s first QHD in-TOUCH LTPS smartphone display (5.5-inch QHD)

•

Developed LTPS 5.5-inch QHD display applying LG Display’s new capacitive type in-cell touch technology with “all points sensing” in March 2015; luminance: 500nit, contrast ratio: 1500:1(using photo alignment & negative LC), 0.95mm panel bezel (L/R)

•

Delivered differentiated value proposition based on touch performance, simplified SCM process and competitive cost innovation

(3)

Developed the world’s narrowest, at the time, bezel videowall product (49-inch FHD)

•

Developed the world’s narrowest bezel videowall product (bezel to bezel 3.5mm)

•

Optimized sizing of panel PAD and mechanical bezel

(4)

Developed our first 43-inch Ultra HD slim and light LED television product

•

Achieved LCD module thickness of 8.4mm

•

Reduced thickness through publication of set LCM parts (back cover and middle cabinet)

(5)

Developed the world’s first Ultra HD OLED television product (55-inch, 65-inch and 77-inch Ultra HD)

•

Developed the world’s first Ultra HD television product lineup

(6)

Developed the world’s first Ultra HD television product applying DRD technology (55-inch, 49-inch and 43-inch Ultra HD)

•

World’s first application of Ultra HD DRD technology based on an RGBW(M+) pixel structure

•

Utilized RGBW(M+) technology to optimize picture quality (high definition, high luminance, low energy consumption and High Dynamic Range (HDR))

(7)

Developed our first Ultra HD asymmetric RGBW(M+) structure product (15.6-inch)

•

Improved panel transmittance, lowered energy consumption and enhanced outdoor visibility compared to previous models

(8)

Developed the world’s first “second display” LTPS smartphone product (5.7-inch QHD+)

•

Delivered differentiated set design through the realization of a second display by applying a panel exterior manufacturing process

•

Developed panel and instrumental optics technology for the independent operation of main display and second display

•

Developed advanced power consumption technology for the realization of “Always On Display” functionality for the second display

(9)

Developed the world’s first four sided borderless monitor product (23.8-inch FHD and 27-inch QHD)

•

Developed the world’s first four sided borderless design LCD module

•

Improved design by reducing lower bezel size from 12.6mm to 6.15mm (23.8-inch FHD)

(10)

Developed the world’s first in-TOUCH notebook product (15.6-inch and 14-inch FHD)

•

Improved touch functionality and cost competitiveness through world’s first application of in-TOUCH technology on notebook products

•

Simplified customer supply chain management by providing “touch” total solution

(11)

Developed the world’s first 15.6-inch FHD notebook narrow bezel (2.9mm) product

•

Ultra-light and narrow concept project for 15.6-inch line extension to LG Electronics’ 13.3-inch and 14-inch Gram products

•

Delivered differentiated design utilizing 2.9mm bezels (Top/L/R)

•

Ultra slim and light design (225g, 2.3t)

(12)

Developed 1900R curved monitor product (34-inch, 21:9 screen aspect ratio)

•

Strengthened product competitiveness by improving the curvature radius of 21:9 screen aspect ratio monitors (3800 reduced to 1900R)

•

Applied 0.25T etching to address looseness and backlight bleeding attributable to curved screen

•

Applied COT structure to enhance panel transmittance and address color mixing defects

(13)

Developed the world’s first four sided borderless 55-inch Ultra HD LED television product

•

Developed panel reverse structure in order to deliver a four-sided borderless product

(14)

Developed the world’s first a-Si 98-inch Quad Ultra HD 120Hz television product

•

Developed the world’s first drive technology for a-Si based extra-large 8K 120Hz panels

(15)

Developed the world’s first 65-inch 8K M+ product

•

Achieved cost competitiveness and maximized 8K transmittance by applying GIP/Source single bank for the first time in the world

•

Developed super resolution (4K enhanced to 8K) and M+ algorithm technologies

(16)

Developed our first 75-inch Ultra HD Signage product

•

Delivered 11.9mm thickness on large-size LCD module

Achievements in 2016

(1)

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

•

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

(2)

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

•

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

•

Applied next-generation stain (per pixel) offset technology

(3)

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

•

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

(4)

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

•

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

•

Simplified customer software configuration management by providing touch total solution

(5)

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

•

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

•

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

(6)

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

•

Developed world class smart phone product through collaboration with other LG Group companies

•

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

•

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

10.

Intellectual Property

As of March 31, 2016, our cumulative patent portfolio (including patents that have already expired) included a total of 29,335 patents, consisting of 14,091 in Korea and 15,244 in other countries.

11.

Environmental and Safety Matters

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

In accordance with the Framework Act on Low Carbon, Green Growth, we implemented the greenhouse gas emission and energy consumption target system from 2012 to 2014. In 2015, we implemented the greenhouse gas trading system, under which we are responsible to meet our emission targets based on the emission credits allocated to us by the Ministry of Environment of the Korean government. As a result, we have been investing in additional equipment and there may be other costs associated with meeting reduction targets, which may have a negative effect on our profitability or production activities. As a designated company subject to greenhouse gas emission targets under the Framework Act on Low Carbon, Green Growth, if we fail to meet a reduction target and are unable to comply with the government’s subsequent enforcement notice relating to such failure, we may be subject to fines. Furthermore, as a designated company subject to the Act on Allocation and Trading of Greenhouse Gas Emissions, if do not have enough emission credits, we may be required to purchase additional credits or be subject to fines.

In connection with the greenhouse gas emission and energy reduction target system, we submitted a statement of our domestic emissions and energy usage for 2015 to the Korean government (i.e., the Ministry of Environment) in March 2016 after it was certified by the Korean Foundation for Quality, 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	2015		2014		2013
Greenhouse gases		7,348		7,537		6,922
Energy		60,146		60,002		61,092

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

In addition, in August 2014, GP1, our newest eighth-generation panel fabrication facility located in Guangzhou, China, was the first electronics plant in China to receive the “Green Plant” designation under China’s Green China Policy, in addition to receiving ISO 14001, ISO 50001, OHSAS 18001, ISO 9001, PAS 2050 and ISO 14064-1 certifications. Furthermore, with respect to our production facilities in Gumi, we have been certified by the Ministry of Environment as a “Green Company” for P1 and our Gumi module production plant since 1997, P2 and P3 since 2006 and P4, P5 and P6 since 2008. Also, we received certification to self-inspect designated waste products with respect to our Paju plant by the Ministry of Environment in 2011, which was recertified in 2013. In recognition of our efforts to reduce greenhouse gas emissions, we were awarded a commendation from the Minster of Environment in the efforts against climate change category in the 2013 Green Management Awards, which was jointly hosted by the Ministry of Environment and the Ministry of Trade, Industry & Energy. In addition, in recognition of our efforts to improve recycling and reduce waste, we received a citation in 2014 for being a leading recycling company from the Prime Minister of Korea and, in recognition of our continued greenhouse gas emission reduction activities, we received a special carbon management award in 2015 from the Carbon Disclosure Project, which was presided over by the Carbon Disclosure Project Korea Committee.

We also have an internal monitoring system to control the use of hazardous substances in the manufacture of our products as we are committed to compliance with all applicable environmental laws and regulations, including European Union Restriction of Hazardous Substances (RoHS) Directive 2011/65/EU, and restricts the use of certain hazardous substances in the manufacture of electrical and electronic equipment.

In addition, as part of our commitment to use environment-friendly raw materials, we have implemented a green purchasing system that prevents the introduction of hazardous materials at the purchasing stage. The green purchasing system has been a key component in our efforts to comply with RoHS and other applicable environmental laws and regulation.

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 February 2015, we were issued a corrective order and assessed a fine of W276 million, which we subsequently followed and paid, respectively, for violating the Occupational Health and Safety Act in connection with an accidental nitrogen gas exposure at one of our production facilities in Paju, Korea in January 2015. To prevent such accidents happening again in the future, we have strengthened our safety standards and management and employee education.

12.

Financial Information

Financial highlights (Based on consolidated K-IFRS)


	(Unit: In millions of Won)
Description	As of March 31, 2016			As of December 31, 2015			As of December 31, 2014
Current assets		8,856,127			9,531,634			9,240,629
Quick assets		6,324,236			7,179,965			6,486,531
Inventories		2,531,891			2,351,669			2,754,098
Non-current assets		13,321,816			13,045,526			13,726,394
Investments in equity accounted investees		347,462			384,755			407,644
Property, plant and equipment, net		10,779,379			10,546,020			11,402,866
Intangible assets		827,728			838,730			576,670
Other non-current assets		1,367,247			1,276,021			1,339,214

Total assets		22,177,943			22,577,160			22,967,023

Current liabilities		5,776,163			6,606,712			7,549,556
Non-current liabilities		3,901,143			3,265,492			3,634,057
Total liabilities		9,677,306			9,872,204			11,183,613
Share capital		1,789,079			1,789,079			1,789,079
Share premium		2,251,113			2,251,113			2,251,113
Retained earnings		7,981,165			8,158,526			7,455,063
Other equity		(18,745	)		(5,766	)		(63,843	)
Non-controlling interest		498,025			512,004			351,998

Total equity		12,500,637			12,704,956			11,783,410


(Unit: In millions of Won, except for per share data and number of consolidated entities)
Description	For the three months ended March 31, 2016			For the year ended December 31, 2015		For the year ended December 31, 2014
Revenue		5,989,201			28,383,884		26,455,529
Operating profit		39,521			1,625,566		1,357,255
Operating profit from continuing operations		1,187			1,023,456		917,404
Profit for the period		1,187			1,023,456		917,404
Profit (loss) attributable to:
Owners of the Company		2,444			966,553		904,268
Non-controlling interest		(1,257	)		56,903		13,136
Basic earnings per share		7			2,701		2,527
Diluted earnings per share		7			2,701		2,527
Number of consolidated entities		18			18		18

Financial highlights (Based on separate K-IFRS)


	(Unit: In millions of Won)
Description	As of March 31, 2016		As of December 31, 2015		As of December 31, 2014
Current assets		7,421,917		8,246,330		8,291,088
Quick assets		5,459,610		6,396,117		6,244,413
Inventories		1,962,307		1,850,213		2,046,675
Non-current assets		11,930,428		11,964,363		12,720,749
Investments		2,668,825		2,543,205		2,301,881
Property, plant and equipment, net		7,476,479		7,719,022		8,700,301
Intangible assets		605,964		607,398		548,078
Other non-current assets		1,179,160		1,094,738		1,170,489

Total assets		19,352,345		20,210,693		21,011,837

Current liabilities		5,238,323		6,505,979		7,550,330
Non-current liabilities		3,018,616		2,375,131		2,837,432
Total liabilities		8,256,939		8,881,110		10,387,762
Share capital		1,789,079		1,789,079		1,789,079
Share premium		2,251,113		2,251,113		2,251,113
Retained earnings		7,055,214		7,289,333		6,583,607
Reserves		0		58		276

Total equity		11,095,406		11,329,583		10,624,075


	(Unit: In millions of Won, except for per share data)
Description	For the three months ended March 31, 2016			For the year ended December 31, 2015		For the year ended December 31, 2014
Revenue		5,567,470			25,856,426		25,383,670
Operating profit (loss)		(117,251	)		770,856		984,790
Operating profit (loss) from continuing operations		(54,104	)		968,209		973,118
Profit (loss) for the period		(54,104	)		968,209		973,118
Basic earnings (loss) per share		(151	)		2,706		2,720
Diluted earnings (loss) per share		(151	)		2,706		2,720

Consolidated subsidiaries (as of March 31, 2016)


Company Interest	Primary Business	Location	Equity
LG Display America, Inc.	Sales	U.S.A.		100	%
LG Display Japan Co., Ltd.	Sales	Japan		100	%
LG Display Germany GmbH	Sales	Germany		100	%
LG Display Taiwan Co., Ltd.	Sales	Taiwan		100	%
LG Display Nanjing Co., Ltd.	Manufacturing and sales	China		100	%
LG Display Shanghai Co., Ltd.	Sales	China		100	%
LG Display Poland Sp. zo.o.	Manufacturing and sales	Poland		100	%
LG Display Guangzhou Co., Ltd.	Manufacturing and sales	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	China		51	%
LG Display Yantai Co., Ltd.	Manufacturing and sales	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	%
MMT (Money Market Trust)	Money market trust	Korea		100	%

Status of equity investments (as of March 31, 2016)


Company⁽¹⁾	Investment Amount	Initial Equity Investment Date		Equity Interest
LG Display America, Inc.	US$411,000,000		September 24, 1999		100	%
LG Display Germany GmbH	EUR960,000		November 5, 1999		100	%
LG Display Japan Co., Ltd.	¥95,000,000		October 12, 1999		100	%
LG Display Taiwan Co., Ltd.	NT$115,500,000		May 19, 2000		100	%
LG Display Nanjing Co., Ltd.	CNY2,936,759,345		July 15, 2002		100	%
LG Display Shanghai Co., Ltd.	CNY4,138,650		January 16, 2003		100	%
LG Display Poland Sp. zo.o.	PLN511,071,000		September 6, 2005		100	%
LG Display Guangzhou Co., Ltd.	CNY1,654,693,079		August 7, 2006		100	%
LG Display Shenzhen Co., Ltd.	CNY3,775,250		August 28, 2007		100	%
LG Display Singapore Pte. Ltd.	SGD1,400,000		January 12, 2009		100	%
L&T Display Technology (Fujian) Limited	CNY59,197,026		January 5, 2010		51	%
LG Display Yantai Co., Ltd.	CNY1,007,720,600		April 19, 2010		100	%
Nanumnuri Co., Ltd.	W800,000,000		March 19, 2012		100	%
LG Display (China) Co., Ltd.	CNY5,703,466,124		December 27, 2012		70	%
Unified Innovative Technology, LLC	US$9,000,000		March 21, 2014		100	%
Global OLED Technology LLC	US$152,767,000		May 7, 2015		100	%
LG Display Guangzhou Trading Co., Ltd.	CNY1,223,960		May 27, 2015		100	%
MMT (Money Market Trust)	W130,300,000,000		March 31, 2016		100	%
Suzhou Raken Technology Co., Ltd.	CNY637,079,715		October 7, 2008		51	%
Paju Electric Glass Co., Ltd.	W33,648,000,000		March 25, 2005		40	%
TLI Co., Ltd.	W14,073,806,250		May 16, 2008		10	%
AVACO Co., Ltd.	W6,172,728,120		June 9, 2008		16	%
New Optics Ltd.	W12,199,600,000		July 30, 2008		46	%
Invenia Co., Ltd. (formerly LIG Invenia Co., Ltd.)	W6,330,000,000		February 24, 2009		13	%
Wooree E&L Co., Ltd. (formerly Wooree LED Co., Ltd.)⁽²⁾	W11,900,000,000		May 22, 2009		14	%
LB Gemini New Growth Fund No. 16⁽³⁾	W4,839,704,518		December 7, 2009		31	%
Can Yang Investments Limited	CNY93,740,124		January 27, 2010		9	%
YAS Co., Ltd.	W10,000,000,000		September 16, 2010		19	%
Narae Nanotech Corporation	W30,000,000,000		April 22, 2011		23	%
Avatec Co., Ltd.	W10,600,000,000		December 6, 2011		16	%
Fuhu, Inc.	US$26,006,159		July 27, 2015		10	%

Changes since December 31, 2015:

(1)	In March 2016, we completed the liquidation of LG Display U.S.A. Inc. We recovered W380 million and recorded W152 million, the excess over carrying value, as finance income. We conducted money market trust acquisitions in the amount of W130,300 million during the reporting period.

(2)

In the first quarter of 2016, Wooree E&L Co., Ltd. conducted a rights offering in which we did not participate. As a result, our shareholding percentage interest in such company decreased from 21% as of December 31, 2015 to 14% as of March 31, 2016. As of March 31, 2016, we determined that the recoverability of such investment was uncertain and we recognized an impairment loss of W6,137 million, an amount equal to the difference between the carrying amount and the recoverable amount of such investment, which loss was categorized as finance costs.

(3)	In February 2016, we redeemed from LB Gemini New Growth Fund No. 16 our principal investment of W2,820 million. The investment did not affect our shareholding percentage interest.

13.

Audit Information

Audit service


	(Unit: In millions of Won, hours)
Description	2016 Q1	2015	2014
Auditor	KPMG Samjong	KPMG Samjong	KPMG Samjong
Activity	Audit by independent auditor	Audit by independent auditor	Audit by independent auditor
Compensation⁽¹⁾	1,020 (440) ⁽²⁾	990 (400) ⁽²⁾	910 (326) ⁽²⁾
Time required	1,640	17,530	16,380

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

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

Non-audit service

None.

14.

Board of Directors

Members of the board of directors

As of March 31, 2016 our board of directors consisted of two non-outside directors, one non-standing director and four outside directors.


	(As of March 31, 2016)
Name	Position	Primary responsibility
Yu Sig Kang⁽¹⁾	Director (non-standing)	Chairman of the board of directors
Sang Beom Han	Representative Director (non-outside), Chief Executive Officer and President	Overall head of management
Sangdon Kim	Director (non-outside), Chief Financial Officer and Senior Vice President	Overall head of finances
Jin Jang	Outside Director	Related to the overall management
Joon Park⁽²⁾	Outside Director	Related to the overall management
Sung-Sik Hwang⁽³⁾	Outside Director	Related to the overall management
Kun Tai Han⁽⁴⁾	Outside Director	Related to the overall management

(1)	Yu Sig Kang is also a registered executive of LG Management Development Institute, a member company of the LG Group.

(2)	Joon Park was reappointed for another term as an outside director at the annual general meeting of shareholders held on March 11, 2016.

(3)	Sung-Sik Hwang is also the president of Samchully Co., Ltd.

(4)	Kun Tai Han was appointed as an outside director at the annual general meeting of shareholders held on March 11, 2016. Mr. Han is also the chief executive officer of Hans Consulting.

Committees of the board of directors

As of March 31, 2016, we had the following committees that serve under our board of directors: Audit Committee, Outside Director Nomination Committee and Management Committee.


	(As of March 31, 2016)
Committee	Composition	Member
Audit Committee	3 outside directors	Joon Park⁽¹⁾, Jin Jang, Sung-Sik Hwang
Outside Director Nomination Committee	1 non-standing director and 2 outside directors	Yu Sig Kang, Jin Jang, Sung-Sik Hwang⁽²⁾
Management Committee	2 non-outside directors	Sang Beom Han, Sangdon Kim

(1)	Joon Park was reappointed for another term as a member of the audit committee of the board of directors at the annual general meeting of shareholders held on March 11, 2016

(2)	Sung-Sik Hwang was appointed as a member of the outside director nomination committee of the board of directors by the board of directors on January 26, 2016.

Independence of directors

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

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

15.

Information Regarding Shares

Total number of shares

(1)

Total number of shares authorized to be issued (as of March 31, 2016): 500,000,000 shares.

(2)

Total shares issued and outstanding (as of March 31, 2016): 357,815,700 shares.

Shareholder list

(1)

Largest shareholder and related parties as of March 31, 2016:


Name	Relationship	Number of shares of common stock		Equity interest
LG Electronics	Largest Shareholder		135,625,000		37.9	%
Sang Beom Han	Related Party		23,014		0.0	%
Sangdon Kim	Related Party		2,500		0.0	%

(2)

Shareholders who are known to us to own 5% or more of our shares as of March 31, 2016:


Beneficial owner	Number of shares of common stock		Equity interest
LG Electronics		135,625,000		37.9	%
National Pension Service		32,813,120		9.17	%

16.

Directors and Employees

Directors

(1)

Remuneration for directors in 2016 Q1


	(Unit: person, in millions of Won)
Classification	No. of directors⁽¹⁾		Amount paid⁽²⁾			Per capita average remuneration paid⁽⁴⁾
Non-outside directors		3		1,376	⁽³⁾		459
Outside directors who are not audit committee members		1		6.5			6.5
Outside directors who are audit committee members		3		58.5			19.5

Total		7		1,441			—

(1)	Number of directors as at March 31, 2016.

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

(3)	Among the non-outside directors, Yu Sig Kang does not receive any remuneration.

(4)	Per capita average remuneration paid is calculated by dividing total amount paid by the average number of directors for the three months ended March 31, 2016.

(2)

Remuneration for individual directors and audit committee members

Not required for quarterly reports.

(3)

Stock options

Not applicable.

Employees

As of March 31, 2016, we had 32,574 employees (excluding our executive officers). On average, our male employees have served 8.1 years and our female employees have served 6.2 years. The total amount of salary paid to our employees for the three months ended March 31, 2016 based on income tax statements submitted to the Korean tax authority in accordance with Article 20 of the Income Tax Act was W655,511 million for our male employees and W163,231 million for our female employees. The following table provides details of our employees as of March 31, 2016:


			(Unit: person, in millions of Won, year)
	Number of employees⁽¹⁾		Total salary in 2016 Q1^(2)(3)(4)		Total salary per capita⁽⁵⁾		Average years of service
Male		23,809		655,511		27		8.1
Female		8,765		163,231		18		6.2

Total		32,574		818,742		25		7.6

(1)	Includes part-time employees and contract-base professionals.

(2)	Welfare benefits and retirement expenses have been excluded. Total welfare benefit provided to our employees for the three months ended March 31, 2016 was W95,841 million and the per capita welfare benefit provided was W2.9 million.

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

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

(5)	Calculated using the average number of employees (male: 23,845, female: 8,868) for the three months ended March 31, 2016.

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Financial Statements

(Unaudited)

March 31, 2016 and 2015

(With Independent Auditors’ Review Report Thereon)

Table of Contents


	Page
Independent Auditors’ Review Report		29

Condensed Consolidated Interim Statements of Financial Position		31

Condensed Consolidated Interim Statements of Comprehensive Income (Loss)		32

Condensed Consolidated Interim Statements of Changes in Equity		33

Condensed Consolidated Interim Statements of Cash Flows		34

Notes to the Condensed Consolidated Interim Financial Statements		36

Independent Auditors’ Review Report

Based on a report originally issued in Korean

To the Board of Directors and Shareholders

LG Display Co., Ltd.:

Reviewed Financial Statements

We have reviewed the accompanying condensed consolidated interim financial statements of LG Display Co., Ltd. and subsidiaries (the “Group”) which comprise the condensed consolidated interim statement of financial position as of March 31, 2016 and the condensed consolidated interim statements of comprehensive income (loss), changes in equity and cash flows for the three-month periods ended March 31, 2016 and 2015, 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 auditing standards generally accepted in the Republic of Korea 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.

Emphasis of Matter

As discussed in note 17 to the consolidated financial statements, the Group has been or is named as defendants in a number of individual lawsuits and class actions in the United States and Canada, respectively, in connection with alleged antitrust violations concerning the sale of LCD panels. The Group estimated and recognized losses related to these alleged violations. However, actual losses are subject to change in the future based on new developments in each matter, or changes in circumstances, which could be materially different from those estimated and recognized by the Group.

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, 2015 and the related consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended, which are not accompanying this review report, in accordance with Korean Standards on Auditing, and our report thereon, dated February 19, 2016, expressed an unqualified opinion. The accompanying condensed consolidated statement of financial position of the Group as of December 31, 2015, presented for comparative purposes, is not different from that audited by us from which it was derived in all material respects.

/s/ KPMG Samjong Accounting Corp.

Seoul, Korea

May 4, 2016

This report is effective as of May 4, 2016 the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying condensed consolidated interim financial statements and notes thereto. Accordingly, the readers of the review report should understand that the above review report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Statements of Financial Position

(Unaudited)

As of March 31, 2016 and December 31, 2015


(In millions of won)	Note		March 31, 2016			December 31, 2015
Assets
Cash and cash equivalents		9	W	818,322			751,662
Deposits in banks		9		1,588,219			1,772,337
Trade accounts and notes receivable, net		9,16,19		3,188,049			4,097,836
Other accounts receivable, net		9		96,987			105,815
Other current financial assets		9		12,161			4,904
Inventories		5		2,531,891			2,351,669
Prepaid income taxes				3,808			3,469
Other current assets				616,690			443,942

Total current assets				8,856,127			9,531,634
Deposits in banks		9		13			13
Investments in equity accounted investees		6		347,462			384,755
Other non-current financial assets		9		68,055			49,732
Property, plant and equipment, net		7,20		10,779,379			10,546,020
Intangible assets, net		8,20		827,728			838,730
Deferred tax assets		21		989,959			930,629
Other non-current assets				309,220			295,647

Total non-current assets				13,321,816			13,045,526

Total assets			W	22,177,943			22,577,160

Liabilities
Trade accounts and notes payable		9,19	W	2,538,435			2,764,694
Current financial liabilities		9,10		886,838			1,416,112
Other accounts payable		9,19		1,410,506			1,499,722
Accrued expenses				426,797			633,113
Income tax payable				90,079			91,726
Provisions		17		123,048			109,897
Advances received		16		62,407			51,127
Other current liabilities				238,053			40,321

Total current liabilities				5,776,163			6,606,712
Non-current financial liabilities		9,10		3,382,083			2,808,204
Non-current provisions				12,777			11,817
Defined benefit liabilities, net		14		410,262			353,798
Deferred tax liabilities		21		33,168			34,663
Other non-current liabilities				62,853			57,010

Total non-current liabilities				3,901,143			3,265,492

Total liabilities				9,677,306			9,872,204

Equity
Share capital		18		1,789,079			1,789,079
Share premium				2,251,113			2,251,113
Retained earnings				7,981,165			8,158,526
Reserves		18		(18,745	)		(5,766	)

Total equity attributable to owners of the Controlling Company				12,002,612			12,192,952

Non-controlling interests				498,025			512,004

Total equity				12,500,637			12,704,956

Total liabilities and equity			W	22,177,943			22,577,160

See accompanying notes to the condensed consolidated interim financial statements.

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Statements of Comprehensive Income (Loss)

(Unaudited)

For the three-month periods ended March 31, 2016 and 2015


(In millions of won, except earnings (loss) per share)	Note		2016			2015
Revenue		19,20	W	5,989,201			7,022,349
Cost of sales		5,11,19		(5,362,801	)		(5,661,060	)

Gross profit				626,400			1,361,289
Selling expenses		12		(166,657	)		(190,077	)
Administrative expenses		12		(147,924	)		(144,429	)
Research and development expenses				(272,298	)		(282,883	)

Operating profit				39,521			743,900

Finance income		15		52,812			28,315
Finance costs		15		(72,430	)		(56,143	)
Other non-operating income		13		440,357			253,064
Other non-operating expenses		13		(467,163	)		(343,639	)
Equity in loss of equity accounted investees, net				(623	)		(1,733	)

Profit (loss) before income tax				(7,526	)		623,764
Income tax expense (benefit)		21		(8,713	)		148,013

Profit for the period				1,187			475,751

Other comprehensive income (loss)
Items that will never be reclassified to profit or loss
Remeasurements of net defined benefit liabilities		14		(1,460	)		(1,359	)
Other comprehensive income (loss) from asssociates and joint ventures				210			(595	)
Related income tax				353			329

				(897	)		(1,625	)
Items that are or may be reclassified to profit or loss
Net change in fair value of available-for-sale financial assets		15		(77	)		16
Foreign currency translation differences for foreign operations				(15,306	)		12,998
Other comprehensive income from asssociates and joint ventures				321			775
Related income tax				19			24

				(15,043	)		13,813

Other comprehensive income (loss) for the period, net of income tax				(15,940	)		12,188

Total comprehensive income (loss) for the period			W	(14,753	)		487,939

Profit attributable to:
Owners of the Controlling Company			W	2,444			458,224
Non-controlling interests				(1,257	)		17,527

Profit for the period			W	1,187			475,751

Total comprehensive income (loss) attributable to:
Owners of the Controlling Company			W	(11,432	)		465,708
Non-controlling interests				(3,321	)		22,231

Total comprehensive income (loss) for the period			W	(14,753	)		487,939

Earnings per share (In won)
Basic earnings per share		22	W	7			1,281

Diluted earnings per share		22	W	7			1,281

See accompanying notes to the condensed consolidated interim financial statements.

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Statements of Changes in Equity

(Unaudited)

For the three-month periods ended March 31, 2016 and 2015


	Attributable to owners of the Controlling Company
	Share		Share		Retained									Non-controlling			Total
(In millions of won)	capital		premium		earnings			Reserves			Sub-total			interests			equity
Balances at January 1, 2015	W	1,789,079		2,251,113		7,455,063			(63,843	)		11,431,412			351,998			11,783,410

Total comprehensive income for the period
Profit for the period		—		—		458,224			—			458,224			17,527			475,751
Other comprehensive income (loss)
Net change in fair value of available-for-sale financial assets, net of tax		—		—		—			12			12			—			12
Remeasurements of net defined benefit liabilities, net of tax		—		—		(1,030	)		—			(1,030	)		—			(1,030	)
Foreign currency translation differences for foreign operations, net of tax		—		—		—			8,322			8,322			4,704			13,026
Other comprehensive income (loss) from asssociates and joint ventures		—		—		(595	)		775			180			—			180

Total other comprehensive income (loss)		—		—		(1,625	)		9,109			7,484			4,704			12,188

Total comprehensive income for the period	W	—		—		456,599			9,109			465,708			22,231			487,939

Transaction with owners, recognized directly in equity
Dividends to equity holders		—		—		(178,908	)		—			(178,908	)		—			(178,908	)
Capital contribution from non-controlling interests		—		—		—			—			—			100,141			100,141

Balances at March 31, 2015	W	1,789,079		2,251,113		7,732,754			(54,734	)		11,718,212			474,370			12,192,582

Balances at January 1, 2016	W	1,789,079		2,251,113		8,158,526			(5,766	)		12,192,952			512,004			12,704,956

Total comprehensive income for the period
Profit (loss) for the period		—		—		2,444			—			2,444			(1,257	)		1,187
Other comprehensive income (loss)
Net change in fair value of available-for-sale financial assets, net of tax		—		—		—			(58	)		(58	)		—			(58	)
Remeasurements of net defined benefit liabilities, net of tax		—		—		(1,107	)		—			(1,107	)		—			(1,107	)
Foreign currency translation differences for foreign operations, net of tax		—		—		—			(13,242	)		(13,242	)		(2,064	)		(15,306	)
Other comprehensive income from asssociates and joint ventures		—		—		210			321			531			—			531

Total other comprehensive loss		—		—		(897	)		(12,979	)		(13,876	)		(2,064	)		(15,940	)

Total comprehensive income (loss) for the period	W	—		—		1,547			(12,979	)		(11,432	)		(3,321	)		(14,753	)

Transaction with owners, recognized directly in equity
Dividends to equity holders		—		—		(178,908	)		—			(178,908	)		—			(178,908	)
Subsidiaries’ dividends distributed to non-controlling interests		—		—		—			—			—			(10,658	)		(10,658	)

Balances at March 31, 2016	W	1,789,079		2,251,113		7,981,165			(18,745	)		12,002,612			498,025			12,500,637

See accompanying notes to the condensed consolidated interim financial statements.

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Statements of Cash Flows

(Unaudited)

For the three-month periods ended March 31, 2016 and 2015


(In millions of won)	Note		2016			2015
Cash flows from operating activities:
Profit for the period			W	1,187			475,751
Adjustments for:
Income tax expense (benefit)		21		(8,713	)		148,013
Depreciation		11		724,659			759,830
Amortization of intangible assets		11		88,345			91,307
Gain on foreign currency translation				(138,007	)		(51,034	)
Loss on foreign currency translation				186,178			50,255
Expenses related to defined benefit plans		14		55,271			49,765
Gain on disposal of property, plant and equipment				(1,958	)		(6,118	)
Loss on disposal of property, plant and equipment				342			8
Loss on disposal of intangible assets				11			11
Impairment loss on intangible assets				85			184
Finance income				(40,464	)		(13,864	)
Finance costs				44,605			36,056
Equity in loss of equity method accounted investees, net				623			1,733
Other income				(659	)		(791	)
Other expenses				56,234			145,983

				966,552			1,211,338
Change in trade accounts and notes receivable				731,316			(22,375	)
Change in other accounts receivable				14,984			41,840
Change in other current assets				(167,036	)		11,837
Change in inventories				(180,222	)		108,556
Change in other non-current assets				(28,895	)		(55,737	)
Change in trade accounts and notes payable				(101,551	)		(485,516	)
Change in other accounts payable				(34,502	)		(276,357	)
Change in accrued expenses				(206,244	)		(94,211	)
Change in other current liabilities				19,664			28,146
Change in other non-current liabilities				7,072			418
Change in provisions				(40,835	)		(34,162	)
Change in defined benefit liabilities, net				(266	)		(2,330	)

				13,485			(779,891	)
Cash generated from operating activities				981,224			907,198
Income taxes paid				(48,679	)		(105,407	)
Interests received				16,940			15,505
Interests paid				(32,715	)		(34,172	)

Net cash provided by operating activities			W	916,770			783,124

See accompanying notes to the condensed consolidated interim financial statements.

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Statements of Cash Flows

(Unaudited)

For the three-month periods ended March 31, 2016 and 2015


(In millions of won)	Note	2016			2015
Cash flows from investing activities:
Dividends received		W	9,770			20,021
Proceeds from withdrawal of deposits in banks			762,102			602,805
Increase in deposits in banks			(577,984	)		(514,735	)
Acquisition of investments in equity accounted investees			—			(360	)
Proceeds from disposal of investments in equity accounted investees			2,820			—
Acquisition of property, plant and equipment			(1,005,225	)		(437,398	)
Proceeds from disposal of property, plant and equipment			6,519			168,164
Acquisition of intangible assets			(117,485	)		(82,983	)
Proceeds from disposal of intangible assets			100			—
Government grants received			718			2,511
Proceeds from settlement of derivatives			29			—
Increase in long-term loans			(18,430	)		—
Increase in deposits			(122	)		—
Decrease in deposits			1,224			267
Acquisition of available-for-sale financial assets			(218	)		(179	)
Proceeds from disposal of available-for-sale financial assets			404			81
Acquisition of financial assets at fair value through profit or loss			(1,500	)		—

Net cash used in investing activities			(937,278	)		(241,806	)

Cash flows from financing activities:
Repayments of short-term borrowings			—			(223,626	)
Proceeds from long-term debt			955,011			—
Repayments of long-term debt			(347,693	)		—
Repayments of current portion of long-term debt and debentures			(533,425	)		(39,485	)
Increase in non-controlling interests			—			100,141

Net cash provided by (used in) financing activities			73,893			(162,970	)

Net increase in cash and cash equivalents			53,385			378,348
Cash and cash equivalents at January 1			751,662			889,839
Effect of exchange rate fluctuations on cash held			13,275			22,563

Cash and cash equivalents at March 31		W	818,322			1,290,750

See accompanying notes to the condensed consolidated interim financial statements.

1.	Reporting Entity

(a)

Description of the Controlling Company

LG Display Co., Ltd. (the “Controlling Company”) was incorporated in February 1985 and the Controlling Company is a public corporation listed in Korea Exchange since 2004. The main business of the Controlling Company and its subsidiaries (the “Group”) is to manufacture and sell displays and its related products. As of March 31, 2016, the Group is operating TFT-LCD and OLED panel manufacturing plant in Gumi, Paju and China and TFT-LCD OLED module manufacturing plant in Gumi, Paju, China and Poland. The Controlling Company is domiciled in the Republic of Korea with its address at 128 Yeouidae-ro, Yeongdeungpo-gu, Seoul, the Republic of Korea. As of March 31, 2016, LG Electronics Inc., a major shareholder of the Controlling Company, owns 37.9% (135,625,000 shares) of the Controlling Company’s common stock.

The Controlling Company’s common stock is listed on the Korea Exchange under the identifying code 034220. As of March 31, 2016, there are 357,815,700 shares of common stock outstanding. The Controlling Company’s common stock is also listed on the New York Stock Exchange in the form of American Depository Shares (“ADSs”) under the symbol “LPL”. One ADS represents one-half of one share of common stock. As of March 31, 2016, there are 28,998,386 ADSs outstanding.

1.	Reporting Entity, Continued

(b)

Consolidated Subsidiaries as of March 31, 2016

(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 TFT-LCD products

USD 411

LG Display
Japan Co., Ltd.

Tokyo, Japan

100%

December
31

October 12,
1999

Sell TFT-LCD products

JPY 95

LG Display
Germany GmbH

Ratingen,
Germany

100%

December
31

November 5,
1999

Sell TFT-LCD products

EUR 1

LG Display
Taiwan Co., Ltd.

Taipei,
Taiwan

100%

December
31

April 12,

1999

Sell TFT-LCD products

NTD 116

LG Display
Nanjing Co., Ltd.

Nanjing,
China

100%

December
31

July 15,

2002

Manufacture and sell
TFT-LCD products

CNY 2,937

LG Display
Shanghai Co., Ltd.

Shanghai,
China

100%

December
31

January 16,
2003

Sell TFT-LCD products

CNY 4

LG Display
Poland Sp. z o.o.

Wroclaw,
Poland

100%

December
31

September 6,
2005

Manufacture and sell
TFT-LCD products

PLN 511

LG Display
Guangzhou Co., Ltd.

Guangzhou,
China

100%

December
31

June 30,

2006

Manufacture and sell
TFT-LCD products

CNY 1,655

LG Display
Shenzhen Co., Ltd.

Shenzhen,
China

100%

December
31

August 28, 2007

Sell TFT-LCD products

CNY 4

LG Display
Singapore Pte. Ltd.

Singapore

100%

December
31

January 12,
2009

Sell TFT-LCD products

SGD 1.4

L&T Display Technology
(Fujian) Limited

Fujian,

China

51%

December
31

January 5, 2010

Manufacture LCD
module and LCD TV
sets

CNY 116

LG Display Yantai Co., Ltd

Yantai,

China

100%

December
31

April 19,

2010

Manufacture and sell
TFT-LCD 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
TFT-LCD products

CNY 8,147

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 TFT-LCD products

CNY 1.2

Global OLED
Technology, LLC

Herndon,
U.S.A.

100%

December
31

December 18,
2009

Manage OLED
intellectual property

USD 138

Money Market Trust(*1)

Seoul,

South Korea

100%

December
31

—

Money market trust

KRW 130,300

(*1)	In Mach 2016, the Controlling Company acquired W130,300 million in Money Market Trust.

In March 2016, LG Display U.S.A., Inc., a subsidiary of the Controlling Company, completed its voluntary liquidation.

2.	Basis of Presenting Financial Statements

(a)

Statement of Compliance

The condensed consolidated interim financial statements have been prepared in accordance with Korean International Financial Reporting Standards (“K-IFRSs”) No.1034, Interim Financial Reporting. They do not include all of the information required for full annual consolidated financial statements and should be read in conjunction with the consolidated financial statements of the Group as of and for the year ended December 31, 2015.

(b)

Basis of Measurement

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

•

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

•

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

(c)

Functional and Presentation Currency

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

(d)

Use of Estimates and Judgments

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

In preparing these condensed consolidated interim financial statements, the significant judgments made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those applied in its consolidated financial statements as of and for the year ended December 31, 2015.

3.	Summary of Significant Accounting Policies

The significant accounting policies followed by the Group in the preparation of its condensed consolidated interim financial statements are the same as those followed by the Group in its preparation of the consolidated financial statements as of and for the year ended December 31, 2015, except for the application of K-IFRS No. 1034, Interim Financial Reporting, and the amended accounting standards explained below:

(a)

Change in Accounting Policies

(i)

K-IFRS No. 1001, Presentation of Financial Statements

The Group has applied the amendment to K-IFRS No. 1001, Presentation of Financial Statements, effective January 1, 2016. The amendment clarifies that the disclosed line items can be omitted, added, or aggregated based on materiality. In addition, the amendment clarifies that the share in the other comprehensive income of associates and joint ventures should be presented separately in the financial statements based on whether they will or will not subsequently be reclassified to profit or loss. Also, additional requirements for disclosures in the notes and others are provided.

The Group has applied the amendment to K-IFRS No. 1001 and separated the share of other comprehensive income of associates and joint ventures into the share of items that (i) will be reclassified subsequently to profit or loss or (ii) will not be reclassified subsequently to profit or loss.

The Group restated the comparative condensed consolidated interim statements of comprehensive income (loss) and changes in equity for the three-month period ended March 31, 2015.

(b)

New Standards and Amendments Not Yet Adopted

(i)

K-IFRS No. 1109, Financial Instruments

K-IFRS No. 1109, Financial Instruments, provides revised guidance on the classification and measurement of financial instruments and replaces incurred loss model with expected credit losses model for calculating impairment on financial assets. K-IFRS No. 1109 also includes new general hedge accounting requirements including hedged items, hedging instruments and risk being hedged in order to expand applicable risk management strategies being utilized. K-IFRS No. 1109 is effective for annual periods beginning on or after January 1, 2018, with early adoption permitted. K-IFRS No. 1109 has not been early adopted in preparing the consolidated financial statements.

(ii)

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

K-IFRS No. 1115, Revenue from Contracts with Customers, establishes a single new revenue recognition standard for contracts with customers and introduces a five-step model for determining whether, how much and when revenue is recognized. K-IFRS No. 1115 replaces risk-and-reward based model with control-based model. K-IFRS No. 1115 is effective for annual periods beginning on or after January 1, 2018, with early adoption permitted. K-IFRS No. 1115 has not been early adopted in preparing the consolidated financial statements.

Management is currently assessing the potential impact on its consolidated financial statements resulting from the application of new standards.

4.	Financial Risk Management

The objectives and policies on financial risk management followed by the Group are consistent with those disclosed in the consolidated financial statements as of and for the year ended December 31, 2015.

5.	Inventories

Inventories as of March 31, 2016 and December 31, 2015 are as follows:


(In millions of won)
	March 31, 2016		December 31, 2015
Finished goods	W	1,069,488		910,844
Work-in-process		756,958		720,221
Raw materials		378,866		389,442
Supplies		326,579		331,162

	W	2,531,891		2,351,669

For the three-month periods ended March 31, 2016 and 2015, the amount of inventories recognized as cost of sales, inventory write-downs and reversal and usage of inventory write-downs included in cost of sales is as follows:


(In millions of won)
	2016			2015
Inventories recognized as cost of sales	W	5,362,801			5,661,060
Including: inventory write-downs		383,778			326,601
Including: reversal and usage of inventory write-downs		(363,755	)		(332,699	)

6.	Investments in Equity Accounted Investees

Associates and Joint Ventures (Equity Method Investees) as of March 31, 2016 are as follows:

(In millions of won)

Associates

and joint ventures

Location

Percentage of
ownership

Fiscal
year end

Date of
incorporation

Business

Carrying
amount

Suzhou Raken
Technology Co., Ltd.(*1)

Suzhou,
China

51%

December
31

October

2008

Manufacture and sell

LCD modules and

LCD TV set

143,698

Paju Electric
Glass Co., Ltd.

Paju,

South Korea

40%

December
31

January

2005

Manufacture electric

glass for FPDs

49,358

TLI Inc.(*2)

Seongnam,

South Korea

10%

December
31

October

1998

Manufacture and sell

semiconductor parts
for FPDs

5,192

AVACO Co., Ltd.(*2)

Daegu,

South Korea

16%

December
31

January

2001

Manufacture and sell

equipment for FPDs

11,807

New Optics Ltd.

Yangju,

South Korea

46%

December
31

August

2005

Manufacture back
light

parts for TFT-LCDs

45,600

INVENIA Co., Ltd.
(LIG INVENIA Co., Ltd.) (*2)

Seongnam,

South Korea

13%

December
31

January

2001

Develop and
manufacture
equipment for FPDs

1,730

WooRee E&L Co., Ltd.
(*2) (*3)

Ansan,

South Korea

14%

December
31

June

2008

Manufacture LED
back

light unit packages

10,268

LB Gemini New
Growth Fund No. 16 (*4)

Seoul,

South Korea

31%

December
31

December 2009

Invest in small and

middle sized

companies and

benefit from M&A
opportunities

17,639

Can Yang
Investments Limited(*2)

Hong Kong

December
31

January

2010

Develop,
manufacture and sell
LED parts

6,874

YAS Co., Ltd.(*2)

Paju,

South Korea

19%

December
31

April

2002

Develop and

manufacture
deposition

equipment for
OLEDs

11,158

Narenanotech
Corporation

Yongin,

South Korea

23%

December
31

December 1995

Manufacture and sell

FPD manufacturing

equipment

25,009

AVATEC Co., Ltd.(*2)

Daegu,

South Korea

16%

December
31

August

2000

Process and sell

glass for FPDs

19,129

Fuhu, Inc. (*2)

Los Angeles
U.S.A.

10%

March

June

2006

Develop and
manufacture tablet

for kids

—

347,462

(*1)

Despite its 51% ownership, management concluded that the Controlling Company does not have control of Suzhou Raken Technology Co., Ltd. because the Controlling Company and AmTRAN Technology Co., Ltd., which has a 49% equity interest of the investee, jointly control the board of directors of the investee through equal voting powers. Accordingly, investment in Suzhou Raken Technology Co., Ltd. was accounted as an equity method investment.

(*2)

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

6.	Investments in Equity Accounted Investees, Continued

(*3)

In 2016, the Controlling Company’s ownership percentage in WooRee E&L Co., Ltd. (“WooRee E&L”) decreased from 21% to 14% as the Controlling Company did not participate in the capital increase of WooRee E&L. The Controlling Company recognized an impairment loss of W6,137 million as finance cost for the difference between the carrying amount and the recoverable amount of investments in WooRee E&L.

(*4)

The Controlling Company is a member of a limited partnership in the LB Gemini New Growth Fund No.16 (“the Fund”). In February 2016, the Controlling Company received W2,820 million from the Fund as capital distribution. In conjunction with this recovery, there were no changes in the Controlling Company’s ownership percentage in the Fund and the Controlling Company is committed to making future investments of up to an aggregate of W30,000 million.

7.	Property, Plant and Equipment

For the three-month periods ended March 31, 2016 and 2015, the Group purchased property, plant and equipment of W991,818 million and W516,553 million, respectively. The capitalized borrowing costs and the annualized capitalization rate were W2,449 million and 2.41%, and W4,636 million and 3.97% for the three-month periods ended March 31, 2016 and 2015, respectively. Also, for the three-month periods ended March 31, 2016 and 2015, the Group disposed of property, plant and equipment with carrying amounts of W4,903 million and W182,858 million, respectively, and recognized W1,958 million and W342 million as gain and loss, respectively, on disposal of property, plant and equipment for the three-month period ended March 31, 2016 (gain and loss for the three-month period ended March 31, 2015: W6,118 million and W8 million, respectively).

8.	Intangible Assets

The Group capitalizes expenditures related to development activities, such as expenditures incurred on designing, manufacturing and testing of products that are ultimately selected for production. The balances of capitalized development costs as of March 31, 2016 and December 31, 2015 are W202,689 million and W187,230 million, respectively.

9.	Financial Instruments

(a)

Credit risk

(i)

Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk as of March 31, 2016 and December 31, 2015 is as follows:


(In millions of won)
	March 31, 2016		December 31, 2015
Cash and cash equivalents	W	818,322		751,662
Deposits in banks(*)		1,588,232		1,772,350
Trade accounts and notes receivable, net		3,188,049		4,097,836
Other accounts receivable, net		96,987		105,815
Available-for-sale financial assets		247		709
Financial assets at fair value through profit or loss		1,500		—
Deposits		25,369		22,234
Loans		34,946		15,856
Derivatives		1,917		—
Other non-current financial assets		5,361		5,148

	W	5,760,930		6,771,610

(*)	As of March 31, 2016, the amount of deposits in banks restricted in use is W70,513 million (as of December 31, 2015: W70,513 million).

The maximum exposure to credit risk for trade accounts and notes receivable as of March 31, 2016 and December 31, 2015 by geographic region was as follows:


(In millions of won)
	March 31, 2016		December 31, 2015
Domestic	W	519,247		425,635
Euro-zone countries		292,371		382,326
Japan		148,781		156,746
United States		760,794		1,211,518
China		782,090		961,425
Taiwan		394,816		654,257
Others		289,950		305,929

	W	3,188,049		4,097,836

9.	Financial Instruments, Continued

(ii)

Impairment loss

The aging of trade accounts and notes receivable as of March 31, 2016 and December 31, 2015 was as follows:


(In millions of won)
	March 31, 2016					December 31, 2015
	Book value		Impairment loss			Book value		Impairment loss
Not past due	W	3,176,022		(1,081	)		4,076,022		(1,339	)
Past due 1-15 days		501		—			6,555		(2	)
Past due 16-30 days		187		—			201		—
Past due 31-60 days		—		—			—		—
Past due more than 60 days		12,545		(125	)		16,565		(166	)

	W	3,189,255		(1,206	)		4,099,343		(1,507	)

The movement in the allowance for impairment in respect of receivables during the three-month period ended March 31, 2016 and the year ended December 31, 2015 are as follows:


(In millions of won)
	2016			2015
Balance at the beginning of the period	W	1,507			825
(Reversal of) bad debt expense		(301	)		682

Balance at the reporting date	W	1,206			1,507

9.	Financial Instruments, Continued

(b)

Liquidity risk

The following are the contractual maturities of financial liabilities, including estimated interest payments, as of March 31, 2016.


(In millions of won)			Contractual cash flows
	Carrying amount		Total		6 months or less		6-12 months		1-2 years		2-5 years		More than 5 years
Non-derivative financial liabilities:
Secured bank loan	W	693,375		753,430		12,156		12,089		24,245		704,940		—
Unsecured bank loans		1,697,637		1,768,014		15,603		307,293		294,684		1,150,434		—
Unsecured bond issues		1,876,673		1,995,355		330,712		316,443		581,707		683,755		82,738
Trade accounts and notes payables		2,538,435		2,538,435		2,538,435		—		—		—		—
Other accounts payable		1,410,506		1,410,836		1,408,176		2,660		—		—		—
Other non-current liabilities		7,182		8,008		—		—		5,348		2,660		—
Derivative financial liabilities
Interest rate swap not qualified for hedging		1,236		1,262		19		300		648		295		—

	W	8,225,044		8,475,340		4,305,101		638,785		906,632		2,542,084		82,738

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

9.	Financial Instruments, Continued

(c)

Currency risk

(i)

Exposure to currency risk

The Group’s exposure to foreign currency risk based on notional amounts as of March 31, 2016 and December 31, 2015 is as follows:


(In millions)	March 31, 2016
	USD			JPY			CNY			TWD			EUR			PLN
Cash and cash equivalents		369			511			732			19			1			77
Deposits in banks		—			—			1,500			—			—			—
Trade accounts and notes receivable		2,195			10			1,082			—			—			—
Other accounts receivable		9			1,300			39			12			1			—
Long-term other accounts receivable		5			—			—			—			—			—
Other assets denominated in foreign currencies		1			255			50			6			—			—
Trade accounts and notes payable		(895	)		(16,462	)		(1,785	)		—			—			—
Other accounts payable		(191	)		(11,372	)		(1,274	)		(5	)		(12	)		(4	)
Debt		(1,292	)		—			(1,964	)		—			—			—

Gross statement of financial position exposure		201			(25,758	)		(1,620	)		32			(10	)		73

Forward exchange contracts		(200	)		—			—			—			—			—

Net exposure		1			(25,758	)		(1,620	)		32			(10	)		73


(In millions)	December 31, 2015
	USD			JPY			CNY			TWD			EUR			PLN
Cash and cash equivalents		578			1,005			866			12			—			45
Deposits in banks		—			—			1,200			—			—			—
Trade accounts and notes receivable		2,935			12			1,465			—			—			—
Other accounts receivable		20			2			101			13			—			—
Long-term other accounts receivable		4			—			—			—			—			—
Other assets denominated in foreign currencies		1			254			27			6			—			—
Trade accounts and notes Payable		(1,207	)		(17,016	)		(1,267	)		—			—			—
Other accounts payable		(541	)		(13,821	)		(1,352	)		(7	)		(2	)		(11	)
Debt		(1,185	)		—			(1,964	)		—			—			—

Net exposure		605			(29,564	)		(924	)		24			(2	)		34

9.	Financial Instruments, Continued

Average exchange rates applied for the three-month periods ended March 31, 2016 and 2015 and the exchange rates at March 31, 2016 and December 31, 2015 are as follows:


(In won)	Average rate				Reporting date spot rate
	2016		2015		March 31, 2016		December 31, 2015
USD	W	1,201.85		1,100.16		1,153.50		1,172.00
JPY		10.42		9.23		10.26		9.72
CNY		183.12		176.18		177.69		178.48
TWD		36.33		34.89		35.85		35.51
EUR		1,326.89		1,241.51		1,307.43		1,280.53
PLN		304.16		295.99		306.05		300.79

(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 March 31, 2016 and December 31, 2015, 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:


(In millions of won)	March 31, 2016						December 31, 2015
	Equity			Profit or loss			Equity			Profit or loss
USD (5 percent weakening)	W	(1,574	)		5,034			24,838			33,152
JPY (5 percent weakening)		(10,310	)		(9,098	)		(11,340	)		(9,486	)
CNY (5 percent weakening)		(9,869	)		(14,178	)		(8,582	)		1,069
TWD (5 percent weakening)		58			4			42			—
EUR (5 percent weakening)		(769	)		430			(214	)		270
PLN (5 percent weakening)		1,084			97			575			(208	)

A stronger won against the above currencies as of March 31, 2016 and December 31, 2015 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.

9.	Financial Instruments, Continued

(d)

Interest rate risk

(i)

Profile

The interest rate profile of the Group’s interest-bearing financial instruments as of March 31, 2016 and December 31, 2015 is as follows:


(In millions of won)
	March 31, 2016			December 31, 2015
Fixed rate instruments
Financial assets	W	2,406,789			2,524,708
Financial liabilities		(2,079,721	)		(2,289,336	)

	W	327,068			235,372

Variable rate instruments
Financial liabilities	W	(2,189,200	)		(1,934,895	)

(ii)

Equity and profit or loss sensitivity analysis for variable rate instruments

As of March 31, 2016 and December 31, 2015, a change of 100 basis points in interest rates at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown below for each 12-month period following the reporting dates. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.


(In millions of won)
	Equity					Profit or loss
	1%p increase			1%p decrease		1%p increase			1%p decrease
March 31, 2016
Variable rate instruments	W	(13,932	)		13,932		(13,932	)		13,932
December 31, 2015
Variable rate instruments	W	(14,667	)		14,667		(14,667	)		14,667

9.	Financial Instruments, Continued

(e)

Fair values

(i)

Fair values versus carrying amounts

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


(In millions of won)
	March 31, 2016					December 31, 2015
	Carrying amounts		Fair values			Carrying amounts		Fair values
Assets carried at fair value
Available-for-sale financial assets	W	247		247			709		709
Financial assets at fair value through profit or loss		1,500		1,500			—		—
Derivatives		1,917		1,917			—		—
Assets carried at amortized cost
Cash and cash equivalents	W	818,322		(	*)		751,662		(	*)
Deposits in banks		1,588,232		(	*)		1,772,350		(	*)
Trade accounts and notes receivable		3,188,049		(	*)		4,097,836		(	*)
Other accounts receivable		96,987		(	*)		105,815		(	*)
Deposits		25,369		(	*)		22,234		(	*)
Loans		34,946		(	*)		15,856		(	*)
Other non-current financial assets		5,361		(	*)		5,148		(	*)
Liabilities carried at fair value
Derivatives	W	1,236		1,236			85		85
Liabilities carried at amortized cost
Secured bank loans	W	693,375		693,375			698,192		698,192
Unsecured bank loans		1,697,637		1,701,194			1,239,914		1,239,969
Unsecured bond issues		1,876,673		1,927,310			2,286,125		2,337,835
Trade accounts and notes payable		2,538,435		(	*)		2,764,694		(	*)
Other accounts payable		1,410,506		1,410,796			1,499,722		1,499,963
Other non-current liabilities		7,182		7,777			8,402		9,005

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

The basis for determining fair values above by the Group are consistent with those disclosed in the financial statements as of and for the year ended December 31, 2015.

9.	Financial Instruments, Continued

(ii)

Financial Instruments measured at cost

Available-for-sale financial assets measured at cost as of March 31, 2016 and December 31, 2015 are as follows:


(In millions of won)
	March 31, 2016		December 31, 2015
Intellectual Discovery Co., Ltd.	W	2,673		2,673
ARCH Venture Fund VIII, L.P		1,564		1,378
Henghao Technology Co., Ltd.		3,372		3,372
Kyulux, Inc.		3,266		3,266

	W	10,875		10,689

(iii)

Fair values of financial assets and liabilities

Fair value hierarchy

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

•

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

•

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

•

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

ii)

Financial instruments measured at fair value

Fair value hierarchy classifications of the financial instruments that are measured at fair value as of March 31, 2016 and December 31, 2015 are as follows:


(In millions of won)
	Level 1		Level 2		Level 3		Total
March 31, 2016
Assets
Available-for-sale financial assets	W	247		—		—		247
Financial assets at fair value through profit or loss		—		—		1,500		1,500
Derivatives		—		1,917		—		1,917
Liabilities
Derivatives		—		—		1,236		1,236


(In millions of won)
	Level 1		Level 2		Level 3		Total
December 31, 2015
Assets
Available-for-sale financial assets	W	709		—		—		709
Liabilities
Derivatives		—		—		85		85

9.	Financial Instruments, Continued

iii)

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

Fair value hierarchy classifications, valuation technique and inputs for fair value measurements of the financial instruments not measured at fair value but for which the fair value is disclosed as of March 31, 2016 and December 31, 2015 are as follows:

(In millions of won)

March 31, 2016

Valuation technique

Input

Classification

Level 1

Level 2

Level 3

Liabilities

Secured bank loan

—

693,375

Discounted cash flow

Discount rate

Unsecured bank loans

—

1,701,194

Discounted cash flow

Discount rate

Unsecured bond issues

—

1,927,310

Discounted cash flow

Discount rate

Other accounts payable

—

1,410,796

Discounted cash flow

Discount rate

Other non-current liabilities

—

7,777

Discounted cash flow

Discount rate

(In millions of won)

December 31, 2015

Valuation technique

Input

Classification

Level 1

Level 2

Level 3

Liabilities

Secured bank loan

—

698,192

Discounted cash flow

Discount rate

Unsecured bank loans

—

1,239,969

Discounted cash flow

Discount rate

Unsecured bond issues

—

2,337,835

Discounted cash flow

Discount rate

Other accounts payable

—

1,499,963

Discounted cash flow

Discount rate

Other non-current liabilities

—

9,005

Discounted cash flow

Discount rate

iv)

The significant interest rates applied for determination of the above fair value at the reporting date are as follows:


	March 31, 2016	December 31, 2015
Debentures, loans and others	1.16~2.25%	1.52~2.48%

9.	Financial Instruments, Continued

(f)

Capital management

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


(In millions of won)
	March 31, 2016			December 31, 2015
Total liabilities	W	9,677,306			9,872,204
Total equity		12,500,637			12,704,956
Cash and deposits in banks (*1)		2,406,541			2,523,999
Borrowings (including bonds)		4,267,685			4,224,231
Total liabilities to equity ratio		77	%		78	%
Net borrowings to equity ratio (*2)		15	%		13	%

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

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

10.	Financial Liabilities

(a)

Financial liabilities as of March 31, 2016 and December 31, 2015 are as follows:


(In millions of won)
	March 31, 2016		December 31, 2015
Current
Current portion of long-term debt	W	886,838		1,416,112

Non-current
Won denominated borrowings	W	552,626		202,992
Foreign currency denominated borrowings		1,546,235		1,323,454
Bonds		1,281,986		1,281,673
Derivatives		1,236		85

	W	3,382,083		2,808,204

(b)

Won denominated long-term debt as of March 31, 2016 and December 31, 2015 is as follows:


(In millions of won)
Lender	Annual interest rate as of March 31, 2016 (%)	March 31, 2016			December 31, 2015
Woori Bank and others	3-year Korean Treasury Bond rate less 1.25, 2.75	W	4,086			4,452
Shinhan Bank	CD rate (91days) + 0.30		200,000			200,000
Korea Development Bank and others	3-year Industrial Financial Debenture rate + 0.55 CD rate (91days) + 0.74		350,000			—
Less current portion of long-term debt			(1,460	)		(1,460	)

		W	552,626			202,992

10.	Financial Liabilities, Continued

(c)

Long-term debt denominated in currencies other than won as of March 31, 2016 and December 31, 2015 is as follows:


(In millions of won, CNY and USD)
Lender	Annual interest rate as of *March 31, 2016 (%)()**	March 31, 2016			December 31, 2015
China Construction Bank and others	USD : 3ML+1.30, 2.00 CNY : 4.28	W	848,367			854,654
Mizuho Bank, Ltd. and others	3ML+0.55~1.78		980,476			879,000
Standard Chartered Bank Korea Limited.	6ML+0.62		8,083			—

Foreign currency equivalent			USD 1,292			USD 1,185
			CNY 1,964			CNY 1,964

Less current portion of long-term debt			(290,691	)		(410,200	)

		W	1,546,235			1,323,454

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

(d)

Details of bonds issued and outstanding as of March 31, 2016 and December 31, 2015 are as follows:


(In millions of won)
	Maturity	Annual interest rate as of March 31, 2016 (%)		March 31, 2016			December 31, 2015
*Won denominated bonds ()**
Publicly issued bonds	August 2016~ May 2022		2.12~4.51	W	1,880,000			2,290,000
Less discount on bonds					(3,327	)		(3,875	)
Less current portion					(594,687	)		(1,004,452	)

				W	1,281,986			1,281,673

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

11.	The Nature of Expenses and Others

The classification of expenses by nature for the three-month periods ended March 31, 2016 and 2015 are as follows:


(In millions of won)
	2016			2015
Changes in inventories	W	(180,222	)		108,555
Purchases of raw materials, merchandise and others		3,392,172			3,275,924
Depreciation and amortization		813,004			851,137
Outsourcing fees		209,793			327,351
Labor cost		763,148			743,882
Supplies and others		235,070			234,766
Utility		207,172			207,016
Fees and commissions		151,722			135,534
Shipping costs		51,731			58,633
Advertising		14,062			41,161
Warranty expenses		42,015			33,719
Taxes and dues		19,398			22,472
Travel		17,644			15,929
Others		229,510			343,304

	W	5,966,219			6,399,383

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

12.	Selling and Administrative Expenses

Details of selling and administrative expenses for the three-month periods ended March 31, 2016 and 2015 are as follows:


(In millions of won)
	2016		2015
Salaries	W	68,515		65,281
Expenses related to defined benefit plans		7,514		6,868
Other employee benefits		20,659		19,103
Shipping costs		43,606		50,784
Fees and commissions		48,048		49,687
Depreciation		33,831		26,144
Taxes and dues		6,927		9,512
Advertising		14,062		41,161
Warranty expenses		42,015		33,719
Rent		6,391		5,672
Insurance		2,429		2,807
Travel		5,770		5,623
Training		3,154		2,738
Others		11,660		15,407

	W	314,581		334,506

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

(a)

Details of other non-operating income for the three-month periods ended March 31, 2016 and 2015 are as follows:


(In millions of won)
	2016		2015
Rental income	W	1,388		971
Foreign currency gain		434,536		245,031
Gain on disposal of property, plant and equipment		1,958		6,118
Reversal of allowance for doubtful accounts for other receivables		—		791
Others		2,475		153

	W	440,357		253,064

(b)

Details of other non-operating expenses for the three-month periods ended March 31, 2016 and 2015 are as follows:


(In millions of won)
	2016		2015
Other bad debt expense	W	321		456
Foreign currency loss		450,624		222,705
Loss on disposal of property, plant and equipment		342		8
Loss on disposal of intangible assets		11		11
Impairment loss on intangible assets		85		184
Donations		2,942		3,208
Expenses related to legal proceedings or claims and others		12,838		117,067

	W	467,163		343,639

14.	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.

(a)

Recognized liabilities for defined benefit plans as of March 31, 2016 and December 31, 2015 are as follows:


(In millions of won)
	March 31, 2016			December 31, 2015
Present value of partially funded defined benefit obligations	W	1,429,520			1,381,648
Fair value of plan assets		(1,019,258	)		(1,027,850	)

	W	410,262			353,798

(b)

Expenses recognized in profit or loss for the three-month periods ended March 31, 2016 and 2015 are as follows:


(In millions of won)
	2016		2015
Current service cost	W	52,701		46,949
Net interest cost		2,570		2,816

	W	55,271		49,765

(c)

Plan assets as of March 31, 2016 and December 31, 2015 are as follows:


(In millions of won)
	March 31, 2016		December 31, 2015
Guaranteed deposits in banks	W	1,019,258		1,027,850

As of March 31, 2016, the Group maintains the plan assets primarily with Mirae Asset Securities Co., Ltd. and Shinhan Bank.

(d)

Remeasurements of the net defined benefit liabilities (assets) included in other comprehensive income (loss) for the three-month periods ended March 31, 2016 and 2015 are as follows:


(In millions of won)
	2016			2015
Remeasurements of the net defined benefit liabilities (assets)	W	(1,460	)		(1,359	)
Tax effect		353			329

Remeasurements of the net defined benefit liabilities (assets), net of income tax	W	(1,107	)		(1,030	)

15.	Finance Income and Finance Costs

(a)

Finance income and costs recognized in profit and loss for the three-month periods ended March 31, 2016 and 2015 are as follows:


(In millions of won)
	2016		2015
Finance income
Interest income	W	11,047		13,856
Foreign currency gain		38,722		14,459
Gain on transaction of derivatives		1,126		—
Gain on valuation of derivatives		1,917		—

	W	52,812		28,315

Finance costs
Interest expense	W	31,201		30,212
Foreign currency loss		26,518		24,529
Loss on disposal of investments in equity accounted investees		5,362		—
Loss on impairment of investments		6,137		—
Loss on sale of trade accounts and notes receivable		964		1,402
Loss on transaction of derivatives		1,012		—
Loss on valuation of derivatives		1,236		—

	W	72,430		56,143

(b)

Finance income and costs recognized in other comprehensive income for the three-month periods ended March 31, 2016 and 2015 are as follows:


(In millions of won)
	2016			2015
Net change in fair value of available-for-sale financial assets	W	(77	)		16
Tax effect		19			(4	)

Finance income (cost) recognized in other comprehensive income after tax	W	(58	)		12

16.	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 2,103 million (W2,425,810 million) in connection with the Controlling Company’s export sales transactions with its subsidiaries. As of March 31, 2016, no short-term borrowings were outstanding in connection with these agreements. In connection with all of the contracts in this paragraph, the Controlling Company has sold its accounts receivable with recourse.

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


(In millions of USD and KRW)
Classification	Financial institutions	Maximum				Not yet due
		Contractual amount		KRW equivalent		Amount		KRW equivalent
Controlling Company	Shinhan Bank		KRW 100,000		100,000		—		—
	Bank of Tokyo-Mitsubishi UFJ		USD 120		138,420		—		—
Subsidiaries
LG Display Singapore Pte. Ltd.	Standard Chartered Bank		USD 300		346,050		USD 123		141,661
LG Display Taiwan Co., Ltd.	BNP Paribas		USD 75		86,513		USD 11		12,971
	Hongkong & Shanghai Banking Corp.		USD 150		173,025		—		—
	Sumitomo Mitsui Banking Corporation		USD 200		230,700		USD 89		102,356
LG Display Shanghai Co., Ltd.	BNP Paribas		USD 125		144,188		—		—
LG Display Germany GmbH	Citibank		USD 160		184,560		—		—
	BNP Paribas		USD 107		123,425		—		—
LG Display America, Inc.	Hongkong & Shanghai Banking Corp.		USD 800		922,800		USD 577		665,800
	Sumitomo Mitsui Banking Corporation		USD 250		288,375		—		—
LG Display Japan Co., Ltd.	Sumitomo Mitsui Banking Corporation		USD 90		103,815		—		—
LG Display Guangzhou Trading Co., Ltd.	Industrial and Commercial Bank of China		USD 64		73,824		—		—

			USD 2,321		2,677,275		USD 800		922,788
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