Softbank Group Corp. · TSE:9984
Softbank — Q3 FY2021 Earnings Presentation
57 slides from Softbank's earnings presentation, Feb 10, 2022
Slide 1: Earnings Results for the Nine-month Period Ended December 31, 2021
Earnings Results for the Nine-month Period Ended December 31, 2021 Investor Briefing February 10, 2022 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 107.74 105.88 104.45 106.24 110.00 110.47 113.60 1 CNY 15.16 15.27 15.71 16.31 17.01 17.09 17.75 EOQ Jun 30 Sep 30 Dec 31 Mar 31 Jun 30 Sep 30 Dec 31 Mar 31 1 USD 110.71 115.02 1 CNY 16.84
Slide 4: FY21Q3: External Environments & SBG's Initiatives
FY21Q3: External Environments & SBG’s Initiatives External environments SBG’s initiatives Tightened regulations in China Arm to start preparations for a FY22 and elsewhere public offering Continue investing in unicorns: Heightened geopolitical risks SVF2 invested $36.3B including 165 Chang
Slide 5: 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 6: Summary of FY2021Q1-Q3
Summary of FY2021Q1-Q3*1 Continue steady investment activities while keeping financial policies Secured net income of ¥392.6B despite loss on investments due to Results falls in share prices of portfolio companies / NAV - While ¥551.8B investment loss was recorded, net income*2 held up at ¥392.6B -
Slide 7: Results of Investment Businesses
- Results of Investment Businesses - Financial Condition - Financial Strategy - ESG Initiatives Finance 3
Slide 8: 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. SBG SVF1 AI ＆ Unicorns Existing investments 83 companies in total etc. SVF2 Latin America Funds AI & Unicorns AI & unicorns (Region: Latin America) etc. 84 compani
Slide 9: Investment Strategy of SoftBank Group
Investment Strategy of SoftBank Group SoftBank Group ＝ ”Vision Capitalist” for the Information Revolution Invest in unicorns globally through SVF and other investment entities Aim to realize our vision by driving innovation and disruption using AI through our portfolio companies Focus on maxim
Slide 10: Gain (Loss) on Investments & Net Income
Gain (Loss) on Investments & Net Income Secured net income of ¥392.6B despite loss on investments Gain (loss) on investments Net income (attributable to owners of the parent) ■ Investment Business of Holding Companies ¥3,799.5B ■ SVF1&2 ■ Latin America Funds ¥3,055.2B ■ Other Gain relating ● Total g
Slide 11: Equity Value of Holdings
Equity Value of Holdings Equity value of holdings decreased to ¥24.7T, yet remaining at high level Excluding asset-backed finance （¥ T） Composition (as of December 31, 2021) 32.1 24％ Alibaba 3％ T-Mobile 30.4 9％ SBKK 0.3％ Deutsche Telekom 28.1 21％ SVF1 11％ Arm 20％ SVF2 3% SB Northstar 25.7 12.4 24.7
Slide 12: NAV & NAV per Share
NAV & NAV per Share NAV and NAV per share both decreased NAV (Net Asset Value) NAV per share*1 and share price (¥ T) (¥) Share price NAV per share 15,000 20.9 19.3 12,191 11,363 10,000 6,480 5,434 5,000 0 Sep 21 Dec 21 Sep 21 Dec 21 (Note) As of the end of each quarter *1 NAV per share = NAV/Total n
Slide 13: Equity Value of Holdings: Diversification of Portfolio
Equity Value of Holdings: Diversification of Portfolio Greater asset diversification due to increased value of SVF1&2 Excluding asset- compared to March 31, 2020 backed finance March 31, 2020 December 31, 2021 Proportion of Proportion Proportion of of listed listed shares listed shares shares (net o
Slide 14: SVF1&2: Cumulative Investment Return
SVF1&2: Cumulative Investment Return (SBG Consolidated Basis, as of Dec 31, 2021) Cumulative investment return of $137.9B at SVF1 and $48.0B at SVF2 SVF1 SVF2 ($ B) ($ B) 150 137.9 75.0 Exited*1 2.1x 48.0 100 88.6 50.0 43.1 Exited*1 2.4x Currently held 1.4x Currently held 1.3x and listed and listed
Slide 15: SVF1&2 etc. Portfolio Companies Fair Value
SVF1&2 etc. Portfolio Companies Fair Value (as of Dec 31, 2021; unrealized value only) Invest in a wide range of regions Asia, Europe, US Latin America, 34% etc. 48% China 18% (Notes) 1. SVF1&2 etc.: SVF1, SVF2, LatAm Funds, other listed and unlisted investments by SBG (excluding Alibaba, T-Mobile,
Slide 16: 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 Cumulative investment cost $87B investment cost $37B Cumulative number Cumulative number of investm
Slide 17: Activities of SVF1&2 (FY21Q1-Q3): Investments
Activities of SVF1&2 (FY21Q1-Q3): Investments New and follow-on investments mainly at SVF2 totaling $39.2B Sale / Investment New listing Monetization Fund Investments (Alphabetical order) Sector SVF1 Investment cost: $2.9B AutoStore Logistics Jellysmack Consumer Revolut Fintech $39.2B SVF2 Swiggy Co
Slide 18: Activities of SVF1&2: New Listings
Investment Activities of SVF1&2 (FY21Q1-Q3): New Listings Multiple large-scale listings with favorable pipeline Sale/ Investment New listing Monetization Companies to be listed Fund Companies listed (Q1-Q3) (Q4 onwards)*1 SVF1 11 companies with a total fair value of $21.0B 3 companies in total as of
Slide 19: Activities of SVF1&2: Sale/Monetization
Investment Activities of SVF1&2 (FY21Q1-Q3): Sale/Monetization A total of $22.2B of sales & monetization*1 Sale/ Investment New listing Monetization Fund Sale/Monetization*1 SVF1 partial sale of 14 investments incl. above $16.0B in total*1 （partial） KE Holdings SVF2 (Beike) plus entire sale of 1 inv
Slide 20: Cycle of Investment and Recovery (FY21Q1-Q3)
Cycle of Investment and Recovery (FY21Q1-Q3) Approx. ¥2.0T invested capital was recovered and funded for new investments. Share repurchase has started. Contribution to SVF1 Investments/ ¥57.5B ($0.5B) Return to shareholders Source of investments Distribution SVF1からの分配 from *1 1,641億円 &2 SVF1*2($1.5B
Slide 21: SVF1&2: Capital Commitment
SVF1&2: Capital Commitment (as of Dec 31, 2021) ($ B) 2.6 *1 SVF1 33.1 SVF2 65.5 （29.8） 48.4 （57.3） 98.6 51.0 (87.1) (43.3) SBG Third-party limited partners Management, etc.*2 * Numbers in brackets represent amounts drawn. (Notes) *1 The presented SBG’s committed capital to SVF1 includes approximate
Slide 22: Arm: Aim for Listing in FY2022
Arm: Aim for Listing in FY2022 Agreed with NVIDIA to terminate the sale of Arm Arm to aim for listing in FY2022 (Note) See the press release dated February 8, 2022, "Termination of Agreement to Sell All Shares in Subsidiary Arm and Preparation for Arm Public Offering” for details. Finance 18
Slide 23: Arm: Revenue and Adjusted EBITDA (annual)
Arm: Revenue and Adjusted EBITDA (annual) Revenue*1 (annual) Adjusted EBITDA*2 (annual) （$M） $2.5B （$M） 1,980 1,823 1,788 1,809 1,689 $900M 827 596 436 371 365 FY16 FY17 FY18 FY19 FY20 FY21 FY16 FY17 FY18 FY19 FY20 FY21 （予想） (forecast) （予想） (forecast) (Notes) 1. Source: Arm 2. All numbers are unaudi
Slide 24: Arm Will Prepare for the Most Significant IPO in Semiconductor History
Arm Will Prepare for the Most Significant IPO in the History of the Semiconductor Industry World’s leader in mobile, gaining share in large and growing markets including automotive and infrastructure Forecasting revenues to grow 26%*1 in FY21 and Adj. EBITDA up 2.5x from trough*2 Highly profitable a
Slide 25: Financial Condition
- Results of Investment Businesses - Financial Condition - Financial Strategy - ESG Initiatives Finance 21
Slide 26: Main Financial Activities in FY21Q3
Main Financial Activities in FY21Q3 Diversified financing to enhance financial flexibility Redemption of domestic subordinated bonds at maturity Corporate bonds Domestic subordinated bonds issued in -¥361.6B (-$3.1B) 2014 Alibaba shares Forward transactions +¥254.2B ($2.2B) Repayment of existing Rep
Slide 27: LTV Trend
LTV Trend Excluding asset-backed finance LTV trend*1 25% *2 21.6% 18.7% 17.5% 17.5% 15.9% Continue to 14.3% maintain sufficient 11.6% 12.2% financial buffer 8.8% Dec 19 Mar 20 Jun 20 Sep 20 Dec 20 Mar 21 Jun 21 Sep 21 Dec 21 (Notes) *1 As of the end of each quarter *2 See “LTV Calculation: SBG Stand
Slide 28: Cash Position
Cash Position Maintain ample cash position, more than sufficient for bond redemptions for the next 2 years Cash position Bond redemption schedule*2 ¥2.1T *1 (¥ B) Bond redemptions for the next 2 years (¥1.3T) 2,099.0 ＞ 830.4 453.0 1,039.8 1,084.5 Dec 21 Jan 22 - Dec 22 Jan 23 - Dec 23 Jan 24 - Dec 2
Slide 29: Management of Cash Position
Management of Cash Position Maintain cash position more than sufficient for bond redemptions for the next 2 years. Distributions from SVF1&2 contribute to cashflows (interest coverage: 6.4x). Maintain funds covering bond redemptions for the next 2 years Interest coverage ¥2.1T Distributions Financia
Slide 30: Bond Redemption Schedule
Bond Redemption Schedule Completed refinancing of domestic subordinated/hybrid bonds for the current fiscal year Domestic senior bonds Domestic subordinated bonds (¥ B) Domestic hybrid bonds 1,131.4 Foreign currency-denominated senior notes 1,021.2 196.4 Foreign currency-denominated hybrid notes Red
Slide 31: Issuance of Domestic Retail Subordinated Bonds (February)
Issuance of Domestic Retail Subordinated Bonds (February) Issued record-high ¥550.0B domestic subordinated bonds amid strong demand from retail investors Completed refinancing of domestic subordinated bonds 1,050.0 (¥ B) Total amount ¥550.0B (record-high over of issue 2019 (¥500.0B)) 766.0 To retail
Slide 32: SBG Stand-alone Interest-bearing Debt
SBG Stand-alone Interest-bearing Debt*1 Interest-bearing debt excl. non-recourse Main variance factors from Sep 30, 2021 items remains stable. • Partial repayment of margin loans using Alibaba shares -$4.0B • Collar transactions using Deutsche Telekom shares +€2.6B 14,033.4 13,967.4 13,860.4 • Entry
Slide 33: SBG Stand-alone Cash Position
SBG Stand-alone Cash Position Cash position decreased due to progress on investments and repayment of debt. (¥ B) 3,589.6 3,437.5 3,357.9 Cash position of SB Northstar 3,103.3 991.6 595.9 1,389.3 2,681.1 1,008.1 582.1 Main variance factors from Sep 30, 2021 Increase Decrease ・Distribution from SVF1&
Slide 34: SBG Stand-alone Net Interest-bearing Debt
SBG Stand-alone Net Interest-bearing Debt Adjusted net interest-bearing debt increased due to continued investments and partial repayment of non-recourse debt. 11,486.0 10,919.2 Excluding SB Northstar 10,513.7 (¥ B) 8,558.8 Adjustments relating to finance 6,163.8 Asset-backed finance -¥6,076.3B 7,64
Slide 35: Adjustment for Asset-backed Finance
Adjustment for Asset-backed Finance Non-recourse finance using assets is deducted from debt, and asset value required for settlement is deducted from assets. Collar/Forward/Put transactions 29.2 (¥ T) Share Alibaba/T-Mobile/Deutsche Telekom 3.1 Adjusted for asset- Fund procurement based on variable
Slide 36: Financial Strategy
- Results of Investment Businesses - Financial Condition - Financial Strategy - ESG Initiatives Finance 32
Slide 37: 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 33
Slide 38: 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 39: Firmly Keeping Financial Policy (2/2): Policy on 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 35
Slide 40: 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 41: Share Repurchase
Share Repurchase Total repurchase amount: ¥1T (maximum) Details Repurchase period: From Nov. 9, 2021 to Nov. 8, 2022 1. Firm commitment to A flexible approach to the financial policies purchase shares 2. Investment opportunities considering these factors 3. Level of NAV discount Policies Depending o
Slide 42: ESG Initiatives
- Results of Investment Businesses - Financial Condition - Financial Strategy - ESG Initiatives Finance 38
Slide 43: ESG Initiatives
ESG Initiatives Development of a group-wide ESG policy • Launched discussion on a group-wide ethical AI policy, to be formulated in FY2022 Environment: Climate change disclosure in line with the TCFD • Developing climate change strategy and actions, to be disclosed by late June 2022 Society: Respons
Slide 44: Investments in Environmental and Social Areas
Investments in Environmental and Social Areas Continue active investment in start-ups tackling environment and social issues Contribute to eliminating disparity and discrimination in the technology and venture capital communities ※This slide shows examples of portfolio companies SVF2 SB Opportunity
Slide 45: Appendix
Appendix
Slide 46: LTV Calculation: SBG Stand-alone Equity Value of Holdings
LTV Calculation: SBG Stand-alone Equity Value of Holdings (L) Adjusted ¥5.32T SBG stand-alone net debt =21.6% (V) Adjusted SBG stand-alone equity value of holdings*1 ¥24.66T (¥ T) Adjusted SBG stand- Interest of SBG in Other, Major = 11.91 + + alone equity value of SVF1&2&Latin America investments i
Slide 47: 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 5.97 Before adjustment 9.13 Multiplying the number of Alibaba ADSs equivalent to the number of shares held by SBG by the ADS price Deducting (a) and (b) below (amount required
Slide 48: 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 (f) T-Mobile 0.74 summing • Value of SBG’s shareholding (incl. the number of shares subject to call options held by Deutsche Telekom (DT):56,124,954 shares as of Dec 31, 2021) × the share
Slide 49: LTV Calculation: SBG Stand-alone Net Debt
LTV Calculation: SBG Stand-alone Net Debt (L) Adjusted SBG stand-alone net debt*1 ¥5.32T (V) Adjusted SBG stand-alone ¥24.66T =21.6% equity value of holdings (¥ T) Adjusted SBG Consolidated Net debt at self- Other = - - stand-alone net debt net debt financing entities adjustments 5.32 16.75 5.26 6.1
Slide 50: 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, 11.49 (before adjustment) net of interest-bearing debt at self-financing entities - Add 50% to interest-bearing debt (to treat it a liability) for USD Hybrid Notes issued in Ju
Slide 51: 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 financ
Slide 52: 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 14 A+ Japan Telecom Vodafone KK of Sprint of Arm of SBKK 13 A 12 JCR (A－) A- Outlook Positive 11 BBB+ 10 On November 2, 2021, JCR BB
Slide 53: SB Northstar: Cumulative Investment Gain (Loss)
SB Northstar: Cumulative Investment Gain (Loss)*1 -¥77.3B ¥284.3B -¥487.0B -¥280.0B -¥91.9B＊2 ¥188.1B＊2 Impact on Positive impact net income Stocks Stocks + credit Derivatives Total investment on net income attributable due to losses borne by transactions loss Masayoshi Son to SBG SBG SB Northstar ×
Slide 54: SB Northstar: Assets Under Management
SB Northstar: Assets Under Management (as of Dec 31, 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 4.4 instruments*1 2,281.7 2
Slide 55: 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） Dec 20 Mar 21 Jun 21 Sep 21 Dec 21 SBG standalone 11,218.9 13,023.3 14,033.4 13,967.4 13,860.4 Incl. SB Northstar 1,528.8 1,866.5 1,424.5 286.3 275.4 SVF1 and SVF2 260.3 4
Slide 56: 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 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 Consider stakeholder CF from investment recovery returns as appropriate Fund B ¥ Fund C ¥ Additional fund procurement as needed Finance 53