Diverse Customer Needs -- Customized IT Solutions

In the third quarter ending in March 2012, our customers, anxious about a downward swing in the economy due to a strong yen and the global economic slowdown, are continuing to remain cautious in terms of their business activities and investment in IT.

According to a report issued by METI (Ministry of Economy, Trade and Industry), profits across the information services industry show that, while certain segments of the information services industry have rebounded, it remains a difficult business environment. At Information Development Group, we place the highest priority on training our staff, maximizing our efficiency by effectively utilizing our resources, and actively developing and expanding group-wide services for current customers.

Through these initiatives, we were able to successfully increase our sales volume in our core business services by working closely with our clients to uncover potential needs and shifting the types of services we provide to our customers to include more value-added services (although a small number of customers did request price reductions). Orders for software development stagnated though, reflecting our customers’ reduced investment in IT, and the total number of orders declined as contracted data entry services are no longer provided. This led to a consolidated total sales volume of ¥11.9 billion (a decrease of 1.6% from the same period last year) for the consolidated cumulative third quarter.

In terms of profits, we improved our productivity by streamlining our organizational business processes, yet saw revenue and profits decline due to requests from our clients for price reductions, leading to an operating profit of ¥559 million (13.6% decrease) and a recurring profit of ¥573 million (17% decrease). Also, due to a change in the corporate income tax eliminating deferred tax assets, which caused in increase in income taxes-deferred, a loss on sales of subsidiary stock was included in deductible expenses. This lowered our corporate tax, leading to a net profit of ¥370 million (1.7% increase).

The financial outlook for the term ending in March 2012 forecasts sales of ¥16.1 billion (2.1% decrease), an operating profit of ¥630 million (24.9% decrease), a recurring profit of ¥650 million (27.2% decrease) and a net profit of ¥470 million (5.1% increase).

We continue to strengthen systems operations and management -- our core business -- while also: 1) expanding our business operations outsourcing services, with multiple projects per customer; 2) enhancing our global presence; and 3) expanding our cloud-based approach to platform system development, focusing on the design and configuration of low-cost and high-integrity system environments.

To expand our business operations outsourcing services, we are proactively reaching out to and securing new customers by strengthening and streamlining our operations while working closely with customers to understand their needs and tailor our services to meet those needs.

To enhance our global presence, we are strengthening our IT support for Japanese corporations with overseas operations through our subsidiary, ID Wuhan, as well as our partnerships with UK-based Newton Information Technology, Ltd and US-based SYSCOM (USA) INC.

To enhance our cloud-based approach, we are focusing on training our technical and support staff by strengthening our operations and corporate partnerships, particularly with Softbank Telecom Corp. and salesforce.com Co., Ltd. in order to better meet the diverse needs of our customers.

At ID Group, we are committed to working closely with each of our customers to understand their needs, provide the best service possible and to ultimately ensure the complete satisfaction of each of our customers. We sincerely appreciate your interest in ID Group and thank you for your continued support.