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    3678   JP3921230003

MEDIA DO CO., LTD.

(3678)
  Report
Delayed Japan Exchange  -  01:00:00 2023-01-31 am EST
1724.00 JPY   +1.83%
01/17Media Do's Fiscal Nine-month Attributable Profit Sinks 60%; Shares Up 3%
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01/16Media Do Co., Ltd. Revises Earning Guidance for the Fiscal Year Ending February 28, 2023
CI
2022Contents Lab. Blue. announced that it has received ą500 million in funding from MEDIA DO Co., Ltd.
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MEDIA DO : Summary of Consolidated Financial Results for the Year Ended February 28, 2022 (Based on Japanese GAAP)

04/14/2022 | 03:26am EST

Summary of Consolidated Financial Results for the Year Ended February 28, 2022

(Based on Japanese GAAP)

April 14, 2022

Company name:

MEDIA DO Co., Ltd.

Stock exchange listing:

Tokyo

Stock code:

3678 (URL:https://mediado.jp/english/)

Representative:

President and CEO Yasushi Fujita

Inquiries:

Director and CAO Yoshiyuki Suzuki (Tel: +81-3-6212-5113)

Scheduled date of the Annual General Meeting of Shareholders:

May 26, 2022

Scheduled date for filing of Securities Report:

May 27, 2022

Scheduled starting date for dividend payment:

May 10, 2022

Preparation of supplementary materials on financial results:

Yes

Financial results briefing for institutional investors and analysts:

Yes

(Amounts less than one million yen are rounded down)

1. Consolidated Financial Results for the Fiscal Year Ended February 28, 2022 (March 1, 2021 to February 28, 2022)

(1) Consolidated operating results

(Percentages indicate year-on-year changes)

Net sales

Operating profit

Ordinary profit

Profit attributable to owners of parent

FY2021

FY2020

Millions of yen 104,722 83,540

% 25.4 26.8

Millions of yen 2,811 2,664

% 5.5 43.8

Millions of yen 2,783 2,720

% 2.3 54.4

Millions of yen 1,576 1,519

% 3.8 71.7

(Note) Comprehensive income: Comprehensive income: FY2021 ¥1,654 million (30.8%);

FY2020 ¥1.264 million (19.0%)

Earnings per share

Diluted earnings per share

Return on equity

Return on assets

Operating profit to net sales ratio

FY2021

FY2020

Yen 99.75 104.52

Yen 99.68 102.80

% 10.9 17.0

% 5.8 7.0

% 2.7 3.2

(Reference) Equity in earnings of affiliates: FY2021 ¥(39 million);

FY2020 ¥50 million

(2) Consolidated Financial Position

Total assets

Net assets

Equity ratio

Net assets per share

As of February 28, 2022

As of February 28, 2021

Millions of yen 52,509 43,187

Millions of yen 16.912 12,169

% 32.0 28.0

Yen 1,059.59 787.66

(Reference) Shareholders' equity: As of February 28, 2022 ¥16,815 million;

As of February 28, 2021 ¥12,104 million

(3)

Consolidated Cash Flows

Cash flows from operating activities

Cash flows from investing activities

Cash flows from financing activities

Cash and cash equivalents at end of period

FY2021

FY2020

Millions of yen 4,632 2,544

Millions of yen

(7,835) (1,275)

Millions of yen 2,089 3,349

Millions of yen 11,399 12,703

2. Dividends

Dividends per share (Yen)

Total dividends (Millions of yen)

Payout ratio (Consolidated)

Ratio of dividends to net assets (Consolidated)

First quarter-end

Second quarter-end

Third quarter- end

Fiscal year-end

Total

FY2020

FY2021

― ―

0.00 0.00

― ―

21.00 21.00

21.00 21.00

322 333

20.1

21.1

3.5

2.3

FY2022 (Forecast)

0.00

0.00

0.00

(Notes)

  • 1. For information about the year-end dividend for FY2021, see the press release "Notice regarding extraordinary loss (impairment loss) and revisions to dividend forecast" released on October 13, 2021.

  • 2. For information about MEDIA DO's annual dividend (forecast) for FY2022 and policy for returning profits to shareholders, please refer to

    "Analysis of operating results (6) Basic policy on distribution of profits and dividend for the current and subsequent fiscal years."

3.

Consolidated Earnings Forecasts for Fiscal Year Ending February 28, 2023 (March 1, 2022 to February 28, 2023)

(Percentage figures are changes from the corresponding period of the previous fiscal year.)

Net sales

Operating profit

Ordinary profit

Profit attributable to owners of parent

Earnings per share

Full year

Millions of yen 100,000

% -4.5

Millions of yen 2,000

% -28.9

Millions of yen 1,870

% -32.8

Millions of yen 850

% -46.1

Yen 53.56

(Note) Consolidated earnings forecasts for the fiscal first half are omitted because the Company budgets on an annual basis. For details, please refer to "(5) Forecast for the fiscal year ending February 28, 2023" on page 5.

Qualitative Information Regarding Financial Results

(1) Analysis of operating results

In FY2021, despite the ongoing impacts of the pandemic and Japan's reissuance of states of emergency, Japan's economic environment gradually began to see a normalization of economic activities following progress with the COVID-19 vaccination rollout. On the other hand, uncertainty persisted due to weakening consumer mindsets from an unstable employment situation and rapidly rising geopolitical risks.

The shift from paper books to eBooks continues as an irreversible trend and the market continues to grow. However, stay-at-home consumption driven by the increase in disposable time from working from home and avoiding going out appears to have peaked in the second half of FY2021. Additionally, the eBook market saw some factors inhibiting market growth, such as the impacts of pirate sites.

In FY2020, the eBook market was valued at ¥482.1 billion, a ¥107.1 billion increase from ¥375.0 billion in FY2019. Breaking down the eBook market, the magazine category is estimated* to be valued at ¥26.3 billion, non-graphic books (arts, how-to, photo compilations, etc.) at ¥55.6 billion, and comics at ¥400.2 billion. By FY2025, the domestic eBook market is projected to grow moderately to ¥674.7 billion, an approx. 40% increase from FY2020. (Source: Impress Research Institute's eBook Marketing Report 2021 on Japanese market)

* We revised the definition of the e-book market this year. The category of "eMagazines" that had been revised in the past is now included in "eBook." Furthermore, historical data has also been retroactively revised.

Under these circumstances, the MEDIA DO Group's mission is "unleashing a virtuous cycle of literary creation," which inspires it to strive to distribute written works to its utmost ability, while ensuring that they are used under fair conditions and that the profits from these works are appropriately returned to their creators. The Group's vision is "More Content for More People!" Based on this mission and vision, we are actively expanding the scope of our business and pursuing improvements in corporate value in order to contribute to the development of culture and enrichment of society in Japan.

As an initiative undertaken in FY2021, focusing on society both during and after the pandemic, we addressed the challenge of striking a balance between resolving societal issues and achieving sustainable growth by playing our role in providing infrastructure to support eBook distribution to match "the new normal," and confronting head-on the requests and problems of all stakeholders associated with digital content, such as creators, publishers, eBook retailers, and users. Specifically, we moved forward with the development of foundations for creating new publishing cultures and distribution ecosystems through multiple M&A activities and capital tie-ups. We are also helping drive the digital transformation of the publishing industry.

In addition, we developed and added non-fungible tokens (NFTs) as a service as new digital content using blockchain technology, and started selling NFTs on "FanTop," our operating platform. In cooperation with TOHAN CORPORATION, we are steadily working to realize the Digital Content Asset (DCA) advocated by MEDIA DO, such as the provision of a service that grants digital benefits using NFT to readers who visit bookstores and purchase books.

However, the number of pirated sites is growing once again. It had previously subsided after the major pirated manga sites that plagued the publishing industry in 2017-18 were shut down. Recently, however, pirate sites serving up Japanese content from Vietnam and elsewhere outside of Japan have been coming to light in rapid succession. Currently, the top-10 pirate sites are believed to collectively garner more traffic than the previous generation of major pirate sites.

As a result of the above, in FY2021 the Group recorded ordinary income of ¥2,783 million (up 2.3% YoY) and profit attributable to owners of parent of ¥1,576 million (up 3.8%) on net sales of ¥104,722 million (up 25.4%).

(2) Segment information eBook Distribution

In the eBook distribution business, MEDIA DO is developing its operations based on two policies: "stimulate the growth of eBook markets," which entails supporting the expansion of the eBook market, and "invent future eBook markets," which will involve utilizing blockchain and other technologies to create new markets and to propose new ways of enjoying digital content.

Initiatives to "stimulate the growth of eBook markets" included the ongoing provision of distribution and eBook transmission solutions to eBook distributors such as LINE MANGA, Amazon Kindle, and Comic Cmoa. The MEDIA DO Group is contributing to the development of the publishing industry as the largest eBook wholesaler in Japan, with business relationships with more than 2,200 publishers and 150 eBook distributors, a content library of over 2 million eBooks, and a track record of helping conduct more than 10,000 campaigns together with publishers and distributors (as of February 28, 2022). In the first quarter of FY2021, the MEDIA DO Group posted a substantial increase in sales from major sales promotion campaigns implemented by an eBook store and going forward we believe that these sales promotion campaigns of eBook stores with capital strength will be key to market expansion.

Additionally, MEDIA DO concluded a capital and business alliance with Tohan, making MEDIA DO Tohan's largest shareholder. In collaboration with Tohan, MEDIA DO implemented a service to grant and sell digital benefits using NFT for paper books and pushed ahead with expansion of our product lineup and new projects. Moreover, MEDIA DO and Tohan are also working together in the field of eLibraries to create synergies that transcend the boundaries of paper and digital, such as by tapping into new markets for introduction of services.

On top of this, we initiated beta testing on the PUBNAVI eBook sales royalty management system developed to support enterprise resource planning (ERP) for sales and royalty management not only for eBooks but also for paper book publishing.

In terms of "invent future eBook markets," the Group aims to build mechanisms promoting the further expansion of the eBook market. Toward this end, the Group is proposing new ways of enjoying digital contents to realize its Digital Content Asset (DCA) model as a new digital content distribution model and asset model.

In October 2021, we launched FanTop as our proprietary NFT platform and commenced service provision. FanTop seeks to transform the act of collecting of fan items, which until now had primarily taken place in the physical world, by combining the physical and digital to capitalize on the unlimited possibilities of the digital world. Moreover, MEDIA DO has developed an app with 3D, AR and VR functionality in preparation for building a secondary market where users can buy and sell items amongst themselves. This service launched in February 2022.

Consequently, segment income was ¥2,650 million (up 2.2% YoY) on net sales of ¥99,309 million (up 20.6%).

Other

In the Other segment, we continued to actively invest in earnings improvements and growth.

We are promoting the expansion of the "flier" business book summary service as a core growth driver for the B2B SaaS business, undertaking initiatives to increase the number of subscribers through the expansion of sales force, promotions, and measures to improve paths to purchasing.

In August 2021, ARTRA ENTERTAINMENT Inc., which provides eComic coloring and comic production support services, completed the relocation and expansion of its office. It is now accelerating its response to rising demand for new digital content, such as vertical scrolling manga.

Moreover, NIHONBUNGEISHA Co., Ltd., which became a consolidated subsidiary in March 2021, posted strong sales and profits driven by the focus on improvement in the return book rate due to the strengthening of distribution control and the focus on sales of eBooks. Additionally, the Firebrand Group (Quality Solutions, Inc. as well as NetGalley, LLC and its subsidiaries) is making good progress with the steady growth of its existing businesses and measures to increase profits through PMI.

In addition to the above, we are working on initiatives to create the second axis of growth. This included acquiring Everystar Co., Ltd., which has a hybrid model of novel posting site and publishing, in December 2021, and acquiring the shares of Supadü Limited, which has D2C marketing functions, such as providing a publisher direct sales site with SaaS, based in London, United Kingdom in January 2022, with both companies joining the Group.

As a result, we recorded a segment loss of ¥179 million (vs. FY2020 segment loss of ¥248 million) on net sales of ¥5,409 million (up 354.3%).

(3) Analysis of financial position Assets

As of February 28, 2022, total assets stood at ¥52,509 million, an increase of ¥9,321 million (up 21.6% YoY).

Current assets amounted to ¥36,361 million, an increase of ¥2,458 million, up 7.3%.

The main factors were an increase in notes and accounts receivable - trade by ¥3,368 million due to an increase in sales despite a decrease in cash and deposits by ¥1,303 million due to purchase of shares of subsidiaries.

Non-current assets totaled ¥16,147 million, an increase of ¥6,862 million, up 73.9%.

This is mainly attributable to an increase of ¥2,632 million in intangible assets such as goodwill and software in addition to a rise of ¥3,920 million in investment securities.

Liabilities

As of February 28, 2022, total liabilities stood at ¥35,596 million, an increase of ¥4,577 million (up 14.8% YoY).

Current liabilities amounted to ¥30,439 million, an increase of ¥5,014 million, up 19.7%.

This is mainly attributable to an increase in notes and accounts payable - trade of ¥4,032 million due to an increase in purchases from an increase in sales, as well as a rise in other current liabilities such as deposits received of ¥740 million.

Non-current liabilities amounted to ¥5,156 million, a decrease of ¥436 million (down 7.8% YoY).

The main factors were a decrease in long-term borrowings of ¥1,027 million although the ¥569 million of retirement benefit liability resulting from inclusion of subsidiaries in consolidation caused non-current liabilities to increase.

Net assets

As of February 28, 2022, total net assets amounted to ¥16,912 million, an increase of ¥4,743 million (up 39.0% YoY).

This is mainly attributable to an increase in capital stock and capital surplus by ¥1,494 million and ¥1,796 million, respectively, due to the payment for third-party allocation of shares from Tohan and retained earnings decreased by ¥322 million due to dividends from surplus while profit attributable to owners of parent was ¥1,576 million.

(4) Cash flows

Cash and cash equivalents as of February 28, 2022 ("cash") were ¥11,399 million.

The status of cash flows during the fiscal year ended February 28, 2022 were as follows.

(Cash flows from operating activities)

Net cash provided by operating activities was ¥4,632 million (up 82.1% YoY).

The main cash inflows were profit before income taxes of ¥2,363 million, depreciation of ¥455 million, amortization of goodwill of ¥660 million, and an increase in trade payables of ¥3,537 million. Main cash outflows included an increase in trade receivables of ¥1,385 million, and income taxes paid of ¥1,113 million.

(Cash flows from investing activities

Net cash used in investing activities was ¥7,835 million, compared to net cash used of ¥1,275 million in the previous fiscal year.

The main factors were purchase of property, plant and equipment of ¥778 million, purchase of investment securities of ¥3,475 million, and purchase of shares of subsidiaries resulting in change in scope of consolidation of ¥3,465 million.

(Cash flows from financing activities)

Net cash provided by financing activities was ¥2,089 million, compared to net cash provided of ¥3,349 million in the previous fiscal year.

The main cash inflows were proceeds from issuance of shares of ¥2,937 million. Main cash outflows included repayments of long-term borrowings of ¥1,182 million, and dividends paid of ¥322 million.

(Reference) Trends in Cash Flow Related Indicators

FY2018

FY2019

FY2020

FY2021

Equity ratio (%)

14.1

17.0

28.0

32.0

Equity ratio based on market value (%)

98.3

118.0

197.1

75.3

Interest-bearing debt to cash flow ratio (years)

4.1

4.3

2.6

1.2

Interest coverage ratio (times)

50.5

46.1

70.7

143.8

Equity ratio: Shareholders' equity / Total assets

Equity ratio based on market value: Market capitalization / Total assets

Interest-bearing debt to cash flows ratio: Interest-bearing debt / Cash flows

Interest coverage ratio: Cash flows / Interest expense

(Notes) 1. Cash flows use operating cash flows. 2. Interest-bearing debt includes all debt appearing on the balance sheet on which interest is being paid.

(5) Forecast for the fiscal year ending February 28, 2023

We expect the eBook market to continue growing over the mid to long term amid the ongoing shift from paper books to eBooks, which has become irreversible trend. In addition, as the integration of digital and physical progresses, we expect to see growth in new business opportunities such as NFTs and vertical scrolling manga, as well as changes in the role expected of our core distribution business.

In response to these changes in the environment, the Group recognizes that its raison d'etre and value proposition is to provide products and services that meet the diverse values of its diverse stakeholders through its own efforts to tackle the challenges of DX. Based on these, today, the Group announced its five-year medium-term management plan, which will commence in the fiscal year ending February 28, 2023.

In the fiscal year ending February 28, 2023, downward pressure on Japan's economy as a whole is expected to continue, including impacts on economic normalization following the aftermath of COVID-19 and the tense situation in Ukraine. In addition, in the field of eBook distribution, some of the Group's main business partners have indicated the possibility of changing their sales channels. For details regarding this matter, please refer to "Notice regarding status of transactions with main business partner, and of earnings forecasts for current fiscal year" separately announced today.

Based on these measures, under the new medium-term management plan, the Group will work on "operational transformation and streamlining" and "business model transformation" as a supporter of DX in the content industry, and the Group will work to expand the market and establish a second revenue pillar while resolving the issues faced by the content industry.

With regard to operational reform and streamlining, the Group will utilize position, which represents its competitive advantage, mainly in the distribution business, to enhance and improve the efficiency of various services and expand its lineup of solution services to promote DX in the publishing value chain.

With regard to business model transformation, as the Internet has begun to shift to the new concept of Web 3, we will accelerate DX in order to become a company that can provide more technology-oriented products and services while grasping the latest trends. By focusing on the FanTop platform to realize the DCA model, such as the monetization of digital content using NFTs, the Group will expand into the B2C domain in addition to the conventional B2B domain.

For details on the medium-term management plan (fiscal year ending February 2023 to fiscal year ending February 2027), including five-year management targets and segment themes, please refer to "Notice regarding formulation of medium-term management plan" separately announced today.

In light of the above, the Group is forecasting FY2022 net sales of ¥100,000 million (down 4.5% YoY), operating profit of ¥2,000 million (down 28.9% YoY), ordinary income of ¥1,870 million (down 32.8% YoY) and profit attributable to owners of parent of ¥850 million (down 46.1% YoY)

These forecasts are based on currently available information and involve substantial uncertainty. Actual outcomes may differ from the forecasts as a result of, e.g., changes in business conditions.

(6) Basic policy on distribution of profits and dividend for the current and subsequent fiscal years

Recognizing that returning profits to shareholders is an important management issue, we believe that capital investment and strengthening of management foundation necessary for sustainable growth in the future are also important management goals. Therefore, the Group's basic policy is to pay dividends of profits by comprehensively judging the management condition, including financial position and performance trends, etc., while securing retained earnings.

Based on this policy, we intend to pay a year-end dividend for the fiscal year ended February 28, 2022 of ¥21.00 per share (total dividend: ¥333 million) based on the resolution of the Board of Directors at its meeting scheduled to be held on April 21, 2022. The dividend is based on a comprehensive assessment of the Company's results for the fiscal year under review, the future management environment, and growth investments for the future.

We will make decisions regarding returns of profits, including the next annual dividend, according to the stock price level, etc., focusing on a total return ratio* of 30% or more from dividends and share buybacks. Based on this shareholder return policy, the Board of Directors intends to resolve at its meeting on April 14, 2022 that the Company will implement share buybacks, from April 15 to September 30, 2020, up to 600,000 shares or the acquisition amount of ¥1 billion (please refer to "Notice regarding changes to shareholder return policy and determination of matters related to share buybacks" released today). As a result, as of February 28, 2023, we expect our total return ratio will be 117.6%, significantly exceeding the target. For this reason, we have decided not to pay dividends of surplus for FY2022 and we will intend to cancel all of the shares bought back.

* Total return ratio = (Total amount of dividends paid + Total amount of share buybacks) / Profit attributable to owners of parent

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

Media Do Holdings Co. Ltd. published this content on 14 April 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 April 2022 07:24:10 UTC.


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Financials
Sales 2023 103 B 786 M 786 M
Net income 2023 850 M 6,52 M 6,52 M
Net Debt 2023 - - -
P/E ratio 2023 30,8x
Yield 2023 -
Capitalization 25 972 M 199 M 199 M
Capi. / Sales 2023 0,25x
Capi. / Sales 2024 0,24x
Nbr of Employees 580
Free-Float 56,0%
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Mean consensus BUY
Number of Analysts 2
Last Close Price 1 693,00 JPY
Average target price 6 750,00 JPY
Spread / Average Target 299%
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Managers and Directors
Yasushi Fujita President, CEO & Representative Director
Hiroshi Kanda CFO, Director & Chief Strategy Officer
Junichiro Izumi Chief Technology Officer
Shin Niina Chief Operating Officer, Director & Vice President
Keiichi Enoki Independent Outside Director
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