Slide 1: Earnings Results for the Fiscal Year Ended March 31, 2020
Ver.1.1 Earnings Results for the Fiscal Year Ended March 31, 2020 Investor Briefing May 20, 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; Abbreviations
Exchange rates used for translation FY2018 FY2019 Average during quarter Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 1 USD 108.71 111.55 112.83 110.46 110.00 107.70 108.98 109.22 1 GBP 147.54 145.84 144.48 143.99 140.88 132.73 139.55 140.20 1 CNY 16.97 16.40 16.31 16.37 16.13 15.37 15.46 15.56 EOQ Jun 30 Sep 30 Dec 31
Slide 4: Finance
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: Global Companies under the Disruption of COVID-19
Global Companies under the Disruption of COVID-19 Large financing by global companies (Credit facility and bond issue etc.) Boeing* $25bn BP* $17bn Coca-Cola* $6.5bn Delta Air Lines* $5.6bn Display prevented Toyota ¥1.25tn due to protection rights ANA ¥950bn Bridgestone* ¥300bn Ricoh ¥297bn Japan Ai
Slide 6: SBG Financial Condition: Extremely solid
SBG Financial Condition Equity Value JPY 28.5tn of Holdings*1 LTV*1 14.2% Cash Position*2 JPY 3.0tn Extremely Top 10 cash rich companies in Japan*3 Toyota SBG standalone HONDA 2.7 3.0 (JPY tn) 4.2 solid Rakuten 1.7 SONY 1.5 Seven & i Holdings 1.4 Mitsubishi 1.3 AEON 1.2 NISSAN 1.2 FAST RETAILING 1.2
Slide 7: Strategic Investment Holding Company
Ver1.1 ＝Strategic Investment Holding Company Finance 4
Slide 8: Equity Value of Holdings
Equity Value of Holdings Holds overwhelming amount of assets that did not exist at the past crises (JPY tn) COVID-19 28.5 Dot-com bubble Financial crash crisis SVF arm Others 99/3 00/3 01/3 02/3 03/3 04/3 05/3 06/3 07/3 08/3 09/3 10/3 11/3 12/3 13/3 14/3 15/3 16/3 17/3 18/3 19/3 20/5 *1 Equity value
Slide 9: Comparison with Conditions in 2008 Financial Crisis
Comparison with Conditions in 2008 Financial Crisis Our capability to deal with crises improved significantly *2 *3 SBG CDS*4 Equity Value of Holdings LTV (at its peak in the crisis) JPY 28.5tn 55.6% 2,220bp Listed Shares 14.2% 78% 555bp JPY 4.5tn Listed Shares 33% Mar' 08 May' 20 Mar' 08 May' 20 Ma
Slide 10: Financial Indicators: Further strengthening the balance sheet
Financial Indicators Further strengthening the balance sheet The previous quarter The current quarter (Feb 12, 2020) (May 18, 2020) Equity Value JPY 31.1tn JPY 28.5tn of Holdings -JPY 2.6tn LTV 16.1％ 14.2% -1.9pp Cash Position JPY 1.9tn JPY 3.0tn*1 +JPY 1.0tn *1 Cash Position= cash and cash equivale
Slide 11: Response to Current Market Environment
Response to Current Market Environment Transforms our financial management drastically in response to a rapid change of market conditions No change in our financial Growing uncertainty in the policy macro environment Enhance of shareholder returns and improve Increasing investor anxiety fina
Slide 12: Asset sale and monetization up to JPY 4.5tn
JPY 4.5tn Program Large-scale returns to shareholders and creditors by asset monetization Asset sale and monetization up to JPY 4.5tn Preparing for future investment opportunities Returns to Financial New Shareholders Improvement Investments Share repurchase Debt repayment up to JPY 2tn Bond buyback
Slide 13: The Progress of JPY 4.5tn Program
The Progress of JPY 4.5tn Program Monetized assets and made shareholder returns Forward transactions using Alibaba shares (April and May) Collar Contract $8.5bn Floor Contract $1.5bn Forward Contract $1.5bn Total Funding Amount $11.5bn Share repurchase Total Amount of Repurchase JPY 250.6bn Repurcha
Slide 14: Price of Shares Held
Price of Shares Held Outperformed indexes even in COVID-19 crisis Share Price (YTD) 140 130 +30.0% : T-Mobile 120 110 +1.5% : Alibaba 100 ▲2.8% : SBG 90 ▲3.6% : SBKK 80 ▲13.8% : Dow Jones Average 70 ▲14.9% : Nikkei 225 60 50 1/1 1/15 1/29 2/12 2/26 3/11 3/25 4/8 4/22 5/6 * As of May 18, 2020. 100 =
Slide 15: Portfolio Composition
Portfolio Composition Our portfolio consists of high quality assets (JPY tn) 28.5 Market Cap：$578bn Average Trading Value*：$3,652mn High liquidity and credit Ratings : A+/A+ (S&P/Fitch) worthiness 14.7 Listed Shares Market Cap：JPY 6.7tn Stable business model 78％ Average Trading Value：JPY 10.7bn
Slide 16: Merger of Sprint and T-Mobile
Merger of Sprint and T-Mobile Merger completed on Apr 1, 2020; the new company became an equity-method associate 1 of the Big 3 getting closer to Merger strengthens the top 2 telecoms in the U.S. financial stability Number of Subscribers*1 (mil) Credit Ratings Verizon 120 AT&T 112 S&P： B BB Fitch： B
Slide 17: SVF1: Fair Value of Investment Assets
SVF1: Fair Value of Investment Assets (SBG Consolidated basis) ($ bn) ＋7.0％ -7.2％ 79.8 74.6 75.0 69.6 Acquisition cost Fair Value Dec' 19 Mar' 20 88 companies 88 companies *1 The presented acquisition cost and fair value of investment assets excludes exited investments. *2 Past performance is not in
Slide 18: SVF1 Listed Portfolio Companies (as of May 15, 2020)
SVF1 Listed Portfolio Companies (as of May 15, 2020) ($ mil) (a) (b) (c) = (b) - (a) (d) = (b) / (a) Investment cost Gross return*1 Gross gain/(loss) Company Gross MOIC*2 to SVF1 to SVF1 to SVF1 Guardant Health 308 2,615 +$2,307 8.5x Slack 334 1,002 +$668 3.0x Vir Biotechnology 199 686 +$488 3.5x Pi
Slide 19: Summary of FY2019
Summary of FY2019 Drastically transform to financial management optimized suitable for an investment company Major funding ⁃ Issued JPY 1tn of domestic retail bonds and wholesale bonds (Apr and Sep 2019) Financial ⁃ Borrowed JPY 500bn through margin loan using SBKK shares (Feb 2020) Activity Ann
Slide 20: SBG Standalone Interest-bearing Debt
SBG Standalone Interest-bearing Debt Funded in preparation for future bond redemptions (JPY bn) Main variance factors from the end of December 2019 Increase/decrease in bank loan and CP (-JPY156.2bn) 8,281.3 7,969.0 Margin loan backed by SBKK shares (+JPY491.2bn) 7,385.5 7,616.9 Breakdown as of the
Slide 21: SBG Standalone Cash Position
SBG Standalone Cash Position Significant increase mainly due to monetization using Alibaba shares (JPY bn) 2,953.1 Net proceeds expected from asset sale to SVF1 (+$1.1bn) *yet to be settled Monetization using Alibaba shares (+$11.5bn) 2,093.9 1,133.6 Amount of share repurchase (-JPY 234.6bn) 1,642.4
Slide 22: Cash Position and Bond Redemption Coverage
Cash Position Maintain ample cash position which can covers the future bond redemption for 4 years Cash Position Bond Redemption Schedule JPY0.03.0tn*1 (JPY bn) Net proceeds expected from asset sale to SVF1 (+$1.1bn) Monetization using Alibaba shares (+$11.5bn) 1,133.6 Amount of share repurchase (-J
Slide 23: SBG Standalone Net Interest-bearing Debt
SBG Standalone Net Interest-bearing Debt Decreased due to a large increase in cash position Excl. Asset Finance *for Mar’ 20 data only 6,461.8 6,212.4 6,228.0 (JPY bn) Adjustment on Financing 5,522.9 Hybrid Finance: -JPY 25.0bn 5,080.5 Asset-backed finance: -JPY 1,718.3bn 2,877.0 Subsequent Events N
Slide 24: LTV: Manages at less than 25%
LTV Excl. Asset Finance 25% 17.2% 16.8% 16.1% 14.5% 14.2% Manages at less than 25% May 9, 2019 Aug 7, 2019 Nov 6, 2019 Feb 12, 2020 May 18, 2020 * See “LTV Calculation: SBG Standalone Equity Value of Holdings” and “LTV Calculation: Adjusted SBG Standalone Net Debt” in Appendix for details. Finance 2
Slide 25: Redemption Schedule
Redemption Schedule Planning various redemption options with refinancing as the main option (JPY bn) 1,305.6 Domestic straight notes Domestic subordinated notes Domestic hybrid notes 455.6 Foreign currency-denominated senior notes 949.5 924.1 Foreign currency-denominated hybrid notes 299.3 424.1 583
Slide 26: 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 23
Slide 27: Firmly Keeping Financial Policy (1/2)
Firmly Keeping Financial Policy (1/2) 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 o
Slide 28: Firmly Keeping Financial Policy (2/2): 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 25
Slide 29: 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 JPY 4.5tn program Appropriately control the balance between new investments and exits (prepare for future investment opportunities) Financial management focused on dia
Slide 30: Direction of Financial Management (illustrative)
Direction of Financial Management (illustrative) Manage finance conservatively under COVID-19; monetizing assets Securing financial stability and preparing for future investment opportunities Value increases in the mid-term Improving LTV Enables balancing elevated leverage with by monetizing assets
Slide 31: Appendix
Appendix
Slide 32: LTV Calculation: Adjusted SBG Standalone Net Debt
LTV Calculation: Adjusted SBG Standalone Net Debt (L) Adjusted SBG Standalone Net Debt JPY 3.58tn (V) SBG Standalone = 14.2% JPY 25.25tn Equity Value of Holdings (JPY tn) = - - Adjusted SBG Consolidated Net Debt at Self- Other Standalone Net Debt Net Debt financing Entities Adjustments 3.58 11.03 4.
Slide 33: LTV Calculation: SBG Standalone Equity Value of Holdings
LTV Calculation: SBG Standalone Equity Value of Holdings (L) Adjusted JPY 3.58tn SBG Standalone Net Debt (V) SBG Standalone = 14.2% Equity Value of Holdings JPY 25.25tn (JPY tn) = + + SBG Standalone Investment Assets Major Shares Others Holdings Under SVF 25.25 21.76 2.61 0.88 Alibaba 14.68 SBKK 4.4
Slide 34: Equity Value of Holdings
Equity Value of Holdings Decreased JPY 1.4tn QoQ, but increased JPY 1.7tn YoY (JPY tn) 29.5 28.0 26.4 26.2 25.7 Composition Ratio 15.9 51％ 14.2 13.4 12.3 12.2 4.5 4.7 4.6 4.4 16％ Alibaba 4.0 SBKK 3.2 3.5 3.1 2.7 10％ SVF (equity value for SBG) 3.1 3.2 12％ Sprint 2.2 2.4 2.3 2.0 Arm 2.7 2.6 2.7 2.7 2.
Slide 35: SVF1: Capital Commitment
SVF1: Capital Commitment Capital Commitment (as of the end of March 2020) ($ bn) 98.6 (78.3) SBG 33.1 (8.0) 65.5 (28.6) (49.7) Third-party Limited partners * Numbers in brackets represent amounts contributed *1 SBG’s committed capital to SVF1 includes approximately $8.2 billion of an obligation sati
Slide 36: SVF1 Listed Portfolio Companies (as of Mar. 31, 2020)
SVF1 Listed Portfolio Companies (as of Mar. 31, 2020) (a) (b) (c) = (b) - (a) (d) = (b) / (a) ($ mil) Investment cost Gross return*1 Gross gain/(loss) Company Gross MOIC*2 to SVF1 to SVF1 to SVF1 Guardant Health 308 1,975 +$1,667 6.4x Slack 334 939 +$605 2.8x Vir Biotechnology 199 775 +$576 3.9x 10x
Slide 37: SVF1 Snapshot (as of Mar. 31, 2020)
SVF1 Snapshot (as of Mar. 31, 2020) ($ bn) (a) (b) (c) = (b) - (a) Investment cost*2 Gross return*1 Gross gain/(Loss) to SVF1 to SVF1 to SVF1 (A) Listed company total $9.6 $11.0 +$1.4 (B) Private & exited company total $71.4 $69.2 -$2.2 (C)=(A)+(B) SVF 1 total (SBG consolidated basis) $81.0 $80.2 -$
Slide 38: SBG Credit Rating Trend
SBG Credit Rating Trend Aim to improve credit rating evaluation under the investment holding company rating criteria Acquisition of Acquisition of Sprint Arm SBKK Japan Telecom Vodafone KK Acquisition Acquisition Listing 14 A/A2 13 12 JCR (A－) A－/A3 Outlook Stable 11 BBB+/Baa1 10 BBB/Baa2 9 8 BB+/Ba
Slide 39: Consolidated Interest-bearing Debt
Consolidated Interest-bearing Debt Interest-bearing debt ＋ (JPY bn) 19,250.0 Lease liabilities 18,088.6 17,329.6 15,685.1 7,969.0 14,272.2 7,616.9 7,385.5 6,722.9 SBG 307.1 283.5 721.3 Others (Arm, etc.) 283.6 8,281.3 127.4 624.3 480.4 SVF 36.6 Variable prepaid forward contract*2 730.6 4,635.9 4,727
Slide 40: Consolidated Cash Position
Consolidated Cash Position (JPY bn) 4,005.9 3,629.1 3,553.2 3,244.6 2,724.2 2,093.9 1,642.4 1,741.0 SBG 1,819.5 1,173.0 Others (Arm, etc.) 322.9 SVF 572.2 416.5 263.2 245.6 SoftBank segment*2 273.8 140.5 118.1 406.9 358.3 Sprint segment*3 645.1 876.9 900.1 197.2 782.4 821.1 524.8 466.5 355.1 Mar' 19
Slide 41: Consolidated Net Interest-bearing Debt
Consolidated Net Interest-bearing Debt Interest-bearing debt (JPY bn) 15,696.8 ＋Lease liabilities – Cash position 14,605.3 14,082.7 12,056.0 6,228.0 6,212.4 11,027.6 5,522.9 SBG 5,080.5 20.4 580.8 Others (Arm, etc.) 9.4 378.7 6,461.8 SVF 730.6 4,451.0 Variable prepaid forward contract*3 3,990.9 3,85