Heeyeon Kim – IR

Nicolas Gaudois – UBS David Smee – Bernstein Research Jeffrey Toder – CIMB Brian White – Cantor Fitzgerald Vivian Tan – AllianceBernstein

Good morning and good evening. First of all thank you all for joining this conference call and now we will begin the conference of the fiscal year 2013 fourth quarter earnings results by LG Display. This conference will start with a presentation followed by a division of Q&A session. (Operator Instructions). Now we shall commence the presentation on the fiscal year 2013 fourth quarter earnings results by LG Display.

: Next slide please, before we move on to the earnings results please take a minute to read the disclaimer. I would like to remind everyone that results are based on the Korean K-IFRS accounting standards and are unaudited. Next slide please, this conference call will take about an hour. Before we go into the Q&A session, please allow me to highlight our Q4 results, performance and Q1 outlook. Also I will briefly talk about our strategic directions. Moving to the revenue and profits on the next slide. In Q4 we have recorded the quarterly revenue at KRW 7.1 trillion, an increase of 8% quarter-on-quarter. With end of China subsidies at the second half of year 2013 we initially had a conservative view on TV orders, however thanks to seasonal demand pickup and increase in demand for larger size TVs in addition to the small and medium sized products seasonal demand pickup. The area shipment recorded high single digits quarter-on-quarter increase compared to the initial guidance of mid-single digits. Despite the increased in-shipment and revenue continued TV price decline from the third quarter and negative FX rate impact affected the margins. Operating income and EBITDA for the quarter declined to KRW 257 billion and KRW 1.1 trillion respectively. Operating margin was a 4% and EBITDA margins to this 16%. Pretax profit KRW 225 billion and net profit of KRW 71 billion. Net profit compared to the pretax profit was greatly reduced to due to the assessment of deferred tax assets. In conjunction with yearly CapEx investment tax credit occurs and are accounted as the deferred tax assets. These deferred tax assets are reviewed regularly and its feasibility and adjusted accordingly. This year the minimum corporate tax rate has risen [ph] from 14% to 16% and according to the rate change adjustment to the deferred tax assets has been reflected. Moving on to slide 4, looking at our financial positions and ratios. At the end of December year 2013 total asset was KRW 21.7 trillion, liability KRW 10.9 trillion and (indiscernible) KRW 10.8 trillion. Cash and cash equivalent decreased by KRW 324 billion to KRW 2.23 trillion. Despite the increase in the utilization rate, higher penetration and active inventory control in preparation for the lowest region [ph] has reduced the inventory amount to KRW 1.9 trillion, the lowest of last three years and 20% quarter-on-quarter decline. Looking at our financial ratios the ability to equity ratio recorded 101%. The quarter ratio at 114%, net debt to equity ratio recorded at 15% maintaining at stable level. Moving on to slide 5, looking at our cash flows. Cash flow from operating activities resulted in cash inflow of KRW 592 billion. Cash flow from investing activities resulted in an outflow of KRW 592 billion. Cash flow from investing activities resulted in an outflow of KRW 924 billion. As a result the net change in cash was outflow of KRW 323 billion. The cash at the end of quarter recording KRW 2.3 trillion. Moving on to slide 6, I would like to go over our performance highlights. Seasonal demand pickup (indiscernible) TV demand in addition to effect of small and medium sized new model launches from customers have helped the first quarter of area shipment to increase by 9% quarter-on-quarter to 9.6 million square meter. Although individual product price decline ASP per square meter rose by 3% quarter-on-quarter to $697. Thanks to increased shipment of small and medium side panels which has higher ASP per square meter compared to the large panels. Moving on to our product mix on slide 7. In Q4, TV business was 37% of our revenues, monitors 17%, notebook 11%, tablet 20% and mobile application 15%. Wide TV shipment area has increased relatively larger price decline compared to the other product category has led to the decline in the sales portion. On the other hand tablet has significant increase over the third portion due to a sharp increase in shipment and also product and average size increase. In mobile despite double the shipment growth sales portion had remained flat Q-on-Q as tablet sales increased effective has been relatively higher. The sales portion of mobile and tablet will remain up 30% in first quarter. Moving on to slide 8 and looking at our capacity. Our producible capacity remains in the similar level to Q3 recording 11.1 million square meters. As seen in the chart our producible capacity has been decreasing slightly quarter-on-quarter since second quarter year 2013 due to factors such as fab convergence. The first quarter capacity is likely to show mid-single digit decline with LTPS fab convergence et cetera. Now we turn to our outlook section. Looking at Q1 we expect the shipment to decline by low to mid-teens digit percentage and ASP decline to slowdown. We expect traditional seasonal decline in all of the product categories however the small and medium size products are expected to show mild seasonality compared to year 2013. Due to customer diversification. Considering the overall industry supply demand inventory situation as well as panel makers financial situations we expect decline in panel price to gradually slowdown. This ends our presentation for Q4 and I would be glad to take your questions. To use time efficiently please limit to three questions per person. Operator please proceed with the Q&A session. Nicolas Gaudois – UBS: So first one will be if you could elaborate a little bit please on your facility ramp plans for China fab in Guangzhou. I know you said I think about production will start middle of the year. How should we think about the progression in terms of shipments [ph] per month into sort of half of the year, please and could you elaborate of the CapEx implications of that and LTPS in total. Thank you.

First question your first question related to China facility ramp up, yes we expect China fab to ramp up in the middle of this year as we have a plant. The capacity of ramp up speed will be flexible depending on the market demand situation especially driven by a larger size TV demand and in terms of our CapEx if you look at our financial statement, our CapEx for last year that was KRW 3.5 trillion. We expected to see our CapEx should be similar that of last year and the CapEx portion is expected to be around 30% should be China facility that remaining 70% will be for OLED and LTPS. Nicolas Gaudois – UBS: And just following up on that, deprecation I think you said will come down 500 billion so just to clarify we sort of bring you down X amortization to just about 3.1, driven for the year and how should we look at this on a quarterly basis? Thank you.

Our depreciation expense for last year that was KRW 3.8 trillion and also it is expected to decline slight over KRW 3 trillion. That’s driven by our second 8th generation perhaps deprecation stopping and then if we look at the deprecating expense trend every quarter in first quarter our depreciation expense is expected to grow slightly and then it will decline to be slightly KRW 1.8 trillion later and then all together it might be slight over KRW 3 trillion. Nicolas Gaudois – UBS: Okay so 3.8 was depreciation plus amortization for last year.

Yes.

The next question will be presented by Mr. (indiscernible) from Retail Capital. Please go ahead sir.

Few questions Heeyeon Kim what you said earlier that mobile shipments was slight in Q4?

Sorry Ben, we cannot follow you. There are a lot of noises.

Can you clarify a little bit earlier about what you said about mobile shipment being flat in Q4? Did I hear you correctly?

Actually mobile shipment in Q4 that was double digit growth sequentially, however our revenue mix was just flattish as the reason why you asked us. Actually the other divisions shipment increased over slightly increase in there was the higher that’s the main reason because although the shipment growth for mobile was double digit but it looked flattish in terms of revenue mix. Is that correct as an answer?

I’m sorry this is the operator but Mr. Ben (indiscernible) phone was taken off.

Next question please.

Okay the next question will be presented by Mr. David Smee from Bernstein Research. Please go ahead sir. David Smee – Bernstein Research: Could you talk about your progress on OLED Television yields as well as the timing and capacity of your M2 OLED fab?

Our progress on OLED Television is expected to our initial planning in terms of ramp up schedule and yearly [ph] improvement. Actually our second facility for OLED is expected to ramp up second half of this year. David Smee – Bernstein Research: Even the projected capacity?

Capacity in terms of the operation capacity is already fixed at 20k per month however outside [ph] the facility is not decided yet because is highly related to the LCD TV demand. Anyway some part of some portion from 26k will give and start this year and the remaining will be ramped up next year. All together 26k will be fully ramped up until next year. David Smee – Bernstein Research: Also one follow-up question, I was wondering if you had mixed your capacity plans on the flexible OLED side, have you made any decisions on there.

Flexible OLEDs side by now we have 6k per month facility based on 4.5 generation. We will expand our facility similar level at the end of this year however it's not fixed yet. This kind of CapEx is also depending on our customer commitment and the market demand situation.

The next following questions will be presented by Jeffrey Toder for CIMB. Please go ahead sir. Jeffrey Toder – CIMB: I wonder if you could talk maybe about your view on ASPs in the first quarter on a like for like basis as opposed on blended basis.

Our ASP guidance is set ASP trend to stabilize going forward but when you look at has the inventory situations from our side and set makers together with the financial status from our competitor’s side. Individual price trend will also be stabilized and in terms of the blended ASP our blended ASP is heavily impacted from product mix in first quarter small size mix should decrease slightly because of our blended ASP should decline. Jeffrey Toder – CIMB: Okay so small and medium size will decline as a percentage of the total is that correct?

Yes. Jeffrey Toder – CIMB: Okay great. And can we just go back to the deprecation numbers that you gave. I didn’t catch the quarterly trend and also how does the ramp up of the OLED fab effect depreciation in the second half of the year?

Our depreciation expense in Q4 is similar to the third quarter last year. That’s almost KRW 900 billion and then this amount should decline every quarter and then it will come back tote KRW 850 billion in Q4. So all together the depreciation expense is expected to be KRW 3.3 trillion this year. Jeffrey Toder – CIMB: And I wonder if you can talk about your plans for UHD for 2014.

Ultra TV Demand. Jeffrey Toder – CIMB: Ultra High Definition, yeah.

Yes Ultra High Definition demand we expect it to be around mid-single digits based on the market demand and also our unit [ph] shipment is expected to be similar trend of market or higher that will totally depend on the market acceptance of our product portfolio to get with set makers price strategy. Jeffrey Toder – CIMB: Okay so you would expect UHD to be mid-single digits percentage of your TV panel shipments?

Yes that’s the market expectation and our portion should be in the range from mid-single digit to high single-digit. Jeffrey Toder – CIMB: Okay so it should be mid to single, high single digits of your unit shipments.

Yes.

(Operator Instructions). The next questions will be presented by Mr. Brian White from Cantor Fitzgerald. Please go ahead sir. Brian White – Cantor Fitzgerald: Yeah I’m wondering if you can talk a little bit about expectations for the Chinese New Year in terms of growth and also talk about inventory levels of televisions for the Chinese New Year going into the Chinese New Year.

: : Brian White – Cantor Fitzgerald: So I just want to be clear so for Chinese New Year you think mid-single digit decline in units year-over-year for the Chinese New Year is that correct?

Yeah could be. Brian White – Cantor Fitzgerald: Okay and I wasn’t clear tablets your tablet business did very well in the fourth quarter. It looks like it doubled more than doubled, how do we think about tablets in the March quarter. What is the percentage decline quarter-on-quarter in the first quarter?

: Brian White – Cantor Fitzgerald: And I’m looking last year in the first quarter of 2013 it looks like tablets fell about 36%. Is that how we should think about the first quarter of 2014? Similar to the last year decline?

First quarter this year seasonal patterns should be better than last year. Brian White – Cantor Fitzgerald: And loading rates finally loading rate, what’s the loading rate, what was the loading rate in the fourth quarter and what do you expect in the first quarter?

In Q4 our loading rate was the high 90% and actually as we online [ph] dimensions our capacity will drop at around mid-single digit percentage because of fab convergence issue. If we compare the similar capacity of last year our loading rate will decline to low to mid 90%. Brian White – Cantor Fitzgerald: Okay and you talked about this deferred I guess tax asset impact in the fourth quarter, how large was that what was the impact to your net income from the deferred tax asset?

If we take out the gap between recurring deferred asset into these KRW 135 million. Brian White – Cantor Fitzgerald: And finally I don’t see the detail I see your presentation but not the detailed financials that you typically provide. Are those on the website or are they going to be posted to the website?

This year’s financials? Brian White – Cantor Fitzgerald: The detailed financial.

The detailed financial, yes. Brian White – Cantor Fitzgerald: Yes they are or yes they are going to be posted?

It is already posted. Brian White – Cantor Fitzgerald: Okay, will look harder. Thanks.

The next question will be presented by Nicolas Gaudois from UBS. Please go ahead sir. Nicolas Gaudois – UBS: On the LTPS side we know what capacity you’ve for Gen Tech’s [ph] Won, could you may be perhaps elaborate a little bit on the production level so you know effectively is the (indiscernible) and how have you being addressing I guess with two key issues in so far for LTPS manufacturing i.e. static electricity for the cell production process and I suspect that’s also some issues in terms of your laser process but now you’re appearing for especially for Gen Tech [ph] so if you could give a little bit about what and how production has been setting so far into your capacity around? Thank you.

Your question our Gen Tech [ph] LTPS conversion progress. Is that right? Nicolas Gaudois – UBS: Not the conversion it's more about the actual production versus the conversion so what kind of production are you achieving and commenting qualitatively on how HD Display has been working to address two of a key issues that industry is facing typically for LTPS process which is number one static electricity on the cell production process and number two what, how are you using your laser and needing process maturing seems to of course is a novelty for the quarter? Thank you.

From the production side as you already understand we already have 40k LTPS facility. Among them 30k was already ramped up and the remaining 10k will be ramped from later [ph] this year and then we also have another plant to ramp up another 20k at the end of this year or next year. That’s the production schedule, this is mostly committed from our diversified customer base and then another… Nicolas Gaudois – UBS: Sorry not capacity but production.

Yes that’s the production schedule but what I’m trying to say our capacity is highly related to the customer commitment from the diversified customer base. And then your second question we cannot follow you. Nicolas Gaudois – UBS: Okay I will think about one offline it's probably a bit complicated but it was some of the process, challenges about typically you’ve seen in LTPS. So let it to be some other time. Thank you.

So you can send email the detail of the question and we will get back to you on that. However anyway in the LTPS process we don’t have any issue so our production process is quite okay.

The next question will be presented by Vivian Tan from AllianceBernstein. Please go ahead ma'am. Vivian Tan – AllianceBernstein: I’ve a question regarding to your product mix. So we see pickup of tablet revenue in fourth quarter but if we look at the four year revenue so from the mobile is around 13% and the tablet is also around 13%. So if we look back 12 months from now if we look the whole year of 2014 do you expect the revenue contribution from tablet and mobile will increase this year or any comments?

Yes definitely we expect to mobile and tablet to grow in terms of sales mix. Vivian Tan – AllianceBernstein: So do you have any like target for instance like the combined sales of mobile and tablet should reach I don’t know 30% I’m just asking if there is a target.

Actually in ’13 year 2013 is around slight over mid-20 percentage but anyway we’re expecting that should be over 30%. Vivian Tan – AllianceBernstein: I see so how are you going to achieve this target? Are you do you increase your customer base or are you getting share with existing customers, are you going to reach this target?

Actually we already showed the feasibility actually in terms of mobile business we already diversified our customer base such as electronics or Chinese handset makers and also handset and tablet market trend is the bigger screen. So this kind of bigger screen demand will give us a chance to increase our ASP. So customer diversification today they are with ASP increase supported by bigger screen demand to give us a chance to meet that kind of target. Vivian Tan – AllianceBernstein: And also another question is regarding to pricing so last year the industry has been pretty tough because the LCD really large panel TV pricing was pretty weak. So compared to last year do you have any comment on the pricing environment for TV and also for like smaller size like mobile and tablet?

Well talking about certain TV pricing right now there is due to seasonality this first panel production [ph] it will be down actually but so from the second half would be quite stable I think.

In case of small size business OLED this is customizing business, it is not that reflected by market price trend and so price trend will not be different from last year trend.

(Operator Instructions). Until we have any participant with question we will wait for a second.

Operator I think there is no question we will end our conference call now. On behalf LG Display we thank you for participating in our Q4 earnings conference call. Should you have further questions please contact either myself or my colleagues. Thank you.