Performance of Shikigaku Co., Ltd. (7049, TSE Mothers) for the first semester ended August 31, 2021
TOKYO, October 18, 2021 / PRNewswire / – Sales and profits increased significantly in the six months ended August 31, 2021. Results were strong in the core consulting business, and the Company saw strong performance growth in management consulting and platform services.
Summary of Findings
During the six months ended August 31, 2021, the economic environment in Japan continued to be ruthless due to the impact of the COVID-19 pandemic. However, the market demonstrates a strong need to improve organizational productivity through such means as results-based employee management and rules-based organizational management that generates results regardless of the workplace used. As a result, demand for the Company’s services remains robust.
As part of its business philosophy of “spreading Shikigaku and maximizing the potential of people”, the Shikigaku Group provides services that facilitate the impregnation of its “Shikigaku” organizational management theory within client organizations. In addition, through its Sports Entertainment business, the Company is actively engaged in sales activities aimed at acquiring sponsors for the start of the 2021-2022 season of professional basketball organization B.LEAGUE. In the venture capital fund industry, Aidma Holdings, Inc., the first company in which SHIKIGAKU No. 1 Investment Limited Partnership has invested, has successfully listed its shares on the TSE Mothers Index. With this listing, two issuers of SHIKIGAKU No. 1 Investment Limited Partnership completed IPOs within a year and a half of its inception. The Company views these results as proof that the Shikigaku organization consulting method supports organizational management aimed at securing public registrations.
For the past six months August 31, 2021, the Company reported net sales of JPY 1,801,483,000 (+ 86.4% YoY), EBITDA (operating income + depreciation charges + goodwill amortization + leasehold deposit amortization) of 236,142,000 JPY (+ 7,588.7% YoY), operating profit of 201,292,000 JPY (compared to the operating loss of 24,381,000 JPY for the six months ended August 31, 2020), ordinary profit of 197,270,000 JPY (compared to the ordinary loss of JPY25,918,000 for the six months ended August 31, 2020), and 120,333,000 JPY in net income attributable to owners of the parent company (compared to 105,132,000 JPY in net loss for the six months ended August 31, 2020).
The Company has five business sectors: the Organizational Consulting activity, the Sports entertainment activity, the Contract development activity, the VC Fund activity and the Practical support fund activity.
Through its organizational consulting business, the Company provides management consulting and platform services.
COVID-19 pandemic impacted management consulting services during the closed semester August 31, 2021. However, the Company continued to make investments supported by vigorous marketing activities to facilitate the active recruitment of consultants and the expansion of its client base. As a result, its number of consultants rose to 65, up 11 from the February 28, 2021. From August 31, 2021, the Company said it has entered into management consulting services contracts with a cumulative total of 2,571 companies. Its management consulting services have generated 1,070,358,000 JPY of sales for the six months ended August 31, 2021 (+ 36.5% year-on-year).
During the period under review, in the platform services category, the Company focused on expanding sales of its core SHIKIGAKU services, which provide continuous operational support until the management organization based on his Shikigaku theory (corresponding service launched in September 2020) to seize. The diagnostics that accompany these services clarify organizational problems and help support their eventual resolution. As a result, the Company has strived to improve the satisfaction of its customers associated with its basic SHIKIGAKU services. From August 31, 2021, the Company had concluded SHIKIGAKU basic service agreements with 379 companies (compared to 167 at February 28, 2021) while also reporting 157 SHIKIGAKU Cloud agreements (compared to 229 in February 28, 2021) and 340 Shikigaku member clients (compared to 479 in February 28, 2021). Platform services generated 487,545,000 JPY of sales for the six months ended August 31, 2021 (+ 210.5% year-on-year).
As a result of these elements, the turnover of the Organization Consulting activity amounted to 1,558,103,000 JPY (+ 65.5% year-on-year) while operating income stood at JPY 294,660,000 (+3,997.2% year-on-year).
In the Sports Entertainment business, the Company has fulfilled its function as a community club by leading initiatives to stimulate and broaden interest in local sports while striving to facilitate team building in further promotion at League B1 level. During the three months ended August 31, 2021, the Company expanded its sales activities aimed at acquiring sponsors for the 2021-2022 season, increased the scope of its sales staff recruitment and strengthened its collaboration with local governments to increase tax payments made in as part of the enterprise version of from Japan taxation of the city of origin, which has become a new tax base. In part as a result of these efforts, sponsorship orders have been strong, rising to 9,397,000 JPY (+ 75.8% year-on-year). However, costs outweighed profits during the period under review as the Company continued to invest in operations aimed at strengthening its team.
As a result, the revenue generated by the Sports Entertainment activity amounts to 91,784,000 JPY while the operating loss of the company amounted to JPY75,255,000.
In the contract development activity, the Company has drawn on its sources of engineers and the vast expertise it has cultivated while managing many and various development projects by carrying out development operations associated with the services of platform of its own group of companies and outsourcing the development of e-learning systems related to certification courses. In March 2021, the company launched Work Experience DX, a recruiting matchmaking service that allows users to simulate the experience of joining participating companies, thereby gaining knowledge of the work they do and an understanding of their compatibility with those companies.
As a result of these factors, the sales generated by the contract development activity amounted to JPY 151,595,000 while the corresponding operating loss amounted to 13,752,000 JPY.
In the venture capital fund industry, the Company has made investments focused on building and expanding organizational power and transforming into a growth-generating organization. At the same time, she also operated venture capital funds that support growth by facilitating organizational improvements in the companies they invest in by implementing the Shikigaku theory of the company. In June 2021, the Company established SHIKIGAKU No. 2 Investment Limited Partnership, converted it into a subsidiary and began including its performance in the consolidated financial results. In June and July 2021, the Company sold part of the shares held by SHIKIGAKU No. 1 Investment Limited Partnership and registered a JPY167 million gain on the sale of investment securities, qualifying this gain as extraordinary income because it was generated by an investment made on or before June 29, 2021.
As a result, the operating loss of the VC Fund business amounted to 13,113,000 JPY.
In the Practical Support Fund activity, the Company operated practical support funds which provide organizational improvement and financial support and earn income from capital gains generated by the investment exit (IPO, M&A, etc. ). In June 2021, the Company created Shinsei Shikigaku Growth Support I Investment Limited Partnership and converted it to an equity affiliate. The objective of this fund is to invest in companies that are expected to grow, to provide practical support aimed at improving their financial performance and to facilitate this growth, and to raise investment capital through their subsequent sale.
As a result of the expenses associated with these efforts, the Practical Support Fund activity generated an operating loss of 990,000 JPY.
The Company made no changes to its earnings guidance for the year ending February 28, 2022, which projects sales of JPY 3,798 million (+ 51.6% year-on-year), EBITDA of JPY 470 million (+ 136.2% YoY), operating profit of JPY400mn (+ 191.2% year-on-year) and ordinary profit of JPY353mn (+ 77.4% year-on-year).
Shikigaku Co., Ltd. (7049, TSE Mothers) https://corp.shikigaku.jp/
Please visit the following URL for a summary of the consolidated financial results for the six months ended August 31, 2021
→ https: //global-assets.irdirect.jp/pdf/tdnet/batch/140120210929404217.pdf
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