SIGNATURES
Pursuant to
the requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
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LINE Corporation
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(Registrant)
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August 10, 2017
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By: /s/ In Joon Hwang
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(Signature)
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Name: In Joon Hwang
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Title: Director and Chief Financial Officer
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LINE
Corporation Announces Consolidated Financial Results for the Six Months
Ended June 30, 2017
TOKYO--(BUSINESS WIRE)--August 10, 2017--LINE Corporation (NYSE:LN)
(TOKYO:3938) announces its consolidated financial results for the six
months ended June 30, 2017.
This is an English translation of the original Japanese-language
document. Should there be any inconsistency between the translation and
the original Japanese text, the latter shall prevail. All references to
the “Company,” “we,” “us,” or “our” shall mean LINE Corporation and,
unless the context otherwise requires, its consolidated subsidiaries.
Cautionary statement with respect to forward-looking statements, and
other information
This document contains forward-looking statements with respect to the
current plans, estimates, strategies and beliefs of the Company.
Forward-looking statements include, but are not limited to, those
statements using words such as “anticipate,” “believe,” “continues,”
“expect,” “estimate,” “intend,” “project” and similar expressions and
future or conditional verbs such as “will,” “would,” “should,” “could,”
“might,” “can,” “may,” or similar expressions generally intended to
identify forward-looking statements. These forward-looking statements
are based on information currently available to the Company, speak only
as of the date hereof and are based on the Company’s current plans and
expectations and are subject to a number of known and unknown
uncertainties and risks, many of which are beyond the Company’s control.
As a consequence, current plans, anticipated actions and future
financial position and results of operations may differ significantly
from those expressed in any forward-looking statements in the document.
You are cautioned not to unduly rely on such forward-looking statements
when evaluating the information presented and the Company does not
intend to update any of these forward-looking statements. Risks and
uncertainties that might affect the Company include, but are not limited
to:
i.
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its ability to attract and retain users and increase the level of
engagement of its users;
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ii.
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its ability to improve user monetization;
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iii.
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its ability to successfully enter new markets and manage its
business expansion;
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iv.
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its ability to compete in the global social network services market;
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v.
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its ability to develop or acquire new products and services, improve
its existing products and services and increase the value of its
products and services in a timely and cost-effective manner;
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vi.
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its ability to maintain good relationships with platform partners
and attract new platform partners;
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vii.
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its ability to attract advertisers to the LINE platform and increase
the amount that advertisers spend with LINE;
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viii.
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its expectations regarding its user growth rate and the usage of its
mobile applications;
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ix.
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its ability to increase revenues and its revenue growth rate;
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x.
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its ability to timely and effectively scale and adapt its existing
technology and network infrastructure;
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xi.
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its ability to successfully acquire and integrate companies and
assets;
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xii.
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its future business development, results of operations and financial
condition;
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xiii.
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the regulatory environment in which it operates;
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xiv.
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fluctuations in currency exchange rates and changes in the
proportion of its revenues and expenses denominated in foreign
currencies; and
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xv.
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changes in business or macroeconomic conditions.
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LINE Corporation
Index
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Cover
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A. Corporate information
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I. Corporate overview
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1. Selected consolidated financial data
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2. Business description
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II. Business
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1. Risk factors
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2. Material contracts
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3. Analysis of financial position, operating results and cash flow
position
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III. Company information
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1. Share information
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(1) Total number of shares
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(2) Stock acquisition rights
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(3) Exercises of bonds with stock acquisition rights with exercise
price amendment clause
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(4) Rights plans
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(5) Total number of shares issued, share capital, etc.
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(6) Principal shareholders
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(7) Voting rights
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2. Directors and executive officers
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IV. Accounting
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1. Interim condensed consolidated financial statements (Unaudited)
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(1) Interim condensed consolidated statement of financial position
(Unaudited)
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(2) Interim condensed consolidated statement of profit or loss
(Unaudited)
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(3) Interim condensed consolidated statement of comprehensive income
(Unaudited)
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(4) Interim condensed consolidated statement of change in equity
(Unaudited)
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(5) Interim condensed consolidated statement of cash flows
(Unaudited)
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2. Others
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B. Information on guarantors
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A. Corporate information
I. Corporate overview
1. Selected consolidated financial data
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Term
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17th term
Six months ended
June 30, 2016
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18th term
Six months ended
June 30, 2017
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17th term
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Accounting period
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From January 1,
2016 to
June 30, 2016
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From January 1,
2017 to
June 30, 2017
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From January 1,
2016 to
December 31,
2016
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Revenues
[Second quarter]
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(Millions of yen)
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67,310
[33,854]
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78,696
[39,780]
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140,704
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Profit before tax from continuing operations
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(Millions of yen)
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10,688
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16,961
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17,990
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Profit for the period
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(Millions of yen)
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2,866
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10,549
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7,104
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Profit for the period attributable to the shareholders of
the
Company
[Second quarter]
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(Millions of yen)
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2,559
[2,682]
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10,273
[8,836]
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6,763
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Total comprehensive income for the period, net of tax
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(Millions of yen)
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1,111
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13,626
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5,852
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Equity attributable to the shareholders of the Company
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(Millions of yen)
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23,471
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176,329
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160,834
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Total assets
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(Millions of yen)
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125,051
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270,612
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256,089
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Basic profit for the period
[Second quarter]
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(Yen)
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14.63
[15.33]
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46.95
[40.31]
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34.84
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Diluted profit for the period
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(Yen)
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13.10
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43.32
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31.48
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Ratio of equity attributable to the shareholders of the
Company
to total assets
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(%)
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18.8
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65.2
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62.8
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Net cash provided by operating activities
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(Millions of yen)
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11,863
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181
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28,753
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Net cash used in investing activities
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(Millions of yen)
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(762)
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(8,810)
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(34,086)
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Net cash used in financing activities
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(Millions of yen)
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(683)
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(623)
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106,628
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Cash and cash equivalents at the end of the period
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(Millions of yen)
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43,049
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125,512
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134,698
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Notes:
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1.
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Trends in these selected financial data for the Company on a
stand-alone basis are not separately discussed as we prepare
quarterly consolidated financial statements.
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2.
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Revenues do not include consumption taxes.
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3.
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The above financial data were prepared based on the unaudited
interim condensed consolidated financial statements and the annual
consolidated financial statements prepared in accordance with
International Financial Reporting Standards (IFRS).
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4.
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As of June 30, 2017, equity attributable to the shareholders of the
Company and total assets held by the shareholders of the Company
increased as a result of the issuance of common stock for the
following reasons:
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● Capital increase through the initial public offerings of new
shares on July 14, 2016 and July 15, 2016
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● Capital increase through third-party allotment of new shares on
August 16, 2016
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● Exercise of stock acquisition rights
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5.
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In 2017, the Company and its subsidiaries (collectively, the
"Group") changed the rounding of its financial statements from
thousands to millions. Prior periods have been revised to reflect
this change in presentation.
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2. Business description
During the six months ended June 30, 2017, there were no material
changes in the business of the Company or in the principal subsidiaries
and affiliates of the Company.
II. Business
1. Risk factors
During the six months ended June 30, 2017, there were no material
changes either regarding the occurrence of new operational risks or
regarding operational risks as mentioned in the Company's annual report.
For readers of this English translation
: There were no material
changes from the information presented in the Risk Factors section of
the Company's Annual Report on Form 20-F (No. 001-37821) filed with the
Securities and Exchange Commission (the "SEC") on March 31, 2017.
2. Material contracts
No important operational contracts, etc. were decided or entered into
during the second quarter ended June 30, 2017.
For readers of this English translation
: With respect to material
contracts, there were no material changes from the information presented
in the Company's Annual Report on Form 20-F (No. 001-37821) filed with
the SEC on March 31, 2017.
3. Analysis of financial position, operating results and cash flow
position
The analysis of financial position, operating results and cash flow
position of the Group is as follows:
(1) Operating results
In the first six months of 2017 (from January 1, 2017 to June 30, 2017),
amid continuing uncertainty regarding the economic policies of the new
U.S. administration, emerging economies in Asia, particularly the
Chinese economy, began to show signs of respite from the global economic
slowdown. In addition, GDP growth rates in some of the Company's key
countries, including Thailand and Taiwan showed a moderate trend of
recovery.
Meanwhile, in the Japanese economy, there were signs of recovery in
exports in industries such as the IT industry, firm improvement in
employment rates and personal income levels, while personal spending
showed moderate improvement.
Amid such circumstances, in the internet industry in which the Group is
engaged, the total number of mobile phone shipments in Japan for the
fiscal year ended December 31, 2016 was 36.06 million, a decrease of
3.0% year on year. The ratio of smartphones to the total number of
mobile phone shipments in Japan was 81.6%, an increase of 3.6 percentage
points year on year. Although the overall number of mobile phone
shipments in Japan has hit a ceiling, there was an increase in users
switching from feature phones to smartphones and an increase in the
number of SIM-free smartphones. Current estimates suggest that the
number of smartphone contracts in Japan will exceed 100 million by year
2018, and the mobile internet market is expected to continue to grow on
the back of this expansion (Source: MM Research Institute, Japan mobile
phone handset shipment estimates for year 2016 and Overview of domestic
mobile phone shipments for FY 2016).
In this business environment, the Group actively moved forward with the
LINE business and portal segment. As of June 30, 2017, MAUs* in our four
key countries (Japan, Taiwan, Thailand and Indonesia) reached 169
million, a year-on-year increase of 7.5%.
* Monthly Active Users ("MAUs") in a given month refers to the number of
user accounts that (i) accessed the LINE messaging application or any
LINE Games through mobile devices; (ii) sent messages through the LINE
messaging application from personal computers; or (iii) sent messages
through any other LINE application from mobile devices, in each case at
least once during that month.
Revenues
LINE Business and Portal segment
The Group’s revenues from continuing operations from its major services
in the first six months of 2016 and 2017 are as follows:
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(In millions of yen)
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For the six-month period
ended June 30,
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2016
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2017
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LINE business and portal segment
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Communication and content
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Communication
(1)
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15,063
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15,615
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Content
(2)
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23,252
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20,521
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Others
(3)
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4,503
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8,496
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Sub-total
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42,818
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44,632
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Advertising
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LINE advertising
(4)
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19,462
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28,892
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Portal advertising
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5,030
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5,172
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Sub-total
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24,492
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34,064
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Total
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67,310
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78,696
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(1)
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Revenues from communication increased mainly due to the steady
growth of Creators’ Themes released in April 2016, as well as a
shortening of the time taken for stickers to pass the review process
and enhancement of products by popular creators for Creators’
stickers.
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(2)
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Revenues from content decreased mainly due to a decrease in revenues
generated by the LINE Games business as a result of fewer new title
releases, although we are steadily promoting existing services such
as LINE Manga and LINE Fortune.
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(3)
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Revenues from others increased mainly due to the expansion of LINE
Friends service primarily overseas as well as the launch of LINE
Mobile in September 2016.
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(4)
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Revenues from LINE advertising increased mainly due to the continued
growth of existing “messenger ads” such as Official Accounts as well
as a significant increase in revenues generated by “performance ads”
on Timeline and LINE NEWS provided by the LINE Ads Platform released
in June 2016.
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Profit from operating activities
Profit from operating activities consists of revenues and other
operating income reduced by operating expenses. In the first six months
of 2017, other operating income included 10,444 million yen in gain on
transfer of the camera application business. With respect to operating
expenses, there was an increase in employee compensation expenses due to
headcount growth in accordance with business expansion, an increase in
marketing expenses due mainly to the active running of TV commercials
for LINE Mobile, an increase in authentication and other service
expenses due mainly to additional network costs for LINE Mobile
accompanying arising number of users, an increase in depreciation
expenses of furniture and fixtures which were newly purchased due to the
relocation of the headquarter offices, and an increase in other
operating expenses due to an increase in LINE Points expenses to attract
new users for LINE Pay and an increase in rent payments for the new
headquarter offices, which were partially offset by a decrease in
share-based payment expenses. Accordingly, the Group recorded operating
expenses of 71,091 million yen, a year-on-year increase of 20.5%.
As a result, for the first six months of 2017, the Group recorded profit
from operating activities of 18,629 million yen, a year-on-year increase
of 39.4%.
Profit for the period from continuing operations
The Group recorded profit before tax for the period from continuing
operations of 16,961 million yen in the first six months of 2017, a
58.7% increase year on year, due in part to an increase in profit from
operating activities, a decrease in loss on foreign currency
transactions, net, and a decrease in other non-operating expenses, which
were offset in part by an increase in share of loss of associates and
joint ventures. Income tax expense increased by 4.1% to 6,405 million
yen for the first six months of 2017 compared to the first six months of
2016. On an after-tax basis, profit for the period from continuing
operations was 10,556 million yen in the first six months of 2017, an
increase of 132.9% year on year. The effective tax rate for the
six-month period ended June 30, 2017 of 37.8% differed from the Japanese
statutory tax rate of 31.7% for the year ended December 31, 2017. The
effective income tax rate of 37.8% was primarily due to pre-tax losses
recorded by subsidiaries on a standalone basis and pre-tax losses
recorded by associates and a joint ventures for which no deferred tax
assets were recognized as the related tax benefits could not be
recognized.
Profit for the period
Loss for the period from discontinued operations, which relate to the
MixRadio business, for the first six months of 2017 decreased from the
corresponding period in 2016. Therefore, after subtracting the loss for
the period from discontinued operations, profit for the period was
10,549 million yen in the first six months of 2017, an increase of
268.1% year on year. Profit for the period attributable to the
shareholders of the Company was 10,273 million yen in the first six
months of 2017, an increase of 301.4% year on year.
(2) Financial position
Regarding the financial position of the Group as of June 30, 2017, total
assets of the Group increased by 14,523 million yen compared to the end
of the previous fiscal year to 270,612 million yen, primarily due to a
10,087 million yen increase in investments in associates and joint
ventures mainly due to the acquisition of additional shares of Snow
Corporation, which is an associate of the Group, in exchange for the
camera application business and a 3,781 million yen increase in property
and equipment, which related mainly to the relocation of the headquarter
offices. Total liabilities decreased by 1,646 million yen to 93,420
million yen as of June 30, 2017. The main factor of decrease was a 2,719
million yen decrease in income taxes payable due to tax payments, while
the main factor of increase was a 1,611 million yen increase in
provisions, non-current, caused by an increase in provision for asset
retirement associated with the relocation of the headquarter offices.
Total shareholders' equity increased by 16,169 million yen to 177,192
million yen as of June 30, 2017. These changes were primarily
attributable to profit for the period of 10,549 million yen.
(3) Cash flow position
The balance of cash and cash equivalents (hereinafter, "cash") as of
June 30, 2017 decreased by 9,186 million yen from the end of the
previous fiscal year to 125,512 million yen.
The respective cash flow positions are as follows.
Cash flows from operating activities
Net cash provided by operating activities was 181 million yen in the
first six months of 2017, compared to net cash provided by operating
activities of 11,863 million yen in the first six months of 2016. Cash
provided by operating activities in the first six months of 2017
primarily consisted of profit before tax of 16,950 million yen, which
was partly offset by adjustment for gain on loss of control of
subsidiaries and business of 10,444 million yen, a non-cash item. Cash
used in operating activities in the first six months of 2017 primarily
consisted of income taxes paid of 6,788 million yen.
Cash flows from investing activities
Net cash used in investing activities was 8,810 million yen in the first
six months of 2017, compared to net cash used in investing activities of
762 million yen in the first six months of 2016. Factors affecting the
cash outflows in the first six months of 2017 are primarily related to
acquisition of property and equipment and intangible assets of 5,793
million yen, purchase of equity investments of 2,310 million yen and
loan receivables of 2,077 million yen. Factors affecting the cash
inflows in the first six months of 2017 are primarily related to the
return of the guarantee deposits for the Japanese Payment Services Act
of 3,325 million yen.
Cash flows from financing activities
Net cash used in financing activities was 623 million yen in the first
six months of 2017, compared to net cash used in financing activities of
683 million yen in the first six months of 2016. The cash outflows in
the first six months of 2017 are primarily related to repayment of
short-term borrowings, net of 2,037 million yen. The cash inflows in the
first six months of 2017 are primarily related to proceeds from exercise
of stock options of 1,454 million yen.
(4) Operational and financial issues to be addressed
During the six months ended June 30, 2017, there were no material
changes in operational and financial issues to be addressed by the Group.
(5) Research and development activities
Not applicable.
III. Company information
1. Share information
(1) Total number of shares
a. Total number of shares authorized
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Total number of shares
authorized
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Class
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(Share)
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Common stock
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690,000,000
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Total
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690,000,000
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b. Number of shares issued
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Class
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Number of shares
issued as of end of
period
(Shares; as of
June
30, 2017)
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Number of shares
issued as of filing date
(Shares; as of
August
10, 2017)
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Name of securities
exchange
where the shares are
traded
or the
name of authorized
financial
instruments firms
association
where
the shares are
registered
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Details
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Common stock
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219,407,000
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220,442,310
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Tokyo Stock Exchange
(First Section) and
New York Stock
Exchange
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100 shares constitute
one "unit" of common
stock.
Common stock is
not restricted by any
significant limitations
in
terms of
shareholders' rights.
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Total
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219,407,000
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220,442,310
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—
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—
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Notes:
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1.
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"Number of shares issued as of filing date" does not include the
number of shares issued upon the exercise of the stock options
during the period from August 1, 2017 until the filing date of
this Quarterly Securities Report.
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2.
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Accompanying the third-party allotment as of July 18, 2017, the
total number of issued shares has increased by 1,007,810.
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(2) Stock acquisition rights
Not applicable.
(3) Exercises of bonds with stock acquisition rights with exercise
price amendment clause
Not applicable.
(4) Rights plans
Not applicable.
(5) Total number of shares issued, share capital, etc.
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Date
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Change in the number
of shares issued
(Shares)
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Balance of
shares
issued
(Shares)
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Change in
share
capital
(Millions of
yen)
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Balance of
share capital
(Millions of
yen)
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Change in legal
capital reserve
(Millions of
yen)
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Balance of legal
capital reserve
(Millions of yen)
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April 1, 2017
to June 30, 2017
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410,500
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219,407,000
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565
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79,918
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565
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69,983
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(Notes)
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1.
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Increase in total number of shares issued as a result of the
exercise of stock options.
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2.
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Amounts less than one thousand yen are rounded down.
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(6) Principal shareholders
(As of June 30, 2017)
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Shareholder name
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Address
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Number of shares held
(Shares)
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Percentage of shares held to
total shares issued (%)
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NAVER CORPORATION (Standing proxy: LINE Corporation, Investment
Development/ IR Office)
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NAVER GREEN FACTORY, 6, BULJEONG-RO, BUNDANG-GU, SEONGNAM-SI,
GYEONGGI-DO, 13561, KOREA
(1-6, Shinjuku 4-chome, Shinjuku-ku, Tokyo)
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174,992,000
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79.75
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MOXLEY & CO LLC (Standing proxy: Mizuho Bank, Ltd., Settlement &
Clearing Services Department)
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270 PARK AVE., NEW YORK, NY 10017 U.S.A.
(15-1, Konan 2-chome, Minato-ku, Tokyo)
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9,845,497
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4.48
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KOREA SECURITIES DEPOSITORY -SAMSUNG (Standing proxy: Citibank,
N.A., Tokyo Branch)
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34-6, YEOUIDO-DONG, YEONGDEUNGPO-GU,
SEOUL, KOREA (27-30, Shinjuku 6-chome, Shinjuku-ku, Tokyo)
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2,113,000
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0.96
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MSIP CLIENT SECURITIES (Standing proxy: Morgan Stanley MUFG
Securities Co., Ltd.)
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25 CABOT SQUARE, CANARY WHARF,
LONDON E14 4QA, U.K. (9-7, Otemachi 1-chome, Chiyoda-ku, Tokyo)
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1,480,215
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0.67
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BNY GCM CLIENT ACCOUNT JPRD AC ISG (FE -AC) (Standing proxy: The
Bank of Tokyo-Mitsubishi UFJ, Ltd.)
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|
PETERBOROUGH COURT 133 FLEET STREET
LONDON EC4A 2BB, UNITED KINGDOM (7-1, Marunouchi 2-chome,
Chiyoda-ku, Tokyo)
|
|
1,449,716
|
|
0.66
|
Japan Trustee Services Bank, Ltd. (Trust Account)
|
|
8-11, Harumi 1-chome, Chuo-ku, Tokyo
|
|
1,400,500
|
|
0.63
|
GOLDMAN SACHS INTERNATIONAL (Standing proxy: Goldman Sachs Japan
Co., Ltd.)
|
|
133 FLEET STREET LONDON EC4A 2BB, U.K. (10-1, Roppongi 6-chome,
Minato-ku, Tokyo)
|
|
1,042,086
|
|
0.47
|
The Master Trust Bank of Japan, Ltd. (Trust Account)
|
|
11-3, Hamamatsucho 2-chome, Minato-ku, Tokyo
|
|
1,040,900
|
|
0.47
|
Japan Trustee Services Bank, Ltd. (Trust Account 5)
|
|
8-11, Harumi 1-chome, Chuo-ku, Tokyo
|
|
814,500
|
|
0.37
|
BNP PARIBAS SECURITIES SERVICES LUXEMBOURG/ JASDEC/ HENDERSON HHF
SICAV (Standing proxy: The Hongkong and Shanghai Banking Corporation
Limited Tokyo branch, Custody Operation Department)
|
|
33 RUE DE GASPERICH, L-5 826 HOWALD
-HESPERANGE, LUXEMBOURG (11-1, Nihonbashi 3-chome, Chuo-ku, Tokyo)
|
|
606,800
|
|
0.27
|
Total
|
|
—
|
|
194,785,214
|
|
88.77
|
|
|
|
|
|
|
|
(7) Voting rights
a. Shares issued
|
|
|
|
|
|
|
(As of June 30, 2017)
|
Classification
|
|
Number of
shares
(Shares)
|
|
Number of voting
rights
(Units)
|
|
Details
|
Shares without voting rights
|
|
—
|
|
—
|
|
—
|
Shares with restricted voting rights (treasury stock, etc.)
|
|
—
|
|
—
|
|
—
|
Shares with restricted voting rights (others)
|
|
—
|
|
—
|
|
—
|
Shares with full voting rights (treasury stock, etc.)
|
|
—
|
|
—
|
|
—
|
Shares with full voting rights (others)
|
|
Common stock
219,390,900
|
|
2,193,909
|
|
100 shares constitute
one "unit" of common
stock.
Common stock is
not restricted by any
significant
limitations in
terms of shareholders'
rights.
|
Shares constituting less than one unit
|
|
Common stock
16,100
|
|
—
|
|
—
|
Total number of shares issued
|
|
Common stock
219,407,000
|
|
—
|
|
—
|
Total number of voting rights held by all shareholders
|
|
—
|
|
2,193,909
|
|
—
|
b. Treasury stock, etc.
Not applicable.
2. Directors and executive officers
Not applicable.
IV. Accounting
Preparation of interim condensed consolidated financial statements
The interim condensed consolidated financial statements of the Group are
prepared in conformity with International Accounting Standard 34,
"Interim Financial Reporting" pursuant to the provisions of Article 93
of the Ordinance on Terminology, Forms and Preparation Methods of
Quarterly Consolidated Financial Statements (Cabinet Office Ordinance
No. 64 of 2007; hereinafter referred to as the "Ordinance on QCFS").
In 2017, the Group changed the rounding of its interim condensed
consolidated financial statements from thousands to millions. Prior
periods have been revised to reflect this change in presentation.
|
|
|
|
|
|
|
1
Interim condensed consolidated financial statements
(1) Interim Condensed Consolidated Statement of Financial Position
- Unaudited
|
|
(In millions of yen)
|
|
|
Notes
|
|
December 31,
2016
|
|
June 30,
2017
|
Assets
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
134,698
|
|
|
125,512
|
|
Trade and other receivables
|
|
7
|
|
28,167
|
|
|
31,418
|
|
Other financial assets, current
|
|
7
|
|
6,952
|
|
|
7,916
|
|
Inventories
|
|
|
|
961
|
|
|
2,526
|
|
Other current assets
|
|
|
|
3,929
|
|
|
5,005
|
|
Total current assets
|
|
|
|
174,707
|
|
|
172,377
|
|
Non-current assets
|
|
|
|
|
|
|
Property and equipment
|
|
5
|
|
9,029
|
|
|
12,810
|
|
Goodwill
|
|
|
|
3,400
|
|
|
5,360
|
|
Other intangible assets
|
|
|
|
1,851
|
|
|
2,101
|
|
Investments in associates and joint ventures
|
|
17
|
|
12,712
|
|
|
22,799
|
|
Other financial assets, non-current
|
|
7
|
|
35,715
|
|
|
38,881
|
|
Deferred tax assets
|
|
6
|
|
18,385
|
|
|
15,933
|
|
Other non-current assets
|
|
|
|
290
|
|
|
351
|
|
Total non-current assets
|
|
|
|
81,382
|
|
|
98,235
|
|
Total assets
|
|
|
|
256,089
|
|
|
270,612
|
|
Liabilities
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
Trade and other payables
|
|
7
|
|
21,532
|
|
|
22,317
|
|
Other financial liabilities, current
|
|
7
|
|
24,497
|
|
|
24,327
|
|
Accrued expenses
|
|
|
|
9,049
|
|
|
8,098
|
|
Income tax payables
|
|
|
|
5,699
|
|
|
2,980
|
|
Advances received
|
|
|
|
11,286
|
|
|
12,557
|
|
Deferred revenue
|
|
|
|
9,739
|
|
|
9,442
|
|
Provisions, current
|
|
|
|
964
|
|
|
1,019
|
|
Other current liabilities
|
|
|
|
3,670
|
|
|
1,212
|
|
Total current liabilities
|
|
|
|
86,436
|
|
|
81,952
|
|
Non-current liabilities
|
|
|
|
|
|
|
Other financial liabilities, non-current
|
|
7
|
|
–
|
|
|
58
|
|
Deferred tax liabilities
|
|
6
|
|
1,161
|
|
|
1,908
|
|
Provisions, non-current
|
|
5
|
|
1,120
|
|
|
2,731
|
|
Post-employment benefits
|
|
|
|
6,204
|
|
|
6,723
|
|
Other non-current liabilities
|
|
|
|
145
|
|
|
48
|
|
Total non-current liabilities
|
|
|
|
8,630
|
|
|
11,468
|
|
Total liabilities
|
|
|
|
95,066
|
|
|
93,420
|
|
Shareholders’ equity
|
|
|
|
|
|
|
Share capital
|
|
8
|
|
77,856
|
|
|
79,919
|
|
Share premium
|
|
8
|
|
91,208
|
|
|
91,283
|
|
Accumulated deficit
|
|
|
|
(12,381
|
)
|
|
(2,100
|
)
|
Accumulated other comprehensive income
|
|
|
|
4,151
|
|
|
7,227
|
|
Equity attributable to the shareholders of the Company
|
|
|
|
160,834
|
|
|
176,329
|
|
Non-controlling interests
|
|
|
|
189
|
|
|
863
|
|
Total shareholders’ equity
|
|
|
|
161,023
|
|
|
177,192
|
|
Total liabilities and shareholders’ equity
|
|
|
|
256,089
|
|
|
270,612
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) Interim Condensed Consolidated Statement of Profit or Loss -
Unaudited
|
(In millions of yen)
|
|
For the six-month period ended June 30,
|
|
|
|
|
|
|
|
|
|
Notes
|
|
2016
|
|
2017
|
Revenues and other operating income:
|
|
|
|
|
|
|
Revenues
|
|
4
|
|
67,310
|
|
|
78,696
|
|
Other operating income
|
|
9
|
|
5,042
|
|
|
11,024
|
|
Total revenues and other operating income
|
|
|
|
72,352
|
|
|
89,720
|
|
Operating expenses:
|
|
|
|
|
|
|
Payment processing and licensing expenses
|
|
|
|
(15,128
|
)
|
|
(15,024
|
)
|
Employee compensation expenses
|
|
13
|
|
(19,114
|
)
|
|
(19,265
|
)
|
Marketing expenses
|
|
|
|
(4,754
|
)
|
|
(7,858
|
)
|
Infrastructure and communication expenses
|
|
|
|
(3,776
|
)
|
|
(4,385
|
)
|
Authentication and other service expenses
|
|
|
|
(6,137
|
)
|
|
(10,709
|
)
|
Depreciation and amortization expenses
|
|
5
|
|
(2,234
|
)
|
|
(3,017
|
)
|
Other operating expenses
|
|
18
|
|
(7,842
|
)
|
|
(10,833
|
)
|
Total operating expenses
|
|
|
|
(58,985
|
)
|
|
(71,091
|
)
|
Profit from operating activities
|
|
|
|
13,367
|
|
|
18,629
|
|
Finance income
|
|
|
|
40
|
|
|
67
|
|
Finance costs
|
|
|
|
(40
|
)
|
|
(14
|
)
|
Share of loss of associates and joint ventures
|
|
|
|
(144
|
)
|
|
(2,443
|
)
|
Loss on foreign currency transactions, net
|
|
|
|
(1,376
|
)
|
|
(329
|
)
|
Other non-operating income
|
|
12
|
|
-
|
|
|
1,094
|
|
Other non-operating expenses
|
|
12
|
|
(1,159
|
)
|
|
(43
|
)
|
Profit before tax from continuing operations
|
|
|
|
10,688
|
|
|
16,961
|
|
Income tax expenses
|
|
6
|
|
(6,156
|
)
|
|
(6,405
|
)
|
Profit for the period from continuing operations
|
|
|
|
4,532
|
|
|
10,556
|
|
Loss from discontinued operations, net of tax
|
|
10
|
|
(1,666
|
)
|
|
(7
|
)
|
Profit for the period
|
|
|
|
2,866
|
|
|
10,549
|
|
Attributable to:
|
|
|
|
|
|
|
The shareholders of the Company
|
|
11
|
|
2,559
|
|
|
10,273
|
|
Non-controlling interests
|
|
|
|
307
|
|
|
276
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In yen)
|
Earnings per share
|
|
|
|
|
|
|
Basic profit for the period attributable to the shareholders of the
Company
|
|
11
|
|
14.63
|
|
|
46.95
|
|
Diluted profit for the period attributable to the shareholders of
the Company
|
|
11
|
|
13.10
|
|
|
43.32
|
|
Earnings per share from continuing operations
|
|
|
|
|
|
|
Basic profit from continuing operations attributable to the
shareholders of the Company
|
|
11
|
|
24.15
|
|
|
46.98
|
|
Diluted profit from continuing operations attributable to the
shareholders of the Company
|
|
11
|
|
21.63
|
|
|
43.35
|
|
Earnings per share from discontinued operations
|
|
|
|
|
|
|
Basic loss from discontinued operations attributable to the
shareholders of the Company
|
|
11
|
|
(9.52
|
)
|
|
(0.03
|
)
|
Diluted loss from discontinued operations attributable to the
shareholders of the Company
|
|
11
|
|
(8.53
|
)
|
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) Interim Condensed Consolidated Statement of Profit or Loss -
Unaudited (continued)
|
(In millions of yen)
|
|
For the three-month period ended June 30,
|
|
|
|
|
|
|
|
|
|
Notes
|
|
2016
|
|
2017
|
Revenues and other operating income:
|
|
|
|
|
|
|
Revenues
|
|
4
|
|
33,854
|
|
|
39,780
|
|
Other operating income
|
|
9
|
|
4,382
|
|
|
10,694
|
|
Total revenues and other operating income
|
|
|
|
38,236
|
|
|
50,474
|
|
Operating expenses:
|
|
|
|
|
|
|
Payment processing and licensing expenses
|
|
|
|
(7,377
|
)
|
|
(7,340
|
)
|
Employee compensation expenses
|
|
|
|
(9,721
|
)
|
|
(9,547
|
)
|
Marketing expenses
|
|
|
|
(2,448
|
)
|
|
(3,832
|
)
|
Infrastructure and communication expenses
|
|
|
|
(1,994
|
)
|
|
(2,243
|
)
|
Authentication and other service expenses
|
|
|
|
(3,240
|
)
|
|
(5,756
|
)
|
Depreciation and amortization expenses
|
|
5
|
|
(1,266
|
)
|
|
(1,541
|
)
|
Other operating expenses
|
|
18
|
|
(4,161
|
)
|
|
(5,611
|
)
|
Total operating expenses
|
|
|
|
(30,207
|
)
|
|
(35,870
|
)
|
Profit from operating activities
|
|
|
|
8,029
|
|
|
14,604
|
|
Finance income
|
|
|
|
13
|
|
|
42
|
|
Finance costs
|
|
|
|
(17
|
)
|
|
(8
|
)
|
Share of loss of associates and joint ventures
|
|
|
|
(81
|
)
|
|
(1,649
|
)
|
(Loss)/gain on foreign currency transactions, net
|
|
|
|
(808
|
)
|
|
33
|
|
Other non-operating income
|
|
12
|
|
-
|
|
|
416
|
|
Other non-operating expenses
|
|
12
|
|
(592
|
)
|
|
(43
|
)
|
Profit before tax from continuing operations
|
|
|
|
6,544
|
|
|
13,395
|
|
Income tax expenses
|
|
6
|
|
(3,418
|
)
|
|
(4,474
|
)
|
Profit for the period from continuing operations
|
|
|
|
3,126
|
|
|
8,921
|
|
Loss from discontinued operations, net of tax
|
|
10
|
|
(26
|
)
|
|
(4
|
)
|
Profit for the period
|
|
|
|
3,100
|
|
|
8,917
|
|
Attributable to:
|
|
|
|
|
|
|
The shareholders of the Company
|
|
11
|
|
2,682
|
|
|
8,836
|
|
Non-controlling interests
|
|
|
|
418
|
|
|
81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In yen)
|
Earnings per share
|
|
|
|
|
|
|
Basic profit for the period attributable to the shareholders of the
Company
|
|
11
|
|
15.33
|
|
|
40.31
|
|
Diluted profit for the period attributable to the shareholders of
the Company
|
|
11
|
|
13.72
|
|
|
37.24
|
|
Earnings per share from continuing operations
|
|
|
|
|
|
|
Basic profit from continuing operations attributable to the
shareholders of the Company
|
|
11
|
|
15.48
|
|
|
40.33
|
|
Diluted profit from continuing operations attributable to the
shareholders of the Company
|
|
11
|
|
13.85
|
|
|
37.26
|
|
Earnings per share from discontinued operations
|
|
|
|
|
|
|
Basic loss from discontinued operations attributable to the
shareholders of the Company
|
|
11
|
|
(0.15
|
)
|
|
(0.02
|
)
|
Diluted loss from discontinued operations attributable to the
shareholders of the Company
|
|
11
|
|
(0.13
|
)
|
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) Interim Condensed Consolidated Statement of Comprehensive
Income - Unaudited
|
(In millions of yen)
|
|
For the six-month period ended June 30,
|
|
|
|
|
|
|
|
|
|
Notes
|
|
2016
|
|
2017
|
Profit for the period
|
|
|
|
2,866
|
|
|
10,549
|
|
Other comprehensive income
|
|
|
|
|
|
|
Items that may be reclassified to profit or loss:
|
|
|
|
|
|
|
Available-for-sale financial assets:
|
|
|
|
|
|
|
Net changes in fair value
|
|
12
|
|
(850
|
)
|
|
4,295
|
|
Reclassification to profit or loss
|
|
|
|
273
|
|
|
(690
|
)
|
Exchange differences on translation of foreign operations:
|
|
|
|
|
|
|
(Loss)/gain arising during the period
|
|
|
|
(1,256
|
)
|
|
404
|
|
Reclassification to profit or loss
|
|
|
|
50
|
|
|
–
|
|
Proportionate share of other comprehensive income of associates and
joint ventures
|
|
|
|
(13
|
)
|
|
(3
|
)
|
Income tax relating to items that may be reclassified subsequently
to profit or loss
|
|
|
|
41
|
|
|
(929
|
)
|
Total other comprehensive income for the period, net of tax
|
|
|
|
(1,755
|
)
|
|
3,077
|
|
Total comprehensive income for the period, net of tax
|
|
|
|
1,111
|
|
|
13,626
|
|
Attributable to:
|
|
|
|
|
|
|
The shareholders of the Company
|
|
|
|
767
|
|
|
13,347
|
|
Non-controlling interests
|
|
|
|
344
|
|
|
279
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) Interim Condensed Consolidated Statement of Comprehensive
Income - Unaudited (continued)
|
(In millions of yen)
|
|
For the three-month period ended June 30,
|
|
|
|
|
|
|
|
|
|
Notes
|
|
2016
|
|
2017
|
Profit for the period
|
|
|
|
3,100
|
|
|
8,917
|
|
Other comprehensive income
|
|
|
|
|
|
|
Items that may be reclassified to profit or loss:
|
|
|
|
|
|
|
Available-for-sale financial assets:
|
|
|
|
|
|
|
Net changes in fair value
|
|
12
|
|
(521
|
)
|
|
3,054
|
|
Reclassification to profit or loss
|
|
|
|
9
|
|
|
(146
|
)
|
Exchange differences on translation of foreign operations:
|
|
|
|
|
|
|
Loss arising during the period
|
|
|
|
(932
|
)
|
|
(294
|
)
|
Reclassification to profit or loss
|
|
|
|
50
|
|
|
–
|
|
Proportionate share of other comprehensive income of associates and
joint ventures
|
|
|
|
(3
|
)
|
|
7
|
|
Income tax relating to items that may be reclassified subsequently
to profit or loss
|
|
|
|
121
|
|
|
(711
|
)
|
Total other comprehensive income for the period, net of tax
|
|
|
|
(1,276
|
)
|
|
1,910
|
|
Total comprehensive income for the period, net of tax
|
|
|
|
1,824
|
|
|
10,827
|
|
Attributable to:
|
|
|
|
|
|
|
The shareholders of the Company
|
|
|
|
1,387
|
|
|
10,743
|
|
Non-controlling interests
|
|
|
|
437
|
|
|
84
|
|
|
|
|
|
|
|
|
|
|
|
(4) Interim Condensed Consolidated Statement of Change in Equity
- Unaudited
|
|
(In millions of yen)
|
|
|
Equity attributable to the shareholder of the Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive income
|
|
|
|
|
|
|
|
|
Notes
|
|
Share
capital
|
|
Share
premium
|
|
Accumulated
deficit
|
|
Foreign
currency
translation
reserve
|
|
Available-for-
sale reserve
|
|
Defined
benefit plan
reserve
|
|
Total
|
|
Non-
controlling
interests
|
|
Total
shareholder’s
equity
|
Balance at January 1, 2016
|
|
|
|
12,596
|
|
18,983
|
|
|
(19,204
|
)
|
|
240
|
|
|
6,917
|
|
|
(1,789
|
)
|
|
17,743
|
|
|
(210
|
)
|
|
17,533
|
|
Comprehensive income/(loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
period
|
|
|
|
|
|
–
|
|
|
2,559
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
2,559
|
|
|
307
|
|
|
2,866
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
comprehensive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
income
|
|
|
|
–
|
|
–
|
|
|
–
|
|
|
(1,480
|
)
|
|
(312
|
)
|
|
–
|
|
|
(1,792
|
)
|
|
37
|
|
|
(1,755
|
)
|
Total comprehensive income/(loss) for the period
|
|
|
|
–
|
|
–
|
|
|
2,559
|
|
|
(1,480
|
)
|
|
(312
|
)
|
|
–
|
|
|
767
|
|
|
344
|
|
|
1,111
|
|
Recognition of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
share-based
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
payments
|
|
8,13
|
|
–
|
|
4,961
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
4,961
|
|
|
–
|
|
|
4,961
|
|
Forfeiture of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
stock options
|
|
8,13
|
|
–
|
|
(34
|
)
|
|
34
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
Acquisition of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
subsidiary
|
|
15
|
|
–
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
92
|
|
|
92
|
|
Other
|
|
|
|
–
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
0
|
|
|
0
|
|
Balance at June 30, 2016
|
|
|
|
12,596
|
|
23,910
|
|
|
(16,611
|
)
|
|
(1,240
|
)
|
|
6,605
|
|
|
(1,789
|
)
|
|
23,471
|
|
|
226
|
|
|
23,697
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions of yen)
|
|
|
|
Equity attributable to the shareholders of the Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive income
|
|
|
|
|
|
|
|
|
Notes
|
|
Share
capital
|
|
Share
premium
|
|
Accumulated
deficit
|
|
Foreign
currency
translation
reserve
|
|
Available-for-
sale reserve
|
|
Defined
benefit plan
reserve
|
|
Total
|
|
Non-
controlling
interests
|
|
Total
Shareholders’
equity
|
Balance at January 1, 2017
|
|
|
|
77,856
|
|
91,208
|
|
|
(12,381
|
)
|
|
(174
|
)
|
|
5,649
|
|
|
(1,324
|
)
|
|
160,834
|
|
|
189
|
|
|
161,023
|
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
period
|
|
|
|
–
|
|
–
|
|
|
10,273
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
10,273
|
|
|
276
|
|
|
10,549
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
comprehensive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
income
|
|
|
|
–
|
|
–
|
|
|
–
|
|
|
390
|
|
|
2,684
|
|
|
–
|
|
|
3,074
|
|
|
3
|
|
|
3,077
|
|
Total comprehensive income for the period
|
|
|
|
–
|
|
–
|
|
|
10,273
|
|
|
390
|
|
|
2,684
|
|
|
–
|
|
|
13,347
|
|
|
279
|
|
|
13,626
|
|
Recognition of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
share-based
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
payments
|
|
8,13
|
|
–
|
|
748
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
748
|
|
|
–
|
|
|
748
|
|
Forfeiture of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
stock options
|
|
8,13
|
|
–
|
|
(8
|
)
|
|
8
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
Exercise of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
stock options
|
|
8,13
|
|
2,063
|
|
(619
|
)
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
1,444
|
|
|
–
|
|
|
1,444
|
|
Acquisition of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
non-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
controlling
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
interest
|
|
8,16
|
|
–
|
|
(46
|
)
|
|
–
|
|
|
2
|
|
|
–
|
|
|
–
|
|
|
(44
|
)
|
|
15
|
|
|
(29
|
)
|
Acquisition of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a subsidiary
|
|
16
|
|
–
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
380
|
|
|
380
|
|
Balance at June 30, 2017
|
|
|
|
79,919
|
|
91,283
|
|
|
(2,100
|
)
|
|
218
|
|
|
8,333
|
|
|
(1,324
|
)
|
|
176,329
|
|
|
863
|
|
|
177,192
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5) Interim Condensed Consolidated Statement of Cash Flows -
Unaudited
|
(In millions of yen)
|
|
For the six-month period ended June 30,
|
|
|
|
|
|
|
|
|
|
Notes
|
|
2016
|
|
2017
|
Cash flows from operating activities
|
|
|
|
|
|
|
Profit before tax from continuing operations
|
|
|
|
10,688
|
|
|
16,961
|
|
Loss before tax from discontinued operations
|
|
10
|
|
(2,558
|
)
|
|
(11
|
)
|
Profit before tax
|
|
|
|
8,130
|
|
|
16,950
|
|
Adjustments for:
|
|
|
|
|
|
|
Depreciation and amortization expenses
|
|
|
|
2,234
|
|
|
3,017
|
|
Finance income
|
|
|
|
(40
|
)
|
|
(67
|
)
|
Finance costs
|
|
|
|
40
|
|
|
14
|
|
Share-based compensation expenses
|
|
8,13
|
|
4,961
|
|
|
748
|
|
Gain on loss of control of subsidiaries and business
|
|
9
|
|
(1,752
|
)
|
|
(10,444
|
)
|
Loss/(gain) on financial assets at fair value through profit or loss
|
|
12
|
|
742
|
|
|
(371
|
)
|
Gain on disposal of property and equipment and intangible assets
|
|
|
|
(2,348
|
)
|
|
-
|
|
Impairment loss of available-for-sale financial assets
|
|
7
|
|
273
|
|
|
8
|
|
Gain on sales of equity instruments
|
|
7
|
|
-
|
|
|
(697
|
)
|
Share of loss of associates and joint ventures
|
|
|
|
144
|
|
|
2,443
|
|
Loss/(gain) on foreign currency transactions, net
|
|
|
|
1,577
|
|
|
(201
|
)
|
Changes in:
|
|
|
|
|
|
|
Trade and other receivables
|
|
|
|
4,232
|
|
|
(3,194
|
)
|
Inventories
|
|
|
|
379
|
|
|
(1,556
|
)
|
Trade and other payables
|
|
|
|
(4,530
|
)
|
|
1,259
|
|
Accrued expenses
|
|
|
|
(681
|
)
|
|
(994
|
)
|
Deferred revenue
|
|
|
|
1,093
|
|
|
(312
|
)
|
Advances received
|
|
|
|
24
|
|
|
1,170
|
|
Provisions
|
|
|
|
138
|
|
|
204
|
|
Post-employment benefits
|
|
|
|
54
|
|
|
792
|
|
Other current assets
|
|
|
|
(516
|
)
|
|
(860
|
)
|
Other current liabilities
|
|
|
|
1,277
|
|
|
(635
|
)
|
Others
|
|
|
|
42
|
|
|
(367
|
)
|
Cash provided by operating activities
|
|
|
|
15,473
|
|
|
6,907
|
|
Interest received
|
|
|
|
40
|
|
|
75
|
|
Interest paid
|
|
|
|
(37
|
)
|
|
(13
|
)
|
Income taxes paid
|
|
|
|
(3,613
|
)
|
|
(6,788
|
)
|
Net cash provided by operating activities
|
|
|
|
11,863
|
|
|
181
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
Purchase of time deposits
|
|
|
|
(371
|
)
|
|
(200
|
)
|
Proceeds from maturities of time deposits
|
|
|
|
227
|
|
|
-
|
|
Purchase of equity investments
|
|
12
|
|
(380
|
)
|
|
(2,310
|
)
|
Proceeds from sales of equity investments
|
|
|
|
-
|
|
|
1,507
|
|
Purchase of debt instruments
|
|
|
|
-
|
|
|
(1,389
|
)
|
Proceeds from redemption of debt instruments
|
|
|
|
-
|
|
|
1,028
|
|
Acquisition of property and equipment and intangible assets
|
|
|
|
(2,783
|
)
|
|
(5,793
|
)
|
Proceeds from disposal of property and equipment and intangible
assets
|
|
|
|
5,054
|
|
|
96
|
|
Investments in associates
|
|
17
|
|
(48
|
)
|
|
(1,578
|
)
|
Payments of the office security deposits
|
|
|
|
(1,016
|
)
|
|
(46
|
)
|
Refund of office securities deposits
|
|
|
|
81
|
|
|
1,155
|
|
Payments of the guarantee deposits for the Japanese Payment Services
Act
|
|
|
|
(590
|
)
|
|
(240
|
)
|
Return of the guarantee deposits for the Japanese Payment Services
Act
|
|
|
|
-
|
|
|
3,325
|
|
Return of the office security deposits received under sublease
arrangement
|
|
|
|
(8
|
)
|
|
-
|
|
Increase in loan receivables
|
|
|
|
-
|
|
|
(2,077
|
)
|
Acquisition of subsidiaries and business, net of cash acquired
|
|
|
|
(423
|
)
|
|
(1,750
|
)
|
Cash disposed on loss of control of subsidiary and business
|
|
|
|
(485
|
)
|
|
(581
|
)
|
Others
|
|
|
|
(20
|
)
|
|
43
|
|
Net cash used in investing activities
|
|
|
|
(762
|
)
|
|
(8,810
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5) Interim Condensed Consolidated Statement of Cash Flows –
Unaudited (continued)
|
(In millions of yen)
|
|
For the six-month period ended June 30,
|
|
|
|
|
|
|
|
|
|
Notes
|
|
2016
|
|
2017
|
Cash flows from financing activities
|
|
|
|
|
|
|
Repayment of short-term borrowings, net
|
|
|
|
(434
|
)
|
|
(2,037
|
)
|
Payments for redemption of bonds
|
|
|
|
(248
|
)
|
|
-
|
|
Payments of common shares issuance costs
|
|
8
|
|
-
|
|
|
(10
|
)
|
Proceeds from exercise of stock options
|
|
8
|
|
-
|
|
|
1,454
|
|
Payment for acquisition of interest in a subsidiary from
non-controlling interests
|
|
16
|
|
-
|
|
|
(29
|
)
|
Others
|
|
|
|
(1
|
)
|
|
(1
|
)
|
Net cash used in financing activities
|
|
|
|
(683
|
)
|
|
(623
|
)
|
Net increase/(decrease) in cash and cash equivalents
|
|
|
|
10,418
|
|
|
(9,252
|
)
|
Cash and cash equivalents at the beginning of the year
|
|
|
|
33,652
|
|
|
134,698
|
|
Effect of exchange rate fluctuations on cash and cash equivalents
|
|
|
|
(1,021
|
)
|
|
66
|
|
Cash and cash equivalents at the end of the interim reporting
period
|
|
|
|
43,049
|
|
|
125,512
|
|
|
|
|
|
|
|
|
Notes to Interim Condensed Consolidated Financial Statements –
Unaudited
1.
Reporting Entity
LINE Corporation (the “Company”) was incorporated in September, 2000 in
Japan in accordance with the Companies Act of Japan under the name
Hangame Japan Corporation to provide online gaming services. The Company
changed its name to NHN Japan Corporation in August 2003, and
subsequently changed its name to LINE Corporation in April 2013. The
Company is a subsidiary of NAVER Corporation (“NAVER”), formerly NHN
Corporation, which is domiciled in Korea. NAVER is the Company and its
subsidiaries’ (collectively, the “Group”) ultimate parent company. The
Company’s head office is located at 4-1-6 Shinjuku, Shinjuku-ku, Tokyo,
Japan.
Shares of the Company’s common stock are traded on the New York Stock
Exchange, in the form of American depositary shares, and on the Tokyo
Stock Exchange.
The Group mainly operates a cross-platform messenger application, LINE,
and provides communication and content sales and advertising services.
Communication and content is provided via the LINE platform, while
advertising services are provided via LINE advertising, livedoor blog
and NAVER Matome.
2.
Basis of Preparation
The unaudited interim condensed consolidated financial statements have
been prepared in accordance with IAS 34
Interim Financial Reporting.
In 2017, the Group changed the rounding of its financial statements from
thousands to millions. Prior periods have been revised to reflect this
change in presentation.
The unaudited interim condensed consolidated financial statements do not
include all the information and disclosures required in the annual
consolidated financial statements and should be read in conjunction with
the Group’s annual consolidated financial statements as of December 31,
2016.
The unaudited interim condensed consolidated financial statements were
approved by Representative Director, President and Chief Executive
Officer Takeshi Idezawa and Director and Chief Financial Officer In Joon
Hwang on August 10, 2017.
The Company meets the criteria of a “specified company” defined under
Article 1-2 of the Ordinance on QCFS.
The preparation of the unaudited interim condensed consolidated
financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent amounts at the date of the unaudited
interim condensed consolidated financial statements as well as reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. The significant estimates and
assumptions are reviewed by management on a regular basis. The effects
of a change in estimates and assumptions are recognized in the period of
the change or in the period of the change and future periods.
On February 12, 2016, the board of directors approved the abandonment of
the MixRadio service (“MixRadio”). The operation of the MixRadio
business was classified as a discontinued operation on March 21, 2016,
when the abandonment took effect.
Intercompany balances and transactions have been eliminated upon
consolidation.
3.
Significant Accounting Policies
The accounting policies adopted in the preparation of the unaudited
interim condensed consolidated financial statements are consistent with
those followed in the preparation of the Group’s annual consolidated
financial statements for the year ended December 31, 2016.
The adoption of new and revised IFRS issued by the International
Accounting Standards Board that are mandatorily effective for an
accounting period that begins on or after January 1, 2017 had no impact
on the Group’s unaudited interim condensed consolidated financial
statements as of and for the six-month periods ended June 30, 2016 and
2017 and annual consolidated financial statements as of December 31,
2016.
Standards issued but not yet effective
IFRS 15 Revenue from Contracts with Customers
The IASB issued IFRS 15 Revenue from Contracts with Customers for
recognizing revenue. IFRS 15 establishes a five-step model that will
apply to revenue earned from a contract with a customer, regardless of
the type of revenue transaction or industry, with limited exceptions.
The Group recognizes revenue associated with communication and content
sales and with advertising services by reference to the stage of
completion. These transactions are satisfied over time and measured by
the progress towards complete satisfaction of performance obligations.
The Group has preliminary assessed that many of the methods currently
used to measure the progress towards complete satisfaction of these
performance obligations will continue to be appropriate under IFRS 15.
Under IFRS 15, the allocation of a consideration will be made based on
relative stand-alone selling prices for each performance obligation. The
Group is currently in the process of assessing the impact mainly on the
allocation of transaction price to the performance obligations,
customers’ unexercised rights and the treatment of contract costs, and
it is not practicable to provide a reasonable financial estimate of the
potential effect of the application of IFRS 15 until the detailed review
is complete. As a result, the above preliminary assessment is subject to
change. The Group plans to complete the assessment on the full impact of
the application of IFRS 15 on the financial statements by the end of the
fiscal year 2017. The Group does not intend to early adopt the standard
and intends to use the full retrospective method upon adoption.
The Group has not early adopted any other standards, interpretations or
amendments that have been issued but are not yet effective.
4.
Segment Information
The Group identifies operating segments based on the internal report
regularly reviewed by the Group's Chief Operating Decision Maker to make
decisions about resources to be allocated to segments and assess
performance. An operating segment of the Group is a component for which
discrete financial information is available. The Chief Operating
Decision Maker has been identified as the Company's board of directors.
No operating segments have been aggregated to form the reportable
segments.
Description of Reportable Segment
The Group has a single reportable
segment:
|
|
|
LINE business and portal segment –
|
|
|
|
|
The Group mainly operates a cross-platform messenger application,
LINE, and provides communication and content and advertising
services. Communication and content are primarily provided to end
users via various communication and content. Communication mainly
includes LINE Stickers. Content includes LINE Games and LINE PLAY.
Others within communication and contents include LINE Friends.
Advertising services are provided via LINE advertising, livedoor
blog and NAVER Matome. LINE advertising includes LINE Official
Accounts, Sponsored Stickers, LINE Point Ads and performance ads,
which are provided in Timeline and LINE NEWS.
|
5.
Property and Equipment
During the six-month periods ended June 30, 2016 and 2017, the Group
acquired property and equipment with a cost of 2,988 million yen and
6,302 million yen, respectively. During the six-month period ended June
30, 2016, such purchases mainly consisted of server infrastructure in
the amount of 1,064 million yen for the operation of the LINE business
and portal segment. During the six-month period ended June 30, 2017,
such purchases mainly consisted of furniture and fixture in the amount
of 2,736 million yen and the recognition of asset retirement obligations
in the amount of 1,493 million yen related to the relocation of the
headquarter offices.
Contractual commitments for the acquisition of property and equipment as
of December 31, 2016 and June 30, 2017 were 1,464 million yen and 930
million yen, respectively.
6.
Income Taxes
The Group’s tax provision for interim periods is determined using an
estimate of the Group’s annual effective tax rate, adjusted for discrete
items arising during the period. In each quarter the Group updates the
estimate of the annual effective tax rate, and if the estimated annual
tax rate changes, the Group makes a cumulative adjustment in that
quarter.
The effective tax rate for the six-month period ended June 30, 2016 of
57.6% differed from the Japanese statutory tax rate of 35.6 % for the
year ended December 31, 2015. The effective income tax rate of 57.6% was
primarily due to non-deductible share-based payment expenses, including
share-based payment expenses in connection with stock options granted to
non-Japanese employees and directors and attributable to pre-tax losses
recorded by subsidiaries on a standalone basis for which no deferred tax
assets were recognized as the related tax benefits could not be
recognized.
The effective tax rate for the six-month period ended June 30, 2017 of
37.8% differed from the Japanese statutory tax rate of 33.1 % for the
year ended December 31, 2016. The effective income tax rate of 37.8% was
primarily due to pre-tax losses recorded by subsidiaries on a standalone
basis and pre-tax losses recorded by associates and joint ventures for
which no deferred tax assets were recognized as the related tax benefits
could not be recognized.
The effective tax rate for the six-month period ended June 30, 2017 was
37.8% compared to the effective tax rate of 57.6% for the six-month
period ended June 30, 2016. This change resulted mainly from an increase
in the estimated annual profit before tax and a decrease in estimated
annual non-deductible share-based payment expenses for the year ending
December 31, 2017 as compared to the year ended December 31, 2016,
resulting in a decrease in the percentage of income tax expenses over
the profit before tax from continuing operations for the six-month
period ended June 30, 2017 compared to the same period in 2016. The
decrease in estimated annual non-deductible share-based payment expenses
is mainly due to the fact that the recognition period of share-based
payment expenses, which corresponds to the vesting period of the stock
options granted in previous years to the directors and employees, was
completed in the three-month period ended March 31, 2017.
7.
Financial Assets and Financial Liabilities
The carrying amounts and fair value of financial instruments, except for
cash and cash equivalents, by line item in the Interim Condensed
Consolidated Statement of Financial Position and by category as defined
in IAS 39 Financial Instruments: Recognition and Measurement as of
December 31, 2016 and June 30, 2017, are as follows:
The fair value is not disclosed for those financial instruments which
are not measured at fair value in the Interim Condensed Consolidated
Statement of Financial Position, and whose fair value approximates their
carrying amount due to their short-term and/or variable-interest bearing
nature. Refer to Note 12 Fair Value Measurements for more details of the
financial instruments, which are measured at fair value.
|
|
|
|
|
(In millions of yen)
|
|
|
|
December 31, 2016
|
|
June 30, 2017
|
Items
|
|
Book value
|
|
Fair value
|
|
Book value
|
|
Fair value
|
Financial assets
|
|
|
|
|
|
|
|
|
Trade and other receivables
|
|
|
|
|
|
|
|
|
Loans and receivables
|
|
28,167
|
|
|
|
31,418
|
|
|
Other financial assets, current
|
|
|
|
|
|
|
|
|
Loans and receivables
|
|
|
|
|
|
|
|
|
Time deposits
|
|
764
|
|
|
|
961
|
|
|
Short-term loans
|
|
2
|
|
|
|
2,052
|
|
|
Corporate bonds and other debt instruments
|
|
4,012
|
|
|
|
3,859
|
|
|
Available-for-sale financial assets
|
|
1,000
|
|
1,000
|
|
1,000
|
|
1,000
|
Office security deposits
|
|
1,170
|
|
|
|
44
|
|
|
Other
|
|
4
|
|
|
|
-
|
|
|
Total
|
|
6,952
|
|
|
|
7,916
|
|
|
Other financial assets, non-current
|
|
|
|
|
|
|
|
|
Held-to-maturity investments
(1)
|
|
280
|
|
294
|
|
280
|
|
292
|
Loans and receivables
|
|
|
|
|
|
|
|
|
Time deposits
|
|
10,000
|
|
10,000
|
|
10,000
|
|
10,000
|
Corporate bonds and other debt instruments
|
|
2,632
|
|
2,632
|
|
3,160
|
|
3,142
|
Guarantee deposits
(1)
|
|
3,447
|
|
|
|
393
|
|
|
Office security deposits
|
|
4,858
|
|
4,739
|
|
4,852
|
|
4,729
|
Financial assets at fair value through profit or loss
|
|
|
|
|
|
|
|
|
Conversion right and redemption right of preferred stock
|
|
325
|
|
325
|
|
793
|
|
793
|
Available-for-sale financial assets
(2)
|
|
14,141
|
|
14,141
|
|
19,331
|
|
19,331
|
Other
|
|
32
|
|
|
|
72
|
|
|
Total
|
|
35,715
|
|
|
|
38,881
|
|
|
Financial liabilities
|
|
|
|
|
|
|
|
|
Trade and other payables
|
|
|
|
|
|
|
|
|
Financial liabilities measured at amortized cost
|
|
21,532
|
|
|
|
22,317
|
|
|
Other financial liabilities, current
|
|
|
|
|
|
|
|
|
Financial liabilities measured at amortized cost
|
|
|
|
|
|
|
|
|
Deposits received
|
|
2,572
|
|
|
|
4,366
|
|
|
Short-term borrowings
(3)
|
|
21,925
|
|
|
|
19,955
|
|
|
Other
|
|
-
|
|
|
|
6
|
|
|
Total
|
|
24,497
|
|
|
|
24,327
|
|
|
Other financial liabilities non-current
|
|
|
|
|
|
|
|
|
Financial liabilities measured at amortized cost
|
|
|
|
|
|
|
|
|
Office security deposits received under sublease agreement
|
|
-
|
|
-
|
|
15
|
|
15
|
Other
|
|
-
|
|
|
|
43
|
|
|
Total
|
|
-
|
|
|
|
58
|
|
|
|
|
|
|
|
|
|
|
|
7.
Financial Assets and Financial Liabilities (continued)
(1)
|
|
The Japanese Payment Services Act requires non-banking entities that
engage in business activities involving advance payments from end
users using virtual credits to secure a certain amount of money
equal to or more than one half of the unused balance of virtual
credits purchased by the end users as of the most recent base date
set on March 31 and September 30 of each year, either by depositing
or entrusting a cash reserve or government bonds with the Legal
Affairs Bureau, or by concluding a guarantee contract with a
financial institution. If deposits are made, they are recorded as
guarantee deposits. If guarantee contracts are entered into,
guarantee fees equal to the contractual amount times a guarantee fee
rate are incurred. In accordance with the Japanese Payment Services
Act, the Group had deposited cash of 3,445 million yen as of
December 31, 2016 and 345 million yen as of June 30, 2017. The Group
also had deposited investments in Japanese government bonds of 280
million yen as of December 31, 2016 and 280 million yen as of June
30, 2017, respectively, which the Group intends to hold until
maturity for this purpose. In addition, the Group had credit
guarantee contracts with banks for 10,100 million yen with a
weighted average guarantee fee rate of 0.1% and for 12,500 million
yen with a weighted average guarantee fee rate of 0.1% as of
December 31, 2016 and as of June 30, 2017, to comply with the
Japanese Payment Services Act.
|
|
(2)
|
|
Impairment loss of 273 million yen was recognized for
available-for-sale financial assets for the six-month period ended
June 30, 2016, and impairment loss of 8 million yen as well as gain
on sales of 697 million yen was recognized for available-for-sale
financial assets for the six-month period ended June 30, 2017.
|
|
(3)
|
|
The weighted average interest rate of the remaining outstanding
short-term borrowings was 0.1% as of December 31, 2016 and 0.1% as
of June 30, 2017.
|
|
|
|
8.
Issued Capital and Reserves
(1)
Shares issued
The movements of shares issued for the six-month period ended June 30,
2017 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Shares issued
(Share capital with
no-par
value)
|
|
Share capital
(In millions of yen)
|
January 1, 2017
|
|
|
|
217,775,500
|
|
77,856
|
Exercise of stock options
(1)
|
|
|
|
1,631,500
|
|
2,063
|
June 30, 2017
|
|
|
|
219,407,000
|
|
79,919
|
|
|
|
|
|
|
|
(1)
Refer to Note 13 Share-Based Payments for further
details.
|
|
(2)
Share premium
The movements in share premium for the six-month period ended June 30,
2016 are as follows:
|
|
|
|
|
|
|
|
|
(In millions of yen)
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
payments
(1)
|
|
Common
control business
combinations
|
|
Others
(2)
|
|
Share
premium total
|
January 1, 2016
|
|
15,023
|
|
294
|
|
3,666
|
|
18,983
|
Share-based payments
|
|
4,961
|
|
–
|
|
–
|
|
4,961
|
Forfeiture of stock options
|
|
(34)
|
|
–
|
|
–
|
|
(34)
|
June 30, 2016
|
|
19,950
|
|
294
|
|
3,666
|
|
23,910
|
|
|
|
|
|
|
|
|
|
The movements in share premium for the six-month period ended June 30,
2017 are as follows:
|
|
|
|
|
|
|
|
|
(In millions of yen)
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
payments
(1)
|
|
Common
control business
combinations
|
|
Others
(2)
|
|
Share
premium total
|
January 1, 2017
|
|
21,935
|
|
|
294
|
|
68,979
|
|
|
91,208
|
|
Share-based payments
|
|
748
|
|
|
–
|
|
–
|
|
|
748
|
|
Exercise of stock options
|
|
(3,084
|
)
|
|
–
|
|
2,475
|
|
|
(609
|
)
|
Forfeiture of stock options
|
|
(8
|
)
|
|
–
|
|
–
|
|
|
(8
|
)
|
Cost related to issuance of
|
|
|
|
|
|
|
|
|
|
|
|
common shares
(3)
|
|
–
|
|
|
–
|
|
(10
|
)
|
|
(10
|
)
|
Acquisition of
|
|
|
|
|
|
|
|
|
|
|
|
non-controlling interests
|
|
–
|
|
|
–
|
|
(46
|
)
|
|
(46
|
)
|
June 30, 2017
|
|
19,591
|
|
|
294
|
|
71,398
|
|
|
91,283
|
|
(1)
Refer to Note 13 Share-Based Payments for further details.
(2)
Resulted mainly from capital reserve requirements under the
Companies Act of Japan.
(3)
Incremental costs directly
attributable to the issue of common shares are recognized as a deduction
from equity, net of any tax effects.
9.
Supplemental Cash Flow Information
Transfer of Camera Application Business to Snow Corporation
On May 1, 2017, the Group has transferred the camera application
business, which was operated by a wholly owned subsidiary, LINE Plus
Corporation, to Snow Corporation, an associate of the Group. The
transferred camera application business includes services such as B612,
LINE Camera, Foodie and Looks.
The Group acquired 208,455 newly issued common shares of Snow
Corporation in exchange for the camera application business. The number
of common shares newly issued by Snow Corporation was determined based
on the ratio of the fair value of the camera application business
transferred as well as the cash and cash equivalent comparing to the
enterprise value of Snow Corporation. As a result of this transaction,
the Group’s ownership of Snow Corporation increased from 25.0% to 48.6%.
The Group continues to account for its ownership in Snow Corporation
using the equity method. Also, as a result of this transaction, NAVER’s
ownership of Snow Corporation decreased from 75.0% to 51.4%.
The common shares of Snow Corporation received in exchange for the
camera application business are measured and recorded at fair value as
of the transaction date. The fair value of the common shares were
measured based on the fair value of the camera application business
which was estimated using the discounted cash flow method. The assets
and liabilities of the camera application business transferred to Snow
Corporation are presented below.
(In millions of yen)
|
|
|
|
Current assets
|
|
603
|
Cash and cash equivalents
|
|
581
|
Other current assets
|
|
22
|
Non-current assets
|
|
71
|
Current liabilities
|
|
(133)
|
Non-current liabilities
|
|
(334)
|
Net assets transferred
|
|
207
|
Consideration received in exchange for the transfer of camera
application business
|
|
10,651
|
Gain on transfer of business
(1)
|
|
10,444
|
(1)
This amount is included in “Other operating income” in
the Group’s Interim Condensed Consolidated Statement of Profit or Loss.
10.
Discontinued Operations
The Group acquired MixRadio on March 16, 2015. Subsequently, the Group
made a strategic decision to focus on its core LINE business and portal
segment. On February 12, 2016, the board of directors approved the
abandonment of the MixRadio segment. The operation of the MixRadio
business was classified as a discontinued operation on March 21, 2016,
when the abandonment took effect.
The aggregated results of the discontinued operations for the six-month
periods ended June 30, 2016 and 2017 are presented below.
|
|
|
|
|
(In millions of yen)
|
|
|
|
|
|
|
|
2016
|
|
2017
|
Revenues
|
|
444
|
|
|
–
|
|
Other operating income
|
|
–
|
|
|
–
|
|
Expenses
(1)
|
|
(3,002
|
)
|
|
(11
|
)
|
Loss before tax from discontinued operations
|
|
(2,558
|
)
|
|
(11
|
)
|
Income tax benefits on disposal
(2)
|
|
892
|
|
|
4
|
|
Loss for the period from discontinued operations (attributable to
the shareholders of the Company)
|
|
(1,666
|
)
|
|
(7
|
)
|
(1)
|
|
In connection with the abandonment of the MixRadio business on March
21, 2016, restructuring expenses related to employee termination
benefits of 1,171 million yen and office lease termination fees of
126 million yen have been incurred.
|
(2)
|
|
The income tax benefits for the six-month periods ended June 30,
2016 and 2017 are mainly due to the deductible temporary difference
arising from the investment in MixRadio Limited, which incurred loss
during the periods.
|
|
|
|
The aggregated cash flow information for the discontinued operations for
the six-month periods ended June 30, 2016 and 2017 are presented below.
|
|
|
|
|
|
|
|
(In millions of yen)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2017
|
Operating
|
|
|
|
|
(4,309
|
)
|
|
(102
|
)
|
Investing
|
|
|
|
|
(2
|
)
|
|
–
|
|
Financing
|
|
|
|
|
–
|
|
|
–
|
|
Net cash outflow
|
|
|
|
|
(4,311
|
)
|
|
(102
|
)
|
|
|
|
|
|
|
|
|
|
|
11.
Earnings per Share
The profit or loss for the period and the weighted average number of
shares used in the calculation of earnings per share are as follows:
For the six-month period ended June 30
|
|
|
|
|
(In millions of yen, except number of shares)
|
|
|
|
|
|
|
|
2016
|
|
2017
|
Profit for the period attributable to the shareholders of the
Company from continuing operations
|
|
4,225
|
|
|
10,280
|
|
Loss for the period attributable to the shareholders of the Company
from discontinued operations
|
|
(1,666
|
)
|
|
(7
|
)
|
Total profit for the period attributable to the shareholders of
the Company for basic and diluted earnings per share
|
|
2,559
|
|
|
10,273
|
|
Weighted average number of total common shares and class A
shares for basic earnings per share
(1)
|
|
174,992,000
|
|
|
218,812,544
|
|
Effect of dilution:
|
|
|
|
|
Stock options
|
|
20,391,874
|
|
|
18,294,536
|
|
Weighted average number of total common shares and class A shares
adjusted for the effect of dilution
(1)
|
|
195,383,874
|
|
|
237,107,080
|
|
|
|
|
|
|
|
|
For the three-month period ended June 30
|
|
|
|
|
(In millions of yen, except number of shares)
|
|
|
|
|
|
|
|
2016
|
|
2017
|
Profit for the period attributable to the shareholders of the
Company from continuing operations
|
|
2,708
|
|
|
8,840
|
|
Loss for the period attributable to the shareholders of the
Company from discontinued operations
|
|
(26
|
)
|
|
(4
|
)
|
Total profit for the period attributable to the shareholders of
the Company for basic and diluted earnings per share
|
|
2,682
|
|
|
8,836
|
|
Weighted average number of total common shares and class A
shares for basic earnings per share
(1)
|
|
174,992,000
|
|
|
219,210,842
|
|
Effect of dilution:
|
|
|
|
|
Stock options
|
|
20,501,455
|
|
|
18,025,794
|
|
Weighted average number of total common shares and class A shares
adjusted for the effect of dilution
(1)
|
|
195,493,455
|
|
|
237,236,636
|
|
|
|
|
|
|
11.
Earnings per Share (continued)
(1)
|
|
Through the amendment of its articles of incorporation on June 15,
2015, the Company introduced a dual class structure of common shares
and class A shares and converted all outstanding common shares into
class A shares; therefore, the weighted average number of shares for
the six-month period ended June 30, 2016 include average number of
common shares and class A shares. Through an amendment of its
article of incorporation effective as of March 31, 2016, the Company
terminated its dual class structure of commons shares and class A
shares and converted all class A shares into common shares.
|
In calculating diluted earnings per share, share options outstanding and
other potential shares are taken into account where their impact is
dilutive. Potential common shares used in the calculation of diluted
earnings per share for the six-month period ended June 30, 2016,
included options representing 25,514,500 shares which were outstanding
as of June 30, 2016 as they had a dilutive impact.
Potential common shares used in the calculation of diluted earnings per
share for the six-month period ended June 30, 2017, included options
representing 21,274,000 shares which were outstanding as of June 30,
2017 as their impact was dilutive.
Subsequent to June 30, 2017, 23,860 stock options were granted on July
18, 2017, the exercise of which would result in an additional 2,386,000
common shares to the directors and executive officers of the Company and
its subsidiary. Also, on July 18, 2017, the Company issued 1,007,810 new
common shares through a third party allotment in accordance with
introduction of the Employee Stock Ownership Plan. Refer to Note 19
Subsequent Events for further details.
12.
Fair Value Measurements
(1) Fair value hierarchy
The Group referred to the levels of the fair value hierarchy for
financial instruments measured at fair value on the interim condensed
consolidated financial statements based on the following inputs:
– Level 1 inputs are quoted prices in active markets for identical
assets or liabilities.
– Level 2 inputs are quoted prices for similar assets or liabilities in
active markets, quoted prices for identical or similar assets or
liabilities in markets that are not active, inputs other than quoted
prices that are observable, and inputs that are derived principally from
or corroborated by observable market data by correlation or other means.
– Level 3 inputs are derived from valuation techniques in which one or
more significant inputs or value drivers are unobservable, which reflect
the reporting entity’s own assumptions that market participants would
use in establishing a price.
Transfers between levels of the fair value hierarchy are recognized as
if they have occurred at the beginning of the reporting period.
(2) Fair value measurements by fair value hierarchy
Assets measured at fair values on a recurring basis in the Interim
Consolidated Statement of Financial Position as of December 31, 2016 and
June 30, 2017 are as follows:
(In millions of yen)
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
Financial asset at fair value through profit or loss
|
|
|
|
|
|
|
|
|
Conversion right and redemption right of preferred stock
|
|
–
|
|
–
|
|
325
|
|
325
|
Available-for-sale financial assets
|
|
|
|
|
|
|
|
|
Listed equity securities
|
|
2,346
|
|
–
|
|
–
|
|
2,346
|
Private equity and other financial instruments
|
|
–
|
|
–
|
|
12,795
|
|
12,795
|
Total
|
|
2,346
|
|
–
|
|
13,120
|
|
15,466
|
(In millions of yen)
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
Financial asset at fair value through profit or loss
|
|
|
|
|
|
|
|
|
Conversion right and redemption right of preferred stock
|
|
–
|
|
–
|
|
793
|
|
793
|
Available-for-sale financial assets
|
|
|
|
|
|
|
|
|
Listed equity securities
|
|
2,006
|
|
–
|
|
–
|
|
2,006
|
Private equity and other financial instruments
|
|
–
|
|
–
|
|
18,325
|
|
18,325
|
Total
|
|
2,006
|
|
–
|
|
19,118
|
|
21,124
|
|
|
|
|
|
|
|
|
|
There have been no transfers among Level 1, Level 2 and Level 3 during
the six-month period ended June 30, 2017, except for the transfer from
Level 1 to Level 3 as described in (3) below.
12.
Fair Value Measurements (continued)
(3) Reconciliations from the opening balance to the closing balance of
financial instruments categorized within Level 3 are as follows:
|
|
|
|
|
(In millions of yen)
|
|
|
|
|
|
|
|
2016
|
|
2017
|
|
|
Private equity
investments
|
|
Conversion
right and
redemption
right of
preferred
stock
|
|
Private equity
and other
financial
instruments
|
|
Conversion
right and
redemption
right of
preferred
stock
|
Fair value as of January 1
|
|
13,648
|
|
|
871
|
|
|
12,795
|
|
|
325
|
Total (loss)/gain for the period:
|
|
|
|
|
|
|
|
|
Included in profit or loss
(1)
|
|
(9
|
)
|
|
(742
|
)
|
|
284
|
|
|
371
|
Included in other comprehensive income
(2)
|
|
(1,330
|
)
|
|
–
|
|
|
2,966
|
|
|
–
|
Comprehensive (loss)/income
|
|
(1,339
|
)
|
|
(742
|
)
|
|
3,250
|
|
|
371
|
Purchases
|
|
380
|
|
|
–
|
|
|
2,220
|
|
|
90
|
Sales
|
|
–
|
|
|
–
|
|
|
(449
|
)
|
|
–
|
Return of capital
|
|
–
|
|
|
–
|
|
|
(1
|
)
|
|
–
|
Transfers in
(3)
|
|
–
|
|
|
–
|
|
|
326
|
|
|
–
|
Effect of exchange rate changes
|
|
(1,536
|
)
|
|
(73
|
)
|
|
184
|
|
|
7
|
Fair value as of June 30
|
|
11,153
|
|
|
56
|
|
|
18,325
|
|
|
793
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
This amount is included in “Other non-operating income” or “Other
non-operating expenses” in the Group’s Interim Condensed
Consolidated Statement of Profit or Loss.
|
(2)
|
|
This amount is included in “Net change in fair value” of
available-for-sale financial assets in the Group’s Interim Condensed
Consolidated Statement of Comprehensive Income.
|
(3)
|
|
During the six-month period ended June 30, 2017, a company was
delisted from a stock exchange in the U.S. subsequent to our
purchase of its equity securities. Accordingly, such equity
investment was transferred from Level 1 to Level 3.
|
|
|
|
12.
Fair Value Measurements (continued)
(4) Valuation techniques and inputs
Assets measured at fair value on a recurring basis in the Interim
Consolidated Statement of Financial Position
Conversion right and redemption right of preferred stock
The conversion right and redemption right of preferred stock are
embedded derivatives. Such conversion right and redemption right are
bifurcated from the underlying preferred stock and measured at fair
value using a binomial option pricing model. Below is the quantitative
information regarding the valuation technique and significant
unobservable inputs used in measuring the fair value of certain
conversion right and redemption right of preferred stock:
|
|
|
|
|
|
|
|
|
Valuation technique
|
|
Significant
unobservable input
|
|
December 31,
2016
|
|
June 30,
2017
|
|
Binomial option pricing model
|
|
Comparable listed companies’ average historical volatility
|
|
13.6% - 39.6%
|
|
36.6% - 46.2%
|
|
|
|
Discount rate
|
|
1.6%
|
|
1.9% - 2.5%
|
|
|
|
|
|
|
|
|
A significant increase (decrease) in the comparable listed companies’
average historical volatility would result in a higher (lower) fair
value of the conversion right and redemption right of preferred stock,
while a significant increase (decrease) in the discount rate would
result in a lower (higher) fair value of the conversion right and
redemption right of preferred stock.
Private equity and other financial instruments
Available-for-sale financial assets categorized within Level 3 mainly
consist of unlisted equity securities and private equity investment
funds. Private equity investment funds were measured at fair value based
on net asset value as of December 31, 2016 and June 30, 2017.
Unlisted equity securities are measured at fair value either based on
the most recent transactions, or using other market approaches and
option pricing model. Below is the quantitative information regarding
the valuation techniques and significant unobservable inputs used in
measuring the fair value of certain unlisted equity securities:
|
|
|
|
|
|
|
|
|
Valuation technique
|
|
Significant
unobservable input
|
|
December 31,
2016
|
|
June 30,
2017
|
|
Market approach - market comparable
companies
|
|
EBITDA multiple
|
|
10.4
|
|
19.9
|
|
|
|
Revenue multiple
|
|
1.7-3.6
|
|
3.2-3.8
|
|
|
|
Liquidity discount
|
|
30%
|
|
30%
|
|
Option pricing model
|
|
Comparable listed companies’ average historical volatility
|
|
39.6% - 78.9%
|
|
46.2% - 76.8%
|
|
|
|
Discount rate
|
|
(0.1%)-1.6%
|
|
(0.1%) - 2.5%
|
|
Discount cash flow model
|
|
Discount rate
|
|
16.8%
|
|
14.1%
|
|
|
|
|
|
|
|
|
A significant increase (decrease) in the EBITDA and revenue multiple
would result in a higher (lower) fair value of the unlisted equity
securities, while a significant increase (decrease) in the liquidity
discount, comparable listed companies’ average historical volatility and
discount rate would result in a lower (higher) fair value of the
unlisted equity securities.
The valuation techniques and the valuation results of the Level 3
financial assets, including those performed by the external experts,
were reviewed and approved by the management of the Group.
13.
Share-Based Payments
The Group has stock option incentive plans for directors and employees.
Each stock option represents the right to purchase 500 common shares at
a fixed price for a defined period of time. During the six-month period
ended June 30, 2017, no additional stock options were granted.
The fair value of stock options is determined using the Black-Scholes
model, a commonly accepted stock option pricing method. Stock options
granted vest after two years from the grant date and are exercisable for
a period of eight years from the vesting date. Conditions for vesting
and exercise of the stock options require that those who received the
allotment of stock options continue to be employed by the Group from the
grant date to the vesting date, and from the grant date to the exercise
date, respectively, unless otherwise permitted by the board of directors.
(1) Movements during the six-month period ended June 30, 2017
The following table illustrates the number and weighted average exercise
prices (“WAEP”) of, and movements in, outstanding Common Stock Options
on a per-common-share basis during the period:
|
|
|
|
Common Stock Options
|
|
|
|
|
Number
(shares)
|
|
WAEP
(yen per share)
|
Outstanding at January 1, 2017
|
|
|
|
22,911,500
|
|
|
653
|
Granted during the period
|
|
|
|
–
|
|
|
–
|
Forfeited during the period
|
|
|
|
(6,000
|
)
|
|
1,320
|
Exercised during the period
(1)
|
|
|
|
(1,631,500
|
)
|
|
891
|
Expired during the period
|
|
|
|
–
|
|
|
–
|
Outstanding at June 30, 2017
|
|
|
|
21,274,000
|
|
|
635
|
Exercisable at June 30, 2017
|
|
|
|
21,274,000
|
|
|
635
|
(1)
The weighted average share price at the date of exercise
of these options was 3,777 yen.
The options outstanding as of June 30, 2017 had an exercise price in the
range of 344 yen to 1,320 yen, and the weighted average remaining
contractual life for the stock options outstanding as of June 30, 2017
was 6.1 years.
(2) The Group has recognized 4,961 million yen and 748 million yen of
share-based compensation expenses in the Interim Condensed Consolidated
Statement of Profit or Loss for the six-month periods ended June 30,
2016 and 2017, respectively.
14.
Related Party Transactions
The following tables provides the total amount of related party
transactions entered into during the six-month periods ended June 30,
2016 and 2017, as well as balances with related parties as of December
31, 2016 and June 30, 2017.
(1) Significant related party transactions during the six-month period
ended June 30, 2016, and outstanding balances with related parties as of
December 31, 2016, are as follows:
(In millions of yen)
|
|
Relationship
|
|
Name
|
|
Transaction
|
|
Transaction
amount
|
|
Outstanding
receivable/
(payable)
balances
(3)
|
Parent company
|
|
NAVER
|
|
Advertising service
(1)
|
|
126
|
|
67
|
|
Subsidiary of parent company
|
|
NAVER Business Platform Corp.
(2)
|
|
Operating expenses
|
|
3,606
|
|
(902
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
LINE Plus Corporation and NAVER entered into an agreement for
exchange of services in which LINE Plus Corporation provides
advertising services via the LINE platform and the right to use
certain LINE characters in exchange for NAVER’s advertising services
for LINE Plus Corporation via NAVER’s web portal. The Group
generated advertising revenues of 126 million yen in connection with
the advertising services provided to NAVER for the six-month period
ended June 30, 2016.
|
(2)
|
|
This subsidiary of NAVER provided IT infrastructure services and
related development services to the Group.
|
(3)
|
|
The receivable and payable amounts outstanding are unsecured and
will be settled in cash.
|
|
|
|
14.
Related Party Transactions (continued)
(2) Significant related party transactions during the six-month period
ended June 30, 2017 and outstanding balances with related parties as of
June 30, 2017, are as follows:
(In millions of yen)
|
|
|
|
|
|
|
|
|
|
Relationship
|
|
Name
|
|
Transaction
|
|
Transaction
amount
|
|
Outstanding
receivable/
(payable)
balances
(3)
|
Parent company
|
|
NAVER
|
|
Advertising service
(1)
|
|
263
|
|
119
|
|
Subsidiary of parent company
|
|
NAVER Business Platform Corp.
(2)
|
|
Operating expenses
|
|
4,198
|
|
(900
|
)
|
Associate of the Group
|
|
Snow Corporation
|
|
Transfer of camera application
business
(4)
|
|
10,651
|
|
–
|
|
(1)
|
|
LINE Plus Corporation and NAVER entered into an agreement for
exchange of services in which LINE Plus Corporation provides
advertising services via the LINE platform and the right to use
certain LINE characters in exchange for NAVER’s advertising services
for LINE Plus Corporation via NAVER’s web portal. The Group
generated advertising revenues of 263 million yen in connection with
the advertising services provided to NAVER for the six-month period
ended June 30, 2017.
|
(2)
|
|
This subsidiary of NAVER provided IT infrastructure services and
related development services to the Group.
|
(3)
|
|
The receivable and payable amounts outstanding are unsecured and
will be settled in cash.
|
(4)
|
|
In May, 2017, LINE Plus Corporation transferred its camera
application business to Snow Corporation. In exchange of the
transfer of the business, LINE Plus Corporation received 208,455
newly issued common shares of Snow Corporation, and the transaction
amount represents the fair value of the newly issued common shares
received on the transaction date. Refer to Note 9 Supplemental Cash
Flow Information for further details.
|
|
|
|
(3) The total compensation of key management personnel for the six-month
periods ended June 30, 2016 and 2017 are as follows:
(In millions of yen)
|
|
|
|
|
|
|
|
2016
|
|
2017
|
Salaries (including bonuses)
|
|
203
|
|
431
|
Share-based payments
(1)
|
|
2,857
|
|
476
|
Total
|
|
3,060
|
|
907
|
(1)
Refer to Note 13 Share-Based Payments for further
details.
|
Key management personnel include directors and corporate auditors of the
Company.
15.
Business Combinations
Acquisition in 2016
Acquisition of M.T. Burn
On February 29, 2016, the Group acquired 50.5% of the voting shares of
M.T. Burn Inc., (“M.T. Burn”), an unlisted company based in Japan,
specializing in developing and providing a native mobile advertising
platform, “Hike”. M.T. Burn became a consolidated subsidiary. The Group
acquired M.T. Burn for the purpose of enhancing the Group’s knowledge
and technological capability for advertising. The final purchase price
allocation of M.T. Burn was completed in the second quarter of 2016.
Assets acquired and liabilities assumed
The identifiable assets and liabilities of M.T. Burn, which are measured
at fair value as of the date of acquisition except for limited
exceptions in accordance with IFRS, were as follows:
|
|
|
|
|
|
(In millions of yen)
|
|
|
|
|
|
|
|
|
|
|
|
Fair value recognized
on acquisition
|
Assets
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
87
|
|
Trade receivables, net
|
|
|
|
|
83
|
|
Customer relationships
|
|
|
|
|
401
|
|
Software
|
|
|
|
|
26
|
|
Deferred tax assets
|
|
|
|
|
88
|
|
Other assets
|
|
|
|
|
1
|
|
|
|
|
|
|
686
|
|
Liabilities
|
|
|
|
|
|
Trade and other payables
|
|
|
|
|
78
|
|
Other financial liabilities, current
|
|
|
|
|
50
|
|
Other financial liabilities, non-current
|
|
|
|
|
210
|
|
Deferred tax liabilities
|
|
|
|
|
149
|
|
Other liabilities
|
|
|
|
|
13
|
|
|
|
|
|
|
500
|
|
Total identifiable net assets at fair value
|
|
|
|
|
186
|
|
Non-controlling interest
|
|
|
|
|
(92
|
)
|
Goodwill
|
|
|
|
|
416
|
|
Total consideration
|
|
|
|
|
510
|
|
All consideration was paid in cash. The fair value of the trade
receivables was 83 million yen. The gross contractual amounts of the
trade receivables were not materially different from the fair value
determined as part of the purchase price allocation.
15.
Business Combinations (continued)
Acquisition in 2016 (continued)
Acquisition of M.T. Burn (continued)
Non-controlling interest in the acquiree that are present ownership
interests and entitle their holders to a proportionate share of the
entity’s net assets in the event of liquidation are measured at the
present ownership instruments’ proportionate share in the recognized
amounts of the acquiree’s identifiable net assets at the acquisition
date.
Goodwill of 416 million yen represented the value of expected synergies
arising from the acquisition and was allocated entirely to the LINE
business and portal segment. None of the goodwill recognized was
expected to be deductible for income tax purposes.
From the date of acquisition, M.T. Burn had contributed 252 million yen
to the revenue of the Group and had reduced profit before tax from
continuing operations of the Group by 146 million yen. If the
combination had taken place on January 1, 2016, revenue for the Group
from continuing operations would have been 67,447 million yen
(unaudited) and the profit before tax from continuing operations for the
Group would have been 10,678 million yen (unaudited) for the six-month
period ended June 30, 2016.
Transaction costs of 5 million yen have been expensed and are included
in “Other operating expenses” in the Interim Condensed Consolidated
Statement of Profit or Loss.
|
|
|
(In millions of yen)
|
|
|
|
|
Analysis of cash flows on acquisition:
|
|
|
|
Total consideration related to the acquisition
|
|
|
(510
|
)
|
Net cash acquired with the subsidiary
|
|
|
87
|
|
Net cash flows on acquisition (included in
cash
flows from investing activities)
|
|
|
(423
|
)
|
Acquisition in 2017
There were no significant business combinations, individually or in
aggregate, during the six-month period ended June 30, 2017.
16.
Principal Subsidiaries
Information on subsidiaries
The table below includes subsidiaries which were newly consolidated
during the six-month period ended June 30, 2017, and subsidiaries in
which the Group’s percentage of ownership changed during such period:
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of ownership
|
Name
|
|
Primary business
activities
|
|
Country of
incorporation
|
|
December 31,
2016
|
|
June 30,
2017
|
LINE Friends America, LLC
(1)
|
|
Character goods business
|
|
United States of America
|
|
–
|
|
100.0%
|
LINE Friends (Shanghai)
|
|
Character goods business
|
|
China
|
|
–
|
|
100.0%
|
Commercial Trade Co., Ltd.
(2)
|
|
|
|
|
|
|
|
|
LINE Vietnam Co., Ltd.
(3)
|
|
Online advertisement
|
|
Vietnam
|
|
95.0%
|
|
100.0%
|
Gatebox Inc.
(4)
|
|
Development of IoT hologram technology
|
|
Japan
|
|
–
|
|
51.0%
|
LINE Digital Technologies India
|
|
Mobile advertising
|
|
India
|
|
100.0%
|
|
–
|
Private Limited
(5)
|
|
|
|
|
|
|
|
|
Kiwiple Inc.
(6)
|
|
Development of applications
|
|
Korea
|
|
–
|
|
100.0%
|
LINE Games Corporation
(7)
|
|
Development and operation of games business
|
|
Korea
|
|
–
|
|
100.0%
|
|
|
|
|
|
|
|
|
|
(1)
|
|
LINE Friends Corporation established LINE Friends America, LLC in
February 2017.
|
(2)
|
|
LINE Friends Corporation established LINE Friends (Shanghai)
Commercial Trade Co., Ltd. in March 2017.
|
(3)
|
|
LINE Plus Corporation acquired additional shares of LINE Vietnam
Co., Ltd. in March 2017 from a third party, resulting in LINE
Vietnam Co., Ltd. to become a wholly owned subsidiary of the Group.
|
(4)
|
|
The Company acquired Gatebox Inc. (renamed from vinclu Inc. in July
2017) in April 2017, resulting in the 51.0% ownership.
|
(5)
|
|
LINE Digital Technologies India Private Limited was liquidated in
May 2017.
|
(6)
|
|
LINE Plus Corporation acquired Kiwiple Inc. in June 2017.
|
(7)
|
|
The Company established LINE Games Corporation in June 2017.
|
|
|
|
Ultimate parent company of the Group
The next senior and the ultimate parent company of the Group is NAVER,
which is domiciled in Korea and listed on the Korea Exchange.
17.
Investments in Associates and Joint Ventures
Investment in K-Fund I
In January 2017, the Group and NAVER established K-Fund I, which invests
in start-up companies in technology and digital sectors in Europe. The
Group’s and NAVER’s interests in this associate are 49.9% and 50.0%,
respectively. The Group’s carrying amount of the investment in this
associate was 1,366 million yen as of June 30, 2017.
Investment in Orfeo SoundWorks Corporation
In June 2017, LINE Friends Corporation acquired a 20.7% interest in
Orfeo SoundWorks Corporation to develop and sell products with Orfeo
SoundWorks Corporation’s technology such as earphones and headsets. The
Group’s carrying amount of the investment in this associate was 116
million yen as of June 30, 2017.
Business transfer of camera application business to Snow Corporation
In May 2017, the Group has transferred its camera application business,
which was a part of LINE Plus Corporation, to Snow Corporation, an
associate of the Group. In exchange for this transfer, the Group has
acquired common shares of Snow Corporation. The Group’s carrying amount
of the investment in this associate was 13,527 million yen as of June
30, 2017. Refer to Note 9 Supplemental Cash Flow Information for further
details.
18.
Other Operating Expenses
Other operating expenses for the six-month period ended June 30, 2017,
consist of various operating expenses, including 2,767 million yen of
rent, 1,695 million yen of cost of goods, and 1,133 million yen of
supply expenses compared to 1,472 million yen, 1,522 million yen and 453
million yen, respectively, for the six-month period ended June 30, 2016.
Rent and supply expenses increased mainly due to the relocation of
headquarter offices.
19.
Subsequent Events
Issuance of Stock Options (Warrants)
Base on the resolution of shareholders’ meeting held on March 30, 2017
and the meeting of the board of directors of the Company held June 26,
2017, the Company has granted stock options (warrants) (LINE Corporation
20
th
Warrants and LINE Corporation 21
st
Warrants)
to directors and executive officers of the Company and a director of a
subsidiary with the grant date of July 18, 2017.
|
Name of stock options (warrants)
|
|
LINE Corporation 20
th
Warrants
|
|
LINE Corporation 21
st
Warrants
|
Title and number of grantees
|
|
Four of the Company’s directors
|
|
Nine of the Company’s executive officers and one of the Company’s
wholly owned subsidiary’s director
|
Number of stock options
|
|
12,621 options
|
|
11,239 options
|
Class and number of shares to be issued upon exercises of stock
options
|
|
1,262,100 of common shares
|
|
1,123,900 of common shares
|
Value of assets to be contributed upon exercise of stock options
|
|
Number of allotted common shares multiplied by the exercise price,
4,206 yen
|
|
same as on the left
|
Fair value of stock options at the grant date
|
|
154,500 yen per stock option (1,545 yen on a per-common-share basis)
|
|
same as on the left
|
Exercise period for stock options
|
|
From July 18, 2018 to July 18, 2027
|
|
same as on the left
|
|
|
|
|
|
19.
Subsequent Events (continued)
Issuance of new shares through a third party allotment
On July 18, 2017, the Company issued 1,007,810 of new shares to Trust &
Custody Services Bank, Ltd. (Trust E) (the “Trust Bank”) through a third
party allotment in accordance with the introduction of an Employee Stock
Ownership Plan which has been resolved at the board of directors meeting
held on June 26, 2017, and the Company has completed payment procedures
for the issuance. The total amount issued, amount of share capital to be
increased, and amount of share premium to be increased are as follows:
|
|
|
|
|
Total amount issued
|
|
|
|
4,000 million yen
|
Amount of share capital to be increased
|
|
|
|
2,000 million yen
|
Amount of share premium to be increased
|
|
|
|
2,000 million yen
|
|
|
|
|
|
The shares of the Company held by the Trust Bank will be accounted for
in the same treatment as the treasury shares and will be recorded as an
offset to the share premium on the consolidated financial statements.
Introduction of the Employee Stock Ownership Plan
The Group has the Regulations on Stock Compensation which is to provide
its employees with incentive which correspond to the movements of the
Company’s share price in order to achieve the retention of excellent
human resources and their long-term success.
On July 18, 2017, the Group granted its employees points equivalent to
839,103 shares in accordance with the Regulations on Stock Compensation.
The right for employees to receive compensation based on the points will
vest as the employees satisfy the conditions described on the
Regulations on Stock Compensation. As the points vest, the Trust Bank
will distribute a portion of the Company’s shares, which are equivalent
to the number of vested points, to the employees. And, the Trust bank
will sell the rest of the Company’s common shares, which the Trust Bank
holds, in the market and distribute the cash received from the sales of
the Company’s common shares in the market to the employees.
The one of the vesting conditions, which is an employment condition
described in the Regulations on Stock Compensation, for the points
granted on July 18, 2017 is for the Group’s employees to remain employed
as of each vesting date, which is scheduled between April 1, 2018 and
April 1, 2020.
2
Others
Not applicable.
B.
Information on guarantors
Not applicable.
CONTACT:
LINE Global PR
Icho Saito, +81 3 4316 2104
dl_gpr@linecorp.co