Softbank Group Corp. · TSE:9984
Softbank — Q1 FY2019 Earnings Presentation
58 slides from Softbank's earnings presentation, Aug 7, 2019
Slide 1: Earnings Results for the 3-month Period ended June 30, 2019
Earnings Results for the 3-month Period ended June 30, 2019 August 7, 2019
Slide 2: Important Information
IMPORTANT INFORMATION This presentation (“Presentation”) is furnished to you for informational purposes in connection with SoftBank Group Corp.’s (together with its subsidiaries, “SoftBank”) interests in the SoftBank Vision Fund L.P. (together with, as the context may require, any parallel fund, fee
Slide 3: Disclaimer
Disclaimer This material was prepared based on information available and views held at the time it was made. Statements in this material that are not historical facts, including, without limitation, plans, forecasts and strategies are “forward-looking statements”. Forward-looking statements are by t
Slide 4: Just Move Forward
Just Move Forward 2
Slide 5: Just Move Forward: DOJ approved the merger with conditions
Just Move Forward DOJ approved the merger with conditions The completion of the T-Mobile and Sprint combination remains subject to remaining regulatory approvals and certain other customary closing conditions. 3 T-Mobile and Sprint expect to receive final federal regulatory approval in Q3 and curren
Slide 6: Just Move Forward: Plans for SoftBank Vision Fund 2
Just Move Forward Plans for DOJ approved SoftBank Vision the merger Fund 2 with conditions The finalization of the Fund II and of related capital commitments remains subject to the completion of definitive documents and other customary conditions. This document has been prepared on the basis of info
Slide 7: Consolidated SoftBank Results
Consolidated SoftBank Results
Slide 8: Consolidated Results
Consolidated Results (JPY bn) FY18Q1 FY19Q1 Change YoY Net sales 2,272.8 2,336.4 +63.6 +3% EBIT 715.0 688.8 -26.2 -4% Excl. one-time gain from Arm China 553.7 688.8 +135.1 +24% Net income 313.7 1,121.7 +808.0 +258% One-time gain from Arm China: On Jun. 26, 2018, Arm sold 51% of its equity interest i
Slide 9: Net Sales
Net Sales (JPY bn) 2,272.8 2,336.4 Up 3% 883.2 895.6 Sprint 1,096.2 1,164.6 SoftBank segment 293.4 276.2 Others FY18Q1 FY19Q1 Others = Arm + Brightstar + “Others” + reconciliations 7
Slide 10: EBIT: Down 4%
EBIT (JPY bn) 715.0 688.8 161.3 63.4 Sprint One-time gain Down 4% from Arm China 98.1 SVF 397.6 segment 239.9 SoftBank 260.2 276.6 segment -44.5 -48.8 Others One-time gain from Arm China: On Jun. 26, 2018, Arm sold 51% of its equity interest in its wholly-owned Chinese subsidiary, Arm China to certa
Slide 11: EBIT excluding one-time gain from Arm China
EBIT (JPY bn) 161.3 688.8 One-time gain from Arm China 63.4 Sprint 553.7 98.1 397.6 SVF segment Up 24% 239.9 (excl. one-time gain from Arm China) SoftBank 260.2 276.6 segment -44.5 -48.8 Others One-time gain from Arm China: On Jun. 26, 2018, Arm sold 51% of its equity interest in its wholly-owned Ch
Slide 12: EBIT with profit from continuing businesses
EBIT (JPY bn) 161.3 One-time gain from 625.4 Sprint Arm China 455.6 397.6 SVF segment Up 37% with profit from continuing businesses 239.9 (excl. Sprint and one-time gain from Arm China) SoftBank 260.2 276.6 segment *Profit from continuing businesses: EBIT excl. Sprint and one-time gain from Arm Chin
Slide 13: EBIT history, Q1 2003-2019
EBIT 715.0 688.8 One-time gain (JPY bn) from Arm China Sprint Down 4% *FY2013-14: excl. impact of GungHo & Supercell 2003 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 (FY) One-time gain from Arm China: On Jun. 26, 2018, Arm sold 51% of its equity interest in its wholly-owned Chine
Slide 14: EBIT history excluding Arm China gain
EBIT 715.0 688.8 One-time gain (JPY bn) from Arm China 553.7 Sprint Up 24% (excl. one-time gain from Arm China) *FY2013-14: excl. impact of GungHo & Supercell 2003 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 (FY) One-time gain from Arm China: On Jun. 26, 2018, Arm sold 51% of its
Slide 15: EBIT history with profit from continuing businesses
EBIT 715.0 One-time gain 625.4 (JPY bn) from Arm China Up 37% 455.6 Sprint with profit from continuing businesses (excl. Sprint and one-time gain from Arm China) *Profit from continuing businesses: EBIT excl. Sprint and one-time gain from Arm China The completion of the T-Mobile and Sprint combinati
Slide 16: Net Income: 3.6x, exceeds JPY 1t
Net Income (JPY bn) 1,121.7 3.6x Exceeds 313.7 JPY 1t FY18Q1 FY19Q1 Net income: net income to attributable to owners of the parent 14
Slide 17: Sprint
Sprint 15
Slide 18: DOJ approved the merger with conditions
DOJ approved the merger with conditions The completion of the T-Mobile and Sprint combination remains subject to remaining regulatory approvals and certain other customary closing conditions. T-Mobile and Sprint expect to receive final federal regulatory approval in Q3 and currently anticipate that
Slide 19: Investment in Sprint
Investment in Sprint (JPY) 2.9t 2.1t Borrowings 1.3t Shareholder value 0.4t Current: USD 1 = JPY 106.34 (as of Aug. 6, 2019) At the time of Current Based on calculation of T-Mobile US share price USD 77.28 (as of Aug. 6, 2019) x exchange ratio 0.10256 excl. acquisition-related expenses acquisition *
Slide 20: Investment in Sprint: 3x, IRR 21%
Investment in Sprint (JPY) 2.9t 2.1t Borrowings 3x IRR 21% 1.3t 0.4t Shareholder value IRR: calculated the shareholder value IRR. Amount of borrowings (JPY 1.65t) is considered as returns at the actual date of its procedure to SBG. Interests related to the borrowings are considered. The IRR set fort
Slide 21: Vodafone K.K. Investment Track Record
Vodafone K.K. Investment Track Record (JPY) 8.3t 41x Borrowings, etc. 1.9t IRR 40% 0.2t • • SBG = SoftBank Group Corp., SBKK = SoftBank Corp., SBM = SoftBank Mobile Corp., SBTM = SoftBank Telecom Corp., SBB = SoftBank BB Corp., YM = Ymobile Corporation SBG acquired Vodafone K.K. (subsequently rename
Slide 22: Shareholder Value
Shareholder Value 20
Slide 23: Remaining Image
Remaining Image Telecom Heavy debt? company 21
Slide 24: Equity Value of Holdings: JPY 26t
• For details, see “Definition and Calculation Method of SBG’s Sum-of-the-parts Valuation” Equity Value of Holdings Others 0.9t SVF 3.5t 2.6t 2.9t 4.7t JPY 26t 11.3t Equity value of holdings Share price: closing price as of Aug. 7 (Japan) closing price as of Aug. 6 (U.S.) 22
Slide 25: Gross debt (consolidated): JPY 17t
• For details, see “Definition and Calculation Method of SBG’s Sum-of-the-parts Valuation” JPY 17t Gross debt (consolidated) 23
Slide 26: Gross debt including Sprint non-recourse
• For details, see “Definition and Calculation Method of SBG’s Sum-of-the-parts Valuation” JPY 17t Sprint Non-recourse to SBG JPY 5t Gross debt (consolidated) 24
Slide 27: Gross debt excluding Sprint: JPY 12t
• For details, see “Definition and Calculation Method of SBG’s Sum-of-the-parts Valuation” Sprint JPY 12t Gross debt (excl. Sprint) 25
Slide 28: Gross debt excluding Sprint and SBKK etc.
• For details, see “Definition and Calculation Method of SBG’s Sum-of-the-parts Valuation” Sprint JPY 12t SBKK etc. JPY 5t Non-recourse to SBG Gross debt (excl. Sprint) 26
Slide 29: Gross debt (SBG): JPY 7.4t
• For details, see “Definition and Calculation Method of SBG’s Sum-of-the-parts Valuation” Sprint SBKK etc. JPY 7.4t Gross debt (SBG) 27
Slide 30: Gross debt and cash position (SBG)
• For details, see “Definition and Calculation Method of SBG’s Sum-of-the-parts Valuation” JPY 7.4t JPY 2.5t Gross debt Cash position, etc. (SBG) (SBG) 28
Slide 31: Net debt (SBG): JPY 5t
• For details, see “Definition and Calculation Method of SBG’s Sum-of-the-parts Valuation” JPY 7.4t JPY 2.5t JPY 5t Gross debt Cash position, etc. Net debt (SBG) (SBG) (SBG) 29
Slide 32: LTV 19%
• Net debt = SBG net interest-bearing debt = SBG gross debt - SBG cash positions, etc • LTV (Loan to value) = Net debt / Equity value of holdings • For details, see “Definition and Calculation Method of SBG’s Sum-of-the-parts Valuation” JPY 26t LTV 19% Manage at less than 25% during “normal” periods
Slide 33: Equity value of holdings minus net debt
Equity value Shareholder Net debt of holdings value 26 − 5 = 21 31
Slide 34: Shareholder value JPY 21t vs market cap JPY 11t
• Shareholder value = equity value of holdings - net debt • For details, see “Definition and Calculation Method of SBG’s Sum-of-the-parts Valuation” JPY 21t JPY 11t Market cap. Shareholder value SBG Market cap.: closing price as of Aug. 7 Share price: closing price as of Aug. 7 (Japan) closing price
Slide 35: SBG market cap history
JPY 11t Market cap. ’95 ’97 ’99 ’01 ’03 ’05 ’07 ’09 ’11 ’13 ’15 ’17 ’19 (FY) SBG Market cap.: closing price as of Aug. 7 33
Slide 36: SBG shareholder value vs market cap
SBG shareholder value JPY 11t Market cap. ’95 ’97 ’99 ’01 ’03 ’05 ’07 ’09 ’11 ’13 ’15 ’17 ’19 (FY) SBG Market cap.: closing price as of Aug. 7 34
Slide 37: Shareholder value JPY 21t, market cap JPY 11t
JPY 21t SBG shareholder value JPY 11t Market cap. ’95 ’97 ’99 ’01 ’03 ’05 ’07 ’09 ’11 ’13 ’15 ’17 ’19 (FY) SBG Market cap.: closing price as of Aug. 7 Shareholder value: closing price as of Aug. 7 (Japan) 35 closing price as of Aug. 6 (U.S.)
Slide 38: Remaining Image
Remaining Image Telecom Heavy debt? company 36
Slide 39: LTV 19% and shareholder value JPY 21t
Shareholder LTV value 19% JPY 21t Shareholder value: closing price as of Aug. 7 (Japan) closing price as of Aug. 6 (U.S.) 37
Slide 40: ioe]
ioe] oO
Slide 41: Alibaba Local Services
* Alibaba Local Services + Investment Committee approved companies + pipeline, etc. (12 companies) As of Aug. 7, 2019 The investments presented herein are solely for illustrative purposes, have been selected in order to demonstrate examples of Fund investments, and do not purport to be a complete li
Slide 42: Vision Fund portfolio composition
Portfolio composition is provided solely for illustrative purposes, and there can be no assurance that future investments will be similar to those set forth herein. Sector characterization has been determined by SBIA, and although the SBIA believes that such determinations are reasonable, they are i
Slide 43: SVF Investment Highlights
SVF Investment Highlights (end of Jun. 2019) USD 20.2bn Investment Investment market uplift market uplift since SVF1 inception +JPY 2.2t Cumulative USD 71.4bn investment cost USD 1 = JPY 107.785 (as of June 28, 2019) Cumulative Investment Cost and Investment Gain are from the SoftBank Vision Fund’s
Slide 44: Finalization of Fund II
The finalization of the Fund II and of related capital commitments remains subject to the completion of definitive documents and other customary conditions. This document has been prepared on the basis of information provided by SBIA and issued by SBG for the sole purpose of announcing to the public
Slide 45: SVF2 Total Expected Contribution of Capital
SVF2 Total Expected Contribution of Capital USD 108 billion (JPY 11.7t) *As of the July 26, 2019 press release announcement *The total anticipated investment amount (USD 108 billion) which is set forth in a series of MOU is converted into yen at USD 1 = JPY 108.22 (as of Jul. 25, 2019) Total expecte
Slide 46: SVF2 Expected Participants
SVF2 Expected Participants September 1 2005 Materials for Reproduction : Master Data 01-3 LW = 150mm * Mizuho Bank, Ltd. Major Management participants of the Fund, National Investment from Taiwan etc. Corporation of National Bank of Kazakhstan *Foxconn Technology Group and/or its affiliates Discussi
Slide 47: SVF2 Expected Contribution of Capital: USD 38 billion
SVF2 Expected Contribution of Capital USD 38 billion *As of the Jul. 26, 2019 press release announcement *USD 38 billion, SBG’s maximum anticipated investment amount, is converted into yen at USD 1 = JPY 108.22 (as of Jul. 25, 2019) (JPY 4.1t) SoftBank Group Corp.’s expected contribution of capital
Slide 48: Firmly Maintain Financial Policy
Firmly Maintain Financial Policy Manage LTV at less than 25% during “normal” periods 1 (upper threshold of 35% even during “abnormal” periods) Maintain cash position covering 2 bond redemptions for at least next 2 years Secure sustainable distribution and dividend income 3 from SVF and other subsidi
Slide 49: SVF1 and SVF2 total expected capital
SVF2 total expected contribution of capital JPY 12t Total JPY 22t SVF1 The amount of committed capital of the Vision Fund USD 98.6bn converted to JPY, USD 1 = JPY 107.785 (as of June 28, 2019) and rounded off to the nearest 1 trillion unit. The total expected investment amount (USD 108 billion) whic
Slide 50: 70x in 10 years: Number of Unicorn Companies
# of Unicorn Companies 334 (Global) 70x in 10 years 5 2008 ’10 ’12 ’14 ’16 ’18 (CY) (source) created by SoftBank Group Corp. based on data from the Crunchbase Unicorn Leaderboard The number of “Current Unicorns”(each year end) 48
Slide 51: 5 out of 10 companies are investees
The comparables provided herein were selected by SBIA for illustrative purposes because SBIA believes that they present the most direct comparables in the industry within the relevant time period. Selection of such criteria is inherently subjective and others might select other Unicorn Companies (gl
Slide 52: Investment Highlights
Investment Highlights Internet Telecommunication AI JPY 15t JPY 9t (net return of SBG) (net return of SBG) JPY 2t (investment market uplift of SVF1) JPY 15t: Cumulative net return of Internet companies which were invested by SoftBank Group Corp. (Alibaba Group, Yahoo Japan, Supercell, Yahoo! Inc., e
Slide 53: Shareholder value history
Shareholder value (equity value of holdings − net debt) JPY 21t ’95 ’97 ’99 ’01 ’03 ’05 ’07 ’09 ’11 ’13 ’15 ’17 ’19 (FY) 51 Shareholder value: closing price as of Aug. 7 (Japan) closing price as of Aug. 6 (U.S.)
Slide 54: Shareholder value by Telco, Internet and AI
Shareholder value (equity value of holdings − net debt) JPY 21t AI Telco Internet Shareholder value is allocated proportionally to the ratio of equity value of holding as of each timing Telco: Telecommunication business included in current SBKK + Sprint AI: SVF1 internet: others excl. telco and A I
Slide 55: SVF segment EBIT
EBIT JPY 2.4t SVF segment JPY 1.3t Others ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 (FY) *FY2013-14: excluding impact of GungHo & Supercell 53
Slide 56: Just Move Forward: Plans for SoftBank Vision Fund 2
Just Move Forward Plans for DOJ approved SoftBank Vision the merger Fund 2 with conditions The finalization of the Fund II and of related capital commitments remains subject to the completion of definitive documents and other customary conditions. This document has been prepared on the basis of info
Slide 57: SoftBank
SoftBank
Slide 58: Definition and Calculation Method of SBG's Sum-of-the-parts Valuation
Definition and Calculation Method of SBG’s Sum-of-the-parts Valuation i. Net debt • Net debt = net interest-bearing debt (SBG) = Net debt (SBG) • Net debt (SBG) = gross debt (SBG) - cash position, etc (SBG) • gross debt (SBG) = gross interest-bearing debt (SBG) = Gross debt (Consolidated) - Gross de