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Consolidated Cumulative Financial Results for the Third Quarter of the Fiscal year Ending March 31, 2021 [Japan GAAP]
February 10, 2021
Company name Code Number Representative Contactgeechs inc. 7060
Listing MarketFirst Section of Tokyo Stock Exchange URLhttps://geechs.com
President and CEO Director CFONaruhito Sonehara Daisuke Sakuma
(TEL)
+81-3-6690-6928
Scheduled date of filing of quarterly report:
February 10, 2021
Scheduled date of commencement of dividend payment
―
Preparation of supplementary materials for quarterly financial results ： YesHolding of quarterly financial results briefing：
None
(Figures are rounded down to the nearest million yen)
1. Consolidated Results for the Nine-Month Period Ended December 31, 2020
(April 1, 2020 - December 31, 2020)
(1) Consolidated Results of Operation
(Percentages indicate year-on-year changes)
Net Sales | Operating income | Ordinary income | Net income attributable to owners of parent Net income | |||||
3rd Quarter of Fiscal Year Ending March 31, 2021 3rd Quarter of Fiscal Year Ended March 31, 2020 | Millions of yen 1,933 2,730 | ％ △29.2 15.6 | Millions of yen 388 545 | ％ △28.8 13.8 | Millions of yen 366 546 | ％ △33.1 15.6 | Millions of yen 221 347 | ％ △36.5 △12.2 |
(Note)Comprehensive 3rd Quarter of Fiscal Year Ending March 31, 2021 | 221Millions of yen | △36.1 | (％) |
income | |||
347Millions of yen | △10.0 | (％) |
3rd Quarter of Fiscal Year Ended March 31, 2020
Net income per share | Diluted Net income per share | |
3rd Quarter of Fiscal Year Ending March 31, 2021 3rd Quarter of Fiscal Year Ended March 31, 2020 | Yen 21.18 33.74 | Yen 20.81 32.73 |
(Note) We conducted a 2-for-1 stock split of common stock on September 1, 2019. Accordingly, net income per share and fully diluted net income per share are calculated as if this stock split had taken place at the beginning of the previous fiscal year.
(2) Consolidated Financial Position
Total assets | Net assets | Equity Ratio | |
3rd Quarter of Fiscal Year Ending March 31, 2021 Fiscal Year Ended March 31, 2020 | Millions of yen 6,029 4,700 | Millions of yen 3,584 3,356 | ％ 59.4 71.4 |
(Reference)Shareholders' equity
3rd Quarter of Fiscal Year Ending March 31, 2021 3,584 Millions of yenFiscal Year Ended March 31, 2020
3,356 Millions of yen
2. Dividends
Dividend per share | |||||
1st Quarter- End | 2nd Quarter- End | 3rd Quarter- End | Year-End | Total | |
Fiscal Year Ended March 31, 2020 Fiscal Year Ending March 31, 2021 | Yen ― ― | Yen 0.00 0.00 | Yen ― ― | Yen 0.00 | Yen 0.00 |
Fiscal Year Ending March 31, 2021 (Forecast) | 0.00 | 0.00 |
：
(Note)Revisions to the most recently announced dividend forecast
None
3. Consolidated Financial Results Forecast for the Fiscal Year Ending March 31, 2021 (April 1, 2020 to March 31, 2021)
(Percentages indicate year-on-year changes)
Net Sales | Operating income | Ordinary income | Net income attributable to shareholders of the parent company | Net income per share | |||||
Full year | Millions of yen 3,450 | ％ △2.7 | Millions of yen 700 | ％ 2.3 | Millions of yen 675 | ％ △0.1 | Millions of yen 400 | ％ 2.4 | Yen 38.30 |
： None
(Note) Revisions to the most recently announced financial results forecast
* Notes
(1) Changes in Significant Subsidiaries during the Period ： None
(Changes in Specified Subsidiaries Resulting in Changes in the Scope of Consolidation) Newly added ― 、Excluded ―
(2) Adoption of Special Accounting Methods for Preparing Quarterly Consolidated Financial Statements
： None
(3) Changes in Accounting Policies, Changes in Accounting Estimates, and Correction of Errors
① Changes in accounting policies due to revisions to accounting standards, etc. ② Changes in accounting policies due to other reasons ③ Changes in accounting estimates ④ Restatements from prior period adjustments and correction of errors
： None
： None
： Yes
： None
(4) Number of shares outstanding (common stock)
① Number of shares outstanding at the end of the period (including treasury stock)
② Number of treasury stock at the end
of the period
③ Average number of shares during the
period (cumulative from the beginning of
the fiscal year)
3rd Quarter of Fiscal Year Ending March 31, 2021 | 10,485,000shares | Fiscal Year ended March 31, 2020 | 10,462,960shares |
3rd Quarter of Fiscal Year Ending March 31, 2021 | 40,031shares | Fiscal Year ended March 31, 2020 | 40,000shares |
3rd Quarter of Fiscal Year Ending March 31, 2021 | 10,438,455shares | 3rd Quarter of Fiscal Year Ended March 31, 2020 | 10,354,659shares |
We conducted a 2-for-1 stock split of common stock on September 1, 2019. Accordingly, the number of shares outstanding (including treasury stock) at the end of the period, the number of treasury stock at the end of the period, and the average number of shares during the period have been calculated assuming that such stock split was implemented at the beginning of the previous fiscal year.
※
This quarterly financial report is exempt from quarterly review by certified public accountants or auditing firms.
※ Cautionary statement with respect to financial forecasts
The financial forecasts as presented in this report are based on information currently available to us and on certain assumptions that we believe reasonable. Actual results may differ materially from the forecasts due to a variety of factors.
○ Contents of the attached materials
1. Qualitative Information on Quarterly Financial Results ....................................... 2
(1) Consolidated Results of Operation ........................................................... 2
(2) Financial Position .......................................................................... 3 (3) Explanation of Consolidated Financial Results Forecast and Other Forward-Looking
Information ................................................................................. 3
2. Quarterly Consolidated Financial Statements and Major Notes •••••••••••••••••••••••••••••••••• 4
(1) Quarterly Consolidated Balance Sheets ....................................................... 4 (2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of
Comprehensive Income ........................................................................ 6
(3) Notes on Quarterly Consolidated Financial Statements ........................................ 8
(Notes on Going Concern Assumption) ......................................................... 8
(Notes on Significant Changes in the Amount of Shareholders' Equity) ......................... 8
(Changes in Accounting Estimates) ........................................................... 8
(Segment Information) ....................................................................... 9
1. Qualitative Information on Quarterly Financial Results (1) Consolidated Results of Operation
Under geechs Inc.'s ("the Group") Grand Vision of "Make the biggest impression in the 21st century," we will leverage our IT Freelancers database and our human resources infrastructure, including the development of IT engineers who are active globally, to proactively grasp the lifestyles of people and the behavior of companies that are rapidly changing due to the spread of the internet, and leverage our ability to respond to change through the creation and evolution of services. We aim to continuously increase our corporate value by growing constantly. The Group consists of four business segments, including two subsidiaries. Each business segment is classified into four segments: "IT Freelance Matching Business," "IT Human Resource Development Business," "Game Business," and "x-Tech Business."
Effective from first quarter of the fiscal year ending March 31, 2021, the Company has changed the classification of its business segments and its reportable segments from the "Video Production Business" and "Internet Business" to the "x-Tech Business." The comparative analysis with the same period of the previous fiscal year is based on the new business segments.
During the nine months ended December 31, 2020 (April 1, 2020 to December 31, 2020), the drastic deterioration of the Japanese economy due to the spread of the new coronavirus infections has been prolonged, and the extremely severe situation has continued. As the spread of infectious diseases continues, there are growing concerns that the economy may fall further, and the uncertainty surrounding the future continues to increase.
At the same time, we recognize that the role that the Group should play will become more important in responding to the challenges faced by companies pursuing digital shifts, and individuals seeking new lifestyles and working methods amid the dramatic changes in the working environment itself, including efforts by companies to adapt to new lifestyles and the promotion of work style reforms.
Under these circumstances, the Group recorded net sales of ¥1,933 million (down 29.2% year-on-year), operating income of ¥388 million (down 28.8%), ordinary income of ¥366 million (down 33.1%), and net income attributable to owners of parent of ¥221 million (down 36.5%).
Results by business segment were as follows.
In the IT Freelance Matching Business, there was a trend of recovery on the demand for recruitment of human resources from companies that had been temporarily restrained due to the effects of the new coronavirus infectious disease. This is partly because of the stabilization of the shift of client companies to the remote work system.
While keeping down costs to attract customers, the Group worked to strengthen its support system by promoting DX, which develops the digitization of existing operations and provides optimal services; and by further expanding Frinove, a welfare services for IT Freelancers.
As a result, net sales in this business segment for the nine months ended December 31, 2020 were ¥1,061 million (up 9.4% year on year) and Segment income was ¥601 million (up 14.7%).
In the IT Human Resource Development Business, IT Study Abroad is a key feature ,which enables students to learn programming and English on an on-site basis. However, the impact of the new coronavirus infectious disease has made it difficult to travel from Japan since April 2020, and this has had a significant effect on our business. Under these circumstances, the Group worked to minimize its impact by providing online classes launched as a new service and focusing on offshore development.
As a result, net sales in this business segment for the nine months ended December 31, 2020 were ¥80 million (down 56.7% year on year) and segment loss was ¥9 million (segment income of ¥16 million in the same period of the previous fiscal year).
The business remained strong, not only due to the strong consumption trend by staying home caused by the effects of the new coronaviral infectious disease, but also due to the strong sales of operating titles. In this business segment, we are managing three titles, including "IDOLiSH7", which we developed on a consignment basis from BANDAI NAMCO Online Inc., and developing five new titles. As the number of developed titles are increasing, we are focusing on appropriate resource control according to the situation.
As a result, net sales in this business segment for the nine months ended December 31, 2020 were ¥587 million (down 58.6% year on year) and segment income was ¥42 million (down 83.9%).
In the x-Tech Business, the Group is engaged in the production of video content utilizing cutting-edge technologies such as VR (virtual reality), AR (augmented reality), MR (Mixed Reality), and 3D hologram, as well as the management of the "Gridge" golf media and supporting the IT adoption and diffusion by companies in the sports field, including golf.
As a result, net sales in this business segment for the nine months ended December 31, 2020 were ¥207 million (up 30.1% year on year) and segment loss was ¥6 million (segment loss of ¥17 million for the same period of the previous fiscal year).
(2) Financial Position
(Current Assets)
The balance of current assets at the end of the third quarter of the current fiscal year was ¥5,521 million, an increase of ¥1,240 million from the end of the previous fiscal year. This was mainly due to a ¥1,011 million increase in work in process.
(Fixed Assets)
The balance of non-current assets at the end of the third quarter of the current fiscal year was ¥508 million, an increase of ¥89 million from the end of the previous fiscal year. This was mainly due to an increase of ¥79 million in investment securities.
(Current liabilities)
The balance of current liabilities at the end of the third quarter of the current fiscal year was ¥2,389 million, an increase of ¥1,104 million from the end of the previous fiscal year. This was mainly due to a ¥1,075 million increase in advances received.
(Non-current liabilities)
The balance of non-current liabilities at the end of the third quarter of the current fiscal year was ¥55 million, a decrease of ¥3 million from the end of the previous fiscal year. This was mainly due to a ¥3 million decrease in lease obligations.
(Net Assets)
The balance of net assets at the end of the third quarter of the current fiscal year was ¥3,584 million, an increase of ¥227 million from the end of the previous fiscal year. This was mainly due to increases of ¥6 million in common stock and additional paid-in capital and ¥221 million in retained earnings.
(3) Explanation of Consolidated Financial Results Forecast and Other Forward-Looking
Information
With regard to the consolidated financial results forecast for the fiscal year ending March 31, 2021, there are no changes to the full-year financial results forecast announced in the "Notice Concerning Differences between the Consolidated Financial Results Forecast for the Six Months Ending March 31, 2021 and Revisions to the Consolidated Financial Results Forecast for the Fiscal Year Ending March 31, 2021" issued on November 12, 2020.
2. Quarterly Consolidated Financial Statements and Major Notes (1) Quarterly Consolidated Balance Sheets
(Thousand yen)Previous consolidated fiscal year
(As at March 31, 2020)
3rd Quarter
(As at December 31, 2020)
Assets | ||
Current assets | ||
Cash and deposits | 2,559,268 | 2,860,505 |
Accounts receivable | 1,280,365 | 1,111,297 |
Merchandise | 66 | - |
Work in process | 364,943 | 1,376,906 |
Supplies | 423 | 427 |
Advance payment | 927 | - |
Prepaid expenses | 65,295 | 98,675 |
Other | 18,888 | 76,777 |
Allowance for doubtful accounts | △8,970 | △3,167 |
Total current assets | 4,281,208 | 5,521,422 |
Fixed assets | ||
Property, plant and equipment | ||
Buildings and structures, net | 113,344 | 91,849 |
Tools, furniture and fixtures, net | 14,131 | 9,137 |
Lease assets, net | - | 7,266 |
Total property, plant and equipment, net | 127,475 | 108,252 |
Intangible assets | ||
Software | 584 | 1,135 |
Total intangible assets | 584 | 1,135 |
Investments and other assets | ||
Investment securities | 30,080 | 109,912 |
Lease and guarantee deposits | 221,794 | 221,673 |
Long-term prepaid expenses | 1,774 | 10,911 |
Deferred tax assets | 37,390 | 56,434 |
Total investments and other assets | 291,040 | 398,932 |
Total fixed assets | 419,100 | 508,320 |
Total assets | 4,700,309 | 6,029,742 |
(Thousand yen)Previous consolidated fiscal year
(As at March 31, 2020)
3rd Quarter
(As at December 31, 2020)
Liabilities | ||
Current liabilities | ||
Accounts payable | 811,911 | 802,076 |
Accounts payable- other | 33,113 | 30,398 |
Accrued expenses | 28,130 | 52,084 |
Income taxes payable | 90,533 | 72,799 |
Accrued consumption taxes | 39,145 | 76,794 |
Deposits received | 27,914 | 41,510 |
Advance received | 203,471 | 1,279,267 |
Unearned revenue | 25,734 | 23,447 |
Asset retirement obligations | 12,248 | - |
Lease obligations | 13,152 | 11,552 |
Total current liabilities | 1,285,357 | 2,389,931 |
Long-term liabilities | ||
Lease obligations | 3,214 | - |
Asset retirement obligations | 55,504 | 55,623 |
Total long-term liabilities | 58,719 | 55,623 |
Total liabilities | 1,344,076 | 2,445,554 |
Net assets | ||
Shareholders' equity | ||
Paid-in capital | 1,086,015 | 1,089,034 |
Capital surplus | 1,035,958 | 1,038,977 |
Retained earnings | 1,256,587 | 1,477,682 |
Treasury stock | △21,000 | △21,040 |
Total shareholders' equity | 3,357,560 | 3,584,655 |
Accumulated other comprehensive income | ||
Foreign currency translation adjustments | △1,495 | △431 |
Total incomeaccumulatedothercomprehensive | △1,495 | △431 |
Non-controlling interests | 167 | △35 |
Total net assets | 3,356,232 | 3,584,188 |
Total liabilities and net assets | 4,700,309 | 6,029,742 |
(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income
Consolidated Statements of Income
3rd Quarter Consolidated Cumulative Period
(Thousand yen)Previous 3rd Quarter Consolidated Cumulative
Period
(April 1, 2019 to December 31, 2019)
3rd Quarter Consolidated
Cumulative Period
(April 1, 2020 to December 31, 2020)
Net sales | 2,730,488 | 1,933,687 |
Cost of sales | 1,179,618 | 568,612 |
Gross profit | 1,550,869 | 1,365,075 |
Selling, general and administrative expenses | 1,005,843 | 976,912 |
Operating income | 545,026 | 388,163 |
Non-operating income | ||
Interest income | 56 | 49 |
Lecture fee income | - | 100 |
Gain on transfer of content rights | 4,500 | - |
Late charge | - | 313 |
Other | 180 | - |
Total non-operating income | 4,736 | 463 |
Non-operating expenses | ||
Interest expenses | 201 | - |
Foreign exchange losses | 1,155 | 4,951 |
Stock issuance expenses | 1,568 | 51 |
Market change costs | - | 15,859 |
Commitment fee | - | 1,697 |
Other | - | 0 |
Total non-operating expenses | 2,925 | 22,559 |
Ordinary income | 546,837 | 366,067 |
Income before income taxes | 546,837 | 366,067 |
Income taxes - current | 147,416 | 164,173 |
Income taxes - deferred | 51,396 | △18,993 |
Total income taxes | 198,813 | 145,179 |
Net income | 348,024 | 220,887 |
Net income (loss) attributable controlling interests (△) tonon- | 42 | △207 |
Net income attributable to owners of parent | 347,981 | 221,095 |
Consolidated Statements of Comprehensive Income
3rd Quarter Consolidated Cumulative Period
Net income | 348,024 | 220,887 |
Other comprehensive income | ||
Foreign currency translation adjustments | △827 | 1,064 |
Total other comprehensive income | △827 | 1,064 |
Comprehensive income | 347,196 | 221,952 |
(Comprehensive income attributable to) | ||
Comprehensive income attributable to owners of parent | 347,158 | 222,153 |
Comprehensive income attributable to non- controlling interests | 37 | △201 |
(Thousand yen) | |
Previous 3rd Quarter | 3rd Quarter |
Consolidated Cumulative | Consolidated Cumulative |
Period | Period |
(April 1, 2019 | (April 1, 2020 |
to December 31, 2019) | to December 31, 2020) |
-7- |
(3) Notes on Quarterly Consolidated Financial Statements
(Notes on Going Concern Assumption)
Not applicable.
(Notes on Significant Changes in the Amount of Shareholders' Equity)
Not applicable.
(Changes in Accounting Estimates)
(Changes in useful lives)
During the nine months ended December 31, 2020, the Group decided to cancel a portion of its head office, and therefore reviewed the useful lives of fixed assets that are not expected to be used after its cancellation. In addition, the expected period of use of asset retirement obligations, which had been recorded as an obligation to restore properties to their original state under the real estate lease agreement for the head office, was changed. As a result, compared with the previous method, operating income, ordinary income, and income before income taxes for the nine months ended December 31, 2020 each decreased by ¥23 million.
(Segment Information)
Previous 3rd Quarter (From April 1, 2019 to December 31, 2019)
1. Information on Net Sales and Income (Loss) by Reportable Segment
(Thousand yen)
Reportable segments | Total | Adjustment (Note 1) | Quarter Consolidated Statements of Income (Note 2) | ||||
IT Freelance Matching Business | IT Human Resource Development Business | Game Business | x-Tech Business | ||||
Net Sales Net Sales to External Customers Inter-segment Net Sales or Transfer | 970,060 - | 181,362 4,777 | 1,419,950 - | 159,115 - | 2,730,488 4,777 | - △ 4,777 | 2,730,488 - |
Total | 970,060 | 186,139 | 1,419,950 | 159,115 | 2,735,265 | △ 4,777 | 2,730,488 |
Segment income Or loss (△) | 524,177 | 16,176 | 267,048 | △ 17,624 | 789,778 | △ 244,751 | 545,026 |
Consolidated
(Note) (1) The adjustment for segment income (loss) △ 244 million yen includes corporate expenses of △263 million yen that are not allocated to each reportable segment and elimination of inter-segment transactions of 18 million yen.
(2) The total of segment income (loss) and adjustments are adjusted with operating income in the quarterly consolidated statements of income.
3rd Quarter (From April 1, 2020 to December 31, 2020)
1. Information on Net Sales and Income (Loss) by Reportable Segment
(Thousand yen)
Reportable segments | Total | Adjustment (Note 1) | Quarter Consolidated Statements of Income (Note 2) | ||||
IT Freelance Matching Business | IT Human Resource Development Business | Game Business | x-Tech Business | ||||
Net Sales Net Sales to External Customers Inter-segment Net Sales or Transfer | 1,061,481 - | 77,771 2,744 | 587,432 - | 207,002 - | 1,933,687 2,744 | - △2,744 | 1,933,687 - |
Total | 1,061,481 | 80,515 | 587,432 | 207,002 | 1,936,431 | △2,744 | 1,933,687 |
Segment income Or loss (△) | 601,192 | △9,546 | 42,882 | △6,860 | 627,668 | △239,505 | 388,163 |
Consolidated
(Note) (1) The adjustment of segment income or loss △ 239 million yen includes corporate expenses of △256 million yen that are not allocated to each reportable segment and elimination of inter-segment transactions of 17 million yen.
(2) The total of segment income (loss) and adjustments are adjusted with operating income in the quarterly consolidated statements of income.
2. Matters Related to Changes in Reportable Segments
Effective from the first quarter of the fiscal year ending March 31, 2021, the former "Video Production Business" and "Internet Business" have been merged to "x-Tech Business" due to changes in our internal organization. Segment information for the first nine months of the fiscal year ended March 31, 2020 is prepared based on the segment classification after the change.