Consolidated Financial Results for the 3Q of the FY ending March 2020
(Nine months ended December 31, 2019)
February 6, 2020
T-Gaia Corporation / TSE
If there is any discrepancy between the English version and the Japanese version, the Japanese version shall prevail.
Disclaimer
This material contains statements about the future performance of T-Gaia Corporation which are based on management's assumptions and beliefs taking information currently available into consideration.
Therefore, please be advised that T-Gaia's actual results could differ materially from those described in these forward looking statements as a result of numerous factors, including general economic conditions in T-Gaia's principal markets as well as other factors detailed from time to time.
Table of Contents
- Outline of the Consolidated Financial Results for the 3Q of the | |||
FY ending March 2020 | 4-7 | ||
- Financial Results of the 3Q of the FY ending March 2020 and | |||
Strategies by the Business Segments | |||
- Mobile Telecommunications Business Segment | 8-11 | ||
- Enterprise Solution Business Segment | 12-16 | ||
- Payment Service Business and Other Business Segment* | 17-22 | ||
- Appendixes | 23-36 | ||
*The translation of the name of the business segment has been revised for more clarity as below. Former translation: Settlement Service Business & Other Business
Revised translation: Payment Service Business & Other Business
Outline of the Consolidated
Financial Results
Summary of the Consolidated Financial Results
5
(unit: billion yen) | 3Q | 3Q | y/y | |
FY 19/3 | FY 20/3 | Change | ||
Net Sales | 376.80 | 354.95 | 94.2% |
Gross Profit | 50.70 | 49.79 | 98.2% |
(to Net Sales) | (13.5%) | (14.0%) | (+0.5p) |
SG&A Expenses | 39.86 | 40.41 | 101.4% |
Operating Profit | 10.83 | 9.38 | 86.7% |
(to Net Sales) | (2.9%) | (2.6%) | (▲0.3p) |
Non-Operating | 4.23 | 4.40 | 104.1% |
Income ※1 | |||
(Income from hoarded cards, | |||
etc.) | 15.06 | 13.79 | 91.6% |
Ordinary Profit | |||
Net Profit | 10.15 | 9.29 | 91.5% |
Forecasts of
20/3 Full-year
432.00
67.50
(15.6%)
54.40
13.10
(3.0%)
5.40
18.50
12.40
Achievement
Ratio
82.2%
73.8%
74.3%
71.7%
81.6%
74.6%
74.9%
Mobile-phone※2 2.980 | 2.747 | 92.2% |
Unit Sales (million units) | ||
*1 No change to full-year plan for the fiscal year ending March 31 2020, including non-operating profit
Overall results fall in line with
initial forecasts of FY 20/3
*2 From this fiscal year, UQ WIMAX has been included to the unit sales, and the unit sales for the 3Q of FY 19/3 has been revised.
(19/3 3Q +5000 units, full year +7000 units)
Financial Results of the 3Q by Business Segment
Mobile Telecommunications | Enterprise Solution | Payment Service Business & | * [ ] = segment ratio | ||
Business | Business | Other Business |
6
Net Sales (Billion Yen)
376.8 | 354.9 |
35.8 | [9.5%] |
39.7 [11.2%] | |
19.4 [5.2%] |
Net Profit | (Billion Yen) |
10.15
21.3 [6.0%] |
321.5293.8
[85.3%][82.8%]
Net sales of mobile telecommunication business decreased affected by the lower unit sales of mobile phone handsets.
3.31
[32.6%]
9.29
2.72
[29.4%]
3Q FY19/3 | 3Q FY20/3 | |
Operating Profit | (Billion Yen) | |
10.83 | 9.38 | |
0.73[6.8%] | The increase in expenses due | |
1.61 [14.9%] | 1.93 [20.6%] | to the planned cost of sales |
promotion for the new service, | ||
"QUO Card Pay" by QUO | ||
8.47 | 7.68 | CARD Co., Ltd. the subsidiary |
company. | ||
[78.3%] | [81.8%] | |
▲0.22 [▲2.4%] | ||
3Q FY19/3 | 3Q FY20/3 |
1.11 | [11.0%] | 1.34 | [14.5%] |
5.72 5.21
[56.4%][56.1%]
3Q FY19/3 | 3Q FY20/3 |
All have marked low compared to the same time last year however overall results fall in line with the initial forecasts.
Unit Sales of the 3Q on Company-wide Basis
7
Unit Sales of Mobile Phones & Tablets
Unit Sales | (Thousand Units) |
2980
2747
From October 2019 onward
Market Trends
●October 2019
・Revised Telecommunications Business Act put in force ・Separation of communication fee from handset price. Regulation on reduction of handset sales price.
・Increase in consumption tax
・Rakuten Mobile postponed its start of MNO service
- Spring of 2020
The deployment of 5G network commercial service
Consumer Trends
3Q FY 19/3 | 3Q FY 20/3 |
・Strong feeling of handsets are overpriced and restrained buying
・Wait and see attitude for Rakuten Mobile MNO service, and the launch of 5G services.
- There was a last-minute demand before the launch of new plans and increase in consumption tax, therefore resulted in less sales for this term.
- Including WiFi terminals and MVNO handsets
- The unit sales of FY 19/3 has been modified as UQ WIMAX has been included into the calculation. (7000 units are added.)
Mobile Telecommunications Business Segment
Financial Results of | 9 | |
Mobile Telecommunications Business Segment | ||
Unit Sales of Mobile Phones | Financial Results Comparison |
(Thousand Units) | * Including WiFi terminals and MVNO handsets |
Net | Operating | Net Profit | (Billion Yen) | ||
Sales | Profit |
2838
2576 321.5 293.8
8.47 7.68
5.72 5.21
3Q FY 19/3 | 3Q FY 20/3 | 3Q FY 19/3 | 3Q FY 20/3 |
The overall results has fall in line with the y/y forecasts though there has been decrease in sales and profit due to the big drop in unit sales of mobile handsets after October 2019.
Total Number of Retail Outlets of Mobile Phone and Others | 10 | |
Change in Number of Retail Outlets
Carrier Shop | Multi-Carrier | Shop-in-shop & GMS | ||
Accessories Shop | Shop | |||
1,906 | 1,855 |
18 | 18 |
572 | 550 |
189 | 188 |
1,1271,099
End of Dec 2018 | End of Dec 2019 | |
Number of Shops by Each Carrier
*( ) = Directly managed Carrier Shop
Docomo au SB YM UQ Rakuten
1,127(331) 1,099(340)
18(18) | 32(9) | 25(23) |
31(8) | ||
34(2)44(3)
348(38)
327(38)
414(91)387(95)
281(173)285(173)
End of Dec 2018 | End of Dec 2019 | |
The number of directly managed carrier shops has increased
due to the transfer of the management contracts.
Examples of Investments in Shops | 11 | ||
Location Transfer | Newly Opened | ||
November 22nd | October 25th | ||
Docomo Shop | Dual shop opened | ||
Across-Plaza | Rakuten Mobile Terrace Mall Matsudo | ||
Minami 22-Jyo | |||
Smart Labo Terrace Mall Matsudo |
Enterprise Solution Business Segment
Financial Results of Enterprise Solution Business Segment | 13 | |
Unit Sales of Mobile Phones
* Including WiFi terminals and MVNO handsets | (thousand units) |
171 |
Financial Results Comparison
Net Sales | Operating | Net Profit | (Billion Yen) | ||
Profit |
141 |
19.4
21.3
1.93
3Q FY19/3 | 3Q FY20/3 |
1.61
1.34
1.11
3Q FY19/3 | 3Q FY20/3 |
Operating profit and net profit increased due to strong sales in solution
services and terminals for enterprise customers.
Subscription Services | 14 | |
Number of movino star ID
The communication line management (thousand IDs) service for corporate clients
598
544
End of Dec 2018 | End of Dec 2019 |
Number of Subscription of Help Desk Services
(thousand IDs)
200
174
End of Dec 2018 End of Dec 2019
Numbers are growing steadily
Subscription Service | 15 |
Cumulative Number of TG Hikari Subscribers (incl. Resale)
increasing
steadily
The optic fiber access service
Support center for sales team
End of April 2015
(Launch)
End of Dec | End of Dec |
2018 | 2019 |
For improved efficiency for sales department to deal with end customers and resales partners
Registration system for
TG Hikari service
The system for simplified registration, efficient
management of each case, and improved
information sharing.
Improved support and efficiency
In November 2019 | 16 | |
Investment in Relay2, Inc. | ||
Cloud wifi X Edge Computing
Offers Connection and terminals/handsets,
Offers solutions to customersconstruction of wifi environment
app | Edge Computing |
Cloud | Data processing done |
インターネット | locally, edge, where it's |
Edge | close to users. |
app
Relay2
ネットワーク
Advantages
・reduces costs
・reduced security risks ・real-time data processing
app
The exclusive sale of Relay2 products in the Japanese market will add edge computing solution to the product range of T-Gaia.
Payment Service Business and Other Business Segment
Financial Results of | 18 | |
Payment Service Business and Other Business Segment | ||
Financial Results Comparison
Operating | Net Profit | ||||||||
Net | |||||||||
(Billion Yen) | |||||||||
Profit | |||||||||
Sales | 39.7 | ||||||||
35.8 | |||||||||
3.312.72
0.73
(0.22)
3Q FY 19/3 | 3Q FY 20/3 | |
Payment Service Business and Other Business Segment
<> Only>
Net | Operating | Net Profit | ||||||
Sales | Profit | 37.2 | ||||||
32.5 |
1.23
0.94
0.640.73
3Q FY 19/3 3Q FY 20/3
Gross Sales of PIN & Gift Card
Increase due to the start of gift card business with a major sales channel from 2Q of FY 2019
3Q FY 19/3 3Q FY 20/3
Amount of Issued QUO Card
Issued amount continues to increase
3Q FY 19/3 3Q FY 20/3
The promotion of QUO Card Pay launched this FY has been proceeding as planned. Although the increased cost has resulted in drop in profit, the overall results are inline with the initial plan.
In November 201919
Formed Capital Alliance with NETSTARS CO.,LTD.
NETSTARS CO.,LTD.
"StarPay"
Accepting more than 20 brands of
QR code payment services
(As of end of Dec 2019)
The service of multi QR code payment gateway StarPay
for retailers mainly in Japan and Asia
In November 2019 | 20 |
Formed Capital and Business Alliance with BlueStack Systems, Inc.
The first esports tournament platform for mobile games in the world
Organize and play made easy by AI and social media connection.
【Our Strengths】
・Nationwide retail outlets ・Sales skills of terminals
・Sales channels of gift cards and digital codes by Payment Service Business
・Organizing offline game tournaments at our retail stores and online tournaments sponsored by our collaborators
・Selling gift cards and digital codes on the game platform
And further planning ahead.
Stepping into the eSports business which 5G will be the key factor.
Recent Campaigns | 21 |
The digital gift that can be used in physical retail stores, allowing
enterprise customers to launch various types of promotional campaigns.
Osaka Prefectural Gov. | UQ Communication Inc. | RIZAP |
The campaign to encourage | 50,000 yen rewarding | |
wellness of its citizens. | Until End of March 2020 | campaign |
ended |
For updates and news on QUO Card Pay campaigns, please check its official website:
https://www.quocard.com/pay/campaign/
Member Stores: where it can be used | 22 |
Member Stores
Convenience
Stores
(As of Feb 1st 2020) | * Its member store differ from that of QUO Card . |
* ●= QUO Card Pay only | |
Cafes / Restaurants |
(一部店舗を除く)
Book Stores | (一部店舗を除く) | (一部店舗を除く) | |||
(一部店舗を除く) | |||||
※飲食店 一部店舗を除く | |||||
(一部店舗を除く) | (一部店舗を除く) | ||||
(一部店舗) | (一部店舗を除く) | Drugstores | |||
(一部店舗を除く) | (一部店舗を除く) | (一部店舗) | |||
(一部店舗を除く) | |||||
Lifestyle Stores | |||||
(一部店舗) | |||||
(一部店舗) | |||||
(一部店舗を除く) | (銀座博品館TOYPARK) | ||||
(一部店舗) | (守口本店のみ) | (一部店舗を除く) | (一部店舗を除く) | ||
(プラスゲオ富久山店のみ) | (一部店舗) | (一部店舗) | |||
(都城 妻ヶ丘本店のみ) | |||||
Appendixes
【T-Gaia Corporate Philosophy】 | 24 |
TG Vision - Our Vision -
- We will propose new ways of communication to provide our customers with excitement, delight, and safety
TG Mission - Our Mission -
- We value our employees, as well as their families, and strive to establish a pleasant work environment for everyone
- We will develop strong relationships with our business partners, regional communities and shareholders toward our future mutual growth
- As a leading company in the industry, we will go ahead of changes to develop new businesses
TG Action - Our Code of Conduct -
- We will provide the highest-quality service exceeding any of someone's expectations
- We will keep challenging something new aggressively with our passion and a sense of speed
- We will value communication and establish workplace with a culture of openness
- We will value our diversity and strive to achieve the best teamwork
- We will move ourselves higher as professionals
- We always act on high ethical standards and strengthen our compliance structure
24
25
The Midterm Goals
From November 2015, T-Gaia has set a medium-term goals to realize a sustainable growth and to respond to the expectations of all stakeholders including shareholders and employees by achieving the following objectives based on the corporate philosophy toward the FY 2020 (FY ending March 2021).
- Firmly maintain the position as the leading company in the core business of mobile phone distribution
- Grow solution business for corporate clients, settlement service and overseas business as a strong core business
- Create and explore new business opportunities in the mobile and internet industries
- Maintain the dividend payout ratio over 30%
In order to realize the objectives noted above, T-Gaia is taking concrete measures every day, setting the following points as the company-wide strategy.
- Cultivate, recruit, utilize and retain human resources to realize maximization and optimization of achievement of respective employees
- Conduct strategic and continuous cost managements to transform the cost structure into one that can response to the change of the market environment
- Maximize the corporate-wide achievements by optimizing the organization as well as the corporate system
Based on the above medium-term goals and company-wide strategies, T-Gaia will develop the business strategies for each business lines and make every effort to realize them through the concrete action plans in each business departments.
Business Environment and The Strategies | 26 |
Evaluations on the Business Environment
The wide spread of smartphones allows people to connect to the world regardless of time. It has brought huge changes to the way people communicate, gather information and purchase.
New types of businesses and services that were unimaginable in the past are now available. The market became more competitive and so as the chance of forming a new partnership.
Strategies of T-Gaia
T-Gaia will accelerate the speed to become "a Comprehensive Provider of ICT- Related Domains".
The company will accelerate its investments in its digital services while making full use of its analog strengths, such as shops and sales bases across the nation, the diverse range of business models and well-established trades.
It will strive to develop new businesses and services while maintaining the existing partnership within the group.
Vision of Becoming "A Comprehensive Provider | 27 |
of ICT-Related Domains"
Digitalization
Mobile Phone | ||||
Distribution | ||||
Business for | ||||
Solution | ||||
Payment | ||||
Consumers | ||||
Business | ||||
Business | ||||
B to C | ||||
B to B to C | B to B | |||
Corporate
Group
Cooperation
Cooperation
Nationwide sales | ||||||||
Wide variety | Wide range of | High flexibility | Financial | |||||
channels | and neutrality | |||||||
of business | business | condition kept in | ||||||
(for mobile distribution | (low in in-house | |||||||
models | relationship | good valance | ||||||
business) | products) | |||||||
The Strengths of the Corporate Group
Unit Sales of FY2020 (Quarterly) | 28 | |
Quarterly Unit Sales | October 2019 |
Revised Telecommunications | |
(Thousand Unit) | Business Act are in put in force |
1,030 | 1,147 | |||
943 | 1,006 | 913 | 983 | |
850 | ||||
1Q | 2Q | 3Q | 4Q | 1Q | 2Q | 3Q |
FY 19/3 | FY 20/3 |
- Including WiFi terminals and MVNO handsets
- The unit sales of FY 19/3 has been modified as UQ WIMAX has been included into the calculation. (7000 units are added.)
Financial Results in Quarterly Comparison | 29 | |
3Q(October to December)
Net Sales | Operating | Net Profit (Billion Yen) | ||
Profit |
137.0
110.4
3.96
3.27
2.42 2.29
FY 19/3 | FY 20/3 |
3Q | 3Q |
Consolidated Forecasts for FY Ending March 2020
30
(Unit: billion yen) | Full Year Results | Full Year Forecast | Year-on-year | ||
for 2019/3 | for 2020/3 | ||||
Net Sales | 526.92 | 432.00 | ▲94.92 ▲18.0% | ||
Gross Profit | 70.94 | 67.50 | ▲3.44 | ▲4.9% | |
SG&A Expense | 55.56 | 54.40 | ▲1.16 | ▲2.1% | |
Operating Profit | 15.38 | 13.10 | ▲ | ▲14.8% | |
2.28 | |||||
Non-Operating Income | 5.21 | 5.40 | +0.19 | +3.6% | |
(Income from Hoarded Cards , etc..) | |||||
Ordinary Profit | 20.59 | 18.50 | ▲2.09 | ▲10.2% | |
Attributable to Shareholders of | 13.84 | 12.40 | ▲1.44 | ▲10.4% | |
the Parent Company | |||||
Net Profit | |||||
Forecasts for Mobile Telecommunications Business Segment 31
The Business Environment
Forecasts of Mobile Telecommunications Business Segment
Net | Operating | Net Profit | (Billion yen) | ||
Sales | Profit |
The large swells that drive the industry are the law amendments regarding the sales of terminals in force from October and the foreseen establishment of a new carrier.
The preparation for 5G has started.
452.6
351.0
13.10
11.56
8.867.76
FY 19/3 | FY 20/3 (Forecasts) |
Our Strategies
- Reinforcing our "values in proposals" in response to the drop in sales volume due to the complete separation of charges of mobile phone handset and communication charges (Smartphone instructional classes and IoT showrooms within shops, etc.)
- Improving the ratio of revenue generated by subscription services
- Active investments in staff education and recruitment of personnel for enhancement of sales ability and improvement of customer satisfaction
- Continue to make strategic investments such as store relocation and renovation
Forecasts for Enterprise Solution Business Segment | 32 | |
The Business Environment |
- Workstyle reform and shortage of labor are both
Forecasts for Enterprise Solution | tailwind. | |||||
Business Segment | - Installing smart devices are popular to enterprise | |||||
customers. | ||||||
Net | Operating | Net Profit | (billion yen) | - Information security issue are becoming more serious. | ||
Sales | Profit | 31.0 | - Re-wholesale of "Hikari" fiber-optic connection | |||
service has started. | ||||||
26.5
2.43
1.68
FY 19/3 Results
Our Strategies | |
Mobile Enterprise Solution Business | |
2.48 | ● Mobile version of LCM business are promoted |
1.71 | ●IoT business put forward through capital alliance |
with venture companies | |
● Building up of subscription business such as "movino | |
star" | |
FY 20/3 (Forecasts) | Network Business |
● Expansion of revenue base of "TG Hikari" | |
● Productivity improvements by effective use of sales | |
support system |
Forecasts for Payment Service Business and Other Business Segment | 33 | |||||||||||||||
Forecast for Payment Service Business and | ||||||||||||||||
Other Business Segment (Consolidated) | The Business Environment | |||||||||||||||
Net | (billion yen) | |||||||||||||||
Operating | Net Profit | |||||||||||||||
Sales | Profit | Gift card business and PIN business are steady. | ||||||||||||||
47.7 | 50.0 | |||||||||||||||
Cashless payment services using smartphone | ||||||||||||||||
3.28 | ||||||||||||||||
2.93 | are expanding. | |||||||||||||||
▲0.16 | ||||||
▲0.94 | ||||||
FY 19/3 Results | FY 20/3 Forecasts | |||||
Reference: The Forecast for Payment Service Business
and Other Business Segment (T-Gaia Alone)
Net | Operating | Net Profit | (billion yen) | |
Sales | Profit | |||
43.646.5
1.241.30
0.760.90
Our Strategies
Payment Service Business
- Increase in gross sales due to expansion of products and sales channels
●Implementing large-scale sales promotion of "QUO Card Pay" (the planned cost: approximately 1 billion yen)
Overseas Business
- Gross sales of gift card increased due to the expanded sales channels at the luxury supermarket chain in Singapore
- Preparing to launch a business in Vietnam
FY 19/3 Results | FY 20/3 Forecasts | |
Financial Information of T-Gaia: Part 1
- Transition of ROE & Operating Profit
34
Operating Profit | ROE (Return on Equity) | |||||
(billion yen) | 15.6 | 15.3 | ||||
14.3 | 14.2 | 14.4 | ||||
12.7 | 13.1 |
26.4%
33.3%
29.4% | 29.3% | 29.7% | 30.9% |
24.5%
*
FY 14/3 | FY 15/3 | FY 16/3 | FY 17/3 | FY 18/3 | FY 19/3 | FY 20/3 |
(Forecast)
It has been selected to "JPX Nikkei Index 400"
for consecutive years by maintaining high level of ROE
*The ROE of the FY 20/3(Forecast) is calculated based on the forecast of the net profit for FY 20/3 attributable to shareholders of the parent company and the prediction of the net worth of the period.
Financial Information of T-Gaia: Part 2
35
- The Past Trends and the Forecasts of the Key Financial Index
Year End (in billion) | 2014/3 | 2015/3 | 2016/3 | 2017/3 | 2018/3 | 2019/3 |
Net Profit | 6.83 | 7.74 | 9.49 | 9.69 | 10.16 | 13.84 |
Net Worth | 23.59 | 29.10 | 35.81 | 29.36 | 36.44 | 46.73 |
Equity Ratio of Net | 29.7% | 30.9% | 33.3% | |||
Profit | 26.4% | 29.4% | 29.3% | |||
(ROE) | ||||||
Return on Investment | 10.0% | 13.5% | 17.3% | 17.6% | 20.3% | 22.0% |
(ROIC) | ||||||
Operating Profit on | 1.8% | 2.2% | 2.5% | 2.6% | 2.6% | 2.9% |
sales | ||||||
Dividend on Equity | 10.0% | 9.8% | 9.1% | 9.9% | 9.3% | 10.0% |
ratio (DOE) | ||||||
Financial Information of T-Gaia: Part 3
- Return to Shareholders: Dividend Policy
Return to Shareholders in FY ending March 2020
- Annual dividend: 75 yen/share (Interim: 37.5 yen/share, Yearend: 37.5 yen/share)
36
Basic Dividend Policy | Targeting & maintaining dividend payout ratio of more than 30% |
- Net Profit per share (yen)
242.24
222.51
172.62182.34
138.11
112.68
86.74
- Dividend per share & Payout Ratio(yen)
Dividend per share | Payout ratio | 75.00 | |
75.00 |
52.00 55.00
43.00
35.00 37.50
40.3%
33.3% 31.1% 30.1% 30.2% 30.1% | 33.7% |
FY14/3 FY15/3 FY16/3 FY17/3 FY 18/3 FY 19/3 FY 20/3 | FY14/3 FY15/3 FY16/3 FY17/3 FY 18/3 FY 19/3 FY 20/3 |
(Forecast) | (Forecast) |
* The net profit per share and dividend per share at the end of FY 20/3 are calculated based on the predicted average number of the share of the period at the end of FY 20/3.
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T-Gaia Corporation published this content on 27 February 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 27 February 2020 03:40:02 UTC