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Edited Transcript of 9984.T earnings conference call or presentation 12-Aug-20 10:59am GMT

Q1 2021 SoftBank Group Corp Earnings Investor Presentation

Tokyo Aug 26, 2020 (Thomson StreetEvents) -- Edited Transcript of SoftBank Group Corp earnings conference call or presentation Wednesday, August 12, 2020 at 10:59:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Kazuko Kimiwada

SoftBank Group Corp. - SVP & Head of Accounting

* Yoshimitsu Goto

SoftBank Group Corp. - SVP & CFO

* Navneet Govil

SoftBank Investment Advisors - Managing Partner & CFO

* Yotaro Agari

SoftBank Group Corp. - Head of IR

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Conference Call Participants

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* Daisaku Masuno

Nomura Securities - Analyst

* Satoru Kikuchi

SMBC Nikko Securities - Analyst

* Shinji Moriyuki

SBI Securities - Analyst

* Keisuke Harada

SMBC Nikko Securities - Analyst

* Chizuru Hoshi

Nomura Securities - Analyst

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Presentation

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Operator [1]

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(Interpreted) Good morning, ladies and gentlemen. Thank you very much for joining for today's SoftBank Group Corp. investors' briefing on earnings results for three month period ended June 30.

First I would like to introduce a representative from SoftBank, Mr. Goto, Senior Vice President and CFO SoftBank Group Corp.; Ms. Kimiwada, Senior Vice President and Head of Accounting Unit; and Mr. Navneet Govil, Managing Partner and CFO, SoftBank Investment Advisors from US.

This session starts with an overview of our consolidated results by Ms. Kimiwada an 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 and we can take both English and Japanese questions within Zoom after the presentation. And this meeting will be available on our corporate website later. Now I would like to invite Ms. Kimiwada to talk about the consolidated.

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Kazuko Kimiwada, SoftBank Group Corp. - SVP & Head of Accounting [2]

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(Interpreted) Thank you very much. This is Kimiwada speaking. Good morning to all of you. First of all, I would like to, first of all, talk about the consolidated results. Please go to page 2. This page shows what was presented yesterday in the outline of the consolidated results. First-quarter 2020 results are shown. So, for net sales income before tax and net income are indicated and net income exceeded JPY1.2 trillion. So, as compared to the same period last year. However, this shows the increase of JPY134 billion.

And as for these numbers, I would like to explain more in detail by showing the following pages. Please go to page 3. First of all, we introduced the changes and presentation of the P&L. Well, we used to show the operating income, but we stopped showing operating income from now on.

So, over here we have net sales and the gross profit and then the income before income tax. But before that we have another line which is a gain and loss on investment and this is the new format of our P&L. And the reason why we decided to introduce this format is that, well, Sprint/T-Mobile merger was completed and Sprint used to be the subsidiary. However, it was removed from the consolidated account. So the importance of investment activities in our P&L has increased.

As for the gain and loss on investments, the Vision Fund investment performance was only included. And investment by the holding company came below the operating income. So, this too was separate. And it is difficult to understand the total picture regarding the gain and loss on investment. So, we introduced the new section in this P&L in the form of a gain and loss on investments.

So, as you see on the right-hand side, what is meant by a gain and loss on investment is shown in the light blue area. So, the Investment Business of Holding Companies and investments at the SoftBank Vision Fund, as well as other investments, are included in this section. So, as an investment company, though the outperformance of SoftBank Group will become clearer with this indication.

So, what is included in this? As you see on the left-hand side at the bottom: number one, realized gain/loss on the sales of investment securities, financial assets at FVTPL and investments accounted for using the equity method; number two, unrealized gain and loss on valuation of financial assets at FVTPL; number three is dividend income from investments; and number four is derivative gain or loss related to financial assets at FVTPL and other investments.

So, not just the financing activities or the derivatives regarding the (inaudible) activities is not included in this section. So, this is the format of the P&L and income statement that we will start using for your communication.

Now moving on to the next page. There was also a change in terms of the reportable segments. For the bottom half of fiscal 2020, these are the new segments and (inaudible) we have a box showing Investment Business of Holding Company segment. This is a major change.

In terms of the segment information, we have the segment and the income and [investment advice] to income. Before income tax from operating income to include income or loss on equity method investments. As for other segments, operating income numbers, we no longer show them. So, segment income means the income before income tax. So, the -- we can confirm the income before income tax for each segment. So, segment by segment you will have a better understanding about the performance of each segment.

Please go to page 5. As for the investment business of the holding companies, our main business is included and also core companies included as shown here. So, the business, main business are the investment activities by SBG and its subsidiaries. And as for the companies, so what companies are included in this segment -- SoftBank Group, SoftBank Group Capital Limited and SoftBank Group Japan. So, these are the main core companies included in the segment.

As for the investment companies or the industries, there are altogether about 120 companies: Ali Baba, T-Mobile, WeWork, InMobi, Lemonade, Social Finance. These are some of the companies included in this section.

Now please go to page 6, which shows the segment income of Investment Business of Holding Companies. And this is some main highlights and main numbers I would like to explain. First of all, T-Mobile gain related to sales of T-Mobile shares at the top. Back in June, we conducted the partial sale of our stake in the T-Mobile.

So number one, gain of JPY280.3 billion on the partial sale of T-Mobile shares. And also what used to be the equity method company became the regular investee for investment activities, a change of the classification. And that amount is JPY296 billion as a result of the reevaluation.

Number three is related to the derivative loss of JPY154.5 billion relating to the call options received by Deutsche Telekom AG for T-Mobile shares held by the Company. And the other JPY421.9 billion was posted. As for the T-Mobile, the profit and loss more than JPY700 billion at the time of the merger and this is discontinued business and this will be included in the net income.

So, the segment -- that number is not included in the segment income numbers. And it was the top of the table where the realized gain on sale of investments. As part of the JPY4.5 trillion program, highly liquid, high quality shares/stocks are being sold. So, in the first quarter, JPY65.4 billion is included in this section, and as well unrealized gain on valuation of investments, JPY28.5 billion is posted here.

Beyond that derivative gain/loss relating to investments, JPY133.3 billion, T-Mobile and Sprint merged and we received the right to receive T-Mobile shares if certain conditions are met. And every quarter we evaluate it based upon the fair value and the value increased in the first quarter. And the JPY129.6 billion, so this number is included in the total of JPY133.3 billion.

And for the profit and loss based upon the equity method, as for T-Mobile, in the first row the equity method calculation is applied only in the first quarter. And Alibaba equity method resulted in a negative JPY18.5 billion. This is the affiliated companies and -- starting from January through March. So, the number during that period was picked up.

Here an IFRS adjustment was conducted and Alibaba equity method for the result was a negative in terms of the investment. And derivative related on the profit and loss. So, this is not related to investment. This was explained yesterday, but by using Alibaba shares, there was a prepaid forward contract. So the Alibaba shares increased towards the end of June. So, JPY179.5 billion of derivative loss was posted as a result. So, the JPY458.9 billion is a total segment income based upon this understanding.

Please move on to the next page. This is about the completion of the merger of Sprint and T-Mobile US, Inc. On April 1, 2020 the merger was completed. And as for gain and loss, this is included in the gain relating to loss of control on the left-hand side of the bar. This is the consideration that we can receive, JPY2.9 trillion.

So, the T-Mobile shares that we received fair value as of April 1, share price and the exchange rate are used to calculate this number. And certain of the conditions are met in that we will receive the T-Mobile shares of JPY2.9 trillion is also posted. More than JPY2.7 trillion is also on the left-hand side.

Now (inaudible) book value was JPY2.1 trillion and there's a difference between JPY2.9 trillion, the total, and the JPY2.1 trillion. So, and the difference is again relating loss of control, JPY736.4 billion.

Please go to page 8. Page 8 shows T-Mobile shares -- a partial sale and evaluation at the end of the first quarter and the transactions in the July and August. Well, the comprehensive picture regarding T-Mobile. On June 26, number one and number two, T-Mobile shares were partially sold as a result. As for gains, and the JPY183 was received and also there was another via the sale of the T-Mobile shares.

And number six, Deutsche Telekom, or the co-option, the right was so the JPY165.4 billion that was added. By providing the option derivative regarding was the JPY254 billion that was posted in the first quarter. This is a little complicated but as for the information -- well, this is comprehensive in terms of the data and information. Transactions in June, transactions in July and also the assignment of the options. So, as you can see, these numbers from one through seven, and so please confirm these numbers later on at your leisure.

Please go to page 9. This is about the prepaid forward contract using Alibaba shares. Between April through June in the first quarter, JPY13.7 billion -- over the $13.7 billion was procured and the effective related profit and loss -- gain and loss are also indicated. So, what we did previously, methodology as well as how to handle in the accounting, the purpose is similar to our previous transactions.

Please go to page 10. This shows the partial sale of SoftBank KK shares and after-tax cash proceeds. In May 2020, SoftBank Group Japan, we call this SBGJ, through this entity we have the shares of SBKK and we partially sold the SBKK shares and the (inaudible) for JPY310.2 billion. And the shareholding ratio after the sale became 62.1%, so we still continue our influence control over this company.

So this is still our subsidiary, but this will not show on the P&L. This is recognized in the asset section and at the SBGJ loss carry forward was not recognized. So that portion is shown on the tax section of our P&L. So, that is shown in the red part, which is JPY58.1 billion tax and JPY37.9 billion received accrued cash tax for the future and the number six is the after-tax cash proceeds, JPY272.3 billion.

Please go to page 11. Page 11 shows the consolidated P&L summary. Already probably you have concluded this with (inaudible) report. So first of all, the green line, total gain on investment, so the JPY664 billion and the JPY264 billion.

And as for the investment, the pink portion, net income from continuing operations. So, this is what I explained earlier that is included in this number. And at the bottom, the net income from discontinued operations as -- well, this is the event on April 1. So, JPY736 billion is posted here.

Please go to page 12. This is the balance sheet and I will just give you the highlight. Number three, please look at circle three, number three, investment securities. Here T-Mobile shares. After partial sale we still continue holding some T-Mobile shares, so JPY1.470 trillion equivalent.

So, based upon the fair value we will continue evaluating this and this will be included in the investment business [overhauling] company segment. The excess on the cash from the JPY4.5 trillion program, JPY365.2 billion of surplus funds is included here.

Please go to page 15. Jump to page 15, this is about cash flow. So, listed shares for the sale and the -- the purchase and sale of the listed companies. For the operating cash flow, which is in the red color, surplus fund is used to acquire the listed companies, both the JPY1.006 trillion and the sale at about JPY4.5 trillion. JPY564 billion is included. T-Mobile shares for the partial sale, JPY1,830.4 trillion is included here.

Please go to page 16. Page 16 shows this is also the same information as (inaudible), but the SVF and the other SBIA managed funds that are indicated on this page. So, so much for my part of our presentation. Thank you very much for your kind attention.

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Unidentified Company Representative [3]

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(Interpreted) Next, Mr. Goto will give you the financial update. Mr. Goto, Please unmute and start your presentation. Thank you.

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Yoshimitsu Goto, SoftBank Group Corp. - SVP & CFO [4]

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(Interpreted) Good morning, everyone. This is Goto speaking. Thank you very much for your time today. As Ms. Kimiwada explained to you, the way of explain or expressing the finance of SBG has been changed. And basically the net income is going to be important. And as an investment company we believe we have prepared as an investment company to disclose this information. So, I believe we are in a fresh start from here.

And our corporate philosophy has not been changed even that our business has been changing here and there. This time has been just falling to investment company. About two years ago, about 70% of our revenue and sales were coming from SoftBank Corp. and the IPO of this company has happened two years ago. And since then we have announced that we are transforming ourselves to an investment company.

And since then we have spent about two years and there bank groups and major shareholders will be supporting us. We are receiving a lot of feedback from them, that along with the growth of the investment company that the culture of SoftBank may decrease.

However, we haven't changed our vision at all. We don't any intention to do so at all. Corporate philosophy, happiness for everyone, information revolution, this has not changed at all since the foundation of the business when we start with the wholesale of software. After then we start providing broadband, launching the mobile phone operations and so on. But since then we haven't changed our corporate philosophy at all.

And as an investment company we would like to keep growing to aim for the leading company of the world. And I believe still this corporate philosophy stays with us so that -- and we've been providing a lot of resources through the Vision Fund to our many businesses and companies and this also comes from our corporate philosophy. So, along with those that we would like to grow together.

So, when it comes to the finance rating agencies, bank groups, investors, I believe we spent the last two years to have communication regarding our changes. And also even with this pandemic situation that we would like to maintain this philosophy, but we of course appreciate your feedback and opinions for us.

Now I'd like to go into my presentation, page 2. So, this is a summary of first quarter 2020. We have three main highlights. So, as an investment company we would like to take advantage of the strong portfolio so that we can improve our financials and increase our equity value of holdings. And we were able to achieve both at the same time.

As we announced a JPY4.5 trillion program, monetization has already executed up to JPY4.3 trillion so far. And why are we executing such program? We also remarked about JPY27.4 trillion of equity value of holdings for -- when it comes to each. For example, Alibaba, we have monetized about JPY14.7 billion. And Alibaba actually also announced the Ant Group's IPO which makes us even more exciting about the future of the Group.

And the second of all is T-Mobile. As Kimiwada mentioned earlier, JPY22.4 billion monetization has already achieved. Starting from this first quarter we still maintain about one-third of the shares so that it is evaluated at fair value as investment securities from first quarter fiscal 2020.

SoftBank Corp., we used a broker -- trade for about JPY310 billion monetization and that this is doing pretty well as a business and our group company in Japan is doing pretty well as well. Under such pandemic situation, I believe that they are continuously making steady growth in progress.

And the fourth one is Vision Fund. At fiscal 2019 end -- year-end announcement we made -- we recorded quite a large negative number for valuation. But the first quarter this fiscal year we were able to show the very good progress since then, total -- JPY3.5 billion in total has realized. And also -- including realized and unrealized. And also one portfolio company went public. So, Vision Fund is also making a very steady progress here.

Second highlight is the debt reduction. In the COVID situation and very sensitive environment we have reduced debt by JPY1.3 trillion. One came from Ali repayment of USD9.4 billion [margin long] using Alibaba share, redemption of 100 billion at maturity of domestic senior retail bonds, and repurchase and retirement of 167.6 billion domestic senior bonds, which I will touch on this later a little bit in detail.

And the third highlight is improvement of LTV. We've been seeing improvement quarter by quarter and right now our loan to value is 11%, which is very safe level that we are keeping. At the same time loan to value is kind of a big picture of our Company. So, at the same time I want you to also look at cash position. By checking the cash position, if there is any big change in market or environment we will be able to still maintain our steady base.

So, by having a JPY3.4 trillion of cash position, which is about 2 times what we set as a financial policy, which means more than bond redemption for the next four years. So -- because of some lack of communication we may still have some misunderstanding of our Company, but we would like to take time to make sure that we fully receive your understanding of our Company in financials so that you will be able to have a clear understanding of our business.

So, progress of JPY4.5 trillion program that I would like to elaborate a little bit. Here on page 4, this is the share price and also CDS chart. This explains the kind of valuation by our investors. And I believe this is one way of expressing the business. So, share price has gone by 2.4 times from the bottom and the CDS on your right-hand side.

CDS has been difficult positions because of the market concerns about SoftBank, but right now I believe that we are in a safe level. Of course our bond, it's still junk bond level, so 200 around is the CDS level for us. But based on the credit I believe that this is something that's moving along with that.

Next page, page 5, (inaudible) for JPY4.5 trillion has not been changed since we announced. There are two purpose of use. One is the return to shareholders and also financial improvements for the bondholders, for example. And also for new investments out of that is coming as well, but at the same time as Masa mentioned in yesterday's presentation, some will be used for or listed securities or management of such cash is also explained from yesterday's presentation.

So, it's through the financial improvements that there we will be having quite a large number of cash positions and cash equivalents. So that we would like to be flexible or not based on the safety first. But at the same time like to manage some amounts of the cash from here as well.

On page 6, about 95% of the monetization has completed, and the amount breakdown wise, about JPY1 trillion return to shareholders which is the buyback has already been completed. And the remaining JPY1.5 trillion will be addressed based on the market status and we would like to well-manage the buyback.

And also for debt reduction, this includes loan repayments in the buyback of bonds, we have reduced by JPY1.2 trillion. And this is still ongoing, so we would like to do a further buyback, further debt reduction and some to do new investment. So, JPY4.5 -- I believe this is the kind of one block that we will be re-monetizing and using for these purposes.

Page 7, this is the detailed breakdown of the JPY4.5 trillion program, so three (inaudible) highlights, Alibaba, SoftBank Group and T-Mobile. So, as for Alibaba, there are prepaid forward contracts, color transactions, those are the main costs. And as for SoftBank Group, block trade and T-Mobile, there are several transactions. This is a combination of several deals -- several transactions.

So, public offering JPY18 billion, also margin loan using shares, JPY2.3 billion. But this JPY2.3 billion, the margin loan [reason] itself was about JPY4.4 billion. However, why we say JPY2.3 billion here, which is only the half of it, is because remaining JPY2.1 billion equivalent as supported by the guarantee of SPG, so this is a with recourse transaction.

So, this is the debt financing from our point of view. Margin loan from loan recourse point of view, JPY2.3 billion is the only amount that we should be showing here. In total, about JPY40 billion. So, JPY4.3 trillion is our actual monetization progress so far.

Page 8, debt reduction, buyback of domestic bonds, JPY167 billion has already achieved, as I mentioned earlier. Other than that we have margin loan of about JPY1 trillion. So, environment wise, many companies and businesses are having difficulty in debt financing and they tried to bring forward a schedule as soon as possible to do the debt financing. So, I believe it's obvious from the chart on your right hand side and we're in the upwards, as a matter of fact. We have very strong assets with us.

Page 9, domestic bond. So -- face value repurchased is JPY167 million, which is not that large number from our balance sheet point of view. But actually this buyback was the largest (inaudible) bond repurchase in Japan. And also the first program repurchase in retail bonds in Japan. From this (inaudible) was very focused and paid attention and we set over about actually subscription rate was about 10%.

So, this time JPY1.69 trillion was a total issue amount of targeted bonds and about 10% subscription rate, which is happy news as well. Many retail investors actually responded and more than 90% show the intention of longer holdings, not offer -- responding to the offer. So, that was also good news for us as well because they have trust in us. On your right-hand side chart, after the announcement of bond repurchase announced actually the reaction was quite positive, spread has been also improved.

Page 10, this is return to shareholders. So, as mentioned, total amount of repurchase has reached JPY1 trillion. And from the Company's [ex] point of view in Japan, buyback has a one-year duration. So, once we set the framework and then we can repurchase in one year. But regardless of this timeframe that we would like to accelerate the buyback if the market condition is good.

But at the same time we cannot speed up too fast in terms of buyback. So, we would like to be flexible based on the market situation so that we will be able to achieve our target of the buyback. Share price and growth trends has also been shown on the right-hand side.

Page 11, this explains the global comparisons about share buyback program. Apple about $50 billion, which was quite a large buyback program, has happened. But we are the next to Apple, as a matter of fact, in times of size.

Page 12, this is domestic comparison. In Japan we are leading number one, as a matter of fact, and for shareholders I believe that we've been able to give you satisfaction on our program.

Now switch gears to our status of assets on page 14. To achieve the JPY4.12 trillion program, there are several asset monetization or some transactions being executed. So, usually we should have received the pressure for down -- down pressure for the share price. However, because of the equity value of holdings, which is marked at JPY27.4 trillion, that this has been supported for share price.

So, as you see on page 15 on our development shares or T-Mobile share price, even though we're having monetization program but still the prices are still solidly trending. And also these companies are very resilient in times of the pandemic situation. Therefore, of course, the Vision Fund is a very important part of our business.

But when you look at all the holdings, actually these three companies are larger in terms of the proportion's point of view. And these are highly liquid listed securities. And at the same time gives us a very comfort under the pandemic situation, which are the main core of our assets at this moment.

Page 16, this is the Alibaba shares stability and the growth which is the majority of our holdings. And we started the relationship with this Company back in the year 2000. And now that 20 years have passed, on your right-hand side you see many group companies has created the ecosystems payment on financials at the very bottom is now expecting to become the bigger engine for the future growth.

And now I would like to talk about Vision Fund on page 17. So, first I want you to see the performance so far on a cumulative basis since the inception, JPY1.8 trillion markup, JPY1.6 trillion in the markdown. So, total JPY2 billion or JPY0.2 trillion is the investment markup market uplift in realized gains.

Page 18, this shows the -- this recent performance of those listed shares.

On page 19, that shows the figures. Here you can see in the past recent three months Relay Therapeutics, our investment co so far, was about $300 million and right now we see about $1.1 billion growth return to Vision Fund 1. So, net-net these others, $4.7 billion as (inaudible) 2020 from gross gain. So, multiple wise it is 1.5 times. As Masa mentioned yesterday, we are expecting potential IPOs, so that we believe that there are farther contribution by Vision Fund for our value enhancement.

Page 20 is the current portfolio companies of 86 and the portfolios that we have had as a private company in direct investments. And some that are engaged in diverse -- and these companies are engaged in diversified businesses.

On page 21, so this shows a kind of strength of portfolio companies. One is the high ratio of listing securities. So, many of the companies, even though they have a large total asset, but it's really difficult to monetize or liquidate some merged companies because of those are the important subsidiaries, so they cannot sell.

But in another case we are the investment holding company so that we can monetize in any way. So, 77% of this securities ratio gives us the flexibility for monetization. And also at the same time that we were able to maintain this kind of classification. So, you see the pie chart, 57% so Alibaba you may say, but at the same time actually Alibaba is not one solo business that they are running.

Actually they are the Internet business; however, this is only the infrastructure. Through this infrastructure they've been accessing to the many segments in industry. So that I don't believe that we can see Alibaba as one business or one company. Actually this is the combination of many segments in the industry. That's how I would like you to also see Alibaba.

Page 22, from yesterday's Masa's presentation he mentioned about this establishment of the investment management subsidiary. The purpose is to manage excess cash and diversify our assets so that those assets that I explained in earlier pages that we would like to diversify the business, diversify the region or in any way that we would like to diversify. And capital investment is about JPY60 billion.

Shareholdings, two-thirds belongs to SBG, SoftBank Group Corp., and one-third belongs to Masa Son, our Chairman and CEO. Investment criteria are primarily highly liquid public listed stocks and the investment method is direct investments and also includes some derivative transactions to seek for efficiency. After this announcement we have received several questions from investors and for these shareholdings is not 100% subsidiary of SBG.

Why Masa is taking 33%? And the reason and the purpose was also questioned. Masa also touched on a little bit yesterday that in this group ultimate compensation system we think about, I believe what will be the best approach, best structure that (inaudible) said, that is something we've been discussing. And with this investment, to make this investment successful, once you succeed you will receive the compensation. But if you do not succeed, not only receiving compensation but also making a loss, which comes to also Masa himself.

So, it's a little bit difficult to explain everything in just a governance point of view, but I believe there are many arguments whether this is tightly governed. But when you look at the many company's CEOs receiving large amount of compensation. However, when you look at Masa, his compensation that he is receiving is very small -- relatively small compared to many company's CEOs.

So, considering that, I believe there must be several discussions regarding the compensation approach or governance approach. Of course, the whole establishment of companies that we have received the approval by the Board.

And last but not least on 24, loan to value, we've been steadily improving the loan to value. And since the last quarter announcement, the 3% point has improved so far.

Page 25, this shows the improvements on a quarterly basis. Currently we are in 11%, which is very safety zoned for us. The calculation of loan to value, for example, nonrecourse finance, once again we would like to clarify that we explained that we should include or not in the safety nets in the long-term value. Because I am also the ex-banker, so from the lender's point of view our most appropriate or optimized definition is important.

And loan to value should not be just a formality measure, but also I'd like to use this measure, or the KPI, as one of the most important KPIs for running our company. So, that I would like to also share with the bondholders or shareholders with -- so that the best and optimized definition for LTV is important for us as well.

Page 26 is cash position. As of the end of June, JPY4.2 trillion. And since then of the subsequent event, for example, loan repayments as a part of the balance sheet improvement. And if we exclude loans that are latest number of cash position is JPY3.4 trillion. Compared to JPY4.2 trillion of course it is smaller, but still that covers the four-year equivalence of the bond redemption, as a matter of fact.

Page 27, this is the SoftBank Group standalone interest-bearing debt latest numbers. If we include nonrecourse SBG, that will give us JPY9.8 trillion of the interest-bearing debt. If we take nonrecourse out, which is JPY3.4 trillion, currently the recourse to SoftBank Group's interest-bearing debt is JPY6.3 trillion.

This is the number as of the end of June, so this includes JPY1 trillion in margin loan using Alibaba share. And as of July, this has also used for the repayment and so on, so that changes a little bit since the end of June.

Page 28, this is a standalone cash position as on subsequent events by the repayments process that the numbers has changed. For example, the margin loan repayment is quite a large number -- portion. So, we said it's JPY3.4 trillion after the repayment of margin loan.

So, net interest-bearing debt is about JPY3 trillion that you see on slide 29. As of the end of June, from JPY5.6 trillion to JPY3 trillion, the number has improved because of the JPY2.4 trillion of adjustment of asset backed finance.

Page 30 shows the redemption schedule. And as you can see, we have no problem at all in terms of redeeming our bonds. And also with each finance transaction we would like to prepare the source for the repayments, but at the same time try to consider the earn-out instruments.

In page 20 and on, these is our financial strategy, which is exactly the same as what we announced back in May. So, we will keep this strategy going forward. So, establishing new investment management company which is a new challenge for us. But actually even more important, our top priority is this financial policy.

This is something we will keep -- keeping and maintaining our LTV, maintaining our cash position. And on top of that, if there is any excess cash that we will like to efficiently use those. So, that's our challenges that we can think of for the mid- to long-term period. So, that is all for me. Thank you very much.

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Unidentified Company Representative [5]

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Thank you. So, last but not least Mr. Navneet Govil, CFO of SoftBank Investment Advisors, will give you update on SoftBank Vision Fund. As CFO of Vision Fund, he will explain about the accounting and the structure of Vision Fund.

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Navneet Govil, SoftBank Investment Advisors - Managing Partner & CFO [6]

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Hello, everyone. Before we begin, please read SBIA legal disclaimers on slide two related to the information you received in this presentation. Please refer to the online presentations for more detail. Today, as you will see on slide 4, I'll summarize first-quarter performance and discuss our key highlights for the three months ended June 30. I will then discuss the fund's financial impact on SoftBank.

Finally, in my in focus section I'll describe how our portfolio is well-positioned to benefit from the accelerated technological shift underway due to the pandemic. COVID-19 has expended addressable markets in a range of sectors from food delivery to enterprise software. We believe our portfolio companies are well-positioned in many of the most coveted industries in the current environment.

We continue to invest. To start on slide 6, since announcing Vision Fund 2 we've made seven investments with a total acquisition cost of $2.1 billion. SoftBank has made a multibillion-dollar commitment to Vision Fund 2 and there is sufficient undrawn capital to continue making new investments for the next several quarters.

Our vision and investment thesis for Vision Fund 2 remains the same as the first, which is to invest in businesses using next-generation technology platforms to leverage data and artificial intelligence. We believe each of the companies listed here are well-positioned versus established players and are poised to disrupt their sectors.

We continue to invest in Vision Fund 1 as well and return capital to our limited partners. On slide 7, you'll see that during the last three months we've made prudent capital allocation decisions, deploying JPY1 million of capital into 11 follow-on investments and one joint venture. The fair value of our portfolio increased $2.9 billion during the period. We're seeing rapid adoption of digital services as many people around the world settle into a new way of doing things amid the pandemic.

During this time we monetized $1.8 billion from our public portfolio, partially exiting our investment in 10X Genomics, Guardant Health, Ping An Good Doctor and Slack. We also distributed an additional $1 billion to our limited partners. Finally, we repaid $3.9 billion of debt, reducing our portfolio financing facility by $800 million and fully paying down our subscription credit facility.

On slide 8, you see that total commitments for our Vision Fund 1 are $98.6 billion. In the three years following our initial close of the Vision Fund we have invested $82.6 billion and recorded gross investment gains of $3.5 billion. We've also distributed $11.6 billion back to our limited partners from realized exits, portfolio financings and the payment of the preferred equity coupon.

In a moment I'll elaborate on how these distributions reduced the preferred equity outstanding. Of the fund's total commitment of $98.6 billion, SoftBank's portion is $28.1 billion. SoftBank has contributed $24.1 billion to date and has received distributions of $1.6 billion.

Moving on to slide 9, since the inception of the Vision Fund, we've made 92 investments, including a new joint venture with an existing portfolio company. Our current total number of investments after six full exits is now 86.

On slide 10, we present the seven sectors we invest in by cost and fair value. In our consumer sector the pandemic is reordering the landscape, creating new winners and exposing retailers who are struggling. Consumers have rapidly adopted e-commerce and food delivery during the pandemic, which benefits our portfolio. Many believe these consumption patterns will remain once life returns to normal.

Here on slide 11 you can see our realized and unrealized gains. The realized values of our exited and monetized investments, as well as the fair market value of our public holdings, are both above our cost at the end of June. Indeed our public companies represent an additional $10 billion of available liquidity on our balance sheet.

While fair value is below cost in our private portfolio, it is up $1.2 billion from the March quarter. As always we were judicious in marking up the value of our assets. We remain long-term patient investors and believe the value of our private portfolio will benefit from the ongoing disruption caused by the rapid adoption of digital services.

Since the inception of the Vision Fund through June 30, eight portfolio companies have listed publicly, which is shown on slide 12.

As shown on slide 13, subsequent to quarter end, another portfolio company, Relay Therapeutics, critical stage precision medicine company had its IPO. Our acquisition costs in December 2018 was $10.75 per share. Relay's IPO in mid-July was priced at $20 per share, which was above the range set by their bankers.

Since then the stock continues to appreciate and today closed above $41 per share. The strong demand from institutional investors participating in the IPO validates our valuation. Furthermore, we are encouraged by the market's strong support post IPO, which we believe reflects the underlying potential of Relay's business.

Shifting gears on slide 14, I would like to share several examples of our Company successfully raising rounds at higher valuations led by investors other than SoftBank. Let's start with Cohesity. In April 2020, the company raised $250 million at a pre-money valuation of $2.3 billion and around that was led by DFJ Growth, Foundation Capital, Greenspring and Wing Venture Capital.

A couple months later in June 2020, Fountainwest and TigerGlobal led a Series E funding round for Zuoyebang, raising $750 million at a pre-money valuation of $6.5 billion. My last example is DoorDash. They raised $400 billion in a Series H funding round co-led by Durable Capital and Fidelity at a pre-money valuation of $15.6 billion.

We believe the investors participating in these recent funding rounds validate our prior and current valuations and reflect the strong underlying growth of each company's business. In these examples the Vision Fund's only participated to maintain our pro rata ownership.

As I mentioned earlier, we've also distributed $11.6 billion to our limited partners. On slide 15 we split this distribution into its constituent parts so you can see the full detail. As you recall, we had different securities that make up the Vision Fund capital in order to cater to the very brisk appetite of our limited partners.

Our capital structure includes preferred equity capital as well as standard equity capital. While $40 billion of our total commitments of $98.6 billion are preferred equity, we only pay a coupon on outstanding capital that has been called. As of June 30, our outstanding preferred equity capital was $29.5 billion. As we return this capital our coupon payments decline.

We're pleased that in the first three years of the fund we've already returned $6 billion of limited partners' capital and have already provided a return on equity capital. This reflects our disciplined approach to monetizations and distribution. Since inception our combined return, including both the preferred equity coupon and equity gains, was $5.6 billion.

Moving down to slide 16, our remaining $14.6 billion of undrawn capital will be used for follow-on investments and to pay management fees, fund expenses and the preferred equity coupon. This in combination with our $10 billion of liquid public assets. And cash on hand of 2.4 billion means are available capital totals $27 billion.

This dry powder shows our limited partners, including SoftBank, that we can continue to provide additional distributions to them. It also gives our portfolio company the freedom to consider strategic opportunities in this market.

Let's discuss the impact of the fund's financial performance on SoftBank. As you can see on slide 18, for the three months ended June 30 SoftBank's share of the fund's net profit was $1.23 billion. Combined with management fee, the total contribution to SoftBank is $1.29 billion. This compares to $2.05 billion in net profit and fees to SoftBank for the same period last year.

Moving on to slide 19, cumulatively from Vision Fund inception through June 30, SoftBank's share of the fund's net loss was $670 million as an investor. Factoring in an additional $420 million in management fee income, the total contribution from inception to date for SoftBank is negative $250 million from the fund.

On slide 20, from a balance sheet perspective, as of June 30 SoftBank contributed $24.1 billion in capital to the fund. This amount is slightly down in total value to $23.4 billion which includes $1.6 billion in distributions.

I'd now like to turn your attention to this quarter's in focus section. Starting on slide 22, we show that [Sangfond] had the foresight to anticipate the major technological shifts of the last several decades. Just as important, he had the conviction to invest significant capital behind these trends.

Now Sangfond's vision for our fund is to invest in businesses that are enabling the next stage of the information revolution. We are unwavering in our belief that artificial intelligence will create tremendous value in the years ahead.

On slide 23 you can see various industries as defined by Standard & Poor's and how they are being impacted by COVID-19.

As you can see on slide 24, implementing Sangfond's vision has positioned us well. Before the pandemic the information revolution was disrupting inefficient industries and creating entirely new categories. While the pandemic has adversely affected some of our companies, such as those in travel and hospitality, it has positively impacted many more, as you can see on the right-hand side of the screen.

Moving on slide 25, earlier this year demand picked up dramatically in several sectors as society responded to the pandemic. These include e-commerce, entertainment, enterprise solutions, healthcare, education, and food delivery. In the following slides I'll discuss these trends and highlight how our companies are involved.

Let's start with e-commerce on slide 26. It is sometimes said there are decades where nothing happens and there are weeks where decades happen. When it comes to e-commerce, we've seen this unfold in front of our eyes.

Consider this, in the United States it took 10 years for e-commerce penetration to increase 10 percentage points from 6% in 2009 to 16% in 2019. Then starting in March 2020, it took less than 10 weeks to grow from 16% to 27%. This is a remarkable acceleration and is representative of growth happening around the world.

Our company, Coupang, is a key player in this retail disruption. Based in South Korea, the third largest e-commerce market in the world, Coupang has built best-in-class logistics and fulfillment capability optimized to provide differentiated delivery experience for customers. As a result, they are now South Korea's number one in gross merchandise value, speed of delivery and number of customers.

In the entertainment sector, shown on slide 27, our portfolio company, ByteDance, has seen 615 million global downloads of its TikTok social video sharing app in the first six months of 2020, which is up 35% year-over-year. This was the highest for any app surpassing Zoom, WhatsApp and Facebook.

Moreover, ByteDance has more than tripled its number of TikTok monthly active users to 480 million and increased the average time users spend on its platform by 73% year-on-year as of March. While we're excited about TikTok's growth and future potential, I'd like to acknowledge the significant media speculation in the last several weeks about TikTok's future with parent company ByteDance. I will not discuss this speculation today nor will I answer questions on this topic.

On slide 28 I would like to highlight three enterprise solutions companies that are experiencing rapid adoption amid the pandemic. These portfolio companies are Slack, Automation Anywhere and ARM. Slack, with its highly rated service to support remote working, reported a 27% year-on-year increase in enterprise customers in April 2020. There are now 750,000 organizations using Slack, including 65 of the Fortune 100.

Automation Anywhere is a fast-growing software company creating bots, also known as digital workers, that automate processes in order to increase business efficiency. They have deployed over 2 million bots for customers in over 90 countries.

In December 2019 Amazon Web Services, the world's largest cloud computing company, announced its new Graviton2 processor which uses ARM's latest technology. In addition to increasing processing speed by up to 65% compared to existing servers, Graviton2 processors help AWS customers reduce cost by up to 40%. To date 172 billion ARM-based chips have been shipped, a staggering figure, but it speaks to the company's ongoing success.

We also have several companies in the healthcare space that are having a direct and positive impact on society. On slide 29 I would like to call out one such company which is Ping An Good Doctor. Headquartered in China, it is that country's leading online healthcare platform. The company drew 1.1 billion visits to their app over a three-week period at the outset of the pandemic in China.

From January to February the company grew new users tenfold in its online medical consultations between healthcare providers and patients were up nine times. Along with the biotech companies mentioned on the right-hand side of this slide, our companies are solving many of today's biggest global healthcare problems.

Let's move on to slide 30. Distance learning is making the jump to light speed during the pandemic. Amid a rush of school closures earlier this year, Zuoyebang, the number one provider of online educational services in China, reported a year-on-year increase of 52% in monthly active users now reaching 137 million as of April 2020. We firmly believe technology will play a critical role in the future of education and this market will continue to grow rapidly.

With many restaurants unable to host guests consumers are adjusting to dining at home instead of dining out. As shown on slide 31, we have several companies spread across the food delivery ecosystem.

Let's begin with REEF, the Dark Kitchen provider. The company is enabling local restaurants and national players to reach thousands of new customers. REEF has deployed over 70 kitchens to prepare and deliver meals to urban consumers. The pandemic has driven business their way, leading to a growth in monthly revenue of 144% between January and May.

DoorDash and Uber Eats are delivering meals and groceries. DoorDash is a market share leader with 46% and has seen its business grow 50% faster than the industry. Meanwhile Uber Eats posted gross bookings of $7 billion in the June quarter, up 113% year-on-year.

Finally, in autonomous delivery our portfolio company, Nuro, recently partnered with Kroger and CVS stores on same-day deliveries of groceries and other necessities. Due to the contactless nature of autonomous delivery, the company has seen a three times increase in demand in the months following the onset of the pandemic.

As you can see on slide 32, the Vision Fund is at the center of these key investment trends and is well-positioned to succeed in the current market environment. Before I close, on slide 33 I'd like to discuss an important program in the Vision Fund. Established last year with our partners at WeWork, we created the Emerge accelerator to help underrepresented founders access networks, tools and capital to grow their startup.

In June our first cohort of 14 Emerge founders presented to more than 100 investors. We plan to expand the accelerator to two cohorts per year and open it up to underrepresented founders around the world.

Thank you for listening. Today I discussed our performance and our contribution to SoftBank. I also discussed the accelerating technological shift underway and how our portfolio is well-positioned to benefit disproportionately from this disruption. I look forward to your questions. Thank you.

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Questions and Answers

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Unidentified Company Representative [1]

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(Interpreted) Thank you very much. Now we would like to receive your questions until 11:30 Tokyo time. (Operator Instructions).

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Operator [2]

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(Interpreted) Mr. Masuno, Nomura Securities.

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Daisaku Masuno, Nomura Securities - Analyst [3]

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(Interpreted) I have two questions. Number one is cash flow page on cash flow, investment cash flow JPY1.1 trillion, you acquired that amount. So, I want you to explain what is included. So, this year's JPY360 billion, that's included I believe, and also JPY4.5 trillion asset sale on the JPY65.4 billion is from the heavy liquid listed shares. So, listed shares and the sales and acquisition, could you please explain more in detail about these aspects?

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Unidentified Company Representative [4]

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(Interpreted) First of all, the acquisition of the listed shares, cash flow, page 15 -- I believe it is on page 15. And so, they expenditures, they are the JPY1.6 trillion, so that is the amount for the acquisition of the listed shares. So, did I answer your question?

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Daisaku Masuno, Nomura Securities - Analyst [5]

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(Interpreted) So, this means shares, am I correct?

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Unidentified Company Representative [6]

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(Interpreted) Yes, listed shares.

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Daisaku Masuno, Nomura Securities - Analyst [7]

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(Interpreted) JPY1 trillion, you already acquired or purchased the listed shares. And also the gain, the proceeds from the sale of the investment. So this means the sale of listed shares? I spoke again from the sale of listed shares?

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Unidentified Company Representative [8]

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(Interpreted) Page 6, I believe it is JPY65.4 billion. So, this is the gain on investment business of our holding company segment, so that is the listed shares. So, the balance at the end of June, so the balance is JPY120 trillion. Right now that's the related listed shares.

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Unidentified Company Representative [9]

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(Interpreted) JPY1 trillion, we purchased the listed shares, and JPY65.4 billion is again from the sale. And then the remainder is on the balance sheet. I already explained and so still the shares that are still remaining are on the balance sheet.

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Daisaku Masuno, Nomura Securities - Analyst [10]

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(Interpreted) So, that is JPY36 billion?

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Unidentified Company Representative [11]

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(Interpreted) Yes, that is what is remaining on the balance sheet.

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Unidentified Company Representative [12]

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(Interpreted) As I mentioned, in order to effectively manage the excess liquidity we purchased the listed shares and JPY36 billion is what still remains.

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Operator [13]

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(Interpreted) Mr. Kikuchi, SMBC Nikko Securities.

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Satoru Kikuchi, SMBC Nikko Securities - Analyst [14]

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(Interpreted) I have two questions please. First, from the accounting spot, page 8, T-Mobile's share of sales, number three and number four. After June, so this is the sales after June. So, it's not reflecting to the P&L of first quarter, but this will be reflecting the second-quarter P&L. It is my understanding correct?

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Unidentified Company Representative [15]

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(Interpreted) This chart explains the outstanding balance as well. And also wanted to show you big picture, so that is why we also show these number three and number four as well.

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Satoru Kikuchi, SMBC Nikko Securities - Analyst [16]

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(Interpreted) We don't know the big value, but if it's not too much difference then you may be able to realize some gain from here, right? In the second quarter?

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Unidentified Company Representative [17]

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(Interpreted) Those transactions after July. By the end of June the majority is already taken in because the price for the sales has already been set. More details from an accounting point of view, investment itself has already evaluated in the first quarter and also the price has already set. So, it's treated as a derivative for us there. So, considering positive and negative P&L impact showing the quarters are very small and minor.

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Satoru Kikuchi, SMBC Nikko Securities - Analyst [18]

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(Interpreted) Then after second quarter you may see some movement in here based on the T-Mobile shares, is that right?

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Unidentified Company Representative [19]

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(Interpreted) If T-Mobile shares increase, number five is the only part that we may see some negative because this is price already set as a derivative price. So, number five, the core option received by Deutsche Telekom, we don't know when they exercise their rights, so that may move based on the share price of T-Mobile. Number three and number four is already done thing, so we don't expect much of the impact. And even in the second quarter the reflection to the P&L is going to be very minor.

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Satoru Kikuchi, SMBC Nikko Securities - Analyst [20]

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(Interpreted) Then if share price goes up you may recognize a negative. Is that correct?

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Unidentified Company Representative [21]

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(Interpreted) Number five, I believe that the set price for share price is 103, so if share price goes up beyond there -- but still it's capped at 103, so that will give us some negatives. It will do that.

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Satoru Kikuchi, SMBC Nikko Securities - Analyst [22]

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(Interpreted) My second question, I have question to Goto San, JPY4.5 trillion program and the majority has already been completed, like JPY4.3 trillion and the remaining JPY0.2 trillion you'll be able to achieve from the asset financing. Or are you expecting to sell or divest any of the assets to achieve the JPY0.2 trillion? In this JPY4.5 trillion, does this include ARM or this does not include ARM?

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Yoshimitsu Goto, SoftBank Group Corp. - SVP & CFO [23]

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(Interpreted) Goto San speaking that we have up to JPY4.3 trillion achievement so far on this program. Remaining JPY0.2 trillion. I think there are many ways that we can achieve this. I believe this can be achieved using our assets. And I don't answer any questions regarding which portfolio we'll be using or anything.

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Satoru Kikuchi, SMBC Nikko Securities - Analyst [24]

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(Interpreted) I have additional questions on ARM. For this JPY4.5 trillion program do you include ARM for the consideration?

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Yoshimitsu Goto, SoftBank Group Corp. - SVP & CFO [25]

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(Interpreted) Goto San speaking. ARM is also one of the portfolios, but I don't answer any questions regarding specific portfolio regarding the breakdown.

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Satoru Kikuchi, SMBC Nikko Securities - Analyst [26]

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(Interpreted) So JPY4.5 trillion, this is the maximum amount I believe. That's how you explain when you announce. As a result, if you sell ARM then in total there can be JPY8 trillion or something like that, JPY9 trillion. If that's the case, those above excess portion due to the ARM divestments, but I'll say the JPY4.5 trillion program.

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Unidentified Company Representative [27]

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(Interpreted) I don't answer question regarding ARM related. This is the JPY4.5 trillion program. If we have any divestments or monetization over JPY4.5 trillion, of course it could happen because we are an investment company. So, I don't discuss any of the specific core portfolio companies regarding how we are going to do.

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Satoru Kikuchi, SMBC Nikko Securities - Analyst [28]

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(Interpreted) So, if you have divestments is that going to be used for additional shareholder's return or additional debt reduction?

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Yoshimitsu Goto, SoftBank Group Corp. - SVP & CFO [29]

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(Interpreted) So, as for 4.5 trillion program, this is something that we announced. So, anything above that we would like to consider once again what will be the best way to return to our stakeholders. That's I believe case-by-case.

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Operator [30]

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(Interpreted) (Operator Instructions). [Omunde Japan, Mr. Omura].

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Unidentified Analyst [31]

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(Interpreted) So this is not related to financial performance, but the Financial Times, the Wall Street Journal, these are the media. They pick up the relationship there between (inaudible) and [Wildcard] and the SoftBank. In September last year Wildcard, the strategic alliance was mentioned and also convertible bond, the investment will be made by SoftBank to that company.

So, these are the segments we have seen. So, I would like to confirm whether these are correct or not. So, between Wildcard and the SoftBank Group, are there any strategic relationship between you and the company? May I confirm whether this is correct?

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Yoshimitsu Goto, SoftBank Group Corp. - SVP & CFO [32]

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(Interpreted) As for a strategic partnership or the relationship, Wildcard, their technology is the business is applied globally extensively. And we also have the Vision Fund portfolio, which is global. And if we can generate synergy, then they as a business opportunity I think it is interesting. However, well -- and we are aware that these are the comments they made. Well, are there any specific transactions that we came to conduct with that company? No, we haven't conducted any such transactions with them.

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Unidentified Analyst [33]

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(Interpreted) Okay, and as for the convertible bond, SBIA senior executives, as part of the Vision Fund they conducted due diligence and they made a personal investment that is what was reported by media. So, are there any concerns like the governance? What was the position of the SoftBank Group?

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Yoshimitsu Goto, SoftBank Group Corp. - SVP & CFO [34]

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(Interpreted) In terms of the governance we see no problem. Initially SoftBank Group and the -- ourselves considered the investment in these opportunities and we conducted the due diligence. But as a result of our due diligence we came to the conclusion that we would not go ahead with the investment. So, that was a decision made by the company. And as for the individuals conducting the transactions after we make decision about the deal and we see no problem about the governance.

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Operator [35]

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(Interpreted) Mr. Ando, Daiwa Securities. Mr. Moriyuki, SBI Securities.

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Shinji Moriyuki, SBI Securities - Analyst [36]

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(Interpreted) This is Moriyuki speaking. Regarding excess cash and also investment using excess cash that I have a question about. Is this going to impact the calculation for LTV or, because of high liquidity, is this going to be seen as cash so it won't impact too much on LTV? That's my first question.

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Unidentified Company Representative [37]

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(Interpreted) This is not cash, this is excluded from the calculation for LTV. We won't count as cash, we don't -- we count as asset.

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Shinji Moriyuki, SBI Securities - Analyst [38]

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(Interpreted) And my next question, so you will be monetizing quite aggressively. So, you have a policy of managing LTV less than 25%. But what is your expectation, your LTV trend going forward?

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Yoshimitsu Goto, SoftBank Group Corp. - SVP & CFO [39]

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(Interpreted) As a financial policy we always like to manage our LTV less than 25%. Even under a normal situation less than 35%. That's our policy to maintain under such policy that we are currently 11% of loan to value, very safety zoned I can say. And also for this level I don't have -- we don't have any plan to say that we're going to improve even further from here anything like that because is it really leveraged from that view of maximizing shareholder's value.

So that -- for equity investors or the debt investors, we would like to maximize their value and the loan-to-value needs to balance with that. So, 11%, we are happy about that, but what we need to keep is to manage this at 25%.

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Shinji Moriyuki, SBI Securities - Analyst [40]

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(Interpreted) So again, if we keep this circumstance, are you expecting to maintain 11% LTV in the meantime?

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Yoshimitsu Goto, SoftBank Group Corp. - SVP & CFO [41]

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(Interpreted) I don't commit to that.

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Shinji Moriyuki, SBI Securities - Analyst [42]

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(Interpreted) And another question, so once you increase excess cash investment you may see there's some increase in loan-to-value from 11%?

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Yoshimitsu Goto, SoftBank Group Corp. - SVP & CFO [43]

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(Interpreted) If you just do the math, that may be the case. But also there are many cases how you invest, so that is a simple case. If we invest the listed securities using SBG's money then that's going to impact. But if we invest through the investment company, based on the agreement between the portfolios and us, or sometimes the portfolio raises it by themselves, so there are many cases. So, even independently raised, but still it's a consolidated company, if it's nonrecourse to SoftBank Group then we don't need to account on raising.

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Operator [44]

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(Interpreted) (Operator Instructions). SMBC Nikko Securities, Mr. Harada.

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Keisuke Harada, SMBC Nikko Securities - Analyst [45]

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(Interpreted) I have two questions. First question, Alibaba monetization, 147 billion -- or the $14.7 billion. So, the payment in kind is what you expect or payment in cash? So, which do you expect? That's my first question. So, either way is it possible on the contract and there is no recourse financing. What's going to happen?

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Unidentified Company Representative [46]

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(Interpreted) As of now we are not able to tell you.

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Keisuke Harada, SMBC Nikko Securities - Analyst [47]

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(Interpreted) Thank you very much. The second question is on page 5, the financial section page 5. JPY4.5 trillion program, the [margin] loan -- provisioning of the margin loan as well as investing in listed shares. I would like to confirm on this. So, on page 5, to improve the cash position that is I believe relevant, in margin loan on page 6 I believe this page is also relevant, JPY4.5 trillion monetization program and the JPY2.8 billion equivalent of T-Mobile shares.

And when it comes to debt repayment will the Alibaba margin loan of the JPY9.6 [billion] is included. So, monetization and margin loan is included in the repayment of the debt -- is included and noted here. So, what is the intention behind this?

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Yoshimitsu Goto, SoftBank Group Corp. - SVP & CFO [48]

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(Interpreted) I'm not sure if I'm responding directly to your question, but when it comes to the repayment of the debt, there are certain assets on the debt percentage (inaudible) repayment of the debt, there's less impact. So, we are thinking about the different ways to do so. So, the way, sort of the ideas and calculated and restructured JPY4.5 trillion program. And I'm sure you understood the structure.

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Keisuke Harada, SMBC Nikko Securities - Analyst [49]

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(Interpreted) Okay, so as for listed shares using the excess fund, page 5. So, where does it fit to this slide on page 5 to improve the financial improvement is where it belongs to?

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Unidentified Company Representative [50]

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(Interpreted) Could you please elaborate your question?

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Keisuke Harada, SMBC Nikko Securities - Analyst [51]

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(Interpreted) So, financial improvement and what is included in this part? I beg your pardon, so yesterday you -- the establishment, the JPY60 billion will be paid to establish the investment management subsidiary. So where does it fit to this page to use the excess fund? So, on Vision Fund where does it belong to? I don't understand where it fits into the slide?

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Unidentified Company Representative [52]

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(Interpreted) So, it is outside of the JPY4.5 trillion monetization program, but JPY4.5 trillion will give us the cash position. Now, let's say we have JPY1 trillion, JPY2 trillion over the cash position and we may use part of that money for the safe management of our money by investing in some [safe fund] securities. So, that's one idea.

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Operator [53]

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(Interpreted) (Operator Instructions). Mr. [Hoshi], Nomura Securities.

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Chizuru Hoshi, Nomura Securities - Analyst [54]

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(Interpreted) So, I have a question to Goto San. Yesterday in Masa's presentation, JPY400 billion to JPY500 billion buyback foreign denominated bond is something that you discussed. When are you expecting to announce the details of that? Especially I believe that the target is a target the dollar top or is it the senior notes? As long as you can say -- if you can share with us any information. That would be helpful. Thank you.

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Yoshimitsu Goto, SoftBank Group Corp. - SVP & CFO [55]

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(Interpreted) What I said yesterday was kind of conceptual. So, once the market and the environment is ready, we may want to study and looking to. So, maybe I said depending on the situation the size can be large, the size can be small because bond price goes high -- what happened. So, even it goes high are we going to do that if once we say we do that? But if the bond price is high, means that many people want it low so we don't have motivation to buy those back.

So that we are going to see the price, we're going to see the environment. So, I believe that the size and the price can be fluctuated. And at this moment we are not at the stage we can discuss any detail. We cannot discuss what will be the target bonds because everything is depending on the market and size. So, once we are ready we will share with you, but please wait for a moment until then.

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Chizuru Hoshi, Nomura Securities - Analyst [56]

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(Interpreted) My second question, as Masa mentioned yesterday, JPY60 billion investment management subsidiary, in the future how much proportion are you expecting as a denominator hold on to better calculation?

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Yoshimitsu Goto, SoftBank Group Corp. - SVP & CFO [57]

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(Interpreted) At this moment, we don't have any specific threshold how much or how far we are going to do. This type of management is just about beginning and we are just about testing this scheme. So, once everything is validated we may consider expanding this company.

However, whenever we do any transaction through this company, we also need to check whether this company's management of the asset is nonrecourse to SBG or not. That also changes the calculation for LTV. So, at the end of June quarter the numbers are you just saw. So, we would like to make sure that we have appropriate accounting process based on the market and the [tax] situation.

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Operator [58]

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(Interpreted) (Operator Instructions). Mr. Masuno, Nomura Securities.

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Daisaku Masuno, Nomura Securities - Analyst [59]

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(Interpreted) Thank you very much. This is the second round, sorry. But page 26, this is the question for Mr. Goto, page 26. So, according to the numbers that you have issued, the liquidity after June of JPY3.4 trillion and asset sale, the JPY200 billion, so putting that together will give us JPY3.8 trillion. So, towards the end of June will be about JPY4 trillion over liquidity.

Our cash position will be achieved according to the analyst [link] of JPY1.5 trillion. The limit is not carried out yet which was announced in June, July. So, if you can deduct, still the JPY2.5 trillion remains. So, the cash reserve or the debt on the response, the usage of this amount of money. Am I correct in understanding that? I believe that you will be announcing some new activities from now on, but that is the [master] that conducted. Is that the rough understanding about the numbers?

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Unidentified Company Representative [60]

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(Interpreted) Yes, so generally you are (inaudible) comfortable with your analysis. And as for the orders or the sequence of the programs, JPY4.5 trillion program, that is the one box and I'm holding a key to the lock that keeps the JPY4.5 trillion. So, the creditor return and the stockholder return, that is inclusion of the JPY4.5 trillion, but the excess cash on top of this JPY4.5 trillion program, there are many different ways to use that amount.

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Daisaku Masuno, Nomura Securities - Analyst [61]

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(Interpreted) Okay, understood. Thank you very much. And another question to Kimiwada San. Sorry this is in detail, but Alibaba -- the IFRS adjustment is conducted which will -- gave the rather small number for the Alibaba, the equity method valuation. So, the IFRS adjustment that you conducted, could you please give me a more detailed explanation?

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Kazuko Kimiwada, SoftBank Group Corp. - SVP & Head of Accounting [62]

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(Interpreted) As for details, Alibaba, there are certain things that Alibaba is not disclosing. So just roughly I would like to respond.

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Daisaku Masuno, Nomura Securities - Analyst [63]

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(Interpreted) But the investment impairment actually happened, so the -- in terms of demand how big was it?

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Kazuko Kimiwada, SoftBank Group Corp. - SVP & Head of Accounting [64]

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(Interpreted) Adjustment amount? Later on I would like to give you the response in detail.

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Daisaku Masuno, Nomura Securities - Analyst [65]

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(Interpreted) Okay, understood. Thank you very much.

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Operator [66]

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(Interpreted) Mr. Kikuchi, SMBC Nikko Securities.

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Satoru Kikuchi, SMBC Nikko Securities - Analyst [67]

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(Interpreted) Thank you for my second question. My name is Kikuchi. JPY60 billion investment management subsidiary, I would like to confirm a little bit. So, I believe scheme may not be finalized yet, but is it going to be SoftBank investment advisory who will be doing the investment activity? Or is any other entity going to do the investment?

And also are you going to lever -- have any leverage in this company? So, you have JPY360 billion out of the JPY1 trillion purchase. Is it nothing to do with the JPY60 billion for this company?

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Yoshimitsu Goto, SoftBank Group Corp. - SVP & CFO [68]

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(Interpreted) The entity of this company is nothing to do or supplied from the SBIA, so this is a separate operation of the investments. And as for leverage, that's of course necessary strategy for investment strategy. So, that's also within the scope for this company, too. And JPY1 trillion to JPY650 billion, that's SBG purchase and the remaining was the JPY350 million. So, that's separate from this company's amount. Thank you.

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Satoru Kikuchi, SMBC Nikko Securities - Analyst [69]

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(Interpreted) So, regarding the leverage, I believe that you will be taking some leverage here, but like Vision Fund, is it going to be somebody -- a third-party partner like Vision Fund or is it going to be borrowings? In case of borrowings I believe it's going to be difficult to make it nonrecourse, but is it going to be recourse to SBG? So, how are you going to think about these borrowings? How are you going to deliver on it?

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Yoshimitsu Goto, SoftBank Group Corp. - SVP & CFO [70]

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(Interpreted) It's just the beginning. We will look into that based on the actuals. We don't expect the structure to be anything like that, but we just look at -- wait and see how it goes.

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Operator [71]

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(Interpreted) (Operator Instructions).

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Unidentified Company Representative [72]

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(Interpreted) (inaudible) earlier, may I respond to the previous question? I just (inaudible) to the IFRS. JPY120 billion -- in Japanese yen, that is the impact or the size of the adjustment. So, does that answer your question?

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Operator [73]

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(Interpreted) (Operator Instructions). So, it seems like we don't have any further questions. So, it's a bit early, but we would like to close the meeting now. So, thank you very much. This concludes the SoftBank Group Corp. investors briefing for the three-month period ended June 30, 2020. And the closure remark, Mr. Yotaro Agari, who assumed the Head of IR position as of July 1. He would like to make one comment.

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Yotaro Agari, SoftBank Group Corp. - Head of IR [74]

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(Interpreted) Yes, my name is Agari. Thank you very much. I take that I am now the Head of IR. So, we would like to enhance the communication with the investors for the mid- to long-term period strategy. And at yesterday's Masa's presentation and today's investors meeting and analyst meeting that I believe you have more questions. So, if you have anything, please feel free to contact IR anytime. Thank you very much.

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Unidentified Company Representative [75]

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(Interpreted) Thank you. So, that concludes today's meeting. Thank you very much for your time and joining with us and you'll be able to see this meeting on our corporate website. Thank you very much. And thank you, Navneet.

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Navneet Govil, SoftBank Investment Advisors - Managing Partner & CFO [76]

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Thank you. Bye-bye.