Softbank Group Corp. · TSE:9984
Softbank — FY2020 Earnings Presentation
65 slides from Softbank's earnings presentation, May 14, 2021
Slide 1: Earnings Results for the Fiscal Year Ended March 31, 2021
Ver.1.3 Earnings Results for the Fiscal Year Ended March 31, 2021 Investor Briefing May 14, 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 used for translation FY2019 FY2020 Average during quarter Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 1 USD 110.00 107.70 108.98 109.22 107.74 105.88 104.45 106.24 1 CNY 16.13 15.37 15.46 15.56 15.16 15.27 15.71 16.31 EOQ Jun 30 Sep 30 Dec 31 Mar 31 Jun 30 Sep 30 Dec 31 Mar 31 1 USD 108.83 110.71 1 CNY 1
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, SVF2, PayPay, Fortress, SB Energy, etc.
Slide 5: Summary of FY2020
Summary of FY2020*1 Investment businesses performed robustly, especially at SVF1 & SVF2. Completed shareholder return and financial improvement committed in ¥4.5T Program. Robust ⚫ Gain on investments totaled ¥7.5T, mainly from SVF1 & SVF2 investment - SVF1 & SVF2: Coupang, Auto1, etc. were listed i
Slide 6: Robust Investment Businesses - Agenda
- Robust Investment Businesses - Status of Assets - Progress of ¥4.5T Program - Financial Condition - Financial Strategy - ESG Initiatives Finance 3
Slide 7: Increase in Gain on Investments
Increase in Gain on Investments Net income of ¥4,988.0B: Gain on investments at SVF1 & SVF2 increased significantly. Gain on investments Net income (attributable to owners of the parent) 持株会社投資事業 Investment Business of Holding Companies SVFおよびSVF2 SVF1 and SVF2 その他 Other investments Total gain (loss
Slide 8: Main Investment Activities of SVF1 & SVF2
Main Investment Activities of SVF1 & SVF2 (since Jan 2021) Large-scale IPO of Coupang and active new investments New listings New investments SVF1 SVF2 SVF2 Market Price Market Price (Gross)*3 (Gross)*2 IPO $26M IPO $28,039M Investment through SPACs*1 (IPO) IPO $2,301M SVF Investment Corp. A total o
Slide 9: SBG Share Price and Domestic Bond Yields
SBG Share Price and Domestic Bond Yields Share price continues to outperform the index. Domestic bond yields declined further. SBG share price*1 SBG domestic senior bond yield*2 (Since 2020) As of May 11 (%) (Since 2020) 5.0 225 200 200 (SBG) 4.0 175 3.0 149 (Nasdaq) 150 125 120 (Dow) 2.0 111 (TOPIX
Slide 10: Status of Assets - Agenda
- Robust Investment Businesses - Status of Assets - Progress of ¥4.5T Program - Financial Condition - Financial Strategy - ESG Initiatives Finance 7
Slide 11: Equity Value of Holdings
Equity Value of Holdings Excluding asset-backed Equity value of holdings marked at ¥29.8T, finance driven by increase in SVF1 and SVF2’s equity value. Composition 30.9 (¥ T) 29.8 43％ Alibaba 8％ SBKK 26.3 26.9 21% SVF1 4％ SVF2 24.3 5％ T-Mobile (formerly Sprint) 12.7 9％ Arm 18.6 6％ Investments in list
Slide 12: Equity Value of Holdings: Increase in Value
Equity Value of Holdings Achieved an increase in value; Excluding asset-backed finance despite the large-scale asset monetization. (¥ T) ＋3.5T Breakdown of ¥3.5T increase 29.8 Increase in equity value, etc *1 + ¥8.0T 26.3 New and follow-on investments *2 + ¥1.6T 12.7 Alibaba Impact of Asset monetiza
Slide 13: Diversification of SBG's Investment Portfolio
Diversification of SBG’s Investment Portfolio Further diversifying portfolio; as Alibaba’s proportion declined Excluding asset-backed and SVF1 & SVF2’s value increased finance March 31, 2020 March 31, 2021 Others Investment in Others listed stocks T-Mobile T-Mobile 5% 3% 6% 12% 5% Alibaba SBKK Aliba
Slide 14: Increase of NAV per Share
Increase of NAV per Share NAV per share is up 43%; due to increase in NAV and decrease in number of shares issued after share repurchases NAV NAV per Share and Share Price (¥ T) Increased 20％ (¥) Increased 43％ NAV increase 26.1 Share price + 15,015 15,000 NAV per share Effect of share repurchases 21
Slide 15: Investment Activities of SBG
Investment Activities of SBG Multiple investment entities are active in their focused fields, preparing for the full-scale AI era. Latin America SBG SVF1 SVF2 Fund SB Northstar Mainly AI management AI AI + Mainly of existing + + Unicorns Unicorns Unicorns Listed stocks investments (Region: Central a
Slide 16: SVF1 & SVF2: Gain (Loss) on Investments
SVF1 & SVF2: Gain (Loss) on Investments (SBG Consolidated Basis)*1 Recorded ¥3.6T gain on investments for FY20Q4, and cumulative ¥6.4T gain for FY20. ¥3.6T (¥ T) (sum of SVF1 and SVF2) 1.4 0.5 0.4 0.4 -0.2 1.1 0.3 -0.9 -1.1 FY18 FY18 FY19 FY19 FY19 FY19 FY20 FY20 FY20 FY20 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Slide 17: SVF1 & SVF2: Cumulative Investment Performance
SVF1 & SVF2: Cumulative Investment Performance (SBG Consolidated Basis) Significant growth in asset values driven mainly by a greater demand for online services under COVID-19 and IPOs of portfolio companies. SVF1 SVF2 ($ B) ($ B) 150 140.7 bn 12 11.2 bn 10 Exited*1 1.8x 100 85.7 bn Currently held 4
Slide 18: SVF1: IRR results (SBG)
SVF1: IRR results (SBG) <Valuation Process> SBIA is responsible for determining fair values of the investments in SVF1 on a quarterly basis in line with the requirements of the AIFM Directive (as issued by the FCA). The SBIA Portfolio Valuations team is functionally independent from portfolio manage
Slide 19: SVF2: IRR results (SBG)
SVF2: IRR results (SBG) <Valuation Process> SBIA is responsible for determining fair values of the investments in SVF2 on a quarterly basis in line with the requirements of the AIFM Directive (as issued by the FCA). The SBIA Portfolio Valuations team is functionally independent from portfolio manage
Slide 20: SVF1&2: combined IRR results (SBG)
SVF1&2: combined IRR results (SBG) <Valuation Process> SBIA is responsible for determining fair values of the investments in SVF1 and SVF2 (together, the “Funds”) on a quarterly basis in line with the requirements of the AIFM Directive (as issued by the FCA). The SBIA Portfolio Valuations team is fu
Slide 21: Investments in Listed Stocks: Cumulative Gain (Loss) for FY2020
Investments in Listed Stocks and Other Instruments: Cumulative Investment Gain (Loss) for FY2020 SBG SB Northstar (¥ B) 113.5 Valuation gain: 134.0 Realized loss: - 20.5 264.2 - 610.6 Valuation gain: 42.2 - 67.1 Realized gain: 222.0 - 232.9 165.8 Actual stocks Actual stocks Derivatives Total investm
Slide 22: Investments in Listed Stocks and Other Instruments
Investments in Listed Stocks and Other Instruments（as of March 31, 2021) ($ M) Fair Value Amazon.com 6,211 Facebook 3,182 TSMC ADR 1,320 PayPal Holdings 1,180 Microsoft 1,030 Alphabet Class C 575 Stocks salesforce.com 385 Netflix 382 Pacific Biosciences of California 328 AbCellera Biologics 265 SPAC
Slide 23: Investments in Listed Stocks: Options
Investments in Listed Stocks and Other Instruments: Options (as of Mar 31, 2021) Fair value Notional principal $44.3B Long call option $13.4B of listed stocks $1.7B $13.8B $1.6B (net) $1.5B $1.5B $10.8B (net) (net) (net) -$0.2B -$0.09B -$2.6B Short call option of listed stocks -$30.5B Dec 20 Mar 21
Slide 24: Progress of ¥4.5T Program - Agenda
- Robust Investment Businesses - Status of Assets - Progress of ¥4.5T Program - Financial Condition - Financial Strategy - ESG Initiatives Finance 21
Slide 25: Results of ¥4.5T Program
Results of ¥4.5T Program Monetized ¥5.6T, exceeding the original plan. ¥1T in total of Financial • Lower corporate bond yields Improvements repayment of bonds • Decline in LTV and bank loans Original plan ¥4.5T Returns to ¥2T of • Rise in share price Shareholders share repurchases*1 • Reduced NAV di
Slide 26: Debt Reduction of ¥1T
Debt Reduction of ¥1T Bond repurchase and early repayment of borrowings Repurchase of domestic Total ¥167.6B (total face value) unsecured bonds (Jul 2020) *1 Repurchase of foreign currency- Total ¥224.9B (total face value) denominated senior notes (Mar 2021) Repaid ¥1T in total Repayment of bank loa
Slide 27: Financial Improvements: Repurchase of Bonds
Financial Improvements: Repurchase of Bonds Repurchased corporate bonds under ¥4.5T Program. Provided opportunity for both domestic and oversea bondholders to subscribe. Repurchase of foreign currency- denominated Repurchase of domestic bonds senior notes (Mar 2021) (Jul 2020) • Much larger than the
Slide 28: Returns to Shareholders (Share Repurchases)
Returns to Shareholders (Share Repurchases) Completed the share repurchase of ¥2.5 trillion. Share repurchases Share Price Performance (From Jan 6, 2020 to May 12, 2021) (¥) 12,000 Authorized amount ¥2.5T Share price 10,635 (of which under ¥4.5T Program) (¥2.0T) Average repurchase price 10,000 8,000
Slide 29: LTV Trend
LTV Trend Excluding asset-backed finance LTV trend*1 • Immediate and large-scale 25% monetization, taking full advantage of highly liquid assets 18.0% 17.9% 14.9% • Agile financial management in *2 response to market 11.8% 12.4% conditions as articulated in 9.0% the financial policy Moneti- Moneti-
Slide 30: Financial Condition - Agenda
- Robust Investment Businesses - Status of Assets - Progress of ¥4.5T Program - Financial Condition - Financial Strategy - ESG Initiatives Finance 27
Slide 31: LTV
LTV Excluding asset-backed finance 17.9% 12.4% Secured a large financial cushion with the completion of ¥4.5T Program and the growth in SVF1 & SVF2 FY19Q4 FY20Q4 (Mar 20) (Mar 21) * Presented LTV ratios are as of the end of each quarter. * See "LTV Calculation: SBG Standalone Net Debt" and "LTV Calc
Slide 32: Main Financial Activities in FY2020 Q4
Main Financial Activities in FY2020 Q4 Flexibly conducted monetization using equity holdings, refinancing, and debt reductions Fund procurement Issuance of domestic hybrid notes*1 (Feb) : ¥177.0B Borrowing using Alibaba shares (Mar) : $8.1B Debt reduction Repurchase of foreign currency-denominated s
Slide 33: 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*3 （¥ B) ¥2.9T *1, 2 310.0 undrawn commitment line Bond redemptions for the next 2 years (¥1.6T) 2,598.0 ＞ 1,221.6 426.0 841.1 542.0 Mar' 21 Apr
Slide 34: SBG Standalone Interest-bearing Debt
SBG Standalone Interest-bearing Debt*1 SBG standalone interest-bearing debt Main variance factors from Dec 31, 2020 (excluding non-recourse debt) remains flat. Issuance of domestic hybrid bonds (Feb): +¥177.0B Borrowing using Alibaba shares (Mar): +$8.1B 13,023.3 Repurchase of foreign currency-denom
Slide 35: SBG Standalone Cash Position
SBG Standalone Cash Position Maintain ample cash while balancing shareholder returns and investment expansion (¥ B) 4,601.6 3,589.6 3,437.5 2,175.0 SB Northstar (Cash and deposits and investments from asset management subsidiaries) 991.6 Cash position decreased due to increase in securities pledged
Slide 36: SBG Standalone Net Interest-bearing Debt
SBG Standalone Net Interest-bearing Debt Remained at a constant level under strict LTV Excluding SB Northstar management 8,558.8 (¥ B) 7,641.9 6,463.0 6,528.9 Adjustments relating to finance 4,849.0 Asset-backed finance ( -¥4,735.9B) 5,645.5 3,624.4 Hybrid finance ( -¥113.1B) 2,877.0 2,887.1 2,628.1
Slide 37: Bond Redemption Schedule
Bond Redemption Schedule Exploring various redemption options with refinancings as a main option (¥ B) Domestic straight bonds Procured (through domestic Domestic subordinated bonds hybrid bonds issued in Feb 2021) 177.0 Domestic hybrid bonds 1,044.6 1,021.2 Foreign currency-denominated senior notes
Slide 38: Financial Strategy - Agenda
- Robust Investment Businesses - Status of Assets - Progress of ¥4.5T Program - Financial Condition - Financial Strategy - ESG Initiatives Finance 35
Slide 39: Financial Strategy for FY2021
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 36
Slide 40: 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 SVF and other subsidiaries Finance 37
Slide 41: 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 38
Slide 42: Financial Strategy for FY2021
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 39
Slide 43: 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 44: 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 execution Sources of funds for Creation of CF through new investments investment recovery Now F
Slide 45: Cycle of Investment and Recovery (Illustrative)
Cycle of Investment and Recovery (Illustrative) To establish an investment cycle over the medium to long term Fund A Expand investment ¥ scale CF from investment Consider stakeholder recovery returns as appropriate Fund B ¥ Fund C ¥ Additional fund procurement as needed Finance 42
Slide 46: 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; Enables balancing finan
Slide 47: Performance of Financial Management (Mar 2020 – Mar 2021)
Performance of Financial Management (Mar 2020 – Mar 2021) Under COVID-19, conducted large-scale monetization of assets and returns to stakeholders while controlling LTV (¥ T) 30.9 29.8 26.3 26.9 Investment 24.3 asset value 17.9% 14.9% LTV % 12.4% 11.8% 9.0% *1 4.7 4.0 3.6 3.7 Net debt 2.2 *1 Mar 20
Slide 48: ESG Initiatives - Agenda
- Robust Investment Businesses - Status of Assets - Progress of ¥4.5T Program - Financial Condition - Financial Strategy - ESG Initiatives Finance 45
Slide 49: Summary of ESG Initiatives for FY2020
Summary of ESG Initiatives for FY2020 Worked to build a foundation, reinforce initiatives, and enhance information disclosure 1. Build a ・Appointed the Chief Sustainability Officer (CSusO) Foundation ・Established the Sustainability Committee <Environment> ・Established the Environmental Policy ・Addre
Slide 50: E: Environment - Climate Change Responses
E: Environment - Climate Change Responses Proactive promotion of greenhouse gas reduction ・Set greenhouse gas reduction targets for each business area. ・Continue to reduce greenhouse gas emissions through renewable energy businesses. Committing to Declared “FY2023 Announced 5 mega solar farms Net Ze
Slide 51: S: Society - Diversity and Inclusion Initiatives
S: Society - Diversity and Inclusion Initiatives SB Opportunity Fund Emerge ・The largest venture fund ($100M) ・An accelerator program to support in the U.S. for racial minorities under-represented entrepreneurs ・Invested in 28 companies (as of May 12, 2021) ・Invested in 13 companies among the progra
Slide 52: S: Society - COVID-19 Responses
S: Society - COVID-19 Responses (as of May 12, 2021) Established SB Coronavirus Inspection Center Corp. Provide immediate and maximum support for the unprecedented pandemic ・PCR testing center: 3 locations (Tokyo, Sapporo, Fukuoka) ・Number of companies applied (total): Approx. 7,100 companies*1 *1 I
Slide 53: G: Governance
G: Governance Achievements in FY20 Improved transparency in Established and held the Nominating & Integrate governance the process of determining Compensation Committee; and enhanced its the Directors’ renumeration functions (expansion of scope of deliberation) appropriate for a strategic investment
Slide 54: Sustainability Integration into Investments
Sustainability Integration into Investments Past activities ・Under the corporate philosophy of “Information Revolution — Happiness for everyone,” we have implemented environmentally and socially friendly investments and businesses. ・ESG assessment has also been conducted in the investment process of
Slide 55: Appendix
Appendix
Slide 56: 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 57: LTV Calculation: SBG Standalone Net Debt
LTV Calculation: SBG Standalone Net Debt (L) Adjusted SBG standalone net debt*1 ¥3.71T (V) SBG standalone = 12.4% ¥29.81T equity value of holdings = - - (¥ T) Adjusted SBG Consolidated Net debt at self- Other adjustments standalone net debt net debt financing entities 3.71 14.02 5.46 4.85 SoftBank s
Slide 58: LTV Calculation: SBG Standalone Equity Value of Holdings
LTV Calculation: SBG Standalone Equity Value of Holdings (L) Adjusted ¥3.71T SBG Standalone Net Debt (V) SBG Standalone = 12.4% Equity Value of Holdings ¥29.81T (¥ T) SBG standalone Interest of SBG in Other, investments in holdings = Major shares + SVF1/SVF2 + listed stocks, etc. 29.81 19.24 7.51 3.
Slide 59: SVF1: Capital Commitment
SVF1: Capital Commitment (as of March 31, 2021) ($ B) 98.6 (85.4) * Numbers in brackets represent amounts contributed. SBG 33.1*1 (29.3) 65.5 (56.1) Third-party limited partners *1 The presented SBG’s committed capital to SVF1 includes approximately $8.2 billion of an obligation satisfied by using A
Slide 60: SVF1 Snapshot
SVF1 Snapshot (as of March 31, 2021) 1. Gross Return to SVF1 is the sum of the cumulative Gross Realized Proceeds from exited and partially exited investments, realized dividend income related to portfolio companies, and Fair Market Value of unrealized investments held by SVF1 as of March 31, 2021.
Slide 61: SVF1 Listed Portfolio Companies
SVF1 Listed Portfolio Companies (as of March 31, 2021) ※3 1. Listed company total only includes companies that have become publicly listed on or after the date SVF1 made its initial investment in the companies. The companies indicated as fully exited are fully exited companies that became publicly l
Slide 62: SVF2 Snapshot
SVF2 Snapshot (as of March 31, 2021) 1. Gross Return to SVF2 is Fair Market Value of unrealized investments held by SVF2 as of March 31, 2021. Gross Gain/(Loss) to SVF2 is the difference between the Gross Return to SVF2 and Investment Cost to SVF2. Gross Realized Proceeds are before tax and expenses
Slide 63: SVF2 Listed Portfolio Companies
SVF2 Listed Portfolio Companies (as of March 31, 2021) 1. Listed company total only includes companies that have become publicly listed after SVF2 made its initial investment in the companies. 2. Gross Return = Unrealized value. SBG’s return on any SVF2 portfolio company is not the full return amoun
Slide 64: 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 65: 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) Mar.20 Jun.20 Sep.20 Dec.20 Mar.21 SBG standalone 8,281.3 9,803.6 9,319.8 11,218.9 13,023.3 Incl. SB Northstar - - 364.3 1,528.8 1,866.5 SVF1 and SVF2 581.5 159.1 156.3 2