Improving profitability under Medium-Term Management Plan III

「The Company has continued from the previous fiscal year to rigorously manage each operating site in order to rebuild its business foundation, while strengthening its human resources development initiatives and aiming to build a stronger and more resilient セレスポ. As a result, performance for the fiscal year was as follows. Net sales: ¥15,138 million (net sales for the previous fiscal year: ¥13,667 million) Operating income: ¥1,083 million (operating income for the previous fiscal year: ¥799 million) Ordinary income: ¥1,086 million (ordinary income for the previous fiscal year: ¥810 million) Net income: ¥766 million (net loss for the previous fiscal year: ¥764 million)」

「当事業年度の業績は下記のとおりとなりました。 売上高 15,138百万円（前期同期の売上高は13,667百万円） 営業利益 1,083百万円（前期同期の営業利益は799百万円） 経常利益 1,086百万円（前期同期の経常利益は810百万円） 当期純利益 766百万円（前期同期の当期純損失は764百万円）」

「The Company has continued from the previous fiscal year to rigorously manage each operating site in order to rebuild its business foundation, while strengthening its human resources development initiatives. In addition, by reinforcing compliance, we are working to restore trust and aiming to build a stronger and more resilient セレスポ. As a result, performance for the interim accounting period was as follows. Net sales: ¥6,013 million (net sales for the same period of the previous fiscal year: ¥5,171 million) Operating income: ¥103 million (operating loss for the same period of the previous fiscal year: ¥133 million) Ordinary income: ¥104 million (ordinary loss for the same period of the previous fiscal year: ¥122 million) Interim net income: ¥60 million (interim net loss for the same period of the previous fiscal year: ¥98 million)」

「To rebuild our business base, we acted to strengthen management at each location and enhanced talent development initiatives, particularly for younger employees. We are also working to restore trust by enforcing compliance and thereby achieve a revival. As a result, interim-period results were as follows: revenue ¥5,171 million, compared with ¥3,533 million in the same period of the previous fiscal year; operating loss ¥133 million, compared with an operating loss of ¥568 million; ordinary loss ¥122 million, compared with an ordinary loss of ¥566 million; and interim net loss ¥98 million, compared with interim net loss of ¥405 million.」

「As a result, full-year results were as follows: revenue ¥8,959 million, compared with ¥19,925 million in the previous fiscal year; operating loss ¥383 million, compared with operating profit of ¥3,022 million; ordinary loss ¥378 million, compared with ordinary profit of ¥3,081 million; and net loss ¥269 million, compared with net profit of ¥2,073 million.」

「As a result, cumulative third-quarter results were as follows: revenue ¥7,369 million, compared with ¥14,680 million in the same period of the previous year; operating loss ¥65 million, compared with operating profit of ¥2,434 million; ordinary loss ¥60 million, compared with ordinary profit of ¥2,492 million; and quarterly net loss ¥64 million, compared with quarterly net profit of ¥1,678 million.」

「However, the number of projects and project prices declined because of fewer COVID-19 response projects and the company's suspension from bidding by government agencies in connection with allegations of antitrust violations related to the Tokyo Olympics and Paralympics. As a result, revenue decreased ¥4,677 million. Cumulative second-quarter results were as follows: revenue ¥3,533 million, compared with ¥8,210 million in the same period of the previous year; operating loss ¥568 million, compared with operating profit of ¥909 million; ordinary loss ¥566 million, compared with ordinary profit of ¥966 million; and quarterly net loss ¥405 million, compared with quarterly net profit of ¥626 million.」

「The number of projects and project prices declined because of fewer projects addressing COVID-19 and the company's suspension from bidding by government agencies in connection with Olympic and Paralympic bidding. As a result, revenue decreased ¥1,382 million. Cost of sales declined ¥779 million because of lower outsourced costs and other factors. Cumulative first-quarter results were as follows: revenue ¥1,782 million, compared with ¥3,164 million in the same period of the previous year; operating loss ¥251 million, compared with operating profit of ¥381 million; ordinary loss ¥250 million, compared with ordinary profit of ¥429 million; and quarterly net loss ¥180 million, compared with quarterly net profit of ¥260 million.」

「The number of projects and project prices remained solid, but both declined compared with projects related to the temporary international sporting event in the same period of the previous year. As a result, revenue decreased ¥4,291 million. Cumulative third-quarter results were as follows: revenue ¥14,680 million, down 22.6% year on year; operating profit ¥2,434 million, down 17.7%; ordinary profit ¥2,492 million, down 17.1%; and quarterly net profit ¥1,678 million, down 19.8%.」

「The number of projects increased and project prices also rose, resulting in a ¥679 million increase in revenue. As a result, cumulative first-quarter results were as follows: revenue ¥3,164 million, up 27.3% year on year; operating profit ¥381 million, up 741.3%; ordinary profit ¥429 million, up 427.5%; and quarterly net profit ¥260 million, up 242.4%.」

「To achieve the goal set out in Medium-Term Management Plan V, which began in April 2022, of creating a management environment capable of continuing to adapt to social change, we worked to achieve ① demonstrating ambition, ② improving on-site responsiveness and ③ strengthening communication capabilities.」

「The number of projects increased and project prices also rose, resulting in a ¥16,274 million increase in revenue. Higher outsourced costs and other factors increased cost of sales by ¥11,506 million. As a result, cumulative third-quarter results were as follows: revenue ¥18,971 million, compared with ¥2,697 million in the same period of the previous year; operating profit ¥2,958 million, compared with an operating loss of ¥1,483 million; ordinary profit ¥3,006 million, compared with an ordinary loss of ¥1,283 million; and quarterly net profit ¥2,091 million, compared with quarterly net loss of ¥923 million.」

「The number of projects increased and project prices also rose, resulting in an ¥11,301 million increase in revenue. As a result, cumulative second-quarter results were as follows: revenue ¥12,920 million, compared with ¥1,618 million in the same period of the previous year; operating profit ¥1,126 million, compared with an operating loss of ¥1,081 million; ordinary profit ¥1,185 million, compared with an ordinary loss of ¥916 million; and quarterly net profit ¥836 million, compared with quarterly net loss of ¥662 million.」

「The number of projects increased and project prices also rose, resulting in a ¥1,994 million increase in revenue. As a result, cumulative first-quarter results were as follows: revenue ¥2,485 million, compared with ¥490 million in the same period of the previous year; operating profit ¥45 million, compared with an operating loss of ¥754 million; ordinary profit ¥81 million, compared with an ordinary loss of ¥654 million; and quarterly net profit ¥76 million, compared with quarterly net loss of ¥462 million.」

「Under Medium-Term Management Plan IV, covering fiscal 2018 through fiscal 2020, we set the following performance targets for fiscal 2020, the final year: revenue ¥16,000 million, operating profit ¥800 million, operating margin 5.0%, net profit ¥500 million, ROE 9.5% and EPS ¥90.00. For the fiscal year, revenue was ¥4,394 million, operating loss was ¥1,829 million, operating margin was negative 41.6%, net loss was ¥1,107 million, return on equity was negative 21.4% and loss per share was ¥199.97.」

「Under Medium-Term Management Plan IV, which began in April 2018, we worked to improve profitability, but many events were voluntarily canceled following the declaration of a state of emergency and restrictions on event scheduling in response to the spread of COVID-19. As a result, cumulative third-quarter results were revenue of ¥2,697 million, compared with ¥14,735 million in the same period of the previous year; operating loss of ¥1,483 million, compared with operating profit of ¥2,275 million; ordinary loss of ¥1,283 million, compared with ordinary profit of ¥2,285 million; and quarterly net loss of ¥923 million, compared with quarterly net profit of ¥1,570 million.」

「Under Medium-Term Management Plan IV, which began in April 2018, we worked to improve profitability, but many events were voluntarily canceled following the declaration of a state of emergency and restrictions on event scheduling in response to the spread of COVID-19. The number of projects and project prices declined, resulting in a ¥2,024 million decrease in revenue. Cost of sales declined ¥1,221 million because of lower outsourced costs and other factors. As a result, cumulative first-quarter results were as follows: revenue ¥490 million, compared with ¥2,515 million in the same period of the previous year; operating loss ¥754 million, compared with an operating loss of ¥66 million; ordinary loss ¥654 million, compared with an ordinary loss of ¥61 million; and quarterly net loss ¥462 million, compared with quarterly net loss of ¥48 million.」

「Under Medium-Term Management Plan IV, covering fiscal 2018 through fiscal 2020, we set the following performance targets for fiscal 2020, the final year: revenue ¥16,000 million, operating profit ¥800 million, operating margin 5.0%, net profit ¥500 million, ROE 9.5% and EPS ¥90.00. For the fiscal year, revenue was ¥16,589 million, operating profit was ¥1,208 million, operating margin was 7.3%, net profit was ¥802 million, ROE was 14.7% and EPS was ¥145.41.」

「Under Medium-Term Management Plan IV, which began in April 2018, we worked to improve profitability. Although the number of projects declined, mainly small-scale projects, we won orders related to international sporting events and other projects, resulting in a substantial increase in project prices. Revenue therefore increased by ¥5,190 million. Higher outsourced costs and other factors increased cost of sales by ¥3,342 million. Selling, general and administrative expenses increased ¥184 million because of higher headcount and bonuses. As a result, cumulative third-quarter results were as follows: revenue ¥14,735 million, up 54.4% year on year; operating profit ¥2,275 million, up 271.8%; ordinary profit ¥2,285 million, up 268.0%; and quarterly net profit ¥1,570 million, up 287.6%.」

「Under Medium-Term Management Plan IV, which began in April 2018, we worked to improve profitability. Although the number of projects declined, mainly small-scale projects, we won orders related to international sporting events and other projects, resulting in a substantial increase in project prices. Revenue therefore increased by ¥2,826 million. Higher outsourced costs and other factors increased cost of sales by ¥2,045 million. Selling, general and administrative expenses increased ¥113 million because of higher headcount and increased provisions for bonuses. As a result, cumulative second-quarter results were as follows: revenue ¥8,113 million, up 53.5% year on year; operating profit ¥703 million, up 1,889.3%; ordinary profit ¥710 million, up 1,647.4%; and quarterly net profit ¥488 million, up 5,470.9%.」

「Under Medium-Term Management Plan IV, which began in April 2018, we worked to improve profitability. The number of projects declined in the core business and sports business divisions. Although order value increased in the competition business division, this was insufficient to offset the decline in project numbers, resulting in a ¥30 million decrease in revenue. Selling, general and administrative expenses increased ¥27 million because of higher headcount and advertising expenses. As a result, cumulative first-quarter results were revenue of ¥2,515 million, down 1.2% year on year; operating loss of ¥66 million, compared with an operating loss of ¥0 million; ordinary loss of ¥61 million, compared with ordinary profit of ¥2 million; and quarterly net loss of ¥48 million, compared with quarterly net loss of ¥9 million.」

「Under Medium-Term Management Plan IV, covering fiscal 2018 through fiscal 2020, we set the following performance targets for fiscal 2020, the final year: revenue ¥16,000 million, operating profit ¥800 million, operating margin 5.0%, net profit ¥500 million, return on equity (ROE) 9.5%, and earnings per share (EPS) ¥180.00. Preparations for international sporting events from the next fiscal year onward are already gathering pace. We will rapidly establish our internal operating structure, including personnel allocation, and appropriately address external factors such as soaring labor and material costs in order to achieve the “pursuit of maximum earnings” set out in Medium-Term Management Plan IV.」

「As reported in the notice dated 30 November 2018 titled “Notice Regarding Revisions to the Earnings Forecast, Medium-Term Management Plan IV and Dividend Forecast (Increase in Dividend),” orders for large-scale bidding projects, mainly in the ceremonies division and centered on the third quarter, were weaker than in the previous fiscal year. Revenue increased in the sports and festival divisions because of more orders for new projects and higher project prices, but this was insufficient to offset the decline, resulting in a ¥771 million decrease in revenue. Although the cost of sales ratio rose 0.4 percentage points because of higher outsourced costs, mainly material and labor costs, selling, general and administrative expenses declined ¥12 million as system implementation-related costs recorded in the previous fiscal year decreased and employee overtime expenses declined in connection with work-style reform initiatives. As a result, cumulative third-quarter results were as follows: revenue ¥9,545 million, down 7.5% year on year; operating profit ¥612 million, down 31.1%; ordinary profit ¥621 million, down 31.0%; and quarterly net profit ¥405 million, down 32.4%.」

「Under Medium-Term Management Plan IV, which began in April 2018, we worked to improve profitability. Revenue increased because of more large-scale projects, particularly in the sports and festival divisions, and higher project prices, while expenses increased because of higher outsourced costs. As a result, revenue for the cumulative second quarter was ¥5,287 million, up 5.5% year on year; operating profit was ¥35 million, compared with an operating loss of ¥12 million in the same period of the previous year; ordinary profit was ¥40 million, compared with an ordinary loss of ¥3 million; and quarterly net profit was ¥8 million, compared with quarterly net loss of ¥18 million.」

「Under Medium-Term Management Plan IV, which began in April 2018, we launched new initiatives to improve profitability. Revenue increased because of a rise in large-scale projects and higher project prices, while expenses increased because of higher outsourced costs and system expenses recognized. As a result, revenue for the cumulative first quarter was ¥2,545 million, up 3.9% year on year; operating loss was ¥0 million, compared with an operating loss of ¥19 million in the same period of the previous year; ordinary profit was ¥2 million, compared with an ordinary loss of ¥14 million; and quarterly net loss was ¥9 million, compared with quarterly net loss of ¥19 million.」

「In the fiscal year, the final year of Medium-Term Management Plan III, which began in April 2015, we worked to improve profitability, as targeted, and strengthen our operating base, including through the transition to a new core system. As a result, revenue was ¥12,607 million, up 2.7% year on year; operating profit was ¥593 million, up 3.2%; ordinary profit was ¥608 million, up 2.7%; and net profit was ¥379 million, up 0.2%, all record highs since the company's founding. We also achieved higher revenue and profit for 7 consecutive fiscal years.」

「Under Medium-Term Management Plan III, which began in April 2015, we continued to work to improve profitability. Revenue progressed steadily, helped by higher order prices, but profitability remained challenging year on year because outsourced costs increased as a result of higher outsourced labor and transportation costs. As a result, revenue for the cumulative third quarter was ¥10,316 million, up 1.1% year on year; operating profit was ¥888 million, down 16.5%; ordinary profit was ¥900 million, down 16.4%; and quarterly net profit was ¥599 million, down 17.0%.」

「Under Medium-Term Management Plan III, which began in April 2015, we continued to work to improve profitability. Revenue declined because of a decrease in large-scale projects and the postponement of some projects to the second half, while expenses increased because of higher outsourced labor costs, higher personnel costs resulting from an increase in mid-career hires, and higher transportation and new system development costs. As a result, the business environment remained challenging compared with the same period of the previous year. Revenue for the cumulative second quarter was ¥5,010 million, down 5.9% year on year; operating loss was ¥12 million, compared with operating profit of ¥176 million in the same period of the previous year; ordinary loss was ¥3 million, compared with ordinary profit of ¥185 million; and quarterly net loss was ¥18 million, compared with quarterly net profit of ¥112 million.」

「Under Medium-Term Management Plan III, which began in April 2015, we continued to work to improve profitability. Revenue declined due to a decrease in large-scale projects, while expenses increased because of higher personnel costs, including an increase in mid-career hires, as well as higher transportation costs, material prices and costs recognized for a new system. As a result, revenue for the cumulative first quarter was ¥2,451 million, down 6.5% year on year; operating loss was ¥19 million, compared with operating profit of ¥111 million in the same period of the previous year; ordinary loss was ¥14 million, compared with ordinary profit of ¥116 million; and quarterly net loss was ¥19 million, compared with quarterly net profit of ¥73 million.」

「Under Medium-Term Management Plan III, which began in April 2015, we continued to work to improve profitability. As a result, revenue was ¥12,272 million, up 14.2% year on year; operating profit was ¥575 million, up 36.1%; ordinary profit was ¥592 million, up 34.9%; and net profit was ¥378 million, up 39.2%. We therefore achieved the performance targets set out in Medium-Term Management Plan III ahead of schedule, and revenue, operating profit, ordinary profit and net profit, as well as their respective margins, reached record highs.」

「Under Medium-Term Management Plan III, which began in the fiscal year ending March 2016, we worked to strengthen our ability to address customer issues through a customer-focused approach, while strengthening our operating base by promoting efficient organizational management and enforcing profit management to stabilize earnings. As a result, revenue remained generally solid and increased overall. Profit also increased at the gross profit, operating profit, ordinary profit and quarterly net profit levels, as efforts to reduce various costs, including a review of material costs and more efficient use of supplies, proved effective. As a result, revenue for the cumulative third quarter was ¥10,208 million, up 17.5% year on year; operating profit was ¥1,065 million, up 61.9%; ordinary profit was ¥1,077 million, up 60.9%; and quarterly net profit was ¥721 million, up 69.7%.」

「In this environment, we worked under Medium-Term Management Plan III, which began in the fiscal year ending March 2016, to strengthen our ability to address customer issues through a customer-focused approach, while also stabilizing earnings and strengthening our operating base by promoting efficient organizational management and enforcing profit management. As a result, revenue remained generally solid and increased overall. Profit increased at the gross profit, operating profit, ordinary profit and quarterly net profit levels, as the increase in revenue was supplemented by efforts to reduce various costs, including a review of material costs and more efficient use of supplies. As a result, revenue for the cumulative second quarter was ¥5,323 million, up 10.6% year on year; operating profit was ¥176 million, up 60.7%; ordinary profit was ¥185 million, up 58.3%; and quarterly net profit was ¥112 million, up 71.9%.」

「In this environment, we worked under Medium-Term Management Plan III, which began in the fiscal year ending March 2016, to strengthen our ability to address customer issues through a customer-focused approach, while also stabilizing earnings and strengthening our operating base by promoting efficient organizational management and enforcing profit management. As a result, revenue remained generally solid and increased overall. Profit increased at the gross profit, operating profit, ordinary profit and quarterly net profit levels, as the increase in revenue was supplemented by efforts to reduce various costs, including a review of material costs and more efficient use of supplies. As a result, revenue for the cumulative first quarter was ¥2,622 million, up 13.1% year on year; operating profit was ¥111 million, up 306.5%; ordinary profit was ¥116 million, up 266.6%; and quarterly net profit was ¥73 million, up 427.1%.」

「In this environment, we continued to work to improve profitability based on Medium-Term Management Plan III, which began in April 2015.」