Strategic Investment and Human Resource Allocation to Enhance Business Continuity, Growth Potential and Profitability
I would like to begin by expressing my sincerest appreciation for the strong support received from our shareholders throughout the year.
I will report on our business performance during the first half of the fiscal year ending March 31, 2021, and assess the future outlook for our operations.
Revenue Hit a New Record-High in the First Half of the Fiscal Year
In the first half of the fiscal year, there was further movement toward enhanced disclosure and IR activities for investors within and outside Japan, increasing sales of convocation notices and English translation services. Additionally, sales of products related to IPOs, finance and website production increased. This increased revenue compensated for a decline in sales of financial product-related products due to a decrease in new investment trusts and the backlash from special demand related to the consumption tax rate revision in the same period of the previous year. As a result, consolidated revenue in the first six months increased 307 million yen to 14,390 million yen, or 2.2% year on year, a record high on a second quarter basis.
In addition to increased labor costs and personnel expenses associated with the strengthening of the organization, we recorded expenses for countermeasures against COVID-19, resulting in operating profit of 2,651 million yen, a decrease of 50 million yen, or 1.8%, year on year. Additionally, we recorded gain on step acquisitions of shares in DISCLOSURE PRO Inc., which transitioned to a consolidated subsidiary from an equity-method affiliate on July 1, 2020, resulting in profit before tax of 2,825 million yen, an increase of 94 million yen, or 3.5%, year on year, and profit attributable to owners of parent was 1,956 million yen, an increase of 84 million yen, or 4.5%, year on year.
Sales performance by business
(Listed companies disclosure-related business)
In addition to higher revenue due to the conversion of convocation notices for shareholders' meeting to color printing, the increase in sales of system services and outsourcing services that support the preparation of disclosure documents also contributed to sales. Furthermore, finance orders expanded against the backdrop of a recovery in stock prices in the securities market and we received orders for large IPOs, resulting in revenue in the listed companies disclosure-related business of 6,946 million yen, an increase of 351 million yen, or 5.3%, year on year.
(Listed companies IR-related, etc. business)
Given the background of compliance with Japan's Corporate Governance Code, orders increased for IR website development, English translation, and other services. In addition, revenue generated by Rainbow Japan Inc. (a web production company that became a consolidated subsidiary on October 1, 2019) started to be included in revenue.
As a result, revenue generated by the listed companies IR-related, etc. business increased 175 million yen (5.1%) year on year, to 3,616 million yen.
(Financial instruments disclosure-related business)
Orders for printed materials for financial product-related products decreased due to the backlash from declining spot demand caused by the consumption tax rate revision in the same period of the previous year. In the investment trust market, there was a slowdown in the launch of certain types of funds, as well as a fall in sales of core products including prospectuses, etc. In addition, revenue from foreign investment trust-related products also declined. As a result, revenue generated by the financial instruments disclosure-related business decreased 220 million yen (6.3%) year on year, to 3,283 million yen.
In both the corporate information databases and economic statistical databases, progress was made in excess of churn in the pursuit of new customers. As a result, revenue generated by the database-related business was 545 million yen, unchanged from the same period last year, an increase of 0.1% year on year.
Full-year Earnings Forecast Remains Unchanged
The major changes in society and business brought about by the spread of COVID-19 has made PRONEXUS keenly aware of the importance of transforming the way we do business and communicate with our customers; thus, we are expanding strategic investments to achieve this transformation. Specifically, while accelerating investment in the development of disclosure operation support systems provided to customers and systems that share information with customers, we are determined to implement priority investments in the digitization of our internal business infrastructure and the expansion of facilities compatible with teleworking. In anticipation of major changes in the business environment, we believe that it is important to recruit human resources that will contribute to strengthening growth fields, thus we are focused on hiring and investing. In line with strategic and human resource investments, as indicated in the following disclosed on August 28, 2020, we expect full-year results will decrease. However, we will use this as an opportunity to enhance the continuity, growth potential and profitability of our business going forward.
I would like to ask all our shareholders for their continued support and encouragement.
- * The Company has been preparing securities report based on the International Financial Reporting Standards (IFRS) since the fiscal year ended March 31, 2020 instead of the conventional Japanese standard (J GAAP).