Softbank Group Corp. · TSE:9984
Softbank — Q3 FY2022 Earnings Presentation
37 slides from Softbank's earnings presentation, Feb 7, 2023
Slide 1: Earnings Results for the Nine-month Period Ended December 31, 2022
Earnings Results for the Nine-month Period Ended December 31, 2022 Investor Briefing February 7, 2023 SoftBank Group Corp.
Slide 2: Disclaimers
Disclaimers This presentation provides relevant information about SoftBank Group Corp. (“SBG”) and its subsidiaries (including Arm Limited, together with SBG, the “Company”) and its affiliates (together with the Company, the “Group”) and does not constitute or form any solicitation of investment inc
Slide 3: Exchange rates and abbreviations
Exchange rates per JPY used for translation FY2021 FY2022 Average during quarter Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 1 USD 110.00 110.47 113.60 117.10 129.04 138.68 141.16 EOQ Jun 30 Sep 30 Dec 31 Mar 31 Jun 30 Sep 30 Dec 31 Mar 31 1 USD 122.39 132.70 Abbreviations Abbreviations used in Finance section of this
Slide 4: Finance
Finance SBG stand-alone financial figures are calculated by excluding those of self- financing entities from the consolidated figures, unless otherwise stated. Major self-financing entities includes SBKK (including its subsidiaries such as Z Holdings and PayPay), SVF1, SVF2, LatAm Funds, and Arm.
Slide 5: Summary of FY22Q3
Summary of FY22Q3 Continue defensive financial management. Maintain ample of cash position NAV of ¥13.9T: -¥2.9T QoQ (incl. -¥1.5T FX impact) NAV/LTV LTV of 18.2％: +3.2% QoQ (incl. +2.1% FX impact) Cash position of ¥3.8T*1: -¥0.5T QoQ Continue monetization and debt reduction - Monetization: +$6.1B t
Slide 6: LTV Trend
LTV Trend*1 Controlled within financial discipline excl. asset-backed finance LTV 100％ 35% (in times of emergency) 25% (in normal *2 times) 18.2% 18.7% 21.6% 20.4% 14.3% 15.9% 14.5% 15.0% 16.1% 12.2% (excl. FX impact) Dec 20 Mar 21 Jun 21 Sep 21 Dec 21 Mar 22 Jun 22 Sep 22 Dec 22 *1 As of the end of
Slide 7: Impact of Changes in FX Rate
Impact of Changes in FX Rate ~90% of equity value of holdings are held in USD. Flow of funds is mostly USD-denominated Equity value of holdings*1 Breakdown by holding currency excl. asset-backed finance 1% EUR FX impact from Sep 30 to Dec 31 (8% weaker USD against JPY) JPY 13% NAV：-¥1.5T LTV：+2.1% T
Slide 8: Main Financing Activities in FY22Q3
Main Financing Activities in FY22Q3 Continued defensive financial management; monetization progressed and bonds refinanced Repurchased foreign currency-denominated notes (Oct) (incl. hybrid notes of $750M) -$2.3B -¥319.7B equivalent Bonds Redeemed domestic senior retail bonds (Dec) -$2.4B -¥337.0B e
Slide 9: Cash Position
Cash Position Maintain ample cash position, well over 2-year worth of bond redemptions Cash position Bond redemption schedule ¥3.8T *1 (¥ B) 646.0 Undrawn commitment line*2 Bond redemptions for the next 2 years (¥1.4T) ＞ 3,137.8 1,026.7 1,201.7 882.1 402.1 Dec 2022 Jan 23 - Dec 23 Jan 24 - Dec 24 Ja
Slide 10: Issuance of Domestic Senior Retail Bonds
Issuance of Domestic Senior Retail Bonds Refinanced senior bonds in Dec 2022. Continue to widely market to retail investors The 19 th Fukuoka SoftBank HAWKS Bond Number of sales to retail investors Total Approx. 94K ¥385.0B *1 amount of (redeemed ¥337.0B) issue Offerees Mainly retail investors Prize
Slide 11: SBG's Initiatives in Retail Bond Market in Japan
SBG‘s Initiatives in Retail Bond Market in Japan Continue to provide various instruments, having developed and expanded domestic retail bond markets SBG issuance of domestic retail bonds (by fiscal year) Cumulative amount issued*1 ¥7.1T ¥3.6T (¥ B) First subordinated bonds of which, amount redeemed
Slide 12: Size of Japanese Retail Bond Markets
Size of Japanese Retail Bond Markets Retail bond market steadily expanding Outstanding amount of Japanese retail bonds*1 (excl. retail JGBs) (¥ T) Corporate bonds, electric power bonds, etc. ¥ 7.8T Other (incl. Samurai bonds and bonds Outstanding issued by financial institutions, life/general insura
Slide 13: Retail Investors' Ownership in Corporate Bonds
Retail Investors’ Ownership in Corporate Bonds Retail investors’ share grew in retail bonds Corporate bond ownership distribution (since 2005)*1 100% Other (incl. various corporations, etc.) 90% Overseas 80% Mutual funds Retail investors: 6.4% Public and private pension funds % of retail investor 70
Slide 14: Bond Redemption Schedule
Bond Redemption Schedule Redemptions will be funded by carefully managed bond issuance with due consideration for cash position and market environment (¥ B) 1,344.8 Domestic senior bonds Domestic subordinated bonds 294.8 1,087.8 Domestic hybrid bonds 999.4 Foreign currency-denominated senior notes 1
Slide 15: Response to First Call for USD-denominated Hybrid Notes
Response to First Call for USD-denominated Hybrid Notes Hybrid Notes subject to refinancing Approach to refinancing Early redemption First call date July 19, 2023 on first call Outstanding YES $2.0B amount Maintain equity treatment Interest rate 6.000% per annum of the Hybrid Notes Undated YES NO Le
Slide 16: SBG Credit Spread
SBG Credit Spread Credit spreads rapidly tightened amid calmer interest rate movements Spread of SBG foreign currency- SBG 5-year CDS denominated senior notes 800 600 bps bps 700 500 600 400 500 400 300 300 200 USD 3.0Y USD 4.5Y 200 SBG 5Y CDS (JPY) USD 6.5Y USD 9.5Y EUR 2.5Y EUR 5.0Y 100 100 EUR 7.
Slide 17: Interest Rates in Japan & U.S.
Interest Rates in Japan & U.S. Global tapering trend and expectations of the unwinding led to higher interest rates 10-year U.S. Government Bond Yield 10-year Japanese Government Bond and Swap Yield 10-year JGB 10-year Swap 3.40% 2.25% 0.82% 0.50% 0.25% 0% 0% Jan 16 Feb 23 Jan 16 Feb 23 (Notes) • As
Slide 18: Impact of U.S. and Japan Interest Rates on Interest Payment
Impact of U.S. and Japan Interest Rates on Interest Payment Breakdown of SBG Interest-bearing Debt*1 by Fixed/Floating (excl. prepaid forward contracts） Floating rate; USD Floating rate; JPY*2 14% 9% Minimal impact of Rise in JPY interest rates higher interest give minimal impact on payments, mainly
Slide 19: SBG Stand-alone Interest-bearing Debt
SBG Stand-alone Interest-bearing Debt*1 Main changes from Sep 2022 Reduced debts by approx. ¥1.2T from • Physical settlement of prepaid forward contracts using Alibaba shares Mar 2022 (excl. non-recourse debts) -¥974.8B • Entry into prepaid forward contracts using Alibaba shares +$6.1B • Repurchase
Slide 20: SBG Stand-alone Cash Position
SBG Stand-alone Cash Position Maintain ample liquidity while reducing debts (¥ B) 3,944.8 127.1 3,637.4 76.6 3,173.4 3,079.9 35.6 Cash position of SB Northstar 2,681.1 330.0 582.1 Main changes from Sep 2022 Increase Decrease 3,817.6 3,560.8 ・New conclusion of ・Share repurchase -¥532.3B 3,137.8 prepa
Slide 21: SBG Stand-alone Net Interest-bearing Debt
SBG Stand-alone Net Interest-bearing Debt Adjusted net debt compressed approx. ¥1.6T since Mar 2022 (¥ B) excl. SB Northstar 12,135.3 12,021.0 11,486.0 8,504.9 8,112.2 6,163.8 7,411.2 8,871.8 Finance-related adjustments 5,549.1 5,030.2 Asset-backed finance, etc. ¥4,901.0B Hybrid finance ¥129.2B 5,32
Slide 22: Asset-backed Finance Using Alibaba Shares
Asset-backed Finance Using Alibaba Shares Beneficial ownership decreased after physical settlement of prepaid forward contracts Beneficial 23.7% ownership Used for prepaid 14.6% forward 13.5% contracts Monetization in FY22Q3 $6.1B through forward transactions *1 *2 *3 Jun 22 Sep 22 Dec 22 *1 Calcula
Slide 23: Equity Value of Holdings: Diversified Portfolio
Equity Value of Holdings: Diversified Portfolio Continued diversification of portfolio excl. asset-backed finance Mar 31, 2022 Dec 31, 2022 % of listed shares*1 % of listed shares*1 (net of asset-backed finance) (net of asset-backed finance) Others 52% Others 44% Alibaba 8% Alibaba 8% Arm 12% 23% Ar
Slide 24: Historical Share Repurchase Amount
Historical Share Repurchase Amount Repurchased approx. ¥4T worth of shares cumulatively in 3 years since “¥4.5T program.” Completed a massive share repurchase of over ¥1T in FY22 (¥ B) Cumulative share repurchase approx. ¥4T 2,226.2 1,055.4 602.4 384.1 232.0 FY18 FY19 FY20 FY21 FY22 Finance 21
Slide 25: Financial Policy Remains Unchanged
Financial Policy Remains Unchanged (2) Flexible and (1) Firmly keeping adaptive financial financial policy management Finance 22
Slide 26: Firmly Keeping Financial Policy
Firmly Keeping Financial Policy 1. Maintain LTV below 25% in normal times (upper threshold of 35% even in times of emergency) 2. Maintain at least 2-year worth of bond redemptions in cash 3. Secure recurring distributions and dividend income from SVF and other subsidiaries Finance 23
Slide 27: Appendix
Appendix
Slide 28: Calculation of Equity Value of Holdings as of Dec 31, 2022
Calculation of Equity Value of Holdings as of Dec 31, 2022 $1 = ¥132.70 (¥ T) Equity value of holding Equity value of holdings Adjustment for ＝ ー (adjusted) （unadjusted） asset-backed finance ¥21.5T （unadjusted） ¥2.0T ＝ ¥4.1T 355M shares held*1 × Share price ＄88.09*1 ー Collar contract, etc. ¥2.1T Col
Slide 29: LTV Calculation: SBG Stand-alone Equity Value of Holdings
LTV Calculation: SBG Stand-alone Equity Value of Holdings (L) Adjusted ¥3.08T SBG stand-alone net debt =18.2% (V) Adjusted SBG stand-alone equity value of holdings*1 ¥16.93T (¥ T) Adjusted SBG Major SBG’s interest in Other Investments = + + stand-alone equity value of holdings assets SVF1&2 & LatAm
Slide 30: Details of SBG Stand-alone Equity Value of Holdings (1/2)
LTV Calculation: Details of SBG Stand-alone Equity Value of Holdings (1/2) (¥ T) Assets Value Calculation method (a) Alibaba 2.05 Multiplying the number of Alibaba ADSs equivalent to the number of shares held by SBG by Before adjustment 4.15 the ADS price Sum of the outstanding maturity settlement a
Slide 31: Details of SBG Stand-alone Equity Value of Holdings (2/2)
LTV Calculation: Details of SBG Stand-alone Equity Value of Holdings (2/2) (¥ T) Assets Value Calculation method (g) T-Mobile 1.15 summing - Value of SBG’s shareholding (incl. the number of shares subject to call options held by Deutsche Telekom (DT): 34,971,809 shares as of Dec 31, 2022) × the shar
Slide 32: LTV Calculation: SBG Stand-alone Net Debt
LTV Calculation: SBG Stand-alone Net Debt (L) Adjusted SBG stand-alone net debt*1 ¥3.08T (V) Adjusted SBG stand-alone ¥16.93T =18.2% equity value of holdings (¥ T) Adjusted SBG Consolidated Net debt at self- Other stand-alone net debt = net debt - financing entities - adjustments 3.08 13.48 5.37 5.0
Slide 33: LTV Calculation: Details of SBG Stand-alone Net Debt
LTV Calculation: Details of SBG Stand-alone Net Debt (¥ T) SBG stand-alone net debt Consolidated net interest-bearing debt, (before adjustment) 8.11 net of interest-bearing debt at self-financing entities - Add 50% to interest-bearing debt (to treat it as liability) for USD Hybrid Notes issued in Ju
Slide 34: Adjustment for Asset-backed Finance in LTV and NAV Calculation
Adjustment for Asset-backed Finance in LTV and NAV Calculation Non-recourse asset-backed finance is deducted from debt. Value of assets required for settlement is deducted from assets 21.5 (¥ T) Collar/Forward/Put 1 2 Margin loan, etc. transactions 1 3.0 Asset-backed Main shares finance Alibaba SBKK
Slide 35: (Ref.) Forward Transaction / Collar Transaction
(Ref.) Forward Transaction / Collar Transaction Objective Non-recourse financing using derivatives • Transaction where parties agree to settle at a pre-specified price or price range at a specific date in the future • Finance through pledged shares and derivatives referencing them Outline • Settleme
Slide 36: SBG Credit Rating Trend
SBG Credit Rating Trend Acquisition of Acquisition of Acquisition Acquisition Listing A+ 14 Japan Telecom Vodafone KK of Sprint of Arm of SBKK A 13 JCR (A－) A- 12 Outlook Stable BBB+11 BBB 10 JCR revised its outlook to “Stable” from “Positive” on January 20, 2023 BBB- 9 BB+ 8 S&P (BB＋) Outlook Negat
Slide 37: Consolidated Interest-bearing Debt/ Cash Position/ Net Interest-bearing Debt
Consolidated Interest-bearing Debt/ Cash Position/ Net Interest-bearing Debt Consolidated Interest-bearing Debt*1 (\ B) Dec 21 Mar 22 Jun 22 Sep 22 Dec 22 SBG stand-alone 13,860.4 14,918.7 15,842.9 12,065.7 11,250.0 Incl. SB Northstar 275.4 33.5 4.2 - - SVF1&2 and LatAm Funds 1,208.6 1,077.3 1,413.4