Transforming into a leaner corporate structure through improved productivity and profitability

「While higher revenue and gross-profit contributions from winning highly profitable projects had a positive effect, we also made capital investments, including improvements to the office environment, and made growth investments ahead of schedule in base-pay increases and education and training for developing human resources. As a result, operating loss was ¥4 million, a decline of ¥69 million from the same quarter of the previous year.」

「Achieved higher revenue and earnings in all segments and set a record high in profit for the third consecutive fiscal year since listing.」

「In terms of earnings, expenses increased as the Company invested in its people through active hiring, expanded education and training, and base salary increases. However, the Company continued from the previous fiscal year to acquire highly profitable projects and contain unprofitable projects through stronger quality control, while also benefiting from higher revenue. Consequently, operating profit was ¥324 million, up ¥23 million, or 7.9%, year on year, and ordinary profit was ¥421 million, up ¥73 million, or 21.1%.」

「In addition to pursuing the acquisition of highly profitable projects, the Company continued to contain unprofitable projects through stronger quality control. As a result, operating profit was ¥1,377 million, up ¥250 million, or 22.2%, year on year; ordinary profit was ¥1,493 million, up ¥286 million, or 23.7%; and net profit attributable to owners of the parent was ¥1,145 million, up ¥250 million, or 27.9%, marking the highest profit since listing.」

「In terms of earnings, in addition to the impact of lower revenue, operating profit was ¥300 million, down ¥318 million, or 51.4%, year on year, due to lower project utilization and higher personnel expenses and other factors. Ordinary profit was ¥348 million, down ¥312 million, or 47.3%, and interim net profit attributable to owners of the parent was ¥433 million, down ¥28 million, or 6.3%.」

「In terms of earnings, in addition to containing unprofitable projects through productivity improvements and stronger quality control initiatives undertaken since the previous medium-term management plan, the Company improved profitability on individual projects by scaling back or withdrawing from low-margin projects and focusing on winning high-margin projects. As a result, the gross profit margin also improved. Operating profit was ¥928 million, up ¥442 million, or 91.2%, year on year; ordinary profit was ¥982 million, up ¥456 million, or 86.9%; and quarterly net profit attributable to owners of the parent was ¥689 million, up ¥297 million, or 76.1%.」

「In addition to containing unprofitable projects through productivity improvements and stronger quality control initiatives undertaken since the previous medium-term management plan, the Company improved profitability on individual projects by scaling back or withdrawing from low-margin projects and focusing on winning relatively high-margin projects, including invoice-related projects. As a result, the gross profit margin also improved. Operating profit was ¥619 million, up ¥345 million, or 126.6%, year on year; ordinary profit was ¥660 million, up ¥358 million, or 118.8%; and quarterly net profit attributable to owners of the parent was ¥462 million, up ¥228 million, or 97.6%.」

「In terms of earnings, in addition to the benefit of higher revenue, the gross profit margin improved through better profitability on individual projects, including a reduction in low-margin projects. Consequently, operating profit was ¥205 million, an earnings improvement of ¥189 million year on year; ordinary profit was ¥241 million, up ¥200 million, or 493.0%; and quarterly net profit attributable to owners of the parent was ¥170 million, up ¥145 million, or 577.4%.」

「Although lower revenue had a negative impact, the gross profit margin improved primarily due to preventing the occurrence of unprofitable projects and improving productivity. Consequently, operating profit was ¥485 million, up ¥366 million, or 306.6%, year on year; ordinary profit was ¥526 million, up ¥351 million, or 201.9%; and quarterly net profit attributable to owners of the parent was ¥391 million, up ¥274 million, or 234.8%.」

「Although lower revenue had a negative impact, the improvement in the gross profit margin, primarily due to measures to prevent the occurrence of unprofitable projects, outweighed that impact and lifted gross profit. Consequently, operating profit was ¥273 million, up ¥116 million, or 74.4%, year on year; ordinary profit was ¥301 million, up ¥117 million, or 63.3%; and quarterly net profit attributable to owners of the parent was ¥234 million, up ¥109 million, or 88.2%.」

「In terms of earnings, although lower revenue had a negative impact, the improvement in the gross profit margin, primarily due to measures to prevent the occurrence of unprofitable projects, outweighed that impact and lifted gross profit. Consequently, operating profit was ¥16 million, an earnings improvement of ¥73 million year on year; ordinary profit was ¥40 million, an earnings improvement of ¥67 million; and quarterly net profit attributable to owners of the parent was ¥25 million, an earnings improvement of ¥49 million.」

「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.」

「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 was substantial. Operating profit was ¥156 million, compared with ¥283 million in the same quarter of the previous year; ordinary profit was ¥184 million, compared with ¥307 million; and net profit attributable to owners of the parent was ¥124 million, compared with ¥283 million.」

「In terms of earnings, although unprofitable projects arose, gross profit was lifted by the recovery in personnel utilization, which had declined due to measures to address COVID-19, and the benefit of higher revenue. Consequently, the operating loss was ¥56 million, compared with an operating loss of ¥63 million in the same quarter of the previous year; the ordinary loss was ¥27 million, compared with an ordinary loss of ¥41 million; and the quarterly net loss attributable to owners of the parent was ¥24 million, compared with a quarterly net loss attributable to owners of the parent of ¥34 million.」

「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 lower personnel utilization associated with COVID-19. As a result, the decrease in gross profit exceeded the restraint on selling, general and administrative expenses achieved through reductions in expenditures and other measures. Operating profit was ¥283 million, down ¥121 million, or 30.1%, year on year, while ordinary profit was ¥307 million, down ¥142 million, or 31.8%.」

「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.」

「As a result, operating profit increased ¥256 million, or 49.0%, year on year to ¥778 million; ordinary profit increased ¥249 million, or 41.9%, to ¥845 million; and net profit attributable to owners of the parent increased ¥89 million, or 23.4%, to ¥473 million. All three measures therefore recorded earnings growth for the second consecutive period.」

「In addition to the benefit of higher revenue, gross profit increased due to an improved gross profit margin, primarily reflecting the acquisition of highly profitable projects, improved profitability on individual projects and stable personnel utilization. Consequently, operating profit increased ¥484 million year on year to ¥386 million, ordinary profit increased ¥481 million to ¥443 million, and quarterly net profit attributable to owners of the parent increased ¥302 million to ¥269 million. All three measures therefore recorded substantial earnings growth.」

「In terms of earnings, although selling, general and administrative expenses increased due to higher depreciation and other expenses associated with rebuilding internal systems, gross profit increased because of the benefit of higher revenue and an improved gross profit margin, primarily reflecting the acquisition of highly profitable projects, improved profitability on individual projects and stable personnel utilization. Consequently, operating profit increased ¥434 million year on year to ¥404 million, ordinary profit increased ¥448 million to ¥449 million, and quarterly net profit attributable to owners of the parent increased ¥350 million to ¥345 million, including ¥53 million in extraordinary income. All three measures therefore recorded substantial earnings growth.」

「In terms of earnings, selling, general and administrative expenses increased, mainly due to higher depreciation and other expenses associated with rebuilding internal systems. However, gross profit increased because of the benefit of higher revenue and an improved gross profit margin, primarily reflecting progress in improving project profitability. Consequently, the operating loss was ¥131 million, an earnings improvement of ¥133 million year on year, and the ordinary loss was ¥96 million, an earnings improvement of ¥136 million.」

「In terms of earnings, although lower revenue had a negative impact, gross profit increased due to an improved gross profit margin, primarily reflecting progress in improving project profitability and a solid utilization rate for personnel. Selling, general and administrative expenses also declined due to lower personnel expenses, the effects of restraining investment and other expenses, and the postponement of some initiatives. As a result, the operating loss was ¥98 million, an earnings improvement of ¥287 million year on year; the ordinary loss was ¥38 million, an earnings improvement of ¥271 million; and the quarterly net loss attributable to owners of the parent was ¥33 million, an earnings improvement of ¥198 million.」

「In terms of earnings, although lower revenue had a negative impact, gross profit increased due to an improved gross profit margin, primarily reflecting progress in improving project profitability and a solid utilization rate for personnel. Selling, general and administrative expenses also declined due to lower personnel expenses, the effects of restraining investment and other expenses, and the postponement of some initiatives. As a result, the operating loss was ¥29 million, an earnings improvement of ¥177 million year on year; ordinary income was ¥1 million, an earnings improvement of ¥170 million; and the quarterly net loss attributable to owners of the parent was ¥4 million, an earnings improvement of ¥124 million.」

「In terms of earnings, although lower revenue had a negative impact, gross profit declined only slightly because of an improvement in the gross profit margin. In addition, selling, general and administrative expenses declined due to lower personnel expenses and other factors. Consequently, the operating loss was ¥265 million, an earnings improvement of ¥73 million year on year; the ordinary loss was ¥233 million, an earnings improvement of ¥72 million; and the quarterly net loss attributable to owners of the parent was ¥170 million, an earnings improvement of ¥53 million.」

「The key management challenge facing the Group is improving its earnings capacity. Accordingly, since the previous medium-term management plan, the Group has been working to shift to an earnings structure that is less affected by changes in the external environment. Specifically, in addition to the five business strategies prioritized under the current medium-term management plan, as described in “2. Business Overview, 1. Management Policy, Business Environment and Issues to Be Addressed, (2) Medium- to Long-Term Management Strategy,” the Group is pursuing a fundamental review of its cost structure by reducing the cost ratio through changes to the development approach used in its core system development business and cutting selling, general and administrative expenses, including by reviewing indirect functions.」

「In terms of earnings, although selling, general and administrative expenses declined due to cost reductions and other measures, gross profit decreased because of the direct impact of lower revenue, declining margins on system development projects for major customers, and the reversal of the prior period's high-margin system equipment sales projects. As a result, the operating loss was ¥385 million, an earnings improvement of ¥183 million year on year; the ordinary loss was ¥310 million, an earnings improvement of ¥169 million; and the quarterly net loss attributable to owners of the parent was ¥231 million, an earnings improvement of ¥120 million.」

「In addition to the direct impact of lower revenue, gross profit declined as the gross margin deteriorated due to lower personnel utilization year on year following a decline in system construction and a higher proportion of low-margin system equipment sales projects. Selling, general and administrative expenses also increased due to higher personnel expenses and other factors. As a result, operating loss was ¥207 million, a decline of ¥229 million year on year; ordinary loss was ¥168 million, a decline of ¥222 million; and net loss attributable to owners of the parent was ¥129 million, a decline of ¥157 million.」

「In terms of earnings, in addition to the direct impact of lower revenue, gross profit declined because the gross margin deteriorated as personnel utilization fell year on year and the proportion of low-margin system equipment sales projects increased. Selling, general and administrative expenses also increased due to higher personnel expenses associated with increases in staff in the sales and administrative divisions. As a result, operating loss was ¥339 million, a decline of ¥161 million year on year; ordinary loss was ¥305 million, a decline of ¥153 million; and net loss attributable to owners of the parent was ¥224 million, a decline of ¥108 million.」

「Although revenue declined, gross profit increased as the gross margin improved due to the suppression of unprofitable projects, while selling, general and administrative expenses declined due to the effects of expense reductions. Operating profit was ¥417 million, an increase of ¥27 million, or 7.1%, year on year; ordinary profit was ¥489 million, an increase of ¥27 million, or 6.0%; and net profit attributable to owners of the parent was ¥317 million, an increase of ¥50 million, or 18.7%.」

「Although revenue declined, improved the cost ratio and lower selling, general and administrative expenses resulting from expense reductions led to narrower losses. Operating loss was ¥201 million, an improvement of ¥110 million year on year; ordinary loss was ¥140 million, an improvement of ¥106 million; and net loss attributable to owners of the parent was ¥111 million, an improvement of ¥70 million.」

「Although revenue declined, gross profit increased as the gross margin improved and selling, general and administrative expenses declined due to the effects of expense reductions. Operating profit was ¥22 million, an increase of ¥151 million year on year; ordinary profit was ¥53 million, an increase of ¥146 million; and net profit attributable to owners of the parent was ¥27 million, an increase of ¥101 million.」

「Although revenue declined, improved the cost ratio and lower selling, general and administrative expenses resulting from cost reductions led to narrower losses. Operating loss was ¥178 million, an improvement of ¥42 million year on year; ordinary loss was ¥151 million, an improvement of ¥38 million; and net loss attributable to owners of the parent was ¥115 million, an improvement of ¥25 million.」

「The company aims to establish and embed a leaner corporate structure capable of securing stable earnings without being swayed by changes in the business environment. To this end, it will further strengthen initiatives to improve productivity and earning power and pursue direct measures such as reducing production costs and selling, general and administrative costs.」