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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 November 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):
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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) | ||
November 5, 2020 | By: /s/ In Joon Hwang | |
(Signature) | ||
Name: In Joon Hwang | ||
Title: Director and Chief Financial Officer |
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Announcement of Additional Information of Summary of Consolidated Financial Results for the Nine Months Ended September 30, 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 Nine Months Ended September 30, 2020” announced on October 28, 2020, as follows.
The new information consists of the following:
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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.
October 28, 2020
LINE Corporation Announces Summary of
Consolidated Financial Results
for the Nine Months Ended September 30, 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 nine months ended September 30, 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: November 6, 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 nine months of 2020 (from January 1, 2020 to September 30, 2020) |
(1) | Consolidated operating results (cumulative) |
(Percentages indicate year-on-year changes.) |
Revenues
|
(Loss)/profit from operating activities
|
Loss before income taxes
|
Loss for the period
| |||||||||||||||||||||||||||||
For the nine months ended | Millions of yen | % | Millions of yen | % | Millions of yen | % | Millions of yen | % | ||||||||||||||||||||||||
September 30, 2020 | 180,240 | 8.1 | 7,169 | — | (24,149 | ) | — | (35,848 | ) | — | ||||||||||||||||||||||
September 30, 2019 |
| 166,702
|
|
| 10.2
|
|
| (27,521
| )
|
| —
|
|
| (36,224
| )
|
| —
|
|
| (36,834
| )
|
| —
|
| ||||||||
Loss attributable to the shareholders of the Company
|
Comprehensive loss
|
Basic earnings/(loss)
|
Diluted earnings/(loss)
| |||||||||||||||||||||||||||||
For the nine months ended | Millions of yen | % | Millions of yen | % | Yen | Yen | ||||||||||||||||||||||||||
September 30, 2020 | (29,185 | ) | — | (35,940 | ) | — | (121.32) | (121.32) | ||||||||||||||||||||||||
September 30, 2019
|
| (33,961
| )
|
| —
|
|
| (40,007
| )
|
| —
|
|
| (142.09)
|
|
| (142.09)
|
|
– 2 –
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(2) | Consolidated financial position |
Total assets
|
Total equity
|
Equity attributable
|
Ratio of equity
| |||||
As of | Millions of yen | Millions of yen | Millions of yen | % | ||||
September 30, 2020 | 568,333 | 161,371 | 143,895 | 25.3 | ||||
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 | — | 0.00 | — | |||||||
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 its year-end 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 September 30, 2020 | 243,715,542 shares | |||
As of December 31, 2019 | 241,133,142 shares |
b. | Number of treasury shares at the end of the period |
As of September 30, 2020 | 12,222 shares | |||
As of December 31, 2019 | 1,524,392 shares |
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c. | Average number of common shares outstanding during the period (cumulative from the beginning of the fiscal year) |
For the nine months ended September 30, 2020 | 240,557,640 shares | |||
For the nine months ended September 30, 2019 | 239,020,020 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, segment information and going-concern assumption 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 –
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Index:
– 5 –
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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 | September 30, 2020 | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | 217,345 | 166,817 | ||||||
Trade and other receivables | 42,680 | 50,496 | ||||||
Other financial assets, current | 20,117 | 46,047 | ||||||
Contract assets | 241 | 199 | ||||||
Inventories | 4,740 | 9,164 | ||||||
Other current assets | 10,518 | 10,187 | ||||||
|
|
|
| |||||
Total current assets | 295,641 | 282,910 | ||||||
|
|
|
| |||||
Non-current assets | ||||||||
Property and equipment | 25,024 | 25,781 | ||||||
Right-of-use assets | 54,337 | 53,740 | ||||||
Goodwill | 17,651 | 16,821 | ||||||
Other intangible assets | 7,801 | 7,283 | ||||||
Investments in associates and joint ventures | 64,194 | 106,486 | ||||||
Other financial assets, non-current | 51,737 | 50,809 | ||||||
Deferred tax assets | 24,095 | 23,942 | ||||||
Other non-current assets | 872 | 561 | ||||||
|
|
|
| |||||
Total non-current assets | 245,711 | 285,423 | ||||||
|
|
|
| |||||
Total assets | 541,352 | 568,333 | ||||||
|
|
|
| |||||
Liabilities | ||||||||
Current liabilities | ||||||||
Trade and other payables | 43,710 | 49,987 | ||||||
Corporate bonds | — | 143,393 | ||||||
Other financial liabilities, current | 44,826 | 63,379 | ||||||
Accrued expenses | 23,462 | 18,635 | ||||||
Income tax payables | 3,963 | 3,422 | ||||||
Lease liabilities, current | 11,487 | 13,425 | ||||||
Contract liabilities, current | 25,752 | 28,165 | ||||||
Provisions, current | 3,221 | 3,740 | ||||||
Other current liabilities | 5,238 | 8,970 | ||||||
|
|
|
| |||||
Total current liabilities | 161,659 | 333,116 | ||||||
|
|
|
| |||||
Non-current liabilities | ||||||||
Corporate bonds | 142,851 | — | ||||||
Other financial liabilities, non-current | 362 | 349 | ||||||
Lease liabilities, non-current | 45,150 | 47,035 | ||||||
Contract liabilities, non-current | — | 5,366 | ||||||
Deferred tax liabilities | 1,071 | 4,986 | ||||||
Provisions, non-current | 4,528 | 5,485 | ||||||
Post-employment benefits | 9,617 | 10,419 | ||||||
Other non-current liabilities | 1,451 | 206 | ||||||
|
|
|
| |||||
Total non-current liabilities | 205,030 | 73,846 | ||||||
|
|
|
| |||||
Total liabilities | 366,689 | 406,962 | ||||||
|
|
|
| |||||
Shareholders’ equity | ||||||||
Share capital | 96,737 | 101,641 | ||||||
Share premium | 121,299 | 125,275 | ||||||
Treasury shares | (6,308 | ) | (63 | ) | ||||
Accumulated deficit | (53,524 | ) | (78,326 | ) | ||||
Accumulated other comprehensive income | (71 | ) | (4,632 | ) | ||||
|
|
|
| |||||
Equity attributable to the shareholders of the Company | 158,133 | 143,895 | ||||||
|
|
|
| |||||
Non-controlling interests | 16,530 | 17,476 | ||||||
|
|
|
| |||||
Total shareholders’ equity | 174,663 | 161,371 | ||||||
|
|
|
| |||||
Total liabilities and shareholders’ equity | 541,352 | 568,333 | ||||||
|
|
|
|
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(2) | Interim Condensed Consolidated Statement of Profit or Loss - Unaudited |
(In millions of yen) | ||||||||
For the nine-month period ended September 30, | ||||||||
2019 | 2020 | |||||||
Revenues and other operating income: | ||||||||
Revenues | 166,702 | 180,240 | ||||||
Other operating income | 2,897 | 29,747 | ||||||
|
|
|
| |||||
Total revenues and other operating income | 169,599 | 209,987 | ||||||
Operating expenses: | ||||||||
Payment processing and licensing expenses | (26,406 | ) | (30,693 | ) | ||||
Sales commission expenses | (12,197 | ) | (7,007 | ) | ||||
Employee compensation expenses | (51,572 | ) | (58,321 | ) | ||||
Marketing expenses | (25,566 | ) | (18,262 | ) | ||||
Infrastructure and communication expenses | (8,063 | ) | (8,543 | ) | ||||
Outsourcing and other service expenses | (30,619 | ) | (33,946 | ) | ||||
Depreciation and amortization expenses | (16,324 | ) | (19,781 | ) | ||||
Other operating expenses | (26,373 | ) | (26,265 | ) | ||||
|
|
|
| |||||
Total operating expenses | (197,120 | ) | (202,818 | ) | ||||
|
|
|
| |||||
(Loss)/profit from operating activities | (27,521 | ) | 7,169 | |||||
Finance income | 400 | 233 | ||||||
Finance costs | (1,459 | ) | (1,525 | ) | ||||
Share of loss of associates and joint ventures | (9,567 | ) | (10,658 | ) | ||||
Loss on foreign currency transactions, net | (237 | ) | (1,395 | ) | ||||
Other non-operating income | 2,347 | 1,468 | ||||||
Other non-operating expenses | (187 | ) | (19,441 | ) | ||||
|
|
|
| |||||
Loss before tax from continuing operations | (36,224 | ) | (24,149 | ) | ||||
Income tax expenses | (609 | ) | (11,699 | ) | ||||
|
|
|
| |||||
Loss for the period from continuing operations | (36,833 | ) | (35,848 | ) | ||||
Loss from discontinued operations, net of tax | (1 | ) | — | |||||
|
|
|
| |||||
Loss for the period | (36,834 | ) | (35,848 | ) | ||||
|
|
|
| |||||
Attributable to: | ||||||||
The shareholders of the Company | (33,961 | ) | (29,185 | ) | ||||
Non-controlling interests | (2,873 | ) | (6,663 | ) | ||||
(In yen | ) | |||||||
Earnings per share | ||||||||
Basic loss for the period attributable to the shareholders of the Company | (142.09 | ) | (121.32 | ) | ||||
Diluted loss for the period attributable to the shareholders of the Company | (142.09 | ) | (121.32 | ) | ||||
Earnings per share from continuing operations | ||||||||
Basic loss from continuing operations attributable to the shareholders of the Company | (142.08 | ) | (121.32 | ) | ||||
Diluted loss from continuing operations attributable to the shareholders of the Company | (142.08 | ) | (121.32 | ) | ||||
Earnings per share from discontinued operations | ||||||||
Basic loss from discontinued operations attributable to the shareholders of the Company | (0.01 | ) | — | |||||
Diluted loss from discontinued operations attributable to the shareholders of the Company | (0.01 | ) | — |
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(3) | Interim Condensed Consolidated Statement of Comprehensive Income - Unaudited |
(In millions of yen) | ||||||||
For the nine-month period ended September 30, | ||||||||
2019 | 2020 | |||||||
Loss for the period | (36,834 | ) | (35,848 | ) | ||||
Other comprehensive income | ||||||||
Items that will not be reclassified to profit or loss: | ||||||||
Net changes in fair value of equity instruments at FVOCI | 1,085 | 3,159 | ||||||
Income tax relating to items that will not be reclassified to profit or loss | (348 | ) | (982 | ) | ||||
Items that may be reclassified to profit or loss: | ||||||||
Debt instruments at FVOCI: | ||||||||
Net changes in fair value of debt instruments at FVOCI | 55 | (96 | ) | |||||
Reclassification to profit or loss of debt instruments at FVOCI | 1 | (10 | ) | |||||
Exchange differences on translation of foreign operations: | ||||||||
Loss arising during the period | (4,727 | ) | (3,006 | ) | ||||
Reclassification to profit or loss | 85 | 76 | ||||||
Proportionate share of other comprehensive income of associates and joint ventures | 151 | 490 | ||||||
Income tax relating to items that may be reclassified subsequently to profit or loss | 525 | 277 | ||||||
|
|
|
| |||||
Total other comprehensive loss for the period, net of tax | (3,173 | ) | (92 | ) | ||||
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|
|
| |||||
Total comprehensive loss for the period, net of tax | (40,007 | ) | (35,940 | ) | ||||
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|
|
| |||||
Attributable to: | ||||||||
The shareholders of the Company | (36,867 | ) | (29,375 | ) | ||||
Non-controlling interests | (3,140 | ) | (6,565 | ) |
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(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 | ||||||||||||||||||||||||||||||||
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 | ) | ||||||||||||||||||||||
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Balance at January 1, 2019 (adjusted) | 96,064 | 118,626 | (8,205 | ) | (5,582 | ) | (659 | ) | (1,417 | ) | 63 | 198,890 | ||||||||||||||||||||
Comprehensive (loss)/income | ||||||||||||||||||||||||||||||||
Loss for the period | — | — | — | (33,961 | ) | — | — | — | (33,961 | ) | ||||||||||||||||||||||
Other comprehensive (loss)/income | — | — | — | — | (3,766 | ) | 860 | — | (2,906 | ) | ||||||||||||||||||||||
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| |||||||||||||||||
Total comprehensive (loss)/income for the period | — | — | — | (33,961 | ) | (3,766 | ) | 860 | — | (36,867 | ) | |||||||||||||||||||||
Transactions with owners and other transactions | ||||||||||||||||||||||||||||||||
Recognition of share-based payments | — | 1,111 | — | — | — | — | — | 1,111 | ||||||||||||||||||||||||
Forfeiture of stock options | — | (51 | ) | — | 51 | — | — | — | — | |||||||||||||||||||||||
Exercise of stock options | 471 | (117 | ) | — | — | — | — | — | 354 | |||||||||||||||||||||||
Changes in interest in subsidiaries | — | 221 | — | — | — | — | — | 221 | ||||||||||||||||||||||||
Acquisition of subsidiaries | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Disposal of treasury shares | — | (447 | ) | 1,608 | — | — | — | — | 1,161 | |||||||||||||||||||||||
Purchase of treasury shares | — | — | (1 | ) | — | — | — | — | (1 | ) | ||||||||||||||||||||||
Transfer of accumulated other comprehensive income to accumulated deficit | — | — | — | 46 | — | (46 | ) | — | — | |||||||||||||||||||||||
Distributions | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Other | — | — | — | (25 | ) | — | — | — | (25 | ) | ||||||||||||||||||||||
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Total transactions with owners and other transactions | 471 | 717 | 1,607 | 72 | — | (46 | ) | — | 2,821 | |||||||||||||||||||||||
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Balance at September 30, 2019 | 96,535 | 119,343 | (6,598 | ) | (39,471 | ) | (4,425 | ) | (603 | ) | 63 | 164,844 | ||||||||||||||||||||
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Non- controlling interests | Total shareholders’ equity | |||||||||||||||||||||||||||||||
Balance at January 1, 2019 | 9,598 | 208,514 | ||||||||||||||||||||||||||||||
Adjustment on adoption of new accounting standards | (26 | ) | ||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||
Balance at January 1, 2019 (adjusted) | 9,598 | 208,488 | ||||||||||||||||||||||||||||||
Comprehensive (loss)/income | ||||||||||||||||||||||||||||||||
Loss for the period | (2,873 | ) | (36,834 | ) | ||||||||||||||||||||||||||||
Other comprehensive (loss)/income | (267 | ) | (3,173 | ) | ||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||
Total comprehensive (loss)/income for the period | (3,140 | ) | (40,007 | ) | ||||||||||||||||||||||||||||
Transactions with owners and other transactions | ||||||||||||||||||||||||||||||||
Recognition of share-based payments | — | 1,111 | ||||||||||||||||||||||||||||||
Forfeiture of stock options | — | — | ||||||||||||||||||||||||||||||
Exercise of stock options | — | 354 | ||||||||||||||||||||||||||||||
Changes in interest in subsidiaries | 12,614 | 12,835 | ||||||||||||||||||||||||||||||
Acquisition of subsidiaries | 246 | 246 | ||||||||||||||||||||||||||||||
Disposal of treasury shares | — | 1,161 | ||||||||||||||||||||||||||||||
Purchase of treasury shares | — | (1 | ) | |||||||||||||||||||||||||||||
Transfer of accumulated other comprehensive income to accumulated deficit | — | — | ||||||||||||||||||||||||||||||
Distributions | (1,669 | ) | (1,669 | ) | ||||||||||||||||||||||||||||
Other | — | (25 | ) | |||||||||||||||||||||||||||||
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Total transactions with owners and other transactions | 11,191 | 14,012 | ||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||
Balance at September 30, 2019 | 17,649 | 182,493 | ||||||||||||||||||||||||||||||
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(In millions of yen) | ||||||||||||||||||||||||||||||||
Equity attributable to the shareholders of the Company | ||||||||||||||||||||||||||||||||
Accumulated other comprehensive income | ||||||||||||||||||||||||||||||||
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 | — | — | — | (29,185 | ) | — | — | — | (29,185 | ) | ||||||||||||||||||||||
Other comprehensive (loss)/income | — | — | — | — | (2,673 | ) | 2,487 | (4 | ) | (190 | ) | |||||||||||||||||||||
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Total comprehensive (loss)/income for the period | — | — | — | (29,185 | ) | (2,673 | ) | 2,487 | (4 | ) | (29,375 | ) | ||||||||||||||||||||
Transactions with owners and other transactions | ||||||||||||||||||||||||||||||||
Recognition of share-based payments | — | 2,664 | — | — | — | — | — | 2,664 | ||||||||||||||||||||||||
Forfeiture of stock options | — | (13 | ) | — | 13 | — | — | — | — | |||||||||||||||||||||||
Exercise of stock options | 4,904 | 927 | — | — | — | — | — | 5,831 | ||||||||||||||||||||||||
Changes in interest in subsidiaries | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Derecognition of non-controlling interests due to loss of control of subsidiaries | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Disposal of treasury shares | — | 398 | 6,296 | — | — | — | — | 6,694 | ||||||||||||||||||||||||
Purchase of treasury shares | — | — | (51 | ) | — | — | — | — | (51 | ) | ||||||||||||||||||||||
Transfer of accumulated other comprehensive income to accumulated deficit | — | — | — | 4,371 | — | (4,371 | ) | — | — | |||||||||||||||||||||||
Other | — | — | — | (1 | ) | — | — | — | (1 | ) | ||||||||||||||||||||||
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Total transactions with owners and other transactions | 4,904 | 3,976 | 6,245 | 4,383 | — | (4,371 | ) | — | 15,137 | |||||||||||||||||||||||
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| |||||||||||||||||
Balance at September 30, 2020 | 101,641 | 125,275 | (63 | ) | (78,326 | ) | (4,015 | ) | 471 | (1,088 | ) | 143,895 | ||||||||||||||||||||
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Non- controlling interests | Total shareholders’ equity | |||||||||||||||||||||||||||||||
Balance at January 1, 2020 | 16,530 | 174,663 | ||||||||||||||||||||||||||||||
Comprehensive (loss)/income | ||||||||||||||||||||||||||||||||
Loss for the period | (6,663 | ) | (35,848 | ) | ||||||||||||||||||||||||||||
Other comprehensive (loss)/income | 98 | (92 | ) | |||||||||||||||||||||||||||||
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| �� | ||||||||||||||||||||||||||||
Total comprehensive (loss)/income for the period | (6,565 | ) | (35,940 | ) | ||||||||||||||||||||||||||||
Transactions with owners and other transactions | ||||||||||||||||||||||||||||||||
Recognition of share-based payments | — | 2,664 | ||||||||||||||||||||||||||||||
Forfeiture of stock options | — | — | ||||||||||||||||||||||||||||||
Exercise of stock options | — | 5,831 | ||||||||||||||||||||||||||||||
Changes in interest in subsidiaries | 9,947 | 9,947 | ||||||||||||||||||||||||||||||
Derecognition of non-controlling interests due to loss of control of subsidiaries | (2,436 | ) | (2,436 | ) | ||||||||||||||||||||||||||||
Disposal of treasury shares | — | 6,694 | ||||||||||||||||||||||||||||||
Purchase of treasury shares | — | (51 | ) | |||||||||||||||||||||||||||||
Transfer of accumulated other comprehensive income to accumulated deficit | — | — | ||||||||||||||||||||||||||||||
Other | — | (1 | ) | |||||||||||||||||||||||||||||
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Total transactions with owners and other transactions | 7,511 | 22,648 | ||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||
Balance at September 30, 2020 | 17,476 | 161,371 | ||||||||||||||||||||||||||||||
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– 10 –
Table of Contents
(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 September 30, 2019 and 2020 and for the nine-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.
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Table of Contents
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.
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Table of Contents
For the nine-month period ended September 30, 2019
(In millions of yen) | ||||||||||||||||||||
Reportable segments | Corporate adjustments(1) | Consolidated | ||||||||||||||||||
Core business | Strategic business | Total | ||||||||||||||||||
Revenue from external customers | 144,881 | 21,821 | 166,702 | — | 166,702 | |||||||||||||||
Segment profit/(loss)(2) | 24,959 | (52,412 | ) | (27,453 | ) | (68 | ) | (27,521 | ) | |||||||||||
Depreciation and amortization expenses | 10,464 | 5,860 | 16,324 | — | 16,324 |
(1) | Corporate adjustments include other operating income and expenses such as share-based compensation expenses. |
(2) | The amount of Segment profit/(loss) is equivalent to (loss)/profit from operating activities on the Interim Condensed Consolidated Statement of Profit or Loss. |
For the nine-month period ended September 30, 2020
(In millions of yen) | ||||||||||||||||||||
Reportable segments | Corporate adjustments(1) | Consolidated | ||||||||||||||||||
Core business | Strategic business | Total | ||||||||||||||||||
Revenue from external customers | 155,795 | 24,445 | 180,240 | — | 180,240 | |||||||||||||||
Segment profit/(loss)(2) | 34,561 | (50,080 | ) | (15,519 | ) | 22,688 | 7,169 | |||||||||||||
Depreciation and amortization expenses | 12,697 | 7,084 | 19,781 | — | 19,781 |
(1) | Corporate adjustments include other operating income and expenses such as share-based compensation expenses. Other operating income includes the gain on loss of control of subsidiaries and business transfer. |
(2) | The amount of Segment profit/(loss) is equivalent to (loss)/profit from operating activities on the Interim Condensed Consolidated Statement of Profit or Loss. |
The reconciliation of Segment (loss)/profit to loss before tax from continuing operations is as follows:
For the nine-month periods ended September 30,
(In millions of yen) | ||||||||
2019 | 2020 | |||||||
Segment (loss)/profit | (27,521 | ) | 7,169 | |||||
Finance income | 400 | 233 | ||||||
Finance costs | (1,459 | ) | (1,525 | ) | ||||
Share of loss of associates and joint ventures | (9,567 | ) | (10,658 | ) | ||||
Loss on foreign currency transactions, net | (237 | ) | (1,395 | ) | ||||
Other non-operating income | 2,347 | 1,468 | ||||||
Other non-operating expenses(1) | (187 | ) | (19,441 | ) | ||||
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Loss for the period before tax from continuing operations | (36,224 | ) | (24,149 | ) | ||||
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(1) | Other non-operating expenses for the nine-month period ended September 30, 2020 include the impairment of investments in associates of 17,101 million yen. |
The above items are not allocated to individual segments as these are managed on an overall group basis.
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Table of Contents
(3) Revenues from Major Services
The Group’s revenues from continuing operations from its major services for the nine-month periods ended September 30, 2019 and 2020 are as follows.
Revenues recognized at a point in time mainly consist of revenues from LINE Friends.
For the nine-month periods ended September 30,
(In millions of yen) |
2019 | 2020 | |||||||
Core business | ||||||||
Advertising | ||||||||
Display advertising(1) | 34,640 | 50,936 | ||||||
Account advertising(2) | 46,261 | 43,759 | ||||||
Other advertising(3) | 10,200 | 5,762 | ||||||
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| |||||
Sub-total | 91,101 | 100,457 | ||||||
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Communication, content, and others | ||||||||
Communication(4) | 21,549 | 22,727 | ||||||
Content(5) | 28,694 | 30,679 | ||||||
Others | 3,537 | 1,932 | ||||||
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| |||||
Subtotal | 53,780 | 55,338 | ||||||
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| |||||
Core business total | 144,881 | 155,795 | ||||||
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| |||||
Strategic business | ||||||||
Friends(6) | 14,048 | 8,000 | ||||||
Others(7) | 7,773 | 16,445 | ||||||
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| |||||
Strategic business total | 21,821 | 24,445 | ||||||
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| |||||
Total | 166,702 | 180,240 | ||||||
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|
|
|
(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 –