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    9326   JP3230300000

KANTSU CO.,LTD.

(9326)
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Kantsu : Non-consolidated Financial Results for the Fiscal Year Ended February 28 ,2021

05/06/2021 | 02:09pm EDT

April 14, 2021

Non-consolidated Financial Results for the Fiscal Year Ended February 28, 2021

[Japanese GAAP]

Company name:

KANTSU CO., LTD.

Listing: Tokyo Stock Exchange (Mothers)

Securities code:

9326

URL: https://www.kantsu.com/

Representative:

Hisahiro Tatsushiro, Representative Director and President

Contact:

Tadashi Katayama, Managing Director

Tel: +81-6-4308-8901

Scheduled date of Annual General Meeting of Shareholders:

May 26, 2021

Scheduled date of filing of Annual Securities Report:

May 27, 2021

Scheduled date of payment of dividend:

-

Preparation of supplementary materials for financial results:

Yes

Holding of financial results meeting:

Yes (for institutional investors and securities analysts)

(All amounts are rounded down to the nearest million yen)

1. Non-consolidated Financial Results for the Fiscal Year Ended February 28, 2021 (March 1, 2020 - February 28, 2021)

(1) Results of operations

(Percentages represent year-on-year changes)

Net sales

Operating profit

Ordinary profit

Profit

Million yen

%

Million yen

%

Million yen

%

Million yen

%

Fiscal year ended Feb. 28, 2021

9,530

30.5

418

43.5

383

50.0

283

66.0

Fiscal year ended Feb. 29, 2020

7,301

12.9

291

129.9

255

145.8

170

117.0

Net income per

Diluted net

Return on equity

Ordinary profit

Operating profit

share

income per share

on total assets

on net sales

Yen

Yen

%

%

%

Fiscal year ended Feb. 28, 2021

94.99

90.00

25.5

5.5

4.4

Fiscal year ended Feb. 29, 2020

74.95

-

31.2

4.0

4.0

Reference: Equity in earnings of affiliates (million yen) Fiscal year ended Feb. 28, 2021: - Fiscal year ended Feb. 29, 2020: -

Notes: 1. KANTSU conducted a 50-for-1 common stock split on October 30, 2019. Net income per share has been calculated as if this stock split had taken place at the beginning of the fiscal year ended February 29, 2020.

    1. Diluted net income per share for the fiscal year ended February 29, 2020 is not shown. Although there were outstanding dilutive shares, it is not possible to determine an average stock price because the stock o f KANTSU was not listed at the end of February 2020.
    2. Equity in earnings of affiliates is not shown because KANTAU has no affiliates.
  1. Financial position

Total assets

Net assets

Equity ratio

Net assets per share

Million yen

Million yen

%

Yen

As of Feb. 28, 2021

7,532

1,595

21.1

500.16

As of Feb. 29, 2020

6,420

626

9.8

275.21

Reference: Shareholders' equityAs of Feb. 28, 2021: 1,591 million yen As of Feb. 29, 2020: 626 million yen

(3) Cash flows

Cash flows from

Cash flows from

Cash flows from

Cash and cash equivalents

operating activities

investing activities

financing activities

at end of period

Million yen

Million yen

Million yen

Million yen

Fiscal year ended Feb. 28, 2021

187

(650)

675

2,400

Fiscal year ended Feb. 29, 2020

398

(401)

653

2,188

2. Dividends

Dividend per share

Total

Dividend

Dividend on

1Q-end

2Q-end

3Q-end

Year-end

Total

dividends

payout ratio

equity

Yen

Yen

Yen

Yen

Yen

Million yen

%

%

Fiscal year ended Feb. 29, 2020

-

0.00

-

0.00

0.00

-

-

-

Fiscal year ended Feb. 28, 2021

-

0.00

-

0.00

0.00

-

-

-

Fiscal year ending Feb. 28, 2022

-

0.00

-

0.00

0.00

-

(forecast)

3. Earnings Forecast for the Fiscal Year Ending February 28, 2022 (March 1, 2021 - February 28, 2022)

(Percentages represent year-on-year changes)

Net sales

Operating profit

Ordinary profit

Profit

Net income per share

Million yen

%

Million yen

%

Million yen

%

Million yen

%

Yen

First half

4,910

12.7

186

43.4

168

52.0

113

44.9

35.57

Full year

10,756

12.9

670

60.4

635

65.7

428

51.5

134.14

Note: Please refer to "1. Overview of Results of Operations, (4) Outlook" on page 4 for further information.

* Notes

(1) Changes in accounting policies and accounting-based estimates, and restatements

1)

Changes in accounting policies due to revisions in accounting standards, others:

None

2)

Changes in accounting policies other than 1) above:

None

3)

Changes in accounting-based estimates:

None

4)

Restatements:

None

(2) Number of outstanding shares (common shares)

1) Number of shares outstanding at the end of the period (including treasury shares)

As of Feb. 28, 2021:

3,182,000 shares

As of Feb. 29, 2020:

2,275,000 shares

2) Number of treasury shares at the end of the period

As of Feb. 28, 2021:

- shares

As of Feb. 29, 2020:

- shares

3) Average number of shares outstanding during the period

Fiscal year ended Feb. 28, 2021:

2,979,558 shares

Fiscal year ended Feb. 29, 2020:

2,275,000 shares

Note: KANTSU conducted a 50-for-1 common stock split on October 30, 2019. The number of shares outstanding at the end of the period and the average number of shares outstanding during the period have been calculated as if this stock split had taken place at the beginning of the fiscal year ended February 29, 2020.

This financial report is not subject to audit by certified public accountants or auditing firms.

Explanation of appropriate use of earnings forecasts, and other special items

Cautionary statement with respect to forward-looking statements

Earnings forecasts and other forward-looking statements in this document are based on information that was available when this information was announced and on assumptions as of the announcement date concerning uncertainties that may affect results of operations in the future. Consequently, these statements are not promises by KANTSU regarding future performance. Actual results may differ significantly from these forecasts for a number of reasons. Please refer to "1. Overview of Results of Operations, (4) Outlook" on page 4 for forecast assumptions and notes of caution for usage.

How to view supplementary information materials for financial results

The supplementary information materials for financial results will be available on KANTSU's website (https://www.kantsu.com/ir/) on April 14, 2021.

KANTSU CO., LTD. (9326) Financial Results for FY2/21

Contents of Attachments

1. Overview of Results of Operations

2

(1)

Results of Operations

2

(2)

Financial Position

3

(3)

Cash Flows

4

(4)

Outlook

4

2. Basic Approach to the Selection of Accounting Standards

8

3. Non-consolidated Financial Statements and Notes

9

(1)

Non-consolidated Balance Sheet

9

(2)

Non-consolidated Statement of Income

11

(3)

Non-consolidated Statement of Changes in Equity

13

(4)

Non-consolidated Statement of Cash Flows

15

(5)

Notes to Non-consolidated Financial Statements

17

Going Concern Assumption

17

Equity in Earnings of Affiliates

17

Segment Information

17

Per Share Information

19

Subsequent Events

20

1

KANTSU CO., LTD. (9326) Financial Results for FY2/21

1. Overview of Results of Operations

This section is a summary of the financial position, results of operations and cash flows of KANTSU in the fiscal year that ended on February 28, 2021.

Forward-looking statements are based on the judgments of KANTSU as of February 28, 2021.

(1) Results of Operations

During the fiscal year that ended on February 28, 2021, there were severe restrictions on economic activity in Japan for a while because of the state of emergency due to the COVID -19 crisis. Furthermore, consumer spending plunged as local governments asked people to limit outings as much as possible. Although a recovery was observed in some sectors of the Japanese economy after the state of emergency ended, the economic outlook remains unclear because of another upturn in COVID -19 cases that started in November 2020 and other reasons.

Logistics companies in Japan continued to operate even during the state of emergency, while taking steps to prevent COVID-19 infections, because logistics was classified as an essential service for maintaining consumer and business activities. As a result, logistics companies fulfilled their responsibil ities as a key component of Japan's infrastructure for these activities.

During the fiscal year, we took many actions for improving efficiency, including measures for raising the productivity of logistics services for existing customers, while implementing safety measures for employees. To receive business from new customers, we strengthened our ability to provide services by adding distribution centers and enlarging existing centers. In addition, there were activities for the effective use of the internet to attract new customers, including the further upgrading of search engine optimization.

Due to these activities, fiscal year sales increased 30.5% year-on-year to 9,530 million yen, operating profit increased 43.5% to 418 million yen and ordinary profit increased 50.0% to 383 million yen. There was extraordinary income of 17 million yen due to gains on sales of investment securities, the result of sales of investments held for business relationships. As a result, profit increased 66.0% to 283 million yen.

Business segment performance was as follows.

Business segment sales are sales to external customers and segment profit or loss is based on operating profit in the income statement.

Logistics services business

The workforce of this business was increased to handle the larger volume of shipments. In addition, there were many activities to increase customer satisfaction. We started using logistics robots and began using the Cloud Thomas warehouse management system that we developed ahead of schedule in order to use this system during the peak volume period of December 2020. These activities to upgrade our operations resulted in a steady improvement in productivity, mainly for EC/catalog logistics support services. To receive orders from new customers, we worked even harder on search engine optimization and many other activities for the effective use of the internet to attract customers.

In the EC/catalog logistics support services category, which is the main component of this segment, the volume of shipments continued to climb because of the growth of e -commerce sales of existing customers. We also added many new customers during the fiscal year. Due to the outlook for Tokyo area distribution centers to reach full capacity sooner than anticipated, the third Tokyo distribution center began operations in October 2020 and other investments were made to maintain an infrastructure capable of handling the business of new customers. In the software sales and use services category, there was steady progress with receiv ing orders from new customers, chiefly for the Cloud Thomas warehouse management system.

As a result, net sales increased 30.9% year-on-year to 9,443 million yen and segment profit increased 31.7% to 429 million yen.

2

KANTSU CO., LTD. (9326) Financial Results for FY2/21

Other businesses

Technology education services for foreign trainees was unable to operate mainly because of the suspension of operations of schools in Myanmar due to the COVID -19 crisis. However, other educational services performed well because this crisis did not have a significant impact on these activities.

As a result, net sales increased 0.2% year-on-year to 86 million yen and segment loss was 11 million yen, compared with a loss of 34 million yen in the previous fiscal year.

Results by Business Segment for the Fiscal year ended February 28, 2021

(Thousands of yen)

Segment

Net sales

Segment profit (loss) (operating profit (loss))

YoY change

Operating

YoY change

Services

Amount

Comp. (%)

Amount

profit on net

(%)

(%)

sales (%)

EC/catalog logistics support

8,968,399

94.1

34.3

services

Outsourced order processing

92,871

1.0

(7.2)

services

Software sales and use

297,033

3.1

46.9

services

Others

85,630

0.9

(63.3)

Logistics services business

9,443,935

99.1

30.9

429,224

4.5

31.7

Other businesses

86,518

0.9

0.2

(11,151)

-

-

Total for reportable segments

9,530,453

100.0

30.5

418,072

4.4

43.5

Note: Rakuten Super Logistics services are included in EC/catalog logistics support services.

(2) Financial Position

Total assets at the end of the current fiscal year were 7,532 million yen, an increase of 1,112 million yen from the end of the previous fiscal year. Liabilities were 5,937 million yen, an increase of 143 million yen and net assets were 1,595 million yen, an increase of 969 million yen.

The major changes are as follows.

Current assets

Current assets increased 615 million yen to 4,142 million yen.

This was attributable primarily to increases of 141 million yen in cash and deposits, mainly the result of a stock offering, third-party stock allotment and the exercise of share acquisition rights and 250 million yen in accounts receivable-trade due to sales growth and to 155 million yen of electronically recorded monetary claims.

Non-current assets

Non-current assets increased 497 million yen to 3,390 million yen.

There were increases of 103 million yen in buildings due to the expansion of refrigerated and frozen warehouses, 50 million yen in machinery and equipment due to purchases of logistics robots and other automation equipment and other machinery, 50 million yen in tools, furniture and fixtures due to purchases of medium duty shelving units, 68 million yen in software due to the development of a warehouse management system, and 115 million yen in leasehold and guarantee deposits due to new and enlarged distribution centers. In addition, there is construction in progress of 109 million yen for preparations to begin using logistics robots.

Current liabilities

Current liabilities increased 176 million yen to 1,836 million yen.

This was attributable mainly to increases of 91 million yen in accounts payable-trade because of the increase in

3

KANTSU CO., LTD. (9326) Financial Results for FY2/21

the cost of sales and 65 million yen in the current portion of long -term borrowings because of the transfer of long-term borrowings to the current portion.

Non-current liabilities

Non-current liabilities decreased 32 million yen to 4,101 million yen.

There were lease obligations of 15 million yen resulting from capital expenditures and a 71 million yen decrease in long-term borrowings because of the transfer of borrowings to the current portion.

Net assets

Net assets increased 969 million yen to 1,595 million yen.

Share capital and the capital surplus each increased 135 million yen because of the stock offering, 28 million yen because of the third-party allotment of stock, and 174 million yen because of the exercise of share acquisition rights. In addition, retained earnings increased 283 million yen because of the fiscal year profit.

(3) Cash flows

Cash and cash equivalents (hereinafter, "cash") at the end of the current fiscal year increased 212 million yen from the end of the previous fiscal year to 2,400 million yen. The cash flow components during the fiscal year and the main reasons for changes are as described below.

Cash flows from operating activities

Net cash provided by operating activities totaled 187 million yen, compared with 398 million yen provided in the previous fiscal year. Major positive factors include profit before income taxes of 392 million yen, depreciation of 239 million yen and an increase in trade payables of 91 million yen. Major negative factors include an increase in trade receivables of 416 million yen and income taxes paid of 104 million yen.

Cash flows from investing activities

Net cash used in investing activities totaled 650 million yen, compared with 401 million yen used in the previous fiscal year. Major negative factors include purchase of property, plant and equipment of 539 million yen, purchase of intangible assets of 130 million yen and payments of leasehold and guarantee deposits of 115 million yen. Major positive factors include proceeds from withdrawal of time deposits of 120 million yen.

Cash flows from financing activities

Net cash provided by financing activities totaled 675 million yen, compared with 653 million yen provided in the previous fiscal year. Major positive factors include proceeds from long -term borrowings of 800 million yen and proceeds from issuance of shares of 675 million yen. Major negative factors include repayments of long-term borrowings of 805 million yen.

(4) Outlook

a. Overall outlook

According to a Ministry of Economy, Trade and Industry report concerning a 2019 survey of the e -commerce market, which is closely linked to services provided by KANTSU, worldwide EC sales in the B-to-C category were 19.4 trillion yen in 2019. This is 7.65% higher than sales of 18.0 trillion yen in 2018. The EC ratio was 6.76% in the B-to-C category, 0.54 of a percentage point higher than in 2018. Furthermore, in the merchandise sales category, the B-to-C EC market increased 8.09% from 9.3 trillion yen in 2018 to 10.5 trillion yen in 2019. These figures demonstrate that the EC market is continuing to expand.

In the logistics industry, all companies are continuing to provide services while using numerous measures for

4

KANTSU CO., LTD. (9326) Financial Results for FY2/21

safety during the COVID-19 crisis. During this crisis, the role of logistics companies as part of the social infrastructure has become even more important in order to help meet growing demand in the EC sector and support growth of this market.

In the EC/catalog logistics support services sector, we expect sales from cargo transport fees to be about 800 million yen below the outlook based on the budget because of the switch to different contracts with some customers. However, there will be two new distribution centers in 2021 to meet new d emand. The EC/Catalog Distribution Center (warehouse space of about 18,500 square meters) in the city of Amagasaki in Hyogo prefecture is scheduled to open in April 2021 and the D -to-C Center (warehouse space of about 17,200 square meters), also in Amagasaki, is scheduled to open in June 2021. In addition, we will continue to use the internet for effective measures to attract new customers. Another goal is improving efficiency for services for current customers. This includes constant measures for improving productivity, such as by using logistics robots and other automated equipment. The aim is to further increase customer satisfaction by handling with efficiency and reliability the steadily growing volume of shipments.

Based on this outlook, in the fiscal year ending on February 28, 2022, we forecast a 12.9% increase in sales to 10,756 million yen, a 60.4% increase in operating profit to 670 million yen, a 65.7% increase in ordinary profit to 635 million yen and a 51.5% increase in profit to 428 million ye n.

In prior years before the fiscal year that ended on February 28, 2021, there was one reportable segment called logistics services and all other businesses were in others. In accordance with a resolution approved today by the board of directors, there will be two reportable segments beginning with the fiscal year ending on February 28, 2022 by establishing the IT automation segment. One reason is the increasing contribution to sales and earnings of software sales and use services, which is currently included in the logistics services segment. Another reason is the increasing importance of software sales and use services within the current medium -term business plan. In conjunction with this change, IT automation sales and earnings in the fiscal year that e nded on February 28, 2021 have been calculated by using the performance of software sales and use services and deducted from the logistics services segment.

b. Individual assumptions

Net sales

We forecast a 12.9% increase in net sales to 10,756 million yen.

KANTSU creates proposals for ways for existing customers to increase the productivity of their logistics operations in order to retain these customers and raise the volume of business with them. To establish relationships with new customers, we seek companies that are considering the use of the internet for outsourcing logistics operations. Companies that contact us are invited to attend warehouse tours and other events. By observing our warehouse operations, representatives of these companies gain a tho rough understanding of our services that can result in a new logistic service orders.

The sales forecast is based on actual sales of individual current customers and services. For major customers, as much information as possible is collected about our services, including the outlook for the volume of shipments. Then projected sales for each customer and service are added. For the outlook for adding new customers, plans for new and enlarged distribution centers are incorporated and, for prospective customers where business discussions are at an advanced stage, studies are performed concerning progress with the process to a yes or no decision about placing an order as well as the level of difficulty of sales activities for each customer. A sales forecast is established for prospective customers where we believe there are good prospects for receiving orders. In addition, based on the number of new customers acquired in prior years, an outlook is determined for the number of other new customers in the fiscal year ending on February 28, 2022 and this number is used to determine a reasonable sales forecast for these customers. Business segment forecasts are as follows.

5

KANTSU CO., LTD. (9326) Financial Results for FY2/21

Logistics services business

This segment accounts for 95.7% of the sales forecast for the fiscal year ending on February 28, 2022. Service categories of this segment are EC/catalog logistics support, outsourced order processing, Rakuten Super Logistics and logistics consulting.

For current customers, as much information as possible is collected about the outlook for shipment volumes and other items involving KANTSU services. Then the projected sales for each customer are added by forecasting shipment volume and other items determined based on prior year performance and by multiplying by the expected unit prices that will apply to each customer. To determine the outlook for adding new customers, for prospective customers where business discussions are at an advanced stage, studies are performed concerning progress with the process to a yes or no decision about placing an order as well as the difficulty of sales activities for each customer. A sales forecast is established for prospective customers where we believe there are good prospects for receiving orders. In addition, based on the number of new customers acquired in prior years, an outlook is determined for the number of other new customers in the fiscal year ending on February 28, 2022 and this number is used to determine a reasonable sales forecast for these customers.

By using this process, and after factoring in the outlook for sales from cargo transport fees to be about 800 million yen below the outlook based on the budget because of the switch to different contracts with some customers (the effect on earnings at all levels is negligible), we add ed the sales forecasts for each current customer to the new customer sales forecast of 1,500 million yen. The forecast also reflects the first full fiscal year contribution to sales of new customers acquired in the fiscal year ended February 28, 2021. The result is a segment sales forecast of 10,292 million yen, 12.5% more than in the previous fiscal year.

IT automation business

This business is growing rapidly, having achieved sales growth of 46.9% in the fiscal year that ended on February 28, 2021. The activities of this business are the Cloud Thomas warehouse management system, the Annie check list system, and two services launched in the fiscal year end ed on February 28, 2021: the e.can system for the automatic processing of orders received and the ippo! service for outsourced robotic process automation (RPA) production.

For current customers, a forecast for the use of services was established based on the use of individual services in prior years and the individual forecasts were added. To determine the outlook for adding new customers, for prospective customers where business discussions are at an advanced stage, studies are performed concerning progress with the process to a yes or no decision about placing an order as well as the difficulty of sales a ctivities for each customer. A sales forecast is established for prospective customers where we believe there are good prospects for starting to provide services. In addition, based on the number of new customers acquired in prior years, progress with sales activities using business alliances, the outlook for the benefits of advertising and other marketing activities, and other factors, an outlook is determined for the number of other new customers in the fiscal year ending on February 28, 2022 and this number is used to determine a reasonable sales forecast for these customers. This process resulted in a segment sales forecast of 349 million yen, 17.6% more than in the previous fiscal year.

Note: The prior-year sales comparison in the IT automation segment uses sales of the software sales and use services category of the logistics services segment. In addition, results of operations for the logistics services segment for the fiscal year that ended on February 28, 2021 has not been audited by the independent auditor.

Other businesses

Other businesses include technology education services for foreign trainees and other education services. Foreign trainee education services must be suspended for the time being because of the COVID -19 pandemic and unrest in Myanmar, the primary location of these services. As a result, we established a conservative sales estimate for

6

KANTSU CO., LTD. (9326) Financial Results for FY2/21

these services. For other education services, we established a reasonable forecast that reflects school utilization rates and other performance metrics in prior years. In addition, the sales forecast includes estimated sales of the service that started in the fiscal year that ended on February 28, 2021 for helping people with developmental disabilities find jobs. By using this process, we established a segment sales forecast of 115 million yen, up 33.1% from the previous fiscal year.

Cost of sales

In the logistics services business, we established a staffing plan for individual logistics service bases that is based on the number of people when the outlook was established and reflects seasonal changes in staffing. We used this plan to calculate an estimate of personnel expenses. We estimated rent expenses by incorporating new and expanded facilities and other factors; outsourcing expenses by incorporating expected changes in the volume of outsourced work; depreciation expenses by incorporating investments in logistics robots, material handling equipment and other equipment; and freight-out expenses by using the shipment volume forecast used for the sales forecast. For other items in the cost of sales, we incorporated changes in sales based on the prior year performance of individual logistics services facilities. In the software business, we estimated personnel expenses by using the estimated time required for maintenance and other services in the staffing plan for the data systems department. We estimated depreciation expenses by using prior year depreciation expenses and the expected increase in depreciable assets based on the fiscal year software develo pment plan. For other items in the cost of sales, we incorporated changes in sales based on the prior year performance.

The cost of sales forecast also reflects a decrease in the freight-out cost associated with the decline in freight transport sales at some customers and the expected improvement in efficiency due to the use of logistics robots and other automated equipment, the use of an upgraded version of the Cloud Thomas warehouse management system, and other measures. On the other hand, we expect increases in two major components of the cost of sales other than freight transport: personnel expenses and rent expenses. As a result, we forecast an 8.8% increase in the cost of sales to 9,148 million yen.

Selling, general and administrative expenses

This forecast is based on expenses in the previous fiscal year and reflects expected increases in personnel expenses, expenses for software maintenance and IT systems, and depreciation expenses due to the upgraded version of the new warehouse management system and other items. The forecast also incorporates the outlook for higher expenses resulting from new offices and more people for administrative and system development positions.

This process resulted in an estimated increase of 32.5% in selling, general and administrative expenses to 937 million yen.

Operating profit

Due to the projected sales growth and other reasons, we forecast a 60.4% increase in operating profit to 670 million yen.

Ordinary profit

The estimates for non-operating income and expense items expected in the fiscal year ending on February 28, 2022 use a reasonable outlook based on income and expenses in the previous fiscal year. As a result, we forecast a 65.7% increase in ordinary profit to 635 million yen.

Profit

We forecast a 51.5% increase in profit to 428 million yen. In the fiscal year that ended on February 28, 2021, there was an extraordinary income of 17 million yen and extraordinary losses of 8 million yen. No extraordinary income or loss is expected in the fiscal year ending on February 28, 2022.

7

KANTSU CO., LTD. (9326) Financial Results for FY2/21

FY2/22 forecasts

(Millions of yen)

FY2/22 forecasts

FY2/21

Plan

Comp. (%)

YoY change

Results

Comp. (%)

(%)

EC/catalog logistics support

10,115

94.0

12.8

8,968

94.1

services

Outsourced order processing

111

1.0

19.7

92

1.0

services

Others

66

0.6

(22.8)

85

0.9

Logistics services business

10,292

95.7

12.5

9,146

96.0

Cloud Thomas

244

2.3

20.8

202

2.1

Others

104

1.0

10.6

94

1.0

IT automation business

349

3.2

17.6

297

3.1

Other businesses

115

1.1

33.1

86

0.9

Net sales

10,756

100.0

12.9

9,530

100.0

Operating profit

670

6.2

60.4

418

4.4

Ordinary profit

635

5.9

65.7

383

4.0

Profit

428

4.0

51.5

283

3.0

Notes: 1. Rakuten Super Logistics services are included in EC/catalog logistics support services.

2. Beginning with the first quarter of the fiscal year ending on February 28, 2022, the software sales and use services category of the logistics services business segment will become a separate business segment called IT automation. In conjunction with this change, IT automation sales and earnings in the fiscal year that ended on February 28, 2021 have been calculated by using the performance of software sales and use services and deducted from the logistics services segment.

2. Basic Approach to the Selection of Accounting Standards

KANTSU has a policy of preparing its financial statements using Japanese GAAP to permit comparisons with other fiscal years as well as comparisons with the performance of other Japanese companies.

8

KANTSU CO., LTD. (9326) Financial Results for FY2/21

3. Non-consolidated Financial Statements and Notes

(1) Non-consolidated Balance Sheet

(Thousands of yen)

FY2/20

FY2/21

(As of Feb. 29, 2020)

(As of Feb. 28, 2021)

Assets

Current assets

Cash and deposits

2,450,903

2,592,792

Electronically recorded monetary claims-operating

-

155,419

Accounts receivable - trade

850,263

1,100,638

Advance payments - trade

71,609

108,835

Prepaid expenses

150,292

181,868

Other

16,154

20,371

Allowance for doubtful accounts

(12,338)

(17,700)

Total current assets

3,526,884

4,142,224

Non-current assets

Property, plant and equipment

Buildings

762,580

948,103

Accumulated depreciation and impairment

(172,972)

(254,839)

loss

Buildings, net

589,607

693,263

Machinery and equipment

238,628

330,562

Accumulated depreciation

(73,145)

(114,956)

Machinery and equipment, net

165,482

215,606

Vehicles

13,288

13,288

Accumulated depreciation

(12,478)

(12,969)

Vehicles, net

810

318

Tools, furniture and fixtures

239,894

329,864

Accumulated depreciation

(124,818)

(164,028)

Tools, furniture and fixtures, net

115,075

165,836

Land

1,125,087

1,125,087

Construction in progress

-

109,111

Leased assets

-

17,843

Accumulated depreciation

-

(956)

Leased assets, net

-

16,886

Total property, plant and equipment

1,996,062

2,326,110

Intangible assets

Software

191,235

259,583

Other

349

349

Total intangible assets

191,584

259,933

Investments and other assets

Investment securities

22,894

-

Investments in capital

631

511

Long-term loans receivable

50,000

36,000

Long-term prepaid expenses

25,776

24,253

Leasehold and guarantee deposits

468,949

584,074

Distressed receivables

8,508

1,467

Deferred tax assets

-

24,139

Other

138,250

136,520

Allowance for doubtful accounts

(9,053)

(2,243)

Total investments and other assets

705,956

804,721

Total non-current assets

2,893,604

3,390,765

Total assets

6,420,488

7,532,989

9

KANTSU CO., LTD. (9326) Financial Results for FY2/21

(Thousands of yen)

FY2/20

FY2/21

(As of Feb. 29, 2020)

(As of Feb. 28, 2021)

Liabilities

Current liabilities

Accounts payable - trade

380,115

472,002

Current portion of long-term borrowings

747,831

813,820

Accounts payable - other

293,104

240,011

Accrued expenses

13,735

24,997

Income taxes payable

69,146

109,726

Advances received

47,786

50,121

Deposits received

17,388

24,254

Provision for bonuses

33,417

30,272

Lease obligations

-

3,893

Other

57,404

66,907

Total current liabilities

1,659,931

1,836,007

Non-current liabilities

Long-term borrowings

3,923,105

3,852,065

Asset retirement obligations

72,614

73,177

Lease obligations

-

15,042

Deferred tax liabilities

5,178

-

Other

133,563

161,406

Total non-current liabilities

4,134,461

4,101,691

Total liabilities

5,794,392

5,937,699

Net assets

Shareholders' equity

Share capital

110,750

449,606

Capital surplus

Legal capital surplus

90,750

429,606

Other capital surplus

6,000

6,000

Total capital surpluses

96,750

435,606

Retained earnings

Other retained earnings

Retained earnings brought forward

423,269

706,285

Total retained earnings

423,269

706,285

Total shareholders' equity

630,769

1,591,498

Valuation and translation adjustments

Valuation difference on available-for-sale securities

(4,673)

-

Total valuation and translation adjustments

(4,673)

-

Share acquisition rights

-

3,792

Total net assets

626,096

1,595,290

Total liabilities and net assets

6,420,488

7,532,989

10

KANTSU CO., LTD. (9326) Financial Results for FY2/21

(2) Non-consolidated Statement of Income

(Thousands of yen)

FY2/20

FY2/21

(Mar. 1, 2019 - Feb. 29, 2020)

(Mar. 1, 2020 - Feb. 28, 2021)

Net sales

7,301,709

9,530,453

Cost of sales

6,327,243

8,404,403

Gross profit

974,465

1,126,050

Selling, general and administrative expenses

683,043

707,977

Operating profit

291,422

418,072

Non-operating income

Interest income

347

614

Dividend income

441

302

Reversal of allowance for doubtful accounts

-

6,336

Rental income from land and buildings

2,700

2,280

Subsidy income

2,978

13,289

Gain on sales of goods

2,529

2,011

Other

4,046

5,603

Total non-operating income

13,043

30,436

Non-operating expenses

Interest expenses

44,155

43,451

Going public expenses

3,959

4,936

Issuance cost of subscription rights to shares

-

9,565

Other

834

7,202

Total non-operating expenses

48,949

65,156

Ordinary profit

255,515

383,353

Extraordinary income

Gain on sales of investment securities

-

17,226

Subsidy income

12,633

-

Total extraordinary income

12,633

17,226

Extraordinary losses

Loss on sales of non-current assets

-

6,978

Loss on retirement of non-current assets

691

1,582

Loss on tax purpose reduction entry of non-current

12,633

-

assets

Loss on sales of investment securities

11

-

Loss on valuation of investment securities

233

-

Loss on valuation of golf club membership

343

-

Total extraordinary losses

13,912

8,561

Profit before income taxes

254,236

392,019

Income taxes - current

89,287

138,321

Income taxes - deferred

(5,556)

(29,317)

Total income taxes

83,730

109,003

Profit

170,505

283,015

11

KANTSU CO., LTD. (9326) Financial Results for FY2/21

Cost of Sales Statement

(Thousands of yen)

FY2/20

FY2/21

(Mar. 1, 2019 - Feb. 29, 2020)

(Mar. 1, 2020 - Feb. 28, 2021)

Item

Amount

%

Amount

%

I

Labor cost

1,506,562

23.8

1,603,746

19.1

II

Expenses

Note

4,753,778

75.1

6,794,066

80.8

Cost of products manufactured

6,260,341

98.9

8,397,813

99.9

Beginning merchandise inventory

21,737

-

Cost of purchased goods

45,165

6,590

Total

66,902

6,590

Ending merchandise inventory

-

-

Cost of goods sold

66,902

1.1

6,590

0.1

Total cost of sales

6,327,243

100.0

8,404,403

100.0

Note: Major breakdown of expenses is as follows:

(Thousands of yen)

Item

FY2/20

FY2/21

(Mar. 1, 2019 - Feb. 29, 2020)

(Mar. 1, 2020 - Feb. 28, 2021)

Freight-out and transportation

2,655,744

3,776,878

expenses

Outsourcing expenses

266,917

274,675

Rent expenses

1,102,946

1,617,684

Depreciation

141,808

190,859

12

KANTSU CO., LTD. (9326) Financial Results for FY2/21

(3) Non-consolidated Statement of Changes in Equity

FY2/20 (Mar. 1, 2019 - Feb. 29, 2020)

(Thousands of yen)

Shareholders' equity

Capital surplus

Retained earnings

Other retained

Total

Share

Legal

Other

Total

earnings

Total retained

shareholders'

capital

capital

capital

capital

Retained

earnings

equity

surplus

surplus

surplus

earnings

brought forward

Balance at beginning

110,750

90,750

6,000

96,750

252,764

252,764

460,264

of period

Changes during period

Issuance of new

-

shares

Profit

170,505

170,505

170,505

Net changes in items

other than

shareholders' equity

Total changes during

-

-

-

-

170,505

170,505

170,505

period

Balance at end of

110,750

90,750

6,000

96,750

423,269

423,269

630,769

period

(Thousands of yen)

Valuation and translation adjustments

Share acquisition

Valuation difference

Total valuation and

Total net assets

on available-for-sale

translation

rights

securities

adjustments

Balance at beginning

6,524

6,524

-

466,788

of period

Changes during period

Issuance of new

-

shares

Profit

170,505

Net changes in items

other than

(11,198)

(11,198)

(11,198)

shareholders' equity

Total changes during

(11,198)

(11,198)

-

159,307

period

Balance at end of

(4,673)

(4,673)

-

626,096

period

13

KANTSU CO., LTD. (9326) Financial Results for FY2/21

FY2/21 (Mar. 1, 2020 - Feb. 28, 2021)

(Thousands of yen)

Shareholders' equity

Capital surplus

Retained earnings

Other retained

Total

Share

Legal

Other

Total

earnings

Total retained

shareholders'

capital

capital

capital

capital

Retained

earnings

equity

surplus

surplus

surplus

earnings

brought forward

Balance at beginning

110,750

90,750

6,000

96,750

423,269

423,269

630,769

of period

Changes during period

Issuance of new

338,856

338,856

338,856

677,713

shares

Profit

283,015

283,015

283,015

Net changes in items

other than

-

shareholders' equity

Total changes during

338,856

338,856

-

338,856

283,015

283,015

960,728

period

Balance at end of

449,606

429,606

6,000

435,606

706,285

706,285

1,591,498

period

(Thousands of yen)

Valuation and translation adjustments

Share acquisition

Valuation difference

Total valuation and

Total net assets

on available-for-sale

translation

rights

securities

adjustments

Balance at beginning

(4,673)

(4,673)

-

626,096

of period

Changes during period

Issuance of new

677,713

shares

Profit

283,015

Net changes in items

other than

4,673

4,673

3,792

8,465

shareholders' equity

Total changes during

4,673

4,673

3,792

969,194

period

Balance at end of

-

-

3,792

1,595,290

period

14

KANTSU CO., LTD. (9326) Financial Results for FY2/21

(4) Non-consolidated Statement of Cash Flows

(Thousands of yen)

FY2/20

FY2/21

(Mar. 1, 2019 - Feb. 29, 2020)

(Mar. 1, 2020 - Feb. 28, 2021)

Cash flows from operating activities

Profit before income taxes

254,236

392,019

Depreciation

173,214

239,229

Increase (decrease) in allowance for doubtful accounts

15,577

(1,447)

Increase (decrease) in provision for bonuses

5,940

(3,145)

Interest and dividend income

(788)

(916)

Interest expenses

44,155

43,451

Foreign exchange losses (gains)

36

-

Loss (gain) on sales of non-current assets

-

6,978

Loss on retirement of non-current assets

691

1,582

Loss (gain) on sales of investment securities

11

(17,226)

Loss (gain) on valuation of investment securities

233

-

Subsidy income

(12,633)

-

Loss on tax purpose reduction entry of non-current

12,633

-

assets

Decrease (increase) in trade receivables

(159,685)

(416,643)

Decrease (increase) in inventories

21,739

-

Decrease (increase) in advance payments - trade

11,769

(37,225)

Increase (decrease) in trade payables

122,904

91,887

Increase (decrease) in accounts payable - other

37,248

(21,345)

Other, net

(22,986)

57,177

Subtotal

504,298

334,373

Interest and dividends received

788

916

Interest paid

(43,011)

(43,135)

Income taxes paid

(67,747)

(104,609)

Subsidies received

3,868

-

Net cash provided by (used in) operating activities

398,196

187,545

Cash flows from investing activities

Payments into time deposits

(113,812)

(48,813)

Proceeds from withdrawal of time deposits

219,827

120,000

Purchase of property, plant and equipment

(265,651)

(539,067)

Proceeds from sales of property, plant and equipment

1,588

57

Purchase of intangible assets

(98,550)

(130,569)

Proceeds from sales of investment securities

280

44,794

Loan advances

(50,000)

-

Collection of loans receivable

-

1,000

Payments of leasehold and guarantee deposits

(151,981)

(115,125)

Proceeds from repayment of lease and guarantee

22,000

-

deposits

Other, net

34,648

17,284

Net cash provided by (used in) investing activities

(401,650)

(650,438)

15

KANTSU CO., LTD. (9326) Financial Results for FY2/21

(Thousands of yen)

FY2/20

FY2/21

(Mar. 1, 2019 - Feb. 29, 2020)

(Mar. 1, 2020 - Feb. 28, 2021)

Cash flows from financing activities

Proceeds from long-term borrowings

1,420,000

800,000

Repayments of long-term borrowings

(766,667)

(805,051)

Repayments of lease obligations

-

(717)

Proceeds from issuance of shares

-

675,362

Proceeds from issuance of share acquisition rights

-

6,143

Net cash provided by (used in) financing activities

653,333

675,737

Effect of exchange rate change on cash and cash

(36)

-

equivalents

Net increase (decrease) in cash and cash equivalents

649,842

212,843

Cash and cash equivalents at beginning of period

1,538,305

2,188,148

Cash and cash equivalents at end of period

2,188,148

2,400,992

16

KANTSU CO., LTD. (9326) Financial Results for FY2/21

  1. Notes to Non-consolidated Financial Statements Going Concern Assumption

Not applicable.

Equity in Earnings of Affiliates

Not applicable.

Segment Information

1. Overview of reportable segments

The KANTSU's reportable segments are components for which discrete financial information is available and whose operating results are regularly reviewed by the Board of Directors to make decisions about resource allocation and to assess performance.

KANTSU has designated the "logistics services business" as its reportable segment because sales and profits from the logistics business, its main business, account for more than 90% of total sales and profits. The main services of this segment are as follows.

  • EC/catalog logistics support services
  • Outsourced order processing services
  • Software sales and use services
  • Rakuten Super Logistics services
  • Logistics consulting services

2. Calculation method for net sales, profit or loss, assets, liabilities, and other items for each reportable segment

The accounting policies for reportable segments are generally the same as those used for preparing the non-consolidated financial statements.

Segment profit for reportable segments are based on operating profit.

There are no inter-segment transfers.

3. Information related to net sales, profit or loss, assets, liabilities, and other items for each reportable segment

FY2/20 (Mar. 1, 2019 - Feb. 29, 2020)

(Thousands of yen)

Reportable segment

Adjustment

Amounts shown on

Others (Note 1)

Total

non-consolidated

Logistics services

(Note 2)

financial statements

Net sales

External sales

7,215,332

86,376

7,301,709

-

7,301,709

Inter-segment sales

-

-

-

-

-

and transfers

Total

7,215,332

86,376

7,301,709

-

7,301,709

Segment profit (loss)

325,834

(34,411)

291,422

-

291,422

Segment assets

3,680,882

98,377

3,779,259

2,641,229

6,420,488

Other items

Depreciation

171,599

1,614

173,214

-

173,214

Increase in

property, plant and

390,046

9,951

399,997

-

399,997

equipment and

intangible assets

Notes: 1. Others are businesses that are not included in the reportable segment and mainly consist of technology education services for foreign trainees and other education services.

2. The 2,641,229 thousand yen adjustment to segment assets is corporate assets that are not allocated to any of the reportable segments. Corporate assets mainly consist of cash and deposits that cannot be attributed to reportable segments.

17

KANTSU CO., LTD. (9326) Financial Results for FY2/21

FY2/21 (Mar. 1, 2020 - Feb. 28, 2021)

(Thousands of yen)

Reportable segment

Adjustment

Amounts shown on

Others (Note 1)

Total

non-consolidated

Logistics services

(Note 2)

financial statements

Net sales

External sales

9,443,935

86,518

9,530,453

-

9,530,453

Inter-segment sales

-

-

-

-

-

and transfers

Total

9,443,935

86,518

9,530,453

-

9,530,453

Segment profit (loss)

429,224

(11,151)

418,072

-

418,072

Segment assets

4,661,160

78,901

4,740,062

2,792,927

7,532,989

Other items

Depreciation

238,183

1,045

239,229

-

239,229

Increase in

property, plant and

653,665

3,654

657,319

-

657,319

equipment and

intangible assets

Notes: 1. Others are businesses that are not included in the reportable segment and mainly consist of technology education services for foreign trainees and other education services.

2. The 2,792,927 thousand yen adjustment to segment assets is corporate assets that are not allocated to any of the reportable segments. Corporate assets mainly consist of cash and deposits that cannot be attributed to report able segments.

18

KANTSU CO., LTD. (9326) Financial Results for FY2/21

Per Share Information

(Yen)

FY2/20

FY2/21

(Mar. 1, 2019 - Feb. 29, 2020)

(Mar. 1, 2020 - Feb. 28, 2021)

Net assets per share

275.21

500.16

Net income per share

74.95

94.99

Diluted net income per share

-

90.00

Notes: 1. Diluted net income per share for FY2/20 is not shown. Although there were outstanding dilutive shares, it is not possible to determine an average stock price because the stock of KANTSU was not listed. The stock of KANTSU was listed on the Tokyo Stock Exchange Mothers Market on March 19, 2020. Diluted net income per share for FY2/21 was determined by using an average stock price during the period between the listing and the end of February 2021.

  1. In accordance with a resolution approved at the Board of Directors on September 13, 2019, KANTSU conducted a 50-for-1 common stock split on October 30, 2019. Net assets per share and net income per share have been calculated as if this stock split had taken place at the beginning of the fi scal year ended February 29, 2020.
  2. The basis of calculating the net income per share and the diluted net income per share is as follows:

(Thousands of yen)

FY2/20

FY2/21

(Mar. 1, 2019 - Feb. 29, 2020)

(Mar. 1, 2020 - Feb. 28, 2021)

(1) Net income per share

[Basis for calculation]

Profit

170,505

283,015

Amounts not attributable to common shareholders

-

-

Profit applicable to common shares

170,505

283,015

Average number of common shares outstanding during

2,275,000

2,979,558

the period (shares)

(2) Diluted net income per share

[Basis for calculation]

Adjustment to profit

-

-

Increase in number of common shares (shares)

-

165,183

[of which share acquisition rights (shares)]

[-]

[165,183]

Summary of dilutive shares not included in the

2 types of share acquisition

calculation of diluted net income per share since there

rights (189,500 common

-

was no dilutive effect

shares)

19

KANTSU CO., LTD. (9326) Financial Results for FY2/21

Subsequent Events

1. Exercise of share acquisition rights

During the period from February 28, 2021 to April 9, 2021, the 4th series of share acquisition rights allocated by KANTSU on November 6, 2020 were partially exercised. A summary of the exercise of these share acquisition rights are as follows.

(1)

Number of share acquisition rights exercised:

150 units

(2)

Class and number of shares issued:

15,000 shares of KANTSU common stock

(3)

Increase in share capital:

18,128 thousand yen

(4)

Increase in legal capital surplus:

18,128 thousand yen

Above figures do not include the number of shares exercised between April 10 and April 14, 2021 .

2. Purchase of non-current assets

On April 14, 2021, the KANTSU board of directors approved a resolution to purchase non -current assets as follows.

  1. Reason for purchase of non-current assets
    Demand for e-commerce logistics and for refrigerated and frozen warehouses is increasing. To meet this demand and increase the ability to attract new customers, KANTSU will construct an automated warehouse with space for ambient storage and cold storage.
  2. Purchases

Automated warehouse (refrigerated/frozen)

About 1,000 pallets

Automated warehouse (ambient)

About 1,300 pallets

Cold storage equipment

*Warehouse floor area is about 2,460 square meters.

(3)

Acquisition cost

465 million yen (planned)

(4)

Schedule

Board of directors' resolution

April 14, 2021

Construction

May 2021 to January 2022 (planned)

Start of operations

February 2022 (planned)

  1. Outlook
    This acquisition will have only a negligible effect on results of operations for the fiscal year ending February 28, 2022.

This summary report is solely a translation of "Kessan Tanshin" (in Japanese, including a ttachments), which has been prepared in accordance with accounting principles and practices generally accepted in Japan, for the convenience of readers who prefer an English translation.

20

Disclaimer

Kantsu Co. Ltd. published this content on 06 May 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 06 May 2021 18:08:14 UTC.


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Financials
Sales 2022 11 600 M 105 M 105 M
Net income 2022 480 M 4,34 M 4,34 M
Net Debt 2022 - - -
P/E ratio 2022 28,7x
Yield 2022 -
Capitalization 13 789 M 125 M 125 M
Capi. / Sales 2022 1,19x
Capi. / Sales 2023 0,98x
Nbr of Employees 285
Free-Float 45,3%
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Managers and Directors
Hisahiro Tatsushiro President & Representative Director
Tadashi Katayama Director & General Manager-Administration
Hiroshi Asakura MD & Head-Logistics Business
Seigo Matsuoka MD, Head-Sales & Education Business
Toshitsuna Tatsushiro Director & General Manager-Corporate Planning
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