Softbank Group Corp. · TSE:9984
Softbank — Q2 FY2020 Earnings Presentation
28 slides from Softbank's earnings presentation, Nov 11, 2020
Slide 1: Earnings Results for the Six-month Period Ended September 30, 2020
Earnings Results for the Six-month Period Ended September 30, 2020 Investor Briefing November 11, 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 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 1 CNY 16.13 15.37 15.46 15.56 15.16 15.27 EOQ Jun 30 Sep 30 Dec 31 Mar 31 Jun 30 Sep 30 Dec 31 Mar 31 1 USD 108.83 105.80 1 CNY 15.31 15.54 Abbreviations A
Slide 4: Accounting
Accounting
Slide 5: Consolidated Results
Consolidated Results FY19 FY20 (JPY bn) Q1-Q2 Q1-Q2 Change YoY Net sales 2,539.7 2,630.5 90.8 3.6% Income before 1,172.7 1,441.5 268.8 22.9% income tax Net income (attributable to owners 421.6 1,883.2 1,461.6 346.7% of the parent) (Reference) Total gain on 216.0 2,033.3 1,817.3 841.5% investments Ac
Slide 6: Change in Reportable Segments
Change in Reportable Segments • In Q1, “Investment Business of Holding Companies” was newly established. Segment income was revised to “income before income tax.” • In Q2, “Brightstar segment” was removed. Changed the name from “SoftBank Vision Fund and Other SBIA-Managed Funds” to “SVF1 and Other S
Slide 7: Sale of All Shares in Arm – Overview
Sale of All Shares in Arm – Overview • In Sep 2020, the Company agreed to sell all of Arm shares to NVIDIA. • As the Company expects to receive approx. 6.7- 8.1% of NVIDIA shares, further upside can be enjoyed as the largest shareholder when the share price goes higher. (USD bn) Transaction Details
Slide 8: Sale of All Shares in Arm – Accounting
Sale of All Shares in Arm – Accounting • Arm will continue to be classified under continuing FY20 FY21 FY22 operations (until the closing of the transaction is deemed Sep. 13 (execution of Closing Purchase Agreement) Approx.18 months highly probable, such as obtaining regulatory approvals). • On clo
Slide 9: Accounting Treatment for Partial Sale of SBKK Shares and After-tax Cash Proceeds
Accounting Treatment for Partial Sale of SBKK Shares and After-tax Cash Proceeds • In May and Sep 2020, SBG sold a total of 1.27 bn shares of SBKK held through SBGJ (SoftBank Group Japan Corp.) and received a total of JPY 1.5 tn. May: 240 mil shares (shareholding ratio: 5.0%) sold for JPY 310.2 bn
Slide 10: Conclusion of Prepaid Forward Contracts Using Alibaba Shares
Conclusion of Prepaid Forward Contracts Using Alibaba Shares • From Apr to Aug 2020, SBG’s wholly owned subsidiaries* entered into several prepaid forward contracts using Alibaba shares and procured an aggregate amount of USD 15.4 bn. • B/S: Financial liabilities relating to sale of shares by prepai
Slide 11: (Q3) Amendment of Prepaid Forward Contract Using Alibaba Shares
(Q3) Amendment of Prepaid Forward Contract Using Alibaba Shares • Amended in Oct 2020: Revised the cap and floor for the price of shares for the contract entered into in Apr 2020. • The following accounting treatment will be made in FY20Q3 based on the amendment. Derecognize the financial liabilit
Slide 12: Segment Income - Investment Business of Holding Companies
Segment Income - Investment Business of Holding Companies (JPY bn) P/L FY19 FY20 Items Q1-Q2 Q1-Q2 Gain on investments 729.4 579.6 (1) Gain of 280.3 bn on sales of T-Mobile shares (2) Gain of 296.0 bn on the revaluation of T-Mobile shares continued to be held by the Company (3) Derivative loss of 15
Slide 13: Investment Business of Holding Companies Segment
Investment Business of Holding Companies Segment • Main businesses: Investment activities by SBG and its subsidiaries • Core companies: SBG, SBGC, SBGJ and SB Northstar SBG 67% (and 33% by Masayoshi Son), both indirectly held SBGC Subsidiaries SB Northstar SBGJ and others Indirect Direct Investment
Slide 14: Investment in Listed Stocks and Other Instruments
Investment in Listed Stocks and Other Instruments • In order to diversify assets and manage surplus funds, investments were initially made by SBG directly and later by the newly established SB Northstar from Q2. • SB Northstar is engaged in acquiring and selling listed stocks and derivative and cred
Slide 15: Main Impact on B/S and P/L (Gain (Loss) on Investments)
Main Impact on B/S and P/L (Gain (Loss) on Investments) (JPY bn) Balance in B/S (minuses indicate Gain (loss) recorded in consolidated P/L Account in Investor Investment type liabilities) Account in consolidated P/L consolidated B/S FY20 FY20Q2-end Q1 Q2 Q1-Q2 Realized gain on sales of 64.5 102.8 16
Slide 16: Price Sensitivity of Derivatives at SB Northstar (FY20Q2-end)
Price Sensitivity of Derivatives at SB Northstar (FY20Q2-end) The below table shows the impact of changes in market prices on income before income tax; arising from options for acquisition/sale of listed stocks, and stock index futures contracts at SB Northstar, assuming all other variables remain u
Slide 17: Consolidated P/L Summary (IFRSs)
Consolidated P/L Summary (IFRSs) FY19 FY20 (JPY bn) P/L item Change Q1-Q2 Q1-Q2 Gain on investments at Investment Business of Holding Companies: +579.6 bn Continuing operations (see page 9, 12 and 24 for details) Net sales 2,539.7 2,630.5 +90.8 ・Gain relating to sales of T-Mobile shares: 421.8 bn ・U
Slide 18: Consolidated B/S Summary (IFRSs) - Assets
Consolidated B/S Summary (IFRSs) - 1 B/S As of As of (JPY bn) Main items Change item Mar 2020 Sep 2020 15,636.9 10,406.3 -5,230.6 Cash and cash equivalents 3,369.0 5,105.2 +1,736.2 Increased mainly due to the sale and monetization of assets under the JPY 4.5 trillion program 1 1 Current assets Inves
Slide 19: Consolidated B/S Summary (IFRSs) - Liabilities
Consolidated B/S Summary (IFRSs) - 2 B/S As of As of (JPY bn) Main items Change item Mar 2020 Sep 2020 14,191.1 7,599.3 -6,591.8 1 Current liabilities related to SB Northstar 1 A: Short-term borrowings to be used in transactions for listed stocks: 364.3 bn Interest-bearing debt 3,845.2 A 2,900.8 -94
Slide 20: Consolidated B/S Summary (IFRSs) - Equity
Consolidated B/S Summary (IFRSs) - 3 (JPY bn) B/S As of As of Items Change item Mar 2020 Sep 2020 7,372.9 8,420.6 +1,047.7 Common stock 238.8 238.8 - Capital surplus 1,490.3 2,388.0 +897.7 Changes in interests in subsidiaries resulting from the partial sale of SBKK shares: +932.4 bn Other equity ins
Slide 21: Consolidated C/F Summary (IFRSs)
Consolidated C/F Summary (IFRSs) FY20 (JPY bn) C/F item Q1-Q2 As SB Northstar’s primary business is to frequently trade marketable 783.7 Subtotal of cash flows from operating activities securities, investments made by the company are recorded in C/F from C/F from -132.7 Interest paid operating activ
Slide 22: Segment Income - SVF1 and Other SBIA-Managed Funds
Segment Income - SVF1 and Other SBIA-Managed Funds (JPY bn) FY19 FY20 P/L Q1-Q2 Q1-Q2 Items Gain on investments at SVF1 and SVF2 -529.3 1,411.6 Sale of a portion of shares in 4 portfolio companies and all shares in 6 portfolio companies Realized gain on sales of investments 34.8 141.4 (including sha
Slide 23: Appendix
Appendix
Slide 24: Breakdown of Goodwill / Intangible Assets
Breakdown of Goodwill / Intangible Assets (JPY bn) Change B/S As of As of Main items Outline item Mar 2020 Sep 2020 Changes in Amortization exchange Others rate 3,998.2 3,941.3 *1 Goodwill Arm 2,554.1 2,515.9 - -38.2 - SBKK 907.5 907.5 - - - ZOZO 212.9 212.9 - - - Technologies 395.6 370.8 Main b/d A
Slide 25: Changes in Presentation of P/L
Changes in Presentation of P/L In FY20Q1, “Gain (loss) on investments” is newly P/L after the revision of the presentation presented Operating income is no longer used Net sales Gross profit • The importance of investment activities has increased in the consolidated results, following the comple
Slide 26: Completion of the Merger of Sprint / T-Mobile US, Inc.
Completion of the Merger of Sprint / T-Mobile US, Inc. • On April 1, 2020, the merger of Sprint / T-Mobile US, Inc. was completed. • The Company received T-Mobile’s 304,606,049 shares and contingent consideration (the right to acquire T-Mobile’s 48,751,557 shares for no additional consideration if c
Slide 27: Partial Sale of T-Mobile Shares and Evaluation at Q2-end
Partial Sale of T-Mobile Shares and Evaluation at Q2-end The Company sold (1) and (2) below in FY20Q1 and received JPY 1,830.4 bn. With additional sales of (3) and (4) in Q2, the Company received JPY 2,099.7 bn in aggregate for FY20Q1-Q2. P/L (FY20Q1-Q2) (JPY bn) Evaluation at Q2-end Gain relating t
Slide 28: Consolidation of Earnings of PayPay
Consolidation of Earnings of PayPay PayPay has consistently been classified as a subsidiary of SBG since its founding in June 2018. FY18 FY19 FY20 May 15, 2019 SBG: 50% Voting ratio SBKK: 50% SBKK: 25% Yahoo Japan (currently Z Holdings): 50% Z Holdings: 25% SBG Subsidiary (Other segment) Subsidiary