Softbank Group Corp. · TSE:9984
Softbank — H1 FY2023 Earnings Presentation
56 slides from Softbank's earnings presentation, Nov 9, 2023
Slide 1: Earnings Results for the Six-month Period Ended September 30, 2023
Ver.1.2 Earnings Results for the Six-month Period Ended September 30, 2023 Investor Briefing November 9, 2023 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 FY2022 FY2023 Average during quarter Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 1 USD 129.04 138.68 141.16 133.26 138.11 145.44 EOQ Jun 30 Sep 30 Dec 31 Mar 31 Jun 30 Sep 30 Dec 31 Mar 31 1 USD 133.53 149.58 Abbreviations Abbreviations used in Finance section of this present
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 includes SBKK (including its subsidiaries such as Z Holdings(currently LY) and PayPay), SVF1, SVF2, LatAm Fund
Slide 5: Listed on NASDAQ
Listed on NASDAQ September 14, 2023 IPO Market Cap*1 $52B (¥7.8T*2) *1 Calculated by 1,025,234,000 shares, the number of Arm’s outstanding shares (before dilution.) as of Sep 30, 2023 multiplied by IPO price per ADS *2 Converted to JPY at 1$=¥149.58 Finance 2
Slide 6: Earnings presentation for the 9-month period ended December 31, 2020
Earnings presentation for the 9-month period ended December 31, 2020 (February 8, 2021) Finance 3
Slide 7: SBG involved in 6 of the top 15 IPOs as a primary shareholder
Global Top 15 Market Cap at IPO (Past 10 Years*1) Saudi Aramco $1,707B Alibaba $168B Life Insurance Corp of India Uber $75B Porsche Rivian Automotive DiDi $67B SBKK $64B SBG involved in 6 of the top 15 IPOs Kuaishou Technology Coupang $60B LG Energy Solution Japan Post Bank as a primary Arm $52B sha
Slide 8: SBG's Growth Strategy
SBG’s Growth Strategy Expanding NAV through repeating investment cycle IPO is effective in realizing value and enhancing the flexibility for monetization, while it is just a milestone in a company’s growth NAV Expand Value IPO Monetize Invest through growth of Realization of value Creation of liquid
Slide 9: Historical NAV
Historical NAV The success in investments as exemplified in Alibaba and Vodafone Japan led to further reinvestments, resulting in significant increase of NAV to 17x in approx. 22 years Launch M&A IPO NAV M&A Launch ¥16.4T IPO IPO M&A Investment M&A M&A IPO FY2000 FY2005 FY2010 FY2015 FY2020 Sep 2023
Slide 10: Historical Consolidated Total Assets
Historical Consolidated Total Assets Consolidated total assets expanded to ¥46T Consolidated total asset ¥ 46.0T ¥1.1T FY2000 FY2005 FY2010 FY2015 FY2020 Sep 2023 (Note) From FY2000 to FY2022, as of the end of each fiscal year Finance 7
Slide 11: Historical Consolidated Interest-bearing Debt
Historical Consolidated Interest-bearing Debt Pursuit group’s optimal leverage Consolidated interest-bearing debt (incl. non-recourse debt) increased along with the expansion of the overall group's assets Consolidated total asset Consolidated interest-bearing debt ¥21.4T FY2000 FY2005 FY2010 FY2015
Slide 12: Breakdown of Consolidated Interest-Bearing Debt
Breakdown of Consolidated Interest-Bearing Debt Contrarily, debt for which SBG has a direct obligation of repayment remains at a low level Start financial management as an investment holding company Consolidated interest-bearing debt ¥21.4T Debt for self-financing entities ( , etc.) Asset-backed fin
Slide 13: History of Asset and Debt
History of Asset and Debt Effectively utilizing financial leverage through non-recourse debt / financing (e.g., debt financing by self-financing entities and asset-backed finance) Realizing overall group growth while mitigating financial risks Consolidated total asset Consolidated interest-bearing d
Slide 14: Enhancement of Presence in the Financial Markets
Enhancement of Presence in the Financial Markets Continue our efforts to divirsify our funding sources by leveraging our robust financial foundation. Highest trust from market participants in our history Before 2010 Current ¥145.0B (2000) ¥740.9B equiv. (2023) Commitment Facility Line 9 banks (prima
Slide 15: Historical LTV
Historical LTV LTV reached an all-time low level Continue to grow and expand pursuing optimal leverage going forward 75% Historically the strongest financials 50% Investment Holding Company 25% LTV 10.6% Investment in domestic Investment in Sprint ¥4.5T Program telecom business 0% FY2005 FY2010 FY20
Slide 16: Current Market Environment
Current Market Environment Persistently high US interest rates are weighing on the stock market U.S. Interest Rates Exchange Rate (USD/JPY) U.S. 米国株価 Stock Prices *1 *1 FF Target Rate (upper bound) US Treasury 2Y (%) (JPY) US Treasury 10Y FF Rate Upper Limit 6.0 160 120 5.50% 2Y ¥ 150.98 4.9% 5.0 15
Slide 17: Finance Summary in FY2023 Q2
Finance Summary in FY2023 Q2 Completion of Arm IPO further strengthened our financial base. Continued proactive investments NAV of ¥16.4T: +¥0.9T QoQ LTV of 10.6％: +2.6pt QoQ NAV・LTV Net debt of ¥1.9T: +¥0.5T QoQ Cash position of ¥5.1T*1: -¥0.7T QoQ Purchased Arm shares from SVF1. Closing of Arm IPO
Slide 18: Summary of Arm IPO
Summary of Arm IPO The largest IPO ever for a semiconductor company*1 Participation of numerous strategic investors symbolizes Arm's core significance in the semiconductor sector Sep 2016 Acquired 100% (approx. $32B) IPO Price $51.00 per ADS (Upper limit of the expected price range of $47.00~$51.00）
Slide 19: Portfolio Replacement
Portfolio Replacement Improved portfolio quality: asset diversification, recovery in proportion of listed assets and reducing geopolitical risk Net of asset- Proportion of 81% 62% 44% 69% backed finance listed shares 15% 24% 28% 16% 59% 15% 11% SBKK 11% 8% T-Mobile 9% 7% Deutsche Telekom 5% 17% 18%
Slide 20: Geographical Portfolio Diversification
Geographical Portfolio Diversification The proportion of China decreased significantly Net of asset-backed finance 15% 9% China 31% 17% Japan 18% 12% APAC 11% 12% (excluding Japan and China） 9% 27% 35% EMEA 20% 4% 5% 5% Latin America 25% 24% 22% North America Mar 2022年 Mar 2023年 Sep 2023年 2022 3月末 2
Slide 21: Invested Amounts (SVF1+2+LatAm+SBG/Others)
Invested Amounts（SVF1+2+LatAm+SBG/Others） Resuming investments from Q1; expanding investments cautiously ($ B) 2.5 SBG/Others 0.2 1.8 1.5 0.9 SVF1+ SVF2+ 2.3 LatAm 1.1 0.5 0.5 0.5 0.1 0.1 0.9 0.2 0.4 0.4 0.4 0.3 Q1 Q2 Q3 Q4 Q1 Q2 (Note) FY2022 FY2023 Invested amounts by SBG/Others: Investment by SBG
Slide 22: Status of WeWork
Status of WeWork SB group has fulfilled all its credit support obligations Oct 2021 Oct 2023 WeWork SPAC listing WeWork withheld interest payments on series of notes Completed fulfillment of credit support from SVF2 in its entirety through cash collateral Nov 6 WeWork’s filing for relief under Chapt
Slide 23: Cash Position and Coming Bond Redemptions
Cash Position and Coming Bond Redemptions Maintain ample cash position, well over 2-year worth of bond redemptions Cash position Bond redemption schedule ¥5.1T *1 (¥ B) 740.9 Undrawn commitment line*2 Bond redemptions 4,357.0 for the next 2 years (¥1.9T) Sep 2023 ＞ 1,036.8 Oct 2023 889.1 Oct 2024 1,
Slide 24: Breakdown and Yield of Cash Position
Breakdown and Yield of Cash Position Continuing high-yield operations primarily with US dollar deposits Average yield*2 for Breakdown of cash position*1 SBG USD deposits, etc. 6.0% (¥ T) 4.4 5.2% 5.4% Yield 4.9% US 2-year 5.0% Subsidiaries 0.4 4.5% 5.0% treasury yield US 10-year JPY 0.6 4.0% 4.6% tr
Slide 25: Response to Interest Rate Hike
Response to Interest Rate Hike Possess considerable financial flexibility, a result of ample cash position built up through accelerated monetization Ample Cash Position Various Funding Options SBG to determine Select from various funding the timing of funding methods ¥5.1T ＞ ¥1.9T Products × Terms C
Slide 26: Impact of Rise in Interest Rate: Floating Rate Debt
Impact of Rise in Interest Rate: Floating Rate Debt No risk of surge in interest payments amid short-term interest rate rise Fixed/Floating Ratio of SBG Stand-alone Interest-bearing Debt*1 Floating rate; USD Floating rate; JPY*4 1 percentage point rise in USD 15% 10% ¥8.2B interest payment interest
Slide 27: Impact of Rise in Interest Rate: Fixed Rate Debt
Impact of Rise in Interest Rate: Fixed Rate Debt Assuming current interest rate environment remains for 2 years Majority of bonds due within 2 years consist of low-interest domestic bonds Breakdown of Bonds Outstanding*1 Domestic bonds ¥1.3T ≦2 years Bonds USD bonds ¥0.3T outstanding ¥6.0T EUR bonds
Slide 28: Breakdown by Currency
Breakdown by Currency Investment and monetization flows are mainly in dollars, while debt refinancing are principally in the same currency Investments and monetization Debt composition Cash position: ¥4.4T*1 Equity value of holdings: ¥18.4T*2 Debt*3: ¥6.7T Subsidiaries EUR Net of asset- JPY backed f
Slide 29: Impact of Forex (FY2023H1)
Impact of Forex（FY2023H1） Weaker JPY increased NAV and equity FX losses are recorded mainly related to foreign currency-denominated borrowings from group companies On NAV On accounting Equity ＋¥1.8T + ¥1.9T Consolidated net income -¥0.6T Finance 26
Slide 30: Bond Redemption Schedule
Bond Redemption Schedule Bond issuances will be managed with due consideration for cash position and market environment. (¥ B) Domestic senior bonds 1,554.0 Domestic subordinated bonds Domestic hybrid bonds 302.9 Foreign currency-denominated senior notes 1,102.1 Foreign currency-denominated hybrid n
Slide 31: Funding and Fund Management Plans in FY2023
Funding and Fund Management Plans in FY2023 Funding: Mainly for refinancing Surplus fund management: Propelling diversification The current focus is on refinancing. No plans to be active Bond in funding Domestic: ~¥400.0B of bonds to be redeemed in Mar 2024 International: $1.9B equiv. of senior bond
Slide 32: SBG Stand-alone Interest-bearing Debt
SBG Stand-alone Interest-bearing Debt*1 Exchange rate effects slightly increased SBG's stand-alone interest- bearing debt Main changes from June 30, 2023 (¥ B) • Impact of Forex (incl. non-recourse debt) +¥233.1B*2 14,083.3 14,335.8 Breakdown (September 30, 2023) (¥ B) 12,691.7 SBG borrowings Vs, Ju
Slide 33: SBG Stand-alone Cash Position
SBG Stand-alone Cash Position Maintain ample cash position (¥ B) 5,171.3 29.6 4,528.4 4,397.6 SB Northstar 41.9 40.6 3,637.4 76.6 3,173.4 35.6 Main changes from June 2023 5,141.6* 4,486.5 4,357.0* Increase Decrease ・Proceeds from Arm IPO ・Bond buyback and early 3,560.8 3,137.8 (+$5.1B) redemption (-
Slide 34: SBG Stand-alone Net Interest-bearing Debt
SBG Stand-alone Net Interest-bearing Debt Adjusted net interest-bearing debt remains at a low level (¥ B) 9,978.8 8,941.6 8,504.9 8,112.2 8,205.2 Finance-related adjustments 8,034.6 Asset-backed finance, etc. ¥7,667.8B 5,549.1 5,030.2 Hybrid finance ¥366.8B 6,458.2 7,588.6 2,955.7 3,082.0 Adjusted 1
Slide 35: Historical Credit Ratings and Financial Condition
Historical Credit Ratings and Financial Condition Strongest financials in history backed by ample assets and low leverage level However, S&P rating is at its lowest in the past 15 years NAV SBG Stand-alone Interest Bearing Debt LTV BBB A- Rating （JCR） BB BB BB+ Rating （S&P） FY2005 FY2010 FY2015 FY20
Slide 36: Gap between the credit rating and creditworthiness
There is a gap between the credit rating and creditworthiness Continuing dialogue with credit rating agencies to obtain a fair evaluation Finance 33
Slide 37: LTV Management Policy
LTV Management Policy Continue to leverage for NAV expansion Continue LTV management with a comfortable buffer, even after resuming investments 25% 25％ LTV To an appropriate level of leverage 14.7％ Average LTV over the past four years 10.6% 0% Sep Dec Mar Jun Sep Dec Mar Jun Sep 2021 2021 2022 2022
Slide 38: Adhering to Financial Policy
Adhering to Financial Policy Maintain LTV below 25% in normal times 1 (upper threshold of 35% even in times of emergency) 2 Maintain at least 2-year worth of bond redemptions in cash Secure recurring distributions and dividend income from 3 SVF and other subsidiaries Finance 35
Slide 39: Our Policy on Supporting Portfolio Companies
Adhering to Financial Policy Our Policy on Supporting Portfolio Companies Portfolio company finances to be No rescue self-financing package Finance 36
Slide 40: FY2023 Financial Strategy
FY2023 Financial Strategy Financial management Adhering to adaptable to financial policy both Defense and Offence Finance 37
Slide 41: Respond to Both Defense and Offence
Respond to Both Defense and Offence Invest in the Defense Information against further downside Revolution, while maintaining financial stability Maintain LTV below 25% in normal times （LTV = 10.6% as of Sep 30, 2023） Maintain at least 2-year worth of bond redemptions in cash （Cash position = ¥5.1T a
Slide 42: Capital Allocation
Capital Allocation New Shareholders investments return* Endeavor to strike a Financial policy balance (Financial stability) * The level of NAV discount is also considered Finance 39
Slide 43: Appendix
Appendix
Slide 44: Historical SBG Credit Rating
Historical SBG Credit Rating Acquisition of Acquisition Acquisition Acquisition Listing A+ 14 Japan Telecom of Vodafone KK of Sprint of Arm of SBKK A 13 JCR(A-) A- 12 Outlook Stable BBB+ 11 (since Jan 2023) BBB10 S&P Downgrade BBB-9 （May 2023） S&P (BB) BB+ 8 Outlook Positive BB 7 (since Sep 2023) BB
Slide 45: SBG Credit Spread
SBG Credit Spread Spread of SBG foreign currency- SBG 5-year CDS denominated senior notes 700 USD 1.2Y USD 2.7Y 500 bps bps SBG 5Y CDS (JPY) USD 4.7Y USD 7.7Y EUR 0.7Y EUR 3.2Y 450 600 EUR 5.7Y EUR 8.7Y 400 500 350 300 400 250 300 200 200 150 100 100 50 0 0 Dec 2022 Mar 2023 Jun 2023 Sep 2023 Dec 20
Slide 46: LTV Trend
LTV Trend*1 Controlled within financial discipline Net of asset-backed finance 100％ LTV 35% (in times of emergency) 25% （in normal times） 18.7% 21.6% 20.4% *2 18.2% 10.6% 14.5% 15.0% 11.0% 8.0% Sep 21 Dec 21 Mar 22 Jun 22 Sep 22 Dec 22 Mar 23 Jun 23 Sep 23 *1 As of the end of each quarter *2 For det
Slide 47: Calculation of Equity Value of Holdings as of Sep 30, 2023
Calculation of Equity Value of Holdings as of Sep 30, 2023 $1 = ¥149.58 ¥25.7T （unadjusted） Equity value of holdings Adjustment for (¥ T) Equity value of holdings ー ＝ asset-backed finance (adjusted) （unadjusted） Prepaid Forward Payable 923M Share price amount for Contracts, etc. 5.6 ¥4.3T ＝ ¥5.6T sh
Slide 48: LTV Calculation: SBG Stand-alone Equity Value of Holdings
LTV Calculation: SBG Stand-alone Equity Value of Holdings (L) Adjusted ¥1.94T SBG stand-alone net debt =10.6% (V) Adjusted SBG stand-alone equity value of holdings*1 ¥18.35T (¥ T) Adjusted SBG Major SBG’s interest in Other investments = + + stand-alone equity value of holdings assets SVF1&2 & LatAm
Slide 49: 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 Alibaba 0.01 Multiplying the number of Alibaba ADSs equivalent to the number of shares held by SBG by the Before adjustment 4.60 ADS price Sum of the outstanding maturity settlement amoun
Slide 50: 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 1.27 summing - Value of SBG’s shareholding (incl. the number of shares subject to call options held by Deutsche Telekom (DT): Before adjustment 1.70 34,971,809 shares as of S
Slide 51: LTV Calculation: SBG Stand-alone Net Debt
LTV Calculation: SBG Stand-alone Net Debt (L) Adjusted SBG stand-alone net debt*1 ¥1.94T (V) Adjusted SBG stand-alone ¥18.35T =10.6% equity value of holdings (¥ T) Adjusted SBG Consolidated Net debt at self- Other stand-alone net debt = net debt - financing entities - adjustments 1.94 14.68 4.70 8.0
Slide 52: 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 - net interest-bearing debt (before adjustment) 9.98 at self-financing entities*1 For hybrid bonds and hybrid loans with maturity dates, deduct 50% from interest-bearing debt; A
Slide 53: 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. (¥ T) 1 Forward/Collar/Put 2 Margin loan 25.7 transactions Main shares Alibaba SBKK, Arm used 1 5.6 Asset-backed fi
Slide 54: Beneficial Ownership of Alibaba Shares
Beneficial Ownership of Alibaba Shares Fully monetized Alibaba shares through prepaid forward contracts Beneficial ownership 14.6% 13.5% 13.7% 13.8% 13.9% Used for prepaid forward contracts Sep 2022 *1 Dec 2022*2 Mar 2023*3 Jun 2023*4 Sep 2023*5 *1 Calculated based on 21,185,107,544 ordinary shares
Slide 55: Forward Transaction / Collar Transaction
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 • Settlement at m
Slide 56: 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 2022 Dec 2022 Mar 2023 Jun 2023 Sep 2023 SBG stand-alone 12,065.7 11,250.0 12,691.7 14,083.3 14,335.8 Incl. SB Northstar - - - - - SVF1&2 and LatAm Funds 1,481.1 1,319.9 1,322