Conexio : Non-consolidated Financial Results for the Year Ended March 31, 2022

CONEXIO Corporation (9422)

Non-consolidated Financial Results for the Year Ended March 31, 2022 [Japanese GAAP]

Note:This document is a translation of a part of the original Japanese version and provided for reference purposes only. In the event of any discrepancy between the Japanese original and this English translation, the Japanese original shall prevail.

Non-consolidated Financial Results

for the Year Ended March 31, 2022[Japanese GAAP]

April 27, 2022

Company name:

CONEXIO Corporation

Stock exchange listing:

Tokyo

Code number:

9422

URL:

https://www.conexio.co.jp

Representative:

Hiroshi Suguta

President

Contact:

Shinya Nakada

Deputy

Chief

Operating

Officer, Financial Accounting

Corporate Planning Digital Transformation Division

Phone: [phone]

Scheduled date of Annual General Meeting of Shareholders:

June 22, 2022

Scheduled date of commencing dividend payments:

June 23, 2022

Scheduled date of filing annual securities report:

June 22, 2022

Availability of supplementary briefing material on annual financial results:

Yes

Schedule of annual financial results briefing session:

Yes

(Amounts of less than one million yen are rounded down)

1. Non-consolidated Financial Results for the Fiscal Year Ended March 31, 2022 (April 01, 2021 to March 31, 2022)

(1) Non-consolidated Operating Results

(% indicates changes from the previous corresponding period.)

Net sales

Operating profit

Ordinary profit

Profit

Fiscal year ended

Million yen

%

Million yen

%

Million yen

%

Million yen

%

March 31, 2022

193,247

2.4

8,072

(24.4)

8,202

(25.9)

5,618

(25.4)

March 31, 2021

188,795

(9.7)

10,676

3.3

11,075

5.3

7,536

7.6

Basic earnings per

Diluted earnings per

Rate of return on

Ordinary profit to

Operating profit to

share

share

equity

total assets ratio

net sales ratio

Fiscal year ended

Yen

Yen

%

%

%

March 31, 2022

125.58

-

10.7

8.0

4.2

March 31, 2021

168.45

-

15.5

11.0

5.7

(Reference) Equity in earnings (losses) of affiliated companies: Fiscal year ended March 31, 2022: Fiscal year ended March 31, 2021:

• - million
• - million

(2) Non-consolidated Financial Position

	Total assets	Net assets	Capital adequacy ratio	Net assets per share
As of	Million yen		Million yen	%	Yen
March 31, 2022	100,965		53,625	53.1	1,198.66
March 31, 2021	105,315		51,140	48.6	1,143.13
(Reference) Equity: As of	March 31, 2022:	¥	53,625 million
As of	March 31, 2021:	¥	51,140 million
(3) Non-consolidated Cash Flows
	Cash flows from	Cash flows from	Cash flows from	Cash and cash
	equivalents at the end
	operating activities	investing activities	financing activities
	of period
Fiscal year ended	Million yen		Million yen	Million yen	Million yen
March 31, 2022	5,086		(2,078)	(3,132)	21,542
March 31, 2021	5,329		(1,473)	(2,687)	21,665

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CONEXIO Corporation (9422)

Non-consolidated Financial Results for the Year Ended March 31, 2022 [Japanese GAAP]

2. Dividends

			Annual dividends			Total	Payout	Dividends
								to net
	1st		2nd	3rd				dividends	ratio
			Year-end	Total	assets
	quarter-end	quarter-end	quarter-end
Fiscal year ended		Yen	Yen	Yen		Yen	Yen	Million yen	%	%
March 31, 2021		-	30.00	-		35.00	65.00	2,907	38.6	6.0
March 31, 2022		-	35.00	-		35.00	70.00	3,131	55.7	6.0
Fiscal year ending
March 31, 2023		-	35.00	-		35.00	70.00		54.9
(Forecast)

3. Non-consolidated Financial Results Forecast for the Fiscal Year Ending March 31, 2023 (April 01, 2022 to March 31, 2023)

(% indicates changes from the previous corresponding period.)

		Net sales			Operating profit	Ordinary profit	Net income		Basic earnings per
					share
		Million yen		%	Million yen		%	Million yen	%	Million yen		%	Yen
Full year	200,000		3.5		8,600		6.5	8,700	6.1	5,700		1.5	127.41
* Notes:
(1) Changes in accounting policies, changes in accounting estimates and retrospective restatement
1)	Changes in accounting policies due to the revision of accounting standards:	Yes
2)	Changes in accounting policies other than 1) above:				No
3)	Changes in accounting estimates:							Yes
4)	Retrospective restatement:							No
(2) Total number of issued shares (common shares)
1)	Total number of issued shares at the end of the period (including treasury shares):
	March 31, 2022:			44,737,938	shares
	March 31, 2021:			44,737,938	shares
2)	Total number of treasury shares at the end of the period:
	March 31, 2022:					194	shares
	March 31, 2021:					153	shares

3) Average number of shares during the period:
Fiscal Year ended March 31, 2022:	44,737,766	shares
Fiscal Year ended March 31, 2021:	44,737,788	shares

• This Financial Results is not subject to audit procedures.
• Explanation of appropriate use of financial forecasts and other special notes
• • Financial forecasts and other forward-looking statements herein are based on information available to the Company and certain assumptions deemed reasonable as at the time of preparing this report. The Company does not guarantee that any forecasts would be met. Actual results may vary significantly from the forecasts due to a wide range of factors. For information on assumptions of the financial forecasts and matters to be heeded upon using the financial forecasts, please refer to "1.Overview of operating results, etc.
    (3) Outlook" on page8-9 of the Appendix.

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CONEXIO Corporation (9422)

Non-consolidated Financial Results for the Year Ended March 31, 2022 [Japanese GAAP]

１．Overview of operating results, etc.

1. Overview of operating results for the fiscal year ended March 31, 2022

(i) Operating results for the fiscal year ended March 31, 2022

During the current business year, despite the lingering impact of the COVID-19 pandemic, the Japanese economy showed signs of recovery, as the challenging conditions began to gradually ease. As for its outlook, although expectations are high for economic recovery, we will need to closely watch the resurgence of the infection due to COVID-19 variants and the economic impact of the situation surrounding Ukraine, etc.

In the mobile phone market in which the Company conducts its business activities, we continued operations while taking measures to prevent the spread of infection due to the pandemic and maintaining an environment where customers could visit stores and employees could come to work with peace of mind. The market was revitalized as telecom carriers revamped their pricing plans, promoting price competition among telecom carriers. As a result, handsets compliant with the new telecommunication standard 5G (the 5th generation mobile telecommunication system) have also been gaining popularity. Meanwhile, as information gaps become greater with the progress of digitalization, we have commenced support toward creating a society where all of society can enjoy the benefits of digitalization by taking part in the government's "Project on Digital Utilization Support."

In such a business environment, although our handset sales showed a recovery trend from the previous fiscal year, when we voluntarily restrained business operations amid the spread of COVID-19, sales volume decreased 0.1% from the previous fiscal year to 1.8 million units, mainly due to inventory shortages of our mainstay handset models. Although revenue from our unique services (smartphone coating, "nexi" service packages, managed mobile services, etc.) increased, the industry environment became more severe, and the decline in carrier agency business revenue was greater than expected. With respect to selling, general and administrative expenses, in addition to an increase in personnel expenses due to an increase in operations in reaction to the previous year's voluntary sales restraints due to COVID-19 and a decrease in support grants from telecom carriers, sales promotion expenses also grew due to the strengthening of external sales and marketing.

As a result, for the fiscal year under review, the Company reported net sales of 193,247 million yen (up 2.4% year-on-year), operating profit of 8,072 million yen (down 24.4% year-on-year), ordinary profit of 8,202 million yen (down 25.9% year-on-year), and net income of 5,618 million yen (down 25.4% year-on-year). While the application of the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020; hereafter referred to as the "Accounting Standard for Revenue Recognition"), etc. decreased net sales by 1,165 million yen, this had no impact on operating profit, ordinary profit and net income.

◆Financial results

			(Million yen)
Account title	FY2020	FY2021	Year-on-year change
			(%)
Net sales	188,795	193,247	2.4
Operating profit	10,676	8,072	△24.4
Ordinary profit	11,075	8,202	△25.9
Profit	7,536	5,618	△25.4

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CONEXIO Corporation (9422)

Non-consolidated Financial Results for the Year Ended March 31, 2022 [Japanese GAAP]

The financial results of each business segment were as follows.

Consumer Business

The Consumer Business segment is engaged in contract agency services for mobile phones and other communication services for consumer customers, provision of after-sales services and sales of mobile phone handsets, operation of "nexi Smartphone Support," a unique service offered by the Company to meet the needs of customers using smartphones and thereby strengthen relationships with them, and operation of an insurance agency business ("Hoken-no-Madoguchi").

In the Consumer Business, the environment surrounding the industry was more severe than expected, and carrier agency business revenues in declined significantly. Revenues from our unique services remained strong due to growth in services such as smartphone coating and "nexi" service packages. In addition, we also won contracts under the "Project on Digital Utilization Support Promotion for Users" by the Ministry of Internal Affairs and Communications, and started efforts to eliminate the digital divide (information gap) among our customers. As for selling, general and administrative expenses, in addition to an increase in personnel expenses resulting from an increase in operations in reaction to the previous year's voluntary sales restraints in the wake of COVID-19 and a decrease in support grants from telecommunications carriers, an increase in sales promotion expenses due to strengthened sales to outside customers was a factor that put downward pressure on earnings.

As a result, the financial results of the Consumer Business were 176,887 million yen in net sales (up 4.1% year-on-year ) and 9,568 million yen in operating profit (down 23.2%). While net sales decreased by 79 million yen due to the application of the Accounting Standard for Revenue Recognition, etc., the application had no impact on operating profit.

◆Financial results

			(Million yen)
Account title	FY2020	FY2021	Year-on-year change
			(%)
Net sales	169,858	176,887	4.1
Operating profit	12,462	9,568	△23.2

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CONEXIO Corporation (9422)

Non-consolidated Financial Results for the Year Ended March 31, 2022 [Japanese GAAP]

Corporate Business

In the Corporate Business, the Company mainly acts as an intermediary for concluding contracts of mobile phones and other communication services, provides after-sales services and sells mobile phone handsets, etc., targeting at corporate customers. The Company also develops and operates MobileWorkPlace (mobile work- related solutions for corporate customers) and offers IoT solutions and prepaid cards to convenience stores.

In the Corporate Business, despite a decline in the carrier agency business revenue due to the impact of inventory shortages of mainstay models and other factors, the number of subscriptions to managed mobile services increased due to the promotion of telework in the previous year, resulting in growth in independent revenue and an increase in operating income. As for mobile solutions, we entered into a business partnership with system integrator Needs Well Inc. and began providing data coordination solutions to core systems as part of the "Mobile WorkPlace" initiative. In the area of IoT solutions, "CONEXIOBlackBear" was adopted by a partner company to provide a simple monitoring system for rotating machinery, enabling early detection of abnormalities and remote monitoring. We will continue to use IoT technology to support on-site solutions.

As a result, the financial results of the Corporate Business were 16,359 million yen in net sales (down 13.6% year-on-year ) and 3,100 million yen in operating profit (up 12.4%). While net sales decreased by 1,086 million yen due to the application of the Accounting Standard for Revenue Recognition, etc., the application had no impact on operating profit.

◆Financial results

			(Million yen)
Account title	FY2020	FY2021	Year-on-year change
			(%)
Net sales	18,937	16,359	△13.6
Operating profit	2,758	3,100	12.4

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