Softbank Group Corp. · TSE:9984
Softbank — H1 FY2021 Earnings Presentation
57 slides from Softbank's earnings presentation, Nov 10, 2021
Slide 1: Earnings Results for the Six-month Period Ended September 30, 2021
Ver.1.1 Earnings Results for the Six-month Period Ended September 30, 2021 Investor Briefing November 10, 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 107.74 105.88 104.45 106.24 110.00 110.47 1 CNY 15.16 15.27 15.71 16.31 17.01 17.09 EOQ Jun 30 Sep 30 Dec 31 Mar 31 Jun 30 Sep 30 Dec 31 Mar 31 1 USD 110.71 111.92 1 CNY 16.84 17.30 Abbrevi
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 Funds, PayPay, Fortress, SB Energy, etc.
Slide 5: Summary of FY2021 Q1-Q2
Summary of FY2021Q1-Q2*1 Positive investment cycle while keeping financial policy Secured net income of ¥363.6B despite loss on investments due to fall in Results share prices of portfolio companies / NAV - While ¥395.2B investment loss was recorded, net income*2 held up at ¥363.6B. - NAV: ¥20.9T (¥
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 81 companies in total etc. SVF2 SB Northstar Mainly listed stocks AI & Unicorns Latin America Funds KE Holdings AI & un
Slide 8: Gain (Loss) on Investments & Net Income
Gain (Loss) on Investments & Net Income Recorded consolidated net income of ¥363.6B despite investment losses Gain (loss) on investments Net income (attributable to owners of the parent) ¥2,033.3B ■ Investment Business of Holding ¥1,883.2B Companies ■ SVF1&2 ■ Latin America Funds Gain relating ■ Oth
Slide 9: Gain (Loss) on Investments: Trends and Breakdown
Gain (Loss) on Investments: Trends and Breakdown Recorded investment loss of ¥395.2B mainly due to the decline in share prices of SVF’s listed portfolio companies 四半期推移 Quarterly trends Breakdown of FY21Q1-Q2 ¥3,729.6B ■ Gain (loss) on investments at SVF1&2 ■ Gain on investments other than SVF1&2 Ga
Slide 10: Equity Value of Holdings
Equity Value of Holdings Equity value of holdings decreased to ¥25.7T yet remaining at high level. (¥ T) Excluding asset-backed finance 31.5 32.1 Composition (as of September 30, 2021) 30.4 28％ Alibaba 3％ T-Mobile 28.1 9％ SBKK 2％ Deutsche Telekom 26.9 20％ SVF1 11％ Arm 25.７ 16％ SVF2 3% SB Northstar 1
Slide 11: NAV & NAV per Share
NAV & NAV per Share NAV and NAV per share both decreased, but recently improved. NAV (Net Asset Value) NAV per share*1 and share price (¥ T) (¥) Share price 27.0 NAV per share 15,755 22.1 15,000 20.9 12,914 12,191 10,000 7,775 6,480 6,161 5,000 0 *2 Jun 21 Sep 21 Nov. 8, 21 *3 Jun 21 Sep 21 Nov. 8,
Slide 12: Equity Value of Holdings: Diversification of Portfolio
Equity Value of Holdings: Diversification of Portfolio Further diversifying portfolio compared to the end of March last year, Excluding asset- as SVF1&2’s value increased backed finance March 31, 2020 September 30, 2021 Proportion of listed Proportion of listed shares shares SB Northstar (net of ass
Slide 13: SVF1&2: Cumulative Performance
SVF1&2: Cumulative Performance (SBG Consolidated Basis, as of Sep. 30, 2021) Cumulative investment return of $137.0B at SVF1 and $37.9B at SVF2 SVF1 SVF2 ($ B) ($ B) 150 137.0 50 Exited*1 2.0x 37.9 33.9 Exited*1 2.3x 100 88.2 Currently held 1.0x Currently held 1.9x and listed and listed 25 50 Curren
Slide 14: SVF1&2 Portfolio Companies Fair Value
SVF1&2 etc. Portfolio Companies Fair Value (As of Sep. 30, 2021, unrealized value only) Invest in a wide range of regions and sectors by Country / Region by Sector Edtech Others 1% 2% Health Tech 4% Enterprise 6% Consumer Asia, Europe, US US Proptech 26％ Asia, Europe, 8％ Latin America, Latin America
Slide 15: SVF1&2: Average Investment Cost Scaled Down
SVF1&2: Average Investment Cost Scaled Down SVF2’s average investment cost per company is $0.2B SVF1 SVF2 Average investment cost Average investment cost per company per company $0.9B $0.2B Cumulative investment cost $87B Cumulative investment cost $29B Cumulative number of investments 92 Cumulative
Slide 16: Activities of SVF1&2: Investments
Activities of SVF1&2 (FY21Q1-Q2): Investments New and follow-on investments mainly at SVF2 totaling $29.7B Sale/ Investment New listing Monetization Fund Investments (alphabetical order) Sector SVF1 Investment cost (follow-on investments): $2.5B AutoStore Logistics InMobi Consumer Jellysmack Consume
Slide 17: Activities of SVF1&2: New Listings
Activities of SVF1&2 (FY21Q1-Q2): New Listings Large-scale listings with rich pipeline Sale/ Investment New listing Monetization Companies to be listed Fund Companies listed (Q1-Q2) (Q3 onwards)*1 SVF1 4 companies with 8 companies in total a total fair value of $8.1B as of Sep. 30, 2021 (of which 3
Slide 18: Activities of SVF1&2: Sale/Monetization
Activities of SVF1&2 (FY21Q1-Q2): Sale/Monetization A total of $15.7B of sales & monetization*1 Sale/ Investment New listing Monetization Fund Sale/Monetization*1 SVF1 partial sale of 9 investments incl. above $13.4B in total*1 (partial) KE Holdings SVF2 (Beike) plus entire sale of 1 investment $2.3
Slide 19: Cycle of Investment and Recovery (FY21Q1-Q2)
Cycle of Investment and Recovery (FY21Q1-Q2) ¥1.5T invested capital was recovered and funded for new investments. Contribution to SVF1 Investments Source of investments ¥33.6B ($0.3B) Distribution from SVF1からの分配 *1 SVF1 &2 *2 1,641億円($1.5B) ¥979.5B ($8.7B) ¥1,454.5B ($12.9B) Return from SB Northstar
Slide 20: SVF1&2: Capital Commitment
SVF1&2: Capital Commitment (as of Sep. 30, 2021) ($ B) 2.6 *1 SVF1 33.1 (29.6) SVF2 39.4 65.5 98.6 42.0 (56.7) (86.3) (33.9) SBG Third-party limited partners Management, etc.*2 * Numbers in brackets represent amounts drawn. *1 The presented SBG’s committed capital to SVF1 includes approximately $8.2
Slide 21: Introduction of Co-investment Program to SVF2
Introduction of Co-investment Program to SVF2 Co-investment by management in SVF2 together with SBG, sharing both the profits and risks associated with investments, will lead to enhanced focus on the fund and contribute to SBG’s earnings growth. Masayoshi Son & SBG other Management, etc.*1 Equity Pr
Slide 22: Equity Share Swap Agreement with Deutsche Telekom
Equity Share Swap Agreement with Deutsche Telekom regarding T-Mobile Shares Agreed with long-term strategic partnership & equity share swap. Received 225M DT shares in exchange for T-Mobile shares Diversification Japan: SBKK 41％ of exposure in Europe: Deutsche Telekom 4.5％ telecom business U.S.: T-M
Slide 23: SB Northstar: Cumulative Investment Gain (Loss)
SB Northstar: Cumulative Investment Gain (Loss)*1 ¥96.7B ¥273.1B -¥534.5B -¥164.7B ¥145.9B＊2 -¥18.7B＊2 Positive impact Impact on on net income net income due to losses attributable Stocks Stocks Stocks + Stocks + credit credit Derivatives Derivatives Total investment Total investment borne by to SBG
Slide 24: SB Northstar: Assets Under Management
SB Northstar: Assets Under Management (as of Sep. 30, 2021) Significant downsizing of investments Stocks, etc. and derivatives (fair value) Notional principal of options (¥ B) ($ B) 44.3 Long call option 2,391.1 2,371.5 of listed stocks 1,741.0 13.4 11.2 Stocks & other 4.9 instruments*1 2,281.7 2,19
Slide 25: Financial Condition
- Results of Investment Businesses - Financial Condition - Financial Strategy - ESG Initiatives Finance 22
Slide 26: Main Financial Activities in FY2021 Q2
Main Financial Activities in FY2021 Q2 Diversified financing to ensure financial flexibility Issuance: refinancing & enhancing cash reserves Foreign currency-denominated senior notes (Jul) ¥814.0B ($7.3B) Corporate Retail: ¥450.0B ($4.0B) Domestic subordinated bonds (Sep) Wholesale: ¥50.0B ($0.4B) b
Slide 27: LTV Trend
LTV Trend Excluding asset-backed finance LTV trend*1 25% *2 18.7% 17.5% 17.5% 15.9% 14.3% 11.6% 12.2% Continue to 8.8% maintain sufficient financial buffer Dec 19 Mar 20 Jun 20 Sep 20 Dec 20 Mar 21 Jun 21 Sep 21 *1 As of the end of each quarter *2 See “LTV Calculation SBG Stand-alone Net Debt” and “
Slide 28: Cash Position
Cash Position Maintain ample cash position, more than sufficient for the bond redemptions for the next 2 years Cash position Bond redemption schedule*2 ¥2.8T *1 (¥ B) Bond redemptions for the next 2 years (¥1.6T) 2,762.0 ＞ 854.9 781.5 1,039.3 905.8 Sep 21 Oct 21 - Sep 22 Oct 22 - Sep 23 Oct 23 - Sep
Slide 29: 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: 4.6x). Maintain funds covering bond redemptions for the next 2 years Interest coverage ¥2.8T Dividends paid Dis
Slide 30: Bond Redemption Schedule
Bond Redemption Schedule Refinanced domestic subordinated bonds ahead of schedule Domestic senior bonds Domestic subordinated bonds (¥ B) 1,128.4 Domestic hybrid bonds Foreign currency-denominated senior notes 1,021.2 193.4 Foreign currency-denominated hybrid notes 455.6 Redeemed 844.4 818.4 344.2 7
Slide 31: SBG Stand-alone Interest-bearing Debt
SBG Stand-alone Interest-bearing Debt*1 Interest-bearing debt excl. non-recourse Main variance factors from June 30, 2021 portion remains flat. SBNS’s debt decreased. • Change in financial liabilities relating to prepaid forward contracts +¥856.7B • Issuance of foreign currency-denominated senior no
Slide 32: SBG Stand-alone Cash Position
SBG Stand-alone Cash Position Maintain ample cash position while investment in SVF progresses (¥ B) 4,601.6 Cash position of SB Northstar 3,589.6 3,437.5 3,357.9 2,175.0 Main variance factors from June 30, 2021 3,103.3 991.6 595.9 Increase Decrease 1,389.3 ・Distribution from SVF1&2 ・SVF2 Capital Cal
Slide 33: SBG Stand-alone Net Interest-bearing Debt
SBG Stand-alone Net Interest-bearing Debt Continue to invest through financing using share holdings. Net interest-bearing debt decreased. Excluding SB Northstar 10,919.2 (¥ B) 10,513.7 8,558.8 Adjustments relating to finance 7,641.9 Asset-backed finance -¥6,022.8B 5,397.8 6,110.4 Hybrid finance -¥87
Slide 34: Financial Strategy
- Results of Investment Businesses - Financial Condition - Financial Strategy - ESG Initiatives Finance 31
Slide 35: Financial Strategy for FY2021
Financial Strategy for FY2021 Establish optimal financial strategy as an investment company Financial management to Firmly keeping enable reproduction financial policy at investment business on an expanded scale Finance 32
Slide 36: 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 37: 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 34
Slide 38: Financial Management to Enable Reproduction at Investment Business
Financial Management to Enable Reproduction at Investment Business on Expanded Scale Procure funds to Establish a cycle of capture attractive investment and investment recovery opportunities • Establish a cycle of “investment” → • Utilize leverage with LTV in mind “recovery and CF generation” → “rei
Slide 39: Share Repurchase
Share Repurchase Total Total repurchase amount: ¥1T (maximum) amount & period Repurchase period: From Nov 9, 2021 to Nov 8, 2022 1. Firm commitment to the financial policies Flexible share repurchase Share 2. Investment opportunities considering these factors repurchase 3. Level of NAV discount poli
Slide 40: ESG Initiatives
- Results of Investment Businesses - Financial Condition - Financial Strategy - ESG Initiatives Finance 37
Slide 41: Integrating E&S Factors into Investment Process
ESG Initiatives in 1st Half of FY21: Integrating E&S Factors into Investment Process Revision of the “Portfolio Company Governance and Investment Guidelines Policy” Clearly state in the Group policy that environmental and social risks and opportunities shall be assessed in the investment process Pre
Slide 42: Investments in Environmental and Social Areas
Investments in Environmental and Social Areas Actively invest in start-up companies tackling ESG issues such as climate change, D&I, disparities and discrimination SVF2 SB Opportunity Fund Providing solar power and energy storage systems through leasing Providing a student transportation etc. with l
Slide 43: ESG Initiatives 1st Half of FY21: Others
ESG Initiatives 1st Half of FY21: Others Establishment of ESG-related policies to promote sustainability initiatives throughout the Group • Established the “Environmental Policy,” revised the “Human Rights Policy,” and established the “Supplier Code of Conduct” • Established and revised the Group po
Slide 44: ESG Plans for 2nd Half of FY21
ESG Plans for 2nd Half of FY21 Transition from foundation building to activity promotion – Promote tangible measures in each area by utilizing systems and policies that have been developed to date. 1st half of FY21 2nd half of FY21 • Revisied the “Portfolio Company • Establish an operating process f
Slide 45: Appendix
Appendix Finance 42
Slide 46: LTV Calculation: SBG Stand-alone Equity Value of Holdings
LTV Calculation: SBG Stand-alone Equity Value of Holdings (L) Adjusted ¥4.81T SBG stand-alone net debt =18.7% (V) Adjusted SBG stand-alone equity value of holdings ¥25.70T (¥ T) Adjusted SBG stand- Interest of SBG in alone equity value of Major SVF1&2&Latin Other, investments in + + shares = holding
Slide 47: LTV Calculation: SBG Stand-alone Net Debt
LTV Calculation: SBG Stand-alone Net Debt (L) Adjusted ¥4.81T SBG stand-alone net debt*1 (V) Adjusted SBG stand-alone =18.7% ¥25.70T equity value of holdings (¥ T) Adjusted SBG stand- Consolidated Net debt at self- = - - Other alone net debt net debt financing entities adjustments 4.81 16.07 5.15 6.
Slide 48: Direction of Financial Management (Illustrative)
Direction of Financial Management (Illustrative) Continue to procure funds to enable reproduction at investments on 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 financ
Slide 49: 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 JCR (A－) A- 12 Outlook Positive BBB+11 BBB 10 On November 2, 2021, JCR
Slide 50: SVF1 Snapshot
SVF1 Snapshot (as of Sep. 30, 2021) ($ B) *1 Investment Cost to SVF1 is the sum of all external cash flows, including investment-related financing, directed towards the purchase of investments, plus net premiums paid for investment-related hedges. *2 Gross Return to SVF1 is the sum of all external c
Slide 51: SVF1 Listed Portfolio Companies
SVF1 Listed Portfolio Companies (as of Sep. 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 52: SVF2 Snapshot
SVF2 Snapshot (as of Sep. 30, 2021) ($ B) *1 Investment Cost to SVF2 is the sum of all external cash flows, including investment-related financing, directed towards the purchase of investments, plus net premiums paid for investment-related hedges. *2 Gross Return to SVF2 is the sum of all external c
Slide 53: SVF2 Listed Portfolio Companies
SVF2 Listed Portfolio Companies (as of Sep. 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 54: Investment in Listed Stocks and Other Instruments
Investment in Listed Stocks and Other Instruments (as of Sep. 30, 2021) ($ M) Fair value AbCellera Biologics 197 Arqit Quantum 10 Doma Holdings 20 Lyell Immunopharma 52 Pacific Biosciences of California 208 Stocks Sana Biotechnology 50 SomaLogic 27 Sema4 Holdings 68 SPACs*1 311 Others 2,568 NVIDIA*2
Slide 55: 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 valu
Slide 56: Net Interest-bearing Debt
Consolidated SBG: Interest-bearing Debt, Cash Position, and Net Interest-bearing Debt *1 Consolidated Interest-bearing Debt （\ B） Sep 20 Dec 20 Mar 21 Jun 21 Sep 21 SBG standalone 9,319.8 11,218.9 13,023.3 14,033.4 13,967.4 Incl. SB Northstar 364.3 1,528.8 1,866.5 1,424.5 286.3 SVF1 and SVF2 156.3 2
Slide 57: 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 54