Exhibit 15.1   Consolidated Financial Statements of Snow Corporation




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Report of Independent Auditors To the Board of Directors of SNOW Corporation We have audited the accompanying consolidated financial statements of SNOW Corporation and its subsidiaries (Group), which
comprise the consolidated statements of financial position as of December 31, 2018 and 2017, and January 1, 2017, and the related consolidated statements of profit or loss, comprehensive loss, changes in equity and cash flows for the years
ended December 31, 2018 and 2017. Managements Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International
Financial Reporting Standards as issued by the International Accounting Standards Board; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on the consolidated financial statements based on our audits. We conducted our audits in accordance
with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material
misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated
financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we
consider internal control relevant to the Companys preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Companys internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting
estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the
consolidated financial statements referred to above, present fairly, in all material respects, the financial position of SNOW Corporation and its subsidiaries as of December 31, 2018 and 2017, and January 1, 2017, and the results of their
operations and their cash flows for the years ended December 31, 2018 and 2017, in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. /s/ Samil PricewaterhouseCoopers Seoul, Korea June 27, 2019  1




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Snow Corporation Consolidated Statements of Financial Position (In thousands of Korean won)  Notes


January 1,2017


December 31,2017


December 31,2018AssetsCurrent assetsCash and cash equivalents


6, 20



24,176,192



20,386,988



104,258,127Trade and other receivables


7, 13, 18, 20



184,117



640,234



4,864,462Other financial assets, current


13, 20



20,000,000



205,700



800,000Other current assets


10



726,684



2,198,435



3,437,537Total current assets






45,086,993



23,431,357



113,360,126Non-current assetsProperty and equipment


8



383,013



1,644,630



4,669,914Goodwill


9







626,138



2,525,462Other intangible assets


9



231,384



309,504



717,651Investments in associates and joint ventures


25



1,464,220



3,841,925



3,972,610Other non-current financial assets


13, 21



440,089



4,591,196



15,913,064Other non-current assets


10



6,799







4,935,023Total non-current assets






2,525,505



11,013,393



32,733,724Total assets






47,612,498



34,444,750



146,093,850LiabilitiesCurrent liabilitiesTrade and other payables


13, 20



3,120,165



6,470,631



9,089,468Other financial liabilities, current


13, 20







163,650



4,459,624Advances received


18











596,818Provisions, current


11



71,608



580,000



Other current liabilities


10



2,392,508



3,986,961



5,154,875Total current liabilities






5,584,281



11,201,242



19,300,785Non-current liabilitiesOther financial liabilities, non-current


13, 20, 21



2,805



7,556



74,009,538Deferred tax liabilities


12











1,273,600Provisions, non-current


11



117,279



378,317



675,444Defined benefits liabilities


14



3,172,269



6,546,075



10,978,932Total non-current liabilities






3,292,353



6,931,948



86,937,514Total liabilities






8,876,634



18,133,190



106,238,299Shareholders equityShare capital


16



2,266,665



3,790,555



5,012,065Share premium


16



52,817,531



103,395,538



236,741,078Accumulated deficit






(16,423,074
)


(90,789,338
)


(199,434,330
)Accumulated other comprehensive income/(loss)






74,742



(85,195
)


(793,042
)Equity attributable to the shareholders of the Company






38,735,864



16,311,560



41,525,771Non-controlling interests


24











(1,670,220
)Total shareholders equity






38,735,864



16,311,560



39,855,551Total liabilities and shareholders equity






47,612,498



34,444,750



146,093,850 See Notes to Consolidated Financial Statements  2




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Snow Corporation Consolidated Statements of Profit or Loss (In thousands of Korean won)  Notes

2017


2018Revenues:

5, 18


2,734,378



13,166,879Operating expenses:Payment processing and licensing expenses




(705,899
)


(2,959,209
)Employee compensation expenses

14


(21,567,930
)


(37,723,838
)Marketing expenses




(41,242,506
)


(49,601,580
)Infrastructure and communication expenses




(221,622
)


(912,879
)Outsourcing and other service expenses




(9,507,888
)


(14,784,211
)Depreciation and amortization expenses

8, 9


(487,403
)


(1,035,930
)Other operating expenses

19


(3,832,886
)


(10,369,897
)Total operating expenses




(77,566,134
)


(117,387,544
)Loss from operating activities




(74,831,756
)


(104,220,665
)Finance income

19


586,181



8,429,867Finance costs

19


(819,201
)


(6,885,505
)Share of loss of associates and joint venture

25


(158,587
)


(3,703,485
)Loss on foreign currency transactions, net




(123,242
)


(30,340
)Other non-operating income

19


198,418



1,151,994Other non-operating expenses

19


(1,012
)


(89,448
)Loss before tax




(75,149,199
)


(105,347,582
)Income tax expenses

12


(725,724
)


(1,281,001
)Loss for the year




(75,874,923
)


(106,628,583
)Attributable to:The shareholders of the Company




(75,874,923
)


(105,661,916
)Non-controlling interests

24






(966,667
)  See Notes to Consolidated Financial Statements  3




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Snow Corporation Consolidated Statements of Comprehensive Loss (In thousands of Korean won)  Notes


2017


2018Loss for the year






(75,874,923
)


(106,628,583
)Other comprehensive income/(loss)Items that will not be reclassified to profit or lossRemeasurement of defined benefit liability


12, 14



1,508,659



(2,983,076
)Items that may be reclassified to profit or lossExchange differences on translation of foreign operations:Loss arising during the year


12



(159,937
)


(736,618
)Total other comprehensive (loss)/income for the year, net of tax






1,348,722



(3,719,694
)Total comprehensive loss for the year, net of tax






(74,526,201
)


(110,348,277
)Attributable to:The shareholders of the Company






(74,526,201
)


(109,357,263
)Non-controlling interests


24







(991,014
)   See Notes to Consolidated Financial Statements  4




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Snow Corporation Consolidated Statements of Changes in Equity (In thousands of Korean won)  Equity attributable to the shareholders of the CompanyAccumulated othercomprehensive income/(loss)Notes


Sharecapital


Sharepremium


Accumulateddeficit


Currencytranslationadjustment


Reassessmentof definedbenefit liability


Total


Non-controllinginterests


TotalshareholdersequityBalance at January 1, 2017






2,266,665



52,817,531



(16,423,074
)


74,742







38,735,864







38,735,864Comprehensive (loss)/incomeLoss for the year














(75,874,923
)










(75,874,923
)






(75,874,923
)Other comprehensive (loss)/income


















(159,937
)


1,508,659



1,348,722







1,348,722Total comprehensive (loss)/income for the year














(75,874,923
)


(159,937
)


1,508,659



(74,526,201
)






(74,526,201
)Transfer to accumulated deficit














1,508,659







(1,508,659
)










Other










10,600















10,600







10,600Transactions with equity holders






























Issuance of common share


16



1,523,890



50,567,407















52,091,297







52,091,297Balance at December 31, 2017






3,790,555



103,395,538



(90,789,338
)


(85,195
)






16,311,560







16,311,560 See Notes to Consolidated Financial Statements  5




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Snow Corporation Consolidated Statements of Changes in Equity (continued)  (In thousands of Korean won)  Equity attributable to the shareholders of the CompanyAccumulated othercomprehensive lossNotes


Sharecapital


Sharepremium


Accumulateddeficit


Currencytranslationadjustment


Reassessmentof definedbenefit liability


Total


Non-controllinginterests


TotalshareholdersequityBalance at January 1, 2018






3,790,555



103,395,538



(90,789,338
)


(85,195
)






16,311,560







16,311,560Comprehensive lossLoss for the year














(105,661,916
)










(105,661,916
)


(966,667
)


(106,628,583
)Other comprehensive loss


















(712,271
)


(2,983,076
)


(3,695,347
)


(24,347
)


(3,719,694
)Total comprehensive loss for the year














(105,661,916
)


(712,271
)


(2,983,076
)


(109,357,263
)


(991,014
)


(110,348,277
)Transfer to accumulated deficit














(2,983,076
)






2,983,076











Transactions with equity holdersIssuance of common share


16



1,221,510



128,770,759















129,992,269







129,992,269Change in interests in a subsidiary










4,574,781







4,424







4,579,205



(679,206
)


3,899,999Total transaction with equity holders






1,221,510



133,345,540







4,424







134,571,474



(679,206
)


133,892,268Balance at December 31, 2018






5,012,065



236,741,078



(199,434,330
)


(793,042
)






41,525,771



(1,670,220
)


39,855,551 See Notes to Consolidated Financial Statements  6




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Snow Corporation Consolidated Statements of Cash Flows (In thousands of Korean won)  Notes

2017


2018Cash flows from operating activitiesLoss before tax




(75,149,199
)


(105,347,582
)Adjustments for:Depreciation and amortization expenses

8, 9


487,403
)


1,035,930Finance income




(586,181
)


(8,429,867
)Finance costs




819,201



6,885,505Share-based payment expense








3,900,000Share of loss of associates and joint ventures

25


158,587



3,703,485Gain on disposal of financial assets at fair value through profit or loss








(282,371
)(Gain)/loss on disposal of property and equipment and intangible assets, net




(1,319
)


150,941Gain on reversal of assets retirement obligations








(264,434
)Changes in:Trade and other receivables

7,18


(458,182
)


(4,230,681
)Trade and other payables




3,196,246



2,603,690Advances received

7,18






609,525Provisions

11


508,392



(580,000
)Defined benefit liability

14


1,479,741



1,449,781Other current assets




(1,402,699
)


(1,187,061
)Other non-current assets




(7,621
)


(4,940,838
)Other current liabilities




240,985



1,158,734Other financial liabilities, non-current








1,499,669Others




10,844



(1,901
)Cash used by operating activities




(70,703,802
)


(102,267,475
)Interest received




389,170



351,026Interest paid




(13,664
)


(4,687
)Income taxes paid




(43,586
)


(3,164
)Net cash used by operating activities




(70,371,882
)


(101,924,300
)Cash flows from investing activitiesProceeds from maturities of time deposits




20,000,000



Purchase of debt instruments




(1,629,958
)


(1,883,545
)Proceeds from sales of debt instruments








440,271Acquisition of property and equipment and intangible assets

8,9,17


(1,197,554
)


(4,151,729
)Proceeds from disposal of property and equipment and intangible assets

8,9,17


15,901



87,630Payments for execution of assets retirement obligations








(50,200
)Acquisition of subsidiaries, net of cash acquired

17, 23


(4,100,145
)


(2,086,866
)Investment in associates and joint venture

25


(2,339,067
)


(3,851,451
)Proceeds from business acquisition

17, 23


5,900,000



Execution of loans




(600,007
)


(1,000,000
)Repayments of loans




705,460



405,700Payment of office security deposits




(395,364
)


(3,121,644
)Refund of office security deposits




210,000



434,584Net cash (used in)/provided by investing activities




16,569,266



(14,777,250
)Cash flows from financing activitiesChanges in short-term borrowings

13, 20


167,460



4,486,052Payments for common shares issuance costs

16


(9,729
)


(7,557
)Proceeds from increase in share capital

16


50,001,751



129,999,826Issuance of redeemable convertible preferred shares by a subsidiary

21






65,674,465Net cash provided by financing activities




50,159,482



200,152,786Net (decrease)/increase in cash and cash equivalents




(3,643,134
)


83,451,236Cash and cash equivalents at the beginning of the year




24,176,192



20,386,988Effect of exchange rate changes on cash and cash equivalents




(146,070
)


419,903Cash and cash equivalents at the end of the year

6


20,386,988



104,258,127 See Notes to Consolidated Financial Statements  7




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Snow Corporation Notes to Consolidated Financial Statements  1.
Reporting Entity Snow Corporation (the Company) was incorporated at August 1, 2016 through the investment by NAVER Corporation
(NAVER), which is domiciled in Korea, under the Commercial Code of the Republic of Korea, followed by the additional investment to the Company by LINE Corporation (LINE), which is domiciled in Japan. The Company develops and
operates mobile contents as well as mobile applications and also provides advertising services. As of December 31, 2018, LINE and its subsidiaries (collectively the LINE Group) and NAVER respectively have 34.0% and 66.0% of the
ownership of the Company. NAVER also has ownership in LINE with 73.4% as of December 31, 2018. NAVER is the ultimate parent company of the Company and its subsidiaries (collectively the Group) as well as the LINE Group. The
Companys headquarter is located at 117, Bundangnaegok-ro, Bundang-gu, Seongnam-si,
Gyeonggi-do, Republic of Korea.  2.
Basis of Preparation The consolidated financial statements has been prepared in accordance with International Financial Reporting Standards (IFRS) as
issued by the International Accounting Standards Board (IASB). As aforementioned in Note 1 Reporting entity, The Company was incorporated on August 1, 2016. LINEs board of directors approved the investment in the
Company on September 29, 2016, and on October 18, 2016, LINE has acquired newly issued voting shares of the Company by paying 49,999,800 thousand won in cash, resulting in a 25.0% ownership interest. The Company acquired camera
application business from LINE Plus Corporation as of May 1, 2017. The camera application business includes services such as B612, LINE Camera, Foodie, and Looks. The Company newly issued 208,455 common shares in exchange for the camera
application business. As a result, the LINE Groups ownership interest in the Company increased to 48.6%. LINE Groups ownership interest of the Company is 45.0% and 34.0% as of December 31, 2017 and December 31, 2018,
respectively. As mentioned above, the Group has been included in LINE Groups consolidated financial statement as an equity
investment from October 18, 2016. These financial statements were prepared pursuant to Rule 3-09 of SEC Regulation S-X for inclusion in the amendment of the Form 20-F of LINE. Accordingly, the Groups financial information should include the consolidated statements of financial position as of December 31, 2017 and 2018, and the consolidated statements of profit or
loss, the consolidated statements of comprehensive loss, the consolidated statements of changes in equity and the consolidated statements of cash flows for the period from October 18, 2016 to December 31, 2016 and for the years ended
December 31, 2017 and 2018 pursuant to Rule 3-09 of SEC Regulation S-X. However, the Group only presents and discloses the consolidated statements of financial
position as of January 1, 2017, December 31, 2017 and 2018, and the consolidated statements of profit or loss, the consolidated statements of comprehensive loss, the consolidated statements of changes in equity and the consolidated
statements of cash flows for the years ended December 31, 2017 and 2018, due to the application of an exception for first time adopters stated in 6340.1 and 6340.2 of U.S. Securities and Exchange Commissions Financial Reporting Manual. The Group first adopted IFRS from January 1, 2018. In accordance with IFRS 1, First-time adoption of International Financial
Reporting Standards (IFRS 1), the Groups transition date to IFRS was January 1, 2017. While the Company has prepared its separate financial statements under the Korean IFRS as issued by the Korean Accounting Standards
Board, the Group did not previously prepare and did not publicly issue any consolidated financial statements since the Group was not required to prepare the consolidated financial statements in accordance with paragraph 4 of Korean IFRS 1110 mainly
because all shares of the Company were held by NAVER and LINE Group and were not listed. Therefore, no reconciliation of equity according to IFRS 1 is required for the purpose of these consolidated financial statements. The Group did not apply any
optional exemptions from retrospective application of IFRS.  8




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Snow Corporation Notes to Consolidated Financial Statements (continued)  2.
Basis of Preparation (continued)  The Groups consolidated financial statements are presented in thousands of Korean won,
which is also the Companys functional currency. The consolidated financial statements were approved by the Board of Directors on June 26, 2019.  3.
Significant Accounting Policies The significant accounting policies applied by the Group in preparing its consolidated financial statements are set out below. The accounting
policies have been applied consistently.  (1)
Basis of Consolidation The consolidated financial statements include the accounts of the Group, which are directly or indirectly controlled. Control
is generally conveyed by ownership of the majority of voting rights. The Group controls an entity when the Group has power over the entity, is exposed, or has rights, to variable returns from the involvement with the entity and has the ability to
affect those returns through its power over the entity. When necessary, adjustments are made to the financial statements
of subsidiaries to bring their accounting policies in line with the Groups accounting policies. If the end of the reporting period of a subsidiary differs from that of the Company, the subsidiary prepares, for the purpose of preparing
consolidation financial statements, additional financial statements as of the same date as the consolidated financial statements of the Group. Non-controlling interest in a subsidiary is accounted for separately from the
parents ownership interests in a subsidiary. Profit or loss and each component of other comprehensive income are attributed to the shareholders of the parent and non-controlling interest, even if this
results in the non-controlling interest having a deficit balance. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. Any difference
between the adjustment to the non-controlling interest and the fair value of the consideration paid or received is recognized directly in shareholders equity as equity attributable to the
shareholders of the Company. Intercompany balances and transactions have been eliminated upon consolidation.  (2)
Basis of Measurement The consolidated financial statements have been prepared on a historical cost basis, except for financial instruments measured
at fair value, which is the price that would be received to sell such financial instruments or paid to transfer the related liability in an orderly transaction between market participants at the measurement date.  (3)
Business Combinations  (a)
Business Combinations In accordance with IFRS 3 Business Combinations, each identifiable asset and liability is measured at fair value as of
acquisition date except for the following:  

Deferred tax assets or liabilities which are recognized and measured in accordance with IAS 12 Income
Taxes; and  

Employee benefit arrangements which are recognized and measured in accordance with IAS 19 Employee
Benefits  9




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Snow Corporation Notes to Consolidated Financial Statements (continued)  3.
Significant Accounting Policies (continued)  (3)
Business Combinations (continued)  (a)
Business Combinations (continued)  Leases and insurance contracts are classified on the basis of the contractual
terms and other factors at the inception of the contract or at the date of modification, which could be the acquisition date if the terms of the contract have been modified in a manner that would change its classification. Contingent liabilities assumed in a business combination are recognized when such liabilities are present obligations and their
fair value can be measured reliably. The consideration transferred in a business combination is measured at fair value,
which is calculated as the sum of the acquisition-date fair values of the assets transferred by the acquirer, the liabilities incurred by the acquirer to former owners of the acquiree and the equity interests issued by the acquirer.
Acquisition-related costs are costs the acquirer incurs to effect a business combination. Those costs include finders fees; advisory, legal, accounting, valuation and other professional or consulting fees; general administrative costs,
including the costs of maintaining an internal acquisitions department; and costs of registering and issuing debt and equity securities. Acquisition-related costs, other than those associated with the issue of debt or equity securities, are expensed
in the periods in which the costs are incurred and the services are received. The Group measures goodwill at the
acquisition date as:  
the fair value of the consideration transferred; plus  
the recognized amount of any non-controlling interest in the
acquiree; plus  
if the business combination is achieved in stages, the fair value of the
pre-existing equity interest in the acquiree; less  
the net recognized amount (generally fair value) of the identifiable assets acquired and liabilities
assumed. Subsequent to initial recognition, goodwill is measured at cost less any accumulated impairment
losses.  (b)
Business combinations under common control A business combination involving entities or businesses under common control is a business combination in which all of the
combining entities or businesses are ultimately controlled by the same party or parties both before and after the business combination, and in which control is not transitory. The Group has accounted for the acquisition of business combination under
common control based on the carrying amounts recorded in the consolidated financial statements of the acquired companies.  (4)
Associates and Joint Arrangements  (a)
Associates An associate is an entity in which the Group has significant influence, but not control, over the entitys financial and
operating policies. Significant influence is presumed to exist when the Group holds between 20% and 50% of the voting power of another entity, unless it can be clearly demonstrated that it is not the case. The Groups investments in associates are accounted for using the equity method. Under the equity method, the investment
in an associate is initially recognized at cost and the carrying amount is  10




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Snow Corporation Notes to Consolidated Financial Statements (continued)  3.
Significant Accounting Policies (continued)  (4)
Associates and Joint Arrangements (continued)  (a)
Associates (continued)  adjusted to recognize the Groups share of the profit or loss and changes in equity of the associate after the date of acquisition. Gains and losses from transactions between the Group and
its associates are eliminated to the extent of the Groups interest in the associates. Intra-group losses are recognized as an expense if intra-group losses indicate an impairment that requires recognition in the consolidated financial
statements. If an associate uses accounting policies different from those of the Group for like transactions and events in
similar circumstances, appropriate adjustments are made to its financial statements in applying the equity method. When
the Groups share of losses exceeds its interest in associates, the carrying amount of that interest, including any long-term investments, is reduced to nil and the recognition of further losses is discontinued.  (b)
Joint arrangements A joint arrangement is an arrangement in which two or more parties have joint control. The classification of a joint
arrangement as a joint operation or a joint venture depends upon the rights and obligations of the parties to the arrangement. Joint operations are joint arrangements whereby the parties that have joint control of the arrangement have rights to the
assets, and obligations for the liabilities, relating to the arrangement. The Group accounts for the assets, liabilities, revenues and expenses relating to its interest in joint operations in accordance with the IFRSs applicable to the particular
assets, liabilities, revenues and expenses. Joint ventures are joint arrangements whereby the parties that have joint
control of the arrangement have rights to the net assets of the arrangement. Joint ventures are accounted for using the equity method.  (5)
Foreign Currencies  (a)
Foreign currency transactions Transactions in foreign currencies are translated to the respective functional currencies of Groups entities at exchange
rates as of the transaction date. Monetary assets and liabilities denominated in foreign currencies are retranslated to the functional currency using exchange rate as of the reporting date. Non-monetary assets
and liabilities denominated in foreign currencies that are measured at historical cost are translated using the exchange rate at the date of the initial transactions. Non-monetary assets and liabilities denominated in foreign currencies that are measured
at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Foreign currency differences arising on retranslation are recognized in profit or loss, except for differences arising on the
retranslation of equity instruments at FVOCI, which are recognized in other comprehensive income.  11




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Snow Corporation Notes to Consolidated Financial Statements (continued)  3.
Significant Accounting Policies (continued)  (5)
Foreign Currencies (continued)  (b)
Foreign operations If the presentation currency of the Group is different from a foreign operations functional currency, the financial
statements of the foreign operation are translated into the presentation currency using the following methods: The assets
and liabilities of foreign operations, whose functional currency is not the currency of a hyperinflationary economy, are translated to presentation currency at the exchange rates as of the reporting date. The income and expenses of foreign
operations are translated to the presentation currency at the average foreign exchange rates of the reporting period. Foreign currency differences are recognized in other comprehensive income. When a foreign operation is disposed of, the relevant amount after the translation is reclassified to profit or loss as part of
profit or loss on disposal. In the event that a partial disposal does not lead to a loss of control in a subsidiary that includes a foreign operation, the relevant proportion of such cumulative amount is reattributed to non-controlling interest. For partial disposals that involve the loss of control in a foreign operation, the relevant proportion is reclassified to profit or loss.  (6)
Cash and Cash Equivalents Cash and cash equivalents comprise cash on hand, demand deposits, and short-term investments with maturity dates that are
within three months from the purchase dates. Such investments are highly liquid and readily convertible to known amounts of cash. Cash and cash equivalents are subject to an insignificant risk of changes in value, and are used by the Group in
managing its short-term commitments.  (7)
Financial Assets  (a)
Classification of financial assets Based on the Groups business model for managing the financial assets and the characteristics of contractual cash flows of
the financial assets, the Group classifies the financial assets by following categories. Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and
interest.  i.
Financial assets at amortized cost Financial assets measured at amortized cost include debt instruments of which contractual cash flows represent solely payments
of principal and interest on the principal amount outstanding, and which are held within a business model whose objective is achieved solely by collecting contractual cash flows.  ii.
Financial assets at fair value through profit or loss Financial assets measured at fair value through profit or loss (FVPL) include financial assets that are not
classified as financial asset at amortized cost or financial assets at fair value through other comprehensive income.  12




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Snow Corporation Notes to Consolidated Financial Statements (continued)  3.
Significant Accounting Policies (continued)  (7)
Financial Assets (continued)  (b)
Measurement of financial assets  i.
Initial measurement At initial recognition, the Group measures financial assets at fair value. Financial assets not classified as financial assets
at fair value through profit or loss are measured at fair value, including any transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets measured at fair value through profit or
loss are expensed in profit or loss.  ii.
Subsequent measurement Debt instruments:  (i)
Financial assets at amortized cost Financial assets at amortized cost are measured at amortized cost using the effective interest method, and related interest
income are included in finance income. When the financial asset is derecognized, the difference between amortized cost and consideration received is recognized in profit or loss. When there are changes in the amount of expected credit loss of the
financial asset, an impairment gain or loss is recognized in profit or loss.  (ii)
Fair value through profit or loss Subsequent to initial recognition, financial assets are measured at fair value. Gains or losses arising from changes in the
fair value of debt instruments are recognized in profit or loss. Equity instruments: Where the Group has irrevocably elected to designate equity instruments as financial assets measured at fair value through
other comprehensive income, any changes in the book value resulting from fair value measurement are recognized as other comprehensive income. There is no subsequent reclassification of cumulative gains or losses previously recognized in other
comprehensive income to profit or loss. The accumulated other comprehensive income of the equity instruments measured at FVOCI on which the Group made an irrevocable election are transferred to retained earnings, when such equity instruments are
sold. Where the Group has not elected to designate equity instruments as financial assets measured at fair value through other comprehensive income, any changes in the book value resulting from fair value measurement are recognized in profit or
loss. Dividends from equity instruments are recognized in profit or loss as Finance income when the
Groups right to receive payments are established.  (c)
Derivative financial instruments The Group may use derivative financial instruments, such as exchange forward contracts to hedge its foreign exchange risk. Such
derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Any  13




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  3.
Significant Accounting Policies (continued)  (7)
Financial Assets (continued)  (c)
Derivative financial instruments (continued)  gains or losses arising from changes in the fair value of derivatives are recognized in profit or loss. Derivatives are carried as financial assets when the fair value is positive and as
financial liabilities when the fair value is negative.  (d)
Derecognition of a financial asset The Group derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers
the right to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is
created or retained by the Group is recognized as a separate asset or liability. If the Group retains substantially all the risks and rewards of ownership of the transferred financial assets, the Group continues to recognize the transferred
financial assets and recognizes financial liabilities for the consideration received.  (e)
Offsetting financial instruments Financial assets and liabilities bear the legally enforceable right of settlement on the recognized assets and liabilities. It
is disclosed in net mount on the balance sheet in case where either financial assets or liabilities are settled at the net amount, or are realized the asset concurrently having an intention to settle the liabilities. The legally enforceable right of
set-off is not influenced by future events and means that it is enforceable in the normal business processes even in the event of default or insolvency and bankruptcy.  (8)
Financial Liabilities  (a)
Initial recognition and classification The Group recognizes financial liabilities in the Consolidated Statements of Financial Position when the Group becomes a party
to the contractual provisions of the financial liability. Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, or payables.  (b)
Initial measurement of financial liabilities All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of
directly attributable transaction costs.  (c)
Subsequent measurement The measurement of financial liabilities depends on their classification, as described below:  i.
Financial liabilities measured at amortized cost Financial liabilities measured at amortized cost include loans and borrowing that are not classified as financial liabilities
at fair value through profit or loss  14




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  3.
Significant Accounting Policies (continued)  (8)
Financial Liabilities (continued)  (c)
Subsequent measurement (continued)  ii.
Financial liabilities measured at fair value through profit or loss Financial liabilities at fair value through profit or loss include debt instruments and financial liabilities designated upon
initial recognition as at fair value through profit or loss. The Group derecognizes financial liabilities from the
Consolidated Statements of Financial Position when it is extinguished (i.e. when the obligation specified in the contract is discharged, canceled or expires).  (9)
Share Capital Common shares are classified as equity. Incremental costs directly attributable to the issue of common shares and stock options
are recognized as a deduction from equity, net of any tax effects.  (10)
Property and Equipment Property and equipment are measured and recognized at cost, net of accumulated depreciation and/or accumulated impairment
losses, if any. Cost includes any other costs directly attributable to bring the assets to a working condition for their intended use and the costs of dismantling and removing the assets and restoring the site on which they are located. The cost of replacing a part of property and equipment is included in the carrying amount of the asset or recognized as a
separate asset, as necessary, if it is probable that the future economic benefits embodied within the part will flow into the Group and if the cost can be reliably measured. Accordingly, the carrying amount of the replaced part is derecognized. The
costs of day to day servicing of property and equipment are recognized in profit or loss as incurred. Land and assets held
within construction-in-progress are not depreciated. Depreciation of property and equipment is computed using the straight-line method based on the depreciable amount of
the assets over their respective useful lives as provided below. A component that is significant compared with the total cost of an item of property and equipment is depreciated separately over its useful life. Gains or losses arising from the derecognition of an item of property and equipment are determined as the difference between
the net disposal proceeds, if any, and the carrying amount of the item and recognized in other operating income or expenses. The estimated useful lives are as follows:  Estimated useful lives (years)Furniture and fixtures

3-5Others

4-5 Depreciation methods, useful lives and residual values are reviewed at each fiscal year-end and adjusted, as appropriate, if expectations differ from previous estimates. The change is accounted for as a change in an accounting estimate.  15




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  3.
Significant Accounting Policies (continued)  (11)
Intangible Assets Intangible assets are initially measured at cost, and carried at cost less accumulated amortization and accumulated impairment
losses after initial recognition. Within intangible assets with finite lives and other intangible assets with finite lives
are amortized mainly using the straight-line method over the useful lives of the respective assets as provided below. Intangible assets with finite lives are assessed for impairment whenever there is an indication that the intangible asset may be
impaired. The residual value of intangible assets is assumed to be zero. The estimated useful lives for the intangible
assets with finite lives are as follows:  Estimated useful lives (years)Software

3-5Industrial rights

5 The amortization periods and methods for intangible assets with finite useful lives are
reviewed at each fiscal year-end. If expectations differ from previous estimates, the changes will be accounted for as a change in an accounting estimate.  (12)
Leases Lease Transactions The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the
inception date. In the event that fulfillment of the arrangement is dependent on the use of specific assets or the arrangement transfers a right to use the asset, such assets are defined as a lease transaction.  (a)
Finance Leases Leases that transfer substantially all risks and benefits of ownership of the leased item to the lessee are classified as
finance leases.  (b)
Operating Leases All lease arrangements, except finance leases that have been capitalized in the Consolidated Statements of Financial Position,
are classified as operating leases. Group as lessee For operating lease transactions, lease payments are recognized as an expense using the straight-line method over the lease
term in the Consolidated Statements of Profit or Loss. Group as a lessor Leases in which the Group does not transfer substantially all the risks and rewards of ownership of an asset are classified as
operating leases. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental income.  16




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  3.
Significant Accounting Policies (continued)  (13)
Impairment of Financial Assets The Group assesses on a forward looking basis the expected credit losses associated with its debt instruments carried at
amortized cost and fair value through other comprehensive income. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade receivables and lease receivables, the Group applies the
simplified approach, which requires expected lifetime credit losses to be recognized from initial recognition of the receivables.  (14)
Impairment of Non-financial Assets The Groups Goodwill and intangible assets that have an indefinite useful life are not subject to amortization and are
tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may
not be recoverable. An impairment loss is recognized for the amount by which the assets carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an assets fair value less costs of disposal and value in use.
Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.  (15)
Employee Compensation  (a)
Short-term employee compensation Short-term employee compensations are employee compensations that are expected to be settled wholly before 12 months after the
end of the annual reporting period in which the employees render the related service. The undiscounted short-term employee compensations are accounted for on an accrual basis over the period in which employees have provided the services.  (b)
Defined benefit plans A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Groups obligation
represents the estimated amount of future benefits that employees have earned in return for their services in the current and prior periods. The calculation is performed annually by an independent actuary using the projected unit credit method. The
calculation is reviewed and approved by the management of the Group. The assets or the liabilities relating to the defined
benefit plans were recognized in the Consolidated Statement of Financial Position as the present value of obligations as of the reporting date, excluding the fair value of plan assets. Current service cost is the increase in the present value of the defined benefit obligation resulting from employee service in
the current period. Past service cost, which is the change in the present value of the defined benefits obligation for employee services in prior periods, resulting in the current period from the introduction of, or change to post-employment
benefits, is recognized in full in profit or loss in the period in which the plan amendment occurs. Remeasurement of the
net defined benefit liability is mainly comprised of actuarial gains and losses resulting from experience adjustments and the effects of changes in actuarial assumptions. Experience adjustments are the effects of differences between the previous
actuarial assumptions and what has actually occurred. The Group recognizes all remeasurements of the net defined benefit liability in other comprehensive income when incurred, and then reclassified to accumulated deficit immediately.  17




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  3.
Significant Accounting Policies (continued)  (15)
Employee Compensation (continued)  (b)
Defined benefit plans (continued)  The discount rate used in the present valuation calculation is the yield at
the reporting date on high-quality corporate bonds that have maturity dates approximating the terms of the Groups obligations and that are denominated in the same currency in which the benefits are expected to be paid. Net interest on the net defined benefit liability is determined by multiplying the net defined benefit liability by the
discount rate noted above, taking account of any changes in the net defined benefit liability during the reporting period, as a result of contribution and benefit payments. Interest on the net defined benefit liability is recognized in profit or
loss.  (c)
Defined contribution plans Defined contribution plans are post-employment benefit plans under which an employer pays fixed contributions into a separate
fund and will have no legal or constructive obligation to pay further contributions. The amount of the retirement benefit to be paid to employees is based on the contribution to the fund made by the Group and its employees as well as the return of
the investment managed by the fund. When an employee provides a service for a certain period of time, the provision in
connection with the defined contribution plan in exchange for the service is recognized as provision with contributions already paid to the fund deducted. If the contributions already paid exceed the contributions to be paid for the services
rendered prior to the end of the reporting period, the excess of the future contributions will be recognized as prepaid expenses, unless related contributions are included in depreciation of assets in accordance with other accounting standards. Contributions to the defined contribution plans are recognized as expenses when the related services are rendered by employees,
and contributions payable are recognized as liabilities.  (16)
Marketing Expenses The Group incurs marketing expenses to increase brand awareness and to promote the launching of new services. The Groups marketing expenses are primarily related to online advertising such as NAVER, Google and Facebook, and
advertising on mobile applications, and expenses incurred for brand promotional events. Marketing personnel compensation expenses are not included in marketing expenses, and are recorded as part of the employee compensation expenses. Expenditures
related to marketing activities are recognized as expenses when incurred.  (17)
Provisions Provisions are recognized when the Group has a present legal or constructive obligation as a result of a past event, it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. There are uncertainties about the amount and timing of the cash outflows related to provisions. The risks and uncertainties
that inevitably surround events and circumstances are taken into account in reaching the best estimate of a provision. Where the effect of the time value of money is material, provisions are determined at the present value of the expected future
cash flows.  18




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  3.
Significant Accounting Policies (continued)  (17)
Provisions (continued)  The Groups provisions mainly consist of provision for restoration
obligations for leased property. Provisions are reviewed at the end of each reporting period and adjusted to reflect the
current best estimates. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed. A provision may only apply to expenditures for which the provision was originally recognized.  (18)
Revenue The Group mainly conducts development and operation of mobile applications and contents as well as providing advertising
services. The major source of the revenue is advertisement service and sales of goods including its virtual credits in the
form of virtual coins that users can use in the mobile application and contents. The Group recognizes revenue differently,
depending on the type of transactions, which is described below. Revenue is measured at the fair value of the consideration of services provided in the ordinary course of business, less applicable sales and other taxes, where appropriate.  (a)
Advertisement Services The Group provides advertisement services for advertisers by displaying advertisements on their mobile applications in various
methods such as sponsored stickers and sponsored quiz shows. The Groups performance obligation is to present
advertisements through sponsored stickers or sponsored quiz shows to users. Revenues from advertising are recognized over the advertising specific periods of typically two weeks on a straight-line basis if the contract is to expose advertisements
for a specific period. If the advertising contract includes the rights to receive payments based on specific actions such as impressions, the Group recognizes revenue when such specific actions under the contract is fulfilled. When another party is involved in providing goods or services to a customer, the Group shall determine whether the nature of
its promise is a performance obligation to provide the specified goods or services itself (i.e. the Group is a principal) or to arrange for those goods or services to be provided by the other party (i.e. the Group is an agent). The Group determines
whether it is a principal or an agent for each specified goods or services promised to the customer. The Group is a principal if it controls the specified good or service before that good or service is transferred to a customer. However, The Group
does not necessarily control a specified good if the Group obtains legal title to that good only momentarily before legal title is transferred to a customer. The Group which is a principal may satisfy its performance obligation to provide the
specified goods or services itself or it may engage another party to satisfy some or all of the performance obligation on its behalf. The Group provides directly advertisement service for customers and considers itself the principal in providing the service to
customers.  (b)
Sales of items with virtual coins The Group provides personalized characters within its mobile application services and sells virtual coins which allows
purchases of items of such characters to its users.  19




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  3.
Significant Accounting Policies (continued)  (18)
Revenue (continued)  (b)
Sales of items with virtual coins (continued)  Virtual coins, which are the prepaid payment instruments may be purchased
with credit cards or cash. Most of the end-user purchases are processed through payment processing service providers such as Apple App Store and Google Play. A processing fee is charged by the payment
processing service providers for each transaction processed which are recognized as outsourcing and other service expenses on the Groups consolidated statements of profit or loss. Upon the initial sales of the Groups virtual
coins, the Group records proceeds received as contract liabilities on the consolidated statements of financial position. As prescribed in the terms and conditions between the Group and end users, the Groups virtual coins are not refundable.
However, in the event of legal dispute with end users, the Korean Framework Act on Consumers may require the Group to refund the advances received to the end users. When virtual coins are redeemed for the purchase of the virtual items within this
service by users, balances of the end users virtual coins are reduced by the price of the purchase, and the related contract liabilities are reclassified to revenues as described in the following paragraphs. Mobile application itself is free to download; however, in-app consumable virtual items
developed by the Group such as various types of fashion and decoration items are purchased with the Groups virtual coins within mobile application. The performance obligation of the Group with respect to the consumable virtual items purchased by end users is to make the
consumable virtual items available to the users for their use at any given time. The period from the time the end user first purchased the consumable virtual item until the user consumed the item is the performance obligation period; however,
consumable virtual items offered by the Group are generally consumed upon purchase by end users,, Accordingly, the Group recognizes revenues attributable to consumable virtual items upon purchases of such items by end users..  (19)
Finance Income and Finance Costs Finance income mainly comprises interest income from demand deposits and gain on valuation of financial assets. Finance costs mainly comprise interest expense on borrowings and loss on valuation of financial liabilities. Borrowing costs
that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognized in profit or loss using the effective interest method.  (20)
Income Taxes Income tax expenses comprise current and deferred tax. Current tax and deferred tax are recognized in profit or loss, except to
the extent that they relate to a business combination, or items recognized directly in equity or in other comprehensive income.  (a)
Current tax Current tax is the expected tax payable or receivable on the taxable profit or loss for the year, using tax rates enacted or
substantively enacted at the end of the reporting period and any adjustment to tax payable in respect of previous years.  20




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  3.
Significant Accounting Policies (continued)  (20)
Income Taxes (continued)  (a)
Current tax (continued)  The taxable profit is different from the accounting profit for the period
since the taxable profit is calculated excluding temporary differences, which will be taxable or deductible in determining taxable profit (tax loss) of future periods, and non-taxable or non-deductible items from the accounting profit.  (b)
Deferred tax Deferred tax is recognized using the asset-liability method in respect of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. A deferred tax liability is recognized for all taxable temporary differences. A deferred tax asset is recognized for all deductible temporary
differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which they can be utilized. However, deferred tax is not recognized for the following temporary differences:
taxable temporary differences arising on the initial recognition of goodwill, or the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting profit or loss nor taxable
income. The Group recognizes a deferred tax liability for all taxable temporary differences associated with investments in
subsidiaries, associates and joint ventures, except to the extent that the Group is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
The Group recognizes a deferred tax asset for all deductible temporary differences arising from investments in subsidiaries, associates and joint ventures, to the extent that it is probable that the temporary difference will reverse in the
foreseeable future and taxable profit will be available against which the temporary difference can be utilized. The
carrying amount of a deferred tax asset is reviewed at the end of each reporting period and is reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred
tax asset to be utilized. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in
the period when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and deferred tax
assets reflects the tax consequences that would follow, in a manner that the Group expects, at the end of the reporting period to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset only if there is a legally enforceable right to offset the related current tax
liabilities and assets, and they relate to income taxes levied on the same taxable entity by the same tax authority.  (21)
Operating Segments The Group identifies operating segments based on the internal report regularly reviewed by the Groups Chief Operating
Decision Maker to make decisions about resources to be allocated to segments and assess performance. An operating segment of the Group is a component for which discrete financial information is available. The Chief Operating Decision Maker has been
identified as the Companys board of directors.  21




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  3.
Significant Accounting Policies (continued)  (22)
Share Based Payments The Group has granted shares to external consultants. The fair values of the share based payments are measured at the grant
dates. Compensation expenses related to shares are recognized for the year that the consulting service rendered. Refer to Note 27 Share Based Payments for more details.  (23)
Financial Guarantee Contracts Financial guarantee contracts are recognized as a financial liability at the time the guarantee is issued. The liability is
initially measured at fair value, subsequently at the higher of following and recognized in the statement of financial position within Provisions. The amount determined in accordance with the expected credit loss model under IFRS 9Financial
Instruments and the amount initially recognized less, where appropriate, the cumulative amount of income recognized in accordance with IFRS 15Revenue from Contracts with Customers.  (24)
Standards Issued but not yet Effective The standards and interpretations that are issued but not yet effective as of December 31, 2018 are disclosed below. The
standards and interpretations issued but not yet effective has not been adopted early by the Group.  
IFRS 16 Leases The IASB issued IFRS 16 Leases. IFRS 16 governs the accounting for leases and the related contractual rights and
obligations. Lessees will no longer make a distinction between finance and operating leases as they have been required to do thus far under IAS 17. At the commencement date of a lease, a lessee will recognize a liability to make lease payments
(i.e., the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use asset). Lessees will be
required to separately recognize the interest expense on the lease liability and the depreciation expense on the right-of-use asset. Lessor accounting under IFRS 16 is
substantially unchanged from todays accounting under IAS 17. Lessors will continue to classify all leases using the same classification principle as in IAS 17 and distinguish between two types of leases: operating and finance leases. IFRS 16
also requires lessees and lessors to make more extensive disclosures than under IAS 17. The Group will adopt IFRS 16 for the annual reporting period beginning on January 1, 2019, which is the mandatory effective date. The Group intends to use
simplified approach and does not plan to restate the amounts in the comparable reporting periods prior to adoption of IFRS 16. So far, the most significant impact identified is that the Group will recognize new right-of-use assets and lease liabilities for its operating leases of certain office space and stores. In addition, the nature of expenses related to those leases will change as a lease expenses shall be
recognized with depreciation charge for the right-of-use asset and interest paid on the lease liability under IFRS 16, replaced from the straight-line operating expense
with IAS 17. On the reporting date, the Group expects to recognize the right-of-use assets and lease liabilities of 10,061 million won and 18,086 million won, respectively, as of January 1, 2019 due to the adoption of IFRS 16. The operating lease expenses are
expected to decrease by 2,864 million won, and total in depreciation expenses of the right-of-use assets and interest expenses on lease liabilities are expected to
increase by 2,965 million won. As of the reporting date, the Group bears commitments of  22




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  3.
Significant Accounting Policies (continued)  (24)
Standards Issued but not yet Effective (continued)  
IFRS 16 Leases (continued)  11,272 million won for non-cancellable operating leases (refer to Note 15 Lease-Group as Lessee). Due to the adoption of IFRS 16, cash flows from
operating activities are expected to increase by approximately 2,864 million won and cash flows from financing activities are expected to decrease by 2,864 million won, compared to those under IAS 17, due to the principal payment of lease
liabilities being classified to financing activities.  4.
Significant Accounting Judgments, Estimates and Assumptions The preparation of the Groups consolidated financial statements requires management to make estimates and assumptions that affect the
reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures. These estimates and assumptions are based on the best judgment of management in light of historical experience and various factors deemed to be
reasonable as of the fiscal year end date. Given their nature, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. The estimates and assumptions are continuously reviewed by management. The effects of a change in estimates and assumptions are
recognized in the period of the change or in the period of the change and future periods. Among estimates and assumptions made by management, the following estimates and assumptions are ones that may have a material effect on the amounts recognized
in the consolidated financial statements of the Group:  (a)
Recoverability of deferred tax assets Regarding temporary differences, which are differences between carrying value of an asset or liability in the Consolidated
Statements of Financial Position and its tax base, the Group recognizes deferred tax assets and deferred tax liabilities. The deferred tax assets and deferred tax liabilities are calculated using the tax rates based on tax laws that have been
enacted or substantively enacted by the end of the reporting period and the tax rates that are expected to apply to the period when the deferred tax asset is realized or the deferred tax liability is settled. Deferred tax assets are recognized for all deductible temporary differences, unused tax losses carryforward and unused tax
credits carryforward to the extent that it is probable that taxable income will be available. The estimation of future taxable income is calculated based on financial budgets approved by management of the Group, and it is based on managements
subjective judgments and assumptions. The Group considers these estimates to be significant because any adjustments in the assumed conditions and amendments of tax laws in the future may significantly affect the amounts of deferred tax assets and
deferred tax liabilities.  (b)
Methods of determining fair value for financial instruments measured at fair value Financial assets and financial liabilities held by the Group are measured at the following fair values:  
quoted prices in active markets for identical assets or liabilities;  
fair value calculated using observable inputs other than quoted prices for the assets or liabilities, either
directly or indirectly; and  
fair value calculated using valuation techniques incorporating unobservable inputs.  23




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  4.
Significant Accounting Judgments, Estimates and Assumptions (continued)  (b)
Methods of determining fair value for financial instruments measured at fair value (continued)  In particular, the fair value estimates using valuation techniques that
incorporate unobservable inputs are based on the judgment and assumptions of Group management, such as experience assumptions, and the use of specific numerical calculation models, such as discounted cash flow models.  (c)
Provisions The Group recognizes asset retirement obligations related to assets leased under operating leases in the Consolidated
Statements of Financial Position. These provisions are recognized based on the best estimates of the costs expected to be incurred for the restoration of the operating lease properties to the state as specified in the rental agreements upon
termination of the operating leases. The estimation takes risks and uncertainty related to the obligations into account as of the fiscal year end date.  (d)
Defined benefit plans The cost of the defined benefit plan and the present value of the obligation are determined using actuarial valuations. An
actuarial valuation involves making various assumptions, including the determination of the discount rate and future salary increases. The Group determines the discount rate based on market returns of high-quality corporate bonds consistent with currencies and
estimated payment terms applicable to the defined benefit obligations as of the reporting date in order to calculate present value of the defined benefit obligations. Estimated future salary increases are based on historical salary increases and
expected future inflation rates. Due to the complexities involved in the valuation and its long-term nature, a defined
benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date. Further details about the Groups defined benefit obligations are presented in Note 14 Employment Benefits.  5.
Segment Information  (1)
Description of Reportable Segment The Group operates in a single operating segment. The Group periodically reports its current business status to the Chief
operating decision maker (CODM), and profit or loss from the single operating segment is not different from the reported amount in the statements of profit or loss of the Group.  24




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  5.
Segment Information (continued)  (2)
Revenues from Major Services The Groups revenues from continuing operations from its major services for the years ended December 31, 2017 and
2018 are as follows:  (In thousands of Korean won)2017


2018Advertising(1)


2,508,087



9,180,961Sales of virtual items(2)






2,715,341Other


226,291



1,270,577Total


2,734,378



13,166,879  (1)
Revenues from Advertising primarily consist of fees received for sponsored stickers on camera apps or
Sponsored quiz shows on live quiz apps. (2)
Revenues from sales of virtual items are primarily recognized when
end-users purchase virtual items with the virtual coins within mobile applications which provides personalized character services.  (3)
Geographic Information Revenues from external customers Revenues from external customers classified by country or region were based on the locations of customers for the years ended
December 31, 2017 and 2018. Revenues attributable to advertising have been classified based on the geographical locations where the services were provided.  (In thousands of Korean won)2017


2018Korea


1,201,313



8,257,726Japan


1,229,903



2,571,159China






1,661,952Other


303,162



676,042Total


2,734,378



13,166,879 Non-current operating assets Non-current operating assets mainly consist of property and equipment and intangible
assets.  (In thousands of Korean won)January 1,2017


December 31,2017


December 31,2018Korea


614,397



2,101,723



7,045,285China






478,549



867,742Total


614,397



2,580,272



7,913,027  25




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  5.
Segment Information (continued)  (4)
Major Customers Single customers accounted for 10 percent or more of the Groups total revenues for the years ended December 31,
2017 and 2018 are as follows: For the year ended December 31, 2017  (In thousands of Korean won)Revenues


RatioNAVER Corporation


339,000



12
% No single customer accounted for 10 percent or more of the Groups total revenues
for the year ended December 31, 2018.  6.
Cash and Cash Equivalents The breakdown of cash and cash equivalents as of January 1, 2017, December 31, 2017 and 2018 are as follows:  (In thousands of Korean won)January 1,2017


December 31,2017


December 31,2018Demand deposits


24,176,192



20,386,988



104,258,127  7.
Trade and Other Receivables Trade and other receivables as of January 1, 2017, December 31, 2017 and 2018 are as follows:  (In thousands of Korean won)January 1,2017


December 31,2017


December 31,2018Trade and other receivables, current


184,117



1,179,919



4,867,370Allowance for doubtful accounts,
general(1)






(539,685
)


(2,908
)Total trade and other receivables


184,117



640,234



4,864,462  (1)
Allowance of doubtful accounts relating to trade receivables amount to 2,908 thousand won as of
December 31, 2018 and allowance of doubtful accounts relating to other receivables amount to 539,685 thousand won as of December 31, 2017. For movement in the allowance of doubtful accounts for trade and other receivables, refer to Note 20 Financial Risk Management.  26




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  8.
Property and Equipment  (1)
Changes in property and equipment for the year ended December 31, 2017 are as follows:  (In thousands of Korean won)Furnitureand fixtures


Others(1)


TotalAcquisition costBalance at January 1, 2017


309,824



117,279



427,103Acquisitions


1,110,321







1,110,321Disposals


(24,788
)






(24,788
)Acquisition through business combinations, etc.


331,099







331,099Exchange differences


(1,002
)






(1,002
)Other






261,039



261,039Balance at December 31, 2017


1,725,454



378,318



2,103,772Accumulated depreciation and impairmentBalance at January 1, 2017


(39,203
)


(4,887
)


(44,090
)Disposals


6,174







6,174Depreciation


(356,731
)


(64,601
)


(421,332
)Exchange differences


106







106Balance at December 31, 2017


(389,654
)


(69,488
)


(459,142
)Carrying amountsBalance at January 1, 2017


270,621



112,392



383,013Balance at December 31, 2017


1,335,800



308,830



1,644,630  (1)
Others consist of the estimated amount of restoration costs charged to asset retirement obligation during
the year ended December 31, 2017.  27




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  8.
Property and Equipment (continued)  (2)
Changes in property and equipment for the year ended December 31, 2018 are as
follows:  (In thousands of Korean won)Furnitureand fixtures


Others


TotalAcquisition costBalance at January 1, 2018


1,725,454



378,318



2,103,772Acquisitions


3,437,023







3,437,023Disposals


(136,045
)


(314,634
)


(450,679
)Acquisition through business combinations


8,195







8,195Exchange differences


(4,858
)






(4,858
)Other






611,762



611,762Balance at December 31, 2018


5,029,769



675,446



5,705,215Accumulated depreciation and impairmentBalance at January 1, 2018


(389,654
)


(69,488
)


(459,142
)Disposals


63,306



149,589



212,895Depreciation


(671,993
)


(118,159
)


(790,152
)Exchange differences


1,098







1,098Balance at December 31, 2018


(997,243
)


(38,058
)


(1,035,301
)Carrying amountsBalance at January 1, 2018


1,335,800



308,830



1,644,630Balance at December 31, 2018


4,032,526



637,388



4,669,914  28




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  9.
Goodwill and Other Intangible Assets  (1)
Changes in goodwill and other intangible assets for the year ended December 31, 2017 are as follows:  (In thousands of Korean won)Goodwill


Software


Industrialrights


TotalAcquisition costBalance at January 1, 2017






247,166







247,166Acquisitions






139,195



4,177



143,372Acquisition through business combinations,
etc.(1)


626,138







820



626,958Other










(42
)


(42
)Balance at December 31, 2017


626,138



386,361



4,955



1,017,454Accumulated amortization and impairmentBalance at January 1, 2017






(15,782
)






(15,782
)Amortization






(65,698
)


(374
)


(66,072
)Other










42



42Balance at December 31, 2017






(81,480
)


(332
)


(81,812
)Carrying amountsBalance at January 1, 2017






231,384







231,384Balance at December 31, 2017


626,138



304,881



4,623



935,642  (1)
The balances were related to the Groups acquisition of Spring Camp Inc. and Yiruike Information
Technology (Beijing) PTE. LTD. in 2017. See Note 23 Business Combinations for further details.  29




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  9.
Goodwill and Other Intangible Assets (continued)  (2)
Changes in goodwill and other intangible assets for the year ended December 31, 2018 are as follows:  (In thousands of Korean won) Goodwill


Software


Industrialrights


Others


TotalAcquisition costBalance at January 1, 2018


626,138



386,361



4,955







1,017,454Acquisitions






616,618



23,937



18,690



659,245Acquisition through business
combinations(1)


1,899,324















1,899,324Disposals






(537
)










(537
)Exchange differences






(7,842
)










(7,842
)Balance at December 31, 2018


2,525,462



994,600



28,892



18,690



3,567,644Accumulated amortization and impairmentBalance at January 1, 2018






(81,480
)


(332
)






(81,812
)Disposal






390











390Amortization






(240,520
)


(2,766
)


(2,492
)


(245,778
)Other






2,669











2,669Balance at December 31, 2018






(318,941
)


(3,098
)


(2,492
)


(324,531
)Carrying amountsBalance at January 1, 2018


626,138



304,881



4,623







935,642Balance at December 31, 2018


2,525,462



675,659



25,794



16,198



3,243,113  (1)
The balances were related to the Groups acquisition of Heartit Inc. (Heartit) in 2018. See
Note 23 Business Combinations for further details.  10.
Other Current Assets, Other Non-current Assets and Other Current
liabilities Other current assets, other non-current assets and other current
liabilities as of January 1, 2017, December 31, 2017 and 2018 are as follow:  (1)
Other current assets as of January 1, 2017, December 31, 2017 and 2018 are as follow:  (In thousands of Korean won)January 1,2017


December 31,2017


December 31,2018Inventories










289,495Prepaid expenses


348,757



1,677,878



1,996,080Value added taxes receivable


350,610



443,870



1,035,326Other


27,317



76,687



116,636Total


726,684



2,198,435



3,437,537  30




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  10.
Other Current Assets, Other Non-current Assets and Other Current
liabilities (continued)  (2)
Other non-current assets as of January 1, 2017,
December 31, 2017 and 2018 are as follow:  (In thousands of Korean won)January 1,2017


December 31,2017


December 31,2018Long-term prepaid expenses


6,799







4,935,023  (3)
Other current liabilities as of January 1, 2017, December 31, 2017 and 2018 are as follow:  (In thousands of Korean won)January 1,2017


December 31,2017


December 31,2018Accrued expenses


2,311,167



3,523,402



4,253,283Withholdings


81,341



443,558



800,789Other






20,001



100,803Total


2,392,508



3,986,961



5,154,875  11.
Provisions Changes in provisions for the years ended December 31, 2017 and 2018 are as follows:  (In thousands of Korean won)Restorationobligationsforoperatingleaseproperties(1)


Other(2)


TotalBalance at January 1, 2017


175,724



13,163



188,887Arising during the year


261,038



580,000



841,038Utilized


(58,445
)






(58,445
)Reversal






(13,163
)


(13,163
)Balance at December 31, 2017


378,317



580,000



958,317Arising during the year


611,761







611,761Utilized


(50,200
)






(50,200
)Reversal


(264,434
)


(580,000
)


(844,434
)Balance at December 31, 2018


675,444







675,444  (1)
The Group records provisions for restoration obligations related to its operating lease properties as the
Group is required to restore these properties upon termination of the operating leases to the state specified in the rental agreements. (2)
Other mainly consisted of the joint liability guarantee obligations of BravePops Co., Ltd. to other
investors.  31




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  12.
Income Taxes  (1)
Current and deferred taxes related to each component of other comprehensive income for the years ended
December 31, 2017 and 2018 are as follows:  (In thousands of Korean won)2017


2018Pretax


Tax


Post tax


Pretax


Tax


Post taxRemeasurement of defined benefit plans


1,508,659







1,508,659



(2,983,076
)






(2,983,076
)Foreign currency translation adjustments


(159,937
)






(159,937
)


(736,618
)






(736,618
)Total


1,348,722







1,348,722



(3,719,694
)






(3,719,694
) No current and deferred taxes related to items directly charged or credited to equity for the
years ended December 31, 2017 and 2018.  (2)
Deferred Tax Assets and Deferred Tax Liabilities The movements in deferred tax assets and deferred tax liabilities for the years ended December 31, 2017 and 2018 are as
follows:  (In thousands of Korean won)Beginningbalance as ofJanuary 1,2017


Amountsrecordedunder profitor loss


Acquisitionthroughbusinesscombinations,etc.


Endingbalance as ofDecember 31,2017Deferred tax assets:Tax losses


3,104,394



15,087,249







18,191,643Depreciation


3,808



17,333







21,141Provisions


41,555



141,573







183,128Accrued expenses


567,422



842,159







1,409,581Post-employment benefits


608,761



(361,698
)


725,724



972,787Sub total


4,325,940



15,726,616



725,724



20,778,280Deferred tax liabilities:Financial assets at fair value though profit or loss






(46,916
)






(46,916
)Accrued income


(14,082
)


12,799







(1,283
)Other property and equipment


(24,726
)


(23,277
)






(48,003
)Sub total


(38,808
)


(57,394
)






(96,202
)Assessment of the recoverability of deferred tax assets


(4,287,132
)


(15,669,222
)


(725,724
)


(20,682,078
)Total














  32




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  12.
Income Taxes (continued)  (2)
Deferred Tax Assets and Deferred Tax Liabilities (continued)  (In thousands of Korean won)Beginningbalance as ofJanuary 1,2018


Amountsrecordedunder profitor loss


Endingbalance as ofDecember 31,2018Deferred tax assets:Tax losses


18,191,643



23,430,947



41,622,590Depreciation


21,141



15,512



36,653Advances received






127,096



127,096Financial assets at fair value






264,315



264,315Financial liabilities at fair value through profit or loss






1,402,523



1,402,523Other receivables






122,378



122,378Provision


183,128



(34,777
)


148,351Accrued expenses


1,409,581



(717,000
)


692,581Investment in associates and joint venture






142,625



142,625Post-employment benefits


972,787



1,400,950



2,373,737Sub total


20,778,280



26,154,569



46,932,849Deferred tax liabilities:Financial assets at fair value


(46,916
)


(1,646,879
)


(1,693,795
)Accrued income


(1,283
)


(893
)


(2,176
)Other property and equipment


(48,003
)


(91,980
)


(139,983
)Sub total


(96,202
)


(1,739,752
)


(1,835,954
)Assessment of the recoverability of deferred tax assets


(20,682,078
)


(25,688,417
)


(46,370,495
)Total






(1,273,600
)


(1,273,600
) The Group offsets tax assets and liabilities if and only if it has a legally enforceable right
to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority. Below is a breakdown of the deductible temporary differences, unused tax losses and unused tax credits for which no deferred
tax assets were recognized:  (In thousands of Korean won)January 1,2017


December 31,2017


December 31,2018Deductible temporary differences


5,552,482



11,320,161



21,304,305Unused tax losses


13,749,304



82,548,043



183,230,029Total


19,301,786



93,868,204



204,534,334  33




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  12.
Income Taxes (continued)  (2)
Deferred Tax Assets and Deferred Tax Liabilities (continued)  Below is a breakdown of the unused tax losses by expiry date for which no
deferred tax assets were recognized:  (In thousands of Korean won)January 1,2017


December 31,2017


December 31,20182026


13,749,304



13,919,566



13,962,7362027






68,628,477



71,733,4622028










97,533,831Total


13,749,304



82,548,043



182,230,029 The Group did not recognize deferred tax assets for the temporary differences amounting to
58,434,708 thousand won (2017: 5,064,526 thousand won) from the investments in subsidiaries, associates and joint venture because of the uncertainty of future taxable income in the foreseeable future as of December 31, 2018. The Group did not recognize deferred tax liabilities for the temporary differences amounting to 4,395,332 thousand won
(2017: 555,421 thousand won) from the investments in subsidiaries and associates as of December 31, 2018. The Group has determined that the undistributed profits of its subsidiaries or associate will not be distributed in
the foreseeable future.  (3)
The components of income tax expenses for the years ended December 31, 2017 and 2018 are as follows:  (In thousands of Korean won)2017


2018Current income tax:Current income tax expenses






7,402Deferred tax:Changes related to origination and reversal of temporary differences(1)(2)


725,724



1,273,600Income tax expenses


725,724



1,281,002  (1)
These balances represent the deferred tax benefit or expense from the increase and decrease of temporary
differences, the reversal of previously written-down deferred tax assets and write-downs of deferred tax assets. The reason for having negative amount of deferred tax for the year ended December 31, 2017 is because deferred tax assets increased
due to the merger of the camera application business, but the deferred tax assets were unrecognized as assessment of the recoverability of deferred tax assets. (2)
Deferred tax liabilities are recognized for temporary difference related to gain on valuation of financial
assets at fair value through profit or loss during the year ended December 31, 2018.  34




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  12.
Income Taxes (continued)  (4)
The income tax expenses calculated by applying the statutory tax rates to the Groups profit or loss
before tax differ from the actual tax expenses in the consolidated statements of profit or loss for the years ended December 31, 2017 and 2018 for the following reasons:  (In thousands of Korean won)2017


2018Accounting loss before tax


(75,149,199
)


(105,347,582
)Income tax benefits at a statutory rate of 21.84% (2017: 21.98%)


(16,516,491
)


(23,006,433
)Permanent non-deductible expenses


567,823



8,537Non-taxable income






(714,921
)Assessment of the recoverability of deferred tax assets


15,669,222



25,688,417Business combination


725,724



Others


279,446



(694,598
)Income tax expenses at an effective tax rate at 1.21% (2017: 0.97%)


725,724



1,281,002  35




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  13.
Financial Assets and Financial Liabilities The carrying amounts and fair value of financial instruments, except for cash and cash equivalents, by line item in the Consolidated Statements
of Financial Position and by category as defined in IFRS 9 Financial Instrument, as of January 1, 2017, December 31, 2017 and 2018 are as follows: The fair value is not disclosed for those financial instruments whose fair value approximates their carrying amount due to their short-term
and/or variable-interest bearing nature among those not measured at fair value in the Consolidated Statements of Financial Position. Refer to Note 21 Fair Value Measurements for more details on the fair value information of the financial instruments
whose fair value is disclosed in this footnote.  (In thousands of Korean won)January 1, 2017


December 31, 2017


December 31, 2018Book value


Fair value


Book value


Fair value


Book value


Fair valueFinancial assets:Trade and other receivablesFinancial assets at amortized cost


184,117







640,234







4,864,462Other financial assets, currentFinancial assets at amortized costTime deposits


20,000,000















Short-term loans










205,700







800,000Other financial assets, non-currentFinancial assets at amortized cost Leasehold deposits


190,000



190,000



581,234



581,234



3,271,693



3,023,180Financial assets at FVPLFinancial assets at fair value through profit or
loss(1)


250,089



250,089



4,009,962



4,009,962



12,641,371



12,641,371Sub-total


440,089



440,089



4,591,196



4,591,196



15,913,064



15,664,551Total


20,624,206







5,437,130







21,577,526Financial liabilities:Trade and other payablesFinancial liabilities at amortized cost


3,120,165







6,470,631







9,089,468Other financial liabilities, currentFinancial liabilities at amortized costShort-term borrowings(2)










163,650







4,459,624Other financial liabilities, non-currentFinancial liabilities at amortized costOffice security deposits received under sublease agreement


2,805



2,805



7,556



7,556



1,507,226



1,382,969Financial liabilities at FVPLFinancial liabilities at fair value through profit or loss(3)


















72,502,312



72,502,312Sub-total


2,805



2,805



7,556



7,556



74,009,538



73,885,281Total


3,122,970







6,641,837







87,558,630  (1)
As of January 1, 2017 and December 31, 2017 and 2018, these financial assets are composed by
compound financial instrument and equity securities. A valuation loss, net of 590,710 thousand won was recognized for financial assets at fair value through profit or loss for the year ended December 31, 2017. A valuation gain, net of
6,905,765 thousand won was recognized for financial assets at fair value through profit or loss for the year ended December 31, 2018.  36




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  13.
Financial Assets and Financial Liabilities (continued)  (2)
The weighted average interest rate of the remaining outstanding short-term borrowings as of December 31,
2017 and 2018 was 3.08% and 3.09%. (3)
SNOW China Limited (SNOW China), a subsidiary of the Group, entered into a contract with 3rd
party investors as of December 20, 2017 that SNOW China would have approved the issuance of at least 1,915,100 series A preferred shares that might be redeemed, purchased back by SNOW China or converted into the ordinary shares, upon the
occurrence of certain events including the date that is the sixth anniversary of the original issue date of the preferred shares and fully executed on January 17, 2018 in the amount of 49,965 thousand USD (equivalent to
54,679,182 thousand won). Furthermore, SNOW China issued additional 383,200 series A preferred shares in the amount of 9,997 thousand USD (equivalent to 10,995,283 thousand won) to other 3rd party investors on April 16, 2018. The
Group determined that such series A preferred shares shall be deemed as redeemable convertible preferred shares and were accounted for as financial liabilities at fair value through profit or loss. A valuation loss of 5,610,094 thousand won was
recognized for this financial liabilities at fair value through profit or loss for the year ended December 31, 2018.  14.
Employment Benefits A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The legal and regulatory framework for the
plans is based on the applicable Korean Employee Retirement Benefit Security Act (ERBSA). Post-employment defined benefit plan provides lump sum payments to eligible employees. Furthermore, the plans expose the Group to actuarial risks,
such as interest rate risk, salary increase risk, and longevity risk. Interest rate risk refers to the risk of fluctuation of bond yields. A decrease in the bond yields will increase the defined benefit obligations liability. The salary increase
risk refers to the risk that an increase in future salary will increase the defined benefit obligations liability. Longevity risk refers to the risk that an increase in life expectancy of the plan participants will increase the defined benefit
obligations liability.  (1)
Defined benefit liabilities as of January 1, 2017, December 31, 2017 and 2018 are as follows:  (In thousands of Korean won)January 1, 2017


December 31, 2017


December 31, 2018Present value of defined benefit obligations


3,172,269



6,546,075



10,978,932Plan assets










Defined benefits liabilities


3,172,269



6,546,075



10,978,932  (2)
Expenses related to defined benefit plans are recognized in the Consolidated Statements of Profit or Loss as
operating expenses for the years ended December 31, 2017 and 2018 are comprised of the following:  (In thousands of Korean won)2017


2018Current service costs


1,523,616



2,062,212Interest costs


165,931



216,064Total


1,689,547



2,278,276  37




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  14.
Employment Benefits (continued)  (3)
Movements in the present value of the defined benefit obligations for the years ended December 31, 2017
and 2018 are as follows:  (In thousands of Korean won)2017


2018Defined benefit obligations at the beginning of year


3,172,269



6,546,075Current service costs


1,523,616



2,062,212Interest costs


165,931



216,064Remeasurement losses/(gains):Actuarial gains arising from changes in financial assumptions


(891,282
)


2,051,172Experience adjustments


(617,377
)


931,903Payments from the plan


(125,193
)


(844,304
)Net transfer


(84,614
)


15,810Increase due to business combinations


3,402,725



Defined benefit obligations at the end of year


6,546,075



10,978,932  (4)
There were no movements in the plan assets for the years ended December 31, 2017 and 2018.  (5)
Significant judgment is required when selecting key assumptions for measuring defined benefit expenses for a
period and the defined benefit obligations at the period end for each defined benefit plan. The principal actuarial assumptions used include discount rates and salary increase rates. The Group determined the discount rate based on market returns of high-quality corporate bonds consistent with the currencies
and estimated payment terms corresponding to the defined benefit obligations as of the reporting date in order to calculate the present value of the defined benefit obligations.  January 1,2017

December 31,2017

December 31,2018Discount rate

3.1%

3.4%

2.7%-3.2%Weighted average of salary increase

8.1%

7.0%

9.1%  (6)
Economic factors and conditions often affect multiple assumptions simultaneously; as such, the effects of
changes in key assumptions are not necessarily linear. The following sensitivity analysis illustrates the impact of changes in certain significant actuarial assumptions, leaving all other assumptions constant, as of December 31, 2017 and 2018:  (In thousands of Korean won)Impact on the defined benefitobligationsAssumptions andsensitivity level

December 31,2017


December 31,2018Discount rate100 basis point increase


(552,359
)


(1,029,964
)100 basis point decrease


642,556



1,212,029Salary increase rate100 basis point increase


612,862



1,129,503100 basis point decrease


(539,572
)


(986,438
)  38




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  14.
Employment Benefits (continued)  (7)
The average duration of the defined benefit plan obligations as of December 31, 2017 and 2018 were 9.13
and 10.2 years, respectively. The following table shows estimated future benefit payments within ten
years from December 31, 2018. Actual payments may differ from those shown because of uncertain future events.  (In thousands of Korean won)Years

Estimated futurebenefit payments2019

534,7062020

718,7682021

901,0702022

1,095,5752023

1,299,09820242028

9,699,792  15.
LeasesGroup as Lessee Operating lease commitmentsGroup as lessee The Group has entered into commercial lease agreements for certain office space. Future minimum rentals payable under non-cancelable operating leases are as follows:  (In thousands of Korean won)December 31,2017


December 31,2018Within one year


681,523



2,864,303After one year but not more than five years


42,000



8,407,463Total


723,523



11,271,766  39




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  16.
Issued Capital and Reserves The movements in issued capital and reserves for the years ended December 31, 2017 and 2018 are as follows:  (1)
Authorized shares and shares issued The movements of shares issued for the years ended December 31, 2017 and 2018 are as follows:  Authorized shares


Shares issued(Share capital withpar value)


Share capital(In thousands ofKorean won)CommonsharesJanuary 1, 2017


50,000,000



453,333



2,266,665Issuance of common shares(1)(2)






304,778



1,523,890December 31, 2017


50,000,000



758,111



3,790,555Issuance of common shares(3)






244,302



1,221,510December 31, 2018


50,000,000



1,002,413



5,012,065  (1)
The Company acquired camera application business from LINE Plus Corporation as of May 1, 2017. The
camera application business includes services such as B612, LINE Camera, Foodie, and Looks. The Company newly issued 208,455 common shares in exchange for the camera application business. As a result of issuing the common shares, the Companys
share capital increased by 1,042,275 thousand won. The number of newly issued common shares was determined based on the ratio of the fair value of camera application business as well as cash and cash equivalent transferred comparing to the
enterprise value of the Company. (2)
The Company issued 77,063 and 19,260 common shares due to the third-party allotment for NAVER Corporation
and LINE Corporation respectively. As a result of issuing the new shares, the Companys share capital increased by 481,615 thousand won. (3)
The Company issued 244,302 common shares due to the third-party allotment for NAVER Corporation. As a result
of issuing the new shares, the Companys share capital increased by 1,221,510 thousand won.  40




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  16.
Issued Capital and Reserves (continued)  (2)
Share premium and accumulated deficit Share premium The movements in share premium for the years ended December 31, 2017 and 2018 are as follows:  (In thousands of Korean won)Businessacquisition(1)


Others(2)


SharepremiumtotalJanuary 1, 2017






52,817,531



52,817,531Issuance of common shares(3)(4)


1,057,000



49,520,136



50,577,136Cost related to issuance of common
shares(5)


(5,051
)


(4,678
)


(9,729
)Other






10,600



10,600December 31, 2017


1,051,949



102,343,589



103,395,538Issuance of common shares(6)






128,778,316



128,778,316Cost related to issuance of common
shares(5)






(7,557
)


(7,557
)Change in interests in
subsidiaries(7)






4,574,781



4,574,781December 31, 2018


1,051,949



235,689,129



236,741,078  (1)
The Company acquired camera application business from LINE Plus Corporation as of May 1, 2017. (2)
Others mainly consist of additional
paid-in-capital. (3)
The Company acquired camera application business from LINE Plus Corporation as of May 1, 2017. The
camera application business includes services such as B612, LINE Camera, Foodie, and Looks. The Company newly issued 208,455 common shares in exchange for the camera application business. As a result of issuing the common shares, the Companys
share premium increased by 1,057,000 thousand won. The number of newly issued common shares was determined based on the ratio of the fair value of camera application business as well as cash and cash equivalent transferred comparing to the
enterprise value of the Company. (4)
The Company issued 77,063 and 19,260 common shares due to the third-party allotment for NAVER Corporation
and LINE Corporation respectively. As a result of issuing the new shares, the Companys share premium increased by 49,520,136 thousand won. (5)
Incremental costs directly attributable to the issuance of common shares are recognized as a deduction from
equity in accordance with IAS 32 Financial Instruments: Presentation. (6)
The Company issued 244,302 common shares due to the third-party allotment for NAVER Corporation. As a result
of issuing the new shares, the Companys share premium increased by 128,778,316 thousand won. (7)
The increase in share premium of 4,574,781 thousand won was due to the transfer of the common shares of
SNOW China Limited to a third-party. See Note 27 Share Based Payments for further details.  41




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  17.
Supplemental Cash Flow Information Material non-cash transactions  (In thousands of Korean won)2017


2018Other payables from acquisition of intangible assets


3,250



(884
)Other payables from acquisition of property and equipment


52,889



(20,887
)Advance payment from acquisition of property and equipment






(33,690
)Other receivables from disposal of property and equipment


(4,032
)


640Liabilities arising from the merger of the camera application business


3,800,725



 Movements on liabilities from financing activities  (In thousands of Korean won)Net liabilities as of January 1, 2017


Cash flows


167,460Items such as foreign currency translation adjustments


(3,810
)Net liabilities as of December 31, 2017


163,650Cash flows


4,486,052Proceeds from issuance of redeemable convertible preferred shares


65,674,465Loss on valuation of financial liabilities at fair value through profit or loss


5,610,094Items such as foreign currency translation adjustments


1,027,675Net liabilities as of December 31, 2018


76,961,936  18.
Revenue from Contracts with Customers The Group has recognized the following amounts relating to revenue in the Consolidated Statement of Profit or Loss for the year ended
December 31, 2018:  (In thousands of Korean won)2017


2018Revenue from contracts with customersRevenue(1)


2,734,378



13,166,879  (1)
Refer to Note 5 Segment Information for further details of revenue. Trade and other receivables, contract assets and contract liabilities  (In thousands of Korean won)January 1,2017


December 31,2017


December 31,2018Trade and other receivables


184,117



640,234



4,864,462Contract liabilities- Unused balance of virtual
coins(1)










596,818  (1)
Represents as advances received in the statement of financial position.  42




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  18.
Revenue from Contracts with Customers (continued)  There were no significant balance of contract assets and contract liabilities as of
January 1, 2017 and December 31, 2017 and 2018. As unsatisfied performance obligations will be fulfilled mainly within a year,
the transaction price allocated to unsatisfied contract is not disclosed, based on the practical expedient as permitted under IFRS 15. Additionally, the payment term for advertisement service is typically within three months and there were no
significant financing components within the services provided to customers by the Group. Moreover, there were no significant contract costs as of December 31, 2018.  19.
Other Income and Expenses, Finance Income and Costs  (1)
Other operating expenses for the years ended December 31, 2017 and 2018 are as follows:  (In thousands of Korean won)2017


2018Rent


854,867



2,107,669Travel


266,087



529,268Supplies


202,163



342,022Taxes and dues


89,275



271,939Professional fees(1)


932,030



5,112,437Training


355,236



464,543Utility expenses


314,530



843,032Others


818,698



698,987Total


3,832,886



10,369,897  (1)
Professional fees included expenses incurred in connection with the consulting service provided by external
consultants, amounting to 3,900,000 thousand won. The Company transferred the common shares of SNOW China Limited to the consultants for the consideration of the consulting service provided. Refer to Note 27 Share Based
Payments.  (2)
Other non-operating income for the years ended December 31,
2017 and 2018 are as follows:  (In thousands of Korean won)2017


2018Gain on reversal of asset retirement obligations






264,434Gain on disposal financial assets at fair value through profit or loss






282,371Others


198,418



605,189Total


198,418



1,151,994  43




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  19.
Other Income and Expenses, Finance Income and Costs (continued)  (3)
Finance income for the years ended December 31, 2017 and 2018 are as follows:  (In thousands of Korean won)2017


2018Interest income


371,352



356,674Gain on valuation of financial assets at fair value through profit or loss


214,829



8,073,193Total


586,181



8,429,867  (4)
Finance costs for the years ended December 31, 2017 and 2018 are as follows:  (In thousands of Korean won)2017


2018Interest expenses


13,662



85,038Loss on valuation of financial assets at fair value through profit or loss


805,539



1,167,428Loss on valuation of financial liabilities at fair value through profit or loss






5,610,094Others






22,945Total


819,201



6,885,505  20.
Financial Risk Management The Group has exposure to the following risks from its use of financial instruments:  
Credit risk  
Liquidity risk  
Market risk This note presents information about the Groups exposure to each of the above risks, the Groups objectives, policies and processes
for measuring and managing risk, and the Groups management of capital. Further quantitative disclosures are included throughout the Groups consolidated financial statements.  (1)
Risk Management Framework The Group is exposed to financial risks arising from its operating activities, such as market risks (foreign currency risk,
interest rate risk and price risk), credit risks, and liquidity risks. The Groups overall risk management policy mainly focuses on financial market fluctuation and minimizing negative influence on the Groups financial performance. The Groups risks are managed by policies that are approved by the Board of Directors. The Board reviews and approves
written policies for the overall risk management, as well as for specific areas, such as foreign currency risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative
financial instruments, and investment of excess liquidity.  44




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  20.
Financial Risk Management (continued)  (2)
Credit Risk Credit risk arises from cash and cash equivalents, contractual cash flows of debt investments and deposits with banks and
financial institutions, as well as credit exposures to corporate and individual customers, including outstanding receivables. The Group has two types of financial assets that are subject to the expected credit loss model:  
Trade receivables and other receivables carried at amortized cost; and  
Other financial assets carried at amortized cost. While cash equivalents are also subject to the impairment requirement, the identified impairment loss was immaterial.  (a)
Maximum amounts of possible financial loss to the Group due to credit risk as of January 1, 2017,
December 31, 2017 and 2018 are as follows:  (In thousands of Korean won)January 1,2017


December 31,2017


December 31,2018Book value


Book value


Book valueDemand deposits


24,176,192



20,386,988



104,258,127Trade and other receivables


184,117



640,234



4,864,462Time deposits


20,000,000







Short-term loan






205,700



800,000Leasehold deposits


190,000



581,234



3,271,693Total


44,550,309



21,814,156



113,194,282  (b)
Impaired or past-due financial assets The Group applies the simplified approach to measure the loss allowance at an amount equal to lifetime expected credit losses
for trade and other receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due. Set out below is the information about the credit risk exposure on the Groups trade and other receivables using a
provision matrix as of December 31, 2018:  (In thousands of Korean won)<180 days


>180 daysExpected credit loss rate


0%



42.33%Total book value (Trade receivable)


4,573,899



6,869Total book value (Other receivable)


286,602



Expected credit loss






2,908  45




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  20.
Financial Risk Management (continued)  (2)
Credit Risk (continued)  (b)
Impaired or past-due financial assets (continued)  Below is the movement in the allowance for doubtful accounts attributable to
trade and other receivables:  (In thousands of Korean won)Allowance for doubtful accountsBalance at January 1, 2017


Provision for the year


539,685Reversal


Utilized


Balance at December 31, 2017


539,685Provision for the year


2,908Reversal


Utilized


(539,685
)Balance at December 31, 2018


2,908 Receivables for which an impairment allowance was recognized are written off against the
allowance when there is no expectation of recovering additional cash. No expectation of recovering additional cash is included those that do not comply with debt adjustments with the Group. Impairment losses on trade receivables are presented as net of bad debt expense in the income statement. Other financial assets carried at amortized cost include demand deposits, shot-term loans and leasehold deposits. As at
January 1, 2017 and December 31, 2017 and 2018, all other financial assets carried at amortized cost are considered to have low credit risk and therefore no provision for losses has been recognized.  (3)
Liquidity Risk The Group continuously monitors its forecast of liquidity reserve to maintain sufficient cash for its operating activities. In
forecasting the liquidity reserve, the Group considers its financing plan, compliance with commitments, internal financial ratios as well as requirements under external regulations and laws, such as restrictions on currencies.  46




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  20.
Financial Risk Management (continued)  (3)
Liquidity Risk (continued)  (a) Financial liabilities The book values of financial liabilities based on the remaining maturities as of January 1, 2017, December 31, 2017
and 2018 are as follows. The amounts below include estimated interest from financial liabilities scheduled to be paid.  (In thousands of Korean won)January 1, 2017Book value


Contractualcash outflows


Less thanone year


One tofive yearsTrade and other payables


3,120,165



3,120,165



3,120,165



Other financial liabilities, current














Other financial liabilities, non-current


2,805



2,805







2,805Total


3,122,970



3,122,970



3,120,165



2,805(In thousands of Korean won)December 31, 2017Book value


Contractualcash outflows


Less thanone year


One tofive yearsTrade and other payables


6,470,631



6,470,631



6,470,631



Other financial liabilities, current


163,650



168,539



168,539



Other financial liabilities, non-current


7,556



7,556







7,556Total


6,641,837



6,646,726



6,639,170



7,556(In thousands of Korean won)December 31, 2018Book value


Contractualcash outflows


Less thanone year


One tofive yearsTrade and other payables


9,089,468



9,089,468



9,089,468



Other financial liabilities, current


4,459,624



4,520,983



4,520,983



Other financial liabilities, non-current


74,009,538



74,009,538







74,009,538Total


87,558,630



87,619,989



13,610,451



74,009,538  (4)
Market Risk Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in
market prices. Market risk comprises three types of risk: foreign currency risk, interest rate risk, and other price risk. Financial instruments affected by market risk include borrowings, deposits, debt instruments and derivative financial
instruments.  (a)
Exchange rate risk The Group is exposed to the foreign currency risk arising from changes in foreign exchange rates especially for United States
Dollar (USD), Chinese Ren Min Bi (RMB), Japanese Yen (JPY),  47




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  20.
Financial Risk Management (continued)  (4)
Market Risk (continued)  (a)
Exchange rate risk (continued)  Hong Kong Dollar (HKD), Taiwan Dollar (TWD), Euro (EUR), and Singapore Dollar (SGD) as it operates its business globally. Foreign currency risks
arises from the recognized assets and liabilities.  January 1, 2017Currency


Amount(In thousands)


Exchangerate


Wonequivalent(In thousands)Monetary liabilities:Trade and other payables


USD



(192
)


1,208.50



(232,032
)RMB



(116
)


173.61



(20,139
)JPY



(1,538
)


10.37



(15,949
)SGD



(68
)


834.60



(56,753
)December 31, 2017Currency


Amount(In thousands)


Exchangerate


Wonequivalent(In thousands)Monetary assets:Cash and cash equivalents


USD



20



1,071.40



21,428JPY



5,311



9.49



50,401Trade receivables


USD



50



1,071.40



53,570JPY



28,503



9.49



270,493December 31, 2017Currency


Amount(In thousands)


Exchangerate


Wonequivalent(In thousands)Monetary liabilities:Trade and other payables


USD



(1,114
)


1,071.40



(1,193,540
)RMB



(16,507
)


163.65



(2,701,371
)JPY



(24,691
)


9.49



(234,318
)TWD



(443
)


35.92



(15,913
)EUR



(12
)


1,279.25



(15,351
)SGD



(40
)


800.63



(32,025
)December 31, 2018Currency


Amount(In thousands)


Exchangerate


Wonequivalent(In thousands)Monetary assets:Cash and cash equivalents


USD



768



1,118.10



858,701JPY



14,504



10.13



146,926Trade receivables


USD



63



1,118.10



70,440JPY



14,146



10.13



143,299  48




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  20.
Financial Risk Management (continued)  (4)
Market Risk (continued)  (a)
Exchange rate risk (continued)  December 31, 2018Currency


Amount(In thousands)


Exchangerate


Wonequivalent(In thousands)Monetary liabilities:Trade and other payables


USD



(463
)


1,118.10



(517,680
)RMB



(15
)


162.76



(2,441
)JPY



(9,227
)


10.13



(93,470
)TWD



(180
)


36.58



(6,584
)SGD



(109
)


818.28



(89,193
) The effects on profit or loss before tax from operations and shareholders equity as a
result of exchange rate fluctuations as of December 31, 2017 and 2018, are as follows:  (In thousands of Korean won)December 31, 2017Shareholders equity


Profit or (loss) before taxCurrency

Appreciationof functionalcurrency by5%


Depreciationof functionalcurrency by5%


Appreciationof functionalcurrency by5%


Depreciationof functionalcurrency by5%USD


(43,623
)


43,623



(55,927
)


55,927RMB


(105,353
)


105,353



(135,068
)


135,068JPY


3,377



(3,377
)


4,329



(4,329
)TWD


(622
)


622



(797
)


797EUR


(599
)


599



(768
)


768SGD


(1,249
)


1,249



(1,601
)


1,601(In thousands of Korean won)December 31, 2018Shareholders equity


Profit or (loss) before taxCurrency

Appreciationof functionalcurrency by5%


Depreciationof functionalcurrency by5%


Appreciationof functionalcurrency by5%


Depreciationof functionalcurrency by5%USD


16,047



(16,047
)


20,573



(20,573
)RMB


(95
)


95



(122
)


122JPY


7,674



(7,674
)


9,838



(9,838
)TWD


(257
)


257



(329
)


329SGD


(3,479
)


3,479



(4,460
)


4,460 The tables above demonstrate the sensitivity to a change in EUR, SGD, USD, RMB, TWD and JPY
assuming all other variables are constant.  49




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  20.
Financial Risk Management (continued)  (4)
Market Risk (continued)  (b)
Interest Rate Risk Interest rate risks is the risks of changes in interest income and expenses from deposits or borrowings due to fluctuations on
the future market interest rates. Interest rate risks relates primarily to deposits with floating interest rates. The Group manages interest rate risks for the purpose of maximizing the Companys value by minimizing uncertainties associated
with fluctuations of interest rates.  (In thousands of Korean won)December 31, 2017Shareholders equity


Profit or (loss) before taxIncrease of 50basis points


Decrease of 50basis points


Increase of 50basis points


Decrease of 50basis pointsInterest expenses


73,481



(73,481
)


94,206



(94,206
)(In thousands of Korean won)December 31, 2018Shareholders equity


Profit or (loss) before taxIncrease of 50basis points


Decrease of 50basis points


Increase of 50basis points


Decrease of 50basis pointsInterest expenses


255,520



(255,520
)


327,590



(327,590
)  (5)
Capital management The Group manages its capital for a purpose to protect its ability to continuously provide returns to its shareholders and
stakeholders as a going concern and maintain an optimal capital structure to minimize any costs associated with its capital. The Group monitors capital using a
debt-to-equity ratio, which is calculated as the total liabilities divided by the total equity.  (In thousands of Korean won)January 1,2017


December 31,2017


December 31,2018Total liabilities


8,876,634



18,133,190



106,238,299Total shareholders equity


38,735,864



16,311,560



39,855,551Debt/equity ratio


23%



111%



267%  21.
Fair Value Measurements  (1)
Fair value hierarchy The Group referred to the levels of the fair value hierarchy for financial instruments measured at fair value in the
consolidated financial statements based on the following inputs:  
Level 1 inputs are quoted prices in active markets for identical assets or liabilities.  
Level 2 inputs are quoted prices for similar assets or liabilities in active markets, quoted prices for
identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs that are derived principally from or corroborated by observable market data by correlation or other means.  50




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  21.
Fair Value Measurements (continued)  (1)
Fair value hierarchy (continued)  
Level 3 inputs are derived from valuation techniques in which one or more significant inputs or value
drivers are unobservable, which reflect the reporting entitys own assumptions that market participants would use in establishing a price. Transfers between levels of the fair value hierarchy are recognized as if they have occurred at the beginning of the reporting
period. Assets measured at fair value on a recurring basis in the Consolidated Statements of Financial Position as of
January 1, 2017, December 31, 2017 and 2018 are as follows:  (In thousands of Korean won)January 1, 2017

Level 1


Level 2


Level 3


TotalFinancial assetsFinancial assets at fair value through profit or loss










250,089



250,089(In thousands of Korean won)December 31, 2017

Level 1


Level 2


Level 3


TotalFinancial assetsFinancial assets at fair value through profit or loss










4,009,962



4,009,962(In thousands of Korean won)December 31, 2018

Level 1


Level 2


Level 3


TotalFinancial assetsFinancial assets at fair value through profit or loss










12,641,371



12,641,371Financial liabilitiesLiabilities designated as financial liabilities at fair value through profit or loss










72,502,312



72,502,312  51




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  21.
Fair Value Measurements (continued)  (2)
Assets and liabilities not measured at fair values in the Consolidated Statements of Financial Position, but
for which fair values are disclosed as of January 1, 2017, December 31, 2017 and 2018 are as follows:  (In thousands of Korean won)January 1, 2017

Level 1


Level 2


Level 3


TotalFinancial assetsOther financial assets, non-currentLeasehold deposits






190,000







190,000Financial liabilitiesOther financial liabilities, non-currentOffice security deposits received under sublease agreement






2,805







2,805(In thousands of Korean won)December 31, 2017

Level 1


Level 2


Level 3


TotalFinancial assetsOther financial assets, non-currentLeasehold deposits






581,234







581,234Financial liabilitiesOther financial liabilities, non-currentOffice security deposits received under sublease agreement






7,556







7,556(In thousands of Korean won)December 31, 2018

Level 1


Level 2


Level 3


TotalFinancial assetsOther financial assets, non-currentLeasehold deposits






3,023,180







3,023,180Financial liabilitiesOther financial liabilities, non-currentOffice security deposits received under sublease agreement






1,382,969







1,382,969 There have been no transfers among Level 1, Level 2 and Level 3 during the
years ended December 31, 2017 and 2018.  52




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  21.
Fair Value Measurements (continued)  (3)
Reconciliations from the opening balance to the closing balance of financial instruments categorized within
Level 3 are as follows:  (In thousands of Korean won)2017


2018Financialassets atfair valuethroughprofit or loss


Financialassets atfair valuethroughprofit or loss


Liabilitiesdesignated asfinancial liabilitiesat fair valuethroughprofit or lossFair value at the beginning of the year


250,089



4,009,962



Total (loss)/gain for the year:Included in profit or loss


(590,710
)


6,905,765



(5,610,094
)Included in other comprehensive income










Comprehensive (loss)/income


(590,710
)


6,905,765



(5,610,094
)Purchases


1,629,958



1,850,485



Issuance of redeemable convertible preferred shares










(65,674,465
)Sales and settlements






(124,841
)


Increase due to business combination


2,720,625







Effect of exchange rate changes










(1,217,753
)Fair value at the end of the year


4,009,962



12,641,371



(72,502,312
)  (4)
Valuation techniques and inputs Assets and liabilities measured at fair value on a recurring basis in the Groups Consolidated Statements of Financial
Position Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss categorized within Level 3 mainly consist of unlisted equity
securities and private equity investment funds. Assets measured at fair value on a recurring basis in the Groups Consolidated Statements of Financial Position as of December 31, 2017 and 2018.  Valuation technique

Significantunobservable input

2017

2018Market approach

Price book value ratio



1 - 3.6Price per sales ratio

3.75

0.6 - 2.5Price earning ratio



51.9Firm value per sales



2.8Option evaluation model

Volatility of underlying assets

20.5 - 24.5%

8.5%Discount rate

2.5%

13.1%Discount cash flow model

Discount rate

10.3 - 11.9%

12.3 - 19.7% Liabilities designated as financial liabilities at fair value through profit or loss Liabilities designated as financial liabilities at fair value through profit or loss categorized within Level 3 mainly
consist of redeemable convertible preference stock. Liabilities measured at fair value using mainly a  53




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  21.
Fair Value Measurements (continued)  (4)
Valuation techniques and inputs (continued) Liabilities designated as financial liabilities at fair value through profit or loss (continued)  binomial option pricing model. Below is the quantitative information regarding the valuation technique and significant unobservable inputs used in measuring the fair value of redeemable
convertible preference shares:  Valuation technique

Significantunobservable input

2018Discount cash flow model

Discount rate

11.9%Option evaluation model

Volatility of underlying assets

51.8%Discount rate

11.9%  22.
Related Party Transactions Note 24 Principal Subsidiaries provides information about the Groups structure, including details of the subsidiaries and the parent
company. The following table provides the total amount of outstanding balances and related party transactions entered into for the years ended December 31, 2017 and 2018.  (1)
Significant related party transactions during the year ended December 31, 2017 and outstanding balances
as of January 1, 2017 and December 31, 2017 with related parties are as follows:  (In thousands of Korean won)Transactionamount


Outstandingreceivable/(payable)balancesRelationship

Name

Transaction

2017


January 1,2017


December 31,2017Parent company

NAVER Corporation

Revenue


339,000







Companies that have significant influence on the group

LINE Corporation

Expense


358,680







Receivable










270,522LINE Plus Corporation

Transfer of camera application business(1)


2,099,275







Associates

Alchera Inc

Expense


512,041







SpringCamp Early StageFund I

Revenue


188,219







Other related parties

NAVER I&S.Corp.

Expense


498,628







Payable










(124,161
)NAVER Business Platform

Expense(2)


2,743,597







Payable






(167,154
)


(330,126
)NAVER China

Expense


169,280







Payable










(210,255
)LINE Fukuoka Corp.

Expense


589,951







Payable










(88,943
)Camp Mobile Corporation

Payable






(233,370
)


  (1)
In May, 2017, Snow Corporation acquired camera application business of LINE Plus Corporation. Refer to Note
23 Business Combinations for further details. (2)
NAVER Business Platform Corp. has provided IT infrastructure services and related development services to the
Group.  54




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  22.
Related Party Transactions (continued)  (2)
Significant related party transactions and outstanding balances with related parties during the year ended
December 31, 2018 are as follows:  (In thousands of Korean won)Relationship

Name

Transaction

Transactionamount


Outstandingreceivable/(payable)balancesParent company

NAVER Corporation

Revenue


200,339



Expense


303,533



Receivable






114,503Payable






(182,330
)Companies that have significant influence on the group

LINE Corporation

Expense


331,112



Receivable






143,323Associates

Alchera Inc

Expense


293,959



SpringCamp Early Stage Fund I

Revenue


619,726



Brave Pops

Expense


120,000



Other related parties

NAVER WEBTOON

Revenue


100,000



Corporation

Receivable






110,000Payable






(59,415
)NAVER I&S.Corp.

Expense


703,043



Payable






(222,559
)NAVER Business Platform

Expense(1)


3,069,645



Payable






(420,600
)NAVER China

Expense


265,608



Payable(2)






(4,545,862
)LINE Friends Corporation

Expense


252,485



Payable






(250,000
)LINE Biz Plus Corporation

Revenue


178,317



LINE Fukuoka Corp.

Expense


797,392



LINE Financial Plus Corporation

Revenue(3)


1,056,611



Payable






(1,496,986
)AXIS Co., LTD.

Receivable






806,150  (1)
NAVER Business Platform Corp. has provided IT infrastructure services and related development services to
the Group. (2)
The Group entered multiple borrowing agreements with NAVER China during a year ended December 31, 2018. (3)
The Group subleased a part of its head office to LINE Financial Plus Corporation.  55




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  22.
Related Party Transactions (continued)  (3)
Financial transactions with related parties for the years ended December 31, 2017 and 2018 are as
follows:  (In thousands of Korean won)Relationship

Name

Transaction

2017


2018Associates

Laiqu Technology (Shenzhen) Co., Ltd.

Investment in cash


164,067



678,157Fast Cowell Private Equity Fund

Investment in cash


1,500,000



BravePops Co., Ltd.

Investment in cash






648,294Joint venture

Playlist Corporation

Investment in cash


600,000



2,400,000Other related parties

Search Solutions, Inc.

Borrowing


3,300,000



Repayment


3,300,000



AXIS Co., LTD.

Rental






800,000Investment in cash






1,500,000NAVER China

Borrowing


163,650



4,459,624Repayment






163,650  (4)
The total compensation of key management personnel for the years ended December 31, 2017 and 2018, was
as follows:  (In thousands of Korean won)2017


2018Salaries


1,242,960



1,341,343Severance benefits


165,552



154,567Total


1,408,512



1,495,910  56




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  23.
Business Combinations Acquisition in 2017 Merger of camera application
business As of May 1, 2017, the Group merged the camera application business which was separated from LINE Plus Corporation and
newly issued 208,455 shares of its common shares. Assets acquired and liabilities assumed  (In thousands of Korean won)Assets acquiredand liabilitiesassumedAssetsCash and cash equivalents


5,900,000Property and equipment


225,494Deferred tax assets


725,724Total


6,851,218LiabilitiesOther liabilities, current


1,349,218Other liabilities, non-current


3,402,725Total


4,751,943Total identifiable net assets at fair value


2,099,275Goodwill


Total consideration


2,099,275 The Group accounted for its business combination with the camera application business of LINE Plus
Corporation, a subsidiary of the Groups parent company, in accordance with the accounting of business combinations of entities under common control. The assets and liabilities of the camera application business transferred to the Group are recognized at book values as of the transaction
date that are recorded in the consolidated financial statements of NAVER Corporation, the ultimate parent company. There was no difference between the considerations paid in exchange for the acquisition of the camera application business and book
values of the net assets acquired.  (In thousands of Korean won)Analysis of cash flows on acquisition:Total consideration related to the acquisition


Net cash and cash equivalents acquired at the acquisition date


5,900,000Net cash flows on acquisition (included in cash flows from investing activities)


5,900,000  57




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  23.
Business Combinations (continued)  Other business combinations Acquisition of Spring Camp Inc. On
March 30, 2017, the Group acquired 100% shares of Spring Camp Inc., which engages in the financial investment business. The Groups goodwill arising from the acquisition reflects the effect of synergy from the human resources and business
operation acquired, and details of the accounting for goodwill are summarized as follows: Assets acquired and liabilities assumed The identifiable assets and liabilities of Spring Camp Inc., which are measured at fair value as of the date of acquisition, were as follows:  (In thousands of Korean won)Assets acquiredand liabilitiesassumedAssetsCash and cash equivalents


1,060,833Other assets, current


602,433Property and equipment


104,534Other assets, non-current


3,062,366Total


4,830,166LiabilitiesOther liabilities, current


16,229Total


16,229Total identifiable net assets at fair value


4,813,937Goodwill


186,063Total consideration


5,000,000  (In thousands of Korean won)Analysis of cash flows on acquisition:Total consideration related to the acquisition


(5,000,000
)Net cash and cash equivalents acquired at the acquisition date


1,060,833Net cash flows on acquisition (included in cash flows from investing activities)


(3,939,167
) Acquisition of Yiruike Information Technology (Beijing) PTE. LTD. On November 1, 2017, the Group acquired 100% shares of Yiruike Information Technology (Beijing) PTE.LTD., which engages in the
mobile camera application business. The Groups goodwill arising from the acquisition reflects the effect of synergy from the human resources and business operation acquired.  58




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  23.
Business Combinations (continued) Other business combinations (continued) Acquisition of Yiruike Information Technology (Beijing) PTE. LTD. (continued)  All consideration related to the acquisition is 164 million won. Goodwill of
440 million won represented the value of expected synergies arising from the acquisition. Acquisition in 2018 Acquisition of Heartit On June 22,
2018, the Group acquired 100% shares of Heartit. The Groups goodwill arising from the acquisition reflects the effect of synergy from the human resources and business operation acquired, and details of the accounting for goodwill are
summarized as follows: Assets acquired and liabilities assumed The identifiable assets and liabilities of the Heartit, which are measured at fair value as of the date of acquisition, were as follows:  (In thousands of Korean won)Assets acquiredand liabilitiesassumedAssetsCash and cash equivalents


333Other assets, current


251,953Property and equipment


8,196Other assets, non-current


11,076Total


271,558LiabilitiesOther liabilities, current


19,255Other liabilities, non-current


64,427Total


83,682Total identifiable net assets at fair value


187,876Goodwill


1,899,324Total consideration


2,087,200(In thousands of Korean won)Analysis of cash flows on acquisition:Total consideration related to the acquisition


(2,087,200
)Net cash and cash equivalents acquired at the acquisition date


333Net cash flows on acquisition (included in cash flows from investing activities)


(2,086,867
) All consideration was paid in cash. Goodwill of 1,899 million won represented the value of expected
synergies arising from the acquisition.  59




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  24.
Principal Subsidiaries Information on subsidiaries The Group has
10 consolidated subsidiaries. The significant subsidiaries of the Group include the following subsidiaries:  Percentage of ownershipName

Primary businessactivities

Country ofincorporation

January 1,2017


December 31,2017


December 31,2018SNOW China Limited(1)

Mobile camera app

Hong Kong (China)


100.0
%


100.0
%


96.2
%SNOW Japan Corporation

Mobile camera app

Japan


100.0
%


100.0
%


100.0
%Spring Camp Inc.

Investment

Korea






100.0
%


100.0
%SNOW China (Beijing) Co., Ltd

Mobile camera app

China






100.0
%


100.0
%Yiruike Information Technology (Beijing) PTE. LTD.

Mobile camera app

China






100.0
%


100.0
%Heartit Inc.(2)

Social Media

Korea










100.0
%  (1)
The Company transferred a portion of common shares of SNOW China Limited to a third-party in May 2018. As a
result, shares of the Group was reduced by 3.8%, arriving to 96.2%. Refer to Note 27 Share Based Payments for further details. (2)
The Company acquired Heartit Inc. in June 2018, resulting in the 100.0% ownership. Ultimate parent company of the Group The
parent company of the Group is NAVER, which is domiciled in Korea and listed on the Korean Stock Exchange.  60




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  25.
Investments in Associates and Joint Venture  (1)
Details of investments in the Groups certain associates and joint ventures, that are individual
immaterial are as follows:  (In thousands of Korean won)January 1, 2017


December 31, 2017


December 31, 2018Name

Primary businessactivities


Country ofincorporation


Percentageof ownership


Carryingamount


Percentageof ownership


Carryingamount


Percentageof ownership


CarryingamountAssociatesAlchera, Inc(1)


AI & AR technologydevelopment



Korea



30.0
%


1,464,220



25.2
%


1,862,085



24.5
%


1,510,954Fandom Co., Ltd.


Internet contentsbusiness



Korea











20.0
%


150,578



20.0
%


84,419Laiqu Technology (Shenzhen) Co.,
Ltd.(2)


AR Devicedevelopment



China











20.0
%


140,653



22.7
%


354,976Fast Cowell Private Equity Fund


Investment



Korea











21.1
%


1,495,655



21.1
%


1,459,812Joint venturePlaylist Corporation


Internet contentsbusiness



Korea











50.0
%


119,757



50.0
%


363,142  (1)
In November 2018, the Companys ownership in Alchera, Inc, decreased from 25.2% to 24.5% as a result of
the issuance of new shares by Alchera, Inc. (2)
In February 2018, the Companys ownership in Laiqu Technology (Shenzhen) Co., Ltd., increased from
20.0% to 26.0% as a result of the issuance of new shares by Laiqu Technology (Shenzhen) Co., Ltd. As a result of the issuance of new shares by Laiqu Technology (Shenzhen) Co., Ltd., the Companys ownership in Laiqu Technology (Shenzhen) Co.,
Ltd., decreased from 26.0% to 24.0% and 24.0% to 22.7% in March 2018 and November 2018, respectively.  (2)
The aggregate amount of individually immaterial associates accounted for by the equity-method is summarized
as follows:  (In thousands of Korean won)January 1, 2017


December 31, 2017


December 31, 2018Carrying amount of the interests


1,464,220



3,722,168



3,609,468  (In thousands of Korean won)2017


2018Loss for the year


(1,279,080
)


(1,753,288
)Other comprehensive income for the year, net of tax


641



Total comprehensive loss for the year, net of tax


(1,278,439
)


(1,753,288
)  61




---

Snow Corporation Notes to Consolidated Financial Statements (continued)  25.
Investments in Associates and Joint Venture (continued)  (3)
Summarized financial information for investments in joint ventures Summarized financial information for investments in joint ventures are excluded as the balance of the investments as well as
the profit/loss are both immaterial.  26.
Commitments and contingencies  (1)
As of December 31, 2018, 240 shares of common stock held by the CEO of AXIS Co., LTD. is pledged for a
loan of 800,000 thousand won to AXIS Co., LTD.  (2)
Details of payment guarantees provided by the others as at December 31, 2018 are as follows:  (In thousands of Korean won)Amount


WarrantiesSeoul Guarantee Insurance


123,000


PaymentKorea Credit Guarantee Fund


600,000


Loan payment guarantee  27.
Share Based Payments The Group granted 279,633 shares of SNOW China to NBT Inc. for the consulting services provided for the year ended at December 31, 2018. The Group recognized the share based payment as expense with a corresponding increase in equity because the vesting condition was
satisfied in the result of the completion of the service by NBT at grant date. The compensation cost of shares granted to NBT Inc. for
the year ended at December 31, 2018 was calculated based on the fair value of the shares rendered.  (In thousands of Korean won)2018Fair value of share based payment granted during the year(1)


3,900,000Fair value per share at grant date


13.96Discount rate


20.6%  (1)
The expense of share based compensation recognized as a cost incurred during the year is
3,900,000 thousand won and is related to share based payment.  28.
Subsequent Events On January 2, 2019, the Group additionally injected 1,500 million won in capital for Playlist Corporation, a joint venture of Snow
Corporation and NAVER WEBTOON Corporation. This investment did not change the percentage of ownership.  62