en-japan inc.
1st Quarter FY March 2021 Earnings Announcement [Japan GAAP] (Consolidated)
August 13, 2020
Company Name | en-japan inc. | Listing Exchanges | First Section of the Tokyo Stock Exchange | |||
Stock Code | 4849 | URL | https://corp.en-japan.com/ | |||
Representative (Title) | President | (Name) | Takatsugu Suzuki | |||
Executive Officer and | ||||||
Contact (Title) | Administration Division | (Name) | Tomoki Tamai | Telephone +81-3-3342-4506 | ||
Director | ||||||
Scheduled Date for Submission of Quarterly Report | August 13, 2020 | |||||
Scheduled Date to Begin Dividend Payments | - | |||||
Preparation of Quarterly Summary Supplementary Explanatory Materials | Yes | |||||
Quarterly Earnings Briefing | No |
(Figures rounded down to nearest million yen)
1. FY Ending March 2021 Cumulative First Quarter Operating Results (From April 1, 2020 to June 30, 2020)
(1) Consolidated Operating Results (cumulative) | (percentages indicate percent change from prior fiscal year) | ||||||||||
Net Sales | Operating Income | Ordinary Income | Profit Attributable to | ||||||||
Owners of Parent | |||||||||||
Million yen | % | Million yen | % | Million yen | % | Million yen | % | ||||
FYE 3/21 1st Qrtr | 10,442 | -24.1 | 1,248 | -57.0 | 1,236 | -57.2 | 618 | -67.8 | |||
FYE 3/20 1st Qrtr | 13,763 | 22.7 | 2,904 | -16.0 | 2,892 | -18.4 | 1,917 | -22.1 | |||
(Note) Comprehensive income | FYE 3/21 1st Qrtr 525 million yen (-72.3%) | FYE 3/20 1st Qrtr 1,896 million yen (-18.9%) | |||||||||
EPS | Fully Diluted EPS | ||||||||||
Yen | Yen | ||||||||||
FYE 3/21 1st Qrtr | 13.79 | 13.75 | |||||||||
FYE 3/20 1st Qrtr | 42.05 | 41.93 | |||||||||
(2) Consolidated Financial Position | |||||||||||
Total Assets | Net Assets | Net Asset Ratio | |||||||||
Million yen | Million yen | % | |||||||||
FYE 3/21 1st Qrtr | 44,475 | 34,212 | 75.2 | ||||||||
FYE 3/20 | 51,896 | 38,648 | 72.8 | ||||||||
(Reference) Core capital | FYE 3/21 1st Qrtr | 33,436 million yen | FYE 3/20 | 37,783 million yen |
2. Dividends
Dividends per Share | |||||||
1st Quarter-end | 2nd Quarter-end | 3rd Quarter-end | Year-end | Full Year | |||
Yen | Yen | Yen | Yen | Yen | |||
FYE 3/20 | - | 0.00 | - | 74.80 | 74.80 | ||
FYE 3/21 | - | ||||||
FYE 3/21 (projected) | - | - | - | - |
(Note) Revisions to the Company's latest dividend forecast: None
Concerning the dividend for the fiscal year ending March 31, 2021, the amount of expected dividends is undecided as the Company has not yet disclosed the full-year operating results forecast.
3. FY Ending March 2021 Projected Consolidated Operating Results (April 1, 2020 - March 31, 2021)
(Percentages indicate the percentage change from the same period of the prior fiscal year.)
Net Sales | Operating Income | Ordinary Income | Profit Attributable to | EPS | |||||
Owners of Parent | |||||||||
Million yen | % | Million yen | % | Million yen | % | Million yen | % | Yen | |
Half year | 19,703 | -30.1 | 1,992 | -67.9 | 1,956 | -68.4 | 1,018 | -75.2 | 22.75 |
(Note) Revisions to the Company's latest operating results projections: Yes
The Company acknowledges that it is extremely difficult to precisely understand the impacts of COVID-19 on its businesses and operating results and incorporate them into the operating results projections of the fiscal year ending March 31, 2021. As such, the Company instead provides projections of operating results for the cumulative second quarter of the fiscal year ending March 31, 2021 as operating results projections for a reasonably computable period, based on the assumptions currently available. Please refer to "(3) Explanation of Future Projections such as Projections of Consolidated Operating Results" on page 4 for details.
- Notes
- Changes in material subsidiaries during the cumulative quarter under review (Change in
specific subsidiaries that will accompany a change in scope of consolidation) | No | |||
Newly included | None | (Name of company) - | ||
Exclusion | None | (Name of company) - | ||
(2) Adoption of special accounting treatment used in preparation of the quarterly | ||||
consolidated financial statements | Yes |
- Changes in accounting policy, changes in accounting estimates, or restatement due to correction
a. Changes in accounting policy accompanying amendment of accounting principles: | No |
b. Changes in accounting policy other than "a." | No |
c. Changes in accounting estimates: | No |
d. Restatement due to correction: | No |
- Number of shares issued (common share)
a. Number of shares issued at the end of the period (including treasury shares)
FYE 3/21 1st Qrtr | 49,716,000 shares | FYE 3/20 | 49,716,000 shares |
b. Number of shares of treasury shares at the end of the period | |||
FYE 3/21 1st Qrtr | 4,945,966 shares | FYE 3/20 | 4,451,919 shares |
c. Average number of shares issued during the period (Quarter Year-to-Date) | |||
FYE 3/21 1st Qrtr | 44,829,940 shares | FYE 3/20 1st Qrtr | 45,605,607 shares |
- The quarterly earnings announcement is not within the scope of the quarterly review procedure by a certified public accountant or an audit corporation.
- Explanation regarding appropriate use of operating results projections, other special notes
- Forward-lookingstatements including projected operating results contained in this report and supplementary materials are based on information currently available to the Company and on certain assumptions deemed as rational, and are not intended to guarantee achievements by the Company. Actual results may differ significantly from such projections due to various factors. For assumptions used when preparing projected operating results and reminders when using projected operating results, please refer to "(3) Explanation of Future Projections such as Projections of Consolidated Operating Results, (Supplementary Explanation of Projected Consolidated Operating Results for Cumulative Second Quarter)" on page 4 of the Attachments.
Attachments Table of Contents
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1. Qualitative Information of Consolidated Performance during the Quarter under Review
(1) Explanation of Operating Results
[1] Operating Results for the Cumulative First Quarter of the Fiscal Year Ending March 31, 2021
The Company recorded a decrease in net sales mainly due to the reduced demand for recruitment at clients and postponement of hiring activities because of COVID-19. The decline was particularly huge in Domestic Job Board where the term from receiving and placing orders to recognizing sales is short. As a result, net sales for the cumulative first quarter of the fiscal year ending March 31, 2021 were ¥10,442 million (down 24.1% year on year). Expenses during the quarter were ¥9,193 million (down 15.3% year on year) as a result of cost reduction efforts primarily in advertisement that is a part of variable costs and because we accelerated an overhaul ahead of the schedule.
As a result, the Company recorded operating income of ¥1,248 million (down 57.0% year on year) and ordinary income of ¥1,236 million (down 57.2% year on year). Profit attributable to owners of parent was ¥618 million (down 67.8% year on year), reflecting the goodwill impairment related to JapanWork, INC., which is a consolidated subsidiary of en-japan inc., for the cumulative first quarter of the fiscal year ending March 31, 2021.
(Unit: Million yen) | ||||
FY Ended March 2020 | FY Ending March 2021 | Percent change | ||
Cumulative First | Cumulative First | Change | ||
(%) | ||||
Quarter | Quarter | |||
Net sales | 13,763 | 10,442 | -3,320 | -24.1 |
Operating income | 2,904 | 1,248 | -1,656 | -57.0 |
Ordinary income | 2,892 | 1,236 | -1,655 | -57.2 |
Profit attributable to | 1,917 | 618 | -1,299 | -67.8 |
owners of parent | ||||
[2] Summary of Major Businesses (based on managerial accounting)
(Unit: Million yen) | ||||
FY Ended March 2020 | FY Ending March 2021 | Percent change | ||
Cumulative First | Cumulative First | Change | ||
(%) | ||||
Quarter | Quarter | |||
Domestic Job Board | 7,550 | 4,642 | -2,908 | -38.5 |
Domestic Permanent | 3,049 | 2,812 | -237 | -7.8 |
Recruitment | ||||
Overseas | 2,728 | 2,208 | -519 | -19.1 |
HR-Tech | 43 | 246 | +203 | +472.9 |
Other business/ | 514 | 657 | +143 | +28.0 |
Subsidiaries | ||||
- The difference between the combined net sales of each business and the consolidated net sales is attributable to the adjustment made among the businesses and consolidated adjustments.
- For characteristics in the sales recognition by the type of services, please refer to "(3) Explanation of Future Projections such as Projections of Consolidated Operating Results, (Supplementary Explanation of Projected Consolidated Operating Results for Cumulative Second Quarter)" on page 4 for details.
(Domestic Job Board)
Net sales in Domestic Job Board decreased significantly due to reduced demand for recruitment at clients and increased postponement of hiring activities and so forth after the declaration of the state of emergency in response to the COVID-19 pandemic.
"[en]Career Change Info (for permanent-job seekers)" and job boards for temporary staffing companies saw an immediate impact on the results. This came from the plunge in the number of job openings as their revenue model is primarily built on pay-
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per-listing billing.
Job boards for permanent recruitment agencies were also affected by the reduced demand for recruitment as well as other job boards. However, the business saw year-on-year growth because the revenue model is mostly based on success fees and the sales recognized in this first quarter were largely boosted by the favorable operational performance in the previous quarter.
As a result, net sales of Domestic Job Board recorded ¥4,642 million, down 38.5% year on year.
(Domestic Permanent Recruitment)
Both "en Agent" and the Company's subsidiary, en World Japan K.K., were affected by the reduced demand for recruitment, but the level of decline in sales was limited because the revenue model is mostly based on success fees and the sales recognized in this first quarter were largely boosted by the favorable operational performance in the previous quarter.
High-profile staffing service, en world Japan K.K., posted solid results as a certain level of recruiting demand is expected in this business even in this challenging market environment.
"en Agent" identified companies aspiring to recruit even under the challenging market environment and made stronger approaches to those companies. "en Agent" also accelerated the implementation of online meetings with clients and interviews with candidates early on, putting in place a system to continue in the future.
As a result, net sales of Domestic Permanent Recruitment recorded ¥2,812 million, down 7.8% year on year.
(Overseas)
For the overseas business, the performance is reflected in the results 3 months behind. The results in countries focused on, Vietnam and India, from January to March reflect the performance in the period before the countries were hit hard by the COVID- 19 pandemic. For this reason, Vietnam recorded an increase in sales in the quarter supported mostly by services for job boards. India, which operates mainly in the temp IT staffing business, recorded a decrease in sales affected by impacts such as the deteriorated economic environment in the country. China, which operates job boards, was severely hit by the impact of the COVID-19 pandemic and the lockdown from January to March.
As a result, net sales of Overseas business recorded ¥2,208 million, down 19.1% year on year.
(HR-Tech)
As for the personnel and recruitment support platform "engage," the number of user companies steadily increased up to 287,000 (as of June 2020). The number of paid user companies increased by more than 6 times year on year, though, the number decreased by approximately 20% from the previous quarter because recruiting needs were lower than expected due to the COVID-19 pandemic. The number hit bottom in May and has been back on a recovery track since June.
As a result, net sales in the quarter were up by 5.7 times year on year to ¥246 million.
(2) Explanation of Financial Position
Total assets at the end of the first quarter of the fiscal year ending in March 31, 2021 decreased ¥7,421 million compared to the end of the previous fiscal year to ¥44,475 million.
Current assets decreased ¥7,496 million to ¥29,568 million. This was mainly attributable to a decrease in cash and deposits of ¥5,645 million, and a decrease in notes and accounts receivable-trade of ¥2,066 million. Non-current assets increased ¥75 million to ¥14,906 million.
Total liabilities at the end of the first quarter of the fiscal year ending March 31, 2021 were ¥10,262 million, a decrease of ¥2,984 million compared to the end of the previous fiscal year.
Current liabilities decreased ¥3,219 million to ¥8,543 million. This mainly stemmed from decreases in income taxes payable of ¥1,355 million and provision of bonuses of ¥595 million. Non-current liabilities increased ¥234 million to ¥1,719 million.
Total net assets were ¥34,212 million, down ¥4,436 million from the end of the previous fiscal year. This was mainly attributable to a decrease in retained earnings of ¥3,069 million due to cash dividends paid and an increase in treasury shares of ¥998 million.
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(3) Explanation of Future Projections such as Projections of Consolidated Operating Results
The Company considers it is hard to grasp the outlook for economic conditions, client companies' financial results and demand for recruitment as it is still uncertain at this point in time when the COVID-19 pandemic will end both in Japan and overseas. For this reason, the Company has decided to disclose projections of operating results for the cumulative second quarter of the fiscal year ending March 31, 2021 in view of recent trends.
The Company will announce the forecast for full-year consolidated operating results as soon as it becomes available.
The estimated operating results for the cumulative second quarter of the fiscal year ending March 31, 2021 include net sales of ¥19,703 million (down 30.1% year on year), operating income of ¥1,992 million (down 67.9% year on year), ordinary income of ¥1,956 million (down 68.4% year on year), and profit attributable to owners of parent of ¥1,018 million (down 75.2% year on year).
- Projected Consolidated Operating Results - FY Ending March 2021 Cumulative Second Quarter (April 2020 - September 2020)
(Unit: Million yen) | ||||
FY Ended March | FY Ending March | Percent change | ||
2020 Cumulative | 2021 Cumulative | Change | ||
(%) | ||||
Second Quarter | Second Quarter | |||
Net sales | 28,204 | 19,703 | -8,500 | -30.1 |
Operating income | 6,200 | 1,992 | -4,208 | -67.9 |
Ordinary income | 6,197 | 1,956 | -4,241 | -68.4 |
Profit attributable to | 4,108 | 1,018 | -3,090 | -75.2 |
owners of parent | ||||
- (Reference) Projected Consolidated Operating Results - FY Ending March 2021 Second Quarter (July 2020 - September 2020)
(Unit: Million yen) | ||||
FY Ended March | FY Ending March | Change | Percent change | |
2020 Second Quarter | 2021 Second Quarter | (%) | ||
Net sales | 14,441 | 9,261 | -5,179 | -35.9 |
Operating income | 3,295 | 743 | -2,552 | -77.4 |
Ordinary income | 3,305 | 719 | -2,585 | -78.2 |
Profit attributable to | 2,190 | 399 | -1,790 | -81.7 |
owners of parent | ||||
(Supplementary Explanation of Projected Consolidated Operating Results for the Second Quarter)
-
Preconditions for results impacted by COVID-19
While Japan has been seeing a resumption of hiring activities since June after the state of emergency was lifted, the
Company assumes the improvement is not enough to achieve a speedy return and the demand for recruitment will recover gradually.
For overseas countries where the Company group operates, the performance is reflected in the results three months behind. For this reason, the above forecast is worked out based on the performance in each country from April to June, which accordingly includes results affected by the lockdown and so forth during the period.
This forecast does not include possibilities such as a further spread of COVID-19 and consequent additional lockdowns both in Japan and overseas.
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[2] Characteristics in the sales revenue recognition by the type of services
Under the Domestic Job Board, "[en]Career Change Info" and job boards for temporary staffing companies operate based on the revenue model centering on pay-per-listing billing, and job boards for permanent recruitment agencies operate based on the revenue model centering on success fees. In a success fee-type service, sales tend to be recorded approximately two to four months behind the actual sales activities and conclusion of contracts (because the sales are recognized when the candidate who has been accepted via our service joins a new company).
Likewise, "en Agent" under the Domestic Permanent Recruitment and the Company's subsidiary "en world Japan K.K." operate based on the success-fee type revenue model, so the timing for recognizing the sales is the same as above.
[3] Preconditions for consolidated net sales and profit planning
Net sales are expected to decrease by 35.9% year on year to ¥9,261 million. This is based on the assumption of the year-on- year decrease in the Domestic Job Board by approximately 47%, Domestic Permanent Recruitment by approximately 29%, overseas subsidiaries by approximately 28%, and the year-on-year growth in HR-Tech by approximately 4 times. As explained in [1] and [2] as above, the forecast is premised on the expectation that companies' recruiting activities will recover gradually and success-fee type services and overseas subsidiaries will see a significant negative impact during the second quarter of the fiscal year ending March 31, 2021 due to the revenue recognition timing.
Expenses are expected to decrease by 23.6% year on year to ¥8,517 million. This reflects a continued control of advertising expenses initiated in the first quarter of the fiscal year ending March 31, 2021 as well as driving further reductions in outsourcing related expenses including the payment of commission fees from the second quarter of the fiscal year.
For these reasons, the Company expects the results in the second quarter of the fiscal year ending March 31, 2021 will be impacted most largely by a decline in sales despite the further expense reductions during the period. Year on year, operating income is expected to decrease by 77.4% to ¥743 million, ordinary income by 78.2% to ¥719 million, and profit attributable to owners of parent by 81.7% to ¥399 million.
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2. Quarterly Consolidated Financial Statements and Key Notes
- Quarterly Consolidated Balance Sheets
(Unit: Million yen) | ||
Previous Fiscal Year | First Quarter of Current | |
Fiscal Year | ||
(As of March 31, 2020) | ||
(As of June 30, 2020) | ||
Assets | ||
Current assets | ||
Cash and deposits | 28,081 | 22,436 |
Notes and accounts receivable - trade | 5,736 | 3,670 |
Securities | 2,047 | 2,045 |
Other | 1,372 | 1,487 |
Allowance for doubtful accounts | -171 | -71 |
Total current assets | 37,065 | 29,568 |
Non-current assets | ||
Property, plant and equipment | 1,021 | 1,052 |
Intangible assets | ||
Goodwill | 3,795 | 3,370 |
Other | 3,917 | 4,056 |
Total intangible assets | 7,712 | 7,426 |
Investments and other assets | ||
Investment securities | 2,957 | 3,196 |
Shares of subsidiaries and associates | 46 | 46 |
Other | 3,338 | 3,473 |
Allowance for doubtful accounts | -246 | -288 |
Total investments and other assets | 6,096 | 6,427 |
Total non-current assets | 14,830 | 14,906 |
Total assets | 51,896 | 44,475 |
Liabilities | ||
Current liabilities | ||
Accounts payable - trade | 475 | 323 |
Income taxes payable | 1,883 | 527 |
Provision for bonuses | 1,192 | 597 |
Provision for directors' bonuses | 2 | 4 |
Advances received | 2,620 | 3,167 |
Other | 5,587 | 3,923 |
Total current liabilities | 11,762 | 8,543 |
Non-current liabilities | ||
Provision for share benefits | 388 | 402 |
Asset retirement obligations | 268 | 269 |
Other | 828 | 1,048 |
Total non-current liabilities | 1,485 | 1,719 |
Total liabilities | 13,247 | 10,262 |
Net assets | ||
Shareholders' equity | ||
Capital stock | 1,194 | 1,194 |
Capital surplus | 1,133 | 923 |
Retained earnings | 39,588 | 36,519 |
Treasury shares | -4,253 | -5,252 |
Total shareholders' equity | 37,663 | 33,386 |
Accumulated other comprehensive income | ||
Valuation difference on available-for-sale securities | -7 | 45 |
Foreign currency translation adjustment | 126 | 4 |
Total accumulated other comprehensive income | 119 | 49 |
Subscription rights to shares | 154 | 161 |
Non-controlling interests | 710 | 614 |
Total net assets | 38,648 | 34,212 |
Total liabilities and net assets | 51,896 | 44,475 |
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- Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income
Quarterly Consolidated Statements of Income
Cumulative First Quarter
(Unit: Million yen) | ||
Cumulative First | Cumulative First | |
Quarter of the Previous | Quarter of the Current | |
Fiscal Year | Fiscal Year | |
(From April 1, 2019 | (From April 1, 2020 | |
to June 30, 2019) | to June 30, 2020) | |
Net sales | 13,763 | 10,442 |
Cost of sales | 2,542 | 2,347 |
Gross profit | 11,221 | 8,094 |
Selling, general and administrative expenses | 8,316 | 6,846 |
Operating income | 2,904 | 1,248 |
Non-operating income | ||
Interest income | 9 | 10 |
Dividend income | 10 | 10 |
Foreign exchange income | - | 3 |
Other | 6 | 5 |
Total non-operating income | 26 | 28 |
Non-operating expenses | ||
Interest expenses | 7 | 10 |
Loss on investments in partnership | 5 | 21 |
Foreign exchange losses | 16 | - |
Provision of allowance for doubtful accounts | - | 5 |
Other | 9 | 3 |
Total non-operating expenses | 38 | 40 |
Ordinary income | 2,892 | 1,236 |
Extraordinary income | ||
Gain on sales of non-current assets | 0 | - |
Total extraordinary income | 0 | - |
Extraordinary losses | ||
Impairment loss | - | 235 |
Loss on retirement of non-current assets | 0 | 8 |
Total extraordinary losses | 0 | 243 |
Profit before income taxes | 2,892 | 993 |
Income taxes-current | 921 | 390 |
Total income taxes | 921 | 390 |
Profit | 1,971 | 602 |
Profit (loss) attributable to non-controlling interests | 53 | -15 |
Profit attributable to owners of parent | 1,917 | 618 |
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Quarterly Consolidated Statements of Comprehensive Income
Cumulative First Quarter
(Unit: Million yen) | ||
Cumulative First | Cumulative First | |
Quarter of the Previous | Quarter of the Current | |
Fiscal Year | Fiscal Year | |
(From April 1, 2019 | (From April 1, 2020 | |
to June 30, 2019) | to June 30, 2020) | |
Profit | 1,971 | 602 |
Other comprehensive income | ||
Valuation difference on available-for-sale securities | -29 | 52 |
Foreign currency translation adjustment | -44 | -129 |
Total other comprehensive income | -74 | -77 |
Comprehensive income | 1,896 | 525 |
(Break down) | ||
Comprehensive income attributable to owners of parent | 1,836 | 548 |
Comprehensive income attributable to non-controlling | 59 | -22 |
interests | ||
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(3) Notes regarding Quarterly Consolidated Financial Statements
(Notes relating to the Going Concern Assumption) There are no pertinent items.
(Notes on Significant Changes to Shareholders' Equity)
en-japan adopted a resolution on matters related to acquiring treasury shares based on a written resolution in lieu of the resolution of the Board of Directors on March 25, 2020 and the provision of Article 156 of the Companies Act to be applied mutatis mutandis pursuant to the provision of Article 165, Paragraph 3 of the said Act, and accordingly acquired 496,200 common shares. As a result, treasury shares increased by ¥1,000 million at the end of the first quarter of the current fiscal year.
(Adoption of Special Accounting Treatment used in Preparation of the Quarterly Consolidated Financial Statements) (Calculation of tax expenses)
The Company calculates tax expenses by rationally estimating the effective tax rate after applying tax effect accounting on profit before income taxes on a consolidated basis for the fiscal year including the first quarter of the period. It then multiplies the estimated effective tax rate by profit before income taxes for the quarter.
Note, however, that if calculating tax expenses using the estimated effective tax rate produces a result which significantly lacks reasonableness, the statutory tax rate is adopted.
(Segment Information)
[Segment Information]
- Cumulative first quarter of the previous fiscal year (April 1, 2019 to June 30, 2019) Description is omitted since en-japan group is formed under a single segment.
- Cumulative first quarter of the fiscal year under review (from April 1, 2020 to June 30, 2020) Description is omitted since en-japan group is formed under a single segment.
(Additional Information)
Cumulative first quarter of the fiscal year ending March 31, 2021
(from April 1, 2020 to June 30, 2020)
There has been no critical change about the assumptions including the outlook for the spread of COVID-19 and the time when it will end, which were described in the Annual Securities Report for the previous fiscal year in the "Additional Information: Accounting estimate under the COVID-19 outbreak."
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En-Japan Inc. published this content on 28 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 August 2020 06:32:08 UTC