Rakuten Reports Consolidated Financial Results (IFRS) for the Six Months Ended June 30, 2013

  Rakuten Reports Consolidated Financial Results (IFRS) for the Six Months
  Ended June 30, 2013

Business Wire

TOKYO -- August 2, 2013

Rakuten, Inc. (TSE JASDAQ:4755) today announced consolidated financial reports
(IFRS) for the six months ended June 30, 2013. The Rakuten Group achieved
revenue of ¥240,880 million, a 32.9% year-on-year increase, in the first half
of the current fiscal year. Operating income grew 26.0% year on year to
¥47,576 million, and net income attributable to owners of the company amounted
to ¥25,616 million, up 18.9% compared to the same period in the previous year.

Qualitative Information, Financial Statements, etc.

1. Qualitative Information Concerning Consolidated Business Results

(1) Business Results for the Second Quarter of the Fiscal Year Ending December
31, 2013

In the world economy during the first half of the current fiscal year (January
1, 2013 to June 30, 2013), the European debt crisis and a slowdown in economic
growth in newly developing regions continued to pose risks of an economic
downturn. Meanwhile, in the Japanese economy, the recovery trend has been
strong, as consumer sentiment recovered and business confidence of companies
improved with the background of a rise in stock prices, in response to
monetary easing measures and other factors.

Under such an environment, the Rakuten Group enhanced its services for
smartphones, tablet devices and other smart devices, whose users have been
increasing in number at exponential rates, engaged in marketing utilizing big
data, and promoted Rakuten Ichiba’s B2B2C marketplace model to the world,
mainly through large-scale sales events such as the “Rakuten Super Sale”. We
also worked on enhancing logistics services through “Rakuten Super Logistics”,
our logistics agency services for corporate clients. In the Internet Finance
business segment, we aggressively expanded the business centering on Rakuten
Card, which has notable synergies with Internet Services. The revitalization
of the financial market also contributed to the growth in profits of the
finance business during the first half of the current fiscal year. Through
these and other measures, the “Rakuten Eco-System” continues to show solid
expansion and growth.

(Millions of yen)
                            Six months      Six months      Amount    % Change
                          ended          ended          Change   YoY
                            June 30, 2012   June 30, 2013   YoY
Revenue                     181,249         240,880         59,631    32.9%
Operating income            37,754          47,576          9,822     26.0%
Net income
(Attributable to owners    21,547         25,616         4,069    18.9%
of
the parent company)


(2) Segment Information

Business results for each segment are as follows:

Internet Services

In the Internet Services segment during the first half of the current fiscal
year, Rakuten actively worked on strengthening its services for smart devices,
promoting personalized marketing utilizing big data, and running large-scale
sales events such as the “Rakuten Super Sale”, among other initiatives in its
core “Rakuten Ichiba” service. We also strove to enhance our logistics
services in line with the B2B2C marketplace model through “Rakuten Super
Logistics” and among other services. As a result of these efforts, we saw
strong performance in the number of unique buyers and orders. Domestic
e-commerce gross merchandise sales rose by 15.9% over the same period in the
previous year, and we continued to maintain a high level of growth. In Travel
services, leisure travel sales were strong, and we pursued a more diversified
earnings base through efforts such as the single payment service for corporate
hotel reservations, resulting in a 13.0% year-on-year increase in gross
transaction value.

At its overseas ventures, Rakuten focused on marketplace-model services while
also horizontally rolling out a range of strategic expertise including the
points program and the “Rakuten Super Sale”, which have proven successful in
Japan. Consequently, gross merchandise sales for these services have grown and
are contributing to the expansion of operations.

As a result, revenue in the Internet Services segment climbed 19.5%
year-on-year to ¥141,915 million. While profit from existing businesses
continue to grow, the segment profit declined 4.8% year-on-year to ¥27,547
million as a result of continued investments in future growth fields.

(Millions of yen)
                  Six months        Six months        Amount Change   % Change
                ended            ended                          
                                                      YoY             YoY
                  June 30, 2012     June 30, 2013
Segment Revenue   118,713           141,915           23,202          19.5%
Segment Profit   28,949           27,547           (1,402)        (4.8)%


Internet Finance

In the Internet Finance segment during the first half of the current fiscal
year, the shopping transaction value for credit card and related services rose
37.8% over the same period in the previous year, accompanying an increase in
Rakuten Card membership. Moreover, a solid rise in the revolving shopping
balance resulted in a rise in commission income, continuing notable growth in
profit. In securities services, revenue and profit grew substantially,
including a 259.6% increase over the same period of the previous year in
proceeds from domestic stock trading, supported by the revitalization of the
financial market. In banking services, solid growth in loan balances led to
increased interest income from loans.

As a result of the above, the Internet Finance segment recorded ¥97,866
million in revenue, a 66.5% year-on-year increase, while segment profit grew
161.4% year on year to ¥21,582 million.

(Millions of yen)
                  Six months        Six months        Amount Change   % Change
                ended            ended                          
                                                      YoY             YoY
                  June 30, 2012     June 30, 2013
Segment Revenue   58,793            97,866            39,073          66.5%
Segment Profit   8,258            21,582           13,324         161.4%


Others

In the Others segment during the first half of the current fiscal year,
operating income remained strong in telecommunications services due to the
growth of cloud services and call services for smartphones, in addition to
improvements in management efficiency. The professional sports division marked
record high annual season ticket sales thanks to the strong performance of the
baseball team.

As a result, revenue in the segment was ¥16,082 million, a 1.5% year-on-year
decrease, while segment profit was ¥1,630 million, a 56.8% year-on-year
increase.

(Millions of yen)
                      Six months      Six months      Amount Change   % Change
                    ended          ended                        
                                                      YoY             YoY
                      June 30, 2012   June 30, 2013
Segment Revenue       16,319          16,082          (237)           (1.5)%
Segment Profit       1,039          1,630          591            56.8%
(Loss)


2. Qualitative Information about Consolidated Business Forecasts

In the fiscal year ending December 31, 2013, we anticipate further expansion
in the use of our services in Japan including e-commerce and travel, resulting
in continued high growth. In financial services, although there will be a
certain degree of impact from financial conditions, we anticipate a continuous
growth in revenue created from synergies within the Rakuten Group. Aiming for
an early return in income, Rakuten will continue to make strategic allocations
of corporate resources and active investments in high-growth areas such as
e-books, in order to generate more mid-to-long-term revenue opportunities.

While making these forward-looking investments, Rakuten intends to surpass its
previous fiscal year’s financial results in the fiscal year ending December
31, 2013.

Rakuten, Inc. and its subsidiaries do not disclose earnings forecasts as these
business operations include an Internet service business characterized by high
uncertainty and financial related businesses such as securities business whose
results heavily depend on highly volatile markets. This precludes us from
making earnings forecasts.

3. Matters regarding summary information (Others)

(1) Changes in significant subsidiaries during the current period

No items to report.

(2) Outline of changes in accounting policies and accounting estimates

(Changes in accounting policies as required under IFRS)

Apart from the cases stated as follows, significant accounting policies
adopted by the Group in this summary of consolidated financial statements for
the six months ended June 30, 2013 basically remain the same as those adopted
in the consolidated financial statements for the previous fiscal year. In
addition, income tax expense for the six months ended June 30, 2013 is
calculated based upon estimated annual effective tax rate.

Impact from the adoption of the new accounting standards

The Group started to adopt following accounting standards from the first
quarter of the current fiscal year.


IFRS                                 Newly established or revised contents
                                      Guidance of fair value measurements,
IFRS 13   Fair value measurement    which are
                                      required in other standards
                                      New disclosure for evaluation of the
            Financial instruments:    effect and
IFRS 7    disclosures              potential effect of offsetting
            (Amended Dec. 2011)       arrangements on an
                                      entity’s financial position


These standards have been adopted in accordance with their respective
transitional provisions, and the adoption of above standards has no
significant impact on the six months ended June 30, 2013.


Notes
(1) Changes in significant subsidiaries during the current period

(Changes in specified subsidiaries resulting in change in scope of
consolidation): No
New - (Company name - )            Excluded - (Company name - )
(2) Changes in accounting policies and changes in accounting estimates
1. Changes in accounting policies as required under IFRS: Yes
2. Changes in accounting policies due to other reasons: No
3. Changes in accounting estimates: No
(3) Number of shares issued (Common stock)
1. Total number of shares issued at the end of the period (including treasury
stocks)
1,322,101,200 shares (As of June 30, 2013)
1,320,626,600 shares (As of December 31, 2012)
2. Number of treasury stocks at the end of the period
6,087,089 shares (As of June 30, 2013)
6,007,996 shares (As of December 31, 2012)
3. Average number of shares during the period (cumulative from the beginning
of the period)
1,315,045,254 shares (Six months ended June 30, 2013)
1,313,700,076 shares (Six months ended June 30, 2012)

         Rakuten, Inc. made a 100-for-1 stock split regarding shares of its
(Note)  common stock on July 1, 2012. Average number of shares during the
         period is calculated under the assumption that the stock split took
         effect at the beginning of the previous fiscal year.


Indication regarding execution of quarterly review procedures

  *This quarterly financial report is not intended for the quarterly review
    based on the Financial Instruments and Exchange Act. At the time of
    disclosure of this quarterly financial results report, the review
    procedures for quarterly consolidated financial statements in accordance
    with the Financial Instruments and Exchange Act are not completed

Explanation about the appropriate use of earnings forecasts, and other special
matters

  *The Rakuten Group adopted IFRS for the first time in the year ending
    December 31, 2012, and from the previous year (December 2012 period) we
    disclosed consolidated financial statements in conformity with IFRS.
  *Rakuten, Inc. and its subsidiaries do not disclose earnings forecasts as
    these business operations include an Internet service business
    characterized by high uncertainty and financial related businesses such as
    securities business whose results heavily depend on highly volatile
    markets. This precludes us from making earnings forecasts.

The above information was originally prepared and published by the Company in
Japanese as it contains timely disclosure materials to be submitted to the
Tokyo Stock Exchange. This English summary translation is for your convenience
only. To the extent there is any discrepancy between this English translation
and the original Japanese version, please refer to the Japanese version. The
following financial information was prepared in accordance with International
Financial Reporting Standards (“IFRS”).

*The full report is available at:
http://global.rakuten.com/corp/investors/documents/pdf/13Q2tanshin_E.pdf

About Rakuten

Rakuten, Inc. (TSE JASDAQ:4755), is one of the world’s leading Internet
service companies, providing a variety of consumer- and business-focused
services including e-commerce, eBooks & eReading, travel, banking, securities,
credit card, insurance, e-money, portal and media, online marketing, logistics
and professional sports. Selected by Forbes as 7th among the World’s Most
Innovative Companies of 2012, Rakuten is expanding globally and currently has
operations throughout the Americas, Europe, Asia and Oceania. Founded in 1997,
Rakuten is headquartered in Tokyo, with over 10,000 employees and partner
staff worldwide. For more information, visit http://global.rakuten.com/corp/.

Contact:

Rakuten Investor Relations
investor-relations@mail.rakuten.com
http://global.rakuten.com/corp/investors/
or
Rakuten Public Relations
Email: pr@mail.rakuten.com
Tel: +81-50-5817-1104
 
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