ValueCommerce : Q3 TSE Filings(292KB)pdf

This filing was originally prepared and published by the company in Japanese as it contained timely disclosure information to be submitted to the Tokyo Stock Exchange (1st section). The English translation is for your reference only. To the extent there is any discrepancy between this English translation and the original Japanese filing, the Japanese filing will prevail. The following financial information was prepared in accordance with generally accepted accounting principles in Japan (JGAAP).

Financial Results (Consolidated) for Q1-Q3(Cumulative) of FY2019

		October 28, 2019
Corporate Name:	ValueCommerce Co., Ltd.	Listed: TSE 1st section
Ticker Symbol:	2491	URL: https://www.valuecommerce.co.jp/en/
Representative:	Representative Director, President and CEO	(Name) Jin Kagawa
Contact person:	Director of the Board, CFO	(Name) Masatomo Endo

	TEL: [phone]
Scheduled date of commencement of dividend payment:	-
Scheduled date of filing the securities report:	November 7, 2019
Results supplementary materials to be created:	Yes
An explanatory presentation to investors:	No
	(Amounts less than one million yen rounded down)

1. Consolidated Operating Results for the Third Quarter of FY2019 (Jan. 1 to Sep. 30, 2019)

(1) Consolidated Operating Results					(Percentage figures refer to comparisons with the previous fiscal year)
										Net income
		Revenue		Operating income	Ordinary income	attributable to owners
										of the parent
		Million Yen		%	Million Yen		%	Million Yen	%	Million Yen		%
Q1-Q3(cumulative) FY2019		18,298		24.7	3,492		33.4	3,503	31.2	2,355		29.8
Q1-Q3(cumulative) FY2018		14,671		20.0	2,618		77.4	2,670	79.0	1,815		213.6

(Note) Comprehensive income:	Third quarter ended September 30, 2019:	2,412 million yen, 31.8%
	Third quarter ended September 30, 2018: 1,830 million yen, 191.0%
	Basic EPS		Diluted EPS
		(Diluted Earnings per
	(Earnings per share)
		share)
	Yen		Yen
Q1-Q3(cumulative) FY2019	72.94		72.87
Q1-Q3(cumulative) FY2018	56.32		56.19
(2) Consolidated Financial Positions
	Total assets	Net worth	Equity ratio	Book-value per share
	Million Yen	Million Yen	%	Yen
As of September 30, 2019	16,054		10,531	65.6	325.86
As of December 31, 2018	14,706		9,145	62.1	283.02
(Reference) Owners' equity:	As of September 30, 2019:	10,525 million yen
	As of December 31, 2018:	9,137 million yen

(Note) Starting from the first quarter of consolidated fiscal year under review, "Partial amendment of accounting standards about accounting for income taxes (Corporate Accounting Standards No.28, February 16, 2018)" has been applied. Figures as of December 31, 2018 have been prepared/analyzed retrospectively based on the new calculation method.

2. Dividends

			Dividend per share
	Q1	Q2	Q3	Q4	Total
	Yen	Yen	Yen	Yen	Yen
FY2018	－	7.00	－	18.00	25.00
FY2019	－	14.00
FY2019 (Forecast)			－	14.00	28.00

(Note) Revisions to dividends forecast published most recently: No

3. Consolidated Operating Forecast for the Fiscal Year Ended Dec. 31, 2019 (Jan. 1 to Dec. 31, 2019)

(Percentage figures refer to comparisons with the previous fiscal year)

								Net income		Basic EPS
	Revenue		Operating income	Ordinary income	attributable to owners	(Earnings
								of the parent		per share)
	Million Yen		%	Million Yen	%	Million Yen	%	Million Yen		%	Yen
FY2019	24,500		18.0	4,350	15.8	4,330	14.1	2,920		12.1	90.41

(Note) Revisions to operating forecast published most recently: No

• Notes

1. Significant changes in scope of consolidation during this year: No
2. Application of specific accounting treatment to the preparation of quarterly consolidated financial statements: No
3. Changes in accounting policies and accounting estimates, retrospective restatement

1.	Changes in accounting policies due to amendment of accounting standards, etc.	:	No
2.	Changes in accounting policies other than "1."		:	No
3.	Changes in accounting estimates			:	No
4.	Retrospective restatement			:	No
(4) Number of shares issued (Common stock)
1.	Common stock		as of	34,471,000 shares	as of		34,471,000 shares
	(including treasury stock)		Sep. 30, 2019	Dec. 31, 2018
2.	Treasury stock		as of	2,170,741 shares	as of		2,185,700 shares
	Sep. 30, 2019	Dec. 31, 2018
3.	Average number of shares		average during	32,294,792 shares	average during		32,231,981 shares
issued (cumulative period)		Jan. 1 to Sep. 30, 2019	Jan. 1 to Sep. 30, 2018

* Quarterly review

This outline of quarterly consolidated financial statements is not subject to the quarterly review.

• Note on proper use of the financial forecasts and other special notes (Note on future descriptions)
  This filing contains future description such as financial outlook. They are based on information currently available to the company and on certain assumptions we deem reasonable. They are not intended to constitute the company's guarantee that the outlook and description will be realized. The actual results may differ materially from those described in this filing due to various factors.

(Method to reach supplementary materials)

The supplementary materials on financial results will be posted on the company's website.

1. Qualitative Information Concerning Consolidated Business Results

(1) Analysis of Operating Results

During the third quarter of the consolidated fiscal year under review, the Japanese economy overall, employment/income environment improved and consumer spending recovered while solid corporate earnings. On the other hand, consumer mind is low due to concerns about a slowdown in the foreign economy and psychological impact before consumption tax hike.

In marketing domain the Group belongs, competition among commerce business operators is intense according to e-commerce market expansion and new entrants increase. Thus the demand of effective marketing solution increases.

In this environment, the Group focus on providing marketing solution from customer attraction to retention to maximize commerce business operators' performance, "conversion (purchase/application)".

For the third quarter of consolidated fiscal year under review, revenue was JPY 18,298,923 thousand (up 24.7% Y/Y). This was attributable to performance in "STORE's R∞ (R Eight)", CRM tool for stores in Yahoo! Shopping, "Storematch", pay-per-click advertising, and "Affiliate Marketing", pay-per-performance advertising.

Selling, general and administrative expenses was JPY 2,482,847 thousand (up 11.2% Y/Y) due to expenses such as increased compensation to motivate employees, new recruiting and system introduction for operational optimization.

Operating income was JPY 3,492,169 thousand (up 33.4% Y/Y) mainly due to growth driven by all services.

Ordinary income was JPY 3,503,736 thousand (up 31.2% Y/Y) mainly due to recognizing operating gains on investment in partnership of JPY 6,388 thousand under non-operating incomes.

Net income attributable to owners of the parent was JPY 2,355,687 thousand (up 29.8% Y/Y) due to the recording of income taxes of JPY 1,097,200 thousand.

The company acquired all shares of Dynatech inc. on September 27, 2019 and Dynatech inc. has become a consolidated subsidiary of the company. With this acquisition, the Group starts to provide services for accommodation facilities. We promote reservation of accommodation facilities and repeat customers by our know-hows of attracting customers/promoting repeat customers and Dynatech inc's know-hows of supporting accommodation facilities cooperating with each other.

Segment performance was as follows:

(i) Marketing Solution Business

During the third quarter of consolidated fiscal year under review, Marketing Solution Business provides solutions of customer attraction to general commerce providers' EC site. Main service is "Affiliate Marketing", pay-per-performance advertising.

Conversion (purchase/application) expanded due to proposal based on ad-technologies and marketing data in "Affiliate Marketing".

As a result, this segment attained revenue of JPY 12,863,947 thousand (up 16.0% Y/Y) and segment operating income of JPY 2,244,206 thousand (up 14.0% Y/Y).

(ii) EC Solution Business

During the third quarter of consolidated fiscal year under review, EC Solution Business provides solutions of sales promotion on general commerce providers' EC site. Main services are "STORE's R∞", CRM tool, and "Storematch", pay-per-click advertising. These services support stores' sales promotion in EC site operated by Yahoo Japan Corporation.

By collaborating with Yahoo Japan Corporation, "STORE's R∞" and "Storematch" engaged some business measures to promote service use of stores. Also the feature for store's partial operational automation developed in the preceding consolidated fiscal year and expansion of ad distribution space contributed to increase the income in "Storematch".

As a result, this segment attained revenue of JPY 5,434,975 thousand (up 51.7% Y/Y) and segment operating income of JPY 2,152,637 thousand (up 34.8% Y/Y).

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1. Analysis of Financial Positions

1. The status of assets, liabilities and net assets (Assets)

At the end of the third quarter of the consolidated fiscal year under review, total assets amounted to JPY 16,054,899 thousand, an increase of JPY 1,348,396 thousand from the end of the preceding consolidated fiscal year.

Current assets amounted to JPY 11,593,068 thousand, a decrease of JPY 1,070,380 thousand from the end of the preceding consolidated fiscal year. This was mainly due to a decrease in cash and deposits of JPY 1,409,993 thousand despite an increase in notes and accounts receivable-trade of JPY 143,757 thousand.

Noncurrent assets amounted to JPY 4,461,831 thousand, an increase of JPY 2,418,776 thousand from the end of the preceding consolidated fiscal year. This was mainly due to an increase in software of JPY 254,656 thousand, software in progress of JPY 821,492 thousand and goodwill of JPY 1,138,371 thousand according to acquisition of 100% share of Dynatech inc. and consolidation of the subsidiary of the company.

(Liabilities)

At the end of the third quarter of the consolidated fiscal year under review, total liabilities amounted to JPY 5,523,464 thousand, a decrease of JPY 37,143 thousand from the end of the preceding consolidated fiscal year.

Current liabilities amounted to JPY 5,447,652 thousand, a decrease of JPY 37,612 thousand from the end of the preceding consolidated fiscal year. This was mainly due to a decrease in accounts payable-trade of JPY 91,702 thousand and income taxes payable of JPY 219,955 thousand despite an increase in accounts payable-other of JPY 154,101 thousand and provision for bonuses of JPY 121,716 thousand.

Noncurrent liabilities amounted to JPY 75,811 thousand, an increase of JPY 468 thousand from the end of the preceding consolidated fiscal year.

(Net assets)

At the end of the third quarter of the consolidated fiscal year under review, net assets amounted to JPY 10,531,435 thousand, an increase of JPY 1,385,540 thousand from the end of the preceding consolidated fiscal year. This was mainly due to an increase in attributable to the recording of net income attributable to owners of the parent of JPY 2,355,687 thousand despite a decrease in retained earnings of JPY 1,033,333 thousand as a result of a dividend of surplus.

Starting from the first quarter of consolidated fiscal year under review, "Partial amendment of accounting standards about accounting for income taxes (Corporate Accounting Standards No.28, February 16, 2018)" has been applied. Figures of consolidated financial positions for the end of the preceding consolidated fiscal year have been prepared/analyzed retrospectively based on the new calculation method.

2. Cash Flows

At the end of the third quarter of the consolidated fiscal year under review, the balance of cash and cash equivalents amounted to JPY 6,568,061 thousand, a decrease of JPY 1,409,993 thousand from the end of the preceding consolidated fiscal year.

The cash flows during the third quarter of the consolidated fiscal year under review and their causes are as follows.

(Operating Cash Flows)

Net cash provided by operating activities amounted to JPY 2,464,816 thousand (compared to net cash provided of JPY 1,549,428 thousand in the preceding third quarter), mainly due to income before income taxes of JPY 3,452,887 thousand. Positive factors include depreciation of JPY 197,271 thousand, amortization of goodwill of JPY 84,260 thousand and a decrease in accounts receivable-trade of JPY 308,070 thousand. Negative factors include a decrease in accounts payable-trade of JPY 177,399 thousand, a decrease in accounts payable-other of JPY 76,040 thousand and income taxes paid of JPY 1,313,850 thousand.

(Investing Cash Flows)

Net cash used in investing activities amounted to JPY 2,854,734 thousand (compared to net cash provided of JPY 558,054 thousand in the preceding third quarter), mainly due to purchase of intangible assets of JPY 139,483 thousand and payment of acquisition of investments in subsidiaries resulting in change in scope of consolidation of JPY 2,640,918 thousand.

(Financing Cash Flows)

Net cash used in financing activities amounted to JPY 1,019,898 thousand (compared to net cash used of JPY 411,073 thousand in the preceding third quarter), mainly due to cash dividends paid of JPY 1,026,753 thousand.

(3) Information about Consolidated Financial Forecasts

The consolidated financial forecast has not revised. Please refer "Notification Concerning Revision of Earnings and Dividends Forecasts for Fiscal 2019", announced on April 24, 2019.

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3. Earnings Results for the Year Ended September 30, 2019

(1) Consolidated Balance Sheet

			(Thousand yen)
		As of	As of
		December 31, 2018	September 30, 2019
(Assets)
Current assets
Cash and deposits	7,978,055	6,568,061
Notes and accounts receivable- trade	3,550,095	3,693,853
Accounts receivable- other	1,059,346	1,105,003
Other current assets	89,300	233,763
Allowance for doubtful accounts	-13,348	-7,612
Current assets in total	12,663,448	11,593,068
Noncurrent assets
Property, plant and equipment
Buildings and accompanying facilities, net	189,933	189,114
Tools, instruments and fixtures, net	102,150	169,304
Leased assets, net	－	653
Property, plant and equipment in total	292,083	359,072
Intangible assets
Software	553,722	808,378
Software in progress	68,813	890,306
Goodwill	224,695	1,363,066
Other intangible assets	11,169	11,251
Intangible assets in total	858,401	3,073,002
Investments and other assets
Investment securities	490,638	595,426
Guarantee deposits	243,455	311,369
Deferred tax assets	136,691	95,292
Other investments	21,785	28,661
Allowance for doubtful accounts	－	-993
Investments and other assets in total	892,569	1,029,755
Noncurrent assets in total	2,043,054	4,461,831
Total assets		14,706,503	16,054,899

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