Wellnet : Financial Results for the Fiscal Year Ended June 30, 2021(Non-consolidated)

Financial Results

for the Fiscal Year Ended June 30, 2021 [Japanese GAAP] (Non-consolidated)

August 10, 2021

Company name: WELLNET CORPORATION

Stock exchange listing: Tokyo Stock Exchange

Code number: 2428

URL: https://www.wellnet.co.jp

Representative: Kazuhiro Miyazawa, President and Representative Director

Contact: Masaaki Uchiyama, Director, General Manager of Administrative Division

Phone: [phone]

Scheduled date of annual general meeting of shareholders: September 22, 2021

Scheduled date of commencing dividend payments: September 24, 2021

Scheduled date of filing securities report: September 24, 2021

Availability of supplementary briefing material on financial results: Available

Schedule of financial results briefing session: Yes

										(Amounts of less than one million yen are rounded down.)
1. Financial Results for the Fiscal Year Ended June 30, 2021 (July 1, 2020 to June 30, 2021)
(1) Operating Results								(% indicates changes from the previous corresponding period.)
				Net sales					Operating profit		Ordinary profit					Profit
Fiscal year ended		Million yen	%		Million yen	%		Million yen	%			Million yen	%
June 30, 2021			8,842	(5.7)				567	(30.6)			666	(19.4)				393	(20.3)
June 30, 2020			9,379	(6.5)				817	62.4			826	55.8				494	31.9
			Basic earnings per		Diluted earnings	Return on equity		Ordinary profit to		Operating profit to
				share			per share			total assets				net sales
Fiscal year ended			Yen				Yen			%					%			%
June 30, 2021			20.94					20.87			5.6					3.2			6.4
June 30, 2020			26.31					26.22			6.9					4.2			8.7
(Reference)	Equity in earnings/loss of affiliates: Fiscal year ended June 30, 2021: ¥- million
										Fiscal year ended June 30, 2020: ¥- million
(2) Financial Position
				Total assets			Net assets		Equity ratio			Net assets per share
				Million yen				Million yen				%					Yen
As of June 30, 2021			21,257				7,175				33.4					377.37
As of June 30, 2020			20,074				7,009				34.6					368.95
(Reference)	Equity:		As of June 30, 2021:			¥7,102 million
				As of June 30, 2020:		¥6,936 million
(3) Status of Cash Flows
				Cash flows from			Cash flows from	Cash flows from				Cash and cash
							equivalents at the end
				operating activities			investing activities	financing activities
									of year
				Million yen				Million yen				Million yen				Million yen
As of June 30, 2021			2,599				(1,799)				1,013						10,423
As of June 30, 2020			(1,846)				(1,181)				(196)						8,609

2. Dividends

		Annual dividends			Total	Payout		Dividend
								to
	1st	2nd	3rd	Year-end	Total		dividends	ratio
	quarter-end	quarter-end	quarter-end			net assets
	Yen	Yen	Yen	Yen	Yen		Million	%	%
		yen
Fiscal year ended
-	0.00	-	13.15	13.15	247	50.0	3.5
June 30, 2020
Fiscal year ended	-	0.00	-	15.47	15.47	291	73.9	4.1
June 30, 2021
Fiscal year ending	-	-	-	-	-			-
June 30, 2022 (Forecast)

Dividends for the fiscal year ended June 30, 2021 are scheduled to be determined by resolution of the Board of Directors on Tuesday, August 17, 2021.

The dividend payout ratio will be set at 50% or more for the fiscal year ending June 30, 2022. As an examination of the financial results forecast is still in progress, the Company will disclose this information in near future. For this reason, "-" has been entered for the year-end and total dividends.

3. Financial Results Forecast for the Fiscal Year Ending June 30, 2022 (July 1, 2021 to June 30, 2022)

As an examination of the financial results forecast for the fiscal year ending June 30, 2022 is still in progress, the Company will disclose this information in near future.

* Notes:

1. Changes in accounting policies, changes in accounting estimates and retrospective restatement
2. 1. Changes in accounting policies due to the revision of accounting standards: No
   2. Changes in accounting policies other than 1) above: No
   3. Changes in accounting estimates: No
   4. Retrospective restatement: No
3. Total number of issued shares (common shares)
4. 1. Total number of issued shares at the end of the period (including treasury shares):

As of June 30, 2021: 19,400,000 shares

As of June 30, 2020: 19,400,000 shares

1. Total number of treasury shares at the end of the period: As of June 30, 2021: 577,865 shares
   As of June 30, 2020: 598,024 shares
2. Average number of shares during the period:

Fiscal year ended June 30, 2021: 18,814,679 shares

Fiscal year ended June 30, 2020: 18,793,333 shares

• These financial results are outside the scope of audit procedures by a certified public accountant or an audit corporation.
• Explanation of the proper use of financial results forecast and other notes

As an examination of the financial results forecast for the fiscal year ending June 30, 2022 is still in progress, the Company will disclose this information in near future.

Table of Contents
1. Overview of Business Results, etc..........................................................................................................................	2
(1)	Overview of Business Results ............................................................................................................................	2
(2)	Overview of Financial Position ..........................................................................................................................	2
(3)	Basic Policy for Profit Sharing and Dividends for the Fiscal Year under Review .............................................	3
2. Management Policy ................................................................................................................................................	4
3. Basic Principle on the Selection of Accounting Standards .....................................................................................	5
4. Financial Statements and Significant Notes ...........................................................................................................	6
(1)	Balance Sheet .....................................................................................................................................................	6
(2)	Statement of Income...........................................................................................................................................	8
(3)	Statement of Changes in Equity .......................................................................................................................	10
(4)	Statement of Cash Flows ..................................................................................................................................	12
(5)	Notes to Financial Statements ..........................................................................................................................	13
	(Notes on going concern assumption).........................................................................................................	13
	(Additional information) .............................................................................................................................	13
	(Significant accounting policies).................................................................................................................	14
	(Notes to Balance Sheet).............................................................................................................................	16
	(Notes to Statement of Income) ..................................................................................................................	16
	(Notes to Statement of Changes in Equity).................................................................................................	17
	(Notes to Statement of Cash Flows)............................................................................................................	21
	(Segment information, etc.) ........................................................................................................................	22
	(Per share information) ...............................................................................................................................	24
	(Significant subsequent events) ..................................................................................................................	24
5. Others....................................................................................................................................................................	25
(1)	Changes to Directors ........................................................................................................................................	25
(2)	Others ...............................................................................................................................................................	25

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1. Overview of Business Results, etc.

(1) Overview of Business Results

During the fiscal year under review, the Japanese economy showed signs of gradual recovery from the economic downturn caused by the COVID-19 pandemic, which had been continuing since the previous fiscal year. However, the second, third, and fourth waves of infection emerged in succession in the second half of the year. With the issuance of semi-state of emergency coronavirus measures and the re-declaration of a state of emergency, the economy was impacted by the government's request to refrain from going out, temporary closures, and other measures. Although the number of people being vaccinated is rising, a state of emergency has been declared as of the date of submission of this report, and the outlook on when the pandemic will subside and the future of the economy remains uncertain.

In the non-face-to-face settlement market, the Company's business domain, the demand for travel in Japan has plummeted, and the impact on transportation-related businesses such as airlines, buses, and railroads has been devastating. Despite our efforts to reduce expenses and other costs and to develop new services, the Company's business performance remains in a difficult situation.

At the same time, DX (Digital Transformation) is being actively promoted in a wide variety of industries and business categories, and the awareness and consumption behaviors of individual consumers are also changing. In this context, the provision of services and purchase of products through non-face-to-face and non- contact means is increasing, and IT is playing an increasingly important role in society. In the midst of this paradigm shift, we have been supporting the promotion of services for consumers from the operator's side as a product provider, such as the priority measures "Response to the age of electronic money" and "Promotion of Bus IT Promotion Solution Project," with "paperless" and "cashless" as keywords. In this context, we have been working to provide a fintech platform that is closely connected to people's lives.

As a result of these business activities, for the fiscal year ended June 30, 2021, the Company reported net sales of ¥8,842 million (down 5.7% year on year), operating profit of ¥567 million (down 30.6% year on year), ordinary profit of ¥666 million (down 19.4% year on year), and profit of ¥393 million (down 20.3% year on year).

1. Overview of Financial Position
2. 1. Status of assets, liabilities, and net assets (Assets)

   Current assets as of June 30, 2021 stood at ¥14,034 million. This mainly comprises cash and deposits of ¥10,503 million, deposits paid of ¥2,124 million and accounts receivable - trade of ¥480 million. Cash and deposits include ¥8,349 million of receiving agency deposits in money collection business, which is the money kept temporarily and separately by the Company up to the predetermined date of transfer to operators in the following month. Meanwhile, non-current assets amounted to ¥7,223 million. This mainly comprises buildings of ¥2,355 million, land of ¥1,739 million, guarantee deposits of ¥1,449 million, and software of ¥731 million. As a result, total assets amounted to ¥21,257 million.

(Reference) Cash and deposits, net (net balance of cash and deposits after offsetting receiving agency deposits related to money collection business)

		(Thousand yen)
	As of June 30, 2020	As of June 30, 2021
(A) Cash and deposits	8,689,868	10,503,958
(B) Receiving agency deposits	6,339,896	8,349,597
(A)-(B) Cash and deposits, net	2,349,972	2,154,360
	2

(Liabilities)

Current liabilities as of June 30, 2021 stood at ¥11,960 million. This mainly comprises receiving agency deposits of ¥8,349 million and deposits received of ¥2,457 million. Meanwhile, non-current liabilities amounted to ¥2,121 million. This mainly comprises long-term borrowings of ¥1,900 million. As a result, total liabilities amounted to ¥14,081 million.

(Net assets)

Net assets as of June 30, 2021 stood at ¥7,175 million. This mainly comprises shareholders' equity of ¥7,097 million.

2) Status of cash flows

Cash and cash equivalents (the "funds") as of June 30, 2021 stood at ¥10,423 million. The status of cash flows as of June 30, 2021 and their contributing factors are as follows.

(Cash flows from operating activities)

Funds provided in operating activities for the fiscal year ended June 30, 2021 amounted to ¥2,599 million. The main factors for the increase are profit before income taxes of ¥666 million, recording of depreciation of ¥366 million and an increase in receiving agency deposits of ¥2,009 million, while the main factor for the decrease is payments of income taxes of ¥312 million.

(Cash flows from investing activities)

Funds used in investing activities for the fiscal year ended June 30, 2021 amounted to ¥1,799 million. The main factor for the decrease is the purchase of property, plant and equipment of ¥1,508 million.

(Cash flows from financing activities)

Funds provided in financing activities for the fiscal year ended June 30, 2021 amounted to ¥1,013 million. The main factor for the increase is proceeds from long-term borrowings of ¥2,000 million, while the main factor for the decrease is repayments of short-term borrowings of ¥740 million.

(3) Basic Policy for Profit Sharing and Dividends for the Fiscal Year under Review

We plan for the dividend payout ratio for the fiscal year ended June 30, 2021 to be 50% or more. In addition, we have decided to pay a commemorative dividend of ¥5 per share, as stated in the timely disclosure "Notice of Commemorative Dividend upon Completion of New Sapporo Office Building and Relocation of Head Office" on June 28, 2021. Accordingly, the Company currently plans to issue ¥15.47 per share.

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