Softbank Group Corp. · TSE:9984
Softbank — H1 FY2022 Earnings Presentation
31 slides from Softbank's earnings presentation, Nov 14, 2022
Slide 1: Earnings Results for the Six-month Period Ended September 30, 2022
Ver.1.1 Earnings Results for the Six-month Period Ended September 30, 2022 Investor Briefing November 14, 2022 SoftBank Group Corp.
Slide 2: Disclaimers
Disclaimers This presentation provides relevant information about SoftBank Group Corp. (“SBG”) and its subsidiaries (including Arm Limited, together with SBG, the “Company”) and its affiliates (together with the Company, the “Group”) and does not constitute or form any solicitation of investment inc
Slide 3: Exchange rates and abbreviations
Exchange rates per JPY used for translation FY2021 FY2022 Average during quarter Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 1 USD 110.00 110.47 113.60 117.10 129.04 138.68 1 CNY 17.01 17.09 17.75 18.43 19.60 20.19 EOQ Jun 30 Sep 30 Dec 31 Mar 31 Jun 30 Sep 30 Dec 31 Mar 31 1 USD 122.39 144.81 1 CNY 19.26 20.37 Abbrevi
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 are SBKK (including its subsidiaries such as Z Holdings), SVF1, SVF2, LatAm Funds, Arm, and PayPay, etc.
Slide 5: Summary of FY22Q2
Summary of FY22Q2*1 Actively reduced debts and repurchased shares, funded by continued monetization of investments NAV of ¥16.7T, LTV of 15.0%, cash position of ¥4.3T*2 NAV/LTV - LTV remained stable despite the decrease in value of equity holdings; contributed by continued monetization & curtailed i
Slide 6: LTV Trend
LTV Trend*1 Maintain sufficient financial buffer excl. asset-backed finance 100％ LTV 35% (in times of emergency) 25% (in normal times) 21.6% 20.4% *2 15.9% 18.7% 15.0% 14.3% 14.5% 11.6% 12.2% Sep 20 Dec 20 Mar 21 Jun 21 Sep 21 Dec 21 Mar 22 Jun 22 Sep 22 *1 As of the end of each quarter *2 See Appen
Slide 7: Equity Value of Holdings: Diversified Portfolio
Equity Value of Holdings: Diversified Portfolio Maintain well diversified portfolio excl. asset-backed finance Mar. 31, 2022 Sep. 30, 2022 % of listed shares*1 % of listed shares *1 (net of asset-backed finance) (net of asset-backed finance) 52% 44% Others Others T-Mobile/ 8% T-Mobile/ 8% Deutsche T
Slide 8: Impact of Forex
Impact of Forex On NAV*1 On accounting Increase in NAV Increase in equity +¥2.6T +¥2.9T Consolidated net income -¥1.1T Weaker JPY increased NAV and equity (Note) As of Sep 2022 *1 NAV (Net Asset Value) = Adjusted SBG stand-alone equity value of holdings - Adjusted SBG stand-alone net interest-bearin
Slide 9: Main Financing Activities in FY22Q2
Main Financing Activities in FY22Q2 Used ample cash on hand for significant debt reduction Senior loans Bank loans Repaid senior loans (Sep) -$2.3B (-¥325.2B) Bonds Bonds Redeemed foreign currency-denominated notes -$0.7B (-¥86.3B) upon maturity (Jul) Alibaba shares Forward transactions +$7.9B (+¥1,
Slide 10: Cash Position
Cash Position Maintain ample cash position, well over 2 years worth of bond redemptions Cash position Bond redemption schedule*2 ¥4.3T *1 (¥ B) 701.7 Undrawn commitment line*3 Bond redemptions 3,560.8 for the next 2 years (¥1.9T) ＞ 871.9 1,046.5 915.0 1,221.8 Sep 2022 Oct 22 - Sep 23 Oct 23 - Sep 24
Slide 11: Bond Redemption Schedule
Bond Redemption Schedule Redemptions will be funded by carefully managed bond issuance with due consideration for cash position and market environment (¥ B) 1,354.6 304.6 1,096.3 Domestic senior bonds 999.4 161.3 Domestic subordinated bonds Domestic hybrid bonds 826.2 322.4 Foreign currency-denomina
Slide 12: SBG Credit Spread
SBG Credit Spread Credit spreads on widening trend, but recently getting tightened Spread of SBG foreign currency- SBG 5 years CDS denominated senior notes 800 bps 600 bps 700 500 600 400 500 400 300 300 200 200 USD 2.2Y USD 3.7Y USD 5.7Y USD 8.7Y 100 100 SBG 5Y CDS (JPY) EUR 1.7Y EUR 4.2Y EUR 6.7Y
Slide 13: Repurchase of Foreign Bonds (FY22Q1-Q3)
Repurchase of Foreign Bonds (FY22Q1-Q3) Repurchased bonds using cash on hand, amid the highly volatile market. Reduced gross debt and secured marginal gains from redemptions, while providing liquidity to the market Tender offer (Oct) USD-denominated hybrid notes (first call in Jul 2023) FY22 $750M Q
Slide 14: Debt Reduction
Debt Reduction (FY22Q1-Q2 + bond repurchase in Oct 2022) Redemption/repurchase of Bonds Total ¥456.5B*1 (incl. bond repurchase in Oct 2022) (equivalent to $3.5B) Repayment of Total ¥1,007.8B*2 Total margin loans ¥2.4T (equivalent to $7.6B) reduction Repayment of Total ¥886.0B bank loans (equivalent
Slide 15: SBG Stand-alone Interest-bearing Debt
SBG Stand-alone Interest-bearing Debt*1 Large debt reduction, cutting both Main changes from Jun 30, 2022 non-recourse and recourse debts • Physical settlement of prepaid forward contracts -$28.6B (Alibaba shares) • Entry into prepaid forward contracts +$7.9B (Alibaba shares) (¥ B) 15,842.9 • Repaym
Slide 16: Change in Non-recourse Debt to SBG Stand-alone
Change in Non-recourse Debt to SBG Stand-alone*1 Reduced over ¥3T in non-recourse debt (¥ T) 15.84 12.07 Decrease in non-recourse debt 8.8 • Financial liabilities relating to prepaid forward contracts, etc.: 5.4 -¥2,555.2B (net) • Margin loans: -¥828.4B 7.1 6.7 Decrease in recourse debt • Bank loans
Slide 17: SBG Stand-alone Cash Position
SBG Stand-alone Cash Position Maintain ample liquidity after significant debt reduction (¥ B) 3,944.8 127.1 3,637.4 76.6 Cash position of SB Northstar 3,357.9 3,079.9 595.9 2,681.1 330.0 Main changes from Jun 30, 2022 Increase Decrease 582.1 ・Conclusion of new prepaid ・Repaid margin loans forward co
Slide 18: SBG Stand-alone Net Interest-bearing Debt
SBG Stand-alone Net Interest-bearing Debt Adjusted net interest-bearing debt decreased by approx. ¥1.8T from Mar 2022 (¥ B) 12,135.3 12,021.0 excl. SB Northstar 11,486.0 10,919.2 8,504.9 6,163.8 7,411.2 6,110.4 8,871.8 Finance-related adjustments 5,549.1 Asset-backed finance -¥5,461.4B Hybrid financ
Slide 19: 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 23.8 (¥ T) Collar/Forward/Put 1 2.4 Asset-backed 1 2 Margin loan, etc. transactions finance Main shares 1.7 ¥4.1T Al
Slide 20: Asset-backed Finance Using Alibaba Shares
Asset-backed Finance Using Alibaba Shares Decrease in beneficial holdings after early physical settlement of prepaid forward contracts Beneficial holding ratio 23.7% Used for prepaid forward 14.6% contracts Monetization in Q2 ・Total $7.9B through forward transactions *1 *2 Jun 22 Sep 22 *1 Ownership
Slide 21: Share Repurchases
Share Repurchases ¥1T program*1 ¥400B program*2 （Nov 9, 2021 - Nov 8, 2022） （Aug 9, 2022 - Aug 8, 2023） Completed Completed （on Oct 17, 2022) （on Nov 10, 2022) *1 Share repurchase program based on the Board resolution on Nov 8, 2021 *2 Share repurchase program based on the Board resolution on Aug 8,
Slide 22: Appendix
Appendix
Slide 23: Calculation of Equity Value of Holdings as of Sep 30, 2022
Calculation of Equity Value of Holdings as of Sep 30, 2022 $1 = ¥144.81 (¥ T) Equity value of holding Equity value of holdings Adjustment for ＝ ー (adjusted) （unadjusted） asset-backed finance ¥23.8T ¥3.0T ＝ ¥4.5T 387M shares held*1 × Share price ＄80.0*1 ー Collar contract, etc. ¥1.5T （unadjusted） ¥2.2
Slide 24: LTV Calculation: SBG Stand-alone Equity Value of Holdings
LTV Calculation: SBG Stand-alone Equity Value of Holdings (L) Adjusted ¥2.96T SBG stand-alone net debt =15.0% (V) Adjusted SBG stand-alone equity value of holdings*1 ¥19.68T (¥ T) Adjusted SBG Major SBG’s interest in Other Investments = + + stand-alone equity value of holdings assets SVF1&2 & LatAm
Slide 25: LTV Calculation: Details of 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) Alibaba 3.03 Multiplying the number of Alibaba ADSs equivalent to the number of shares held by SBG by Before adjustment 4.48 the ADS price Sum of the outstanding maturity settlement a
Slide 26: LTV Calculation: Details of 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 1.15 summing - Value of SBG’s shareholding (incl. the number of shares subject to call options held by Deutsche Telekom (DT): 34,971,809 shares as of Sep 30, 2022) × the shar
Slide 27: LTV Calculation: SBG Stand-alone Net Debt
LTV Calculation: SBG Stand-alone Net Debt (L) Adjusted SBG stand-alone net debt*1 ¥2.96T (V) Adjusted SBG stand-alone ¥19.68T =15.0% equity value of holdings (¥ T) Adjusted SBG Consolidated Net debt at self- Other stand-alone net debt = net debt - financing entities - adjustments 2.96 14.13 5.63 5.5
Slide 28: LTV Calculation: 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, (before adjustment) 8.50 net of interest-bearing debt at self-financing entities - Add 50% to interest-bearing debt (to treat it as liability) for USD Hybrid Notes issued in Ju
Slide 29: (Ref.) Forward Transaction / Collar Transaction
(Ref.) Forward Transaction / Collar Transaction Objective Non-recourse financing using derivatives • Transaction where parties agree to settle at a pre-specified price or price range at a specific date in the future • Finance through pledged shares and derivatives referencing them Outline • Settleme
Slide 30: SBG Credit Rating Trend
SBG Credit Rating Trend Acquisition of Acquisition of Acquisition Acquisition Listing A+ 14 Japan Telecom Vodafone KK of Sprint of Arm of SBKK A 13 JCR (A－) A- 12 Outlook Positive BBB+11 BBB 10 JCR revised its outlook to “positive” BBB- 9 on November 2, 2021 BB+ 8 S&P (BB＋) Outlook Stable BB 7 BB- 6
Slide 31: Consolidated Interest-bearing Debt/ Cash Position/ Net Interest-bearing Debt
Consolidated Interest-bearing Debt/ Cash Position/ Net Interest-bearing Debt Consolidated Interest-bearing Debt*1 (\ B) Sep 21 Dec 21 Mar 22 Jun 22 Sep 22 SBG stand-alone 13,967.4 13,860.4 14,918.7 15,842.9 12,065.7 Incl. SB Northstar 286.3 275.4 33.5 4.2 - SVF1&2 and LatAm Funds 835.6 1,208.6 1,077