Softbank Group Corp. · TSE:9984
Softbank — Q1 FY2020 Earnings Presentation
50 slides from Softbank's earnings presentation, Aug 12, 2020
Slide 1: Earnings Results for the Three-month Period Ended June 30, 2020
Ver.1 Earnings Results for the Three-month Period Ended June 30, 2020 Investor Briefing August 12, 2020 SoftBank Group Corp.
Slide 2: Disclaimers
Disclaimers This presentation provides relevant information about SoftBank Group Corp. (“SBG”) and its subsidiaries (together with SBG, the “Company”) and its affiliates (together with the Company, the “Group”) and does not constitute or form any solicitation of investment including any offer to buy
Slide 3: Exchange rates used for translation and Abbreviations
Exchange rates used for translation FY2019 FY2020 Average during quarter Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 1 USD 110.00 107.70 108.98 109.22 107.74 1 CNY 16.13 15.37 15.46 15.56 15.16 EOQ Jun 30 Sep 30 Dec 31 Mar 31 Jun 30 1 USD 108.83 107.74 1 CNY 15.31 15.23 Abbreviations Abbreviations used in Finance secti
Slide 4: Finance
Finance SBG standalone financial numbers are calculated by excluding numbers of self- financing entities from the consolidated numbers, unless otherwise stated. Major self- financing entities are SBKK, Arm, SVF1, Brightstar, PayPay, Fortress, SB Energy, etc.
Slide 5: Summary of FY2020 Q1
Summary of FY2020 Q1*1 Utilizing the strong portfolio, SBG achieved significant financial improvements and increased equity value of holdings. ⚫ Rapid execution of ¥4.3T asset monetization. Equity value of holdings marked at ¥27.4T - Alibaba:$14.7B monetization; its associate Ant Group announced an
Slide 6: Progress of ¥4.5T Program, Status of Assets, Financial Condition, Financial Strategy
- Progress of ¥4.5T Program - Status of Assets - Financial Condition - Financial Strategy Finance 3
Slide 7: SBG Share Price and Credit Spread
SBG Share Price and Credit Spread Both equity and credit markets favorably perceived the ¥4.5T Program. SBG share price*1 SBG CDS*2 (YTD) As of Aug 7 (bps) (YTD) 150 600 2.4 times from 544bps the bottom 137 (SBG) 125 123 (Nasdaq) 400 100 96 (Dow) As of Aug 7 90 (TOPIX) 242bps 200 75 ¥4.5T Program an
Slide 8: Asset sale and monetization up to ¥4.5T
¥4.5T Program Large-scale returns to shareholders and creditors by asset monetization Asset sale and monetization up to ¥4.5T Preparing for future investment opportunities Returns to Financial New Shareholders Improvements Investments Share repurchase Debt repayment up to ¥2T Bond buyback (¥2.5T in
Slide 9: Progress of ¥4.5T Program
Progress of ¥4.5T Program Steady progress; the monetization is almost complete (95%). (¥ T) 0.2 • Taking full advantage of highly liquid assets 4.3 • Returns to shareholders and 1.2 Debt reduction debt reduction of bank loan and bonds to come 1.0 Returns to shareholders Monetization Executed returns
Slide 10: Asset Monetization (¥4.5T Program)
Asset Monetization (¥4.5T Program) ¥4.3T of successful asset monetization just in 4.5 months with the least market impact Prepaid forward Alibaba April to July contracts $14.7B $14.7B SBKK May Block trade ¥310.2B $2.9B*1 June to July Public offering etc. $18.1B T-Mobile July Margin loan $2.3B*2 $22.
Slide 11: Debt Reduction
Debt Reduction Reduced debt by ¥1.2T*1 in total while other companies accelerate debt finance US investment-grade issue volume ($ B) (accumulated) 1,600 Repurchase of domestic bonds in July 2020 2017 1,400 2016 Total repurchase ¥167.6B 1,200 2018 2019 amount (Face value) 1,000 800 600 Repayment of A
Slide 12: Repurchase of Domestic Bonds
Repurchase of Domestic Bonds Unprecedent large-scale repurchase of domestic retail bonds; tightened supply-demand balance improved bond yields. % SBG domestic bond yields*1 6.0 • The first program of repurchasing retail bonds in #57 6.1Y Japan (no tender offer mechanism in Japan) #56 6.2Y 5.0 #50 5.
Slide 13: Returns to Shareholders
Returns to Shareholders Share repurchase brings higher shareholder value per share; SBG share price recovered faster than other shares. Japanese large-cap companies Market cap trend (March 19, 2020 ~ July 31, 2020*2) Share repurchase (Market cap, ¥ T) Maximum amount of ¥2.5T #1 Toyota (20.3) repurch
Slide 14: Share Repurchase Program – Global Comparison
Share Repurchase Program – Global Comparison Executed a world-class large-scale returns to shareholders while improving the financial condition Top 10 large share repurchase programs announced in the U.S. and Japan since January 2020*1 # Issuer Announcement Repurchase period Repurchase amount 1 Appl
Slide 15: Share Repurchase Program – Domestic Comparison
Share Repurchase Program – Domestic Comparison Largest share repurchase programs announced in Japan since April 2010*1 Maximum repurchase # Issuer Date of authorization amount (¥ B) 1 SBG March – July 2020 2,500.0 2 JAPAN POST HOLDINGS October 19, 2015 731.0 3 TOSHIBA November 8, 2018 700.0 4 TOYOTA
Slide 16: Progress of ¥4.5T Program, Status of Assets, Financial Condition, Financial Strategy
- Progress of ¥4.5T Program - Status of Assets - Financial Condition - Financial Strategy Finance 13
Slide 17: Equity Value of Holdings
Equity Value of Holdings Excluding asset-backed Equity value of holdings marked at ¥27.4T even after finance a large-scale asset monetization (¥ T) 28.2 27.4 26.3 Composition 14.7 57％ 13.0 15.6 Alibaba 4.6 3.9 SBKK 14％ 3.8 2.7 SVF (interest of SBG) 3.1 2.7 10％ T-Mobile (formerly Sprint) 2.0 3.2 1.2
Slide 18: Price Trend of Listed Shareholdings (YTD)
Price Trend of Listed Shareholdings (YTD) Alibaba, T-Mobile, and SBKK shares successfully dealt with selling pressures caused by asset monetization; the prices are all solidly trending. 140 T-Mobile 140 130 130 120 120 Nasdaq 110 Alibaba 110 S&P500 100 100 SBKK 90 90 Nikkei 80 80 70 70 60 60 50 50 J
Slide 19: Stability and Growth Potential of Alibaba Shares
Stability and Growth Potential of Alibaba Shares Stable growth so far; deploying businesses that can demonstrate its strength in the post-COVID-19 period. Adjusted EBITDA ($ M) 22,266 E-commerce 18,170 16,866 Health care Entertain- ment 10,817 Post- 8,117 COVID-19 IT infra- Digital structure marketi
Slide 20: SVF1: Investment Highlights (SBG Consolidated basis)
SVF1: Investment Highlights (SBG Consolidated basis) (From SVF1 inception through June 30, 2020) SVF1 highlights are provided solely for illustrative purposes and individual investors' results may vary. Past performance is not necessarily indicative of future results. Investment market uplift includ
Slide 21: SVF1: Listed Shares Performance in the Secondary Market (YTD)
SVF1: Listed Shares Performance in the Secondary Market (YTD) 400% 300% Vir Biotechnology Ping An Good Doctor OneConnect Financial Technology 200% ZhongAn Online P&C Insurance 10x Genomics 100% Slack Technologies Nasdaq Guardant Health 0% Uber Technologies Dow Jones Industrial Average -100% Jan Feb
Slide 22: SVF1: Listed Portfolio Companies (as of August 10, 2020)
SVF1：Listed Portfolio Companies (as of August 10, 2020) Finance 19
Slide 23: SVF1: Investment Portfolio listed companies
SVF1: Investment Portfolio 9 listed companies Finance 20
Slide 24: Strength of SBG Investment Portfolio
Strength of SBG Investment Portfolio • Proportion of listed companies marks as high as 77% of the total value. • Portfolio companies are engaged in diversified businesses. Transportation & logistics Enterprise Health tech Proportion of listed companies (excl. the value related to asset-backed financ
Slide 25: Establishment of Investment Management Subsidiary
Establishment of Investment Management Subsidiary Finance 22
Slide 26: Progress of ¥4.5T Program, Status of Assets, Financial Condition, Financial Strategy
- Progress of ¥4.5T Program - Status of Assets - Financial Condition - Financial Strategy Finance 23
Slide 27: LTV improvement
LTV Excluding asset-backed finance 14.2% 11.0% • Asset monetization and higher share prices of assets held improved LTV ratio by 3 pt • Thick financial buffer secured FY19Q4 FY20Q1 (May' 20) (Aug' 20) * LTV ratios presented are as of the date of the earnings results release of each quarter. Finance
Slide 28: Conservative Financial Management
Conservative Financial Management Excluding asset-backed finance 25% 17.2% 16.8% 16.1% Adhering to the 14.2% LTV-based financial 11.0% commitment for over 2 years FY19Q1 FY19Q2 FY19Q3 FY19Q4 FY20Q1 (Aug' 19) (Nov' 19) (Feb' 20) (May' 20) (Aug' 20) * LTV ratios presented are as of the date of the ear
Slide 29: Cash Position
Cash Position Maintain ample cash position, more than the bond redemptions for the next four years Cash position Bond redemption schedule (¥ B) ¥4.2T Repurchase of domestic bonds (-¥167.6B) Repayment of Alibaba margin loan (-$9.5B) Share repurchase (-¥398.3B） Finance using Alibaba shares (+$0.9B) Fi
Slide 30: SBG Standalone Interest-bearing Debt
SBG Standalone Interest-bearing Debt*1 Financial liabilities relating to prepaid forward contract (non-recourse to SBG) increased ¥1.7T due to monetization of Alibaba shares Main variance factors from the end of March 2020 (¥ B) Increase/decrease in bank loan and CP (-¥201.5B) Financial liabilities
Slide 31: SBG Standalone Cash Position
SBG Standalone Cash Position Significant increase following the monetization of equity holdings; a source for future returns to shareholders and bond holders Subsequent events to end of June 2020 (¥ B) Repurchase of domestic bonds (-¥167.6B) Repayment of Alibaba margin loan (-$9.5B) 4,159.0 Share re
Slide 32: SBG Standalone Net Interest-bearing Debt
SBG Standalone Net Interest-bearing Debt*1 Progress of the ¥4.5T Program led to significant financial Excluding asset-backed finance only for June 2020 reduction 6,461.8 Subsequent events (cash position): decrease ¥622.7B (¥ B) 6,212.4 6,228.0 Repayment of Alibaba margin loan (-$9.5B） Share repurcha
Slide 33: Redemption Schedule (after repurchase of domestic bonds)
Redemption Schedule (after repurchase of domestic bonds) Exploring various redemption options with refinancing as the main option (¥ B) 1,221.6 Domestic straight bonds Domestic subordinated bonds Domestic hybrid bonds 455.6 924.1 Foreign currency-denominated senor bonds 895.9 Foreign currency-denomi
Slide 34: Progress of ¥4.5T Program, Status of Assets, Financial Condition, Financial Strategy
- Progress of ¥4.5T Program - Status of Assets - Financial Condition - Financial Strategy Finance 31
Slide 35: Financial Strategy for FY2020
Financial Strategy for FY2020 Flexible financial management adapting to any change Agile financial Firmly keeping management in financial policy response to market conditions Finance 32
Slide 36: Firmly Keeping Financial Policy (1/2)
Firmly Keeping Financial Policy (1/2) 1. Manage LTV below 25% in normal times (upper threshold of 35% even in times of emergency) 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 F
Slide 37: Firmly Keeping Financial Policy (2/2): Policy on Supporting Portfolio Companies
Firmly Keeping Financial Policy (2/2): Our Policy on Supporting Portfolio Companies Portfolio company finances to be No rescue self-financing package Finance 34
Slide 38: Agile Financial Management in Response to the Market
Agile Financial Management in Response to the Market Achieving both shareholder return and financial improvement by implementing the ¥4.5T Program Appropriately control the balance between new investments and exits (prepare for future investment opportunities) Financial management focused on dialogu
Slide 39: Appendix
Appendix
Slide 40: Direction of Financial Management (illustrative)
Direction of Financial Management (illustrative) • Conservative financial management with asset monetization in the COVID-19 market environment • Securing financial stability and preparing for future investment opportunities Value increases in the mid-term; Improving LTV Enables balancing elevated l
Slide 41: SBG Credit Rating Trend
SBG Credit Rating Trend Aim to improve credit rating under the investment holding company rating criteria Acquisition of Acquisition of Acquisition Acquisition Listing Japan Telecom Vodafone KK of Sprint of Arm of SBKK A+ 14 A 13 A- 12 JCR (A－) Outlook Stable BBB+11 BBB 10 BBB- 9 BB+ 8 S&P (BB＋) Out
Slide 42: LTV Calculation: SBG Standalone Net Debt
LTV Calculation: SBG Standalone Net Debt (L) Adjusted ¥3.02T SBG standalone net debt = 11.0% (V) SBG standalone ¥27.40T equity value of holdings (¥ T) Adjusted SBG Consolidated Net Debt at Self- Other Standalone Net Debt 3.02 = Net Debt 9.95 - financing Entities 4.31 - Adjustments 2.63 Repayment of
Slide 43: LTV Calculation: SBG Standalone Equity Value of Holdings
LTV Calculation: SBG Standalone Equity Value of Holdings (L) Adjusted ¥3.02T SBG Standalone Net Debt (V) SBG Standalone = 11.0% Equity Value of Holdings ¥27.40T (¥ T) SBG Standalone Investment Assets Holdings = Major Shares + Under SVF + Others 27.40 23.25 2.74 1.41 Alibaba shares +17.71 SBKK shares
Slide 44: SVF1: Capital Commitment
SVF1: Capital Commitment Capital commitment (as of the end of June 2020) ($ B) 98.6 (84.1) SBG 33.1 （8.0） 65.5 （28.4） （55.7） Third-party limited ※ Numbers in brackets represent amounts contributed. partners *1 SBG’s committed capital to SVF1 includes approximately $8.2 billion of an obligation satis
Slide 45: SVF1: Fair Value of Investment Assets (SBG Consolidated basis)
SVF1: Fair Value of Investment Assets (SBG Consolidated basis) ($ B) 82.2 79.8 77.6 75.2 74.6 75.0 70.7 69.6 71.5 66.3 Acquisition cost Fair value Jun' 19 Sep' 19 Dec' 19 Mar' 20 Jun' 20 *1 The presented acquisition cost and fair value of investment assets excludes exited investments. *2 Past perfor
Slide 46: SVF1: Listed Portfolio Companies (as of June 30, 2020)
SVF1: Listed Portfolio Companies (as of June 30, 2020) Finance 43
Slide 47: SVF1: Snapshot (as of June 30, 2020)
SVF1: Snapshot (as of June 30, 2020) To CM: タイトル部分を除いた社長プレゼンのみを張り 付けて、タイトルはこのプレゼンフォーマットに準じたも ので記載してください また注記のアラインメント（4行目）が変です。 Finance 44
Slide 48: Consolidated Interest-bearing Debt
Consolidated Interest-bearing Debt*1 (¥ B) Interest-bearing debt ＋ Lease liabilities 19,250.0 18,088.6 17,329.6 15,869.1 7,969.0 14,272.2 7,616.9 7,385.5 SBG standalone 307.1 Others (Arm, etc.) 283.5 721.3 9,803.6 283.6 8,281.3 127.4 624.3 SVF SoftBank segment 4,727.6 5,351.1 Sprint segment*2 4,635.
Slide 49: Consolidated Cash Position
Consolidated Cash Position*1 (¥ B) 5,918.7 4,005.9 4,159.0 SBG standalone 3,553.2 3,244.6 Others (Arm, etc.) SVF 2,724.2 2,093.9 1,741.0 SoftBank segment 1,819.5 Sprint segment*2 1,173.0 322.9 416.5 458.2 263.2 245.6 118.1 140.5 406.9 256.7 645.1 876.9 197.2 900.1 821.1 1,044.7 524.8 466.5 355.1 Jun
Slide 50: Consolidated Net Interest-bearing Debt
Consolidated Net Interest-bearing Debt*1 (¥ B) Interest-bearing debt 15,696.8 ＋Lease liabilities – Cash position 14,605.3 14,082.7 6,228.0 6,212.4 11,027.6 5,522.9 9,950.5 SBG standalone 580.8 20.4 378.7 Others (Arm, etc.) 9.4 6,461.8 5,644.6 SVF 4,451.0 3,990.9 3,850.7 SoftBank segment Sprint segme