Please note this report is a summary of disclosure documents prepared for the convenience of shareholders and other investors outside Japan. In the event of any discrepancy between the translation and the Japanese original, the latter shall prevail.
October 30, 2023
Consolidated Financial Statements for the First Half of the Fiscal Year Ending March 31, 2024 [Japanese standard]
INES Corporation
Listing: | Tokyo Stock Exchange (Code: 9742) |
Representative: | Koichi Yoshimura, President & Representative Director |
Contacts: | Satoshi Numazaki, Assistant General Manager, Corporate Staff Division |
Tel: +81-3-6864-3650 | |
Head Office: | 3-10-1, Harumi, Chuo-ku, Tokyo 104-0053, Japan |
Tel: +81-3-6864-3650 | |
URL: | https://www.ines.co.jp/en/ |
1. Consolidated Financial Results for the First Half of the Fiscal Year Ending March 31, 2024 (April 1, 2023 to September 30, 2023)
(1) Consolidated Operating Results
(Million yen, figures in percentages denote year-on-year changes.)
Net sales | Operating profit | Ordinary profit | Profit attributable to | |||||||||
owners of parent | ||||||||||||
Six months ended Sep. 30, 2023 | 19,612 | (1.9%) | 856 | (43.9%) | 890 | (43.0%) | 473 | (52.3%) | ||||
Six months ended Sep. 30, 2022 | 19,987 | 5.6% | 1,525 | 80.3% | 1,563 | 74.9% | 991 | 98.3% | ||||
(Note) Comprehensive income | Six months ended September 30, 2023: ¥612 million (-31.5%) | |||||||||||
Six months ended September 30, 2022: ¥895 million (29.3%) | ||||||||||||
Profit per share (Yen) | Fully diluted profit per share | |||||||||||
(Yen) | ||||||||||||
Six months ended Sep. 30, 2023 | 22.76 | ― | ||||||||||
Six months ended Sep. 30, 2022 | 47.68 | ― | ||||||||||
(2) Consolidated Financial Position | (Million yen) | |||
Total assets | Net assets | Equity ratio (%) | ||
As of September 30, 2023 | 53,243 | 36,394 | 68.4 | |
As of March 31, 2023 | 48,523 | 36,286 | 74.8 | |
(Reference) Shareholders' equity | As of September 30, 2023: ¥36,394 million | As of March 31, 2023: ¥36,286 million |
2. Dividends
Dividends per share (Yen) | |||||||
End of Q1 | End of Q2 | End of Q3 | Fiscal year end | Annual | |||
Fiscal year ended March 31, 2023 | ― | 20.00 | ― | 25.00 | 45.00 | ||
Fiscal year ending March 31, 2024 | ― | 25.00 | |||||
Fiscal year ending March 31, 2024 | ― | 25.00 | 50.00 | ||||
(Forecast) | |||||||
(Note) Revisions to dividend forecasts published most recently: Yes
The Company has decided to pay a second quarter-end dividend of ¥25 for the fiscal year ending March 31, 2024 (forecast). The second quarter-end dividend had been undecided. The annual dividend forecast, including the year-end dividend, remains unchanged. For details, please refer to the "Notice Concerning Determination of Dividends from Surplus (Interim Dividend) and Year-End Dividend Forecast" released today (October 30, 2023).
3. Forecasts for Consolidated Financial Results for the Fiscal Year Ending March 31, 2024 (April 1, 2023 to March 31, 2024)
(Million yen, figures in percentages denote year-on-year changes.)
Net sales | Operating profit | Ordinary profit | Profit attributable to | Profit per share | |||||
owners of parent | (Yen) | ||||||||
Full year | 41,500 | (2.1%) | 3,000 | (21.1%) | 2,800 | (27.9%) | 1,700 | (33.1%) | 81.72 |
(Note) Revisions to results forecasts published most recently: Yes
For details on the revisions to the consolidated financial results forecasts, please refer to the "Notice of Revision of Performance Forecast" released today (October 30, 2023).
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- Notes
- Significant changes in subsidiaries during the first half under review (changes in subsidiaries causing a change in the scope of consolidation): No
- Application of special accounting treatment to the preparation of consolidated financial statements: Yes
- Changes in accounting policies and changes or restatement of accounting estimates
- Changes in accounting policies associated with the revision of accounting standards, etc.: No
- Changes in accounting policies other than 1.: No
- Changes in accounting estimates Yes
- Restatement: No
- Number of shares outstanding (common shares)
- Number of shares outstanding at the term end (including treasury shares)
FY2024/3 H1: | 20,900,000 shares | |
FY2023/3: | 20,900,000 shares | |
2. | Number of treasury shares at the term end | |
FY2024/3 H1: | 96,137 shares | |
FY2023/3: | 104,676 shares | |
3. | Average number of shares outstanding | |
FY2024/3 H1: | 20,800,797 shares | |
FY2023/3 H1: | 20,794,180 shares |
- Quarterly consolidated financial statements are placed outside the scope of quarterly reviews performed by a certified public accountant or an audit corporation.
- Explanation regarding the proper use of results forecasts and other important notes
(Disclaimer regarding forward-looking statements)
Forward-looking statements such as results forecasts provided in this document are prepared based on currently available information and assumptions that are deemed reasonable, but the Company does not intend to guarantee their achievement. Actual results may differ significantly from the above forecasts for various reasons. For conditions regarding the assumptions for results forecasts and notes on the use of results forecasts, etc., please refer to page 5 of the accompanying materials "1. Qualitative Information on Financial Results for the First Half of the Fiscal Year Ending March 31, 2024, (3) Explanation on future forecast information such as consolidated results forecasts."
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1. Qualitative Information on Financial Results for the First Half of the Fiscal Year Ending March 31, 2024
- External environment and the Company's initiatives in the first half under review
During the first half under review, the severity of COVID-19 was downgraded to a category 5 infectious disease under the Infectious Diseases Control Law, and the Japanese economy staged a moderate recovery, with improvements in employment and income. Meanwhile, there were still downside risks to global economies, such as the prolonged Russia-Ukraine war and global inflation and monetary tightening. These factors put downward pressure on the Japanese economy.
In this environment, the Group has been conducting its businesses with a focus on three basic policy measures, supporting the standardization of local governments' WebRings information system to meet the national government's specifications, enhancing DX solutions and accelerating sustainable management, in the final year of its 2023 Medium-term Management Plan.
The Group is working on developing the WebRings information system to support the standardization of the local governments' system based on specifications prepared by the Ministry of Internal Affairs and Communications, while stepping up efforts to recruit more staff and improve quality. The Company established a business partnership with Japan Information Processing Service Co., Ltd. in the area of business for local governments. The companies will deal with the standardization, which will begin in earnest in fiscal 2024, and develop and provide next-generation services. Taking advantage of the partnership, the Group aims to expand market share and provide comprehensive support to customers.
To enhance DX solutions, the Group sought to develop and sell solutions, such as "AI Consultation Partner", which was jointly developed with Mitsubishi Research Institute, Inc., "Tetsuzuki Baton", which supports the digitalization of administrative procedures, and "Madoguchi Shien Service", which improves the efficiency of local governments' counter services.
In terms of the acceleration of sustainable management, the Company transitioned to a company with an audit and supervisory committee in June 2023 to enhance corporate governance. The Group is steadily working towards developing its human resources. The Company was selected as the Rising Star of the Year of AWS Japan Certification Award 2022. The award is presented by Amazon Web Services Japan G.K., which is involved in Gov-Cloud of the Digital Agency. The Company's active employee education and its employees' achievement of AWS certification were recognized. The Company will continue working to create an environment and culture in which all employees shine, grow sustainably and participate actively and move forward with sustainable management.
The Company established the Yaesu Office near Tokyo station in May this year. The office is positioned as a hub of all operations of the Company. The office serves as the central location for all Company operations. In September, the Company acquired an office building near Suitengumae Station. The office building will have the headquarters functions of INES Group companies. With this, the Group aims to make decisions about Group management more promptly, improve productivity, facilitate communication, strengthen the management base, and enhance corporate value.
(Note) The product names and company names above are trademarks or registered trademarks.
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(2) Details of operating results
Consolidated net sales for the first half under review decreased 1.9% year on year, to ¥19,612 million (please refer to "Consolidated net sales and operating profit in the first half of the past five fiscal years" and "Consolidated net sales by sector," which are shown in the tables below). Net sales in the Public sector came to ¥8,497 million, a decrease of 5.9% year on year, chiefly due to a decrease in sales from the development of welfare-related systems. Net sales in the Financial sector stood at ¥5,803 million, which was almost unchanged from the previous year, or up 0.2% year on year. Net sales in the General Industry sector rose 2.9% year on year, to ¥5,311 million, mainly reflecting the strong performance of cloud services.
On the profit front, operating profit decreased 43.9% year on year to ¥856 million and ordinary profit fell 43.0% year on year to ¥890 million, largely reflecting a decrease in sales in the Public sector and an increase in costs due to the opening of new sales offices. As a result, the Company recorded a profit attributable to owners of parent of ¥473 million (down 52.3% year on year).
Net sales and operating profit in the firsthalf of the past five fiscal years | (Million yen) | ||||||||||
1H of FY2019 | 1H of FY2020 | 1H of FY2021 | 1H of FY2022 | 1H of FY2023 | |||||||
Net sales | 19,822 | 19,716 | 18,923 | 19,987 | 19,612 | ||||||
Operating profit | 1,495 | 1,363 | 846 | 1,525 | 856 | ||||||
Consolidated net sales by sector | (Million yen) | ||||||||||
Six months ended September 30, 2022 | Six months ended September 30, 2023 | ||||||||||
Category/Term | YoY change (%) | ||||||||||
Amount | Composition ratio | Amount | Composition ratio | ||||||||
(%) | (%) | ||||||||||
Public | 9,030 | 45.2 | 8,497 | 43.3 | (5.9) | ||||||
Financial | 5,794 | 29.0 | 5,803 | 29.6 | 0.2 | ||||||
General industry | 5,163 | 25.8 | 5,311 | 27.1 | 2.9 | ||||||
Total | 19,987 | 100.0 | 19,612 | 100.0 | (1.9) | ||||||
(Note) Effective from the first quarter of the fiscal year under review, net sales of the Group companies that were included in Other previously have been reclassified and presented in the Public, Financial and General Industry sectors due to the restructuring of the Group's businesses. Net sales in the first half of the previous fiscal year are reclassified and presented in the same way.
Consolidated net sales by product/service | (Million yen) | ||||||
Six months ended September 30, 2022 | Six months ended September 30, 2023 | ||||||
Category/Term | YoY change (%) | ||||||
Amount | Composition ratio | Amount | Composition ratio | ||||
(%) | (%) | ||||||
System development | 7,749 | 38.8 | 7,261 | 37.0 | (6.3) | ||
System operation | 7,429 | 37.2 | 7,283 | 37.1 | (2.0) | ||
System maintenance | 2,388 | 11.9 | 2,410 | 12.3 | 0.9 | ||
Sales of information | 449 | 2.3 | 447 | 2.3 | (0.6) | ||
equipment | |||||||
Other | 1,970 | 9.8 | 2,210 | 11.3 | 12.1 | ||
Total | 19,987 | 100.0 | 19,612 | 100.0 | (1.9) | ||
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(3) Explanation on future forecast information such as consolidated results forecasts
The Company revises its net sales forecast due to expected decreases in local governments' investments in new systems and projects related to legal revisions, which are more than previously anticipated, in the Public sector before the full-scale standardization of operational systems at local governments from the next fiscal year.
It revises its forecasts for operating profit, ordinary profit and profit attributable to owners of parent due to the aforementioned expected decrease in net sales and expected additional expenses from the relocation from the rented Yokohama office, which is happening sooner than originally planned.
Revisions to forecasts for the consolidated financial results for the fiscal year ending March 31, 2024 (April 1, 2023 to March 31, 2024)
Profit attributable | |||||
Net sales | Operating profit | Ordinary profit | to owners of | Profit per share | |
parent | |||||
(Million yen) | (Million yen) | (Million yen) | (Million yen) | (Yen) | |
Before the revision (A) | |||||
(Announced on April | 43,000 | 4,000 | 4,000 | 2,600 | 125.03 |
28, 2023) | |||||
After the revision (B) | 41,500 | 3,000 | 2,800 | 1,700 | 81.72 |
Change (B-A) | (1,500) | (1,000) | (1,200) | (900) | |
Change (%) | (3.5) | (25.0) | (30.0) | (34.6) | |
Results in the previous | |||||
year (Fiscal year ended | 42,404 | 3,801 | 3,882 | 2,541 | 122.20 |
March 31, 2023) | |||||
The Company has decided to pay a second quarter-end dividend of ¥25 for the fiscal year ending March 31, 2024 (forecast). The second quarter-end dividend had been undecided. The annual dividend forecast, including the year-end dividend, remains unchanged.
(Caution on future forecast information)
Forward-looking statements such as results forecasts provided in this document are prepared based on currently available information and assumptions that are deemed reasonable, but the Company does not intend to guarantee their achievement. Actual results may differ significantly from the above forecasts for various reasons.
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Quarterly Consolidated Financial Statements and Important Notes
Quarterly consolidated balance sheet
As of March 31 and September 30, 2023
(Million yen) | ||
As of March 31, 2023 | As of September 30, 2023 | |
ASSETS | ||
Current assets | ||
Cash and deposits | 9,376 | 9,691 |
Notes and accounts receivable - trade, and | 11,960 | 8,205 |
contract assets | ||
Securities | 2,300 | - |
Work in process | 268 | 675 |
Raw materials and supplies | 66 | 59 |
Prepaid expenses | 454 | 481 |
Other | 514 | 679 |
Allowance for doubtful accounts | (16) | (13) |
Total current assets | 24,924 | 19,779 |
Non-current assets | ||
Property, plant and equipment | ||
Buildings and structures | 3,710 | 4,282 |
Accumulated depreciation | (3,204) | (3,303) |
Buildings and structures, net | 506 | 979 |
Tools, furniture and fixtures | 4,583 | 4,665 |
Accumulated depreciation | (3,494) | (3,600) |
Tools, furniture and fixtures, net | 1,089 | 1,065 |
Land | 3 | 5,281 |
Construction in progress | 1 | 3,953 |
Total property, plant and equipment | 1,600 | 11,279 |
Intangible assets | ||
Software | 2,241 | 2,303 |
Other | 24 | 23 |
Total intangible assets | 2,265 | 2,327 |
Investments and other assets | ||
Investment securities | 13,236 | 13,354 |
Long-term prepaid expenses | 678 | 657 |
Deferred tax assets | 4,490 | 4,428 |
Other | 1,328 | 1,415 |
Total investments and other assets | 19,733 | 19,856 |
Total non-current assets | 23,599 | 33,463 |
Total assets | 48,523 | 53,243 |
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Quarterly consolidated balance sheet
As of March 31 and September 30, 2023
(Million yen) | ||
As of March 31, 2023 | As of September 30, 2023 | |
LIABILITIES | ||
Current liabilities | ||
Accounts payable - trade | 2,006 | 1,840 |
Accrued expenses | 1,261 | 1,012 |
Income taxes payable | 908 | 564 |
Accrued consumption taxes | 363 | 209 |
Advances received | 191 | 597 |
Provision for bonuses | 959 | 955 |
Provision for bonuses for directors (and other | 73 | 39 |
officers) | ||
Provision for losses on orders received | 48 | 42 |
Asset retirement obligations | - | 27 |
Other | 601 | 801 |
Total current liabilities | 6,414 | 6,091 |
Non-current liabilities | ||
Long-term borrowings | - | 5,000 |
Provision for retirement benefits for directors | 102 | 107 |
(and other officers) | ||
Net defined benefit liability | 4,608 | 4,403 |
Asset retirement obligations | 276 | 430 |
Other | 834 | 815 |
Total non-current liabilities | 5,822 | 10,756 |
Total liabilities | 12,237 | 16,848 |
NET ASSETS | ||
Shareholders' equity | ||
Capital stock | 15,000 | 15,000 |
Capital surplus | 10,100 | 10,099 |
Retained earnings | 11,682 | 11,636 |
Treasury shares | (155) | (139) |
Total shareholders' equity | 36,627 | 36,596 |
Accumulated other comprehensive income | ||
Valuation difference on available-for-sale | (179) | (74) |
securities | ||
Remeasurements of defined benefit plans | (162) | (127) |
Total accumulated other comprehensive | (341) | (202) |
income | ||
Total net assets | 36,286 | 36,394 |
Total net assets and liabilities | 48,523 | 53,243 |
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Quarterly consolidated statement of income
For the six months ended September 30, 2022 and 2023
(Million yen) | ||
1H of FY2022 | 1H of FY2023 | |
(April 1, 2022 to | (April 1, 2023 to | |
September 30, 2022) | September 30, 2023) | |
Net sales | 19,987 | 19,612 |
Cost of sales | 15,384 | 15,492 |
Gross profit | 4,603 | 4,120 |
Selling, general and administrative expenses | 3,078 | 3,264 |
Operating profit | 1,525 | 856 |
Non-operating income | ||
Interest income | 24 | 26 |
Dividends income | 5 | 6 |
Other | 10 | 9 |
Total non-operating income | 41 | 42 |
Non-operating expenses | ||
Interest expenses | 0 | 0 |
Loss on investments in investment partnerships | - | 5 |
Other | 2 | 2 |
Total non-operating expenses | 2 | 8 |
Ordinary profit | 1,563 | 890 |
Extraordinary income | ||
Gain on liquidation of subsidiaries and associates | - | 18 |
Total extraordinary income | - | 18 |
Extraordinary losses | ||
Loss on retirement of non-current assets | 0 | 4 |
Total extraordinary losses | 0 | 4 |
Profit before income taxes | 1,563 | 905 |
Income taxes | 572 | 431 |
Profit | 991 | 473 |
Profit attributable to owners of parent | 991 | 473 |
8
Quarterly consolidated statement of comprehensive income
For the six months ended September 30, 2022 and 2023
(Million yen) | ||
1H of FY2022 | 1H of FY2023 | |
(April 1, 2022 to | (April 1, 2023 to | |
September 30, 2022) | September 30, 2023) | |
Profit | 991 | 473 |
Other comprehensive income | ||
Valuation difference on available-for-sale securities | (171) | 104 |
Remeasurements of defined benefit plans, net of tax | 74 | 34 |
Total other comprehensive income | (96) | 139 |
Comprehensive income | 895 | 612 |
Comprehensive income attributable | ||
Comprehensive income attributable to owners of parent | 895 | 612 |
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Quarterly consolidated statement of cash flow
For the six months ended September 30, 2022 and 2023
(Million yen) | ||
1H of FY2022 | 1H of FY2023 | |
(April 1, 2022 to | (April 1, 2023 to | |
September 30, 2022) | September 30, 2023) | |
Cash flows from operating activities | ||
Profit before income taxes | 1,563 | 905 |
Depreciation | 972 | 873 |
Increase (decrease) in provision for bonuses | (24) | (4) |
Increase (decrease) in provision for bonuses for directors (and other | (33) | (33) |
officers) | ||
Increase (decrease) in provision for loss on order received | (30) | (6) |
Increase (decrease) in provision for retirement benefits for directors | (11) | 4 |
(and other officers) | ||
Increase (decrease) in retirement benefit liability | (52) | (163) |
Loss (gain) on liquidation of subsidiaries and associates | - | (18) |
Loss on retirement of non-current assets | 0 | 4 |
Decrease (increase) in trade receivables | 1,759 | 4,161 |
Decrease (increase) in inventories | (280) | (400) |
Decrease (increase) in other assets | 33 | 1 |
Increase (decrease) in trade payables | (446) | (166) |
Increase (decrease) in other liabilities | (339) | (840) |
Other, net | 4 | 21 |
(Subtotal) | 3,114 | 4,336 |
Income taxes refund | 12 | 6 |
Income taxes paid | (544) | (773) |
Net cash provided by (used in) operating activities | 2,582 | 3,569 |
Cash flows from investing activities | ||
Net decrease (increase) in time deposits | - | 0 |
Net decrease (increase) in short-term investment securities | - | 2,300 |
Purchase of property, plant and equipment | (111) | (9,410) |
Purchase of intangible assets | (232) | (418) |
Purchase of long-term prepaid expenses | (117) | (137) |
Purchase of investment securities | (1) | (1) |
Proceeds from liquidation of subsidiaries and associates | - | 30 |
Payments of leasehold and guarantee deposits | (197) | (148) |
Proceeds from refund of leasehold and guarantee deposits | 55 | 60 |
Payments for asset retirement obligations | (1) | (2) |
Other, net | 9 | 1 |
Net cash provided by (used in) investing activities | (596) | (7,727) |
Cash flows from financing activities | ||
Proceeds from long-term borrowing | - | 5,000 |
Repayments of lease obligations | (8) | (7) |
Purchase of treasury shares | (1) | (1) |
Cash dividends paid | (415) | (518) |
Net cash provided by (used in) financing activities | (425) | 4,472 |
Net increase (decrease) in cash and cash equivalents | 1,560 | 315 |
Beginning cash and cash equivalent balance | 9,731 | 9,162 |
Ending cash and cash equivalent balance | 11,292 | 9,477 |
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