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MarketScreener Homepage  >  Equities  >  Tokyo Stock Exchange  >  Information Services International-Dentsu, Ltd.    4812   JP3551530003

INFORMATION SERVICES INTERNATIONAL-DENTSU, LTD.

(4812)
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Information Services International Dentsu : Consolidated Financial Results for the Second Quarter of Fiscal Year Ending December 31, 2020 (Japanese GAAP)

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07/30/2020 | 02:05am EDT

Note: This English translation is solely for reference purposes and not a legally definitive translation of the original Japanese text.

In the event a difference arises regarding the meaning herein, the original Japanese version will prevail as the official authoritative version.

July 30, 2020

Consolidated Financial Results for the Second Quarter of Fiscal Year Ending December 31, 2020 (Japan GAAP)

Name of Listed Company:

Information Services International-Dentsu, Ltd.

Listed Exchange:

Tokyo

Code Number:

4812

URL:

https://www.isid.co.jp/english/

Representative:

Ryoichi Nawa, President, CEO and COO

Contact for Inquiries:

Naoto Momiki, General Manager, Corporate Planning Office

Tel: (03) 6713-6160

Date of scheduled filing of securities report:

August 7, 2020

Date of scheduled payment of dividends:

September 1, 2020

Quarterly earnings supplementary explanatory documents:

Yes

Quarterly earnings presentation:

Yes

(Amounts less than one million yen are rounded down.)

1. Consolidated Business Performance for the Second Quarter of FY2020 (from January 1, 2020 to June 30, 2020)

  1. Consolidated Operating Results (Cumulative)

Percentages indicate year-on-year increase/(decrease)

Net sales

Operating income (loss)

Ordinary income (loss)

Net income (loss) *

(million yen)

(%)

(million yen)

(%)

(million yen)

(%)

(million yen)

(%)

Second Quarter of FY2020

55,020

11.9

6,971

33.9

6,862

33.2

4,512

32.2

Second Quarter of FY2019

49,185

14.2

5,204

36.9

5,152

33.5

3,412

29.2

* Net income attributable to parent company's shareholders.

Note: Comprehensive income: Second Quarter of FY2020: 4,464 million yen (up 33.8%); Second Quarter of FY2019: 3,337 million yen (up 32.8%)

Earnings per share

Diluted earnings

per share

(yen)

(yen)

Second Quarter of FY2020

138.50

-

Second Quarter of FY2019

104.74

-

(2) Consolidated Financial Position

Total assets

Net assets

Equity ratio

(million yen)

(million yen)

(%)

As of June 30, 2020

96,994

57,973

59.7

As of December 31, 2019

87,305

54,882

62.8

Reference: Total shareholders' equity: As of June 30, 2020: 57,952 million yen; As of December 31, 2019: 54,858 million yen

2. Dividends

Dividends per share

Record date

End of first

End of second

End of third

Fiscal year-end

Full year

quarter

quarter

quarter

(yen)

(yen)

(yen)

(yen)

(yen)

FY2019

-

35.00

-

42.00

77.00

FY2020

-

43.00

FY2020 (forecast)

-

43.00

86.00

Note: Revision to the dividend forecasts from the latest announcement: None

iii.

3. Consolidated Forecasts for FY2020 (from January 1, 2020 to December 31, 2020)

Percentages indicate year-on-year increase/(decrease)

Net sales

Operating income

Ordinary income

Net income*

EPS

(million yen)

(%)

(million yen)

(%)

(million yen)

(%)

(million yen)

(%)

(yen)

Full year

105,000

4.3

10,500

4.2

10,217

5.9

6,911

11.0

212.11

* Net income attributable to parent company's shareholders.

Note: Revision to the consolidated forecasts from the latest announcement: None

4. Other Items

  1. Changes in the scope of consolidation for significant subsidiaries during the six months under review (Changes in specified subsidiaries resulting in change in the scope of consolidation): None
  2. Application of special accounting practices in the preparation of the quarterly consolidated financial statements: None
  3. Changes in accounting policies, changes in accounting estimates and restatements:
    1. Changes in accounting policies in accordance with revision of accounting standards: None
    2. Changes in accounting policies other than 1) above: None
    3. Changes in accounting estimate: None
    4. Restatements: None
  1. Issued and outstanding common stock
    1. Number of shares issued and outstanding at the end of the period, including treasury stock:
    2. Number of treasury stock at the end of the period:

Average number of shares outstanding for each period (cumulative quarterly period):

June 30, 2020:

32,591,240 shares

December 31,

32,591,240 shares

2019:

June 30, 2020:

8,889 shares

December 31,

8,869 shares

2019:

Six months ended

32,582,363 shares

Six months ended

32,582,548 shares

June 30, 2020:

June 30, 2019:

This quarterly financial report is outside the scope of quarterly review procedures.

Explanation regarding the appropriate use of forecasts of business results

Forecast figures are projections based on information available at the time of release, and are not intended as a guarantee that the Company will achieve these targets. Actual results may differ significantly from the above forecasts as a result of changes in the business environment and other factors.

Index of the Attachment

I. Qualitative Information on the Consolidated Financial Results for the Subject Period

1.

Explanation of Operating Results ………………………………………………………….………………

2

2.

Explanation of Financial Position ………………………………………………………….………………

4

3.

Explanation of Consolidated Financial Results Forecasts ………………….……………………………….

4

II. Consolidated Financial Statements

1.

Consolidated Balance Sheets……………………………………………………………………………….

5

2.

Consolidated Statements of Income and Consolidated Statements of Comprehensive Income

[Consolidated Statements of Income] ………………………………………………………….……………

7

[Consolidated Statements of Comprehensive Income] ………………………………………………………

8

3.

Notes on Quarterly Consolidated Financial Statement………………………………………………………

9

Segment Information…………………………………………………………………………………….….…

10

- 1 -

  1. Qualitative Information on the Consolidated Financial Results for the Subject Period

1. Explanation of Business Results

(Millions of yen)

Second quarter of FY2019

Second quarter of FY2020

YoY

(cumulative)

(cumulative)

Variance

% change

Net sales

49,185

55,020

5,835

11.9%

Operating income

5,204

6,971

1,767

33.9%

Operating margin

10.6%

12.7%

2.1p

-

Ordinary income

5,152

6,862

1,710

33.2%

Profit attributable to owners of parent

3,412

4,512

1,100

32.2%

During the first half of the fiscal year under review (from January 1, 2020 to June 30, 2020), although the Japanese economy started on a moderate recovery trend thanks to improvements in employment and the income environment, the economy deteriorated rapidly and became extremely difficult due to the consequent influence of worldwide outbreak of the Coronavirus Disease 2019 (COVID-19). Amid the lack of prospects for the convergence of the COVID-19, there is a strong sense of uncertainty about the outlook for the domestic and overseas economies, and there is concern that the negative impact on corporate performance will prolong in the future. Meanwhile, in the information service industry, some companies have begun to restrain or postpone IT investment due to the deterioration in business conditions, however, corporate IT investment demand for the creation of innovative services and the transformation of business processes has remained firm.

Amid such conditions, the ISID Group is advancing the medium-term management plan "ISID X (Cross) Innovation 2021," which ends in the fiscal year ending December 2021. Under the three basic policies of "core business evolution", "the new business creation" and "the business foundation innovations," we aim to achieve consolidated net sales of ¥110 billion, operating income of ¥11 billion, operating margin of 10.0% and ROE of 12.5% by the fiscal year ending December 2021. In the fiscal year under review, the second year of the medium-term management plan, we will work to further create new businesses by reinforcing existing businesses and promoting X Innovation while actively strengthening our personnel structure, investing in R&D and creating a comfortable working environment. Through these efforts, we will work to strengthen the foundations for future growth.

During the first half of the fiscal year under review, net sales were ¥55,020 million (up 11.9% year on year), operating income was ¥6,971 million (up 33.9% year on year), ordinary income was ¥6,862 million (up 33.2% year on year) and profit attributable to owners of parent was ¥4,512 million (up 32.2% year on year).

Net sales increased in year on year thanks to strong performance in Business Solutions segment, Manufacturing Solutions segment and Communication IT segment among the four businesses in which we operate. In terms of operating income, in addition to the effects of higher sales, the gross profit margin improved due to the elimination of the negative impact of projects that were unprofitable in the same period of the previous fiscal year, resulting in a significant increase in year on year profits.

Due to the COVID-19, there were delays or disruptions to the progress of some projects, mainly consulting services. However, the impact on results was limited in the first half of the fiscal year under review.

- 2 -

Net sales, operating income and status of business operations by reportable segment are as follows:

In order to reflect the operating results of each reportable segment more appropriately, the method of allocation of some expenses has been changed to the method of allocation based on rational allocation standards that are appropriate for the actual conditions of each segment since the second quarter of the fiscal year under review. Also, segment information for t the first half of the previous fiscal year is also presented based on the revised method for calculating profit or loss.

Net Sales and Operating Income by Reportable Segment

(Millions of yen)

Second quarter of FY2019

Second quarter of FY2020

Variance

Reportable Segment

(cumulative)

(cumulative)

Net sales

Operating

Operating

Net sales

Operating

Operating

Net sales

Operating

Income

margin

Income

margin

income

Financial Solutions

12,240

707

5.8%

12,224

866

7.1%

(16)

159

Business Solutions

9,572

1,219

12.7%

10,885

1,720

15.8%

1,313

501

Manufacturing Solutions

15,140

1,351

8.9%

15,531

1,257

8.1%

391

(94)

Communication IT

12,231

1,926

15.7%

16,378

3,126

19.1%

4,147

1,200

Total

49,185

5,204

10.6%

55,020

6,971

12.7%

5,835

1,767

Status of Business Operations by Reportable Segment Financial Solutions

The main business of this segment is providing IT solutions that support various financial operations at financial institutions and other companies.

During the first half of the fiscal year under review, net sales were at the same level as in the previous year due to a steady increase in projects for government-affiliated financial institutions and business companies participating in the financial service business. Profits increased due to the elimination of the negative impact of projects that were unprofitable in the same period of the previous fiscal year.

Business Solutions

The main business of this segment is providing IT solutions for core systems and the business and human resources management fields. During the first half of the fiscal year under review, net sales increased due to an expansion of licensing sales and installation of SAP

solutions in addition to software developed in-house such as the human resource management solution POSITIVE, the accounting solution Ci*X and the consolidated accounting solution STRAVIS, as a result of continuing demand for system upgrades triggered by corporate work style reforms, and the end of the support period and aging of existing systems. Despite an increase in R&D investment aimed at new product development, profits also increased due to the effects of higher sales and improved profitability.

Manufacturing Solutions

The main business of this segment is providing IT solutions for the entire product lifecycle, from product development and production, to sales and maintenance in the manufacturing industry.

During the first half of the fiscal year under review, although there were delays in progress and interruptions in some consulting services projects due to the impact of the COVID-19, net sales increased due to a steady increase of licensing sales and installation of third- party software such as PLM*1 and CAE*2, particularly for the automotive industry. Profits decreased mainly due to a decrease in sales of highly profitable consulting services.

*1 PLM: Product Lifecycle Management

*2 CAE: Computer Aided Engineering

- 3 -

Communication IT

The main business of this segment is providing IT solutions for core systems at the Dentsu Group, as well as in collaboration with the Dentsu Group.

During the first half of the fiscal year under review, in addition to steady growth in large-scale system upgrade projects in Dentsu Group's core system field, the expansion of businesses supporting digital transformation through collaboration with Dentsu Group resulted in higher net sales and profits.

- 4 -

2. Explanation of Financial Position

Status of Assets, Liabilities and Net Assets

  1. Assets

At the end of the second quarter of the fiscal year under review (as of June 30, 2020), total assets amounted to ¥96,994 million, up ¥9,689 million from the end of the previous fiscal year. Current assets up ¥8,350 million from the end of the previous fiscal year to ¥78,078 million due to a decrease in notes and accounts receivable-trade and an increase in deposits due to the expansion of transactions, as well as an increase in advance payments due to the renewal of prepaid rental fees and maintenance contracts for customer services. Non-current assets rose ¥1,340 million from the end of the previous fiscal year to ¥18,916 million due to the acquisition of intangible lease assets (software) for customer services and additional investment in affiliated companies.

  1. Liabilities

At the end of the second quarter of the fiscal year under review, total liabilities amounted to ¥39,020 million, up ¥6,597 million from the end of the previous fiscal year. Current liabilities up ¥6,009 million from the end of the previous fiscal year to ¥35,465 million, primarily due to an increase in notes and accounts payable-trade accompanying the expansion of the scale of transactions and an increase in advances received, mainly from the renewal of contracts for rental and maintenance fees received. Non-current liabilities up ¥589 million from the end of the previous fiscal year to ¥3,555 million, mainly due to an increase in lease obligations associated with an increase in intangible lease assets and an increase in asset retirement obligations associated with the lease of a new office.

  1. Net assets

At the end of the second quarter of the fiscal year under review, total net assets amounted to ¥57,973 million, up ¥3,090 million from the end of the previous fiscal year. This change was primarily due to an increase in retained earnings caused by the recording of net income attributable to owners of parent, despite dividends from retained earnings.

3. Explanation of Consolidated Financial Results Forecasts

The full-year earnings forecast announced on February 10, 2020 remains unchanged due to the uncertainty of future business performance resulting from the spread of the COVID-19. We will promptly disclose any necessary revisions to forecasts in the light of the affairs, business trends and other factors.

Note: Forecast figures are projections based on information available at the time of release, and are not intended as a guarantee that the Company will achieve these targets. Actual results may differ significantly from the above forecasts as a result of changes in the business environment and other factors.

- 5 -

II. Consolidated Financial Statement

1. Consolidated Balance Sheets

(Millions of yen)

As of December 31, 2019

As of June 30, 2020

Assets

Current assets

Cash and deposits

3,497

2,841

Notes and accounts receivable - trade

20,263

22,789

Merchandise and finished goods

152

118

Work in process

2,332

1,786

Raw materials and supplies

23

22

Advance payments - trade

8,634

13,536

Deposits paid

33,666

35,630

Other

1,169

1,356

Allowance for doubtful accounts

11)

2)

Total current assets

69,728

78,078

Non-current assets

Property, plant and equipment

4,574

4,428

Intangible assets

3,233

4,263

Investments and other assets

Investments and other assets

9,952

10,422

Allowance for doubtful accounts

183)

198)

Total investments and other assets

9,769

10,224

Total non-current assets

17,576

18,916

Total assets

87,305

96,994

Liabilities

Current liabilities

Notes and accounts payable - trade

7,668

8,593

Income taxes payable

1,781

2,275

Advances received

10,097

15,143

Provision for loss on order received

575

279

Other

9,334

9,173

Total current liabilities

29,456

35,465

Non-current liabilities

Retirement benefit liability

34

37

Asset retirement obligations

946

1,058

Other

1,986

2,459

Total non-current liabilities

2,966

3,555

Total liabilities

32,423

39,020

- 6 -

(Millions of yen)

As of December 31, 2019

As of June 30, 2020

Net assets

Shareholders' equity

Share capital

8,180

8,180

Capital surplus

15,285

15,285

Retained earnings

31,238

34,383

Treasury shares

30)

(30)

Total shareholders' equity

54,675

57,819

Accumulated other comprehensive income

Valuation difference on available-for-sale securities

68

97

Foreign currency translation adjustment

115

36

Total accumulated other comprehensive income

183

133

Non-controlling interests

23

20

Total net assets

54,882

57,973

Total liabilities and net assets

87,305

96,994

- 7 -

2. Consolidated Statements of Income and Consolidated Statements of Comprehensive Income [Consolidated Statements of Income]

(Millions of yen)

Six months ended

Six months ended

June 30, 2019

June 30, 2020

Net sales

49,185

55,020

Cost of sales

32,953

35,857

Gross profit

16,232

19,163

Selling, general and administrative expenses

11,027

12,192

Operating profit

5,204

6,971

Non-operating income

Interest and dividend income

21

20

Dividend income of insurance

62

59

Subsidy income

15

25

Miscellaneous income

8

16

Total non-operating income

107

122

Non-operating expenses

Interest expenses

15

20

Share of loss of entities accounted for using equity method

103

175

Foreign exchange losses

23

5

Loss on investments in investment partnerships

15

10

Miscellaneous loss

1

19

Total non-operating expenses

159

230

Ordinary profit

5,152

6,862

Extraordinary losses

Loss on valuation of investment securities

54

119

Total extraordinary losses

54

119

Profit before income taxes

5,097

6,743

Income taxes - current

1,560

2,151

Income taxes - deferred

118

77

Total income taxes

1,678

2,228

Profit

3,419

4,514

Profit attributable to non-controlling interests

6

1

Profit attributable to owners of parent

3,412

4,512

- 8 -

[Consolidated Statements of Comprehensive Income]

(Millions of yen)

Six months ended

Six months ended

June 30, 2019

June 30, 2020

Profit

3,419

4,514

Other comprehensive income

Valuation difference on available-for-sale securities

1)

29

Foreign currency translation adjustment

80)

79)

81)

Total other comprehensive income

509)

Comprehensive income

3,337

4,464

Comprehensive income attributable to

Comprehensive income attributable to owners of parent

3,330

4,462

Comprehensive income attributable to non-controlling

6

1

interests

- 9 -

3. Notes on Quarterly Consolidated Financial Statement

(Notes regarding Assumption of a Going Concern)

Not applicable

(Notes on Significant Changes in Shareholders' Equity)

Not applicable

(Additional Information) Not applicable

- 10 -

  • Segment Information
  1. The second quarter cumulative period of FY2019 (from January 1, 2019 to June 30, 2019) 1. Sales and Income (Loss) by Reportable Segment

(Millions of yen)

Reportable Segment

Financial

Business

Manufacturing

Communication IT

Total

Solutions

Solutions

Solutions

Net sales

Sales to customers

12,240

9,572

15,140

12,231

49,185

Inter-segment sales

-

-

-

-

-

and transfers

Total

12,240

9,572

15,140

12,231

49,185

Segment income

707

1,219

1,351

1,926

5,204

Notes: Total values for segment income match those for the operating income on the "Consolidated Statements of Income."

  1. The second quarter cumulative period of FY2020 (from January 1, 2020 to June 30, 2020) 1. Sales and Income (Loss) by Reportable Segment

(Millions of yen)

Reportable Segment

Financial

Business

Manufacturing

Communication IT

Total

Solutions

Solutions

Solutions

Net sales

Sales to customers

12,224

10,885

15,531

16,378

55,020

Inter-segment sales

-

-

-

-

-

and transfers

Total

12,224

10,885

15,531

16,378

55,020

Segment income

866

1,720

1,257

3,126

6,971

Notes: 1. Total values for segment income match those for the operating income on the "Consolidated Statements of Income."

2. Sales and Income (Loss) by Reportable Segment

In order to reflect the operating results of each operating segment more appropriately, the method of allocation of some expenses has been changed to the method of allocation based on rational allocation standards that are appropriate for the actual conditions of each segment since the second quarter of the fiscal year under review. Also, segment information for the first half of the previous fiscal year is also presented based on the revised method for calculating profit or loss.

- 11 -

Disclaimer

ISID - Information Services International - Dentsu Ltd. published this content on 30 July 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 July 2020 06:05:17 UTC


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Financials
Sales 2020 109 B 1 037 M 1 037 M
Net income 2020 8 157 M 77,9 M 77,9 M
Net Debt 2020 - - -
P/E ratio 2020 26,4x
Yield 2020 1,49%
Capitalization 217 B 2 074 M 2 075 M
Capi. / Sales 2020 2,00x
Capi. / Sales 2021 1,90x
Nbr of Employees 2 879
Free-Float 35,9%
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Technical analysis trends INFORMATION SERVICES INTERNATIONAL-DENTSU, LTD.
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TrendsBullishBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus BUY
Number of Analysts 4
Average target price 6 770,00 JPY
Last Close Price 6 670,00 JPY
Spread / Highest target 12,4%
Spread / Average Target 1,50%
Spread / Lowest Target -10,0%
EPS Revisions
Managers
NameTitle
Ryoichi Nawa President, CEO, COO & Representative Director
Tsuyoshi Hirashima Manager-Finance Solutions
Shigehiro Kotani Manager-Enterprise IT Business
Shinichi Ogane Manager-Communication IT Segment
Hirohisa Iwamoto Senior General Manager-Manufacturing Technology
Sector and Competitors