■Performance Trends
2. Financial Status of WingArk 1st ＜4432＞
(1) Consolidated statement of financial position
Assets at the end of the 2024/2 fiscal year were 65,950 million yen (up 3,399 million yen from the end of the previous fiscal year). Current assets were 15,273 million yen (up 2,035 million yen from the same period), and non-current assets were 50,676 million yen (same increase of 1,364 million yen). The main reason for the increase in current assets was the increase in cash and cash equivalents of 1,810 million yen. The main reason for the increase in non-current assets was an increase of 1,677 million yen in other financial assets.
Liabilities at the end of the 2024/2 fiscal year were 26,853 million yen (down 1,122 million yen from the end of the previous fiscal year). Current liabilities were 13,348 million yen (up 596 million yen from the same period), and non-current liabilities were 13,504 million yen (down 1,718 million yen from the same period). The main reason for the increase in current liabilities was due to an increase of 4.28 million yen in contract liabilities, etc. The main reason for the decline in non-current liabilities was a decrease of 1,699 million yen in long-term loans associated with loan repayment.
The capital at the end of the 2024/2 fiscal year was 39,096 million yen (up 4,522 million yen from the end of the previous fiscal year). The main reason for the increase in capital was the increase in retained earnings of 3,510 million yen.
Regarding financial soundness, the company's financial leverage (net interest-bearing debt ÷ EBITDA) has improved drastically to minus 0.4 times (0.1 times in the previous fiscal year), and soundness has improved. Cash is steadily piling up, and it seems that they are considering M&A etc. in the future.
Furthermore, goodwill and other intangible assets generated when the company acquired all of the shares of the former Wingarc 1st in 2016/4, were 27,348 million yen and 15,674 million yen, respectively, as of the end of the 2024/2 fiscal year, including those generated by subsequent corporate acquisitions, accounting for 65.2% of the Group's assets. IFRS does not amortize goodwill or partial intangible assets (trademark rights) whose useful life cannot be determined. An impairment test is carried out each period or when there are signs of impairment. When it is recognized that the profitability of the Group's business has declined, it is necessary to record impairment losses, so there is a possibility that it will have an important impact on the Group's business results.
However, the company group is striving to strengthen business profitability in order to reduce risks related to impairment of goodwill, and is mainly implementing the following initiatives.
・Expansion of the recalling business
Recurring revenue from software license maintenance, subscriptions, cloud service usage fees, etc., is recorded continuously every year as long as contracts continue, and as the number of contract companies increases, sales also increase by that amount. The company group is planning to expand this recurring business in order to stabilize the business and strengthen profitability.
・Promotion of business-specific solutions
The company group does not simply provide software or cloud services, but provides solutions suited to customer operations that combine know-how from each industry. In particular, data empowerment solutions have grown by providing IoT visualization solutions for the manufacturing industry and sales productivity improvement solutions for the financial industry. We are striving for continuous technology development and accumulation of industry know-how in order to further expand sales through new solutions.
(2) Consolidated cash flow statements
The status of each cash flow for the fiscal year ending 2024/2 is as follows.
(a) Cash flow from operating activities
Funds obtained as a result of sales activities were 7,840 million yen (6,870 million yen acquired in the previous fiscal year). This is mainly due to the fact that although corporate income tax payments of 1,791 million yen were recorded, profit before income tax was recorded of 7,304 million yen, and depreciation and amortization expenses of 1,612 million yen were recorded.
(b) Cash flows from investing activities
Funds used as a result of investment activities were 1600 million yen (1020 million yen used in the previous fiscal year). This is mainly due to recording expenditure of 585 million yen due to acquisition of intangible assets associated with core system renewal and customer management system renovation, expenditure of 527 million yen due to acquisition of investment securities, and expenditure of 488 million yen due to acquisition of tangible fixed assets associated with new technical equipment construction, etc.
(c) Cash flows from financial activities
Funds used as a result of financial activities were 4,462 million yen (3,730 million yen used in the previous fiscal year). This is mainly due to the fact that although income from long-term loans was 10,000 million yen, expenses due to repayment of long-term loans of 12,250 million yen and dividend payments of 1,900 million yen were recorded.
(Written by Yasushi Inoue, FISCO Guest Analyst)