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TOKYO, Aug. 05, 2022 (GLOBE NEWSWIRE) — Internet Initiative Japan Inc. (“IIJ”, TSE Prime: 3774) today announced its consolidated financial results for the first three months for the fiscal year ending March 31, 2023 (“1Q22”, from April 1, 2022 to June 30, 2022) under International Financial Reporting Standards (IFRS).1

Highlights of Financial Results for 1Q22 FY22 Targets
 
                    First Half         Full Year  
Total revenues JPY 58.2 billion up 9.8 % YoY2 JPY 117.0 billion JPY 250.0 billion  
Operating profit JPY 5.0 billion up 15.3 % YoY JPY 10.7 billion JPY 27.2 billion  
Profit before tax JPY 6.6 billion up 23.8 % YoY JPY 10.3 billion JPY 26.3 billion  
Net profit3 JPY 4.4 billion up 25.2 % YoY JPY 6.8 billion JPY 17.5 billion  
   

Overview of 1Q22 Financial Results and Business Outlook
“As the second fiscal year of our three-year mid-term plan, FY2022 started as planned with 1Q22 total revenues and operating profit increased by 9.8% and 15.3% year over year, respectively. Along with further advancement of IT utilization through business activities in Japan, enterprise systems are gradually and continuously transforming to be more network-based. This transition is a tailwind for us, as we have capabilities of offering various and highly reliable network services together with systems integration which are based on our robust Internet infrastructure and Internet technology expertise. In this first quarter, with our network related projects becoming more complex and larger, we continued to acquire these middle scale projects, which would bring us increases in our monthly recurring revenues hereafter. Having seen the continued upward trend in Japanese Internet traffic, we are confident that our enterprise network services revenues would be accumulated continuously, and this would contribute to our structural increase in operating profit,” said Eijiro Katsu, President of IIJ.

“In order to sustain our strong growth, we are strengthening the recruitment and development of human resources. For FY2022, we have set approximately 50% higher recruitment targets4 for both new graduates and mid-career hires than we had in previous years, and recruiting activities have made progress in accordance with those policy, while we maintain reasonable management over the number of outsourced personnel. Our continuous network infrastructure enhancement, services development, and stable network operation for about thirty years have been our distinguished competitive advantages. We believe that these technology-oriented business models have been attracting competent Internet-related engineers, which drive us to pursue further technology developments,” concluded Koichi Suzuki, Founder and Chairman of IIJ.

1Q22 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
    1Q21 1Q22 YoY Change
    JPY millions JPY millions
Total revenues 52,975   58,190   9.8  
  Network services 31,475   33,234   5.6  
  Systems integration (SI) 20,807   24,269   16.6  
  ATM operation business 693   687   (0.9 )
Total costs (41,548 ) (45,490 ) 9.5  
  Network services (23,145 ) (24,431 ) 5.6  
  Systems integration (SI) (17,959 ) (20,659 ) 15.0  
  ATM operation business (444 ) (400 ) (9.9 )
Total gross profit 11,427   12,700   11.1  
  Network services 8,330   8,803   5.7  
  Systems integration (SI) 2,848   3,610   26.8  
  ATM operation business 249   287   15.3  
SG&A, R&D, and other operating income (expenses) (7,067 ) (7,674 ) 8.6  
Operating profit 4,360   5,026   15.3  
Profit before tax 5,350   6,623   23.8  
Profit for the period attributable to owners of the parent 3,507   4,391   25.2  
(Note) Systems integration includes equipment sales.      
         

Segment Results Summary
    1Q21 1Q22
    JPY millions JPY millions
Total revenues 52,975   58,190  
  Network services and SI business 52,316   57,531  
  ATM operation business 693   687  
  Elimination (34 ) (28 )
Operating profit 4,360   5,026  
  Network services and SI business 4,189   4,809  
  ATM operation business 195   237  
  Elimination (24 ) (20 )
       

1Q22 Revenues and Income
Revenues
Total revenues were JPY58,190 million, up 9.8% YoY (JPY52,975 million for 1Q21).

Network services revenue was JPY33,234 million, up 5.6% YoY (JPY31,475 million for 1Q21).

Revenues for Internet connectivity services for enterprise were JPY9,516 million, up 1.1% YoY from JPY9,410 million for 1Q21. The increase was due to an increase in revenues of IP services and enterprise mobile services, which absorbed a decrease in MVNO Platform service (MVNE) revenue owing to reflecting the annual revision of mobile data interconnectivity charge5 in selling prices.

Revenues for Internet connectivity services for consumers were JPY6,099 million, down 0.1% YoY from JPY6,108 million for 1Q21, mainly due to a decrease in average revenue per user along with continued migration of former plan’s customers to “GigaPlans”, which launched at the beginning of the previous fiscal year.

Revenues for Outsourcing services were JPY10,944 million, up 15.1% YoY from JPY9,510 million for 1Q21, mainly due to an increase in security-related services revenues.

Revenues for WAN services were JPY6,675 million, up 3.5% YoY from JPY6,447 million for 1Q21.

Network Services Revenues Breakdown
        1Q21 1Q22 YoY Change
        JPY millions JPY millions
Total network services 31,475 33,234 5.6  
  Internet connectivity services (enterprise) 9,410 9,516 1.1  
    IP services (including data center connectivity services) 3,275 3,446 5.2  
    IIJ Mobile Services 5,189 5,060 (2.5 )
      Enterprise mobile services (IoT usages etc.) 2,344 2,634 12.4  
      IIJ Mobile MVNO Platform service (MVNE) 2,845 2,426 (14.7 )
    Others 946 1,010 6.8  
  Internet connectivity services (consumer) 6,108 6,099 (0.1 )
    IIJmio Mobile Services 5,392 5,310 (1.5 )
    Others 716 789 10.2  
  Outsourcing services 9,510 10,944 15.1  
  WAN services 6,447 6,675 3.5  

Number of Contracts and Subscription for Connectivity Services (Note 1)
        As of June 30, 2021 As of June 30, 2022 YoY Change
Internet connectivity services (enterprise) 2,299,032 2,582,448 283,416  
  IP service (greater than or equal to 1Gbps)(Note2) 764 787 23  
  IP service (less than 1Gbps)(Note2) 1,202 1,247 45  
  IIJ Mobile Services 2,205,759 2,489,768 284,009  
    Enterprise mobile services (IoT usages etc.) 1,163,312 1,457,464 294,152  
    IIJ Mobile MVNO Platform service (MVNE) 1,042,447 1,032,304 (10,143 )
  Others 91,307 90,646 (661 )
Internet connectivity services (consumer) 1,396,386 1,464,327 67,941  
  IIJmio Mobile Services 1,053,173 1,125,756 72,583  
  Others 343,213 338,571 (4,642 )
Total contracted bandwidth (Gbps)(Note 3) 7,108.2 7,600.9 492.7  
(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 JPY24,269 million, up 16.6% YoY (JPY20,807 million for 1Q21). Systems construction and equipment sales, a one-time revenue, was JPY7,628 million, up 11.7% YoY (JPY6,832 million for 1Q21). Systems operation and maintenance revenue, a recurring revenue, was JPY16,641 million, up 19.1% YoY (JPY13,975 million for 1Q21), 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 JPY33,889 million, up 56.5% YoY (JPY 21,649 million for 1Q21); orders received for systems construction and equipment sales were JPY10,756 million, up 23.1% YoY (JPY8,737 million for 1Q21), and orders received for systems operation and maintenance were JPY23,133 million, up 79.2% YoY (JPY12,911 million for 1Q21).

Order backlog for SI, including equipment sales, as of June 30, 2022 amounted to JPY82,411 million, up 22.1% YoY (JPY67,496 million as of June 30, 2021); order backlog for systems construction and equipment sales was JPY15,579 million, up 40.7% YoY (JPY11,073 million as of June 30, 2021) and order backlog for systems operation and maintenance was JPY66,832 million, up 18.4% YoY (JPY56,424 million as of June 30, 2021).

ATM operation business revenues were JPY687 million, down 0.9% YoY (JPY693 million for 1Q21).

Cost of sales
Total cost of sales was JPY45,490 million, up 9.5% YoY (JPY41,548 million for 1Q21).

Cost of network services revenue was JPY24,431 million, up 5.6% YoY (JPY23,145 million for 1Q21), mainly due to an increase in purchasing cost of mobile device. Gross profit was JPY8,803 million, up 5.7% YoY (JPY8,330 million for 1Q21), and gross profit ratio was 26.5% (26.5% for 1Q21).

Cost of SI revenues, including equipment sales was JPY20,659 million, up 15.0% YoY (JPY17,959 million for 1Q21), mainly due to increases in license fees along with an increase in multi-cloud related services’ revenues and purchasing costs. Gross profit was JPY3,610 million, up 26.8% YoY (JPY2,848 million for 1Q21) and gross profit ratio was 14.9% (13.7% for 1Q21).

Cost of ATM operation business revenues was JPY400 million, down 9.9% YoY (JPY444 million for 1Q21). Gross profit was JPY287 million (JPY249 million for 1Q21) and gross profit ratio was 41.8% (36.0% for 1Q21).
        
Selling, general and administrative expenses and other operating income and expenses
Selling, general and administrative expenses, including research and development expenses, totaled JPY7,858 million, up 10.9% YoY (JPY7,083 million for 1Q21), mainly due to increases in advertising expenses, personnel-related expenses and outsourcing expenses.

Other operating income was JPY194 million (JPY52 million for 1Q21).

Other operating expenses was JPY10 million (JPY36 million for 1Q21).

Operating profit
Operating profit was JPY5,026 million (JPY4,360 million for 1Q21), up 15.3% YoY.

Finance income and expenses, and share of profit (loss) of investments accounted for using equity method
Finance income was JPY1,747 million, compared to JPY1,361 million for 1Q21. It included gains on financial instruments, mainly related to funds, of JPY1,200 million (JPY1,296 million for 1Q21) and foreign exchange gain of JPY474 million (loss of JPY17 million for 1Q21).

Finance expense was JPY136 million, compared to JPY154 million for 1Q21. It included interest expenses of JPY133 million (JPY137 million for 1Q21).

Share of loss of investments accounted for using equity method was JPY14 million (compared to loss of JPY217 million for 1Q21), mainly due to loss of DeCurret Holdings, Inc. of JPY78 million

Profit before tax
Profit before tax was JPY6,623 million (JPY5,350 million for 1Q21), up 23.8% YoY.

Profit for the period
Income tax expense was JPY2,136 million (JPY1,807 million for 1Q21). As a result, profit for the period was JPY4,487 million (JPY3,543 million for 1Q21), up 26.6% YoY.

Profit for the period attributable to non-controlling interests was JPY96 million (JPY36 million for 1Q21), mainly related to net income of Trust Networks Inc.

Profit for the period attributable to owners of parent was JPY4,391 million (JPY3,507 million for 1Q21), up 25.2% YoY.

Financial Position as of June 30, 2022
As of June 30, 2022, the balance of total assets was JPY225,730 million, decreased by JPY6,075 million from the balance as of March 31, 2022 of JPY231,805 million.

As of June 30, 2022, the balance of current assets was JPY101,186 million, decreased by JPY3,299 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 JPY4,834 million to JPY42,557 million, trade receivables decreased by JPY3,214 million to JPY34,435 million and prepaid expenses increased by JPY3,340 million to JPY16,893 million.

As of June 30, 2022, the balance of non-current assets was JPY124,544 million, decreased by JPY2,776 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 decreased by JPY225 million to JPY17,621 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 JPY2,449 million to JPY42,425 million mainly due to depreciation, intangible assets decreased by JPY299 million to JPY16,125 million mainly due to amortization of software, and other investments decreased by JPY56 million to JPY17,354 million.

As of June 30, 2022, the balance of current liabilities was JPY72,110 million, decreased by JPY4,667 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 decreased by JPY1,349 million to JPY19,393 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 JPY3,942 million to JPY1,853 million, contract liabilities increased by JPY1,128 million to JPY10,699 million and other financial liabilities increased by JPY132 million to JPY17,167 million.

As of June 30, 2022, the balance of non-current liabilities was JPY47,000 million, decreased by JPY3,407 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 JPY412 million to JPY7,017 million and other financial liabilities decreased by JPY1,467 million to JPY28,679 million mainly due to a transfer to current portion.

As of June 30, 2022, the balance of total equity attributable to owners of the parent was JPY105,480 million, increased by JPY1,952 million from the balance as of March 31, 2022 of JPY103,528 million. Ratio of owners’ equity to total assets was 46.7% as of June 30, 2022.

1Q22 Cash Flows
Cash and cash equivalents as of June 30, 2022 were JPY42,557 million (JPY34,831 million as of June 30, 2021).

Net cash provided by operating activities for 1Q22 was JPY4,855 million (net cash provided by operating activities of JPY7,654 million for 1Q21). There were profit before tax of JPY6,623 million (JPY5,350 million for 1Q21), depreciation and amortization of JPY7,055 million (JPY6,606 million for 1Q21), including JPY2,808 million (JPY2,500 million for 1Q21) of depreciation of right-of-use operating lease assets under IFRS 16, and income taxes paid of JPY6,091 million (JPY3,334 million for 1Q21). Regarding changes in working capital, there was net cash out of JPY1,063 million compared to net cash-out of JPY71 million for 1Q21. As for the major factors for the increase in net cash outflow in comparison with 1Q21, there was a decrease in proceeds from trade receivables, which exceeded decreases in payments of current liabilities, such as trade payable and other liabilities.

Net cash used in investing activities for FY1Q22 was JPY2,366 million (net cash used in investing activities of JPY6,414 million for 1Q21), mainly due to payments for purchases of tangible assets of JPY1,839 million (JPY2,839 million for 1Q21), payments for purchases of intangible assets, such as software, of JPY1,149 million (JPY1,325 million for 1Q21), and proceeds from sales of tangible assets of JPY791 million (JPY584 million for 1Q21).

Net cash used in financing activities for 1Q22 was JPY7,875 million (net cash used in financing activities of JPY8,875 million for 1Q21), mainly due to payments of other financial liabilities of JPY4,819 million (JPY4,463 million for 1Q21), which included payments under operating lease contracts such as office rent and finance lease contracts such as network equipment, dividends paid of JPY2,258 million (JPY1,759 million for 1Q21) and repayments of long-term bank borrowings of JPY750 million (JPY4,085 million for 1Q21).

Future Prospects including FY2022 Financial Targets
1Q22 financial results were in line with our expectation. Therefore, financial targets for the fiscal year ending March 31, 2023 (FY2022) announced on May 13, 2022 remain unchanged.

Presentation
Presentation materials will be posted on our web site (https://www.iij.ad.jp/en/ir/) on August 5, 2022.
The materials can also be found in the following URL. http://ml.globenewswire.com/Resource/Download/d8c087ab-4ca8-4088-899d-67dbd89d895b 

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: [email protected] 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.

_________________________
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 The recruitment targets are on a non-consolidated basis.
5 A unit charge for interconnectivity data communications charge between mobile carriers such as NTT DoCoMo and MVNO such as IIJ. The unit price is per Mbps.

         
Condensed Consolidated Statements of Financial Position (Unaudited)    
         
    March 31, 2022   June 30, 2022
    Millions of yen   Millions of yen
Assets        
Current assets        
Cash and cash equivalents   47,391     42,557  
Trade receivables   37,649     34,435  
Inventories   2,608     3,304  
Prepaid expenses   13,553     16,893  
Contract assets   1,870     2,429  
Other financial assets   1,295     1,446  
Other current assets   119     122  
Total current assets   104,485     101,186  
Non-current assets        
Tangible assets   17,846     17,621  
Right-of-use assets   44,874     42,425  
Goodwill   9,479     9,765  
Intangible assets   16,424     16,125  
Investments accounted for using the equity method   5,830     5,717  
Prepaid expenses   10,452     10,575  
Contract assets   69     68  
Other investments   17,410     17,354  
Deferred tax assets   183     187  
Other financial assets   4,245     4,178  
Other non-current assets   508     529  
Total non-current assets   127,320     124,544  
Total assets   231,805     225,730  
         
         
    Millions of yen   Millions of yen
Liabilities and Equity        
Liabilities        
Current liabilities        
  Trade and other payables   20,742     19,393  
  Borrowings   16,370     16,620  
  Income taxes payable   5,795     1,853  
  Contract liabilities   9,571     10,699  
  Deferred income   65     69  
  Other financial liabilities   17,035     17,167  
  Other current liabilities   7,199     6,309  
Total current liabilities   76,777     72,110  
Non-current liabilities        
Borrowings   5,500     4,500  
Retirement benefit liabilities   4,395     4,371  
Provisions   786     787  
Contract liabilities   7,429     7,017  
Deferred income   340     326  
Deferred tax liabilities   641     210  
Other financial liabilities   30,146     28,679  
Other non-current liabilities   1,170     1,110  
Total non-current liabilities   50,407     47,000  
Total liabilities   127,184     119,110  
Equity        
Share capital   25,562     25,562  
Share premium   36,518     36,552  
Retained earnings   37,024     39,157  
Other components of equity   6,275     6,040  
Treasury shares   (1,851 )   (1,831 )
Total equity attributable to owners of the parent   103,528     105,480  
Non-controlling interests   1,093     1,140  
Total equity   104,621     106,620  
Total liabilities and equity   231,805     225,730  
         

 

Condensed Consolidated Statements of Profit or Loss (Unaudited)    
         
    Three Months Ended   Three Months Ended
    June 30, 2021   June 30, 2022
    Millions of yen   Millions of yen
Revenues        
Network services   31,475     33,234  
System integration   20,807     24,269  
ATM operation business   693     687  
Total revenues   52,975     58,190  
         
Cost of sales        
Cost of network services   (23,145 )   (24,431 )
Cost of systems integration   (17,959 )   (20,659 )
Cost of ATM operation business   (444 )   (400 )
Total cost of sales   (41,548 )   (45,490 )
Gross Profit   11,427     12,700  
             
Selling, general and administrative expense   (7,083 )   (7,858 )
Other operating income   52     194  
Other operating expenses   (36 )   (10 )
Operating Profit   4,360     5,026  
             
Finance income   1,361     1,747  
Finance expenses   (154 )   (136 )
Share of profit (loss) of investments accounted for using equity method   (217 )   (14 )
Profit (loss) before tax   5,350     6,623  
Income tax expense   (1,807 )   (2,136 )
Profit (loss) for the period   3,543     4,487  
         
Profit (loss) for the period attributable to:        
Owners of the parent   3,507     4,391  
Non-controlling interests   36     96  
Total   3,543     4,487  
         
Earnings per share        
Basic earnings per share (yen)   38.86     48.62  
Diluted earnings per share (yen)   38.67     48.38  
         

 

Condensed Consolidated Statements of Comprehensive Income (Unaudited)    
         
    Three Months Ended   Three Months Ended
    June 30, 2021   June 30, 2022
    Millions of yen   Millions of yen
Profit (loss)   3,543     4,487  
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
  834     (952 )
Total items that will not be reclassified to profit or loss   834     (952 )
Items that may be reclassified to profit or loss        
Exchange differences on translation of foreign operations   (5 )   702  
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     16  
Total of items that may be reclassified to profit or loss   8     717  
Total other comprehensive income, net of tax   842     (235 )
Other comprehensive income   4,385     4,252  
Other comprehensive income attributable to:        
Owners of the parent   4,349     4,156  
Non-controlling interest   36     96  
Other comprehensive income   4,385     4,252  
         

 

Condensed  Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)
Three months ended June 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)       3,507             3,507     36     3,543  
Other comprehensive income           842         842         842  
Total comprehensive income       3,507     842         4,349     36     4,385  
Transactions with owners                              
Issuance of common stock 16   (16 )               0         0  
Disposal of treasury shares   (6 )           23     17         17  
Dividends paid       (1,759 )           (1,759 )   (48 )   (1,807 )
Stock-based compensation   16                 16         16  
Total transactions with owners 16   (6 )   (1,759 )       23     (1,726 )   (48 )   (1,774 )
Balance, June 30, 2021 25,547   36,383     26,795     5,707     (1,852 )   92,580     1,003     93,583  
                               
                               
Three months ended June 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)       4,391             4,391     96     4,487  
Other comprehensive income           (235 )       (235 )       (235 )
Total comprehensive income       4,391     (235 )       4,156     96     4,252  
Transactions with owners                              
Disposal of treasury shares   12             20     32         32  
Dividends paid       (2,258 )           (2,258 )   (49 )   (2,307 )
Stock-based compensation   22                 22         22  
Total transactions with owners   34     (2,258 )       20     (2,204 )   (49 )   (2,253 )
Balance, June 30, 2022 25,562   36,552     39,157     6,040     (1,831 )   105,480     1,140     106,620  
                               

 

Condensed Consolidated Statements of Cash Flows (Unaudited)    
         
    Three Months Ended   Three Months Ended
    June 30, 2021   June 30, 2022
    Millions of yen   Millions of yen
Cash flows from operating activities:        
Profit (loss) before tax   5,350     6,623  
Adjustments        
Depreciation and amortization   6,606     7,055  
Loss (gain) on sales/disposals of property and equipment   30     (162 )
Shares of loss (profit) of investments
    accounted for using the equity method
  217     14  
Finance income   (1,326 )   (1,747 )
Finance expenses   142     136  
Other   27     41  
Changes in working capital        
Decrease (increase) in trade receivables   8,034     3,568  
Decrease (increase) in inventories   (187 )   (674 )
Decrease (increase) in prepaid expenses   (3,365 )   (3,289 )
Decrease (increase) in contract assets   (527 )   (558 )
Decrease (increase) in other assets   (30 )   (3 )
Decrease (increase) in other financial assets   (352 )   (117 )
Increase (decrease) in trade and other payables   (3,774 )   (832 )
Increase (decrease) in contract liabilities   578     554  
Increase (decrease) in deferred income   (3 )   (1 )
Increase (decrease) in other liabilities   (1,647 )   (943 )
Increase (decrease) in other financial liabilities   1,103     1,255  
Increase (decrease) in retirement benefit liabilities   99     (23 )
Subtotal   10,975     10,897  
Interest and dividends received   150     182  
Interest paid   (137 )   (133 )
Income taxes paid   (3,334 )   (6,091 )
Cash flows from operating activities   7,654     4,855  
Cash flows from investing activities        
Purchases of tangible assets   (2,839 )   (1,839 )
Proceeds from sales of tangible assets   584     791  
Purchases of intangible assets   (1,325 )   (1,149 )
Purchase of a subsidiary   (2,612 )    
Purchases of other investments   (346 )   (161 )
Proceeds from sales of other investments   35     9  
Payments for leasehold deposits and guarantee deposits   (11 )   (9 )
Proceeds from collection of leasehold deposits
    and guarantee deposits
  118     10  
Payments for refundable insurance policies   (19 )   (19 )
Other   1     1  
Cash flows from investing activities   (6,414 )   (2,366 )
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   (4,463 )   (4,819 )
Dividends paid   (1,759 )   (2,258 )
Other   (48 )   (48 )
Cash flows from financing activities   (8,875 )   (7,875 )
Effect of exchange rate changes on cash and cash equivalents   (1 )   552  
Net increase (decrease) in cash and cash equivalents   (7,636 )   (4,834 )
Cash and cash equivalents, beginning of the period   42,467     47,391  
Cash and cash equivalents, end of the period   34,831     42,557  
         

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:

Three months ended June 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 52,282   693     52,975  
Intersegment transactions 34     (34 )  
Total revenue 52,316   693   (34 )   52,975  
                   
Segment operating profit 4,189   195   (24 )   4,360  
               
Finance income             1,361  
Finance expense             (154 )
Share of profit (loss) of investments accounted for using the equity method             (217 )
Profit before tax             5,350  
               
               
Three months ended June 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 57,503   687     58,190  
Intersegment transactions 28     (28 )  
Total revenue 57,531   687   (28 )   58,190  
                   
Segment operating profit 4,809   237   (20 )   5,026  
               
Finance income             1,747  
Finance expense             (136 )
Share of profit (loss) of investments accounted for using the equity method             (14 )
Profit before tax             6,623  
               

 

Intersegment transactions are based on market price.

Subsequent Events

On August 5, 2022, IIJ’s board of directors resolved a stock split of its common stock, as follows.

1.  Purpose of stock split
     The purpose of the stock split is to increase the liquidity of IIJ’s common stock and expand its investor base by reducing the trading price per share of its common stock. As a result of the stock split, the investment unit amount of its common stock will be one half (1/2) of the previous amount.

2.  Overview of stock split

(1)  Method of the stock split    
  The record date of the stock split shall be Friday, September 30, 2022. Each share of IIJ’s common stock held by its shareholders written or recorded in the latest Registry of Shareholders as of the record date shall be split into two shares.
   
   
(2)   Number of shares to be increased by the stock split    
1 ) Total number of issued shares before the stock split: 93,534,800 shares  
2 ) Number of shares to be increased by the stock split: 93,534,800 shares  
3 ) Total number of issued shares after the stock split: 187,069,600 shares  
4 ) Total number of shares authorized to be issued after the stock split: 302,080,000 shares  
(Note) Total number of issued shares stated in the above could be increased as a result of exercise of stock acquisition rights.

 

(3)   Schedule of the stock split  
1 ) Public notice date of the record date: Thursday, September 15, 2022 (Scheduled)
2 ) Record date: Friday, September 30, 2022
3 ) Effective date: Saturday, October 1, 2022

3. Effect on per share information
    Assuming the stock split had been conducted at the beginning of the fiscal year ended March 31, 2021, basic earnings per share attributable to IIJ would have been as follows:

  Three months ended June 30, 2021 Three months ended June 30, 2022
Basic earnings per share (yen) 19.43 24.31

Note: The following information is provided to disclose Internet Initiative Japan Inc. (“IIJ”) financial results (unaudited) for the first three months ended June 30, 2022 (“1Q22”) in the form defined by the Tokyo Stock Exchange.

Consolidated Financial Results for the Three Months ended June 30, 2022 [Under IFRS]

August 5, 2022

Company name: Internet Initiative Japan Inc.
Exchange listed: Tokyo Stock Exchange
Ticker symbol: 3774
URL: https://www.iij.ad.jp/
Representative: Eijiro Katsu, President and Representative Director
Contact: Akihisa Watai, Senior Managing Director and CFO
TEL: (03) 5205-6500
Scheduled date for filing of quarterly report (Shihanki-houkokusho) to Japan’s regulatory organization: August 15, 2022
Scheduled date for dividend payment: –
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 Three Months ended June 30, 2022 (April 1, 2022 to June 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 %
Three Months ended June 30, 2022 58,190 9.8  5,026 15.3  6,623 23.8 4,487 26.6  4,391 25.2  4,252 (3.0 )
Three Months ended June 30, 2021 52,975 5.2  4,360 113.0  5,350 215.8 3,543 215.8  3,507 214.1  4,385 93.9  

  Basic earnings per share Diluted earnings per share  
  JPY JPY  
Three Months ended June 30, 2022 48.62  48.38   
Three Months ended June 30, 2021 38.86  38.67   

 

(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 June 30, 2022 225,730  106,620  105,480  46.7 
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
       
Fiscal Year Ending
March 31, 2023 (forecast)
  29.25  14.63 

(Notes)
1. Changes from the latest forecasts disclosed: Yes
2. IIJ plans 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, revised 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
Interim Period Ending September 30, 2022 117,000  7.3 10,700  15.0 10,300  (1.3 ) 6,800 (1.3 ) 37.65 
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)

  1. Changes from the latest forecasts disclosed: None
  2. IIJ plans a stock split at a ratio of two-for-one effective as of October 1, 2022. The basic earnings per share are calculated on the post-split basis.
  3. 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 June 30, 2022: 93,534,800 shares
As of March 31, 2022: 93,534,800 shares

ii. Number of treasury stock:
As of June 30, 2022: 3,185,828 shares
As of March 31, 2022: 3,221,667 shares

iii. Number of weighted average common shares outstanding:
For the three months ended June 30, 2022: 90,319,431 shares
For the three months ended June 30, 2021: 90,244,770 shares

* 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 August 5, 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 and the first quarter of 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 August 5, 2022.

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