Softbank Group Corp. · TSE:9984
Softbank — FY2022 Earnings Presentation
48 slides from Softbank's earnings presentation, May 11, 2023
Slide 1: Earnings Results for the Fiscal Year Ended March 31, 2023
Ver.1.1 Earnings Results for the Fiscal Year Ended March 31, 2023 Investor Briefing May 11, 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 FY2021 FY2022 Average during quarter Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 1 USD 110.00 110.47 113.60 117.10 129.04 138.68 141.16 133.26 EOQ Jun 30 Sep 30 Dec 31 Mar 31 Jun 30 Sep 30 Dec 31 Mar 31 1 USD 122.39 133.53 Abbreviations Abbreviations used in Finance section o
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 and PayPay), SVF1, SVF2, LatAm Funds, and Arm.
Slide 5: How We See the Current Environment
How We See the Current Environment Stock markets remained vulnerable and volatile in FY2022 due to rising interest rates. However, we now see a return to stability. U.S. Interest Rates U.S. Stock Price*1 Stock Volatility FF Target Rate (upper bound) S&P500 (%) US Treasury 2Y VIX Index May 8, 2023 US
Slide 6: Financial Stability
Financial Management Focused on Defense Enhanced financial stability while continuing shareholder returns Shareholder New Returns Financial ¥1.1T Investments Significant investment Stability share repurchase curbs (completed) Large scale monetization Debt reduction Finance 3
Slide 7: Historical NAV
Historical NAV NAV declined YoY due to challenging market conditions; but has slightly increased QoQ. NAV （¥ T） Decreased by ¥4.4T 18.5 18.5 YoY 16.7 13.9 14.1 Mar 2022 Jun 2022 Sep 2022 Dec 2022 Mar 2023 Finance 4
Slide 8: Financial Management Focused on Defense
Financial Management Focused on Defense LTV significantly lower (improved) due to reduction in net debt Net Debt*1 LTV （¥ T） Reduced Declined 4.7 by ¥3.0T by 9.4pp YoY 20.4% YoY 18.2% 3.1 3.1 3.0 1.7 15.0% 14.5% 11.0% Mar 2022 Jun 2022 Sep 2022 Dec 2022 Mar 2023 Mar 2022 Jun 2022 Sep 2022 Dec 2022 M
Slide 9: Summary of FY2022
Summary of FY2022 Enhanced financial stability through large-scale monetization and substantial investment curbs NAV of ¥14.1T: -¥4.4T YoY LTV of 11.0％: -9.4pp YoY NAV・LTV Net debt of ¥1.7T: -¥3.0T YoY Cash position of ¥5.1T*1: +¥2.3T YoY Large scale monetization and debt reduction - Monetization of
Slide 10: Main Financing Activities since FY2022Q4
Main Financing Activities since FY2022Q4 Continued defensive financial management. Fully refinanced Hybrid bonds Jan - Mar (FY2022Q4)*1 Alibaba forward transactions (Jan-Mar) +$11.0B +¥1,471.2B Asset-backed equivalent finance etc. Refinance of SBKK margin loan (Feb) $3.8B ¥500.0B equivalent Apr - Ma
Slide 11: Financing Activities Results (FY2022)
Financing Activities Results (FY2022) Effectively used funds from asset-backed finance to reduce debt and repurchase shares +5.7 (¥ T) -0.4 SVF investments Debt -2.4 repayment Monetization Share 5.1 -1.1 repurchase 0.6 Undrawn commitment -0.1 line Undrawn 2.9 -3.8 commitment 0.1 line 4.5 2.7 Cash po
Slide 12: Invested Amounts (SVF1+2)
Invested Amounts (SVF1+2) Significantly curtailed investments FY2021 $44.3B ($B) 15.6 14.1 9.6 5.0 FY2022 $3.1B 2.2 0.3 0.3 0.4 FY2021Q1 FY2021Q2 FY2021Q3 FY2021Q4 FY2022Q1 FY2022Q2 FY2022Q3 FY2022Q4 (Note) The sum of new and follow-on investments, including those through share exchanges Finance 9
Slide 13: Debt Reduction (FY2022)
Debt Reduction (FY2022) Redemption / repurchase of bonds Total ¥442.0B*1 Repayment of Total ¥1,007.8B*2 Total ¥2.4T margin loans reduction Repayment of Total ¥915.9B bank loans (Note) Exchange rates: translated to JPY by using average exchange rate for each quarter *1 Face value. Net of ¥385.0B incr
Slide 14: Historical Share Repurchases
Historical Share Repurchases Repurchased ~¥4.5T worth of shares in the last 5 years (¥ B) 2,226.2 Repurchase based on 1,055.4 ¥4.5T program*1 602.4 384.1 232.0 FY2018 FY2019 FY2020 FY2021 FY2022 *1 Repurchase for ¥4.5T program is ¥1,742.2B in FY2020 and ¥257.8B in FY2021. Finance 11
Slide 15: Monetization of Alibaba Shares
Monetization of Alibaba Shares Large scale monetization of $35.5B in FY2022 Totaling $35.5B in FY2022 ($B) 11.0 10.5 7.9 6.1 4.1 Q1 Q2 Q3 Q4 Q1 FY2022 FY2023 as of May 11, 2023 Finance 12
Slide 16: Beneficial Ownership of Alibaba Shares
Beneficial Ownership of Alibaba Shares Largely completed monetization through prepaid forward contracts Beneficial 23.7% ownership Used for prepaid forward 14.6% 13.7% 13.7% 13.5% contracts *5 *1 *2 *3 *4 *4 Jun 2022 Sep 2022 Dec 2022 Mar 2023 As of 本日時点 May 11, 2023 *1 Calculated based on 21,357,32
Slide 17: Monetizing Alibaba Shares
Monetizing Alibaba Shares Completed a large-scale ~¥10T*1 monetization ¥9.7T IRR 57% *2 (From 2000 to May 11, 2023) ¥7.4B Invested 投資総額 Monetized 資金化総額 (Note) The total amount of investment and the total amount of monetization are calculated using historical foreign exchange rates. *1 The total amou
Slide 18: Equity Value of Holdings: Diversified Portfolio
Equity Value of Holdings: Diversified Portfolio Continued diversification of portfolio excl. asset-backed finance Mar 31, 2022 Mar 31, 2023 % of listed shares*1 % of listed 41% shares *1 (net of asset-backed finance) (net of asset-backed finance) Others Alibaba 52% Others 41% Arm 8% Alibaba 8% 5% SB
Slide 19: Diversified Portfolio
Diversified Portfolio The proportion of China investments decreased significantly; leading to greater geographical diversification of assets % by regions of assets held excl. asset-backed finance 14% China 30% 50% 18% Japan 11% 12% APAC （excluding Japan and China） 9% 8% 20% 27% EMEA 8% 12% 4% 5% Lat
Slide 20: Arm Offering Plans
Arm Offering Plans Arm has confidentially submitted a draft registration statement on Form F-1 to the U.S. Securities and Exchange Commission. The size and price range for the proposed offering have yet to be determined. The initial public offering is subject to market and other conditions and the c
Slide 21: Liquidity of Portfolio
Liquidity of Portfolio Maintained high proportion of listed shares + cash position even after monetization of listed shares excl. asset-backed finance 100% 80% Expect Unlisted shares Monetization of Unlisted shares further upside with listing of 60% listed shares shares held Cash position Listed Cas
Slide 22: Historical SBG Stand-alone Cash Position
Historical SBG Stand-alone Cash Position The largest cash position in the last 5 years (¥ T) 5.1 *1 Undrawn 0.6 commitment line*2 2.9 2.9 0.3 0.1 4.5 1.8 1.8 1.4 0.2 2.6 2.7 1.6 1.8 1.4 Mar 2018 Mar 2019 Mar 2020 Mar 2021 Mar 2022 Mar 2023 *1 Cash and cash equivalents + short term investments record
Slide 23: Cash Position
Cash Position Maintain ample cash position, well over 2-year worth of bond redemptions Cash position Bond redemption schedule ¥5.1T *1 (¥ B) 649.8 Undrawn commitment line*2 ＞ 4,486.5 Bond redemptions for the next 2 years (¥1.5T) 803.7 999.4 1,089.7 689.6 Mar 2023 Apr 2023 Apr 2024 Apr 2025 Apr 2026
Slide 24: Status of Cash Deposit
Status of Cash Deposit Surplus funds are deposited across several credible banks and mainly managed in USD Average interest rates*2 for Breakdown of cash position*1 SBG USD deposits, etc. 4.5 (¥ T) 5.00% 4.92% Investment 4.46% return 4.03% Subsidiaries’ 1.0 US 2-year 4.00% cash position 3.47% treasu
Slide 25: Debt Fixed/Floating Ratio
Debt Fixed/Floating Ratio (No Financial Risk from Interest Rate Hike） Minimal impact on interest payment from interest rate swings Fixed/Floating Ratio • Only 23% of SBG Debt is at floating rates of SBG Stand-alone Debt*1 • Impacts on USD are offset by higher Floating rate; Floating rate; interest i
Slide 26: Bond Redemption Schedule
Bond Redemption Schedule Redemptions will be funded by carefully managed bond issuance with due consideration for cash position and market environment Domestic senior bonds （¥ B） 1,544.6 Domestic subordinated bonds Domestic hybrid bonds 293.5 Foreign currency-denominated senior notes Refinance Forei
Slide 27: Replacement of Hybrid bonds
Replacement of Hybrid bonds Completed refinance in preparation for early redemption of USD-denominated Hybrid bonds in July 2023 2nd Hybrid Loan $750M Mizuho Bank Sumitomo Mitsui Banking Corporation (Repurchased Participating MUFG Bank in Oct 2022) banks Sumitomo Mitsui Trust Bank SBI Shinsei Bank (
Slide 28: Refinancing of Domestic Bonds
Refinancing of Domestic Bonds Remain committed to maintaining a cash position > 2 years of bond redemptions. In addition, the virtuous cycle of issuance and redemption of domestic bonds has sustained (¥ B) Domestic bonds issued 1,550.0 1,455.0 971.0 1,000.0 450.0 470.0 450.0 385.0 177.0 205.0 120.0
Slide 29: Funding Plan in FY2023
Funding Plan in FY2023 In FY2023, funding will be mainly for refinancing The principal focus is on refinancing. No plans for active fundraising in sight at this moment Domestic: Refinancing of domestic senior retail bonds maturing at the Bonds end of FY2023 International: Completed refinancing of Hy
Slide 30: SBG Stand-alone Interest-bearing Debt
SBG Stand-alone Interest-bearing Debt*1 Reduced debts by ~¥2.2T from Mar 2022 (incl. non-recourse debts) Main changes from Dec 2022 (¥ B) 15,842.9 14,918.7 • New conclusion of Alibaba prepaid forward contracts +$11.0B Breakdown (Mar 31, 2023) (¥ B) 12,691.7 SBG borrowings vs. Dec 31 12,065.7 11,250.
Slide 31: SBG Stand-alone Cash Position
SBG Stand-alone Cash Position ¥1.4T increase from Mar 2022, even after significant debt reduction (¥ B) 4,528.4 41.9 Cash position of 3,944.8 SB Northstar 127.1 3,637.4 76.6 3,173.4 3,079.9 35.6 Main changes from December 2022 330.0 Increase Decrease ・New conclusion of Alibaba ・Repayment of SBKK mar
Slide 32: SBG Stand-alone Net Interest-bearing Debt
SBG Stand-alone Net Interest-bearing Debt Adjusted net debt significantly decreased to a low-level of ¥1.7T (¥ B) excl. SB Northstar 12,135.3 12,021.0 8,504.9 8,112.2 8,205.2 7,411.2 8,871.8 5,549.1 5,030.2 Finance-related adjustments 6,458.2 Asset-backed finance, etc. ¥6,329.0B Hybrid finance ¥129.
Slide 33: Historical SBG Credit Rating
Historical SBG Credit Rating 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 Stable (Since Jan 2023) BBB+11 BBB 10 BBB- 9 S&P (BB＋) BB+ 8 Outlook Negative (Since Nov 2022) BB 7 BB- 6 B+ 5 4 '03 '04 '05
Slide 34: Communication with Rating Agencies
Communication with Rating Agencies Improved our financials enough to eliminate credit rating agencies’ concerns, with our management team in close communication Rating agencies’ concerns Our current status The proportion is expected to recover significantly when Arm’s proposed initial public offerin
Slide 35: SBG Credit Spread
SBG Credit Spread Temporarily widened in March 2023 due to concerns about US financial system Spread of SBG foreign currency- SBG 5-year CDS denominated senior notes 800 600 bps bps 700 500 600 400 500 400 300 300 200 200 SBG 5Y CDS (JPY) USD 3.0Y USD 4.5Y USD 6.5Y USD 9.5Y 100 100 EUR 2.5Y EUR 5.0Y
Slide 36: FY2023 Financial Strategy
FY2023 Financial Strategy Financial management Adhering to adaptable to financial policy both defense and offense Finance 33
Slide 37: Adherence to Financial Policy
Adherence to Financial Policy Maintain LTV below 25% in normal times 1 (upper threshold of 35% even in times of emergency) Maintain at least 2-year worth of bond redemptions 2 in cash Secure recurring distributions and dividend 3 income from SVF and other subsidiaries Finance 34
Slide 38: Respond to Both Defense and Offense
Respond to Both Defense and Offense Invest in the Defense against Information further downside Revolution, while maintaining financial stability Maintain LTV below 25% in normal times (LTV＝11.0% as of Mar 31, 2023) Maintain at least 2-year worth of bond redemptions in cash (Cash position＝¥5.1T as of
Slide 39: Appendix
Appendix
Slide 40: Calculation of Equity Value of Holdings as of Mar 31, 2023
Calculation of Equity Value of Holdings as of Mar 31, 2023 $1 = ¥133.53 (¥ T) Equity value of holdings Equity value of holdings Adjustment for ＝ ー (adjusted) （unadjusted） asset-backed finance ¥22.5T （unadjusted） ¥0.7T ＝ ¥4.8T 355M shares held*1 × Share price ＄102.18*1 ー Prepaid forward contract, etc
Slide 41: LTV Calculation: SBG Stand-alone Equity Value of Holdings
LTV Calculation: SBG Stand-alone Equity Value of Holdings (L) Adjusted ¥1.75T SBG stand-alone net debt =11.0% (V) Adjusted SBG stand-alone equity value of holdings*1 ¥15.87T (¥ T) Adjusted SBG Major SBG’s interest in Other Investments = + + stand-alone equity value of holdings assets SVF1&2 & LatAm
Slide 42: 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 0.71 Multiplying the number of Alibaba ADSs equivalent to the number of shares held by SBG by Before adjustment 4.84 the ADS price Sum of the outstanding maturity settlement a
Slide 43: 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 1.23 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 Mar 31, 2023) × the shar
Slide 44: LTV Calculation: SBG Stand-alone Net Debt
LTV Calculation: SBG Stand-alone Net Debt (L) Adjusted SBG stand-alone net debt*1 ¥1.75T (V) Adjusted SBG stand-alone ¥15.87T =11.0% equity value of holdings (¥ T) Adjusted SBG Consolidated Net debt at self- Other stand-alone net debt = net debt - financing entities - adjustments 1.75 13.59 5.38 6.4
Slide 45: 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) 8.21 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 46: 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 22.5 (¥ T) Collar/Forward/Put 1 2 Margin loan, etc. transactions 1 Main shares 5.0 Asset-backed Alibaba SBKK, Arm us
Slide 47: (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 48: Consolidated Interest-bearing Debt / Cash Position / Net Debt
Consolidated Interest-bearing Debt/ Cash Position/ Net Interest-bearing Debt Consolidated Interest-bearing Debt*1 (\ B) Mar 2022 Jun 2022 Sep 2022 Dec 2022 Mar 2023 SBG stand-alone 14,918.7 15,842.9 12,065.7 11,250.0 12,691.7 Incl. SB Northstar 33.5 4.2 - - - SVF1&2 and LatAm Funds 1,077.3 1,413.4 1