インソース（6200） – 2Q FY2021 Consolidated Financial Results [JGAAP]

2Q FY21 2Q FY20 2Q FY2021 2Q FY2020 2. Dividends FY20 Full-year FY21 Full-year FY21 (forecast) Disclaimer: This document is a translation of the Japanese original for reference purposes only. 2Q FY2021 Consolidated Financial Results [JGAAP] Company Name: Insource Co., Ltd. Code number: Representative: Takayuki Funahashi, Representative Director, President and CEO Contact: Shigeo Fujimoto, Director, Executive Officer, and CFO URL: https://www.insource.co.jp/index.html 6200 TEL. +81-3-5577-2283 Stock Exchange Listing: Tokyo May 9, 2022 Scheduled date to submit the Quarterly Securities Report: May 12, 2022 Scheduled date to commence dividend payments: ― Availability of supplementary briefing material on quarterly results: Yes Scheduled date of Quarterly Results Briefing Session: Scheduled (Intended for analysts) 1. 2Q FY21 Consolidated Financial Results (October 1, 2021 – March 31, 2022) (1) Consolidated Financial Results (cumulative) (% indicates changes from the previous year) (Amounts are rounded down to the nearest million yen) Net sales Operating profit Ordinary profit mil yen 4,510 3,673 % 22.8 26.4 mil yen 1,674 1,257 % 33.2 101.3 mil yen 1,658 1,273 % 30.2 104.3 Profit attributable to owners of parent mil yen 1,136 823 % 38.0 95.6 (Note) Comprehensive income: 2Q FY21 1,135 million yen (37.4%) 2Q FY20 825 million yen (98.0%) Earnings per share Fully diluted earnings per share yen sen 26.99 19.67 yen sen 26.98 19.65 (Note) We conducted a stock split on January 1, 2021, whereby each share of common stock was split into two shares. In the above, “Earnings per share” and “Fully diluted earnings per share” are calculated on the assumption that the said stock split was conducted at the beginning of the previous consolidated fiscal year. (2) Consolidated Financial Position Total assets Net assets Equity ratio 2Q FY21 FY20 (Full-year) (Reference) Shareholders’ equity: 2Q FY21 mil yen 7,611 6,766 mil yen 5,004 4,500 % 65.7 66.5 5,004 million yen FY20 4,500 million yen End of Q1 End of 2Q Annual cash dividends per share End of Q3 Year-end yen sen － － yen sen 0.00 0.00 yen sen － － yen sen 15.50 17.00 Annual yen sen 15.50 17.00 (Note) Revisions of dividend forecast from recently announced figures: None 3. Consolidated Financial Forecast for FY21 (October 1, 2021 – September 30, 2022) Net sales Operating profit Ordinary profit FY21 Full-year % 18.6 (Note) Revisions of the forecast of financial results from recently announced figures: None mil yen 2,600 mil yen 8,900 mil yen 2,600 % 8.1 % 7.6 * Notes (1) Significant changes in subsidiaries during 2Q FY21 (changes in specific subsidiaries involving changes in the scope of consolidation): None (% indicates changes from the previous year) Profit attributable to owners of parent Earnings per share yen sen mil yen 41.53 1,770 % 12.7 (2) Specific accounting methods for quarterly consolidated financial statements: Yes (Note) For details, please refer to “2. Quarterly Consolidated Financial Statements and Notes (4) Notes to Quarterly Consolidated Financial Statements (Application of Special Accounting Methods for the Preparation of Quarterly Consolidated Financial Statements)” on page 8 of the attached materials. (3) Changes in accounting policies, estimates, and restatements (i) Changes in accounting policies due to the revision of accounting standards (ii) Changes in accounting policies other than (3)-(i) (iii) Changes in accounting estimates (iv) Restatements : Yes : None : None : None (4) Total number of issued shares (common stocks) (i) Total number of issued shares at the end of the period (including treasury stocks) (ii) Total number of treasury stocks at the end of the period 2Q FY21 42,621,500 shares FY20 42,621,500 shares 2Q FY21 526,511 shares FY20 529,534 shares (iii) Average number of shares during the period 2Q FY21 42,091,545 shares 2Q FY20 41,864,030 shares (Note) We conducted a stock split on January 1, 2021, whereby each share of common stock was split into two shares, and the above calculations are based on the assumption that the stock split was conducted at the beginning of the previous consolidated fiscal year. * These quarterly consolidated financial results are outside the scope of an audit by certified public accountants and audit corporations. * Explanation for the appropriate use of financial forecasts and other special notes: (Cautionary note on forward-looking statement) The statements regarding the forecast of financial results in this report are based on the information that is available to the Company, as well as certain assumptions that are deemed to be reasonable by management, and they are not meant to be a commitment by the Company. Therefore, there might be cases in which actual results differ materially from forecast figures due to various factors. For details, please refer to “1. Qualitative Information on Quarterly Financial Results (3) Consolidated Financial Forecasts” on page 3 of the attached materials. (How to obtain supplementary explanatory materials for financial results) Supplementary briefing material on quarterly results is disclosed via TDnet on the same day. Table of Contents 1. Qualitative Information on Quarterly Financial Results…………………………………………………………………….. (1) Overview of Business Results……………………………………………………………………………………………. 2 (2) Overview of Financial Position…………………………………………………………………………………………… 2 (3) Consolidated Financial Forecasts…………………………………………………………….…………………………… 3 4 2. Quarterly Consolidated Financial Statements and Notes…………………………………………………………………….. (1) Quarterly Consolidated Balance Sheets………………………………………………………………………………….. (2) Quarterly Consolidated Statements of Income and Comprehensive Income……………………………………………… 5 5 Quarterly Consolidated Statements of Income Consolidated Period of 2Q……………………………………………………………………………………………… Quarterly Consolidated Statements of Comprehensive Income Consolidated Period of 2Q……………………………………………………………………………………………… (3) Quarterly Consolidated Cash Flows Statements (4) Notes to Quarterly Consolidated Financial Statements…………………………………………………………………… 8 (Notes related to the Going Concern Assumption)………………………………………………………………………… 8 (Notes to Significant Changes in the Amount of Shareholders’ Equity)………………………………………………….. 8 8 (Application of Special Accounting Methods for the Preparation of Quarterly Consolidated Financial Statement) (Additional Information) ………………………………………………………………………………………………… (Segment Information) …………………………………………………………………………………………………… 8 8 (Significant Subsequent Events) ………………………………………………………………………………………… 2 4 5 6 6 7 8 – 1 – 1． Qualitative Information on Quarterly Financial Results (1) Description of Business Results In the first half of the current fiscal year (October 1, 2021 to March 31, 2022), due to the impact of the sixth wave of the COVID-19 on the career training market, needs for face-to face training declined again, while demands for non-face-to-face services increased such as online training and e-learning/videos. In response to this situation, the Group strengthened the provision of non-face-to-face services and the development of new training contents and services., such as online training, ‟Leaf” (HR support system, LMS (*1)), and e-learning/videos. As for On-Site Training business, despite postponements and cancellations mainly by the public sector, online trainings and DX trainings to private sector, which have a high unit price, increased. Therefore, the total number of trainings conducted increased by 14.2% YoY. In addition, the online composition ratio was 60.3%. For Open Seminars business, DX trainings, including a programming course “Python Academy”, and new various trainings via online performed well, and the total number of attendees increased by 20.4% YoY. In addition, the online composition ratio was 90.3%, maintaining a high level. About IT Services, the number of paid organizations for ‟Leaf” increased to 470 (+137, + 41.1% YoY). Total users exceed 1.93 million as of the end of March 2022, and Leaf`s monthly subscription fees (MRR (*2)) have increased steadily, with ARR (*3) increasing 44.1% YoY to 572 million yen. The number of customizations increased 50.0% YoY due to an increase in the introduction of optional functions and an increase in requests for individual customization from large enterprises. In Other Businesses, highly profitable e-learning/videos’ sales increased by 102.1% YoY due to the fiscal-year-end demands of clients and demands for the latest contents in response to legal revisions in April. In addition to the increase in net sales, improvement in gross profit margin and curbed labor costs, as the number of consolidated employees was lower than planned, increased operating profit. As a result of the above, for the first half of the fiscal year, net sales are 4,510,021 thousand yen (+ 22.8% YoY), operating profit is 1,674,849 thousand yen (+ 33.2% YoY), ordinary profit is 1,658,782 thousand yen (+ 30.2%YoY), and profit attributable to owners of parent is 1,136,219 thousand yen (+ 38.0% YoY). *1:LMS (Learning Management System): A system necessary for implementing e-learning. *2:MRR: Monthly Recurring Revenue *3:ARR: Annual Recurring Revenue. Calculated by multiplying the MRR of the last month of each term by 12. ■Net sales by business for the first half of FY21 (Unit: thousand yen) 2Q FY21 (Oct. 1, 2021 – Mar. 31, 2022) YoY (%) 2Q FY20 (Oct. 1, 2020 -Mar. 31, 2021) Business On-Site Training Open Seminars IT Service Other Businesses Total 2,123,224 984,236 687,083 715,476 4,510,021 115.5 115.8 125.1 164.2 122.8 1,838,831 850,095 549,311 435,678 3,673,917 (Note)1. Since our Group has a single business segment, which is the education service business, the information herein is presented by business category instead of the segment. (2) Overview of Financial Position (Assets) Total assets at the end of the second quarter of the current fiscal year increased by 844,881 thousand yen compared to the end of the previous fiscal year to 7,611,586 thousand yen, mainly due to an increase of 419,940 thousand yen in cash and deposits. (Liabilities) Total liabilities at the end of the second quarter of the current fiscal year increased by 341,044 thousand yen compared to the end of the previous fiscal year to 2,607,324 thousand yen, mainly due to an increase of 500,000 thousand yen in short-term borrowing. (Net Assets) Net assets at the end of the second quarter of the current fiscal year increased by 503,837 thousand yen compared to the end of the previous fiscal year to 5,004,261 thousand yen. This was mainly due to an increase of 483,794 thousand yen in retained earnings. – 2 – (3) Consolidated Financial Forecasts There is no change to the full-year consolidated financial forecast for FY21 announced on January 24, 2022. The forecasts are based on information available at the time of preparation and actual results may differ from these forecasts due to various factors in the future. – 3 – 2. Quarterly Consolidated Financial Statements and Notes (1) Quarterly Consolidated Balance Sheets (Unit: thousand yen) FY20 (As of Sep. 30, 2021) 2Q FY21 (As of Mar. 31, 2022) Assets Current assets Cash and deposits Accounts receivable – trade Inventories Other Allowance for doubtful accounts Total current assets Non-current assets Property, plant and equipment Land Other, net Total property, plant and equipment Intangible assets Leasehold interests in land Goodwill Software Other Total intangible assets Investments and other assets Total non-current assets Total assets Liabilities Current liabilities Accounts payable – trade Short-term borrowings Accounts payable – other Income taxes payable Advances received Provision for bonuses Other Total current liabilities Non-current liabilities Asset retirement obligations Other Total non-current liabilities Total liabilities Net assets Shareholders’ equity Share capital Capital surplus Retained earnings Treasury shares Total shareholders’ equity Accumulated other comprehensive income Valuation difference on available-for-sale securities Total accumulated other comprehensive income Total net assets Total liabilities and net assets – 4 – 2,624,111 882,846 51,283 203,441 (1,994) 3,759,687 1,179,658 700,019 1,879,678 305,984 53,120 92,624 951 452,680 674,658 3,007,017 6,766,705 114,029 2,340 399,621 758,874 599,026 － 328,417 2,202,311 59,504 4,465 63,969 2,266,280 800,623 854,983 3,313,927 (472,612) 4,496,921 3,503 3,503 4,500,424 6,766,705 3,044,051 1,075,467 20,990 203,742 (1,560) 4,342,691 1,179,658 1,050,614 2,230,273 305,984 44,619 102,478 152 453,235 585,386 3,268,894 7,611,586 95,208 502,340 556,767 571,376 598,319 6,000 225,299 2,555,310 48,719 3,295 52,014 2,607,324 800,623 862,213 3,797,722 (458,734) 5,001,824 2,437 2,437 5,004,261 7,611,586 (2) Quarterly Consolidated Statements of Income and Comprehensive Income (Quarterly Consolidated Statements of Income) (For the six months ended March 31, 2022) (Unit: thousand yen) 2Q FY20 (Oct. 1,2020- Mar. 31, 2021) 2Q FY21 (Oct. 1,2021- Mar. 31, 2022) Net sales Cost of sales Gross profit Selling, general and administrative expenses Operating profit Non-operating income Interest income Dividend income Foreign exchange gains Subsidies for employment adjustment Subsidy income Income from sales of goods Other Total non-operating income Non-operating expenses Interest expenses Loss on extinguishment of stock-based compensation expenses Total non-operating expenses Ordinary profit Extraordinary losses Loss on valuation of investment securities Impairment losses Total extraordinary losses Profit before income taxes Income taxes Profit Profit attributable to owners of parent 3,673,917 847,996 2,825,920 1,568,792 1,257,128 255 71 213 12,600 3,216 － 768 17,125 437 － 437 1,273,816 50,859 12,199 63,059 1,210,757 387,458 823,299 823,299 4,510,021 1,012,065 3,497,956 1,823,107 1,674,849 17 78 455 － － 1,444 1,679 3,675 349 19,393 19,742 1,658,782 － － － 1,658,782 522,562 1,136,219 1,136,219 – 5 – (Quarterly Consolidated Statements of Comprehensive Income) (For the three months ended March 31, 2022) (Unit: thousand yen) 2Q FY20 (Oct. 1,2020- Mar. 31, 2021) 2Q FY21 (Oct. 1,2021- Mar. 31, 2022) Profit Other comprehensive income Valuation difference on available-for-sale securities Total other comprehensive income Comprehensive income Comprehensive income attributable to Comprehensive income attributable to owners of parent Comprehensive income attributable to non-controlling interests 823,299 2,619 2,619 825,919 825,919 － 1,136,219 (1,065) (1,065) 1,135,154 1,135,154 － – 6 – (3) Quarterly Consolidated Statements of Cash Flows (Unit: thousand yen) 2Q FY20 (Oct. 1,2020- Mar. 31, 2021) 2Q FY21 (Oct. 1,2021- Mar. 31, 2022) Cash flows from operating activities Profit before income taxes Depreciation Amortization of goodwill Share-based payment expenses Impairment losses Loss (gain) on valuation of investment securities Increase (decrease) in allowance for doubtful accounts Interest and dividend income Foreign exchange losses (gains) Decrease (increase) in trade receivables Decrease (increase) in inventories Increase (decrease) in trade payables Other, net Subtotal Interest and dividends received Interest paid Income taxes paid Net cash provided by (used in) operating activities Cash flows from investing activities Purchase of investment securities Purchase of property, plant and equipment Purchase of intangible assets Proceeds from sale of shares of subsidiaries and associates Payments of leasehold and guarantee deposits Proceeds from refund of leasehold and guarantee deposits Other, net Net cash provided by (used in) investing activities Cash flows from financing activities Increase (decrease) in short-term borrowings Repayments of long-term borrowings Purchase of treasury shares Proceeds from disposal of treasury shares Dividends paid Net cash provided by (used in) financing activities Effect of exchange rate change on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period 1,210,757 46,763 4,606 － 12,199 50,859 1,058 (326) (213) (148,287) 1,825 (10,009) (75,181) 1,094,052 326 (437) (20,188) 1,073,752 (30,056) (438,598) (302,906) 22,768 (21,789) 3,165 7,308 (760,109) 700,000 － (702) 937 (387,152) 313,081 213 626,937 2,219,868 2,846,806 1,658,782 66,772 8,500 68,918 － － (433) (95) (455) (192,621) 30,293 (18,821) (10,087) 1,610,751 95 (349) (717,967) 892,530 (4,553) (320,290) － － (8,407) 35,341 (21,318) (319,228) 500,000 (1,170) (694) 472 (652,425) (153,817) 455 419,940 2,624,111 3,044,051 – 7 – (4) Notes to Quarterly Consolidated Financial Statements (Notes related to the Going Concern Assumption) Not applicable (Notes to Significant Change in the Amount of Shareholders’ Equity) Not applicable (Application of Special Accounting Methods for the Preparation of Quarterly Consolidated Financial Statement) (Calculating Tax Expense) Tax expenses are calculated by reasonably estimating the effective tax rate after applying tax effect accounting to income before income taxes for the fiscal year, including the first quarter under review, and multiplying quarterly income before income taxes by the effective tax rate. (Changes in Accounting Principles) (Application of Accounting Standard for Revenue Recognition, etc.) The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31,2020) (hereinafter referred to as “Revenue Recognition Accounting Standards”), etc. from the beginning of the first quarter of FY21 and recognizes revenue as the amount expected to be received in exchange for the promised goods or services when the control of the goods or services is transferred to the customer. This has no impact on the quarterly consolidated financial statements. (Application of Accounting Standard for Fair Value Measurement, etc.) The Company has applied the “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4,2019) (hereinafter, “Fair Value Measurement Accounting Standards”), etc. from the beginning of the first quarter of FY21. In accordance with the transitional treatment stipulated in Paragraph 19 of the Fair Value Measurement Accounting Standards and Paragraph 44-2 of the “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019), the Company will apply the new accounting policies set forth in the Fair Value Measurement Accounting Standards, etc. at a future date. This has no impact on the quarterly consolidated financial statements. (Additional Information) In assessing the possibility of impairment of non-current assets and the recoverability of deferred tax assets, the Company has assumed that the impact of the COVID-19 pandemic in the Group’s training business will continue for a certain period in FY21, but that demand will recover in the second half of FY21. However, results based on actual results in the future may differ from these estimates and assumptions. (Segment Information) This information is omitted because the Group operates in a single segment of the education service business. (Significant subsequent events) None – 8 –