Softbank Group Corp. · TSE:9984
Softbank — Q1 FY2021 Earnings Presentation
60 slides from Softbank's earnings presentation, Aug 11, 2021
Slide 1: Earnings Results for the Three-month Period Ended June 30, 2021
Ver.1.1 Earnings Results for the Three-month Period Ended June 30, 2021 Investor Briefing August 11, 2021 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 FY2020 FY2021 Average during quarter Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 1 USD 107.74 105.88 104.45 106.24 110.00 1 CNY 15.16 15.27 15.71 16.31 17.01 EOQ Jun 30 Sep 30 Dec 31 Mar 31 Jun 30 Sep 30 Dec 31 Mar 31 1 USD 110.71 110.58 1 CNY 16.84 17.11 Abbreviations Abbrev
Slide 4: Finance
Finance SBG stand-alone 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, SVF2, Latin America Fund, PayPay, Fortress, SB Energy, etc.
Slide 5: Summary of FY2021 Q1
Summary of FY2021 Q1*1 Greater gain on investments vs. FY20Q1. Maintained a stable financial condition, while accelerating a pace of new investments. ⚫ Gain on investments totaled ¥1,263.1B - Investment businesses remained strong. Net income*2 totaled ¥761.5B. - Investment businesses other than SVF1
Slide 6: Results of Investment Businesses
- Results of Investment Businesses - Financial Condition - Financial Strategy - ESG Initiatives Finance 3
Slide 7: Investment Activities of the Group
Investment Activities of the Group Multiple investment entities are active in their focused fields, preparing for the full-scale AI era. SVF1 SBG AI + Unicorns Existing investments 82 companies in total etc. SVF2 SB Northstar Mainly listed stocks AI + Unicorns Amazon TSMC etc. Latin America Fund KE
Slide 8: Gain on Investments and Net Income
Gain on Investments and Net Income Gain on investments increased year on year Gain on investments Net income (attributable to owners of the parent) ■ Investment Business of Holding Companies ■ SVF1&2 ¥1,263.1B ■ Latin America Fund ¥1,255.7B ■ Other ¥982.9B Gain relating to loss of control of ¥761.5B
Slide 9: Gain on Investments: Trends and Breakdown
Gain on Investments: Trends and Breakdown A diversified portfolio has led to investment gains from multiple assets Quarterly trends Breakdown of FY21Q1 ¥3,729.6B Investments of Others ■Gain on investments at SVF1&2 holding companies ¥78.4B ■Gain on investments other than SVF1&2 (e.g. SoFi Technologi
Slide 10: Equity Value of Holdings
Equity Value of Holdings Equity value of holdings marked at ¥31.6T, remaining at high level Excluding asset- backed finance Composition 39% Alibaba (¥ T) 30.9 31.6 7% SBKK 29.8 20% SVF1 9% SVF2 26.9 2% Latin America Fund 6% T-Mobile 24.3 12.4 9% Arm 12.7 5% SB Northstar 18.6 13.1 3% Others 12.6 2.3
Slide 11: Increase of NAV per Share
Increase of NAV per Share Both NAV and NAV per share remain at the same level since FY20-end Net Asset Value NAV per share*1 and share price (¥ T) (¥) 26.1 +1.5% 26.5 Share price NAV per share 15,015 +2.9% 15,450 15,000 10,000 9,330 7,775 5,000 0 Mar 21 Jun 21 Mar 21 Jun 21 (Note) As of the end of e
Slide 12: Equity Value of Holdings: Diversification of Investment Portfolio
Equity Value of Holdings: Diversification of Investment Portfolio Further diversifying portfolio as SVF1&2’s value increased Excluding asset-backed finance March 31, 2021 June 30, 2021 Proportion of listed shares Proportion of listed shares (net of asset-backed finance) (net of asset-backed finance)
Slide 13: SVF1&2: Cumulative Investment Performance
SVF1&2: Cumulative Investment Performance (SBG Consolidated Basis, as of June 30, 2021) Public listings accelerated for investments in SVF1, while new investments increased for SVF2 SVF1 SVF2 ($ B) ($ B) 150 146.1 40 Exited*1 1.9x 30 100 87.8 25.0 Exited *1 3.0x Currently held 2.5x 20.2 and listed 2
Slide 14: SVF1&2: Gain (Loss) on Investments
SVF1&2: Gain (Loss) on Investments (SBG Consolidated Basis)*1 Recorded ¥0.3T gain on investments for FY21Q1 (¥ T) 3.6 1.4 1.1 (sum of SVF1&2) 0.4 0.3 ¥0.3T -0.2 -0.9 -1.1 FY19 FY19 FY19 FY19 FY20 FY20 FY20 FY20 FY21 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 *1 Gain and loss on investments at SVF1&2 Finance 11
Slide 15: Major Investment Activities of SVF1&2: New Listings and Recovery
Major Investment Activities of SVF1&2 (FY21Q1): New Listings and Recovery of Investments Large-scale IPOs and progress in recovery of investments New Listings Sales Fair value as of June 30, 2021 Partial sale IPO $13.7B SVF1 Partial sale IPO $4.0B SVF1 Partial sale IPO $1.7B and 3 other companies IP
Slide 16: Major Investment Activities of SVF1&2: New Investments
Major Investment Activities of SVF1&2 (FY21Q1): New Investments New and follow-on investments totaling $13.5B Fund Investments (alphabetical order) Sector AutoStore Logistics Better Fintech Content Square Enterprise Cybereason Enterprise Dingdong Consumer Made new investments SVF2 InMobi Consumer in
Slide 17: SVF1&2: Capital Commitment
SVF1&2: Capital Commitment (as of June 30, 2021) ($ B) *1 SVF1 33.1 (29.6) SVF2 65.5 98.6 40.0 (56.7) (86.3) (21.5) SBG Third-party limited partners * Numbers in brackets represent amounts contributed. *1 The presented SBG’s committed capital to SVF1 includes approximately $8.2B of an obligation sat
Slide 18: Introduction of Co-investment to SVF2
Introduction of Co-investment to SVF2 Co-investment by management in SVF2 together with SBG is intended to create a shared interest in SVF2 and instill a sense of ownership leading to enhanced focus on the fund, thereby contributing to SBG’s earnings growth. SVF2 (Present) SVF2 (After introduction)
Slide 19: Introduction of Co-investment and Change in SVF2 Structure
Introduction of Co-investment and Change in SVF2 Structure Supplementary information ◆ Introduction of the program will improve risk / return profile for SBG with thicker downside protection. ◆ Masayoshi Son and other management*1 will bear the losses up to their equity ownership amount. ◆ Distribut
Slide 20: Cycle of Investment and Recovery (FY21Q1)
Cycle of Investment and Recovery (FY21Q1) ¥725.9B invested capital was recovered and then funded SVF2’s investments Cash outflows for Cash inflows from investments recovery of investments Contribution to SVF1 Distribution from SVF1*1 ¥33.2B ($0.3B) ¥164.1B ($1.5B) Distribution from SVF2 ¥230.1B ($2.
Slide 21: SVF1&2 and LatAm Fund Portfolio Companies Fair Value
SVF1&2 and LatAm Fund, etc. Portfolio Companies Fair Value (As of July 30, 2021, Unrealized value only) Invest in a wide range of regions and sectors Country / Region Sector Edtech 1% Others 1% Health Tech Latin 3% America Enterprise 6% etc. Europe 5% Fintech Consumer 13% US 7% 28% Proptech 34% 7% C
Slide 22: SB Northstar: Cumulative Investment Gain (Loss)
SB Northstar: Cumulative Investment Gain (Loss)*1 ¥196.7B -¥491.2B ¥272.0B ¥98.2B*2 ¥75.7B*2 -¥22.5B Positive impact Impact on on net income due net income to losses borne by 現物株式 Stocks 現物株式 Stocks デリバティブ Derivatives 投資損益合計 Total investment attributable + gain (loss) Masayoshi Son to SBG +信用取引 Cred
Slide 23: SB Northstar: Assets Under Management
SB Northstar: Assets Under Management (as of June 30, 2021) Investments scaled down Stocks, etc. and derivatives (fair value) Notional principal of options (¥ B) ($ B) 44.3 Long call option 2,391.1 2,371.5 of listed stocks Stocks 1,741.0 13.4 11.2 and other instruments*1 2,281.7 2,198.1 1,501.3 -2.6
Slide 24: Financial Condition
- Results of Investment Businesses - Financial Condition - Financial Strategy - ESG Initiatives Finance 21
Slide 25: Main Financial Activities in FY2021
Main Financial Activities in FY2021 Diversified financing to ensure financial flexibility. Refinancing completed for the first call of domestic hybrid bonds. Issuance of corporate bonds Issued domestic hybrid bonds for retail investors (June) ¥405.0B Notice of optional redemption of domestic hybrid
Slide 26: Continue to maintain sufficient financial buffer (LTV trend)
LTV Trend Excluding asset-backed finance LTV trend *1 25% 18.0% 17.9% *2 16.2% 14.9% 11.8% 12.4% Continue to maintain 9.0% sufficient financial buffer ¥4.5T Moneti- Moneti- COVID-19 Program zation zation announced executed completed Dec 19 Mar 20 Jun 20 Sep 20 Dec 20 Mar 21 Jun 21 *1 As of the end o
Slide 27: Cash Position
Cash Position Always maintain ample cash position, more than sufficient for the bond redemptions for the next 2 years Cash position Bond redemption schedule*2 ¥2.1T *1 (¥ B) Bond redemption for the next 2 years (¥1.8T) Foreign currency- denominated senior notes issued in July 2021 2,095.2 ＞ 159.5 1,
Slide 28: Management of Cash Position
Management of Cash Position Maintain cash position more than sufficient for the bond redemptions for the next 2 years Distributions from SVF1&2 contribute to cashflows (interest coverage: 2.6x) Maintain funds covering bond redemptions for the next 2 years Interest coverage ¥2.1T Dividends Distributi
Slide 29: Bond Redemption Schedule
Bond Redemption Schedule Refinancing of domestic hybrid bonds is completed (¥ B) ¥582.0B was raised 1,221.6 • Domestic hybrid bonds issued in February 2021 Domestic senior bonds • Domestic hybrid bonds issued in June 2021 1,128.7 Domestic subordinated bonds 1,021.2 Domestic hybrid bonds 193.7 455.6
Slide 30: Issuance of Domestic Retail Hybrid Bonds (June)
Issuance of Domestic Retail Hybrid Bonds (June) ¥405.0B retail bonds were sold out amid strong demand, following the successful issuance to institutional investors. Completed refinancing for ¥455.6B scheduled to be redeemed in September Issue amount (versus 2016) Total amount of ¥405.0B (¥ B) 582.0
Slide 31: Issuance of Foreign Currency-denominated Senior Notes (July)
Issuance of Foreign Currency-denominated Senior Notes (July) Secured financial flexibility through agile procurement by capturing the favorable market condition. Issue amount totaled $7.4B, record high for SBG / Reg S High Yield. (%) USD bond index yields*3 Total amount $7,360M (¥813.9B) 12 ハイイールド債利
Slide 32: SBG Stand-alone Interest-bearing Debt
SBG Stand-alone Interest-bearing Debt*1 Interest-bearing debt increased due to issuance of hybrid bonds Main variance factors from Mar 31, 2021 for refinancing and short-term borrowings, etc. • Change in bank loans +¥685.7B 14,033.4 • Issuance of domestic hybrid bonds +¥405.0B 13,023.3 • Repayment o
Slide 33: SBG Stand-alone Cash Position
SBG Stand-alone Cash Position Maintain ample cash position while expanding investments (¥ B) 4,601.6 Cash position of SB Northstar 3,589.6 2,175.0 3,437.5 Main variance factors from Mar 31, 2021 3,103.3 991.6 Increase Decrease 1,389.3 ・Distribution from SVF1&2 ・ SVF2 Capital Call 1,008.1 (+$3.6B) (-
Slide 34: SBG Stand-alone Net Interest-bearing Debt
SBG Stand-alone Net Interest-bearing Debt Continue adhering to financial policy while net interest-bearing debt is on the rise (¥ B) Excluding SB Northstar 10,513.7 8,558.8 Adjustments relating to finance 7,641.9 Asset-backed finance -¥ 5,085.9B 5,397.8 Hybrid finance -¥311.9B 6,528.9 5,645.5 4,849.
Slide 35: Financial Strategy
- Results of Investment Businesses - Financial Condition - Financial Strategy - ESG Initiatives Finance 32
Slide 36: Establish optimal financial strategy as an investment company
Financial Strategy for FY2021 Establish optimal financial strategy as an investment company Financial management Firmly keeping to enable reproduction at investment financial policy business on an expanded scale Finance 33
Slide 37: 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 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
Slide 38: Firmly Keeping Financial Policy (2/2)
Firmly Keeping Financial Policy (2/2): Our Policy on Supporting Portfolio Companies Portfolio company finances to be No rescue self-financing package Finance 35
Slide 39: Financial Management to Enable Reproduction at Investment Business
Financial Management to Enable Reproduction at Investment Business on Expanded Scale Procure funds to capture Establish a cycle of attractive investment investment and recovery opportunities • Establish a cycle of “investment” → • Utilize leverage with LTV in mind “recovery and CF generation” → “rei
Slide 40: Cycle of Investment and Recovery (Illustrative)
Cycle of Investment and Recovery (Illustrative) Cash inflows from investment exits are the source of funds for new investments in the future. Investment Investment Value-up IPO Exit Distribution lifecycle Sources of funds for Creation of CF through new investments investment recovery Present Future
Slide 41: Cycle of Investment and Recovery (Illustrative)
Cycle of Investment and Recovery (Illustrative) To establish an investment cycle over the medium to long term Expand investment Fund A scale ¥ CF from investment Consider stakeholder recovery returns as appropriate Fund B ¥ Fund C ¥ Additional fund procurement as needed Finance 38
Slide 42: Capital Allocation Policy
Capital Allocation Policy Our top priority is to firmly keep the financial policy. Optimal mix of the three pillars is flexibly determined. Firmly keeping the financial policy Financial Shareholder Growth Improvement Return Investments Finance 39
Slide 43: ESG Initiatives
- Results of Investment Businesses - Financial Condition - Financial Strategy - ESG Initiatives Finance 40
Slide 44: E: Environment - Further Initiatives to Address Climate Change
E: Environment - Further Initiatives to Address Climate Change Promote tangible initiatives to reduce greenhouse gas emissions • Major Subsidiaries: Making steady progress toward achieving reduction targets Achieve Net Zero Carbon Achieve Carbon Neutral Convert 100% of electricity used by 2030 by FY
Slide 45: S: Society - COVID-19 Responses
S: Society - COVID-19 Responses Vaccination: Conducted large-scale vaccinations as a social contribution beyond the workplace • Started operation of vaccination sites at 8 locations nationwide on June 15 – Approx. 78,000 vaccinations are completed (as of August 2, 2021) – Target: Medical professiona
Slide 46: G: Governance
G: Governance Promoting diversity and inclusion in the Board of Directors • More diversified Board in terms of skills, gender, and nationality • External Directors compose 5 out of 9, reaching a majority Areas of expertise particularly expected by SBG (up to 3 areas) Name Position at SBG Corporate B
Slide 47: ESG Integration into the Investment Process
ESG Integration: Integration of E&S Factors into the Investment Process Revised “Portfolio Company Governance and Investment Guidelines Policy” (April 2021) – Integrated the Company’s ESG approaches into the investment process – Evaluate opportunities and risks arising not only from governance facto
Slide 48: Information Disclosure
Information Disclosure Selected for inclusion in ESG indexes through enhanced disclosure of ESG-related information Time of Index Evaluated point inclusion June 2021 FTSE4Good Index Series New Overall enhancement of ESG-related disclosure, including policies on June 2021 environment and human rights
Slide 49: Appendix
Appendix
Slide 50: LTV Calculation: SBG Stand-alone Equity Value of Holdings
LTV Calculation: SBG Stand-alone Equity Value of Holdings (L) Adjusted ¥5.12T SBG stand-alone net debt =16.2% (V) Adjusted SBG stand-alone equity value of holdings ¥31.58T (¥ T) Adjusted SBG stand- Interest of SBG in Other, investments alone equity value of Major shares SVF1&2 / Latin in listed stoc
Slide 51: LTV Calculation: SBG Stand-alone Net Debt
LTV Calculation: SBG Stand-alone Net Debt (L) Adjusted ¥5.12T SBG stand-alone net debt*1 (V) SBG stand-alone =16.2% ¥31.58T equity value of holdings (¥ T) Adjusted SBG Consolidated Net debt at self- Other stand-alone net debt = net debt - financing entities - adjustments 5.12 15.87 5.36 5.40 SoftBan
Slide 52: Direction of Financial Management (Illustrative)
Direction of Financial Management (Illustrative) Continue to procure funds to enable reproduction at investments at an expanded scale, while maintaining financial discipline and managing net debt increase to be more moderate than asset growth. Value increases in the mid-term; Investment Enables bala
Slide 53: 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 A+ 14 Japan Telecom Vodafone KK of Sprint of Arm of SBKK A 13 12 JCR (A－) A- Outlook Stable BBB+11 BBB 10 BBB- 9 BB+ 8 S&P (BB+) Out
Slide 54: SVF1 Snapshot
SVF1 Snapshot (as of June 30, 2021) ($ B) *1 Gross Return to SVF1 is the sum of all external cash flows generated by investments and their related hedges, gross of taxes, transaction fees, investment-related financing and other fund-related expenses and liabilities, plus the market value of any unre
Slide 55: SVF1 Listed Portfolio Companies
SVF1 Listed Portfolio Companies (as of June 30, 2021) ($ M) ※3 ※3 *1 SBG Consolidated basis: includes the impact from hedges on the public securities and the effect of consolidating inter-company transactions. For a certain investments that were originally to be transferred from SBG to SVF1 but canc
Slide 56: SVF2 Snapshot
SVF2 Snapshot (as of June 30, 2021) ($ B) 1.Gross Return to SVF2 is the sum of all external cash flows generated by investments and their related hedges, gross of taxes, transaction fees, investment-related financing and other fund-related expenses and liabilities, plus the market value of any unrea
Slide 57: SVF2 Listed Portfolio Companies
SVF2 Listed Portfolio Companies (as of June 30, 2021) ($ M) 1. SBG Consolidated basis: Cumulative investment performance is presented on net basis. 2. Investment Cost is the sum of all external cash flows, including investment-related financing, directed towards the purchase of investments, plus net
Slide 58: Investment in Listed Stocks and Other Instruments
Investment in Listed Stocks and Other Instruments (as of June 30, 2021) ($ M) Fair value Amazon.com 5,653 TSMC ADR 812 PayPal Holdings 702 Pacific Biosciences of California 345 AbCellera Biologics 216 Century Therapeutics 59 Lyell Immunopharma 57 Stocks ironSource 53 Sana Biotechnology 52 Adaptive B
Slide 59: Entry into Agreement for Sale of Shares in Arm to NVIDIA
Entry into Agreement for Sale of Shares in Arm to NVIDIA Remain committed to the long-term success of NVIDIA as a major shareholder (approximately 6.7- 8.1% ownership expected). Received by the Company as a deposit*1 Cash $2.0B Cash $10.0B To be received by the Company*2 Transaction upon closing val
Slide 60: Consolidated SBG: Interest-bearing Debt, Cash Position, and Net Debt
Consolidated SBG: Interest-bearing Debt, Cash Position, and Net Interest-bearing Debt Consolidated Interest-bearing Debt*1 (\ B) Jun 20 Sep 20 Dec 20 Mar 21 Jun 21 SBG standalone 9,803.6 9,319.8 11,218.9 13,023.3 14,033.4 Incl. SB Northstar - 364.3 1,528.8 1,866.5 1,424.5 SVF1 and SVF2 159.1 156.3 2