Softbank Group Corp. · TSE:9984
Softbank — Q1 FY2019 Earnings Presentation
33 slides from Softbank's earnings presentation, Aug 9, 2019
Slide 1: Earnings Results for the Three-month Period Ended June 30, 2019
V1.1 Earnings Results for the Three-month Period Ended June 30, 2019 Investor Briefing August 9, 2019 SoftBank Group Corp. 1
Slide 2: Disclaimer
DISCLAIMER This material was prepared based on information available and views held at the time it was made. Statements in this material that are not historical facts, including, without limitation, plans, forecasts and strategies are “forward-looking statements”. Forward-looking statements are by t
Slide 3: Accounting policy, trademarks and exchange rates
Accounting policy SoftBank Group Corp. adopted the International Financial Reporting Standards (IFRSs) in fiscal 2013. Trademarks and registered trademarks, etc. The names of other companies, other logos, product names, service names, brands, etc., mentioned in this material are registered trademark
Slide 4: Finance
Finance In this section, SoftBank Corp. is referred to as SBKK and SoftBank Vision Fund is referred to as SVF. SBG standalone financial measures are calculated by deducting self-financing entities’ financial measures from consolidated financial measures. Self-financing entities are SBKK, Sprint, Arm
Slide 5: Financial Highlights (FY2019)
Financial Highlights (FY2019) • Issued JPY 500bn of domestic retail bond in April and redeemed Financial JPY 300bn of domestic retail bond in May position • Increased commitment line from JPY 178.5bn to JPY 330.0bn in July • Announced the planned establishment of SVF2, with approximately US$ 108bn o
Slide 6: Net Debt and Investment Asset Value
Net Debt and Investment Asset Value (JPY) Net debt 4.9tn Investment SVF Others asset value 11.3tn 4.7tn 2.9tn 3.5tn 2.6tn 0.9tn 25.8tn Listed Listed Listed * Yahoo Japan became a consolidated subsidiary of SBKK in June 2019 * Listed share prices: (Japan) closing price as of Aug 7, 2019, (US) closing
Slide 7: LTV
LTV Manage LTV at less than 25% during normal periods with upper threshold of 35% even during abnormal periods (JPY) 25.8 tn （8.0） （8.0） LTV 18.9% (Debt cover 5x) 4.9 tn Investment SBG standalone asset value net debt (As of Aug. 7) * Debt cover = Investment asset value divided by net debt 74
Slide 8: SBG Standalone Interest-bearing Debt
SBG Standalone Interest-bearing Debt Increase due to early bond issuance for refinancing purpose and short-term borrowings for temporal expenses (JPY bn) Main variance factors from Mar. 31, 2019 Issuance/redemption of domestic bond (+JPY 200bn) 9,265.1 Short-term borrowing (+JPY 420bn) for payment o
Slide 9: SBG Standalone Cash Position
SBG Standalone Cash Position Decrease due to new investments, corporate tax payment and share buyback (JPY bn) 2,463.0 Refund of withholding income tax (JPY 423.6bn)*2 2,158.8 Net proceeds expected for asset sale to SVF, etc. (JPY 866.4bn)*3 Main variance factors from Mar. 31, 2019 1,642.4 1,290.0 I
Slide 10: Maintaining Abundant Cash Position
Maintaining Abundant Cash Position Maintain a liquidity level that covers bond redemptions for at least the next 2 years JPY2.5tn 0.0 *1 (JPY bn) In addition to maintaining abundant cash position, secure various funding sources: • Refinance Withholding income tax • Asset divestments, non-recourse as
Slide 11: SBG Standalone Net Interest-bearing Debt
SBG Standalone Net Interest-bearing Debt Increase mainly due to decrease in cash position (JPY bn) 8,254.9 6,834.8 6,212.4 5,253.1 5,080.5 JPY 4,922.5bn※ Refund of withholding income tax; Net proceeds expected for asset sale to SVF, etc. Jun' 18 Sep' 18 Dec' 18 Mar' 19 Jun' 19 * The difference with
Slide 12: Interest Expenses (Standalone)
Interest Expenses (Standalone*1) Interest payments are sufficiently covered • Dividend income from (JPY bn) Average coupon on subsidiaries standalone basis*2 2.28％ JPY 270.5bn*3 Funded in JPY : 1.80％ • Distribution from SVF 250.0 Funded in foreign currencies : 3.66% (CY2018 actual) 205.7 200.0 191.2
Slide 13: A Concept of Interest Coverage
A Concept of Interest Coverage Sufficient recurring cash income to cover interest payment Dividend income from Distribution from SVF subsidiaries (CY2018 actual) Approx. JPY 270.5bn*1 Approx. JPY 220.0bn Interest payment 2.2x JPY 222.9bn*2 Dividend income from Distribution from SVF subsidiaries (CY2
Slide 14: Equity Value of Holdings
Equity Value of Holdings Market value of shareholdings amounts to JPY 25.8tn (JPY tn) 27.3 25.4 25.8 Composition 21.9 Ratio 20.1 13.1 44％ 11.3 12.1 Alibaba 13.4 11.3 SBKK 4.5 4.7 18％ SVF (equity value for SBG) 4.3 Sprint 13％ Arm 1.9 2.1 2.7 3.2 3.5 Yahoo Japan 2.2 2.4 2.8 2.9 11％ 2.7 Others 2.7 2.8
Slide 15: Alibaba Shares
Alibaba Shares Share price/Target price Trading volume Market cap JPY 43.6tn US$ 409.9bn (US$) (US$ bn) Share price*1 US$ 157.43 300 Trading Share Price Target Price 16 Target price*2 US$ 217.65 volume 60-day average daily trading volume US$ 3.5bn 14 250 % owned by SBG Group 26.0% 12 Market cap of s
Slide 16: SBKK Shares
SBKK Shares Share price/Target price Trading volume Market cap JPY 7.1tn (JPY) (JPY bn) Share price*1 JPY 1,492.00 Target price*2 JPY 1,600.83 1,700 Trading Share Price Target Price 100 volume 60-day average daily trading volume JPY 11.8bn 90 1,600 % owned by SBG Group 66.5% 80 Market cap of shares
Slide 17: Sprint Shares
Sprint Shares Share price/Target price Trading volume (US$) (US$ mn) Market cap JPY 2.9tn US$27.4bn 10.0 Trading Share Price Target Price 1,400 volume Share price*1 US$ 6.71 *2 1,200 Target price US$ 6.89 9.0 60-day average daily trading volume US$ 197mn 1,000 8.0 % owned by SBG Group 84.2% 800 Mark
Slide 18: SVF: Capital Commitment
SVF: Capital Commitment Capital Commitment (as of June 30, 2019) (US$ bn) 97.0*1 (56.2) SBG 63.9 *1 33.1 *2 （8.0） （19.6）*3 （36.6）*3 Third-party Numbers in brackets represent amounts contributed limited partners *1 A portion of the capital committed by third-party investors in SVF and Delta Fund has
Slide 19: SVF: Investment Portfolio
SVF: Investment Portfolio 19 16
Slide 20: SVF: Fair Value of Investment Assets
SVF: Fair Value of Investment Assets (US $bn) ・ SVF/Delta Fund Total ・ Excluding exited investments ＋24％ 82.2 ＋20％ 72.3 66.3 60.1 Fair value Acquisition cost Mar' 2019 Jun' 2019 *1 Excludes exited investments. Includes Delta Fund, but Delta Fund has no investment holding as of June 30, 2019, due to
Slide 21: SoftBank Vision Fund 2
SoftBank Vision Fund 2 Total expected contribution of capital $108bn Expected contribution of capital by SBG $38bn * As of the July 26, 2019 press release announcement <Financial Policy> Manage LTV at less than 25% during normal periods (upper threshold of 35% even during abnormal periods) Plan
Slide 22: Financial Policy
Financial Policy 1. Manage LTV at less than 25% during “normal” periods (upper threshold of 35% even during “abnormal” periods) 2. Maintain cash position covering bond redemptions for at least the next 2 years 3. Secure sustainable distribution and dividend income from SVF and other subsidiaries 22
Slide 23: Appendix
Appendix 23 20
Slide 24: FY2019 Finance Strategy
FY2019 Finance Strategy Pursue both financial stability and flexibility as an investment company Well-protected financial management to be invulnerable to any environmental change 1. Manage balance between investment asset value and debt size • Manage LTV at less than 25% with upper threshold of
Slide 25: Direction of Financial Management (illustrative)
Direction of Financial Management (illustrative) Maximize enterprise value by maintaining optimal leverage through LTV management LTV to improve in the long run as investment assets appreciate in value Balance elevated leverage Divestment during with improvement in financial bull market; position du
Slide 26: LTV Calculation: Adjusted SBG Standalone Net Debt
LTV Calculation: Adjusted SBG Standalone Net Debt (L) Adjusted JPY 4.90tn SBG Standalone Net Debt = 18.9% (V) SBG Standalone Investment Asset Value JPY 25.85tn (JPY tn) = - - Adjusted SBG Consolidated Net Debt at Self- Other Standalone Net Debt Net Debt *1,２ Financing Entities Adjustments 4.90 14.60
Slide 27: LTV Calculation: SBG Standalone Investment Asset Value
LTV Calculation: SBG Standalone Investment Asset Value (L) Adjusted SBG Standalone Net Debt JPY 4.90tn (V) SBG Standalone = 18.9% JPY 25.85tn Investment Asset Value (JPY tn) = + + + Investment SBG Standalone Major Listed Arm Shares Assets Under Other Holdings Shares (75% SBG-held) SVF Shares 25.85 1
Slide 28: SVF: Committed Capital of SBG
SVF: Committed Capital of SBG SBG reserves funds for remaining committed capital at SVF (US $bn) Change in SBG’s cash position upon asset sale to SVF * * The amount includes $5bn planned to be used in an incentive scheme related to SVF and approximately $8.2bn of obligation to be satisfied by using
Slide 29: SBG Credit Rating Trend
SBG Credit Rating Trend Aim to improve credit rating evaluation under the investment holding company rating criteria 14 Acquisition of Acquisition of Sprint Arm SBKK Japan Telecom Vodafone KK Acquisition Acquisition Listing 13 A/A2 JCR (A－) 12 A－/A3 11 BBB+/Baa1 10 BBB/Baa2 S&P (BB＋) 9 BBB－/Baa3 Moo
Slide 30: Redemption Schedule
Redemption Schedule Planning various redemption options with refinancing as the main option Domestic straight notes (JPY bn) 1,305.6 Domestic subordinated notes Domestic hybrid notes Foreign currency-denominated senior notes 455.6 Foreign currency-denominated 946.6 924.1 hybrid notes 296.4 424.1 583
Slide 31: Consolidated Interest-bearing Debt
Consolidated Interest-bearing Debt Interest-bearing Debt ＋ (JPY bn) Lease Liabilities 17,987.8 17,349.0 17,053.8 17,328.2 SBG 15,685.1 Others (Arm etc.) SVF 8,116.5 7,385.5 Variable prepaid forward contract 7,411.9 (Alibaba) 9,265.1 6,722.9 SoftBank segment*3 283.6 Sprint segment 501.1 472.0 635.9 4
Slide 32: Consolidated Cash Position
Consolidated Cash Position (JPY bn) 5,125.8 2,158.8 3,629.1 3,338.8 2,978.2 2,724.2 1,281.7 547.9 1,642.4 1,010.2 1,173.0 SBG 617.9 1,285.6 572.2 795.5 Others (Arm etc.) 115.9 263.2 311.1 273.8 118.1 SVF 77.5 168.0 376.1 358.3 645.1 SoftBank segment*3 927.0 1,012.3 782.4 757.4 524.8 Sprint segment J
Slide 33: Consolidated Net Interest-bearing Debt
Consolidated Net Interest-bearing Debt (JPY bn) Interest-bearing Debt ＋Lease Liabilities – Cash Position 14,370.8 14,648.9 14,603.9 11,927.9 12,056.0 6,834.8 6,212.4 8,254.9 5,253.1 5,080.5 520.0 SBG 741.7 727.8 730.6 Others (Arm etc.) 537.5 3,989.5 719.0 SVF 3,065.1 3,012.4 2,928.0 1,662.9 Variable