NAVER Corporation and Subsidiaries Consolidated Financial Statements December 31, 2017 and 2016 NAVER Corporation and Subsidiaries Index December 31, 2017 and 2016 Page(s) Independent Auditor’s Report ·········································································· 1 - 2 Consolidated Financial Statements Consolidated Statements of Financial Position ························································ 3 Consolidated Statements of Comprehensive Income ················································ 4 Consolidated Statements of Changes in Equity ······················································· 5 Consolidated Statements of Cash Flows ······························································· 6 Notes to the Consolidated Financial Statements······················································ 7 - 112 Independent Auditor’s Report (English Translation of a Report Originally Issued in Korean) To the Shareholders and Board of Directors of NAVER Corporation We have audited the accompanying consolidated financial statements of NAVER Corporation (the “Company”) and its subsidiaries (collectively the “Group”), which comprise the consolidated statements of financial position as at December 31, 2017 and 2016, and the consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies and other explanatory information. Management's Responsibilities for the Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (Korean IFRS), and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibilities Our responsibility is to express an opinion on the consolidated financial statements based on our audits. We conducted our audits in accordance with Korean Standards on Auditing. Those standards require that we comply with ethical requirements and 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 Group'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 Group'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 opinion. Opinion In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2017 and 2016, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with Korean IFRS. Auditing standards and their application in practice vary among countries. The procedures and practices used in the Republic of Korea to audit such financial statements may differ from those generally accepted and applied in other countries. Seoul, Korea March 8, 2018 This report is effective as of March 8, 2018, the audit report date. Certain subsequent events or circumstances, which may occur between the audit report date and the time of reading this report, could have a material impact on the accompanying consolidated financial statements and notes thereto. Accordingly, the readers of the audit report should understand that there is a possibility that the above audit report may have to be revised to reflect the impact of such subsequent events or circumstances, if any. 2 NAVER Corporation and Subsidiaries Consolidated Statements of Financial Position December 31, 2017 and 2016 (in Korean won) Notes December 31, 2017 December 31, 2016 Assets Current assets Cash and cash equivalents 6,7 \ 1,907,575,060,667 \ 1,726,231,781,291 Short-term financial instruments 6,7 1,333,889,498,274 1,243,188,526,333 Financial assets at fair value through profit or loss 5,6,8 274,532,710,666 352,050,575,067 Trade and other receivables 6,9 1,026,872,808,889 760,913,097,079 Available-for-sale financial assets 5,6,10 79,435,727,110 31,239,415,661 Inventories 12 36,204,513,812 10,346,098,622 Current tax asset 1,099,626,162 - Other current assets 13 124,617,831,303 75,963,752,602 4,784,227,776,883 4,199,933,246,655 Non-current assets Property and equipment 14 1,150,012,698,630 863,258,398,071 Intangible assets 15 339,511,680,983 112,131,534,109 Long-term financial instruments 6,7 120,301,393,998 192,181,000,000 Financial assets at fair value through profit or loss 5,6,8 39,151,181,682 4,338,051,108 Trade and other receivables 6,9 74,199,645,388 122,501,672,197 Available-for-sale financial assets 5,6,10 943,632,439,930 385,267,016,322 Held-to-maturity financial assets 6,11 2,660,696,298 2,907,350,285 Investments in associates and joint ventures 16 280,997,122,915 182,152,420,107 Deferred tax assets 29 248,493,530,447 285,890,760,768 Other non-current assets 13 36,063,392,760 20,073,730,970 3,235,023,783,031 2,170,701,933,937 Total assets \ 8,019,251,559,914 \ 6,370,635,180,592 Liabilities Current liabilities Trade and other payables 4,6,17 \ 770,724,455,666 \ 671,823,271,030 Financial liabilities at fair value through profit or loss 5,6 30,360,536 - Short-term borrowings 4,6,19 211,011,222,442 227,320,592,500 Current portion of debentures 4,6,19 150,000,000,000 - Income tax payables 305,730,913,120 239,105,201,541 Provisions 20 5,897,847,971 46,354,541,621 Other current liabilities 18 859,335,494,500 619,321,944,579 2,302,730,294,235 1,803,925,551,271 Non-current liabilities Trade and other payables 4,6,17 11,652,173,744 9,065,271,620 Financial liabilities at fair value through profit or loss 5,6 4,608,180,098 - Long-term borrowings 4,6,19 49,933,677,257 - Debentures 4,6,19 - 150,000,000,000 Net defined benefit liabilities 21 284,033,206,529 241,674,742,927 Provisions 20 34,765,546,071 15,120,742,106 Deferred tax liabilities 29 25,177,671,162 20,622,509,111 Other non-current liabilities 18 1,164,575,869 627,500,617 411,335,030,730 437,110,766,381 Total liabilities 2,714,065,324,965 2,241,036,317,652 Equity Equity attributable to owners of the Parent Company Share capital 22 16,481,339,500 16,481,339,500 Share premium 1,507,878,510,842 1,217,201,126,674 Other components of equity 23 (1,317,531,622,681) (1,449,123,370,169) Retained earnings 25 4,555,517,868,323 3,810,189,403,596 Non-controlling interest 542,840,138,965 534,850,363,339 Total equity 5,305,186,234,949 4,129,598,862,940 Total liabilities and equity \ 8,019,251,559,914 \ 6,370,635,180,592 The above consolidated statements of financial position should be read in conjunction with the accompanying notes. 3 NAVER Corporation and Subsidiaries Consolidated Statements of Comprehensive Income Years Ended December 31, 2017 and 2016 (in Korean won) Notes 2017 2016 Operating revenues 35 \ 4,678,468,928,032 \ 4,022,629,619,982 Operating expenses 26 (3,499,281,121,701) (2,920,589,144,190) Operating profit 1,179,187,806,331 1,102,040,475,792 Other income 27 35,057,161,984 102,016,939,984 Other expenses 27 (86,985,385,595) (91,759,944,041) Finance income 28 115,010,335,280 66,704,079,766 Finance costs 28 (32,414,107,346) (37,789,903,111) Share of net loss of associates and joint ventures 16 (14,026,821,694) (9,440,699,473) Profit before income tax expense 1,195,828,988,960 1,131,770,948,917 Income tax expense 29 (423,173,257,798) (360,863,616,391) Profit for the year from continuing operations 772,655,731,162 770,907,332,526 Loss from discontinued operations (2,554,060,955) (11,834,381,339) Profit for the year \ 770,101,670,207 759,072,951,187 Profit (loss) for the year is attributable to: Owners of the Parent Company Profit from continuing operations 775,433,640,876 761,140,055,404 Loss from discontinued operations 36 (2,554,060,955) (11,834,381,339) Non-controlling interests (2,777,909,714) 9,767,277,122 Other comprehensive income Items that may be subsequently reclassified to profit or loss Changes in the fair value of available-for-sale financial assets (1,660,488,494) (12,901,819,949) Reclassification due to disposal of available-for-sale financial assets (21,149,295,045) (42,827,000) Exchange differences (120,113,501,595) (48,071,575,946) Share of other comprehensive income of associates and joint ventures (8,355,322,396) 1,038,023,692 Items that will not be reclassified to profit or loss Remeasurements of net defined benefit liabilities 8,580,245,095 24,496,714,917 Share of other comprehensive