Decline following the completion of a large-scale demonstration project

「(Think Tank and Consulting Services) During the interim consolidated accounting period, systems and business-strategy support services for companies in the energy, transportation and IT sectors, as well as human-resources-related and marketing-related services for financial institutions, contributed to revenue. However, these could not offset the impact of the completion of multiple large-scale projects and other projects recorded in the previous interim consolidated accounting period. Net sales (external sales) were ¥28,914 million, down 5.0% year on year, and ordinary profit was ¥5,648 million, down 9.4%.」

「(Think Tank and Consulting Services) During the fiscal year, systems and business-strategy support services for private-sector companies in the energy and transportation sectors, as well as projects related to reviewing analog regulations and digitalization for government agencies, contributed to revenue. Net sales (external sales) were ¥45,419 million, down 10.0% year on year. The decline from the previous fiscal year was due to the completion of multiple large-scale telecommunications-related demonstration projects and other projects recorded in the previous fiscal year, but the impact of lower revenue on profit was limited.」

「(Think Tank and Consulting Services) During the six months ended the second quarter, the completion of multiple large-scale telecommunications-related demonstration projects and other projects recorded in the six months ended the second quarter of the previous fiscal year resulted in net sales (external sales) of ¥30,433 million, down 16.0% year on year. These large-scale projects had a high proportion of external outsourcing costs and other expenses, so the impact of lower revenue on profit was limited.」

「(Think Tank and Consulting Services) During the three months ended the first quarter, projects involving regulatory reform for government agencies, demonstration projects in the medical and nursing-care fields, and system and IT-related work for private-sector companies contributed to revenue. Net sales (external sales) increased 8.1% year on year to ¥9,563 million, while ordinary profit increased 6.0% to ¥995 million.」

「(Think Tank and Consulting Services) During the fiscal year, growth in 5G and disaster-prevention communications demonstration projects for government agencies, digital-related projects such as government cloud, and healthcare-related projects, including medical care and nursing care, resulted in net sales (external sales) of ¥50,462 million, up 3.9% year on year. However, ordinary profit declined 14.7% to ¥4,428 million due to higher outsourcing costs for large-scale demonstration projects, investment in human resources for future growth, and upfront costs to strengthen research and recommendation functions.」

「(Think Tank and Consulting Services) During the nine months ended the third quarter, net sales (external sales) increased 4.5% year on year to ¥42,666 million, driven by growth in large-scale projects in the government sector, including demonstration projects for government cloud and public-safety radio systems, 5G-related demonstration projects, research and demonstration projects related to renewable energy, and system implementation and management consulting projects for the transportation and telecommunications industries. Ordinary profit, however, declined 22.4% to ¥4,819 million due to higher outsourcing costs for large-scale demonstration projects, investments in human resources for future growth, and upfront costs to strengthen the company's functions for providing recommendations and disseminating information.」

「(Think Tank and Consulting Services) During the nine months ended the third quarter, growth in consulting projects for government agencies and financial institutions resulted in net sales (external sales) of ¥28,828 million, up 2.2% year on year. In the first quarter, the company recorded an amount equivalent to negative goodwill arising from the conversion of INES Corporation into an equity-method affiliate as non-operating income. As a result, ordinary profit increased 62.7% to ¥5,912 million. (IT Services) During the nine months ended the third quarter, system development projects for the financial sector and other projects contributed to revenue, resulting in net sales (external sales) of ¥41,762 million, up 2.1% year on year. Ordinary profit increased 92.9% to ¥2,125 million, a substantial improvement from the same period of the previous year, when an additional loss was recorded for a project involving quality issues.」

「(Think Tank and Consulting Services) During the three months ended the first quarter, in addition to the seasonal factor of having few projects completed during the period, the negative impact following system consulting and development process management projects resulted in net sales (external sales) of ¥2,098 million, down 20.0% year on year.」

「(IT Services) During the fiscal year, the negative impact following the completion of multiple system development projects and revisions to major customers' large-scale development plans resulted in net sales (external sales) of ¥55,930 million, down 1.5% year on year. Ordinary profit, however, increased 13.4% to ¥2,325 million, due in part to the reversal of the provision for loss on orders recorded in the previous fiscal year.」

「(Think Tank and Consulting Services) During the nine months ended the third quarter, revenue from a broad range of projects for general private-sector companies increased, including information security, system implementation support, new-business development consulting, overseas transportation infrastructure and subscription-based new services. However, the negative impact following the completion of a large-scale project for the financial sector and delays in completing large-scale projects resulted in net sales (external sales) of ¥28,215 million, up 0.3% year on year, and ordinary profit of ¥3,634 million, down 2.0%, essentially in line with the previous year.」

「(Think Tank and Consulting Services) During the six months ended the second quarter, revenue increased from a broad range of projects for general private-sector companies, including system implementation support, new-business development consulting and overseas transportation infrastructure. Net sales (external sales) increased 8.3% year on year to ¥17,768 million, while ordinary profit increased 27.5% to ¥2,969 million. (IT Services) During the six months ended the second quarter, revenue declined due to the negative impact following the completion of multiple system development projects and lost opportunities resulting from responses to projects involving quality issues. Net sales (external sales) were ¥28,135 million, down 6.4% year on year. In addition to the impact of lower revenue, ordinary profit declined 55.8% to ¥1,013 million due to an additional loss recorded in the first quarter in connection with the project involving quality issues.」

「(Think Tank and Consulting Services) During the nine months ended the third quarter, fiscal 2017 research and demonstration projects for government agencies were steadily completed and contributed to revenue. In addition to services for financial institutions, services for private-sector clients being developed under the medium-term management plan, including renewable-energy consulting, AI-powered application-form assessment services and big-data marketing, grew. Net sales (external sales) increased 5.0% year on year to ¥28,139 million. In addition to higher revenue, improved project profitability resulted in ordinary profit of ¥3,707 million, up 90.2% year on year.」

「During the six months ended the second quarter, revenue benefited from the completion of numerous research and demonstration projects for government agencies during the period, as well as steady contributions from services for private-sector clients being developed under the medium-term management plan, including AI-powered application-form assessment services and big-data marketing, in addition to services for financial institutions. As a result, net sales (external sales) increased 17.2% year on year to ¥16,400 million, while ordinary profit improved substantially, increasing 76.9% to ¥2,328 million.」

「(Think Tank and Consulting Services) During the three months ended the first quarter, projects supporting system procurement and process management for government agencies, as well as projects examining next-generation systems for financial institutions, contributed to revenue. However, because few projects were completed during the period, net sales (external sales) were ¥1,827 million, down 15.0% year on year, and the company recorded an ordinary loss of ¥1,007 million, compared with a loss of ¥1,025 million in the same period of the previous year.」

「During the fiscal year, research projects for government agencies, including the use of health data, support for medical device development, the promotion of regional tourism, regional industrial location initiatives and the realization of a low-carbon society, contributed to revenue. Projects for private-sector clients, including business consulting and marketing data analysis for financial institutions, also contributed. However, these could not offset the completion of large-scale ICT consulting projects for general private-sector companies and the transfer of services for financial institutions to the IT Services segment. Net sales (external sales) were ¥32,730 million, down 0.9% year on year. Ordinary profit was ¥2,029 million, down 29.4%, due to higher costs for demonstration projects for government agencies and higher SG&A and personnel expenses associated with strengthening the sales organization and other measures.」

「(Think Tank and Consulting Services) During the nine months ended the third quarter, research projects for government agencies, including the use of health data, support for medical device development, the promotion of regional tourism, regional industrial location initiatives and the realization of a low-carbon society, contributed to revenue. Projects for private-sector clients, including risk management and marketing data analysis for financial institutions, also contributed, but these were insufficient to offset the decline in ICT consulting projects for general private-sector companies. Net sales (external sales) were ¥26,799 million, down 3.4% year on year. Ordinary profit was ¥1,949 million, down 39.3%, due to higher costs for demonstration projects for government agencies and higher SG&A expenses associated with strengthening the sales organization and other measures.」

「(Think Tank and Consulting Services) During the six months ended the second quarter, research projects for government agencies, including support for medical device development and the advancement of electrical safety technologies for new-energy power generation, contributed to revenue, as did projects for private-sector clients, including the analysis and use of marketing data for financial institutions. However, orders for ICT consulting projects for general private-sector companies fell short of plan, resulting in net sales (external sales) of ¥13,994 million, down 6.2% year on year. Ordinary profit was ¥1,315 million, down 30.4%, due to the impact of lower revenue and higher SG&A expenses associated with strengthening the sales organization and other measures.」

「(Think Tank and Consulting Services) During the cumulative first quarter of the current consolidated fiscal year, sales were contributed by system development process management projects and research projects related to satellite ground facilities for government agencies, as well as consulting projects supporting risk management and regulatory compliance for financial institutions and customer data analysis projects for private-sector clients. External revenue was ¥2,150 million, up 4.2% year on year, and ordinary loss was ¥1,025 million, compared with a loss of ¥893 million in the same period of the previous year.」

「The company was unable to fully offset the decline following the completion of the large-scale demonstration project, resulting in external revenue of ¥33,014 million, down 5.8% year on year. Ordinary profit was ¥2,875 million, down 18.9%, due to lower revenue, higher personnel expenses, and increased investment.」

「During the cumulative third quarter of the current consolidated fiscal year, sales were contributed by various research projects and system development management projects in public-sector fields such as environment and energy, social security, and international standardization for government agencies, as well as risk management and regulatory compliance support projects for financial institutions and customer data analysis projects for railway operators in the private sector. However, due in part to a decline following the completion of a large-scale demonstration project, external revenue was ¥27,748 million, down 4.8% year on year, and ordinary profit was ¥3,211 million, down 14.7%.」