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Earnings Results for Q2 FY2022

Earnings Results for Q2 FY2022 ― November 11, 2022

Webcast

Highlights (9 minutes)
Full-length (1:44:02)

Earnings Highlights

1. Alibaba

The Company recorded a total profit of ¥5,371.6 billion as a result of the early physical settlement*1 (the “Early Physical Settlement”) of prepaid forward contracts corresponding to 242 million American Depository Receipts (ADRs) of Alibaba shares from August to September 2022. During the course of the Early Physical Settlement, the Company’s voting ownership in Alibaba fell below 20%, and Alibaba was therefore excluded from the associates of the Company.

AmountAccount in the condensed interim consolidated statement of profit or loss
Gain on settlement of prepaid forward contracts using Alibaba shares pertaining to the Early Physical Settlement¥584.8 billionGain on investments at Investment Business of Holding Companies
Gain from remeasurement of Alibaba shares held upon exclusion from associates¥3,996.7 billion
Derivative gain on prepaid forward contracts that are the subject of the Early Physical Settlement¥790.1 billionDerivative gain (excluding gain (loss) on investments)
Total (contribution to income before income tax)¥5,371.6 billion

Apart from the above, the Company recorded an unrealized valuation loss of ¥1,077.1 billion on Alibaba shares that continued to be held, following a decrease in the share price that occurred after Alibaba’s exclusion from the associates of the Company.

2. SVF

Gross performance since inception was a $13.5 billion gain in SVF1 and a $14.6 billion loss in SVF2.*2

3. Highlights of results
Loss of ¥849.6 billion on investments
  1. ¥3,524.7 billion investment gain at Investment Business of Holding Companies; which included
  • Gain of ¥4,581.5 billion relating to settlement of prepaid forward contracts using Alibaba shares pertaining to the Early Physical Settlement
  • Unrealized valuation loss of ¥1,077.1 billion due to a decrease in the Alibaba share price from the time of Alibaba’s exclusion from the Company’s associates up to the second quarter-end
  1. ¥4,353.5 billion investment loss at SoftBank Vision Funds; which included
  • Realized gain (net) of ¥3.3 billion and unrealized valuation loss (net) of ¥1,845.8 billion at SVF1
  • Realized gain (net) of ¥0.8 billion and unrealized valuation loss (net) of ¥2,021.6 billion at SVF2
    Share prices of numerous public portfolio companies*3 declined amid the weakness in global stock markets, and the fair value of a wide range of private portfolio companies*3 also decreased.
Income before income tax of ¥292.6 billion (decrease of ¥754.3 billion yoy)

reflecting the recordings of:

  1. Finance cost of ¥314.2 billion
  2. Foreign exchange loss of ¥1,095.4 billion due to an increase in U.S. dollar-denominated liabilities (net) of SBG in yen terms caused by the weaker yen
  3. Derivative gain (excluding gain (loss) on investments) of ¥1,029.8 billion related to prepaid forward contracts using Alibaba shares, due to the decrease in the Alibaba share price
  4. Decrease in third-party interests at SVF of ¥1,018.7 billion
Net loss attributable to owners of the parent of ¥129.1 billion (deterioration of ¥492.7 billion yoy)

reflecting the recordings of:

  1. Income tax of ¥306.2 billion
  2. Net income attributable to non-controlling interests of ¥115.5 billion
4. Maintained prudent defensive financial management - with continued monetization of, and contraction in investments. These resulted in a large improvement in LTV.*4
Continued monetization of investments
  1. Raised $18.35 billion through prepaid forward contracts using Alibaba shares in the period.
  2. Sold 21.2 million T-Mobile shares for $2.40 billion in the first quarter.
  3. SVF1 and SVF2 sold investments, including full exits of seven portfolio companies such as Uber and KE Holdings, for a total of $3.60 billion*5 in the period.
Contraction in investments
  1. SVF1 invested a total of $0.26 billion in the period*5 (compared to $2.50 billion invested in the same period of the previous fiscal year).
  2. SVF2 invested a total of $2.24 billion in the period (compared to $27.17 billion invested in the same period of the previous fiscal year), bringing the fund’s total cost to $49.79 billion.
  3. LatAm Funds invested a total of $0.25 billion in the period*5 (compared to $2.33 billion invested in the same period of the previous fiscal year).
Integration of international investment functions to improve operational efficiency

In October 2022, the Company decided to integrate the operations of SBIA and SoftBank Group International,*6 which are collectively responsible for the Company’s global investment activities, to improve the operational efficiency of international investment functions.

5. Reduced interest-bearing debt by ¥2,849.7 billion at SBG, its subsidiaries engaged in fund procurement, etc., from the previous fiscal year-end (excluding a decrease associated with foreign bond repurchases conducted in October), as a result of proactive debt repayment and the Early Physical Settlement.
  1. Reduced financial liabilities relating to the sale of shares by prepaid forward contracts by $27.57 billion due to the Early Physical Settlement (including $13.47 billion relating to contracts concluded in the period)
  2. Repaid borrowings of $4.50 billion made through commitment lines in the first quarter.
  3. Repaid the entire ¥325.2 billion of bank loans (senior loans) in the second quarter, including ¥292.7 billion repaid early.
  4. Repaid $6.0 billion in a margin loan borrowed through Alibaba shares in full in the second quarter.
  5. Repaid $2.06 billion in a margin loan borrowed through T-Mobile shares in the period.
  6. Repurchased a total of $2.27 billion worth of USD-denominated hybrid notes and USD- and EUR-denominated senior notes (at face values) in October 2022, subsequent to the second quarter.
6. Continued share repurchase
  1. On October 17, 2022, SBG completed the full acquisition of shares under the ¥1 trillion share repurchase program authorized in November 2021. The repurchase includes shares totaling ¥523.1 billion acquired in the period.
  2. On November 10, 2022, SBG completed the full acquisition of shares under the ¥400 billion share repurchase program authorized in August 2022. The share repurchase under the program had been started on October 18, 2022.

  1. Certain contracts that became due for settlement during the implementation period were also settled.

  2. Gross amounts before deductions such as third-party interests and taxes.

  3. Public portfolio companies are shares traded on stock exchanges or over-the-counter markets. Private portfolio companies are those that do not fall under the category of public portfolio companies. The same applies hereinafter.

  4. The ratio of liabilities to holding assets, which is calculated as adjusted net interest-bearing debt divided by equity value of holdings.
    Equity value of holdings and adjusted net interest-bearing debt each exclude amounts to be settled at maturity or borrowings that are part of asset-backed finance. The calculation of adjusted net interest-bearing debt excludes interest-bearing debt and cash and cash equivalents, etc., attributable to entities managed on a self-financing basis, such as SoftBank Corp. (including its subsidiaries such as Z Holdings Corporation), SVF1, SVF2, LatAm Funds, Arm, and PayPay Corporation, as well as SB Northstar.

  5. Includes share exchanges. During the second quarter, SVF1 sold its stake in Grofers International Pte. Ltd. to Zomato Limited in exchange for shares in Zomato Limited as consideration, and LatAm Funds exchanged its shares in Yaydoo, Inc. for shares in PayStand Inc. These share exchanges are treated as full exits (entire sale) from investments and acquisition of new investments, with the sale price and acquisition cost being recorded in gross, respectively, and with the difference between the acquisition cost of shares initially held and sale price (acquisition cost of the exchanged shares) being recorded as realized gain and loss on investments.

  6. Refers collectively to several entities, including SoftBank Group Capital Limited and SB Group US, Inc.

Materials＆News

Q1Q2Q3Q4
FY2022Aug. 8, 2022Nov. 11, 2022−−
Webcast
CEO Reflections −
Highlights
Presentation


  • (6.47MB/50 pages)


  • (5.32MB/78 pages)

Quarterly Results


  • (1.40MB/85 pages)


  • (1.49MB/95 pages)

Data Sheet


  • (481KB/23 pages)


  • (490KB/23 pages)


  • (568KB)


  • (690KB)

FY2021Aug. 10, 2021Nov. 8, 2021Feb. 8, 2022May 12, 2022
Webcast
CEO Reflections − −
Highlights
Presentation


  • (24.1MB/71 pages)


  • (2.66MB/118 pages)


  • (8.53MB/67 pages)


  • (16.0MB/90 pages)

Quarterly Results


  • (1.97MB/95 pages)


  • (2.66MB/118 pages)


  • (2.24MB/116 pages)


  • (2.27MB/121 pages)

Data Sheet


  • (887KB/19 pages)


  • (430KB/20 pages)


  • (457KB/20 pages)


  • (480KB/21 pages)


  • (479KB)


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