Softbank Group Corp. · TSE:9984
Softbank — 9M FY2019 Earnings Presentation
36 slides from Softbank's earnings presentation, Feb 14, 2020
Slide 1: Earnings Results for the Nine-month Period Ended Dec. 31, 2019
Ver1.1 Earnings Results for the Nine-month Period Ended Dec. 31, 2019 Investor Briefing February 14, 2020 SoftBank Group Corp.
Slide 2: Disclaimers
Disclaimers This presentation provides relevant information about SoftBank Group Corp. (“SBG”) and its subsidiaries and associates (together with SBG, “we,” “us” or the “Group”) and does not constitute or form any solicitation of investment including any offer to buy or subscribe for any securities
Slide 3: Exchange rates used for translation; Abbreviations
Exchange rates used for translation FY2018 FY2019 Average during quarter Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 1 USD 108.71 111.55 112.83 110.46 110.00 107.70 108.98 1 GBP 147.54 145.84 144.48 143.99 140.88 132.73 139.55 1 CNY 16.97 16.40 16.31 16.37 16.13 15.37 15.46 EOQ Jun 30 Sep 30 Dec 31 Mar 31 Jun 30 Sep 30
Slide 4: Finance
Ver1.1 Finance SBG standalone financial measures are calculated by excluding self-financing entities from consolidated group, unless otherwise stated. Self-financing entities are SBKK, Sprint, Arm, SVF, Brightstar, PayPay, Fortress, SB Energy, etc.
Slide 5: Equity Value of Holdings
Equity Value of Holdings (JPY tn) 31.1 25.7 12.2 16.1 +JPY 5.4tn Alibaba SBKK 4.8 SVF (equity value for SBG) 4.7 Sprint 3.2 Arm 3.1 3.2 Others 2.3 2.7 2.7 0.8 1.1 *2 Sep. 30, 2019 Feb. 12, 2020 *1 Equity value of holdings are calculated as follows - Alibaba: calculated by multiplying the number of s
Slide 6: LTV
LTV Manage LTV at less than 25% during normal periods with upper Excl. asset finance threshold of 35% even during abnormal periods (JPY) 29.9 tn （8.0） （8.0） LTV 16.1% *1 (Debt coverage 6.2x) 4.8 tn Equity value SBG standalone of holdings *2 net debt *1 Debt coverage = Equity value of holdings divide
Slide 7: SVF I Listed Portfolio Companies
SVF I Listed Portfolio Companies As of Dec. 31, 2019 As of Feb. 11, 2020 As of Feb. 11, 2020 (USD m) Investment cost Gross gain/(loss) Gross gain/(loss) Gross MOIC* Company to SVF I to SVF I to SVF I Guardant Health 308 +$1,863 +$1,875 7.1 x Uber 7,666 -$1,057 +$1,505 1.2 x Slack 334 +$489 +$578 2.7
Slide 8: Alibaba: Share Price
Alibaba: Share Price Alibaba share price hit all-time high in January 2020 and continues considerably high liquidity (US$) Alibaba share price and target price Global trading value ranking* ($, bn) 275 3 Months Average 250 $242 Company Market Cap. $248 Daily Trading Value 225 $211 $217 1 Apple 8.7 1
Slide 9: Sprint
Sprint Sprint and T-Mobile won in court in litigation seeking injunction prohibiting the closing of the merger Moving to finalize the merger (%) Sprint’s bond yield* (due 2024) 8 7 Will have a customer base 6 rivaling top two carriers 5 4 3 3.5% Establish stronger financial 2 base through the merger
Slide 10: SVF I Cumulative Investment Highlights
SVF I Cumulative Investment Highlights(as of Dec.31, 2019) Investment USD 9.5bn market uplift + realized gains Cumulative Investment cost USD 80.5bn (Since SVF I inception) Cumulative investment cost and aggregate market uplift include Flipkart and Nvidia, which were exited in August 2018 and Januar
Slide 11: SVF I Cumulative Investment Highlights
SVF I Cumulative Investment Highlights(as of Dec.31, 2019) USD17.2bn USD 9.5bn Realized gain Investment USD 4.7bn market uplift + USD -7.7bn realized gains Valuation gain USD 12.5bn Realized loss -$0.2bn Valuation loss USD -7.5bn Mark up Mark down (38 companies) (31 companies) SVF I highlights are p
Slide 12: Credit Quality of Portfolio Companies
Credit Quality of Portfolio Companies High creditworthiness supports our portfolio value (JPY tn) 31.1 Market cap : $601bn / Ratings : A+/A1/A+ Spread : 53bp (in US$) 16.1 Generated JPY0.9tn FCF in last 6 months (+34%). Consists of highly creditworthy assets Market Cap : $65bn / Ratings : AA-/A+ Ann
Slide 13: Progress of Transactions Related to WeWork
Progress of Transactions Related to WeWork Announced Plan Progress Support for letter of credit facility Entered into from financial institutions (US$1.75bn) an agreement (Date of execution: Dec. 27, 2019) Preparing a loan facility to WeWork Unsecured notes Facilitated / Undrawn (US$2.2bn) (Date of
Slide 14: SVF I: Fair Value of Investment Assets
SVF I: Fair Value of Investment Assets (US$bn) ＋10％ ＋7％ 77.6 79.8 74.6 70.7 Acquisition cost Fair Value Sep' 19 Dec' 19 88 companies 88 companies *1 The presented acquisition cost and fair value of investment assets excludes exited investments. *2 Past performance is not indicative of future results
Slide 15: SBG Standalone Interest-bearing Debt
SBG Standalone Interest-bearing Debt Funded in preparation for future bond redemptions (JPY bn) Main variance factors from Sep 30, 2019 7,969.0 Increase/decrease in bank loan and CP (+JPY39.8bn) 7,411.9 7,385.5 7,616.9 Collar financing on Alibaba shares (+JPY196.6bn) *Variable prepaid forward contra
Slide 16: SBG Standalone Cash Position
SBG Standalone Cash Position Decreased due to SVF I Capital call, new investments, etc. (JPY bn) 2,158.8 2,093.9 1,914.8 173.8 Net proceeds expected from asset sale 1,642.4 1,741.0 to SVF I (+$1.6bn) *unsettled 1,173.0 Main variance factors from Sep 30, 2019 Increase Decrease Exercising warrants of
Slide 17: Maintaining Abundant Cash Position
Maintaining Abundant Cash Position Maintain a liquidity level that covers bond redemptions for at least the next 2 years Steady implementation of early refinancing Cash position In addition to maintaining abundant cash position, (JPY bn) JPY0 1.9tn*1 secure various funding sources: • Refinancing Net
Slide 18: SBG Standalone Net Interest-bearing Debt
SBG Standalone Net Interest-bearing Debt Increased mainly due to change in cash position Excl. asset finance *for Dec.19 data (JPY bn) 6,212.4 6,228.0 5,522.9 Net proceeds expected from asset sale to SVF I: −$1.6bn 5,253.1 1,426.4 Adjustment on hybrid finance: −JPY 25.0bn 5,080.5 Adjustment on asset
Slide 19: Interest Expenses (standalone)
Interest Expenses (standalone*1) Interest payments are sufficiently covered by cash income and cash position 250.0 (JPY bn) 205.7 • Dividend income from 200.0 187.3 subsidiaries JPY 270.5bn*3 150.0 • Distribution from SVF I*4 $1.6bn in FY2018 100.0 $0.4bn in FY2019 Avg. interest rate on • Asset disp
Slide 20: Redemption Schedule
Redemption Schedule Planning various redemption options with refinancing as the main option (JPY bn) Domestic straight notes 1,305.6 Domestic subordinated notes Domestic hybrid notes 455.6 Foreign currency-denominated senior notes 951.5 924.1 Foreign currency-denominated hybrid notes 301.3 424.1 583
Slide 21: 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 Fin
Slide 22: Our Policy on Portfolio Companies' Support
Our Policy on Portfolio Companies’ Support Portfolio company finances to be No rescue self-financing package Finance 19
Slide 23: Appendix
Appendix
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 SBG Standalone Net Debt JPY 4.80tn (V) SBG Standalone = 16.1% JPY 29.85tn Equity Value of Holdings (JPY tn) = - - Adjusted SBG Consolidated Net Debt at Self- Other Standalone Net Debt Net Debt financing Entities Adjustments 4.80 15.70 9.
Slide 27: LTV Calculation: SBG Standalone Equity Value of Holdings
LTV Calculation: SBG Standalone Equity Value of Holdings (L) Adjusted JPY 4.80tn SBG Standalone Net Debt (V) SBG Standalone = 16.1% Equity Value of Holdings JPY 29.85tn (JPY tn) = + + Investment SBG Standalone Holdings Major Shares Assets Under Others SVF 29.85 25.56 3.15 1.14 Alibaba 16.08 SBKK 4.7
Slide 28: Equity Value of Holdings
Equity Value of Holdings +JPY6.7tn YoY (JPY tn) 29.5 26.4 26.2 25.7 Composition Ratio 22.8 54％ 15.9 13.4 12.3 12.2 10.1 Alibaba SBKK SVF (equity value for SBG) 4.0 4.5 4.7 4.6 16％ Sprint 4.3 Arm 3.2 3.5 11％ Yahoo Japan 2.7 3.1 3.1 7％ Others 2.2 2.2 2.4 2.3 2.0 2.7 2.7 2.6 2.7 2.7 9％ 0.5 0.2 0.5 0.5
Slide 29: SVF I Listed Portfolio Companies (as of Dec. 31, 2019)
SVF I Listed Portfolio Companies (as of Dec. 31, 2019) (a) (b) (c) = (b) - (a) (d) = (b) / (a) (USD m) Company Investment cost Gross Return*5 Gross gain/(loss) Gross MOIC*7 to SVF I to SVF I to SVF I Guardant Health*1 308 2,171 +$1,863 7.1 x Slack 334 823 +$489 2.5 x 10x Genomics 31 293 +$262 9.4 x
Slide 30: SVF I Snapshot (as of Dec. 31, 2019)
SVF I Snapshot (as of Dec. 31, 2019) (a) (b) (c) = (b) - (a) (USD billion) Investment cost*2 Gross return*1 Gross gain/(loss)*1 to SVF I to SVF I to SVF I (A) Listed company total*3 $9.6 $11.0 +$1.4 (B) Private & existed company total $70.9 $79.0 +$8.1 (A)+(B) SVF I total（Gross） $80.5 $90.0 +$9.5 (d
Slide 31: SVF I Listed Portfolio Companies (as of Feb. 11, 2020)
SVF I Listed Portfolio Companies (as of Feb. 11, 2020) (a) (b) (c) = (b) - (a) (d) = (b) / (a) (USD m) Investment cost Gross return*8 Gross gain/(loss) Company Gross MOIC*9 to SVF I to SVF I to SVF I Guardant Health*1 308 2,183 +$1,875 7.1 x Uber 7,666 9,171 +$1,505 1.2 x Slack*2 334 912 +$578 2.7 x
Slide 32: SVF I: Capital Commitment
SVF I: Capital Commitment Capital Commitment (as of Dec. 31, 2019) (US$bn) 98.6 (74.9) SBG 65.5 33.1 （26.9） （48.0） Third-party limited partners * Numbers in brackets represent amounts contributed *1 SBG’s committed capital to SVF I includes approximately $8.2 billion of an obligation satisfied by us
Slide 33: 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 12 A－/A3 JCR (A－) 11 BBB+/Baa1 10 BBB/Baa2 9 BBB－/Baa3 S&P (BB＋) 8 B
Slide 34: Consolidated Interest-bearing Debt
Consolidated Interest-bearing Debt Interest-bearing debt ＋ (JPY bn) 19,250.0 Lease liabilities 18,088.6 17,053.8 17,329.6 SBG 15,685.1 Others (Arm, etc.) 7,969.0 SVF 7,616.9 7,385.5 Variable prepaid forward contract*2 7,411.9 (Alibaba) 6,722.9 307.1 SoftBank segment*3 283.5 721.3 283.6 624.3 Sprint
Slide 35: Consolidated Cash Position
Consolidated Cash Position (JPY bn) 5,125.8 4,005.9 2,158.8 3,629.1 3,553.2 SBG 2,724.2 2,093.9 547.9 1,642.4 1,741.0 Others (Arm, etc.) SVF 1,173.0 1,285.6 572.2 322.9 SoftBank segment*2 416.5 263.2 245.6 273.8 118.1 140.5 Sprint segment 376.1 358.3 645.1 876.9 900.1 757.4 782.4 524.8 466.5 355.1 D
Slide 36: Consolidated Net Interest-bearing Debt
Consolidated Net Interest-bearing Debt Interest-bearing debt (JPY bn) ＋Lease liabilities – Cash position 15,696.8 14,605.3 14,082.7 11,927.9 12,056.0 6,228.0 6,212.4 5,522.9 SBG 5,253.1 5,080.5 Others (Arm, etc.) 580.8 9.4 378.7 SVF 20.4 Variable prepaid forward contract*3 727.8 730.6 4,451.0 (Aliba