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Earnings Results for Q3 FY2022

Earnings Results for Q3 FY2022 ― February 7, 2023

SoftBank Group Corp. announced on February 7, 2023 its earnings results for the third quarter of the fiscal year ending March 31, 2023.

Consolidated Financial Report for the nine-month period ended December 31, 2022Open PDF file(1.49MB/98 pages)

Webcast

Highlights (5 minutes)

Full-length (1:24:54)

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 Depositary 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 ¥948.0 billion on Alibaba shares that continued to be held at the third quarter-end following a decrease in the share price that occurred from Alibaba’s exclusion from the associates of the Company up to the third quarter-end.

2. SVF

Gross performance since inception was a $11.0 billion gain in SVF1 and a $16.7 billion loss in SVF2.*2

3. Highlights of results for the nine-month period ended December 31, 2022

Loss of ¥1,361.2 billion on investments (including a ¥511.6 billion loss for the third quarter)
  1. ¥3,699.6 billion investment gain at Investment Business of Holding Companies (gain for the third quarter: ¥174.9 billion), 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 ¥948.0 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 third quarter-end
  1. ¥5,006.8 billion investment loss at SoftBank Vision Funds (including a ¥653.2 billion loss for the third quarter). This included realized gain (net) of ¥48.1 billion and unrealized valuation loss (net) of ¥2,052.8 billion at SVF1 and realized loss (net) of ¥2.7 billion and unrealized valuation loss (net) of ¥2,322.4 billion at SVF2. Share prices of numerous public portfolio companies*3 declined amid the weakness in global stock markets (although share prices of several companies rose in the third quarter), and the fair value of a wide range of private portfolio companies*3 also decreased, reflecting markdowns of weaker-performing companies and share price declines in market comparable companies.
Loss before income tax of ¥290.0 billion (deterioration of ¥1,524.8 billion yoy)

reflecting the recordings of:

  1. Finance cost of ¥433.5 billion
  2. Foreign exchange loss of ¥728.0 billion due to the impact of the weaker yen amid an excess of U.S. dollar-denominated liabilities (net) mainly at SBG over its U.S dollar-denominated cash and cash equivalents and loans receivable
  3. Derivative gain (excluding gain (loss) on investments) of ¥619.6 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 ¥1,145.8 billion
Net loss attributable to owners of the parent of ¥912.5 billion (deterioration of ¥1,305.1 billion yoy)

reflecting the recordings of:

  1. Income tax of ¥468.2 billion
  2. Net income attributable to non-controlling interests of ¥154.3 billion

4. Maintained prudent defensive financial management with continued monetization of and contraction in investments, resulting in an improvement in LTV (Loan-to-Value)*4 from the previous fiscal year-end.

Continued monetization of investments
  1. Raised $24.42 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 those through share exchanges) for a total of $5.26 billion in the period, including full exits of eight portfolio companies, such as Uber and KE Holdings, and partial exits of several public portfolio companies.
Contraction in investments

SVF1 and SVF2 made new and follow-on investments (including those through share exchanges) totaling $2.76 billion in the period, a significant reduction from $39.24 billion in the same period of the previous fiscal year.

5. Reduced interest-bearing debt by ¥3,674.0 billion at SBG and its subsidiaries engaged in fund procurement, etc., from the previous fiscal year-end 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 six-month period ended September 30, 2022).
  2. Repaid borrowings of $4.5 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 early repayment of ¥292.7 billion.
  4. Repaid in full $6.0 billion in a margin loan borrowed through Alibaba shares in the second quarter.
  5. Repaid $2.06 billion in a margin loan borrowed through T-Mobile shares in the six-month period ended September 30, 2022.
  6. In the third quarter the Company repurchased a total of $1.51 billion worth of foreign currency-denominated senior notes (at face value) and $0.75 billion worth of USD-denominated Undated Subordinated Non-Call 6 years Resettable Notes (at face value). The latter is classified as equity instruments in accordance with IFRSs.

6. Completed share repurchase totaling ¥1.4 trillion

  1. On October 17, 2022, SBG completed the full acquisition of shares under the ¥1 trillion share repurchase program authorized in November 2021.
  2. On November 10, 2022, SBG completed the full acquisition of shares under the ¥400 billion share repurchase program authorized in August 2022.
  3. By March 31, 2023, SBG plans to retire 252,958,500 shares (14.68% of the total number of shares issued prior to the retirement), the same number as the total number of shares acquired in accordance with the above two programs.

7. In February 2023, Z Holdings resolved on a merger policy among the company and mainly LINE and Yahoo Japan.

Z Holdings decided on a basic policy of implementing a merger by around the end of the fiscal year ending March 31, 2024, mainly around the three companies (Z Holdings and its core wholly owned subsidiaries: LINE and Yahoo Japan) to build an organization structure that puts more emphasis on products, to accelerate the expansion of synergies from the business integration.

  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 and PayPay Corporation), SVF1, SVF2, LatAm Funds, and Arm, as well as SB Northstar.

Materials＆News

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FY2022Aug. 8, 2022Nov. 11, 2022Feb. 7, 2023−
Webcast VideoWatch video VideoWatch video VideoWatch video −
CEO Reflections VideoWatch video − − −
Highlights VideoWatch video VideoWatch video VideoWatch video −
Presentation

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Quarterly Results

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Data Sheet

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

  • PDFOpen PDF file
    (24.1MB/71 pages)

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    (2.66MB/118 pages)

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Quarterly Results

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    (1.97MB/95 pages)

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    (2.24MB/116 pages)

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Data Sheet

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