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 February, 2015

LG Display Co., Ltd.

(Translation of Registrant’s name into English)

LG Twin Towers, 128, Yeoui-daero, Youngdungpo-gu, Seoul, 150-721, The 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

Submission of Audit Report

1.	Name of external auditor: Samjong Accounting Corporation (KPMG)

2.	Date of receiving external audit report: February 25, 2015

3.	Auditor’s opinion


	FY 2014	FY 2013
Audit Report on Separate Financial Statements	Unqualified	Unqualified

4.	Financial Highlights of Separate Financial Statements


Items	FY 2014			FY 2013
Total Assets		21,011,836,600,394			20,644,592,617,994
Total Liabilities		10,387,761,963,439			10,882,167,949,202
Total Shareholders’ Equity		10,624,074,636,955			9,762,424,668,792
Capital Stock		1,789,078,500,000			1,789,078,500,000
Revenues		25,383,670,078,470			25,854,183,399,062
Operating Income		984,789,915,471			753,550,179,197
Ordinary Income		1,221,692,397,193			386,425,310,479
Net Income		973,118,312,897			99,671,926,545
Total Shareholders’ Equity / Capital Stock		593.8	%		545.7	%

LG DISPLAY CO., LTD.

Separate Financial Statements

For the Years Ended December 31, 2014 and 2013

(With Independent Auditors’ Report Thereon)

Contents


	Page

Independent Auditors’ Report		1
Separate Statements of Financial Position		3
Separate Statements of Comprehensive Income		4
Separate Statements of Changes in Equity		5
Separate Statements of Cash Flows		6
Notes to the Separate Financial Statements		8
Independent Accountants’ Review Report on Internal Accounting Control System		81
Report on the Operation of Internal Accounting Control System		83

Independent Auditors’ Report

Based on a report originally issued in Korean

To the Board of Directors and Shareholders

LG Display Co., Ltd.:

We have audited the accompanying separate financial statements of LG Display Co., Ltd. (the “Company”) which comprise the separate statements of financial position of the Company as of December 31, 2014 and 2013, the related separate statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these separate financial statements in accordance with Korean International Financial Reporting Standards (“K-IFRS”), and for such internal control as management determines is necessary to enable the preparation of separate financial statements that are free from material misstatements, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these separate financial statements based on our audits. We conducted our audits in accordance with Korean Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the separate financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the separate financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the separate financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the separate financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the separate financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the separate financial statements referred to above present fairly, in all material respects, the separate financial position of the Company as of December 31, 2014 and 2013, and its separate financial performance and its separate cash flows for the years then ended in accordance with K-IFRS.

Emphasis of Matter

Without qualifying our opinion, we draw attention to the following:

As discussed in note 20 to the separate financial statements, the Company 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 Company 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 Company.

Other Matters

The accompanying separate financial statements of the Company as of December 31, 2013 and for the year then ended were audited by us in accordance with the previous auditing standards generally accepted in the Republic of Korea.

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

KPMG Samjong Accounting Corp.

Seoul, Korea

February 17, 2015

This report is effective as of February 17, 2015, the audit report date. Certain subsequent events or circumstances, which may occur between the audit report date and the time of reading this report, could have a material impact on the accompanying separate financial statements and notes thereto. Accordingly, the readers of the audit report should understand that the above audit report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

LG DISPLAY CO., LTD.

Separate Statements of Financial Position

As of December 31, 2014 and 2013


(In millions of won)	Note	December 31, 2014		December 31, 2013

Assets
Cash and cash equivalents	6, 13	￦	100,558		253,059
Deposits in banks	6, 13		1,525,609		1,301,176
Trade accounts and notes receivable, net	7, 13, 19, 23		4,015,904		3,543,193
Other accounts receivable, net	7, 13		396,651		59,806
Other current financial assets	9, 13		2,569		—
Inventories	8		2,046,675		1,586,642
Prepaid income taxes			—		3,665
Other current assets	7		203,122		129,826

Total current assets			8,291,088		6,877,367

Deposits in banks	6, 13		8,427		13
Investments	10		2,301,881		1,820,806
Other non-current financial assets	9, 13		27,609		40,892
Property, plant and equipment, net	11		8,700,301		10,294,740
Intangible assets, net	12		548,078		461,620
Deferred tax assets	29		883,965		936,000
Other non-current assets	7		250,488		213,155

Total non-current assets			12,720,749		13,767,226

Total assets		￦	21,011,837		20,644,593


Liabilities
Trade accounts and notes payable	13, 23	￦	3,989,505		3,482,120
Current financial liabilities	13, 14		964,122		886,852
Other accounts payable	13		1,057,485		1,050,586
Accrued expenses			708,664		476,040
Income tax payable			142,760		—
Provisions	18		193,429		199,737
Advances received	19		463,740		627,997
Other current liabilities	18		30,625		30,843

Total current liabilities			7,550,330		6,754,175

Non-current financial liabilities	13, 14		2,484,280		2,994,837
Non-current provisions	18		8,014		5,005
Defined benefit liabilities, net	17		323,710		318,696
Long-term advances received	19		—		427,397
Other non-current liabilities	18		21,428		382,058

Total non-current liabilities			2,837,432		4,127,993

Total liabilities			10,387,762		10,882,168


Equity
Share capital	21		1,789,079		1,789,079
Share premium			2,251,113		2,251,113
Reserves	21		276		(305	)
Retained earnings	22		6,583,607		5,722,538

Total equity			10,624,075		9,762,425


Total liabilities and equity		￦	21,011,837		20,644,593

See accompanying notes to the separate financial statements.

LG DISPLAY CO., LTD.

Separate Statements of Comprehensive Income

For the years ended December 31, 2014 and 2013


(In millions of won, except earnings per share)	Note	2014			2013

Revenue	23, 24	￦	25,383,670			25,854,183
Cost of sales	8, 23		(22,360,245	)		(23,103,569	)

Gross profit			3,023,425			2,750,614

Selling expenses	16		(485,557	)		(515,211	)
Administrative expenses	16		(396,916	)		(394,656	)
Research and development expenses			(1,156,162	)		(1,087,197	)

Operating profit			984,790			753,550


Finance income	27		479,321			67,136
Finance costs	27		(205,608	)		(254,022	)
Other non-operating income	25		862,167			850,870
Other non-operating expenses	25		(898,978	)		(1,031,109	)


Profit before income tax			1,221,692			386,425
Income tax expense	28		248,574			286,753


Profit for the year			973,118			99,672


Other comprehensive income (loss)
Items that will never be reclassified to profit or loss
Remeasurements of net defined benefit liabilities	17, 28		(147,822	)		1,379
Related income tax	17, 28		35,773			(334	)

			(112,049	)		1,045
Items that are or may be reclassified to profit or loss
Net change in fair value of available-for-sale financial assets	27, 28		767			776
Related income tax	27, 28		(186	)		(188	)

			581			588

Other comprehensive income (loss) for the year, net of income tax			(111,468	)		1,633

Total comprehensive income for the year		￦	861,650			101,305


Earnings per share (In won)
Basic earnings per share	30	￦	2,720			279

Diluted earnings per share	30	￦	2,720			279

See accompanying notes to the separate financial statements.

LG DISPLAY CO., LTD.

Separate Statements of Changes in Equity

For the years ended December 31, 2014 and 2013


(In millions of won)	Share capital		Share premium		Fair value Reserves			Retained earnings			Total equity

Balances at January 1, 2013	￦	1,789,079		2,251,113		(893	)		5,621,821			9,661,120

Total comprehensive income for the year
Profit for the year		—		—		—			99,672			99,672

Other comprehensive income
Net change in fair value of available-for-sale financial assets, net of tax		—		—		588			—			588
Remeasurements of net defined benefit liabilities, net of tax		—		—		—			1,045			1,045

Total other comprehensive income		—		—		588			1,045			1,633

Total comprehensive income for the year	￦	—		—		588			100,717			101,305

Transaction with owners, recognized directly in equity		—		—		—			—			—

Balances at December 31, 2013	￦	1,789,079		2,251,113		(305	)		5,722,538			9,762,425


Balances at January 1, 2014	￦	1,789,079		2,251,113		(305	)		5,722,538			9,762,425

Total comprehensive income for the year
Profit for the year		—		—		—			973,118			973,118

Other comprehensive income (loss)
Net change in fair value of available-for-sale financial assets, net of tax		—		—		581			—			581
Remeasurements of net defined benefit liabilities, net of tax		—		—		—			(112,049	)		(112,049	)

Total other comprehensive income (loss)		—		—		581			(112,049	)		(111,468	)

Total comprehensive income for the year	￦	—		—		581			861,069			861,650

Transaction with owners, recognized directly in equity		—		—		—			—			—

Balances at December 31, 2014	￦	1,789,079		2,251,113		276			6,583,607			10,624,075

See accompanying notes to the separate financial statements.

LG DISPLAY CO., LTD.

Separate Statements of Cash Flows

For the years ended December 31, 2014 and 2013


(In millions of won)	Note	2014			2013

Cash flows from operating activities:
Profit for the year		￦	973,118			99,672
Adjustments for:
Income tax expense	28		248,574			286,753
Depreciation	11, 15		2,854,996			3,380,966
Amortization of intangible assets	12, 15		263,326			230,539
Gain on foreign currency translation			(41,789	)		(54,937	)
Loss on foreign currency translation			72,877			35,954
Expenses related to defined benefit plans	17, 26		196,495			158,866
Gain on disposal of property, plant and equipment			(18,248	)		(8,258	)
Loss on disposal of property, plant and equipment			2,204			621
Impairment loss on property, plant and equipment			8,097			—
Loss on disposal of intangible assets			115			452
Impairment loss on intangible assets			492			1,626
Reversal of impairment loss on intangible assets			—			(296	)
Finance income			(475,659	)		(54,014	)
Finance costs			179,343			177,332
Other income			(14,508	)		(2,947	)
Other expenses			278,001			352,205

			3,554,316			4,504,862

Change in trade accounts and notes receivable			(1,082,193	)		557,445
Change in other accounts receivable			(14,900	)		49,113
Change in other current assets			(43,759	)		4,505
Change in inventories			(460,033	)		361,303
Change in other non-current assets			(87,729	)		(118,745	)
Change in trade accounts and notes payable			506,663			(877,147	)
Change in other accounts payable			(367,623	)		(168,872	)
Change in accrued expenses			233,936			44,790
Change in other current liabilities			(14,128	)		(13,259	)
Change in other non-current liabilities			17,978			9,805
Change in provisions			(187,021	)		(315,266	)
Change in defined benefit liabilities, net			(339,303	)		(19,093	)

			(1,838,112	)		(485,421	)



Cash generated from operating activities			2,689,322			4,119,113
Income taxes refunded (paid)			1,709			(36,537	)
Interests received			33,530			28,333
Interests paid			(158,162	)		(172,054	)


Net cash provided by operating activities		￦	2,566,399			3,938,855

See accompanying notes to the separate financial statements.

LG DISPLAY CO., LTD.

Separate Statements of Cash Flows, Continued

For the years ended December 31, 2014 and 2013


(In millions of won)	2014			2013

Cash flows from investing activities:
Dividends received	￦	107,173			14,582
Proceeds from withdrawal of deposits in banks		1,651,176			1,657,079
Increase in deposits in banks		(1,884,023	)		(2,643,933	)
Acquisition of investments		(531,387	)		(508,400	)
Proceeds from disposal of investments		12,280			13,717
Acquisition of property, plant and equipment		(1,365,062	)		(2,973,707	)
Proceeds from disposal of property, plant and equipment		72,825			22,950
Acquisition of intangible assets		(325,651	)		(181,708	)
Proceeds from disposal of intangible assets		—			1,902
Government grants received		3,639			1,744
Proceeds from disposal of other financial assets		82			—
Acquisition of other non-current financial assets		(4,219	)		(5,410	)
Proceeds from disposal of other non-current financial assets		15,390			43,047


Net cash used in investing activities		(2,247,777	)		(4,558,137	)


Cash flows from financing activities:
Proceeds from short-term borrowings		219,839			1,123,130
Repayments of short-term borrowings		—			(1,123,130	)
Proceeds from issuance of debentures		597,563			587,603
Proceeds from long-term debt		102,389			372,785
Repayments of long-term debt		(503,618	)		(301,229	)
Repayments of current portion of long-term debt and debentures		(887,296	)		(1,187,384	)


Net cash used in financing activities		(471,123	)		(528,225	)


Net decrease in cash and cash equivalents		(152,501	)		(1,147,507	)
Cash and cash equivalents at January 1		253,059			1,400,566

Cash and cash equivalents at December 31	￦	100,558			253,059

See accompanying notes to the separate financial statements.

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

1.	Organization and Description of Business

LG Display Co., Ltd. (the “Company”) was incorporated in February 1985 under its original name of LG Soft, Ltd. as a wholly owned subsidiary of LG Electronics Inc. In 1998, LG Electronics Inc. and LG Semicon Co., Ltd. transferred their respective Thin Film Transistor-Liquid Crystal Display (“TFT-LCD”) related business to the Company. The main business of the Company is to manufacture and sell TFT-LCD panels. The Company is a stock company (“Jusikhoesa”) domiciled in the Republic of Korea with its address at 128, Yeouidae-ro, Yeongdeungpo-gu, Seoul, the Republic of Korea. In July 1999, LG Electronics Inc. and Koninklijke Philips Electronics N.V. (“Philips”) entered into a joint venture agreement. Pursuant to the agreement, the Company changed its name to LG.Philips LCD Co., Ltd. However, in February 2008, the Company changed its name to LG Display Co., Ltd. considering the decrease of Philips’s share interest in the Company and the possibility of its business expansion to other display products including Organic Light-Emitting Diode (“OLED”) and Flexible Display products. As of December 31, 2014, LG Electronics Inc. owns 37.9% (135,625,000 shares) of the Company’s common stock.

As of December 31, 2014, the Company has TFT-LCD manufacturing plants, an OLED manufacturing plant and a Research & Development Center in Paju and TFT-LCD manufacturing plants in Gumi. The Company has overseas subsidiaries located in North America, Europe and Asia.

The Company’s common stock is listed on the Korea Exchange under the identifying code 034220. As of December 31, 2014, there are 357,815,700 shares of common stock outstanding. The Company’s common stock is also listed on the New York Stock Exchange in the form of American Depository Shares (“ADSs”) under the symbol “LPL.” One ADS represents one-half of one share of common stock. As of December 31, 2014, there are 22,485,216 ADSs outstanding.

2.	Basis of Presenting Financial Statements

(a)

Statement of Compliance

In accordance with the Act on External Audits of Stock Companies, these separate financial statements have been prepared in accordance with Korean International Financial Reporting Standards (“K-IFRS”).

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

The separate financial statements were authorized for issuance by the Board of Directors on January 27, 2015, which will be submitted for approval to the shareholders’ meeting to be held on March 13, 2015.

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

2.	Basis of Presenting Financial Statements, Continued

(b)

Basis of Measurement

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

•

available-for-sale financial assets are 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 separate financial statements are presented in Korean won, which is the Company’s functional currency. All amounts in Korean won are in millions unless otherwise stated.

(d)

Use of Estimates and Judgments

The preparation of the separate 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.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Information about critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the separate financial statements is included in the following notes:

•

Classification of financial instruments (note 3.(d))

•

Estimated useful lives of property, plant and equipment (note 3.(e))

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next 12 months is included in the following notes:

•

Recognition and measurement of provisions (note 3.(j), 18 and 20)

•

Net realizable value of inventories (note 8)

•

Measurement of defined benefit obligations (note 17)

•

Deferred tax assets and liabilities (note 29)

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

2.	Basis of Presenting Financial Statements, Continued

(e)

Changes in accounting policies

Except for the changes below, the Company has consistently applied the accounting policies set out in Note 3 to all periods presented in the separate financial statements.

The following amendments to standards and an interpretation were adopted with a date of initial application of January 1, 2014 are as follows.

•

Amendments to K-IFRS No. 1032, Financial Instruments: Presentation

•

Amendments to K-IFRS No. 1036, Impairment of Assets, and

•

K-IFRS No. 2121, Levies

The nature and effects of the changes are explained below.

(i) Presentation of financial instruments

The Company has adopted amendments to K-IFRS No.1032, Financial Instruments: Presentation, since January 1, 2014. The amendments clarify the meaning of ‘currently has a legally enforceable right of set-off’. According to the amendments, the right to set off should not be contingent on a future event, and legally enforceable in the normal course of business, in the event of default, and in the event of insolvency or bankruptcy of the entity and all of the counterparties. The amendments also state that some gross settlement systems would be considered equivalent to net settlement if they eliminate or result in insignificant credit and liquidity risk and process receivables and payables in a single settlement process or cycle. There is no impact of applying this amendment on the separate financial statements.

(ii) Disclosure of the recoverable amount

The Company has adopted amendments to K-IFRS No. 1036, Impairment of Assets, since January 1, 2014. The amendments require the disclosure of information about the recoverable amount of impaired assets, if that amount is based on fair value less costs of disposal. They also require the disclosure of additional information about that fair value measurement. In addition, if the recoverable amount of impaired assets based on fair value less costs of disposal was measured using a present value technique, the amendments also require the disclosure of the discount rates that have been used in the current and previous measurements. There is no significant impact of applying this amendment on the separate financial statements.

(iii) Levies

The Company has adopted K-IFRS No. 2121, Levies, since January 1, 2014. K-IFRS No. 2121 is an Interpretation of K-IFRS No. 1037, Provisions, Contingent Liabilities and Contingent Assets, on the accounting for levies imposed by governments. K-IFRS No. 1037 sets out criteria for the recognition of a liability, one of which is the requirement for the entity to have a present obligation as a result of a past event (or “obligating event”). K-IFRS No. 2121 clarifies that the obligating event that gives rise to a liability to pay a levy is the activity described in the relevant legislation that triggers the payment of the levy. The interpretation does not provide guidance on the accounting for the costs arising from recognizing the liability to pay a levy. Other K-IFRSs should be applied to determine whether the recognition of a liability to pay a levy gives rise to an asset or an expense. There is no impact of applying this interpretation on the separate financial statements.

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

3.	Summary of Significant Accounting Policies

The significant accounting policies followed by the Company in preparation of its separate financial statements are as follows:

(a)

Interest in subsidiaries, associates and joint ventures

These separate financial statements are prepared and presented in accordance with K-IFRS No.1027, Separate Financial Statements. The Company applied the cost method to investments in subsidiaries, associates and joint ventures in accordance with K-IFRS No.1027. Dividends from subsidiaries, associates or joint ventures are recognized in profit or loss when the right to receive the dividend is established.

(b)

Foreign Currency Transactions and Translation

Transactions in foreign currencies are translated to the respective functional currencies of the Company at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated to the functional currency at the exchange rate on the reporting date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was originally determined. Foreign currency differences arising on retranslation are recognized in profit or loss, except for differences arising on available-for-sale equity instruments and a financial asset and liability designated as a cash flow hedge, which are recognized in other comprehensive income. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the original transaction. Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition are recognized in profit or loss in the period in which they arise. Foreign currency differences arising from assets and liabilities in relation to the investing and financing activities including loans, bonds and cash and cash equivalents are recognized in finance income (costs) in the separate statement of comprehensive income and foreign currency differences arising from assets and liabilities in relation to activities other than investing and financing activities are recognized in other non-operating income (expense) in the separate statement of comprehensive income. Relevant foreign currency differences are presented in gross amounts in the separate statement of comprehensive income.

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

3.	Summary of Significant Accounting Policies, Continued

(c)

Inventories

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on the weighted-average method, and includes expenditures incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated selling expenses. In the case of manufactured inventories and work-in-process, cost includes an appropriate share of production overheads based on the actual capacity of production facilities. However, the normal capacity is used for the allocation of fixed production overheads if the actual level of production is lower than the normal capacity.

(d)

Financial Instruments

(i) Non-derivative financial assets

The Company initially recognizes loans and receivables and deposits on the date they are originated. All other non-derivative financial assets, including financial assets at fair value through profit or loss (“FVTPL”), are recognized in the separate statement of financial position when the Company becomes a party to the contractual provisions of the instrument.

The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows of the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Company is recognized as a separate asset or liability. If a transfer does not result in derecognition because the Company has retained substantially all the risks and rewards of ownership of the transferred asset, the Company continues to recognize the transferred asset and recognizes a financial liability for the consideration received. In subsequent periods, the Company recognizes any income on the transferred assets and any expense incurred on the financial liability.

Financial assets and liabilities are offset and the net amount presented in the separate statement of financial position when, and only when, the Company has a legal right to offset the amounts and intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

The Company has the following non-derivative financial assets: financial assets at FVTPL, loans and receivables and available-for-sales financial assets.

Financial assets at fair value through profit or loss

A financial asset is classified at FVTPL if it is classified as held for trading or is designated as such upon initial recognition. If a contract contains one or more embedded derivatives, the Company designates the entire hybrid (combined) contract as a financial asset at FVTPL unless: the embedded derivative(s) does not significantly modify the cash flows that otherwise would be required by the contract; or it is clear with little or no analysis when a similar hybrid (combined) instrument is first considered that separation of the embedded derivative(s) is prohibited. Upon initial recognition, attributable transaction costs are recognized in profit or loss as incurred. Financial assets at FVTPL are measured at fair value, and changes therein are recognized in profit or loss.

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

3.	Summary of Significant Accounting Policies, Continued

(d)

Financial Instruments, Continued

(i) Non-derivative financial assets, Continued

Cash and cash equivalents

Cash and cash equivalents include all cash balances and short-term highly liquid investments with an original maturity of three months or less that are readily convertible into known amounts of cash.

Deposits in banks

Deposits in banks are those with maturity of more than three months and less than one year and are held for cash management purposes.

Loans and receivables

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. When loans and receivables are recognized initially, the Company measures them at their fair value plus transaction costs that are directly attributable to the acquisition or issue of the financial asset. Subsequent to initial recognition, loans and receivables are measured at amortized cost using the effective interest method, less any impairment losses. Loans and receivables comprise trade accounts and notes receivable and other accounts receivable.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale or that are not classified as financial assets at FVTPL, held-to-maturity financial assets or loans and receivables. The Company’s investments in equity securities and certain debt securities are classified as available-for-sale financial assets. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses and foreign currency differences on available-for-sale equity instruments, are recognized in other comprehensive income and presented within equity in the fair value reserve. When an investment in available-for-sale financial assets is derecognized, the cumulative gain or loss in other comprehensive income is transferred to profit or loss.

Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured and whose derivatives are linked to and must be settled by delivery of such unquoted equity instruments are measured at cost.

(ii) Non-derivative financial liabilities

The Company classifies financial liabilities into two categories, financial liabilities at FVTPL and other financial liabilities, in accordance with the substance of the contractual arrangement and the definitions of financial liabilities, and recognizes them in the separate statement of financial position when the Company becomes a party to the contractual provisions of the instrument.

Financial liabilities at FVTPL include financial liabilities held for trading or designated as such upon initial recognition at FVTPL. After initial recognition, financial liabilities at FVTPL are measured at fair value, and changes therein are recognized in profit or loss. Upon initial recognition, transaction costs that are directly attributable to the issuance of financial liabilities are recognized in profit or loss as incurred.

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

3.	Summary of Significant Accounting Policies, Continued

(d)

Financial Instruments, Continued

(ii) Non-derivative financial liabilities, Continued

Non-derivative financial liabilities other than financial liabilities classified as FVTPL are classified as other financial liabilities and measured initially at fair value minus transaction costs that are directly attributable to the issuance of financial liabilities. Subsequent to initial recognition, these financial liabilities are measured at amortized cost using the effective interest method. As of December 31, 2014, non-derivative financial liabilities comprise borrowings, bonds and others.

The Company derecognizes a financial liability when its contractual obligations are discharged, cancelled or expired.

(iii) Share Capital

The Company only issued common stocks and they are classified as equity. Incremental costs directly attributable to the issuance of common stocks are recognized as a deduction from equity, net of tax effects. Capital contributed in excess of par value upon issuance of common stocks is classified as share premium within equity.

(iv) Derivative financial instruments, including hedge accounting

Derivatives are initially recognized at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are recognized in profit or loss except in the case where the derivatives are designated as cash flow hedges and the hedge is determined to be an effective hedge.

If necessary, the Company designates derivatives as hedging items to hedge the risk of changes in the fair value of assets, liabilities or firm commitments (a fair value hedge) and foreign currency risk of highly probable forecasted transactions or firm commitments (a cash flow hedge).

On initial designation of the hedge, the Company’s management formally documents the relationship between the hedging instrument(s) and hedged item(s), including the risk management objectives and strategy in undertaking the hedge transaction, together with the methods that will be used to assess the effectiveness of the hedging relationship. The Company’s management makes an assessment, both at the inception of the hedge relationship as well as on an ongoing basis, whether the hedging instruments are expected to be “highly effective” in offsetting the changes in the fair value or cash flows of the respective hedged items during the period for which the hedge is designated, and whether the actual results of each hedge are within a range of 80-125 percent. For a cash flow hedge of a forecasted transaction, the transaction should be highly probable to occur and should present an exposure to variations in cash flows that could ultimately affect reported net income.

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

3.	Summary of Significant Accounting Policies, Continued

(d)

Financial Instruments, Continued

(iv) Derivative financial instruments, including hedge accounting, Continued

Cash flow hedges

When a derivative is designated as a hedge of the variability in cash flows attributable to a particular risk associated with a recognized asset or liability or a highly probable forecasted transaction that could affect profit or loss, the effective portion of changes in the fair value of the derivative is recognized in other comprehensive income and presented in the hedging reserve in equity. The amount recognized in other comprehensive income is removed and included in profit or loss in the same period the hedged cash flows affect profit or loss under the same line item in the separate statement of comprehensive income. Any ineffective portion of changes in the fair value of the derivative is recognized immediately in profit or loss.

If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated, exercised, or the designation is revoked, then hedge accounting is discontinued prospectively. The cumulative gain or loss previously recognized in other comprehensive income and presented in the hedging reserve in equity remains there until the forecasted transaction affects profit or loss. When the hedged item is a non-financial asset, the amount recognized in other comprehensive income is transferred to the carrying amount of the asset when the asset is recognized. If the forecasted transaction is no longer expected to occur, then the balance in other comprehensive income is recognized immediately in profit or loss. In other cases the amount recognized in other comprehensive income is transferred to profit or loss in the same period that the hedged item affects profit or loss.

Embedded derivative

Embedded derivatives are separated from the host contract and accounted for separately if the economic characteristics and risks of the host contract and the embedded derivative are not closely related, a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative, and the combined instrument is not measured at FVTPL. Changes in the fair value of separable embedded derivatives are recognized immediately in profit or loss.

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

3.	Summary of Significant Accounting Policies, Continued

(e)

Property, Plant and Equipment

(i) Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes an expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labor, any costs directly attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located and borrowing costs on qualifying assets.

The gain or loss arising from the derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item and recognized in other non-operating income or other non-operating expenses.

(ii) Subsequent costs

Subsequent expenditure on an item of property, plant and equipment is recognized as part of its cost only if it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognized in profit or loss as incurred.

(iii) Depreciation

Depreciation is recognized in profit or loss on a straight-line basis method, reflecting the pattern in which the asset’s future economic benefits are expected to be consumed by the Company. The residual value of property, plant and equipment is zero. Land is not depreciated.

Estimated useful lives of the assets are as follows:


		Useful lives (years)
Buildings and structures		20, 40
Machinery		4, 5
Furniture and fixtures		4
Equipment, tools and vehicles		4, 12

Depreciation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate and any changes are accounted for as changes in accounting estimates. There were no such changes for all periods presented.

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

3.	Summary of Significant Accounting Policies, Continued

(f)

Borrowing Costs

The Company capitalizes borrowing costs, which includes interests and exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs, directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale. To the extent that the Company borrows funds specifically for the purpose of obtaining a qualifying asset, the Company determines the amount of borrowing costs eligible for capitalization as the actual borrowing costs incurred on that borrowing during the period less any investment income on the temporary investment of those borrowings. The Company immediately recognizes other borrowing costs as an expense.

(g)

Government Grants

In case there is reasonable assurance that the Company will comply with the conditions attached to a government grant, the government grant is recognized as follows:

(i) Grants related to the purchase or construction of assets

A government grant related to the purchase or construction of assets is deducted in calculating the carrying amount of the asset. The grant is recognized in profit or loss over the life of a depreciable asset as a reduced depreciation expense and cash related to grant received is presented in investing activities in the statement of cash flows.

(ii) Grants for compensating the Company’s expenses incurred

A government grant that compensates the Company for expenses incurred is recognized in profit or loss as a deduction from relevant expenses on a systematic basis in the periods in which the expenses are recognized.

(iii) Other government grants

A government grant that becomes receivable for the purpose of giving immediate financial support to the Company with no compensation for expenses or losses already incurred or no future related costs is recognized as income of the period in which it becomes receivable.

(h)

Intangible Assets

Intangible assets are initially measured at cost. Subsequently, intangible assets are measured at cost less accumulated amortization and accumulated impairment losses.

(i) Goodwill

Goodwill arising from business combinations is recognized as the excess of the acquisition cost of investments in subsidiaries, associates and joint ventures over the Company’s share of the net fair value of the identifiable assets acquired and liabilities assumed. Any deficit is a bargain purchase that is recognized in profit or loss. Goodwill is measured at cost less accumulated impairment losses.

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

3.	Summary of Significant Accounting Policies, Continued

(h)

Intangible Assets, Continued

(ii) Research and development

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognized in profit or loss as incurred.

Development activities involve a plan or design of the production of new or substantially improved products and processes. Development expenditure is capitalized only if the Company can demonstrate all of the following:

•

the technical feasibility of completing the intangible asset so that it will be available for use or sale,

•

its intention to complete the intangible asset and use or sell it,

•

its ability to use or sell the intangible asset,

•

how the intangible asset will generate probable future economic benefits. Among other things, the Company can demonstrate the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset,

•

the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset, and

•

its ability to measure reliably the expenditure attributable to the intangible asset during its development.

The expenditure capitalized includes the cost of materials, direct labor, overhead costs that are directly attributable to preparing the asset for its intended use, and borrowing costs on qualifying assets.

(iii) Other intangible assets

Other intangible assets include intellectual property rights, software, customer relationships, technology, memberships and others.

(iv) Subsequent costs

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific intangible asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred.

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

3.	Summary of Significant Accounting Policies, Continued

(h)

Intangible Assets, Continued

(v) Amortization

Amortization is calculated on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use. The residual value of intangible assets is zero. However, as there are no foreseeable limits to the periods over which condominium and golf club memberships are expected to be available for use, these intangible assets are regarded as having indefinite useful lives and not amortized.


		Estimated useful lives (years)
Intellectual property rights		5, 10
Rights to use electricity, water and gas supply facilities		10
Software		4
Customer relationships		7
Technology		10
Development costs		(*)
Condominium and golf club memberships		Not amortized

(*)	Capitalized development costs are amortized over the useful life considering the life cycle of the developed products. Amortization of capitalized development costs is recognized in research and development expenses in the separate statement of comprehensive income.

Amortization periods and the amortization methods for intangible assets with finite useful lives are reviewed at each financial year-end. The useful lives of intangible assets that are not being amortized are reviewed each period to determine whether events and circumstances continue to support indefinite useful life assessments for those assets. If appropriate, the changes are accounted for as changes in accounting estimates.

(i)

Impairment

(i) Financial assets

A financial asset not carried at FVTPL is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.

Objective evidence that financial assets are impaired can include default or delinquency in interest or principal payments by an issuer or a debtor, for economic reasons relating to the borrower’s financial difficulty, granting to the borrower a concession that the Company would not otherwise consider, or the disappearance of an active market for that financial asset. In addition, for an investment in an equity security, objective evidence of impairment includes significant financial difficulty of the issuer and a significant or prolonged decline in its fair value below its cost.

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

3.	Summary of Significant Accounting Policies, Continued

(i)

Impairment, Continued

(i) Financial assets, Continued

The Company’s management considers evidence of impairment for loans and receivables at both a specific asset and collective level. All individually significant loans and receivables are assessed for specific impairment. All individually significant receivables found not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified. Loans and receivables that are not individually significant are collectively assessed for impairment by grouping together receivables with similar risk characteristics.

In assessing collective impairment the Company uses historical trends of the probability of default, timing of recoveries and the amount of loss incurred, adjusted for management’s judgment as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical trends.

If there is objective evidence that an impairment loss has been incurred on financial assets carried at amortized cost, the amount of the impairment loss is measured as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Impairment losses are recognized in profit or loss and reflected in an allowance account against loans and receivables.

The amount of the impairment loss on financial assets including equity securities carried at cost is measured as the difference between the carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed.

When a decline in the fair value of an available-for-sale financial asset has been recognized in other comprehensive income, the amount of the cumulative loss that is reclassified from equity to profit or loss is the difference between the acquisition cost and current fair value, less any impairment loss on that financial asset previously recognized in profit or loss.

In a subsequent period, for the financial assets recorded at fair value, if the fair value increases and the increase can be objectively related to an event occurring after the impairment loss was recognized, the previously recognized impairment loss is reversed. The amount of the reversal in financial assets carried at amortized cost and a debt instrument classified as available for sale is recognized in profit or loss. However, impairment loss recognized for an investment in an equity instrument classified as available-for-sale is reversed through other comprehensive income.

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

3.	Summary of Significant Accounting Policies, Continued

(i)

Impairment, Continued

(ii) Non-financial assets

The carrying amounts of the Company’s non-financial assets, other than assets arising from employee benefits, inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For goodwill, and intangible assets that have indefinite useful lives or that are not yet available for use, irrespective of whether there is any indication of impairment, the recoverable amount is estimated each year at the same time.

For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”, or “CGU”). The recoverable amount of an asset or cash-generating unit is determined as the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Fair value less costs to sell is based on the best information available to reflect the amount that the Company could obtain from the disposal of the asset in an arm’s length transaction between knowledgeable, willing parties, after deducting the costs of disposal.

An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognized in profit or loss. Goodwill acquired in a business combination is allocated to CGUs that are expected to benefit from the synergies of the combination. Impairment losses recognized in respect of a CGU are allocated first to reduce the carrying amount of any goodwill allocated to the unit, and then to reduce the carrying amounts of the other assets in the unit on a pro rata basis.

In respect of other assets, impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of accumulated depreciation or amortization, if no impairment loss had been recognized. An impairment loss in respect of goodwill is not reversed.

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

3.	Summary of Significant Accounting Policies, Continued

(j)

Provisions

A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.

The risks and uncertainties that inevitably surround events and circumstances are taken into account in reaching the best estimate of a provision. Where the effect of the time value of money is material, provisions are determined at the present value of the expected future cash flows. The unwinding of the discount is recognized as finance cost.

Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed.

The Company recognizes a liability for warranty obligations based on the estimated costs expected to be incurred under its basic limited warranty. This warranty covers defective products and is normally applicable for eighteen months from the date of purchase. These liabilities are accrued when product revenues are recognized. Factors that affect the Company’s warranty liability include historical and anticipated rates of warranty claims on those repairs and cost per claim to satisfy the Company’s warranty obligation. Warranty costs primarily include raw materials and labor costs. As these factors are impacted by actual experience and future expectations, management periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary. Accrued warranty obligations are included in the current and non-current provisions.

Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources, are recorded when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated.

(k)

Employee Benefits

(i) Short-term employee benefits

Short-term employee benefits that are due to be settled within twelve months after the end of the period in which the employees render the related service are recognized in profit or loss on an undiscounted basis. The expected cost of profit-sharing and bonus plans and others are recognized when the Company has a present legal or constructive obligation to make payments as a result of past events and a reliable estimate of the obligation can be made.

(ii) Other long-term employee benefits

The Company’s net obligation in respect of long-term employee benefits other than pension plans is the amount of future benefit that employees have earned in return for their service in the current and prior periods.

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

3.	Summary of Significant Accounting Policies, Continued

(k)

Employee Benefits, Continued

(iii) Defined contribution plan

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in profit or loss in the periods during which services are rendered by employees.

(iv) Defined benefit plan

A defined benefit plan is a post-employment benefit plan other than defined contribution plans. The Company’s net obligation in respect of its defined benefit plan is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. The fair value of any plan assets is deducted.

The calculation is performed annually by an independent actuary using the projected unit credit method. The discount rate is the yield at the reporting date on high quality corporate bonds that have maturity dates approximating the terms of the Company’s obligations and that are denominated in the same currency in which the benefits are expected to be paid. The Company recognizes all actuarial gains and losses arising from defined benefit plans in retained earnings immediately.

The Company determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Consequently, the net interest on the net defined benefit liability (asset) now comprises: interest cost on the defined benefit obligation, interest income on plan assets, and interest on the effect on the asset ceiling.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in profit or loss. The Company recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

(l)

Revenue

Revenue from the sale of goods in the course of ordinary activities is measured at the fair value of the consideration received or receivable, net of estimated returns, earned trade discounts, volume rebates and other cash incentives paid to customers. Revenue is recognized when persuasive evidence exists that the significant risks and rewards of ownership have been transferred to the buyer, generally on delivery and acceptance at the customers’ premises, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognized as a reduction of revenue when the sales are recognized. Sales taxes collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from revenues in the separate statements of comprehensive income.

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

3.	Summary of Significant Accounting Policies, Continued

(m)

Operating Segments

In accordance with K-IFRS No. 1108, Operating Segments, entity wide disclosures of geographic and product revenue information are provided in the consolidated financial statements.

(n)

Finance Income and Finance Costs

Finance income comprises interest income on funds invested (including available-for-sale financial assets), dividend income, gains on the disposal of available-for-sale financial assets, changes in the fair value of financial assets at FVTPL, and gains on hedging instruments that are recognized in profit or loss. Interest income is recognized as it accrues in profit or loss, using the effective interest method. Dividend income is recognized in profit or loss on the date that the Company’s right to receive payment is established.

Finance costs comprise interest expense on borrowings, unwinding of the discount on provisions, changes in the fair value of financial assets at FVTPL, impairment losses recognized on financial assets, and losses on hedging instruments that are recognized in profit or loss. Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of the cost of that asset.

(o)

Income Tax

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in profit or loss except to the extent that it relates to a business combination, or items recognized directly in equity or in other comprehensive income.

(i) Current tax

Current tax is the expected tax payable or receivable on the taxable profit or loss for the year, using tax rates enacted or substantively enacted at the reporting date and any adjustment to tax payable in respect of previous years. The taxable profit is different from the accounting profit for the period since the taxable profit is calculated excluding the temporary differences, which will be taxable or deductible in determining taxable profit (tax loss) of future periods, and non-taxable or non-deductible items from the accounting profit.

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

3.	Summary of Significant Accounting Policies, Continued

(o)

Income Tax, Continued

(ii) Deferred tax

Deferred tax is recognized, using the liability method, in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and deferred tax assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. However, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill.

The Company recognizes a deferred tax liability for all taxable temporary differences associated with investments in subsidiaries, associates, and interests in joint ventures, except to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future. A deferred tax asset is recognized for all deductible temporary differences to the extent that it is probable that the differences relating to investments in subsidiaries, associates and joint ventures will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilized.

Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

The Company offsets deferred tax assets and deferred tax liabilities if, and only if, the Company has a legally enforceable right to set off current tax assets against current tax liabilities and the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority.

(p)

Earnings Per Share

The Company presents basic and diluted earnings per share (“EPS”) data for its common stocks. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of common stocks outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of common stocks outstanding, adjusted for the effects of all dilutive potential common stocks, which comprise convertible bonds.

(q)

New Standards and Interpretations Not Yet Adopted

Amendment to K-IFRS No. 1027, Separate Financial Statements

Amendment to K-IFRS No. 1027, Separate Financial Statements, introduced equity accounting as a third option in the entity’s separate financial statements, in addition to the existing cost and fair value options. This amendment will be effective for annual periods beginning on or after January 1, 2016, and has not been adopted early in preparing the separate financial statements.

Management believes that the adoption of the amendment is expected to have no impact on the separate financial statements.

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

4.	Determination of Fair Value

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

(a)

Current Assets and Liabilities

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

(b)

Trade Receivables and Other Receivables

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

(c)

Investments in Equity and Debt Securities

The fair value of marketable available-for-sale financial assets is determined by reference to their quoted closing bid price at the reporting date. The fair value of non-marketable securities is determined using valuation methods.

(d)

Non-derivative Financial Liabilities

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

5.	Risk Management

(a)

Financial Risk Management

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

(i) Credit risk

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

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

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

5.	Risk Management, Continued

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

The Company does not establish allowances for receivables under insurance or receivables from customers with a high credit rating. For the rest of the receivables, the Company establishes an allowance for impairment of trade and other receivables that have been individually or collectively evaluated for impairment and estimated on the basis of historical loss experience for assets.

(ii) Liquidity risk

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

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

(iii) Market risk

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

i) Currency risk

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

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

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

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

5.	Risk Management, Continued

ii) Interest rate risk

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

(b)

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. Equity, defined by K-IFRS, is identical to the definition of capital, managed by management.


(In millions of won)
	December 31, 2014			December 31, 2013
Total liabilities	￦	10,387,762			10,882,168
Total equity		10,624,075			9,762,425
Cash and deposits in banks (*1)		1,626,167			1,554,235
Borrowings (including bonds)		3,448,402			3,881,689
Total liabilities to equity ratio		98	%		111	%
Net borrowings to equity ratio (*2)		17	%		24	%

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

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

6.	Cash and Cash Equivalents and Deposits in Banks

Cash and cash equivalents and deposits in banks at the reporting date are as follows:


(In millions of won)
	December 31, 2014		December 31, 2013
Current assets
Cash and cash equivalents
Demand deposits	￦	100,558		253,059
Deposits in banks
Time deposits	￦	1,452,804		1,231,176
Restricted cash (*)		72,805		70,000

	￦	1,525,609		1,301,176

Non-current assets
Deposits in banks
Restricted cash (*)	￦	8,427		13

	￦	1,634,594		1,554,248

(*)	Restricted cash includes mutual growth fund to aid LG Group’s second and third-tier suppliers, and others.

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

7.	Receivables and Other Current Assets

(a)

Trade accounts and notes receivable at the reporting date are as follows:


(In millions of won)
	December 31, 2014		December 31, 2013

Trade, net	￦	145,301		175,997
Due from related parties		3,870,603		3,367,196

	￦	4,015,904		3,543,193

(b)

Other accounts receivable at the reporting date are as follows:


(In millions of won)
	December 31, 2014		December 31, 2013
Current assets
Non-trade accounts receivable, net	￦	378,704		49,626
Accrued income		17,947		10,180

	￦	396,651		59,806

Due from related parties included in other accounts receivable, as of December 31, 2014 and 2013 are ￦363,267 million and ￦1,154 million, respectively.

(c)

Other assets at the reporting date are as follows:


(In millions of won)
	December 31, 2014		December 31, 2013
Current assets
Advance payments	￦	9,558		8,503
Prepaid expenses		42,657		44,179
Value added tax refundable		150,907		77,144

	￦	203,122		129,826

Non-current assets
Long-term prepaid expenses	￦	247,588		209,655
Others		2,900		3,500

	￦	250,488		213,155

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

8.	Inventories

Inventories at the reporting date are as follows:


(In millions of won)	December 31, 2014		December 31, 2013
Finished goods	￦	653,610		487,990
Work-in-process		710,813		570,008
Raw materials		381,558		240,439
Supplies		300,694		288,205

	￦	2,046,675		1,586,642

For the years ended December 31, 2014 and 2013, 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)	2014			2013
Inventories recognized as cost of sales	￦	22,360,245			23,103,569
Including: inventory write-downs		299,948			189,312
Including: reversal and usage of inventory write-downs		(189,312	)		(118,903	)

There were no significant reversals of inventory write-downs recognized during 2014 and 2013.

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

9.	Other Financial Assets

(a)

Other financial assets at the reporting date are as follows:


(In millions of won)	December 31, 2014		December 31, 2013
Current assets
Available-for-sale financial assets	￦	2,569		—

Non-current assets
Available-for-sale financial assets	￦	6,713		16,792
Deposits		13,037		15,282
Long-term other accounts receivable		7,859		8,818

	￦	27,609		40,892

(b)

Available-for-sale financial assets at the reporting date are as follows:


(In millions of won)	December 31, 2014		December 31, 2013
Current assets
Debt securities
Government bonds	￦	2,569		—
Non-current assets
Debt securities
Government bonds	￦	668		2,838
Equity securities
Intellectual Discovery, Ltd.	￦	2,673		2,673
Siliconworks Co., Ltd.		—		11,281
Henghao Technology Co., Ltd.		3,372		—

		6,045		13,954

	￦	9,282		16,792

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

10.	Investments

(a)

Investments in subsidiaries consist of the following:


(In millions of won)			December 31, 2014					December 31, 2013
Overseas Subsidiaries	Location	Business	Percentage of ownership			Book value		Percentage of ownership			Book Value
LG Display America, Inc. (*1)	San Jose, U.S.A.	Sell TFT-LCD products		100	%	￦	36,815		100	%	￦	—
LG Display Germany GmbH	Ratingen, Germany	Sell TFT-LCD products		100	%		19,373		100	%		19,373
LG Display Japan Co., Ltd.	Tokyo, Japan	Sell TFT-LCD products		100	%		15,686		100	%		15,686
LG Display Taiwan Co., Ltd.	Taipei, Taiwan	Sell TFT-LCD products		100	%		35,230		100	%		35,230
LG Display Nanjing Co., Ltd. (*2)	Nanjing, China	Manufacture and sell TFT-LCD products		100	%		579,747		100	%		561,635
LG Display Shanghai Co., Ltd.	Shanghai, China	Sell TFT-LCD products		100	%		9,093		100	%		9,093
LG Display Poland Sp. z o.o. (*3)	Wroclaw, Poland	Manufacture and sell TFT-LCD products		100	%		194,992		80	%		157,864
LG Display Guangzhou Co., Ltd. (*4)	Guangzhou, China	Manufacture and sell TFT-LCD products		100	%		293,557		100	%		174,157
LG Display Shenzhen Co., Ltd.	Shenzhen, China	Sell TFT-LCD products		100	%		3,467		100	%		3,467
LG Display Singapore PTE. LTD.	Singapore	Sell TFT-LCD products		100	%		1,250		100	%		1,250
L&T Display Technology (Xiamen) Limited	Xiamen, China	Manufacture LCD module and TV sets		51	%		—		51	%		—
L&T Display Technology (Fujian) Limited	Fujian, China	Manufacture LCD module and LCD monitor sets		51	%		10,123		51	%		10,123
LG Display Yantai Co., Ltd. (*5)	Yantai, China	Manufacture and sell TFT-LCD products		100	%		159,769		100	%		88,488
LUCOM Display Technology (Kunshan) Limited (*6)	Kunshan, China	Manufacture notebook borderless hinge-up		—			—		51	%		8,594
LG Display U.S.A., Inc.	McAllen, U.S.A.	Manufacture and sell TFT-LCD products		100	%		12,353		100	%		12,353
LG Display Reynosa S.A.de C.V. (*7)	Reynosa, Mexico	Manufacture TFT-LCD products		—			—		1	%		92

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

10.	Investments, Continued


(In millions of won)			December 31, 2014					December 31, 2013
Overseas Subsidiaries	Location	Business	Percentage of ownership			Book value		Percentage of ownership			Book value

Nanumnuri Co., Ltd.	Gumi, South Korea	Janitorial services		100	%		800		100	%		800
LG Display China Co., Ltd. (*8)	Guangzhou, China	Manufacture and sell TFT-LCD products		56	%		588,467		64	%		367,728
Unified Innovative Technology, LLC (*9)	Wilmington, U.S.A.	Manage intellectual property		100	%		9,489		—			—
Money Market Trust	Seoul, South Korea	Money market trust		100	%		18,100		—			—

						￦	1,988,311				￦	1,465,933

(*1)	In June 2014, the Company invested ￦36,815 million in cash for the capital increase of LG Display America, Inc. (“LGDUS”). There was no change in the Company’s ownership percentage in LGDUS as a result of this additional investment.

(*2)	In December 2014, the Company invested ￦18,112 million in cash for the capital increase of LG Display Nanjing Co., Ltd. (“LGDNJ”). There was no change in the Company’s ownership percentage in LGDNJ as a result of this additional investment.

(*3)	In November 2014, Toshiba Corporation exercised its put option to sell 20% ownership of LG Display Poland Sp. z o.o. (“LGDWR”) in whole at ￦37,128 million.

(*4)	In December 2014, the Company invested ￦119,400 million in cash for the capital increase of LG Display Guangzhou Co., Ltd. (“LGDGZ”). There was no change in the Company’s ownership percentage in LGDGZ as a result of this additional investment.

(*5)	In June 2014, the Company invested ￦71,281 million in cash for the capital increase of LG Display Yantai Co., Ltd. (“LGDYT”). There was no change in the Company’s ownership percentage in LGDYT as a result of this additional investment.

(*6)	In June 2014, the Company disposed of the entire investments in LUCOM Display Technology (Kunshan) Limited at ￦3,383 million and recognized ￦5,211 million for the difference between the disposal amount and the carrying amount as finance cost.

(*7)

In December 2014, the Company disposed of entire investments in LG Display Reynosa S.A. de C.V. (“LGDRS”) at ￦65 million and recognized ￦27 million for the difference between the disposal amount and the carrying amount as finance cost. Meanwhile, LG Display U.S.A. Inc. (“LGDUH”), a subsidiary of the Company, disposed of the entire investments in LGDRS at ￦6,419 million.

(*8)

In May 2014, the Company invested ￦220,740 million in cash for the capital increase of LG Display (China) Co., Ltd. (“LGDCA”). In addition, in January, April and September 2014, LG Display Guangzhou Co., Ltd. (“LGDGZ”), a subsidiary of the Company, invested an aggregate of ￦105,297 million in cash for the capital increase of LGDCA. In 2014, the Company’s ownership percentage in LGDCA decreased from 64% to 56% and LGDGZ’s ownership percentage in LGDCA increased from 6% to 14%.

(*9)	In March, the Company established Unified Innovative Technology, LLC (“UNIT”), a wholly owned subsidiary of the Company, for the management of intellectual property, with an investment of ￦4,283 million. In April 2014, the Company invested ￦5,206 million in cash for the capital increase of UNIT.

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

10.	Investments, Continued

(b)

Investments in joint ventures consist of the following:


(In millions of won)
			December 31, 2014					December 31, 2013
Joint Ventures	Location	Business	Percentage of ownership			Book value		Percentage of ownership			Book value
Suzhou Raken Technology Co., Ltd. (*1)	Suzhou, China	Manufacture and sell LCD modules and LCD TV sets		51	%	￦	120,184		51	%	￦	120,184
Global OLED Technology LLC (*2)	Herndon, U.S.A.	Managing and licensing OLED patents		33	%		28,732		33	%		53,282

						￦	148,916				￦	173,466

(*1)

Despite of its 51% ownership, management concluded that the Company does not have control of Suzhou Raken Technology Co., Ltd. (“Raken”) because the 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.

(*2)	In 2014, the Company recognized an impairment loss of ￦24,550 million for the difference between the carrying amount and the recoverable amount of investments in Global OLED Technology LLC as finance cost.

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

10.	Investments, Continued

(c)

Investments in associates consist of the following:


(In millions of won)
			December 31, 2014					December 31, 2013
Associates	Location	Business	Percentage of ownership			Book Value		Percentage of ownership			Book Value
Paju Electric Glass Co., Ltd.	Paju, South Korea	Manufacture electric glass for FPDs		40	%	￦	45,089		40	%	￦	45,089
TLI Inc.	Seongnam, South Korea	Manufacture and sell semiconductor parts		10	%		6,961		10	%		6,961
AVACO Co., Ltd.	Daegu, South Korea	Manufacture and sell equipment for FPDs		16	%		6,021		16	%		6,021
New Optics Ltd.	Yangju, South Korea	Manufacture back light parts for TFT-LCDs		46	%		14,221		46	%		14,221
LIG ADP Co., Ltd.	Seongnam, South Korea	Develop and manufacture the equipment for FPDs		13	%		6,330		13	%		6,330
WooRee E&L Co., Ltd.	Ansan, South Korea	Manufacture LED back light unit packages		21	%		11,900		21	%		11,900
LB Gemini New Growth Fund No.16 (*1)	Seoul, South Korea	Invest in small and middle sized companies and benefit from M&A opportunities		31	%		14,065		31	%		20,939
Can Yang Investments Limited (*2)	Hong Kong	Develop, manufacture and sell LED parts		9	%		9,467		9	%		17,516
YAS Co., Ltd.	Paju, South Korea	Develop and manufacture deposition equipment for OLEDs		19	%		10,000		19	%		10,000
Eralite Optoelectronics (Jiangsu) Co., Ltd. (*3)	Suzhou, China	Manufacture LED Packages		—			—		20	%		1,830
Narenanotech Corporation	Yongin, South Korea	Manufacture and sell FPD manufacturing equipment		23	%		30,000		23	%		30,000
AVATEC Co., Ltd.	Daegu, South Korea	Process and sell glass for FPDs		16	%		10,600		16	%		10,600
Glonix Co., Ltd.	Gimhae, South Korea	Manufacture and sell LCD		20	%		—		20	%		—

						￦	164,654				￦	181,407

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

10.	Investments, Continued

(*1)

The Company is a member of a limited partnership in the LB Gemini New Growth Fund No.16 (“the Fund”). In January, March, September and December 2014, the Company received ￦1,035 million, ￦921 million, ￦1,596 million and ￦3,646 million respectively, from the Fund as capital distribution and made an additional cash investment of ￦324 million in the fund in March 2014. There was no change in the Company’s ownership percentage in the Fund and the Company is committed to making future investments of up to an aggregate of ￦30,000 million.

(*2)	In 2014, the Company recognized an impairment loss of ￦8,049 million as finance cost for the difference between the carrying amount and the recoverable amount of investments in Can Yang Investments Limited which develop, manufactures and sells LED parts.

(*3)	In March 2014, the Company disposed of the entire investments in Eralite Optoelectronics (Jiangsu) Co., Ltd., which manufactures LED Package, for ￦1,634 million and recognized ￦196 million for the difference between the disposal amount and the carrying amount as finance cost.

For the years ended December 31, 2014 and 2013, the aggregate amount of received dividends from subsidiaries, joint ventures and associates are ￦431,592 million and ￦14,276 million, respectively.

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

11.	Property, Plant and Equipment

Changes in property, plant and equipment for the year ended December 31, 2014 are as follows:


(In millions of won)
	Land			Buildings and structures			Machinery and equipment			Furniture and fixtures			Construction- in-progress (*1)			Others			Total
Acquisition cost as of January 1, 2014	￦	438,375			4,702,736			30,425,132			675,033			2,115,532			195,947			38,552,755
Accumulated depreciation as of January 1, 2014		—			(1,338,458	)		(26,162,867	)		(603,000	)		—			(153,690	)		(28,258,015	)

Book value as of January 1, 2014		438,375			3,364,278			4,262,265			72,033			2,115,532			42,257			10,294,740
Additions		—			—			—			—			1,329,074			—			1,329,074
Depreciation		—			(220,896	)		(2,578,739	)		(40,853	)		—			(14,508	)		(2,854,996	)
Impairment loss		—			—			(8,097	)		—			—			—			(8,097	)
Disposals		(3,778	)		(9,488	)		(43,463	)		(40	)		—			(12	)		(56,781	)
Others (*2)		4			5,570			2,348,486			37,778			(2,405,593	)		13,755			—
Subsidy received		—			(192	)		(3,447	)		—			—			—			(3,639	)

Book value as of December 31, 2014	￦	434,601			3,139,272			3,977,005			68,918			1,039,013			41,492			8,700,301

Acquisition cost as of December 31, 2014	￦	434,601			4,696,510			32,538,649			706,364			1,039,013			167,330			39,582,467

Accumulated depreciation as of December 31, 2014	￦	—			(1,557,238	)		(28,553,547	)		(637,446	)		—			(125,838	)		(30,874,069	)

Accumulated impairment loss as of December 31, 2014	￦	—			—			(8,097	)		—			—			—			(8,097	)

(*1)	As of December 31, 2014, construction-in-progress relates to construction of manufacturing facilities.

(*2)	Others are mainly amounts transferred from construction-in-progress.

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

11.	Property, Plant and Equipment, Continued

Changes in property, plant and equipment for the year ended December 31, 2013 are as follows:


(In millions of won)
	Land			Buildings and structures			Machinery and equipment			Furniture and fixtures			Construction- in-progress (*1)			Others			Total
Acquisition cost as of January 1, 2013	￦	440,992			4,666,537			30,223,060			642,747			896,032			172,540			37,041,908
Accumulated depreciation as of January 1, 2013		—			(1,112,321	)		(23,250,273	)		(549,029	)		—			(125,850	)		(25,037,473	)

Book value as of January 1, 2013		440,992			3,554,216			6,972,787			93,718			896,032			46,690			12,004,435
Additions		—			—			—			—			1,688,328			—			1,688,328
Depreciation		—			(225,608	)		(3,089,654	)		(51,550	)		—			(14,154	)		(3,380,966	)
Disposals		(3,579	)		(8,521	)		(3,151	)		(62	)		—			—			(15,313	)
Others (*2)		962			45,935			382,283			29,927			(468,828	)		9,721			—
Subsidy received		—			(1,744	)		—			—			—			—			(1,744	)

Book value as of December 31, 2013	￦	438,375			3,364,278			4,262,265			72,033			2,115,532			42,257			10,294,740

Acquisition cost as of December 31, 2013	￦	438,375			4,702,736			30,425,132			675,033			2,115,532			195,947			38,552,755

Accumulated depreciation as of December 31, 2013	￦	—			(1,338,458	)		(26,162,867	)		(603,000	)		—			(153,690	)		(28,258,015	)

(*1)	As of December 31, 2013, construction-in-progress relates to construction of manufacturing facilities.

(*2)	Others are mainly amounts transferred from construction-in-progress.

The capitalized borrowing costs and capitalization rate for the years ended December 31, 2014 and 2013 are as follows:


(In millions of won)
	2014			2013
Capitalized borrowing costs	￦	27,288			20,470
Capitalization rate		4.23	%		4.56	%

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

12.	Intangible Assets

Changes in intangible assets for the year ended December 31, 2014 are as follows:


(In millions of won)
	Intellectual property rights			Software			Memberships			Development costs			Construction- in-progress (software)			Customer relationships			Technology			Goodwill		Others *(2)**			Total
Acquisition cost as of January 1, 2014	￦	561,400			476,033			50,110			617,355			9,365			24,011			11,074			14,593		13,076			1,777,017
Accumulated amortization as of January 1, 2014		(467,707	)		(355,101	)		—			(454,112	)		—			(12,591	)		(4,065	)		—		(12,571	)		(1,306,147	)
Accumulated impairment loss as of January 1, 2014		—			—			(9,250	)		—			—			—			—			—		—			(9,250	)

Book value as of January 1, 2014		93,693			120,932			40,860			163,243			9,365			11,420			7,009			14,593		505			461,620
Additions - internally developed		—			—			—			267,081			—			—			—			—		—			267,081
Additions - external purchases		17,867			—			—			—			65,443			—			—			—		—			83,310
Amortization (*1)		(17,472	)		(64,187	)		—			(176,700	)		—			(3,428	)		(1,106	)		—		(433	)		(263,326	)
Disposals		(115	)		—			—			—			—			—			—			—		—			(115	)
Impairment loss		—			—			(492	)		—			—			—			—			—		—			(492	)
Transfer from construction-in-progress		—			69,633			—			—			(69,633	)		—			—			—		—			—

Book value as of December 31, 2014	￦	93,973			126,378			40,368			253,624			5,175			7,992			5,903			14,593		72			548,078

Acquisition cost as of December 31, 2014	￦	579,033			545,666			50,110			884,436			5,175			24,011			11,074			14,593		13,076			2,127,174

Accumulated amortization as of December 31, 2014	￦	(485,060	)		(419,288	)		—			(630,812	)		—			(16,019	)		(5,171	)		—		(13,004	)		(1,569,354	)

Accumulated impairment loss as of December 31, 2014	￦	—			—			(9,742	)		—			—			—			—			—		—			(9,742	)

(*1)	The Company has classified the amortization as manufacturing overhead costs, selling expenses, administrative expenses, and research and development expenses.

(*2)	Others mainly consist of rights to use of electricity and gas supply facilities.

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

12.	Intangible Assets, Continued

Changes in intangible assets for the year ended December 31, 2013 are as follows:


(In millions of won)
	Intellectual property rights			Software			Memberships			Development costs			Construction- in-progress (software)			Customer relationships			Technology			Goodwill		Others *(2)**			Total
Acquisition cost as of January 1, 2013	￦	542,895			423,125			50,233			495,120			2,204			24,011			11,074			14,593		13,076			1,576,331
Accumulated amortization as of January 1, 2013		(456,699	)		(273,181	)		—			(325,944	)		—			(9,164	)		(2,958	)		—		(11,794	)		(1,079,740	)
Accumulated Impairment loss as of January 1, 2013		—			—			(7,928	)		—			—			—			—			—		—			(7,928	)

Book value as of January 1, 2013		86,196			149,944			42,305			169,176			2,204			14,847			8,116			14,593		1,282			488,663
Additions - internally developed		—			—			—			123,271			—			—			—			—		—			123,271
Additions - external purchases		22,996			—			1,100			—			59,813			—			—			—		—			83,909
Amortization (*1)		(15,214	)		(81,664	)		—			(128,350	)		—			(3,427	)		(1,107	)		—		(777	)		(230,539	)
Impairment loss		(285	)		—			(1,215	)		(854	)		—			—			—			—		—			(2,354	)
Disposals		—			—			(1,330	)		—			—			—			—			—		—			(1,330	)
Transfer from construction-in-progress		—			52,652			—			—			(52,652	)		—			—			—		—			—

Book value as of December 31, 2013	￦	93,693			120,932			40,860			163,243			9,365			11,420			7,009			14,593		505			461,620

Acquisition cost as of December 31, 2013	￦	561,400			476,033			50,110			617,355			9,365			24,011			11,074			14,593		13,076			1,777,017

Accumulated amortization as of December 31, 2013	￦	(467,707	)		(355,101	)		—			(454,112	)		—			(12,591	)		(4,065	)		—		(12,571	)		(1,306,147	)

Accumulated impairment loss as of December 31, 2013	￦	—			—			(9,250	)		—			—			—			—			—		—			(9,250	)

(*1)	The Company has classified the amortization as manufacturing overhead costs, selling expenses, administrative expenses, and research and development expenses.

(*2)	Others mainly consist of rights to use of electricity and gas supply facilities.

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

13.	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 at the reporting date is as follows:


(In millions of won)
	December 31, 2014		December 31, 2013
Cash and cash equivalents	￦	100,558		253,059
Deposits in banks		1,534,036		1,301,189
Trade accounts and notes receivable, net		4,015,904		3,543,193
Other accounts receivable, net		396,651		59,806
Available-for-sale financial assets		3,237		2,838
Deposits		13,037		15,282
Other non-current financial assets		7,859		8,818

	￦	6,071,282		5,184,185

In addition to the financial assets above, as of December 31, 2014 and 2013, the Company provides payment guarantees of ￦148,392 million and ￦7,387 million, respectively, for its subsidiaries.

The maximum exposure to credit risk for trade accounts and notes receivable at the reporting date by geographic region is as follows:


(In millions of won)
	December 31, 2014		December 31, 2013
Domestic	￦	406,163		264,703
Euro-zone countries		283,257		286,445
Japan		127,354		116,994
United States		1,816,906		1,236,652
China		784,896		987,746
Taiwan		368,503		422,461
Others		228,825		228,192

	￦	4,015,904		3,543,193

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

13.	Financial Instruments, Continued

(ii)

Impairment loss

The aging of trade accounts and notes receivable at the reporting date was as follows:


(In millions of won)	December 31, 2014					December 31, 2013
	Book value		Impairment loss			Book value		Impairment loss
Not past due	￦	4,006,346		(114	)		3,551,096		(9,890	)
Past due 1-15 days		3,061		(25	)		1,650		(4	)
Past due 16-30 days		1,252		(12	)		112		(1	)
Past due 31-60 days		1,830		(18	)		53		(1	)
Past due more than 60 days		13,540		(9,956	)		180		(2	)

	￦	4,026,029		(10,125	)		3,553,091		(9,898	)

The movement in the allowance for impairment in respect of receivables for the years ended December 31, 2014 and 2013 is as follows:


(In millions of won)
	2014		2013
Balance at the beginning of the year	￦	9,898		243
Bad debt expense		227		9,655

Balance at the end of the year	￦	10,125		9,898

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

13.	Financial Instruments, Continued

(b)

Liquidity Risk

The following are the contractual maturities of financial liabilities, including estimated interest payments, as of December 31, 2014.


(In millions of won)			Contractual cash flows
	Carrying amount		Total		6 months or less		6-12 months		1-2 years		2-5 years		More than 5 years
Non-derivative financial liabilities
Unsecured bank loans	￦	853,719		869,477		265,408		98,661		391,435		113,355		618
Unsecured bond issues		2,594,683		2,799,414		249,662		454,352		1,060,631		1,034,769		—
Trade accounts and notes payable		3,989,505		3,989,505		3,989,505		—		—		—		—
Other accounts payable		1,043,422		1,043,535		1,030,570		12,965		—		—		—
Other non-current liabilities		12,805		13,972		—		—		10,640		3,332		—
Payment guarantee		—		154,237		1,161		1,181		2,348		149,547		—

	￦	8,494,134		8,870,140		5,536,306		567,159		1,465,054		1,301,003		618

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

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

13.	Financial Instruments, Continued

(c)

Currency Risk

(i)

Exposure to currency risk

The Company’s exposure to foreign currency risk based on notional amounts at the reporting date is as follows:


(In millions)	December 31, 2014
	USD			JPY			CNY			PLN			EUR			BRL
Cash and cash equivalents		78			1,150			2			—			—			—
Trade accounts and notes receivable		3,332			7,909			—			—			16			—
Other accounts receivable		25			13			—			—			—			—
Long-term other accounts receivable		6			—			—			—			—			—
Other assets denominated in foreign currencies		—			51			—			—			—			—
Trade accounts and notes payable		(2,463	)		(21,474	)		—			—			—			—
Other accounts payable		(106	)		(3,484	)		(260	)		(19	)		(1	)		(34	)
Debt		(770	)		—			—			—			—			—

Net exposure		102			(15,835	)		(258	)		(19	)		15			(34	)


(In millions)	December 31, 2013
	USD			JPY			PLN		EUR
Cash and cash equivalents		199			1,927			1		4
Deposits in banks		—			—			—		20
Trade accounts and notes receivable		3,091			6,390			—		19
Other accounts receivable		7			—			—		—
Long-term other accounts receivable		8			—			—		—
Other assets denominated in foreign currencies		—			51			—		—
Trade accounts and notes payable		(2,703	)		(24,532	)		—		—
Other accounts payable		(153	)		(3,210	)		—		(6	)
Debt		(700	)		—			—		—

Net exposure		(251	)		(19,374	)		1		37

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

13.	Financial Instruments, Continued

Significant exchange rates applied during the reporting periods are as follows:


(In won)	Average rate				Reporting date spot rate
	2014		2013		December 31, 2014		December 31, 2013
USD	￦	1,052.70		1,094.79	￦	1,099.20		1,055.30
JPY		9.96		11.23		9.20		10.05
CNY		170.83		178.06		176.81		174.09
PLN		334.20		346.39		312.49		351.11
EUR		1,398.37		1,453.39		1,336.52		1,456.26
BRL		448.16		509.26		413.62		446.75

(ii)

Sensitivity analysis

A weaker won, as indicated below, against the following currencies which comprise the Company’s assets or liabilities denominated in a foreign currency as of December 31, 2014 and 2013, would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Company considers to be reasonably possible as of the end of the reporting period. The analysis assumes that all other variables, in particular interest rates, would remain constant. The changes in equity and profit or loss would have been as follows:


(In millions of won)	December 31, 2014						December 31, 2013
	Equity			Profit or loss			Equity			Profit or loss
USD (5 percent weakening)	￦	4,249			4,249		￦	(10,039	)		(10,039	)
JPY (5 percent weakening)		(5,522	)		(5,522	)		(7,377	)		(7,377	)
CNY (5 percent weakening)		(1,729	)		(1,729	)		—			—
PLN (5 percent weakening)		(225	)		(225	)		13			13
EUR (5 percent weakening)		760			760			2,042			2,042
BRL (5 percent weakening)		(533	)		(533	)		—			—

A stronger won against the above currencies as of December 31, 2014 and 2013 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.

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

13.	Financial Instruments, Continued

(d)

Interest Rate Risk

(i)

Profile

The interest rate profile of the Company’s interest-bearing financial instruments at the reporting date is as follows:


(In millions of won)
	December 31, 2014			December 31, 2013
Fixed rate instruments
Financial assets	￦	1,637,818			1,557,073
Financial liabilities		(2,818,383	)		(3,135,500	)

	￦	(1,180,565	)		(1,578,427	)

Variable rate instruments
Financial liabilities	￦	(630,019	)		(746,189	)

(ii)

Equity and profit or loss sensitivity analysis for variable rate instruments

For the years ended December 31, 2014 and 2013, a change of 100 basis points in interest rates at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown below for the respective following years. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.


(In millions of won)
	Equity					Profit or loss
	1% increase			1% decrease		1% increase			1% decrease
December 31, 2014
Variable rate instruments	￦	(4,776	)		4,776		(4,776	)		4,776

December 31, 2013
Variable rate instruments	￦	(5,656	)		5,656		(5,656	)		5,656

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

13.	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 separate statement of financial position, are as follows:


(In millions of won)	December 31, 2014					December 31, 2013
	Carrying amounts		Fair values			Carrying amounts		Fair values
Assets carried at fair value
Available-for-sale financial assets	￦	3,237		3,237			14,119		14,119
Assets carried at amortized cost
Cash and cash equivalents	￦	100,558			(*)		253,059			(*)
Deposits in banks		1,534,036			(*)		1,301,189			(*)
Trade accounts and notes receivable		4,015,904			(*)		3,543,193			(*)
Other accounts receivable		396,651			(*)		59,806			(*)
Deposits		13,037			(*)		15,282			(*)
Other non-current financial assets		7,859			(*)		8,818			(*)
Liabilities carried at amortized cost
Secured bank loans	￦	—		—			26,383		26,383
Unsecured bank loans		853,719		853,753			1,220,891		1,245,426
Unsecured bond issues		2,594,683		2,667,092			2,634,415		2,689,697
Trade accounts and notes payable		3,989,505			(*)		3,482,120			(*)
Other accounts payable		1,043,422		1,043,196			1,011,012		1,011,067
Other non-current liabilities		12,805		13,257			9,850		9,930

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

The basis for determining fair values is disclosed in note 4.

(ii)

Financial Instruments measured at cost

Available-for-sale financial assets measured at cost as of December 31, 2014 and 2013 are as follows:


(In millions of won)
	December 31, 2014		December 31, 2013
Intellectual Discovery Co., Ltd.	￦	2,673		2,673
Henghao Technology Co., Ltd.		3,372		—

	￦	6,045		2,673

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

13.	Financial Instruments, Continued

(e)

Fair Values, Continued

(iii)

Fair values of financial assets and liabilities

Fair value hierarchy

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


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

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

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

ii)

Financial instruments measured at fair value

Fair value hierarchy classifications of the financial instruments that are measured at fair value as of December 31, 2014 and December 31, 2013 are as follows:

(In millions of won)

Level 1

Level 2

Level 3

Total

December 31, 2014

Assets

Available-for-sale financial assets

￦

3,237

—

3,237

(In millions of won)

Level 1

Level 2

Level 3

Total

December 31, 2013

Assets

Available-for-sale financial assets

￦

14,119

—

14,119

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

13.	Financial Instruments, Continued

(e)

Fair Values, 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 December 31, 2014 and December 31, 2013 are as follows:

(In millions of won)

December 31, 2014

Valuation
technique

Input

Classification

Level 1

Level 2

Level 3

Liabilities

Unsecured bank loans

￦

—

853,753

Discounted
cash flow

Discount
rate

Unsecured bond issues

—

2,667,092

Discounted
cash flow

Discount
rate

Other accounts payable

—

1,043,196

Discounted
cash flow

Discount
rate

Other non-current liabilities

—

13,257

Discounted
cash flow

Discount
rate

(In millions of won)

December 31, 2013

Valuation
technique

Input

Classification

Level 1

Level 2

Level 3

Liabilities

Secured bank loan

￦

—

26,383

Discounted
cash flow

Discount
rate

Unsecured bank loans

—

1,245,426

Discounted
cash flow

Discount
rate

Unsecured bond issues

—

2,689,697

Discounted
cash flow

Discount
rate

Other accounts payable

—

1,011,067

Discounted
cash flow

Discount
rate

Other non-current liabilities

—

9,930

Discounted
cash flow

Discount
rate

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


	December 31, 2014	December 31, 2013
Debentures, loans and others	2.23~2.60%	2.81~3.84%

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

14.	Financial Liabilities

(a)

Financial liabilities at the reporting date are as follows:


(In millions of won)	December 31, 2014		December 31, 2013
Current
Short-term borrowings	￦	219,839		—
Current portion of long-term debt		744,283		886,852

	￦	964,122		886,852


Non-current
Won denominated borrowings	￦	4,452		503,968
Foreign currency denominated borrowings		494,640		495,991
Bonds		1,985,188		1,994,878

	￦	2,484,280		2,994,837

(b)

Short-term borrowings as of December 31, 2014 and 2013 are as follows:


(In millions of won and USD)
Lender	Annual interest rate as of December 31, 2014 (%)	December 31, 2014		December 31, 2013
Korea Development Bank and others(*)	0.49~0.52	￦	219,839		—

Foreign currency equivalent		USD	200		—

		￦	219,839		—

(*)

The Company accounts for proceeds from sale of accounts receivables, which arose from export sales to the Company’s subsidiaries, to financial institutions as short term borrowings as the sale did not meet derecognition criteria. The Company recognized ￦3,993 million as interest expense in relation to the above short-term borrowings in 2014.

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

14.	Financial Liabilities, Continued

(c)

Won denominated long-term debt at the reporting date is as follows:


(In millions of won)
Lender	Annual interest rate as of December 31, 2014 (%)	December 31, 2014			December 31, 2013
Woori Bank and others	3-year Korean Treasury Bond rate less 1.25, 2.75	￦	7,336			11,932
Korea Development Bank and others	—		—			496,632
Less current portion of long-term debt			(2,884	)		(4,596	)

		￦	4,452			503,968

(d)

Foreign currency denominated long-term debt at the reporting date is as follows:


(In millions of won)
Lender	Annual interest rate as of *December 31, 2014 (%) ()**	December 31, 2014			December 31, 2013
Mizuho Bank, Ltd. and others	3ML+0.90~1.90	￦	626,544			738,710

Foreign currency equivalent		USD	570		USD	700

Less current portion of long-term debt			(131,904	)		(242,719	)

		￦	494,640			495,991

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

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

14.	Financial Liabilities, Continued

(e)

Details of bonds issued and outstanding at the reporting date are as follows:


(In millions of won)
	Maturity	Annual interest rate as of December 31, 2014 (%)	December 31, 2014			December 31, 2013
*Won denominated bonds()**
Publicly issued bonds	June 2015~ October 2019	2.40~5.89	￦	2,600,000			2,640,000
Less discount on bonds				(5,317	)		(5,585	)
Less current portion				(609,495	)		(639,537	)

			￦	1,985,188			1,994,878

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

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

15.	The Nature of Expenses and Others

The classification of expenses by nature for the years ended December 31, 2014 and 2013 are as follows:


(In millions of won)
	2014			2013
Changes in inventories	￦	(460,033	)		361,303
Purchases of raw materials, merchandise and others		11,461,984			11,578,556
Depreciation and amortization		3,118,322			3,611,505
Outsourcing fees		4,299,529			3,852,996
Labor costs		2,486,219			2,191,521
Supplies and others		883,981			917,010
Utility		718,868			694,407
Fees and commissions		393,626			365,780
Shipping costs		140,736			222,770
Advertising		106,417			144,777
Warranty expenses		170,524			99,216
Travel		65,423			50,921
Taxes and dues		47,347			43,646
Others		1,097,546			1,243,107

(*)	￦	24,530,489			25,377,515

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

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

16.	Selling and Administrative Expenses

Details of selling and administrative expenses for the years ended December 31, 2014 and 2013 are as follows:


(In millions of won)
	2014		2013
Salaries	￦	171,615		151,023
Expenses related to defined benefit plans		26,864		21,454
Other employee benefits		35,620		29,988
Shipping costs		100,444		170,450
Fees and commissions		122,057		130,863
Depreciation		73,571		80,719
Taxes and dues		2,906		2,256
Advertising		106,417		144,777
Warranty expenses		170,524		99,216
Rent		9,387		9,346
Insurance		5,297		5,168
Travel		16,783		15,265
Training		11,004		10,516
Others		29,984		38,826

	￦	882,473		909,867

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

17.	Employee Benefits

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

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

(a)

Recognized net defined benefit liabilities at the reporting date are as follows:


(In millions of won)
	December 31, 2014			December 31, 2013
Present value of partially funded defined benefit obligations	￦	1,114,219			807,347
Fair value of plan assets		(790,509	)		(488,651	)

	￦	323,710			318,696

(b)

Changes in the present value of the defined benefit obligations for the years ended December 31, 2014 and 2013 are as follows:


(In millions of won)
	2014			2013
Opening defined benefit obligations	￦	807,347			672,032
Current service cost		158,978			149,392
Past service cost		21,990			—
Interest cost		34,596			26,019
Remeasurements (before tax)		144,100			(1,373	)
Benefit payments		(54,376	)		(40,730	)
Transfers from related parties		1,584			2,007

Closing defined benefit obligations	￦	1,114,219			807,347

Weighted average remaining maturity of defined benefit obligations as of December 31, 2014, and 2013 are 13.7 years and 13.4 years, respectively.

(c)

Changes in fair value of plan assets for the years ended December 31, 2014 and 2013 are as follows:


(In millions of won)
	2014			2013
Opening fair value of plan assets	￦	488,651			491,730
Expected return on plan assets		19,069			16,545
Remeasurements (before tax)		(3,722	)		6
Contributions by employer directly to plan assets		330,000			15,000
Benefit payments		(43,489	)		(34,630	)

Closing fair value of plan assets	￦	790,509			488,651

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

17.	Employee Benefits, Continued

(d)

Plan assets at the reporting date are as follows:


(In millions of won)
	December 31, 2014		December 31, 2013
Guaranteed deposits in banks	￦	790,509		488,651

As of December 31, 2014, the Company maintains the plan assets with Mirae Asset Securities Co., Ltd., Shinhan Bank, etc.

The Company’s estimated contribution to the plan assets for the year ending December 31, 2015 is ￦107,291 million under the assumption that the Company continues to maintain the plan assets at 70% of the amount payable and all the employees of the Company would leave the Company on December 31, 2015.

(e)

Expenses recognized in profit or loss for the years ended December 31, 2014 and 2013 are as follows:


(In millions of won)
	2014		2013
Current service cost	￦	158,978		149,392
Past service cost		21,990		—
Net interest cost		15,527		9,474

	￦	196,495		158,866

Expenses are recognized in the following line items in the separate statements of comprehensive income.


(In millions of won)
	2014		2013
Cost of sales	￦	157,323		126,712
Selling expenses		11,612		10,194
Administrative expenses		15,252		11,260
Research and development expenses		12,308		10,700

	￦	196,495		158,866

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

17.	Employee Benefits, Continued

(f)

Remeasurements of net defined benefit liabilities (assets) included in other comprehensive income for the years ended December 31, 2014 and 2013 are as follows:


(In millions of won)
	2014			2013
Included in other comprehensive income
Balance at January 1	￦	(85,261	)		(86,306	)
Remeasurements
Actuarial profit or loss arising from:
Experience adjustment		(24,399	)		(33,447	)
Demographic assumptions		7,016			(3,791	)
Financial assumptions		(126,717	)		38,611
Return on plan assets		(3,722	)		6

		(147,822	)		1,379

Income tax		35,773			(334	)

Balance at December 31	￦	(197,310	)		(85,261	)

(g)

Principal actuarial assumptions at the reporting date (expressed as weighted averages) are as follows:


	December 31, 2014			December 31, 2013
Expected rate of salary increase		5.1	%		5.1	%
Discount rate for defined benefit obligations		3.5	%		4.4	%

Assumptions regarding future mortality are based on published statistics and mortality tables. The current mortality underlying the values of the liabilities in the defined benefit plans are as follows:


		December 31, 2014			December 31, 2013
Twenties	Males		0.01	%		0.01	%
Twenties	Females		0.00	%		0.00	%
Thirties	Males		0.01	%		0.01	%
Thirties	Females		0.01	%		0.01	%
Forties	Males		0.03	%		0.03	%
Forties	Females		0.01	%		0.01	%
Fifties	Males		0.06	%		0.06	%
Fifties	Females		0.03	%		0.03	%

(h)

Reasonably possible changes to respective relevant actuarial assumptions would have affected the defined benefit obligations by the amounts as of December 31, 2014 are as follows:


	Defined benefit obligation
	1% increase			1% decrease
Discount rate for defined benefit obligations	￦	(132,479	)		162,165
Expected rate of salary increase		157,968			(131,892	)

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

18.	Provisions and Other Liabilities

(a)

Changes in provisions for the year ended December 31, 2014 are as follows:


(In millions of won)
	Litigations and claims (*1)			Warranties (*2)			Others			Total
Balance of January 1, 2014	￦	156,557			46,342			1,843			204,742
Additions		46,681			170,524			—			217,205
Usage and reclassification		(54,935	)		(165,357	)		(212	)		(220,504	)

Balance at December 31, 2014	￦	148,303			51,509			1,631			201,443

Current	￦	148,303			43,495			1,631			193,429
Non-current	￦	—			8,014			—			8,014

(*1)	The Company expects that the provision for litigation and claims will be utilized in the next year.

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

(b)

Other liabilities at the reporting date are as follows:


(In millions of won)
	December 31, 2014		December 31, 2013
Current liabilities
Withholdings	￦	18,230		26,111
Unearned revenues		12,395		4,732

	￦	30,625		30,843

Non-current liabilities
Long-term accrued expenses	￦	—		335,034
Long-term other accounts payable		12,805		39,530
Long-term unearned revenues		8,623		7,494

	￦	21,428		382,058

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

19.	Commitments

Factoring and securitization of accounts receivable

The Company has agreements with Korea Development Bank and several other banks for accounts receivable sales negotiating facilities of up to an aggregate of USD 2,058 million (￦2,262,681 million) in connection with the Company’s export sales transactions with its subsidiaries. As of December 31, 2014, accounts and notes receivable amounting to USD 200 million (￦219,839 million) were sold but are not past due. In connection with all of the contracts in this paragraph, the Company has sold its accounts receivable with recourse.

The Company has a credit facility agreement with Shinhan Bank pursuant to which the Company could sell its accounts receivables up to an aggregate of ￦100,000 million in connection with its domestic sales transactions and, as of December 31, 2014, no accounts and notes receivable sold to Shinhan Bank were outstanding in connection with the agreement. In connection with the contract above, the Company has sold its accounts receivable without recourse.

Letters of credit

As of December 31, 2014, the Company has agreements with Korea Exchange Bank in relation to the opening of letters of credit up to USD 15 million (￦16,488 million), USD 15 million (￦16,488 million) with China Construction Bank, USD 80 million (￦87,936 million) with Bank of China, USD 60 million (￦65,952 million) with Sumitomo Mitsui Banking Corporation and USD 30 million (￦32,976 million) with Hana Bank.

Payment guarantees

The Company obtained payment guarantees from Korea Exchange Bank for borrowings amounting to USD 200 million (￦219,840 million) and USD 8.5 million (￦9,343 million) from Royal Bank of Scotland for value added tax payments in Poland. In addition, the Company provides a payment guarantee in connection with the term loan credit facilities of LG Display Yantai, Co., Ltd. amounting to USD 135 million (￦148,392 million) for principals and related interests.

License agreements

As of December 31, 2014, in relation to its TFT-LCD business, the Company has technical license agreements with Hitachi Display, Ltd. and others and has a trademark license agreement with LG Corp.

Long-term supply agreement

In connection with long-term supply agreements, as of December 31, 2014, the Company’s balance of advances received from a customer amount to USD 405 million (￦445,183 million) in aggregate. The advances received will be offset against outstanding accounts receivable balances after a given period of time, as well as those arising from the supply of products thereafter. The Company received a payment guarantee amounting to USD 140 million (￦153,888 million) from the Industrial Bank of Korea relating to advances received.

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

20.	Legal Proceedings

Delaware Display Group LLC and Innovative Display Technologies LLC

In December 2013, Delaware Display Group LLC and Innovative Display Technologies LLC filed a patent infringement case against the Company and LG Display America, Inc. in the United States District Court for the District of Delaware. The Company does not have a present obligation for this matter and has not recognized any provision at December 31, 2014. It is not possible to reasonably estimate an amount of potential loss, if any, because the plaintiffs have not provided any information regarding damages.

Surpass Tech Innovation LLC

In March 2014, Surpass Tech Innovation LLC filed a complaint in the United States District Court for the District of Delaware against the Company and LG Display America, Inc. for alleged patent infringement. In November 2014, the case has been stayed by the United States District Court for the District of Delaware pending Inter Partes Review. The Company does not have a present obligation for this matter and has not recognized any provision at December 31, 2014. It is not possible to reasonably estimate an amount of potential loss, if any, because the plaintiffs have not provided any information regarding damages.

Anti-trust litigations

Certain individual plaintiffs filed complaints in various state or federal courts in the United States alleging violation of the respective antitrust laws and related laws by various LCD panel manufacturers. To date the Company is currently defending against Direct Action Plaintiffs including Motorola Mobility, Inc., Electrograph Technologies Corp. and its affiliates, TracFone Wireless Inc., Costco Wholesale Corp., Office Depot, Inc., Interbond Corp. of America (BrandsMart), P.C. Richard & Son Long Island Corp., MARTA Cooperative of America, Inc., ABC Appliance (ABC Warehouse), Schultze Agency Services, LLC (Tweeter), AASI Creditor Liquidating Trust for All American Semiconductor Inc., Tech Data Corp. and its affiliates, CompuCom Systems, Inc., NECO Alliance LLC and the attorney general of Illinois. The timing and amounts of outflows are uncertain and the outcomes depend upon the various court proceedings.

In Canada, class action complaints alleging violations of Canada competition laws were filed in 2007 against the Company and other TFT-LCD manufacturers in Ontario, British Columbia and Quebec. The Ontario Superior Court of Justice certified the class action complaints filed by the direct and indirect purchasers in May 2011. The Company is pursuing an appeal of the class certification decision. The actions in Quebec and British Columbia are in abeyance. The timing and amount of outflows are uncertain and the outcome depends upon the court proceedings.

While the Company continues its vigorous defense of the various pending proceedings described above, management’s assessment of the facts and circumstances could change based upon new information, intervening events and the final outcome of the cases. Consequently, the actual results could be materially different from management’s current estimates.

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

21.	Capital and Reserves

(a)

Share capital

The Company is authorized to issue 500,000,000 shares of capital stock (par value ￦5,000), and as of December 31, 2014 and December 31, 2013, the number of issued common shares is 357,815,700. There have been no changes in the capital stock from January 1, 2013 to December 31, 2014.

(b)

Reserves

Reserve is comprised of the fair value reserve which is the cumulative net change in the fair value of available-for-sale financial assets until the investments are derecognized or impaired.

22.	Retained Earnings

(a)

Retained earnings at the reporting date are as follows:


(In millions of won)
	December 31, 2014			December 31, 2013
Legal reserve	￦	140,594			140,594
Other reserve		68,251			68,251
Defined benefit plan actuarial loss		(197,310	)		(85,261	)
Retained earnings		6,572,072			5,598,954

	￦	6,583,607			5,722,538

(b)

For the years ended December 31, 2014 and 2013, details of the Company’s appropriations of retained earnings are as follows:


(In millions of won, except for cash dividend per common stock)
	2014		2013
Retained earnings before appropriations
Unappropriated retained earnings carried over from prior year	￦	5,598,954		5,499,282
Net income		973,118		99,672

		6,572,072		5,598,954
Appropriation of retained earnings (*)
Earned surplus reserve		17,891		—
Cash dividend
(Dividend per common stock (%): 2014: ￦500 (10%))		178,908		—

		196,799		—
Unappropriated retained earnings carried forward to the following year	￦	6,375,273		5,598,954

(*)	For the years ended December 31, 2014 and 2013, the date of appropriation is March 13, 2015 and March 7, 2014, respectively.

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

23.	Related Parties

(a)

Related parties

Related parties for the year ended December 31, 2014 are as follows:


Classification		Description
Subsidiaries(*)		LG Display America, Inc. and others
Associates and joint ventures(*)		Suzhou Raken Technology Co., Ltd. and others
Subsidiaries of Associates		ADP System Co., Ltd.
Entity that has significant influence over the Company		LG Electronics Inc.
Subsidiaries of the entity that has significant influence over the Company		Subsidiaries of LG Electronics Inc.

(*)	Details of subsidiaries, associates and joint ventures are described in note 10.

Related parties that have transactions such as sales or balance of trade accounts and notes receivable and payable with the Company excluding subsidiaries, associates, and joint ventures for the years ended December 31, 2014 and 2013 are as follows:


Classification	December 31, 2014	December 31, 2013
Subsidiaries of associates	ADP System Co., Ltd.	ADP System Co., Ltd.

Entity that has significant influence over the Company	LG Electronics Inc.	LG Electronics Inc.

Subsidiaries of the entity that has significant influence over the Company	Hi Business Logistics Co., Ltd. Hiplaza Co., Ltd. Hi Entech Co., Ltd. LG Hitachi Water Solutions Co., Ltd.	Hi Business Logistics Co., Ltd. Hiplaza Co., Ltd. Hi Entech Co., Ltd. LG Hitachi Water Solutions Co., Ltd.
	LG Innotek Co., Ltd.	LG Innotek Co., Ltd.
	Hanuri Co., Ltd.	Hanuri Co., Ltd.
	Hi M Solutek	—
	Qingdao LG Inspur Digital Communication Co., Ltd.	Qingdao LG Inspur Digital Communication Co., Ltd.
	Hi Logistics Europe B.V	Hi Logistics Europe B.V.
	LG Innotek Poland Sp. z o.o.	LG Innotek Poland Sp. z o.o.
	—	LG Innotek (Guangzhou) Co., Ltd
	LG Electronics Vietnam Co., Ltd.	LG Electronics Vietnam Co., Ltd.
	LG Electronics Vietnam Haiphong Co., Ltd.	—
	LG Electronics Thailand Co., Ltd.	LG Electronics Thailand Co., Ltd.
	LG Electronics RUS, LLC	LG Electronics RUS, LLC
	LG Electronics Nanjing Display Co., Ltd.	LG Electronics Nanjing Display Co., Ltd.

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

23.	Related Parties, Continued


Classification	December 31, 2014	December 31, 2013
	LG Electronics India Pvt. Ltd.	LG Electronics India Pvt. Ltd.
	LG Electronics do Brasil Ltda.	LG Electronics do Brasil Ltda.
	LG Electronics (Kunshan) Computer Co., Ltd.	LG Electronics (Kunshan) Computer Co., Ltd.
	—	LG Electronics (Hangzhou) Co., Ltd.
	LG Electronics Alabama Inc.	—
	LG Electronics Reynosa S.A. DE C.V.	—
	LG Electronics Singapore PTE LTD.	—
	LG Electronics Japan, Inc.	—
	LG Electronics Philippines Inc.	—
	P.T. LG Electronics Indonesia	—

(b)

Key management personnel compensation

Compensation costs of key management for the years ended December 31, 2014 and 2013 are as follows:


(In millions of won)
	2014		2013
Short-term benefits	￦	2,607		2,591
Expenses related to the defined benefit plan		355		1,139

	￦	2,962		3,730

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

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

23.	Related Parties, Continued

(c)

Significant transactions such as sales of goods and purchases of raw material and outsourcing service and others, which occurred in the normal course of business with related parties for the years ended December 31, 2014 and 2013 are as follows:


(In millions of won)	2014
					Purchase and others
	Sales and others		Dividend Income		Purchase of raw material and others		Acquisition of property, plant and equipment		Outsourcing fees		Other costs
Subsidiaries
LG Display America, Inc.	￦	9,152,108		—		3		—		—		7
LG Display Japan Co., Ltd.		1,599,585		—		—		—		—		88
LG Display Germany GmbH		2,971,423		22,766		—		—		—		7,138
LG Display Taiwan Co., Ltd.		2,178,463		35,956		—		—		—		638
LG Display Nanjing Co., Ltd.		2,170		19,363		15		391		392,527		—
LG Display Shanghai Co., Ltd.		2,357,326		—		—		—		—		116
LG Display Poland Sp. z o.o.		496		37,124		60		—		73,652		—
LG Display Guangzhou Co., Ltd.		31,984		301,935		14,661		—		2,069,655		5,583
LG Display Shenzhen Co., Ltd.		2,002,633		—		—		—		—		321
LG Display Yantai Co., Ltd.		30,401		—		9,872		—		904,422		2,021
LG Display China Co., Ltd.		31,522		—		172,866		—		—		23
LUCOM Display Technology (Kunshan) Limited		505		—		—		—		9,464		—
LG Display U.S.A., Inc.		78,128		—		—		—		—		—
LG Display Singapore PTE LTD.		1,200,847		13,390		—		—		—		234
L&T Display Technology (Fujian) Limited		469,180		—		19		—		—		355
Nanumnuri Co., Ltd.		44		—		—		—		331		7,916

	￦	22,106,815		430,534		197,496		391		3,450,051		24,440

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

23.	Related Parties, Continued


(In millions of won)	2014
					Purchase and others
	Sales and Others		Dividend Income		Purchase of raw material and others		Acquisition of property, plant and equipment		Outsourcing fees		Other costs
Joint Venture
Suzhou Raken Technology Co., Ltd.	￦	190,780		—		—		—		101,830		—
Global OLED Technology LLC		—		—		—		—		—		2,045

	￦	190,780		—		—		—		101,830		2,045


Associates and their subsidiaries
New Optics Ltd.	￦	579		—		56,412		—		11,057		2,015
LIG ADP Co., Ltd.		—		—		413		16,647		—		722
TLI Inc.		—		—		76,047		—		—		2,753
AVACO Co., Ltd.		41		—		1,520		46,671		—		3,673
AVATEC Co., Ltd.		—		265		143		—		92,353		360
Paju Electric Glass Co., Ltd.		—		—		600,655		—		—		3,097
Narenanotech Corporation		—		180		519		8,873		—		1,403
Glonix Co., Ltd.		—		—		21,344		—		—		315
ADP System Co., Ltd.		—		—		1,810		1,263		—		497
LB Gemini New Growth Fund No. 16		—		613		—		—		—		—
YAS Co., Ltd.		—		—		734		21,614		—		460

	￦	620		1,058		759,597		95,068		103,410		15,295


Entity that has significant influence over the Company
LG Electronics Inc.	￦	1,657,634		—		60,002		168,395		—		70,189

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

23.	Related Parties, Continued


(In millions of won)	2014
					Purchase and others
	Sales and others		Dividend Income		Purchase of raw material and others		Acquisition of property, plant and equipment		Outsourcing fees		Other costs
Subsidiaries of the entity that has significant influence over the Company
LG Electronics India Pvt. Ltd.	￦	117,075		—		—		—		—		—
LG Electronics Vietnam Co., Ltd.		36,204		—		—		—		—		2
LG Electronics Vietnam Haiphong Co., Ltd.		19,476		—		—		—		—		—
LG Electronics Thailand Co., Ltd.		68,212		—		—		—		—		—
LG Electronics RUS, LLC		25,945		—		—		—		—		—
LG Electronics do Brasil Ltda.		8,083		—		—		—		—		502
LG Electronics (Kunshan) Computer Co., Ltd.		15,968		—		—		—		—		—
Hi Business Logistics Co., Ltd.		41		—		—		—		—		29,788
LG Innotek Co., Ltd.		3,514		—		509,352		—		—		2,791
LG Hitachi Water Solutions Co., Ltd.		—		—		—		29,827		—		—
Qingdao LG Inspur Digital Communication Co., Ltd.		173,821		—		—		—		—		—
Hi Entech Co., Ltd.		—		—		—		—		—		25,676
Others		10		—		810		—		—		5,322

	￦	468,349		—		510,162		29,827		—		64,081

	￦	24,424,198		431,592		1,527,257		293,681		3,655,291		176,050

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

23.	Related Parties, Continued


(In millions of won)	2013
					Purchase and others
	Sales and others		Dividend Income		Purchase of raw material and others		Acquisition of property, plant and equipment		Outsourcing fees		Other costs
Subsidiaries
LG Display America, Inc.	￦	7,781,246		—		51		—		—		9
LG Display Japan Co., Ltd.		2,018,780		—		—		—		—		18
LG Display Germany GmbH		3,547,947		—		106		—		—		1,611
LG Display Taiwan Co., Ltd.		2,062,541		—		17		—		—		350
LG Display Nanjing Co., Ltd.		3,543		—		52		—		449,075		—
LG Display Shanghai Co., Ltd.		2,752,610		—		2		—		—		257
LG Display Poland Sp. z o.o.		1,177		—		96		—		82,375		128
LG Display Guangzhou Co., Ltd.		—		—		17,373		—		2,230,559		4,184
LG Display Shenzhen Co., Ltd.		2,230,943		—		—		—		—		36
LG Display Yantai Co., Ltd.		27,076		—		4,673		—		461,919		836
LUCOM Display Technology (Kunshan) Limited		26,932		—		—		—		8,199		—
LG Display U.S.A., Inc.		97,940		—		—		—		—		—
LG Display Singapore PTE LTD.		1,382,368		—		44		—		—		—
L&T Display Technology (Fujian) Limited		446,754		—		10		—		—		—
Image&Materials, Inc.		—		—		—		189		—		—
Nanumnuri Co., Ltd.		—		—		—		—		—		4,865

	￦	22,379,857		—		22,424		189		3,232,127		12,294


Joint Venture
Suzhou Raken Technology Co., Ltd.	￦	480,897		12,804		—		—		166,571		2

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

23.	Related Parties, Continued


(In millions of won)	2013
					Purchase and others
	Sales and others		Dividend Income		Purchase of raw material and others		Acquisition of property, plant and equipment		Outsourcing fees		Other costs
Associates and their subsidiaries
New Optics Ltd.	￦	—		—		76,929		—		2,470		6,315
LIG ADP Co., Ltd.		—		—		666		8,743		—		3,102
TLI Inc.		—		—		58,881		—		—		1,473
AVACO Co., Ltd.		—		—		665		44,040		—		4,712
AVATEC Co., Ltd.		—		292		23		—		61,738		3,897
Paju Electric Glass Co., Ltd.		—		—		734,714		—		—		4,713
LB Gemini New Growth Fund No. 16		—		880		—		—		—		—
Narenanotech Corporation		—		300		328		2,061		—		412
Glonix Co., Ltd		—		—		5,209		—		—		115
ADP System Co., Ltd.		—		—		924		1,524		—		692
YAS Co., Ltd.		—		—		1,941		82,483		—		855

	￦	—		1,472		880,280		138,851		64,208		26,286


Entity that has significant influence over the Company
LG Electronics Inc.	￦	1,350,965		—		39,237		208,531		—		38,204

Subsidiaries of the entity that has significant influence over the Company
LG Electronics India Pvt. Ltd.	￦	108,084		—		—		—		—		—

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

23.	Related Parties, Continued


(In millions of won)	2013
					Purchase and others
	Sales and others		Dividend Income		Purchase of raw material and others		Acquisition of property, plant and equipment		Outsourcing fees		Other costs
LG Electronics Vietnam Co., Ltd.	￦	42,366		—		—		—		—		—
LG Electronics Thailand Co., Ltd.		69,674		—		—		—		—		—
LG Electronics Nanjing Display Co., Ltd.		6,010		—		—		—		—		—
LG Electronics RUS, LLC		9,622		—		—		—		—		—
LG Electronics do Brasil Ltda.		9,909		—		—		—		—		—
Hi Business Logistics Co., Ltd.		41		—		—		—		—		30,611
Hi Logistics Europe B.V.		—		—		—		—		—		3,182
LG Innotek Co., Ltd.		6,139		—		448,794		—		—		5,109
LG Innotek Poland Sp. z o.o.		—		—		6,442		—		—		161
LG Innotek (Guangzhou) Co., Ltd.		—		—		5,937		—		—		—
LG Hitachi Water Solutions Co., Ltd.		—		—		—		29,344		—		—
Qingdao LG Inspur Digital Communication Co., Ltd.		23,714		—		—		—		—		—
Others		132		—		2,229		—		—		1,118

	￦	275,691		—		463,402		29,344		—		40,181

	￦	24,487,410		14,276		1,405,343		376,915		3,462,906		116,967

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

23.	Related Parties, Continued

(d)

Trade accounts and notes receivable and payable as of December 31, 2014 and 2013 are as follows:


(In millions of won)
	Trade accounts and notes receivable and others				Trade accounts and notes payable and others
	December 31, 2014		December 31, 2013		December 31, 2014		December 31, 2013
Subsidiaries
LG Display America, Inc.	￦	1,810,674		1,211,404		—		1
LG Display Japan Co., Ltd.		128,248		117,041		—		4
LG Display Germany GmbH		306,277		285,711		6,312		861
LG Display Taiwan Co., Ltd.		368,188		421,799		52		18,960
LG Display Nanjing Co., Ltd.		19,732		439		86,499		57,614
LG Display Shanghai Co., Ltd.		311,532		401,209		20		14
LG Display Poland Sp. z o.o.		131		197		10,746		12,426
LG Display Guangzhou Co., Ltd.		307,469		620		772,702		754,373
LG Display Shenzhen Co., Ltd.		260,602		340,174		—		5
LG Display Yantai Co., Ltd.		2,214		614		447,994		120,468
LG Display China Co., Ltd.		—		—		12,147		—
LUCOM Display Technology (Kunshan) Limited		—		41		—		4,889
LG Display U.S.A., Inc.		4,397		15,154		2,923		—
LG Display Singapore PTE LTD.		106,506		117,513		—		—
L&T Display Technology (Xiamen) Limited		—		20,066		—		—
L&T Display Technology (Fujian) Limited		81,898		79,701		199,470		198,968
Nanumnuri Co., Ltd.		—		—		1,077		806

	￦	3,707,868		3,011,683		1,539,942		1,169,389

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

23.	Related Parties, Continued


(In millions of won)
	Trade accounts and notes receivable and others				Trade accounts and notes payable and others
	December 31, 2014		December 31, 2013		December 31, 2014		December 31, 2013
Joint Venture
Suzhou Raken Technology Co., Ltd.	￦	27,750		66,855		—		104,119
Global OLED Technology LLC		—		—		505		—

	￦	27,750		66,855		505		104,119

Associates and their subsidiaries
New Optics Ltd.	￦	440		—		14,785		8,998
LIG ADP Co., Ltd.		—		—		2,471		1,649
TLI Inc.		—		—		14,086		10,418
AVACO Co., Ltd.		—		—		12,700		15,291
AVATEC Co., Ltd.		—		—		10,645		10,041
Paju Electric Glass Co., Ltd.		—		—		82,792		108,379
Narenanotech Corporation		—		—		1,532		1,766
Glonix Co., Ltd.		—		—		1,752		1,987
ADP System Co., Ltd.		—		—		1,822		1,410
YAS Co., Ltd.		—		—		7,300		17,156

	￦	440		—		149,885		177,095


Entity that has significant influence over the Company
LG Electronics Inc.	￦	379,977		239,504		110,281		74,085

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

23.	Related Parties, Continued


(In millions of won)
	Trade accounts and notes receivable and others				Trade accounts and notes payable and others
	December 31, 2014		December 31, 2013		December 31, 2014		December 31, 2013
Subsidiaries of the entity that has significant influence over the Company
LG Electronics India Pvt. Ltd.	￦	13,825		7,414		—		—
LG Electronics Vietnam Co., Ltd.		—		8,827		—		—
LG Electronics Vietnam Haiphong Co., Ltd.		13,491		—		—		—
LG Electronics Thailand Co., Ltd.		17,792		10,141		—		—
LG Innotek Co., Ltd.		4		3		84,931		84,727
LG Hitachi Water Solutions Co., Ltd.		—		—		7,079		—
Qingdao LG Inspur Digital Communication Co., Ltd.		65,641		22,948		—		—
Hi Entech Co., Ltd.		—		—		5,954		—
Others		7,082		975		5,008		7,068

	￦	117,835		50,308		102,972		91,795

	￦	4,233,870		3,368,350		1,903,585		1,616,483

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

24.

Revenue

Details of revenue for the years ended December 31, 2014 and 2013 are as follows:


(In millions of won)
	2014		2013

Sales of goods	￦	25,331,787		25,791,484
Royalties		14,582		19,405
Others		37,301		43,294

	￦	25,383,670		25,854,183

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

(a)

Details of other non-operating income for the years ended December 31, 2014 and 2013 are as follows:


(In millions of won)
	2014		2013

Rental income	￦	3,550		4,072
Foreign currency gain		787,972		829,122
Gain on disposal of property, plant and equipment		18,248		8,258
Reversal of impairment on intangible assets		—		296
Commission earned		3,001		3,596
Others (*)		49,396		5,526

	￦	862,167		850,870

(*)	A gain amounting to ￦34,804 million as a result of the Company’s success in its appeal against the fining decision of the Korea Fair Trade Commission is included.

(b)

Details of other non-operating expenses for the years ended December 31, 2014 and 2013 are as follows:


(In millions of won)
	2014		2013

Other bad debt expense	￦	283		29
Foreign currency loss		767,369		754,227
Loss on disposal of property, plant and equipment		2,204		621
Loss on disposal of intangible assets		115		452
Impairment loss on property, plant and equipment		8,097		—
Impairment loss on intangible assets		492		1,626
Donations		11,597		16,267
Expenses related to legal proceedings or claims and others		108,821		257,887

	￦	898,978		1,031,109

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

26.	Personnel Expenses

Details of personnel expenses for the years ended December 31, 2014 and 2013 are as follows:


(In millions of won)
	2014		2013

Salaries and wages	￦	2,040,568		1,795,049
Other employee benefits		280,717		272,981
Contributions to National Pension plan		64,077		61,788
Expenses related to defined benefit plan		196,495		158,866

	￦	2,581,857		2,288,684

27.	Finance Income and Finance Costs

(a)

Finance income and costs recognized in profit or loss for the years ended December 31, 2014 and 2013 are as follows:


(In millions of won)
	2014		2013
Finance income
Interest income	￦	43,001		29,754
Dividend income		431,874		14,582
Foreign currency gain		3,671		22,762
Gain on disposal of investments		—		38
Gain on disposal of available-for-sale financial assets		775		—

	￦	479,321		67,136

Finance costs
Interest expense	￦	107,260		161,930
Foreign currency loss		53,277		75,797
Loss on early redemption of debt		6,986		2,179
Loss on impairment of investments		32,599		12,823
Loss on disposal of investments		5,434		1,161
Loss on sale of trade accounts and notes receivable		52		132

	￦	205,608		254,022

(b)

Finance income and costs recognized in other comprehensive income or loss for the years ended December 31, 2014 and 2013 are as follows:


(In millions of won)
	2014			2013
Net change in fair value of available-for-sale financial assets	￦	767			776
Tax effect		(186	)		(188	)

Finance income recognized in other comprehensive income after tax	￦	581			588

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

28.	Income Taxes

(a)

Details of income tax expense for the years ended December 31, 2014 and 2013 are as follows:


(In millions of won)
	2014			2013
Current tax expense
Current year	￦	160,952			4,762
Adjustment for prior years		—			31,809

	￦	160,952			36,571
Deferred tax expense (benefit)
Origination and reversal of temporary differences	￦	(4,627	)		34,813
Change in unrecognized deferred tax assets		92,249			215,369

		87,622			250,182

Income tax expense	￦	248,574			286,753

(b)

Income taxes recognized directly in other comprehensive income for the years ended December 31, 2014 and 2013 are as follows:


(In millions of won)	2014
	Before tax			Tax (expense) benefit			Net of tax
Net change in fair value of available-for-sale financial assets	￦	767			(186	)		581
Remeasurements of net defined benefit liabilities (assets)		(147,822	)		35,773			(112,049	)

	￦	(147,055	)		35,587			(111,468	)


(In millions of won)	2013
	Before tax			Tax (expense) benefit			Net of tax
Net change in fair value of available-for-sale financial assets	￦	776			(188	)		588
Remeasurements of net defined benefit liabilities (assets)		1,379			(334	)		1,045

	￦	2,155			(522	)		1,633

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

28.	Income Taxes, Continued

(c)

Reconciliation of the actual effective tax rate for the years ended December 31, 2014 and 2013 is as follows:


(In millions of won)	2014						2013
Profit for the year				￦	973,118					99,672
Income tax expense					248,574					286,753

Profit before income tax					1,221,692					386,425


Income tax expense using the Company’s statutory tax rate		24.20	%		295,649			24.20	%	93,515
Non-deductible expenses (benefits)		(2.38	%)		(29,059	)		1.94	%	7,495
Tax credits		(9.47	%)		(115,659	)		(12.95	%)	(50,032	)
Change in unrecognized deferred tax assets		7.56	%		92,249			55.73	%	215,369
Adjustment for prior years		—			—			4.37	%	16,877
Others		0.44	%		5,394			0.91	%	3,529

Actual income tax expense				￦	248,574					286,753

Actual effective tax rate					20.35	%				74.21	%

29.	Deferred Tax Assets and Liabilities

(a)

Unrecognized deferred tax liabilities

As of December 31, 2014, in relation to the temporary differences on investments in subsidiaries amounting to ￦210,319 million, the Company did not recognize deferred tax liabilities since the Company is able to control the timing of the reversal of the temporary difference and it is probable that the temporary differences will not reverse in the foreseeable future.

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

29.	Deferred Tax Assets and Liabilities, Continued

(b)

Unused tax credit carryforwards for which no deferred tax asset is recognized

Realization of deferred tax assets related to tax credit carryforwards is dependent on whether sufficient taxable income will be generated prior to their expiration. As of December 31, 2014, the Company recognized deferred tax assets of ￦397,105 million, in relation to tax credit carryforwards, to the extent that management believes the realization is probable. The amount of unused tax credit carryforwards for which no deferred tax asset is recognized and their expiration dates are as follows:

(In millions of won)

December 31,

2015

2016

2017

2018

2019

Tax credit carryforwards

￦

156,178

120,893

20,455

21,715

6,005

(c)

Deferred tax assets and liabilities are attributable to the following:


(In millions of won)	Assets				Liabilities						Total
	December, 31, 2014		December, 31, 2013		December, 31, 2014			December, 31, 2013			December, 31, 2014			December, 31, 2013
Other accounts receivable, net	￦	—		—		(3,440	)		(2,476	)		(3,440	)		(2,476	)
Inventories, net		44,543		17,500		—			—			44,543			17,500
Available-for-sale financial assets		—		98		(88	)		—			(88	)		98
Defined benefit liabilities, net		112,213		72,709		—			—			112,213			72,709
Accrued expenses		173,635		81,193		—			—			173,635			81,193
Property, plant and equipment		129,370		102,651		—			—			129,370			102,651
Intangible assets		1,423		—		—			(1,207	)		1,423			(1,207	)
Provisions		12,710		11,460		—			—			12,710			11,460
Gain or loss on foreign currency translation, net		169		282		(1	)		(957	)		168			(675	)
Others		16,326		5,908		—			—			16,326			5,908
Tax losses carryforwards		—		110,550		—			—			—			110,550
Tax credit carryforwards		397,105		538,289		—			—			397,105			538,289

Deferred tax assets (liabilities)	￦	887,494		940,640		(3,529	)		(4,640	)		883,965			936,000

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

29.	Deferred Tax Assets and Liabilities, Continued

(d)

Changes in deferred tax assets and liabilities for the years ended December 31, 2014 and 2013 are as follows:


(In millions of won)	January 1, 2013			Profit or loss			Other Comprehensive income			December 31, 2013			Profit or loss			Other Comprehensive income			December 31, 2014
Other accounts receivable, net	￦	(2,063	)		(413	)		—			(2,476	)		(964	)		—			(3,440	)
Inventories, net		8,903			8,597			—			17,500			27,043			—			44,543
Available-for-sale financial assets		285			1			(188	)		98			—			(186	)		(88	)
Defined benefit Liabilities, net		38,573			34,470			(334	)		72,709			3,731			35,773			112,213
Accrued expenses		79,321			1,872			—			81,193			92,442			—			173,635
Property, plant and equipment		81,832			20,819			—			102,651			26,719			—			129,370
Intangible assets		2,488			(3,695	)		—			(1,207	)		2,630			—			1,423
Provisions		12,979			(1,519	)		—			11,460			1,250			—			12,710
Gain or loss on foreign currency translation, net		4,382			(5,057	)		—			(675	)		843			—			168
Others		27,336			(21,428	)		—			5,908			10,418			—			16,326
Tax losses carryforwards		233,139			(122,589	)		—			110,550			(110,550	)		—			—
Tax credit carryforwards		699,529			(161,240	)		—			538,289			(141,184	)		—			397,105

Deferred tax assets (liabilities)	￦	1,186,704			(250,182	)		(522	)		936,000			(87,622	)		35,587			883,965

Statutory tax rate applicable to the Company to calculate tax base and deferred tax expense is 24.2% for the year ended December 31, 2014.

LG DISPLAY CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2014 and 2013

30.	Earnings per Share

(a)

Basic earnings per share for the years ended December 31, 2014 and 2013 are as follows:


(In won and No. of shares)	2014		2013

Profit for the period	￦	973,118,312,897		99,671,926,545
Weighted-average number of common stocks outstanding		357,815,700		357,815,700

Earnings per share	￦	2,720		279

There were no events or transactions that resulted in changes in the number of common stocks used for calculating earnings per share from January 1, 2013 to December 31, 2014.

(b)

Diluted earnings per share are not calculated since there was no potential common stock for the years ended December 31, 2014 and 2013.

31.	Supplemental Cash Flow Information

Supplemental cash flow information for the years ended December 31, 2014 and 2013 is as follows:


(In millions of won)
	2014			2013
Non-cash investing and financing activities:
Changes in other accounts payable arising from the purchase of property, plant and equipment	￦	(63,276	)		(1,305,849	)

Independent Accountants’ Review Report on Internal Accounting Control System

English translation of a Report Originally Issued in Korean

To the President of

LG Display Co., Ltd.:

We have reviewed the accompanying Report on the Operation of Internal Accounting Control System (“IACS”) of LG Display Co., Ltd. (the “Company”) as of December 31, 2014. The Company’s management is responsible for designing and maintaining effective IACS and for its assessment of the effectiveness of IACS. Our responsibility is to review management’s assessment and issue a report based on our review. In the accompanying report of management’s assessment of IACS, the Company’s management stated: “Based on the assessment on the operations of the IACS, the Company’s IACS has been effectively designed and is operating as of December 31, 2014, in all material respects, in accordance with the IACS Framework issued by the Internal Accounting Control System Operation Committee.”

We conducted our review in accordance with IACS Review Standards, issued by the Korean Institute of Certified Public Accountants. Those Standards require that we plan and perform the review to obtain assurance of a level less than that of an audit as to whether Report on the Operations of Internal Accounting Control System is free of material misstatement. Our review consists principally of obtaining an understanding of the Company’s IACS, inquiries of company personnel about the details of the report, and tracing to related documents we considered necessary in the circumstances. We have not performed an audit and, accordingly, we do not express an audit opinion.

A company’s IACS is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of separate financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, however, IACS may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Based on our review, nothing has come to our attention that Report on the Operations of Internal Accounting Control System as of December 31, 2014 is not prepared in all material respects, in accordance with IACS Framework issued by the Internal Accounting Control System Operation Committee.

This report applies to the Company’s IACS in existence as of December 31, 2014. We did not review the Company’s IACS subsequent to December 31, 2014. This report has been prepared for Korean regulatory purposes, pursuant to the External Audit Law, and may not be appropriate for other purposes or for other users.

KPMG Samjong Accounting Corp.

Seoul, Korea

February 17, 2015

Notice to Readers

This report is annexed in relation to the audit of the separate financial statements as of December 31, 2014 and the review of internal accounting control system pursuant to Article 2-3 of the Act on External Audit for Stock Companies of the Republic of Korea.

Report on the Operation of Internal Accounting Control System

English translation of a Report Originally Issued in Korean

To the Board of Directors and Audit Committee of LG Display Co., Ltd.

We, as the Internal Accounting Control System (“IACS”) Officer and Chief Executive Officer (“CEO”) of LG Display (“the Company”), assessed the effectiveness of the design and operation of the Company’s ICFR as of December 31, 2014.

The Company’s management, including myself, is responsible for designing and operating an IACS. We assessed the design and operational effectiveness of the IACS in the prevention and detection of an error or fraud which may cause a misstatement in the preparation and disclosure of reliable separate financial statements. We followed the IACS Framework to evaluate the effectiveness of the IACS design and operation.

Based on the assessment results, we believe that the Company’s IACS, as of December 31, 2014, is effectively designed and operating, in all material respects, in conformity with the IACS Framework issued by the Internal Accounting Control System Operation Committee.

January 19, 2015

Sangdon Kim

Internal Control over Financial Reporting Officer

Sang Beom Han

Chief Executive Officer

SIGNATURES

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


	LG Display Co., Ltd.

	(Registrant)

Date: February 25, 2015	By:	/s/ Heeyeon Kim

	(Signature)

	Name:	Heeyeon Kim

	Title:	Head of IR / Vice President