Softbank Group Corp. · TSE:9984
Softbank — Q3 FY2019 Earnings Presentation
30 slides from Softbank's earnings presentation, Feb 14, 2020
Slide 1: Earnings Results for the Nine-month Period Ended Dec. 31, 2019
Ver1.1 Earnings Results for the Nine-month Period Ended Dec. 31, 2019 Investor Briefing February 14, 2020 SoftBank Group Corp.
Slide 2: Disclaimers
Disclaimers This presentation provides relevant information about SoftBank Group Corp. (“SBG”) and its subsidiaries and associates (together with SBG, “we,” “us” or the “Group”) and does not constitute or form any solicitation of investment including any offer to buy or subscribe for any securities
Slide 3: Exchange rates used for translation and abbreviations
Exchange rates used for translation FY2018 FY2019 Average during quarter Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 1 USD 108.71 111.55 112.83 110.46 110.00 107.70 108.98 1 GBP 147.54 145.84 144.48 143.99 140.88 132.73 139.55 1 CNY 16.97 16.40 16.31 16.37 16.13 15.37 15.46 EOQ Jun 30 Sep 30 Dec 31 Mar 31 Jun 30 Sep 30
Slide 4: Accounting
Ver1.1 Accounting
Slide 5: Consolidated Results
Consolidated Results FY18 FY19 (JPY bn) Q1-Q3 Q1-Q3 Change YoY Net sales 7,168.5 7,089.8 -78.7 -1.1% Operating income 1,859.0 -13.0 -1,872.0 - Net income (attributable to owners 1,538.4 476.6 -1,061.8 -69.0% of the parent) Accounting 2
Slide 6: Change in Reportable Segments
Change in Reportable Segments • Revised segment classifications from FY19 after SBKK made Yahoo Japan (currently Z Holdings) a subsidiary. The results of operations for FY18 are restated retroactively according to the new reportable segments. • In FY19Q3, the “SoftBank Vision Fund and Other SBIA-Man
Slide 7: Details and Progress of SBG/WeWork Agreement
Details and Progress of SBG/WeWork Agreement Details and progress of the agreement between SBG and WeWork dated Oct 22, 2019 are as follows Details Progress Exercise Price Existing commitment of USD 1.5 bn originally • SBG paid full amount of USD 1.5 bn on Oct 30, 2019 Reduction of planned to be exe
Slide 8: Investments in WeWork by SBG -1
Investments in WeWork by SBG -1 (USD mil) Cumula- Carrying Amounts Gain (loss) Recorded in tive Cumula- in FY19 Consolidated P/L in FY19 Account in Account in Investment Type Invest- tive Gain Consolidated B/S Consolidated P/L ment (loss) Q2 End Q3 End Q1 Q2 Q3 Q1-3 Amount Loss from Investment finan
Slide 9: Investments in WeWork by SBG -1 (Illustration)
Investments in WeWork by SBG -1 (Illustration) Outlook of the treatment of transactions agreed by SBG/WeWork (for illustrative purposes only) The losses are expected to be approximately the same Assumption: (a) the fair value of WeWork’s entire Actual Outlook equity remains at USD 7.8 bn as of Sep 3
Slide 10: Investments in WeWork by SBG -2
Investments in WeWork by SBG -2 (USD mil) FY18 FY19 FY19 Q1 Q2 Q3 Item in (c) Conversion of (e) Exercise of Investment Type Acqui- Valuation Q4 End (a) Tender Offer Warrants, Gain (loss) Q3 End Consolidated B/S sition Gain Carrying Promissory Notes Carrying and (f) Exercise and in Q1-Q3 Cost (Loss)
Slide 11: Sprint/T-Mobile Merger Status and Impact on Financial Results
Sprint/T-Mobile Merger Status and Impact on Financial Results Sprint/T-Mobile Merger Transaction Status Regulatory Approvals Business Combination Agreement (BCA) with T-Mobile • Received approvals from DOJ, FCC and 18 of the state PUC. • BCA is still effective (as of Feb 12) • Resolution of litigati
Slide 12: Consolidated P/L Summary (IFRSs)
Consolidated P/L Summary (IFRSs) FY18 FY19 (JPY bn) P/L item Change Q1-Q3 Q1-Q3 ・FY18Q1-Q3: Recognized gain relating to loss of control over subsidiaries of 176.3 bn as a result of Net sales 7,168.5 7,089.8 -78.7 Arm’s Chinese subsidiary becoming a JV. Operating income (excluding income from 1,050.2
Slide 13: Consolidated B/S Summary (IFRSs) - Non-current assets
Consolidated B/S Summary (IFRSs) - 1 B/S As of As of (JPY bn) Main items Change item Mar 2019 Dec 2019 Decrease of 422.6 bn due to withholding tax refund on dividends paid in FY18 from SoftBank 7,758.0 7,501.4 -256.6 Group Japan (SBGJ) to SBG Current assets Cash and cash equivalents 3,858.5 3,804.7
Slide 14: Consolidated B/S Summary (IFRSs) - Non-current liabilities
Consolidated B/S Summary (IFRSs) - 2 B/S As of As of (JPY bn) Main items Change item Mar 2019 Dec 2019 8,681.7 8,087.1 -594.6 1 Impact of the adoption of IFRS 16 at the beginning of FY19 Interest-bearing debt 3,481.0 3,483.1 +2.1 1 892.5 bn of lease obligations previously included in interest-bearin
Slide 15: Consolidated B/S Summary (IFRSs) - Equity
Consolidated B/S Summary (IFRSs) - 3 (JPY bn) B/S As of As of Items Change item Mar 2019 Dec 2019 9,009.2 9,191.4 182.2 Common stock 238.8 238.8 - Increased due to a decrease in SBG’s economic interests in Yahoo Japan (currently Z Holdings) Capital surplus 1,467.8 1,484.1 16.3 1 Net income attributa
Slide 16: Consolidation of ZOZO by Z Holdings
Consolidation of ZOZO by Z Holdings • Z Holdings implemented a tender offer of ZOZO with the aim of strengthening its e-commerce business. • Completed the tender on Nov 13, 2019 and acquired 50.1% of voting rights; ZOZO became a subsidiary of Z Holdings. Increase of assets of SBG B/S by ZOZO consoli
Slide 17: Consolidated C/F Summary (IFRSs)
Consolidated C/F Summary (IFRSs) FY19 (JPY bn) C/F item Q1-Q3 ・SBG’s wholly owned subsidiary acquired preferred and common stock of 1,747.5 Subtotal of cash flows from operating activities WeWork for USD 2.0 bn in FY19Q1 and paid existing commitment of USD C/F from -430.5 Interest paid 1.5 bn to WeW
Slide 18: Income and Loss Arising from SVF and Other SBIA-Managed Funds
Income and Loss Arising from SVF and Other SBIA-Managed Funds (JPY bn) FY18 FY19 P/L Q1-Q3 Q1-Q3 Items Gain and loss on investments at 838.8 -729.0 SVF and other SBIA-Managed Funds FY18Q1-Q3: Gain on sale of Flipkart shares Realized gain and loss on sales of investments 146.7 14.6 FY19Q1-Q3: Gain on
Slide 19: Difference in Tax Rate
Difference in Tax Rate FY19Q1-Q3 Reconciliation between statutory tax rate and effective tax rate Amount Rate (%) (JPY bn) Income before income tax 1,345.4 Statutory income tax rate 31.5% 423.3 (main factors of difference) - Impact from reassessment of the recoverability of 12.2% 163.7 deferred tax
Slide 20: Bridge of Disclosures between SBG Financial Report and SoftBank Vision Fund I Update
Bridge of Disclosures between SBG Financial Report and “SoftBank Vision Fund I Update” section (USD bn) Committed capital, Total (p.15) Committed capital, The Company (p. 16) Contributions, The Company (p.16) SBG Financial Report 98.6 (SVF) 33.1 (SVF) 26.9 (SVF) Paid-in capital from the incentive -4
Slide 21: Bridge from Income before Income Tax of SVF Business to SVF's Contribution to SBG
Bridge from Income before Income Tax of SVF and Other SBIA- Managed Funds Business to SVF’s Contribution to SBG FY18 FY19 Q1-Q3 Q1-Q3 JPY bn 584.9 -623.1 SBG Financial Income before income tax of SVF and other SBIA- Report (p.17) managed funds business (Contribution to SBG) USD bn 5.29 -5.81 Income
Slide 22: Appendix
Appendix
Slide 23: Consolidation of Yahoo Japan by SBKK, ZOZO by Z Holdings
Consolidation of Yahoo Japan by SBKK, ZOZO by Z Holdings • On June 27, 2019, Yahoo Japan (currently Z Holdings) issued 1,511 mil. new shares to SBKK through a third-party allotment. • SoftBank Group Japan (SBGJ), a wholly owned subsidiary of SBG, accepted a tender offer of share buyback by Yahoo Jap
Slide 24: Breakdown of Goodwill / Intangible Assets
Breakdown of Goodwill / Intangible Assets (JPY bn) Change B/S As of As of Main items Changes in Outline item Mar 2019 Dec 2019 Amortization Others exchange rate 4,321.5 4,518.7 Goodwill Arm 2,777.5 2,748.7 - -28.7 - SBKK 907.5 907.5 - - - Sprint 326.8 322.6 - -4.2 - ZOZO - 212.9 - - 212.9*1 FCC lice
Slide 25: (Reference) Adoption of new standards: IFRS 16 - Leases
(Reference) Adoption of new standards: IFRS 16 - Leases Initial measurement for Right-of-use Assets (ROU) and Lease Liabilities Lease Liabilities: Measured at the present value of total lease payments over the lease term Right-of-use Assets: Amount of the initial measurement of a lease liability plu
Slide 26: Adoption of new standards: IFRS 16 - Leases
Adoption of new standards: IFRS 16 - Leases Primary change in accounting treatment: Classification of finance and operating leases has been eliminated and “right-of-use assets*1” and “lease liabilities” are recognized on a balance sheet for all leases. -Leases previously classified as operating leas
Slide 27: Adoption of new standards: IFRS 16 - Leases
Adoption of new standards: IFRS 16 - Leases Breakdown of right-of-use assets Opening B/S (Apr 1, 2019) (JPY bn) Class of underlying assets SBKK Sprint Others Total Telecommunications equipment (wireless equipment, 1,079.0 21.9 117.5 1,216.6 switching equipment and other network equipment) Reclassifi
Slide 28: SVF - Gain/Loss on Investments Purchased from SBG in P/L
SVF - Gain/Loss on Investments Purchased from SBG in P/L Investments purchased from SBG other than “Bridge investments” shown below. Examples include investments that were made without the premise of offering to the SVF at the time of acquisition, or, investments that were made with the premise of o
Slide 29: Differences in Figures of Financial Results of SoftBank Segment and SBKK
Differences in Figures of Financial Results of SoftBank Segment and SBKK (1) Depreciation and amortization for non-current assets at SBKK (formerly Vodafone K.K.) SBG’s consolidated financial statements SBKK’s consolidated financial statements When Vodafone K.K.’s controlling Depreciation & amortiza
Slide 30: Settlement of Prepaid Forward Contract using Alibaba Shares
Settlement of Prepaid Forward Contract using Alibaba Shares At signing of contract 3 years total At settlement （June 2016） （June 2019） Derivative liabilities USD 6.8 bn Gain relating to settlement of variable prepaid forward contract Amortized Interest expense using Alibaba cost USD 0.3 bn shares De