UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of May 2020
Commission File Number: 001-37821
LINE Corporation
(Translation of registrant’s name into English)
JR Shinjuku Miraina Tower, 23rd Floor
4-1-6 Shinjuku
Shinjuku-ku, Tokyo, 160-0022, Japan
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F X Form 40-F
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
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.
| LINE Corporation | ||
| (Registrant) | ||
| May 13, 2020 | By: /s/ In Joon Hwang | |
| (Signature) | ||
| Name: In Joon Hwang | ||
| Title: Director and Chief Financial Officer | ||
Announcement of Additional Information of Summary of Consolidated Financial Results for the Three Months Ended March 31, 2020
LINE Corporation (Headquarters: Shinjuku-ku, Tokyo, Japan; Representative Director and President: Takeshi Idezawa) announces additional information for the “Summary of Consolidated Financial Results for the Three Months Ended March 31, 2020” announced on April 28, 2020, as follows.
The new information consists of the following:
– 1 –
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.
April 28, 2020
LINE Corporation Announces Summary of
Consolidated Financial Results
for the Three Months Ended March 31, 2020
<Prepared in accordance with the International Financial Reporting Standards (“IFRS”)
as issued by the International Accounting Standards Board (“IASB”)>
TOKYO — LINE Corporation (NYSE: LN) (TOKYO: 3938) announces the summary of its consolidated financial results for the three months ended March 31, 2020.
| Company name: |
LINE Corporation (Stock Code: 3938) (the “Company”) | |
| Stock exchange on which the shares are listed: |
Tokyo Stock Exchange | |
| URL: |
http://linecorp.com/ | |
| Representative: |
Takeshi Idezawa, Chief Executive Officer | |
| Contact: |
Kokan Ki, Executive Officer | |
| Telephone: |
+81-3-4316-2050 | |
| Filing date of quarterly securities report: May 14, 2020 | ||
| Payment date of dividends: – | ||
| Supplemental materials prepared on quarterly financial results: Yes | ||
| Financial results conference scheduled: None | ||
(Yen amounts are rounded to the nearest million, unless otherwise noted.)
| 1. | Consolidated financial results for the first three months of 2020 (from January 1, 2020 to March 31, 2020) |
(1) Consolidated operating results (cumulative)
| (Percentages indicate year-on-year changes.) |
|
Revenues
|
Loss from operating
|
Loss before income taxes |
Loss for the period
|
|||||||||||||||||||||||||||||
| For the three months ended | Millions of yen | % | Millions of yen | % | Millions of yen | % | Millions of yen | % | ||||||||||||||||||||||||
|
March 31, 2020 |
58,968 | 6.6 | (4,356 | ) | — | (10,082 | ) | — | (10,574 | ) | — | |||||||||||||||||||||
|
March 31, 2019
|
|
55,323
|
|
|
13.5
|
|
|
(7,892
|
)
|
|
—
|
|
|
(11,270
|
)
|
|
—
|
|
|
(10,718
|
)
|
|
—
|
| ||||||||
|
Loss attributable to the
|
Comprehensive loss for the
|
Basic earnings/(loss) per share
|
Diluted earnings/(loss)
|
|||||||||||||||||||||||||||||
| For the three months ended | Millions of yen | % | Millions of yen | % | Yen | Yen | ||||||||||||||||||||||||||
| March 31, 2020 |
(8,283 | ) | — | (15,192 | ) | — | (34.55 | ) | (34.55 | ) | ||||||||||||||||||||||
|
March 31, 2019
|
|
(10,314
|
)
|
|
—
|
|
|
(11,555
|
)
|
|
—
|
|
|
(43.23
|
)
|
|
(43.23
|
)
| ||||||||||||||
– 2 –
| (2) | Consolidated financial position |
|
Total assets
|
Total equity
|
Equity attributable
|
Ratio of equity
| |||||
| As of | Millions of yen | Millions of yen | Millions of yen | % | ||||
| March 31, 2020 |
524,810 | 160,349 | 146,071 | 27.8 | ||||
|
December 31, 2019 |
541,352 | 174,663 | 158,133 | 29.2 |
| 2. | Cash dividends |
| Annual dividends per share | ||||||||||
| First quarter-end | Second quarter-end | Third quarter-end | Fiscal year-end | Total | ||||||
| Yen | Yen | Yen | Yen | Yen | ||||||
| For the year ended December 31, 2019 |
— | 0.00 | — | 0.00 | 0.00 | |||||
| For the year ending December 31, 2020 |
— | |||||||||
| For the year ending December 31, 2020 (Forecast) |
— | — | — | — | ||||||
| Note: | Revisions to the cash dividends forecasts most recently announced: None |
| Cash dividend forecasts for the year ending December 31, 2020: The Company has not yet made a decision regarding dividends. |
| 3. | Consolidated earnings forecasts for 2020 (from January 1, 2020 to December 31, 2020) |
Amid rapid international and domestic changes, there is a level of uncertainty within the mobile applications market for smartphones and other mobile devices, the main business of the Company and its subsidiaries (collectively, the “Group”). As the state of this market significantly impacts the Group’s financial results, it is difficult to formulate a precise earnings forecast. Furthermore, as the Company’s shares are listed on the New York Stock Exchange as well as the Tokyo Stock Exchange, we are also carefully considering risks relating to U.S. securities regulations. Accordingly, an announcement concerning earnings forecasts is not made at this time.
Notes
| (1) | Changes in significant subsidiaries during the current period (changes in specified subsidiaries resulting in change in scope of consolidation): None |
| (2) | Changes in accounting policies and estimates |
| a. | Changes in accounting policies due to revision in accounting standard under IFRS: None |
| b. | Changes in accounting policies due to other reasons: None |
| c. | Changes in accounting estimates: None |
| (3) | Number of shares issued and outstanding (common stock) |
| a. | Total number of common shares issued and outstanding at the end of the period (including treasury shares) |
| As of March 31, 2020 |
241,363,642 shares | |||
| As of December 31, 2019 |
241,133,142 shares |
| b. | Number of treasury shares at the end of the period |
| As of March 31, 2020 |
1,522,276 shares | |||
| As of December 31, 2019 |
1,524,392 shares |
– 3 –
| c. | Average number of common shares outstanding during the period (cumulative from the beginning of the fiscal year) |
| For the three months ended March 31, 2020 |
239,737,615 shares | |
| For the three months ended March 31, 2019 |
238,602,623 shares |
Quarterly financial results reports are exempt from review procedures conducted by certified accountants or an audit firm.
For the purpose of fair disclosure in connection with the release of the financial statements by NAVER Corporation, the Company’s parent company, and timely disclosure of the Company’s Summary of Consolidated Financial Results, the Company discloses the Interim Condensed Consolidated Statement of Financial Position, Interim Condensed Consolidated Statement of Profit or Loss and segment information in advance, and other information will be released as soon as it has been prepared. Supplementary information to this earnings release, including the Group’s profit and loss by segment, will be available today at the following IR website: https://linecorp.com/en/ir/top.
– 4 –
– 5 –
| 1. | Interim Condensed Consolidated Financial Statements and selected Notes |
| (1) | Interim Condensed Consolidated Statement of Financial Position - Unaudited |
| (In millions of yen) | ||||||||
| December 31, 2019 |
March 31, 2020 |
|||||||
| Assets |
||||||||
| Current assets |
||||||||
| Cash and cash equivalents |
217,345 | 178,757 | ||||||
| Trade and other receivables |
42,680 | 45,084 | ||||||
| Other financial assets, current |
20,117 | 19,750 | ||||||
| Contract assets |
241 | 269 | ||||||
| Inventories |
4,740 | 6,016 | ||||||
| Other current assets |
10,518 | 8,793 | ||||||
|
|
|
|
|
|||||
| Total current assets |
295,641 | 258,669 | ||||||
|
|
|
|
|
|||||
| Non-current assets |
||||||||
| Property and equipment |
25,024 | 23,969 | ||||||
| Right-of-use assets |
54,337 | 63,559 | ||||||
| Goodwill |
17,651 | 17,540 | ||||||
| Other intangible assets |
7,801 | 8,408 | ||||||
| Investments in associates and joint ventures |
64,194 | 73,669 | ||||||
| Other financial assets, non-current |
51,737 | 54,023 | ||||||
| Deferred tax assets |
24,095 | 24,112 | ||||||
| Other non-current assets |
872 | 861 | ||||||
|
|
|
|
|
|||||
| Total non-current assets |
245,711 | 266,141 | ||||||
|
|
|
|
|
|||||
| Total assets |
541,352 | 524,810 | ||||||
|
|
|
|
|
|||||
| Liabilities |
||||||||
| Current liabilities |
||||||||
| Trade and other payables |
43,710 | 40,466 | ||||||
| Other financial liabilities, current |
44,826 | 46,192 | ||||||
| Accrued expenses |
23,462 | 14,968 | ||||||
| Income tax payables |
3,963 | 938 | ||||||
| Lease liabilities, current |
11,487 | 13,155 | ||||||
| Contract liabilities |
25,752 | 26,099 | ||||||
| Provisions, current |
3,221 | 3,474 | ||||||
| Other current liabilities |
5,238 | 6,672 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
161,659 | 151,964 | ||||||
|
|
|
|
|
|||||
| Non-current liabilities |
||||||||
| Corporate bonds |
142,851 | 143,031 | ||||||
| Other financial liabilities, non-current |
362 | 397 | ||||||
| Lease liabilities, non-current |
45,150 | 52,869 | ||||||
| Deferred tax liabilities |
1,071 | 675 | ||||||
| Provisions, non-current |
4,528 | 4,806 | ||||||
| Post-employment benefits |
9,617 | 9,566 | ||||||
| Other non-current liabilities |
1,451 | 1,153 | ||||||
|
|
|
|
|
|||||
| Total non-current liabilities |
205,030 | 212,497 | ||||||
|
|
|
|
|
|||||
| Total liabilities |
366,689 | 364,461 | ||||||
|
|
|
|
|
|||||
| Shareholders’ equity |
||||||||
| Share capital |
96,737 | 97,032 | ||||||
| Share premium |
121,299 | 121,864 | ||||||
| Treasury shares |
(6,308 | ) | (6,300 | ) | ||||
| Accumulated deficit |
(53,524 | ) | (61,797 | ) | ||||
| Accumulated other comprehensive income |
(71 | ) | (4,728 | ) | ||||
|
|
|
|
|
|||||
| Equity attributable to the shareholders of the Company |
158,133 | 146,071 | ||||||
|
|
|
|
|
|||||
| Non-controlling interests |
16,530 | 14,278 | ||||||
|
|
|
|
|
|||||
| Total shareholders’ equity |
174,663 | 160,349 | ||||||
|
|
|
|
|
|||||
| Total liabilities and shareholders’ equity |
541,352 | 524,810 | ||||||
|
|
|
|
|
|||||
– 6 –
| (2) | Interim Condensed Consolidated Statement of Profit or Loss - Unaudited |
| (In millions of yen) | ||||||||
| For the three-month period ended March 31, | ||||||||
| 2019 | 2020 | |||||||
| Revenues and other operating income: |
||||||||
| Revenues |
55,323 | 58,968 | ||||||
| Other operating income |
152 | 252 | ||||||
|
|
|
|
|
|||||
| Total revenues and other operating income |
55,475 | 59,220 | ||||||
|
|
|
|
|
|||||
| Operating expenses: |
||||||||
| Payment processing and licensing expenses |
(8,803 | ) | (10,137 | ) | ||||
| Sales commission expenses |
(4,254 | ) | (2,785 | ) | ||||
| Employee compensation expenses |
(17,190 | ) | (18,705 | ) | ||||
| Marketing expenses |
(7,499 | ) | (4,789 | ) | ||||
| Infrastructure and communication expenses |
(2,708 | ) | (2,699 | ) | ||||
| Outsourcing and other service expenses |
(9,101 | ) | (11,304 | ) | ||||
| Depreciation and amortization expenses |
(5,184 | ) | (6,487 | ) | ||||
| Other operating expenses |
(8,628 | ) | (6,670 | ) | ||||
|
|
|
|
|
|||||
| Total operating expenses |
(63,367 | ) | (63,576 | ) | ||||
|
|
|
|
|
|||||
| Loss from operating activities |
(7,892 | ) | (4,356 | ) | ||||
| Finance income |
143 | 105 | ||||||
| Finance costs |
(452 | ) | (515 | ) | ||||
| Share of loss of associates and joint ventures |
(3,474 | ) | (3,144 | ) | ||||
| Gain/(loss) on foreign currency transactions, net |
93 | (843 | ) | |||||
| Other non-operating income |
649 | 525 | ||||||
| Other non-operating expenses |
(337 | ) | (1,854 | ) | ||||
|
|
|
|
|
|||||
| Loss before tax from continuing operations |
(11,270 | ) | (10,082 | ) | ||||
| Income tax benefits/(expenses) |
547 | (492 | ) | |||||
|
|
|
|
|
|||||
| Loss for the period from continuing operations |
(10,723 | ) | (10,574 | ) | ||||
| Profit from discontinued operations, net of tax |
5 | — | ||||||
|
|
|
|
|
|||||
| Loss for the period |
(10,718 | ) | (10,574 | ) | ||||
|
|
|
|
|
|||||
| Attributable to: |
||||||||
| The shareholders of the Company |
(10,314 | ) | (8,283 | ) | ||||
| Non-controlling interests |
(404 | ) | (2,291 | ) | ||||
| (In yen) | ||||||||
| Earnings per share |
||||||||
| Basic loss for the period attributable to the shareholders of the Company |
(43.23 | ) | (34.55 | ) | ||||
| Diluted loss for the period attributable to the shareholders of the Company |
(43.23 | ) | (34.55 | ) | ||||
| Earnings per share from continuing operations |
||||||||
| Basic loss from continuing operations attributable to the shareholders of the Company |
(43.25 | ) | (34.55 | ) | ||||
| Diluted loss from continuing operations attributable to the shareholders of the Company |
(43.25 | ) | (34.55 | ) | ||||
| Earnings per share from discontinued operations |
||||||||
| Basic profit from discontinued operations attributable to the shareholders of the Company |
0.02 | — | ||||||
| Diluted profit from discontinued operations attributable to the shareholders of the Company |
0.02 | — | ||||||
– 7 –
| (3) | Interim Condensed Consolidated Statement of Comprehensive Income - Unaudited |
| (In millions of yen) | ||||||||
| For the three-month period ended March 31, | ||||||||
| 2019 | 2020 | |||||||
| Loss for the period |
(10,718 | ) | (10,574 | ) | ||||
| Other comprehensive income |
||||||||
| Items that will not be reclassified to profit or loss: |
||||||||
| Net changes in fair value of equity instruments at FVOCI |
(268 | ) | 626 | |||||
| Income tax relating to items that will not be reclassified to profit or loss |
86 | (197 | ) | |||||
| Items that may be reclassified to profit or loss: |
||||||||
| Debt instruments at FVOCI: |
||||||||
| Net changes in fair value of debt instruments at FVOCI |
(1 | ) | (43 | ) | ||||
| Reclassification to profit or loss of debt instruments at FVOCI |
4 | (2 | ) | |||||
| Exchange differences on translation of foreign operations: |
||||||||
| Loss arising during the period |
(741 | ) | (5,273 | ) | ||||
| Reclassification to profit or loss |
1 | — | ||||||
| Proportionate share of other comprehensive income of associates and joint ventures |
(3 | ) | (243 | ) | ||||
| Income tax relating to items that may be reclassified subsequently to profit or loss |
85 | 514 | ||||||
|
|
|
|
|
|||||
| Total other comprehensive loss for the period, net of tax |
(837 | ) | (4,618 | ) | ||||
|
|
|
|
|
|||||
| Total comprehensive loss for the period, net of tax |
(11,555 | ) | (15,192 | ) | ||||
|
|
|
|
|
|||||
| Attributable to: |
||||||||
| The shareholders of the Company |
(11,084 | ) | (12,940 | ) | ||||
| Non-controlling interests |
(471 | ) | (2,252 | ) | ||||
– 8 –
| (4) | Interim Condensed Consolidated Statement of Change in Equity - Unaudited |
| (In millions of yen) | ||||||||||||||||||||||||||||||||
| Equity attributable to the shareholders of the Company | ||||||||||||||||||||||||||||||||
| Accumulated other comprehensive income or loss |
||||||||||||||||||||||||||||||||
| Share capital |
Share premium |
Treasury shares |
Accumulated deficit |
Foreign currency translation reserve |
Financial assets at FVOCI |
Defined benefit plan reserve |
Total | |||||||||||||||||||||||||
| Balance at January 1, 2019 |
96,064 | 118,626 | (8,205 | ) | (5,556 | ) | (659 | ) | (1,417 | ) | 63 | 198,916 | ||||||||||||||||||||
| Adjustment on adoption of new accounting standards |
— | — | — | (26 | ) | — | — | — | (26 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Balance at January 1, 2019 (adjusted) |
96,064 | 118,626 | (8,205 | ) | (5,582 | ) | (659 | ) | (1,417 | ) | 63 | 198,890 | ||||||||||||||||||||
| Comprehensive loss |
||||||||||||||||||||||||||||||||
| Loss for the period |
— | — | — | (10,314 | ) | — | — | — | (10,314 | ) | ||||||||||||||||||||||
| Other comprehensive loss |
— | — | — | — | (584 | ) | (186 | ) | — | (770 | ) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total comprehensive loss for the period |
— | — | — | (10,314 | ) | (584 | ) | (186 | ) | — | (11,084 | ) | ||||||||||||||||||||
| Transactions with owners and other transactions |
||||||||||||||||||||||||||||||||
| Recognition of share-based payments |
— | 460 | — | — | — | — | — | 460 | ||||||||||||||||||||||||
| Exercise of stock options |
135 | (34 | ) | — | — | — | — | — | 101 | |||||||||||||||||||||||
| Changes in interest in subsidiaries |
— | 208 | — | — | — | — | — | 208 | ||||||||||||||||||||||||
| Acquisition of subsidiaries |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Disposal of treasury shares |
— | (10 | ) | 13 | — | — | — | — | 3 | |||||||||||||||||||||||
| Transfer of accumulated other comprehensive income to accumulated deficit |
— | — | — | 52 | — | (52 | ) | — | — | |||||||||||||||||||||||
| Other |
— | — | — | (24 | ) | — | — | — | (24 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total transactions with owners and other transactions |
135 | 624 | 13 | 28 | — | (52 | ) | — | 748 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Balance at March 31, 2019 |
96,199 | 119,250 | (8,192 | ) | (15,868 | ) | (1,243 | ) | (1,655 | ) | 63 | 188,554 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Non- controlling interests |
Total shareholders’ equity |
|||||||||||||||||||||||||||||||
| Balance at January 1, 2019 |
9,598 | 208,514 | ||||||||||||||||||||||||||||||
| Adjustment on adoption of new accounting standards |
— | (26 | ) | |||||||||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||||||||||
| Balance at January 1, 2019 (adjusted) |
9,598 | 208,488 | ||||||||||||||||||||||||||||||
| Comprehensive loss |
||||||||||||||||||||||||||||||||
| Loss for the period |
(404 | ) | (10,718 | ) | ||||||||||||||||||||||||||||
| Other comprehensive loss |
(67 | ) | (837 | ) | ||||||||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||||||||||
| Total comprehensive loss for the period |
(471 | ) | (11,555 | ) | ||||||||||||||||||||||||||||
| Transactions with owners and other transactions |
||||||||||||||||||||||||||||||||
| Recognition of share-based payments |
— | 460 | ||||||||||||||||||||||||||||||
| Exercise of stock options |
— | 101 | ||||||||||||||||||||||||||||||
| Changes in interest in subsidiaries |
9,602 | 9,810 | ||||||||||||||||||||||||||||||
| Acquisition of subsidiaries |
86 | 86 | ||||||||||||||||||||||||||||||
| Disposal of treasury shares |
3 | |||||||||||||||||||||||||||||||
| Transfer of accumulated other comprehensive income to accumulated deficit |
— | — | ||||||||||||||||||||||||||||||
| Other |
— | (24 | ) | |||||||||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||||||||||
| Total transactions with owners and other transactions |
9,688 | 10,436 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||||||||||
| Balance at March 31, 2019 |
18,815 | 207,369 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||||||||||
– 9 –
| (4) | Interim Condensed Consolidated Statement of Change in Equity - Unaudited |
| (In millions of yen) | ||||||||||||||||||||||||||||||||
| Equity attributable to the shareholders of the Company | ||||||||||||||||||||||||||||||||
| Accumulated other comprehensive income or loss |
||||||||||||||||||||||||||||||||
| Share capital |
Share premium |
Treasury shares |
Accumulated deficit |
Foreign currency translation reserve |
Financial assets at FVOCI |
Defined benefit plan reserve |
Total | |||||||||||||||||||||||||
| Balance at January 1, 2020 |
96,737 | 121,299 | (6,308 | ) | (53,524 | ) | (1,342 | ) | 2,355 | (1,084 | ) | 158,133 | ||||||||||||||||||||
| Comprehensive (loss)/income |
||||||||||||||||||||||||||||||||
| Loss for the period |
— | — | — | (8,283 | ) | — | — | — | (8,283 | ) | ||||||||||||||||||||||
| Other comprehensive (loss)/income |
— | — | — | — | (4,840 | ) | 189 | (6 | ) | (4,657 | ) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total comprehensive (loss)/income for the period |
— | — | — | (8,283 | ) | (4,840 | ) | 189 | (6 | ) | (12,940 | ) | ||||||||||||||||||||
| Transactions with owners and other transactions |
||||||||||||||||||||||||||||||||
| Recognition of share-based payments |
— | 632 | — | — | — | — | — | 632 | ||||||||||||||||||||||||
| Forfeiture of stock options |
— | (13 | ) | — | 13 | — | — | — | — | |||||||||||||||||||||||
| Exercise of stock options |
295 | (44 | ) | — | — | — | — | — | 251 | |||||||||||||||||||||||
| Disposal of treasury shares |
— | (10 | ) | 13 | — | — | — | — | 3 | |||||||||||||||||||||||
| Purchase of treasury shares |
— | — | (5 | ) | — | — | — | — | (5 | ) | ||||||||||||||||||||||
| Other |
— | — | — | (3 | ) | — | — | — | (3 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total transactions with owners and other transactions |
295 | 565 | 8 | 10 | — | — | — | 878 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Balance at March 31, 2020 |
97,032 | 121,864 | (6,300 | ) | (61,797 | ) | (6,182 | ) | 2,544 | (1,090 | ) | 146,071 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Non- controlling interests |
Total shareholders’ equity |
|||||||||||||||||||||||||||||||
| Balance at January 1, 2020 |
16,530 | 174,663 | ||||||||||||||||||||||||||||||
| Comprehensive (loss)/income |
||||||||||||||||||||||||||||||||
| Loss for the period |
(2,291 | ) | (10,574 | ) | ||||||||||||||||||||||||||||
| Other comprehensive (loss)/income |
39 | (4,618 | ) | |||||||||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||||||||||
| Total comprehensive (loss)/income for the period |
(2,252 | ) | (15,192 | ) | ||||||||||||||||||||||||||||
| Transactions with owners and other transactions |
||||||||||||||||||||||||||||||||
| Recognition of share-based payments |
— | 632 | ||||||||||||||||||||||||||||||
| Forfeiture of stock options |
— | — | ||||||||||||||||||||||||||||||
| Exercise of stock options |
— | 251 | ||||||||||||||||||||||||||||||
| Disposal of treasury shares |
— | 3 | ||||||||||||||||||||||||||||||
| Purchase of treasury shares |
— | (5 | ) | |||||||||||||||||||||||||||||
| Other |
— | (3 | ) | |||||||||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||||||||||
| Total transactions with owners and other transactions |
— | 878 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||||||||||
| Balance at March 31, 2020 |
14,278 | 160,349 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||||||||||
– 10 –
| (5) | Notes to Interim Condensed Consolidated Financial Statements - Unaudited |
Notes to Significant Accounting Policies
The significant 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, 2019.
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, 2020 had no significant impact on the Group’s unaudited interim condensed consolidated financial statements as of March 31, 2019 and 2020 and for the three-month periods then ended, as well as annual consolidated financial statements for the year ended December 31, 2019.
In addition, the new and revised standards and interpretations that have been issued but are not yet effective have not been adopted early by the Group.
– 11 –
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 to 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.
Under the corporate strategy to allocate the resources generated from the Core business to the Strategic business, the Company’s board of directors individually assesses the business performance of the Core business based on revenue and profitability growth and assesses the business performance of the Strategic business based on profitability as well as important non-financial KPIs such as expansion of the user base.
| (1) | Description of Reportable Segments |
The Group’s reportable segments are as follows:
| Core business segment |
The Core business segment mainly consists of advertising service, communication and content. Advertising services mainly include display advertising, account advertising, and other advertising. Display advertising provides advertisements on services such as LINE NEWS. Account advertising mainly includes LINE Official Accounts and Sponsored Stickers. Other advertising mainly includes advertisements on services such as livedoor Blog, NAVER Matome and advertisements appearing on LINE Part-Time Job. Communication mainly includes LINE Stickers. Content mainly includes LINE GAME. | |
| Strategic business segment |
The Strategic business segment consists of Fintech services such as LINE Pay service, and other services such as AI, LINE Friends, and E-commerce. |
| (2) | Profit or Loss for the Group’s reportable segments |
The Group’s operating profit or loss for each segment is prepared in the same method as used in the consolidated financial statements, except that certain items such as other operating income and share-based compensation expenses are included in corporate adjustments. Also, IT development expenses and indirect expenses such as department management fees are allocated based on the information such as the hours of service provided, the number of server infrastructures used to provide the service, or the percentage of revenues. As the Company’s board of directors uses the information after eliminating intercompany transactions for their performance assessment, there is no adjustment between segments.
– 12 –
For the three-month period ended March 31, 2019
| (In millions of yen) | ||||||||||||||||||||
| Reportable segments | Corporate adjustments(1) |
Consolidated | ||||||||||||||||||
| Core business | Strategic business |
Total | ||||||||||||||||||
| Revenue from external customers |
47,948 | 7,375 | 55,323 | — | 55,323 | |||||||||||||||
| Segment profit/(loss)(2) |
8,266 | (14,987 | ) | (6,721 | ) | (1,171 | ) | (7,892 | ) | |||||||||||
| Depreciation and amortization expenses |
3,283 | 1,901 | 5,184 | — | 5,184 | |||||||||||||||
| (1) | Corporate adjustments include expenses such as other operating income and share-based compensation expenses. |
| (2) | The amount of Segment profit/(loss) is equivalent to loss from operating activities on the Interim Condensed Consolidated Statement of Profit or Loss. |
For the three-month period ended March 31, 2020
| (In millions of yen) | ||||||||||||||||||||
| Reportable segments | Corporate adjustments(1) |
Consolidated | ||||||||||||||||||
| Core business | Strategic business |
Total | ||||||||||||||||||
| Revenue from external customers |
51,854 | 7,114 | 58,968 | — | 58,968 | |||||||||||||||
| Segment profit/(loss)(2) |
11,970 | (15,192 | ) | (3,222 | ) | (1,134 | ) | (4,356 | ) | |||||||||||
| Depreciation and amortization expenses |
4,146 | 2,341 | 6,487 | — | 6,487 | |||||||||||||||
| (1) | Corporate adjustments include expenses such as other operating income and share-based compensation expenses. |
| (2) | The amount of Segment profit/(loss) is equivalent to loss from operating activities on the Interim Condensed Consolidated Statement of Profit or Loss. |
The reconciliation of Segment loss to loss before tax from continuing operations is as follows:
For the three-month periods ended March 31,
| (In millions of yen) | ||||||||
| 2019 | 2020 | |||||||
| Segment loss |
(7,892 | ) | (4,356 | ) | ||||
| Finance income |
143 | 105 | ||||||
| Finance costs |
(452 | ) | (515 | ) | ||||
| Share of loss of associates and joint ventures |
(3,474 | ) | (3,144 | ) | ||||
| Gain/(loss) on foreign currency transactions, net |
93 | (843 | ) | |||||
| Other non-operating income |
649 | 525 | ||||||
| Other non-operating expenses |
(337 | ) | (1,854 | ) | ||||
|
|
|
|
|
|||||
| Loss for the period before tax from continuing operations |
(11,270 | ) | (10,082 | ) | ||||
|
|
|
|
|
|||||
The above items are not allocated to individual segments as these are managed on an overall group basis.
– 13 –
| (3) | Revenues from Major Services |
The Group’s revenues from continuing operations from its major services for the three-month periods ended March 31, 2019 and 2020 are as follows.
Revenues recognized at a point in time mainly consist of revenues from LINE Friends.
For the three-month periods ended March 31,
| (In millions of yen) | ||||||||
| 2019 | 2020 | |||||||
| Core business |
||||||||
| Advertising |
||||||||
| Display advertising(1) |
10,624 | 15,356 | ||||||
| Account advertising(2) |
15,590 | 15,665 | ||||||
| Other advertising(3) |
3,639 | 2,023 | ||||||
|
|
|
|
|
|||||
| Sub-total |
29,853 | 33,044 | ||||||
|
|
|
|
|
|||||
| Communication, content, and others |
||||||||
| Communication(4) |
7,427 | 7,763 | ||||||
| Content(5) |
9,492 | 10,340 | ||||||
| Others |
1,176 | 707 | ||||||
|
|
|
|
|
|||||
| Subtotal |
18,095 | 18,810 | ||||||
|
|
|
|
|
|||||
| Core business total |
47,948 | 51,854 | ||||||
|
|
|
|
|
|||||
| Strategic business |
||||||||
| Friends(6) |
4,463 | 2,909 | ||||||
| Others(7) |
2,912 | 4,205 | ||||||
|
|
|
|
|
|||||
| Strategic business total |
7,375 | 7,114 | ||||||
|
|
|
|
|
|||||
| Total |
55,323 | 58,968 | ||||||
|
|
|
|
|
|||||
| (1) | Revenues from display advertising primarily consisted of fees from advertisement on services such as Timeline, Smart Channel and LINE NEWS. |
| (2) | Revenues from account advertising primarily consisted of fees from LINE Official Accounts, Sponsored Stickers and LINE Points. |
| (3) | Revenues from other advertising were mainly attributable to advertising revenue from livedoor, NAVER Matome and LINE Part-Time Job. |
| (4) | Revenues from communication were mainly attributable to sales of LINE Stickers and Creator Stickers. |
| (5) | Revenues from content primarily consisted of sales of LINE GAME’s virtual items. |
| (6) | Friends primarily consisted of revenues from sales of character goods. |
| (7) | Others primarily consisted of revenues from E-commerce. |
– 14 –
Issuance of Stock Warrant (Stock Option)
Pursuant to the resolution of the board of directors’ meeting held on July 9, 2019, March 30, 2020 and April 28, 2020, the Company granted stock warrants in the form of stock options (LINE Corporation 25th stock option) to employees of the Company and its subsidiaries on April 30, 2020.
| Name of stock options | LINE Corporation 25th Stock Option | |
| Title and number of grantees | 2,396 of the Company’s employees, including executive officers 3,415 of the employees of the Company’s subsidiaries | |
| Total number of stock options | 48,226 | |
|
Class and number of shares to be issued upon exercise of stock options |
4,822,600 of common shares | |
|
Value of property to be contributed upon exercise of stock options |
3,500 yen of the exercise price per share multiplied by number of shares granted | |
| Fair value of stock options at the grant date | 271,359 yen per stock option (2,714 yen per-common-share basis) | |
| Exercise period for stock options | From July 29, 2022 to July 8, 2029 |
Acquisition of additional shares of DEMAE-CAN, Ltd.
The Group resolved at the board of directors’ meeting held on March 26, 2020 to take on new shares issued by DEMAE-CAN, Ltd. through a third-party allotment and settled the payment of 15,000 million yen on April 24, 2020. As a result, the proportion of voting rights held by the Company became 35.9% from 21.7%.
– 16 –