LG Chem 2020 Contingent Financial Statements

LG Chem, Ltd.
Separate Financial Statements and

Internal Control over Financial Reporting
December 31, 2020 and 2019
LG Chem, Ltd.
Index
Page(s)
Independent Auditor’s Report......................................................................................................... 1 - 4
Separate Financial Statements
Separate Statements of Financial Position ....................................................................................... 5 - 6
Separate Statements of Profit or Loss .................................................................................................... 7
Separate Statements of Comprehensive Income ................................................................................... 8
Separate Statements of Changes in Equity ............................................................................................. 9
Separate Statements of Cash Flows .................................................................................................... 10
Notes to the Separate Financial Statements ............................................................................. 11 – 97
Report on Independent Auditor’s Audit of Internal Control over Financial Reporting .........98 - 99
Report on the Effectiveness of the Internal Control over Financial Reporting ........................... 100
Independent Auditor’s Report
(English Translation of a Report Originally Issued in Korean)
To the Shareholders and Board of Directors of

LG Chem, Ltd.
Opinion
We have audited the accompanying separate financial statements of LG Chem, Ltd. (the Company),
which comprise the separate statements of financial position as at December 31, 2020 and 2019, and
separate statements of profit or loss, separate statements of comprehensive income, separate statements
of changes in equity and separate statements of cash flows for the years then ended, and notes to the
separate financial statements, including a summary of significant accounting policies and other
explanatory information.
In our opinion, the accompanying separate financial statements present fairly, in all material respects, the
separate financial position of LG Chem, Ltd. as at December 31, 2020 and 2019, and its separate
financial performance and its separate cash flows for the years then ended in accordance with
International Financial Reporting Standards as adopted by the Republic of Korea (Korean IFRS).
We also have audited, in accordance with Korean Standards on Auditing, the Company's Internal Control
over Financial Reporting as of December 31, 2020, based on Conceptual Framework for Designing and
Operating Internal Control over Financial Reporting, and our report dated March 11, 2021 expressed an
unqualified opinion.
Basis for Opinion
We conducted our audits in accordance with Korean Standards on Auditing. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of the Company in accordance with the ethical
requirements of the Republic of Korea that are relevant to our audit of the separate financial statements
and we have fulfilled our other ethical responsibilities in accordance with the ethical requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Emphasis of Matter
Without modifying our opinion, we draw attention to Note 4 to the separate financial statements. Note 4 to
the separate financial statements describes management’s plans and action taken to resolve uncertainty
relating to the impact of Coronavirus disease 2019 (COVID-19) on the Group’s productivity and ability to
satisfy customer’s orders, and to solve these events or circumstances.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the separate financial statements of the current period. These matters were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters.
(1) Goodwill impairment assessment for Life Sciences Cash Generating Unit
Why this matter was determined to be a key audit matter
We focused on goodwill impairment assessment due to the significance of size of goodwill balance
(\723,756 million as at December 31, 2020) and because the measurement of the ‘recoverable amount’
of the Group’s Cash Generating Units (CGUs) involves management's judgements about the future results
of the business, discount rate and adjustments arising from the perspective of market participants. Details
are described in Note 12.
In particular, we focused our audit effort on the goodwill recognized in relation to the Life Sciences CGU
(₩686,229 million as at December 31, 2020) which is the most significant element among all relevant
CGUs with goodwill. The Life Sciences business was acquired by the Group in 2017 and has not
recognized impairment on goodwill since then. We focused on this area due to the significance of size of
goodwill balance
How this matter was addressed the in our audit
Audit procedures we performed to address this key audit matter include:
· Understanding, evaluation and testing of the design and operating effectiveness of relevant internal
controls in place in connection with impairment assessment of goodwill including review and approval
by management of future cash flow forecasts and assumptions applied in the assessment.
· Evaluation of valuation model used by management to estimate value-in-use.
· Comparison of future cash flow forecasts used to estimate value-in-use with the budgets approved by
the management except for the cash flows relating to specific fixed assets adjusted from the
perspective of market participants.
· Comparison of the current year actual results with the prior year forecasts to assess whether
management’s forecasts include optimistic assumptions.
· Evaluation of management’s assumptions used to estimate value-in-use.
- Comparison of estimated revenue growth rate, operating margin rate and capital expenditures
applied to estimate value-in-use with historical performances of the CGU and the current market
condition to evaluate whether applied assumptions are consistent.
- Evaluation of long-term growth rate by considering economic and industry forecasts
- Comparison of the discount rate used by the management with the discount rate independently
calculated by us using observable information in the market.
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· Evaluation of CGUs identification and testing of book values allocated to CGUs
· Evaluation of sensitivity analysis performed by management on the discount rate and terminal growth
rate
Other Matter
Auditing standards and their application in practice vary among countries. The procedures and practices
used in the Republic of Korea to audit such financial statements may differ from those generally accepted
and applied in other countries.
Responsibilities of Management and Those Charged with Governance for the Financial Statements
Management is responsible for the preparation and fair presentation of the separate financial statements
in accordance with Korean IFRS, and for such internal control as management determines is necessary to
enable the preparation of separate financial statements that are free from material misstatement, whether
due to fraud or error.
In preparing the separate financial statements, management is responsible for assessing the Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless management either intends to liquidate the Company
or to cease operations.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the separate financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with Korean Standards on Auditing will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of these financial statements.
As part of an audit in accordance with Korean Standards on Auditing, we exercise professional judgment
and maintain professional skepticism throughout the audit. We also:
· Identify and assess the risks of material misstatement of the separate financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting
a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
· Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances.
· Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
3
· Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report
to the related disclosures in the separate financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Company to cease to continue
as a going concern.
· Evaluate the overall presentation, structure and content of the separate financial statements, including
the disclosures, and whether the separate financial statements represent the underlying transactions
and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the separate financial statements of the current period and are
therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that
a matter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Kibok Lee, Certified
Public Accountant.
Seoul, Korea
March 11, 2021
This report is effective as of March 11, 2021, 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 there is a possibility that the
above audit report may have to be revised to reflect the impact of such subsequent events or
circumstances, if any.
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LG Chem, Ltd.
Separate Statements of Financial Position
(in millions of Korean won) Notes 2020 2019
Assets
Current assets
Cash and cash equivalents 3, 5, 6 852,668 1,002,263
Trade receivables 3, 5, 7, 31 2,198,988 3,981,935
Other receivables 3, 5, 7, 31 145,612 366,141
Prepaid income taxes - 110,525
Other current financial assets 3, 5, 8 - 10,879
Other current assets 13 119,288 207,596
Inventories 9 1,591,578 2,670,294
Assets held for sale 34 26,150 -
Total current assets 4,934,284 8,349,633
Non-current assets
Other receivables 3, 5, 7 158,566 505,489
Other financial assets 3, 5, 8 51,699 135,922
Investments in subsidiaries 10 8,793,551 5,151,116
Investments in associates and joint ventures 10 157,642 198,967
Deferred income tax assets 28 - 281,828
Property, plant and equipment 11 10,096,185 10,621,415
Intangible assets 12 1,630,149 1,680,815
Investment properties 36 22,803 53,328
Other non-current assets 13 5,271 48,573
Total non-current assets 20,915,866 18,677,453
Total assets 25,850,150 27,027,086
Liabilities
Current liabilities
Trade payables 3, 5, 31 877,035 1,738,053
Other payables 3, 5, 31 3,192,441 2,199,997
Borrowings 3, 5, 14 256,561 149,126
Other financial liabiliites 3, 5, 8 18,015 27,194
Provisions 15 13,448 448,662
Income tax payables 205,375 -
Other current liabilities 17 345,330 413,248
Total current liabilities 4,908,205 4,976,280
Non-current liabilities
Other payables 3, 5 4,226 8,233
Borrowings 3, 5, 14 3,277,409 5,174,881
Other financial liabilities 3, 5, 8 - 930
Provisions 15 22,889 114,593
Net defined benefit liabilities 16 58,265 159,182
Deferred income tax liabilities 28 559,817 -
Other non-current liabilities 17 55,834 132,757
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LG Chem, Ltd.
Separate Statements of Financial Position
Total non-current liabilities 3,978,440 5,590,576

Total liabilities 8,886,645 10,566,856
Equity
Share capital 1, 19 391,406 391,406
Capital surplus 2,701,242 2,283,378
Other components of equity 21 (35,699) (354,945)
Accumulated other comprehensive income 15,495 28,797
Retained earnings 20 13,891,061 14,111,594
Total equity 16,963,505 16,460,230
Total liabilities and equity 25,850,150 27,027,086
The above separate statements of financial position should be read in conjunction with the accompanying
notes.
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LG Chem, Ltd.
Separate Statements of Profit or Loss
Years Ended December 31, 2020 and 2019
(in millions of Korean won, except per share amounts) Notes 2020 2019
Revenue 31 20,830,009 21,809,592

Cost of sales 23, 31 (16,483,775) (17,844,346)
Gross profit 4,346,234 3,965,246
Selling and administrative expenses 22, 23, 31 (3,231,797) (3,341,081)
Operating profit 1,114,437 624,165
Finance income 25 421,562 328,468

Finance costs 25 (782,028) (275,662)
Other non-operating income 26 834,210 380,791
Other non-operating expenses 27 (765,000) (502,523)
Profit before income tax 32 823,181 555,239

Income tax expense (840,780) (99,507)
Profit (loss) from continuing operations (17,599) 455,732
Loss from discontinued operations 34 (80,624) (89,808)
Profit (loss) for the year (98,223) 365,924
Earnings (losses) per share for profit 29

from continuing operations (in won)
Basic earnings (losses) per ordinary share (234) 5,944
Basic earnings (losses) per preferred share (184) 5,994
Diluted earnings (losses) per ordinary share (234) 5,679
Diluted earnings (losses) per preferred share (184) 5,729
Earnings (losses) per share (in won)

Basic earnings (losses) per ordinary share (1,283) 4,771
Basic earnings (losses) per preferred share (1,233) 4,821
Diluted earnings (losses) per ordinary share (1,283) 4,527
Diluted earnings (losses) per preferred share (1,233) 4,577
The above separate statements of profit or loss should be read in conjunction with the accompanying notes.
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LG Chem, Ltd.
Separate Statements of Comprehensive Income

Other comprehensive income
Items that will not be reclassified to profit or loss 17,585 (24,432)
Remeasurements of net defined benefit liability 16 21,231 (68,778)
Gain on valuation of financial assets at fair value
3,025 35,079
through other comprehensive income
Income tax relating to these items (6,671) 9,267
Items that may be subsequently reclassified to profit or loss 411 28,890
Cash flow hedges 567 39,848
Income tax relating to these items (156) (10,958)
Other comprehensive income for the year, net of tax 17,996 4,458
Total comprehensive income (loss) for the year (80,227) 370,382
The above separate statements of comprehensive income should be read in conjunction with the
accompanying notes.
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LG Chem, Ltd.
Separate Statements of Changes in Equity
Accumulated
Other other
Share components comprehensive Retained Total
(in millions of Korean won) Notes capital Capital surplus of equity income earnings equity
Balance at January 1, 2019 391,406 2,283,378 (354,945) (25,525) 14,255,592 16,549,906

Comprehensive income
Profit for the year - - - - 365,924 365,924
Remeasurements of net defined benefit liability 16 - - - - (49,864) (49,864)
through other comprehensive income - - - 25,432 - 25,432
Cash flow hedges - - - 28,890 - 28,890
Total comprehensive income for the year - - - 54,322 316,060 370,382
Transactions with owners

Dividends 30 - - - - (460,058) (460,058)
Total transactions with owners - - - - (460,058) (460,058)
Balance at December 31, 2019 391,406 2,283,378 (354,945) 28,797 14,111,594 16,460,230
Balance at January 1, 2020 391,406 2,283,378 (354,945) 28,797 14,111,594 16,460,230

Comprehensive income (loss)
Loss for the year - - - - (98,223) (98,223)
Remeasurements of net defined benefit liability 16 - - - - 15,393 15,393
through other comprehensive income - - - 2,192 - 2,192
Cash flow hedges - - - (15,494) 15,905 411
Total comprehensive loss for the year - - - (13,302) (66,925) (80,227)
Transactions with owners

Disposal of treasury shares - 417,864 319,246 - - 737,110
Dividends 30 - - - - (153,608) (153,608)
Total transactions with owners - 417,864 319,246 - (153,608) 583,502
Balance at December 31, 2020 391,406 2,701,242 (35,699) 15,495 13,891,061 16,963,505
The above separate statements of changes in equity should be read in conjunction with the accompanying
notes.
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LG Chem, Ltd.
Separate Statements of Cash Flows
Cash flows from operating activities

Cash generated from operations 32 5,326,138 2,408,957
Interest received 28,000 26,999
Interest paid (152,564) (95,195)
Dividends received 108,240 84,910
Income taxes paid (73,135) (482,520)
Net cash inflow from operating activities 5,236,679 1,943,151
Cash flows from investing activities

Decrease in other receivables 500 554
Decrease in other non-current receivables 26,850 20,555
Proceeds from disposal of investments in associates and joint ventures 382,974 16,149
Proceeds from disposal of investments in subsidiaries - 12,108
Proceeds from disposal of financial instruments 91,159 1,116
Proceeds from disposal of property, plant and equipment 32,765 80,822
Proceeds from disposal of intangible assets 17,066 19,410
Government grants received 889 7,076
Proceeds from disposal of assets held for sale 52,114 -
Increase in other non-current receivables (83,197) (411,186)
Acquisition of investments in subsidiaries (1,294,981) (1,500,123)
Acquisition of investments in associates and joint ventures (44,006) (46,526)
Acquisition of financial instruments (10,400) (10,750)
Acquisition of property, plant and equipment (2,187,196) (2,800,070)
Acquisition of intangible assets (124,583) (250,894)
Business combination - (529)
Split-off (1,251,298) -
Net cash outflow from investing activities (4,391,344) (4,862,288)
Cash flows from financing activities

Proceeds from borrowings 897,317 2,763,638
Repayments of borrowings (1,732,731) (63,259)
Dividends (153,608) (460,058)
Net cash inflow (outflow) from financing activities (989,022) 2,240,321
Net decrease in cash and cash equivalents (143,687) (678,816)

Cash and cash equivalents at the beginning of the year 1,002,263 1,690,862
Effects of exchange rate changes on cash and cash equivalents (5,908) (9,783)
Cash and cash equivalents at the end of year in
the separate statement of financial position 852,668 1,002,263
The above separate statements of cash flows should be read in conjunction with the accompanying notes.
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LG Chem, Ltd.
Notes to the Separate Financial Statements
1. General Information
LG Chem, Ltd. (the Company) was spun off on April 1, 2001, from LG Chem Investment Ltd.
(now, LG Corp., formerly, LG Chemical Ltd.).
As at December 31, 2020, the Company has its manufacturing facilities in Yeosu, Daesan,
Cheongju, Ulsan, Naju, Iksan, Paju, Osong, Onsan and Gimcheon and engages in petrochemical,
advanced materials, and life sciences business.
As described in Note 37, on December 1, 2020, LG Energy Solution Co., Ltd. was newly
established through the split-off of energy solution business division of the Company and related
assets and liabilities of energy solution division have been transferred to LG Energy Solution Co.,
Ltd.
The Company is authorized to issue 292 million shares of ordinary shares with par value of
￦ 5,000 per share. As at December 31, 2020, the Company has issued 70,592,343 ordinary
shares (￦ 352,962 million) and 7,688,800 preferred shares (￦ 38,444 million). The largest
shareholder of the Company is LG Corp., which owns 33.34% of the Company’s ordinary shares.
Preferred shareholders have no voting rights but are entitled to receive dividends at a rate 1%
more than those paid to ordinary shareholders.
2. Summary of Significant Accounting Policies
The principal accounting policies applied in the preparation of these separate financial
statements are set out below. These policies have been consistently applied to all the years
presented, unless otherwise stated.
2.1 Basis of Preparation
The Company 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 separate
financial statements have been condensed, restructured and translated into English from the
Korean language financial statements.
The separate financial statements of the Company have been prepared in accordance with
Korean IFRS. These are the standards, subsequent amendments and related interpretations
issued by the International Accounting Standards Board (IASB) that have been adopted by the
Republic of Korea.
The financial statements have been prepared on a historical cost basis, except for the following:
· Certain financial assets and liabilities (including derivative instruments) – measured at fair
value
· Assets held for sale – measured at fair value less costs to sell, and
· Defined benefit pension plans – plan assets measured at fair value.
The preparation of financial statements requires the use of critical accounting estimates.
Management also needs to exercise judgement in applying the Company’s accounting policies.
The areas involving a higher degree of judgment or complexity, or areas where assumptions and
estimates are significant to the separate financial statements are disclosed in Note 4.
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LG Chem, Ltd.
2.2 Changes in Accounting Policy and Disclosures
(a) New and amended standards adopted by the Company
The Company has applied the following standards and amendments for the first time for their
annual reporting period commencing January 1, 2020.
- Amendments to Korean IFRS 1001 Presentation of Financial Statements and Korean IFRS
1008 Accounting Policies, Changes in Accounting Estimates and Errors – Definition of Material
The amendments clarify the definition of material. Information is material if omitting, misstating or
obscuring it could reasonably be expected to influence the decisions that the primary users of
general-purpose financial statements make on the basis of those financial statements. The
amendments do not have a significant impact on the financial statements.
- Amendments to Korean IFRS 1103 Business Combination – Definition of a Business
The amended definition of a business requires an acquisition to include an input and a

substantive process that together significantly contribute to the ability to create outputs and the
definition of output excludes the returns in the form of lower costs and other economic benefits. If
substantially all of the fair value of the gross assets acquired is concentrated in a single
identifiable asset or group of similar identifiable assets, an entity may elect to apply an optional
concentration test that permits a simplified assessment of whether an acquired set of activities
and assets is not a business. The amendments do not have a significant impact on the financial
statements.
- Amendments to Korean IFRS 1109 Financial Instruments, Korean IFRS 1039 Financial
Instruments: Recognition and Measurement and Korean IFRS 1107 Financial Instruments:
Disclosure – Interest Rate Benchmark Reform
The amendments allow to apply the exceptions when forward-looking analysis is performed in
relation the application of hedge accounting while uncertainties arising from interest rate
benchmark reform exist. The exceptions require the Company assumes that the interest rate
benchmark on which the hedged items and the hedging instruments are based on is not altered
as a result of interest rate benchmark reform, when determining whether the expected cash flows
are highly probable, whether an economic relationship between the hedged item and the hedging
instrument exists, and when assessing the hedging relationship is highly effective.
(b) New standards and interpretations not yet adopted by the Company
The following new accounting standards and interpretations have been published that are not
mandatory for December 31, 2020 reporting periods and have not been early adopted by the
Company.
- Amendments to Korean IFRS 1116 Lease – Practical expedient for COVID-19 - Related Rent
Exemption, Concessions, Suspension
As a practical expedient, a lessee may elect not to assess whether a rent concession occurring
as a direct consequence of the COVID-19 pandemic is a lease modification, and the amounts
recognized in profit or loss as a result of applying this exemption should be disclosed. The
amendments should be applied for annual periods beginning on or after June 1, 2020, and
earlier application is permitted. The Company does not expect that these amendments have a
significant impact on the financial statements.
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LG Chem, Ltd.
- Amendments to Korean IFRS 1109 Financial Instruments, Korean IFRS 1039 Financial
Instruments: Recognition and Measurement, Korean IFRS 1107 Financial Instruments:
Disclosure, Korean IFRS 1104 Insurance Contracts and Korean IFRS 1116 Lease – Interest Rate
Benchmark Reform
In relation to interest rate benchmark reform, the amendments provide exceptions including
adjust effective interest rate instead of book amounts when interest rate benchmark of financial
instruments at amortized costs is replaced, and apply hedge accounting without discontinuance
although the interest rate benchmark is replaced in hedging relationship. The amendments
should be applied for annual periods beginning on or after January 1, 2021, and earlier
application is permitted. The Company does not expect that these amendments have a
significant impact on the financial statements.
- Amendments to Korean IFRS 1103 Business Combination – Reference to the Conceptual

Framework
The amendments update a reference of definition of assets and liabilities qualify for recognition
in revised Conceptual Framework for Financial Reporting. However, the amendments add an
exception for the recognition of liabilities and contingent liabilities within the scope of Korea IFRS
1037 Provisions, Contingent Liabilities and Contingent Assets, and Korean IFRS 2121 Levies.
The amendments also confirm that contingent assets should not be recognized at the acquisition
date. The amendments should be applied for annual periods beginning on or after January 1,
2022, and earlier application is permitted. The Company does not expect that these amendments
have a significant impact on the financial statements.
- Amendments to Korean IFRS 1016 Property, Plant and Equipment - Proceeds before intended
use
The amendments prohibit an entity from deducting from the cost of an item of property, plant and
equipment any proceeds from selling items produced while the entity is preparing the asset for its
intended use. Instead, the entity will recognize the proceeds from selling such items, and the
costs of producing those items, in profit or loss. The amendments should be applied for annual
periods beginning on or after January 1, 2022, and earlier application is permitted. The Company
is in review for the impact of these amendments on the financial statements.
- Amendments to Korean IFRS 1037 Provisions, Contingent Liabilities and Contingent Assets -
Onerous Contracts : Cost of Fulfilling a Contract
The amendments clarify that the direct costs of fulfilling a contract include both the incremental
costs of fulfilling the contract and an allocation of other costs directly related to fulfilling contracts
when assessing whether the contract is onerous. The amendments should be applied for annual
periods beginning on or after January 1, 2022, and earlier application is permitted. The Company
does not expect that these amendments have a significant impact on the financial statements.
- Annual improvements to Korean IFRS 2018-2020
Annual improvements of Korean IFRS 2018-2020 Cycle should be applied for annual periods
beginning on or after January 1, 2022, and earlier application is permitted. The Company does
not expect that these amendments have a significant impact on the financial statements.
 Korean IFRS 1101 First time Adoption of Korean International Financial Reporting
Standards – Subsidiaries that are first-time adopters
 Korean IFRS 1109 Financial Instruments – Fees related to the 10% test for derecognition of
financial liabilities
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LG Chem, Ltd.
 Korean IFRS 1116 Leases – Lease incentives
 Korean IFRS 1041 Agriculture – Measuring fair value
- Amendments to Korean IFRS 1001 Presentation of Financial Statements - Classification of

Liabilities as Current or Non-current
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 include 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
annual periods beginning on or after January 1, 2023, and earlier application is permitted. The
Company does not expect that these amendments have a significant impact on the financial
statements.
2.3 Subsidiaries, Joint Ventures, and Associates
The financial statements of the Company are the separate financial statements prepared in
accordance with Korean IFRS 1027 Separate Financial Statements. Investments in subsidiaries,
joint ventures and associates are recognized at cost. Management applied the carrying amounts
under the previous K-GAAP at the time of transition to Korean IFRS as deemed cost of
investments. The Company recognizes dividend income from subsidiaries, joint ventures and
associates in profit or loss when its right to receive the dividend is established.
2.4 Foreign Currency Translation
(a) Functional and presentation currency
Items included in the financial statements of each of the Company are measured using the
currency of the primary economic environment in which each entity operates (the “functional
currency”). The financial statements are presented in Korean won, which is the Company’s
functional and presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange
rates at the dates of the transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation of monetary assets and liabilities
denominated in foreign currencies at year end exchange rates are generally recognized in profit
or loss. They are recognized in other comprehensive income if they relate to qualifying cash flow
hedges ,qualifying effective portion of net investment hedges, or are attributable to monetary
part of the net investment in a foreign operation.
Foreign exchange gains and losses that relate to borrowings are presented in the statement of
profit or loss, within ‘finance income or costs’. All other foreign exchange gains and losses are
presented in the statement of profit or loss within ‘other non-operating income or expenses’.
Foreign exchange gains and losses on non-monetary items are recognized as part of gains and
losses resulting from the changes in fair value. Foreign exchange gains and losses on equity
investments measured at fair value through profit or loss are recognized in profit or loss and
those on equity investments measured at fair value through other comprehensive income are
recognized in other comprehensive income.
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LG Chem, Ltd.
2.5 Cash and Cash Equivalents
Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-
term highly liquid investments with original maturities of three months or less.
2.6 Financial Assets
(a) Classification
The Company classifies its financial assets in the following measurement categories:
 those to be measured at fair value through profit or loss,

 those to be measured at fair value through other comprehensive income, and
 those to be measured at amortized cost
Financial assets are classified on the basis of the entity’s business model for managing the
financial assets and the contractual cash flow characteristics of the financial assets.
Gains and losses on financial assets measured at fair value are recognized either in profit or loss
or other comprehensive income. For investments in debt instruments, this will depend on the
business model in which the investment is held. The Company reclassifies debt investments only
when its business model for managing those assets changes.
Subsequent changes in the fair value of investments in equity instruments that are not held for
trading are recognized in other comprehensive income.
(b) Measurement
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of
a financial asset not at fair value through profit or loss, transaction costs that are directly
attributable to the acquisition of the financial asset. Transaction costs of financial assets carried
at fair value through profit or loss are expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining
whether their cash flows are solely payment of principal and interest.
A. Debt instruments
Subsequent measurement of debt instruments depends on the Company’s business model for
managing the asset and the cash flow characteristics of the asset. The Company classifies its
debt instruments into one of the following three measurement categories:
 Amortized cost: Assets that are held for collection of contractual cash flows where those
cash flows represent solely payments of principal and interest are measured at amortized
cost. A gain or loss on a debt investment that is subsequently measured at amortized cost
and is not part of a hedging relationship is recognized in profit or loss when the asset is
derecognized or impaired. Interest income from these financial assets is included in ‘finance
income’ using the effective interest rate method.
 Fair value through other comprehensive income: Assets that are held for collection of
contractual cash flows and for selling the financial assets, where the assets’ cash flows
represent solely payments of principal and interest, are measured at fair value through other
comprehensive income. Movements in the carrying amount are taken through other
comprehensive income, except for the recognition of impairment loss (reversal of
impairment loss), interest income and foreign exchange gains and losses which are
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LG Chem, Ltd.
recognized in profit or loss. When the financial asset is derecognized, the cumulative gain or
loss previously recognized in other comprehensive income is reclassified from equity to
profit or loss. Interest income from these financial assets is included in ‘finance income’
using the effective interest rate method. Foreign exchange gains and losses are presented
in ‘finance income/costs’ or ‘other non-operating income/expenses’ and impairment loss is
presented in ‘other non-operating expenses’.
 Fair value through profit or loss: Assets that do not meet the criteria for amortized cost or fair
value through other comprehensive income are measured at fair value through profit or loss.
A gain or loss on a debt investment that is subsequently measured at fair value through
profit or loss and is not part of a hedging relationship is recognized in profit or loss and
presented net in the statement of profit or loss within ‘finance income/costs’ or ‘other non-
operating income/expenses’ in the period in which it arises.
B. Equity instruments
The Company subsequently measures all equity investments at fair value. Where the Company’s
management has elected to present fair value gains and losses on equity investments, which
held for long-term investment or strategic purpose, in other comprehensive income, there is no
subsequent reclassification of fair value gains and losses to profit or loss following the
derecognition of the investment. Dividend income from such investments continue to be
recognized in profit or loss as ‘finance income’ when the right to receive payments is established.
Changes in the fair value of financial assets at fair value through profit or loss are recognized in
‘Finance income or costs’ in the statement of profit or loss as applicable. Impairment loss
(reversal of impairment loss) on equity investments measured at fair value through other
comprehensive income are not reported separately from other changes in fair value.
(c) Impairment
The Company assesses on a forward looking basis the expected credit losses associated with its
debt instruments carried at amortized cost and fair value through other comprehensive income.
The impairment methodology applied depends on whether there has been a significant increase
in credit risk. For trade receivables and lease receivables, the Company applies the simplified
approach, which requires expected lifetime credit losses to be recognized from initial recognition
of the receivables.
(d) Recognition and Derecognition
Regular way purchases and sales of financial assets are recognized or derecognized on trade-
date, the date on which the Company commits to purchase or sell the asset. Financial assets are
derecognized when the rights to receive cash flows from the financial assets have expired or
have been transferred and the Company has transferred substantially all the risks and rewards of
ownership.
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 in its entirety and recognizes a financial liability for the consideration
received. The Company classified the financial liability as “borrowings” in the statement of
financial position.
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LG Chem, Ltd.
2.7 Derivative Financial Instruments
Derivatives are initially recognized at fair value on the date a derivative contract is entered into
and are subsequently remeasured to their fair value at the end of each reporting period. The
accounting for subsequent changes in fair value depends on whether the derivative is designated
as a hedging instrument, and if so, the nature of the item being hedged. The Company has
hedge relationships and designates certain derivatives as either:
- hedges of the fair value of recognized assets or liabilities or a firm commitment

(fair value hedges)
- hedges of a particular risk associated with the cash flows of recognized assets and liabilities
and highly probable forecast transactions (cash flow hedges), or
- hedges of a net investment in a foreign operation (net investment hedges)
At inception of the hedge relationship, the Company documents the economic relationship
between hedging instruments and hedged items including whether changes in the cash flows of
the hedging instruments are expected to offset changes in the cash flows of hedged items.
The full fair value of a hedging derivative is classified as a non-current asset or liability when the
remaining maturity of the hedged item is more than 12 months; it is classified as a current asset
or liability when the remaining maturity of the hedged item is less than 12 months. A non-
derivative financial asset and a non-derivative financial liability is classified as a current or non-
current based on its expected maturity and its settlement, respectively.
Cash flow hedge

The effective portion of changes in the fair value of derivatives that are designated and qualify as
cash flow hedges is recognized in the cash flow hedge reserve within equity, limited to the
cumulative change in fair value (present value) of the hedged item (the present value of the
cumulative change in the future expected cash flows of the hedged item) from the inception of the
hedge. The ineffective portion is recognized in ‘other non-operating income (expenses)’.
When option contracts are used to hedge forecast transactions, the Company designates only
the intrinsic value of the option contract as the hedging instrument. Gains or losses relating to the
effective portion of the change in intrinsic value of the option contracts are recognized in the cash
flow hedge reserve within equity. The changes in the time value of the option contracts that relate
to the hedged item (‘aligned time value’) are recognized within the costs of hedging in other
comprehensive income within equity.
When forward contracts are used to hedge forecast transactions, the Company generally
designates only the change in fair value of the forward contract related to the spot element as the
hedging instrument. Gains or losses relating to the effective portion of the change in the spot
element of the forward contracts are recognized in the cash flow hedge reserve within equity. The
change in the forward element of the contract that relates to the hedged item is recognized within
other comprehensive income within equity. In some cases, the Company may designate the full
change in fair value of the forward contract (including forward points) as the hedging instrument.
In such cases, the gains or losses relating to the effective portion of the change in fair value of
the entire forward contract are recognized in the cash flow hedge reserve within equity.
Amounts accumulated in equity are reclassified in the periods when the hedged item affects profit
or loss, as follows:
- Where the hedged item subsequently results in the recognition of a non-financial asset (such as
inventory), both the deferred hedging gains and losses and the deferred time value of the
option contracts or deferred forward points, if any, are included within the initial cost of the
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LG Chem, Ltd.
asset. The deferred amounts are ultimately recognized in profit or loss as the hedged item
affects profit or loss (for example through cost of sales).
- The gain or loss relating to the effective portion of the interest rate swaps hedging variable rate
borrowings is recognized in profit or loss within ‘finance cost’ at the same time as the interest
expense on the hedged borrowings.
When a hedging instrument expires, or is sold, terminated, exercised, or when a hedge no longer
meets the criteria for hedge accounting, any accumulated cash flow hedge reserve at that time
remains in equity until the forecast transaction occurs, resulting in the recognition of a non-
financial asset such as inventory. When the forecast transaction is no longer expected to occur,
the cash flow hedge reserve and deferred costs of hedging that were reported in equity are
immediately reclassified to profit or loss.
Changes in the fair value of any derivative instrument that does not qualify for hedge accounting
are recognized immediately in profit or loss within 'other non-operating income (expenses)' or
'finance income (costs)' based on the nature of transactions.
2.8 Trade Receivables
At initial recognition, trade receivables are measured at the amount of unconditional

consideration, unless the trade receivables contain a significant financing component. Trade
receivables are subsequently measured at amortized cost using the effective interest method,
less loss allowance.
2.9 Inventories
Inventories are stated at the lower of cost and net realizable value. Cost is determined using
weighted average cost method, except for goods in transit which is determined using the specific
identification method.
2.10 Assets Held for sale
Assets are classified as held for sale when their carrying amount will be recovered principally
through a sale transaction rather than through continuing use and a sale is considered highly
probable. The assets are measured at the lower amount between their carrying amount and the
fair value less costs to sell.
2.11 Property, Plant and Equipment
Property, plant and equipment are stated at historical cost less accumulated depreciation and
accumulated impairment losses. Historical cost includes expenditure that is directly attributable to
the acquisition of the items. Depreciation of all property, plant and equipment, except for land, is
calculated using the straight-line method to allocate their cost or revalued amounts, net of their
residual values, over their estimated useful lives as follows:
Useful lives
Buildings 25 - 50 years
Structures 15 - 50 years
Machinery 4 - 15 years
Others 1 - 15 years
The assets’ depreciation method, residual values and useful lives are reviewed, and adjusted if
appropriate, at the end of each reporting period.
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LG Chem, Ltd.
2.12 Investment Property
Investment property is property held to earn rentals or for capital appreciation or both. An
investment property is measured initially at its cost. An investment property is measured after
initial measurement at depreciated cost (less any accumulated impairment losses.) The
Company depreciates investment properties, except for land, using the straight-line method over
their useful lives of 25 ~ 50 years.
2.13 Borrowing Costs
General and specific borrowing costs that are directly attributable to the acquisition, construction
or production of a qualifying asset are capitalized during the period of time that is required to
complete and prepare the asset for its intended use or sale. Investment income earned on the
temporary investment of specific borrowings on qualifying assets is deducted from the borrowing
costs eligible for capitalization. Other borrowing costs are expensed in the period in which they
are incurred.
2.14 Government Grants
Grants from the government are recognized at their fair value where there is a reasonable
assurance that the grant will be received and the Company will comply with all attached
conditions. Government grants related to assets are presented in the statement of financial
position by deducting the grant in arriving at the carrying amount of the asset, and government
grants related to income are deferred and later deducted from the related expense.
2.15 Intangible Assets
The excess of consideration transferred and amount of acquisition-date fair value of any previous
equity interest in the acquired entity over the fair value of the net identifiable assets acquired is
recoded as goodwill. Goodwill is carried at its cost less accumulated impairment losses.
Impairment losses on goodwill are not reversed.
Intangible assets, except for goodwill, are initially recognized at its historical cost, and carried at
cost less accumulated amortization and accumulated impairment losses.
Development costs that are directly attributable to internally generated by the Company are
recognized when the criteria; such as, technically feasible, generate probable future economic
benefits and other, are met. Membership rights that have an indefinite useful life are not subject
to amortization because there is no foreseeable limit to the period over which the assets are
expected to be utilized. The Company amortizes intangible assets with a limited useful life using
the straight-line method over the following periods:
Useful lives
Development costs 3 - 15 years

Industrial property rights 5 - 15 years
Other intangible assets 6 - 20 years
2.16 Research and Development
Costs associated with research are recognized as an expense as incurred. Costs that are
identifiable, controllable and directly attributable to development projects are recognized as
intangible assets when the following criteria are met:
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LG Chem, Ltd.
- It is technically feasible to complete the development project so that it will be available for use;
- Management intends to complete the development project for its own use or selling;
- There is an ability to use or sell the development project;
- It can be demonstrated how the development project will generate probable future economic
benefits;
- Adequate technical, financial resources and other resources to complete the development
and to use or sell the development project are available; and
- The expenditure attributable to the development project during its development can be reliably
measured.
Generally, internally generated development projects have the following stages; formulation and
selection of a project, verification of idea and technology, development and testing, decision of
commercialization, test of final application. Expenditures can be capitalized as intangible assets
only after the decision of commercialization. Expenditures incurred in other stages are
recognized as expenses on the research phase.
Internally generated development projects in the Life Sciences business have the following
stages; formulation of potential candidates, preclinical research, clinical researches such as
phase 1, 2 and 3 trials, approval of regulatory body and new product launch. Expenditures
incurred from new drug development project are recognized as expensed on the research phase.
However, expenditures incurred during clinical phase 1~3 trials from development projects for
generic drugs or biosimilars are recognized as intangible assets depending on the nature of the
products.
Expenditures incurred from technology license agreement with the third parties are recognized as
intangible assets.
Development costs previously recognized as an expense are not recognized as an asset in a

subsequent period. Capitalized development costs that are recognized as intangible assets are
amortized using the straight-line method over their estimated useful lives when the assets are
available for use and are tested for impairment.
2.17 Impairment of Non-financial Assets
Goodwill and intangible assets with indefinite useful life are tested annually for impairment, or
more frequently if events or changes in circumstances indicate that they might be impaired. Other
assets that are subject to amortization are tested for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is
recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in
use. Non-financial assets other than goodwill that suffered an impairment are reviewed for
possible reversal of the impairment at the end of each reporting period.
2.18 Trade and Other Payables
These amounts represent liabilities for goods and services provided to the Group prior to the end
of reporting period which are unpaid. Trade and other payables are presented as current
liabilities, unless payment is not due within 12 months after the reporting period. They are
recognized initially at their fair value and subsequently measured at amortized cost using the
effective interest method.
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LG Chem, Ltd.
2.19 Financial Liabilities
(a) Classification and measurement
The Company’s financial liabilities at fair value through profit or loss are financial instruments
held for trading. A financial liability is held for trading if it is incurred principally for the purpose of
repurchasing in the near term. A derivative that is not a designated as hedging instruments and
an embedded derivative that is separated are also classified as held for trading.
The Company classifies non-derivative financial liabilities, except for financial liabilities at fair
value through profit or loss, financial guarantee contracts and financial liabilities that arise when a
transfer of financial assets does not qualify for derecognition, as financial liabilities carried at
amortized cost and present as ‘trade payables’, ‘borrowings’, and ‘other payables’ in the
statement of financial position.
(b) Derecognition
Financial liabilities are removed from the statement of financial position when it is extinguished;
for example, when the obligation specified in the contract is discharged or cancelled or expired
or when the terms of an existing financial liability are substantially modified. The difference
between the carrying amount of a financial liability extinguished or transferred to another party
and the consideration paid (including any non-cash assets transferred or liabilities assumed) is
recognized in profit or loss.
2.20 Financial Guarantee Contracts
Financial guarantee contracts are recognized as a financial liability at the time the guarantee is
issued. The liability is initially measured at fair value, subsequently at the higher of following and
recognized in the statement of financial position within ‘other financial liabilities’.
 the amount determined in accordance with the expected credit loss model under Korean
IFRS 1109 Financial Instruments and
 the amount initially recognized less, where appropriate, the cumulative amount of income
recognized in accordance with Korean IFRS 1115 Revenue from Contracts with Customers
2.21 Compound Financial Instruments
Compound financial instruments that the Company has issued are exchangeable bonds that can
be exchanged with equity instruments at the option of the holder.
The liability component of this compound financial instrument is recognized initially at the fair
value and subsequently recognized at amortized cost until exchange or maturity of the bonds.
The exchange component is subsequently measured at fair value until exchange or maturity of
the bonds. Any directly attributable transaction costs are allocated to the liability and equity
components in proportion to their initial carrying amounts.
2.22 Current and Deferred Tax
The tax expense for the period consists of current and deferred tax. Current and deferred tax is
recognized in profit or loss, except to the extent that it relates to items recognized in other
comprehensive income or directly in equity. In this case, the tax is also recognized in other
comprehensive income or directly in equity, respectively.
The current income tax expense is measured at the amount expected to be paid to the taxation
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LG Chem, Ltd.
authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted
by the end of the reporting period. Management periodically evaluates positions taken in tax
returns with respect to situations in which applicable tax regulation is subject to interpretation,
and considers whether it is probable that a taxation authority will accept an uncertain tax
treatment. The Company measures its tax balances either based on the most likely amount or
the expected value, depending on which method provides a better prediction of the resolution of
the uncertainty.
Deferred income tax is provided in full, using the liability method, on temporary differences
arising between the tax bases of assets and liabilities and their carrying amounts in the separate
financial statements. However, deferred income tax is not accounted for if it arises from initial
recognition of an asset or liability in a transaction other than a business combination that at the
time of the transaction affects neither accounting nor taxable profit or loss.
Deferred tax assets are recognized only if it is probable that future taxable amounts will be
available to utilize those temporary differences and losses.
The Company recognizes a deferred tax liability all taxable temporary differences associated
with investments in subsidiaries, associates, and interests in joint arrangements, except to the
extent that the Company is able to control the timing of the reversal of the temporary difference
and it is probable that the temporary difference will not reverse in the foreseeable future. In
addition, The Company recognizes a deferred tax asset for all deductible temporary differences
arising from such investments to the extent that it is probable the temporary difference will
reverse in the foreseeable future and taxable profit will be available against which the temporary
difference can be utilized.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset
current tax assets and liabilities and when the deferred tax balances relate to the same taxation
authority. Current tax assets and tax liabilities are offset when the Company has a legally
enforceable right to offset and intends either to settle on a net basis, or to realize the assets and
settle the liability simultaneously.
2.23 Provisions
Provisions for warranties, site restorations, and legal claims are recognized when the Company
has a present legal or constructive obligation as a result of past events, it is probable that an
outflow of resources will be required to settle the obligation and the amount can be reliably
estimated. Provisions are measured at the present value of management’s best estimate of the
expenditure required to settle the present obligation at the end of the reporting period, and the
increase in the provision due to the passage of time is recognized as interest expense.
2.24 Greenhouse Gas Emissions Permits and Obligations
With enforcement of The Act on the Allocation and Trading of Greenhouse Gas Emission
Permits, the permits that are received free of charge from the government are measured at zero
while permits purchased are measured at acquisition cost and stated net of accumulated
impairment loss. Emissions obligations are measured as the sum of the carrying amount of the
allocated permits that will be submitted to the government and the best estimate of expenditure
required to settle the obligation at the end of reporting period for any excess emission. The
permits and emissions obligations are classified as intangible assets and provisions, respectively,
in the statement of financial position.
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LG Chem, Ltd.
2.25 Employee Benefits
(a) Post-employment benefits
The Company operates both defined contribution and defined benefit pension plans. For defined
contribution plans, the Company pays contribution to publicly or privately administered pension
insurance plans on mandatory, contractual or voluntary basis. The Company has no further
payment obligation once the contribution has been paid. The contribution is recognized as
employee benefit expense when they are due. A defined benefit plan is a pension plan that is not
a defined contribution plan.
Generally, post-employment benefits are payable after the completion of employment, and the
benefit amount depended on the employee’s age, periods of service or salary levels. The liability
recognized in the statement of financial position in respect of defined benefit pension plans is the
present value of the defined benefit obligation at the end of the reporting period less the fair value
of plan assets. The defined benefit obligation is calculated annually by independent actuaries
using the projected unit credit method. The present value of the defined benefit obligation is
determined by discounting the estimated future cash outflows using interest rates of high-quality
corporate bonds that are denominated in the currency in which the benefits will be paid, and that
have terms approximating to the terms of the related obligation. Remeasurement gains and
losses arising from experience adjustments and changes in actuarial assumptions are recognized
in the period in which they occur, directly in other comprehensive income.
Changes in the present value of the defined benefit obligation resulting from plan amendments or
curtailments are recognized immediately in profit or loss as past service costs.
(b) Other long-term employee benefits
Certain entities within the Company provide long-term employee benefits that are entitled to
employees with service period for ten years and above. The expected costs of these benefits are
accrued over the period of employment using the same accounting methodology as used for
defined benefit pension plans. The Company recognizes service cost, net interest on other long-
term employee benefits and remeasurements as profit or loss for the year. These liabilities are
valued annually by an independent qualified actuary.
2.26 Revenue Recognition
(a) Identify performance obligation
With regard to the contract of selling products to the customer, the Company identifies the
services provided separately to the customer as a different performance obligation. When the
Company makes a sales contract with the customer, the standard warranty period for each
product and customer is set up considering the legal warranty period. Even though the standard
warranty period has been expired, the warranties are recognized as a revenue and is identified
as a separate performance obligation when the Company provides additional warranties for the
quality of product or when the customer has an option to purchase additional warranties
separately.
(b) A performance obligation satisfied at a point in time
The revenue from the sale of goods is recognized at the time they are delivered to the customer.
Delivery occurs when the products have been shipped to the specific location, the risks of
obsolescence and loss have been transferred to the customer, and either the customer has
accepted the products in accordance with the sales contract, the acceptance provisions have
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LG Chem, Ltd.
lapsed, or the Company has objective evidence that all criteria for acceptance have been
satisfied.
The goods are often sold with volume discounts, and it is the Company’s policy to sell its
products to the customer with a right of return. Accumulated experience is used to estimate for
the discounts and the refund, and the volume discounts is calculated based on the periodical
forecast sales. The warranty provision for the sales and refund is reasonably estimated and
recognized properly.
(c) Sales return
A gross contract liability for the expected refunds to customers is recognized as adjustment to
revenue, and the Company has a right to recover the product from the customer where the
customer exercises his right of return and recognizes an asset and a corresponding adjustment
to cost of sales. A right to recover the products is measured at former carrying amount of the
product less the costs to recover the products.
(d) Significant financing component
As a practical expedient, the Company need not adjust the promised amount of consideration for
the effects of a significant financing component as the period between when the entity transfers a
promised good or service to a customer and when the customer pays for that good or service is
generally one year or less.
2.27 Lease
Lease activities and accounting policies of the Company
Lease income from operating leases where the Company is a lessor is recognized in income on a
straight-line basis over the lease term. Initial direct costs incurred in obtaining an operating lease
are added to the carrying amount of the underlying asset and recognized as expense over the
lease term on the same basis as lease income. The respective leased assets are included in the
statement of financial position based on their nature.
The Company leases various machinery, real estate and cars. Lease contracts are typically
made for fixed periods, but may have extension options. Lease terms are negotiated on an
individual basis and contain a wide range of different terms and conditions. The lease
agreements do not impose any covenants, but leased assets may not be used as security for
borrowing purposes.
At the commencement date, the Company recognizes a right-of-use asset and a lease liability.
Each lease payment is allocated between the liability and finance cost. The finance cost is
charged to profit or loss over the lease period so as to produce a constant periodic rate of interest
on the remaining balance of the liability for each period. The right-of-use asset is depreciated
over the shorter of the asset's useful life and the lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease
liabilities include the net present value of the following lease payments:
 Fixed payments (including in-substance fixed payments), less any lease incentives
receivable
 Variable lease payment that are based on an index or a rate, initially measured using the
index or rate as at the commencement date
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LG Chem, Ltd.
 Amounts expected to be payable by the Company (the lessee) under residual value
guarantees
 The exercise price of a purchase option if the Company (the lessee) is reasonably certain to
exercise that option, and
 Payments of penalties for terminating the lease, if the lease term reflects the Company (the
lessee) exercising that option
If the Company is reasonably certain to exercise a purchase option, the right-of-use asset is
depreciated over the useful life of the underlying asset.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot
be determined, the lessee’s incremental borrowing rate is used, being the rate that the lessee
would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar
economic environment with similar terms and conditions.
Right-of-use assets are measured at cost comprising the following:
 the amount of the initial measurement of lease liability
 any lease payments made at or before the commencement date less any lease incentives
received
 any initial direct costs, and
 restoration costs
Payments associated with short-term leases or leases of low-value assets are recognized on a
straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term
of 12 months or less. Low-value assets comprise IT-equipment and small items of office furniture.
(a) Variable lease payments
Some property leases contain variable payment terms that are linked to sales generated from a
warehouse. Variable lease payments that depend on usage are recognized in profit or loss in the
period in which the condition that triggers those payments occurs.
(b) Extension and termination options
Extension and termination options are included in a number of leases across the Company.
These terms are used to maximize operational flexibility in terms of managing contracts. The
majority of extension and termination options held are exercisable only by the Company and not
by the respective lessor.
The Company determines the lease term as the non-cancellable period of a lease within the
period for which the contract is enforceable, together with both (a) periods covered by an option
to extend the lease if the lessee is reasonably certain to exercise that option; and (b) periods
covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that
option. When both lessee and lessor have the right to terminate the lease without permission
from the other party, the Company considers the contractual termination payments in determining
the period for which the contract is enforceable.
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LG Chem, Ltd.
3. Financial Risk Management
3.1 Financial risk factors
The Company’s activities expose it to a variety of financial risks: market risk, credit risk and
liquidity risk. The Company’s overall risk management program focuses on the unpredictability of
financial markets and seeks to minimize potential adverse effects on the financial performance of
the Company. The Company uses derivative financial instruments to hedge certain risk
exposures.
Risk management is carried out by the Company’s finance team under policies approved by the
Corporate Management Committee. The finance team identifies, evaluates and hedges financial
risks in close co-operation with the Company’s operating units. The Corporate Management
Committee reviews and approves written principles for overall risk management, as well as
written policies covering specific areas, such as foreign exchange risk, interest rate risk, credit
risk, use of derivative financial instruments and non-derivative financial instruments and
investment of excess liquidity.
(a) Market risk
1) Foreign exchange risk
The Company operates internationally and is exposed to foreign exchange risk arising from
foreign currency transactions, primarily with respect to the US dollar. Foreign exchange risk
arises from future commercial transactions, recognized assets and liabilities.
Management has set up a policy to require Company companies to manage their foreign
exchange risk against their functional currency. The Company manages maximum loss for
currency risk exposures within acceptable range by using currency risk management model and
hires employees who are exclusively responsible for currency risk management.
As at December 31, 2020 and 2019, the Company’s monetary assets and liabilities denominated
in currencies other than its functional currency, are as follows:
(in millions of Korean won) 2020 2019

Assets Liabilities Assets Liabilities
USD 1,815,013 527,283 3,548,166 2,692,491

EUR 149,222 66,340 446,572 1,087,954
JPY 1,966 60,225 26,354 62,200
CNY and others 83,922 8,291 541,877 7,851
As at December 31, 2020 and 2019, if the Company’s functional currency had weakened /
strengthened by 10% against the US dollar with all other variables held constant, profit before
income tax would have been affected as follows:

10% Increase 10% Decrease 10% Increase 10% Decrease
USD 128,773 (128,773) 85,568 (85,568)
The above sensitivity analysis has been performed for monetary assets and liabilities
denominated in foreign currencies other than the Company’s functional currency at the reporting
date.
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LG Chem, Ltd.
2) Price risk
The Company is exposed to equity securities price risk arises from investments held by the
Company and classified in the separate statement of financial position either as available-for-sale
or at fair value through profit or loss. The Company’s equity investments are publicly traded and
are related to the NASDAQ index.
The table below summarizes the impact of increases/decreases of the listed stock price index on
the Company's equity before tax effects as at December 31, 2020 and 2019. The analysis is
based on the assumption that the equity index has increased/decreased by 10% with all other
variables held constant, and that all the Company's equity instruments moved in line with the
index.

10% 10% 10% 10%
Increase Decrease Increase Decrease
KOSDAQ - - 676 (676)

NASDAQ 997 (997) 819 (819)
HSI - - 7,944 (7,944)
997 (997) 9,439 (9,439)
3) Interest rate risk
Interest rate risk is defined as the risk that the interest income or expenses arising from deposits
and borrowings will fluctuate because of changes in future market interest rate. The interest rate
risk mainly arises on floating rate deposits and borrowings. The objective of interest rate risk
management lies in maximizing corporate value by minimizing uncertainty in interest rates
fluctuations and net interest expense.
The Company adequately minimizes risks from interest rate fluctuations through various policies,
such as sharing excess cash within the Company (internal cash sharing) to minimize external
borrowings, avoiding high rate borrowings, reforming capital structure, managing an appropriate
ratio of fixed rate borrowings and floating rate borrowings, monitoring a fluctuation of domestic
and foreign interest rates daily, weekly and monthly, establishing alternatives, and balancing
floating rate short-term borrowings with floating rate deposits.
The Company has no floating rate deposits and borrowings outstanding at the end of the
reporting period.
(b) Credit risk
Credit risk arises from trade receivables that the Company holds, as well as debt instruments at
amortized cost or fair value through other comprehensive income.
A. Trade receivables
The Company applies the simplified approach to measuring expected credit losses which uses a
lifetime expected loss allowance for trade receivables. To measure the expected credit losses,
trade receivables have been grouped based on shared credit risk characteristics and the days
past due. The loss allowance provision as at December 31, 2020 and 2019, is as follows.
Expected credit losses include forward-looking information.
27
LG Chem, Ltd.
Receivables
past due but
Receivables not Impaired
(in millions of Korean won) not past due1 impaired1 receivables2 Total
December 31, 2020

(Trade receivables)
Gross carrying amount 2,161,591 37,163 2,733 2,201,487
Expected loss rate 0.1% 0.1% 48.7% 0.1%
Loss allowance provision 1,131 36 1,332 2,499
December 31, 2019
(Trade receivables)
Gross carrying amount 3,374,960 607,497 3,524 3,985,981
Expected loss rate 0.0% 0.0% 65.0% 0.1%
Loss allowance provision 1,523 231 2,292 4,046
1 See Note 7.(3) for aging analysis

2 Impaired receivables are those for which impairment indicators have been confirmed, such as
significant lack of collectability.
Movements in the loss allowance provision for trade receivables for the years ended December
31, 2020 and 2019, are as follows:
(in millions of Korean won) Trade receivables

2020 2019
Beginning balance 4,046 5,948

Increase in loss allowance recognized in
profit or loss during the year (748) (1,122)
Receivables written off during the year as
uncollectible (640) (780)
Decrease due to split-off (159) -
Ending balance 2,499 4,046
As at December 31, 2020, the carrying amount of trade receivables representing the maximum
exposure to credit risk amounts to ￦ 2,201,487 million (2019: ￦ 3,985,981 million).
B. Other financial at assets amortized cost
Movements in loss allowance provision for other financial assets at amortized cost for the years
ended December 31, 2020 and 2019, are as follows:

Increase in loss allowance recognized as ‘other non-
operating expenses’ in profit or loss during the year 2 1,903
Receivables written off during the year as uncollectible - (1,903)
28
LG Chem, Ltd.
All of the financial assets at amortized costs are considered to have low credit risk, and the loss
allowance recognized during the period was, therefore, limited to 12 months expected losses.
The Company has established the following policies and procedures to manage credit risks.
To manage credit risks relating to trade receivables, the Company evaluates the credit rating of
customers and determines credit limit for each customer based on the information provided by
credit rating agencies and other available financial information before commencing business with
customers. The credit risks relating to trade receivables are also mitigated by insurance contracts,
collaterals as well as payment guarantees.
The Company has entered into export insurance contracts with Korea Trade Insurance
Corporation to mitigate credit risks relating to export trade receivables to overseas customers.
The Company is also provided with collaterals by customers depending on their credit rating or
payment guarantees from the customers’ financial institutions as necessary.
The Company has deposited its cash and cash equivalents, and other long-term deposits in
several financial institutions, such as Woori Bank and others. The Company has also entered into
derivative contract with several financial institutions. The Company maintains business
relationship with those financial institutions with high credit ratings evaluated by independent
credit rating agencies and accordingly, credit risks associated with these financial institutions are
limited.
(c) Liquidity risk
The Company monitors rolling forecasts of the Company’s liquidity requirements to ensure it has
sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn
committed borrowing facilities at all times so that the Company does not breach borrowing limits
or covenants (where applicable) on any of its borrowing facilities. The Company’s liquidity
management policy involves projecting cash flows in major currencies and considering the level
of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal
and external regulatory requirements and maintaining debt financing plans.
1) The table below analyzes the Company’s non-derivative financial liabilities into relevant
maturity groupings based on the remaining period at the reporting date to the contractual
maturity date. Cash flows presented below are gross cash flows before discount, and includes
cash flows for interests.
29
LG Chem, Ltd.
(in millions of Korean won) 2020

Less than Between 1-2 Between 2-5
1 year years years Over 5 years
Borrowings (excluding lease

liabilities) 298,407 627,415 1,753,211 1,074,696
Lease liabilities 36,666 21,024 28,547 63,706
Trade and other payables1 4,069,476 4,225 - -
Total 4,404,549 652,664 1,781,758 1,138,402

Borrowings (excluding
finance lease liabilities) 232,655 961,501 2,813,084 1,923,735
Finance lease liabilities 30,959 10,956 23,723 47,829
Trade and other payables 3,938,050 8,190 43 -
Total 4,201,664 980,647 2,836,850 1,971,564
1 Included ￦ 2,099,936 million of financial liabilities due to a financial institution relating to

reverse factoring arrangement. The Parent Company has entered into reverse factoring
arrangement (interest rate: CD 91 days + 0.92 ~ 1.04%) with a financial institution whereby
suppliers receive payments from the financial institution on the due date of each invoice and the
Parent Company pays to the financial institution at the end of extended credit period as agreed in
the reverse factoring arrangement (2019: ￦ 862,452 million).
2) As at December 31, 2020 the merchandise (raw materials) swap contracts for cash flow
hedges the the Company had entered into were transferred to LG Energy Solution Co., Ltd.
due to the split-off.
Purpose of Hedged Financial Fair

Maturity
the contracts items institution value
Merchandise (raw materials) Cash flow Non-ferrous

Citi bank ~2021.12 -
swap hedges metal
Details of derivative assets and liabilities as at December 31, 2020 and 2019, are as follows.
30
LG Chem, Ltd.

Assets Liabilities Assets Liabilities
Merchandise (raw materials)

swap1,2 - - 21,371 -
Total - - 21,371 -
1 Gain (loss) resulting from the contracts to avoid cash flow fluctuation risk of expected future
transaction is accounted for as accumulated other comprehensive income. And it is all effective
to avoid cash flow fluctuation risk (Note 5).
2 ￦567 million of gain on valuation was recognized in other comprehensive income in 2020 and
the accumulated gain on valuation was transferred to LG Energy Solution Co., Ltd. due to the
split-off.
3) The table below analyzes the Company’s financial guarantee contracts into relevant maturity
groupings based on the remaining maturity as at the reporting date to the contractual maturity
date.

Financial guarantee contracts1,2 190,000 - - -
2019
Financial guarantee contracts1 1,672,676 - - -
1 The Company has provided financial guarantee for subsidiaries. The amount represents the
maximum amount of the guarantee as at December 31, 2020 and 2019, in which the guarantee
could be called (Note 18).
2 Financial guarantees provided by the Company for the liability of LG Chem Wroclaw Energy
sp.zo.o. were transferred to LG Energy Solution Co., Ltd. according to the split-off.
31
LG Chem, Ltd.
3.2 Capital Risk Management
The Company’s objectives when managing capital are to safeguard the Company’s ability to
continue as a going concern in order to provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
Consistent with others in the industry, the Company monitors capital on the basis of the gearing
ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total
borrowings less cash and cash equivalents. Total capital is calculated as ‘equity’ as shown in the
statement of financial position plus net debt.
The gearing ratios and debt-to-equity ratios at December 31, 2020 and 2019, were as follows:
(in millions of Korean won, except for ratios) 2020 2019
Total borrowings (Note 14) (A) 3,533,970 5,324,007

Less: cash and cash equivalents (B) (852,668) (1,002,263)
Net debt (C=A+B) 2,681,302 4,321,744
Total liabilities (D) 8,886,645 10,566,856
Total equity (E) 16,963,505 16,460,230
Total capital (F=C+E) 19,644,807 20,781,974
Gearing ratio (C/F) 13.6% 20.8%
Debt-to-equity ratio (D/E) 52.4% 64.2%
32
LG Chem, Ltd.
3.3 Fair Value
(a) Carrying amount and fair value of financial instruments by category as at December 31,
2020 and 2019, are as follows:
Carrying Carrying
amount Fair value amount Fair value
Financial assets (current)
Cash and cash equivalents 852,668 1 1,002,263 1
Trade receivables 2,198,988 1 3,981,935 1
Other receivables 145,612 1 366,141 1
Current derivative financial assets - - 10,879 10,879
Financial assets (non-current)

Deposits held by financial institutions 106,121 1 106,621 1
Other receivables (excluding

deposits held by financial institutions) 52,445 1 398,868 1
Other non-current financial assets

(carried at fair value)
Marketable financial assets
(excluding derivative instruments) 7,679 7,679 83,172 83,172
Non-marketable financial assets3 44,020 44,020 42,258 42,258
Non-current derivative financial
assets - - 10,492 10,492
Financial liabilities (current)

Trade and other payables 4,069,476 1 3,938,050 1
Current borrowings
(excluding exchangeable bonds
and lease liabilities) 189,973 1 119,949 1
Current borrowings
(exchangeable bonds) 32,500 32,763 - -
Current lease liabilities 34,088 2 29,177 2
Current derivative financial liabilities

(exchange rights) 16,797 16,797 - -
Other current financial liabilities
(excluding derivative liabilities) 1,218 1 27,194 1
Financial liabilities (non-current)

Non-current borrowings
(excluding lease liabilities) 3,183,528 3,213,522 5,109,507 5,212,400
Non-current lease liabilities 93,881 2 65,374 2
Other non-current payables 4,226 1 8,233 1
Other non-current financial liabilities

(exchange rights) - - 930 930
1 These financial assets and liabilities are not included in the disclosure above as their carrying
amount is a reasonable approximation of the fair value.
2 Fair values for these financial assets and liabilities are not disclosed above in accordance with
related Korean IFRS.

3 Acquisition costs of these financial assets approximate their fair values.
33
LG Chem, Ltd.
(b) Fair value for measurement and disclosure are determined based on the following method:
Fair values of financial liabilities (non-current) are based on cash outflows discounted using
Korean won currency note yield in the same credit grade with the Company (AA+), and the
applied discount rates as at December 31, 2020 and 2019, are as follows:
(in percentage) 2020 2019
Discount rate 0.97%~2.27% 1.63%~2.24%
(c) Fair Value Hierarchy
Items that are measured at fair value are categorized by the fair value hierarchy levels, and the
defined levels are as follows:
 Quoted prices (unadjusted) in active markets for identical assets or liabilities that an entity
can access at the measurement date (Level 1).
 All inputs other than quoted prices included in level 1 that are observable (either directly that
is, prices, or indirectly that is, derived from prices) for the asset or liability (Level 2).
 Unobservable inputs for the asset or liability (Level 3).
Fair value hierarchy classifications of the financial instruments that are measured at fair value or
its fair value is disclosed as at December 31, 2020 and 2019, are as follows:

Level 1 Level 2 Level 3 Total
Financial assets/liabilities measured at fair value
(Marketable financial assets) 7,679 - - 7,679
(Non-marketable financial assets) - - 44,020 44,020
Current financial liabilities
(exchange rights) 1 - - 16,797 16,797
Financial assets/liabilities not measured at fair value
Current borrowings
(exchangeable bonds) - - 32,763 32,763
(excluding lease liabilities) - 3,213,522 - 3,213,522
34
LG Chem, Ltd.
1 Movements in exchange rights are as follows.
(in millions of Korean

won) USD EUR Total
2020 2019 2020 2019 2020 2019
Beginning Balance 42 14,350 888 16,034 930 30,384
Exchange (89,961) - (188,303) - (278,264) -
Redemption (70) - - - (70) -
Evaluation 89,989 (14,308) 204,212 (15,146) 294,201 (29,454)
Ending Balance - 42 16,797 888 16,797 930

Level 1 Level 2 Level 3 Total
Financial assets/liabilities measured at fair value
(Marketable financial assets) 83,172 - - 83,172
(Non-marketable financial assets) - - 42,258 42,258
Current derivative financial assets - 10,879 - 10,879
assets - 10,492 - 10,492
liabilities (exchange rights) - - 930 930
Financial assets/liabilities not measured at fair value
(excluding lease liabilities) - 4,560,647 651,753 5,212,400
(d) Valuation Technique and the Inputs
Valuation techniques and inputs used in level 3 fair value measurements are as follows:

Valuation Coverage of
Fair value Level Technique Inputs Level 3 inputs
Financial liabilities
– Exchangeable Bond
Exchangeable Bond 32,763 3 Binominal option Annual rates -0.5%p ~
pricing model of credit +0.5%p
volatility
Exchange right 16,797 3 Annual rates -0.5%p ~
of credit +0.5%p
Binominal option
volatility
pricing model
Underlying -5.0% ~ +5.0%
asset (equity)
volatility
35
LG Chem, Ltd.

Valuation Coverage of
Fair value Level Technique Inputs Level 3 inputs
Financial liabilities
– Exchangeable Bond
Exchangeable Bond 651,753 3 Binominal option Annual rates -0.5%p ~
pricing model of credit +0.5%p
volatility
Exchange right 930 3 Annual rates -0.5%p ~
of credit +0.5%p
Binominal option
volatility
pricing model
Underlying -5.0% ~ +5.0%
asset (equity)
volatility
(e) Sensitivity analysis for Recurring Fair Value Measurements Categorized Within Level 3
Sensitivity analysis of financial instruments is performed to measure favorable and unfavorable

changes in the fair value of financial instruments which are affected by the unobservable
parameters, using a statistical technique. When the fair value is affected by more than two input
parameters, the most favorable or most unfavorable amounts are presented.
The results of the sensitivity analysis for the effect on profit or loss from changes in inputs for
exchangeable bonds categorized as level 3 and subject to sensitivity analysis, are as follows:

The effect on profit The effect on loss
Financial liabilities – Exchangeable Bond
Annual rates of credit volatility 47 (48)
Financial liabilities – Exchange right
Underlying asset (equity) volatility 44 (129)

The effect on profit The effect on loss
Financial liabilities – Exchangeable Bond
Annual rates of credit volatility 4,130 (4,177)
Financial liabilities – Exchange right
Underlying asset (equity) volatility 497 (580)
36
LG Chem, Ltd.
4. Critical Accounting Estimates and Assumptions
The preparation of financial statements requires the Company to make estimates and
assumptions concerning the future. Management also needs to exercise judgement in applying
the Company’s accounting policies. 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 may
differ from the related actual results. The estimates and assumptions that have a significant risk
of causing a material adjustment to the carrying amounts of assets and liabilities within the next
financial year are discussed below.
The spread of COVID-19 during 2020 has a significant impact on the domestic and international
economies. This may affect the Company’s financial position and business performance.
Significant accounting estimates and assumptions used in the preparation of financial statements
may be adjusted according to fluctuations in uncertainty arising from COVID-19
, and the ultimate impact of COVID-19 on the Company’s business, financial position, and
management performance is currently unpredictable.
(a) Impairment test of goodwill
The Company tests whether goodwill has suffered any impairment on an annual basis. The
recoverable amount of a cash generating unit (CGU) is determined based on value-in-use or fair
value less cost of disposal calculations. (Note 12).
(b) Income taxes
The Company recorded, based on its best estimate, current taxes and deferred taxes that the
Company will be liable in the future for the operating results as at the financial year end. However,
the final tax outcome in the future may be different from the amounts that were initially recorded.
Such differences will impact the current and deferred tax assets and liabilities in the period in
which such determination is made. (c) Provisions
(c) Provisions
The Company recognizes provisions for product warranties and others as explained in Note 15.
These provisions are estimated based on the past experience.
(d) Fair value of financial instruments
The fair value of financial instruments that are not traded in an active market is determined by
using valuation techniques. The Company uses its judgment to select a variety of methods and
make assumptions that are mainly based on market conditions existing at the end of each
reporting period (Note 3.3).
(e) Impairment of financial assets
The provision for impairment for financial assets is based on assumptions about risk of default
and expected loss rates. The Company uses judgement in making these assumptions and
selecting the inputs to the impairment calculation based on the Company’s past experience,
existing market conditions as well as forward looking estimates at the end of each reporting
period (Note 3.1 (b)).
37
LG Chem, Ltd.
(f) Net defined benefit liability
The present value of net defined benefit liability depends on a number of factors that are
determined on an actuarial basis using a number of assumptions including the discount rate
(Note 16).
(g) Lease
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).
When both lessee and lessor have the right to terminate the lease without permission from the
other party, the Company considers the contractual termination payments in determining the
period for which the contract is enforceable.
The lease term is reassessed if an option is actually exercised (or not exercised) or the Company
becomes obliged to exercise (or not exercise) it. The assessment of reasonable certainty 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.
38
LG Chem, Ltd.
5. Financial Instruments by Category
(a) Categorizations of financial instruments as at December 31, 2020 and 2019, are as follows:

Financial
Financial
assets at
Financial assets at fair
fair Other
assets at value through
Financial assets value Financial Total
amortized other
through asset1
cost comprehensive
profit or
income
loss
Cash and cash equivalents 852,668 - - - 852,668

Trade receivables 2,144,495 - 54,493 - 2,198,988
Other receivables 125,949 - 19,663 - 145,612
Other non-current receivables 158,566 - - - 158,566
Other non-current financial
assets - 26,196 25,503 - 51,699
Total 3,281,678 26,196 99,659 - 3,407,533

Financial
liabilities at Financial
amortized liabilities at
fair value Other
cost through profit financial
Financial liabilities or loss liabilities2 Total
Trade payables 877,035 - - 877,035

Other payables 3,192,441 - - 3,192,441
Borrowings (current) 222,473 - 34,088 256,561
Other current financial
liabilities - 16,797 1,218 18,015
Other non-current payables 4,226 - - 4,226
Borrowings (non-current) 3,183,528 - 93,881 3,277,409
Total 7,479,703 16,797 129,187 7,625,687
39
LG Chem, Ltd.

Financial
Financial
assets at
Financial assets at fair
fair Other
assets at value through
Financial assets value Financial Total
amortized other
through asset1
cost comprehensive
profit or
income
loss
Cash and cash equivalents 1,002,263 - - - 1,002,263

Trade receivables 3,770,420 - 211,515 - 3,981,935
Other receivables 358,794 - 7,347 - 366,141
Other non-current receivables 505,489 - - - 505,489
Other current financial assets - - - 10,879 10,879
assets - 23,634 101,796 10,492 135,922
Total 5,636,966 23,634 320,658 21,371 6,002,629

Financial
liabilities at Financial
fair value liabilities at Other
through amortized financial
Financial liabilities profit or loss cost liabilities2 Total
Trade payables - 1,738,053 - 1,738,053

Other payables - 2,199,997 - 2,199,997
Borrowings (current) - 119,949 29,177 149,126
Other current financial
liabilities - - 27,194 27,194
liabilities 930 - - 930
Other non-current payables - 8,233 - 8,233
Borrowings (non-current) - 5,109,507 65,374 5,174,881
Total 930 9,175,739 121,745 9,298,414
1 Other financial assets include derivative assets.

2 Other financial liabilities include lease liabilities and derivatives liabilities.
40
LG Chem, Ltd.
(b) Net gains or losses on each category of financial instruments for the years ended December
Dividend income
Financial assets at fair value through other
comprehensive income 2,538 1,512
Interest income
Financial assets at amortized cost 27,135 34,614
Interest expense
Financial liabilities at amortized cost (162,965) (116,358)
Other financial liabilities (2,331) (2,142)
Financial assets at amortized cost1 (246) (2,527)
comprehensive income1 (631) (3,018)
Gain (loss) on valuation
Financial assets at fair value through profit or loss 3,898 -
comprehensive income 3,025 35,079
Derivative instruments (309,421) 69,303
Exchange differences
Financial assets at amortized cost (197,253) 75,837
Financial liabilities at amortized cost 98,336 (75,714)
Other financial liabilities (10,522) 187
1 Fees paid to financial institutions for factoring
6. Cash and Cash Equivalents
Details of cash and cash equivalents as at December 31, 2020 and 2019, are as follows:
Bank deposits and cash on hand 127,821 81,494

Deposits held by financial institutions and others 724,847 920,769
Total 852,668 1,002,263
As at December 31, 2020, cash and cash equivalents include ￦ 1,963 million which is subject
to a restriction on the use in association with the national R&D projects.
41
LG Chem, Ltd.
7. Trade and Other Receivables
(a) Trade and other receivables and its provisions for impairment as at December 31, 2020 and
2019, are as follows:

Gross Provision for Carrying
amount impairment amount
Trade receivables 2,201,487 (2,499) 2,198,988

Other current receivables 147,723 (2,111) 145,612
Other non-current receivables 158,566 - 158,566
Total 2,507,776 (4,610) 2,503,166

Gross Provision for Carrying
amount impairment amount
Trade receivables 3,985,981 (4,046) 3,981,935

Other current receivables 368,250 (2,109) 366,141
Other non-current receivables 505,489 - 505,489
Total 4,859,720 (6,155) 4,853,565
(b) Details of other receivables as at December 31, 2020 and 2019, are as follows:
Current
Non-trade receivables 123,276 329,151
Accrued income 9 8,702
Guarantee deposits provided 22,327 28,288
145,612 366,141
Non-current
Non-trade receivables 25,251 18,339
Deposits held by financial institutions1 106,121 106,621
Loans - 331,480
Guarantee deposits provided 27,194 49,049
158,566 505,489
Total 304,178 871,630
1 Asat December 31, 2020, ￦ 106,100 million (2019: ￦ 106,600 million) is restricted from
being withdrawn in relation to large, small and medium-sized companies cooperation agreement
and others. In addition, ￦ 21 million is restricted from withdrawal in connection with maintaining
checking accounts (2019: ￦ 21 million).
42
LG Chem, Ltd.
(c) The aging analysis of trade and other receivables as at December 31, 2020 and 2019, are as
follows:

Trade Other Trade Other
receivables receivables receivables receivables
Receivables not past due 2,161,591 304,094 3,374,960 861,254

Past due but not impaired
Up to 3 months 37,163 84 607,497 10,376
Between 3-6 months 34,433 76 464,382 6,772
Over 6 months 1,452 8 123,132 2,838
1,278 - 19,983 766
Impaired receivables 2,733 2,111 3,524 2,109
2,201,487 306,289 3,985,981 873,739
(d) Movements on the provision for impairment of trade and other receivables for the years

Trade receivables Other receivables
Non- Non-
Current current Current current
Beginning balance 4,046 - 2,109 -

Provisions for impairment (748) - 2 -
Write-off (640) - - -
Decrease due to split-off (159) - - -
Ending balance 2,499 - 2,111 -

Trade receivables Other receivables
Non- Non-
Current current Current current
Beginning balance 5,948 - 2,109 -

Provisions for impairment (1,122) - 1,903 -
Write-off (780) - (1,903) -
Decrease due to split-off - - - -
Ending balance 4,046 - 2,109 -
(e) As at December 31, 2020 and 2019, the carrying amounts of trade and other receivables are
approximation of their fair values.
(f) The Company transferred trade and other receivables to financial institutions for ￦ 97,642
million at December 31, 2020 (2019: ￦ 407,463 million), and derecognized the trade and
other receivables from the financial statements at the date of disposal, as substantial all the
risks and rewards were transferred.
43
LG Chem, Ltd.
8. Other Financial Assets and Liabilities
(a) Details of other financial assets and liabilities as at December 31, 2020 and 2019, are as
follows:
Other financial assets

Derivative financial assets (futures contract)
(current) - 10,879
comprehensive income (excluding futures
contract) (non-current) 25,503 101,796
Derivative financial assets (futures contract)
(non-current) - 10,492
Financial assets at fair value through profit
or loss (excluding futures contract) (non-
current) 26,196 23,634
51,699 146,801
Other financial liabilities
Financial guarantee contracts 1,218 27,194
Financial liabilities at fair value through profit
or loss (exchange right) (current) 16,797 -
Financial liabilities at fair value through profit
or loss (exchange right) (non-current) - 930
18,015 28,124
(b) Changes in equity and debt instruments included in other financial assets for the years ended
December 31, 2020 and 2019, are as follows:

Acquisitions / Transfer 10,505 10,892
Disposals (91,159) (1,116)
Gain on valuation (before income tax effects),
through other comprehensive income 3,025 35,079
Gain on valuation, through profit or loss 3,898 -
According to the split-off, ￦ 26,339 million in currency futures contract liabilities and ￦ 21,938
million in commodity (raw material) swap derivatives were transferred to LG Energy Solution co.,
Ltd.
(c) No impairment losses on other financial assets were recognized for the years ended
December 31, 2020 and 2019.
44
LG Chem, Ltd.
9. Inventories
(a) Details of inventories as at December 31, 2020 and 2019, are as follows:

Gross Valuation Carrying
amount allowance amount
Merchandise 20,502 (65) 20,437

Finished / Semi-finished
products 861,257 (55,332) 805,925
Work-in-process 22,668 - 22,668
Raw materials 457,193 (10,132) 447,061
Supplies 113,919 - 113,919
Materials-in-transit 181,568 - 181,568
Total 1,657,107 (65,529) 1,591,578

Gross Valuation Carrying
amount allowance amount
Merchandise 48,566 (794) 47,772

Finished / Semi-finished
products 1,574,003 (79,788) 1,494,215
Work-in-process 9,771 - 9,771
Raw materials 653,671 (13,872) 639,799
Supplies 126,387 - 126,387
Materials-in-transit 352,350 - 352,350
Total 2,764,748 (94,454) 2,670,294
(b) During the year, the cost of inventories recognized as expense and included in ‘cost of sales’
amounted to ￦ 12,980,183 million (2019: ￦ 13,785,403 million).
45
LG Chem, Ltd.
10. Investments in Subsidiaries, Associates and Joint ventures
(a) Changes in investments in subsidiaries, associates and joint ventures for the years ended
Beginning balance 5,350,083 3,857,939

Additions / Transfer 8,254,097 1,546,649
Impairment1,2 (144,919) (21,158)
Reclassified as held-for-sale3 (13,444) -
Transfer due to split-off4 (4,452,376) -
Others5,6 (42,248) (33,347)
Ending balance 8,951,193 5,350,083
1 The Company reviews whether there are any events or changes in circumstances indicate that
assets might be impaired at the end of each reporting period. If the indications are present, the
recoverable amount of that asset is estimated by future cashflow discount method or other
method. If the recoverable amount is less than its carrying amount, the carrying amount of the
asset shall be reduced and the impairment loss shall me recognized.
2 Impairment loss recognized as other non-operating expenses and key assumptions used to
determine value in use are as follows:
(in millions of Korean won

and in percentage) 2020 2019
FarmHannong
Co., Ltd. Ugimag Korea Co., Ltd
Impaired amount 144,919 21,158

Pre-tax discount rate 11.6% 6.56%
Terminal growth rate 1% 0%
3 Upon the approval of management, the Company decided to dispose of LCD polarizer business
(June 2020). The related assets and liabilities were reclassified as assets held for sale. The
disposal of LCD polarizer business was completed in February 2021.
4 During 2020, LG Chem (Nanjing) Information & Electronics Materials Co.,Ltd., LG Chem
Michigan Inc., Nanjing LG Chem New Energy Battery Co., Ltd., LG Chem Wroclaw Energy sp. z
o.o., LG Chem Austrailia Pty Ltd., LG Chem Nanjing Energy Solution Co.,Ltd., VINFAST
LITHIUM BATTERY PACK LLC., WUXI CL New Energy Technology Ltd., Jiangxi VL Battery
Co.,Ltd, HL Greenpower Co., Ltd. have been transferred to LG Energy Solution Co., Ltd. due to
the split-off.
5 LG Holdings (HK) Ltd. had completed its equal capital reduction for ￦ 15,788 million during
2019 and has been disposed of during 2020.

6 During 2019, LG Chem HK Ltd. and NanoH2O (Jiangsu) Water Processing Technology Co. Ltd.
were liquidated.
46
LG Chem, Ltd.
(b) Details of investments in subsidiaries, associates and joint ventures as at December 31,
Percentage of
(in millions of Korean won and in percentage) Location ownership (%) Carrying amount
2020 2019 2020 2019
Subsidiaries
Ningbo LG Yongxing Chemical Co.,Ltd. China 75 75 135,908 135,908
LG Energy Solution co., Ltd.1 Korea 100 - 6,915,141 -
LG Chemical India Pvt. Ltd. India 100 100 54,929 54,929
LG Chemical (Guangzhou) Engineering Plastics
Co.,Ltd. China 100 100 21,911 21,911
LG Chem (Nanjing) Information & Electronics
Materials Co.,Ltd. 2 China - 81 - 1,138,401
LG Chem (Taiwan), Ltd. Taiwan 100 100 18 18
3
LG Chem Display Materials (Beijing) Co., Ltd. China 90 90 - 13,444
Tianjin LG Bohai Chemical Co.,Ltd. China 68 68 77,871 77,871
Tianjin LG BOTIAN Chemical Co.,Ltd. China 58 58 10,423 10,423
LG Chem (China) Investment Co.,Ltd. China 100 100 264,233 264,233
LG Chem (Tianjin) Engineering Plastics Co.,Ltd. China 90 90 14,733 14,733
LG Chem Europe GmbH Germany 100 100 3,085 3,085
LG Chem Poland Sp. z o.o. Poland 100 100 26,948 26,948
LG Chem Michigan Inc.2 USA - 100 - 377,337
LGC Petrochemical India Private Ltd. India 100 100 299 299
HAENGBOKNURI CO.,LTD. Korea 100 100 600 600
LG CHEM TK Kimya SANAYI VE TIC. Ltd. STI. Turkey 100 100 174 174
LG Chem Japan Co.,Ltd. Japan 100 100 1,406 1,406
Nanjing LG Chem New Energy Battery Co., Ltd. China - 50 - 88,706
LG Chem (Chongqing) Engineering Plastics Co.,
Ltd. China 100 100 37,410 37,410
2
LG Chem Wroclaw Energy sp. z o.o. Poland - 100 - 1,396,269
LG Chem(HUIZHOU) Petrochemical Co., Ltd. China 70 70 99,001 99,001
LG Chem Hai Phong Veitnam Co.,Ltd. Vietnam 100 100 3,079 3,079
2
LG Chem Austrailia Pty Ltd. Australia - 100 - 429
LG Chem Mexico S.A. de C.V. Mexico 100 100 394 394
LG Chem Hai Phong Engineering Plastics Co.,Ltd. Vietnam 100 100 15,344 15,344
LG Chem (Guangzhou) Information & Electronics
Materials Co.,Ltd. 8 China 100 100 184,491 184,491
FarmHannong Co.,Ltd.4 Korea 100 100 579,581 724,500
LG Chem Life Sciences India Pvt. Ltd. India 100 100 2,170 2,170
LG Chem Life Sciences (Beijing) Co.,Ltd. China 100 100 1,233 1,233
LG Chem Life Sciences (Thailand) Ltd. Thailand 100 100 431 431
LG Chem Life Sceience Innovation Center, Inc.5 USA 100 - 1,702 -
LG CHEM FUND I LLC 6 USA 100 100 40,178 24,068
LEYOU NEW ENERGY
MATERIALS(WUXI)CO.,LTD.7 China 51 51 169,113 151,474
Ugimag Korea Co., Ltd. 8 Korea 100 100 30,862 6,362
LG Chem Nanjing Energy Solution Co.,Ltd.2 China - 100 - 274,035
LG Chem America, Inc.5 USA 100 - 32,283 -
47
LG Chem, Ltd.
LG NanoH2O, Inc.5 USA 100 - 38,414 -

Uniseal, Inc. 5 USA 100 - 30,186 -
8,793,551 5,151,116
Associates
LG Holdings (HK) Ltd.9 Hong Kong - 26 - 42,248
TECWIN Co.,Ltd. Korea 21 21 2,861 2,861
LG Chem BRASIL INTERMEDICAO DE
NEGOCIOS DO SETOR QUIMICO LTDA. 10 Brazil 100 100 579 579
10
LG Chem Malaysia SDN.BHD. Malaysia 100 100 150 150
FJ Composite Material Co., Ltd. Japan 33 33 3,016 3,016
WUXI CL New Energy Technology Ltd.2 China - 30 - 1,737
10
LG Chem Life Sciences Poland Ltd. Poland 100 100 17 17
HUAJIN NEW ENERGY
MATERIALS(QUZHOU)CO.,LTD11 China 49 49 89,523 67,330
VINFAST LITHIUM BATTERY PACK LLC.2 Vietnam - 35 - 5,323
2
Jiangxi VL Battery Co.,Ltd China - - - -
96,146 123,261
Joint ventures
LG Vina chemical Co.,Ltd. Vietnam 50 50 3,080 3,080
HL Greenpower Co.,Ltd.2 Korea - 49 - 14,210
SEETEC Co.,Ltd. Korea 50 50 58,416 58,416
61,496 75,706
Total 157,642 198,967
1 During 2020, the Company acquired shares of LG Energy Solution Co., Ltd., a newly established
entity through the spilt-off of energy solution business division from the Company, for
￦ 6,915,141 million.
2 During 2020, LG Chem (Nanjing) Information & Electronics Materials Co.,Ltd., LG Chem
Michigan Inc., Nanjing LG Chem New Energy Battery Co., Ltd., LG Chem Wroclaw Energy sp. z
o.o., LG Chem Austrailia Pty Ltd., LG Chem Nanjing Energy Solution Co.,Ltd., VINFAST LITHIUM
BATTERY PACK LLC., WUXI CL New Energy Technology Ltd., Jiangxi VL Battery Co.,Ltd and HL
Greenpower Co.,Ltd. have been transferred to LG Energy Solution Co., Ltd. according to the
split-off.
3 During 2020, the Company reclassified shares of LG Chem Display Materials (Beijing) Co., Ltd.
of ￦ 13,444 million as non-current assets held for sale.

4 During 2020, the Company recognized impairment loss of ￦ 144,919 million for FarmHannong
Co.,Ltd.
5 During 2020, the Company acquired shares of LG Chem Life Sceience Innovation Center, Inc.,
LG Chem America, Inc., LG NanoH2O, Inc., and Uniseal, Inc. from LG Chem Michigan Inc. for
￦ 102,585 million according to the split-off of energy solution business division.
6 During 2020, the Company acquired additional shares of LG CHEM FUND I LLC for ￦ 16,110
million.
7 During 2020, the Company acquired additional shares of LEYOU NEW ENERGY
MATERIALS(WUXI) Co.,Ltd. for ￦ 17,639 million.

8 During 2020, the Company acquired additional shares of Ugimag Korea Co., Ltd. for ￦ 24,500
million.
9 During 2020, the Company has disposed of LG Holdings (HK) Ltd.
10 Classified as an investment in associate due to its small size.
11 During 2020, the Company acquired additional shares of HUAJIN NEW ENERGY
MATERIALS(QUZHOU)CO.,LTD for ￦ 22,191 million.
48
LG Chem, Ltd.
11. Property, Plant and Equipment
(a) Changes in property, plant and equipment for the years ended December 31, 2020 and 2019,
are as follows:
(in millions of 2020

Korean won) Right-of- Construction Machinery
Land Buildings Structures Machinery Vehicles Tools Equipment Others use assets -in-progress -in-transit Total
Beginning balance 1,247,766 2,515,249 802,725 3,530,647 3,434 398,009 114,682 175,123 92,717 1,581,035 160,028 10,621,415
Cost 1,284,718 3,120,778 1,331,742 11,860,563 26,424 1,124,510 357,401 378,824 126,123 1,666,659 160,028 21,437,770
Accumulated
depreciation - (580,822) (521,145) (8,151,131) (22,893) (714,723) (240,363) (197,978) (33,331) - - (10,462,386)
Accumulated
impairment (36,952) (24,707) (7,872) (178,785) (97) (11,778) (2,356) (5,723) (75) (85,624) - (353,969)
Acquisitions/
Transfer 177 379,952 68,353 762,969 1,441 120,564 51,824 38,837 72,595 2,317,554 258,442 4,072,708
Disposals/ Transfer (157) (3,984) (199) (45,876) (3) (5,922) (485) (1,979) (2,191) (1,612,730) (72,345) (1,745,871)
Depreciation - (69,439) (47,286) (706,256) (1,359) (116,998) (34,714) (99,491) (34,737) - - (1,110,280)
Impairment - (1,662) (8,639) (39,509) - (10,148) (60) (195) (86) (1,704) (260) (62,263)
Reversal of
impairment - - - - - - - - - 220 - 220
Transfer to assets
held for sale (Note
34) - - - (7,733) (12) (2,805) (40) - - - - (10,590)
Split-off (223,170) (863,101) (37,759) (178,801) (641) (161,958) (34,526) - (2,393) (143,581) (23,224) (1,669,154)
Ending balance 1,024,616 1,957,015 777,195 3,315,441 2,860 220,742 96,681 112,295 125,905 2,140,794 322,641 10,096,185
Cost 1,060,900 2,395,008 1,329,896 10,575,612 22,433 696,284 298,035 413,151 187,255 2,217,048 322,641 19,518,263
Accumulated
depreciation - (415,241) (538,185) (7,124,438) (19,488) (464,216) (199,410) (294,938) (61,337) - - (9,117,253)
Accumulated
impairment (36,284) (22,752) (14,516) (135,733) (85) (11,326) (1,944) (5,918) (13) (76,254) - (304,825)
49
LG Chem, Ltd.

Korean won) Right-of- Construction Machinery
Land Buildings Structures Machinery Vehicles Tools Equipment Others use assets -in-progress -in-transit Total
Beginning balance 1,123,590 2,311,548 720,774 3,043,583 11,015 340,661 114,223 115,903 - 1,369,361 174,116 9,324,774
Cost 1,160,542 2,863,091 1,216,503 10,775,322 36,473 992,866 331,043 315,051 - 1,416,372 174,116 19,281,379
Accumulated
depreciation - (529,521) (490,109) (7,605,723) (25,353) (640,512) (214,792) (196,996) - - - (9,703,006)
Accumulated
impairment (36,952) (22,022) (5,620) (126,016) (105) (11,693) (2,028) (2,152) - (47,011) - (253,599)
Changes in
accounting policies - - (17,697) (9,668) - - - - 82,582 - - 55,217
Restated beginning
balance 1,123,590 2,311,548 703,077 3,033,915 11,015 340,661 114,223 115,903 82,582 1,369,361 174,116 9,379,991
Acquisitions/
Transfer 128,058 307,095 147,189 1,338,598 4,364 178,913 34,095 144,767 26,411 2,452,813 195,797 4,958,100
Disposals/ Transfer (3,882) (37,140) (390) (96,900) (10,087) (4,714) (875) (174) (319) (2,202,062) (208,708) (2,565,251)
Depreciation - (63,127) (44,865) (674,547) (1,860) (116,027) (32,340) (81,802) (15,882) - - (1,030,450)
Impairment - (3,139) (2,298) (70,600) - (824) (429) (3,571) (75) (39,077) (1,177) (121,190)
Reversal of
impairment - 12 12 181 2 - 8 - - - - 215
Ending balance 1,247,766 2,515,249 802,725 3,530,647 3,434 398,009 114,682 175,123 92,717 1,581,035 160,028 10,621,415
Cost 1,284,718 3,120,778 1,331,742 11,860,563 26,424 1,124,510 357,401 378,824 126,123 1,666,659 160,028 21,437,770
Accumulated
depreciation - (580,822) (521,145) (8,151,131) (22,893) (714,723) (240,363) (197,978) (33,331) - - (10,462,386)
Accumulated
impairment (36,952) (24,707) (7,872) (178,785) (97) (11,778) (2,356) (5,723) (75) (85,624) - (353,969)
(b) During the year, the Company capitalized ￦ 34,550 million of borrowing costs (2019:
￦ 22,865 million) in relation to acquisition of property, plant and equipment, on property, plant
and equipment. The capitalization rate of borrowings used to determine the amount of
borrowing costs eligible for capitalization is 2.37% (2019: 2.48%).
(c) Line items including depreciation in the separate statements of profit or loss for the years
Cost of sales 957,622 895,328

Selling and administrative expenses 146,754 122,708
Others 795 2,358
Discontinued operations 5,109 10,056
Total 1,110,280 1,030,450
50
LG Chem, Ltd.
(d) Lease
(i) Amounts recognized in the statement of financial position
The statement of financial position shows the following amounts relating to leases:
Right-of-use assets1
Real-estate 109,010 75,184
Machinery 9,004 11,850
Vehicles 7,891 5,683
125,905 92,717
1 Included in the line item ‘Property, plant and equipment’ in the statements of financial position.
Additions to the right-of-use assets during the 2020 financial year were ￦ 72,595 million. (2019:
￦ 82,582 million)
Lease liabilities1
Current 34,088 29,177
Non-current 93,881 65,374
127,969 94,551
1 Included in the line item ‘borrowings’ in the statements of financial position.
(ii) Amounts recognized in the statement of profit or loss
The statement of profit or loss shows the following amounts relating to leases:
Depreciation of right-of-use assets

Real-estate 26,620 9,337
Machinery 2,895 2,962
Vehicles and others 5,222 3,583
34,737 15,882
Interest expense relating to lease liabilities (included in
finance cost) 2,331 2,142
Expense relating to short-term leases (included in cost
of goods sold and administrative expenses) 14,167 30,941
Expense relating to leases of low-value assets that are
not short-term leases (included in cost of goods sold
and administrative expenses) 13,024 9,578
Expense relating to variable lease payments not
included in lease liabilities (included in cost of goods
sold and administrative expenses) - 22
51
LG Chem, Ltd.
The total cash outflow for leases during year ended December 31, 2020 was ￦ 63,333 million.
(2019: ￦ 51,002 million)
12. Intangible Assets
(a) Changes in intangible assets for the years ended December 31, 2020 and 2019, are as
follows:

Industrial
Development property
costs Software rights Goodwill Memberships Others Total
Beginning balance 56,375 231,063 442,187 723,756 46,842 180,592 1,680,815

Separate acquisitions/
Transfer1 - 267,285 123,359 - 867 10,320 401,831
Additions – internal
development 4,116 - - - - - 4,116
Disposals/ Transfer - (1,591) (4,023) - (16,623) (7,901) (30,138)
Amortization (4,814) (85,001) (41,866) - - (16,140) (147,821)
Impairment - (26) (1,447) - - - (1,473)
Transfer to assets held
for sale (Note 34) - - (5,124) - - - (5,124)
Split-off - (116,905) (145,495) - (9,218) (439) (272,057)
Ending balance 55,677 294,825 367,591 723,756 21,868 166,432 1,630,149
1 Intangible assets acquired from Dupont related to S-OLED are included.

Industrial
Development property
costs Software rights Goodwill Memberships Others Total
Beginning balance 75,399 173,286 270,419 723,756 50,234 182,178 1,475,272

Separate acquisitions/
Transfer1 5,272 124,397 215,116 - 67 40,079 384,931
Additions – internal
development 16,870 - - - - - 16,870
Disposals/ Transfer (7,822) (12,502) (4,455) - (3,459) (10,149) (38,387)
Amortization (4,532) (54,014) (35,304) - - (17,127) (110,977)
Impairment (28,812) (104) (3,589) - - (14,389) (46,894)
Ending balance 56,375 231,063 442,187 723,756 46,842 180,592 1,680,815
1 Intangible assets acquired from Dupont related to S-OLED are included.
52
LG Chem, Ltd.
(b) Line items including amortization of intangible assets for the years ended December 31, 2020
and 2019, are as follows:
Cost of sales 33,459 21,865

Discontinued operations 263 710
Total 147,821 110,977
(c) The Company recognized total research and development costs of ￦ 1,023,180 million
(2019: ￦ 1,003,225 million) as expenses.
(d) Goodwill is allocated to the Company’s CGUs identified for each operating segment. The
carrying amounts of goodwill allocation by CGUs as at December 31, 2020 and 2019, are as
follows:

Acquisition
Merger of LG Acquisition Acquisition of of LG Life
Petrochemical of SAP PSAA Sciences,
CGUs Co., Ltd business business Ltd, Total
Petrochemicals
NCC 2,639 - - - 2,639
ABS 1,472 - - - 1,472
PO 1,054 - - - 1,054
PVC 808 - - - 808
Acrylic 350 25,222 - - 25,572
Plasticizer 53 - - - 53
BPA 467 - - - 467
Others 1,350 - - - 1,350
Advanced Materials
PSAA - - 4,112 - 4,112
Life Sciences
Life sciences - - - 686,229 686,229
Total 8,193 25,222 4,112 686,229 723,756

Acquisition
Merger of LG Acquisition Acquisition of of LG Life
Petrochemical of SAP PSAA Sciences,
CGUs Co., Ltd business business Ltd, Total
Petrochemicals
NCC 2,639 - - - 2,639
ABS 1,472 - - - 1,472
PO 1,054 - - - 1,054
PVC 808 - - - 808
Acrylic 350 25,222 - - 25,872
Plasticizer 53 - - - 53
BPA 467 - - - 467
53
LG Chem, Ltd.
Others 1,350 - - - 1,350

Advanced Materials
PSAA - - 4,112 - 4,112
Life Sciences
Life sciences - - - 686,229 686,229
Total 8,193 25,222 4,112 686,229 723,756
The recoverable amounts of CGUs have been determined based on value-in-use or fair value
less cost of disposal calculations. Value-in-use calculations use pre-tax cash flow projections
based on financial budgets approved by management covering a five-year period. Fair value less
cost of disposal reflects expectation of future business and usage pattern of assets from the
perspective of market participants. Management determined the estimated pre-tax cash flow
based on past performance and its expectations of market development. Discount rates applied
by the management are the pre-tax discount rates reflecting specific risks relating to the relevant
operating segments. Taking into account the uncertainties relating to COVID-19, discount rates
have been determined based on average values of input parameters (e.g. market risk premium)
for longer observable period than before.
During 2020, key assumptions used for calculation of value in use and fair value less cost of
disposal are as follows:

Growth rate for
subsequent
Pre-tax discount rate years after five years
Acquisition of
LG Petrochemical Co., Ltd. 7.8% 0.0%
Acquisition of SAP business 7.7% 0.0%
Acquisition of PSAA business 7.8% 0.0%
Acquisition of LG Life Sciences 11.3% 3.0%
The results of the sensitivity analysis for the fair value less cost of disposal calculation of Life
Sciences CGU are as follows:
(in millions of Korean won) 0.5% Increase 0.5% Decrease

Discount rate
Increase(decrease) in fair value (138,675) 162,305
Growth rate
Increase(decrease) in fair value 113,949 (97,435)
(e) Changes in greenhouse gas emission permits for the years ended December 31, 2020 and
(in thousands of tons 2020

and millions of 2019 2020
Korean won) Quantity Amount Quantity Amount
Beginning balance 7,583 4,375 7,479 -

Allocation with nil
consideration 650 - 3 -
Purchase/Sale 138 3,525 - -
Borrowings/Carry
forwards between 41 - (41) -
54
LG Chem, Ltd.
years
Surrendered to the
government (8,412) (7,900) - -
Ending balance - - 7,441 -
(in thousands of tons 2019

and millions of 2018 2019 2020
Korean won) Quantity Amount Quantity Amount Quantity Amount
Beginning balance 7,809 7,359 7,479 - - -

Allocation with nil
consideration 65 - - - 7,479 -
Purchase/Sale 100 2,790 130 4,375 - -
Borrowings/Carry
forwards between
years 26 - (26) - - -
Surrendered to the
government (8,000) (10,149) - - - -
Ending balance - - 7,583 4,375 7,479 -
13. Other Current and Non-current Assets
Details of other current and non-current assets as at December 31, 2020 and 2019, consist of:
Current
Prepayments to suppliers and prepaid
expense 36,106 30,543
Prepaid value added tax 75,933 76,151
Others 7,249 100,902
Total 119,288 207,596
Non-current
Long-term prepayments and prepaid
expenses 5,241 48,543
Others 30 30
Total 5,271 48,573
55
LG Chem, Ltd.
14. Borrowings
(a) Borrowings as at December 31, 2020 and 2019, are as follows:
Current
Current-portion of debentures 222,473 119,949
Current-portion of lease liabilities 34,088 29,177
256,561 149,126
Non-current
Debentures 3,183,528 5,109,507
Lease liabilities 93,881 65,374
3,277,409 5,174,881
Total 3,533,970 5,324,007
(b) Details of debentures as at December 31, 2020 and 2019, are as follows:

Annual Latest Amount in
interest rate maturity Korean Non-
Financial institution (%) date won Current current
50-2nd Debenture (non- NH Investment & Securities

guaranteed/public) Co., Ltd. and others 2.28 2022.5.19 400,000 - 400,000
50-3rd Debenture (non- NH Investment & Securities
51-1st Debenture (non- NH Investment & Securities
guaranteed/public) Co., Ltd. and others 2.56 2021.2.20 190,000 190,000 -
51-4th Debenture (non- NH Investment & Securities
guaranteed/public)1 Co., Ltd. and others 2.21 2026.3.13 - - -
USD foreign currency
CITI and others
debenture with maturity 3.25 2024.10.15 - - -
56
LG Chem, Ltd.
in 20241
debenture with maturity CITI and others
in 20291 3.63 2029.4.15 - - -
EUR foreign currency
in 20231 0.50 2023.4.15 - - -
1-1st USD Overseas
Credit Suisse
Exchangeable bonds2,4 - 2020.10.7 - - -
1-2nd EUR Overseas
Credit Suisse
Exchangeable bonds3,4 - 2021.1.14 32,787 32,787 -
Less: discount on debentures (6,786) (314) (6,472)
Total 3,406,001 222,473 3,183,528

Annual Latest Amount in
interest rate maturity Korean Non-
Financial institution (%) date won Current current

guaranteed/public) Co., Ltd. and others 1.95 2020.5.19 120,000 120,000 -
1-1st USD Overseas
Credit Suisse
Exchangeable bonds2 - 2021.4.16 254,716 - 254,716
1-2nd EUR Overseas
Credit Suisse
Exchangeable bonds3 - 2021.4.16 408,950 - 408,950
in 2024 3.25 2024.10.15 578,900 - 578,900
in 2029 3.63 2029.4.15 578,900 - 578,900
EUR foreign currency
in 2023 0.50 2023.4.15 648,715 - 648,715
57
LG Chem, Ltd.
Less: discount on debentures (40,725) (51) (40,674)

Total 5,229,456 119,949 5,109,507
1 The 52-3rd Debenture (non-guaranteed/public) of ￦ 200 billion, USD foreign currency

debenture of ￦ 1,104.4 billion, and EUR foreign currency debenture of ￦ 660.8 billion were
transferred to LG Energy Solution Co., Ltd. according to the split-off of energy solution division of
the Company.
2 Details of 1-1st USD overseas exchangeable bonds are as follows:
Details
Aggregate principal amount USD 220,000,000

Issue price USD 220,000,000
Coupon rate (%) 0.00
Issue date April 16, 2018
Maturity date April 16, 2021
Redemption - Redemption at maturity: Outstanding bond principal, which is not
repaid early or which call option is not exercised on, is repaid at
maturity as a lump sum.
- Prepayment: The issuer has a call option.
Underlying shares 509,606 registered ordinary shares (treasury shares)
Exchange price
460,000
(Korean won/shares)
Exchange period From May 27, 2018 to April 06, 2021
Call option by the issuer - Share price (based on closing price) is higher than 130% of
exchange price for more than 20 trading days during 30
consecutive trading days in a row, after 1 year from the closing
date.
- The amount of outstanding bonds is less than 10% in aggregate
principal amount of the bonds originally issued (clean up call).
- As a result of changes relating to tax laws in Korea, the issuer
becomes obliged to pay any additional amounts.
Call option by bondholders - The shares cease to be listed or admitted to trading or are
suspended for a period equal to or exceeding 30 consecutive
trading days.
- The occurrence of a change of control
3 Details of 1-2nd EUR overseas exchangeable bonds are as follows:
Details
Aggregate principal amount EUR 315,200,000

Issue price EUR 315,200,000
Coupon rate (%) 0.00
Issue date April 16, 2018
Maturity date April 16, 2021
Redemption - Redemption at maturity: Outstanding bond principal, which is not
repaid early or which call option is not exercised on, is repaid at
maturity as a lump sum.
- Prepayment: The issuer has a call option.
Underlying shares 775,128 registered ordinary shares (treasury shares)
Exchange price
533,600
(Korean won/shares)
58
LG Chem, Ltd.
Exchange period From May 27, 2018 to April 06, 2021

Call option by the issuer - Share price (based on closing price) is higher than 130% of
exchange price for more than 20 trading days during 30
consecutive trading days in a row, after 1 year from the closing
date.
- The amount of outstanding bonds is less than 10% in aggregate
principal amount of the bonds originally issued (clean up call).
- As a result of changes relating to tax laws in Korea, the issuer
becomes obliged to pay any additional amounts.
Call option by bondholders - The shares cease to be listed or admitted to trading or are
suspended for a period equal to or exceeding 30 consecutive
trading days.
- The occurrence of a change of control
4 As the conditions for the execution of call options have been satisfied for the year ended
December 31, 2020, exchangeable bonds of USD 219,800,000 were exchanged with 509,113
treasury shares and the remaining exchangeable bonds of USD 200,000 have been early repaid
on October 7, 2020. In January 2021, exchangeable bonds of EUR 290,700,000 were
exchanged with 714,856 treasury shares and EUR 22,300,000 were additionally exchanged with
54,834 treasury shares and the remaining exchangeable bonds of EUR 2,200,000 have been
early repaid on January 14, 2021.
Details of finance lease liabilities as at December 31, 2020 and 2019, are as follows:

Annual Latest
Leaser interest rate (%) maturity date Total amount Current Non-current
Hyundai Oil Bank and others 1.98 ~ 3.01 2068.12.31 127,969 34,088 93,881

Annual Latest
Leaser interest rate (%) maturity date Total amount Current Non-current
Hyundai Oil Bank and others 1.98 ~ 4.13 2068.12.31 94,551 29,177 65,374
15. Provisions
Changes in the carrying amount of provisions for the years ended December 31, 2020 and 2019,
are as follows:

Greenhouse
gas Legal
Warranty1 emission2 claims3 Restoration4 Total
Beginning balance 534,351 25,157 370 3,377 563,255

Effect of split-off (546,647) (746) (336) - (547,729)
Additions (reversal) 304,616 (12,478) (34) 22,394 314,498
Used (285,419) (7,900) - (368) (293,687)
Ending balance 6,901 4,033 - 25,403 36,337
Less : current portion (4,951) (4,033) - (4,464) (13,448)
Total 1,950 - - 20,939 22,889
59
LG Chem, Ltd.

Greenhouse
gas Legal
Warranty1 emission2 claims3 Restoration4 Total
Beginning balance 173,193 11,700 358 3,738 188,989

Additions 610,732 23,606 12 85 634,435
Used (249,574) (10,149) - (446) (260,169)
Ending balance 534,351 25,157 370 3,377 563,255
Less : current portion (423,505) (25,157) - - (448,662)
Total 110,846 - 370 3,377 114,593
1 Warranty provisions have been accrued based on historical experience for the estimated
warranty costs to be incurred due to quality control, exchange, refunds with regard to products.
2 Greenhouse gas emission provisions have been accrued for estimated expenditures to be
obligated for any excess emission. The estimated emission for the year ended December 31,
2020, amounts to 7,886 thousand tons (2019: 7,905 thousand tons).
3 Lawsuit provisions have been accrued for certain pending cases.
4 Restoration provisions have been accrued based on the estimated expenses to restore land
pollutions.
16. Net Defined Benefit Liability
(a) Details of net defined benefit liabilities recognized in the statements of financial position as at
Present value of defined benefit obligations1 936,965 1,285,980

Fair value of plan assets (878,700) (1,126,798)
Liability in the separate statement of financial
position 58,265 159,182
1 The present value of retirement benefit obligations is net of existing contributions to the National
Pension Plan of ￦ 649 million as at December 31, 2020 (2019: ￦ 732 million).
(b) The amounts recognized in the separate statements of profit or loss for the years ended
Current service cost1 170,964 154,249

Net interest cost 3,557 5,203
Total, included in employee benefit expenses 174,521 159,452
1 The above amounts excluded ￦ 5,138 million (2019: ￦ 1,719 million) of expenses capitalized
to construction in progress and development costs.
(c) Post-employment benefits recognized for defined contribution plan for the year ended
December 31, 2020, amounted to ￦ 7,298 million (2019: ￦ 6,218 million).
60
LG Chem, Ltd.
(d) Post-employment benefits recognized in the separate statements of profit or loss for the
years ended December 31, 2020 and 2019, are as follows:
Cost of sales 111,904 105,173

Discontinued operations 2,222 6,446
Total 181,819 165,670
(e) Movements in the present value of defined benefit obligations for the years ended December
Beginning balance 1,285,980 1,108,144

Transfer in 6,106 20,715
Transfer out (1,436) (5,445)
Decrease in defined benefit obligations due
to disposal and merger (455,133) -
Current service cost 176,102 155,968
Interest expense 29,221 29,194
Remeasurements:
Actuarial loss from change in
demographic assumptions 7,943 6,124
Actuarial loss (gain) from change in
financial assumptions (24,874) 74,680
Actuarial gain from experience
adjustments (10,239) (21,594)
Others 1,201 2,917
Payments from plans (77,906) (84,723)
Ending balance 936,965 1,285,980
(f) Movements in the fair value of plan assets for the years ended December 31, 2020 and 2019,
are as follows:
Beginning balance 1,126,798 913,995

Transfer out (725) (185)
Increase (decrease) in assets due to
disposal and merger (415,772) -
Interest income 25,664 23,991
Remeasurements:
Return on plan assets (excluding amounts
included in interest income) (4,738) (6,651)
Contributions:
Employers 220,000 270,000
Payments from plans (72,228) (73,262)
Administrative costs (299) (1,090)
61
LG Chem, Ltd.
Ending balance 878,700 1,126,798
(g) The actual return on plan assets for the year ended December 31, 2020, was ￦ 20,926
million (2019: ￦ 17,340 million).
(h) The significant actuarial assumptions as at December 31, 2020 and 2019, are as follows:
2020 2019
Discount rate 2.5% 2.4%

Salary growth rate 5.0% 5.0%
(i) The sensitivity analysis for changes in key actuarial assumptions as at December 31, 2020, is
as follows:
(in millions of Korean won) Increase by 0.5% Decrease by 0.5%
Discount rate:
Increase (decrease) in defined benefit
obligations (51,000) 55,899
Salary growth rate:
Increase (decrease) in defined benefit
obligations 54,251 (50,081)
A decrease in corporate bond yields may lead most significantly to an increase in defined benefit
liabilities.
The above sensitivity analyses are 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 recognized on the statement of
financial position.
The methods and types of assumptions used in preparing the sensitivity analysis did not change
compared to the prior period.
(j) Plan assets as at December 31, 2020 and 2019, consist of:

Amount Composition Amount Composition
Insurance contracts with
guaranteed yield 878,700 100% 1,126,798 100%
Plan assets consist of various debt instruments with principal and interest protection and others
which have no quoted market prices in an active market.
(k) As at December 31, 2020, the weighted average duration of defined benefit obligation is
13.13 years.
The Company reviews the funding level on an annual basis and has a policy of eliminating deficit
from the fund. Expected contributions to post-employment benefit plans for the year ending
December 31, 2021 are ￦ 176,684 million.
62
LG Chem, Ltd.
17. Other Current and Non-current Liabilities
Details of other current and non-current liabilities as at December 31, 2020 and 2019, are as
follows:
Current
Advances from customers 31,453 150,141
Withholding 74,579 92,050
Unearned revenues 22,060 32,182
Accrued expenses 217,238 138,875
Total 345,330 413,248
Non-current
Long-term accrued expenses 40,562 58,786
Long-term unearned revenues 15,272 15,272
Long-term advances from customers - 58,699
Total 55,834 132,757
18. Commitments and Contingencies
(a) The company is jointly liable for liabilities of LG Energy Solutions Co., Ltd. as at December 1,
2020, a newly established company through the split-off from the Parent Company.
(b) As at December 31, 2020, the Company has been guaranteed from the Seoul Guarantee
Insurance Company for the execution of contracts and others.
(c) As at December 31, 2020, the Company has bank overdraft agreements with several banks
for up to ￦ 20,400 million, and has entered into contracts with several financial institutions,
and for letters of credit for up to ￦ 22,000 million and US$ 356 million, foreign currency
purchase agreement for up to US$ 397 million, and for the guaranteed payments in foreign
currency for up to US$ 41 million. The Company also has comprehensive credit line of credit
agreements with several financial institutions for up to ￦ 20,000 million (including bank
overdraft of ￦ 5,000 million), US$ 55 million (relating to trade finance and import/export), and
other credit limit of US$ 55 million.
(d) As at December 31, 2020, the Company has B2B purchase arrangements with several
financial institutions amounting to ￦ 330,000 million, as well as enterprise general fund
arrangement with limit of ￦ 350,000 million.
(e) As at December 31, 2020, the Company has reverse factoring agreements, and utilized the
facility for ￦ 739,616 million provided by Shinhan Card and utilized the facility for
￦ 1,360,320 million provided by Woori Card.
(f) In addition, as at December 31, 2020, the Company have been named as a plaintiff in 9 legal
actions involving ￦ 20,711 million, and as a defendant in 7 legal actions with ￦ 4,612
million. The ultimate outcome of these cases cannot be determined at the reporting date.
(g) As at December 31, 2020, the Company is under investigation by the related authorities in
relation to the manipulation of the emission of fine dust-causing substance in the Yeosu
Industrial Complex, and the final outcome of these investigations cannot be determined at the
reporting date. As at December 31, 2020, the Company shut down the relevant production
facilities.
(h) The Company has entered into manufacture and production technical contracts with
ExxonMobil and others.
63
LG Chem, Ltd.
(i) The Company has entered into a license agreement with LG Corp. to use trademarks on the
products that the Company manufactures and sells, and on the services the Company
provides in relation to its business.
(j) As at December 31, 2020, the Company has contracts of US$ 8 million in guarantees with
financial institutions in regard to warranty for certain products.
(k) As at December 31, 2020, the Company has guaranteed the repayment of various obligations
of its subsidiaries. The outstanding balance of such guarantees as at December 31, 2020,
amounts to ￦ 190,000 million (2019: ￦ 1,672,676 million). Details of guarantees provided
as at December 31, 2020 and 2019, are as follows:
(in millions of Korean won) Amount of guarantee Outstanding loan amount

Financial
Guarantee beneficiary institution Guarantee period 2020 2019 2020 2019
LG Chem Wroclaw
Energy sp. z o.o 1 Citibank 2017.7.31 ~ 2020.4.6 - 38,949 - 38,949
LG Chem Wroclaw
LG Chem Wroclaw
Energy sp. z o.o 1 Citibank 2018.11.2 ~ 2023.11.2 - 64,914 67,381 64,914
LG Chem Wroclaw
LG Chem Wroclaw
Energy sp. z o.o 1 ING 2017.9.1 ~ 2022.9.1 - 64,914 67,381 64,914
LG Chem Wroclaw
Energy sp. z o.o 1 ING 2018.11.23 ~ 2023.11.23 - 64,914 67,381 64,914
LG Chem Wroclaw
Energy sp. z o.o 1 ING 2018.11.23 ~ 2023.11.23 - 25,966 26,952 25,966
LG Chem Wroclaw
Energy sp. z o.o 1 MUFG 2019.1.16 ~ 2024.1.31 - 64,914 67,381 64,914
LG Chem Wroclaw
Energy sp. z o.o 1 MUFG 2019.1.16 ~ 2022.1.31 - 64,914 67,381 64,914
LG Chem Wroclaw
Energy sp. z o.o 1 SMBC 2019.2.1 ~ 2020.11.25 - 25,966 - 25,966
LG Chem Wroclaw
Energy sp. z o.o 1 Hana Bank 2019.2.6 ~ 2024.3.31 - 259,658 269,523 259,658
LG Chem Wroclaw
LG Chem Wroclaw
Energy sp. z o.o 1 SMBC 2019.9.25 ~ 2020.11.24 - 129,829 134,761 129,829
LG Chem Wroclaw
LG Chem Wroclaw
Energy sp. z o.o 1 EBRD 2019.9.25 ~ 2026.9.24 - 129,829 134,761 129,829
LG Chem Wroclaw
Energy sp. z o.o 1 HSBC 2019.11.25 ~ 2020.11.23 - 129,829 - 129,829
LG Chem Wroclaw
Energy sp. z o.o 1 KB Kookmin Bank 2019.11.29 ~ 2020.11.28 - 129,829 - 12,983
LG Chem Wroclaw
Energy sp. z o.o 1 SMBC 2020.2.7 ~ 2023.2.6 - - 134,761 -
LG Chem Wroclaw
Energy sp. z o.o 1 SMBC 2020.2.7 ~ 2027.2.5 - - 67,381 -
LG Chem Wroclaw EBRD 2020.3.26 ~ 2027.3.26 - - 202,142 -
64
LG Chem, Ltd.
Energy sp. z o.o 1

LG Chem Wroclaw
Energy sp. z o.o 1 DBS 2020.3.11 ~ 2023.3.11 - - 134,761 -
LG Chem Wroclaw
Energy sp. z o.o 1 EIB 2020.3.16 ~ 2031.3.6 - - 646,854 -
Korea
Development
Bank / The
Export-Import
LG Chem Wroclaw Bank of Korea /
Energy sp. z o.o 1 Nonghyup Bank 2020.4.29 ~ 2022.4.29 - - 741,188 -
Korea
Development
Bank / The
LG Chem Wroclaw Export-Import
Energy sp. z o.o 1 Bank of Korea / 2020.11.26 ~ 2021.11.26 - - 134,761 -
FarmHannong Co.,Ltd. Creditors 2017.2.16 ~ 2020.2.16 - 100,000 - 100,000
FarmHannong Co.,Ltd. Creditors 2017.2.16 ~ 2022.2.16 100,000 100,000 100,000 100,000
Total 190,000 1,672,676 3,289,512 1,536,979
1 Financial
guarantees provided by the Company for LG Chem Wroclaw Energy sp. z o. o. have
been transferred to LG Energy Solution Co., Ltd. according to the split-off of energy solution
division.
In addition, the Company provides Letters of Comfort (LOC) in relation to certain borrowings of
subsidiaries.
Further, as at December 31, 2020, the Company provided no financial guarantee to its
associates in relation to their borrowings.
(l) Capital expenditure arrangement that has not incur at the end of the reporting period are as
follows:
Property, plant and equipment 403,201 922,832
19. Share Capital
(a) Changes in share capital and share premium for the years ended December 31, 2020 and
(in millions of Korean

won and in shares) Ordinary shares Preferred shares
Number of Share Number of Share Share
shares capital shares capital premium
January 1, 2019 70,592,343 352,962 7,688,800 38,444 2,014,454

December 31, 2019 70,592,343 352,962 7,688,800 38,444 2,014,454
December 31, 2020 70,592,343 352,962 7,688,800 38,444 2,014,454
65
LG Chem, Ltd.
(b) Changes in treasury shares for the years ended December 31, 2020 and 2019, are as follows:
Number of shares Gain on

(in millions of Korean won Ordinary Preferred Carrying disposal of
and in shares) shares shares amount treasury shares
January 1, 2019 1,652,417 16,367 354,945 13,855

December 31, 2019 1,652,417 16,367 354,945 13,855
Decrease in treasury shares
due to exercise of
exchange rights (1,187,575) - (319,246) 417,864
Others - 1 - -
December 31, 2020 464,842 16,368 35,699 431,719
20. Retained Earnings
Retained earnings as at December 31, 2020 and 2019, consist of:
Legal reserve 1 195,703 195,703

Discretionary reserve 2 13,762,283 13,599,831
Retained earnings before appropriation (66,925) 316,060
Total 13,891,061 14,111,594
1 The Commercial Code of the Republic of Korea requires the Company to appropriate for each
financial period, 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
cash dividends payment, but may be transferred to share capital or used to reduce
accumulated deficit. When the accumulated legal reserves (the sum of capital reserves and
earned profit reserves) are greater than 1.5 times the paid-in capital amount, the excess legal
reserves may be distributed in accordance with a resolution of the shareholders’ meeting.
2 The Company separately accumulates a discretionary reserve for research and human
resource development through appropriation of retained earnings, which has been included as
deductible expense for the corporate income tax return according to the Special Tax Treatment
Law. The reserve could be paid as a dividend in accordance with the terms of related tax laws.
21. Other Components of Equity
Details of other components of equity as at December 31, 2020 and 2019, are as follows:
Treasury shares (Note 19) (35,699) (354,945)
66
LG Chem, Ltd.
22. Selling and Administrative Expenses
Selling and administrative expenses for the years ended December 31, 2020 and 2019, are as
follows:
Wages and salaries 721,035 674,107

Post-employment benefits (Note 16) 67,693 54,051
Employee benefits 142,341 136,287
Travel expense 25,734 61,029
Water & utilities 52,647 50,070
Packaging expenses 5,739 9,282
Rental expenses 89,154 96,944
Commission expenses 742,363 617,212
Depreciation 148,101 123,934
Advertising expense 22,337 30,673
Freight expenses 430,305 427,371
Training expense 13,469 22,442
Amortization (Note 12) 114,099 88,402
Sample expense 11,835 13,180
Development costs 224,996 232,343
Others 419,949 703,754
Total 3,231,797 3,341,081
23. Breakdown of Expenses by Nature
Cost of sales, and selling and administrative expenses by nature for the years ended December
31, 2020 and 2019, consist of:
Changes in inventories of merchandise, finished

goods, semi-finished goods and
work in process 654,877 (110,067)
Raw materials and consumables used 11,335,921 12,895,488
Purchase of merchandise 989,385 999,982
Employee benefit expenses (Note 24) 2,114,975 1,920,053
Advertising expenses 23,379 31,895
Freight expenses 458,069 454,056
Commission expenses 949,705 804,900
Depreciation and amortization 1,253,281 1,129,529
Rentals and fees 30,163 46,316
Other expenses 1,905,817 3,013,275
Total 19,715,572 21,185,427
67
LG Chem, Ltd.
24. Employee Benefit Expenses
Details of employee benefit expenses for the years ended December 31, 2020 and 2019, are as
follows:
Salaries 1,761,211 1,596,254

Post-employment benefits – Defined benefit plan
(Note 16) 172,420 153,099
Post-employment benefits – Defined contribution
plan (Note 16) 7,177 6,125
Others 174,167 164,575
Total 2,114,975 1,920,053
25. Finance Income and Costs
Details of finance income and costs for the years ended December 31, 2020 and 2019, are as
follows:
Finance income
Interest income1 27,135 34,614
Dividend income 92,595 100,374
Exchange differences 297,934 163,881
Gain on derivative instruments - 29,599
Gain on financial assets 3,898 -
Total 421,562 328,468
Finance costs
Interest expense2 131,623 101,180
Loss on valuation of derivative instruments 309,988 273
Total 782,028 275,662
1 Details of interest income for the years ended December 31, 2020 and 2019, are as follows:
Deposits held by financial institutions 12,339 25,938

Other loans and receivables 14,796 8,676
Total 27,135 34,614
68
LG Chem, Ltd.
2 Details of interest expense for the years ended December 31, 2020 and 2019, are as follows:
Interest related to financial institutions 877 5,545

Interest on finance lease liabilities 2,331 2,139
Interest on debentures 138,937 114,759
Other interest expenses 24,028 1,602
Capitalized interest for qualifying assets (34,550) (22,865)
Total 131,623 101,180
26. Other Non-Operating Income
Details of other non-operating income for the years ended December 31, 2020 and 2019, are as
follows:

Gain on disposal of property, plant and
equipment 2,245 7,339
Gain on disposal of intangible assets 149 72
Reversal of impairment loss on property, plant
and equipment (Note 11) 220 215
Gain on disposal of associates and joint ventures 341,015 599
Others 71,512 32,331
Total 834,210 380,791
27. Other Non-Operating Expenses
Details of other non-operating expenses for the years ended December 31, 2020 and 2019, are
as follows:

Loss on disposal of property, plant and
equipment 25,541 21,668
Loss on disposal of intangible assets 1,451 862
Impairment loss on property, plant and
equipment (Note 11) 60,190 52,455
Impairment loss on intangible assets (Note 12) 1,410 45,924
Donations 12,168 14,143
Impairment loss on investments in subsidiaries 144,919 21,158
Others 33,296 16,716
Total 765,000 502,523
69
LG Chem, Ltd.
28. Tax Expense and Deferred Tax
(a) Income tax expense for the years ended December 31, 2020 and 2019, are as follows:
Current tax on profit for the year 399,670 102,141

Adjustments in respect of prior years (10,634) 51,789
Deferred tax movement in temporary differences 619,342 (77,019)
Deferred tax - credit carryforwards (329) 4,678
1,008,048 81,589
Deferred tax charged directly to equity (181,470) (20,605)
Current tax charged directly to equity (5,839) 18,914
Effect of discontinued operations 20,041 19,609
Income tax expense 840,780 99,507
(b) The aggregate current and deferred tax charged directly to equity (other comprehensive
income) for the years ended December 31, 2020 and 2019, are as follows:
Current tax
Remeasurements of net defined benefits liabilities (5,839) 18,914
Deferred tax
Loss on disposal of financial assets at fair value
through other comprehensive income (5,262) -
Gain (loss) on valuation of financial assets at fair
value through other comprehensive income 4,430 (9,647)
Loss on disposal of treasury shares (180,482) -
Loss on valuation of derivative instruments (156) (10,958)
Total (187,309) (1,691)
70
LG Chem, Ltd.
(c) Movements in deferred tax assets (liabilities) for the years ended December 31, 2020 and

Increase (decrease)
Other
Beginning Profit (loss) comprehensive Ending
balance for the year income (loss) Split-off balance
Defined benefit liability 347,371 29,261 - (119,472) 257,160

Plan assets (309,869) (46,113) - 113,186 (242,796)
Provision for impairment on
receivables 235 - - - 235
Property, plant and equipment 47,223 23,052 - - 70,275
Investments in subsidiaries,
associates and joint ventures (6,250) 5,204 - - (1,046)
Accrued income (20) 17 - - (3)
Others 196,660 (449,293) (181,470) (216,345) (650,448)
275,350 (437,872) (181,470) (222,631) (566,623)
Tax credit carryforwards 6,478 329 - - 6,807
Deferred income tax assets
(Liabilities) 281,828 (437,543) (181,470) (222,631) (559,816)

Increase (decrease)
Other
Beginning Profit (loss) comprehensive Ending
balance for the year income (loss) balance
Defined benefit liability 299,565 47,806 - 347,371

Plan assets (251,348) (58,521) - (309,869)
Provision for impairment on
receivables 254 (19) - 235
Property, plant and equipment 40,671 6,552 - 47,223
Investments in subsidiaries,
associates and joint ventures 15,142 (21,392) - (6,250)
Accrued income (308) 288 - (20)
Others 94,355 122,910 (20,605) 196,660
198,331 97,624 (20,605) 275,350
Tax credit carryforwards 11,156 (4,678) - 6,478
Deferred income tax assets 209,487 92,946 (20,605) 281,828
71
LG Chem, Ltd.
(d) The reconciliations between income tax expense and accounting profit for the years ended
Profit before income tax expense1 722,517 445,822

Tax at domestic tax rates applicable 188,330 112,239
Tax effects of:
Income not subject to tax (36,482) (19,851)
Expenses not deductible for tax purposes 9,521 29,654
Unrecognized deferred income tax for temporary
differences in the current year 758,122 5,285
Tax credit (149,047) (88,472)
Others 50,296 41,043
Effect of discontinued operations 20,041 19,609
Income tax expense 840,780 99,507
Effective tax rate (income tax expense/ profit before
income tax) 116.37% 22.32%
1 The amount before taking into account the discontinued operating income.
(e) Realization of deferred tax assets is dependent on the Company's ability to generate future
taxable profits in excess of the profits arising from the reversal of taxable temporary
differences, and economic and industry outlooks. Management periodically reviews on these
factors.
(f) Details of deductible (taxable) temporary differences unrecognized as deferred tax assets
(liabilities) as at December 31, 2020 and 2019, are as follows:
Investment in subsidiaries, associates and joint ventures 3,610,119 62,795

Land 488 488
Goodwill (694,422) (694,422)
Total 2,916,185 (631,139)
72
LG Chem, Ltd.
29. Earnings per Share
Basic earnings per share is calculated by dividing the profit attributable to ordinary shares by the
weighted average number of shares in issue excluding shares purchased by the Company and
held as treasury shares. As at the reporting date, the Company has no potential ordinary shares.
Preferred shares have a right to participate in the profits of the Company. These participation
rights have been considered in presenting the EPS for ordinary shares and preferred shares.
(a) Basic earnings per share for profit from continuing operations and earnings per share for the
years ended December 31, 2020 and 2019, are computed as follows:
Basic earnings per ordinary share from continuing operations
(in millions of Korean won and

in number of shares) 2020 2019
Profit (loss) from continuing operations

attributable to ordinary shares1 (16,187) 409,747
Weighted average number of ordinary shares
outstanding2 69,177,128 68,939,926
Basic earnings (losses) per ordinary share from
continuing operations (in won) (234) 5,944
Basic earnings per ordinary share

Profit (loss) attributable to ordinary shares1 (88,762) 328,933

Weighted average number of ordinary shares
outstanding2 69,177,128 68,939,926
Basic earnings (losses) per ordinary shares
(in won) (1,283) 4,771
Basic earnings per preferred share from continuing operations


attributable to preferred share1 (1,412) 45,985
Weighted average number of preferred shares
outstanding2 7,672,433 7,672,433
Basic earnings (losses) per preferred share from
continuing operations (in won) (184) 5,994
73
LG Chem, Ltd.
Basic earnings per preferred share

Profit (loss) attributable to preferred shares1 (9,461) 36,991

Weighted average number of preferred shares
outstanding2 7,672,433 7,672,433
Basic earnings (losses) per preferred shares
(in won) (1,233) 4,821
1 Profit attributable to ordinary and preferred shares are as follows:

attributable to the equity holders of the
Parent Company (17,599) 455,732
Ordinary shares dividends (A) 691,771 137,880
Preferred shares dividends (B) 77,108 15,728
Undistributed earnings (losses) from
continuing operation for the year (786,478) 302,124
Undistributed earnings (losses) available for
ordinary shares (C) (707,958) 271,867
preferred shares (D) (78,520) 30,257
Profit (loss) from continuing operations for
the year attributable to ordinary shares
(A+C) (16,187) 409,747
Profit (loss) from continuing operations for
the year attributable to preferred shares
(B+D) (1,412) 45,985
Profit (loss) attributable to the equity holders

of the Parent Company (98,223) 365,924
Ordinary shares dividends (A) 691,771 137,880
Preferred shares dividends (B) 77,108 15,728
Undistributed earnings (losses) for the year (867,102) 212,316
ordinary shares (C) (780,533) 191,053
preferred shares (D) (86,569) 21,263
Profit (loss) for the year attributable to
ordinary shares (A+C) (88,762) 328,933
Profit (loss) for the year attributable to
preferred shares (B+D) (9,461) 36,991
74
LG Chem, Ltd.
2 Weighted average numbers of shares are calculated as follows:
2020
Number of Number of Number of shares
Ordinary shares outstanding Period shares days x days
Beginning balance 2020. 1. 1 - 2020. 12. 31 68,939,926 366 25,232,012,916

Exchange of treasury shares 2020. 8. 1 - 2020. 12. 31 47,277 153 7,233,381
2020. 9. 1 - 2020. 12. 31 446,115 122 54,426,030
2020. 10. 1 - 2020. 12. 31 16,212 92 1,491,504
2020. 11. 1 - 2020. 12. 31 50,658 61 3,090,138
2020. 12. 1 - 2020. 12. 31 663,707 31 20,574,917
Total 25,318,828,886
Weighted average number of ordinary shares outstanding: 25,318,828,886 / 366 = 69,177,128 shares
2020
Preferred shares outstanding Period shares days x days

Total 2,808,110,478
Weighted average number of preferred shares outstanding: 2,808,110,478 / 366 = 7,672,433 shares
2019
Ordinary shares outstanding Period shares days x days

Total 25,163,072,990
Weighted average number of ordinary shares outstanding: 25,163,072,990 / 365 = 68,939,926 shares
2019
Preferred shares outstanding Period shares days x days

Total 2,800,438,045
Weighted average number of preferred shares outstanding: 2,800,438,045 / 365 = 7,672,433 shares
75
LG Chem, Ltd.
As at December 31, 2020, the Company did not calculate diluted earnings per share due to
antidilution.
(in millions of Korean won and in number of shares) 2019
Diluted earnings per ordinary shares from continuing operations

Profit from continuing operation for the year attributable to ordinary
shares 409,747
Loss on exchangeable bonds (after tax effects) (10,910)
Profit from continuing operation used in calculating diluted earnings per
share from continuing operation 398,837
Weighted average number of ordinary shares outstanding 68,939,926

Adjustments for calculation of diluted earnings per share:
Assumed exchange of exchangeable bonds 1,284,734
Weighted average number of ordinary shares and potential ordinary
shares used as the denominator in calculating diluted earnings per
share from continuing operation 70,224,660
Diluted earnings per share from continuing operation attributable to the
ordinary shares (in won) 5,679
Diluted earnings per ordinary shares

Profit for the year attributable to the ordinary shares 328,933
Profit used in calculating diluted earnings per share 317,875
Weighted average number of ordinary shares outstanding 68,939,926

Assumed exchange of exchangeable bonds 1,284,734
Weighted average number of ordinary shares and potential ordinary
share 70,224,660
Diluted earnings per share attributable to the ordinary shares (in won) 4,527
Diluted earnings per preferred share from continuing operations

Profit from continuing operation for the year attributable to preferred
shares 45,985
Profit from continuing operation used in calculating diluted earnings per
share from continuing operation 43,959
Weighted average number of preferred shares outstanding 7,672,433

Assumed exchange of exchangeable bonds -
Weighted average number of preferred shares and potential preferred
share from continuing operation 7,672,433
Diluted earnings per share from continuing operation attributable to
preferred shares (in won) 5,729
76
LG Chem, Ltd.
Diluted earnings per preferred shares

Profit for the year attributable to preferred shares 36,991
Profit used in calculating diluted earnings per share 35,113
Weighted average number of preferred shares outstanding 7,672,433

Assumed exchange of exchangeable bonds -
Weighted average number of preferred shares and potential preferred
share 7,672,433
Diluted earnings per share attributable to the preferred shares (in won) 4,577
Basic and diluted earnings (losses) per share attributable to ordinary and preferred shares from
discounted operations for the years ended December 31, 2020 and 2019, are as follows:
(in Korean won) 2020 2019
Basic (losses) per ordinary share from

discounted operations (1,049) (1,173)
Basic (losses) per preferred share from
Diluted (losses) per ordinary share from
Diluted (losses) per preferred share from
77
LG Chem, Ltd.
30. Dividends
(a) Details of dividends for the years ended December 31, 2020 and 2019, are as follows:
2020 2019
Number of shares entitled to dividends: shares issued

and outstanding (par value per share: ￦ 5,000)
Ordinary shares 70,127,501 68,939,926
Preferred shares 7,672,432 7,672,433
Dividend per share (in Korean won, %)

Ordinary shares: cash 10,000 (200%) 2,000 (40%)
Preferred shares: cash 10,050 (201%) 2,050 (41%)
Cash dividends to distribute (in millions of Korean won)

Ordinary shares 701,275 137,880
Preferred shares 77,108 15,728
778,383 153,608
(b) Dividend payout ratios for the years ended December 31, 2020 and 2019, are as follows:
Dividends (A) 778,383 153,608

Profit (loss) attributable to the ordinary equity holders
of the Parent Company (B) (98,223) 365,924
Dividend payout ratio (A/B) - 41.98%
(c) Dividend yield ratios for the years ended December 31, 2020 and 2019, are as follows:
2020 2019
Ordinary Preferred Ordinary Preferred
(in Korean won) shares Shares shares Shares
Dividend per share (A) 10,000 10,050 2,000 2,050

Market value at the end of year (B)1 808,750 377,375 312,000 171,500
Dividend yield ratio (A/B) 1.24% 2.66% 0.64% 1.20%
1 Average price in the stock market during one week preceding two business days before
shareholder list closing date for the general shareholders’ meeting.
78
LG Chem, Ltd.
31. Related Party Transactions
(a) As at December 31, 2020 and 2019, LG Corp. is an entity exercising a significant influence
over the Company as it owns 33.34% of the Company’s ordinary shares.
(b) Details of other related parties that have sales and other transactions with the Company or
have receivables and payables balances, other than consolidated subsidiaries, associates
and joint ventures (Note 10), as at December 31, 2020 and 2019, are as follows:
Related party’s subsidiary Related party’s subsidiary

Related party (Domestic) (Overseas) Details
S&I CM NANJING Co., Ltd.

S&I corp. S&I CM Subsidiary of LG Corp.
and others
Biz Tech Partners Co., Ltd. LG CNS America Inc.
LG CNS Co., Ltd. Subsidiary of LG Corp.
and others and others
LG Management
- - Subsidiary of LG Corp.
Development Institute
LG Sports Ltd. - - Subsidiary of LG Corp.
LG Holdings Japan - - Subsidiary of LG Corp.
LG MMA Corporation - - Joint venture of LG Corp.
LG Display (China) Co., Ltd.
LG Display Co., Ltd. - LG Enterprise group1
and others
Inspur LG Digital Mobile
LG Innotek Co., Ltd. and
LG Electronics, Inc. Communications Co., Ltd. LG Enterprise group1
others
and others
Pantos Logistics Co., Ltd. LG International (Japan) Ltd.
LG International Corp. LG Enterprise group1
and others and others
LG Hausys Tianjin Co., Ltd.
LG Hausys, Ltd. - LG Enterprise group1
and others
LG Household & Health Coca-Cola Beverage Co. LG Household & Health Care
LG Enterprise group1
Care Ltd. and others trading (Shanghai) Co.,Ltd.
LG Uplus Corp. LG HelloVision Corp. - LG Enterprise group1
GllR Inc. HS AD Inc. - LG Enterprise group1
Silicon Works Co., Ltd. - - LG Enterprise group1
Serveone(Nanjing).Co.,Ltd.
SERVEONE2 - LG Enterprise group1
and others
1 Although these entities are not the related parties of the Company in accordance with Korean
IFRS 1024, the entities belong to a large enterprise group in accordance with the Monopoly
Regulation and Fair Trade Act.
2 During 2019, SERVEONE has been excluded from other related parties as S&I corp. has sold
its shares of SERVEONE.
79
LG Chem, Ltd.
(c) Sales and purchases with related parties for the years ended December 31, 2020 and 2019,
are as follows:

Purchase and others
Acquisition of
property, plant
Purchase of and equipment Acquisition
Sales and raw materials and intangible of right-of- Interest
others /merchandises assets use assets expense Others
Entity with a significant

influence over the
Company
LG Corp. 14 - - - 167 60,718
Subsidiaries
LG Energy Solution
Co.,Ltd. 23,674 - - - - 1,970
Ningbo LG Yongxing
Chemical Co.,Ltd. 102,860 3,681 - - - 444
LG Chem America, Inc. 638,310 - - - - 1,028
LG Chem (Nanjing)
Information &
Electronic Materials
Co.,Ltd. 683,526 1,662,368 - - - 5,391
LG Chemical
(Guangzhou)
Engineering Plastics
Co.,Ltd. 44,386 2,633 - - - -
LG Chem (Taiwan), Ltd. 58,953 - - - - 6,988
LG Chem Display
Materials (Beijing)
Co.,Ltd. 4,297 - - - - 14
Tianjin LG Bohai Chemical
Co.,Ltd. 116,529 - - - - -
LG Chem (China)
Investment Co.,Ltd. - - - - - 44,204
LG Chem (Tianjin)
Engineering Plastics 13,357 615 - - - 53
LG Chem Europe Gmbh 484,954 - - - - 59,587
LG Chem Poland Sp. z o.
o. 22,107 - - - - 34
LG NanoH2O, LLC. 25,372 - - - - 12,998
LG Chem Michigan Inc. 267,522 1,596 - - - 33,287
Nanjing LG Chem New
Energy Battery Co.,Ltd. 123,161 859,981 - - - 41
LG Chem Wroclaw Energy
sp. z o.o. 1,680,540 1,955 - - - 9,150
LG Chem (Guangzhou)
I&E Materials Co.,Ltd. 148,352 18 - - - 1,116
LG Chem Nanjing Energy
Solution Co.,Ltd. 69,241 351,938 - - - 509
Others 173,091 19,535 2 - - 29,432
80
LG Chem, Ltd.
Associates and joint

ventures
SEETEC Co., Ltd. 66,396 135,799 10 618 86 78,908
TECWIN Co., Ltd. 339 318 4,662 - - 211
HL Greenpower Co., Ltd. 853,423 - - - - 3,530
Others 53 4,678 - - - 2,482
Other related parties
LG MMA Corporation2 84,388 135,179 - - - 3,320
S&I Corp. and its
subsidiaries 267 27,015 328,981 - - 76,005
LG CNS Co., Ltd. and its
subsidiaries 12,132 4,479 234,921 - 16 76,516
Others 14 - - - - 15,433
Others
LG Display Co., Ltd. and
its subsidiaries 468,405 98 - - - 95
LG Electronics Inc. and its
subsidiaries 775,401 168,409 28,698 - - 27,827
LG International Corp. and
its subsidiaries 57,832 263,481 1,272 - - 337,158
LG Hausys, Ltd. and its
subsidiaries 167,253 1,861 5,665 - 1 6,227
Others 7,844 22,499 2,060 1,605 29 5,846
Total 7,173,993 3,668,136 606,271 2,223 299 900,576

Purchase and others
Acquisition of
property, plant
Purchase of and equipment Acquisition
Sales and raw materials and intangible of right-of- Interest
others /merchandises assets use assets expense Others

influence over the
Company
LG Corp. 2,655 - - - - 53,885
Subsidiaries
Ningbo LG Yongxing
Chemical Co.,Ltd. 86,914 1,224 - - - 18
LG Chem HK Ltd. 10,724 - - - - -
LG Chem America, Inc. 582,352 - - - - 2,471
LG Chem (Nanjing)
Information &
Electronics Materials
Co.,Ltd. 854,435 1,532,582 - - - 2,733
LG Chemical
(Guangzhou)
Co.,Ltd. 41,552 9,917 - - - -
LG Chem (Taiwan), Ltd. 54,465 - - - - 5,652
81
LG Chem, Ltd.
LG Chem Display
Materials (Beijing)
Co.,Ltd. 62 - - - - 8,132
Tianjin LG Bohai Chemical
Co.,Ltd. 2,213 - - - - -
LG Chem (China)
Investment Co.,Ltd. 44 - - - - 34,414
LG Chem (Tianjin)
Co.,Ltd. 12,162 13 - - - 19
LG Chem Europe GmbH 599,099 - - - - 37,960
LG Chem Poland Sp. z
o.o. 20,476 - - - - 1,947
LG NanoH2O, LLC 11,132 - - - - 8,628
LG Chem Michigan Inc. 43,359 5,813 - - - 33,503
Nanjing LG Chem New
Energy Battery Co.,Ltd. 51,230 669,773 - - - -
LG Chem Wroclaw Energy
sp. z o.o. 773,387 1,938 - - - 3,667
Others 203,539 861 - - - 20,575
ventures
SEETEC Co., Ltd. 44,097 152,533 337 2,775 14 65,623
TECWIN Co., Ltd. 3 37 3,188 - - 127
HL Greenpower Co., Ltd. 611,193 - - - - 719
Others 219 27 - - - 2,252
LG MMA Corporation1 82,539 149,210 - - - 4,474
S&I Corp. and its
subsidiaries2 8,062 318,257 274,657 - - 77,701
LG CNS Co., Ltd. and its
subsidiaries 13,242 3,401 115,830 - - 53,316
Others - - - - - 14,223
Others
LG Display Co., Ltd. and
its subsidiaries 504,522 130 - - - -
LG Electronics Inc. and its
subsidiaries 599,867 161,548 29,895 - - 40,225
LG International Corp. and
its subsidiaries 135,219 181,793 761 - - 257,314
LG Hausys, Ltd. and its
subsidiaries 142,553 6,266 2,950 113 - 5,251
Others 11,217 17,759 829 280 2 6,508
Total 5,502,533 3,213,082 428,447 3,168 16 741,337
1 Netsales and purchase amounts after offsetting for Raffinate transactions with LG MMA.
2SERVEONE has been excluded from the related parties as at December 31, 2019 since S&I
corporation sold its shares of SERVEONE in 2019. Transactions with SERVEONE until the sale
of shares have been included in the above information.
(d) Balances of receivables and payables arising from sales and purchases of goods and
services as at December 31, 2020 and 2019, are as follows:
82
LG Chem, Ltd.

Receivables
Trade receivables Loan Other
and others receivables receivables Total
Entity with a significant influence over the

Company
LG Corp. - - 12,395 12,395
Subsidiaries
LG Energy Solution Co.,Ltd. 20,351 - 6,972 27,323
Ningbo LG Yongxing Chemical Co.,Ltd. 3,612 - 2,196 5,808
LG Chem America, Inc. 163,936 - - 163,936
LG Chem (Nanjing) Information & Electronic
Materials Co.,Ltd. 75,438 - 27,154 102,592
Co.,Ltd. 9,355 - 4,966 14,321
LG Chem (Taiwan), Ltd. 15,190 - 3,137 18,327
LG Chem Display Materials (Beijing) Co.,Ltd. - - 16 16
Tianjin LG Bohai Chemical Co.,Ltd. 4,665 - 325 4,990
LG Chem (China) Investment Co.,Ltd. - - - -
LG Chem (Tianjin) Engineering Plastics 2,068 - 1,441 3,509
LG Chem Europe Gmbh 103,411 - 163 103,574
LG Chem Poland Sp. z o. o. 6,256 - 3,018 9,274
LG NanoH2O, LLC. 9,959 - - 9,959
LG Chem Michigan Inc. 4,173 - 602 4,775
Nanjing LG Chem New Energy Battery Co.,Ltd. 4,047 - 11 4,058
LG Chem Wroclaw Energy sp. z o.o. 232,308 - 3,900 236,208
LG Chem (Guangzhou) I&E Materials Co.,Ltd. 51,790 - 4,351 56,141
LG Chem Nanjing Energy Solution Co.,Ltd. 1,538 - - 1,538
Others 49,276 - 6,903 56,179
Associates and joint ventures
SEETEC Co., Ltd. 3,820 - 201 4,021
TECWIN Co., Ltd. - - - -
HL Greenpower Co., Ltd. - - - -
Others - - 22 22
LG MMA Corporation 3,186 - 504 3,690
S&I Corp. and its subsidiaries - - 8,462 8,462
LG CNS Co., Ltd. and its subsidiaries - - - -
Others - - 2,562 2,562
Others
LG Display Co., Ltd. and its subsidiaries 66,258 - 25,528 91,786
LG Electronics Inc. and its subsidiaries 73,447 - 131 73,578
LG International Corp. and its subsidiaries - - - -
LG Hausys, Ltd. and its subsidiaries 34,272 - 31 34,303
Others 128 - 1,160 1,288
Total 938,484 - 116,151 1,054,635
83
LG Chem, Ltd.

Payables
Trade Lease Other
payables Borrowings liabilities payables Total

Company
LG Corp. - - 11,934 3,349 15,283
Subsidiaries
LG Energy Solution Co.,Ltd. - - - 2,765 2,765
Ningbo LG Yongxing Chemical Co.,Ltd. 813 - - 3 816
LG Chem America, Inc. - - - 254 254
LG Chem (Nanjing) Information & Electronic
Materials Co.,Ltd. 14,299 - - - 14,299
Co.,Ltd. 389 - - 4 393
LG Chem (Taiwan), Ltd. - - - 2,767 2,767
LG Chem Display Materials (Beijing) Co.,Ltd. - - - 670 670
Tianjin LG Bohai Chemical Co.,Ltd. - - - - -
LG Chem (China) Investment Co.,Ltd. - - - 5,068 5,068
LG Chem (Tianjin) Engineering Plastics 34 - - 2 36
LG Chem Europe Gmbh - - - 2,847 2,847
LG Chem Poland Sp. z o. o. - - - 3 3
LG NanoH2O, LLC. - - - 5,263 5,263
LG Chem Michigan Inc. - - - 1 1
Nanjing LG Chem New Energy Battery Co.,Ltd. - - - 4 4
LG Chem Wroclaw Energy sp. z o.o. - - - 168 168
LG Chem (Guangzhou) I&E Materials Co.,Ltd. 635 - - 161 796
LG Chem Nanjing Energy Solution Co.,Ltd. - - - 1 1
Others 3,196 - - 2,530 5,726
SEETEC Co., Ltd. 14,977 - 26,014 9,884 50,875
TECWIN Co., Ltd. - - - 574 574
HL Greenpower Co., Ltd. - - - - -
Others 194 - - 272 466
LG MMA Corporation 13,088 - - - 13,088
S&I Corp. and its subsidiaries - - - 106,712 106,712
LG CNS Co., Ltd. and its subsidiaries - - 1,206 61,940 63,146
Others - - - 187 187
Others
LG Display Co., Ltd. and its subsidiaries - - - - -
LG Electronics Inc. and its subsidiaries 16,152 - - 16,793 32,945
LG International Corp. and its subsidiaries 6,591 - - 35,478 42,069
LG Hausys, Ltd. and its subsidiaries - - - 3,955 3,955
Others 1,820 - 1,101 5,563 8,484
Total 72,188 - 40,255 267,218 379,661
84
LG Chem, Ltd.

Receivables
Trade receivables Loan Other
and others receivables receivables Total

Company
LG Corp. - - 12,391 12,391
Subsidiaries
Ningbo LG Yongxing Chemical Co.,Ltd. 9,735 - 18,823 28,558
LG Chem America, Inc. 265,291 - - 265,291
Materials Co.,Ltd. 274,781 331,495 42,361 648,637
Co.,Ltd. 10,400 - 3,211 13,611
LG Chem (Taiwan), Ltd. 20,104 - 20 20,124
LG Chem Display Materials (Beijing) Co.,Ltd. 33 - 1,214 1,247
Tianjin LG Bohai Chemical Co.,Ltd. - - 275 275
LG Chem (China) Investment Co.,Ltd. - - - -
LG Chem (Tianjin) Engineering Plastics Co.,Ltd. 2,764 - 803 3,567
LG Chem Europe GmbH 267,117 - 325 267,442
LG Chem Poland Sp. z o.o. 7,812 - 1,628 9,440
LG NanoH2O, LLC 4,020 - - 4,020
LG Chem Michigan Inc. 44,017 - 9,889 53,906
Nanjing LG Chem New Energy Battery Co.,Ltd. 8,565 - 120 8,685
LG Chem Wroclaw Energy sp. z o.o. 593,266 - 115,402 708,668
LG Chem (Guangzhou) I&E Materials Co.,Ltd. 80,768 - 36 80,804
LG Chem Nanjing Energy Solution Co.,Ltd. 16,742 - 8 16,750
Others 57,627 - 6,796 64,423
SEETEC Co., Ltd. 4,140 - 636 4,776
TECWIN Co., Ltd. - - - -
HL Greenpower Co., Ltd. 54,908 - - 54,908
Others - - 10 10
LG MMA Corporation 8,425 - 823 9,248
S&I Corp. and its subsidiaries1 - - 24,274 24,274
LG CNS Co., Ltd. and its subsidiaries 7,650 - - 7,650
Others - - 4,356 4,356
Others
LG Display Co., Ltd. and its subsidiaries 59,096 - - 59,096
LG Electronics Inc. and its subsidiaries 214,183 - 21,092 235,275
LG International Corp. and its subsidiaries 13,215 - - 13,215
LG Hausys, Ltd. and its subsidiaries 17,789 - 49 17,838
Others 40 - 1,096 1,136
Total 2,042,488 331,495 265,638 2,639,621
85
LG Chem, Ltd.

Payables
Trade Lease Other
payables Borrowings liabilities payables Total

Company
LG Corp. - - 14,863 1,360 16,223
Subsidiaries
Ningbo LG Yongxing Chemical Co.,Ltd. 122 - - 10 132
LG Chem America, Inc. - - - 2,866 2,866
Materials Co.,Ltd. 337,059 - - 41,083 378,142
Co.,Ltd. 198 - - 9 207
LG Chem (Taiwan), Ltd. - - - 2,292 2,292
LG Chem Display Materials (Beijing) Co.,Ltd. - - - 690 690
Tianjin LG Bohai Chemical Co.,Ltd. 187 - - - 187
LG Chem (China) Investment Co.,Ltd. - - - 5,378 5,378
LG Chem (Tianjin) Engineering Plastics Co.,Ltd. 88 - - 3 91
LG Chem Europe GmbH - - - 12,006 12,006
LG Chem Poland Sp. z o.o. - - - 4 4
LG NanoH2O, LLC - - - 6,533 6,533
LG Chem Michigan Inc. 1,486 - - 7,297 8,783
Nanjing LG Chem New Energy Battery Co.,Ltd. 82,594 - - 31 82,625
LG Chem Wroclaw Energy sp. z o.o. 1,661 - - 14,530 16,191
LG Chem (Guangzhou) I&E Materials Co.,Ltd. 195 - - 62 257
LG Chem Nanjing Energy Solution Co.,Ltd. 539 - - 2 541
Others 203 - - 3,557 3,760
SEETEC Co., Ltd. 15,781 - 1,402 11,375 28,558
TECWIN Co., Ltd. - - - 1,633 1,633
HL Greenpower Co., Ltd. - - - 65 65
Others - - - 258 258
LG MMA Corporation 13,234 - - - 13,234
1
S&I Corp. and its subsidiaries - - - 161,372 161,372
LG CNS Co., Ltd. and its subsidiaries - - 1,206 88,877 90,083
Others - - - 403 403
Others
LG Display Co., Ltd. and its subsidiaries 17 - - - 17
LG Electronics Inc. and its subsidiaries 58,184 - - 39,673 97,857
LG International Corp. and its subsidiaries 5,736 - - 47,044 52,780
LG Hausys, Ltd. and its subsidiaries 512 - 50 5,621 6,183
Others 1,593 - 168 3,829 5,590
Total 519,389 - 17,689 457,863 994,941
86
LG Chem, Ltd.
(e) Fund transactions with related parties for the years ended December 31, 2020 and 2019, are
as follows:

Equity Loans Borrowings1
contributions
in cash
Dividends Dividends (capital
received paid reduction) Loans Repayment Borrowings Repayment

influence over the
Company
LG Corp. - 47,068 - - - 167 14,699
Subsidiaries
LG Energy Solution
Co.,Ltd.2 - - 6,915,141 - - 41 1,038
Ningbo LG Yongxing
Chemical Co.,Ltd. 72,121 - - - - - -
LG Chemical
(Guangzhou)
Co.,Ltd. 2,401 - - - - - -
LG Chem (Taiwan), Ltd. 3,253 - - - - - -
LG Chem Display
Materials (Beijing)
Co.,Ltd. 4,241 - - - - - -
FarmHannong Co., Ltd - - - - - - -
LG Chem America Inc. - - 32,283 - - - -
LG NanoH2O, LLC.. - - 38,414 - - - -
Uniseal, Inc. 30,186
LG Chem Life Sceience
Innovation Center, Inc 1,702
LG Chem Fund I LLC - - 16,111 - - - -
LEYOU NEW ENERGY
MATERIALS(WUXI)
Co.,LTD - - 17,639 - - - -
Ugimag Korea Co., Ltd. - - 24,500 - - - -
LG Chem Michigan Inc. - - 206,240 - - - -

LG Chem Wroclaw
Energy sp. Z o.o. - - 413,739 - - - -
Solution Co.,Ltd. - - 514,137 - - - -
ventures
SEETEC Co., Ltd. 10,000 - - - - 86 3,506
TECWIN Co., Ltd. 314 - - - - - -
HUAJIN NEW ENERGY
MATERIALS(QUZHOU)
CO.,LTD - - 22,191 - - - -
WUXI CL New Energy
Technology - - - - - - -
87
LG Chem, Ltd.
Jiangxi VL Battery Co.,Ltd - - 21,814 - - - -

LG CNS Co., Ltd. - - - - - 16 1,190
Others
LG Hausys, Ltd. - - - - - 56 8
LG HOUSEHOLD &
HEALTH CARE LTD - - - - - 29 697
Total 92,330 47,068 8,254,097 - - 395 21,138

Equity Loans Borrowings1
contributions
in cash
Dividends Dividends (capital
received paid reduction) Loans Repayment Borrowings Repayment

influence over the
Company
LG Corp. - 141,205 - - - - -
Subsidiaries
LG Chem HK Ltd. 10,724 - - - - - -
Ningbo LG Yongxing
Chemical Co.,Ltd. 71,557 - - - - - -
LG Chem (Nanjing)
Information &
Electronics Materials
Co.,Ltd. - - 288,053 337,040 - - -
LG Chem (Taiwan), Ltd. 5,384 - - - - - -
LG Chem (China)
Investment Co.,Ltd. - - 68,591 - - - -
LG Chem Michigan Inc. - - 1,128 - - - -
LG Chem Wroclaw
Energy sp. z o.o. - - 743,355 - - - -
LG Chem Life Sciences
(Thailand) Ltd. - - - - 554 - -
LG Chem Fund I LLC - - 15,273 - - - -
LEYOU NEW ENERGY
MATERIALS(WUXI)
Co.,LTD - - 51,580 - - - -
Ugimag Korea Co., Ltd. - - 4,500 - - - -
Solution Co., Ltd. - - 161,466 - - - -
ventures
SEETEC Co., Ltd. 10,000 - - - - 2,775 1,027
LG Holdings (HK) Ltd. - - (15,789) - - - -
HUAJIN NEW ENERGY
MATERIALS(QUZHOU)
CO.,LTD - - 27,676 - - - -
VINFAST LITHIUM - - 5,323 - - - -
88
LG Chem, Ltd.
BATTERY PACK LLC.
Others
LG Hausys, Ltd. - - - - - 113 39
LG HOUSEHOLD &
HEALTH CARE LTD - - - - - 280 105
Total 97,665 141,205 1,351,156 337,040 554 3,168 1,171
1 The amounts represent lease liabilities that were recognized or repaid for the years ended
2 Included transactions related to the split-off of energy solution division of the Company into LG
Energy Solution Co., Ltd.
(f) Compensation for key management of the Company for the years ended December 31, 2020
and 2019, consists of:
Short-term employee benefits 88,895 77,651

Post-employment benefits 6,308 4,344
Total 95,203 81,995
Key management includes directors and audit committee members having duties and
responsibilities over planning, operations and controlling of the Company’s business activities.
There is no provision recognized for receivables of related parties as at December 31, 2020 and
no impairment loss on receivables for related parties are recognized for the years ended
Details of the guarantees manufactured by the Company for related parties at the reporting date
are disclosed in Note 18.
89
LG Chem, Ltd.
32. Cash generated from operations
(a) Reconciliation between profit before income tax and cash generated from operations for the
years ended December 31, 2020 and 2019, are as follows:
Profit before income tax 722,517 445,822

Profit before income tax from continuing operations 823,181 555,239
Loss before income tax from discontinued operations (100,664) (109,417)
Adjustments for:
Depreciation 1,110,832 1,029,318
Amortization 147,821 110,977
Post-employment benefits 174,521 159,452
Finance income (224,359) (184,089)
Finance costs 585,228 220,755
Foreign exchange differences 14,170 (59)
Loss on valuation of inventories (3,884) 5,487
Gain on disposal of property, plant and equipment (16,298) (8,715)
Gain on disposal of intangible assets (149) (72)
Loss on disposal of property, plant and equipment 26,180 22,824
Loss on disposal of intangible assets 1,451 1,663
Impairment loss on property, plant and equipment 62,264 121,190
Reversal of impairment loss on (220) (215)
property, plant and equipment
Impairment loss on intangible assets 1,473 46,894
Impairment loss on investments in associates 144,919 21,158
Gain on disposal of investments in associates (341,015) (599)
Loss on disposal of investments in subsidiaries - 5,421
Gain on disposal of business (32,085) -
Additions to provisions 314,498 634,435
Other expenses 11,896 3,639
Decrease (increase) in inventories 317,376 (241,641)
Decrease (increase) in trade receivables 106,854 (31,801)
Increase in other receivables (291,959) (32,196)
Decrease (increase) in other current assets 69,651 (52,888)
Settlement of derivative assets (733) -
Increase (decrease) in trade payables 1,497,917 (187,775)
Increase in other payables 1,298,622 855,569
Increase (decrease) in other current liabilities 128,306 (39,166)
Decrease in net defined benefit liabilities (217,071) (264,916)
Decrease in provisions (285,787) (260,169)
Other cash flows from operations 3,202 28,654
Cash generated from operations 5,326,138 2,408,957
90
LG Chem, Ltd.
(b) Changes in liabilities arising from financial activities for the year ended December 31, 2020,
are as follows:

Korean won) Cash flows
from Reclassification At
At January financing of current Amortization Lease December
1, 2020 activities portion (transfer) liabilities Split-off Others 31, 2020
Short-term borrowings 29,177 (34,694) 40,579 - - (1,170) 195 34,087
Long-term borrowings 65,374 - (40,579) - 70,341 (1,255) - 93,881

Debentures 5,229,456 777,084 - 16,563 - (1,951,409) (665,694) 3,406,000
Exchange rights 930 - - - - - 15,867 16,797
Other payables for the
reverse factoring 856,287 (1,577,805) - - - - 2,802,825 2,081,307
arrangement
6,181,224 (835,415) - 16,563 70,341 (1,953,834) 2,153,193 5,632,072
(c) The significant non-cash transactions for the years ended December 31, 2020 and 2019, are
as follows:
Reclassification of construction-in-progress 1,612,730 2,202,062

Reclassification of machinery-in-transit 72,345 208,708
Reclassification of long-term borrowings into current 903,097
portion 159,189
Other payables related to acquisitions of property, plant 602,608
and equipment and intangible assets 862,452
Reclassification of other payables under the reverse 2,802,825
factoring arrangement 719,040
Reclassification into non-current assets held for sale 29,158 -
Conversion of exchangeable bonds into treasury shares 917,592 -
Transfer of related assets due to split-off 10,016,932 -
Transfer of related liabilities and equities due to split-off 4,353,089 -
91
LG Chem, Ltd.
33. Appropriation of Retained Earnings
The appropriation of retained earnings for the year ended December 31, 2020, is expected to be
appropriated at the shareholders' meeting on March 25, 2021. The appropriation date for the year
ended December 31, 2019, was March 20, 2020.
The appropriation of retained earnings for the years ended December 31, 2020 and 2019, are as
follows:
Unappropriated retained earnings carried over

from prior year - -
Remeasurements of net defined benefit liabilities 15,393 (49,864)
Cash flow hedge 15,905 -
Retained earnings available for appropriation (66,925) 316,060
Transfer from other reserves

Reserve for technology development 845,308 -
Appropriation of retained earnings

Legal reserve - -
Dividends 778,383 153,608
Reserve for technology development - 162,452
778,383 316,060
Unappropriated retained earnings to be carried
forward - -
34. Assets Held for Sale and Discontinued Operations
34.1 Assets Held for Sale
Upon the approval of management, the Company decided to dispose of acrylic film business
(December 2020) and LCD polarizer business (June 2020). The related assets were reclassified
as assets held for sale.The disposal of acrylic film business is expected to be completed in the
second half of 2021 and the disposal of LCD polarizer business has been completed in February
2021.
(a) Details of assets of disposal group classified as assets held for sale as at December 31,
Assets of disposal group

Property, plant and equipment 7,668 -
Intangible assets 5,038 -
Investment in subsidiaries 13,444 -
Total 26,150 -
92
LG Chem, Ltd.
(b) Assets of the disposal group were measured at net fair value immediately before the initial
classification as assets as held for sale and there are no other non-operating expenses
(income) recognized from the measurement for the years ended December 31, 2020 and
2019.
34.2 Discontinued Operations
The Company decided to discontinue Glass substrate business with the resolution of the Board
of Directors in January 2020 and substantially discontinued the related business as of March
2020. In addition, the Company decided to dispose of LCD polarizer business with the resolution
of the Board of Directors in June 2020, and the disposal has been completed in February 2021.
Profit and loss from the related operations are presented as discontinued operations and the
comparative separate statements of profit or loss have been restated.
Comprehensive income information from discontinued operation for the years ended December

LCD polarizer Glass substrate Total
Revenue 177,226 43,901 221,127

Expense (238,145) (83,646) (321,791)
Loss before income tax of discontinued
(60,919) (39,745) (100,664)
operation
Income tax benefits 12,128 7,912 20,040
Loss after income tax of discontinued
(48,791) (31,833) (80,624)
operations

Revenue 465,804 57,440 523,244

Expense (461,976) (170,685) (632,661)
Gain (loss) before income tax of
3,828 (113,245) (109,417)
discontinued operation
Income tax benefits (expense) (686) 20,295 19,609
Gain (loss) after income tax of
3,142 (92,950) (89,808)
discontinued operations
93
LG Chem, Ltd.
Net cash flows from discontinued operations for the years ended December 31, 2020 and 2019,
are as follows:

Net cash inflow from operating activities 57,363 (3,995) 53,368

Net cash inflow (outflow) from investing
(441) 33,111 32,670
activities
Net cash outflow from financing activities (56,922) (29,116) (86,038)

Net cash inflow (outflow) from operating

62,566 (16,862) 45,704
activities
Net cash inflow (outflow) from investing
(2,957) (38,820) (41,777)
activities
Net cash inflow (outflow) from financing
(59,609) 55,682 (3,927)
activities
35. Assets and Liabilities related to Contracts with Customers
(a) Assets and liabilities related to contracts with customers as at December 31, 2020 and 2019,
are as follows:
Contract assets
Total contract assets - -
Contract liabilities
Advances in relation to revenue from the
Company’s main business activities 26,145 164,557
Expected services to be transferred - 3,500
Expected customer incentives 1,536 6,818
Unearned revenue 25,696 34,247
Expected refunds 902 2,634
Total contract liabilities 54,279 211,756
94
LG Chem, Ltd.
Revenue recognized in relation to contract liabilities
(b) Revenue recognized in the current year that was included in the contract liability balance at
the beginning of the year, and revenue recognized in the current year from performance
obligations satisfied (or partially satisfied) in previous years are as follows.
Revenue recognized in the current year from

the contract liability balance at the beginning
of the year 132,408 52,875
Advances in relation to revenue from the
Company’s main business activities 116,305 46,272
Unearned revenue 12,603 2,068
Expected services to be transferred 3,500 4,535
Revenue recognized from performance
obligations satisfied in previous years - -
36. Investment Properties
(a) Details of investment properties as at December 31, 2020 and 2019, are as follows:
(in millions of
Korean won) 2020 2019
Accumulated Accumulated Book Accumulated Accumulated Book
Cost depreciation impairment amount Cost depreciation impairment amount
Land 4,216 - - 4,216 4,368 - - 4,368

Buildings 30,140 (11,361) (192) 18,587 61,242 (12,202) (80) 48,960
34,356 (11,361) (192) 22,803 65,610 (12,202) (80) 53,328
(b) Changes in investment properties for the years ended December 31, 2020 and 2019, are as
follows:

Land Building Total Land Building Total
Beginning balance 4,368 48,960 53,328 486 529 1,015

Acquisitions/transfers - 17,338 17,338 3,882 49,657 53,539
Disposals/transfers (152) (5,221) (5,373) - - -
Depreciation - (1,347) (1,347) - (1,226) (1,226)
Transfer - (41,143) (41,143) - - -
Ending balance 4,216 18,587 22,803 4,368 48,960 53,328
(c) The fair value of investment properties is measured either by independent professional
appraisers with certified qualification or measured based on official appraised value of land
and available information from recent transactions of similar properties, and it is classified as
95
LG Chem, Ltd.
‘level 3’ of the fair value hierarchy. The fair value of investment properties as at December 31,
2020, is ￦ 30,298 million.
Rental income from investment properties under operating lease is ￦ 6,439 million, and
operating expenses incurred for investment properties that generated rental income
(including maintenance and repair expenses) are ￦ 1,335 million. Operating expenses
incurred for investment properties that do not generate rental income (including maintenance
and repair expenses) are ￦12 million.
(d) Operating lease
Investment properties are leased to tenants under operating leases with monthly rent payments.
Where considered necessary to reduce credit risk, the Company may obtain bank guarantees for
the term of the lease.
Although the Company is exposed to changes in the residual value at the end of the current
leases, the Company typically enters into new operating leases and therefore will not immediately
realize any reduction in residual value at the end of these leases. Expectations about the future
residual values are reflected in the fair value of investment properties.
The future minimum lease payments expected to be received in relation to the above operating
lease agreement for investment properties as at December 31, 2020 and 2019, are as follows:
Within one year 1,304 6,848

Within two years 173 -
Within five years 215 -
1,692 6,848
37. Split-off
Upon the resolution of Boad of Directors on September 17, 2020, the Company decided to split
off its enery solution division into LG Energy Solution Co., Ltd. Assets and liailities related to the
energy solution divison of the Company were transferred to LG Energy Solution Co., Ltd., a newly
established entity and 100% of shares of LG Energy Solution Co., Ltd. were issued to the
Company as a consideration according to the split-off plan. The split-off was approved by
shareholers’ meeting on October 30, 2020. Details of the split-off are as follows.
Details
Method Split-off
Related Entities LG Chem Co., Ltd. (surviving company
after the split-off)
LG Energy Solution Co., Ltd. (newly
established entity for the split-off)
Approval of shareholders’s meeting October 30, 2020
Effective split-off date December 1, 2020
96
LG Chem, Ltd.
Acquisition cost of investment in subsidary resulting from the split-off was measured based on the
net book value of assets and liabilities transferred. Details of assets and liabilities transferred are
as follows.
(in millions of Korean won) Amount
Assets
Cash and cash equivalents 1,251,298
Trade receivables 1,552,070
Inventories 756,250
Investments in associates and joint
4,452,376
ventures
Property, plant and equipment 1,669,154
Intangible assets 272,057
Other assets 1,315,025
Total assets 11,268,230
Liabilities
Trade payables 1,224,818
Borrowings 1,953,835
Other liabilities 1,174,436
Total liabilities 4,353,089
Net assets transferred (Investment in

6,915,141
subsidiary)
38. Events after the reporting period
(a) The Company decided to issue publicly offered bonds at the Management Committee held on
January 25, 2021. In accordance with the resolution, publicly offered bonds of KRW 1,200
billion were issued on February 19th.
(in millions of Korean won) Expiry date Amount
54-1st Debenture (non-guaranteed/public) 2024.02.19 350,000

nd
54-2 Debenture (non-guaranteed/public) 2026.02.19 270,000
rd
th
54-5th Debenture (non-guaranteed/public) 2036.02.19 120,000
(b) The sale of LCD polarizer business, which was classified as assets held for sale upon the
resolution of the Board of Directors in June 2020, was completed in February 2021.
39. Approval of Issuance of the Financial Statements
The separate financial statements 2020 were approved for issue by the Board of Directors on
March 4, 2021 and are subject to change with approval of shareholders at their Annual General
Meeting.
97
Report on Independent Auditor’s
Audit of Internal Control over Financial Reporting
To the Board of Directors and Shareholders of

LG Chem, Ltd.
Opinion on Internal Control over Financial Reporting
We have audited LG Chem, Ltd. (the Company) Internal Control over Financial Reporting as of
December 31, 2020, based on Conceptual Framework for Designing and Operating Internal Control
over Financial Reporting.
In our opinion, the Company maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2020, based on Conceptual Framework for Designing and
Operating Internal Control over Financial Reporting.
We also have audited, in accordance with Korean Standards on Auditing, the separate financial
statements of the Company, which comprise the separate statements of financial position as at
December 31, 2020 and 2019, and the separate statements of profit or loss, separate statements of
comprehensive income, separate statements of changes in equity and separate statements of cash
flow for the years then ended, and notes to the separate financial statements including a summary of
significant accounting policies, and our report dated on March 11, 2021, expressed unqualified
opinion.
Basis for Opinion on Internal Control over Financial Reporting
We conducted our audit in accordance with Korean Standards on Auditing. Our responsibility under
these standards are further described in the Auditor’s Responsibilities for the Audit of the Internal
Control over Financial Reporting section of our report. We are independent of the Company in
accordance with the ethical requirements of the Republic of Korea that are relevant to our audit of
internal control over financial reporting and we have fulfilled our other ethical responsibilities in
accordance with the ethical requirements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management and Those Charged with Governance for Internal

Control over Financial Reporting
Management is responsible for designing, implementing and maintaining effective internal control
over financial reporting, and for its assessment about the effectiveness of internal control over
financial reporting, included in the accompanying Report on the Effectiveness of
Internal Control over Financial Reporting.
Those charged with governance have the responsibilities for overseeing internal control over financial
reporting.
Auditor’s Responsibilities for the Audit of Internal Control over Financial Reporting
Our responsibility is to express opinion on the Company’s internal control over financial reporting
based on our audit. We conducted the audit in accordance with Korean Standards on Auditing. Those
98
standards require that we plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all material respects.
An audit of internal control over financial reporting involves performing procedures to obtain audit
evidence about whether a material weakness exists. The procedures selected depend on the
auditor’s judgment, including the assessment of the risks that a material weakness exists. An audit
includes obtaining an understanding of internal control over financial reporting and testing and
evaluating the design and operating effectiveness of internal control over financial reporting based on
the assessed risk.
Definition and Inherent Limitations of Internal Control over Financial Reporting
An entity’s internal control over financial reporting is a process effected by those charged with
governance, management, and other personnel, designed to provide reasonable assurance regarding
the preparation of reliable separate financial statements in accordance with International Financial
Reporting Standards as adopted by the Republic of Korea. An entity’s internal control over financial
reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
entity; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of separate financial statements in accordance with International Financial Reporting
Standards as adopted by the Republic of Korea, and that receipts and expenditures of the entity are
being made only in accordance with authorizations of management and those charged with
governance; and (3) provide reasonable assurance regarding prevention, or timely detection and
correction of unauthorized acquisition, use, or disposition of the entity’s assets that could have a
material effect on the separate financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent, or detect
and correct, misstatements. Also, projections of any assessment 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.
The engagement partner on the audit resulting in this independent auditor’s report is Kibok Lee,
Certified Public Accountant.
Seoul, Korea
March 11, 2021
This report is effective as of March 11, 2021, 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 Company’s internal control over financial reporting thereto.
Accordingly, the readers of the audit report should understand that there is a possibility that the
above audit report may have to be revised to reflect the impact of such subsequent events or
circumstances, if any.
99
Report on the Effectiveness of
Internal Control over Financial Reporting
To the Shareholders, Board of Directors and Audit Committee of

LG Chem, Ltd.
We, as the Chief Executive Officer (“CEO”) and the Internal Control over Financial Reporting (“ICFR”)
Officer of LG Chem, Ltd. (“the Company”), assessed the effectiveness of the design and operation of
the Company’s Internal Control over Financial Reporting for the year ended December 31, 2020.
The Company’s management, including ourselves, is responsible for designing and operating ICFR.
We assessed the design and operating effectiveness of the ICFR in the prevention and detection of
an error or fraud which may cause material misstatements in the preparation and disclosure of
reliable separate financial statements.
We designed and operated ICFR in accordance with Conceptual Framework for Designing and
Operating Internal Control over Financial Reporting established by the Operating Committee of
Internal Control over Financial Reporting in Korea (the ICFR Committee). And, we conducted an
evaluation of ICFR based on Management Guideline for Evaluating and Reporting Effectiveness of
Internal Control over Financial Reporting established by the ICFR Committee.
Based on the assessment results, we believe that the Company’s ICFR, as at December 31, 2020, is
designed and operating effectively, in all material respects, in accordance with Conceptual
Framework for Designing and Operating Internal Control over Financial Reporting.
We certify that this report does not contain any untrue statement of a fact or omit to state a fact
necessary to be presented herein. We also certify that this report does not contain or present any
statement which cause material misunderstandings, and we have reviewed and verified this report
with sufficient due care.
January 27, 2021
Hak -Cheol Shin, Chief Executive Officer
Dong-Seok Cha, Internal Control over Financial Reporting Officer
100

LG Chem 2020 Contingent Financial Statements

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LG Chem, Ltd.

Separate Financial Statements and

Independent Auditor’s Report......................................................................................................... 1 - 4

Separate Financial Statements

Separate Statements of Financial Position ....................................................................................... 5 - 6

Separate Statements of Profit or Loss .................................................................................................... 7

Separate Statements of Comprehensive Income ................................................................................... 8

Separate Statements of Changes in Equity ............................................................................................. 9

Separate Statements of Cash Flows .................................................................................................... 10

Notes to the Separate Financial Statements ............................................................................. 11 – 97

(English Translation of a Report Originally Issued in Korean)

To the Shareholders and Board of Directors of

Basis for Opinion

Why this matter was determined to be a key audit matter

How this matter was addressed the in our audit

Audit procedures we performed to address this key audit matter include:

· Evaluation of valuation model used by management to estimate value-in-use.

· Evaluation of management’s assumptions used to estimate value-in-use.

- Evaluation of long-term growth rate by considering economic and industry forecasts

Auditor’s Responsibilities for the Audit of the Financial Statements

(in millions of Korean won) Notes 2020 2019

(in millions of Korean won) Notes 2020 2019

Total non-current liabilities 3,978,440 5,590,576

Revenue 31 20,830,009 21,809,592

Finance income 25 421,562 328,468

Profit before income tax 32 823,181 555,239

Earnings (losses) per share for profit 29

Earnings (losses) per share (in won)

(in millions of Korean won) Notes 2020 2019

Profit (loss) for the year (98,223) 365,924

Total comprehensive income (loss) for the year (80,227) 370,382

Balance at January 1, 2019 391,406 2,283,378 (354,945) (25,525) 14,255,592 16,549,906

Transactions with owners

Balance at January 1, 2020 391,406 2,283,378 (354,945) 28,797 14,111,594 16,460,230

Transactions with owners

(in millions of Korean won) Notes 2020 2019

Cash flows from operating activities

Cash flows from investing activities

Cash flows from financing activities

Net decrease in cash and cash equivalents (143,687) (678,816)

2. Summary of Significant Accounting Policies

2.1 Basis of Preparation

· Defined benefit pension plans – plan assets measured at fair value.

2.2 Changes in Accounting Policy and Disclosures

(a) New and amended standards adopted by the Company

- Amendments to Korean IFRS 1103 Business Combination – Definition of a Business

The amended definition of a business requires an acquisition to include an input and a

- Amendments to Korean IFRS 1103 Business Combination – Reference to the Conceptual

- Annual improvements to Korean IFRS 2018-2020

 Korean IFRS 1116 Leases – Lease incentives

 Korean IFRS 1041 Agriculture – Measuring fair value

- Amendments to Korean IFRS 1001 Presentation of Financial Statements - Classification of

2.3 Subsidiaries, Joint Ventures, and Associates

2.4 Foreign Currency Translation

(a) Functional and presentation currency

(b) Transactions and balances

2.5 Cash and Cash Equivalents

2.6 Financial Assets