LGE - 23 1Q - Consolidated - F - Signed
LGE - 23 1Q - Consolidated - F - Signed
LGE - 23 1Q - Consolidated - F - Signed
Page(s)
Auditor's Responsibility
Our responsibility is to issue a report on these consolidated interim financial statements based on our
review.
We conducted our review in accordance with quarterly or semi-annual review standards established by
the Securities and Futures Commission of the Republic of Korea. A review of interim financial
information consists of making inquiries, primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A review is substantially less in scope
than an audit conducted in accordance with Korean Standards on Auditing and consequently does not
enable us to obtain assurance that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe the accompanying
consolidated interim financial statements are not presented fairly, in all material respects, in
accordance with Korean IFRS 1034 Interim Financial Reporting.
Other Matters
We have audited the consolidated statement of financial position of the Group as at December 31,
2022, and the related consolidated statements of profit or loss, comprehensive income, changes in
equity and cash flows for the year then ended, not presented herein, in accordance with Korean
Standards on Auditing. We expressed an unqualified opinion on those financial statements, in our audit
report dated March 17, 2023. The consolidated statement of financial position as at December 31, 2022,
presented herein for comparative purposes, is consistent, in all material respects, with the above
audited statement of financial position as at December 31, 2022.
Review standards and their application in practice vary among countries. The procedures and practices
used in the Republic of Korea to review such financial statements may differ from those generally
accepted and applied in other countries.
This report is effective as of May 15, 2023, the review report date. Certain subsequent events or
circumstances, which may occur between the review report date and the time of reading this report,
could have a material impact on the accompanying consolidated interim financial statements and
notes thereto. Accordingly, the readers of the review report should understand that there is a
possibility that the above review report may have to be revised to reflect the impact of such
subsequent events or circumstances, if any.
2
LG Electronics Inc.
Consolidated Interim Statements of Financial Position
March 31, 2023 and December 31, 2022
(in millions of Korean won) Notes March 31, 2023 December 31, 2022
Assets (Unaudited)
Current assets
Cash and cash equivalents 5,32 6,810,985 6,322,360
Deposits held by financial institutions 5,32 173,082 171,046
Trade receivables 5,6,32 8,921,142 8,216,512
Other receivables 5,6,32 600,955 602,782
Other financial assets 5,7,32 94,882 7,823
Inventories 8 9,832,444 9,388,808
Current tax assets 136,399 215,722
Contract assets 9 838,435 704,039
Other current assets 1,834,180 1,846,221
Assets held for sale 34 3,500 12,915
29,246,004 27,488,228
Non-current assets
Deposits held by financial institutions 5,32 73,719 75,180
Trade receivables 5,6,32 195,006 143,209
Other receivables 5,6,32 1,456,681 787,793
Other financial assets 5,7,32 424,754 411,158
Property, plant and equipment 10 16,115,397 15,831,838
Intangible assets 10 2,518,930 2,454,830
Deferred tax assets 2,512,465 2,452,091
Investments in associates and joint ventures 11 3,613,257 3,963,550
Investment properties 100,568 101,877
Net defined benefit assets 14 537,108 771,233
Contract assets 9 382,488 364,643
Other non-current assets 314,266 310,511
28,244,639 27,667,913
Total assets 57,490,643 55,156,141
Liabilities
Current liabilities
Trade payables 5,32 9,110,011 8,212,419
Borrowings 5,12,32 2,486,367 2,287,518
Lease liabilities 5,13,32 302,956 303,969
Other payables 5,32 3,959,516 4,551,554
Other financial liabilities 5,7,32 6,860 10,237
Current tax liabilities 324,393 250,575
Provisions 15 1,431,420 1,480,805
Contract liabilities 9 1,605,304 1,443,977
Other current liabilities 3,582,657 3,791,495
22,809,484 22,332,549
Non-current liabilities
Borrowings 5,12,32 9,735,012 8,757,669
Lease liabilities 5,13,32 797,101 792,266
Other payables 5,32 139,767 136,509
Other financial liabilities 5,7,32 10,260 10,428
Deferred tax liabilities 35,496 46,801
Net defined benefit liabilities 14 94,714 86,220
Provisions 15 286,806 288,130
Contract liabilities 9 51,707 47,212
Other non-current liabilities 170,526 166,360
11,321,389 10,331,595
Total liabilities 34,130,873 32,664,144
Equity
Paid-in capital: 16
Share capital 904,169 904,169
Share premium 3,088,179 3,088,179
Retained earnings 17 16,081,165 15,834,021
Accumulated other comprehensive income (loss) 18 (171,511) (750,372)
Accumulated other comprehensive income (loss) from assets held for sale 18,34 (234) 838
Other components of equity 19 (83,402) (84,727)
Equity attributable to owners of the Parent Company 19,818,366 18,992,108
Non-controlling interests 3,541,404 3,499,889
Total equity 23,359,770 22,491,997
Total liabilities and equity 57,490,643 55,156,141
3
LG Electronics Inc.
Consolidated Interim Statements of Profit or Loss
Three-month Periods Ended March 31, 2023 and 2022
(in millions of Korean won, except per share amounts) Three-month Period Ended March 31
Notes 2023 2022
(Unaudited) (Unaudited)
Continuing operations
Net sales 20 20,415,872 20,969,002
Cost of sales 21 15,245,929 15,018,514
Gross profit 5,169,943 5,950,488
Selling and marketing expenses 21,22 2,285,658 2,588,433
Administrative expenses 21,22 456,256 435,633
Research and development expenses 21,22 577,323 549,210
Service costs 21,22 353,318 434,322
Operating profit (loss) 1,497,388 1,942,890
Financial income 23 358,565 231,508
Financial expenses 24 385,583 229,949
Gain (Loss) from equity method valuation 11 (471,685) 9,540
Other non-operating income 25 688,457 772,561
Other non-operating expenses 26 753,481 660,575
Profit (Loss) before income tax 933,661 2,065,975
Income tax expense 387,716 559,785
Profit (Loss) from continuing operations 545,945 1,506,190
Discontinued operations
Profit (Loss) from discontinued operations 35 584 (105,189)
Profit (Loss) for the period 546,529 1,401,001
4
LG Electronics Inc.
Consolidated Interim Statements of Comprehensive Income
Three-month Periods Ended March 31, 2023 and 2022
5
LG Electronics Inc.
Consolidated Interim Statements of Changes in Equity
Three-month Periods Ended March 31, 2023 and 2022
Balance at January 1, 2023 3,992,348 15,834,021 (750,372) 838 (84,727) 18,992,108 3,499,889 22,491,997
Total comprehensive income (loss):
Profit(Loss) for the period - 471,260 - - - 471,260 75,269 546,529
Remeasurements of the net defined benefit liability 14 - (96,657) - - - (96,657) (10,789) (107,446)
Share of remeasurements of associates 11 - (524) - - - (524) - (524)
Financial assets at fair value through
other comprehensive income 7 - (30) 3,562 - - 3,532 132 3,664
Share of other comprehensive income
(excluding remeasurements) of
associates and joint ventures 11 - - 116,693 - - 116,693 - 116,693
Cash flow hedges 32 - - (20,254) - - (20,254) (680) (20,934)
Exchange differences
on translation of foreign operations - - 478,860 (1,072) - 477,788 46,145 523,933
Total comprehensive income (loss) - 374,049 578,861 (1,072) - 951,838 110,077 1,061,915
6
LG Electronics Inc.
Consolidated Interim Statements of Cash Flows
Three-month Periods Ended March 31, 2023 and 2022
Effects of exchange rate changes on cash and cash equivalents 140,768 47,541
Net increase (decrease) in cash and cash equivalents 488,625 (490,442)
Cash and cash equivalents included in assets held for sale
at the beginning of the period 34 - 58,371
Cash and cash equivalents at the beginning of the period 6,322,360 6,051,516
Cash and cash equivalents included in assets held for sale
at the end of the period 34 - -
Cash and cash equivalents at the end of the period 6,810,985 5,619,445
7
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
1. General Information
LG Electronics Inc. (the “Company” or “Parent Company”) was spun off from LG Electronics
Investment Ltd. on April 1, 2002. The Parent Company’s shares were listed on the Korea
Exchange on April 22, 2002, and some of its preferred shares, in the form of global depositary
receipts (“GDRs”), are listed on the London Stock Exchange at the end of the reporting period.
The Parent Company is domiciled in Korea at Yeoui-daero, Yeongdeungpo-gu, Seoul.
As at March 31, 2023, LG Corp. owns 33.7% of the Parent Company’s total shares, excluding
preferred shares, while financial institutions, foreign investors and others own the rest.
The Parent Company and its subsidiaries (collectively referred to as the “Group”) operate
following five major business segments: Home Appliance & Air Solution segment manufactures
and sells refrigerators, washing machines, vacuum cleaners, and residential and commercial air
conditioners; Home Entertainment segment manufactures and sells TVs and digital media
products; Vehicle component Solutions segment designs and manufactures automobile parts;
Business Solutions segment manufactures and sells monitors, PCs, information displays and
others; and LG Innotek Co., Ltd. operates optics solutions, substrate materials and automotive
components businesses. As at March 31, 2023, the Parent Company has 143 subsidiaries
(Note 1 (a)), 21 associates and joint ventures (Note 11).
8
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
(a) Consolidated subsidiaries as at March 31, 2023 and December 31, 2022, are as follows:
9
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
10
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
11
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
12
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
13
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
14
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
ACE R&A Hungary Limited Production and sales of More than half of
Hungary 100.0% - 100.0% - December
Liability Company air conditioner voting rights
More than half of
UK Alphonso UK Limited 56.0% 44.0% 56.1% 43.9% December Advertisement
voting rights
More than half of
Greece Alphonso Hellas S.A. 56.0% 44.0% 56.1% 43.9% December Advertisement
voting rights
North LG Electronics Alabama More than half of
USA 100.0% - 100.0% - December Services
America Inc.(LGEAI) voting rights
LG Electronics Canada, Sales of More than half of
Canada 100.0% - 100.0% - December
Inc.(LGECI) electronic products voting rights
LG Electronics Mexico S.A. DE Sales of More than half of
Mexico 100.0% - 100.0% - December
C.V.(LGEMS) electronic products voting rights
LG Electronics Reynosa, S.A. Production of electronic More than half of
Mexico 100.0% - 100.0% - December
De C.V.(LGERS) products voting rights
LG Electronics U.S.A., Production and sales of More than half of
USA 100.0% - 100.0% - December
Inc.(LGEUS) electronic products voting rights
More than half of
USA Zenith Electronics LLC(Zenith) 100.0% - 100.0% - December R&D
voting rights
Sales of
USA LG Innotek USA, Inc.(LGITUS)1 40.8% 59.2% 40.8% 59.2% December electrical/electronic De-facto control
materials
15
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
16
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
17
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
18
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
1 Although the Group owns less than half of the voting rights of LG Innotek Co., Ltd., which is an intermediate parent company of its subsidiaries, the Group is deemed
to have control over LG Innotek Co., Ltd. due to the size and dispersion of holdings of the other shareholders and their voting patterns at previous shareholders’
meetings (Note 3.2).
2 Although the Group owns less than a majority of the effective percentage of ownership of the entity, the Group has concluded that the Group controls the entity. This is
because the Group has a right to appoint or dismiss the majority of its Board of Directors by virtue of an agreement with the other investors.
3 Although the Group owns less than a majority of the effective percentage of ownership of the entity, the Group has concluded that the Group controls the entity. This is
because the Group has the substantial power to direct the relevant activities and is exposed to variable returns.
4 In the preparation of the consolidated financial statements, the financial statements for the three-month period ended March 31, 2023 were used for those subsidiaries
with different fiscal year ends.
19
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
(b) Financial information of major subsidiaries as at March 31, 2023 and December 31, 2022,
and for the three-month periods ended March 31, 2023 and 2022, are as follows (before
elimination of intercompany transactions):
LG Electronics Vietnam Hai Phong Co., Ltd(LGEVH) 1,973,451 989,680 983,771 1,281,040 48,841
LG Innotek Vietnam Hai Phong Co., ltd.(LGITVH) 1,251,107 560,032 691,075 689,552 14,471
LG Electronics (Tianjin) Appliances Co., Ltd.(LGETA) 1,082,021 602,839 479,182 586,268 49,218
Taizhou LG Electronics Refrigeration Co., Ltd.(LGETR) 695,539 474,601 220,938 325,157 15,101
LG Electronics Vietnam Hai Phong Co., Ltd(LGEVH) 1,678,486 774,694 903,792 1,055,283 51,898
20
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
LG Innotek Vietnam Hai Phong Co., ltd.(LGITVH) 1,481,701 824,286 657,415 884,861 30,496
LG Electronics (Tianjin) Appliances Co., Ltd.(LGETA) 889,028 477,274 411,754 519,339 17,185
Taizhou LG Electronics Refrigeration Co., Ltd.(LGETR) 643,568 446,437 197,131 431,853 14,799
1 Energy business was classified as discontinued operations and the sales related to the
discontinued operations were excluded.
(in millions of Korean won) March 31, 2023 December 31, 2022
Percentage of ownership in non-controlling 59.2% 59.2%
interests
Accumulated non-controlling interests 2,595,953 2,593,209
ii) Profit and dividends attributable to non-controlling interests for the three-month periods
ended March 31, 2023 and 2022, are as follows:
21
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
(in millions of Korean won) March 31, 2023 December 31, 2022
Current assets 4,314,766 4,713,796
Non-current assets 5,190,293 5,079,822
Total assets 9,505,059 9,793,618
Current liabilities 3,574,559 4,270,417
Non-current liabilities 1,666,921 1,257,408
Total liabilities 5,241,480 5,527,825
Equity attributable to the owners of LG Innotek
4,263,579 4,265,793
Co., Ltd.
Non-controlling interests - -
Total equity 4,263,579 4,265,793
22
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
i) Significant restrictions on the ability to use the assets and settle the liabilities of the
Group
Cash and other short-term financial instruments held by subsidiaries in Egypt, Algeria, Russia
and Kazakhstan are subject to exchange control regulations of each relevant country.
Accordingly, there are transfer limits on their cash and short-term financial instruments from
these countries.
ii) The protective rights of non-controlling interests which can restrict the use of the assets
and settlement of the liabilities of the Group exist in certain subsidiaries.
During the three-month period ended March 31, 2023, non-controlling interests decreased by
\ 97 million due to the effect of changes in the percentage of ownership resulting from the stock
options exercised and the tender offer agreement for non-controlling interests in relation to
Alphonso Inc.
(f) There are no subsidiaries newly included and excluded from the scope of the preparation of
the consolidated interim financial statements for the three-month period ended March 31,
2023.
The Group did not recognize gains or losses from the loss of control for the three-month period
ended March 31, 2023.
The Group maintains its accounting records in Korean won and prepares statutory financial
statements in the Korean language (Hangul) in accordance with International Financial Reporting
Standards as adopted by the Republic of Korea (Korean IFRS). The accompanying consolidated
interim financial statements have been condensed, restructured and translated into English from
the Korean language financial statements.
The Group’s consolidated interim financial statements for the three-month period ended March 31,
2023, have been prepared in accordance with Korean IFRS 1034 Interim Financial Reporting.
These consolidated interim financial statements have been prepared in accordance with Korean
IFRS which is effective or early adopted as at March 31, 2023.
23
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
(a) New and amended standards and interpretations effective for the financial year beginning
January 1, 2023
The amendments to Korean IFRS 1001 define and require entities to disclose their material
accounting policies. The amendment does not have a significant impact on the consolidated
interim financial statements.
If the entire or a part of financial instrument, whose exercise price is subject to change due to the
issuer's share price, is classified as a financial liability, the carrying amount of the financial liability
and related gains and losses shall be disclosed. The amendment does not have a significant
impact on the consolidated interim financial statements.
- Korean IFRS 1008 Accounting Policies, Changes in Accounting Estimates and Errors -
Definition of Accounting Estimates
The amendments define accounting estimates and clarify how to distinguish them from changes
in accounting policies. The amendment does not have a significant impact on the consolidated
interim financial statements.
- Korean IFRS 1012 Income Taxes - Deferred Tax related to Assets and Liabilities arising from a
Single Transaction
The amendments include an additional condition to the exemption to initial recognition of an asset
or liability that a transaction does not give rise to equal taxable and deductible temporary
differences at the time of the transaction. The amendment does not have a significant impact on
the consolidated interim financial statements.
(b) New, enacted and amended standards issued, but not effective for March 31, 2023, and not
early adopted by the Group.
The amendments clarify that liabilities are classified as either current or non-current, depending
on the substantive rights that exist at the end of the reporting period. Classification is unaffected
by the likelihood that an entity will exercise right to defer settlement of the liability or the
expectations of management. Also, the settlement of liability includes the transfer of the entity’s
own equity instruments, however, it would be excluded if an option to settle them by the entity’s
own equity instruments if compound financial instruments is met the definition of equity
instruments and recognized separately from the liability. The amendments should be applied for
24
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
annual periods beginning on or after January 1, 2024. The Group does not expect that these
amendments have a significant impact on the consolidated interim financial statements.
Material accounting policies and method of computation used in the preparation of the condensed
consolidated interim financial statements are consistent with those of the consolidated financial
statements for the year ended December 31, 2022, except for the changes due to the application
of amendment and enactments of standards described in Note 2.1.1 and the ones described
below.
Income tax expense for the interim period is recognized based on management’s best estimate of
the weighted average annual income tax rate expected for the full financial year. The estimated
average annual tax rate is applied to the pre-tax income for the period.
The estimates and judgments are continuously evaluated and are based on historical experience
and other factors, including expectations of future events that are believed to be reasonable.
The Group makes estimates and assumptions concerning the future. Estimates and assumptions
are continually evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances. The
resulting accounting estimates will, by definition, seldom equal the related actual results.
The Russia - Ukraine armed conflict and continuous international sanctions on Russia have a
material impact on the global economy. It may have a negative impact; such as, decrease in
productivity, decrease or delay in sales, collection of existing receivables and others. Accordingly,
it may have a negative impact on the financial position and financial performance of the Group,
and the impact is expected to be continued to the consolidated annual financial statements in
2023.
Significant accounting estimates and assumptions applied in the preparation of the consolidated
interim financial statements can be adjusted depending on changes in the uncertainty from
Russia - Ukraine armed conflict. Also, the ultimate effect of Russia - Ukraine armed conflict to the
Group’s business, financial position and financial performance cannot presently be determined.
The estimates and assumptions that have a significant risk of causing adjustments to the carrying
amounts of assets and liabilities after the end of the reporting period are addressed below.
25
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
The Group recognizes revenue over time using the percentage of completion method for the
rendering of service such as equipment production and installation. The Group measures the
percentage of completion by estimating total cost for the completion of the transaction, and the
factors for the estimation of revenue may vary.
The Group tests goodwill and others regularly for impairment. The recoverable amounts of cash-
generating units have been determined based on fair value less costs of disposal or value-in-use
calculations. These calculations require estimates.
The Group recognizes assets and liabilities for anticipated tax audit issues based on the best
estimates of whether additional taxes will be due. Where the final tax outcome of these matters is
different from the amounts that were initially recorded, such differences will impact the current
and deferred income tax assets and liabilities in the period in which such determination is made.
The fair value of financial instruments that are not traded in an active market is determined by
using valuation techniques. The Group uses its judgement to select a variety of methods and
makes assumptions that are mainly based on market conditions existing at the end of the
reporting period.
(e) Provisions
The Group recognizes provisions for product warranties and others based on their historical data
at the end of the reporting period.
The present value of the defined benefit liability depends on various factors that are determined
on an actuarial basis. The assumptions used in determining the net cost (income) for pensions
include the discount rate, which is the interest rate that is used to determine the present value of
estimated future cash outflows expected to be required to settle the defined benefit liability. In
determining the appropriate discount rate, the Group considers the interest rates of high-quality
corporate bonds that are denominated in the currency in which the benefits will be paid, and that
have terms to maturity approximating the terms of the related pension liability. Other key
assumptions for defined benefit liability are based on current market conditions.
The Group capitalizes development costs when there is a reasonable assurance that projects
have technical feasibility and the possibility of generating future economic benefits, and performs
26
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
periodic impairment test. The recoverable amount of each project has been calculated on a basis
of the value-in-use reflecting expected sales quantity and unit price and estimated operating profit.
(h) Leases
In determining the lease term, management considers all facts and circumstances that create an
economic incentive to exercise an extension option, or not exercise a termination option.
Extension options (or periods after termination options) are only included in the lease term if the
lease is reasonably certain to be extended (or not terminated).
The reassessment of the lease term based on a judgment of whether the extension option is
reasonably certain to be exercised (or not exercised) is only revised if a significant event or a
significant change in circumstances occurs, which affects this assessment, and that is within the
control of the lessee.
In order to determine the Group’s de-facto control, the Group considers the size of the Group’s
holding of voting rights relative to the size and dispersion of holdings of the other vote holders
and additional facts and circumstances including voting patterns at previous shareholders’
meetings.
4. Segment Information
The segments of the Group are strategic business divisions providing different products and
services. They are reported separately because each business division requires different
technologies and marketing strategies. At the end of the reporting periods, the main products of
each business division are as follows, and the comparative information is presented in conformity
with the same classification in the current period.
27
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
(a) The segment information for sales and operating profit (loss) for the three-month periods
ended March 31, 2023 and 2022, is as follows:
2023
(in millions of Other
Korean won) H&A HE VS BS Innotek segments1 Total
Sales 8,021,688 3,359,631 2,386,526 1,479,595 4,375,862 792,570 20,415,872
External sales 8,010,182 3,358,347 2,386,526 1,478,540 4,240,709 941,568 20,415,872
Internal sales 11,506 1,284 - 1,055 135,153 (148,998) -
Operating profit (loss)2 1,018,823 200,269 54,004 65,737 145,344 13,211 1,497,388
Depreciation
and amortization 231,929 88,223 137,308 31,613 230,122 49,413 768,608
2022
(in millions of Other
Korean won) H&A HE VS BS Innotek segments1 Total
Sales 7,970,441 4,065,061 1,877,663 1,873,825 3,952,381 1,229,631 20,969,002
External sales 7,968,508 4,063,369 1,877,661 1,872,541 3,812,507 1,374,416 20,969,002
Internal sales 1,933 1,692 2 1,284 139,874 (144,785) -
Operating profit (loss)2 446,758 187,233 (6,739) 103,085 366,792 845,761 1,942,890
Depreciation
and amortization 212,374 96,144 135,249 27,000 195,551 43,673 709,991
1 Other segments include operating segments that are not qualified as reportable segments, departments
that support the operating segments and R&D, and inter-segment transactions. Sales between segments
are accounted on terms equivalent to those that prevail in arm’s length transactions.
2Other income or expenses items not included in the operating profit (loss) are not separately disclosed
because the Chief Operating Decision Maker does not review them by segment.
(b) Segment assets and liabilities as at March 31, 2023 and December 31, 2022, are as follows:
28
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
(c) Non-current assets by geographic area as at March 31, 2023 and December 31, 2022, are
as follows:
(d) Sales from a single external customer who contribute more than 10% of the Group's total
sales for the three-month period ended March 31, 2023 are sales from Innotek segment and
others amounting to \3,416,644 million (March 31, 2022: \3,885,949 million).
(a) Categorizations of financial instruments as at March 31, 2023 and December 31, 2022, are
as follows:
29
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
(b) Net gains or losses on each category of financial instruments for the three-month periods
ended March 31, 2023 and 2022, are as follows:
2023
Financial Financial assets at fair Financial assets at
assets at value through other fair value through
(in millions of Korean won) amortized cost comprehensive income profit or loss Other Total
Interest income 83,047 - - - 83,047
Exchange differences 203,049 48,383 - - 251,432
Bad debts expenses (7,540) - - - (7,540)
Loss on disposal of trade
- (12,021) - - (12,021)
receivables
Dividend income - 189 263 - 452
Gain (loss) on valuation of
financial assets at fair value - - (1,014) - (1,014)
through profit or loss
Gain (loss) on derivatives
- - 4,818 - 4,818
(through profit or loss)
Profit (loss) for the period from
(4) - - - (4)
discontinued operations
Fair value gain (loss), net of tax
(through other comprehensive - 3,664 - - 3,664
income)
Gain (loss) on derivatives, net of
tax (through other - - - (263) (263)
comprehensive income)
30
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
2023
Financial liabilities
Financial liabilities at at fair value through
(in millions of Korean won) amortized cost profit or loss Other Total
Interest expense (126,462) - 1,412 (125,050)
Exchange differences (303,392) - 47,475 (255,917)
Gain (loss) on derivatives
- (14,344) - (14,344)
(through profit or loss)
Profit (loss) for the period from
(2) - - (2)
discontinued operations
Gain (loss) on derivatives, net of
tax (through other - - (20,671) (20,671)
comprehensive income)
Others (796) - - (796)
2022
Financial Financial assets at fair Financial assets at
assets at value through other fair value through
(in millions of Korean won) amortized cost comprehensive income profit or loss Other Total
Interest income 23,856 - - - 23,856
Exchange differences 207,790 21,782 - - 229,572
Bad debts expense (1,341) - - - (1,341)
Loss on disposal of trade
- (1,661) - - (1,661)
receivables
Dividend income - 187 2,300 - 2,487
Gain (loss) on valuation of
financial assets at fair value - - (4,574) - (4,574)
through profit or loss
Gain (loss) on derivatives
- - 34,533 - 34,533
(through profit or loss)
Profit (loss) for the period from
(676) - 1 - (675)
discontinued operations
Fair value gain (loss), net of tax
(through other comprehensive - (5,119) - - (5,119)
income)
Gain (loss) on derivatives, net of
tax (through other - - - 34,942 34,942
comprehensive income)
2022
Financial liabilities
Financial liabilities at at fair value through
(in millions of Korean won) amortized cost profit or loss Other Total
Interest expense (58,620) - (13,854) (72,474)
Exchange differences (214,256) - 15,246 (199,010)
Gain (loss) on derivatives
- (63,258) - (63,258)
(through profit or loss)
Profit (loss) for the period from
(9,427) (47) (54) (9,528)
discontinued operations
Gain (loss) on derivatives, net of
tax (through other - - 17,218 17,218
comprehensive income)
Others (827) - - (827)
31
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
(a) Trade receivables and other receivables, net of allowance for doubtful accounts, as at March
31, 2023 and December 31, 2022, are as follows:
(b) Movements in allowance for doubtful accounts for the three-month periods ended March 31,
2023 and 2022, are as follows:
2023
Addition
(in millions of Korean won) At January 1 (Reversal) Write-off Other At March 31
Trade receivables 87,922 8,826 (945) 7,357 103,160
Other receivables
Current 10,287 (1,257) (47) (219) 8,764
Non-current 83 (4) - 11 90
2022
Addition
(in millions of Korean won) At January 1 (Reversal) Write-off Other At March 31
Trade receivables 85,523 5,560 (424) 1,005 91,664
Other receivables
Current 11,717 (1,515) (2) (183) 10,017
Non-current 114 30 - 2 146
32
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
(c) The aging analysis of trade receivables and other receivables as at March 31, 2023 and
December 31, 2022, is as follows:
(d) Trade receivables have been discounted through collateralized borrowing agreements with
banks for the three-month period ended March 31, 2023. In case the customers default, the
Group has an obligation to pay the related amounts to the banks. As a result, this
transaction has been accounted for as a collateralized borrowing (Note 12). Discounted
trade receivables as at March 31, 2023 amount to \70,347 million (December 31, 2022:
\41,026 million).
33
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
(a) Details of other financial assets and liabilities as at March 31, 2023 and December 31, 2022,
are as follows:
(in millions of Korean won) March 31, 2023 December 31, 2022
Other financial assets
Derivatives 216,478 194,049
Financial assets at fair value through other
125,659 118,926
comprehensive income
Financial assets at fair value through profit
177,499 106,006
or loss
Total 519,636 418,981
Current 94,882 7,823
Non-current 424,754 411,158
(in millions of Korean won) March 31, 2023 December 31, 2022
Other financial liabilities
Derivatives 16,994 20,550
Financial guarantee liability 126 115
Total 17,120 20,665
Current 6,860 10,237
Non-current 10,260 10,428
(b) Details of derivatives as at March 31, 2023 and December 31, 2022, are as follows:
The details of major derivative contracts at the end of the reporting period are presented in Note
32.
34
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
(c) Changes in carrying amount of financial assets at fair value through other comprehensive
income for the three-month periods ended March 31, 2023 and 2022, are as follows:
2023
(in millions of Korean At At
won) January 1 Acquisition Disposals Transfer Valuation Other March 31
Listed equity securities 29,425 - - - 4,537 423 34,385
Unlisted equity securities 89,501 2,613 - - - (840) 91,274
Total 118,926 2,613 - - 4,537 (417) 125,659
2022
(in millions of Korean At At
won) January 1 Acquisition Disposals Transfer Valuation Other March 31
Listed equity securities 60,441 - - - (6,536) 149 54,054
Unlisted equity securities 60,782 400 - 1,600 - 691 63,473
Total 121,223 400 - 1,600 (6,536) 840 117,527
(d) Changes in carrying amount of financial assets at fair value through profit or loss for the
three-month periods ended March 31, 2023 and 2022, are as follows:
2023
(in millions of Korean At At
won) January 1 Acquisition Disposals Transfer Valuation Other March 31
Listed equity securities 362 67,728 (209) 27 (268) 249 67,889
Unlisted equity securities 105,011 6,866 (179) (2,027) (746) 52 108,977
Debt securities 633 - - - - - 633
Total 106,006 74,594 (388) (2,000) (1,014) 301 177,499
2022
(in millions of Korean At At
won) January 1 Acquisition Disposals Transfer Valuation Other March 31
Listed equity securities 2,297 - (479) 129 (1,081) 51 917
Unlisted equity securities 71,221 1,484 (551) (1,729) (3,493) 439 67,371
Total 73,518 1,484 (1,030) (1,600) (4,574) 490 68,288
35
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
8. Inventories
Inventories as at March 31, 2023 and December 31, 2022, consist of:
(a) Contract assets as at March 31, 2023 and December 31, 2022, are as follows:
(in millions of Korean won) March 31, 2023 December 31, 2022
Due from customers 750,073 639,024
(Less: allowance for doubtful accounts) (3,843) (4,170)
Right to recover returned products 117,693 126,522
Costs to fulfill contracts and others 357,000 307,306
Total 1,220,923 1,068,682
Current 838,435 704,039
Non-current 382,488 364,643
(b) Contract liabilities as at March 31, 2023 and December 31, 2022, are as follows:
(in millions of Korean won) March 31, 2023 December 31, 2022
Expected promotional incentives for customers 853,517 739,990
Expected returns from customers 215,336 221,652
Customer loyalty program 112,281 113,625
Rendering of warranty services 144,376 136,636
Due to customers and others 331,501 279,286
Total 1,657,011 1,491,189
Current 1,605,304 1,443,977
Non-current 51,707 47,212
36
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
(c) Revenue recognized in relation to contract liabilities for the three-month periods ended
March 31, 2023 and 2022, is as follows:
At the end of the reporting period, the total amount of transaction price allocated to the
unsatisfied or partially unsatisfied performance obligations was \1,599,801 million
(December 31, 2022: \1,584,092 million) which were expected to be satisfied by 2031, at
the latest. Also, as a practical expedient, the Group excluded performance obligation which
was a part of contract that had an original expected duration of one year or less.
(e) For the three-month period ended March 31, 2023, the Group recognized a reversal of
impairment loss amounting to \317 million (March 31, 2022: impairment loss of \745
million) in relation to due from customers, and amortization and other costs of \38,828
million (March 31, 2022: \12,000 million) in relation to costs to fulfill contracts.
(a) Changes in property, plant and equipment for the three-month periods ended March 31, 2023
and 2022, are as follows:
1 For the three-month period ended March 31, 2022, impairment loss on property, plant and equipment
from discontinued operations of MC business amounting to \915 million is included.
2 For the three-month period ended March 31, 2022, impairment loss on property, plant and equipment
from discontinued operations of energy business amounting to \73,633 million is included.
37
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
(b) Line items including depreciation in the consolidated interim statements of profit or loss for
the three-month periods ended March 31, 2023 and 2022, are as follows:
(c) Changes in right-of-use assets included in property, plant and equipment for the three-month
periods ended March 31, 2023 and 2022, are as follows:
The amount recognized as lease income in relation to sublease of the above right-of-use assets
for the three-month period ended March 31, 2023, was \1,716 million (March 31, 2022: \1,819
million).
(d) Changes in intangible assets for the three-month periods ended March 31, 2023 and 2022,
are as follows:
1 For three-month period ended March 31, 2022, impairment loss on intangible assets from discontinued
38
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
(e) Line items including amortization of intangible assets in the consolidated interim statements
of profit or loss for the three-month periods ended March 31, 2023 and 2022, are as follows:
i) Carrying amounts of investments in associates and joint ventures, as at March 31, 2023
and December 31, 2022, are as follows:
(in millions of Korean won) March 31, 2023 December 31, 2022
Associates 3,557,465 3,909,200
Joint ventures 55,792 54,350
Total 3,613,257 3,963,550
39
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
ii) Investments in associates as at March 31, 2023 and December 31, 2022, are as follows:
1 The financial statements as at February 28, 2023 were used due to a different closing date.
2 Classified as an associate although the percentage of ownership is less than 20% because the Group can
exercise a significant influence in the Board of Directors of the investee.
iii) Investments in joint ventures as at March 31, 2023 and December 31, 2022, are as
follows:
40
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
All joint arrangements, over which the Group has joint control, are structured through
separate companies and are categorized as joint ventures as the parties with joint control are
assumed to have rights to the net assets of the arrangement.
41
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
iii) Above associates and joint ventures are accounted for using the equity method.
ii) Changes in the carrying amounts of investments in joint ventures for the three-month
periods ended March 31, 2023 and 2022, are as follows:
42
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
(d) Summarized financial information of the associates that are material to the reporting entity as
at March 31, 2023 and December 31, 2022, and for the three-month periods ended March
31, 2023 and 2022, is as follows:
(in millions of Korean won) March 31, 2023 December 31, 2022
Current assets 9,853,531 9,444,035
Non-current assets 26,790,707 26,241,984
Total assets 36,644,238 35,686,019
Current liabilities 12,758,129 13,961,520
Non-current liabilities 13,357,365 10,405,272
Total liabilities 26,115,494 24,366,792
Equity attributable to the owners of
8,967,330 9,879,589
LG Display Co., Ltd.
Non-controlling interests 1,561,414 1,439,638
Total equity 10,528,744 11,319,227
There are no dividends to be received from LG Display Co., Ltd. for the three-month period
ended March 31, 2023 (2022: \88,156 million).
(e) Reconciliations of the summarized financial information of associates that are material to the
reporting entity to the carrying amount of the Group’s interest for the three-month periods
ended March 31, 2023 and 2022, are as follows:
43
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
(f) The Group’s share in the operating results of the individually insignificant associates and
joint ventures for the three-month periods ended March 31, 2023 and 2022, is as follows:
2023 2022
(in millions of Korean won) Associates Joint ventures Associates Joint ventures
Profit (Loss) for the period (7,804) (5,789) 730 (1,097)
Other comprehensive income (loss),
521 1,379 1,788 (1,356)
net of tax
Total comprehensive income (loss),
(7,283) (4,410) 2,518 (2,453)
net of tax
(g) There are no accumulated unrecognized changes in equity due to discontinued use of the
equity method as at March 31, 2023 and December 31, 2022.
(h) Details of marketable investments in associates as at March 31, 2023 and December 31,
2022, are as follows:
44
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
12. Borrowings
(a) Carrying amounts of borrowings as at March 31, 2023 and December 31, 2022, are as
follows:
(in millions of Korean won) March 31, 2023 December 31, 2022
Current
Short-term borrowings 875,447 885,911
Current portion of long-term borrowings 713,792 506,782
Current portion of debentures 897,128 894,825
Subtotal 2,486,367 2,287,518
Non-current
Long-term borrowings 4,632,806 4,584,578
Debentures 5,102,206 4,173,091
Subtotal 9,735,012 8,757,669
Total 12,221,379 11,045,187
(b) Details of borrowings as at March 31, 2023 and December 31, 2022, are as follows:
1 The above short-term borrowings in foreign currency include the short-term borrowings
collateralized by trade receivables amounting to ₩70,347 million (December 31, 2022: ₩41,026
million) as at March 31, 2023. The Group entered into interest rate swap and cross-currency
swap contracts to hedge cash flow risk related to floating interest rates and foreign exchange
45
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
The principal and interests of certain private guaranteed bonds are guaranteed by Shinhan Bank
(Note 29).
(a) Details of lease liabilities as at March 31, 2023 and December 31, 2022, are as follows:
(in millions of Korean won) March 31, 2023 December 31, 2022
Lease liabilities
Current 302,956 303,969
Non-current 797,101 792,266
Total 1,100,057 1,096,235
(b) The amounts, relating to leases, recognized in the consolidated interim statements of profit
or loss for the three-month periods ended March 31, 2023 and 2022, are as follows:
(c) Total expenses for leases including short-term leases and leases of low-value assets for the
three-month period ended March 31, 2023, are \143,928 million (March 31, 2022: \133,530
million).
46
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
(a) The amounts of net defined benefit liabilities (assets) as at March 31, 2023 and December
31, 2022, are as follows:
(in millions of Korean won) March 31, 2023 December 31, 2022
Present value of funded obligations 3,942,708 3,787,030
Present value of unfunded obligations 161,213 152,566
Subtotal 4,103,921 3,939,596
Fair value of plan assets (4,546,315) (4,624,609)
Net defined benefit liabilities (assets) 1 (442,394) (685,013)
1 Net defined benefit assets are included.
(b) The amounts recognized in the consolidated interim statements of profit or loss for the three-
month periods ended March 31, 2023 and 2022, are as follows:
(c) Line items in which expenses are included for the three-month periods ended March 31,
2023 and 2022, are as follows:
47
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
(d) Movements in the present value of defined benefit obligations for the three-month periods
ended March 31, 2023 and 2022, are as follows:
(e) Movements in the fair value of plan assets for the three-month periods ended March 31,
2023 and 2022, are as follows:
(f) The significant actuarial assumptions used as at March 31, 2023 and December 31, 2022,
are as follows:
As at March 31, 2023, the discount rates applied to the Parent Company and subsidiaries are
between 0.5%~10.9% (December 31, 2022: 0.1%~7.9%), and the expected salary growth rates
are between 1.0%~10.0% (December 31, 2022: 1.0%~10.0%).
48
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
(g) The sensitivity analysis of the defined benefit obligation to changes in principal assumptions
as at March 31, 2023, is as follows:
The above sensitivity analysis is based on a change in an assumption while holding all other
assumptions constant. In practice, this is unlikely to occur, and changes in some of the
assumptions may be correlated. The sensitivity of the defined benefit obligation to changes in
principal actuarial assumptions is calculated using the projected unit credit method, the same
method applied when calculating the defined benefit obligations.
The expense recognized for the three-month period ended March 31, 2023 in relation to the
defined contribution plan was \3,907 million (March 31, 2022: \4,518 million).
15. Provisions
Changes in provisions for the three-month periods ended March 31, 2023 and 2022, are as follows:
2023
Litigation and
(in millions of Korean won) Warranty Restoration others Total
At January 1 1,556,634 36,374 175,927 1,768,935
Additions1 127,458 1,983 25,297 154,738
Utilizations (206,413) (226) (18,520) (225,159)
Exchange differences 14,237 606 4,869 19,712
At March 31 1,491,916 38,737 187,573 1,718,226
Current 1,375,999 9,930 45,491 1,431,420
Non-current 115,917 28,807 142,082 286,806
2022
Litigation and
(in millions of Korean won) Warranty Restoration others Total
At January 1 2,767,091 50,480 165,438 2,983,009
Additions1 143,574 1,060 4,065 148,699
Utilizations (378,652) (599) (8,177) (387,428)
Exchange differences 8,458 10 5,466 13,934
At March 31 2,540,471 50,951 166,792 2,758,214
Current 2,358,838 31,494 15,725 2,406,057
Non-current 181,633 19,457 151,067 352,157
1 Net amount of additional provisions equals to additional provisions less reversed amounts.
49
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
(a) At the end of the reporting period, the number of shares authorized is 600 million.
The preferred shareholders have no voting rights and are entitled to preferred dividends at a
rate of one percentage point over that of ordinary shares. This preferred dividend rate is not
applicable to stock dividends. In addition, the preferred shareholders have same rights on
the remaining assets as ordinary shareholders. Repayment and conversion are not
applicable to preferred shares.
(b) Share premium balance as at March 31, 2023, is \3,088,179 million. The share premium of
\1,876,153 million was recognized, which is \2,815,707 million of the carrying amount of
net assets acquired from the entity spin-off back on April 1, 2002, less the Parent
Company’s capital of \783,961 million and less the Parent Company’s capital adjustment of
\155,593 million. In addition, the amount of \331,766 million paid in excess of par value
due to issuance of ordinary shares (merger with LG IBMPC Co., Ltd.) and the exercise of
conversion options in 2005 and 2006 are included. The excess in paid-in capital amounting
to \880,260 million over the par value was recognized as the share premium due to the
issuance of ordinary shares in 2011.
Retained earnings as at March 31, 2023 and December 31, 2022, consist of:
(in millions of Korean won) March 31, 2023 December 31, 2022
Legal reserve1 259,302 246,609
Discretionary reserve 5,504,431 4,539,499
Unappropriated retained earnings2 10,317,432 11,047,913
Total 16,081,165 15,834,021
1 The Commercial Code of the Republic of Korea requires the Parent Company to appropriate, as a legal
reserve, an amount equal to a minimum of 10% of cash dividends paid until such reserve equals 50% of its
issued share capital. The reserve is not available for the payment of cash dividends, but may be transferred
to share capital or used to reduce accumulated deficit.
2 Dividendfor the year ended December 31, 2022 of \126,905 million was approved at the annual general
meeting held on March 27, 2023, and paid in April 2023 (2022 payments: \153,915 million).
50
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
Accumulated other comprehensive income (loss) as at March 31, 2023 and December 31, 2022,
consists of:
(in millions of Korean won) March 31, 2023 December 31, 2022
Accumulated share of other comprehensive
179,718 63,025
income of associates and joint ventures
Cash flow hedge 41,136 61,390
Financial assets at fair value through other
(13,534) (17,096)
comprehensive income
Exchange differences on translation of foreign
(378,831) (857,691)
operations
Subtotal (171,511) (750,372)
Accumulated other comprehensive income
(234) 838
(loss) held for sale
Subtotal (234) 838
Total (171,745) (749,534)
Other components of equity as at March 31, 2023 and December 31, 2022, consist of:
(in millions of Korean won) March 31, 2023 December 31, 2022
Treasury shares1 (44,893) (44,893)
Consideration for conversion rights 9,891 9,891
Gain on disposal of treasury shares 2,183 2,183
Capital transactions within the Group and others2 (50,583) (51,908)
Total (83,402) (84,727)
1 The Parent Company has treasury shares consisting of 763,176 ordinary shares (December 31, 2022:
763,176 shares) and 4,693 preferred shares (December 31, 2022: 4,693 shares) at the end of the
reporting period. The Parent Company intends to either grant these treasury shares to employees and
directors as compensation or to sell them in the future.
2 Included gain (loss) from transactions with non-controlling interests and other reserves of subsidiaries net
of deferred taxes.
51
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
(a) Details of net sales for the three-month periods ended March 31, 2023 and 2022, are as
follows:
(b) Details of revenue from contracts with customers for the three-month periods ended March
31, 2023 and 2022, are as follows:
52
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
(c) Changes in the estimates of total contract revenue and total contract costs
Due to the factors causing the changes in the costs of VS and other segments during the three-
month period ended March 31, 2023, the estimated total contract revenue and costs for contracts
in progress have changed. Details of changes in estimated total contract revenue and costs and
the impact on profit or loss for the three-month period ended March 31, 2023 and the succeeding
periods are as follows:
Impact on
Changes in profit or loss Impact on profit
estimated total Changes in for the period or loss for the
contract estimated total ended March succeeding
(in millions of Korean won) revenue contract cost 31, 2023 periods
VS (6,861) (18,249) 12,759 (1,371)
Other segments 17,282 21,896 (59) (4,555)
Total 10,421 3,647 12,700 (5,926)
Expenses that are recorded by nature for the three-month periods ended March 31, 2023 and
2022, consist of:
53
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
22. General Operating Expenses (Selling and Marketing Expenses, Administrative Expenses,
Research and Development Expenses, and Service Costs)
Details of general operating expenses for the three-month periods ended March 31, 2023 and
2022, are as follows:
Financial income for the three-month periods ended March 31, 2023 and 2022, consists of:
54
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
Financial expenses for the three-month periods ended March 31, 2023 and 2022, consist of:
Other non-operating income for the three-month periods ended March 31, 2023 and 2022,
consists of:
55
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
Other non-operating expenses for the three-month periods ended March 31, 2023 and 2022,
consist of:
56
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
The Group has no potential dilutive ordinary shares. Accordingly, basic earnings (losses) per
share is identical to diluted earnings (losses) per share.
(a) Basic earnings (losses) per ordinary share for the three-month periods ended March 31,
2023 and 2022, is as follows:
2023 2022
Profit (Loss) attributable to ordinary shares
426,100 1,109,391
(in millions of Korean won)
Continuing operations 425,572 1,204,518
Discontinued operations 528 (95,127)
Weighted average number of ordinary shares
162,884,638 162,884,638
outstanding (unit: shares)
Basic earnings (losses) per ordinary share
2,616 6,811
(in Korean won)
Continuing operations 2,613 7,395
Discontinued operations 3 (584)
(b) Basic earnings (losses) per preferred share for the three-month periods ended March 31,
2023 and 2022, is as follows:
2023 2022
Profit (Loss) attributable to preferred shares
45,160 117,235
(in millions of Korean won)
Continuing operations 45,104 127,269
Discontinued operations 56 (10,034)
Weighted average number of preferred shares
17,181,299 17,181,299
outstanding (unit: shares)
Basic earnings (losses) per preferred share
2,628 6,823
(in Korean won)
Continuing operations 2,625 7,407
Discontinued operations 3 (584)
57
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
Cash flows from operating activities are presented using the indirect method. Details of cash
generated from operations for the three-month periods ended March 31, 2023 and 2022, are as
follows:
58
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
2023
Effects of other changes
Net cash flows Exchange Effects of
(in millions of from financing differences Amortization exchange rate
Korean won) At January 1 activities Additions (profit/loss) and others changes At March 31
Borrowings 5,977,271 81,622 - 68,087 - 95,065 6,222,045
Debentures 5,067,916 908,778 - 21,932 708 - 5,999,334
Lease liabilities 1,096,235 (92,360) 75,592 (1,738) 602 21,726 1,100,057
Other payables 51,403 - - 5,417 - - 56,820
Total 12,192,825 898,040 75,592 93,698 1,310 116,791 13,378,256
2022
Effects of other changes
Net cash flows Exchange Effects of
(in millions of from financing differences Amortization exchange rate
Korean won) At January 1 activities Additions (profit/loss) and others changes At March 31
Borrowings 4,329,597 568,746 - 17,256 - 24,926 4,940,525
Debentures 5,601,956 (445,520) - 6,293 829 - 5,163,558
Lease liabilities 955,422 (77,285) 108,830 (190) 467 1,585 988,829
Other payables 48,048 - - 1,038 - - 49,086
Total 10,935,023 45,941 108,830 24,397 1,296 26,511 11,141,998
59
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
ii) Total consideration received and the assets and liabilities of the transferred business are
as follows:
29. Contingencies
(a) At the end of the reporting period, borrowings are collateralized by a certain portion of
property, plant and equipment (land, buildings) with the pledged amount of \205,088 million
(December 31, 2022: \199,236 million) and the book amount of pledged assets is \184,462
million (December 31, 2022: \172,889 million). In addition, the Group provided buildings as
collateral to Shinhan Bank and others, the mortgagee, in order to guarantee obligations of
landlords, who leased the land to the Group, with the pledged amount of \14,400 million
(December 31, 2022: \14,400 million), and the book amount of pledged assets is \4,968 million
(December 31, 2022: \5,165 million).
(b) At the end of the reporting period, the Parent Company and domestic subsidiaries are
provided with performance guarantees of \442,293 million (December 31, 2022: \412,039
million) from Seoul Guarantee Insurance and others relating to the performance guarantees. LG
Innotek Co., Ltd. are provided with guarantee of principal amounting to USD 50 million
(December 31, 2022: EUR 100 million and USD 50 million) and interests from Shinhan Bank for
the guaranteed private placement bonds.
(c) At the end of the reporting period, the Parent Company is providing KEB Hana Bank with a
subrogation payment obligation for buyers up to \46,000 million (December 31, 2022: \46,000
million).
60
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
(d) In relation to the Bolt electric vehicle consumers' class action lawsuit filed against General
Motors (GM) in November 2020, the Group and others were additionally included as defendants
in September 2021, and the ultimate outcome of these case cannot be determined at the
reporting date.
(e) There are a number of legal actions, disputes and investigations arising from the normal
course of business that remain pending at the end of the reporting period. The ultimate effect of
those lawsuits on the financial position of the Group cannot reflect a reasonable expectation.
Management does not expect the outcome of the litigations will have a material effect on the
Group’s financial position.
At the end of the reporting period, LG Display Co., Ltd., an associate of the Group, has been
accused as a defendant in cases related to the infringement of patents. In addition, LG Display
Co., Ltd. is currently under the investigation and civil suit for anti-competitive activities. The
outcome of the case may affect the gain or loss from the equity method valuation, but the Group
is not individually responsible for the above case and the investigation.
30. Commitments
(a) At the end of the reporting period, the Group has borrowing agreements, such as overdraft
facility agreements, trade financing and others, with various banks, including Shinhan Bank, with
a limit of ₩7,503,127 million (December 31, 2022: ₩7,130,413 million).
(b) At the end of the reporting period, the Group has sales agreements for receivables with
various banks including KEB Hana Bank amounting to ₩5,421,202 million (December 31, 2022:
₩5,792,793 million).
(c) At the end of the reporting period, the Group has corporate electronic settlement services
contracts and vendor prepayment services contracts with various banks including Shinhan Bank
for up to ₩1,412,200 million (December 31, 2022: ₩1,409,200 million) in connection with the
payment of trade payables.
(d) At the end of the reporting period, the Group has commercial paper agreements with Shinhan
Bank and others for \68,000 million (December 31, 2022: \68,000 million).
Assets contracted for, but not yet acquired at the end of the reporting period, are as follows:
(in millions of Korean won) March 31, 2023 December 31, 2022
Property, plant and equipment 857,761 674,211
Intangible assets 20,029 27,539
Investments in associates and joint ventures 62,984 68,871
Total 940,774 770,621
61
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
Other than the above commitments, Zenith Electronics LLC(Zenith), a subsidiary, agreed to
the tender offers based on fair value at certain time in relation to the shares held by non-
controlling shareholders of Alphonso Inc. and the shares to be issued by the exercise of
stock options. At the end of the reporting period, the Group recognized this commitment as
‘other payables’.
In addition, the Parent Company agreed to tender offers based on fair value at certain time
in relation to the shares held by non-controlling shareholders of Cybellum Technologies Ltd.
and the shares to be issued by the exercise of stock options. At the end of the reporting
period, the Group recognized this commitment as ‘other payables’ and ‘other financial
liabilities’ (Note 33).
i) The Group has non-cancellable operating lease agreements regarding healthcare rental
business that lends water purifiers and others to customers and real estate rentals
business. The future aggregate lease receipts under operating leases at the end of the
reporting period, are as follows:
ii) The Group recognized \131,118 million (March 31, 2022: \154,969 million) in lease
income for the three-month period ended March 31, 2023.
i) Gross investment in the lease and present value of the minimum lease payments for the
financial lease as at March 31, 2023 and December 31, 2022, are as follows:
(in millions of Korean won) March 31, 2023 December 31, 2022
Gross Net Gross Net
investment Investment investment Investment
in the lease 1 in the lease in the lease 1 in the lease
Within one year 50,299 36,495 34,976 25,768
Between 1 and 2 years 50,355 38,941 35,453 27,832
Between 2 and 3 years 49,069 40,200 34,943 29,016
Between 3 and 4 years 48,567 42,289 34,337 30,147
Later than 4 years 77,602 73,404 56,137 53,336
Total 275,892 231,329 195,846 166,099
1 There are no remaining useful life without guarantee reflected on gross investment in the
lease.
62
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
ii) Unrealized interest income of financial lease as at March 31, 2023 and December 31,
2022, are as follows:
(in millions of Korean won) March 31, 2023 December 31, 2022
Gross investment in the lease 275,892 195,846
Net investment in the lease 231,329 166,099
Unrealized interest income 44,563 29,747
iii) For the three-month period ended March 31, 2023, the Group recognized income
amounting to \69,936 million (March 31, 2022: \28,498 million) in relation to financial
lease contract, and financial income of net investment in the lease amounting to \3,013
million (March 31, 2022: \511 million) is included.
At the end of the reporting period, the Group has various agreements as follows:
(a) Major transactions for the three-month periods ended March 31, 2023 and 2022, and
balances of receivables and payables from transaction with related parties as at March 31,
2023 and December 31, 2022, are as follows:
63
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
64
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
1 Although the entities are not the related parties of the Group in accordance with Korean IFRS 1024, the entities
belong to the Large Enterprise Group to which the Group also belongs in accordance with the Monopoly
Regulation and Fair Trade Act.
2 LX Holdings Corp. and its affiliates are separated from the corporate group in accordance with independent
management on June 21, 2022.
3 Others include acquisition amount of right-of-use assets and interest expense of lease liabilities.
65
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
66
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
1 Although the entities are not the related parties of the Group in accordance with Korean IFRS 1024, the entities
belong to the Large Enterprise Group to which the Group also belongs in accordance with the Monopoly
Regulation and Fair Trade Act.
2 The amount agreed to be reimbursed by the related party for provisions to be paid by the Group to a third party
is included.
3 Other payables include lease liabilities.
67
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
iii) Significant capital transactions and others with related parties for the three-month
periods ended March 31, 2023 and 2022, are as follows:
1 It is based on dividends declared and recognized as ‘other payables’ as at March 31, 2023 and 2022.
2 Repayments of financing borrowing transactions include repayment of principal elements of lease liabilities.
68
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
3 At the end of the reporting period, the Parent Company has entered into a loan agreement with LG Display Co.,
Ltd. for ₩1,000,000 million, and in relation to this loan, the Parent Company has been provided with collateral.
At the end of the reporting period, ₩650,000 million has been executed and recorded as long-term loans.
(b) The compensation paid or payable to key management personnel for the three-month periods
ended March 31, 2023 and 2022, consists of:
Key management refers to the directors who have significant control and responsibilities on
the Group’s business plans, operations and control.
(c) There is no collateral provided by the Group for the financial support of related parties at the
end of the reporting period.
(d) The Group has not recognized any bad debt expense or allowance for trade receivables from
related parties at the end of the reporting period.
The Group’s financial risk management (“FRM”) policy supports each business division to
achieve excellent performance solidly and continuously against market risk, credit risk and
liquidity risk. In addition, FRM helps the Group to enhance cost competitiveness through cost-
efficient financing cost by improving financial structure and effective cash management.
While cooperating with other divisions, Finance Division in the Parent Company mainly
implements FRM. This involves setting-up risk management policies and recognizing, evaluating
and hedging risks from a global point of view.
The Group anticipatively and systematically manages the financial risks over global business
activities through its four overseas treasury centers in New Jersey (United States), Amsterdam
(Netherlands), Beijing (China), and Singapore in coordination with Finance Division in the Parent
Company. And it also helps to improve overseas subsidiaries’ business competitiveness by
performing integration of their finance functions.
The Group mitigates the adverse effects from financial risk by monitoring the risk periodically and
updating FRM policy each year.
69
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
The carrying amount and profit or loss of each category of financial instruments, and the details
of borrowings related to the financial risk management are presented in Note 5 and Note 12,
respectively.
Due to its multinational business operations, the Group is mainly exposed to foreign exchange
risk on the U.S. Dollar and Euro.
The purpose of foreign exchange risk management is to provide the foundation of a stable
business operation by minimizing the uncertainty and volatility of foreign exchange gains and
losses from foreign exchange rate fluctuations.
The Group’s foreign exchange risk management is implemented under its own foreign
exchange policy through which the Group can minimize the exposure to foreign exchange risk
by preferentially making equal amount of foreign exchange assets and liabilities from general
operating activities. And the Group continuously considers efficient foreign exchange risk
hedges against its remaining exposure with derivative financial instruments and scrutinizes
changes in foreign exchange exposure and the results of hedging activities on a monthly basis.
Speculative foreign exchange trading is prohibited in principle.
As at March 31, 2023 and December 31, 2022, if the foreign exchange rate of the Korean won
fluctuated for monetary assets and liabilities denominated in major foreign currency other than
functional currency by 10% while other variables were fixed, the effects on profit (loss) before
tax would be as follows:
(in millions of Korean won) 10% increase 10% decrease 10% increase 10% decrease
USD/KRW 26,367 (26,367) 20,926 (20,926)
EUR/KRW 2,241 (2,241) (18,480) 18,480
The Group is exposed to interest rate risk through changes in interest-bearing liabilities or
assets. The risk mainly arises from borrowings and deposits held by financial institutions with
variable interest rates linked to market interest rate changes in the future. The objective of
interest rate risk management lies in improving corporate value by minimizing uncertainty
caused by fluctuations in interest rates and minimizing net interest expense.
The Group minimizes its borrowings from others and optimizes its deposits by expanding
internal finance sharing. The Group periodically monitors both domestic and foreign interest
rate trends to establish countermeasures against changes in interest rates.
70
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
If interest rates fluctuate by 1%p with all other variables held constant, the effects on income
and expenses related to borrowings and deposits held by financial institutions with variable
interest rates for the three-month periods ended March 31, 2023 and 2022, are as follows:
2023 2022
(in millions of Korean won) 1%p increase 1%p decrease 1%p increase 1%p decrease
Interest income 16,962 (16,962) 13,669 (13,669)
Interest expenses 3,440 (3,440) 1,876 (1,876)
The Group entered into the currency forward, cross-currency swap and the interest rate swap
contracts to hedge cash flow risks and fair value risks related to the floating interest rates and
foreign exchange rates .
Book amount
(in millions of
Contracted Contracted Interest Korean won)
amount currency rate Types of Expiration Liabiliti
Contractor (in millions) rate (paid) (%) hedging Starting date date Assets es
Woori Bank USD 864 1,067.9 Cash flow 2017. 10. 23 2025. 4. 23
1.88 ~ 4.47 157,311 3,186
and others (USD/KRW) ~ 1,309 hedge ~ 2023. 2. 3 ~ 2031. 7. 28
Cross-
EUR 95 Cash flow
currency CITI Bank 1,312 3.84 2022. 7. 15 2028. 1. 14 4,399 -
(EUR/KRW) hedge
swap
SGD 140 Cash flow
DBS 859.3 1.21 2020. 7. 9 2024. 1. 9 20,655 -
(SGD/KRW) hedge
KRW
Interest rate Woori Bank Cash flow 2014. 1. 3 2024. 1. 3
1,086,821 - 2.75 ~ 4.53 28,467 3,718
swap and others hedge ~ 2023. 2. 14 ~ 2032.11.16
/ USD 226
Interest rates received for the above swap contracts are equal to annual interest rates of
borrowings (Note 16).
71
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
Other Accumulated
Changes in fair Reclassified to comprehensive other
(in millions of Korean Types of value of derivatives Line items in profit or loss loss comprehensive
won) hedging (net of tax) profit or loss (net of tax) (net of tax) income
Cash flow Interest expense
Cross-currency swap hedge 33,538 and exchange (41,823) (8,285) 27,361
differences
Cash flow
Interest rate swap hedge (9,146) Interest expense (3,502) (12,648) 17,764
Changes in fair
(in millions of Korean Types of value of derivatives Line items in Effective hedge Ineffective hedge
won) hedging (before tax) profit or loss (before tax) (before tax)
Fair value Exchange
Currency forward 2,444 2,444 -
hedge differences
Trading purposes
The Group entered into the currency forward, the cross-currency swap and the interest rate
swap contracts to manage the risk against possible future changes in foreign exchange rates
and interest rates. Details of currency forward contracts of subsidiaries and the interest rate
swap contracts as at March 31, 2023, and related profit or loss for the three-month period
ended March 31, 2023, are as follows:
According to the put options granted to employees to whom stock options of Cybellum
Technologies Ltd. were granted, the Group recognized \4,151 million of derivative liabilities
and no gain or loss on derivatives transaction was recognized during the three-month period
ended March 31, 2023.
The Group is exposed to price risk through equity securities owned by the Group classified as
financial assets at fair value through other comprehensive income.
The listed securities owned by the Group are traded in the open market, and related to
KOSDAQ, NASDAQ and NYSE Index and Austrian Traded Index.
The effect of price index’s fluctuation related to the listed securities on the equity (before
applying the tax effect) is set out in the below table. The analysis is performed in respect of 30%
increase/decrease in the price index under the assumption that other variations are consistent
and the listed securities owned by the Group have correlation with the relevant past index.
72
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
(in millions of Korean won) 30% increase 30% decrease 30% increase 30% decrease
KOSDAQ 6,063 (6,063) 4,277 (4,277)
NASDAQ 697 (697) 701 (701)
NYSE 2,494 (2,494) 2,360 (2,360)
Austrian Traded Index 166 (166) 148 (148)
The valuation and changes in book amounts of the financial assets at fair value through other
comprehensive income related to the market risk above are presented in Note 7.
The Group operates a consistent Global Credit / TR (trade receivables) policy to manage credit
risk exposures.
In regard to receivables, the Group operates an integrated receivable insurance program with the
world top three receivable insurers (Euler Hermes, Atradius and Coface) and Korea Trade
Insurance Corporation (K-SURE). To minimize receivable credit risk, the Group applies the credit
rating of the counterparty rated by insurers, when determining the insurance coverage. In addition,
the Group performs stringent credit risk management based on credit valuation criteria for
receivables without insurance coverage or collateral.
At the end of the reporting period, trade receivable balance of the Group is \9,219,308 million
(December 31, 2022: \8,447,643 million) and its risk is managed appropriately within insurer’s
credit limit of \25,893,368 million (December 31, 2022: \25,823,363 million). Therefore,
the Group determined that credit risk exposed to the Group is limited.
At the end of the reporting period, the carrying amount of financial assets represents net of
impairment loss to reflect Group’s maximum exposure to the credit risk.
The Group forecasts its cash flow and liquidity status and sets action plans on a regular basis to
manage liquidity risk proactively. The Group systematically works with experts in four regional
treasury centers to carry out fund and liquidity management that can react proactively to the
changing global financial environment.
The Group maintains adequate amount of cash and committed credit facilities in Kookmin Bank
and Shinhan Bank to cope with potential liquidity risk arising from financial distress.
In addition, the Group is able to source funds any time in the domestic and international financial
markets because it has good investment credit grades of AA Stable from Korea Investors Service,
Korea Ratings and NICE Information Service, BBB from Standard & Poors, and Baa2 from
Moody’s at the end of the reporting period.
73
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
i) Cash flow information on maturity of financial liabilities as at March 31, 2023, is as follows:
(in millions of Korean won) Total Within 1 year 1 to 2 years 2 to 5 years Over 5 years
Trade payables 9,110,011 9,110,011 - - -
Borrowings 13,729,024 2,853,520 1,682,168 5,507,299 3,686,037
Lease liabilities 1,231,078 332,472 214,905 456,554 227,147
Other payables 4,099,609 3,959,583 82 126,535 13,409
Other financial liabilities 10,216 6,860 - 3,020 336
Total 28,179,938 16,262,446 1,897,155 6,093,408 3,926,929
The above cash flows are calculated at nominal value based on the earliest maturity dates
and include cash flows of principal and interests. The Group’s trading portfolio derivative
within other financial liabilities that are not qualified for hedge accounting have been included
at their fair value of \6,734 million within the less than 1-year time bucket. This is because
the contractual maturities are not essential for an understanding of the timing of the cash
flows. These contracts are managed on a net-fair value basis rather than by maturity date.
Derivatives for cash flow hedges from changes in interest rate and exchange rate are
reflected in the cash flows of related borrowings.
ii) At the end of the reporting period, the maturity analysis of financial guarantee contracts
provided by the Group to third party companies is as follows:
(in millions of Korean won) Total Within 1 year 1 to 2 years 2 to 5 years Over 5 years
The above cash flow is the maximum amount of guarantees allocated to earliest period in
which the Group can be required to make payments.
The Group’s capital risk management purpose is to maximize shareholders’ value through
maintaining a sound capital structure. The Group monitors financial ratios, such as liability to
equity ratio and net borrowing ratio each month and implements required action plan to improve
the capital structure.
Liability to equity ratio and net borrowing ratio as at March 31, 2023 and December 31, 2022, are
as follows:
(in millions of Korean won, except for ratios) March 31, 2023 December 31, 2022
Liability (A) 34,130,874 32,664,144
Equity (B) 23,359,770 22,491,997
Cash and cash equivalents (C) 6,810,985 6,322,360
Borrowings and lease liabilities (D) 13,321,436 12,141,422
Liability to equity ratio (A/B) 146.1% 145.2%
Net borrowings ratio ((D-C)/B) 27.9% 25.9%
74
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
(a) The book amount and fair value of the Group’s financial assets and liabilities as at March 31,
2023 and December 31, 2022, are as follows:
75
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
1 Excluded from disclosure such as fair value hierarchy and measurement method as the book amount is
the reasonable approximate of fair value.
2 Lease liabilities were excluded from the fair value disclosures in accordance with Korean IFRS 1107
Financial Instruments: Disclosures.
3 Measured at the higher of the amount of the loss allowance determined in accordance with Korean IFRS
76
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
1109 Financial Instruments, and the amount initially recognized less cumulative amount of income
recognized in accordance with Korean IFRS 1115 Revenue from Contracts with Customers, and excluded
from disclosure as there is no significant difference between the book amount and its fair value.
The fair value is defined as the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants. The fair value
measurement is to estimate the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at the measurement
date under current market conditions. When measuring fair value using valuation techniques,
the Group maximizes the use of market information and minimizes the use of unobservable
inputs.
Financial instruments measured at fair value are categorized within the fair value hierarchy,
and the defined levels are as follows:
- Level 1: Financial instruments measured at the quoted prices in an active market for
identical assets or liabilities are included in ‘level 1’. Assets or liabilities categorized within
‘level 1’ are financial instruments such as listed equity securities.
- Level 2: When financial instruments are measured by using a discounted cash flow, if all
significant inputs required to measure the fair value of an instrument are observable, the
instrument is included in ‘level 2’. Assets or liabilities categorized within ‘level 2’ are financial
instruments such as derivative financial instruments.
- Level 3: When financial instruments are measured by using a discounted cash flow, if one
or more of the significant inputs are unobservable market data, the instrument is included in
‘level 3’. There are no assets or liabilities categorized within ‘level 3’.
The fair value of financial instruments traded in active markets is based on quoted market
prices at the end of the reporting period. A market is regarded as active if quoted prices are
readily and regularly available from an exchange, dealer, broker, an entity within the same
industry, pricing service, or regulatory agency, and those prices represent actual and
regularly occurring market transactions on an arm’s length basis. The quoted market price
for financial assets held by the Group is the closing price at the end of the reporting period.
These instruments are included in ‘level 1’. Instruments included in ‘level 1’ comprise
primarily equity investments classified as financial assets at fair value through other
comprehensive income.
The fair value of financial instruments that are not traded in an active market is determined
by using valuation techniques. The Group uses various valuation techniques that the Group
develops or figures that external valuation agencies provide, and makes judgements based
on current market conditions. These valuation techniques maximize the use of observable
market data where it is available and rely as little as possible on entity specific estimates. If
77
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
all significant inputs required to measure the fair value of an instrument are observable, the
instrument is included in ‘level 2’.
If one or more of the significant inputs are not based on observable market data, the
instrument is included in ‘level 3’. Financial instrument included ‘level 3' uses other method
including discounting cash flow method.
Fair value hierarchy classifications of the financial assets and financial liabilities that are
measured at fair value as at March 31, 2023 and December 31, 2022, are as follows:
The above fair value amounts are recurring fair value measurements.
78
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
- Valuation technique and inputs for fair value measurements categorized within ‘level 2’
Valuation technique and inputs for fair value measurements categorized within ‘level 2’ as at
March 31, 2023 and December 31, 2022, are as follows:
Fair value
March 31, December 31, Valuation
(in millions of Korean won) 2023 2022 techniques Inputs
Assets
Other financial assets
Financial assets at fair value Discounted cash Discount rate and
5,646 5,722
through profit or loss flow exchange rate
Discounted cash Discount rate and
Derivatives for hedging purposes 210,832 188,327
flow exchange rate
Liabilities
Other financial liabilities
Discount rate and
Discounted cash
Financial liabilities at fair value exchange rate
10,090 10,787 flow and
through profit or loss share price and
binomial model
volatility
Discounted cash Discount rate and
Derivatives for hedging purposes 6,904 9,763
flow exchange rate
- Valuation techniques and inputs used in the fair value measurements categorized within
‘level 3’
At the end of the reporting period, financial instruments measured at fair value categorized
within ‘level 3’ comprise unlisted equity securities and debt securities and are measured
using discounted cash flow considering discount rate and others as inputs.
iii) Financial instruments not measured at fair value but for which the fair value is disclosed
Financial instruments not measured at fair value but for which the fair value is disclosed as at
March 31, 2023 and December 31, 2022, are as follows:
79
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
- Valuation technique and inputs for fair value measurements categorized within ‘level 2’
At the end of the reporting period, there are no financial instruments that are not measured
at fair value but for which the fair value is disclosed and categorized within ‘level 2’.
Valuation technique, inputs and unobservable inputs of financial instruments that are not
measured at fair value but for which the fair value is disclosed and categorized within ‘level 3’
as at March 31, 2023 and December 31, 2022, are as follows:
80
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
(a) On October 31, 2022, the Group acquired 60.0% shares of APPLEMANGO CO., LTD. in
order to enter the EV charging business, and the subsidiary acquired EV charging business
from Speel Co., Ltd. on December 31, 2022.
The following table summarizes the consideration paid and the fair value of assets acquired
and liabilities assumed:
1 The fair value of above trade receivables is the same as the contractual amount in gross.
2 Goodwill is incurred from a business combination amounting to \23,098 million due to an increase in
sales from integration of business with APPLEMANGO CO., LTD., which is a non-deductible expense
for tax purpose.
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LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
(a) Details of assets classified as held for sale as at March 31, 2023 and December 31, 2022,
are as follows:
(in millions of Korean won) March 31, 2023 1 December 31, 2022 2
Assets held for sale
Land 622 554
Building 2,767 3,106
Machinery 104 100
Other property, plant and equipment 7 7
Other assets - 9,148
Total 3,500 12,915
1 The sale is in progress as at March 31, 2023 and expected to be completed by 2023.
2 The sale of other assets was completed for the three-month period ended March 31, 2023 and the sale
of land and buildings held by the Group is in progress.
(b) Assets held for sale were measured at fair value less costs to sell before the reclassification,
and there is no impairment loss on property, plant and equipment recognized for the three-
month period ended March 31, 2023.
(c) Details of other components of equity as held for sale as at March 31, 2023 and December
31, 2022, are as follows:
(in millions of Korean won) March 31, 2023 December 31, 2022
Exchange differences on translation of foreign
(234) 838
operations
82
LG Electronics Inc.
Notes to the Consolidated Interim Financial Statements
March 31, 2023 and 2022 (Unaudited), and December 31, 2022
In 2022 and 2021, the Group discontinued the operations of energy business and MC business,
respectively, in order to focus on the Group’s core business through firmwide resource efficiency
and to secure financial resources for preparing new business for future growth by improving its
financial structure.
Profit and loss from discontinued operation for the three-month periods ended March 31, 2023
and 2022, are as follows:
Cash flows from discontinued operations for the three-month periods ended March 31, 2023 and
2022, are as follows:
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