SoftBank Group Corp. – Annual report – 31 March 2022
Industry: telecoms, software
5. Significant judgments and estimates (extract)
In preparing consolidated financial statements under IFRSs, management makes judgments, estimates, and assumptions that affect the application of accounting policies and carrying amounts of assets, liabilities, revenue, and expenses. These estimates and underlying assumptions are based on management’s best judgments, through their evaluation of various factors that were considered reasonable as of the period-end, based on historical experience and by collecting available information. By the nature of its estimates or assumptions, however, actual results in the future may differ from those projected estimates or assumptions.
Estimates and underlying assumptions are continuously reviewed. Revisions to accounting estimates are recognized in the period in which the estimate is revised as well as in the future periods. Significant judgments, estimates and assumptions that affect the amounts recognized in the Company’s consolidated financial statements are as follows:
- significant judgments of whether an entity is controlled by the Company in determining the scope of consolidation ((1) and (20) in “Note 3. Significant accounting policies” and “Note 21. Major subsidiaries”);
3. Significant accounting policies (extract)
(1) Basis of consolidation
A subsidiary is an entity that is controlled by SoftBank Group Corp.
The Company controls an entity when the Company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Please refer to “a. Consolidation of SVF1 and SVF2 by the Company” under “(20) Significant accounting policies for the SoftBank Vision Funds segment” for details of SVF1 and SVF2.
The subsidiaries’ financial statements are consolidated from the date when control is acquired (“acquisition date”) until the date when the control is lost.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with those used by the Company.
Non-controlling interests consist of those interests at the acquisition date and any adjustments for subsequent changes in those interests.
Total comprehensive income of subsidiaries is generally attributed to the owners of the parent and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance.
All intragroup balances and transactions and unrealized gains and losses arising from intragroup transactions are eliminated on consolidation.
Changes in the Company’s ownership interests in subsidiaries that do not result in the Company losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Company’s interests and the non-controlling interests are adjusted to reflect the changes in their interests in the subsidiaries.
Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to owners of the parent.
When SoftBank Group Corp. loses control of a subsidiary, a gain or loss is calculated as the difference between:
- the aggregate of the fair value of the consideration received and the fair value of any retained interest; and
- the net carrying amount of the assets (including goodwill), liabilities, and non-controlling interests of the subsidiary when control is lost.
Any amounts previously recognized in accumulated other comprehensive income in relation to the former subsidiaries are reclassified to profit or loss.
21. Major subsidiaries (extract)
(1) Organizational structure
The Company’s major subsidiaries are as follows:
Major subsidiaries as of March 31, 2022
*1 Limited partnerships are deemed as structured entities and the voting rights are not described.
*2 The Company does not own a majority of SoftBank Corp.’s voting rights. However, the Company has determined that it has substantial control over SoftBank Corp. and included it in the scope of consolidation, considering the fact that the Company holds 40.7% of the voting rights of SoftBank Corp., the dispersion of voting rights in SoftBank Corp. and the voting patterns exercised in SoftBank Corp.’s past shareholders meetings.
*3 The Company does not own a majority of A Holdings Corporation’s voting rights. However, the Company has determined that it has substantial control over A Holdings Corporation and included it in the scope of consolidation, considering the fact that the Company holds 50.0% of the voting rights of A Holdings Corporation and appoints the majority of the members of A Holdings Corporation’s Board of Directors.
*4 The Company does not own a majority of PayPay Bank Corporation’s voting rights. However, the Company has determined that it has substantial control over PayPay Bank Corporation and included it in the scope of consolidation, considering the fact that the Company holds 46.6% of the voting rights of PayPay Bank Corporation and directors from the Company constitute the majority of the members of PayPay Bank Corporation’s Board of Directors. In addition, effective as of April 5, 2021, PayPay Bank Corporation changed its name from The Japan Net Bank, Limited.
*5 The Company does not own a majority of ASKUL Corporation’s voting rights. However, the Company has determined that it has substantial control over ASKUL Corporation and included it in the scope of consolidation, considering the fact that the Company holds 44.5% of the voting rights of ASKUL Corporation, the dispersion of voting rights in ASKUL Corporation and the voting patterns exercised in ASKUL Corporation’s past shareholders meetings.
*6 SBLA Latin America Fund LLC changed its name from SoftBank Latin America Fund L.P. to SLA Latin America Fund LLC, effective as of September 22, 2021, and changed its name from SLA Latin America Fund LLC to SBLA Latin America Fund LLC, effective as of October 6, 2021. In addition, as of March 31, 2021, the entity is deemed as a structured entity and the voting rights are not described.