GlobeNewswire

IIJ Announces its Financial Results for the Fiscal Year Ended March 31, 2022

2022-05-13T03:03:17Z

TOKYO, May 13, 2022 (GLOBE NEWSWIRE) -- Internet Initiative Japan Inc. (“IIJ”, TSE Prime: 3774) today announced its consolidated financial results for the fiscal year ended March 31, 2022 (“FY2021”, from April 1, 2021 to March 31, 2022) under International Financial Reporting Standards (IFRS).1

Highlights of Financial Results for FY2021
Total revenuesJPY 226.3 billionup6.3%YoY2 
Operating profitJPY 23.5 billionup65.3%YoY 
Profit before taxJPY 24.2 billionup72.2%YoY 
Net profit3JPY 15.7 billionup61.4%YoY 
Annual cash dividendJPY48.00per share of common stock   up 61.3% YoY4
      
Highlights of Financial Targets for FY2022 (fiscal year ending March 31, 2023)
      
Total revenuesJPY 250.0 billionup10.5%YoY 
Operating profitJPY 27.2 billionup15.5%YoY 
Profit before taxJPY 26.3 billionup8.8%YoY 
Net profit3JPY 17.5 billionup11.7%YoY 
Annual cash dividendJPY58.50per share of common stock   up 21.9% YoY
 

Overview of FY2021 Financial Results and Business Outlook
“We are in the midst of growth. IT utilization by Japanese enterprises has just begun and is becoming more mission-critical. We are confident in delivering further business growth by leveraging our capabilities of offering both various network services and systems integration backed by our robust Internet infrastructure and renowned Internet technology expertise, which we have continued to accumulate since our inception,” said Koichi Suzuki, Founder and Chairman of IIJ.
“In FY2021, our enterprise network services significantly drove our profit growth; network services revenues excluding mobile services revenues grew by 10.3% YoY, mainly by IP services5 and security services, and about two-thirds of network services’ gross profit increase came from these enterprise network services revenue accumulation. We have also acquired some large-scale network renewal projects, which require comprehensive network services together with systems integration. We finished the first year of our three-year mid-term plan by exceeding operating profit margin target. Under these continued favorable business environment, for FY2022, we target the total revenues of JPY250.0 billion, up 10.5% YoY and the operating profit of JPY27.2 billion, up 15.5% YoY. And today, we update our Mid-term operating margin target for FY2023 from over 10%6 to 11.5%,” said Eijiro Katsu, President of IIJ.
“During the dramatic penetration of Internet, we have been leading Internet technology for about thirty years in Japan. Our success so far toward competitors such as large telecom carriers, was mainly made by our network services generation and Internet operation abilities. We have enhanced our senior management and are accelerating execution of our consistent business strategy, which would expand our business scale more than ever. We continue to contribute to the efficiency and productivity of society by our network expertise, and respond sincerely to the trust and expectations of our stakeholders through our business growth,” concluded Suzuki.

_______________________

1 Unless otherwise stated, all financial figures discussed in this announcement are prepared in accordance with IFRS, unaudited and consolidated.
2 YoY is an abbreviation for year over year change.
3 Net profit is “profit for the year attributable to owners of the parent.”
4 IIJ conducted a stock split at a ratio of two-for-one with an effective date of January 1, 2021. YoY in annual cash dividend is calculated based on the post-stock-split basis.
5 IP services are IIJ’s dedicated-type Internet connectivity services, mainly used by corporate users.
6 On November 5, 2021 we updated our FY2023 operating margin target for our three-year mid-term plan, from over 9% to over 10%.
7 Mobile unit charge: Mobile unit charge refers to the unit charge for interconnectivity data communications relating to the usage of mobile infrastructure between mobile carriers such as NTT DoCoMo and MVNO such as IIJ. The unit price is per Mbps.

FY2021 Financial Results Summary
We have omitted segment analysis because most of our revenues are dominated by network services and systems integration (SI) business.

      
 Operating Results Summary
   FY2020FY2021YoY Change
   JPY millionsJPY millions
 Total revenues213,002 226,335 6.3 
  Network services126,827 128,213 1.1 
  Systems integration (SI)83,284 95,338 14.5 
  ATM operation business2,891 2,784 (3.7)
 Total costs(172,720)(174,707)1.2 
  Network services(99,656)(92,595)(7.1)
  Systems integration (SI)(71,197)(80,396)12.9 
  ATM operation business(1,867)(1,716)(8.1)
 Total gross profit40,282 51,628 28.2 
  Network services27,171 35,618 31.1 
  Systems integration (SI)12,087 14,942 23.6 
  ATM operation business1,024 1,068 4.2 
 SG&A, R&D, and other operating income (expenses)(26,034)(28,081)7.9 
 Operating profit14,248 23,547 65.3 
 Profit before tax14,035 24,162 72.2 
 Profit for the year attributable to owners of the parent9,712 15,672 61.4 
 (Note) Systems integration includes equipment sales.   
     


    
Segment Results Summary
  FY2020FY2021
  JPY millionsJPY millions
Total revenues213,002 226,335 
 Network services and SI business210,278 223,678 
 ATM operation business2,891 2,784 
 Elimination(167)(127)
Operating profit14,248 23,547 
 Network services and SI business13,541 22,799 
 ATM operation business826 834 
 Elimination(119)(86)
    

FY2021 Revenues and Income
Revenues
Total revenues were JPY226,335 million, up 6.3% YoY (JPY213,002 million for FY2020).

Network services revenue was JPY128,213 million, up 1.1% YoY (JPY126,827 million for FY2020).

Revenues for Internet connectivity services for enterprise were JPY37,911 million, down 6.0% YoY from JPY40,347 million for FY2020. The decrease was due to a decrease in IIJ Mobile MVNO Platform service (MVNE) revenue, which was mainly in the response to the reduction in procurement cost, while revenues of IP services and enterprise mobile services increased.

Revenues for Internet connectivity services for consumers were JPY23,376 million, down 9.1% YoY from JPY25,722 million for FY2020, mainly due to a decrease in average revenue per user of new plan “GigaPlans” for our consumer mobile services.

Revenues for Outsourcing services were JPY40,523 million, up 13.5% YoY from JPY35,710 million for FY2020, mainly due to an increase in security-related services revenues.

Revenues for WAN services were JPY26,403 million, up 5.4% YoY from JPY25,048 million for FY2020.

       
Network Services Revenues Breakdown
    FY2020FY2021YoY Change
    JPY millionsJPY millions
Total network services 126,827128,2131.1 
 Internet connectivity services (enterprise)  40,34737,911(6.0)
  IP services (including data center connectivity services)12,17113,68312.4 
  IIJ Mobile Services24,52520,351(17.0)
   Enterprise mobile service (IoT usages etc.)7,80710,25731.4 
   IIJ Mobile MVNO Platform service (MVNE)16,71810,094(39.6)
  Others 3,6513,8776.2 
 Internet connectivity services (consumer)  25,72223,376(9.1)
  IIJmio Mobile Services22,99720,365(11.4)
  Others 2,7253,01110.5 
 Outsourcing services35,71040,52313.5 
 WAN services 25,04826,4035.4 
       
Number of Contracts and Subscription for Connectivity Services(Note 1)
    As of March 31, 2021As of March 31, 2022YoY Change
Internet connectivity services (enterprise)2,303,7172,500,116196,399 
 IP service (greater than or equal to 1Gbps)(Note2)  791786(5)
 IP service (less than 1Gbps)(Note2)  1,2001,25050 
 IIJ Mobile Services2,209,8362,407,083197,247 
  Enterprise mobile service (IoT usages etc.) 1,110,4151,374,055263,640 
  IIJ Mobile MVNO Platform service (MVNE) 1,099,4211,033,028(66,393)
 Others  91,89090,997(893)
Internet connectivity services (consumer)1,379,2771,437,10757,830 
 IIJmio Mobile Services1,034,1481,090,20856,060 
 Others  345,129346,8991,770 
Total contracted bandwidth (Gbps)(Note 3)6,624.17,641.61,017.5 
(Notes)      
1.Numbers in the table above show number of contracts except for “IIJ Mobile Services (enterprise)” and “IIJmio Mobile Services” which show number of subscriptions.
2.The numbers of IP service contracts include the numbers of IIJ data center connectivity service contracts.
3.Total contracted bandwidth is calculated by multiplying number of contracts under “Internet connectivity services (enterprise)” except for “IIJ Mobile Services” and the contracted bandwidths of the services respectively.
  

SI revenues, including equipment sales, were JPY95,338 million, up 14.5% YoY (JPY83,284 million for FY2020).
Systems construction and equipment sales, a one-time revenue, was JPY35,376 million, up 11.4% YoY (JPY31,767 million for FY2020). Of this amount, revenue of PTC SYSTEM (S) PTE LTD (“PTC”) was JPY4,731 million. Systems operation and maintenance revenue, a recurring revenue, was JPY59,962 million, up 16.4% YoY (JPY51,517 million for FY2020), mainly due to continued accumulation of systems operation orders as well as an increase in cloud-related services’ revenues. Of this amount, revenue of PTC was JPY2,159 million.

Orders received for SI, including equipment sales, totaled JPY101,476 million, up 12.4% YoY (JPY90,314 million for FY2020); orders received for systems construction and equipment sales were JPY38,660 million, up 18.6% YoY (JPY32,590 million for FY2020), and orders received for systems operation and maintenance were JPY62,816 million, up 8.8% YoY (JPY57,724 million for FY2020).

Order backlog for SI, including equipment sales, as of March 31, 2022 amounted to JPY72,792 million, up 15.7% YoY (JPY62,894 million as of March 31, 2021); order backlog for systems construction and equipment sales was JPY12,451 million, up 49.5% YoY (JPY8,330 million as of March 31, 2021) and order backlog for systems operation and maintenance was JPY60,340 million, up 10.6% YoY (JPY54,564 million as of March 31, 2021).

ATM operation business revenues were JPY2,784 million, down 3.7% YoY (JPY2,891 million for FY2020).

Cost of sales
Total cost of sales was JPY174,707 million, up 1.2% YoY (JPY172,720 million for FY2020).

Cost of network services revenue was JPY92,595 million, down 7.1% YoY (JPY99,656 million for FY2020). Although the costs related to Internet backbone, facilities and personnel, etc., increased slightly, costs of mobile services were decreased due to reduction of purchase price in voice services from the beginning of FY2021 and one-time cost reimbursement of mobile unit charge7 by NTT DOCOMO, INC. in 3Q21 as FY2020 mobile unit charge was fixed based on its actual results for the corresponding period. Gross profit was JPY35,618 million, up 31.1% YoY (JPY27,171 million for FY2020), and gross profit ratio was 27.8% (21.4% for FY2020).

Cost of SI revenues, including equipment sales was JPY80,396 million, up 12.9% YoY (JPY71,197 million for FY2020), mainly due to increases in outsourcing costs, license fees along with an increase in cloud-related services’ revenues and purchasing costs. Of this amount, PTC’s cost was JPY6,125 million. Gross profit was JPY14,942 million, up 23.6% YoY (JPY12,087 million for FY2020) and gross profit ratio was 15.7% (14.5% for FY2020).

Cost of ATM operation business revenues was JPY1,716 million, down 8.1% YoY (JPY1,867 million for FY2020). Gross profit was JPY1,068 million (JPY1,024 million for FY2020) and gross profit ratio was 38.3% (35.4% for FY2020).
        
Selling, general and administrative expenses and other operating income and expenses
Selling, general and administrative expenses, including research and development expenses, totaled JPY27,969 million, up 9.7% YoY (JPY25,491 million for FY2020), mainly due to increases in personnel-related expenses, sales commission expenses and advertising expenses. Of this amount, PTC’s expenses was JPY463 million.

Other operating income was JPY171 million (JPY149 million for FY2020).

Other operating expenses was JPY283 million (JPY692 million for FY2020), mainly due to disposal loss on fixed assets.

Operating profit
Operating profit was JPY23,547 million (JPY14,248 million for FY2020), up 65.3% YoY.

Finance income and expenses, and share of profit (loss) of investments accounted for using equity method
Finance income was JPY3,506 million, compared to JPY776 million for FY2020. It included gains on financial instruments of JPY3,055 million (JPY479 million for FY2020).

Finance expense was JPY556 million, compared to JPY581 million for FY2020. It included interest expenses of JPY538 million (JPY580 million for FY2020).

Share of loss of investments accounted for using equity method was JPY2,335 million (compared to loss of JPY408 million for FY2020). As for DeCurret Holdings, Inc, there were an increase in equity method loss and an impairment loss on corresponding amount of goodwill of JPY1,181 million due to a divestment of its crypto asset business.

Profit before tax
Profit before tax was JPY24,162 million (JPY14,035 million for FY2020), up 72.2% YoY.

Profit for the year
Income tax expense was JPY8,362 million (JPY4,234 million for FY2020). As a result, profit for the year was JPY15,800 million (JPY9,801 million for FY2020), up 61.2% YoY.

Profit for the year attributable to non-controlling interests was JPY128 million (JPY89 million for FY2020), mainly related to net income of Trust Networks Inc.

Profit for the year attributable to owners of parent was JPY15,672 million (JPY9,712 million for FY2020), up 61.4% YoY.

Financial Position as of March 31, 2022
As of March 31, 2022, the balance of total assets was JPY231,805 million, increased by JPY11,028 million from the balance as of March 31, 2021 of JPY220,777 million.

As of March 31, 2022, the balance of current assets was JPY104,486 million, increased by JPY11,081 million from the balance as of March 31, 2021 of JPY93,405 million. As for the major breakdown of balance and fluctuation of current assets, cash and cash equivalents increased by JPY4,924 million to JPY47,391 million, trade receivables increased by JPY2,850 million to JPY37,649 million and prepaid expenses increased by JPY2,955 million, which included JPY1,667 million due to the acquisition of PTC, to JPY13,553 million.

As of March 31, 2022, the balance of non-current assets was JPY127,320 million, decreased by JPY53 million from the balance as of March 31, 2021 of JPY127,373 million. As for the major breakdown of balance and fluctuation of non-current assets, tangible assets increased by JPY761 million to JPY17,846 million. Right-of-use assets, which include right to use leased assets under operating lease contracts such as office and data centers and assets under finance lease contracts such as data communication equipment, decreased by JPY5,834 million to JPY44,874 million, mainly due to depreciation. Goodwill increased by JPY3,397 million to JPY9,479 million, mainly due to the acquisition of PTC. Investments accounted for using the equity method decreased by JPY3,197 million, mainly due to loss related to DeCurret Holdings, Inc., to JPY5,830 million. Prepaid expenses increased by JPY915 million to JPY10,452 million, including an increase of JPY1,122 million related to the acquisition of PTC. The amount of other investments was JPY17,410 million, increased by JPY4,497 million mainly due to fluctuation of fair value of our holding marketable equity securities and funds.

As of March 31, 2022, the balance of current liabilities was JPY76,778 million, increased by JPY3,519 million from the balance as of March 31, 2021 of JPY73,259 million. As for the major breakdown of balance and fluctuation of current liabilities, trade and other payables increased by JPY1,498 million to JPY20,742 million. Borrowings decreased by JPY2,190 million to JPY16,370 million, due to a decrease by JPY5,170 million from repayment of long-term borrowings, an increase by JPY1,480 million in short-term borrowings and an increase by JPY1,500 million from a transfer from non-current liabilities. Contract liabilities increased by JPY2,469 million to JPY9,571 million, including an increase of JPY1,857 million related to the acquisition of PTC. Other financial liabilities decreased by JPY845 million to JPY17,035 million.

As of March 31, 2022, the balance of non-current liabilities was JPY50,407 million, decreased by JPY6,140 million from the balance as of March 31, 2021 of JPY56,547 million. As for the major breakdown of balance and fluctuation of current liabilities, long-term borrowings decreased by JPY1,500 million to JPY5,500 million due to a transfer to current portion. Contract liabilities increased by JPY184 million to JPY7,429 million. Other financial liabilities decreased by JPY5,502 million to JPY30,146 million, mainly due to a transfer to current portion.

As of March 31, 2022, the balance of total equity attributable to owners of the parent was JPY103,528 million, increased by JPY13,572 million from the balance as of March 31, 2021 of JPY89,956 million. Ratio of owners' equity to total assets was 44.7% as of March 31, 2022.

FY2021 Cash Flows
Cash and cash equivalents as of March 31, 2022 were JPY47,391 million (JPY42,467 million as of March 31, 2021).

Net cash provided by operating activities for FY2021 was JPY43,573 million (net cash provided by operating activities of JPY40,544 million for FY2020). There was profit before tax of JPY24,162 million(JPY14,035 million for FY2020), depreciation and amortization of JPY28,444 million, including JPY11,534 million of depreciation of right-of-use operating lease assets under IFRS 16, and income taxes paid of JPY5,700 million (JPY3,912 million for FY2020). Regarding changes in working capital, there was net cash out of JPY2,892 million compared to net cash-in of JPY1,513 million for FY2020. As for the major factors for the increase in net cash outflow in comparison with FY2020, there were increases in payment of liabilities and decreases in advance receipt of contract liabilities.

Net cash used in investing activities for FY2021 was JPY11,838 million (net cash used in investing activities of JPY13,216 million for FY2020), mainly due to payments for purchases of tangible assets of JPY6,783 million (JPY6,391 million for FY2020), payments for purchases of intangible assets, such as software, of JPY4,734 million (JPY4,617 million for FY2020), payments for the acquisition of PTC (net of its cash) of JPY2,612 million, and proceeds from sales of tangible assets, which include sale and leaseback, of JPY2,150 million (JPY2,499 million for FY2020).

Net cash used in financing activities for FY2021 was JPY27,296 million (net cash used in financing activities of JPY23,618 million for FY2020), mainly due to payments of other financial liabilities of JPY19,983 million (JPY20,168 million for FY2020), which included payments under operating lease contracts such as office rent and finance lease contracts such as network equipment, repayments of long-term bank borrowings of JPY5,170 million (JPY1,830 million for FY2020), dividends paid of JPY3,836 million (JPY1,533 million for FY2020) and net increase in short-term borrowings of JPY1,480 million (net decrease of JPY360 million for FY2020).   

Outlook for FY2022
With regard to our outlook for FY2022, we expect continued growth in revenues and gross profit for enterprise network services and an upward trend of systems integration revenues. Our consolidated financial targets for FY2022 are as follows: total revenues of JPY250.0 billion (up 10.5% from FY2021) and operating profit of JPY27.2 billion (up 15.5% from FY2021). As for profit before tax, we target JPY26.3 billion (up 8.8% from FY2021), by considering finance expenses, share of profit or loss of investments accounted for using equity method and others. As for profit for the year attributable to owners of the parent, we target JPY17.5 billion (up 11.7% from FY2021), by considering income tax expenses at the normal effective tax rate.

Three-year mid-term plan (FY2021-FY2023)
As for FY2021, we exceeded our profit targets. Considering the progress of financial performance and the continued favorable market environment, today we update our FY2023 operating margin target in three-year mid-term plan to 11.5% from over 10%, which was revised from original target of over 9% on November 5, 2021. The revenue target remains unchanged from the initially announced, which is around JPY270.0 billion.

Dividend Policy, FY2021 Dividend and FY2022 Dividend Forecast
The basic dividend policy of IIJ is that IIJ pays dividends to its shareholders continuously and in a stable manner while considering the need to have retained earnings for the enhancement of financial position, medium-to long-term business expansion, future business investment and other goals.

Based on the Articles of Incorporation of IIJ, the frequency of dividend payments is twice each fiscal year, an interim dividend and a year-end dividend. The interim dividend is decided by the meeting of the board directors of IIJ and the year-end dividend is approved at IIJ’s general meeting of shareholders.

As for FY2021, considering this basic policy, our interim dividend was JPY23.00 per share of common stock. Today, we revise our year-end dividend forecast to JPY25.00 per share, from the initial forecast at the beginning of the fiscal year of JPY19.50 per share and the previous forecast of JPY23.00 per share which was revised on November 5, 2021. Total annual dividend forecast for FY2021 is JPY48.00 per share of common stock, which is an increase of JPY18.25 per share from FY2020 dividend (post-stock-split basis).

As for FY2022, our interim and year-end dividend forecasts are JPY29.25 and JPY29.25 per share of common stock respectively. FY2022 total annual dividend forecast is JPY58.50 per share of common stock, which is an increase of JPY10.50 from FY2021 annual dividend.

Presentation
Presentation materials will be posted on our web site (https://www.iij.ad.jp/en/ir/) on May 13, 2022.
The presentation material can be found in the following URL as well: http://ml.globenewswire.com/Resource/Download/621bbd59-a916-4f69-a84f-2dbfc48a74e9

About Internet Initiative Japan Inc.
Founded in 1992, IIJ is one of Japan’s leading Internet-access and comprehensive network solutions providers. IIJ and its group companies provide total network solutions that mainly cater to high-end corporate customers. IIJ's services include high-quality Internet connectivity services, mobile services, security services, cloud computing services, and systems integration. Moreover, IIJ operates one of the largest Internet backbone networks in Japan that is connected to the United States, the United Kingdom and Asia. IIJ listed on the First Section of the Tokyo Stock Exchange (“TSE”) in 2006 and transitioned to the Prime Market of TSE from April 2022.

For inquiries, contact:
IIJ Investor Relations Tel: +81-3-5205-6500 E-mail: ir@iij.ad.jp URL: https://www.iij.ad.jp/en/ir

Disclaimer:
Statements made in this press release regarding IIJ’s or management’s intentions, beliefs, expectations, or predictions for the future are forward-looking statements that are based on IIJ’s and managements’ current expectations, assumptions, estimates and projections about its business and the industry. These forward-looking statements, such as statements regarding revenues and profits, are subject to various risks, uncertainties and other factors that could cause IIJ’s actual results to differ materially from those contained in any forward-looking statement.


Consolidated Statements of Financial Position (Unaudited)  
     
  March 31, 2021 March 31, 2022
  Thousands of yen Thousands of yen
Assets    
 Current assets    
  Cash and cash equivalents 42,466,933  47,390,527 
  Trade receivables 34,799,075  37,649,104 
  Inventories 2,171,046  2,608,348 
  Prepaid expenses 10,598,441  13,553,353 
  Contract assets 1,281,918  1,870,396 
  Other financial assets 1,975,910  1,294,616 
  Other current assets 111,334  119,198 
  Total current assets 93,404,657  104,485,542 
 Non-current assets    
  Tangible assets 17,084,401  17,845,557 
  Right-of-use assets 50,707,726  44,874,062 
  Goodwill 6,082,472  9,479,464 
  Intangible assets 16,954,274  16,423,552 
  Investments accounted for using the equity method 9,026,980  5,829,694 
  Prepaid expenses 9,537,160  10,452,179 
  Contract assets 46,638  68,584 
  Other investments 12,912,483  17,409,909 
  Deferred tax assets 143,337  182,641 
  Other financial assets 4,442,704  4,244,549 
  Other non-current assets 434,437  509,343 
  Total non-current assets 127,372,612  127,319,534 
 Total assets 220,777,269  231,805,076 
  Thousands of yen Thousands of yen
Liabilities and Equity    
 Liabilities    
  Current liabilities    
   Trade and other payables 19,243,800  20,741,835 
   Borrowings 18,560,000  16,370,000 
   Income taxes payable 3,012,415  5,795,084 
   Contract liabilities 7,101,821  9,571,064 
   Deferred income 79,914  65,415 
   Other financial liabilities 17,879,331  17,034,706 
   Other current liabilities 7,381,746  7,199,450 
   Total current liabilities 73,259,027  76,777,554 
  Non-current liabilities    
   Borrowings 7,000,000  5,500,000 
   Retirement benefit liabilities 4,168,575  4,394,707 
   Provisions 756,405  786,273 
   Contract liabilities 7,244,411  7,428,629 
   Deferred income 405,579  340,164 
   Deferred tax liabilities 225,469  640,624 
   Other financial liabilities 35,647,899  30,146,338 
   Other non-current liabilities 1,098,253  1,169,990 
   Total non-current liabilities 56,546,591  50,406,725 
  Total liabilities 129,805,618  127,184,279 
 Equity    
  Share capital 25,530,621  25,561,838 
  Share premium 36,388,811  36,518,235 
  Retained earnings 25,046,813  37,023,749 
  Other components of equity 4,865,110  6,275,222 
  Treasury shares (1,874,976) (1,850,924)
  Total equity attributable to owners of the parent 89,956,379  103,528,120 
  Non-controlling interests 1,015,272  1,092,677 
  Total equity 90,971,651  104,620,797 
 Total liabilities and equity 220,777,269  231,805,076 
     

 

      
 Consolidated Statements of Profit or Loss (Unaudited)    
      
   For the year ended For the year ended
   March 31, 2021 March 31, 2022
   Thousands of yen Thousands of yen
 Revenues    
   Network services 126,826,927  128,212,839 
   System integration 83,283,912  95,338,864 
   ATM operation business 2,891,041  2,783,674 
     Total revenues 213,001,880  226,335,377 
      
 Cost of sales    
   Cost of network services (99,656,232) (92,594,448)
   Cost of systems integration (71,196,904) (80,396,387)
   Cost of ATM operation business (1,866,789) (1,716,341)
     Total cost of sales (172,719,925) (174,707,176)
 Gross Profit 40,281,955  51,628,201 
        
 Selling, general and administrative expense (25,490,666) (27,968,883)
 Other operating income 148,500  171,128 
 Other operating expenses (692,066) (283,363)
 Operating Profit 14,247,723  23,547,083 
        
 Finance income 776,298  3,506,147 
 Finance expenses (581,486) (556,074)
 Share of profit (loss) of investments accounted for
     using equity method
 (407,816) (2,334,956)
 Profit (loss) before tax 14,034,719  24,162,200 
 Income tax expense (4,233,584) (8,361,808)
 Profit (loss) for the year 9,801,135  15,800,392 
      
 Profit (loss) for the year attributable to:    
   Owners of the parent 9,711,559  15,672,105 
   Non-controlling interests 89,576  128,287 
   Total 9,801,135  15,800,392 
      
 Earnings per share    
   Basic earnings per share (yen) 107.67  173.56 
   Diluted earnings per share (yen) 107.14  172.74 
      
 ※IIJ conducted stock a split at a ratio of two-for-one with an effective date of January 1, 2021. 
    Basic earnings per share and diluted earnings per share are calculated as if the stock split had been conducted at the beginning of the previous fiscal year.
  


      
 Consolidated Statements of Comprehensive Income (Unaudited)  
      
   For the year ended For the year ended
   March 31, 2021 March 31, 2022
   Thousands of yen Thousands of yen
 Profit (loss) for the year 9,801,135  15,800,392 
 Other comprehensive income, net of tax    
  Items that will not be reclassified to profit or loss    
   Net change in fair value of equity instruments designated
               as measured at fair value through other
               comprehensive income
 2,371,133  691,051 
   Remeasurement of defined benefit plans 115,649  141,044 
   Total items that will not be reclassified to profit or loss 2,486,782  832,095 
  Items that may be reclassified to profit or loss    
   Exchange differences on translation of foreign operations 98,938  695,038 
   Financial assets measured at fair value through
               other comprehensive income
 (692) (1,199)
   Share of other comprehensive income of investments
               accounted for using equity method
 (21,921) 25,222 
   Total of items that may be reclassified to profit or loss 76,325  719,061 
  Total other comprehensive income, net of tax 2,563,107  1,551,156 
 Other comprehensive income for the year 12,364,242  17,351,548 
 Other comprehensive income for the year attributable to:    
  Owners of the parent  12,274,666  17,223,261 
  Non-controlling interest 89,576  128,287 
  Other comprehensive income for the year 12,364,242  17,351,548 
      

 

 

 
 Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)          
 For the year ended March 31, 2021               
                 
  Owners of the parent’s shareholders’ equity Non-controlling interests Total
equity
  Share capital Share premium Retained earnings Other components of equity Treasury shares Total  
  Thousands of yen Thousands of yen Thousands of yen Thousands of yen Thousands of yen Thousands of yen Thousands of yen Thousands of yen
 Balance, April 1, 202025,530,621 36,271,395  16,500,993  2,669,501  (1,896,921) 79,075,589  981,528  80,057,117 
                        
 Comprehensive income               
  Profit for the year- -  9,711,559  -  -  9,711,559  89,576  9,801,135 
  Other comprehensive income- -  -  2,563,107  -  2,563,107  -  2,563,107 
  Total comprehensive income- -  9,711,559  2,563,107  -  12,274,666  89,576  12,364,242 
 Transactions with owners               
  Purchase of treasury stock- -  -  -  (140) (140) -  (140)
  Disposal of treasury shares- 52,781  -  -  22,085  74,866  -  74,866 
  Dividends paid- -  (1,533,237) -  -  (1,533,237) (55,832) (1,589,069)
  Stock-based compensation- 64,635  -  -  -  64,635  -  64,635 
  Transfer from other components of
          equity to retained earnings
- -  367,498  (367,498) -  -  -  - 
  Total transactions with owners- 117,416  (1,165,739) (367,498) 21,945  (1,393,876) (55,832) (1,449,708)
 Balance, March 31, 202125,530,621 36,388,811  25,046,813  4,865,110  (1,874,976) 89,956,379  1,015,272  90,971,651 
                 
                 
 For the year ended March 31, 2022               
                 
  Owners of the parent’s shareholders’ equity Non-controlling interests Total
equity
  Share capital Share premium Retained earnings Other components of equity Treasury shares Total  
  Thousands of yen Thousands of yen Thousands of yen Thousands of yen Thousands of yen Thousands of yen Thousands of yen Thousands of yen
 Balance, April 1, 202125,530,621 36,388,811  25,046,813  4,865,110  (1,874,976) 89,956,379  1,015,272  90,971,651 
                        
 Comprehensive income               
  Profit for the year- -  15,672,105  -  -  15,672,105  128,287  15,800,392 
  Other comprehensive income- -  -  1,551,156  -  1,551,156  -  1,551,156 
  Total comprehensive income- -  15,672,105  1,551,156  -  17,223,261  128,287  17,351,548 
 Transactions with owners               
  Issuance of common stock31,217 (31,152) -  -  -  65  -  65 
  Disposal of treasury shares- 82,447  -  -  24,052  106,499  -  106,499 
  Dividends paid- -  (3,836,213) -  -  (3,836,213) (48,550) (3,884,763)
  Stock-based compensation- 82,794  -  -  -  82,794  -  82,794 
  Transfer from other components of
          equity to retained earnings
- -  141,044  (141,044) -  -  -  - 
  Other- (4,665) -  -  -  (4,665) (2,332) (6,997)
  Total transactions with owners31,217 129,424  (3,695,169) (141,044) 24,052  (3,651,520) (50,882) (3,702,402)
 Balance, March 31, 202225,561,838 36,518,235  37,023,749  6,275,222  (1,850,924) 103,528,120  1,092,677  104,620,797 
                 

 

      
 Consolidated Statements of Cash Flows (Unaudited)    
      
   For the year ended For the year ended
   March 31, 2021 March 31, 2022
   Thousands of yen Thousands of yen
 Cash flows from operating activities:    
  Profit (loss) before tax 14,034,719  24,162,200 
  Adjustments    
   Depreciation and amortization 27,973,729  28,444,400 
   Loss (gain) on sales/disposals of property and equipment 634,271  218,938 
   Shares of loss (profit) of investments
               accounted for using the equity method
 407,816  2,334,956 
   Finance income (639,262) (3,439,435)
   Finance expenses 579,741  537,785 
   Other 338,666  241,612 
   Changes in working capital    
    Decrease (increase) in trade receivables (2,151,565) (1,403,938)
    Decrease (increase) in inventories 312,484  (423,357)
    Decrease (increase) in prepaid expenses (2,671,608) (1,414,078)
    Decrease (increase) in contract assets (829,519) (610,424)
    Decrease (increase) in other assets 15,818  162,549 
    Decrease (increase) in other financial assets 1,504,966  834,332 
    Increase (decrease) in trade and other payables 1,071,330  551,939 
    Increase (decrease) in contract liabilities 2,505,263  (162,719)
    Increase (decrease) in deferred income (82,505) (9,735)
    Increase (decrease) in other liabilities 1,677,036  (877,379)
    Increase (decrease) in other financial liabilities (185,457) 28,482 
    Increase (decrease) in retirement benefit liabilities 347,171  432,037 
  Subtotal 44,843,094  49,608,165 
  Interest and dividends received 192,760  190,635 
  Interest paid (580,053) (526,334)
  Income taxes paid (3,911,634) (5,699,672)
  Cash flows from operating activities 40,544,167  43,572,794 
 Cash flows from investing activities    
  Purchases of tangible assets (6,390,700) (6,783,406)
  Proceeds from sales of tangible assets 2,499,494  2,150,398 
  Purchases of intangible assets (4,616,636) (4,734,494)
  Proceeds from sales of intangible assets 44,085  189 
  Purchase of a subsidiary -  (2,612,008)
  Purchase of investments accounted for using equity method (4,754,000) - 
  Proceeds from sale of investments accounted for using
           equity method
 60,637  780,000 
  Purchases of other investments (241,307) (716,670)
  Proceeds from sales of other investments 462,547  104,818 
  Payments for leasehold deposits and guarantee deposits (280,742) (102,687)
  Proceeds from collection of leasehold deposits
          and guarantee deposits
 64,852  150,369 
  Payments for refundable insurance policies (68,767) (74,896)
  Other 4,695  273 
  Cash flows from investing activities (13,215,842) (11,838,114)
 Cash flows from financing activities    
  Repayment of  long-term borrowings (1,830,000) (5,170,000)
  Net increase (decrease) in short-term borrowings (360,000) 1,480,000 
  Proceeds from other financial liabilities 329,566  261,360 
  Payments of other financial liabilities  (20,168,227) (19,982,614)
  Dividends paid (1,533,237) (3,836,213)
  Other (55,832) (48,486)
  Cash flows from financing activities (23,617,730) (27,295,953)
 Effect of exchange rate changes on cash and cash equivalents 84,604  484,867 
 Net increase (decrease) in cash and cash equivalents 3,795,199  4,923,594 
 Cash and cash equivalents, beginning of the year 38,671,734  42,466,933 
 Cash and cash equivalents, end of year 42,466,933  47,390,527 
 

Notes to Condensed Consolidated Financial Statements (Unaudited)

Going Concern Assumption

         Nothing to be reported.

Changes in Accounting Policies

         Nothing to be reported.

Segment Information
IIJ and its subsidiaries (collectively “the Company”) primarily operates its network service and system integration business, which provides a comprehensive range of network solutions to meet its customers’ needs by cross-selling a variety of services, including Internet connectivity services, WAN services, outsourcing services, systems integration and sales of network-related equipment, and the ATM operation business. Therefore, the Company defined two reportable segments: “Network service and systems integration business” and “ATM operation business.”
Segment information for the Company is as follows:

Fiscal year ended March 31, 2021

 Reportable segments     
Network service and systems integration business ATM operation
business
 Adjustments Consolidated
Thousands of yen Thousands of yen Thousands of yen Thousands of yen
Revenue       
Customers210,110,839 2,891,041  213,001,880 
Intersegment transactions167,160  (167,160) 
Total revenue210,277,999 2,891,041 (167,160) 213,001,880 
        
Segment operating profit13,541,072 826,004 (119,353) 14,247,723 
        
Finance income      776,298 
Finance expense      (581,486)
Share of profit (loss) of investments accounted for using the equity method      (407,816)
Profit before tax      14,034,719 
        

Fiscal year ended March 31, 2022

 Reportable segments     
Network service and systems integration business ATM operation
business
 Adjustments Consolidated
Thousands of yen Thousands of yen Thousands of yen Thousands of yen
Revenue       
Customers223,551,703 2,783,674   226,335,377
Intersegment transactions127,000  (127,000) 
Total revenue223,678,703 2,783,674 (127,000) 226,335,377 
        
Segment operating profit22,798,740 834,462 (86,119) 23,547,083 
        
Finance income      3,506,147 
Finance expense      (556,074)
Share of profit (loss) of investments accounted for using the equity method      (2,334,956)
Profit before tax      24,162,200 

 

Intersegment transactions are based on market price. Substantially all revenues are from customers operating in Japan. Geographic information for revenues is not presented due to immateriality of revenue attributable to international operations. In addition, non-current assets (excluding financial instruments, deferred tax assets and assets related to retirement benefits) are not presented because substantially all non-current assets are located in Japan and non-current assets located overseas are not material.
Major customers information is not provided because there is no single external customer that accounts for 10% or more of the Company's revenue.

Earnings per share

Basic earnings per share attributable to owners of the parent and diluted earnings per share attributable to owners of the parent for the years ended March 31, 2021 and 2022 were as follows:

  For the year ended
March 31, 2021
 For the year ended
March 31, 2022
Numerator:    
 Basic earnings attributable to owners of the parent ( thousands of yen ) 9,711,559 15,672,105
     
Denominator:    
 Weighted average number of shares ― basic(shares) 90,195,162 90,296,089
 Dilution arising from stock options (shares) 451,642 430,813
 Weighted average number of shares ― diluted(shares) 90,646,804 90,726,902
     
Earnings per share attributable to owners of the parent    
 Basic (yen) 107.67 173.56
 Diluted (yen) 107.14 172.74

Stock split
Based on a resolution of the Board of Directors on November 9, 2020, the Company conducted a two-for-one stock split of common shares held by shareholders as of December 31, 2020, with an effective date of January 1, 2021. As a result of the stock split, per share information for the previous and current consolidated fiscal years presented in the condensed quarterly consolidated financial statements is presented after adjustment for the stock split.

Subsequent Events

         Nothing to be reported.

Note: The following information is provided to disclose Internet Initiative Japan Inc. (“IIJ”) financial results (unaudited) for the fiscal year ended March 31, 2022 (“FY2021”) in the form defined by the Tokyo Stock Exchange.

Consolidated Financial Results for the Fiscal Year ended March 31, 2022 [Under IFRS]

May 13, 2022

Company name: Internet Initiative Japan Inc.
Exchange listed: Tokyo Stock Exchange
Ticker symbol: 3774
URL: https://www.iij.ad.jp/
Representative: Eijiro Katsu, President and Representative Director
Contact: Akihisa Watai, Senior Managing Director and CFO
TEL: (03) 5205-6500
Scheduled date for annual general shareholders’ meeting: June 28, 2022
Scheduled date for dividend payment: June 29, 2022
Scheduled date for filing of annual securities report (Yuka-shoken -houkokusho) to Japan’s regulatory organization: June 30, 2022
Supplemental material on annual results: Yes
Presentation on annual results: Yes (for institutional investors and analysts)

(Amounts of less than JPY one million are rounded)

1. Consolidated Financial Results for the Fiscal Year ended March 31, 2022 (April 1, 2021 to March 31, 2022)

                                                                                              

(1) Consolidated Results of Operations  (% shown is YoY change)
 RevenuesOperating profitProfit (loss) before taxProfit (loss)
for the year
Profit (loss)
attributable to owners
of the parent
Other comprehensive income
 JPY millions%JPY millions%JPY millions%JPY millions%JPY millions%JPY millions%
Fiscal Year ended  March 31, 2022226,3356.323,54765.324,16272.215,80061.215,67261.417,35240.3
Fiscal Year ended March 31, 2021213,0024.214,24873.214,03596.09,801133.79,712142.412,364195.5

                                                                   

 Basic earnings per shareDiluted earnings per shareRate of return
on equity
Ratio of profit before taxes to total assetsRatio of operating profit to revenues
 JPYJPY%%%
Fiscal Year ended March 31, 2022173.56172.7416.210.710.4
Fiscal Year ended March 31, 2021107.67107.1411.56.66.7

(Reference) Equity in net income (loss) of equity method investees
Fiscal year ended March 31, 2022: JPY(2,335) million, Fiscal year ended March 31, 2021: JPY(408) million
(Note) IIJ conducted a stock split at a ratio of two-for-one with an effective date of January 1, 2021. Accordingly, basic earnings per share and diluted earnings per share have been calculated as if the stock split was conducted at the beginning of the previous consolidated fiscal year.

(2) Consolidated Financial Position

 Total assetsTotal equityTotal equity attributable to owners of the parentRatio of owners' equity
 to total assets
Owners' equity
per share
 JPY millionsJPY millionsJPY millions%JPY
As of March 31, 2022231,805104,621103,52844.71,146.32
As of March 31, 2021220,77790,97289,95640.7997.24

(Note) IIJ conducted a stock split at a ratio of two-for-one with an effective date of January 1, 2021. Accordingly, owners' equity per share have been calculated as if the stock split was conducted at the beginning of the previous consolidated fiscal year.

(3) Consolidated Cash Flow

 Operating activitiesInvesting activitiesFinancing activitiesCash and cash equivalents
(end of the year)
 JPY millionsJPY millionsJPY millionsJPY millions
Fiscal year ended March 31, 202243,573(11,838)(27,296)47,391
Fiscal year ended March 31, 202140,544(13,216)(23,618)42,467


2Dividends

 Dividend per SharesTotal cash
dividends
for the year
Payout
Ratio
(consolidated)
Ratio of Dividends to Shareholder's Equity
(consolidated)
 1Q-end2Q-end3Q-endYear-endTotal
 JPYJPYJPYJPYJPYJPY millions%%
Fiscal Year Ended
March 31, 2021
20.5019.502,68427.63.2
Fiscal Year Ended
March 31, 2022
23.0025.0048.004,33527.74.5
Fiscal Year Ending
March 31, 2023
 (forecast)
29.2529.2558.50 30.2 

(Note) IIJ conducted a stock split at a ratio of two-for-onewith an effective date of January 1, 2021. The 2Q-end dividend per share for the fiscal year ended March 31, 2021 is the amount before the stock split. Regarding the post-split basis amount for the fiscal year ended March 31, 2021, 2Q-end and annual dividend per share are JPY10.25 and JPY29.75, respectively.

3. Targets of Consolidated Financial Results for the Fiscal Year ending March 31, 2023

 (April 1, 2022 through March 31, 2023)

(% shown is YoY change)

 RevenuesOperating profitProfit (loss) before taxProfit (loss) for the year attributable to owners of the parentBasic earnings per share
 JPY millions%JPY millions%JPY millions%JPY millions%JPY
Interim Period Ending September 30, 2022117,0007.310,70015.010,300(1.3)6,800(1.3)75.29
Fiscal Year Ending March 31, 2023250,00010.527,20015.526,3008.8 17,50011.7 193.77

* Notes:

(1) Changes in significant subsidiaries: None

(2) Changes in accounting policies and estimate

i. Changes in accounting policies required by IFRS: None
ii. Other changes in accounting policies: None
iii. Changes in accounting estimates: None

(3) Number of shares issued (common stock)

i. Number of shares issued (inclusive of treasury stock):

As of March 31, 2022: 93,534,800 shares
As of March 31, 2021: 93,469,200 shares

ii. Number of treasury stock:

As of March 31, 2022: 3,221,667 shares
As of March 31, 2021: 3,263,532 shares

iii. Number of weighted average common shares outstanding:

For the fiscal year ended March 31, 2022: 90,296,089 shares
For the fiscal year ended March 31, 2021: 90,195,162 shares

* IIJ conducted a stock split at a ratio of two-for-one with an effective date of January 1, 2021. Accordingly, number of shares issued, number of treasury stock and number of weighted average common shares outstanding above have been calculated as if the stock split was conducted at the beginning of the previous consolidated fiscal year, respectively.

* Status of Audit Procedures

This document is not subject to the audit procedures by certified public accountant or independent auditor.

* Explanation on the Appropriate Use of Future Outlook and other special instructions

i) Forward-looking statements
Forward-looking statements disclosed in this document are based on IIJ Group’s expectation, estimates, and projections based on information available to IIJ Group as of May 13, 2022. As these forward-looking statements are subject to known and unknown risks and uncertainties, actual results may differ from those disclosed due, for example, to but not limited to changes in business climate and/or market trends. As for our latest forecast of our financial targets, please refer to “Considered Factors for FY2022 Financial Targets” written on page 8 of this document.

ii) Adoption of IFRS
We have adopted IFRS from the Annual Securities Report (Yuka-shoken houkokusho) for the fiscal year ended March 31, 2019.

 

 

[English Translation]

May 13, 2022

Company name: Internet Initiative Japan Inc.

Company representative: Eijiro Katsu, President and Representative Director
(Ticker symbol: 3774, The Prime Market of the Tokyo Stock Exchange)

Contact: Akihisa Watai, Senior Managing Director and CFO
TEL: 81-3-5205-6500

Information Pertaining to Our Largest Shareholder

1. About Our Largest Shareholder (As of March 31, 2022)

NameRelationshipIts Ownership Percentage (%)Securities Exchanges
where its Shares are Listed
Direct  ownershipIndirect ownershipTotal
Nippon Telegraph
and Telephone
Corporation (“NTT”)
IIJ is NTT's affiliate  company22.44.526.9Tokyo Stock Exchange
 (The Prime Market)

2. Position of the Listed Company (IIJ) within NTT Group and other relationships

The ownership percentage by NTT, which is IIJ's largest shareholder, was 26.9% as of March 31, 2022, including its indirect ownership. However, IIJ's business activities are not affected by NTT's ownership in IIJ and IIJ is maintaining its management independence.

3. Business Relationship with NTT Group

IIJ uses services provided by Nippon Telegraph and Telephone East Corporation and Nippon Telegraph and Telephone West Corporation for a significant portion of IIJ’s access circuits, services provided by NTT Communications Corporation for a significant portion of IIJ’s domestic and international backbone circuits, and services provided by NTT DOCOMO, INC for a significant portion of IIJ’s mobile infrastructure, to provide Internet connectivity, mobile-related and other services to IIJ’s customers. IIJ also leases a part of Internet data center facilities from NTT Group companies to provide Internet data center services. The aggregate amount paid to for these services was JPY21,649 million for the fiscal year ended March 31, 2022.


End