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. its ability to attract and retain users and increase the
level of engagement of its users; ii. its ability to improve user
monetization; iii. its ability to successfully enter new markets
and manage its business expansion; iv. its ability to compete in
the global social network services market; v. 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; vi. its ability to
maintain good relationships with platform partners and attract new
platform partners; vii. its ability to attract advertisers to the
LINE platform and increase the amount that advertisers spend with
LINE; viii. its expectations regarding its user growth rate and the
usage of its mobile applications; ix. its ability to increase
revenues and its revenue growth rate; x. its ability to timely and
effectively scale and adapt its existing technology and network
infrastructure; xi. its ability to successfully acquire and
integrate companies and assets; xii. its future business
development, results of operations and financial condition; xiii.
the regulatory environment in which it operates; xiv. fluctuations
in currency exchange rates and changes in the proportion of its
revenues and expenses denominated in foreign currencies; and xv.
changes in business or macroeconomic conditions.
LINE Corporation
Index
Cover A. Corporate information I. Corporate
overview
1. Selected consolidated financial
data
2. Business description
II. Business
1. Risk factors
2. Material contracts
3. Analysis of financial position,
operating results and cash flow position
III. Company information
1. Share information
(1) Total number of shares
(2) Stock acquisition rights
(3) Exercises of bonds with stock acquisition rights with
exercise price amendment clause
(4) Rights plans
(5) Total number of shares issued, share capital, etc.
(6) Principal shareholders
(7) Voting rights
2. Directors and executive officers
IV. Accounting
1. Interim condensed consolidated
financial statements (Unaudited)
(1) Interim condensed consolidated statement of financial
position (Unaudited)
(2) Interim condensed consolidated statement of profit or
loss (Unaudited)
(3) Interim condensed consolidated statement of
comprehensive income (Unaudited)
(4) Interim condensed consolidated statement of change in
equity (Unaudited)
(5) Interim condensed consolidated statement of cash flows
(Unaudited)
2. Others
B. Information on guarantors
A. Corporate information
I. Corporate overview
1. Selected consolidated financial
data
Term
17th termSix months endedJune 30, 2016
18th termSix months endedJune 30, 2017
17th term Accounting period
From January 1,2016 toJune 30, 2016
From January 1,2017 toJune 30, 2017
From January 1,2016 toDecember 31,2016
Revenues[Second quarter]
(Millions of yen)
67,310[33,854]
78,696[39,780]
140,704 Profit before tax from continuing operations
(Millions of yen)
10,688 16,961 17,990 Profit for the period
(Millions of yen)
2,866 10,549 7,104
Profit for the period attributable to the
shareholders ofthe Company[Second quarter]
(Millions of yen)
2,559[2,682]
10,273[8,836] 6,763 Total comprehensive income for the period, net
of tax
(Millions of yen)
1,111 13,626 5,852 Equity attributable to the shareholders of the
Company
(Millions of yen)
23,471 176,329 160,834 Total assets
(Millions of yen)
125,051 270,612 256,089
Basic profit for the period[Second
quarter]
(Yen)
14.63[15.33]
46.95[40.31]
34.84 Diluted profit for the period
(Yen)
13.10 43.32 31.48
Ratio of equity attributable to the
shareholders of theCompany to total assets
(%)
18.8 65.2 62.8 Net cash provided by operating activities
(Millions of yen)
11,863 181 28,753 Net cash used in investing activities
(Millions of yen)
(762) (8,810) (34,086) Net cash used in financing activities
(Millions of yen)
(683) (623) 106,628 Cash and cash equivalents at the end of the
period
(Millions of yen)
43,049 125,512 134,698 Notes: 1.
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. 2. Revenues do not
include consumption taxes. 3. 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). 4. 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:
● Capital increase through the initial
public offerings of new shares on July 14, 2016 and July 15,
2016
● Capital increase through third-party
allotment of new shares on August 16, 2016
● Exercise of stock acquisition rights
5.
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.
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:
(In millions of yen)
For the six-month periodended
June 30,
2016 2017 LINE business and portal segment
Communication and content Communication(1) 15,063 15,615 Content(2)
23,252 20,521 Others(3) 4,503 8,496
Sub-total
42,818 44,632 Advertising LINE advertising(4) 19,462 28,892 Portal
advertising 5,030 5,172 Sub-total 24,492 34,064 Total 67,310 78,696
(1)
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.
(2)
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.
(3)
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.
(4)
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.
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
Total number of sharesauthorized
Class (Share) Common stock 690,000,000
Total 690,000,000
b. Number of shares issued
Class
Number of sharesissued as of end
ofperiod(Shares; as ofJune 30, 2017)
Number of sharesissued as of filing
date(Shares; as ofAugust 10, 2017)
Name of securitiesexchangewhere the shares
aretraded or thename of authorizedfinancialinstruments
firmsassociationwhere the shares areregistered
Details Common stock 219,407,000 220,442,310
Tokyo Stock Exchange(First Section) andNew
York StockExchange
100 shares constituteone "unit" of
commonstock. Common stock isnot restricted by anysignificant
limitationsin terms ofshareholders' rights.
Total 219,407,000 220,442,310 — —
Notes:
1.
"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.
2.
Accompanying the third-party allotment as
of July 18, 2017, the total number of issued shares has increased
by 1,007,810.
(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.
Date
Change in the numberof shares
issued(Shares)
Balance ofsharesissued(Shares)
Change insharecapital(Millions ofyen)
Balance ofshare capital(Millions
ofyen)
Change in legalcapital reserve(Millions
ofyen)
Balance of legalcapital reserve(Millions
of yen)
April 1, 2017to June 30, 2017 410,500 219,407,000
565 79,918 565 69,983
(Notes) 1. Increase in total number of shares issued as a result of
the exercise of stock options. 2. Amounts less than one thousand
yen are rounded down.
(6) Principal shareholders
(As of June 30, 2017)
Shareholder name
Address
Number of shares held(Shares)
Percentage of shares held tototal shares
issued (%)
NAVER CORPORATION (Standing proxy: LINE Corporation, Investment
Development/ IR Office) NAVER GREEN FACTORY, 6, BULJEONG-RO,
BUNDANG-GU, SEONGNAM-SI, GYEONGGI-DO, 13561, KOREA
(1-6, Shinjuku 4-chome, Shinjuku-ku,
Tokyo)
174,992,000 79.75 MOXLEY & CO LLC (Standing proxy: Mizuho Bank,
Ltd., Settlement & Clearing Services Department) 270 PARK AVE.,
NEW YORK, NY 10017 U.S.A.
(15-1, Konan 2-chome, Minato-ku,
Tokyo)
9,845,497 4.48 KOREA SECURITIES DEPOSITORY -SAMSUNG (Standing
proxy: Citibank, N.A., Tokyo Branch) 34-6, YEOUIDO-DONG,
YEONGDEUNGPO-GU,
SEOUL, KOREA (27-30, Shinjuku 6-chome,
Shinjuku-ku, Tokyo)
2,113,000 0.96 MSIP CLIENT SECURITIES (Standing proxy: Morgan
Stanley MUFG Securities Co., Ltd.) 25 CABOT SQUARE, CANARY WHARF,
LONDON E14 4QA, U.K. (9-7, Otemachi
1-chome, Chiyoda-ku, Tokyo)
1,480,215 0.67 BNY GCM CLIENT ACCOUNT JPRD AC ISG (FE -AC)
(Standing proxy: The Bank of Tokyo-Mitsubishi UFJ, Ltd.)
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 ofshares(Shares)
Number of votingrights(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 stock219,390,900
2,193,909
100 shares constituteone "unit" of
commonstock. Common stock isnot restricted by anysignificant
limitations interms of shareholders'rights.
Shares constituting less than one unit
Common stock16,100
— — Total number of shares issued
Common stock219,407,000
— — 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
Sharecapital
Sharepremium
Accumulateddeficit
Foreigncurrencytranslationreserve
Available-for-sale
reserve
Definedbenefit
planreserve
Total
Non-controllinginterests
Totalshareholder’sequity
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 Sharecapital
Sharepremium
Accumulateddeficit
Foreigncurrencytranslationreserve
Available-for-sale
reserve
Definedbenefit
planreserve
Total
Non-controllinginterests
TotalShareholders’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 SegmentThe 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:
CommonShares issued(Share
capital withno-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-basedpayments(1)
Commoncontrol
businesscombinations
Others(2)
Share premiumtotal
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-basedpayments(1)
Commoncontrol
businesscombinations
Others(2)
Sharepremium 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 equityinvestments
Conversionright andredemptionright
ofpreferred stock
Private equityand
otherfinancialinstruments
Conversionright andredemptionright
ofpreferred 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
Significantunobservable 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
Significantunobservable
input
December 31,2016
June 30,2017
Market approach - market
comparablecompanies
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
Transactionamount
Outstandingreceivable/(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
Transactionamount
Outstandingreceivable/(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
applicationbusiness(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 recognizedon
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
businessactivities
Country ofincorporation
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 20th Warrants and LINE Corporation
21st 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
20th Warrants LINE Corporation 21st 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.
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version on businesswire.com: http://www.businesswire.com/news/home/20170810005546/en/
LINE Global PRIcho Saito, +81 3 4316 2104dl_gpr@linecorp.co
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