[This is an English translation prepared for the convenience of non-resident shareholders. Should there be any inconsistency between the translation and the official Japanese text, the latter shall prevail. The Company assumes no responsibility for this translation or for direct, indirect or any other forms of damages arising from the translations.]
Consolidated Financial Results
for the Six Months Ended June 30, 2020 [IFRS]
August 6, 2020 | |
Company name: NEXON Co., Ltd. | |
Stock exchange listing: Tokyo Stock Exchange | |
Stock code: 3659 | |
URL: http://www.nexon.co.jp/ | |
Representative: Owen Mahoney, Chief Executive Officer and President | |
Contact: Shiro Uemura, Representative Director and Chief Financial Officer | Phone: +81-3-6629-5318 |
Scheduled date for filing of quarterly securities report: August 7, 2020 | |
Scheduled date of commencing dividend payments: September 28, 2020 | |
Supplementary briefing material on quarterly financial results: Yes | |
Quarterly financial results briefing: No |
(Amounts are rounded to nearest million yen)
1. Consolidated Financial Results for the Six Months Ended June 30, 2020 (from January 1, 2020 to June 30, 2020)
(1) Consolidated Operating Results (cumulative) | (% changes year-over-year) | |||||||||||||||||||||||
(Millions of yen) | ||||||||||||||||||||||||
Net income | Total | |||||||||||||||||||||||
Operating | Income before | attributable to | ||||||||||||||||||||||
Revenue | Net income | comprehensive | ||||||||||||||||||||||
income | income taxes | owners of the | ||||||||||||||||||||||
income | ||||||||||||||||||||||||
parent company | ||||||||||||||||||||||||
Six months ended | 147,228 | 0.2% | 68,254 | 4.1% | 86,667 | 3.3% | 69,293 | (2.8)% | 69,674 | (4.0)% | 43,514 | 15.2% | ||||||||||||
June 30, 2020 | ||||||||||||||||||||||||
Six months ended | 146,942 | 6.2% | 65,588 | (7.3)% | 83,895 | (3.5)% | 71,302 | (9.2)% | 72,545 | (8.0)% | 37,770 | (19.7)% | ||||||||||||
June 30, 2019 | ||||||||||||||||||||||||
Basic earnings per share | Diluted earnings per share | |||||||||||||||||||||||
Yen | Yen | |||||||||||||||||||||||
Six months ended June 30, 2020 | 78.91 | 77.97 | ||||||||||||||||||||||
Six months ended June 30, 2019 | 81.01 | 80.37 | ||||||||||||||||||||||
(2) Consolidated Financial Position | ||||||||||||||||||||||||
(Millions of yen) | ||||||||||||||||||||||||
Total equity | Ratio of equity | |||||||||||||||||||||||
Total assets | Total equity | attributable to | attributable to | |||||||||||||||||||||
owners of the parent | owners of the parent | |||||||||||||||||||||||
company | company | |||||||||||||||||||||||
As of June 30, 2020 | 765,934 | 674,055 | 663,767 | 86.7% | ||||||||||||||||||||
As of December 31, 2019 | 719,088 | 631,131 | 619,985 | 86.2% | ||||||||||||||||||||
2. Dividends
(Yen) | ||||||
Annual Dividends | ||||||
End of 1st Quarter | End of 2nd Quarter | End of 3rd Quarter | End of Year | Total | ||
FY 2019 | - | 0.00 | - | 2.50 | 2.50 | |
FY 2020 | - | 2.50 | ||||
FY 2020 (Forecast) | - | 2.50 | 5.00 | |||
(Note) Revision of most recently announced dividend forecasts: No
3. Consolidated Financial Results Forecast for the Nine Months Ending September 30, 2020 (from January 1, 2020 to September 30, 2020)
(% changes year-over-year) (Millions of yen)
Net income | ||||||||||||
Revenue | Operating | Income before | Net income | attributable to | Basic earnings | |||||||
income | income taxes | owners of the | per share | |||||||||
parent company | ||||||||||||
Yen | ||||||||||||
3rd Quarter | 224,558 | 12.7% | 98,758 | 9.7% | 118,988 | (5.9)% | 94,440 | (14.4)% | 95,177 | (15.3)% | 107.73 | |
~ | ~ | ~ | ~ | ~ | ~ | ~ | ~ | ~ | ~ | ~ | ||
(cumulative) | ||||||||||||
232,612 | 16.7% | 105,654 | 17.4% | 125,884 | (0.5)% | 100,039 | (9.3)% | 100,710 | (10.4)% | 113.99 | ||
(Note) As it is difficult to reasonably estimate financial results for the year ending December 31, 2020 at the moment, only the financial results forecast for the nine months ending September 30, 2020 is disclosed. Also, as it is difficult to estimate specific figures, disclosure is made with a range. For details, please refer to "1. Qualitative Information on Consolidated Financial Results for the Period (3) Explanation on Future Forecast Information including Consolidated Financial Results Forecast" on page 4 of the Appendix.
*(Notes)
(1) Changes in Significant Subsidiaries during the Period : Yes
(Changes in specified subsidiaries accompanying changes in scope of consolidation)
New 3 entities (Names) VIP Global Super Growth Hedge Fund; | Excluded - entities (Names) - |
Mirae Asset Global Innovation Growth Focus | |
Equity Privately Placed Investment Trust; | |
Samsung Digital Innovation Equity Fund | Private |
Investment Trust 1 |
(Note) Refer to Appendix p.7, "2. Matters Related to Summary Information (Notes), (1) Changes in Significant Subsidiaries during the Period" for details.
- Changes in Accounting Policies and Changes in Accounting Estimates
- Changes in accounting policies required by IFRS: Yes
- Changes in accounting policies other than 1) above: No
- Changes in accounting estimates: No
- Number of Shares Issued (common stock)
-
Total number of shares issued at the end of the period (including treasury stock): As of June 30, 2020: 884,433,539 shares
As of December 31, 2019: 901,530,560 shares - Total number of treasury stock at the end of the period:
As of June 30, 2020: 44 shares
As of December 31, 2019: 19,109,021 shares
- Average number of shares during the period (cumulative): Six months ended June 30, 2020: 882,913,222 shares Six months ended June 30, 2019: 895,477,517 shares
- This quarterly financial report is outside the scope of quarterly review procedures by a certified public accountant or an audit firm.
- Explanation of the Proper Use of Financial Results Forecasts and Other Notes
(Caution Concerning Forward-Looking Statements)
The forward-looking statements including the financial results forecast herein are based on information currently available to the Company and certain assumptions that can be deemed reasonable, and are not intended as the Company's commitment to achieve such forecasts. Actual results may differ significantly from these forecasts due to a wide range of factors. For conditions prerequisite to the financial results forecast and the points to be noted in the use thereof, please refer to "1. Qualitative Information on Consolidated Financial Results for the Period (3) Explanation on Future Forecast Information including Consolidated Financial Results Forecast" on page 4 of the Appendix.
(Method of Obtaining Supplementary Briefing Material on Financial Results)
The supplementary briefing materials on quarterly financial results are available on the Company's website.
Contents of Appendix
1. Qualitative Information on Consolidated Financial Results for the Period …………………………………… | 2 |
(1) Explanation on Operating Results …………………………………………………………………………… | 2 |
(2) Explanation on Financial Position …………………………………………………………………………… | 3 |
(3) Explanation on Future Forecast Information including Consolidated Financial Results Forecast ………… | 4 |
(4) Basic Policy on the Distribution of Profits and Dividend in the Current Fiscal Year……………………… | 6 |
2. Matters Related to Summary Information (Notes) ……………………………………………………………… | 7 |
(1) Changes in Significant Subsidiaries during the Period ……………………………………………………… | 7 |
(2) Changes in Accounting Policies and Changes in Accounting Estimates …………………………………… | 7 |
3. Condensed Consolidated Financial Statements and Major Notes ……………………………………………… | 8 |
(1) Condensed Consolidated Statement of Financial Position ………………………………………………… | 8 |
(2) Condensed Consolidated Income Statement ……………………………………………………………… | 10 |
(3) Condensed Consolidated Statement of Comprehensive Income …………………………………………… | 12 |
(4) Condensed Consolidated Statement of Changes in Equity ………………………………………………… | 14 |
(5) Condensed Consolidated Statement of Cash Flows ………………………………………………………… | 15 |
(6) Notes on Going Concern Assumption ……………………………………………………………………… | 16 |
(7) Changes in Presentation Method …………………………………………………………………………… | 16 |
(8) Notes on Significant Changes in the Amount of Equity Attributable to Owners of the Parent Company … | 16 |
- Segment Information ………………………………………………………………………………………… 17
- Subsequent Events …………………………………………………………………………………………… 22
―1―
1. Qualitative Information on Consolidated Financial Results for the Period
(1) Explanation on Operating Results
Nexon Group discloses our financial outlook for the upcoming quarter as a range so as to provide our shareholders and investors with more accurate information, while the explanation on operating results in our quarterly consolidated financial results focuses on analyses and comparisons with the same quarter in the previous accounting year.
During the three months ended June 30, 2020, the Japanese economy experienced a sharp downturn due to disruptions in economic activities caused by the COVID-19 pandemic. While the declaration of state of emergency was lifted in Japan, a complete restart of economic activities remains uncertain due to fears of the second wave of the pandemic. As for global economy, while global economic activities are gradually restarting from the economic stagnation caused by the COVID-19 pandemic, the road to economic recovery is expected to remain harsh.
Under these circumstances, Nexon Group has operated its PC online and mobile businesses, endeavoring to provide users with an enjoyable game experience by developing high-quality games, acquiring more contents, servicing new titles, and updating existing titles. Specifically, we have established the following as Nexon's four pillars: (i) focusing on massive multiplayer online games, (ii) enabling our service to be played across multiple platforms including PC, console and mobile, (iii) leveraging Nexon's IPs, and (iv) investing in new IPs that we think are really special. We have also worked on initiatives for the growth of our global business.
For the three months ended June 30, 2020, revenue grew year-over-year driven by our business in Korea despite the unfavorable effect of the foreign exchange rates, with the Japanese yen appreciating year-over-year against the major foreign currencies in our business.
In China, we introduced the Labor Day and 12th Anniversary updates to Dungeon&Fighter, our key PC online game. While the numbers of active users and paying users improved after the introduction of the key update in March, which focused on increasing the engagement of existing players and recapturing churned users, they did not remain at those levels for as long as anticipated and dropped off. The PC cafés which had temporarily closed since late January due to the COVID-19 pandemic started to gradually reopen, but there has been no marked increase in the number of PC café users since last quarter mainly because they have not been able to conduct business as usual even after their reopening. Consequently, the numbers of active users and paying users for the three months ended June 30, 2020 remained at lower levels than expected. Revenue was below our outlook and decreased year-over- year.
In Korea, PC online revenue increased year-over-year, driven by the strong performances of MapleStory, Dungeon&Fighter and Sudden Attack, our key PC online titles. Mobile revenue also increased year-over-year driven by positive contributions from V4 which launched in Q4 2019, as well as KartRider Rush+ and EA SPORTSTM FIFA MOBILE, both of which launched in Q2 2020. PC and mobile businesses both grew year-over- year, marking the highest Q2 revenue in Korea.
In Japan, positive contributions from TRAHA which launched in Q2 2020 was more than offset by MapleStory M's revenue decrease due to comparison with Q2 2019 when it launched, as well as the disposition of gloops, Inc., which was our consolidated subsidiary. Consequently, revenue decreased year-over-year.
In North America and Europe, while revenue from MapleStory and Choices: Stories You Play increased, this was more than offset by the year-over-year decreases in revenue from MapleStory 2, OVERHIT, AxE and Darkness Rises. Consequently, revenue decreased year-over-year.
In Rest of World, while revenue from OVERHIT, Moonlight Blade and AxE decreased, this was more than offset by positive contributions from KartRider Rush+ which launched in Q2 2020, V4 which launched in Taiwan, Hong Kong and Macau in Q1 2020, as well as MapleStory's revenue increase. Consequently, revenue increased year- over-year.
In terms of expenses, while royalty costs increased, cost of sales decreased year-over-year due to decreases in HR and AWS costs, as well as the favorable effect of the foreign exchange rates due to the appreciation of the Japanese yen. Selling, general and administrative expenses increased year-over-year mainly due to decreases in marketing and stock option costs being more than offset by increases in research and development costs and platform costs due to the growth of our mobile business. Other expenses decreased year-over-year due to comparisons with Q2 2019, when we recorded impairment losses primarily on rights-of-use assets and prepaid royalties.
Finance costs increased year-over-year as a result of a foreign exchange loss primarily on foreign currency- denominated cash deposits.
―2―
As a result, for the six months ended June 30, 2020, Nexon Group recorded revenue of ¥147,228 million (up 0.2% year-over-year), operating income of ¥68,254 million (up 4.1% year-over-year), income before income taxes of ¥86,667 million (up 3.3% year-over-year) and net income attributable to owners of the parent company of ¥69,674 million (down 4.0% year-over-year).
Business results by reportable segments for the six months ended June 30, 2020 are as follows:
(a) Japan
Revenue for the six months ended June 30, 2020 amounted to ¥1,964 million (down 54.9% year-over-year), and segment loss amounted to ¥1,279 million (segment loss of ¥2,123 million for the six months ended June 30, 2019).
(b) Korea
Revenue for the six months ended June 30, 2020 amounted to ¥134,225 million (up 2.0% year-over-year), and segment profit amounted to ¥75,686 million (down 0.3% year-over-year). Revenue in Korea include royalty income of NEOPLE INC. (a subsidiary of NEXON Korea Corporation, our consolidated subsidiary) attributable to license agreements in China.
(c) China
Revenue for the six months ended June 30, 2020 amounted to ¥1,487 million (down 3.3% year-over-year), and segment profit amounted to ¥948 million (up 3.1% year-over-year).
(d) North America
Revenue for the six months ended June 30, 2020 amounted to ¥8,258 million (down 3.7% year-over-year), and segment loss amounted to ¥563 million (segment loss of ¥2,998 million for the six months ended June 30, 2019).
(e) Other
Revenue for the six months ended June 30, 2020 amounted to ¥1,294 million (up 57.7% year-over-year), and segment loss amounted to ¥1,028 million (segment profit of ¥38 million for the six months ended June 30, 2019).
- Explanation on Financial Position
-
Assets, liabilities and equity (Assets)
Total assets as of June 30, 2020 amounted to ¥765,934 million, an increase of ¥46,846 million from December 31, 2019. Major components include an increase of ¥85,661 million in other financial assets, an increase in cash and cash equivalents of ¥51,883 million, and a decrease of ¥88,887 million in other deposits.
-
Assets, liabilities and equity (Assets)
(Liabilities)
Total liabilities as of June 30, 2020 amounted to ¥91,879 million, an increase of ¥3,922 million from December 31, 2019. Major components include an increase of ¥5,753 million in income taxes payable and a decrease of ¥2,596 million in provisions.
(Equity)
Equity as of June 30, 2020 amounted to ¥674,055 million, an increase of ¥42,924 million from December 31, 2019. Major components of changes in equity include an increase of ¥60,422 million in retained earnings mainly due to recording net income, and a decrease of ¥25,591 million in other equity interest mainly due to changes in exchange differences on translating foreign operations.
As a result, ratio of equity attributable to owners of the parent company was 86.7% (86.2% as of December 31, 2019).
―3―
(b) Cash flows
Cash and cash equivalents (collectively, "cash") as of June 30, 2020 was ¥305,519 million, an increase of ¥51,883 million from December 31, 2019. The increase includes ¥(551) million in effects of exchange rate changes on cash.
Cash flows from each activity for the six months ended June 30, 2020 and their significant components are as follows:
(Cash flows from operating activities)
Net cash provided by operating activities was ¥65,586 million, compared to ¥60,514 million for the six months ended June 30, 2019. Major components of the increase include income before income taxes of ¥86,667 million. Major components of the decrease include a payment of income taxes of ¥11,378 million and a foreign exchange gain of ¥11,149 million.
(Cash flows from investing activities)
Net cash used in investing activities was ¥10,429 million, compared to ¥48,209 million for the six months ended June 30, 2019. Major cash outflows include purchases of investment securities of ¥74,352 million, purchases of securities by investment funds under consolidated subsidiaries of ¥18,343 million and a net increase of ¥3,433 million in restricted deposits. Major cash inflows include a net decrease of ¥79,161 million in time deposits, and proceeds from sale of securities by investment funds under consolidated subsidiaries of ¥8,139 million.
(Cash flows from financing activities)
Net cash used in financing activities was ¥2,723 million, compared to ¥801 million provided by financing activities for the six months ended June 30, 2019. Major cash inflows include proceeds from exercise of stock options of ¥3,526 million. Major cash outflows include purchases of treasury stock of ¥2,783 million, cash dividends paid of ¥2,206 million, and repayment of lease liabilities of ¥1,123 million.
(3) Explanation on Future Forecast Information including Consolidated Financial Results Forecast
The harsh conditions in the business environment surrounding Nexon Group are expected to continue going forward as there are concerns of an economic downturn due to the sharp decline in consumption attributable to the COVID-19 pandemic while the end of the pandemic is still nowhere in sight. However, we do not expect any event that could have material impact on our business to occur going forward.
In our consolidated business outlook, we disclose our expectations for the following quarter as a range to provide more accurate information to our shareholders and investors, since it is difficult to derive full-year consolidated forecasts due to uncertainties in projecting the speed of growth of PC online game and mobile game markets in which Nexon Group's main businesses operate, and because our revenue is largely dependent on such uncertain factors as users' preferences and whether or not we have any hit titles. "Consolidated Financial Results Forecast for the Nine Months Ending September 30, 2020" is the sum of our actual consolidated financial results for the six months ended June 30, 2020 and our consolidated business outlook for the three months ending September 30, 2020. Please refer to the table below for our consolidated financial results forecast for the three months ending September 30, 2020.
For the nine months ending September 30, 2020, Nexon Group expects consolidated revenue in the range of ¥224,558 ~ 232,612 million (an increase of 12.7% ~ 16.7% year-over-year), operating income in the range of ¥98,758 ~ 105,654 million (an increase of 9.7% ~ 17.4% year-over-year), income before income taxes in the range of ¥118,988 ~ 125,884 million (a decrease of 5.9% ~ 0.5% year-over-year), net income in the range of ¥94,440 ~ 100,039 million (a decrease of 14.4% ~ 9.3% year-over-year), net income attributable to owners of the parent company in the range of ¥95,177 ~ 100,710 million (a decrease of 15.3% ~ 10.4% year-over-year), and basic earnings per share in the range of ¥107.73 ~ 113.99. Nexon Group operates its businesses around the world, in Japan, South Korea, China, the United States and other countries. Major exchange rates for Q3 2020 are assumed to be 1 U.S Dollar = ¥106.38, 100 South Korean Won = ¥8.93 and 1 Chinese Yuan = ¥15.24. In general, the exchange rates of the South Korean Won and the Chinese Yuan to Japanese Yen are assumed to be linked to the exchange rate of U.S. Dollar to Japanese Yen. Based on this assumption, we expect that every one Japanese Yen move against the U.S. Dollar will have an impact of approximately ¥763 million on consolidated revenue and approximately ¥338 million on operating income for the three months ending September 30, 2020.
As for revenue based on customer location for the three months ending September 30, 2020, our expectations are ―4―
as follows.
In China, we launched a Summer update of our key PC title Dungeon&Fighter on July 16th and are scheduled to introduce a National Day update in September. As for current KPIs, we have not experienced any major change in the trend since Q2, and MAUs and the number of paying users have remained at low levels compared to last year. Meanwhile, ARPPU is at a higher level than last year, so we expect Dungeon&Fighter's revenue in Q3 to be roughly flat year-over-year. For mobile, we expect revenue to increase due to an expected decrease in revenue from KartRider Rush+ compared to Q3 2019, when a large-scale update was introduced, being more than offset by contributions from Dungeon&Fighter Mobile, a new mobile title scheduled to launch on August 12th. As a result, we expect our overall revenue in China to increase year-over-year.
In Korea, we expect double-digit growth year-over-year from our key PC online title MapleStory, which introduced its Summer update in late June and is performing well, having sustained its momentum from the first half of FY2020. Other major PC online titles such as Dungeon&Fighter and Sudden Attack have also sustained their momentum from the first half of FY2020 and expect double-digit growth in revenue year-over-year. We expect revenue from EA SPORTSTM FIFA ONLINE 4 to be roughly flat compared to Q3 2019 when the service transition from EA SPORTSTM FIFA Online 3 was successfully completed. For mobile, we expect revenue to grow year-over-year driven by benefits from V4 which launched in Q4 2019, KartRider Rush+ and EA SPORTSTM FIFA MOBILE, both of which launched in Q2 2020, and The Kingdom of the Winds: Yeon which launched on July 15th and is off to a good start. As a result, we expect our overall revenue in Korea to increase year-over-year.
In Japan, we expect revenue to decrease year-over-year due to contributions from TRAHA which launched in Q2 2020 being more than offset by the disposition of gloops, Inc. and a decrease in revenue from MapleStory M due to the difficult comparison with Q3 2019 which was right after the game launched.
In North America and Europe, we expect revenue to increase year-over-year driven by a triple-digit growth in MapleStory's revenue year-over-year due to its momentum sustained from Q2 2020. We also expect to benefit from KartRider Rush+ which launched in Q2 2020 and V4 which launched on July 24th.
In the rest of the world as well, we expect revenue to increase year-over-year driven by a double-digit growth in MapleStory's revenue year-over-year due to its momentum sustained from Q2 2020. We also expect to benefit from V4 Taiwan, Hong Kong and Macau services which launched in Q1 2020, V4 global services which launched on July 24th and KartRider Rush+ which launched in Q2 2020.
In Q3 2020, we expect costs to increase year-over-year. We expect platform and royalty costs to increase in proportion to the revenue increase. We also expect increased HR costs primarily due to increases in employees' salaries, performance-linked bonuses, and stock option costs, as well as increased marketing costs associated with promotions for new mobile games.
We expect "Other income" and "Other expenses" to decrease year-over-year because last year in Q3 we recorded a ¥7.5 billion gain on step acquisition in reference to the consolidation of Embark Studios AB and an impairment loss of ¥2.2 billion.
Our business outlook is forecasted based on information currently available to us and it contains various uncertain factors. Therefore, any change in our business condition may cause our actual results to differ from the outlook.
(Reference)
Consolidated financial results forecast for the three months ending September 30, 2020 (from July 1, 2020 to September 30, 2020)
(% changes from the previous fiscal year) (Millions of yen)
Net income | |||||||||||
Revenue | Operating | Income before | Net income | attributable to | Basic earnings | ||||||
income | income taxes | owners of the | per share | ||||||||
parent company | |||||||||||
Yen | |||||||||||
3rd Quarter | 77,330 | 47.7% | 30,505 | 24.9% | 32,321 | (24.2)% | 25,148 | (35.6)% | 25,503 | (36.0)% | 28.83 |
~ | ~ | ~ | ~ | ~ | ~ | ~ | ~ | ~ | ~ | ~ | |
85,384 | 63.1% | 37,400 | 53.2% | 39,217 | (8.0)% | 30,747 | (21.2)% | 31,036 | (22.1)% | 35.08 |
―5―
- Basic Policy on the Distribution of Profits and Dividend in the Current Fiscal Year
Nexon recognizes that one important issue for us is the construction of an organizational framework that enables us to review and execute effective investments for the proactive development of our business in anticipation of future growth, such as the expansion of our existing business and development of new businesses, M&As or acquisition of game publishing rights, for the purpose of strengthening our management base and enhancing our business going forward. We also recognize that the return of profits to shareholders is an important management issue.
Based on such recognition, our basic policy on distribution of surplus is to pay dividends twice a year as interim and year-end dividends. We intend to use the internal reserve funds by taking into account the balance between effective investments for the proactive development of our business in anticipation of future growth and return of profits to shareholders.
As for Nexon's interim dividend for the year ending December 31, 2020, payment of ¥2.5 per share of common stock of Nexon with a record date of June 30, 2020 was approved at the Board of Directors meeting held on August 6, 2020. The dividend payment will commence on September 28, 2020.
―6―
2. Matters Related to Summary Information (Notes)
(1) Changes in Significant Subsidiaries during the Period
During the three months ended March 31, 2020, Nexon Group invested in the investment funds VIP Global Super Growth Hedge Fund, Mirae Asset Global Innovation Growth Focus Equity Privately Placed Investment Trust and Samsung Digital Innovation Equity Fund Private Investment Trust 1, and we have included these funds in the scope of our consolidation. The respective amounts of investment received by these funds correspond to tenone hundredth (10/100) or more of Nexon's capital stock. Consequently, they are also deemed to be our specified subsidiaries.
-
Changes in Accounting Policies and Changes in Accounting Estimates (Changes in accounting policies required by IFRS)
The accounting policies used to prepare these condensed consolidated financial statements are consistent with those applied in the consolidated financial statements for the year ended December 31, 2019 unless otherwise noted, except for the new standards applied as listed below. Nexon Group calculated income taxes for the six months ended June 30, 2020, based on the estimated average annual effective tax rate.
Nexon Group has applied the following standards since Q1 2020, but the application of these standards did not have material impacts on the six months ended June 30, 2020.
StandardsTitle
IFRS 3 Business Combinations
IAS 1 Presentation of Financial
Statements
IAS 8 Accounting Policies,
Changes in Accounting
Estimates and Errors
IFRS 9 Financial Instruments
IAS 39 Financial Instruments:
Recognition and
IFRS 7 Measurement
Financial Instruments:
Disclosures
Overview of New or Revised Standard
Improved the definition of "business"
Clarified the definition of "material"
Revised the requirements for certain hedge accounting to mitigate the potential impact of uncertainties caused by the IBOR reform
―7―
3. Condensed Consolidated Financial Statements and Major Notes
(1) Condensed Consolidated Statement of Financial Position
(Millions of yen) | |||
As of December 31, 2019 | As of June 30, 2020 | ||
Assets | |||
Current assets | |||
Cash and cash equivalents | 253,636 | 305,519 | |
Trade and other receivables | 28,643 | 36,786 | |
Other deposits | 257,331 | 168,444 | |
Other financial assets | 8,418 | 20,074 | |
Other current assets | 5,468 | 7,286 | |
Total current assets | 553,496 | 538,109 | |
Non-current assets | |||
Property, plant and equipment | 23,481 | 22,330 | |
Goodwill | 42,480 | 38,178 | |
Intangible assets | 21,519 | 15,702 | |
Right-of-use assets | 6,612 | 7,545 | |
Investments accounted for using equity method | 2,515 | 2,634 | |
Other financial assets | 47,256 | 121,261 | |
Other non-current assets | 243 | 202 | |
Deferred tax assets | 21,486 | 19,973 | |
Total non-current assets | 165,592 | 227,825 | |
Total assets | 719,088 | 765,934 | |
―8―
(Millions of yen) | |||
As of December 31, 2019 | As of June 30, 2020 | ||
Liabilities and equity | |||
Liabilities | |||
Current liabilities | |||
Trade and other payables | 7,753 | 11,179 | |
Deferred income | 10,250 | 10,214 | |
Borrowings | 2,223 | 1,980 | |
Income taxes payable | 7,403 | 13,156 | |
Lease liabilities | 2,129 | 2,053 | |
Provisions | 4,099 | 1,567 | |
Other current liabilities | 7,311 | 7,118 | |
Total current liabilities | 41,168 | 47,267 | |
Non-current liabilities | |||
Deferred income | 15,950 | 14,784 | |
Lease liabilities | 8,507 | 8,148 | |
Other financial liabilities | 826 | 766 | |
Provisions | 260 | 196 | |
Other non-current liabilities | 4,472 | 4,379 | |
Deferred tax liabilities | 16,774 | 16,339 | |
Total non-current liabilities | 46,789 | 44,612 | |
Total liabilities | 87,957 | 91,879 | |
Equity | |||
Capital stock | 17,967 | 20,318 | |
Capital surplus | 35,688 | 15,069 | |
Treasury stock | (27,219) | (0) | |
Other equity interest | 38,511 | 12,920 | |
Retained earnings | 555,038 | 615,460 | |
Total equity attributable to owners of the parent | |||
619,985 | 663,767 | ||
company | |||
Non-controlling interests | 11,146 | 10,288 | |
Total equity | 631,131 | 674,055 | |
Total liabilities and equity | 719,088 | 765,934 | |
―9―
(2) Condensed Consolidated Income Statement | ||
For the six months ended June 30, 2019 and 2020 | (Millions of yen) | |
Six months ended June 30 | ||
2019 | 2020 | |
(From January 1, 2019 to June | (From January 1, 2020 to June | |
30, 2019) | 30, 2020) | |
Revenue | 146,942 | 147,228 |
Cost of sales | (30,955) | (29,917) |
Gross profit | 115,987 | 117,311 |
Selling, general and administrative expenses | (44,233) | (43,536) |
Other income | 610 | 1,298 |
Other expenses | (6,776) | (6,819) |
Operating income | 65,588 | 68,254 |
Finance income | 19,466 | 18,533 |
Finance costs | (724) | (493) |
Equity in profit (loss) of affiliates | (435) | 373 |
Income before income taxes | 83,895 | 86,667 |
Income taxes expense | (12,593) | (17,374) |
Net income | 71,302 | 69,293 |
Attributable to: | ||
Owners of the parent company | 72,545 | 69,674 |
Non-controlling interests | (1,243) | (381) |
Net income | 71,302 | 69,293 |
Earnings per share | ||
(Yen) | (Yen) | |
(attributable to owners of the parent company) | ||
Basic earnings per share | 81.01 | 78.91 |
Diluted earnings per share | 80.37 | 77.97 |
―10―
For the three months ended June 30, 2019 and 2020 | ||
(Millions of yen) | ||
Three months ended June 30 | ||
2019 | 2020 | |
(From April 1, 2019 to June | (From April 1, 2020 to June | |
30, 2019) | 30, 2020) | |
Revenue | 53,865 | 64,466 |
Cost of sales | (15,055) | (14,574) |
Gross profit | 38,810 | 49,892 |
Selling, general and administrative expenses | (22,178) | (22,922) |
Other income | 181 | 101 |
Other expenses | (3,826) | (360) |
Operating income | 12,987 | 26,711 |
Finance income | 9,663 | 4,598 |
Finance costs | (466) | (6,891) |
Equity in profit (loss) of affiliates | (101) | 260 |
Income before income taxes | 22,083 | 24,678 |
Income taxes expense | (3,588) | (5,139) |
Net income | 18,495 | 19,539 |
Attributable to: | ||
Owners of the parent company | 19,145 | 19,763 |
Non-controlling interests | (650) | (224) |
Net income | 18,495 | 19,539 |
Earnings per share | ||
(Yen) | (Yen) | |
(attributable to owners of the parent company) | ||
Basic earnings per share | 21.37 | 22.37 |
Diluted earnings per share | 21.21 | 21.97 |
―11―
- Condensed Consolidated Statement of Comprehensive Income For the six months ended June 30, 2019 and 2020
(Millions of yen) | |||
Six months ended June 30 | |||
2019 | 2020 | ||
(From January 1, 2019 to June | (From January 1, 2020 to June | ||
30, 2019) | 30, 2020) | ||
Net income | 71,302 | 69,293 | |
Other comprehensive income | |||
Items that will not be reclassified to net income | |||
Financial assets measured at fair value through | (349) | 2,291 | |
other comprehensive income | |||
Re-measurement of defined benefit pension plans | (58) | (10) | |
Income taxes | 33 | (583) | |
Total items that will not be reclassified to net | |||
(374) | 1,698 | ||
income | |||
Items that may be reclassified subsequently to net | |||
income | |||
Exchange differences on translating foreign | (33,157) | (27,476) | |
operations | |||
Other comprehensive income under equity | (1) | (1) | |
method | |||
Total items that may be reclassified subsequently | |||
(33,158) | (27,477) | ||
to net income | |||
Total other comprehensive income | (33,532) | (25,779) | |
Total comprehensive income | 37,770 | 43,514 | |
Attributable to: | |||
Owners of the parent company | 39,633 | 44,423 | |
Non-controlling interests | (1,863) | (909) | |
Total comprehensive income | 37,770 | 43,514 | |
―12―
For the three months ended June 30, 2019 and 2020 | |||
(Millions of yen) | |||
Three months ended June 30 | |||
2019 | 2020 | ||
(From April 1, 2019 to June 30, (From April 1, 2020 to June 30, | |||
2019) | 2020) | ||
Net income | 18,495 | 19,539 | |
Other comprehensive income | |||
Items that will not be reclassified to net income | |||
Financial assets measured at fair value through | (479) | 2,035 | |
other comprehensive income | |||
Re-measurement of defined benefit pension plans | (9) | (37) | |
Income taxes | 106 | (502) | |
Total items that will not be reclassified to net | |||
(382) | 1,496 | ||
income | |||
Items that may be reclassified subsequently to net | |||
income | |||
Exchange differences on translating foreign | (26,138) | 7,600 | |
operations | |||
Other comprehensive income under equity | (2) | 0 | |
method | |||
Total items that may be reclassified subsequently | |||
(26,140) | 7,600 | ||
to net income | |||
Total other comprehensive income | (26,522) | 9,096 | |
Total comprehensive income | (8,027) | 28,635 | |
Attributable to: | |||
Owners of the parent company | (6,926) | 28,727 | |
Non-controlling interests | (1,101) | (92) | |
Total comprehensive income | (8,027) | 28,635 | |
―13―
(4) Condensed Consolidated Statement of Changes in Equity | |||||||||
For the six months ended June 30, 2019 (From January 1, 2019 to June 30, 2019) | |||||||||
(Millions of yen) | |||||||||
Equity attributable to owners of the parent company | Non- | ||||||||
Total | |||||||||
Other | |||||||||
Capital | Capital | Treasury | Retained | controlling | |||||
equity | Total | equity | |||||||
stock | surplus | stock | earnings | interests | |||||
interest | |||||||||
Balance at December 31, 2018 | 14,402 | 34,814 | (1) | 64,068 | 441,985 | 555,268 | 10,209 | 565,477 | |
Adjustment of applying | - | - | - | - | (2,965) | (2,965) | - | (2,965) | |
IFRS16 | |||||||||
Restated total equity at | |||||||||
14,402 | 34,814 | (1) | 64,068 | 439,020 | 552,303 | 10,209 | 562,512 | ||
January 1, 2019 | |||||||||
Net income for the period | - | - | - | - | 72,545 | 72,545 | (1,243) | 71,302 | |
Other comprehensive income | - | - | - (32,912) | - (32,912) | (620) | (33,532) | |||
Total comprehensive income | - | - | - (32,912) | 72,545 | 39,633 | (1,863) | 37,770 | ||
Reclassification from capital | - | (423) | - | - | 423 | - | - | - | |
surplus to retained earnings | |||||||||
Issue of shares | 1,050 | 1,050 | - | - | - | 2,100 | - | 2,100 | |
Stock issue cost | - | (7) | - | - | - | (7) | - | (7) | |
Share-based compensation | - | - | - | 1,004 | - | 1,004 | - | 1,004 | |
Reclassification from other | |||||||||
equity interest to retained | - | - | - | 65 | (65) | - | - | - | |
earnings | |||||||||
Total transactions with the | |||||||||
1,050 | 620 | - | 1,069 | 358 | 3,097 | - | 3,097 | ||
owners | |||||||||
Balance at June 30, 2019 | 15,452 | 35,434 | (1) | 32,225 | 511,923 | 595,033 | 8,346 | 603,379 | |
For the six months ended June 30, 2020 (From January 1, 2020 to June 30, 2020)
(Millions of yen) | |||||||||
Equity attributable to owners of the parent company | Non- | ||||||||
Total | |||||||||
Other | |||||||||
Capital | Capital | Treasury | Retained | controlling | |||||
equity | Total | equity | |||||||
stock | surplus | stock | earnings | interests | |||||
interest | |||||||||
Balance at January 1, 2020 | 17,967 | 35,688 | (27,219) | 38,511 | 555,038 | 619,985 | 11,146 | 631,131 | |
Net income for the period | - | - | - | - | 69,674 | 69,674 | (381) | 69,293 | |
Other comprehensive income | - | - | - (25,251) | - (25,251) | (528) | (25,779) | |||
Total comprehensive income | - | - | - (25,251) | 69,674 | 44,423 | (909) | 43,514 | ||
Issue of shares | 2,351 | 2,351 | - | - | - | 4,702 | - | 4,702 | |
Stock issue cost | - | (16) | - | - | - | (16) | - | (16) | |
Payment of dividends | - | - | - | - | (2,206) | (2,206) | - | (2,206) | |
Share-based compensation | - | - | - | (358) | - | (358) | - | (358) | |
Changes in interests in | - | 20 | - | - | - | 20 | 51 | 71 | |
subsidiaries | |||||||||
Purchase of treasury stock | - | (2) | (2,781) | - | - | (2,783) | - | (2,783) | |
Cancellation of treasury stock | - (22,972) | 30,000 | - | (7,028) | - | - | - | ||
Reclassification from other | |||||||||
equity interest to retained | - | - | - | 18 | (18) | - | - | - | |
earnings | |||||||||
Total transactions with the | |||||||||
2,351 | (20,619) | 27,219 | (340) | (9,252) | (641) | 51 | (590) | ||
owners | |||||||||
Balance at June 30, 2020 | 20,318 | 15,069 | (0) | 12,920 | 615,460 | 663,767 | 10,288 | 674,055 | |
―14― |
(5) Condensed Consolidated Statement of Cash Flows | |||
(Millions of yen) | |||
Six months ended June 30 | |||
2019 | 2020 | ||
(From January 1, 2019 to June (From January 1, 2020 to June | |||
30, 2019) | 30, 2020) | ||
Cash flows from operating activities | |||
Income before income taxes | 83,895 | 86,667 | |
Depreciation and amortization | 3,451 | 4,163 | |
Share-based compensation expenses | 1,526 | 884 | |
Interest and dividend income | (6,855) | (4,964) | |
Interest expense | 122 | 155 | |
Impairment loss | 6,538 | 6,314 | |
Equity in (profit) loss of affiliates | 435 | (373) | |
Exchange (gain) loss | (10,203) | (11,149) | |
(Increase) decrease in trade and other receivables | (4,628) | (10,089) | |
(Increase) decrease in other current assets | (1,857) | (2,316) | |
(Decrease) increase in trade and other payables | (562) | 3,784 | |
(Decrease) increase in deferred income | (710) | 20 | |
(Decrease) increase in provisions | (1,308) | (2,348) | |
Other | (1,257) | (1,555) | |
Subtotal | 68,587 | 69,193 | |
Interest and dividends received | 6,621 | 7,977 | |
Interest paid | (112) | (206) | |
Income taxes paid | (14,582) | (11,378) | |
Net cash provided by operating activities | 60,514 | 65,586 | |
Cash flows from investing activities | |||
Net decrease (increase) in restricted deposit | (31) | (3,433) | |
Net decrease (increase) in time deposit | (49,240) | 79,161 | |
Purchases of property, plant and equipment | (731) | (882) | |
Proceeds from sales of property, plant and equipment | 12 | 19 | |
Purchases of intangible assets | (290) | (383) | |
Payments associated with increase in long-term | (29) | (37) | |
prepaid expenses | |||
Purchases of securities by investment funds under | - | (18,343) | |
consolidated subsidiaries | |||
Proceeds from sale of securities by investment funds | - | 8,139 | |
under consolidated subsidiaries | |||
Purchases of investment securities | - | (74,352) | |
Proceeds from sale and redemption of investment | 2,395 | 276 | |
securities | |||
Other | (295) | (594) | |
Net cash used in investing activities | (48,209) | (10,429) | |
Cash flows from financing activities | |||
Net increase (decrease) in short-term borrowings | - | (137) | |
Proceeds from exercise of stock options | 1,564 | 3,526 | |
Purchases of treasury stock | - | (2,783) | |
Cash dividends paid | (0) | (2,206) | |
Repayment of lease liability | (763) | (1,123) | |
Net cash provided by (used in) financing activities | 801 | (2,723) | |
Net (decrease) increase in cash and cash equivalents | 13,106 | 52,434 | |
Cash and cash equivalents at the beginning of the period | 205,292 | 253,636 | |
Effects of exchange rate changes on cash and cash | (7,649) | (551) | |
equivalents | |||
Cash and cash equivalents at the end of the period | 210,749 | 305,519 | |
―15― |
- Notes on Going Concern Assumption Not applicable.
- Changes in Presentation Method
(Condensed consolidated statement of cash flows)
For the three months ended March 31, 2020, presentation of "Purchases of securities by investment funds under consolidated subsidiaries" was included in "Purchases of investment securities" under "Cash flows from investing activities," and "Proceeds from sale of securities by investment funds under consolidated subsidiaries" was included in "Proceeds from sale and redemption of investment securities" under "Cash flows from investing activities." However, these items are separately listed from the six months ended June 30, 2020 due to increased materiality of each of their monetary amounts. Their presentation in the condensed consolidated statement of cash flows for the three months ended March 31, 2020 has been reclassified in the six months ended June 30, 2020 to
reflect these changes in the presentation method.
Consequently, the presentation of the following amounts in the condensed consolidated statement of cash flows for the three months ended March 31, 2020 were each reclassified as follows: ¥(9,879) million was reclassified from "Purchases of investment securities" to "Purchases of securities by investment funds under consolidated subsidiaries" under "Cash flows from investing activities," and ¥1,433 million was reclassified from "Proceeds from sale and redemption of investment securities" to "Proceeds from sale of securities by investment funds under consolidated subsidiaries" under "Cash flows from investing activities."
(8) Notes on Significant Changes in the Amount of Equity Attributable to Owners of the Parent Company
(a) Amount of dividends paid | |||||||||
For the six months ended June 30, 2020 (From January 1, 2020 through June 30, 2020) | |||||||||
Class of stock | Total dividends | Dividend per | Record date | Effective date | |||||
share | |||||||||
(million yen) | (yen) | ||||||||
Resolution of the | |||||||||
Board of Directors | Common stock | 2,206 | 2.5 | December 31, | March 26, 2020 | ||||
on February 20, | 2019 | ||||||||
2020 |
Of the dividends for which the record date belongs to the six months ended June 30, 2020, that for which the effective date of dividends is in the following period is as follows:
Class of stock | Total dividends | Dividend per | Record date | Effective date | ||||||
share | ||||||||||
(million yen) | (yen) | |||||||||
Resolution of the | September 28, | |||||||||
Board of Directors Common stock | 2,211 | 2.5 June 30, 2020 | ||||||||
2020 | ||||||||||
on August 6, 2020 | ||||||||||
(b) Purchases of treasury stock
Nexon's treasury stock increased by ¥2,781 million as a result of the purchase of 1,862,000 shares of treasury stock during the six months ended June 30, 2020 based on a resolution of the Board of Directors on September 9, 2019.
(c) Retirement of treasury stock
During the six months ended June 30, 2020, Nexon retired 20,971,021 shares of its treasury stock based on a resolution of the Board of Directors' meeting held on February 13, 2020. As a result, treasury stock and other capital surplus each decreased by ¥30,000 million. Due to the retirement of such treasury stock, the balance of other capital surplus of Nexon as of June 30, 2020 was negative ¥7,028 million and other retained earnings were reduced by this amount.
―16―
- Segment Information
- Outline of reportable segments
Reportable segments of Nexon Group are components of Nexon Group, for which separate financial statements are available, that are evaluated regularly by the board of directors in deciding how to allocate management resources and in assessing performance.
Nexon Group is engaged in production, development and distribution of PC online games and mobile games, and the Company (in Japan) and its local consolidated subsidiaries (overseas) develop overall strategies and operate business activities for their respective products and services in each region as independent units. Accordingly, Nexon Group is comprised of geographical business segments based on production, development, and distribution of PC online games and mobile games. Nexon Group has formed its reportable segments by consolidating business segments based on the geographic location since subsidiaries in the same region, due to their business characteristics, receive similar impact of the foreign exchange fluctuation risk on their operating results and the ratio of the impact to operating results is high. There are five reportable segments: "Japan", "Korea", "China", "North America" and "Other" which includes Europe and Asian countries.
Furthermore, IFRS 15 is applied by Nexon Group. We have therefore presented the revenue arising from our contracts with customers by breaking it down into PC online, mobile and other revenues based on such contracts with customers.
- Revenue, profit or loss by reportable segment Information on the segments of Nexon Group is as follows:
(For the six months ended June 30)
For the six months ended June 30, 2019 (From January 1, 2019 to June 30, 2019)
(Millions of yen) | ||||||||||
Reportable Segments | Adjustments | |||||||||
Total | Consolidated | |||||||||
North | ||||||||||
Japan | Korea | China | Other | (Note 3) | ||||||
America | ||||||||||
Revenue | ||||||||||
Revenue from external | ||||||||||
customers | ||||||||||
PC online | 1,853 | 108,419 | 1,539 | 1,932 | 819 | 114,562 | - | 114,562 | ||
Mobile | 2,463 | 22,126 | - | 6,589 | - | 31,178 | - | 31,178 | ||
Other | 37 | 1,106 | - | 57 | 2 | 1,202 | - | 1,202 | ||
Total revenue from | ||||||||||
4,353 | 131,651 | 1,539 | 8,578 | 821 | 146,942 | - | 146,942 | |||
external customers | ||||||||||
Intersegment revenue | 512 | 1,050 | - | 639 | 142 | 2,343 | (2,343) | - | ||
Total | 4,865 | 132,701 | 1,539 | 9,217 | 963 | 149,285 | (2,343) | 146,942 | ||
Segment profit or loss | ||||||||||
(2,123) | 75,903 | 920 | (2,998) | 38 | 71,740 | 14 | 71,754 | |||
(Note 1) | ||||||||||
Other income (expense), net | (6,166) | |||||||||
(Note 4) | ||||||||||
Operating income | 65,588 | |||||||||
Finance income (costs), net | ||||||||||
18,742 | ||||||||||
(Note 6) | ||||||||||
Equity in loss of affiliates | (435) | |||||||||
Income before income taxes | 83,895 |
(Notes) 1. Segment profit or loss is calculated by deducting cost of sales and selling, general and administrative expenses from revenue.
- Price for intersegment transactions is based on the general market price.
- Adjustments in segment profit or loss of ¥14 million represent elimination of intersegment transactions.
- A major component of other expense is impairment of prepaid royalty of ¥5,199 million.
- For PC online and mobile, performance obligations are fulfilled and revenues are recognized over a certain period of time mainly because control over services is transferred over a certain period of time.
- A major component of finance income is foreign exchange gain of ¥12,236 million.
―17―
For the six months ended June 30, 2020 (From January 1, 2020 to June 30, 2020)
(Millions of yen) | ||||||||||
Reportable Segments | Total | Adjustments | Consolidated | |||||||
North | ||||||||||
Japan | Korea | China | Other | (Note 3) | ||||||
America | ||||||||||
Revenue | ||||||||||
Revenue from external | ||||||||||
customers | ||||||||||
PC online | 1,646 | 103,755 | 1,487 | 2,255 | 698 | 109,841 | - | 109,841 | ||
Mobile | 293 | 29,696 | - | 5,994 | 596 | 36,579 | - | 36,579 | ||
Other | 25 | 774 | - | 9 | - | 808 | - | 808 | ||
Total revenue from | ||||||||||
1,964 | 134,225 | 1,487 | 8,258 | 1,294 | 147,228 | - | 147,228 | |||
external customers | ||||||||||
Intersegment revenue | 492 | 1,239 | - | 303 | 179 | 2,213 | (2,213) | - | ||
Total | 2,456 | 135,464 | 1,487 | 8,561 | 1,473 | 149,441 | (2,213) | 147,228 | ||
Segment profit or loss | (1,279) | 75,686 | 948 | (563) | (1,028) | 73,764 | 11 | 73,775 | ||
(Note 1) | ||||||||||
Other income (expense), net | (5,521) | |||||||||
Operating income | 68,254 | |||||||||
Finance income (costs), net | ||||||||||
18,040 | ||||||||||
(Note 5) | ||||||||||
Equity in profit of affiliates | 373 | |||||||||
Income before income taxes | 86,667 |
(Notes) 1. Segment profit or loss is calculated by deducting cost of sales and selling, general and administrative expenses from revenue.
- Price for intersegment transactions is based on the general market price.
- Adjustments in segment profit or loss of ¥11 million represent elimination of intersegment transactions.
- For PC online and mobile, performance obligations are fulfilled and revenues are recognized over a certain period of time mainly because control over services is transferred over a certain period of time.
- A major component of finance income is foreign exchange gain of ¥11,922 million.
―18―
(For the three months ended June 30) | |||||||||
For the three months ended June 30, 2019 (From April 1, 2019 to June 30, 2019) | |||||||||
(Millions of yen) | |||||||||
Reportable Segments | Total | Adjustments | Consolidated | ||||||
North | |||||||||
Japan | Korea | China | Other | (Note 3) | |||||
America | |||||||||
Revenue | |||||||||
Revenue from external | |||||||||
customers | |||||||||
PC online | 852 | 34,555 | 669 | 987 | 369 | 37,432 | - | 37,432 | |
Mobile | 1,011 | 11,882 | - | 2,847 | - 15,740 | - | 15,740 | ||
Other | 21 | 642 | - | 28 | 2 | 693 | - | 693 | |
Total revenue from | 1,884 | 47,079 | 669 | 3,862 | 371 | 53,865 | - | 53,865 | |
external customers | |||||||||
Intersegment revenue | 247 | 541 | - | 304 | 81 | 1,173 | (1,173) | - | |
Total | 2,131 | 47,620 | 669 | 4,166 | 452 | 55,038 | (1,173) | 53,865 | |
Segment profit or loss | |||||||||
(1,165) | 19,038 | 324 | (1,613) | 36 | 16,620 | 12 | 16,632 | ||
(Note 1) | |||||||||
Other income (expense), net | |||||||||
(3,645) | |||||||||
(Note 4) | |||||||||
Operating income | 12,987 | ||||||||
Finance income (costs), net | |||||||||
9,197 | |||||||||
(Note 6) | |||||||||
Equity in loss of affiliates | (101) | ||||||||
Income before income taxes | 22,083 |
(Notes) 1. Segment profit or loss is calculated by deducting cost of sales and selling, general and administrative expenses from revenue.
- Price for intersegment transactions is based on the general market price.
- Adjustments in segment profit or loss of ¥12 million represent elimination of intersegment transactions.
- A major component of other expense is impairment of prepaid royalty of ¥2,445 million.
- For PC online and mobile, performance obligations are fulfilled and revenues are recognized over a certain period of time mainly because control over services is transferred over a certain period of time.
- A major component of finance income is foreign exchange gain of ¥5,901 million.
―19―
For the three months ended June 30, 2020 (From April 1, 2020 to June 30, 2020)
(Millions of yen) | |||||||||
Reportable Segments | Total | Adjustments | Consolidated | ||||||
North | |||||||||
Japan | Korea | China | Other | (Note 3) | |||||
America | |||||||||
Revenue | |||||||||
Revenue from external | |||||||||
customers | |||||||||
PC online | 929 | 41,518 | 584 | 1,271 | 266 | 44,568 | - | 44,568 | |
Mobile | 132 | 16,031 | - | 3,266 | 114 | 19,543 | - | 19,543 | |
Other | 8 | 340 | - | 7 | - | 355 | - | 355 | |
Total revenue from | |||||||||
1,069 | 57,889 | 584 | 4,544 | 380 | 64,466 | - | 64,466 | ||
external customers | |||||||||
Intersegment revenue | 268 | 728 | - | 159 | 89 | 1,244 | (1,244) | - | |
Total | 1,337 | 58,617 | 584 | 4,703 | 469 | 65,710 | (1,244) | 64,466 | |
Segment profit or loss | (624) | 27,962 | 295 | (102) | (567) | 26,964 | 6 | 26,970 | |
(Note 1) | |||||||||
Other income (expense), net | (259) | ||||||||
Operating income | 26,711 | ||||||||
Finance income (costs), net | (2,293) | ||||||||
(Note 5) | |||||||||
Equity in profit of affiliates | 260 | ||||||||
Income before income taxes | 24,678 |
(Notes) 1. Segment profit or loss is calculated by deducting cost of sales and selling, general and administrative expenses from revenue.
- Price for intersegment transactions is based on the general market price.
- Adjustments in segment profit or loss of ¥ 6 million represent elimination of intersegment transactions.
- For PC online and mobile, performance obligations are fulfilled and revenues are recognized over a certain period of time mainly because control over services is transferred over a certain period of time.
- A major component of finance cost is foreign exchange loss of ¥6,741 million.
―20―
(c) Information on each region
Revenue from external customers are as follows:
Nexon Group has made a change to a part of its regional segmentation of revenue from external customers from the three months ended March 31, 2020. The numbers for the six months ended June 30, 2019 and for the three months ended June 30, 2019 have also been adjusted accordingly.
(For the six months ended June 30)
For the six months ended June 30, 2019 (From January 1, 2019 to June 30, 2019)
(Millions of yen) | ||||
Revenue by major business | Total | |||
PC online | Mobile | Other | ||
Main regional market | ||||
Japan | 1,871 | 6,560 | 10 | 8,441 |
Korea | 29,808 | 11,102 | 834 | 41,744 |
China | 78,681 | 90 | 61 | 78,832 |
North America and | 1,752 | 8,739 | 208 | 10,699 |
Europe | ||||
Rest of World | 2,450 | 4,687 | 89 | 7,226 |
Total | 114,562 | 31,178 | 1,202 | 146,942 |
(Notes) 1. Revenue is classified into country or region category based on the customers' location.
- The category of country or region is based on geographic proximity.
- Main countries or regions in each category:
- North America and Europe: USA, Canada and Europe
- Rest of World: Central and South America and Asian countries
For the six months ended June 30, 2020 (From January 1, 2020 to June 30, 2020)
(Millions of yen) | ||||
Revenue by major business | Total | |||
PC online | Mobile | Other | ||
Main regional market | ||||
Japan | 1,647 | 2,675 | 26 | 4,348 |
Korea | 50,934 | 20,938 | 669 | 72,541 |
China | 52,006 | 707 | 5 | 52,718 |
North America and | 2,029 | 7,119 | 74 | 9,222 |
Europe | ||||
Rest of World | 3,225 | 5,140 | 34 | 8,399 |
Total | 109,841 | 36,579 | 808 | 147,228 |
(Notes) 1. Revenue is classified into country or region category based on the customers' location.
- The category of country or region is based on geographic proximity.
- Main countries or regions in each category:
- North America and Europe: USA, Canada and Europe
- Rest of World: Central and South America and Asian countries
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(For the three months ended June 30)
For the three months ended June 30, 2019 (From April 1, 2019 to June 30, 2019)
(Millions of yen) | ||||
Revenue by major business | Total | |||
PC online | Mobile | Other | ||
Main regional market | ||||
Japan | 858 | 3,742 | 8 | 4,608 |
Korea | 13,443 | 5,543 | 401 | 19,387 |
China | 21,204 | 46 | 32 | 21,282 |
North America and | 892 | 4,075 | 181 | 5,148 |
Europe | ||||
Rest of World | 1,035 | 2,334 | 71 | 3,440 |
Total | 37,432 | 15,740 | 693 | 53,865 |
(Notes) 1. Revenue is classified into country or region category based on the customers' location.
- The category of country or region is based on geographic proximity.
- Main countries or regions in each category:
- North America and Europe: USA, Canada and Europe
- Rest of World: Central and South America and Asian countries
For the three months ended June 30, 2020 (From April 1, 2020 to June 30, 2020)
(Millions of yen) | ||||
Revenue by major business | Total | |||
PC online | Mobile | Other | ||
Main regional market | ||||
Japan | 930 | 1,839 | 12 | 2,781 |
Korea | 22,077 | 10,435 | 285 | 32,797 |
China | 18,959 | 255 | 5 | 19,219 |
North America and | 1,136 | 3,883 | 35 | 5,054 |
Europe | ||||
Rest of World | 1,466 | 3,131 | 18 | 4,615 |
Total | 44,568 | 19,543 | 355 | 64,466 |
(Notes) 1. Revenue is classified into country or region category based on the customers' location.
- The category of country or region is based on geographic proximity.
- Main countries or regions in each category:
- North America and Europe: USA, Canada and Europe
- Rest of World: Central and South America and Asian countries
(Change in presentation method)
From the three months ended March 31, 2020, the revenue from Europe, which was previously included in "Other [Rest of World]" is included along with "North America" under the category of "North America and Europe." This is due to increasing similarity between these regions attributable to the same service being provided by Nexon Group in North America and Europe.
As a result, in the six months and three months ended June 30, 2019, ¥2,533 million and ¥1,148 million, respectively, have been reclassified from "Other [Rest of World]" to "North America and Europe."
- Subsequent Events Not applicable.
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Nexon Co. Ltd. published this content on 06 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 06 August 2020 06:18:19 UTC