Year-on-year Earnings Results Comparison
October 27, 2011
for the Six-month Period Ended September 30, 2011
SOFTBANK CORP. (hereafter “the Company”) announces the following earnings results comparison between the six-month period ended September 30, 2011 (hereafter “the interim period”) and the same period of the previous fiscal year (April 1, 2010 to September 30, 2010, hereafter “year-on-year”).
This press release is announced based on Tokyo Stock Exchange's guideline.
1. Year-on-year comparison of earnings results for the interim period
|Net Sales||Operating Income||Ordinary Income||Net Income||Net Income per Share|
|Six-month period ended
September 30, 2010 (A)
|Six-month period ended
September 30, 2011 (B)
2. Factors of the earnings results' difference
(a) Net sales
Net sales totaled JPY 1,535,647 million, for a JPY 70,625 million (4.8%) year-on-year increase. This was mainly the result of increased telecom service revenue backed by steady growth in the number of mobile phone subscribers in the Mobile Communications segment. On the other hand, an increase in the portion of lower-priced handsets such as Mimamori Phone, a handset with a security buzzer, resulted in a slight decrease in the aggregate sales of mobile handsets in the same segment, despite a rise in the number of handsets shipped.*1
- *1Handsets shipped: handsets shipped (sold) to agents
(b) Cost of sales
Cost of sales rose JPY 5,471 million (0.8%) year on year to JPY 670,967 million. This was primarily due to higher depreciation and amortization expenses, mainly relating to the installation of additional base stations in the Mobile Communications segment. On the other hand, an increase in the portion of lower-priced handsets resulted in a decrease in the aggregate cost of sales for mobile handsets in the same segment, despite a rise in the number of handsets shipped.
(c) Selling, General and Administrative Expenses
Selling, general and administrative expenses grew JPY 7,452 million (1.5%) year on year to JPY 491,456 million. This was mainly because of increased sales commissions*2 in the Mobile Communications segment, such as higher upgrade related cost, while subscriber acquisition cost decreased due to an increase in the portion of handsets that have a lower acquisition cost per subscriber.
- *2Sales commissions paid to sales agents per new subscription and upgrade purchase
(d) Operating Income
As a result, operating income totaled JPY 373,223 million, for a JPY 57,701 million (18.3%) year-on-year increase. The operating margin rose 2.8 percentage points year on year, to 24.3%.
(e) Non-operating Income / Expenses
Non-operating income totaled JPY 6,768 million, a JPY 434 million year-on-year increase. Non-operating expenses stood at JPY 65,506 million, a JPY 2,505 million year-on-year decrease. Interest expense decreased by JPY 14,033 million as SOFTBANK MOBILE Corp. (hereafter “SOFTBANK MOBILE”) repaid its SBM loan.*3 Meanwhile, the Company refinanced part of SBM loan during the interim period, and recorded refinancing related expenses of JPY 13,606 million comprising expenses relating to this financing and expenses associated with the continued repayment of SBM loan, which amounted to JPY 12,695 million.
- *3The loan procured under a whole business securitization scheme as part of the loan for procurement of the acquisition finance for Vodafone K.K. (currently SOFTBANK MOBILE)
(f) Ordinary Income
Ordinary income therefore totaled JPY 314,485 million, for a JPY 60,641 million (23.9%) year-on-year increase.
(g) Special Income
Special income totaled JPY 102,730 million. The main components of this were gain on sale of investment securities of JPY 83,527 million and dilution gain from changes in equity interest of JPY 17,158 million.
The gain on sale of investment securities was primarily attributable to a JPY 76,430 million gain on sale of Yahoo! Inc. shares. In connection with the Company's financing of US$1,135 million from CITIBANK, N.A. through its U.S. subsidiary in February 2004, certain forward contracts (“collar transaction”) were entered into, which allowed the obligation to be settled at maturity by delivering Yahoo! Inc. shares held by the Company's subsidiary. The forward contracts were to effectively hedge the variability of cash flows associated with the future market price of the underlying security.
During the interim period, the obligation under the forward contracts was settled at maturity by effectively delivering the shares of Yahoo! Inc. (book basis of US$142 million) to CITIBANK, N.A. The cash proceeds received by the Company's subsidiary from delivering the shares of Yahoo! Inc. to CITIBANK, N.A. were then remitted to repay the related obligation. Gain on sale of investment securities of JPY 76,430 million (US$993 million) was recorded as a result of settling the forward contracts.
Dilution gain from changes in equity interest was recorded mainly in relation to the Company's equity method affiliate Renren Inc.'s listing on the New York Stock Exchange in May 2011.
(h) Special Loss
Special loss was JPY 9,154 million. Valuation loss of JPY 8,920 million was recorded mainly associated with the drop in the stock price of Betfair Group plc in which the Group holds shares.
(i) Income Taxes
Provisions for current income taxes were JPY 101,361 million and provisions for deferred income taxes were JPY 57,337 million. Total income taxes increased JPY 18,044 million year-on-year to JPY 158,699 million.
(j) Minority Interests in Net Income
Minority interests in net income totaled JPY 32,108 million, mainly through booking net income at Yahoo Japan Corporation.
(k) Net Income
As a result of the above, net income totaled JPY 217,252 million, for a JPY 140,413 million (182.7%) year-on-year increase.
(l) Comprehensive Income
Comprehensive income was JPY 196,326 million. Of this, comprehensive income attributable to owners of the parent was JPY 166,373 million and comprehensive income attributable to minority interests came to JPY 29,952 million.
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