SoftBank Group Corp. · TSE:9984
SoftBank — Q1 FY2022 Earnings Presentation
54 slides from SoftBank's earnings presentation, Aug 10, 2022
Slide 1: Earnings Results for the Three-month Period Ended June 30, 2022
Earnings Results for the Three-month Period Ended June 30, 2022 Investor Briefing August 10, 2022 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 1 CNY 17.01 17.09 17.75 18.43 19.60 EOQ Jun 30 Sep 30 Dec 31 Mar 31 Jun 30 Sep 30 Dec 31 Mar 31 1 USD 122.39 136.68 1 CNY 19.26 20.38 Abbreviations Abbrev
Slide 4: How We See the Market Environment
How We See the Market Environment Stock market correction undergoing with inflation and rising interest rates 10 3.5 105 10 year NASDAQ 2 year 3.0% S&P500 9.5 100 ＋9.1% 3 -4.9% 9 95 8.5 8.6 8.5 2.9% 2.5 2.3% 90 8.3 8 7.9 -20.6% 85 2.3% 7.5 7.5 2 -9.1% 80 7 7.0 1.5 75 6.5 70 6 1 -29.5% 5.5 65 5 0.5 6
Slide 5: How We See the China-related Environment
How We See the China-related Environment Uncertainty remains; with both positives and negatives in U.S.–China tension and China’s regulatory environment ($) 10,000 Environment surrounding Chinese NASDAQ Golden tech firms Dragon China Index (HXC) $7,955.51 Positives $7,064.73 May: China’s Vice Premie
Slide 6: Achievements in FY22Q1: Defensive financial management
Achievements in FY22Q1: Defensive financial management Global economy • Interest rate hikes accelerate to curb inflation; risk of entering recession smoldering • Correction on tech stock continued in Apr-Jun, followed by a sign of bottoming out Current environment Geopolitical risks • Uncertaint
Slide 7: 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 are SBKK (including its subsidiaries such as Z Holdings), SVF1, SVF2, LatAm Funds, Arm, and PayPay, etc.
Slide 8: Summary of FY22Q1
Summary of FY22Q1*1 Heightened investment discipline and continued monetization resulted in a large improvement in LTV Net loss of ¥3,162.7B, NAV of ¥18.5T (flat from end-Mar 2022) - Recorded investment loss of ¥2,834.4B and net loss*2 of ¥3,162.7B due to a decrease Results in the fair value of SVF’
Slide 9: Gain (Loss) on Investments & Net Income (Loss)
Gain (Loss) on Investments & Net Income (Loss) Investment loss of ¥2,834.4B and net loss of ¥3,162.7B Gain (loss) on investments Net income (loss) (attributable to owners of the parent) ■ Investment Business ¥1,263.1B of Holding Companies ■ SVF segment*1 ■ Other ¥761.5B ● Total gain (loss) on invest
Slide 10: Impact of Foreign Exchange for FY22Q1
Impact of Foreign Exchange for FY22Q1 Positive impact of the weaker yen on both accounting and NAV Decrease in Increase in equity consolidated net income (Increase in accumulated other accounting Impact on (Recording of foreign exchange loss) comprehensive income) -¥820.0B ＋¥2,096.7B Foreign exchang
Slide 11: NAV & NAV per Share
NAV & NAV per Share NAV remained flat from end-Mar 2022 NAV (Net Asset Value) NAV per share*1 and share price (¥ T) (¥) Share price Decrease in NAV per share equity value 23.2 of holdings 1.5 21.7 15,000 4.7 Decrease in net debt 3.1 11,206 11,640 1.6 10,000 NAV 5,559 5,235 18.5 flat 18.5 5,000 0 Mar
Slide 12: LTV Trend
LTV Trend*1 Monetization lowered LTV significantly Excl. asset-backed finance 100％ LTV 35% (in times of emergency) 25% (in normal times) 21.6% 20.4% 15.9% 18.7% 14.3% 14.5%*2 11.6% 12.2% Sep 20 Dec 20 Mar 21 Jun 21 Sep 21 Dec 21 Mar 22 Jun 22 *1 As of the end of each quarter *2 See “LTV Calculation:
Slide 13: Cycle of Investment and Recovery in FY22Q1
Cycle of Investment and Recovery in FY22Q1 Cash position increased by ¥1.1T as a result of new investments with heightened disciplines and continued monetization SB Northstar (¥ T) Sale/ monetization monetization*1 SVF *2 investment Share 4.6 repurchase Undrawn commitment line 0.7 SVF*2 distribution
Slide 14: Results of Investment Businesses, Financial Condition, Financial Strategy, ESG
- Results of Investment Businesses - Financial Condition - Financial Strategy - ESG Initiatives Finance 8
Slide 15: Investment Strategy of SoftBank Group
Investment Strategy of SoftBank Group SoftBank Group ＝ “Vision Capitalist” for the Information Revolution Two important drivers SVF Arm Finance 9
Slide 16: Equity Value of Holdings
Equity Value of Holdings Decreased to ¥21.7T as a result of Alibaba shares Excl. asset- backed finance monetization and refreshed valuation of SVF portfolio 32.1 (¥ T) Composition (as of Jun 30, 2022) 21％ Alibaba 5％ T-Mobile 11％ SBKK 0.8％ Deutsche Telekom 16％ SVF1 14％ Arm 25.7 12.4 24.7 21％ SVF2 2%
Slide 17: Equity Value of Holdings: Diversification of Portfolio
Equity Value of Holdings: Diversification of Portfolio Maintained a well-diversified portfolio Excl. asset- backed finance Mar 31, 2022 Jun 30, 2022 Proportion of listed shares Proportion of (net of asset-backed finance) listed shares (net of asset-backed finance) 49%*1 SB Northstar Others SB Norths
Slide 18: Overview of Investments through Funds
Overview of Investments through Funds Investing in unicorns globally through SVF1&2 and LatAm Funds As of June 30, 2022 SoftBank Vision Fund 1 SoftBank Vision Fund 2 SoftBank （SVF1） （SVF2） Latin America Funds Committed capital $98.6B $56.0B $7.6B Start of investments/ 2017 2019 2019 Value creation &
Slide 19: SVF1&2: Cumulative Investment Return
SVF1&2: Cumulative Investment Return (SBG Consolidated Basis, as of Jun 30, 2022) Cumulative investment return of $107.8B at SVF1 and $39.7B at SVF2 SVF1 SVF2 ($ B) ($ B) 120 75 107.8 90 89.2 Exited*1 2.0x 49.6 50 39.7 Exited*1 1.8x 60 Public companies Public companies currently held*2 0.7x currentl
Slide 20: SVF1&2: Invested Amounts (FY21-FY22Q1)
SVF1&2: Invested Amounts（FY21-FY22Q1） Significantly slowing down investments yoy （$ B） 2.1 0.4 SVF1＆2 invested a total of $2.2B in FY22Q1 0.4 13.5 13.7 9.2 0.5 SVF1 4.5 0.06 2.1 SVF2 FY21Q1 FY21Q2 FY21Q3 FY21Q4 FY22Q1 Finance 14
Slide 21: SVF1&2: IPOs and Monetization (FY22Q1)
SVF1&2: IPOs and Monetization (FY22Q1) Three IPOs and monetization* of $4.1B IPO: 3 companies SVF1 SVF2 Sales and monetization*: $3.8B by SVF1 and $0.3B by SVF2 SVF1: entire sale of 2 investments and SVF2: entire sale of 1 investment partial sale of 5 investments etc. *Includes asset-backed finan
Slide 22: Arm: Revenue (Quarterly)
Arm: Revenue (Quarterly) （$ M） $719M 675 419 426 429 378 398 FY16Q1 FY17Q1 FY18Q1 FY19Q1 FY20Q1 FY21Q1 FY22Q1 (Notes) • Source: Arm • After FY17Q1: excl. ISG revenues • ISG: Internet-of-Things Services Group • Based on, but not necessarily conformity with IFRS • All numbers are unaudited and provide
Slide 23: Results of Investment Businesses, Financial Condition, Financial Strategy, ESG
- Results of Investment Businesses - Financial Condition - Financial Strategy - ESG Initiatives Finance 17
Slide 24: Main Financing Activities in FY22Q1
Main Financing Activities in FY22Q1 Prudent defensive financial management with monetization mainly through asset-backed finance Short-term borrowings Bank loan Repaid borrowings under commitment line (Apr) -$4.5B (-¥580.7B) Arm shares Asset-backed finance (upsize) (Jun) +$0.5B (+¥64.5B) Alibaba sha
Slide 25: Cash Position
Cash Position Maintain ample cash position, more than sufficient for bond redemptions for the next 2 years Cash position Bond redemption schedule 社債償還スケジュール *2 *2 *1 ¥4.6T ( Well in excess of bond redemptions for the next 4 years ) (¥ B) 739.8 Undrawn commitment line*3 Bond redemptions 3,817.6 for t
Slide 26: Bond Redemption Schedule
Bond Redemption Schedule Redemptions will be funded by carefully managed bond issuance with due consideration for cash position and market environment. 1,377.5 (¥ B) 1,147.5 327.5 Domestic senior bonds 1,018.3 212.5 Domestic subordinated bonds 912.5 Domestic hybrid bonds 341.3 Foreign currency-denom
Slide 27: SBG Credit Spread
SBG Credit Spread SBG’s credit spreads have been on a widening trend but currently tightening Spread of SBG foreign currency- SBG 5 years CDS denominated notes 900 600 bps bps 800 500 700 600 400 500 300 400 300 200 200 EUR 1.9Y USD 2.4Y USD 3.9Y 100 USD 8.9Y USD 5.9Y EUR 4.4Y 100 SBG 5Y CDS (JPY) E
Slide 28: SBG Stand-alone Interest-bearing Debt
SBG Stand-alone Interest-bearing Debt*1 Interest-bearing debt excluding non-recourse Main variance factors from Mar 31, 2022 debts decreased • Asset-backed finance using Arm shares (upsize) +$0.5B • Entry into prepaid forward contracts using Alibaba shares +$10.5B (¥ B) 15,842.9 • Physical settlemen
Slide 29: SBG Stand-alone Cash Position
SBG Stand-alone Cash Position Cash position increased mainly due to fund procurement by asset- backed finance (¥ B) 3,944.8 127.1 Cash position of SB Northstar 3,589.6 3,357.9 3,103.3 3,079.9 991.6 595.9 2,681.1 330.0 1,008.1 Main variance factors from Mar 31, 2022 582.1 Increase Decrease ・Asset-bac
Slide 30: SBG Stand-alone Net Interest-bearing Debt
SBG Stand-alone Net Interest-bearing Debt Adjusted net interest-bearing debt decreased due to accelerated monetization (¥ B) Excl. SB Northstar 12,135.3 12,021.0 11,486.0 10,919.2 10,513.7 8,558.8 6,163.8 7,411.2 Finance-related adjustments 5,397.8 6,110.4 Asset-backed finance -¥8,784.1B 8,871.8 Hyb
Slide 31: 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, and value of assets required for settlement is deducted from assets Collar/Forward/Put (¥ T) 1 2 Margin loan, etc. 29.6 transactions Alibaba- related Shares Alibaba, T-Mobile, Deut
Slide 32: Results of Investment Businesses, Financial Condition, Financial Strategy, ESG
- Results of Investment Businesses - Financial Condition - Financial Strategy - ESG Initiatives Finance 26
Slide 33: Financial Strategy for FY22
Financial Strategy for FY22 Already established optimal financial management structure as an investment company (2) Flexible and agile (1) Firmly keeping financial management financial policy that can respond to any changes Finance 27
Slide 34: Firmly Keeping Financial Policy
(1) Firmly Keeping Financial Policy 1. Manage LTV below 25% in normal times (upper threshold of 35% even in times of emergency) 2. Maintain funds covering bond redemptions for at least the next 2 years 3. Secure recurring distribution and dividend income from SVF1&2 and other subsidiaries Finance 28
Slide 35: Direction of Financial Management for FY2022
Direction of Financial Management for FY2022 (Illustrated) Flexible and agile response to any changes in the external environment LTV (％) Scenario Assumption Action to be taken 25 External Uncertainty in the Continue new Firmly committed to the financial policy of environment external environment in
Slide 36: Share Repurchase
Share Repurchase Progress of repurchase based on the Resolution by the Board of Directors resolution of the Board of Directors on on Aug 8, 2022 November 8, 2021 Establishment of ¥400B repurchase limit Total repurchase amount ¥1T* ¥400B (maximum) Remaining repurchase ¥295.2B Repurchase period Fr
Slide 37: Results of Investment Businesses, Financial Condition, Financial Strategy, ESG
- Results of Investment Businesses - Financial Condition - Financial Strategy - ESG Initiatives Finance 31
Slide 38: Enhancement of Sustainability Promotion Structure
Enhancement of Sustainability Promotion Structure Reinforcement of the structure • Established the Sustainability Department as an independent department • Head of IR and Sustainability Departments serves as CSusO for greater agility • Yoshimitsu Goto, CFO, remains committed as the board member in c
Slide 39: Summary of Initiatives in FY22: Environment
Summary of Initiatives in FY22: Environment TCFD Disclosure • SBG, SBKK: Disclosed climate-related information in accordance with TCFD recommendations (June 2022) • SBIA, Arm: Preparing for disclosure in 2024 Group target for GHG reduction and greater group collaboration • Set Group target (June 202
Slide 40: Summary of Initiatives in FY22: Social and Governance
Summary of Initiatives in FY22: Social and Governance Promote human rights initiatives • Conduct training and monitoring etc. to risk areas identified in the human rights survey • Initiated monitoring of business partners, and expand it to subsidiaries hereafter FY21 FY22 FY23 SBG human rights surve
Slide 41: Publication of SoftBank Group Report
Publication of SoftBank Group Report • Renewed the existing Annual Report as “SoftBank Group Report" integrating non-financial information • Show the relationship between the SoftBank Group‘s investment activities and its philosophy/vision/strategy to further boost engagements with stakeholders and
Slide 42: Appendix
Appendix
Slide 43: Calculation of Equity Value of Holdings as of Jun 30, 2022
Calculation of Equity Value of Holdings as of Jun 30, 2022 1USD = ¥136.68 ¥29.6T (non-adjusted) (¥ T) Equity value of holdings Equity value of holdings Adjustment for ＝ ー asset-backed finance Alibaba 4.5 (adjusted) (non-adjusted) shown in the dotted box T-Mobile 0.4 Collar contracts, Share price ¥4.
Slide 44: Calculation of Equity Value of Holdings as of Mar 31, 2022
(Reference) Calculation of Equity Value of Holdings as of Mar 31, 2022 1USD = ¥122.39 ¥29.0T (non-adjusted) (¥ T) Equity value of holdings Equity value of holdings Adjustment for ＝ ー asset-backed finance Alibaba 2.7 Collar contracts, (adjusted) (non-adjusted) shown in the dotted box T-Mobile 0.4 Deu
Slide 45: LTV Calculation: SBG Stand-alone Equity Value of Holdings
LTV Calculation: SBG Stand-alone Equity Value of Holdings (L) Adjusted ¥3.15T SBG stand-alone net debt (V) Adjusted SBG stand-alone =14.5% equity value of holdings*1 ¥21.66T (¥ T) Adjusted SBG Major Other Interest of SBG in = + + stand-alone equity Investments in value of holdings assets SVF1&2 & La
Slide 46: 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 4.48 Multiplying the number of Alibaba ADSs equivalent to the number of shares held by SBG by Before adjustment 9.84 the ADS price Deducting (a) and (b) below (amount required
Slide 47: 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 1.00 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 Jun 30, 2022) × the shar
Slide 48: LTV Calculation: SBG Stand-alone Net Debt
LTV Calculation: SBG Stand-alone Net Debt (L) Adjusted SBG stand-alone net debt*1 ¥3.15T (V) Adjusted SBG stand-alone =14.5% ¥21.66T equity value of holdings (¥ T) Adjusted SBG Consolidated Net debt at self- Other = - - stand-alone net debt net debt financing entities adjustments 3.15 17.92 5.90 8.8
Slide 49: 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, 12.02 net of interest-bearing debt at self-financing entities (before adjustment) - Add 50% to interest-bearing debt (to treat it as liability) for USD Hybrid Notes issued in J
Slide 50: (Reference) Forward / Collar Transaction
(Reference) Forward / Collar Transaction Objective Non-recourse financing using derivatives • Transaction in which parties agree to settle at a pre-specified price or price range at a specific date in the future • Fund procurement through pledged shares and derivative referencing them Outline • Sett
Slide 51: SBG Credit Rating Trend
SBG Credit Rating Trend Acquisition of Acquisition of Acquisition Acquisition Listing 14 A+ Japan Telecom Vodafone KK of Sprint of Arm of SBKK 13 A 12 JCR (A－) A- Outlook Positive 11 BBB+ 10 JCR revised its outlook to “positive” BBB on November 2, 2021 9 BBB- BB+ 8 S&P (BB＋) Outlook Stable 7 BB 6 BB
Slide 52: Cycle of Investment and Recovery in FY2021
(Reference) Cycle of Investment and Recovery in FY2021: Breakdown of Investment and Monetization Allocated capital generated by various means primarily to new investments SB Northstar monetization Invest- (¥ T) Sale/ monetization*1 *3 ment*2 *3 SVF1&2 distribution Bond issuance/ redemption, Interest
Slide 53: SVF1&2: Capital Commitment
SVF1&2: Capital Commitment (as of Jun 30, 2022) ($ B) 2.6 *1 SVF1 33.1 （29.8） SVF2 53.4 65.5 98.6 56.0 （57.3） (87.1) (49.6) SBG Third-party limited partners Management, etc.*2 * Numbers in brackets represent amounts drawn. *1 The presented SBG’s committed capital to SVF1 includes approximately $8.2B
Slide 54: Consolidated Interest-bearing Debt / Cash Position / Net Interest-bearing Debt
Consolidated Interest-bearing Debt/ Cash Position/ Net Interest-bearing Debt *1 Consolidated Interest-bearing Debt (\ B) Jun 21 Sep 21 Dec 21 Mar 22 Jun 22 SBG stand-alone 14,033.4 13,967.4 13,860.4 14,918.7 15,842.9 Incl. SB Northstar 1,424.5 286.3 275.4 33.5 4.2 SVF1&2 and LatAm Funds 545.0 835.6