Softbank Group Corp. · TSE:9984
Softbank — Investor Presentation (September 2017)
30 slides from Softbank's investor presentation, Sep 1, 2017
Slide 1: Accounting Treatments for SoftBank Vision Fund
Accounting Treatments for SoftBank Vision Fund September 1, 2017 SoftBank Group Corp.
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: Agenda - Accounting treatments
Agenda - Accounting treatments - 1. General 1) Accounting treatment for entities composing SoftBank Vision Fund 2) Accounting treatment for investees (portfolio companies) 3) Accounting treatment for third-party interests in SoftBank Vison Fund 4) Overview of consolidated financial statements and se
Slide 4: Agenda - Appendix
Agenda - Appendix - 1) Definition of “investment entity” under IFRS 2) Accounting treatments and presentations of investments (non-subsidiary) i. General ii. Bridge investments 3) List of major investments from SVF 4) Valuation techniques for investments 3
Slide 5: Accounting treatments
SoftBank Group - Accounting treatments -
Slide 6: Agenda - Accounting treatments
Agenda - Accounting treatments - 1. General 1) Accounting treatment for entities composing SoftBank Vision Fund 2) Accounting treatment for investees (portfolio companies) 3) Accounting treatment for third-party interests in SoftBank Vison Fund 4) Overview of consolidated financial statements and se
Slide 7: Accounting treatment for entities composing SVF
1) Accounting treatment for entities composing SVF SoftBank Vision Fund (SVF) consists of several limited partnerships (funds), general partners (“GPs”), advisory companies and newly-established holding entities for several of the portfolio company investments. All these entities are consolidated by
Slide 8: Accounting treatment for investees (portfolio companies)
2) Accounting treatment for investees (portfolio companies) Subsidiaries are consolidated, and investments except for subsidiaries are in principle treated as financial instruments at FVTPL in SBG consolidated financial statements *See P24 for the definition of “Investment entity” SBG consolidation:
Slide 9: Accounting treatment for third-party interests in SVF
3) Accounting treatment for third-party interests in SVF Third-party interests are classified as liabilities Fund life is finite; Obliged to distribute to Third-party interests investors classified as “liabilities” Two types of contribution to SVF: - Equity (Performance-based) - Preferred Equity (Fi
Slide 10: Overview of consolidated financial statements and segment information - 1
4) Overview of consolidated financial statements and segment information - 1 Consolidated Statement of Financial Position (B/S) (except for a case where the investee is a subsidiary) Assets Liabilities and Equity Current assets Current liabilities Cash and cash equivalents Interest-bearing debt Trad
Slide 11: Overview of consolidated financial statements and segment information - 2
4) Overview of consolidated financial statements and segment information - 2 Consolidated Statement of Income (P/L) (except for a case where the investee is a subsidiary) [Gains/losses from investments] Net sales • Realized gain and loss on sales of investments • Unrealized gain and loss on valuatio
Slide 12: Overview of consolidated financial statements and segment information - 3
4) Overview of consolidated financial statements and segment information - 3 Consolidated Statement of Cash Flows (CF) (except for a case where the investee is a subsidiary) Cash flows from operating activities Net income Depreciation and amortization Gain on investments at SVF Change in third-party
Slide 13: Overview of consolidated financial statements and segment information - 4
4) Overview of consolidated financial statements and segment information - 4 Segment information (except for a case where the investee is a subsidiary) Domestic Reconcili- Consolidat ・・・ SVF Other telecom ations ed Net sales xxx ・・・ - xxx xxx xxx Segment income xxx ・・・ xxx xxx xxx xxx ＝Operating inc
Slide 14: Agenda - Accounting treatments
Agenda - Accounting treatments - 1. General 1) Accounting treatment for entities composing SoftBank Vision Fund 2) Accounting treatment for investees (portfolio companies) 3) Accounting treatment for third-party interests in SoftBank Vison Fund 4) Overview of consolidated financial statements and se
Slide 15: Interests of SoftBank Group Corp. and third-party - 1
1) Interests of SoftBank Group Corp. and third-party - 1 Below are the assumptions used for illustrations on P15-16 (A Co.=subsidiary, B Co.=non-subsidiary): ■Total amount of capital called by the Fund: 1,000 consist of SBG (performance-based distribution type) = 300; third-party investors (performa
Slide 16: Interests of SoftBank Group Corp. and third-party - 2
1) Interests of SoftBank Group Corp. and third-party - 2 Waterfall for distribution to SBG and third-party investors Gain on valuation 1,200 Interests of third- Operating Interests of SBG party investors expenses*1 200 Fixed fees Gain on valuation GP Management Fees & Performance-based fees Fixed &
Slide 17: Interests of SoftBank Group Corp. and third-party - 3
1) Interests of SoftBank Group Corp. and third-party - 3 Illustrative example of PL for the distribution flow on page 15 (assumptions: all investees are non-subsidiaries) SVF P/L SBG consolidated P/L LP GP / Reconcili- Recorded item Consolidated Presentation (Fund) Advisory ations Net sales Gain on
Slide 18: Accounting treatments and presentations of investments - 1
2) Accounting treatments and presentations of investments - 1 (Assumption) Investments from the Fund and capital relationship SBG Third-party investors Fund Subsidiary Other (non-subsidiary) A Co. B Co. (Consolidated) (FVTPL) 17
Slide 19: Accounting treatments and presentations of investments - 2
2) Accounting treatments and presentations of investments - 2 Below are the assumptions used for illustrations on P19-20 (A Co.=subsidiary, B Co.=non-subsidiary): ■Total amount of capital called by the Fund: 1,000 consist of SBG (performance-based distribution type) = 300; third-party investors (per
Slide 20: Accounting treatments and presentations of investments - 3
2) Accounting treatments and presentations of investments - 3 Flow chart of fund investments consolidation A Co. B/S B Co. shares Reconciliation Consolidated SBG B/S Debt Fair value A Co. Debt 800 700 Third-party interests 800 1,100 ＋ ＋ Asset A Co. Asset 1,800 = 1,800 Third-party interests 1,100 B C
Slide 21: Accounting treatments and presentations of investments - 4
2) Accounting treatments and presentations of investments - 4 In the segment information, valuation gain/loss from investments in subsidiaries at FVTPL in SVF is recognized in the SVF segment, and eliminated in Reconciliations. ■Supplementary assumptions for the case study A Co. (subsidiary) : Net s
Slide 22: Accounting treatments and presentations of investments - 5
2) Accounting treatments and presentations of investments - 5 Below are the assumptions used for illustrations on the following page: ■The Fund only invests to Arm (subsidiary). There is no SBG’s subsidiary other than Arm. ■Gain on valuation for entire Arm shares: 4,000 Of which, attributable to SVF
Slide 23: Accounting treatments and presentations of investments - 6
2) Accounting treatments and presentations of investments - 6 FVTPL valuation gain/loss of Arm shares (max 24.99% shares of total) is recognized in the SVF segment and eliminated in Reconciliations Only financial results Segment Reconcili- Consoli- from Arm segment Consolidated P/L Arm SVF (100%) re
Slide 24: Appendix
- Appendix - SoftBank 23
Slide 25: Definition of "investment entity" under IFRS
1) Definition of “investment entity” under IFRS ■Definition of investment entity under IFRS IFRS10 27 (excerpt) An investment entity is an entity that: a. obtains funds from one or more investors for the purpose of providing those investor(s) with investment management services; b. commits to its in
Slide 26: Accounting treatments and presentations of investments (non-subsidiary) -1
2) Accounting treatments and presentations of investments (non-subsidiary) -1 Investments by SVF are presented separately from investments made other than SVF i. General Securities acquired as Accounting treatment in P/L Presentation as asset in B/S FVTPL Investments from SVF a. Investments from SVF
Slide 27: Accounting treatments and presentations of investments (non-subsidiary) -2
2) Accounting treatments and presentations of investments (non-subsidiary) -2 Presentation for bridge investments depends on whether they are determined to be transferred to SVF ii. Bridge investments (investments acquired by SBG with an intension of recommending to SVF) Securities acquired as Accou
Slide 28: List of major investments from SVF
3) List of major investments from SVF Acquisition cost and fair value of major investees (U.S. dollars) Investee Held by L.P. Acquisition cost Fair value (as of June 30, 2017) NVIDIA SVF L.P. 2.8B 3.9B Guardant AIV M1 L.P. 0.1B 0.1B Others 0.3B 0.3B Total 3.2B 4.3B 27
Slide 29: Valuation techniques for investments (shares)
4) Valuation techniques for investments (shares) Generally-accepted methods are applied The valuation techniques for financial instruments 【In active markets for identical assets or liabilities if such prices are available】 Quoted prices 【If such prices are unavailable】 ■ If prices of recent arm’s-l
Slide 30: SoftBank
SoftBank
SoftBank Group — Investor Presentation (September 2017) on 6ix