First-quarter progress reached approximately one-quarter of the full-year plan, with net income lagging as the focus

First-quarter revenue was ¥18.173 billion, up 8.7% year on year; operating profit was ¥2.271 billion, up 17.4%; ordinary profit was ¥2.352 billion, up 16.9%; and net income attributable to owners of the parent was ¥1.173 billion, up 15.9%. The continued trend of growth in both revenue and operating profit is positive when assessing whether the expansion of existing operations, acquisition of new clients and progress in revising contract fees from the previous fiscal year are delivering results.

The full-year forecasts are revenue of ¥76.0 billion, operating profit of ¥9.6 billion, ordinary profit of ¥9.93 billion and profit attributable to owners of the parent of ¥5.92 billion. Dividing first-quarter results by the full-year forecasts gives progress of 23.9% for revenue, 23.7% for operating profit, 23.7% for ordinary profit and 19.8% for profit attributable to owners of the parent. Revenue and operating profit are broadly in line with one-quarter progress, while net income is lagging. The interim results will need to clarify the effects of taxes, non-operating income and expenses, and profit attributable to non-controlling interests.

Total extraordinary income in the first quarter was approximately ¥25 million, and total extraordinary losses were approximately ¥21 million, both small relative to operating profit of ¥2.271 billion. There is therefore little basis for explaining the lag in profit progress solely through temporary extraordinary gains and losses. At the interim results, the conversion rate from ordinary profit to profit attributable to owners of the parent, income taxes and the breakdown of profit attributable to non-controlling interests should be reviewed.

The company did not prepare a consolidated cash flow statement for the first quarter, and cash flow from operating activities and investing activities was not disclosed. At the interim results, it should also be confirmed whether the increase in profit is translating into operating cash flow and higher cash and deposits, and the extent of the investment and working-capital burden associated with the start of operations at the Akita BPO Katagami Campus.