TOKYO, Feb. 08, 2021 (GLOBE NEWSWIRE) -- Internet Initiative Japan Inc. (“IIJ”, TSE1: 3774) today announced its nine months consolidated financial results for the fiscal year ending March 31, 2021 (“1Q-3Q20”, from April 1, 2020 to December 31, 2020) under International Financial Reporting Standards (IFRS).1
| Highlights of Financial Results for 1Q-3Q20 | ||||||||
| Total revenues | JPY156.1 billion | up | 3.6 | % | YoY2 | |||
| Gross profit | JPY28.8 billion | up | 21.5 | % | YoY | |||
| Operating profit | JPY10.1 billion | up | 67.1 | % | YoY | |||
| Profit before tax | JPY9.2 billion | up | 64.5 | % | YoY | |||
| Net profit3 | JPY5.9 billion | up | 75.2 | % | YoY | |||
| New Financial Targets for FY2020 (Revised on February 8, 2021) | ||||||||
| Previous Targets | ||||||||
| Total revenues | JPY213.0 billion | up | 4.2 | % | YoY | JPY212.0 billion | ||
| Operating profit | JPY13.5 billion | up | 64.1 | % | YoY | JPY11.3 billion | ||
| Profit before tax | JPY12.3 billion | up | 71.8 | % | YoY | JPY10.0 billion | ||
| Net profit | JPY7.6 billion | up | 89.7 | % | YoY | JPY6.1 billion | ||
Overview of 1Q-3Q20 Financial Results and Business Outlook
“We were able to structurally and continuously increase profit with strong accumulation of enterprise monthly recurring revenue, especially network services. As a leading comprehensive network solution provider, we need to continuously develop and upgrade our service functions, which always impose in-front cost on us. Yet, when we have substantial accumulation of revenue, we can enjoy scale-merit and expect to see continuous profit growth as we gather revenues of various network services on our common network infrastructure. Among many enterprise network services, IP services (dedicated Internet connectivity services for enterprise), whose revenue growth used to be low single digit, have been growing around 12.5% this fiscal year. Moreover, with our in-house developed various network services, such as reliable VPN Internet connectivity, multi-cloud private connection, SASE type services, remote access services, and security services, we have been able to absorb enterprise network demands that are becoming more complex and advanced,” said Eijiro Katsu, President and COO of IIJ.
“Enterprise mobile, which is generated by direct sales from enterprises and doesn’t include MVNE, continued to grow quite strongly: around 26.7% year over year revenue growth. Although consumer mobile continues to be a red ocean market, our first priority has always been on enterprise usages to which we can leverage our strengths, such as blue-chip customer base, wide range of network services, and SI expertise. Going forward, we expect to operate a growing number and a variety of comprehensive IoT projects, like the factory automation system for Toyota Motor Hokkaido,4 in the middle-to-long term. They shall lead to better utilized mobile infrastructure as well as contribute to improved profitability, along with the business expansion,” continued Katsu.
“We revised our FY2020 financial target upward again by reflecting the favorable demand situation and strong performance, mainly led by the significant improvement in network services gross profit. Our competitive advantage of having expertise in both network and SI should see even greater business opportunity as Japan’s attitude toward IT adoption has changed and become significantly more advanced. This change does not seem to be a onetime phenomenon but rather grow and become stronger in the middle-to-long term under the undeniable and unstoppable waves of so-called digital shift,” said Koichi Suzuki, Founder, Chairman and CEO of IIJ.
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1 Unless otherwise stated, all financial figures discussed in this announcement are prepared in accordance with IFRS, unaudited and consolidated.
2 YoY is an abbreviation for year over year change.
3 Net profit is “profit for the period attributable to owners of the parent.”
4 For details, please refer to our press release titled “IIJ builds IoT system for new production line at Toyota Motor Hokkaido” which could be found here https://www.iij.ad.jp/en/news/pressrelease/2020/0803.html
1Q-3Q20 Financial Results Summary
We have omitted segment analysis because most of our revenues are dominated by network services and systems integration (SI) business.
| Operating Results Summary | ||||||
| 1Q-3Q19 | 1Q-3Q20 | YoY Change | ||||
| JPY millions | JPY millions | % | ||||
| Total revenues | 150,688 | 156,070 | 3.6 | |||
| Network services | 91,525 | 93,983 | 2.7 | |||
| Systems integration (SI) | 56,062 | 59,927 | 6.9 | |||
| ATM operation business | 3,101 | 2,160 | (30.4 | ) | ||
| Total costs | (126,994 | ) | (127,273 | ) | 0.2 | |
| Network services | (76,211 | ) | (74,201 | ) | (2.6 | ) |
| Systems integration (SI) | (49,111 | ) | (51,672 | ) | 5.2 | |
| ATM operation business | (1,672 | ) | (1,400 | ) | (16.3 | ) |
| Total gross profit | 23,694 | 28,797 | 21.5 | |||
| Network services | 15,314 | 19,782 | 29.2 | |||
| Systems integration (SI) | 6,951 | 8,255 | 18.8 | |||
| ATM operation business | 1,429 | 760 | (46.8 | ) | ||
| SG&A, R&D, and other operating income (expenses) | (17,634 | ) | (18,670 | ) | 5.9 | |
| Operating profit | 6,060 | 10,127 | 67.1 | |||
| Profit before tax | 5,610 | 9,227 | 64.5 | |||
| Profit for the period attributable to owners of the parent | 3,354 | 5,877 | 75.2 | |||
| (Note) Systems integration includes equipment sales. | ||||||
| Segment Results Summary | ||||
| 1Q-3Q19 | 1Q-3Q20 | |||
| JPY millions | JPY millions | |||
| Total revenues | 150,688 | 156,070 | ||
| Network services and SI business | 147,805 | 154,039 | ||
| ATM operation business | 3,101 | 2,160 | ||
| Elimination | (218 | ) | (129 | ) |
| Operating profit | 6,060 | 10,127 | ||
| Network service and SI business | 4,901 | 9,603 | ||
| ATM operation business | 1,271 | 616 | ||
| Elimination | (112 | ) | (92 | ) |
1Q-3Q20 Revenues and Income
Revenues
Total revenues were JPY156,070 million, up 3.6% YoY (JPY150,688 million for 1Q-3Q19).
Network services revenue was JPY93,983 million, up 2.7% YoY (JPY91,525 million for 1Q-3Q19).
Revenues for Internet connectivity services for enterprise were JPY29,699 million, up 9.0% YoY from JPY27,258 million for 1Q-3Q19, mainly due to an increase in IP services revenues and mobile-related services revenues along with an increase of telecommunication demands.
Revenues for Internet connectivity services for consumers were JPY19,390 million, down 0.7% YoY from JPY19,530 million for 1Q-3Q19, mainly due to competition and a decrease in “IIJmio Mobile Service,” consumer mobile services revenues, along with sluggish sales of retailers under the COVID-19 pandemic.
Revenues for WAN services were JPY18,605 million, down 10.5% YoY from JPY20,796 million for 1Q-3Q19. The decrease was mainly because of the year over year impact by large enterprises clients’ migration to mobile which mostly ended in 3Q19.
Revenues for Outsourcing services were JPY26,289 million, up 9.8% YoY from JPY23,941 million for 1Q-3Q19, mainly due to an increase in security-related services revenues.
Network Services Revenues Breakdown
| 1Q-3Q19 | 1Q-3Q20 | YoY Change | |||||||
| JPY millions | JPY millions | % | |||||||
| Total network services | 91,525 | 93,983 | 2.7 | ||||||
| Internet connectivity services (enterprise) | 27,258 | 29,699 | 9.0 | ||||||
| IP services (including data center connectivity services) | 7,992 | 8,988 | 12.5 | ||||||
| IIJ Mobile services | 16,780 | 18,034 | 7.5 | ||||||
| Enterprise mobile service (IoT usages etc.) | 4,350 | 5,513 | 26.7 | ||||||
| IIJ Mobile MVNO Platform service (MVNE) | 12,430 | 12,521 | 0.7 | ||||||
| Others | 2,486 | 2,677 | 7.7 | ||||||
| Internet connectivity services (consumer) | 19,530 | 19,390 | (0.7 | ) | |||||
| IIJmio Mobile Service | 17,605 | 17,363 | (1.4 | ) | |||||
| Others | 1,925 | 2,027 | 5.3 | ||||||
| WAN services | 20,796 | 18,605 | (10.5 | ) | |||||
| Outsourcing services | 23,941 | 26,289 | 9.8 | ||||||
Number of Contracts and Subscription for Connectivity Services
| As of Dec. 31, 2019 | As of Dec. 31, 2020 | YoY Change | ||||||
| Internet connectivity services (enterprise) | 1,902,586 | 2,258,371 | 355,785 | |||||
| IP service (greater than or equal to 1Gbps) | 757 | 782 | 25 | |||||
| IP service (less than 1Gbps) | 1,259 | 1,225 | (34 | ) | ||||
| IIJ Mobile Services | 1,815,268 | 2,165,723 | 350,455 | |||||
| Enterprise mobile service (IoT usages etc.) | 710,604 | 1,046,470 | 335,866 | |||||
| IIJ Mobile MVNO Platform service (MVNE) | 1,104,664 | 1,119,253 | 14,589 | |||||
| Others | 85,302 | 90,641 | 5,339 | |||||
| Internet connectivity services (consumer) | 1,405,848 | 1,380,594 | (25,254 | ) | ||||
| IIJmio Mobile Service | 1,072,576 | 1,037,227 | (35,349 | ) | ||||
| Others | 333,272 | 343,367 | 10,095 | |||||
| Total contracted bandwidth (Gbps) | 4,745.7 | 6,021.9 | 1,276.2 | |||||
(Notes)
- Numbers in the table above show number of contracts except for “IIJ Mobile Services (enterprise)” and “IIJmio Mobile Service” which show number of subscriptions.
- The numbers of IP service contracts include the numbers of IIJ data center connectivity service contracts.
- Total contracted bandwidth is calculated by multiplying number of contracts under “Internet connectivity services (enterprise)” except for “IIJ Mobile Services” and the contracted bandwidths of the services respectively.
SI revenues, including equipment sales, were JPY59,927 million, up 6.9% YoY (JPY56,062 million for 1Q-3Q19).
Systems construction and equipment sales, a one-time revenue, was JPY21,687 million, down 1.8% YoY (JPY22,081 million for 1Q-3Q19). Systems operation and maintenance revenue, a recurring revenue, was JPY38,240 million, up 12.5% YoY (JPY33,981 million for 1Q-3Q19), mainly due to an increase in private cloud services’ revenues.
Orders received for SI, including equipment sales, totaled JPY65,167 million, up 8.2% YoY (JPY60,231 million for 1Q-3Q19); orders received for systems construction and equipment sales were JPY23,943 million, up 2.7% YoY (JPY23,305 million for 1Q-3Q19), and orders received for systems operation and maintenance were JPY41,224 million, up 11.6% YoY (JPY36,926 million for 1Q-3Q19).
Order backlog for SI, equipment sales, as of December 31, 2020 amounted to JPY61,104 million, up 10.5% YoY (JPY55,284 million as of December 31, 2019); order backlog for systems construction and equipment sales was JPY9,763 million, up 7.7% YoY (JPY9,064 million as of December 31, 2019) and order backlog for systems operation and maintenance was JPY51,341 million, up 11.1% YoY (JPY46,220 million as of December 31, 2019).
ATM operation business revenues were JPY2,160 million, down 30.4% YoY (JPY3,101 million for 1Q-3Q19), mainly due to the decrease in the number of ATM usage and ATMs in operation along with store closure and stay-at-home by the COVID-19.
Cost of sales
Total cost of sales was JPY127,273 million, up 0.2% YoY (JPY126,994 million for 1Q-3Q19).
Cost of network services revenue was JPY74,201 million, down 2.6% YoY (JPY76,211 million for 1Q-3Q19). There was a decrease in circuit-related costs along with WAN services revenue decrease. There was also a decrease in cost due to mobile unit charge revised by Mobile Network Operators (MNOs) based on their actual results of FY2019. Gross profit was JPY19,782 million, up 29.2% YoY (JPY15,314 million for 1Q-3Q19), and gross profit ratio was 21.0% (16.7% for 1Q-3Q19).
Cost of SI revenues, including equipment sales was JPY51,672 million, up 5.2% YoY (JPY49,111 million for 1Q-3Q19). There was an increase in license fees along with an increase in cloud-related revenues. Gross profit was JPY8,255 million, up 18.8% YoY (JPY6,951 million for 1Q-3Q19) and gross profit ratio was 13.8% (12.4% for 1Q-3Q19).
Cost of ATM operation business revenues was JPY1,400 million, down 16.3% YoY (JPY1,672 million for 1Q-3Q19). Gross profit was JPY760 million (JPY1,429 million for 1Q-3Q19) and gross profit ratio was 35.2% (46.1% for 1Q-3Q19).
Selling, general and administrative expenses and other operating income and expenses
Selling, general and administrative expenses, which include research and development expenses, totaled JPY18,328 million, up 3.7% YoY (JPY17,680 million for 1Q-3Q19). There was an increase in personnel-related expenses and decreases in sales commission expenses and traveling expenses.
Other operating income was JPY113 million (JPY187 million for 1Q-3Q19).
Other operating expenses was JPY455 million (JPY141 million for 1Q-3Q19), mainly due to disposal loss on fixed assets.
Operating profit
Operating profit was JPY10,127 million (JPY6,060 million for 1Q-3Q19), up 67.1% YoY.
Finance income and expenses, and share of profit (loss) of investments accounted for using equity method
Finance income was JPY317 million, compared to JPY349 million for 1Q-3Q19. It included dividend income of JPY83 million (JPY75 million for 1Q-3Q19) and gains on financial instruments of JPY192 million (JPY192 million for 1Q-3Q19).
Finance expense was JPY490 million, compared to JPY432 million for 1Q-3Q19. It included interest expenses of JPY440 million (JPY432 million for 1Q-3Q19).
Share of loss of investments accounted for using equity method was JPY727 million (compared to loss of JPY367 million for 1Q-3Q19), mainly due to loss of DeCurret of JPY785 million.
Profit before tax
Profit before tax was JPY9,227 million (JPY5,610 million for 1Q-3Q19), up 64.5% YoY.
Profit for the period
Income tax expense was JPY3,281 million (JPY2,108 million for 1Q-3Q19). As a result, profit for the period was JPY5,946 million (JPY3,502 million for 1Q-3Q19), up 69.8% YoY.
Profit for the period attributable to non-controlling interests was JPY69 million (JPY148 million for 1Q-3Q19) mainly related to net income of Trust Networks Inc.
Profit for the period attributable to owners of parent was JPY5,877 million (JPY3,354 million for 1Q-3Q19), up 75.2% YoY.
Financial Position as of December 31, 2020
As of December 31, 2020, the balance of total assets was JPY210,108 million, increased by JPY3,584 million from the balance as of March 31, 2020 of JPY206,524 million.
As of December 31, 2020, the balance of current assets was JPY91,901 million, increased by JPY5,311 million from the balance as of March 31, 2020 of JPY86,590 million. The major breakdown of fluctuation and balance of current assets was: an increase in cash and cash equivalents by JPY3,299 million to JPY41,970 million, a decrease in trade receivables by JPY2,763 million to JPY29,822 million, an increase in prepaid expenses by JPY1,377 million to JPY11,074 million and an increase in contract assets by JPY2,822 million to JPY3,261 million.
As of December 31, 2020, the balance of non-current assets was JPY118,207 million, decreased by JPY1,727 million from the balance as of March 31, 2020 of JPY119,934 million. As for the major breakdown of fluctuation and balance of non-current assets, tangible assets, right-of-use assets and intangible assets decreased mainly due to depreciation. Tangible assets decreased by JPY847 million to JPY16,553 million. Right-of-use assets, which include right to use leased assets under operating lease contracts such as office and data centers, and assets under finance lease contracts such as data communication equipment, decreased by JPY4,140 million to JPY46,420 million. Intangible assets decreased by JPY1,009 million to JPY17,272 million. The balance of investments accounted for using the equity method was JPY6,708 million, increased by JPY1,881 million, mainly due to an additional investment in DeCurret. The amount of other investments was JPY11,592 million, increased by JPY2,406 million mainly due to fluctuation of fair value of our holding marketable equity securities.
As of December 31, 2020, the balance of current liabilities was JPY69,391 million, increased by JPY3,705 million from the balance as of March 31, 2020 of JPY65,687 million. Trade and other payables increased by JPY1,984 million to JPY20,271 million. Borrowings increased by JPY2,980 million to JPY18,560 million, due to an increase by JPY5,170 million from a transfer from non-current liabilities and a decrease by JPY2,190 from repayment. Other financial liabilities decreased by JPY2,198 million to JPY15,647 million, mainly due to lease payments.
As of December 31, 2020, the balance of non-current liabilities was JPY54,544 million, decreased by JPY6,236 million from the balance as of March 31, 2020 of JPY60,780 million. Long-term borrowings decreased by JPY5,170 million to JPY7,000 million due to a transfer to current portion. Other financial liabilities decreased by JPY2,077 million to JPY34,228 million, mainly due to a transfer to current portion.
As of December 31, 2020, the balance of total equity attributable to owners of the parent was JPY85,178 million, increased by JPY6,102 million from the balance as of March 31, 2020 of JPY79,076 million. Ratio of owners' equity to total assets was 40.5% as of December 31, 2020.
1Q-3Q20 Cash Flows
Cash and cash equivalents as of December 31, 2020 were JPY41,970 million (JPY36,351 million as of December 31, 2019).
Net cash provided by operating activities for 1Q-3Q20 was JPY31,399 million (net cash provided by operating activities of JPY25,051 million for 1Q-3Q19). There was profit before tax of JPY9,227 million, depreciation and amortization of JPY21,094 million, including JPY8,841 million of depreciation of right-of-use operating lease assets under IFRS 16, and income taxes paid of JPY3,928 million. Regarding changes in working capital, there was net cash in of JPY3,526 million compared to net cash in of JPY314 million for 1Q-3Q19. The major factors for the increase in net cash-inflow were: net cash in from decrease in trade receivable and increase in contract liabilities increased in comparison with 1Q-3Q19 and net payment of trade payable, which temporarily increased at the beginning of FY2019, decreased in comparison with 1Q-3Q19. The increase in net cash-inflow related to these factors exceeded the net increased amount of payment of prepaid expenses and contract assets.
Net cash used in investing activities for 1Q-3Q20 was JPY8,918 million (net cash used in investing activities of JPY6,461 million for 1Q-3Q19), mainly due to payments for purchases of tangible assets of JPY4,555 million (JPY6,222 million for 1Q-3Q19), payments for purchases of intangible assets, such as software, of JPY3,722 million (JPY4,017 million for 1Q-3Q19), proceeds from sales of tangible assets, which include sale and leaseback, of JPY1,859 million (JPY1,774 million for 1Q-3Q19) and an investment in an equity method investee of JPY2,754 million.
Net cash used in financing activities for 1Q-3Q20 was JPY19,031 million (net cash used in financing activities of JPY14,154 million for 1Q-3Q19), mainly due to repayments of bank borrowings of JPY2,190 million, payments of other financial liabilities of JPY15,252 million, including JPY8,771 million of payment of operating lease under IFRS 16, and dividends paid of JPY1,533 million.
Considered Factors for FY2020 Financial Targets
We have revised our FY2020 financial targets announced on November 9, 2020. For details, please refer to our press release titled “Notice Regarding Upward Revision of the Full-Year Financial Targets for the Fiscal Year ending March 31, 2021” announced today, February 8, 2021.
Presentation
Presentation materials will be posted on our web site (https://www.iij.ad.jp/en/ir/) on February 8, 2021.
Presentation materials can also be found here (http://ml.globenewswire.com/Resource/Download/33042e9f-e8a1-4ac0-9d5b-79d809b3323a)
About Internet Initiative Japan Inc.
Founded in 1992, IIJ is one of Japan's leading Internet-access and comprehensive network solutions providers. IIJ and its group companies provide total network solutions that mainly cater to high-end corporate customers. IIJ's services include high-quality Internet connectivity services, mobile services, security services, cloud computing services, and systems integration. Moreover, IIJ operates one of the largest Internet backbone networks in Japan that is connected to the United States, the United Kingdom and Asia. IIJ listed on the First Section of the Tokyo Stock Exchange in 2006.
For inquiries, contact:
| IIJ Investor Relations | Tel: +81-3-5205-6500 | E-mail: ir@iij.ad.jp | URL: https://www.iij.ad.jp/en/ir |
Disclaimer:
Statements made in this press release regarding IIJ’s or management’s intentions, beliefs, expectations, or predictions for the future are forward-looking statements that are based on IIJ’s and managements’ current expectations, assumptions, estimates and projections about its business and the industry. These forward-looking statements, such as statements regarding revenues and profits, are subject to various risks, uncertainties and other factors that could cause IIJ’s actual results to differ materially from those contained in any forward-looking statement.
| Condensed Consolidated Statements of Financial Position (Unaudited) | |||||
| March 31, 2020 | December 31, 2020 | ||||
| Thousands of yen | Thousands of yen | ||||
| Assets | |||||
| Current Assets | |||||
| Cash and cash equivalents | 38,671,734 | 41,970,420 | |||
| Trade receivables | 32,585,326 | 29,822,130 | |||
| Inventories | 2,476,477 | 2,345,596 | |||
| Prepaid expenses | 9,696,856 | 11,073,659 | |||
| Contract assets | 438,675 | 3,260,968 | |||
| Other financial assets | 2,629,332 | 3,185,141 | |||
| Other current assets | 92,027 | 243,044 | |||
| Total Current Assets | 86,590,427 | 91,900,958 | |||
| Non-current Assets | |||||
| Tangible assets | 17,399,863 | 16,552,561 | |||
| Right-of-use Assets | 50,560,361 | 46,420,207 | |||
| Goodwill | 6,082,472 | 6,082,472 | |||
| Intangible assets | 18,280,247 | 17,271,611 | |||
| Investments accounted for using the equity method | 4,827,287 | 6,707,822 | |||
| Prepaid expenses | 7,777,997 | 8,352,479 | |||
| Contract assets | 60,362 | 33,774 | |||
| Other investments | 9,186,646 | 11,592,406 | |||
| Deferred tax assets | 742,857 | 151,545 | |||
| Other financial assets | 4,645,959 | 4,626,162 | |||
| Other non-current assets | 369,782 | 416,113 | |||
| Total non-current assets | 119,933,833 | 118,207,152 | |||
| Total assets | 206,524,260 | 210,108,110 | |||
| Liabilities and Equity | |||||
| Liabilities | |||||
| Current liabilities | |||||
| Trade and other payables | 18,287,546 | 20,271,191 | |||
| Borrowings | 15,580,000 | 18,560,000 | |||
| Income taxes payable | 2,283,707 | 1,698,338 | |||
| Contract liabilities | 5,897,674 | 6,770,021 | |||
| Deferred income | 88,901 | 83,410 | |||
| Other financial liabilities | 17,845,194 | 15,647,406 | |||
| Other current liabilities | 5,703,623 | 6,360,988 | |||
| Total current liabilities | 65,686,645 | 69,391,354 | |||
| Non-current liabilities | |||||
| Borrowings | 12,170,000 | 7,000,000 | |||
| Retirement benefit liabilities | 3,984,880 | 4,250,999 | |||
| Provisions | 753,518 | 755,681 | |||
| Contract liabilities | 5,991,807 | 6,576,503 | |||
| Deferred income | 479,097 | 422,429 | |||
| Deferred tax liabilities | 136,536 | 276,857 | |||
| Other financial liabilities | 36,305,781 | 34,228,425 | |||
| Other non-current liabilities | 958,879 | 1,033,570 | |||
| Total non-current liabilities | 60,780,498 | 54,544,464 | |||
| Total liabilities | 126,467,143 | 123,935,818 | |||
| Equity | |||||
| Share capital | 25,530,621 | 25,530,621 | |||
| Share premium | 36,271,395 | 36,372,219 | |||
| Retained earnings | 16,500,993 | 21,096,389 | |||
| Other components of equity | 2,669,501 | 4,053,607 | |||
| Treasury shares | (1,896,921 | ) | (1,875,112 | ) | |
| Total equity attributable to owners of the parent | 79,075,589 | 85,177,724 | |||
| Non-controlling interests | 981,528 | 994,568 | |||
| Total equity | 80,057,117 | 86,172,292 | |||
| Total liabilities and equity | 206,524,260 | 210,108,110 | |||
| Condensed Consolidated Statements of Profit or Loss (Unaudited) | |||||
| Nine Months Ended | Nine Months Ended | ||||
| December 31, 2019 | December 31, 2020 | ||||
| Thousands of yen | Thousands of yen | ||||
| Revenues | |||||
| Network services | 91,524,644 | 93,983,677 | |||
| System integration | 56,062,205 | 59,926,698 | |||
| ATM operation business | 3,101,475 | 2,159,738 | |||
| Total revenues | 150,688,324 | 156,070,113 | |||
| Cost of sales | |||||
| Cost of network services | (76,210,678 | ) | (74,201,460 | ) | |
| Cost of systems integration | (49,111,625 | ) | (51,671,863 | ) | |
| Cost of ATM operation business | (1,672,487 | ) | (1,400,165 | ) | |
| Total cost of sales | (126,994,790 | ) | (127,273,488 | ) | |
| Gross Profit | 23,693,534 | 28,796,625 | |||
| Selling, general and administrative expense | (17,680,244 | ) | (18,327,863 | ) | |
| Other operating income | 187,214 | 113,091 | |||
| Other operating expenses | (140,434 | ) | (454,357 | ) | |
| Operating Profit | 6,060,070 | 10,127,496 | |||
| Finance income | 349,156 | 317,146 | |||
| Finance expenses | (432,586 | ) | (490,797 | ) | |
| Share of profit (loss) of investments accounted for using equity method | (367,133 | ) | (726,857 | ) | |
| Profit (loss) before tax | 5,609,507 | 9,226,988 | |||
| Income tax expense | (2,107,255 | ) | (3,281,332 | ) | |
| Profit (loss) for the period | 3,502,252 | 5,945,656 | |||
| Profit (loss) for the period attributable to: | |||||
| Owners of the parent | 3,353,994 | 5,876,784 | |||
| Non-controlling interests | 148,258 | 68,872 | |||
| Total | 3,502,252 | 5,945,656 | |||
| Earnings per share | |||||
| Basic earnings per share (yen) | 37.20 | 65.16 | |||
| Diluted earnings per share (yen) | 37.04 | 64.84 | |||
| * IIJ conducted stock a split at a ratio of two-for-one with an effective date of January 1, 2021. | |||||
| Basic earnings per share and diluted earnings per share have been calculated as if the stock split was conducted at the beginning of the previous fiscal year. | |||||
| Condensed Consolidated Statements of Profit or Loss (Unaudited) | |||||
| Three Months Ended | Three Months Ended | ||||
| December 31, 2019 | December 31, 2020 | ||||
| Thousands of yen | Thousands of yen | ||||
| Revenues | |||||
| Network services | 30,320,743 | 31,879,433 | |||
| System integration | 20,146,597 | 21,760,024 | |||
| ATM operation business | 1,001,449 | 765,666 | |||
| Total revenues | 51,468,789 | 54,405,123 | |||
| Cost of sales | |||||
| Cost of network services | (25,057,088 | ) | (24,305,137 | ) | |
| Cost of systems integration | (17,369,639 | ) | (18,281,933 | ) | |
| Cost of ATM operation business | (547,741 | ) | (476,046 | ) | |
| Total cost of sales | (42,974,468 | ) | (43,063,116 | ) | |
| Gross Profit | 8,494,321 | 11,342,007 | |||
| Selling, general and administrative expense | (5,779,614 | ) | (6,203,679 | ) | |
| Other operating income | 28,146 | 32,677 | |||
| Other operating expenses | (34,733 | ) | (282,558 | ) | |
| Operating Profit | 2,708,120 | 4,888,447 | |||
| Finance income | 245,051 | 349,379 | |||
| Finance expenses | (152,940 | ) | (163,377 | ) | |
| Share of profit (loss) of investments accounted for using equity method | (234,012 | ) | (313,322 | ) | |
| Profit (loss) before tax | 2,566,219 | 4,761,127 | |||
| Income tax expense | (922,320 | ) | (1,625,064 | ) | |
| Profit (loss) for the period | 1,643,899 | 3,136,063 | |||
| Profit (loss) for the period attributable to: | |||||
| Owners of the parent | 1,597,892 | 3,106,856 | |||
| Non-controlling interests | 46,007 | 29,207 | |||
| Total | 1,643,899 | 3,136,063 | |||
| Earnings per share | |||||
| Basic earnings per share (yen) | 17.72 | 34.44 | |||
| Diluted earnings per share (yen) | 17.64 | 34.27 | |||
| * IIJ conducted stock a split at a ratio of two-for-one with an effective date of January 1, 2021. | |||||
| Basic earnings per share and diluted earnings per share have been calculated as if the stock split was conducted at the beginning of the previous fiscal year. | |||||
| Condensed Consolidated Statements of Comprehensive Income (Unaudited) | |||||
| Nine Months Ended | Nine Months Ended | ||||
| December 31, 2019 | December 31, 2020 | ||||
| Thousands of yen | Thousands of yen | ||||
| Profit (loss) | 3,502,252 | 5,945,656 | |||
| Other comprehensive income, net of tax | |||||
| Items that will not be reclassified to profit or loss | |||||
| Net change in fair value of equity instruments designated as measured at fair value through other comprehensive income | 2,115,344 | 1,737,941 | |||
| Total items that will not be reclassified to profit or loss | 2,115,344 | 1,737,941 | |||
| Items that may be reclassified to profit or loss | |||||
| Exchange differences on translation of foreign operations | (45,806 | ) | (80,184 | ) | |
| Financial assets measured at fair value through other comprehensive income | (471 | ) | 236 | ||
| Share of other comprehensive income of investments accounted for using equity method | 1,189 | (22,038 | ) | ||
| Total of items that may be reclassified to profit or loss | (45,088 | ) | (101,986 | ) | |
| Total other comprehensive income, net of tax | 2,070,256 | 1,635,955 | |||
| Other comprehensive income | 5,572,508 | 7,581,611 | |||
| Other comprehensive income attributable to: | |||||
| Owners of the parent | 5,424,250 | 7,512,739 | |||
| Non-controlling interest | 148,258 | 68,872 | |||
| Other comprehensive income | 5,572,508 | 7,581,611 | |||
| Condensed Consolidated Statements of Comprehensive Income (Unaudited) | |||||
| Three Months Ended | Three Months Ended | ||||
| December 31, 2019 | December 31, 2020 | ||||
| Thousands of yen | Thousands of yen | ||||
| Profit (loss) | 1,643,899 | 3,136,063 | |||
| Other comprehensive income, net of tax | |||||
| Items that will not be reclassified to profit or loss | |||||
| Net change in fair value of equity instruments designated as measured at fair value through other comprehensive income | 1,297,640 | 177,294 | |||
| Total items that will not be reclassified to profit or loss | 1,297,640 | 177,294 | |||
| Items that may be reclassified to profit or loss | |||||
| Exchange differences on translation of foreign operations | 71,967 | (37,415 | ) | ||
| Financial assets measured at fair value through other comprehensive income | (1,445 | ) | 17 | ||
| Share of other comprehensive income of investments accounted for using equity method | (1,304 | ) | (10,939 | ) | |
| Total of items that may be reclassified to profit or loss | 69,218 | (48,337 | ) | ||
| Total other comprehensive income, net of tax | 1,366,858 | 128,957 | |||
| Other comprehensive income | 3,010,757 | 3,265,020 | |||
| Other comprehensive income attributable to: | |||||
| Owners of the parent | 2,964,750 | 3,235,813 | |||
| Non-controlling interest | 46,007 | 29,207 | |||
| Other comprehensive income | 3,010,757 | 3,265,020 | |||
| Condensed Consolidated Statements of Changes in Shareholders’ Equity (Unaudited) | |||||||||||||||||||||||
| Nine months ended December 31, 2019 | |||||||||||||||||||||||
| Owners of the parent’s shareholders’ equity | Non-controlling interests | Total equity | |||||||||||||||||||||
| Share capital | Share premium | Retained earnings | Other components of equity | Treasury shares | Total | ||||||||||||||||||
| Thousands of yen | Thousands of yen | Thousands of yen | Thousands of yen | Thousands of yen | Thousands of yen | Thousands of yen | Thousands of yen | ||||||||||||||||
| Balance, April 1, 2019 | 25,518,712 | 36,225,775 | 12,335,035 | 4,088,704 | (1,896,788 | ) | 76,271,438 | 848,172 | 77,119,610 | ||||||||||||||
| Cumulative impact of adopting IFRS 16 | - | - | (33,728 | ) | - | - | (33,728 | ) | - | (33,728 | ) | ||||||||||||
| Comprehensive income | |||||||||||||||||||||||
| Profit (loss) | - | - | 3,353,994 | - | - | 3,353,994 | 148,258 | 3,502,252 | |||||||||||||||
| Other comprehensive income | - | - | - | 2,070,256 | - | 2,070,256 | - | 2,070,256 | |||||||||||||||
| Total comprehensive income | - | - | 3,353,994 | 2,070,256 | - | 5,424,250 | 148,258 | 5,572,508 | |||||||||||||||
| Transactions with owners | |||||||||||||||||||||||
| Issuance of common stock | 11,909 | (11,895 | ) | - | - | - | 14 | - | 14 | ||||||||||||||
| Dividends paid | - | - | (1,217,082 | ) | - | - | (1,217,082 | ) | (53,405 | ) | (1,270,487 | ) | |||||||||||
| Stock-based compensation | - | 43,065 | - | - | - | 43,065 | - | 43,065 | |||||||||||||||
| Transfer from other components of equity to retained earnings | - | - | 1,543,793 | (1,543,793 | ) | - | - | - | - | ||||||||||||||
| Total transactions with owners | 11,909 | 31,170 | 326,711 | (1,543,793 | ) | - | (1,174,003 | ) | (53,405 | ) | (1,227,408 | ) | |||||||||||
| Balance, December 31, 2019 | 25,530,621 | 36,256,945 | 15,982,012 | 4,615,167 | (1,896,788 | ) | 80,487,957 | 943,025 | 81,430,982 | ||||||||||||||
| Nine months ended December 31, 2020 | |||||||||||||||||||||||
| Owners of the parent’s shareholders’ equity | Non-controlling interests | Total equity | |||||||||||||||||||||
| Share capital | Share premium | Retained earnings | Other components of equity | Treasury shares | Total | ||||||||||||||||||
| Thousands of yen | Thousands of yen | Thousands of yen | Thousands of yen | Thousands of yen | Thousands of yen | Thousands of yen | Thousands of yen | ||||||||||||||||
| Balance, April 1, 2020 | 25,530,621 | 36,271,395 | 16,500,993 | 2,669,501 | (1,896,921 | ) | 79,075,589 | 981,528 | 80,057,117 | ||||||||||||||
| Comprehensive income | |||||||||||||||||||||||
| Profit (loss) | - | - | 5,876,784 | - | - | 5,876,784 | 68,872 | 5,945,656 | |||||||||||||||
| Other comprehensive income | - | - | - | 1,635,955 | - | 1,635,955 | - | 1,635,955 | |||||||||||||||
| Total comprehensive income | - | - | 5,876,784 | 1,635,955 | - | 7,512,739 | 68,872 | 7,581,611 | |||||||||||||||
| Transactions with owners | |||||||||||||||||||||||
| Purchase of treasury stock | - | - | - | - | (140 | ) | (140 | ) | - | (140 | ) | ||||||||||||
| Disposal of treasury shares | - | 52,917 | - | - | 21,949 | 74,866 | - | 74,866 | |||||||||||||||
| Dividends paid | - | - | (1,533,237 | ) | - | - | (1,533,237 | ) | (55,832 | ) | (1,589,069 | ) | |||||||||||
| Stock-based compensation | - | 47,907 | - | - | - | 47,907 | - | 47,907 | |||||||||||||||
| Transfer from other components of equity to retained earnings | - | - | 251,849 | (251,849 | ) | - | - | - | - | ||||||||||||||
| Total transactions with owners | - | 100,824 | (1,281,388 | ) | (251,849 | ) | 21,809 | (1,410,604 | ) | (55,832 | ) | (1,466,436 | ) | ||||||||||
| Balance, December 31, 2020 | 25,530,621 | 36,372,219 | 21,096,389 | 4,053,607 | (1,875,112 | ) | 85,177,724 | 994,568 | 86,172,292 | ||||||||||||||
| Condensed Consolidated Statements of Cash Flows (Unaudited) | |||||
| Nine Months Ended | Nine Months Ended | ||||
| December 31, 2019 | December 31, 2020 | ||||
| Thousands of yen | Thousands of yen | ||||
| Cash flows from operating activities: | |||||
| Profit (loss) before tax | 5,609,507 | 9,226,988 | |||
| Adjustments | |||||
| Depreciation and amortization | 21,355,819 | 21,093,793 | |||
| Loss (gain) on sales/disposals of property and equipment | 114,310 | 432,101 | |||
| Shares of loss (profit) of investments accounted for using the equity method | 367,133 | 726,857 | |||
| Finance income | (305,089 | ) | (283,369 | ) | |
| Finance expenses | 437,618 | 538,117 | |||
| Other | 6,904 | 332,913 | |||
| Changes in working capital | |||||
| Decrease (increase) in trade receivables | (421,001 | ) | 2,753,953 | ||
| Decrease (increase) in inventories | 1,176,389 | 132,323 | |||
| Decrease (increase) in prepaid expenses | (1,800,779 | ) | (1,977,177 | ) | |
| Decrease (increase) in contract assets | 1,425,857 | (2,795,705 | ) | ||
| Decrease (increase) in other assets | 215,219 | (151,013 | ) | ||
| Decrease (increase) in other financial assets | (1,076,142 | ) | (100,592 | ) | |
| Increase (decrease) in trade and other payables | (1,215,472 | ) | 2,820,693 | ||
| Increase (decrease) in contract liabilities | 873,982 | 1,501,364 | |||
| Increase (decrease) in deferred income | (17,544 | ) | (62,159 | ) | |
| Increase (decrease) in other liabilities | 496,485 | 666,159 | |||
| Increase (decrease) in other financial liabilities | 449,121 | 472,422 | |||
| Increase (decrease) in retirement benefit liabilities | 208,082 | 266,119 | |||
| Subtotal | 27,900,399 | 35,593,787 | |||
| Interest and dividends received | 184,017 | 172,300 | |||
| Interest paid | (430,602 | ) | (438,861 | ) | |
| Income taxes paid | (2,602,595 | ) | (3,928,124 | ) | |
| Cash flows from operating activities | 25,051,219 | 31,399,102 | |||
| Cash flows from investing activities | |||||
| Purchases of tangible assets | (6,222,176 | ) | (4,555,236 | ) | |
| Proceeds from sales of tangible assets | 1,774,021 | 1,859,157 | |||
| Purchases of intangible assets | (4,017,051 | ) | (3,722,346 | ) | |
| Proceeds from sales of intangible assets | 273,773 | 44,085 | |||
| Purchase of investments accounted for using equity method | (718,000 | ) | (2,754,000 | ) | |
| Proceeds from sale of investments accounted for using equity method | - | 60,637 | |||
| Purchases of other investments | (100,313 | ) | (113,076 | ) | |
| Proceeds from sales of other investments | 2,749,885 | 462,547 | |||
| Payments for leasehold deposits and guarantee deposits | (188,062 | ) | (180,311 | ) | |
| Proceeds from collection of leasehold deposits and guarantee deposits | 14,491 | 25,986 | |||
| Payments for refundable insurance policies | (42,255 | ) | (50,043 | ) | |
| Other | 14,833 | 4,695 | |||
| Cash flows from investing activities | (6,460,854 | ) | (8,917,905 | ) | |
| Cash flows from financing activities | |||||
| Repayment of long-term borrowings | (1,500,000 | ) | (1,830,000 | ) | |
| Net increase (decrease) in short-term borrowings | 2,500,000 | (360,000 | ) | ||
| Proceeds from other financial liabilities | 1,473,000 | - | |||
| Payments of other financial liabilities | (15,356,191 | ) | (15,252,049 | ) | |
| Dividends paid | (1,217,082 | ) | (1,533,237 | ) | |
| Other | (53,418 | ) | (55,832 | ) | |
| Cash flows from financing activities | (14,153,691 | ) | (19,031,118 | ) | |
| Effect of exchange rate changes on cash and cash equivalents | (43,661 | ) | (151,393 | ) | |
| Net increase (decrease) in cash and cash equivalents | 4,393,012 | 3,298,686 | |||
| Cash and cash equivalents, beginning of the period | 31,957,789 | 38,671,734 | |||
| Cash and cash equivalents, end of the period | 36,350,802 | 41,970,420 | |||
Notes to Condensed Consolidated Financial Statements (UNAUDITED)
Going Concern Assumption
Nothing to be reported.
Material Changes In Shareholders' Equity
Nothing to be reported.
Segment Information
IIJ and its subsidiaries (collectively “the Company”) primarily operate their network service and system integration business, which provides a comprehensive range of network solutions to meet their customers’ needs by cross-selling a variety of services, including Internet connectivity services, WAN services, outsourcing services, systems integration and sales of network-related equipment, and the ATM operation business. Therefore, the Company defined two reportable segments: “Network service and systems integration business” and “ATM operation business.”
Segment information for the Company is as follows:
Nine months ended December 31, 2019
| Reportable segments | |||||||||||
| Network service and systems integration business | ATM operation business | Adjustments | Consolidated | ||||||||
| Thousands of yen | Thousands of yen | Thousands of yen | Thousands of yen | ||||||||
| Revenue | |||||||||||
| Customers | 147,586,849 | 3,101,475 | ― | 150,688,324 | |||||||
| Intersegment transactions | 217,943 | ― | (217,943 | ) | ― | ||||||
| Total revenue | 147,804,792 | 3,101,475 | (217,943 | ) | 150,688,324 | ||||||
| Segment operating profit | 4,901,631 | 1,270,909 | (112,470 | ) | 6,060,070 | ||||||
| Finance income | 349,156 | ||||||||||
| Finance expense | (432,586 | ) | |||||||||
| Share of profit (loss) of investments accounted for using the equity method | (367,133 | ) | |||||||||
| Profit before tax | 5,609,507 | ||||||||||
Nine months ended December 31, 2020
| Reportable segments | |||||||||||
| Network service and systems integration business | ATM operation business | Adjustments | Consolidated | ||||||||
| Thousands of yen | Thousands of yen | Thousands of yen | Thousands of yen | ||||||||
| Revenue | |||||||||||
| Customers | 153,910,375 | 2,159,738 | ― | 156,070,113 | |||||||
| Intersegment transactions | 128,904 | ― | (128,904 | ) | ― | ||||||
| Total revenue | 154,039,279 | 2,159,738 | (128,904 | ) | 156,070,113 | ||||||
| Segment operating profit | 9,603,150 | 615,697 | (91,351 | ) | 10,127,496 | ||||||
| Finance income | 317,146 | ||||||||||
| Finance expense | (490,797 | ) | |||||||||
| Share of profit (loss) of investments accounted for using the equity method | (726,857 | ) | |||||||||
| Profit before tax | 9,226,988 | ||||||||||
Intersegment transactions are based on market price.
Subsequent Events (Unaudited)
Nothing to be reported.
Note: The following information is provided to disclose Internet Initiative Japan Inc. (“IIJ”) financial results (unaudited) for the nine months ended December 31, 2020 (“1Q-3Q20”) in the form defined by the Tokyo Stock Exchange.
Consolidated Financial Results for the Nine Months ended December 31, 2020 [Under IFRS]
February 8, 2021
Company name: Internet Initiative Japan Inc.
Exchange listed: Tokyo Stock Exchange First Section
Stock code number: 3774
URL: https://www.iij.ad.jp/
Representative: Eijiro Katsu, President and Representative Director
Contact: Akihisa Watai, Managing Director and CFO
TEL: +81-3-5205-6500
Scheduled date for filing of quarterly report (Shihanki-houkokusho) to Japan’s regulatory organization: February 15, 2021
Scheduled date for dividend payment: -
Supplemental material on quarterly results: Yes
Presentation on quarterly report: Yes (for institutional investors and analysts)
(Amounts of less than JPY one million are rounded)
1. Consolidated Financial Results for the Nine Months ended December 31, 2020
(April 1, 2020 to December 31, 2020)
| (1) Consolidated Results of Operations | (Millions of yen, except per share amounts. % shown is YoY change) | |||||||||||||||||
| Revenues | Operating profit | Profit (loss) before tax | Profit (loss) for the period | Profit (loss) attributable to owners of the parent | Other comprehensive income | |||||||||||||
| Nine Months ended December 31, 2020 | 156,070 | 3.6 | % | 10,127 | 67.1 | % | 9,227 | 64.5 | % | 5,946 | 69.8 | % | 5,877 | 75.2 | % | 7,582 | 36.1 | % |
| Nine Months ended December 31, 2019 | 150,688 | 7.9 | % | 6,060 | 10.0 | % | 5,610 | 0.8 | % | 3,502 | (2.7 | )% | 3,354 | (3.3 | )% | 5,573 | 242.6 | % |
| Basic earnings per share | Diluted earnings per share | ||
| JPY | JPY | ||
| Nine Months ended December 31, 2020 | 65.16 | 64.84 | |
| Nine Months ended December 31, 2019 | 37.20 | 37.04 | |
| (Note) IIJ conducted a stock split at a ratio of two-for-one with an effective date of January 1, 2021. Accordingly, basic earnings per share and diluted earnings per share have been calculated as if the stock split was conducted at the beginning of the previous consolidated fiscal year. | |||
| (2) Consolidated Financial Position | ||||
| Total assets | Total equity | Total equity attributable to owners of the parent | Ratio of owners' equity to total assets | |
| JPY millions | JPY millions | JPY millions | % | |
| As of December 31, 2020 | 210,108 | 86,172 | 85,178 | 40.5 |
| As of March 31, 2020 | 206,524 | 80,057 | 79,076 | 38.3 |
2．Dividends
| Dividend per Shares | |||||
| 1Q-end | 2Q-end | 3Q-end | Year-end | Total | |
| JPY | JPY | JPY | JPY | JPY | |
| Fiscal Year Ended March 31, 2020 | ― | 13.50 | ― | 13.50 | 27.00 |
| Fiscal Year Ending March 31, 2021 | ― | 20.50 | ― | ||
| Fiscal Year Ending March 31, 2021 (forecast) | 10.25 | ― | |||
(Notes)
| |||||
3．Targets of Consolidated Financial Results for the Fiscal Year Ending March 31, 2021
| (% shown is YoY change) | |||||||||
| Revenues | Operating profit | Profit (loss) before tax | Profit (loss) for the year attributable to owners of the parent | Basic earnings per share | |||||
| JPY millions | % | JPY millions | % | JPY millions | % | JPY millions | % | JPY | |
| Fiscal Year Ending March 31, 2021 | 213,000 | 4.2 | 13,500 | 64.1 | 12,300 | 71.8 | 7,600 | 89.7 | 84.26 |
(Notes)
| |||||||||
* Notes:
(1) Changes in significant subsidiaries: None
(2) Changes in accounting policies and estimate
i. Changes in accounting policies required by IFRS: None
ii. Other changes in accounting policies: None
iii. Changes in accounting estimates: None
(3) Number of shares issued (common stock)
i. Number of shares issued (inclusive of treasury stock):
As of December 31, 2020: 93,469,200 shares
As of March 31, 2020: 93,469,200 shares
ii. Number of treasury stock:
As of December 31, 2020: 3,263,532 shares
As of March 31, 2020: 3,301,900 shares
iii. Number of weighted average common shares outstanding:
For the nine months ended December 31, 2020: 90,191,724 shares
For the nine months ended December 31, 2019: 90,158,642 shares
(Note) IIJ conducted stock a split at a ratio of two-for-one with an effective date of January 1, 2021. Number of shares outstanding (shares of common stock) in the above have been calculated as if the stock split was conducted at the beginning of the previous fiscal year.
* Status of Audit Procedures
This document is not subject to the quarterly review by certified public accountant or independent auditor.
* Explanation on the Appropriate Use of Future Outlook and other special instructions
i) Forward-looking statements
Forward-looking statements disclosed in this document are based on IIJ Group’s expectation, estimates, and projections based on information available to IIJ Group as of February 8, 2021. As these forward-looking statements are subject to known and unknown risks and uncertainties, actual results may differ from those disclosed due, for example, to but not limited to changes in business climate and/or market trends. As for our latest forecast of our financial targets for the fiscal year ending March 31, 2021, please refer to the page 8 of this document.
ii) Others
Presentation material will be disclosed on TDnet as well as posted on our website on Monday, February 8, 2021.
