SoftBank Group Corp full year net losses hit JPY961.6bn

18 May 2020

SoftBank Group Corp has published its consolidated financial report for the fiscal year ended 31 March 2020, reporting that net sales for the period edged up 1.5% year-on-year to JPY6.185 trillion (USD57.8 billion) from JPY6.093 trillion in the prior year – bolstered by increases in the holding company’s SoftBank and Arm segments, but partially offset by decreases in the Brightstar segment – although net profit attributable to the parent slumped to a JPY961.58 billion loss from a profit of JPY1.41 trillion in FY2018/19. In its financial report SoftBank highlighted that the losses in FY2019/20 were mainly related to: a JPY339.8 billion dilution gain from changes in equity interest recorded in conjunction with a new issuance of shares by Alibaba upon its listing in Hong Kong; a gain relating to settlement of a variable pre-paid forward contract using Alibaba shares; changes in third-party interests in SoftBank Vision Fund and other SBIA-managed funds; a financial cost of JPY300.9 billion; and losses totalling JPY720.8 billion related to the investment in WeWork held by a wholly owned subsidiary of the company.

Operating income (excluding income from SoftBank Vision Fund and other SBIA-managed funds) in the year under review improved by JPY63.51 billion in the SoftBank segment, and JPY18.07 billion in the Brightstar segment. However, segment income deteriorated JPY176.79 billion in the Arm segment, and by JPY159.50 billion in the Other segment. The group also recorded an ‘unrealised loss on valuation’ of JPY1.87 trillion from investments held by SoftBank Vision Fund at the fiscal year-end, due to ‘a decrease in the fair values of investments including Uber Technologies … and WeWork … along with a significant decrease in the total fair value of other portfolio companies in the fourth quarter, mainly due to the impact of the COVID-19 outbreak’.

With the carrier’s finances under pressure, on 23 March 2020 the board of directors opted to pursue a strategy to sell or monetise up to JPY4.5 trillion of assets held by the company, which will be used to repurchase up to JPY2 trillion of its common stock with the balance to be used for debt redemptions, bond buybacks and increasing cash reserves. The transactions will be executed over four quarters and are in addition to the JPY500 billion share repurchase programme announced on 13 March 2020. The measures are designed to strengthen its balance sheet and enhance its credit rating, it said.

Further, SoftBank also noted that from 1 April 2020 Sprint ‘is no longer a subsidiary of the Company and the combined new company, T-Mobile US, Inc. (“New T-Mobile”) became an equity method associate of the Company with an approximately 24% share-holding (fully-diluted base)’. As of 31 March 2020, SoftBank Group Corp had adjudged the US merger to be ‘highly probable’, and accordingly, ‘Sprint’s net income and loss is presented as net income or loss from discontinued operations, separate from continuing operations in the Consolidated Statement of Income for the fiscal year’. It went on to note that ‘Sprint’s net income and loss for the previous fiscal year has also been retrospectively revised and presented as net income or loss from discontinued operations.’

Japan, SoftBank Group Corp