■Netyear Group <3622> Performance Trends
1. Summary of financial results for the interim period ending March 31, 2025
Financial results for the interim period ending 2025/3 were 1502 million yen, down 11.9% from the same period last year in terms of sales, 59 million yen (loss of 36 million yen in the same period last year), 59 million yen (loss of 36 million yen) in ordinary loss, and 132 million yen (loss of 27 million yen) in interim net loss. Although orders remained steady, the decrease in sales was due to the fact that the balance of orders received at the end of the previous fiscal year was 667 million yen and a low level compared to 909 million yen at the end of the 2023/3 fiscal year. The gross profit margin improved 0.2 points compared to the same period last year, and SG&A expenses also decreased 2.8% from the same period, making efforts to control costs, so operating losses only increased slightly. However, since an investment securities valuation loss of 90 million yen was recorded as an extraordinary loss, the interim net loss increased by 105 million yen compared to the same period last year. The acquisition price was recorded as a full valuation loss due to a decrease in the net assets of capital and business partner companies. However, business alliances are continuing, and certain results have been achieved, such as releasing joint development projects.
Sales trends by industry were 465 million yen, down 26.7% from the same period last year due to the end of large-scale projects for the NTT Group centered on NTT DATA. Also, the retail and restaurant industries decreased 13.7% to 492 million yen, and the service industry decreased 12.1% to 239 million yen, respectively, and to cover these declines, the same 34.2% increase to 304 million yen for other industries, but that could not be fully covered.
Looking at the factors for the increase and decrease in sales and administration costs, labor costs increased by 5 million yen compared to the same period last year, and others increased by 12 million yen due to recording development costs for new products, but payment fees decreased by 13 million yen and recruitment costs by 12 million yen, respectively. Recruiting new graduates increased by 1 from the previous year to 9, but recruitment costs decreased by suppressing mid-career recruitment. The number of employees at the end of the mid-term period seems to have increased slightly from 189 at the end of the previous fiscal year.
The financial details are good with debt-free management and the capital adequacy ratio is in the 80% range
2. Financial Status and Management Indicators
As for the financial situation at the end of the interim period ending 2025/3, total assets decreased 296 million yen from the end of the previous fiscal year to 2892 million yen. As the main factors for the increase or decrease, cash and deposits decreased by 24 million yen, accounts receivable and contract assets decreased by 251 million yen, respectively, in fixed assets, investment securities decreased by 90 million yen, and deferred tax assets increased by 18 million yen.
Total liabilities decreased 121 million yen from the end of the previous fiscal year to 349 million yen. Accounts payable decreased by 82 million yen and bonus provisions by 14 million yen. Also, total net assets decreased by 174 million yen to 2542 million yen. Retained earnings declined due to the recording of an interim net loss of 132 million yen and dividend expenditure of 41 million yen.
As for management indicators, the capital adequacy ratio is maintained at a high level of 87.9%, and the management is debt-free, and cash and deposits have also secured a level of 2136 million yen where there is no problem based on the business scale, and it can be determined that financial details are in a healthy state. Going forward, it is our policy to allocate cash on hand for growth investments, including M&A alliances, and shareholder returns. The targets of M&A alliances are companies with advanced technology and human resources in the EC, AI, and big data fields. It is a strategy to efficiently expand the business by replenishing currently scarce resources with M&A alliances.
(Author: FISCO Visiting Analyst Joe Sato)