REG - Nippon Telegraph - NOTICE REGARDING NETYEAR GROUP CORP'S ANNOUNCEMENT

Nippon Telegraph and TelephoneAnnouncement

31/01/2020 07:02

RNS Number : 5487B
Nippon Telegraph and Telephone Corp
31 January 2020
 


January 31, 2020
 



















Company Name: Netyear Group Corporation




















Representative: Fujiyo Ishiguro, President and Chief Executive Officer




















(Code No.: 3622, Tokyo Stock Exchange Mothers Market)




















Tel: +81-3-6369-0550



 



















Parent Company: NTT DATA Corporation




















Representative: Yo Honma, President and Chief Executive Officer




















(Code No.: 9613, First section of Tokyo Stock Exchange)



 



















Parent Company: Nippon Telegraph and Telephone Corporation




















Representative: Jun Sawada, President and Chief Executive Officer




















(Code No.: 9432, First section of Tokyo Stock Exchange)



 
NOTICE REGARDING NETYEAR GROUP CORPORATION'S ANNOUNCEMENT OF THE REVISION OF ANNUAL CONSOLIDATED FINANCIAL FORECASTS AND OF DIFFERENCES BETWEEN ANNUAL NON-CONSOLIDATED FINANCIAL FORECASTS AND PRIOR YEAR RESULTS
Based on recent business performance trends, Netyear Group Corporation (the "Company") has announced today the revision of its annual consolidated financial forecasts for the fiscal year ending March 31, 2020, which were previously announced on May 9, 2019, as stated below. Furthermore, although the Company has not previously announced annual non-consolidated financial forecasts, the Company also announced today that it anticipates that there will be differences between its annual non-consolidated financial forecasts for the fiscal year ending March 31, 2020 and the financial results for the fiscal year ended March 31, 2019.
1.    Revised Consolidated Financial Forecasts for the Fiscal Year Ending March 31, 2020
(Millions of yen)







Operating
Revenues


Operating
Income


Recurring
Profit


Profit Attributable to Parent Shareholder


Earnings
per Share




Previous Forecast (A)


6,200


80


80


56


8.00 yen




Revised Forecast (B)


5,300


(200)


(200)


(233)


(33.29) yen




Change (B-A)


(900)


(280)


(280)


(289)


―




Percentage Change (%)


(14.5)


―


―


―


―




(Reference) Results for the Fiscal Year Ended March 31, 2019


5,513


21


20


(83)


(11.94) yen



2.    Differences between Annual Non-Consolidated Financial Forecasts for the Fiscal Year Ending March 31, 2020 and Financial Results for the Fiscal Year Ended March 31, 2019
(Millions of yen)







Operating
Revenues


Operating
Income


Recurring
Profit


Net Income


Earnings
per Share




Results for the Fiscal Year Ended March 31, 2019 (A)


3,403


(58)


(57)


(133)


(19.05) yen




Current Forecast (B)


3,350


(50)


(50)


(52)


(7.43) yen




Change (B-A)


(53)


8


7


81


  ―




Percentage Change (%)


(1.6)


―


―


―


  ―



 
3.    Reasons for the Revisions and Differences
(1)   Consolidated Financial Results
The Company anticipates that the financial results for the Company and its consolidated subsidiary, Tribal Media House, Inc. ("Tribal Media House"), will differ from initial forecasts and that annual consolidated financial forecasts will vary significantly.
In particular, with respect to Tribal Media House, financial results for the second quarter decreased significantly compared to the prior year quarter as a result of budget reductions at major customers, among other reasons. Although the Company has been strengthening its order procurement activities in order to acquire new customers and has been working to reduce selling, general and administrative expenses beginning in the third quarter, the Company anticipates that these measures will be unable to compensate for the decline in sales, and expects a significant operating loss for the fiscal year.
Due to the significant changes affecting the financial forecasts for Tribal Media House, consolidated financial results for operating revenues, operating income, recurring profit and profit attributable to parent shareholder are all expected to be significantly lower than the previously announced financial forecasts. (For a discussion of annual non-consolidated financial forecasts, please see "Non-Consolidated Financial Forecasts" below.)
(2)   Non-Consolidated Financial Forecasts
In the digital marketing market, projects are becoming increasingly difficult as they become increasingly complex and large-scale, including advanced integration of multiple systems, system development across departments within customer companies and project management across multiple vendors, and the Company experienced operating losses for three consecutive terms prior to the previous fiscal year as a result of numerous project difficulties such as delivery delays and increases in development costs due to changes in specifications.
In order to prevent such difficulties, the Company has undertaken measures including strengthened procurement risk management and project management and reviews of transactions with unprofitable customers, and has continued to implement these measures during the current fiscal year.
Based on these measures to improve profitability, the Company aims to achieve stability and growth through increased continuity of transactions with customers by enhancing its services and improving quality. However, the overall progress of these measures has been delayed due to intensifying competition for personnel and other factors, and as a result, the Company's financial results for operating revenues, operating income and recurring profit are expected to remain at the same levels as its financial results for the previous fiscal year. In addition, in the previous fiscal year, the Company recorded an impairment loss (non-recurring loss) on business assets of ¥73 million, which is expected to cause net income for the fiscal year ending March 31, 2020 to differ significantly from results for the fiscal year ended March 31, 2019.
4.    Dividend Forecasts
With respect to distribution of profits, the Company's fundamental policy is to both secure internal reserves required for future business development and for strengthening its management structure while also making stable and continuous dividends. The Company expects to pay an annual dividend of ¥3.25 per share as initially announced.
Note on Financial Forecasts:
The above forecasts are based on the information currently available to the Company as of the date of this announcement, and include certain potential risks and uncertainties. As a result, various factors in the future could cause actual results to differ materially from the above forecasts.




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