Softbank Group Corp. · TSE:9984
Softbank — H1 FY2024 Earnings Presentation
45 slides from Softbank's earnings presentation, Nov 12, 2024
Slide 1: Earnings Results for the Six-month Period Ended September 30, 2024
Earnings Results for the Six-month Period Ended September 30, 2024 Investor Briefing November 12, 2024 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 and abbreviations
Exchange rates per JPY used for translation FY2023 FY2024 Average during quarter Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 1 USD 138.11 145.44 147.00 147.87 156.53 150.26 EOQ Jun 30 Sep 30 Dec 31 Mar 31 Jun 30 Sep 30 Dec 31 Mar 31 1 USD 151.41 142.73 Abbreviations Abbreviations used in Finance section of this present
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 include SBKK (including its subsidiaries such as LY Corporation and PayPay), Arm, SVF1, SVF2, LatAm Funds, etc
Slide 5: Business environment surrounding SBG
Business environment surrounding SBG Financial management with the flexibility to respond to environmental changes Geopolitical risks Financial markets AI market trends Russia-Ukraine war Volatile stock market Generative AI evolution S&P500 0.25% Accelerated data center U.S.-China tension BOJ’s init
Slide 6: Market Environment
Market Environment Stock indices rebounded from the sharp decline in August. FX rate shifted from JPY appreciation through the end of September, to a current trend of JPY depreciation Stock Indices*1 FX Rate (USD/JPY) 180 170 VC Index*2 JPY161.07 160 162 160 SOX*2 JPY153.72 150 140 S&P500 140 150 NI
Slide 7: FY2024Q2 Financial Summary
FY2024Q2 Financial Summary Investment gains increased substantially driven by SVF. Partially adjusted direct/indirect financing ratio leveraging strong financial position NAV ¥29.0T (-¥6.3T QoQ) LTV 12.5％ (+4.7ppt QoQ) NAV・LTV Net debt ¥4.1T (+¥1.1T QoQ) *1 Cash position ¥3.8T (-¥0.8T QoQ) Reinforci
Slide 8: Historical NAV
Historical NAV Maintaining a high level (¥ T) 35.3 31.6 29.0 FY2000 FY2005 FY2010 FY2015 FY2020 Q1 Q2 (Q2*) (Note) As of the end of each fiscal year FY2024 Applying share prices • NAV (Net Asset Value) = Adj. SBG stand-alone equity value of holdings – adj. SBG stand-alone net interest-bearing debt a
Slide 9: NAV Fluctuation Breakdown
NAV Fluctuation Breakdown NAV decreased by JPY6.3T mainly due to forex impact (¥ T) Share price impact Forex -2.4 impact*2 Others Key share price -4.0 0.1 impact 11% depreciation Arm: -¥3.1T T-Mobile/DT: +¥0.4T of USD SVF*1: +¥0.4T ($1=¥161.07→¥142.73) 35.3 31.6 29.0 Jun 30, 2024 Sep 30, 2024 (Sep 3
Slide 10: Historical Arm Share Price
Historical Arm Share Price Analysts’ target share price rising steadily (USD) 200 $163.62 (Q1 end) $143.01 180 (Q2 end) 160 $124.99 Arm share price (FY23Q4 end) 140 Analysts’ target 120 share price (average) 100 80 60 40 20 0 Sep 23 Oct 23 Nov 23 Dec 23 Jan 24 Feb 24 Mar 24 Apr 24 May 24 Jun 24 Jul
Slide 11: Historical LTV
Historical LTV Keeping LTV with a significant buffer 25% 18.2% 15.0% Average LTV over the past 3 years: 11.0% 11.5% 12.5% * 13.7% 10.6% 8.0% 8.4% 7.8% Sep 2022 Dec 2022 Mar 2023 Jun 2023 Sep 2023 Dec 2023 Mar 2024 Jun 2024 Sep 2024 * As of the end of each quarter * For details, see Appendix “LTV Cal
Slide 12: Our Stance on Forex Risk
Our Stance on Forex Risk Pursuing long-term equity return, unaffected by short-term forex fluctuations JPY-based NAV fluctuation risk Financial risks from forex fluctuation from USD investments Focus on long-term equity value growth LTV control with forex risks in mind • Long-term returns are primar
Slide 13: Performance of Large-scale Investments and Exchange Rate Trends
Performance of Large-scale Investments and Exchange Rate Trends All previous large-scale investments benefited from USD appreciation Historical USD/JPY (since 2005) (USD/JPY) 180 160 Nov 11 JPY154 140 120 100 80 2006 2017 2019 Vodafone SVF1 SVF2 (JPY investment) 2013 2016 60 (USD investment) (GBP in
Slide 14: Historical Equity Value of Holdings
Historical Equity Value of Holdings Equity value of holdings decreased from June end due to the depreciation of Arm shares. Values of other assets trending steadily Net of asset-backed 38.3 finace 35.7 33.1 (¥ T) 30.3 21.0 17.6 21.7 14.4 16.5 $143.01 $141.965 Most recent 18.4 Share price as of Sep 3
Slide 15: Proportion of Listed Shares
Proportion of Listed Shares Controlled portfolio’s liquidity through Alibaba monetization and Arm IPO, etc. Portfolio’s liquidity remains at a high level 79% 79% 76% Proportion of 74% 74% listed shares* 7.0 Others (unlisted) 5.3 6.5 52% 3.7 Listed shares 4.0 2.7 2.7 41% 2.7 8.3 16.5 14.4 12.7 13.0 2
Slide 16: Historical Invested Amounts (SVF + SBG)
Historical Invested Amounts (SVF + SBG) Invested $2.0B in Q2 ($ B) FY2022 FY2023 FY2024H1 2.5 $4.0B $3.9B $3.9B SBG*1 0.2 2.0 1.8 1.9 1.5 0.9 1.4 1.2 SVF*2 2.3 1.1 0.5 0.5 0.5 0.1 0.1 0.2 0.9 0.3 0.3 0.6 0.6 0.4 0.4 0.4 0.2 0.3 0.3 0.1 0.1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY2022 FY2023 FY2024 *1 Invest
Slide 17: Cash Position and Future Bond Redemptions
Cash Position and Future Bond Redemptions Maintain ample cash position, well over 2-year worth of bond redemptions Cash position Bond redemption schedule*3 ¥3.8 T *1 (¥ B) 815.6 Undrawn commitment line*2 Bond redemptions for the next 2 years (¥2.1T) 2,974.4 ＞ 885.6 1,204.6 559.7 999.7 Sep 2024 Oct 2
Slide 18: Currency Breakdown and Yield of Cash Position
Currency Breakdown and Yield of Cash Position Continuing to maintain high-yield investments primarily in USD deposits Breakdown of cash position*1 Yield for SBG USD deposits, etc. (¥ T) 3.0 5.5% 5.5% 5.5% 5.4% 5.2% FF Rate Subsidiaries 0.5 4.9% (Upper Limit) 4.5% 4.9% Yield*2 JPY 0.5 US 10Y 3.8% Tre
Slide 19: Adjusting Direct/Indirect Financing Ratio
Utilizing Indirect Finance: Adjusting Direct/Indirect Financing Ratio Executed new term loan. Refinanced hybrid loan with an upsized amount Renewed New term loan Hybrid loan (Medium-long term commitment lines investment funds) (Refinance) Amount $5.5B+¥35.6B $2.9B ¥135.0B ($750M increase) (¥413.9B*)
Slide 20: Historical Loans and Commitment Lines Balances
Historical Loans and Commitment Lines Balances Arranged new term loan for the first time in three years after the term loan repayment (¥ B) 1,417.6 1,241.2 1,176.6 New term loan 1,101.1 413.9 (Medium-long term investments) 390.2 324.9 845.7 188.1 * 792.6 Term loan 84.0 782.6 137.1 (Acquisition 84.0
Slide 21: Role and Positioning of Debt Financing
Role and Positioning of Debt Financing Leveraging debt financing to capture investment opportunities and maximize returns, while reinforcing investor confidence through the repetition of investment and monetization cycles Investment opportunities Debt finance Bonds/loans, etc. Cycle of Commitment to
Slide 22: Historical NAV
Historical NAV Expanded NAV significantly while reshuffling our portfolio IPO M&A IPO Acquisition Monetization Arm SVF1/SVF2/ Acquisition LatAm Funds SBKK T-Mobile/ Acquisition Deutsche Telekom capital contribution Alibaba Yahoo Japan Others FY1998 FY2005 FY2010 FY2015 FY2020 FY2024 • NAV (Net Asset
Slide 23: FY2024 Funding and Fund Management Policy
FY2024 Funding and Fund Management Policy Completed bond/loan refinancing for FY2024. Future financing to be considered while closely monitoring market conditions Products Policy Progress status Domestic bond Primarily anticipated for refinancing Completed refinancing Considering financing options F
Slide 24: Bond Redemption Schedule
Bond Redemption Schedule Completed refinancing for bond redemptions in FY2024. Future bond issuances to be managed with due consideration for cash position and market environment 1,626.7 (¥ B) Domestic senior bonds Domestic subordinated bonds 375.6 Domestic hybrid bonds Foreign currency-denominated
Slide 25: SBG Stand-alone Interest-bearing Debt
SBG Stand-alone Interest-bearing Debt*1 Interest-bearing debt decreased due to settlements of prepaid forward contracts using Alibaba shares, etc. Recourse debt increased due to borrowing of new term loan Main changes from June 30, 2024 • Decrease of financial liabilities relating to prepaid forward
Slide 26: Financial Liabilities Relating to Prepaid Forward Contracts
Alibaba Monetization Related Financial Liabilities Relating to Prepaid Forward Contracts All transactions to be settled by June 2025 Balance of financial liabilities relating to prepaid forward contracts using Alibaba shares (quarterly basis) ($B) Projection* 33 33 32 31 29 25 Completion of settleme
Slide 27: SBG Stand-alone Cash Position
SBG Stand-alone Cash Position While new funding was secured, cash position decreased due to forex impact, investments, and installments for Arm shares transaction consideration (¥ B) SB Northstar 4,397.6 3,771.1 3,956.1 3,831.2 2,986.2 Main changes from Jun 2024 Increase Decrease 4,357.0 ・Installmen
Slide 28: SBG Stand-alone Net Interest-bearing Debt
SBG Stand-alone Net Interest-bearing Debt Adjusted net debt increased due to installments for Arm shares transaction consideration and new investments (¥ B) 10,363.5 10,515.1 10,275.3 9,978.8 10,023.3 Finance-related adjustments 6,144.4 Asset-backed finance, etc. ¥5,777.1B 7,534.1 Hybrid finance ¥36
Slide 29: Historical Credit Ratings
Historical Credit Ratings Acquisition of Acquisition Acquisition Acquisition Listing Listing JCR A A+ 14 Japan Telecom of Vodafone KK of Sprint of Arm of SBKK of Arm A 13 A- 12 (Stable) BBB+ 11 BBB10 BBB-9 S&P BB+ 8 BB 7 BB+ (Stable) BB- 6 B+ 5 4 (CY) '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14
Slide 30: Historical SBG Share Price
Historical SBG Share Price Promptly launched the share repurchase program in response to sudden market upheaval Historical SBG and NIKKEI 225 share prices (JPY) Aug 7 Total share repurchase (JPY) 14,000 Resolved share amount as of Oct 31: 55,000 repurchase JPY174.8B program (Maximum amount: 12,000 J
Slide 31: FY24 Financial Strategy
FY24 Financial Strategy Prioritizing growth investments for future NAV expansion • Effective use of ample cash position • Active use of non-recourse financing to support strategic investments • Enhanced monitoring of portfolio → monetization and reinvestment Steadfast financial principles Adhering t
Slide 32: Appendix
Appendix
Slide 33: SBG Credit Spread
SBG Credit Spread Spread of SBG foreign currency- denominated senior notes SBG 5-year CDS bps USD 1.7Y USD 3.7Y USD 4.7Y 500 bps 700 USD 6.7Y USD 6.7Y EUR 2.2Y SBG 5Y CDS (JPY) EUR 4.7Y EUR 4.2Y EUR 7.7Y 450 EUR 7.7Y 600 400 500 350 300 400 250 300 200 150 200 100 100 50 0 0 Mar 2023 Jun 2023 Sep 20
Slide 34: Calculation of Equity Value of Holdings
Sep 30, 2024: Calculation of Equity Value of Holdings $1 = ¥142.73 ¥39.7T （unadjusted） Equity value of holdings Adjustment for (¥ T) Equity value of holdings ー ＝ asset-backed finance (adjusted) （unadjusted） Prepaid Forward Contracts, etc. Payable 923M Share price 4.9 ¥16.5T ＝ amount for Margin loan
Slide 35: LTV Calculation: SBG Stand-alone Equity Value of Holdings
LTV Calculation: SBG Stand-alone Equity Value of Holdings (L) Adjusted ¥4.13T SBG stand-alone net debt =12.5% (V) Adjusted SBG stand-alone equity value of holdings*1 ¥33.14T (¥ T) Adjusted SBG Major SBG’s interest in Other investments = + + stand-alone equity value of holdings assets SVF1&2 & LatAm
Slide 36: 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) Arm 16.50 Multiplying the number of Arm ADSs equivalent to SBG's holdings by the ADS price (¥18.83T) - Before adjustment 17.70 payable amount of the consideration for Arm shares acqui
Slide 37: 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 2.51 Number of T-Mobile shares held by SBG × the share price (h) Deutsche Telekom 0.37 Before adjustment 0.95 Number of DT shares held by SBG × the share price Adjustment for
Slide 38: LTV Calculation: SBG Stand-alone Net Debt
LTV Calculation: SBG Stand-alone Net Debt (L) Adjusted SBG stand-alone net debt*1 ¥4.13T (V) Adjusted SBG stand-alone ¥33.14T =12.5% equity value of holdings (¥ T) Adjusted SBG Consolidated Net debt at self- Other stand-alone net financing entities, debt = net debt - etc. - adjustments 4.13 15.43 5.
Slide 39: 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 - net interest-bearing debt (before adjustment) 10.28 at self-financing entities*1 For hybrid bonds and hybrid loans with maturity dates, deduct 50% from interest-bearing debt;
Slide 40: 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 (¥ T) Forward/Collar 1 transactions 2 Margin loan 39.7 Main shares Asset-backed Alibaba, Deutsche Telekom SBKK, Arm
Slide 41: Breakdown of Equity Value of Holdings
Breakdown of Equity Value of Holdings Net of asset- 15% backed finance 28% 24% 16% 50% 15% 11% 11% 9% 8% 7% 5% 17% 18% 9% SBKK 20% 9% T-Mobile / Deutsche Telekom 21% 21% 11% SVF1(62 investments) 16% 12% SVF2 (273 investments) 5% 3% 5% 3% LatAm Funds (89 investments) 8% 8% 9% 6% Others Sep 2021 Sep 2
Slide 42: Geographical Portfolio Diversification
Geographical Portfolio Diversification Proportion of China decreased significantly. Proportion of EMEA increased significantly due to growth of Arm’s value Net of asset-backed finance 10% 7% China 23% 11% Japan 35% 17% 7% APAC (excl. China and Japan） 13% 12% 10% 10% 9% 32% 57% EMEA 25% 21% 23% 23% 2
Slide 43: Breakdown by Currency
Breakdown by Currency Investment and monetization flows are mainly in USD, while debt refinancing is principally in the same currency Investments and monetization Debt composition Cash position: ¥3.0T*1 Equity value of holdings: ¥33.1T*2 Debt*3: ¥7.4T Subsidiaries JPY EUR Net of asset- EUR USD backe
Slide 44: FY2024Q2: Increase/Decrease in Cash Position
FY2024Q2: Increase/Decrease in Cash Position Cash position decreased mainly due to installments for Arm shares transaction consideration and forex impact （¥ T） Debt financing- related +0.6 -1.0 -0.2 -0.3 Increase in +0.1 Investment- Share commitment line related repurchase New term loan +0.4 Forex i
Slide 45: Net Interest-bearing Debt
Consolidated Interest-bearing Debt/Cash Position/ Net Interest-bearing Debt Consolidated Interest-bearing Debt*1 (¥ B) Sep 2023 Dec 2023 Mar 2024 Jun 2024 Sep 2024 SBG stand-alone 14,335.8 13,765.7 14,297.5 14,328.8 13,249.7 Incl. SB Northstar - - - - - SVF1&2 and LatAm Funds 542.2 513.2 547.9 583.1