Earnings Results for Q2 FY2023
Earnings Results for Q2 FY2023 ― November 9, 2023
SoftBank Group Corp. announced on November 9, 2023 its earnings results for the second quarter of the fiscal year ending March 31, 2024.
Webcast
Full-length (1:29:38)
7-minute highlight video is also available.
[Short Video] SoftBank Group Earnings : Q2 FY2023 by Yoshimitsu Goto, Board Director, Corporate Officer, Senior Vice President, CFO & CISO
Earnings Highlights
1. Listing of Arm on the Nasdaq Global Select Market
- Arm was listed on the Nasdaq Global Select Market on September 14, 2023. In the IPO, a wholly owned subsidiary of the Company disposed of 102,500,000 American depositary shares (“ADSs”), representing 10% of Arm’s outstanding ordinary shares,*1 and received proceeds of $5.12 billion.
- No gain on the disposal is recorded in the consolidated statement of profit or loss as Arm continues to be a subsidiary of the Company after the disposal. However, in the consolidated statement of financial position, ¥674.4 billion ($4.65 billion), which represents the gain on disposal, was recorded as capital surplus.
2. Results highlights
¥963.6 billion investment loss (¥849.6 billion loss for the same period of the previous fiscal year)
- ¥413.5 billion investment loss at Investment Business of Holding Companies
- Unrealized valuation loss of ¥364.5 billion and derivative loss on investments of ¥66.5 billion
- ¥237.6 billion unrealized valuation loss on Alibaba shares included in the unrealized valuation loss above was offset by a derivative gain of ¥642.0 billion relating to prepaid forward contracts, etc. using Alibaba shares (recorded as derivative gain (excluding gain or loss on investments)).
- ¥583.3 billion investment loss at SoftBank Vision Funds (excluding gains associated with SVF’s investments in the Company’s subsidiaries)
Note: The SoftBank Vision Funds segment recorded ¥181.1 billion gain on investments; this included gains associated with SVF’s investments in Arm and other subsidiaries of the Company.
- For the investments held at the second quarter-end, the fair value of public portfolio companies*2 decreased due to lower share prices, and the fair value of private portfolio companies*2 decreased mainly reflecting markdowns of weaker-performing companies.
¥907.4 billion loss before income tax (deterioration of ¥1,200.1 billion yoy)
reflecting the recordings of:
- Finance cost of ¥295.2 billion
- Foreign exchange loss of ¥648.1 billion due to the impact of the weaker yen amid an excess of U.S. dollardenominated liabilities (net) mainly at SBG over its U.S. dollar-denominated cash and cash equivalents and loans receivable
- Derivative gain (excluding gain or loss on investments) of ¥701.7 billion due to recording a gain relating to prepaid forward contracts using Alibaba shares following a fall in the share price, which offset an unrealized valuation loss on the shares
¥1,408.7 billion net loss attributable to owners of the parent (deterioration of ¥1,279.6 billion yoy)
reflecting the recordings of:
- Income tax of ¥197.7 billion
- Net income attributable to non-controlling interests of ¥303.6 billion
3. Balancing defense and offense
LTV*3 remained nearly unchanged from the previous fiscal year-end as a result of continued monetization
- Raised $4.39 billion through prepaid forward contracts using Alibaba shares
- Received proceeds of $5.12 billion through the IPO of Arm
- Received proceeds totaling $1.97 billion from sales of investments by SVF*4
Expanded investments
- $1.33 billion for acquisition of investments by SVF*4
- ¥282.6 billion primarily for strategic investments by SBG and its wholly owned subsidiaries*5
4. SVF
Gross performance since inception was $14.8 billion in gain for SVF1 and $20.7 billion in loss for SVF2.*6
5. Completed replacement of USD-denominated NC6 undated hybrid notes
The Company issued domestic hybrid bonds of ¥222.0 billion in April 2023. Together with funds procured through a hybrid loan*7 of ¥53.1 billion in May 2023, the Company completed the replacement of USD-denominated NC6 undated hybrid notes ($2.0 billion) with the first voluntary call date in July 2023. The Company also replaced domestic hybrid bonds (¥15.4 billion) in September 2023, with the first voluntary call date in the same month.
6. Completion of the group reorganization involving Z Holdings and its core wholly owned subsidiaries, primarily LINE and Yahoo Japan
As of October 1, 2023, subsequent to the end of the second quarter, Z Holdings successfully completed the scheduled group reorganization procedures, including a merger primarily among the company and its core wholly owned subsidiaries, LINE and Yahoo Japan, and changed its trade name to LY Corporation. The revised organizational structure, with a further emphasis on products, is expected to accelerate synergy expansion through business integration.
The calculation is based on the 1,025,234,000 company shares issued and outstanding on September 30, 2023.
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.
Loan-to-Value (LTV) refers to the ratio of liabilities to holding assets, calculated by dividing the adjusted net interest-bearing debt by the equity value of holdings. Both the equity value of holdings and adjusted net interest-bearing debt exclude amounts to be settled at maturity or borrowings associated with asset-backed finance. In computing the adjusted net interest-bearing debt, the calculation omits 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 like Z Holdings Corporation and PayPay Corporation), SVF1, SVF2, LatAm Funds, and Arm. A portion of SB Northstar’s interest-bearing debt and short-term investments included in its cash position are also excluded.
The amounts recorded in the condensed interim consolidated statement of cash flows
The amount comprises the investment outlay by SBG and its primary wholly owned subsidiaries (excluding investments in U.S.Treasury Bonds), as accounted for under “Acquisition of investments” in the condensed interim consolidated statements of cash flows, combined with the amount paid to third-party shareholders of Berkshire Grey, Inc. to acquire all of its shares in July 2023, net of cash and cash equivalents held by the company.
Gross amounts before deductions, such as third-party interests and taxes
The hybrid loan is eligible for 50% equity treatment for the drawn down amount by Japan Credit Rating Agency, Ltd. and S&P Global Ratings Japan Inc.
Refer to “ Consolidated Financial Report for the six-month period ended September 30, 2023” to find more details and definition of each company name and abbreviation.
Materials＆News
| Q1 | Q2 | Q3 | Q4 | |
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| FY2023 | Aug. 8, 2023 | Nov. 9, 2023 | − | − |
| Webcast | Video | Video | − | − |
| CFO Reflections | Video | Video | − | − |
| Highlights | Video | Video | − | − |
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| Quarterly Results |
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| Data Sheet |
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| FY2022 | Aug. 8, 2022 | Nov. 11, 2022 | Feb. 7, 2023 | May 11, 2023 |
| Webcast | Video | Video | Video | Video |
| CEO/CFO Reflections | Video | − | − | Video |
| Highlights | Video | Video | Video | Video |
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| Quarterly Results |
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| Data Sheet |
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