Softbank Group Corp. · TSE:9984
Softbank — Q2 FY2023 Earnings Presentation
31 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 Accounting section of this pres
Slide 4: Accounting
Accounting
Slide 5: Consolidated Results
Consolidated Results FY22 FY23 (¥ B) Q1-Q2 Q1-Q2 Change Change % Net sales 3,182.5 3,227.1 +44.6 +1.4% Income before 292.6 -907.4 -1,200.1 ー income tax Net income (attributable to owners of the -129.1 -1,408.7 -1,279.6 ー parent) (Reference) Loss on investments -849.6 -963.6 -114.0 ー Investment Busin
Slide 6: Arm (2016-)
Arm (2016-) Treated as a subsidiary SBG ownership SVF1 Non-controlling in SBG’s consolidated ownership interests financial statements (incl. third-party interests) Acquired Arm 100％ － － Sep 2016 Contributed 25% of Arm 75％ 25％ － Aug 2017- shares to SVF1 SVF segment: FVTPL Acquired 25% of Arm 100％ － －
Slide 7: Intra-Group Transaction of Arm Shares and Accounting Considerations
Intra-Group Transaction of Arm Shares and Accounting Considerations Prior to Arm’s IPO, in August 2023, SBG’s wholly owned subsidiary acquired substantially all of Arm shares held by SVF1 (equivalent to 24.99% of Arm’s outstanding shares) for $16.1B. The transaction consideration was established b
Slide 8: Arm IPO and Accounting Treatment
Arm IPO and Accounting Treatment In September 2023, SBG’s wholly owned subsidiary disposed 10%* of Arm shares in the IPO and received proceeds of $5.12B. The amount equivalent to the gain on the disposal was $4.65B. Arm continues to be SBG’s consolidated subsidiary post-IPO as SBG holds 90%* of
Slide 9: Bridge to Arm's Form F-1 (FY22 P/L)
Arm Segment in SBG’s Consolidated Financial Report Bridge to Arm’s Form F-1 (FY22 P/L) Adjustment (1) Adjustment (2) Adjustment (3) Amortization expenses SBG Consolidated related to intangible Difference in Reflecting the latest assets recognized in accounting available Arm Financial Report Arm segm
Slide 10: Bridge to Arm's disclosure (FY23H1 P/L)
Arm Segment in SBG’s Consolidated Financial Report Bridge to Arm’s disclosure (FY23H1 P/L) Adjustment (1) Adjustment (2) Adjustment (3) Amortization expenses SBG Consolidated related to intangible Difference in assets recognized in accounting Arm Financial Report Arm segment the purchase price stand
Slide 11: Investment Business of Holding Companies Segment
Investment Business of Holding Companies Segment (¥ B) FY22 FY23 P/L item FY23Q1-Q2 Main Items Q1-Q2 Q1-Q2 Gain/loss on investments at Investment 3,524.7 -413.5 Business of Holding Companies Gain/loss relating to settlement of prepaid forward 4,838.3 ― contracts using Alibaba shares Gain/loss relati
Slide 12: Alibaba Shares and Derivative Financial Assets/Liabilities
Alibaba Shares and Derivative Financial Assets/Liabilities (Amount Recorded in B/S) Value of Alibaba shares Derivative financial recorded in B/S Investment securities (FVTPL) assets/liabilities (net) considering prepaid Alibaba share price forward contracts: $102.18 $102.18 $32,108M ( A + B ) $86.74
Slide 13: T-Mobile: Shareholding & Fair Values
T-Mobile: Shareholding & Fair Values includes shares subject to unexercised Deutsche Telekom’s call options $144.84 $140.00 $138.90 $140.05 Held 43.3M T-Mobile $134.54 $134.17 shares at FY23Q2, up 3.6M shares from T-Mobile share price FY22Q4 -$181M (-¥24.6B) Received 3.6M T-Mobile shares valuation l
Slide 14: Deutsche Telekom: Shareholding & Fair Values
Deutsche Telekom: Shareholding & Fair Values Acquired 225M Deutsche Telekom shares in Sep 2021 Deutsche Telekom share price €22.35 in return for the sale of T-Mobile €19.98 €19.87 -$731M (-¥102.2B) €18.95 shares. €18.64 valuation loss for €17.49 FY23Q1-Q2 5,463 4,904 4,732 Fair value of Deutsche 4,4
Slide 15: T-Mobile Shares: Fair Values of Contingent Consideration
T-Mobile Shares: Fair Values of Contingent Consideration Closing price on Nov 7, 2023: $147.13 Contingent consideration $144.84 is the Company’s right $134.54 $134.17 $140.00 $138.90 $140.05 to acquire 48.8M T-Mobile shares for no consideration if: T-Mobile share price 45-day trailing VWAP of -$578M
Slide 16: SoftBank Vision Funds Segment
SoftBank Vision Funds Segment (¥ B) FY22 FY23 P/L Q1-Q2 Q1-Q2 FY23Q1-Q2 Main Items In consolidated P/L, loss on investments at SoftBank Gain/loss on investments at SoftBank Vision Funds -4,312.3 181.1 Vision Funds was ¥583.3B ¥482.2B gain at SVF1, ¥347.1B loss at SVF2 Gain/loss on investments at SVF
Slide 17: (Reference) Investment Performance of SVF1 and SVF2
(Reference) Investment Performance of SVF1 and SVF2 ($ B) Since Inception FY23*1 Gain/loss Gain/loss Cost*2 Returns*2 Gain/loss Q2 Q1-Q2 SVF1 89.6 104.4 14.8 2.4 3.4 Exited investments 34.6 59.7 25.1 6.9 6.3 Investments before exit 55.0 42.3 -12.7 -1.6 -2.0 Reversal of previously-recorded valuation
Slide 18: Status of Investment and Financial Support for WeWork
Status of Investment and Financial Support for WeWork (¥ B) P/L B/S Amount in Carrying amount Account FY23Q1-Q2 Account as of Sep 2023 (Minus shows loss) (Minus shows liabilities) Loss on investments at Investments from 17.2 -98.9 SoftBank Vision Funds SVF (FVTPL) ($115M) a WeWork stocks and warrant
Slide 19: Status of Investment and Financial Support for WeWork (Cumulative)
Status of Investment and Financial Support for WeWork (Cumulative) ($ M) Cumulative acquisition cost as of Sep 2023 (SBG consolidated basis) Cumulative loss Cumulative cash Carrying amount as of Sep 2023 * Exchange from flows as of Sep 2023 (SBG consolidated as of Sep 2023 Cash Consideration (Minus
Slide 20: Consolidated P/L Summary
Consolidated P/L Summary (¥ B) FY22 FY23 P/L item Change Q1-Q2 Q1-Q2 Net sales 3,182.5 3,227.1 +44.6 1 ・¥364.5B valuation loss due to declines in the share prices of Gross profit 1,721.3 1,732.3 +11.0 Alibaba, DT, and TMo Gain/loss on investments ・Of the above valuation loss, ¥237.6B loss on Alibaba
Slide 21: Consolidated B/S Summary – Non-current assets
Consolidated B/S Summary – 1 (¥ B) B/S Main items Mar 2023 Sep 2023 Change item Current assets 10,586.5 10,803.3 +216.8 1 SBG and wholly owned subsidiaries conducting fund procurement, etc.: ¥3,908.4B (¥107.7B decrease) Cash and cash equivalents 6,925.2 1 6,707.8 -217.3 Derivative financial assets 2
Slide 22: Investment Securities in Consolidated B/S (Main Investments)
Investment Securities in Consolidated B/S (Main Investments) (¥ B) Mar 2023 Sep 2023 Change Outline Investment securities 7,706.5 8,139.1 +432.6 FVTPL 7,244.3 7,477.5 +233.2 4,842.3 4,604.7 -237.6 Decreased due to lower share price Alibaba $36,264M $30,784M -$5,480M Increased due to the receipt of 3
Slide 23: Breakdown of Goodwill/Intangible Assets
Breakdown of Goodwill/Intangible Assets (¥ B) Change B/S Main items Mar 2023 Sep 2023 Amorti- Outline Item Changes in Others zation FX rate 5,199.5 5,601.6 * Arm 3,161.7 3,541.7 ― +380.0 ― Goodwill SBKK 913.9 913.9 ― ― ― LINE 628.9 628.9 ― ― ― ZOZO 214.1 214.1 ― ― ― Technologies 344.3 378.4 Main Arm
Slide 24: Consolidated B/S Summary – Non-current liabilities
Consolidated B/S Summary – 2 (¥ B) B/S Main items Mar 2023 Sep 2023 Change item 10,580.7 11,039.6 +458.8 Interest-bearing debt 5,129.0 1 5,751.4 +622.3 1 SBG Borrowings*: ¥459.9B (¥78.1B increase) Lease liabilities 184.1 161.2 -23.0 Current liabilities Corporate bonds*: ¥5,958.4B (¥205.4B increase)
Slide 25: Consolidated B/S Summary – Equity
Consolidated B/S Summary – 3 (¥ B) Mar Sep Items Change 2023 2023 10,649.2 11,671.3 +1,022.1 1 Amount equivalent to the gain on the sale of Arm shares upon Common stock 238.8 238.8 ― IPO :¥674.4B Capital surplus 2,652.8 3,319.5 1 +666.7 2 Redeemed $2.00B USD-denominated NC6 undated hybrid notes Othe
Slide 26: Impact of the Weaker Yen on P/L & B/S (Illustration)
Impact of the Weaker Yen on P/L & B/S (Illustration) P/L B/S Entities Components Foreign exchange Exchange differences gain (loss) from translation Foreign currency- denominated cash and cash equivalents/ SBG stand-alone + Loans receivable Foreign exchange gain Subsidiaries conducting (excl. investm
Slide 27: Impact of the Weaker Yen in FY23Q1-Q2
Impact of the Weaker Yen in FY23Q1-Q2 Foreign exchange loss in consolidated P/L for FY23Q1-Q2: ¥648.1B At SBG stand-alone: Foreign exchange losses of ¥954.7B related to foreign currency-denominated borrowings from Group companies, ¥65.0B related to foreign currency-denominated bonds excl. USD-denomi
Slide 28: Consolidated C/F Summary
Consolidated C/F Summary (¥ B) 1 ¥466.8B decrease yoy C/F FY22 FY23 ・¥251.4B increase in outlay for income taxes Primary details for FY23Q1-Q2 item Q1-Q2 Q1-Q2 SBG has paid ¥238.2B income taxes mainly due to gains +614.2 Subtotal of cash flows from operating activities from the sale of Alibaba share
Slide 29: Income Taxes Paid on a Consolidated Basis (Net)
Income Taxes Paid on a Consolidated Basis (Net) (¥ B) FY23 FY18 FY19 FY20 FY21 FY22 Total Q1-Q2 Consolidated 415.4 636.3 445.5 589.3 525.9 2,612.4 438.7 Japan 284.3 575.2 310.5 551.2 469.7 2,190.9 397.7 SBG and holding companies (wholly 36.8 324.7 35.7 200.0 214.2 811.4 283.1 owned subsidiaries) O
Slide 30: Co-investment Program to SVF2: Related Party Transactions
Co-investment Program to SVF2: Related Party Transactions Equity interests of third-party interests Masayoshi SBG FY23Q2: $― (¥―) Son* 1 FY22: $― (¥―) Equity interests: 17.25% (B) (A) Distribution: $173M Equity acquisition amount: $2,923M 100% (Return of capital) (i) Acquisition costs: $2,594M (comm
Slide 31: Co-investment Program to LatAm Funds & Management's Investment
Co-investment Program to LatAm Funds & Management’s Investment in Asset Management Subsidiary Co-investment program to LatAm Funds Management’s investment in Equity interests of third-party investors asset management subsidiary FY23Q2: $153M ( ¥22.9B) FY22: $215M (¥28.7B) Masayoshi SBG Masayoshi Son