Changes in Subsidiaries (Sub-Subsidiaries)
SoftBank Group Corp. (“SBG”) announced today that LINE Corporation (“LINE”)*, LINE Financial Corporation, and LINE Financial Asia Corporation Limited have become subsidiaries (sub-subsidiaries) of SBG as of today.
LINE will change its company name to A Holdings Corporation (“AHD”) as of February 28, 2021.
1. Reason and method for the change
As announced in the “Entry into a Definitive Agreement by Subsidiaries (SoftBank Corp., and Z Holdings Corporation) Regarding the Business Integration of Z Holdings Corporation and LINE Corporation, and the Planned Commencement of a Joint Tender Offer for the Shares of LINE Corporation by a Subsidiary (SoftBank Corp.) and NAVER Corporation” dated December 23, 2019, LINE, as the surviving corporation, implemented as of today an absorption-type merger (the “Absorption-type Merger”) with Shiodome Z Holdings GK, a wholly owned subsidiary of SoftBank, as the absorbed corporation, as part of the business integration between Z Holdings Corporation (Securities Code: 4689, Tokyo Stock Exchange First Section; a subsidiary of SBG; “ZHD”) and LINE (the “Business Integration”) pursuant to a business integration agreement that SoftBank, NAVER, ZHD and LINE entered into as of December 23, 2019.
Through a series of transactions including the Absorption-type Merger, LINE as well as LINE Financial Corporation and LINE Financial Asia Corporation Limited, all of which are wholly owned subsidiaries of LINE, have become subsidiaries (sub-subsidiaries) of SBG as of today.*1 *2
Descriptions regarding LINE’s subsidiaries other than LINE Financial Corporation and LINE Financial Asia Corporation Limited are omitted in this notice as the changes in them fall under the minor change criteria under the timely disclosure rules.
LINE will transfer its entire business (excluding the ZHD shares, the contractual status pursuant to the agreements executed by LINE in relation to the Business Integration, and the rights and obligations set out in the absorption-type demerger agreement) to its wholly owned subsidiary, LINE Demerger Preparatory Company, in an absorption-type demerger (the “Corporate Demerger”) as of February 28, 2021. For accounting purposes, the acquisition date will be February 28, 2021, the date when the Corporate Demerger will become effective, as the Absorption-type Merger and the Corporate Demerger are deemed to be a series of transactions regarding the Business Integration.
2. Outline of the subsidiaries (sub-subsidiaries)
(i) LINE Corporation
| (1) Name | LINE Corporation | |||
|---|---|---|---|---|
| (2) Address | 4-1-6 Shinjuku Shinjuku-ku, Tokyo | |||
| (3) Name and title of representative | Takeshi Idezawa, Representative Director and President | |||
| (4) Nature of business | Advertising service based on the mobile messenger application “LINE”, core businesses including the sales of stickers and game services, and strategic businesses including Fintech, AI, and commerce services | |||
| (5) Share Capital | JPY 101,788 million (as of December 31, 2020) | |||
| (6) Founded | September 4, 2000 | |||
| (7) Major shareholders and shareholding ratios | SoftBank Corp. | 50.00% | ||
| NAVER Corporation | 42.25% | |||
| NAVER J.Hub Corporation | 7.75% | |||
| (8) Relationships with SBG | Capital relationship | SBG, through SoftBank, owns 50.00% of the shares in LINE | ||
| Personnel relationship | Not applicable | |||
| Business relationship | There are business relationships with respect to advertising services, etc. | |||
| (9) Results of operation and financial position over the past 3 years (Consolidated, IFRS) | ||||
| Fiscal year | Fiscal year ended December 31, 2017 | Fiscal year ended December 31, 2018 | Fiscal year ended December 31, 2019 | |
| Total capital | JPY 189,977 million | JPY 208,514 million | JPY 174,663 million | |
| Total assets | JPY 303,439 million | JPY 486,587 million | JPY 541,352 million | |
| Equity attributable to owners of parent per share | JPY 779.30 | JPY 833.87 | JPY 659.96 | |
| Revenues | JPY 167,147 million | JPY 207,182 million | JPY 227,485 million | |
| Operating income (loss) | JPY 25,078 million | JPY 16,110 million | JPY -38,997 million | |
| Income (loss) attributable to owners of the parent company | JPY 8,078 million | JPY -3,718 million | JPY -46,888 million | |
| Earnings per share: basic profit (loss) for the period | JPY 36.56 | JPY -15.62 | JPY -196.07 | |
| Dividends per share | - | - | - | |
(ii) LINE Financial Corporation
| (1) Name | LINE Financial Corporation | |||
|---|---|---|---|---|
| (2) Address | 1-1-1 Nishi Shinagawa, Shinagawa-ku Tokyo | |||
| (3) Name and title of representative | Tetsuhiko Saito, Representative Director and CEO | |||
| (4) Nature of business | Provision of financial services | |||
| (5) Share Capital | JPY 45,650 million (as of February 26, 2021) | |||
| (6) Founded | January 10, 2018 | |||
| (7) Major shareholders and shareholding ratios | LINE Corporation | 100.00% | ||
| (8) Relationships with SBG | Capital relationship | SBG, through SoftBank, owns 50.00% of the shares in LINE, the parent company of LINE Financial Corporation. | ||
| Personnel relationship | Not applicable | |||
| Business relationship | Not applicable | |||
| (9) Results of operation and financial position over the past 3 years (Standalone, Japanese GAAP) | ||||
| Fiscal year | First Fiscal Year: Fiscal year from January 10, 2018 until May 31, 2018 | Second Fiscal Year: Fiscal year from June 1, 2018 until March 31, 2019 | Third Fiscal Year: Fiscal year from April 1, 2019 until March 31, 2020 | |
| Sales | - | JPY 127 million | JPY 405 million | |
| Operating income (loss) | JPY -188 million | JPY -1,648 million | JPY -3,010 million | |
| Ordinary income (loss) | JPY -260 million | JPY -1,754 million | JPY -3,280 million | |
| Net income (loss) | JPY -261 million | JPY -1,755 million | JPY -4,277 million | |
| Net income (loss) per share | JPY -183.16 | JPY -447.09 | JPY -599.85 | |
| Total assets | JPY 20,005 million | JPY 58,491 million | JPY 72,695 million | |
| Net assets | JPY 19,739 million | JPY 57,051 million | JPY 72,238 million | |
| Net assets per share | JPY 9,869.73 | JPY 9,669.69 | JPY 9,261.26 | |
| Dividends per share | - | - | - | |
(iii) LINE Financial Asia Corporation Limited
| (1) Name | LINE Financial Asia Corporation Limited | |
|---|---|---|
| (2) Address | Units 04-05, 26/F, Railway Plaza, 39 Chatham Road South, Tsim Sha Tsui, Kowloon, Hong Kong | |
| (3) Name and title of representative | HWANG In Joon, Director | |
| (4) Nature of business | Financial business strategy | |
| (5) Share Capital | JPY 39,523 million (as of February 26, 2021) * | |
| (6) Founded | September 4, 2018 | |
| (7) Major shareholders and shareholding ratios | LINE Financial Plus Corporation | 100.00% |
| (8) Relationships with SBG | Capital relationship | SBG, through SoftBank, owns 50.00% of the shares in LINE, the parent company of LINE Financial Asia Corporation Limited. |
| Personnel relationship | Not applicable | |
| Business relationship | Not applicable | |
| (9) Results of operation and financial position over the past 3 years (Standalone, IFRS) | ||
| Fiscal year | First Fiscal Year: Fiscal year from September 4, 2018 until December 31, 2019 | |
| Sales | - | |
| Operating loss | JPY -461 million | |
| Net loss | JPY -1,048 million | |
| Net loss per share | JPY -431.63 | |
| Total assets | JPY 39,456 million | |
| Net assets | JPY 39,089 million | |
| Dividends per share | - | |
The exchange rate as of February 25, 2021 (1 USD = JPY 105.90480) has been used for the conversion from USD to JPY.
3. Date of change
February 26, 2021
4. Outlook
As a result of the series of transactions for the Business Integration including the Absorption-type Merger, AHD (currently LINE) will become a subsidiary in which SBG holds 50% of the shares through SoftBank. AHD is expected to hold 65.3% of the ZHD shares, the listed integrated company after the Business Integration. The impact of these changes on SBG’s consolidated financial results for the fiscal year ending March 2021 is expected to be minimal.
Reference: Consolidated financial results forecast for the fiscal year ending March 2021 and actual for the fiscal year ended March 2020
| Net sales | Income before income tax | Net income attributable to owners of the parent | |
|---|---|---|---|
| Forecast for the fiscal year ending March 2021 | - | - | - |
| Actual for the fiscal year ended March 2020 | JPY 5,238,938 million | JPY 50,038 million | JPY -961,576 million |
Net sales and income before income tax are presented in results of continuing operations only.
SBG does not provide forecasts of consolidated results of operations because they are difficult to project due to numerous uncertainties affecting earnings.
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