IIJ Announces Its First Six Months Results For The Fiscal Ye...| MENAFN.COM

Saturday, 26 November 2022 06:17 GMT

IIJ Announces Its First Six Months Results For The Fiscal Year Ending March 31, 2023


(MENAFN- GlobeNewsWire - Nasdaq)

TOKYO, Nov. 07, 2022 (GLOBE NEWSWIRE) -- Internet Initiative Japan Inc. (“IIJ”, TSE Prime: 3774) today announced its consolidated financial results for the first six months for the fiscal year ending March 31, 2023 (“1H22”, from April 1, 2022 to September 30, 2022) under International Financial Reporting Standards (IFRS).1

Highlights of Financial Results for 1H22
FY22 Targets
1H22 Full Year
Total revenues JPY 122.0 billion up 11.8 % YoY2 JPY 117.0 billion JPY 250.0 billion
Operating profit JPY 11.2 billion up 20.1 % YoY JPY 10.7 billion JPY 27.2 billion
Profit before tax JPY 12.9 billion up 23.3 % YoY JPY 10.3 billion JPY 26.3 billion
Net profit3 JPY 8.6 billion up 25.3 % YoY JPY 6.8 billion JPY 17.5 billion

Overview of 1H22 Financial Results and Business Outlook
“Digital transformation trend among Japanese enterprises, accelerated by the COVID-19 pandemic, has continued to expand, while business activities have been gradually getting back to normal. Under those circumstances, revenue growth rate year over year (YoY), which we regard as an important indicator for business expansion, showed the increasing trend from 9.8% in 1Q22 to 13.7% in 2Q22. For this six-month period of 1H22, network services recurring revenues excluding mobile services continued to accumulate with 10.1% YoY growth, mainly driven by IP services4, security services and WAN services. Also, we have been seeing strong demands for network related integration from various industries and had 1H22 systems integration revenue and orders received increased by 19.5% and 31.2% YoY respectively. As a result, we exceeded each of our 1H22 financial targets. As for the further expansion of our network services line-up, we internally developed and launched 'IIJ Secure Access Service' as our SASE5 service based on our service development strategy. Through offering a combination of our highly reliable and value-added services with systems integration, we are confident that our revenue growth would be stronger, which should lead to significant profit expansion,” said Eijiro Katsu, President of IIJ.
“Japanese enterprises and government agencies have just started to evolve their network and systems to the ones that combine Internet technologies such as Cloud, remote access and advanced security features based on zero-trust, which is what we had foreseen years ago. These shifts are making our expertise in Internet and network technologies more prominent against competitors such as telecom carriers and system integrators. In order to strengthen our business expansion further, we are enhancing on recruiting activities and have acquired 1.5 times more new graduates expected to join IIJ next spring. We believe that our technology-oriented business operation continues to attract engineers which contribute further business expansion,” concluded Koichi Suzuki, Founder and Chairman of IIJ.

_____________________

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 year attributable to owners of the parent.”
4 IP services are IIJ's dedicated-type Internet connectivity services, mainly used by corporate users.
5 SASE (Secure Access Service Edge) is a concept to shift controls of network and security on the route to Cloud services to enable secure access from any points, instead of the conventional centralized management through headquarters or data centers.

1H22 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
1H21 1H22 YoY Change
JPY millions JPY millions
Total revenues 109,054 121,962 11.8
Network services 63,436 67,707 6.7
Systems integration (SI) 44,209 52,846 19.5
ATM operation business 1,409 1,409 0.0
Total costs (85,969 ) (95,471 ) 11.1
Network services (46,754 ) (49,802 ) 6.5
Systems integration (SI) (38,340 ) (44,857 ) 17.0
ATM operation business (875 ) (812 ) (7.2 )
Total gross profit 23,085 26,491 14.8
Network services 16,682 17,905 7.3
Systems integration (SI) 5,869 7,989 36.1
ATM operation business 534 597 11.8
SG&A, R&D, and other operating income (expenses) (13,781 ) (15,318 ) 11.2
Operating profit 9,304 11,173 20.1
Profit before tax 10,432 12,858 23.3
Profit for the period attributable to owners of the parent 6,892 8,638 25.3
(Note) Systems integration includes equipment sales.


Segment Results Summary
1H21 1H22
JPY millions JPY millions
Total revenues 109,054 121,962
Network services and SI business 107,712 120,608
ATM operation business 1,408 1,409
Elimination (66 ) (55 )
Operating profit 9,304 11,173
Network services and SI business 8,933 10,725
ATM operation business 417 468
Elimination (46 ) (20 )


1H22 Revenues and Income
Revenues
Total revenues were JPY121,962 million, up 11.8% YoY (JPY109,054 million for 1H21).

Network services revenue was JPY67,707 million, up 6.7% YoY (JPY63,436 million for 1H21).

Revenues for Internet connectivity services for enterprise were JPY19,269 million, up 2.4% YoY from JPY18,813 million for 1H21. The increase was due to an increase in revenues of IP services and enterprise mobile services, which absorbed a decrease in IIJ Mobile MVNO Platform service (MVNE) revenue in the response to the reduction in procurement cost.

Revenues for Internet connectivity services for consumers were JPY12,453 million, up 2.1% YoY from JPY12,196 million for 1H21, mainly due to an increase in revenue of IIJmio Mobile services led by an increase in subscription, which absorbed a decrease in revenue resulted from a decrease in average revenue per user along with continued migration of old plan's customers to“GigaPlans”, which launched at the beginning of the previous fiscal year.

Revenues for Outsourcing services were JPY22,469 million, up 15.0% YoY from JPY19,546 million for 1H21, mainly due to an increase in security-related services revenues.

Revenues for WAN services were JPY13,516 million, up 4.9% YoY from JPY12,881 million for 1H21.

Network Services Revenues Breakdown
1H21 1H22 YoY Change
JPY millions JPY millions
Total network services 63,436 67,707 6.7
Internet connectivity services (enterprise) 18,813 19,269 2.4
IP services (including data center connectivity services) 6,622 7,090 7.1
IIJ Mobile Services 10,284 10,137 (1.4 )
Enterprise mobile services (IoT usages etc.) 4,839 5,302 9.6
IIJ Mobile MVNO Platform service (MVNE) 5,445 4,835 (11.2 )
Others 1,907 2,042 7.1
Internet connectivity services (consumer) 12,196 12,453 2.1
IIJmio Mobile Services 10,741 10,866 1.2
Others 1,455 1,587 9.1
Outsourcing services
19,546 22,469 15.0
WAN services 12,881 13,516 4.9
Number of Contracts and Subscription for Connectivity Services (Note 1)
As of Sep. 30, 2021 As of Sep. 30, 2022 YoY Change
Internet connectivity services (enterprise) 2,301,380 2,627,001 325,621
IP service (greater than or equal to 1Gbps) (Note2) 757 818 61
IP service (less than 1Gbps) (Note2) 1,211 1,307 96
IIJ Mobile Services
2,210,095 2,532,815 322,720
Enterprise mobile services (IoT usages etc.) 1,218,375 1,493,805 275,430
IIJ Mobile MVNO Platform service (MVNE) 991,720 1,039,010 47,290
Others 89,317 92,061 2,744
Internet connectivity services (consumer) 1,416,927 1,518,130 101,203
IIJmio Mobile Services
1,072,107 1,178,269 106,162
Others 344,820 339,861 (4,959 )
Total contracted bandwidth (Gbps) (Note 3) 7,279.7 7,729.1 449.4
(Notes)
1. Numbers in the table above show number of contracts except for“IIJ Mobile Services (enterprise)” and“IIJmio Mobile Services” which show number of subscriptions.
2. The numbers of IP service contracts include the numbers of IIJ data center connectivity service contracts.
3. 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 JPY52,846 million, up 19.5% YoY (JPY44,209 million for 1H21).
Systems construction and equipment sales, a one-time revenue, was JPY19,549 million, up 26.4% YoY (JPY15,472 million for 1H21). Systems operation and maintenance revenue, a recurring revenue, was JPY33,297 million, up 15.9% YoY (JPY28,737 million for 1H21), mainly due to continued accumulation of systems operation orders as well as an increase in cloud-related services' revenues. 

Orders received for SI, including equipment sales, totaled JPY60,992 million, up 31.2% YoY (JPY46,503 million for 1H21); orders received for systems construction and equipment sales were JPY21,670 million, up 14.9% YoY (JPY18,865 million for 1H21), and orders received for systems operation and maintenance were JPY39,322 million, up 42.3% YoY (JPY27,638 million for 1H21).

Order backlog for SI, including equipment sales, as of September 30, 2022 amounted to JPY80,937 million, up 17.4% YoY (JPY68,949 million as of September 30, 2021); order backlog for systems construction and equipment sales was JPY14,572 million, up 16.0% YoY (JPY12,561 million as of September 30, 2021) and order backlog for systems operation and maintenance was JPY66,365 million, up 17.7% YoY (JPY56,388 million as of September 30, 2021).

ATM operation business revenues were JPY1,409 million, almost same revenue as JPY1,409 million for 1H21.

Cost of sales
Total cost of sales was JPY95,471 million, up 11.1% YoY (JPY85,969 million for 1H21).

Cost of network services revenue was JPY49,802 million, up 6.5% YoY (JPY46,754 million for 1H21), mainly due to an increase in purchasing cost of mobile device. Gross profit was JPY17,905 million, up 7.3% YoY (JPY16,682 million for 1H21), and gross profit ratio was 26.4% (26.3% for 1H21).

Cost of SI revenues, including equipment sales was JPY44,857 million, up 17.0% YoY (JPY38,340 million for 1H21), mainly due to increases in license fees along with an increase in multi-cloud related services' revenues and purchasing costs. Gross profit was JPY7,989 million, up 36.1% YoY (JPY5,869 million for 1H21) and gross profit ratio was 15.1% (13.3% for 1H21).
Cost of ATM operation business revenues was JPY812 million, down 7.2% YoY (JPY875 million for 1H21). Gross profit was JPY597 million (JPY534 million for 1H21) and gross profit ratio was 42.4% (37.9% for 1H21).

Selling, general and administrative expenses and other operating income and expenses
Selling, general and administrative expenses, including research and development expenses, totaled JPY15,508 million, up 12.5% YoY (JPY13,790 million for 1H21), mainly due to increases in personnel-related expenses, advertising expenses and outsourcing expenses.

Other operating income was JPY221 million (JPY93 million for 1H21).

Other operating expenses was JPY31 million (JPY84 million for 1H21).

Operating profit
Operating profit was JPY11,173 million (JPY9,304 million for 1H21), up 20.1% YoY.

Finance income and expenses, and share of profit (loss) of investments accounted for using equity method
Finance income was JPY2,042 million, compared to JPY1,772 million for 1H21. It included gains on financial instruments, mainly related to funds, of JPY1,196 million (JPY1,692 million for 1H21) and foreign exchange gain of JPY761 million (JPY3 million for 1H21).

Finance expense was JPY279 million, compared to JPY272 million for 1H21. It included interest expenses of JPY266 million (JPY272 million for 1H21).

Share of loss of investments accounted for using equity method was JPY78 million (loss of JPY372 million for 1H21). There was a loss of DeCurret Holdings, Inc. of JPY180 million.

Profit before tax
Profit before tax was JPY12,858 million (JPY10,432 million for 1H21), up 23.3% YoY.

Profit for the period
Income tax expense was JPY4,118 million (JPY3,474 million for 1H21). As a result, profit for the period was JPY8,740 million (JPY6,958 million for 1H21), up 25.6% YoY.

Profit for the period attributable to non-controlling interests was JPY102 million (JPY66 million for 1H21), mainly related to net income of Trust Networks Inc.

Profit for the period attributable to owners of the parent was JPY8,638 million (JPY6,892 million for 1H21), up 25.3% YoY.

Financial Position as of September 30, 2022
As of September 30, 2022, the balance of total assets was JPY235,160 million, increased by JPY3,355 million from the balance as of March 31, 2022 of JPY231,805 million.

As of September 30, 2022, the balance of current assets was JPY103,947 million, decreased by JPY538 million from the balance as of March 31, 2022 of JPY104,485 million. As for the major breakdown of balance and fluctuation of current assets, cash and cash equivalents decreased by JPY5,323 million to JPY42,068 million, trade receivables decreased by JPY103 million to JPY37,546 million, inventories increased by JPY1,279 million to JPY3,887 million, prepaid expenses increased by JPY2,097 million to JPY15,650 million, mainly due to operation and maintenance costs, and contract assets increased by JPY1,575 million to JPY3,445 million.

As of September 30, 2022, the balance of non-current assets was JPY131,213 million, increased by JPY3,893 million from the balance as of March 31, 2022 of JPY127,320 million. As for the major breakdown of balance and fluctuation of non-current assets, tangible assets increased by JPY2,838 million to JPY20,684 million mainly due to purchases related to Shiroi Data Center Campus construction, 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 JPY214 million to JPY44,660 million mainly due to depreciation, intangible assets decreased by JPY746 million to JPY15,678 million mainly due to amortization of software, and prepaid expenses increased by JPY1,512 million to JPY11,964 million, mainly due to operation and maintenance costs.

As of September 30, 2022, the balance of current liabilities was JPY74,501 million, decreased by JPY2,276 million from the balance as of March 31, 2022 of JPY76,777 million. As for the major breakdown of balance and fluctuation of current liabilities, trade and other payables increased by JPY1,031 million to JPY21,773 million, borrowings increased by JPY250 million to JPY16,620 million due to a decrease of JPY750 million from repayment of long-term borrowings and an increase of JPY1,000 million owing to a transfer from non-current liabilities, income taxes payable decreased by JPY1,907 million to JPY3,888 million, contract liabilities increased by JPY435 million to JPY10,006 million and other financial liabilities decreased by JPY1,305 million to JPY15,730 million.

As of September 30, 2022, the balance of non-current liabilities was JPY49,154 million, decreased by JPY1,253 million from the balance as of March 31, 2022 of JPY50,407 million. As for the major breakdown of balance and fluctuation of non-current liabilities, long-term borrowings decreased by JPY1,000 million to JPY4,500 million due to a transfer to current portion, contract liabilities decreased by JPY921 million to JPY6,508 million and other financial liabilities increased by JPY911 million to JPY31,057 million.

As of September 30, 2022, the balance of total equity attributable to owners of the parent was JPY110,359 million, increased by JPY6,831 million from the balance as of March 31, 2022 of JPY103,528 million. Ratio of owners' equity to total assets was 46.9% as of September 30, 2022.
1H22 Cash Flows
Cash and cash equivalents as of September 30, 2022 were JPY42,068 million (JPY39,795 million as of September 30, 2021).

Net cash provided by operating activities for 1H22 was JPY13,457 million (net cash provided by operating activities of JPY18,865 million for 1H21). There were profit before tax of JPY12,858 million (JPY10,432 million for 1H21), depreciation and amortization of JPY14,145 million (JPY13,266 million for 1H21), including JPY5,629 million (JPY5,035 million for 1H21) of depreciation of right-of-use operating lease assets under IFRS 16, and income taxes paid of JPY6,035 million (JPY3,352 million for 1H21). Regarding changes in working capital, there was net cash out of JPY5,992 million compared to net cash-out of JPY399 million for 1H21. As for the major factors for the increase in net cash outflow in comparison with 1H21, there were a decrease in proceeds from trade receivables and increases in payments of prepaid expenses and inventories, which exceeded a decrease in payments of trade and other payables.

Net cash used in investing activities for 1H22 was JPY7,219 million (net cash used in investing activities of JPY8,185 million for 1H21), mainly due to payments for purchases of tangible assets of JPY5,704 million (JPY4,164 million for 1H21), payments for purchases of intangible assets, such as software, of JPY2,137 million (JPY2,167 million for 1H21), and proceeds from sales of tangible assets of JPY947 million (JPY1,011 million for 1H21).

Net cash used in financing activities for 1H22 was JPY12,601 million (net cash used in financing activities of JPY13,402 million for 1H21), mainly due to payments of other financial liabilities of JPY9,544 million (JPY8,989 million for 1H21), which included payments under operating lease contracts such as office rent and finance lease contracts such as network equipment, repayments of long-term bank borrowings of JPY750 million (JPY4,085 million for 1H21) and dividends paid of JPY2,258 million (JPY1,759 million for 1H21).

Future Prospects including FY2022 Financial Targets
1H22 financial results slightly exceeded our financial targets announced on May 13, 2022. Meanwhile, FY2022 financial targets remain unchanged, because the full-year forecasts are largely dependent on the fourth quarter results in general.

Presentation
Presentation materials will be posted on our web site ( on November 7, 2022.
The presentation material can also be found here 

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 (“TSE”) in 2006 and transitioned to the Prime Market of TSE from April 2022.

For inquiries, contact:
IIJ Investor Relations Tel: +81-3-5205-6500 E-mail: URL:

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, 2022 September 30, 2022
Millions of yen Millions of yen
Assets
Current assets
Cash and cash equivalents 47,391 42,068
Trade receivables 37,649 37,546
Inventories 2,608 3,887
Prepaid expenses 13,553 15,650
Contract assets 1,870 3,445
Other financial assets 1,295 1,112
Other current assets 119 239
Total current assets 104,485 103,947
Non-current assets
Tangible assets 17,846 20,684
Right-of-use assets 44,874 44,660
Goodwill 9,479 9,877
Intangible assets 16,424 15,678
Investments accounted for using equity method 5,830 5,672
Prepaid expenses 10,452 11,964
Contract assets 69 53
Other investments 17,410 17,780
Deferred tax assets 183 196
Other financial assets 4,245 4,101
Other non-current assets 508 548
Total non-current assets 127,320 131,213
Total assets 231,805 235,160
Millions of yen Millions of yen
Liabilities and Equity
Liabilities
Current liabilities
Trade and other payables 20,742 21,773
Borrowings 16,370 16,620
Income taxes payable 5,795 3,888
Contract liabilities 9,571 10,006
Deferred income 65 77
Other financial liabilities 17,035 15,730
Other current liabilities 7,199 6,407
Total current liabilities 76,777 74,501
Non-current liabilities
Borrowings 5,500 4,500
Retirement benefit liabilities 4,395 4,478
Provisions 786 788
Contract liabilities 7,429 6,508
Deferred income 340 311
Deferred tax liabilities 641 322
Other financial liabilities 30,146 31,057
Other non-current liabilities 1,170 1,190
Total non-current liabilities 50,407 49,154
Total liabilities 127,184 123,655
Equity
Share capital 25,562 25,562
Share premium 36,518 36,615
Retained earnings 37,024 43,404
Other components of equity 6,275 6,609
Treasury shares (1,851 ) (1,831 )
Total equity attributable to owners of the parent 103,528 110,359
Non-controlling interests 1,093 1,146
Total equity 104,621 111,505
Total liabilities and equity 231,805 235,160

 

Condensed Consolidated Statements of Profit or Loss (Unaudited)
Six Months Ended Six Months Ended
September 30, 2021 September 30, 2022
Millions of yen Millions of yen
Revenues
Network services 63,436 67,707
System integration 44,209 52,846
ATM operation business 1,409 1,409
Total revenues 109,054 121,962
Cost of sales
Cost of network services (46,754 ) (49,802 )
Cost of systems integration (38,340 ) (44,857 )
Cost of ATM operation business (875 ) (812 )
Total cost of sales (85,969 ) (95,471 )
Gross Profit 23,085 26,491
Selling, general and administrative expenses (13,790 ) (15,508 )
Other operating income 93 221
Other operating expenses (84 ) (31 )
Operating Profit 9,304 11,173
Finance income 1,772 2,042
Finance expenses (272 ) (279 )
Share of profit (loss) of investments accounted for
using equity method
(372 ) (78 )
Profit (loss) before tax 10,432 12,858
Income tax expense (3,474 ) (4,118 )
Profit (loss) for the period 6,958 8,740
Profit (loss) for the period attributable to:
Owners of the parent 6,892 8,638
Non-controlling interests 66 102
Total 6,958 8,740
Earnings per share
Basic earnings per share (yen) 38.17 47.81
Diluted earnings per share (yen) 37.99 47.58
※IIJ conducted a stock split at a ratio of two-for-one with an effective date of October 1, 2022.
Basic earnings per share and diluted earnings per share are calculated as if the stock split had been conducted at the beginning of the previous fiscal year.


Condensed Consolidated Statements of Profit or Loss (Unaudited)
Three Months Ended Three Months Ended
September 30, 2021 September 30, 2022
Millions of yen Millions of yen
Revenues
Network services 31,961 34,473
System integration 23,403 28,578
ATM operation business 715 721
Total revenues 56,079 63,772
Cost of sales
Cost of network services (23,609 ) (25,371 )
Cost of systems integration (20,380 ) (24,197 )
Cost of ATM operation business (431 ) (412 )
Total cost of sales (44,420 ) (49,980 )
Gross Profit 11,659 13,792
Selling, general and administrative expenses (6,707 ) (7,652 )
Other operating income 40 28
Other operating expenses (48 ) (21 )
Operating Profit 4,944 6,147
Finance income 427 300
Finance expenses (135 ) (148 )
Share of profit (loss) of investments accounted for
using equity method
(155 ) (64 )
Profit (loss) before tax 5,081 6,235
Income tax expense (1,666 ) (1,982 )
Profit (loss) for the period 3,415 4,253
Profit (loss) for the period attributable to:
Owners of the parent 3,385 4,248
Non-controlling interests 30 5
Total 3,415 4,253
Earnings per share
Basic earnings per share (yen) 18.74 23.51
Diluted earnings per share (yen) 18.65 23.39
※IIJ conducted a stock split at a ratio of two-for-one with an effective date of October 1, 2022.
Basic earnings per share and diluted earnings per share are calculated as if the stock split had been conducted at the beginning of the previous fiscal year.

 

 

Condensed Consolidated Statements of Comprehensive Income (Unaudited)
Six Months Ended Six Months Ended
September 30, 2021 September 30, 2022
Millions of yen Millions of yen
Profit (loss) 6,958 8,740
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
2,008 (711 )
Total of items that will not be reclassified to profit or loss 2,008 (711 )
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations 18 1,011
Financial assets measured at fair value through
other comprehensive income
0 (1 )
Share of other comprehensive income of investments
accounted for using equity method
13 35
Total of items that may be reclassified to profit or loss 31 1,045
Total other comprehensive income, net of tax 2,039 334
Other comprehensive income 8,997 9,074
Other comprehensive income attributable to:
Owners of the parent 8,931 8,972
Non-controlling interest 66 102
Other comprehensive income 8,997 9,074

 

Condensed Consolidated Statements of Comprehensive Income (Unaudited)
Three Months Ended Three Months Ended
September 30, 2021 September 30, 2022
Millions of yen Millions of yen
Profit (loss) 3,415 4,253
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
1,174 241
Total items that will not be reclassified to profit or loss 1,174 241
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations 23 309
Financial assets measured at fair value through
other comprehensive income
(0 ) 0
Share of other comprehensive income of investments
accounted for using equity method
(0 ) 19
Total of items that may be reclassified to profit or loss 23 328
Total other comprehensive income, net of tax 1,197 569
Other comprehensive income 4,612 4,822
Other comprehensive income attributable to:
Owners of the parent 4,582 4,817
Non-controlling interest 30 5
Other comprehensive income 4,612 4,822

 

Condensed Consolidated Statements of Changes in Shareholders' Equity (Unaudited)
Six months ended September 30, 2021
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
Millions of yen Millions of yen Millions of yen Millions of yen Millions of yen Millions of yen Millions of yen Millions of yen
Balance, April 1, 2021 25,531 36,389 25,047 4,865 (1,875 ) 89,957 1,015 90,972
Comprehensive income
Profit (loss) - - 6,892 - - 6,892 66 6,958
Other comprehensive income - - - 2,039 - 2,039 - 2,039
Total comprehensive income - - 6,892 2,039 - 8,931 66 8,997
Transactions with owners
Issuance of common stock 31 (31 ) - - - 0 - 0
Disposal of treasury shares - 23 - - 24 47 - 47
Dividends paid - - (1,759 ) - - (1,759 ) (49 ) (1,808 )
Stock-based compensation - 39 - - - 39 - 39
Total transactions with owners 31 31 (1,759 ) - 24 (1,673 ) (49 ) (1,722 )
Balance, September 30, 2021 25,562 36,420 30,180 6,904 (1,851 ) 97,215 1,032 98,247
Six months ended September 30, 2022
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
Millions of yen Millions of yen Millions of yen Millions of yen Millions of yen Millions of yen Millions of yen Millions of yen
Balance, April 1, 2022 25,562 36,518 37,024 6,275 (1,851 ) 103,528 1,093 104,621
Comprehensive income
Profit (loss) - - 8,638 - - 8,638 102 8,740
Other comprehensive income - - - 334 - 334 - 334
Total comprehensive income - - 8,638 334 - 8,972 102 9,074
Transactions with owners
Disposal of treasury shares - 56 - - 20 76 - 76
Dividends paid - - (2,258 ) - - (2,258 ) (49 ) (2,307 )
Stock-based compensation - 41 - - - 41 - 41
Total transactions with owners - 97 (2,258 ) - 20 (2,141 ) (49 ) (2,190 )
Balance, September 30, 2022 25,562 36,615 43,404 6,609 (1,831 ) 110,359 1,146 111,505

 

Condensed Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended Six Months Ended
September 30, 2021 September 30, 2022
Millions of yen Millions of yen
Cash flows from operating activities
Profit (loss) before tax 10,432 12,858
Adjustments
Depreciation and amortization 13,266 14,145
Loss (gain) on sales/disposals of property and equipment 69 (151 )
Shares of loss (profit) of investments
accounted for using equity method
373 78
Finance income (1,742 ) (2,042 )
Finance expenses 272 279
Other 63 389
Changes in working capital
Decrease (increase) in trade receivables 5,133 534
Decrease (increase) in inventories 79 (1,242 )
Decrease (increase) in prepaid expenses (1,464 ) (3,351 )
Decrease (increase) in contract assets (585 ) (1,559 )
Decrease (increase) in other assets (30 ) (120 )
Decrease (increase) in other financial assets 685 372
Increase (decrease) in trade and other payables (2,877 ) 766
Increase (decrease) in contract liabilities (259 ) (700 )
Increase (decrease) in deferred income (5 ) (1 )
Increase (decrease) in other liabilities (1,293 ) (772 )
Increase (decrease) in other financial liabilities 0 (2 )
Increase (decrease) in retirement benefit liabilities 217 83
Subtotal 22,334 19,564
Interest and dividends received 154 189
Interest paid (271 ) (261 )
Income taxes paid (3,352 ) (6,035 )
Cash flows from operating activities 18,865 13,457
Cash flows from investing activities
Purchases of tangible assets (4,164 ) (5,704 )
Proceeds from sales of tangible assets 1,011 947
Purchases of intangible assets (2,167 ) (2,137 )
Purchase of a subsidiary (2,612 ) -
Purchases of other investments (348 ) (280 )
Proceeds from sales of other investments 95 9
Payments for leasehold deposits and guarantee deposits (84 ) (30 )
Proceeds from collection of leasehold deposits
and guarantee deposits
121 14
Payments for refundable insurance policies (37 ) (37 )
Other 0 (1 )
Cash flows from investing activities (8,185 ) (7,219 )
Cash flows from financing activities
Repayment of long-term borrowings (4,085 ) (750 )
Net increase (decrease) in short-term borrowings 1,480 -
Payments of other financial liabilities (8,989 ) (9,544 )
Dividends paid (1,759 ) (2,258 )
Other (49 ) (49 )
Cash flows from financing activities (13,402 ) (12,601 )
Effect of exchange rate changes on cash and cash equivalents 50 1,040
Net increase (decrease) in cash and cash equivalents (2,672 ) (5,323 )
Cash and cash equivalents, beginning of the period 42,467 47,391
Cash and cash equivalents, end of the period 39,795 42,068

 

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 operates its network service and system integration business, which provides a comprehensive range of network solutions to meet its 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:


Six months ended September 30, 2021
Reportable segments
Network service and systems integration business ATM operation business Adjustments Consolidated
Millons of yen Millons of yen Millons of yen Millons of yen
Revenue
Customers 107,646 1,408 109,054
Intersegment transactions 66 (66 )
Total revenue 107,712 1,408 (66 ) 109,054
Segment operating profit 8,933 417 (46 ) 9,304
Finance income 1,772
Finance expense (272 )
Share of profit (loss) of investments accounted for using the equity method (372 )
Profit before tax 10,432
Six months ended September 30, 2022
Reportable segments
Network service and systems integration business ATM operation business Adjustments Consolidated
Millons of yen Millons of yen Millons of yen Millons of yen
Revenue
Customers 120,553 1,409 121,962
Intersegment transactions 55 (55 )
Total revenue 120,608 1,409 (55 ) 121,962
Segment operating profit 10,725 468 (20 ) 11,173
Finance income 2,042
Finance expense (279 )
Share of profit (loss) of investments accounted for using the equity method (78 )
Profit before tax 12,858


 

Intersegment transactions are based on market price.

Subsequent Events

Based on the resolution of the IIJ's board of directors held on August 5, 2022, IIJ conducted the stock split of shares as of the record date of September 30, 2022, at a ratio of two-for-one with an effective date of October 1, 2022. Therefore, the information per share for the first half ended September 30, 2021, for the second quarter ended September 30, 2021, for the first half ended September 30, 2022 and for the second quarter ended September 30, 2022 in the consolidated financial statements is based on the post-split basis.

Note: The following information is provided to disclose Internet Initiative Japan Inc. (“IIJ”) financial results (unaudited) for the first six months ended September 30, 2022 (“1H22”) in the form defined by the Tokyo Stock Exchange.

Consolidated Financial Results for the Six Months ended September 30, 2022 [Under IFRS]

November 7, 2022

Company name: Internet Initiative Japan Inc.
Exchange listed: Tokyo Stock Exchange
Ticker symbol: 3774
URL: Eijiro Katsu, President and Representative Director
Contact: Akihisa Watai, Senior Managing Director and CFO
TEL: +81-3-5205-6500
Scheduled date for filing of quarterly report (Shihanki-houkokusho) to Japan's regulatory organization: November 14, 2022
Scheduled date for dividend payment: December 2, 2022
Supplemental material on quarterly results: Yes
Presentation on quarterly results: Yes (for institutional investors and analysts)

(Amounts of less than JPY one million are rounded)

1. Consolidated Financial Results for the Six Months ended September 30, 2022 (April 1, 2022 to September 30, 2022)

(1) Consolidated Results of Operations

 (% 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
JPY millions % JPY millions % JPY millions % JPY millions % JPY millions % JPY millions %
Six Months ended September 30, 2022 121,962 11.8 11,173 20.1 12,858 23.3 8,740 25.6 8,638 25.3 9,074 0.9
Six Months ended September 30, 2021 109,054 7.3 9,304 77.6 10,432 133.6 6,958 147.6 6,892 148.8 8,997 108.4

Basic earnings per share Diluted earnings per share
JPY JPY
Six Months ended September 30, 2022 47.81 47.58
Six Months ended September 30, 2021 38.17 37.99

(Note) IIJ conducted a stock split at a ratio of two-for-one with an effective date of October 1, 2022. Accordingly, basic earnings per share and diluted earnings per share have been calculated as if the stock split had been 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 September 30, 2022 235,160 111,505 110,359 46.9
As of March 31, 2022 231,805 104,621 103,528 44.7

2.Dividends

Annual Dividends
1Q-end 2Q-end 3Q-end Year-end Total
JPY JPY JPY JPY JPY
Fiscal Year Ended
March 31, 2022
23.00 25.00 48.00
Fiscal Year Ending
March 31, 2023
29.25
Fiscal Year Ending
March 31, 2023 (forecast)
14.63

(Notes)
1. Changes from the latest forecasts disclosed: None
2. IIJ conducted a stock split at a ratio of two-for-one effective as of October 1, 2022. The forecast of year-end dividend per share is the amount after the stock split. Regarding the amount on a pre-split basis, the forecast of year-end and annual dividend per share are JPY29.26 and JPY58.51, respectively.

3.Targets of Consolidated Financial Results for the Fiscal Year ending March 31, 2023
(April 1, 2022 through March 31, 2023)

(% 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, 2023 250,000 10.5 27,200 15.5 26,300 8.8 17,500 11.7 96.89

(Notes)

  • Changes from the latest forecasts disclosed: None
  • IIJ conducted a stock split at a ratio of two-for-one with an effective date of October 1, 2022. The target of basic earnings per share is the amount after the stock split.
  • As for the details about our financial targets for the fiscal year ending March 31, 2023, please refer to“Future Prospects including FY2022 Financial Targets” which is disclosed on page 8 of this earnings release.

    * 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 September 30, 2022: 187,069,600 shares
    As of March 31, 2022: 187,069,600 shares

    ii. Number of treasury stock:
    As of September 30, 2022: 6,371,656 shares
    As of March 31, 2022: 6,443,334 shares

    iii. Number of weighted average common shares outstanding:
    For the six months ended September 30, 2022: 180,668,564 shares
    For the six months ended September 30, 2021: 180,558,276 shares

    * IIJ conducted a stock split at a ratio of two-for-one with an effective date of October 1, 2022. Accordingly, number of shares issued, number of treasury stock and number of weighted average common shares outstanding above have been calculated as if the stock split had been conducted at the beginning of the previous consolidated fiscal year, respectively.

    * Status of Audit Procedures

    This document is not subject to the audit procedures 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 November 7, 2022. 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, please refer to“Future Prospects including FY2022 Financial Targets” written on page 8 of this document.

    ii) Change in the unit of presentation for monetary amounts
    Amounts of accounts and other items presented in our condensed quarterly consolidated financial statements were previously stated in thousands of yen, but effective from the first quarter ended June 30, 2022, IIJ has changed to present such amounts in millions of yen. In order to facilitate comparison, the amounts for the previous consolidated fiscal year are also presented in millions of yen.

    iii) Others
    Presentation material will be disclosed on TDnet as well as posted on our website on November 7, 2022.




    Attachments IIJ2Q22E_presentation.pdf...

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