Executive summary

Business overview

JBR provides a nationwide service to handle emergencies. Customers call the company with problems such as a broken window, a leaky faucet, or other odd jobs. JBR dispatches a repairman from its partner stores. JBR offers various services, including lock replacement, glass repair, household insurance for apartments, light plumbing services, pest control, roofing repair, small appliance repair, and garden maintenance.

As of September 2021, the company’s five reporting segments are Urgent Response, Membership, Insurance, Repair, and LifeTech (providing power producer and supplier services through existing partner companies involved primarily in the real estate rental business). These segments produced 9.8%, 51.8%, 34.7%, 2.0%, and 1.7% of sales respectively, and -1.5%, 97.6%, 21.5%, -4.3%, and -13.2% of operating profit in FY09/21. Group companies include the parent company JBR, three subsidiaries (JBR Anshin Hosho Co., Ltd., Rescue Insurance Co., Ltd., and Japan Small Amount and Short-Term Insurance Co., Ltd.), and one equity-method affiliate (Japan PC Service Co., Ltd.). In FY09/15, the company had eight reporting segments: Call Center, Membership, Corporate Tie-Ups, Member Shop, Small Amount Short-Term Insurance, Environmental Maintenance (decontamination), Car Leasing, and Others. However, in August 2015, it sold all of its shares in Binos Corp. and effectively exited the Environmental Maintenance business. According to company estimates, its current market share in resolving everyday customer troubles is only about 1%, but JBR has set a target of 10%, and will work to expand and deepen its operations in its main business.

Earnings

Full-year FY09/21 results: The company reported consolidated sales of JPY13.5bn (+11.6% YoY) and operating profit of JPY1.4bn (+3.0% YoY). Recurring profit came to JPY1.7bn (-3.2% YoY), and net income attributable to owners of the parent was JPY57mn (-94.3% YoY). 4Q and full-year sales marked record highs. GPM was down 3.9pp YoY to 42.8%. Cost of sales went up due to an increase in electricity procurement prices in the PPS business and a reactionary increase in dispatch costs, which were curtailed under the state of emergency a year earlier. SG&A expenses fell 3.0pp to 32.3% YoY and OPM was down 0.8pp to 10.5%.

For FY09/22, JBR forecasts full-year consolidated sales of JPY18.0bn (+33.7% YoY), operating profit of JPY1.7bn (+22.8% YoY), recurring profit of JPY1.9bn (+9.2% YoY), net income attributable to owners of the parent of JPY1.2bn (21.4x YoY) and EPS of JPY35.36. Factors contributing to the forecast JPY4.5bn YoY sales increase are the ACTCALL acquisition effect (+JPY3.6bn), existing businesses (+JPY1.2bn), and effect of withdrawal from the PPS business (-JPY300mn). Factors contributing to the forecast JPY321mn YoY operating profit increase are existing businesses (+JPY227mn), effect of withdrawal from the PPS business (+JPY145mn), ACTCALL acquisition effect (+JPY70mn), and ERP expenses (-JPY120mn).

JBR announced a medium-term management plan that extends through FY09/24, which targets FY09/24 sales of JPY22.0bn (versus JPY13.5bn in FY09/21, +63.4%). Based on this sales forecast, the company aims to establish a structure for profit growth with a CAGR of over 20%, targeting operating profit of JPY2.5bn in FY09/24 (versus JPY1.4bn in FY09/21, +77.5%), recurring profit of JPY2.7bn in FY09/24 (JPY1.7bn, +52.2%), net income attributable to owners of the parent of JPY1.8bn in FY09/24 (JPY56mn, 32.1x), and EBITDA of JPY3.2bn in FY09/24 (JPY1.7bn, +92.6%).  

KPI targets are member count (4,604,000 in FY09/24 versus 3,347,000bn in FY09/21, +37.6%) and number of insured individuals (867,000 in FY09/24 versus 593,000 in FY09.21, +46.2%).

Strengths and weaknesses

Shared Research views the company’s strengths as its strong financial position and ability to leverage the single fixed cost base (call centers). Weaknesses include an inability to leverage a single brand identity and JBR’s reliance on partner and network stores for its store network. (See the Strengths and weaknesses section.)

Key financial data

Recent updates

Full-year FY09/21 flash update

Japan Best Rescue System Co., Ltd. announced earnings results for full-year FY09/21. See the results section for details.

Recording of extraordinary loss, revisions to full-year FY09/21 forecast, and dividend increase

Japan Best Rescue System (JBR) revised its full-year FY09/21 earnings forecast to reflect the posting of an extraordinary loss. The company also announced an increase to its expected dividend, subject to approval at the annual ordinary shareholders meeting scheduled for December 2021.

Posting of extraordinary loss 

JBR announced on July 27, 2021 that it had acquired ACTCALL INC., which has more than 500,000 members and is in a competitive relationship with JBR in the membership business segment. As noted in JBR's “Announcement on acquiring 100% ownership of ACTCALL INC. and TSUNAGU CO., LTD. and having capital and business alliance with CHIC Holdings INC.”, the company acquired 100% ownership of ACTCALL Inc. and TSUNAGU Inc. through a share exchange implemented on September 30, 2021. JBR determined the share exchange ratio based on the calculations of an independent valuer, taking July 26, 2021 as the evaluation basis date and allocating 3,007,519 ordinary shares to CHIC Holdings INC., the parent of the acquired subsidiaries.

However, JBR's share price rose sharply during the period between the above announcement and the effective date of the share exchange, such that the value of shares to be allocated to CHIC Holdings also increased and as a result the total amount of the accounting-based acquisition cost calculated at the time of equity swap exceeded the initially assumed acquisition cost.

JBR could not avoid having a period between announcing agreement to the transaction and the effective date of the 
equity swap under the Companies Act of Japan, and moreover the rise in its share price was in large part driven by factors emerging after the above announcement. The company accordingly discussed with its accounting auditor whether it should record the gap between the subsidiaries' acquisition cost and the appraised value of goodwill as an impairment loss. It decided to use the appraised value of the stock as of September 30, 2021 (the time of the share exchange) as the acquisition cost, and record the JPY995mn gap between this and the appraised value at the time of agreement as an impairment loss. For the aforementioned extraordinary loss, JBR reduced the amount to be booked as a fixed asset on the consolidated balance sheet to the acquisition cost, and booked this reduced amount as an impairment loss. There was no outflow of cash or deposits.

On the other hand, as JBR also booked a JPY2.4bn gain on disposal of treasury stock as capital surplus, the value of net assets is expected to increase from JPY 7.9bn as of end-FY09/20 to JPY11.0bn as of end-FY09/21. Thus, JBR's financial condition should improve even further.

Earnings forecast revisions

Revisions to full-year FY09/21 earnings forecast

Sales: JPY13.5bn (previously JPY14.5bn)
Operating profit: JPY1.4bn (previously JPY1.7bn)
Recurring profit: JPY1.7bn (previously JPY1.7bn)
Net income attributable to owners of parent: JPY50mn (previously JPY1.1bn)

The revision to net income is due to the aforementioned extraordinary loss. The company did not disclose reasons for revising its forecasts for sales, operating profit, and recurring profit. 

Dividend forecast revision (increase) 

JBR's basic dividend policy is to target a payout ratio of 30%. In view of this policy, the fact that net assets exceed JPY10bn
due to the posting of gains on the disposal of treasury stock, and also having reviewed growth prospects for its business, the company decided to increase its FY09/21 year-end dividend by JPY1 per share from the figure announced on November 6, 2020, and will now pay an annual dividend of JPY17. 

Business alliance with Joyo Bank

Japan Best Rescue (JBR) announced a business alliance with Joyo Bank.

The company decided to form a partnership with Joyo Bank (TSE1: 7167; part of Mebuki Financial Group) to provide the bank with its services.

As of end-June 2021, the company had signed contracts with more than 3,000 partner stores across the country to provide services helping them with problems or emergencies. The company has been seeking alliances with regional financial institutions, which are indispensable in resolving the business and financial issues of its partner stores, in order to expand its network of partner stores and enhance its service lineup. In recent years, more and more regional financial institutions have adopted the strategy of improving their consulting functions, and discussions on forming alliances with them have been accelerating.

Joyo Bank is utilizing the knowledge of gerontology and strengthening collaboration with external companies in order to solve the problems and meet the diverse needs of its customers in anticipation of the aging of Japanese society. Joyo Bank is taking advanced measures to raise the level of its proposal capabilities, including in non-financial fields. In April 2021, it introduced "Smile Navigation," a tool to provide senior clients with information on potential issues and case studies where they were successfully resolved.

Joyo Bank will start offering its "life problem solving service" through Smile Navigation. The Smile Navigation system allows customers to enter their age, health condition, and other information, and the system displays their potential issues and what they can do to resolve them. The system recommends services including non-financial services such those JBR provides in addition to financial services such as asset management. As of end-August 2021, the system had entries for around 60 services. Customers of Joyo Bank can use JBR services through a dedicated toll-free number.

JBR has been in discussions with several financial institutions to attach its services to their financial products, such as mortgages, and the company believes that the formation of this alliance will help to accelerate these discussions. The company believes that the alliance could be a major turning point for its Membership business, which has been growing mainly in the real estate industry.

Trends and outlook

Quarterly trends and results

Full-year FY09/21 results (out November 5, 2021)

Results summary

Full-year FY09/21 results

The company booked consolidated sales of JPY13.5bn (+11.6% YoY), operating profit of JPY1.4bn (+3.0% YoY), recurring profit of JPY1.7bn (-3.2% YoY), and net income attributable to owners of the parent of JPY57mn (-94.3% YoY). Both Q4 and full-year sales reached record highs. 

Results versus forecast

Full-year results were in line with the revised company forecast announced on October 18, 2021. Progress versus the initial full-year FY09/21 forecast was 92.8% for sales, 85.3% for operating profit, 102.4% for recurring profit, and 5.1% for net income attributable to owners of the parent. Sales fell short of the initial forecast due to delays in installing partner companies' systems for group household insurance (currently in progress with goal of system starting by end of 2021) and the impact of withdrawing from the PPS business. However, the company exceeded its recurring profit forecast by recording JPY581mn in non-operating profit (JPY249mn in non-operating expenses), including JPY365mn profit from the sale of investment securities. Net income was below target because of a JPY997mn impairment charge for a change in the goodwill amount from the initial estimate related to the acquisition of competitors ACTCALL and TSUNAGU.  

Sales 

Full-year FY09/21 sales were JPY13.5bn (+11.6% YoY). The mainstay Membership and Insurance businesses recorded double-digit YoY growth. Sales of the mainstay QR Service for New Tenant in the Membership business and core product household insurance for apartments in the Insurance business showed solid growth. At end-Q4, the member count reached 3,347,000 (+39.5% YoY; of which approximately 630,000 are members of ACTCALL, which was acquired by the company in FY09/21) and the number of insured individuals was 593,000 (+7.8% YoY).

Quarterly sales

Sales totaled JPY3.2bn (+9.9% YoY) in Q1 FY09/21, JPY3.5bn (+11.4% YoY) in Q2, JPY3.6bn (+18.4% YoY) in Q3, and JPY3.2bn in Q4 (+6.8% YoY). While sales grew YoY in all four quarters, it is notable that the mainstay Membership and Insurance businesses recorded YoY sales growth in all four quarters. Growth of the Membership business, which has recurring/subscription type revenue, is helping to build a stable earnings base in the longer term for the company as a whole that is less vulnerable to external conditions.

Operating profit 

Full-year operating profit was JPY1.4bn (+3.0% YoY). The gross profit margin declined 3.9pp to 42.8% due to a relative increase in the cost of sales caused by a rise in electricity procurement prices in the PPS business and a reactionary increase in dispatch costs, which were curtailed under a state of emergency a year earlier. SG&A expenses were down 3.0pp to 32.3% and the operating profit margin declined 0.9pp to 10.5%.

Factors contributing to JPY41mn YoY increase in operating profit

Factors buoying profit: (1) increased sales accompanying stable growth at mainstay businesses, JPY168mn; and (2) effect of spot projects for municipalities, JPY57mn

Factors draining profit: (1) increase in insurance policy reserve, JPY73mn; (2) higher electricity procurement costs at Life & Technology business, JPY69mn; and (3) M&A expenses, JPY44mn

The company received spot project orders from municipalities in Q4 as well as in Q3, which generated sales of JPY274mn and gross profit of JPY57mn in FY09/21. 

Recurring profit 

Full-year recurring profit was JPY1.7bn (-3.2% YoY). Recurring profit declined by JPY58mn YoY as a result of a JPY62mn increase in non-operating profit offset against a JPY161mn increase in non-operating expenses. Non-operating profit totaled JPY581mn, of which profit from the sale of investment securities accounted for a large share (JPY365mn versus JPY312mn in FY09/20), while non-operating loss was JPY249mn, of which loss from the sale of investment securities accounted for JPY100mn.

Quarterly net income attributable to owners of the parent

Net income attributable to owners of the parent was JPY57mn (-94,3% YoY). A JPY997mn impairment charge for a change in the goodwill amount from the initial estimate related to the acquisition of competitors ACTCALL and TSUNAGU in FY-09/21 booked as an extraordinary loss was a major factor. The company decided to raise its dividend per share for FY09/21 from JPY16 to JPY17, because net assets exceeded JPY10bn. This will be the seventh consecutive fiscal year since FY09/15 in which the company increased its dividend. 

Accumulation of unearned revenue

For the Membership business, unearned revenue and long-term unearned revenue (source of future sales and profits) rose to JPY9.3bn at end-FY09/21 (+JPY1.6bn or +21.3% versus end-FY09/20), driven by an increase in members for core services. 

Main contract numbers in  FY09/21

The number of contracts in window-related services was 3,000 (4,000 in FY09/20), plumbing services 22,000 (25,000), and lock replacement services 29,000 (32,000).

Making ACTCALL and TSUNAGU wholly owned subsidiaries through a share exchange and concluding a capital and business alliance with CHIC

On July 27, 2021, Japan Best Rescue System (JBR) resolved to carry out a share exchange under which it would acquire 100% ownership of ACTCALL Inc. and TSUNAGU Inc., with each of these companies as a result becoming wholly owned JBR subsidiaries. ACTCALL (established on January 27, 2005; capital of JPY101mn) operates a comprehensive outsourcing business relating to housing life while TSUNAGU (established on October 1, 2020; capital of JPY10mn) is engaged in the call center operations business.

At the same time it concluded the share exchange agreement, JBR concluded a capital and business alliance agreement with CHIC Holdings Inc. (TSE Mothers: 7365), the parent company for ACTCALL and TSUNAGU, with the aim of promoting mutual business development and collaborative efforts in the operating areas of both companies. 

The share exchange agreement is subject to approval at the extraordinary general meeting of shareholders scheduled at each of the companies targeted for acquisition on September 29, 2021. JBR expects to implement the share exchange on September 30, 2021 without having secured approval at shareholders meetings in accordance with the simple share exchange provisions stipulated under Article 796 Clause 2 of the Companies Act of Japan.

Reasons for making the targeted companies wholly owned subsidiaries through a share exchange and concluding a capital and business alliance with CHIC

JBR’s Membership business for tenants of rental real estate properties has to date focused on improving its performance as a competitor to the housing life related comprehensive outsourcing business provided by CHIC. However, since CHIC started to consider focusing its management resources on the settlement solutions business, JBR saw an opportunity to discuss future business strategies with CHIC alongside it being entrusted with a portion of call center operations within the housing life related comprehensive outsourcing business operated by CHIC. After discussions focused on the further development of both companies, it was agreed that the JBR would make the targeted companies wholly owned subsidiaries through a share exchange.

Making the targeted companies wholly owned subsidiaries will increase the number of total group members to more than three million, which would allow the company to make great strides toward achieving its mid-term goals. In addition, since the profit margin in its Membership business exceeds that at the targeted companies, JBR expects profitability at those companies to improve through the streamlining of their marketing resources and call center operations.

At the same time, JBR notes that CHIC aims to expand its settlement solutions business, and in line with capital and business alliance concluded alongside the share exchange agreement, the company will support the sales and marketing efforts of CHIC in the settlement solutions business while working with CHIC toward the establishment of joint venture companies and the development of new services.

With the share exchange and alliance agreements as a starting point, JBR aims to expand the Membership business and improve its profitability while also contributing to the further expansion of CHIC’s settlement solutions business. The company expects that the two companies will thereafter work to further advance business synergies.

Procedure for the share exchange

Under the share exchange agreement, 0.266 JBR common shares will be allocated for each ACTCALL share, while 96.415 JBR common shares will be allocated for each TSUNAGU share. JBR will allocate 3,007,519 treasury shares in the share exchange and does not plan to issue any new shares.

Creating synergies through the grouping of the targeted companies

The acquisition and conversion of ACTCALL and TSUNAGU to subsidiaries reflects competitive conditions. In line with market trends, the company is working to expand its share in membership services for real estate rental property tenants and ensure for itself a slice of that expanding market. As noted earlier, the targeted companies are not as profitable as JBR, though by helping them adopt its methods, the company aims to improve their profitability. In the near term, JBR aims to boost the Membership business by improving its market share and sharing mutual strengths acquired in the same industry. On the other hand, the company over the long term intends to assess the possibility and potential merits of integrating the targeted companies. In light of share price fluctuations, goodwill has not yet been determined. The company indicated that it would announce accounting effects tied to the treasury stock and the number of years for goodwill amortization as soon as it has determined the associated impact on earnings.  

Near-term initiatives (Improving market share and performance): In the Membership business, the number of members for real estate leasing exceeds 1.5 million, and the total number of members in the Membership business exceeds 3 million

Medium-term initiatives (① Improving profit margins through improved operational efficiency): In addition to sharing strengths with the targeted companies, JBR will promote the joint use of sales and operational expertise accumulated within the same industry, including how the company improved profit margins in the past.

Medium-term initiatives (② Strategy for expanding sales through an increased market share): Amid a declining birthrate and aging population, the real estate market is expected to see an increase in the outsourcing of call and after-sales services, and JBR intends to follow a strategy for expansion based on securing a leading share in this market.

Medium-term initiatives (③ Collaboration with other businesses) In addition to the Insurance business, which is mainly focused on the real estate rental market, the company will collaborate with the Repair business and extended warranty services, which are focused on the owner-occupied home market.

Medium- to long-term initiatives (Collaboration in the settlement business): By forming a capital alliance with CHIC, the company will strengthen its collaborative efforts in the settlement business, where it currently does not operate, and promote the creation of new value centered on the Membership and Insurance businesses.

Exit from PPS business

As was the case with a large number of other power suppliers in Japan, the company’s PPS business incurred impact from electricity prices that soared to unexpectedly high levels from December 2020 through January 2021. In response, the company began considering a variety of possibilities for the future operation of this business, as previously announced in the Q2 FY09/21 financial results briefing materials it released on May 7, 2021. According to the company, electricity prices have currently stabilized at levels that prevailed prior to their rise. Despite these circumstances, the company made the decision to withdraw from its PPS business due to concerns regarding the risk of additional price leaps.

The company withdrew from the PPS business at the end of September 2021. JBR
believes that avoiding characteristic procurement risks associated with the PPS business will contribute to improved stability for all of its businesses.

Results by segment

Urgent Response segment 

Sales: JPY1.3bn (-11.0% YoY)
Operating loss: JPY26mn (vs. profit of JPY51mn in FY09/20)

Sales fell YoY on a decrease in online customer traffic, especially via other companies’ websites.

Membership segment

Sales: JPY7.0bn (+15.1% YoY)
Operating profit: JPY1.6bn (+6.5% YoY)

Sales increased by 15.1% and operating profit increased by 6.5% YoY, thanks to a firm expansion in the core membership service QR Service for New Tenant, with faster-than-expected progress with customer acquisition, and orders for spot projects using existing infrastructure also contributing. In addition, an expansion in sales channels for the warranty extension for home appliances service contributed to membership growth.

In QR Service for New Tenant, the company is looking to implement a subscription model (fixed monthly payments including shared service fees) for all real estate alliances (a new sales channel), as well as switching existing contracts to a subscription basis. Cancellation is generally unlikely after the second year with subscription type contracts (the renewal rate is around 30% range for the standard existing contracts). The percentage of established subscriptions increased by 6pp YoY to 65% (this was 40% at end-FY09/16).

Dispatch costs did not decrease amid the trend of customers spending more time at home, and the rate of growth of operating profit (+6.5% YoY) was lower than the growth rate of sales (+15.1% YoY). That being said, dispatch costs of JPY524mn in Q4 FY09/21 is lower than pre-COVID 19 levels (e.g., 549mn in Q4 FY09/17) despite the sharp increase in the member count.

Membership as of end-FY09/21 was 3,347,000 (+39.5% YoY), of which ACTCALL, which the company acquired in FY09/21, accounts for 630,000. The number of mainstay QR Service for New Tenant members reached 1,020,900 (+11.7% YoY).  

Insurance segment

Sales: JPY4.7bn (+11.7% YoY)
Operating profit: JPY362mn (+6.8% YoY)

The 11.7% YoY increase in sales reflected strong (9.7% YoY) growth in the number of contracts for mainstay household insurance for apartments. New products also contributed to earnings, with the number of individuals with Smartphone Insurance contracts increasing 3.7x to 55,000. In this context, operating profit grew 6.8% YoY despite continued transfer of reserves set aside for payments of future insurance claims.

The number of insured individuals at end- FY09/21 was 593,000 (+7.8% YoY), of which the number of individuals with household insurance for apartments contracts rose 9.7% YoY to 248,000, while 240,000 individuals had Sports Club Accident Insurance contracts (-9.1% YoY), 55,000 individuals had Smartphone Insurance contracts (3.7x YoY), and 49,000 individuals had other contracts (-16.9% YoY). 
The ability to now offer group insurance products (Sports Club Accident Insurance and Smartphone Insurance) led to a substantial increase in insured individuals. 

Repair segment

Sales: JPY267mn (+0.6% YoY)
Operating loss: JPY73mn (vs. loss of JPY78mn in FY09/20)

Despite an increase in unit prices driven by an improved mix of projects with high unit prices using special construction techniques, the company recorded a loss on flat sales as it continued to liquidate projects with low construction unit prices.

LifeTech segment

Sales: JPY231mn (+169.7% YoY)
Operating loss: JPY223mn (vs. loss of JPY154mn in FY09/20) 

JBR's decided to withdraw from the power production and supply (PPS) business at a board of directors' meeting in June 2021 due to the spike in the procurement price of electricity, and completed the withdrawal process at the end of September 2021. 

Future new initiatives (excerpt of negotiation with partners; as of November 5, 2021)

Negotiations are underway for alliances (collaboration) in various industries, not limited to the regional bank & credit card industries.

Regional financial institutions: (1) by the end of the year (one institution); (2) in 2022 (three institutions), (3) TBD (over 20 institutions)

Credit card: (1) in 1H FY09/22 (department store A: market of 1.5mn people); (2) TBD (department store B: market of 170,000 people, department store C: market of 300,000 people)

Medical and nursing care: (1) upcoming (Karadanote: target market of 9,000 people); (2) in 2022 (support service for patients discharged from hospital: target market of 2.5mn people/year)

Real estate: (1) pilot (major real estate service: press release may not be possible due to terms of contract with business partner); (2) in 2021 (home contents insurance (group type): market of 3,000 people/month 

Travel industry: (1) April 2022 (major travel service: press release may not be possible due to terms of contract with business partner); in 2022 (travel reservation service: market of 250,000 people)

Other: (1) in 1H FY09/22 (daily life related service A: mail-order service, target market of 500,000 people); (2) in 2022 (daily life related service B: market of 400,000 people); (3) TBD (daily life related service B, target market of 400,000 people; service for seniors: market of 300,000 people; LP and city gas companies)

For details on previous quarterly and annual results, please refer to the Historical financial statements section.

Full-year company forecast

Overview

JBR forecasts full-year FY09/22 consolidated sales of JPY18.0bn (+33.7% YoY), operating profit of JPY1.7bn (+22.8% YoY), recurring profit of JPY1.9bn (+9.2% YoY), net income attributable to owners of the parent of JPY1.2bn (21.4x YoY), and EPS of JPY35.36.

The company projects record sales and operating profit.

In FY09/22, the company targets JPY4.5bn YoY sales growth, of which the sales growth effect of the ACTCALL acquisition accounts for JPY3.6bn and the effect of alliances and collaboration between existing businesses and departments accounts for JPY1.2bn, offset against a JPY300mn negative impact of withdrawal from the PPS business and dropout of COVID-19 infection prevention business.

The company targets a JPY321mn YoY operating profit increase in FY09/22, of which the positive impact of stable growth of existing businesses accounts for JPY227mn, effect of withdrawal from the PPS business for JPY145mn, and the ACTCALL acquisition effect for JPY70mn, offset against JPY120mn in expenses associated with the introduction of ERP to streamline business processes and strengthen management structure.

Dividend: JBR plans a FY09/22 dividend of JPY17 (flat YoY). The FY09/21 dividend is JPY17.0 versus EPS of JPY1.83. Based on the company’s assumptions of EPS of JPY35.36 and a full-year dividend of JPY17, the payout ratio will be 48.1% in FY09/22. JBR's management policy targets a dividend payout ratio of 30% or more. 

By segment

Urgent Response: Initiatives for high-efficiency customer attraction centered on the company’s website.

Membership: The company expects growth in sales and profits from continued business growth in mainstay QR Service for New Tenant, warranty extension for home appliances, and QR Service for Student Life. It will work to achieve growth beyond the existing plan through new alliances and expanded content offerings.

Insurance: The company expects increased contracts in household insurance for apartments provided by Japan Small Amount and Short-term Insurance Co., Ltd., as well as smartphone insurance and sports gym accident insurance, which Rescue Insurance Co., Ltd., has started selling, to contribute to sales and profit growth. It will further expand its business by developing and selling products in both small-amount short-term insurance and non-life insurance.

Repair business: The company will work to regain profitability by accelerating receipt of orders for projects with high unit prices that utilize the company’s specialist skills.

LifeTech: The company expects an increase in sales and a quarterly surplus from steady growth in electricity sales contracts. It will also develop new services that utilize AI and big data.

Medium-term outlook

Medium-term management strategies

JBR unveiled a medium-term management plan that extends through FY09/24, which targets FY09/24 sales of JPY22.0bn (versus JPY13.5bn in FY09/21, +63.4%). Based on this sales forecast, the company aims to establish a structure for profit growth with a CAGR of over 20%, targeting operating profit of JPY2.5bn in FY09/24 (versus JPY1.4bn in FY09/21, +77.5%), recurring profit of JPY2.7bn in FY09/24 (JPY1.7bn, +52.2%), net income attributable to owners of the parent of JPY1.8bn in FY09/24 (JPY56mn, 32.1x), and EBITDA of JPY3.2bn in FY09/24 (JPY1.7bn, +92.6%).

KPI targets are member count (4,604,000 in FY09/24 versus 3,347,000 in FY09/21, +37.6%) and number of insured individuals (867,000 in FY09/24 versus 593,000 in FY09/21, +46.2%).

The following is based on the previous medium-term management plan. Shared Research plans to update the report after company interviews.

Urgent Response

In the Urgent Response business, which helps general consumers with issues they face, JBR will promote more efficient advertising by mixing various advertising methods. It will strengthen its ability to attract customers via the Internet in particular, aiming to provide faster and more professional response to various emergency requests regarding such things as locks, plumbing, and windows.

Membership

In the Membership business, the company aims to attract new members for its QR Service for New Tenant, which targets tenants and new home owners in cooperation with companies involved in real estate, and QR Service for Student Life, via the National Federation of University Co-operative Associations. In addition, consolidated subsidiary JBR Anshin Hosho Co., Ltd., aims to attract new members for its warranty extension for home appliances (which provides support after the manufacturer warranty expires for various housing facilities and equipment) and create new alliances and services.

Whereas the Urgent Response business targets the market for solving issues that have actually arisen (manifest market), the Membership business targets the market for preparation for such issues or equipment warranty shortcomings (potential market) by having members subscribe to services before trouble occurs. The scale of the manifest market is relatively small, but JBR believes the scale of the potential market is much more expansive, as it is possible to develop a range of services based on a large number and wide variety of customer contact points. The company therefore aims to promote business growth and customer acquisition in this potential market. It expects further business growth through market penetration in recurring revenue-type memberships, along with business growth through expansion of subscription-type memberships for both existing and new alliances.

Recurring revenue-type membership services: The business model is similar to that of the Insurance business, in which users pay for membership in advance and the company provides services free of charge as the need arises. Partner companies sell JBR’s services and, as the number of recurring revenue-type memberships grows, the balance of unearned revenue increases. This is a market the company is currently developing, and its partners include real estate firms, university co-ops, home electronics mass retailers, and housing manufacturers.

Subscription-type membership services: This is a new market on which JBR is focusing. Potential partners include companies involved with credit cards, electricity and gas, newspapers, media, telecommunications, medicine, nursing care, and leisure services. Subscription-type membership services are available to anyone, with monthly fees set so as to make subscribing easy. It is also possible to attach the services to the existing services or products of partner companies, providing them the benefits of standing out from the competition and increasing added value. JBR can collaborate with companies in a wide range of industries. While some costs will be incurred upfront, new partnerships will help to expand the target market and accelerate growth. The following are some specific examples:

Partnership with company in the leisure industry: In March 2020, JBR entered a business alliance with Yuko Holdings Inc., which operates an onsen (hot spring) accommodation booking service and onsen media business. JBR provides the Yuko Life Support Club service to users of Yuko Yuko’s accommodation booking service at yukoyuko.net.

Partnership with utilities companies: In addition to providing energy, gas companies can develop package products that include equipment warranties and resolution of trouble encountered in day-to-day life. JBR already has business alliances with Osaka Gas and Kyushu Electric Power’s wholly owned subsidiary QTNet.

JBR says it is also approaching regional banks and local governments throughout Japan.

Insurance

In the Insurance business, consolidated subsidiary Japan Small Amount and Short-Term Insurance Co., Ltd., offers a range of insurance products such as household insurance for apartments, bicycle insurance, and attorney fee insurance (includes an emergency telephone help service that assists with false accusations of public groping). The company aims to expand sales of each product and enhance its product lineup by designing and developing new small amount and short-term insurance products to suit market needs. In addition, with the establishment of Rescue Insurance Co., Ltd., the company aims to further expand the Insurance business by developing insurance products that could not be developed under the category of small amount and short-term insurance.

To establish a foundation for growth, the company will continue to expand sales of existing products, especially household insurance. The number of agencies selling household insurance increased due to a business alliance with Casa Inc. (December 2018).

The company has accelerated the development of non-life insurance products. Examples include the portable device (including smartphones) repair insurance launched in July 2020 and the sports injury insurance for groups launched in April 2020.

JBR will promote a multi-product, multi-channel strategy leveraging its planning and development capabilities covering both non-life insurance and small amount and short-term insurance. Specific initiatives are as follows:

Existing products × existing markets: Product categories include household insurance, bicycle insurance, and smartphone insurance. The company will promote market penetration by increasing the number of partner agencies to strengthen its sales network.

Existing products × new markets: Product categories include attorney fee insurance. JBR aims to develop new markets by collaborating within its own group and with new business partners on the horizontal expansion of its existing product lineup (working to provide existing products to different markets). For example, it is working to sell insurance to existing customers of its other services who are not yet insurance customers (in some cases selling insurance and services together) and proposing insurance and service combinations to new customers. With these initiatives, it aims to develop new sales routes for its insurance products.

New products × existing markets: Product categories include fire insurance for property management companies and homeowners and comprehensive household insurance. Focusing on the real estate market as the main sales channel, in addition to household insurance for tenants, JBR plans to start rolling out fire insurance for homeowners in the near future. Preparations have already been completed, but the exact timing of the rollout is unclear because authorization is taking time. The company says it can also develop comprehensive household insurance and other insurance that is easily handled by agencies.

New products × new markets: JBR will plan suitable product categories in consultation with business partners. The company, with its product planning and development capabilities, will work with companies including Nippon Life Insurance Company and Seven Bank, Ltd., which have strong sales channels, with the aim of developing a range of products and channels. JBR is already considering using convenience stores as a sales channel. It expects to produce interesting products through mutual development projects with both companies.

Repair

The company aims to grow the Repair business and improve profitability by leveraging its construction techniques to win new customers.

LifeTech

In the LifeTech business, the company aims to sell electricity by leveraging synergies mainly with its Membership business and to establish and develop new technology-based services.

ESG

Environment

Energy conservation

Reducing paper use: After moving invoices and receipts online, the number of invoices issued fell to 7,000 (-89% YoY) in FY09/20. From FY09/21 onward, the company will promote a paperless system for meeting materials.

Promoting dispatch efficiency: By reviewing its operations, developing new stores for its service network, and making arrangements with network stores in closest proximity to where services are needed, the company was able to reduce the number of dispatches making use of highways to 7,966 in FY09/20 (-31% YoY). From FY09/21 onward, it will continue efforts to reduce the number of highway trips to an appropriate level. In addition, it will seek to improve dispatch efficiency by activating a video chat function in its app to allow monitoring of progress.

Support of activities by environmental protection organizations

In FY09/20, JBR installed vending machines with a donation function to support environmental causes. From FY09/21 onward, it will continue supporting environmental protection activities.

Society

Creating a workplace where employees want to work

Reducing overtime: In FY09/20, the average number of overtime hours per employee fell to 15.1 (-11% YoY) thanks to optimization of overtime (with introduction of a pre-approval system) and operational efficiency improvements. The company will continue working to improve efficiency with the goal of getting average overtime below 10 hours by FY09/22.

Promoting a work-life balance: In FY09/20, JBR encourages employees to use their paid leave and enhanced its schemes for childcare leave and reduce working hours. In July 2020, it formulated a childcare leave system for men. From FY09/21 onward, it will promote further workplace improvement based on a General Business Owner Action Plan.

Conducting employee training: In September 2020, the company conducted training for all employees and worked on an employee development system based on personnel evaluations and feedback. From FY09/21 onward, it aims to enhance manager training and improve employees’ basic skills through systematic training courses.

Realizing a sustainable community

Supporting the activities of social action organizations: In FY09/20, JBR ran a temporary exhibition as an official sponsor of KidZania and made donations to two organizations as part of its support efforts. From FY09/21 onward, it will continue to provide support to social action organizations and strengthen ties with companies with deep roots in their communities.

Governance

Strengthening corporate governance

Improving Board of Director effectiveness: In FY09/20, a meeting with outside directors was held with the aim of stimulating discussion and facilitating communication at meetings of the Board of Directors. From FY09/21 onward, the company will promote the transfer of some authorities to subordinate bodies of the Board.

Ensuring compliance: In FY09/20, JBR distributed a compliance newsletter to all employees on the first day of each month and conducted compliance training for managers and general employees five times during the year.

Enhancing risk management: In FY09/20, executive officers reported risk status on a monthly basis (by submitting Risk Confirmation Sheets).

From FY09/21 onward, JBR will further enhance governance through the practical implementation of internal controls.

BCP

Strengthening systems for maintaining stability in call answering in the event of a natural disaster: In FY09/20, the company established a phone answering system using multiple locations, including outsourcing, to ensure backups are in place.

Strengthening phone answering system in response to COVID-19 pandemic: In FY09/20, the company took thorough measures to prevent infection, by promoting hand washing and mouth rinsing and by splitting work areas to reduce interaction. It also established a system to allow employees to answer calls from home.

From FY09/21 onward, the company will promote standardization of crisis management for dealing with pandemics.

Active dialog with stakeholders

Active dialog with investors: In FY09/20, the company held meetings with institutional investors 166 times (due to the pandemic, this was fewer than the usual 240–250 times a year) and seminars for individual investors five times. From 2021 onward, it aims to increase the number of both institutional investor meetings and individual investor seminars. It also plans to disclose information in a bilingual format (Japanese and English).

(Reference) Previous medium-term management plan

On November 12, 2018, JBR announced a medium-term management plan for the period through FY09/21. Numerical targets for the close of this plan (FY09/21) were sales of JPY16.5bn (+40.2% compared to FY09/18), operating profit of JPY2.5bn (+74.7%), recurring profit of JPY2.7bn (+61.2%), and net income attributable to owners of the parent of JPY1.9bn (+55.1%). Under the previous plan (FY09/17–FY09/19), JBR formed a business base as a foundation for growth and attained its OPM target of 10% a year early in FY09/18. The company therefore formulated its new medium-term plan to respond to changes in the business environment and seek further growth.

This plan calls for the promotion of a business strategy and investment aimed at accelerating growth in the company’s main businesses: Urgent Response, Membership, Insurance, and Repair. Initiatives include streamlining the wide range of businesses the company has built up over the years and reorganizing them into three main segments (Urgent Response, Membership, and Insurance). JBR is pushing ahead with priority measures and deepening its operations as well as improving the profitability of the Repair business. The company also aims to help create a society that is safer and more convenient by creating new value, including trialing new products and services. It will continue to work on improving profitability, and targets a consolidated OPM of 15% in FY09/21 and improved management efficiency.

Medium-term management plan targets (JPYmn)

Medium-term management plan’s vision and priority measures

JBR announced its vision for the new medium-term plan ending in FY09/21 as “providing a service to 5mn households.” To make this vision a reality, the company will implement the following priority measures.

Priority measures
Sales targeting all levels of client companies with collaboration between business segments and divisions: JBR will promote the cross-selling of new and existing products to new and existing clients (aiming to enhance its sales capacity). It aims to improve average revenue per user (ARPU) through such cross-selling and by targeting all levels of client companies with collaboration between business segments and divisions.

Alliances with top companies in other sectors: The company will promote alliances with top companies in various sectors. Alliance targets include real estate firms, university co-ops, telecom carriers, electric and gas companies, home electronics mass retailers, housing manufacturers, and lodging facilities. It plans to provide services simultaneously to all members at alliance companies. It will also work to promote new alliances in sectors where it has not traditionally had dealings. The company aims to develop a plan for providing its services to alliance partners so that the partners can provide special service to preferred customers. It will focus on creating new alliances for the Membership, Insurance, and Repair segments in particular.

Cost reduction by the use of IoT and IT systems: The company will develop an enterprise resource planning (ERP) system*1, formulate a BCP system, add various functions*2 to its member identification app, and utilize AI.

Create new products and services: By providing pinpoint services*3 and utilizing IoT, the company aims to relieve customer inconvenience and insecurity. In the Membership and Insurance segments in particular, it will conduct active development, including trials.

Financial measures

Investment strategy

JBR will pursue aggressive M&A in businesses related to its core operations that will help improve its corporate value and capital alliances with or financing of companies with businesses and strengths necessary for growth. The company also plans IT capex to improve business efficiency and establish a BCP system.

Financial strategy

The company’s policies for dividends, share buybacks, and shareholder benefits to improve shareholder returns are as follows.

Dividend policy: JBR shall aim for a consolidated dividend payout ratio of at least 30%. For the distribution of surplus, dividends will be paid twice a year (interim dividend and year-end dividend).

Shareholders will receive gift cards for KidZania, of which JBR is an official sponsor. JBR supports KidZania’s basic philosophy of children learning from experience the importance of being a member of society.

Business

Business description

Overview

JBR provides nationwide service to handle emergencies. Customers call the company with problems such as a broken window, a leaky faucet, or other odd jobs. JBR dispatches a repairman from its partner stores* (at end-September 2020, the number of partner contracts was 2,198, +64 YoY). JBR offers various services, including lock replacement, glass repair, household insurance for apartments, light plumbing services, pest control, roofing repair, small appliance repair, and garden maintenance. The Repair segment acquired in May 2016 provides a repair service for residential buildings and furniture made from any material (including timber, aluminum, and stone).

The company develops and provides small-amount and short-term insurance products covering problems and concerns encountered in daily life through subsidiary Japan Small Amount and Short-Term Insurance Co., Ltd. In July 2019, JBR established Rescue Insurance Co., Ltd., with Nippon Life Insurance Company and Seven Bank, Ltd. (shareholdings: JBR 85.7%, Nippon Life Insurance 7.1%, and Seven Bank 7.1%) to develop and market insurance products that are outside the scope of small-amount and short-term insurance. Japan Small Amount and Short-Term Insurance became a wholly owned subsidiary of Rescue Insurance as of October 1, 2019.

As of September 2020, the company’s five segments are Urgent Response (accounting for 12.3% of sales and 3.0% of operating profit), Membership (50.1%, 90.7%), Insurance (34.6%, 19.9%), Repair (2.2%, -4.6%, and LifeTech (0.7%, -9,0%); refer to the following image). The group comprises JBR, three subsidiaries (JBR Anshin Hosho Co., Ltd., Rescue Insurance Co., Ltd., and Japan Small Amount and Short-Term Insurance Co., Ltd.), and one equity-method affiliate (Japan PC Service Co., Ltd.).

Business model

JBR’s business model is summarized below.

Urgent Response segment (12.3% of sales and 3.0% of operating profit in FY09/20)

In Urgent Response, the company’s call center takes calls 365 days a year requesting lock replacement, plumbing help, and other home-related emergency services.

The Urgent Response business targets general customers (non-membership customers) who have found the company via Townpage (Japan’s telephone directory), the internet, leaflets, or other advertising. Located within the company’s head office in Naka-ku, Nagoya, the call center (contact center) receives service requests from general customers, and an operator determines what sort of problem an individual customer has and submits a request for service to a partner store. Operators also follow up with customers as needed.

Partner stores are businesses with which JBR concludes a service contract to perform service calls in the Urgent Response business. In contrast, network stores are used by JBR to respond to service calls in the Membership business. Partner and network stores are screened for competence before selection. At end-FY09/20, the number of partner contracts was 2,198. Partner stores are mostly located around Tokyo, Osaka, and Aichi, which are areas of highest demand.

The relationship between JBR and partner stores is similar to a franchisee but there are no fixed royalty payments. The company provides partner stores with workflow and advertising support in exchange for per-revenue commission. It receives 40% of the amount paid by the customer as a referral fee. JBR sets prices. Partner store contracts are renewed annually.

In FY09/20, the job count was 32,000 lock replacements (39,000 in FY09/19), 25,000 plumbing-related services (29,000), 5,000 computer-related services (6,000), and 4,000 window-related services (5,000). Although the company’s own website, QR Service for Emergency, attracted more customers and the average cost per job improved, the job count for each category declined YoY as the company attracted fewer customers via other companies’ websites and Townpage, and customers were reluctant to request work in light of the COVID-19 pandemic.

Changes to method of booking sales

In FY09/18, JBR changed the method of booking sales for the Urgent Response segment.

In Urgent Response, which provides lifestyle trouble resolution services, after having developed business with joint venture companies in the past, with regard to plumbing and glass-related Urgent Response services, traditionally, fees received from customers using these services were booked as overall gross sales, with sales (income) from partner stores booked as gross cost of sales (note: Urgent Response services other than plumbing and glass were traditionally booked as net sales, as indicated below).

However, when reviewing the terms of contracts with partner stores in the Urgent Response segment, the company changed the method by which it books sales (net) only with respect to introduction fees (see table below).

In all these methods, GPM remains the same.

Membership segment (50.1% of sales and 90.7% of operating profit in FY09/20)

The Membership segment provides the company’s services at discounted prices or free of charge to members for the duration of the membership. After receiving an up-front membership fee, customers can receive on-site service or advice over the telephone in the event of any issue.

From the perspective of the purchaser, becoming a member means receiving services for free or paying only for materials and in many cases, insurance is part of the package. Members get support 24/7 with JBR dispatching a handyman within the hour.

The number of members of mainstay services is steadily rising. As of end-September 2019, the figure stood at 2,222,000 members, a decrease of 25,000 members versus end-September 2018 as a result of reducing the number of unprofitable and problematic memberships, but as of end-September 2020, it stood at 2,399,000 members (+177,000 YoY) on growth in the member count for key services. Major service lines under the daily necessities umbrella include QR Service for New Tenant (about 913,000 members at end-September 2020 compared to about 870,000 at end-September 2019), QR Service for Student Life (about 290,000 members at end-September 2020 compared to about 286,000 at end-September 2019), and warranty extension for home appliances (934,000 members at end-September 2020 compared to 758,000 at end-September 2019). On May 31, 2019, JBR terminated d Living® (house cleaning and housekeeping agency services, and resolving problems in daily life for NTT Docomo subscribers), which had 241,000 members at end-FY09/18 and 145,000 members at end-1H FY09/19.

These provide members with a package of services for a fixed period fee (typically plumbing, lock and key service, and glass repair). The company partners with a number of different companies and organizations to help sell these services, including real estate agents, university co-ops, and telecom carriers. JBR’s basic business is the same for all sales channels; what changes is the contract’s length and pricing.

Services offered

“QR Service for New Tenant” memberships are offered to rental home tenants through property agents. Memberships typically last two years and sell for JPY16,200 (including tax, both years in total). The company also offers “QR Service for Condominium Life” for condominium residents.

“QR Service for Student Life” memberships are sold to university students through university co-ops. Memberships typically last four years after payment of a one-time fee of JPY9,250.

“Warranty extension for home appliances” memberships are sold to consumers through retailers of home electronics and housing facilities and equipment, and provide maintenance support for a period following the expiration of the manufacturer’s warranty. Memberships last for a maximum of five years for home electronics, and ten years for appliances. The service is provided by JBR Anshin Hosho Co., Ltd., one of JBR’s consolidated subsidiaries.

“Life Depot” memberships are generally JPY324 (including tax) per month, and services provided include partial payment for repairs and replacement mobile phones, and discounts on urgent everyday services.

“Internet Emergency” memberships are sold through property agents, providing support to tenants who wish to move their Internet services from one residence to another.

Changes to method of booking sales

In FY09/18, JBR changed the method of booking sales for the Membership segment.

Previous methods

Membership fees for most of the services were previously billed as one-time fees, but there were some services that were not included and revenue booking methods varied depending upon the type of contract. In fact, there were three main booking methods: installment booking (for QR Service for Student Life, warranty extension for home appliances, and other services), one-time booking, and monthly booking (for d Living and other services where the company collected monthly fees). There were also other variations in addition to these main booking methods.

For plans such as QR Service for New Tenant—which are under two years—membership fees were recorded in full on the income statement. Expenses were booked based on past results and the expected rate of service provision. For long-term services exceeding two years, such as QR Service for Student Life and warranty extension for home appliances, revenue from memberships was recorded as advances received on the balance sheet, and pro-rated amounts were booked on the income statement. Expenses were recorded based upon actual values recorded during the year.

FY09/18 onward

To rationalize operations and unify booking, the company is currently transitioning to contracts that divide membership sales on a monthly basis*.

In this case, when collecting two years’ worth of fees, unearned revenue and long-term unearned revenue are temporarily booked as liabilities on the balance sheet. When revenue is recognized on a monthly basis, an accounting treatment will be applied that changes the unearned revenue into sales. On the other hand, paid fees (introduction fees) for referrals that become expenses are simultaneously booked in a lump sum, an accounting treatment that can be said to be in line with the principles of the conservativism (expenses are booked on an accrual basis, revenue on a realization basis).

The total amount of the company’s unearned revenue and long-term unearned revenue at end-FY09/20 was JPY7.6bn (+13.9% YoY).

Insurance segment (34.6% of sales and 19.9% of operating profit in FY09/20)

Having registered with the Kanto regional office of the Ministry of Finance, JBR’s consolidated insurance company subsidiary (Japan Small Amount and Short-Term Insurance Co., Ltd.) is authorized to operate a single-line insurance underwriting business on a limited scale, consisting of underwriting short-term policies for relatively small amounts.

In July 2019, JBR established Rescue Insurance Co., Ltd., with Nippon Life Insurance Company and Seven Bank, Ltd. (shareholdings: JBR 85.7%, Nippon Life Insurance 7.1%, and Seven Bank 7.1%) to develop and market insurance products that are outside the scope of small-amount and short-term insurance. Although the company initially planned to convert Japan Small Amount and Short-Term Insurance into a non-life insurance company, it decided to continue operating Japan Small Amount and Short-Term Insurance as a small amount and short-term insurance business and established Rescue Insurance as a new company instead.

The limitations of the small amount and short-term insurance business meant that Japan Small Amount and Short-Term Insurance was often unable to develop insurance products that fulfill the needs of customers and alliance companies. This problem was resolved by establishing Rescue Insurance.

Rescue Insurance plans to accelerate development and sales of non-life insurance and small amount and short-term insurance products in partnership with Nippon Life Insurance and Seven Bank. It will initially operate a reinsurance business for policies acquired from Japan Small Amount and Short-Term Insurance and provide a contract fulfillment insurance for companies as a direct insurance business. In the longer term, the company plans to sell fire insurance and repair insurance through JBR’s existing sales channels and aggressively adopt InsureTech.

The company provides insurance covering repair expenses for mobile phones, as well as movable insurance and liability coverage to residents and third parties under the “household insurance for apartments” brand. Items insured in the movable insurance include residential contents, items damaged due to fire or water, and theft. Policies cost between JPY8,800 and JPY16,000 (JPY15,000–27,000 for lump-sum payments) and typically last two years. As of end-FY09/20, there were 226,000 people covered by household insurance for apartments (+25,000 YoY).

In addition, Rescue Insurance Co., Ltd., provides sports injury insurance for groups (launched in Q3 FY09/20), in which a sports club or school is the policyholder and members of the sports club or school are the insured, so as to be prepared for injuries or thefts that may occur within the facilities. As of end-FY09/20, there were 264,000 people covered by sports injury insurance (none a year earlier, as it is a newly launched product).

Additionally, JBR provides comprehensive tenant insurance for office and eatery tenants, weather insurance for travel companies, hotels, and golf courses, bicycle insurance, and attorney fee insurance (includes an emergency telephone help service to assist with false accusations of public molestation).

Attorney fee insurance (launched in September 2015) has a JPY590 monthly fee (JPY6,400 annual fee). It pays up to JPY10mn in individual liability insurance to cover legal fees (including consultation fee, lawyer interview fee, and transportation costs) within 48 hours of arrest on suspicion of public molestation (note: a full refund is demanded in the event it is determined after the fact that the individual had acted with malice). For a victim, it pays up to JPY3mn in claims to cover legal fees and up to JPY100,000 to cover legal consultation. An individual who is mistaken for a molester can press a button on their smartphone and an email will automatically be sent to all lawyers who serve as partners and an available lawyer will send a response email containing instructions for the accused to follow. This help service in particular is attracting interest, and the number of customers purchasing the insurance is increasing.

Repair segment (2.2% of sales and -4.6% of operating profit in FY09/20)

In May 2016, JBR acquired the Repair segment, and began working through alliance companies to provide repair/maintenance services for the floors and walls of condominiums and single-family homes.

It also provides housing manufacturers with pre-delivery maintenance for new buildings and other companies such as accommodation facility operators with a range of requested services. It provides repair and maintenance services for both residences and furniture in a variety of materials, including wood and aluminum, leveraging the repair techniques that are its strength.

LifeTech segment (0.7% of sales and -9.0% of operating profit in FY09/20)

This business provides power producer and supplier (PPS) services through existing partner companies involved especially in the real estate rental business.

The company also provides services for resolving a range of issues related to households using AI, IoT, and other technologies.

Earnings structure

JBR earns recurring fees from membership customers and service usage fees from general customers (non-membership customers). The biggest driver of revenues and earnings is volume (the number of memberships or services).

For services provided to general customers, JBR receives 40% of amounts paid by customers as introduction fees. For membership services costs fluctuate depending on the number of dispatches (receive membership fees; provide services upon demand).

In the Membership segment, members make upfront payments to the company and receive service when needed either for free or at discounted prices. The company recognizes the upfront payment as revenue (minus a commission as necessary). Costs are incurred when service is used (payment to partner or network stores). In addition, from FY09/21 onward, JBR will be giving more attention to subscription-based member services. Potential partners include companies involved with credit cards, electricity and gas, newspapers, media, telecommunications, medicine, nursing care, and leisure services. Subscription-type membership services are available to anyone, with monthly fees set so as to make subscribing easy. It is also possible to attach the services to the existing services or products of partner companies, providing them the benefits of standing out from the competition and increasing added value. JBR can collaborate with companies in a wide range of industries. While some costs will be incurred upfront, new partnerships will help to expand the target market and accelerate growth.

Cost structure

The company’s SG&A expenses consist mainly of labor and advertising expenses. Advertising expenses are variable and labor expenses are fixed.

JBR has historically advertised mostly in Townpage (Japan’s telephone directory) but in FY09/09 it began advertising on the internet and mobile platforms. In Q4 FY09/20, jobs performed broken down by medium for attracting customers was 50.6% for Townpage and 37.9% for internet and mobile platforms. The share of Townpage increased YoY (44.2% for Townpage and 44.4 for mobile and internet platforms in Q4 FY09/19).

Full-time employees mostly perform sales, operations management, and manage call center operators.