SoftBank Group Corp. (9984) Earnings Call Transcript & Summary

[Interpreted] Thank you very much for waiting. Good morning, everyone. Now we'd like to start the SoftBank Group Corp. investors briefing for the 3-month period ended June 30, 2022. First of all, I would like to introduce the representatives from SoftBank. We have Mr. Goto, Board Director and CFO; Ms. Kimiwada, Corporate Officer, Senior Vice President and Head of Accounting Unit; Mr. Navneet Govil, Managing Partner and CFO of SoftBank Vision Fund Advisor from the U.S. The session starts with the market overview by Mr. Goto, the overview of the consolidated results by Ms. Kimiwada, financial update by Mr. Goto, followed by SoftBank Vision Fund update by Mr. Navneet Govil. You can choose either English or Japanese for this meeting. [Operator Instructions] Materials for today is available at our corporate website. Now we'd like to start with the market overview by Mr. Goto. Goto-san, please.

[Interpreted] Good morning, everyone. My name is Goto from SoftBank Group Corp. First of all, let me share with you our views on current market environment and our thoughts on our financial management. As you can see on the screen, you can see CPI in the U.S., U.S. Treasury interest rates and NASDAQ Composite Index and S&P 500 for CPI. It's on the upward trend despite some corrections. U.S. Treasury interest rate, as you know, there are a lots of thoughts in the U.S. from FRB's perspective. And also for the first quarter, the market environment was really challenging. And also, there are different thoughts and views on the market, but there are some comfortable sentiment looking ahead. From wider, broader perspective, looking at China, which has been challenging from a financial perspective for several years especially for us, Alibaba, which accounts for a big portion of our financial instruments, and how the globalization goes is something that we keep watching on. There are a lot of positivities and negativities in China. And NASDAQ Golden Dragon China Index, which is shown on the left-hand side, it's kind of mild, if you will, compared to S&P and NASDAQ. So again, there are positivities and negativities. I think that's why the Golden Dragon Index is relatively less volatile. But there are challenges still persisting in the global market. Personally, still less volatile in China than other countries. I'm sure there are some reasons why. I've been in financial business for over 40 years. There are some assumptions that have changed and interest rate. Changes in the credit market, which has an impact on equity market. But again, talking about interest rate, the view is different now than 30 years ago. For example, the interest rate from 50 years old -- 60 years old business plans perspective, long-term prime rate was 5%, 6%, but in the latest 5, 10 years, some people might surprise when interest rate jumped from 0% to 3%. But for someone like me, it's not really surprising. And more importantly, the market move is mainly due to information. In the past, because of the gap and information that people have, interest rate moves. But now, most of us have a similar level of information. That's why that doesn't have an impact on the market compared to before. So I think those are some of the reasons why the market environment is rather mild compared to before. And also there are things that are happening that we have not thought of before. For example, pandemic, COVID-19 pandemic and some conflict between East and West, which we have not anticipated before. And climate change that might have a negative impact that we have not thought of before. Those are the themes that we did not see or we did not anticipate 30 years ago. But now when it comes to calculating costs, for example, that's more difficult to do, but that's something that we have to face seriously. So in short, uncertainties remain. In our team, financial team, what we have to do is to make sure that we manage finance steadily like Mr. Son keeps saying, now it's not the time to make an investment, making new investments. Rather, we need to keep financial disciplines. So financing should be stable, whereas not so much new investment. Net asset value is flat, LTV improved dramatically. Also cash position improved dramatically. So from financial management team's perspective, we believe that our stakeholders, like investors should feel comfortable. That's our executive summary. And I'll come back to those points later in more detail. Next, Ms. Kimiwada will walk you through consolidated results.

[Interpreted] Good morning. My name is Kimiwada. Let me present to you a consolidated results that we announced a few days ago. Please take a look at Page 2 of accounting section. It shows a summary of consolidated results of the first quarter. As you all know, in the first quarter, we lost JPY 3.1 trillion in terms of net, especially due to loss on investment, especially SoftBank Vision Fund loss was huge, which is over JPY 2.9 trillion. Overall, that's the consolidated results. Next slide and onwards, let me pick up some highlights or points. Page 3, change in reportable segments. In FY '21, LatAm Fund was independent segment. And since the start of last half of FY '22, LatAm Fund is going to be integrated in SoftBank Vision Fund. So since FY '22, LatAm America, LatAm Fund is integrated in SoftBank Vision Fund in segment. And also SoftBank KK announced that they plan to own PayPay. PayPay has been SoftBank Group's subsidiary. So even though there are some changes in terms of relationship between SoftBank KK and PayPay, despite that from SBG's perspective, nothing should change. So business combination accounting treatment, which will be done by SBKK should not have an impact on consolidated results of SBG. Talking about segment, PayPay has been in other segments, still in other segments. And when SoftBank KK owns PayPay as a subsidiary and PayPay will be included in SoftBank business. Then retrospectively, retreatment -- restatement rather will be disclosed in the future. Next page, integration of LatAm Funds segment into SVF segment. On the right-hand side, as you can see, it's obvious that P/L presentation includes investment from SVF 1/2 and LatAm Funds. And other investments, including SB Opportunity Fund, even though the amount is not big. And also, investment by De-SPAC is included. But from B/S perspective, investments from SVF and LatAm Fund is presented as investment from SVF. However, other investment is presented as investment securities. I don't think there should be any confusion because amount is very small. And detailed numbers are shown on the left hand of the slide. Page 5. Segment income in terms of SoftBank Vision Fund. JPY 2.9 trillion of SVF investment loss. So segment loss before tax was JPY 2.3 trillion. As for SoftBank Vision Fund business, Mr. Navneet will talk more about this later, so I'm not going into detail here. Please go to Page 6. At the consolidated level realized loss and gain -- unrealized loss and gain are shown here. Also, you can see what is portfolio companies, private one and public one. We might come back to those points later. But the point here is, as for private portfolio companies, as you can see on the items column, for Vision Fund 1 and Visual Fund 2, even for private portfolio companies, we took into account of a decrease in the fair value. For SVF2, decrease in the fair value reflecting a decline in the share price of market comparable companies is also taken into account. Page 7, investment business of holding company segment income. There are a lot of things included here. So it's kind of a busy chart. Segment income was JPY 112 billion, including gain related to third parties -- excuse me, partial settlement of Alibaba prepared forward contract by share delivery, which was JPY 97 billion. And also gain related to sales of T-Mobile share was JPY 24 billion. I will come back to this point later. And for SB Northstar, as you can see the scale has been getting smaller and smaller. Before talking about T-Mobile, if you go down to the slide, foreign exchange loss, which is shown in adopted blue line, JPY 822 billion loss due to weaker yen. I will talk more about it later. As for Alibaba, JPY 139 billion income on equity method investment. In the past, we saw a lot of positive numbers. But this quarter, JPY 139 billion negative number was picked up here talking about derivatives. Compared to end of March, Alibaba share price went up. Consequently, we have negative numbers from derivative transaction prospective. All in all, segment income before income tax was JPY 1.1 trillion. Now talk about T-Mobile, which is on Page 8. This chart shows how we have been monetizing T-Mobile shares as of end of June. At the very far bottom right, it shows how many T-Mobile shares and how many T-Mobile -- excuse me, Deutsche Telekom shares. Page 9, for 4 T-Mobile shares, Deutsche Telekom has call options and they exercised the part of the call options. Still exercised part remains. And we have shares that are not subject to call options as well. The far right, that shows how much we have. Blue-light shows the number of shares that is subject to call option. And the dark blue shows those not subject to call options. Every quarter, fair value is calculated. And for options, derivatives value are calculated. Just to remind you Deutsche Telekom, talking about call options, what kind of options Deutsche Telekom has. It has fixed part and floating part. For fixed part, they can exercise when stock price is $103 per share. For variable part, price is set based on a weighted average of trading price in the last 20 days of the transaction. For Deutsche Telekom shares, we just simply own them. Every quarter, we apply fair value calculation. On Page 11, T-Mobile shares, contingent consideration. When we sold Sprint, we acquired this right. And once conditions are met, we have the right to acquire 48.8 million T-Mobile shares. And what are the conditions? Sometime between April 1, 2022 to December 31, 2025, 45-day trading VWAP of T-Mobile share exceeds $150 per share. If the condition is met, then we have a right to acquire 48.8 million T-Mobile shares. Every quarter, we record fair value. And currently, the value is $5.3 billion. And next slide shows the relative gain or loss on Alibaba prepaid forward contracts on a quarterly basis. It's been disclosed for some time. So I'm sure you are familiar with this. Page 13, consolidated PL summary. For investment gain or loss you have been hearing this at different times and places, and derivative loss and gain are shown here as well. And change in third-party interest in SoftBank Vision Fund. SVF recorded a loss, but from SBG's perspective, because part of the loss is attributing to third party from SoftBank Group's perspective, it's a positive number. And income before income tax. From expense perspective, SBKK and Yahoo!, they calculated corporate tax income. But from SBG's perspective, due to reversal of deferred tax liabilities in conjunction with recording derivatives loss related to Alibaba prepaid forward contract. So all in all, there is a positive number for income taxes. Next slide shows consolidated summary. I don't have anything to say particular here. Just one thing, just number 3, JPY 2.9 trillion of investment securities. Other than SoftBank Vision Fund, you may be surprised that SoftBank Group still has this investment securities. And if you look at Page 15, investment securities, as you can see, we have those stocks, including T-Mobile and Deutsche Telekom, SoFi, Lemonade and NVIDIA. Those are the big investments that we have and others, it's just a combination or a total of small ticket size investment. Next slide, consolidated B/S summary for liabilities. Goto-san will talk more about interest-bearing debt. So I am not going to go into detail here. Rather, I'm going to equity section of B/S summary, which is on Page 17. If you take a look at #3, accumulated other comprehensive income, due to foreign exchange differences, impact of the weaker yen on P/L and B/S, I'm going to talk about later. But on P/L, loss is recorded from translation of foreign exchange differences. But for B/S, we have positive number, which has strengthened equity. Again, impact of a weaker yen on P/L and B/S is shown on Page 18. For SBG standalone and subsidiaries conducting fund procurement in Japan. And for foreign currency-denominated cash equivalent and loan receivables, when yen gets weaker, there is a positive impact. And for foreign currency-denominated liabilities when yen gets weaker than negative impact. But for foreign subsidiary and associated whose functional equity is not Japanese yen. In terms of B/S, there is a positive impact. That is something that we talked about earlier to during EM. And next slide shows impact of the weaker yen in FY '22 fourth quarter, just for your reference, top path balance in SBG stand-alone. When yen gets weaker, foreign exchange loss of negative JPY 1 trillion related to foreign currency-denominated borrowing from group companies is recorded and exchange difference from translation in consolidated B/S at FY '22 first quarter end, it's shown at the bottom half of the slide. Exchange differences from translation in consolidated B/S include SVF 1/2, SBGC and Arm. Next slide shows cash flow. Please refer to the slide later for your reference. Before I close my section, just let me talk about 2 things. First, co-investment program to SVF2 related party transaction, which is disclosed. As you can see, bottom right shows balance of the receivables owned by SBG. And the top right shows equity interest, third-party interest from SBG's prospective. Numbers as of end of FY '21 and end of the first quarter of '22. For receivables, premium will be added and for equity interest from fund prospective, loss was recorded. Accordingly, interest decreased a little bit. Finally, on Page 24, due to weaker yen, even though there is no acquisition, on balance sheet, goodwill increased due to weaker yen. For example, Arm, JPY 387 billion, JPY 100 billion goodwill increased around Arm. That's all from Kimiwada. Next, we would like Mr. Goto to give you the financial update.

[Interpreted] Yes, I would like to explain you about the financial update. Here is a summary. April to June, first quarter summary here. As I mentioned in the beginning of this meeting, we've been slowing down the investment activities and also monetizing continuously, that's been contributing to the improvement of the loan to value. So we've been -- we have stability of our finance, and we rather like to achieve further of the stabilities because of the current environment. Results and net asset value, net loss is JPY 3 trillion and net asset value, JPY 18.5 trillion. So almost flat from the end of March. The fair value of Vision Fund portfolio, this has been decreasing. At the same time, we have increasing the liquidity with the utilization of asset work financing. And with this weak yen situation, net asset value has been about flat from the end of March. Financial activities, loan-to-value 14.5% and cash position, JPY 4.6 trillion. So with these two, the most important index, our KPI has been very stable situation. The reason that we've been able to have this stability is mainly from $12.2 billion of the asset-backed financing of this is U.S. dollars and also that coming mainly from Alibaba, T-Mobile, and Arm shares. And also, we have an affluent cash position so that anything that we can repay in loans that we would like to repay those, for example, short-term borrowings and also the commitment line. Those drawdowns has been repaid with this opportunity. As for investment activities, we are very much slow in terms of new investments. But when it comes to buybacks, we still seeing the large discounts of the share so that we have announced JPY 1 trillion buyback program last November has been steadily executed. Investment of JPY 2.2 billion from Vision Fund 1 and 2 and also -- which means very small and slow. And at the same time, USD 4.1 billion sales and divestment and monetization, and JPY 300 billion of the buyback has been executed. So the 9 months to date, about JPY 700 billion. So time line-wise, we believe that we are making the steady steps of the consumption of programs of buyback. And the investment loss gain and loss, which is a loss of JPY 2.8 trillion. As a result, net loss was JPY 3.1 trillion. This was also explained by Masa the day before yesterday. Who -- he has been taking the overall lead on the investment activities,and I understand that he has been taking this seriously. And also, having a lot of study of insights for the future activities. From my positions and my point of view under such a circumstance with the equity market drops, our JPY 3 trillion loss of the investment company is something that we could have imagined. I believe that the good time -- we also have a good time in a good market. That market, we should suffer as well. Under such circumstance, I believe my role is rather seek for the further stability of the balance sheet. I heard that Berkshire Hathaway also reported JPY 6 trillion level of the loss. So I believe that the trend is also applied to the -- to everyone. And this page shows the foreign exchange as the detail just explained by Ms. Kimiwada. So decrease in consolidated net income, JPY 800 billion from a P&L point of view, but there are other increase in accumulated other comprehensive income for increase in equity by JPY 2 trillion. And also from net asset value point of view, this increased by JPY 2.2 trillion. This net asset value very bottom impact is actually the largest impact. And for your reference, JPY 820 billion of loss in P&L has recorded, especially mainly due to foreign exchange loss related to foreign currency denominated borrowings at SBG stand-alone. Of course, there are accounting rule there. I understand that, but this JPY 820 billion negative. And the scope for this loss is actually at the end of March as a baseline. Playing debt, mainly corporate bonds in foreign currency is about JPY 2 trillion. Other than those debt or debt equivalents which is mainly non-asset -- nonrecourse asset-backed financing, which are the majority, which are about JPY 6 trillion, which includes Alibaba forward transaction, which is to be scheduled to settle in 2 years. That's also debt counting. And also, which includes T-Mobile, Deutsche Telekom transaction, which Kimiwada mentioned earlier. Those are asset-backed financing and also nonrecourse to SoftBank Group. That means we can settle in shares. So JPY 6 trillion foreign denominated borrowings is kind of separated with assets. But also for the assets point of view, net asset value is increasing in our holdings. So we have about JPY 9 trillion of the foreign exchange of the borrowings at the end of March. And that due to the foreign exchange move JPY 820 billion of loss here in consolidated net income. And 70% of those are because of the increase in assets for foreign exchange and fixed transaction, then the real move is not JPY 820 billion, but actually much, much smaller than that. That's actually real picture from a finance point of view. But still, of course, we do need to follow the accounting standard. So that's that. But I just wanted to share with you the view from the finance point of view as well. And here is the net asset value and the net asset value per share. As mentioned, it's flat from the previous quarter. Net interest-bearing debt is also decreasing. Actual holdings itself is decreasing, but the net debt is also increasing. That also includes some impact from foreign exchange movement. So it's still the same number from the previous quarter. On your right-hand side is per share basis, net asset value per share, about JPY 11,000, JPY 11,640. This is the case. However, our share price is JPY 5,200 somewhere. Therefore, the discount is about 55% or so, which we are very much seriously taking, and we believe that we need to seek for or explore this challenge. Loan to value 20.4% at the end March to 14.5% at the end of June, which large improvements. This itself is something that makes you comfortable feeling. And you may feel a little bit strange by looking at this chart is because we are not using above half -- half above the chart that we are using only the half bottom. This is something I just wanted to share with you that 25% -- or 35% of the threshold, those actually is already a very safety level. That's our view from a financial policy point of view. That's I wanted to remind you when it comes to 100%. And from there, our level that we set as our financial policy is very, very low. And we are consciously, intentionally trying to manage this number as well as -- and our financing activities, also needs to be taken place in a steady basis. And our new investment activities is going to be kept slowdown. Therefore, we believe our safetiness and soundness of our balance sheet is going to be even improved. People may say that why are you doing too much, but I don't want to say I'm too much optimistic under such a market condition that's going to be damage later on so that I want to be careful for this type of situations. And loan to -- next is cycle of the investment recovery in fiscal 2022. And you see the incrementals mainly from the distribution from Vision Fund, not too much, but also sales and monetization or asset-backed financing are actually accumulating to JPY 1.6 trillion. Decreasing portion is the Vision Fund investment or buyback. SVF investment, which has been very much slowed so we don't have much to pay here. Therefore, final number for cash position is JPY 3.8 trillion on the balance sheet. And also, we have unused or undrawn commitment line facility there because those used has been repaid one. So that has been undrawn once again. Therefore, adding all that, then that will give you a JPY 4.6 trillion equivalent of the cash position or liquidity are on our balance sheet. And going to the investment strategy. Of course, the Vision Fund details is going to be explained by Navneet after my presentation, and he will give you more color on this. But when it comes to the group overall strategy and also the vision for the investment has not been changed. We are to be vision capitalist for the information revolution and try to enhance our enterprise value. Through such activities, so Vision Fund and also those 2 drivers are the very important factors. And that will also influence to our allies or businesses or companies. And that can enhance further group overall enterprise value, and we would like to support that activity as well from our point of view. And finance team also needs to make sure that we have a very robust financial policy so that we will be able to enhance their growth so that we have enough reserve, but once the signal turns to green lights, then that we are ready to go for any investment activities when the market allows. So preparation wise, we are very much ready. And the equity value of holdings, here is the trend by the quarter stages. In big picture, Alibaba share declines and also monetization going on at the same time. So that's one thing. And this is the diversification of portfolio. On your left-hand side, at the end of March, compared to 2 years ago, 3 years ago, actually, diversification has been very much improved. Actually, 2, 3 years ago, Orange of Alibaba portion was taking almost half of this pie chart, but that has been changed and already improving diversification. One another large factor is you see the small box. This is the proportion of public securities, which is the important index for credit point of view, 52% at the end of March. And -- but that has decreased to 49% at the end of June. This is a slight decrease, but I believe you understand that we are expecting to go public sometime near future. And we are having a good preparation for that. So Arm is now a private company at this moment. But once they go public, that's going to give us 62% of the public securities proportions once Arm go public. And investments through funds, no change, Vision Fund 1 and 2 and LatAm Fund. So this platform has not changed. And that again, I will ask Navneet to give you more colors on this portion. And here, again, Vision Fund cumulative investment return. For Vision Fund 1, JPY 89 billion investment costs and JPY 107 billion as a cumulative investment return. When it comes to Vision Fund 2, unfortunately, cumulative return is below the amount of investment cost. And here, for these numbers, a bit unfortunate. But still, it's early stage since we launched Vision Fund 2 and the number of investments is over [ JPY 300 billion ] so that we believe there are very potential youngsters. And in this portfolio are going to show us a good sign of growth, and we would like to keep a very close look in monitoring so that we will be able to improve the performance of Vision Fund 2 in the future. Here is the invested amount. This shows how small we are making investment in terms of our new investment activities. Actually, we are not hitting gas all the time. First quarter, about JPY 15 billion per quarter in terms of investment amount, but that's been declining steadily. And this first quarter, it was JPY 2 billion investment invested. And further -- going forward, we would like to be even more selective in terms of the investment activities. So in principle that we are keeping the speed of slowing down. Here is the IPOs and the monetization in Vision Fund 1 and 2. For this quarter, as you can tell, the market is not too good so that there is no big movement. But still, we had 3 IPOs, also monetization being done in Visual Fund 1, JPY 3.8 billion and JPY 0.3 billion in Vision Fund 2. So I think we did quite a good exists too. And here is about Arm. They are now preparing for IPO. So I hesitate to make any detailed comments. But here, we want to share with you the revenue, and they are making a good jump and also making -- keeping a good trend. So that's on the page that I can share at this moment in terms of Arm, and I hope that you can have a good expectation on the future of Arm. In financial condition, I'd like to explain to you a bit details about our activities in these 3 months. So with a very affluent cash position and based on that, we have returned or repaid borrowings under commitment line of $4.5 billion. This is commitment line. So we repay, but we have unused line again. So that's equivalent to the cash that we will be able to use immediately if we wish to. And asset-backed financing, in March, we had used Arm share for financing of JPY 8 billion. And this was a very popular one. In May, June, we have structured second syndication and able to increase the size. Actually, demand was very high, but we try to squeeze that to $0.5 billion. It was very popular. Alibaba share forward transaction, this is the derivative transaction and $10.5 billion, almost JPY 1.4 trillion equivalent, and this is one of the main source for the financing, which is working pretty well. T-Mobile share and Deutsche Telekom related. For T-Mobile shares, we have sold the shares to Deutsche Telekom in April. It was about JPY 300 billion equivalent. And with that, we had a margin on -- based on that share. So we have repaid that by JPY 150 billion. So net-net is positive JPY 150 billion. Here on the cash position. I mentioned earlier, loan-to-value is actually showing our status of finance. And that's one of the important KPI. But here, actually, another important KPI is cash position to share with you, our credit status. So as we promised, we managed to maintain enough cash to cover 2-year equivalent redemption. JPY 4.6 trillion is the current number. This is almost 4-year equivalent of the repayments. And because of this tough situation, that's why that we try to keep enough cash to be able to repay the debt in our bonds, not only for retail but also for the professional institutional investors. But also we have a retail bond for domestic market as well. So we have professionals, and we have retails, which has a different view on the company's credit. And also there are some discrepancies in between the understanding of those. So even for the retail investors, we would like to make sure that we have easy to understand type of financing situation. And I believe cash position is one of those KPIs, which can explain well to retail investors. So we have -- as we see very important for this one. And this is the redemption schedule. About JPY 2 trillion of the level of the cash position is required to maintain from here. And based on that, we would like to be prepared in advance as much as possible. And here is the credit spread. Of course, it goes up and down. But in the very beginning, I mentioned about the interest rates and also the index. Actually, this is aligned with those movements. June and after, there may be some improvement trend with these adjustments. And here is the interest-bearing debt in gross. So in overall, JPY 15.8 trillion, of which JPY 8.7 trillion is nonrecourse to SoftBank Group. So gross debt with recourse is about JPY 7 trillion. So this is improving. And next is the cash position trend. With the slowing down of investment speed, cash position is seeing dramatically improvement. And with these 2 KPI gross debt and cash position, net -- shows the net interest-bearing debt on the next page. Here, I believe it's also an important slide. Our net interest-bearing debt, deducting the equaled adjustment that gives us a JPY 3 trillion level of adjusted SBG stand-alone net debt. And this is, of course, again, making a good improvement so far. And when we calculate loan to value of our company, we believe this definition is the best to measure our company. And that calculation method is something that I wanted to share with you. So nonrecourse asset-backed finance, including forward transaction or color transactions. Those are actually financed with the shares we hold. And as for margin loan, this is a low with collateral type of instruments. So if you borrow JPY 1 trillion, you may need JPY 3 trillion equivalent of shares which gives you about 30% to 40% of the margin. So that's the kind of the common instrument. So JPY 1 trillion loan, JPY 3 trillion of shares, then you may not be able to use up to JPY 3 trillion. However, loan to value is the kind of -- at this moment, we believe that we can enjoy the economy of the time. And how we're going to redeem whether to settle in shares, then we just finished with the same actual amount of the loan and conclude. So I believe the same amount as financing has been offsetted from the calculation of loan-to-value, and we believe this is the best way to calculate our loan-to-value. And on your right-hand side, you see the equity value of holdings, deducting asset-backed financing, which is JPY 7.9 trillion and also from debt. Those nonrecourse asset-backed financing JPY 8.8 trillion is deducted, so that the dark blue portion JPY 21.7 trillion for equity volume -- net equity value of holding and JPY 3.1 trillion for net debt. Financial strategy. No change at all because of this current environment and market, we're always keen to manage and maintain our financial policy. And this is in detail of our financial policy, 3 points. I think this is even more important considering the current market situation, not changed at all again. Here, put it into the situation with variant of external market. So although there may be a big change in the -- outside of the world, we would not be dangerous. I mean, when it comes to big change in red circle, we just need to maintain our policy. When it comes to the recovery, then we believe we can start using our leverage finance and also expand our assets with investments and improve the performance. That's the kind of a situation. So depending on the external environment. In the current situation, we see, external environment is not good. Under such circumstance, we need to slow down the new investments first and then financing activity should be steadily addressed. That, I believe, is important. With that, we believe that we will be able to maintain our financial policy. So loan-to-value improving by 5 points shows you that we have been working based on this scenario. And buyback. Last year in November, we have announced JPY 1 trillion program of buyback. And as I mentioned earlier, about JPY 700 billion has been already executed. Remaining is about JPY 300 billion, which will be utilized in 3 months or so. But depending on the market situation, we may accelerate, we may slow down the speed of buyback. At the same time, we may be able to finish this JPY 1 trillion buyback. That is why that we wanted to add this program. Or we may not be able to achieve JPY 1 trillion in the period we said. So that's another reason why that we have decided to prepare additional program, which we thought this is a good timing for the messaging out to the market. So additional JPY 400 billion repurchase limit until August 8 next year. So these -- past these days, JPY 1 trillion and JPY 400 billion. So in total, are you going to do the JPY 1.4 trillion buyback? That's not always true because this for JPY 400 billion, we may not be able to achieve -- and this JPY 1 trillion program, we may not be able to achieve depending on the market. So the maximum amount is JPY 1.4 trillion, but there are cases where that we may not be able to reach to this number. So that's the kind of a condition for this program. As long as we announced, of course, we would like to do our best to achieve this goal, but that's also the case -- that could be also the case. And that's for the financing -- financials, and Head of the sustainability has been changed to me -- from me to Mr. Agari, I would like to let Agari-san to speak about it.

[Interpreted] My name is Agari. Let me explain ESG initiatives. First slide shows enhancement of sustainability, promotion, governance, structure. We established a sustainability department as an independent department. And Head of IR and Sustainability Department serve as CSusO for great agility. Goto-san remains committed as the Board member in charge of sustainability. And the purpose of promoting sustainability and IR activities together include enhancing disclosure on our essential initiatives to investors and other stakeholders. Understanding the expectations of investors and other stakeholders and reflect them in our initiatives and capturing increasing ESG investment funds. Through those activities, we want to contribute to increasing shareholders' value for mid and long term. Next slide shows a summary of initiatives in FY '22. From environment perspective, at SBG and SBKK level, we disclosed climate-related information in accordance with TCFD recommendations. At SBIA and Arm level, they are preparing for disclosure in 2024. We also set group target for greenhouse gas reduction and greater group collaboration. Next slide shows a summary of initiatives in terms of social and governance. For human rights, we conducted training and monitoring to risk areas identify in terms of human rights. And we continue to developing group policies. In July, we set tax policy and FX policy disclosure is expected in October. And publication of SoftBank Group Report, we renewed the existing annual report as SoftBank Group Report integrating nonfinancial information. It show the relationship between SoftBank Group's investment activities and its philosophy Vision strategy to further boost engagement with the stakeholder and share our kokorozashi mission. That's all from myself.

[Interpreted] Last but not least, we would like to invite Mr. Navneet, the CFO of SoftBank Vision Fund to give you an update on SoftBank Vision Fund. Navneet, please?

Hello, everyone. Thank you for joining us. Before we get started, please read the SBIA legal disclaimers on Slides 2 and 3 or refer to the online presentation for more details. For more information on the Vision Fund, please visit visionfund.com and for the SoftBank LatAm Funds, go to latinamericafund.com. As Slide 4 indicates, today, I'll summarize our key performance highlights and the financial impact for the June quarter. In the in-focus section, I'll dive into our investment ecosystem's embedded resilience and our continued conviction in the power of the AI revolution to whether the current macroeconomic uncertainty. We'll begin with a summary of our progress along with some highlights from the last quarter. Before diving into the figures, I want to provide some historic context on today's macro conditions and their impact on markets. Slide 6 shows what a challenging year 2022 has been so far. Looking back 100 years or so, real annual returns for the S&P suggest this year is on track to be one of the sharpest market downturns on par with the record-breaking historic recessions. This phenomenon is mirrored in private markets in which individual capital -- individual venture capital sector portfolios are down 55% as of June 30. Like many global investors, we are closely watching changes in market conditions. I have spoken before about the economic drivers outlined to the left of the chart. Despite the volatile market backdrop, we believe the AI revolution is a secular trend as economies all over the world become increasingly digitized. We are confident in our portfolio's resilience, and we remain committed to a long-term focus on technology-driven disruption. Slide 7 shows a performance snapshot for our investment platform, including Vision Funds 1 and 2 and the LatAm Funds. Throughout 2022, we've seen weakness in equity markets. This impacted listed company valuations last quarter and continues to do so this quarter. We've also marked down our private portfolio to reflect the current market conditions and public comps. In total, combined losses for the quarter were $23.1 billion, leading to a new combined fair value of $155 billion. Total committed capital now stands at $162.2 billion. Our total acquisition costs are now $144 billion. Cumulative investment gains are $11 billion, and we have now made a total of $51.6 billion in distributions to our limited partners. I'm certain that valuations across public markets, private markets and our own portfolio companies are currently top of mind for all of you here today. I've talked in the past about our robust internal valuation framework. But given the current market environment, I want to revisit our baseline principles. Our valuation approach is based around triangulation, reaching a concluded valuation based on 3 critical inputs. First, the market approach, which takes a comprehensive view of our portfolio companies, industry peers, benchmarking against comparable companies valuation multiples. And second, the income approach based on our company's projected future cash flows. And third, a consideration of recent transactions such as follow-on rounds of financing, which can give a valuation indication, assuming the transaction meets certain criteria. We've been valuing our portfolio under the same consistent and robust framework since the inception of our funds. Our valuations are subject to the highest levels of scrutiny from investors, independent valuers and independent auditors and are conducted under IFRS 13 standards as well as following [indiscernible] best practice guidelines. These valuations reflect our best understanding of all information available to us at quarter end, including the meaningful volatility we've seen in public markets. Slide 9 dives deeper into the unique set of considerations for each of these approaches. An overarching theme is the wealth of data we have collected from our 469 investments as well as their public and private peers. As mentioned, the volatility in public markets is top of mind. This volatility is captured in our valuations by actively tracking over 1,500 unique public comps, around 10 per portfolio company. The income approach gives an assessment of a more normalized fundamental company value. All performance data, actual and projected is tracked in a centralized cloud-based system, allowing for a rigorous review of performance and outlook. Finally, as everyone is aware, 2021 was a strong year for fundraising. Over the last 12 months, our portfolio companies completed more than 300 funding rounds, raising capital from over 1,000 third-party investors. While relied upon less heavily in the current market environment, each round gives valuable insight into company and industry dynamics. Given our unique portfolio construction, our approach is a composite of valuation best practices across the VC and private equity spectrum, providing an in-depth analytical standard above and beyond sector norms. Since the inception of the Vision Fund 1, we have seen a consistent track record of companies reaching public markets. Slide 10 shows our roster of listed companies across all funds, including exited investments. Vision Fund 1 has seen 28 listings by industry leaders across the mobility, logistics, digital health and financial technology sectors. 15 companies in Vision Fund 2's portfolio have become public companies, including global leaders in the AI revolution such as Beike and Symbotic. Six companies in the LatAm funds portfolio are now public, reflecting the growing maturity of the region start-up ecosystem. This also shows that public market investors remain interested in late-stage companies across different markets, which can demonstrate sustainable growth trajectories. Bucking the broader trend in the current macroeconomic environment, I'd like to highlight 3 recent examples of companies successfully entering the public markets. In April 2021, GoTo raised $1.1 billion in its market debut and has since become Indonesia's most valuable publicly listed technology company. Indonesia represents one of the world's largest consumer markets and GoTo is tapping into it, reaching into just about every facet of daily life, from food delivery and ride-hailing to e-commerce and financial services. As of June 30, GoTo had a market cap of $30.8 billion, representing for us gross unrealized gains of $1.9 billion and a gross MOIC of 3.2x. As the pandemic has accelerated the country's digitization, GoTo is bringing more Indonesians into the country's online economy, which is expected to reach $330 billion by 2030. Delhivery is one of India's largest logistics and fulfillment companies and its recent IPO was one of the largest ever tech listings on the Indian markets with a market share representing nearly 1/4 of the Express Parcel business in India, the company has built a strong foundation for potential future growth. As of June 30, Delhivery had a market cap of $4.6 billion, representing for us gross gains of $0.5 billion and a gross MOIC of 2.3x. As most recent earnings announcement, Delhivery more than doubled revenue from the prior year, and we are optimistic of Delhivery's continued prospects as a listed company. Finally, in June, SVF Investment Corp. 3 finalized its merger with Symbotic, allowing the company to raise $450 million in new capital. Symbotic represents our platform's core vision, an AI-powered company with strong unit economics and a clear path to profitability. Of note, the company has an addressable market of over $350 billion, with just over $11 billion in contracted orders. Symbotic continues to make significant progress in reinventing the global supply chain. Evidence of this is the recent expansion of its deal to implement automation systems for North America's largest retailer, Walmart. As our companies continue to reach public markets, we have maintained a disciplined approach to monetization. In practice, this means being strategic about exiting our investments in select public companies, including recently Guardant, Opendoor and Uber from Vision Fund 1, and Beike from Vision Fund 2. Acquisition costs for these investments totaled $9.8 billion, with $5.6 billion in gains for these companies, our investment platform has delivered a 23% gross investment IRR and a gross MOIC of 1.6x for a total of $15.4 billion in gross realized proceeds. The decisions to exit these investments have been carefully considered based on our monetization framework and ongoing assessment by our capital markets team. These exits have in turn allowed us to make distributions through LPs and reinvest capital into new and existing opportunities elsewhere. Before we begin the in-focus section, I'd like to summarize the financial impact of performance across Vision Funds 1 and 2 and the LatAm Funds on SoftBank Group. Beginning with Vision Fund 1. From inception to June 30, fund net profit was $10.8 billion, of which SoftBank's share was $5.4 billion. The total contribution to SoftBank net of third-party interest was $6.3 billion. Continuing to focus on Vision Fund 1 here on Slide 17, I show the impact to date of fund performance on SoftBank. Total paid-in capital is $27.7 billion and total value to SoftBank is $33.2 billion. Moving on to Vision Fund 2. Slide 18 shows equivalent data points showing the impact of fund performance on SoftBank. Total paid-in capital is $48 billion, and total value to SoftBank is $39 billion. I'd like to pause here to address the disparity between paid-in capital and the fund's current total value. Vision Fund 2 is still in the early stages of its cycle, but we are confident in the fundamental strength of the portfolio and the long-term opportunity to unlock value. It should be noted that we have been able to make $8.9 billion in distributions to SoftBank. Finally, Slide 19 shows equivalent data points for the LatAm funds, showing the impact of the fund's performance on SoftBank. Total paid-in capital is $6.7 billion, and total value to SoftBank is $6.4 billion. In this quarter's in-focus section, I want to rearticulate our focus and conviction in the AI revolution and our belief that the best companies will emerge stronger from the market's present volatility. We have made strategic decisions to embed high levels of resilience into our investment and monetization strategy. Our portfolio companies are well capitalized and have been recalibrating their operating plans to maintain strong performance despite challenging external conditions. At the same time, our investment thesis remains unchanged. We are guided by our conviction in the power of the AI revolution and stand by the long-term potential of our portfolio companies as evidenced by their strong growth. As I mentioned, a core aspect of our portfolio's resilience is a disciplined approach to monetization, which in turn enables distributions to SoftBank and our limited partners. As shown on Slide 22, since inception and as of June 30, cumulative distributions across all 3 funds have reached $51.6 billion. Notably, our rate of distribution has continued to increase, quadrupling in the last 2 years alone. Within that period, it was our disciplined monetization approach that enabled us to exit investments while markets were at their most constructive. Ultimately, we feel that divestment decisions are as important as investment decisions, and we continue to focus on maximizing value and returns over the long-term life cycle of all funds. Let's take a look at Slide 23. As we've seen in the last few quarters, there has been a drop in the number of global listings as investor sentiment has softened. We saw similar slowdowns during the 2008 global financial crisis and the COVID-19 outbreak in 2020. Despite headwinds, we have a robust roaster of late-stage pre-IPO portfolio companies poised to raise capital in the public markets over the next couple of years. These are companies with solid long-term growth prospects, reflecting over $40 billion in total fair value. A couple of quarters ago, we discussed the performance indicators and operational capabilities that are the prerequisite for any successful public listing, namely, strong fundamentals, a resilient business model, a sustainable growth profile and governance, operating and financial discipline. It is undoubtedly a challenging time, but we continue to support our portfolio companies to the point that they determine is the right time to go public. And these indicators continue to serve as a useful tool in making that determination. Let's now look at our portfolio. In the long term, value creation from Vision Fund 1 will be driven by disruptors with large addressable markets and a clear strategy for sustainable growth. The 8 companies shown here on Slide 24 are evidence of this, and we expect these companies will be the drivers of the fund's future performance: Arm, ByteDance, Fanatics, Gopuff, Flexport, DiDi, Nuro and Ziroom. With $28.7 billion invested, these 8 companies represent 33% of Vision Funds 1 total acquisition cost. And as of June 30, the total fair value for these companies stands at $35.2 billion, representing $6.5 billion in gains. Given their performance to date and the total addressable markets they serve, we see significant value yet to be unlocked. Let's turn to Vision Fund 2 and the LatAm Funds. We see hundreds of our portfolio companies continuing to record healthy top line growth. These companies are tapping into large addressable markets to accelerate revenue growth. As you can see on Slide 25, the large majority of companies in our portfolio are achieving upwards of 50% revenue growth. Specifically, 76% of companies in Vision Fund 2's portfolio and 78% of companies in the LatAm Funds portfolio. As I mentioned earlier, another important feature of our portfolio is a level of embedded resilience. This resilience is a result of an investment focus on strong business models and sound financial decisions on the part of the companies. Companies across our portfolio shows strong liquidity positions with aggregated cash balances totaling $122 billion as of quarter end. This, in turn, has led to ample cash runways, providing them with the resources to manage uncertainty and sustain growth. To put a final point on it, the vast majority of companies currently have cash runway of upwards of 12 months, including 97% of Vision Fund 1's portfolio as measured by fair value, 95% of Vision Fund 2's portfolio and 84% of the LatAm Funds. A significant subset of those companies are fully funded through to profitability. These strong liquidity positions have been the result of continued access to capital and prudent cash management. Just in the last 12 months, companies in our portfolio have raised over $65 billion in follow-on funding. We've previously discussed the significance of sector and geographical diversification to support the fund's long-term performance. This applies to both the Vision Funds and now the LatAm Funds. Here on Slide 27, you can see that our investments are distributed across 9 key sectors and represent a truly global reach. This diversification includes a focus on defensive investments that is resilient companies that are well positioned to grow despite cyclical economic downturns, with substantial dry powder still available to deploy. We continue to invest in companies where we see the greatest upside in building new digital infrastructures across sectors and geographies. Let's wrap up. It's been a quarter of increasing uncertainty for investors everywhere. We are living in a market environment on par with some of the greatest downturns in modern history. We are tracking these fluctuations closely, but fundamentally remain patient investors with a long-term view. We want to reiterate our continued conviction as growth equity investors to harness the power of AI and continue to enable growth, even in today's challenging panoroma. As we've built our portfolio, we focused on designing a resilient platform capable of weathering macroeconomic challenges. We've done this by building a diverse platform that gathers the best companies across sectors and geographies, ensuring our portfolio companies are well capitalized and approaching monetization with a view toward maximizing value in the long term. We will continue to address today's acute market challenges head on with a clear perspective focused on continuing to leverage our know-how to tap into the unlocked potential of the AI revolution. As always, thank you for joining us today, and I'm happy to field any questions you may have.

[Interpreted] [Operator Instructions] First, take questions in Japanese. Nagao-san from BofA Securities.

[Interpreted] My name is Nagao from BofA. Two questions. Two questions to Goto-san. First, Slide -- Page 6, LTV. Currently, 14.5%. From Goto-san's perspective, this level -- are you comfortable with this level at the moment? Or would you like to be more defensive? Of course, it depends on external environment. So what's your view on the level of 14.5%? That's the first question.

[Interpreted] You can ask a second question together.

[Interpreted] Then my second question. You have plenty of cash position and shed your view on how to utilize. On Page 7 of your finance presentation. I asked this question because external environment gets worsened and discount rate on net asset value can go higher and there are circumstances. From a financial perspective, share repurchase might be more important option. So your view on share repurchase activities, if you could please share with us.

[Interpreted] First, about loan-to-value current level. Well, they will -- around 25% is good enough. So 14.5%, which is current level, which is, well -- very good. I mean if it's business as usual environment, 14% is not because we may not be able to maximum leverage power. So in order to maximize corporate value, we need to seek the optimal level of leverage. So if it's business as usual, 14.5% may be too low. But now environment is as is, monetization of our assets needs to be carefully looked at for financing, and we need to keep financing appropriately. On the other hand, we want to slow down our investment. So loan to value, there is an opportunity for further improvement of LTV. That's just an opportunity, though. About our cash position and how we would like to utilize our cash position, you mentioned share buyback. Under the current market condition, share repurchase program is something that we want to execute as planned, which is one of our priorities. But since NAV discount is over 50-something percent, unfortunately, we may cause you some concern. But under the current circumstances, we believe that we can have a better impact from share repurchase than new investment. But also, we want to make sure that we have a sound financial management, which is the most priority. So even though we have plenty of cash position, we don't want to spend too much money or financial resources for repurchase of our shares. Of course, we keep watching how the market condition changes. That's all for myself. Thank you for your question.

[Interpreted] Then taking the next question, Tsuruo-san of Citigroup Securities.

[Interpreted] My first question is about Vision Fund. So a question to you, Navneet. So Page 26 of your material. Here on Page 26, on your left-hand side, how much companies have more than 12 months more cash runway? I understand that in the 3 or 5 or 16% of the companies are actually not having enough cash runway. So 3 months before, I believe this percentage or cash balance, how much were there? So I believe that you have a cash flow projection for each company. So in 6 months or 12 months later, how do you see these numbers going to change going forward? So the 3 months before, how much of those and 6 to 12 months later, how much of those is going to be changed?

Yes. So we expect the number to get higher because a lot of them just raised funding rounds in 2021 and as well as in 2022. They are also driving their -- reducing their cash outlays by changing the operating levers in the company. So a combination of those having raised money in '21 and being able to change the operating levers gives them ample runway.

[Interpreted] How about 3 months before. So at the end of March, can you tell us the numbers at the end of March for those? And also, if possible, can you share with us how much that's going to be in 6 months later?

Tsuruo-san, I don't have the number for March. We can give it to you offline, and we can show you what the numbers are every quarter. Thank you.

[Interpreted] Understood. My second question is to Goto-san, Page 24 of finance section. I believe this is one of the most important slides as Goto-san said, and the net interest-bearing debt is shown here. So peak was last year, and it's decreasing. And looking at the cash runway of Vision Fund portfolio companies, but also that means that there are some still rooms that have marked down and also considering the market situation. What is your ideal level of net interest-bearing debt? And if you have any target for that? July or further monetization over JPY 1 trillion level. So I believe that how should we expect that you are going to decline the net interest in debt?

[Interpreted] Yes, thank you for your question. So when -- I actually don't have any specific target as a number for net debt. So it is just a factor for the calculation of loan-to-value, that's the kind of a way I'm looking at the net debt amount. So we have a nonrecourse financing or exit monetization, distribution contributes to our cash position. So that's going to be improving a lot. And the reason is balanced is because we keep investing in new portfolio companies. However, right now, although there are many people say that this is a chance to invest, however, we believe that we would like to slow it down, the new investment activities at the current market situation. That's the Masa's idea. And also, we feel the same way as well from a finance perspective. As long as we see this situation continues, I believe net debt will continue to decrease. That's quite a high possibility that I can say. And I don't believe that there is no argument that it's too low or anything like that because we believe the market condition right now is a bit neutral. Whenever the market recovers, then we will consider. But at this moment, we should be looking at a more improved KPI from the finance point of view, including net debt. So that's the kind of policy we are taking at this moment.

[Interpreted] Next question is from Kikuchi-san from SMBC Nikko Securities.

[Interpreted] I have a question to Navneet-san for Fund 1, Fund 2 and LatAm, respectively. I'm sure you reviewed private portfolio companies value, how many of them or how much of them have you marked down against which standard? As much as possible, if you could share that with us, that would be great. How much of them -- how many of them have you not marked down in the last quarter or in the last 6 months? And if you have not marked down, is there any chance, opportunity for you to mark down later, not now? But if there is a likelihood of how many companies or how many -- how much of them private portfolio companies are you going to mark down in the future against what standard, please?

The details of those are in Son-san's presentation. So Page 13 and Page 15 of Son-san's presentation have all the details. In terms of which standard, we use IFRS 13. And in the future, it will depend on the market, the comps as well as the performance of the companies.

[Interpreted] Okay, understood. But roughly how much of them? Like in the last 6 months, how much of private portfolio companies you have not marked down? Can you share or not?

Yes, yes. So those are all, as I mentioned, we have full details in Son-san's presentation, Page 15 of Son-san's presentation.

[Interpreted] Okay. Understood. Just one thing for Kimiwada-san. When you talk about markdown or not markdown, I don't understand your definition.

[Interpreted] Because every quarter for every portfolio company, we apply fair value calculation. So depending on the market circumstances, if necessary, we review value against our fair value standard.

[Interpreted] Then the second question, I don't know, maybe 2 strange question to Goto-san. I wonder what SBG is all about. You are in a defensive mode. What the role or what is the corporate value? What is your role as SBG in defensive mode? Again, the value or role of SBG in defensive mode is what? And going forward, I'm sure you have asset value, but as a corporate value in the future, where can we expect? Of course, Goto-san's financing efforts should carry some value. But at the moment, again, you are in defensive mode. So what is the value of SBG from Goto-san's perspective?

[Interpreted] Thank you for your question. Well, I would like you to look at mid-long-term future, 5 years ahead, 10 years ahead because there are lots of ups and downs. So when things are down, true value of the company is tested. We are investment company. We are not operating company. We don't have factories. We don't have a store. So we are directly linked to financial environment. Our base business model is based on that. When things are bad, if you keep taking risks against such circumstances, we might end up being not investor, not good investor, but the speculator. So even though there are opportunities, sometimes you have to take safe and soundness as highest priority. Maybe this condition may not last 5, 10 years, which I believe. Sooner rather than later, we can be offensive again. By then, we have to prepare ourselves in order for us to be successful as an investor and a capitalist. In the days of winter, if you will, like this, we need to get ourselves prepared for the spring. That's where we are now. I hope I answered your question.

[Interpreted] Hoshi-san, Nomura Securities.

[Interpreted] This is Hoshi speaking. I have 2 questions, please. First, for Goto-san or Navneet, I'm not sure about, Vision Fund, variation of private companies. So markdown is delayed by public securities. I believe that's something that you have discussed. What is the logic for that? And -- so in that case, for second quarter, should we expect that further markdown of private portfolio. That's my first question. And the second question, at the end of July, SEC has announced the Alibaba putting on the delisting list that was covered by media. And if that really happens, is that going to impact to your asset-backed finance? That's my second question. If there is anything you can comment on.

[Interpreted] Let me answer your first question. I believe that's something that I mentioned regarding what you have said. So last time I said that the private securities valuation, there are several valuation approach. And one of which is to refer to the public comp. So that's the one aspect that we need to refer to. And in that area, we need to see the actual otherwise, that cannot be reflected. That is once we see the changes -- moving public companies, then that's going to be reflected later on to the private securities. So that's -- I think we have no choice that -- do you have any additional comment, Navneet?

Agree with you Goto-san.

[Interpreted] And for your second question, Alibaba is considered to be delisted from New York Stock Exchange. So that's the assumption from this moment if that's going to be delisted from New York Stock Exchange. I don't say there is nothing, no impact at all. Of course, as you know, Alibaba share is also listed on Hong Kong Stock Exchange as well. Therefore, if there is any case that delisted from New York Stock Exchange, we will be looking at the transaction volumes on the Hong Kong Stock Exchange for our financing. So, of course, transaction volume in New York Stock Exchange change is quite large. So that the size of the financing, it depends on the -- also the volume of the trading so that it may decrease. But I believe that we have several ways so that's not something the large impact to the financing...

[Interpreted] We'd like to take questions in English. [indiscernible] Research, Kirk [indiscernible].