Slide 1: Earnings Results for the Fiscal Year Ended March 31, 2020 Investor Briefing
Earnings Results for the Fiscal Year Ended March 31, 2020 Investor Briefing SoftBank Corp. May 11, 2020
Slide 2: Disclaimer
Disclaimer Important Notice Regarding Forward Looking Statements and Other Information This document is based on the information available to SoftBank Corp. (“we” or “the Company”) as of the time hereof and assumptions which it believes are reasonable. Statements contained herein that are not histor
Slide 3: Contents
Contents 1 FY2019 Results p.4 – p.19 2 FY2020 Forecast p.20 – p.25 3
Slide 4: FY2019 Results
FY2019 Results
Slide 5: Results for FY2019
Results for FY2019 FY18: after retrospective ◼ Increases in revenue and income for two consecutive years since the initial public offering, adjustments of ZHD*1 consolidation reaching record high figures. Double-digit growth in operating income ◼ Revenue and operating income reached full-year foreca
Slide 6: Revenue (1/2)
Revenue (1/2) FY18: after retrospective ◼ Revenue increased in all segments, JPY +204.4 bn (+4.4%) YoY adjustments of ZHD consolidation ◼ Consumer segment: JPY +16.2 bn (+0.6%) YoY due to growth in Mobile and Broadband, although revenue from device sales decreased By Segment Consumer Breakdown [JPY
Slide 7: Revenue (2/2)
Revenue (2/2) FY18: after retrospective ◼ Enterprise segment: JPY +24.2 bn (+16.7%) in Business solution and others adjustments of ZHD consolidation ◼ Yahoo segment: double-digit growth. JPY +94.0 bn (+14.5%) in Commerce, including JPY c.+57.0 bn due to ZOZO consolidation Enterprise Breakdown Yahoo
Slide 8: Operating Income/Adjusted EBITDA/Segment Income
Operating Income/Adjusted EBITDA/Segment Income FY18: after retrospective ◼ Double-digit growth in operating income, with increases in all segments. JPY +93.5 bn (+11.4%) YoY adjustments of ZHD consolidation ◼ Adjusted EBITDA increased by JPY +239.5 bn (+17.5％) YoY. Adjusted EBITDA excluding impact
Slide 9: Operating Income (YoY Comparison)
Operating Income (YoY Comparison) FY18: after retrospective ◼ Revenue increase contributed greatly. After deduction of Cost of goods sold adjustments of ZHD consolidation and Telecommunication network charges, gross profit increased by JPY +107.6 bn YoY (a) ◼ Expenses increased by JPY 72.2 bn YoY (b
Slide 10: Cumulative Subscribers (Main Subscribers/Smartphones)
Cumulative Subscribers (Main Subscribers/Smartphones) ◼ Cumulative main subscribers reached 36.50 mil (+1.76 mil YoY) ◼ Cumulative smartphones reached 24.13 mil (+2.05 mil YoY), steady growth in all 3 brands Cumulative Subscribers*1 Smartphone Subscribers YoY [Mil] [Mil] 36.50 +1.76 34.74 35.93 Main
Slide 11: Churn Rate (Main Subscribers/Smartphones)
Churn Rate (Main Subscribers/Smartphones) ◼ Churn rate improved significantly due to success of multi-brand strategy and lower customer liquidity following the amendment of Telecommunications Business Act in October 2019 ◼ FY19 churn rate for main subscribers and smartphones reached a record low FY1
Slide 12: ARPU (Main Subscribers)
ARPU (Main Subscribers) ◼ ARPU before discount decreased due to the introduction of plans that separate handset payment and service fees, a rise in composition ratio of Y!mobile and LINE MOBILE subscribers and a change in accounting method of First-year discount*1 (a) ◼ FY19Q4 Total ARPU decreased b
Slide 13: Broadband Service
Broadband Service ◼ SoftBank Hikari cumulative subscribers were 6.39 mil as of Q4, steadily increased by 0.47 mil YoY ◼ Home Bundle Discount Hikari Set applications to mobile subscribers increased to 10.09 mil Cumulative Subscribers Home Bundle Discount Hikari Set (Number of Connected Lines) YoY Cum
Slide 14: Net Income (YoY Comparison)
FY18: after retrospective Net Income (YoY Comparison) adjustments of ZHD consolidation ◼ Shares of profit/losses of associates accounted for using the equity method: Loss increased from upfront investment to new businesses, such as PayPay (a) ◼ Income taxes: Increased due to increase in profit, inco
Slide 15: CAPEX/Adjusted Free Cash Flow
CAPEX/Adjusted Free Cash Flow FY18: after retrospective ◼ CAPEX excluding ZHD was JPY 369.8 bn due to certain construction projects being postponed adjustments of ZHD consolidation ◼ Adjusted free cash flow excluding ZHD and IFRS 16 impact was JPY 524.2 bn. Achieving full-year forecast of JPY 520.0
Slide 16: Adjusted Free Cash Flow
Adjusted Free Cash Flow ◼ FY19 adjusted FCF*1 was JPY 524.2 bn, of which JPY 72.6 bn in growth investments such as mergers and acquisitions [JPY bn] +30.1 Securitization of installment sales receivables -344.9 Net cash outflows -72.6 +20.4 from investing 891.2 activities Net cash outflows Gain on sa
Slide 17: Additional Investments to PayPay
Additional Investments to PayPay ◼ Equal additional investments to PayPay made by SoftBank Corp. and ZHD in FY19Q4 ◼ Ratio of voting rights remains unchanged since non-voting preferred stock were acquired ◼ Non-voting preferred stock is accounted for as equity instruments at FVTOCI May 2018 May 2019
Slide 18: Interest-bearing Debt/Net Interest-bearing Debt and Net Leverage Ratio
Interest-bearing Debt/Net Interest-bearing Debt and Net Leverage Ratio ◼ Net interest-bearing debt improved to a level below JPY 4 tn ◼ Net leverage ratio decreased to 2.3 times Interest-bearing Debt/ Net Interest-bearing Debt*1 Net Leverage Ratio*4,5,6 Before ZHD Consolidation After [JPY tn] 5.35 E
Slide 19: Major Financing Activities
Major Financing Activities ◼ Promoting the diversification of financing methods with the aim of stabilizing the financial base ◼ Issued bonds in March 2020 FY19 Time Category Events Purpose, effect, etc. balance period JPY Syndicated loan arrangement Financing to acquire ZHD shares Oct. 2019 325.0 b
Slide 20: FY2020 Forecast
FY2020 Forecast
Slide 21: FY2020 Forecasts
FY2020 Forecasts ◼ Continue increases in revenue, profits, and dividends since initial public offering *Excludes impact from ◼ Strengthen CAPEX. Adjusted FCF*1 will increase even with impact from COVID-19 business integration between ZHD and LINE FY19 Actual FY20 Forecast Variance Growth rate Revenu
Slide 22: Initiatives and Impact from COVID-19
Initiatives and Impact from COVID-19 ◼ We will promote cost optimization through structural reform, and aim to achieve increases in profits and dividends Initiatives Impact from COVID-19 Immaterial impact • Smartphone subscriber growth Shop traffic decrease Consumer • Active 5G deployment No. of sub
Slide 23: FY2020 Operating Income (Half-year) Trend
FY2020 Operating Income (Half-year) Trend ◼ Due to the impact of the amendment of Telecommunications Business Act, the difference in operating income between the first and second half in FY20 is expected to decrease FY19 Results FY20 Forecast [JPY bn] Impact of Telecommunications Business Act [JPY b
Slide 24: Financial Strategy (Adjusted Free Cash Flow)
Financial Strategy (Adjusted Free Cash Flow) ◼ Continued solid forecasts for adjusted FCF*1 in FY20 (JPY +25.8 bn YoY) ◼ Cash balance after dividends payment applied to repayment of debt [JPY bn] CAPEX 400.0 Investments for growth (M&A, etc.) Cash balance after Dividends shareholder returns 70.0 Sou
Slide 25: Achieve Both Growth and Shareholder Returns
Achieve Both Growth and Shareholder Returns Continue increases in revenue and profits Earnings per share Dividends per share FY18 FY19 FY20 FY18 FY19 FY20 *1 *2 *3 [JPY] 90 99 102 (Forecast) 75 85 86 (Forecast) Shareholder Growth Returns Revenue and Payout ratio profits c. 85％ Deliver forecasted div
Slide 26: Appendix
Appendix
Slide 27: Business Integration Between ZHD and LINE
Business Integration Between ZHD and LINE ◼ After the business integration is completed, the JV (consolidated by SoftBank) between NAVER and SoftBank will own 65.3% of ZHD Post-Integration Structure ・SoftBank will have control of the majority of the board of directors (three out of five nominees) 50
Slide 28: Proposed Transaction Structure
Proposed Transaction Structure As of the commencement Tender offer for LINE shares/ Transfer of Integration of of transaction 100% subsidization ZHD shares ZHD and LINE business Joint tender offer and squeeze-out SB NAVER SB NAVER SB NAVER SB NAVER 13.7% 86.3% 100% 100% 50% 50% 50% 50% JV Shiodome-Z
Slide 29: Consolidated Statements of Income
Consolidated Statements of Income [Reference] After ZHD Consolidation Variance Reasons for Variance Disclosed [JPY bn] FY18 FY19 FY18 Revenue 4,656.8 4,861.2 +204.4 3,746.3 Cost of sales -2,496.0 -2,536.8 -40.9 -2,114.9 Gross profit 2,160.8 2,324.4 +163.6 1,631.4 Selling, general and administrative
Slide 30: Consolidated Statements of Financial Position (Assets)
Consolidated Statements of Financial Position (Assets) [Reference] After ZHD Consolidation Disclosed [JPY bn] Variance Reasons for Variance As of As of As of Mar. 31, 2019 Mar. 31, 2020 Mar. 31, 2019 Total assets 8,036.3 9,792.3 +1,755.9 5,775.0 Current assets 2,965.7 3,364.3 +398.6 1,756.3 Cash and
Slide 31: Consolidated Statements of Financial Position (Liabilities)
Consolidated Statements of Financial Position (Liabilities) [Reference] After ZHD Consolidation Disclosed [JPY bn] Variance Reasons for Variance As of As of As of Mar. 31, 2019 Mar. 31, 2020 Mar. 31, 2019 Total liabilities 6,013.8 8,084.7 +2,070.9 4,510.6 Current liabilities 3,317.0 4,496.6 +1,179.6
Slide 32: Consolidated Statements of Financial Position (Equity)
Consolidated Statements of Financial Position (Equity) [Reference] After ZHD Consolidation Disclosed [JPY bn] Variance Reasons for Variance As of As of As of Mar. 31, 2019 Mar. 31, 2020 Mar. 31, 2019 Total equity 2,022.6 1,707.6 -315.0 1,264.5 Equity attributable to owners of the Company 1,498.2 1,0
Slide 33: Consolidated Statements of Cash Flows
Consolidated Statements of Cash Flows [Reference] After ZHD Consolidation Disclosed [JPY bn] Reasons for Variance FY18 FY19 FY18 Cash flows from operating activities 965.5 1,249.5 826.6 Net income 494.2 506.7 425.6 Depreciation 504.5 675.2 +141.9 due to adoption of IFRS 16 452.2 Change in working ca
Slide 34: Subsidiaries (1/2)
Subsidiaries (1/2) ◼ 263 group companies at the end of Mar. 2020 (of which, 202 subsidiaries and 61 affiliate*1 companies) Ratio of Voting Segment Company Name Business Description Blue: listed company Rights Held Wireless City Planning Inc. 32.2% Telecommunication services (Economic interests: 99.5
Slide 35: Subsidiaries (2/2), Affiliates
Subsidiaries (2/2), Affiliates Ratio of Voting Segment Company Name Business Description Blue: listed company Rights Held HAPSMobile Inc. 92.9% R&D and manufacturing of network equipment for HAPS business SB Payment Service Corp. 100.0% Payment processing SB Cloud Corp. 60.0% Sales of public cloud s
Slide 36: SoftBank's Priority Issues (Materiality)
SoftBank’s Priority Issues (Materiality) ◼ Identified priority issues (materiality) to contribute to the achievement of Sustainable Development Goals (SDGs) Building society and Connecting people to Creating new business issues through Solving social industry through information to create through op
Slide 37: SoftBank
SoftBank