Financial Statements of FY2018

We announced the Financial Statements of FY2018 (July 2018 – June 2019) issued on 9 August, 2019 as below summary.

■Financial results for the full-year of FY2018.
Total Sales and ordinary profit in 2019 marked record high.
・Total Sales : 5,446 million yen (37% higher than the previous year)
・Ordinary profit :886 million yen (74% higher than the previous year)
・Ordinary profit rate: 16.2%

■Factor of the strong performance
(1) “Residence Wi-Fi” business
Due to strong sales for this year, the market share has expanded based on subscription contract.
・Number of new contract by houses: About 55,000 houses
・Total number of contract by houses: About 210,000 houses

(2) “Free Wi-Fi” business
We installed “Free Wi-Fi” spots counted by number of installed access points(“APs”) has increased due to the growing needs for free access Wi-Fi.
・The number of installed APs: About 17,000 APs
・The number of total installed APs: About 63,000 APs

■Our income model
We see our two business models have been worked gradually for the profit and loss in order to combination of one-time sales income (initial installation fees) and subscription income (usage fees).
・One-time sales income:1.3 times higher than the previous year
・Subscription income : 1.5 times higher than the previous year

■Profit and loss
The main factor of the increase in profit in order that the “Residence Wi-Fi” business sales were brisk. In addition, total profit of “Free Wi-Fi” business was significantly increased even after deducted SG&A expenses.
・Operating income: about 380 million yen higher than the previous year

■Financial situation
There is a characteristic as for our business in order to have burden of initial investments until turning to profit from subscription income.

While full-year net results remained at a slightly loss, however, our cash flow almost broke even due to have increased and improved the subscription income.
With the prospect of the improvement the subscription income, our free cash flow gradually shift to positive from next term.

・Interest-bearing debt at the term end: decreased to 2,380 million yen
・Capital-asset ratio at the term end : increased to 37%

■Performance of Q4 of FY2018 (April 2019 – June 2019)
Our sales typically show decreasing tendency in fourth-quarter due to the seasonal demands in the market. However, we achieved to increase our total sales that “Residence Wi-Fi” business led.
・Total sales: increased 320 million yen (30% higher than the previous year)
・Ordinary profit: increased 20 million yen (55% higher than the previous year)

■Prospect for FY2019 total (July 2019 – June 2020)
・Predictive sales: 6,900 million yen (27% higher than the previous year)
・Predictive ordinary profit: 1,060 million yen (20% higher than the previous year)
If we achieve the forecasts for the next term, it become the best achievement from the past for the 4 consecutive financial years.
In addition, we will approach the income budget of the medium-term plan (June, 2021 period, total sales 7 billion yen, ordinary profit 1,300 million yen) ahead of the schedule.
This is not a easy goal at all, however, we will strive to achieve the goal with reviewing our plan and strategy.

■Prospect for FY2019 sales by business segments
(1) “Residence Wi-Fi” business
We assume the sales is steadily expanding.
・Predictive number of contract by houses: 276,000 houses
・Predictive sales amount :24% increase
・Predictive operating income: 8% increase

(2) “Free Wi-Fi” business
We expect that our access point is increasing due to increase the needs in the market.
・Predictive number of the total access points: 88,000 APs
・Predictive sales amount: 36% increase
・Predictive operating income: 83% increase

■Prospect for FY2019 income by business models
We assume that the subscription income (our core business) increase steadily.
・Predictive subscription income: 34% increase
・Predictive one-time sales income:18% increase

■Considerations of the above prospects
In the above-mentioned prospects for FY2019, we considered the increase the below cost factors.
・Communication technology related expense (Hiring engineers and system investment etc.)
・Enhancement of the corporate governance related expense (Hiring sales stuff, expansion of the core system and hiring administrative manager)

We plan to enhance our corporate governance to prevent from business risks by ensuring more secure technology, our information management and risks control as a company that is one of the social infrastructure in the fast paced industry.
It becomes the increase in cost factor in this term, however, we believe that these actions contribute to the sustained growth of the company in the long term.

■Revised medium-term plan (June, 2022 period)
We have set out the below revised income budgets for medium-term plan after reviewed the pace of company’s growth.
・Sales amount: 9,600 million yen
・Ordinary profit: 1,700 million yen
・Total number of “Residence Wi-Fi” subscriber: over 430,000 houses
・Total number of installed “Free Wi-Fi” access points: over 160,000 houses

We will provide superior service in responding to customer needs in a speedy and reliable action for realizing our vision according to our slogan “Alternative Telecom Carrier”. And we will focus on our plan to achieve the following goal.