Economic Stagnation Caused by COVID-19 and Declining IT Investment

「During the current interim consolidated accounting period, there has been no emergence of any of the major risks that management recognizes as potentially having a material effect on the financial position, operating results or cash flows of the consolidated companies among the matters concerning the business and financial condition described in this interim report, nor any significant change in the risks described under “Business and Other Risks” in the securities report for the previous fiscal year.」

「During the interim consolidated accounting period, there were no new major risks or significant changes to the business risks described in the annual securities report that management recognized as potentially having a material effect on the financial position, operating results, or cash flows of the consolidated companies, among the matters concerning business conditions and financial matters described in this Semiannual Report.」

「During the cumulative third quarter under review, there were no significant changes in the matters described in this quarterly report regarding the business and accounting conditions that management recognizes could materially affect the financial position, operating results and cash flows of the consolidated companies, or in the “Business and Other Risks” described in the securities report for the previous fiscal year.」

「During the cumulative second quarter under review, there were no significant changes in the matters described in this quarterly report regarding the business and accounting conditions that management recognizes could materially affect the financial position, operating results and cash flows of the consolidated companies, or in the “Business and Other Risks” described in the securities report for the previous fiscal year.」

「During the three-month period ended 30 June, there were no new risks that management recognizes as having the potential to materially affect the financial position, operating results or cash flows of the consolidated companies, and no material changes to the business risks described in the annual securities report for the previous fiscal year.」

「During the cumulative third quarter under review, there were no significant changes in the matters described in this quarterly report regarding the business and accounting conditions that management recognizes could materially affect the financial position, operating results and cash flows of the consolidated companies, or in the “Business and Other Risks” described in the securities report for the previous fiscal year.」

「During the cumulative second quarter under review, there were no significant changes in the matters described in this quarterly report regarding the business and accounting conditions that management recognizes could materially affect the financial position, operating results and cash flows of the consolidated companies, or in the “Business and Other Risks” described in the securities report for the previous fiscal year.」

「During the three-month period ended 30 June, there were no new risks that management recognizes as having the potential to materially affect the financial position, operating results or cash flows of the consolidated companies, and no material changes to the business risks described in the annual securities report for the previous fiscal year.」

「Although profit benefited from the recovery in personnel utilization, which had declined due to measures to address COVID-19, and from higher revenue, the impact of a major unprofitable project and the increase in selling, general and administrative expenses associated with higher personnel expenses and other factors resulted in operating profit of ¥119 million, compared with ¥342 million in the same quarter of the previous year; ordinary profit of ¥174 million, compared with ¥423 million; and net profit attributable to owners of the parent of ¥116 million, compared with ¥372 million.」

「Profit was boosted by the recovery in the staff utilization rate, which had declined due to COVID-19 measures, as well as the effect of higher revenue.」

「Recovery in the staff utilization rate, which had declined due to COVID-19 measures」

「In terms of earnings, although higher revenue and restraint on selling, general and administrative expenses through reductions in expenditures and other measures contributed to higher earnings, the impact of lower gross profit was greater. Gross profit declined as the gross profit margin deteriorated due to the reversal of the previous year's results and lower personnel utilization associated with measures to address COVID-19. Operating profit was ¥342 million, down ¥44 million, or 11.4%, year on year, while ordinary profit was ¥423 million, down ¥19 million, or 4.3%.」

「In addition to the direct impact of lower revenue, the gross profit margin declined due to the lower staff utilization rate and other effects associated with COVID-19.」

「In terms of earnings, although the gross profit margin declined due to lower personnel utilization associated with measures to address COVID-19 and other factors, gross profit increased on the benefit of higher revenue, while selling, general and administrative expenses also declined. Consequently, the operating loss was ¥63 million, an earnings improvement of ¥68 million year on year; the ordinary loss was ¥41 million, an earnings improvement of ¥55 million; and the quarterly net loss attributable to owners of the parent was ¥34 million, an earnings improvement of ¥3 million.」

「Regarding the outlook for Japan’s economy, real GDP growth in fiscal 2020 is expected to contract substantially, as economic activity in Japan and around the world, including Japan, has entered an extreme temporary stagnation due to the impact of COVID-19, and although activity is gradually resuming, conditions remain uncertain.」