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| The analytical report of the company is released. |
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| To Our Shareholders |
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President and Representative Director Yoshiyuki Yamamoto reports on the company's performance for the second quarter of the fiscal year ending June 2009 and on future plans and challenges.
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Performance for the Second Quarter of the Fiscal Year Ending June 2009
Due to the global financial crisis, the performance of many domestic companies has worsened and capital expenditures are declining significantly. The system investments of our main clients, namely credit card companies, banks, securities companies and other financial institutions are coming under pressure. Furthermore, postponements of new projects to other quarters and reviews of projects, etc. have occurred, making the operating environment very severe for our company.
For the second quarter (quarterly consolidated cumulative period), consolidated net sales was 2,770 million yen, ordinary income was 19 million yen and net income was 38 million yen. Net sales declined year-on-year, but operating income grew (up 186 million yen YoY) as a result of the significant recovery of earnings, mainly in the Security System business.
On the other hand, when compared to the initial performance forecast, net sales exceeded the initial forecast by 209 million yen due to the number of inspected and accepted projects in the Retail Banking Online Systems business exceeding initial estimates as a result of front-loading and other factors. However, operating income decreased by 175 million yen compared to initial forecasts due to the postponement of the sales of internally developed packages in the System Solution business to other quarters, as well as the shortfall in sales of the Security Systems business.
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Basic Strategy
As mentioned above, we think that the severe management environment will persist for some time. During this time, the company would like to strengthen its finances, organization and human resources in order to strengthen its structure and establish a strong management base.
We strengthened our financial position by liquidating our assets until the fiscal year ended June 2008. For the fiscal year ending June 2009, we have started to implement the strengthening of our management system and sales capabilities through organizational reform, and we are working to strengthen our management base. In order to continue strengthening our company structure during the latter half of the current fiscal year, we will promote a measure that employs the key words "IT x Operations."
"IT x Operations" refers to efforts to increase productivity through a synergy between advanced technology and business response capabilities, and to efforts to expand business to adjoining fields of the company's business lines. As we heighten our technological capabilities, we would like to strengthen our business response capabilities by increasing our knowledge and deepening our understanding of the business lines of our clients. By doing so, we will increase the precision of definitions of requirements in the development business and will increase customer satisfaction by enhancing efficiency and improving quality. Furthermore, by making appropriate system proposals through the strengthening of our business response capabilities, we will attempt to expand our sales activities into new business areas.
In addition, on October 2008, we made a capital investment in ODN Solution Inc., which has achieved results in the commissioned development of core systems for credit cards and in system development for banks, and have implemented measures to expand businesses through this alliance.
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Credit Card Business
We assume that it will take some time for system investments from credit card companies to make a full-fledged recovery, but there are system investments being made in order to comply with the amended Money-Lending Business Law. The company has been conducting system development such as connection processes to credit information agencies designated by the amended Money-Lending Business Law, and we are achieving results in this area.
Furthermore, there are signs that system investment by credit card companies with the aim of reducing administrative costs or enhancing business efficiency is proceeding at a faster pace than originally assumed. In order not to miss this opportunity and to achieve results, we would like to strengthen our structure by implementing measures for strengthening our technological and business response capabilities with the use of the keywords "IT x Operations."
Securities Companies Systems Business
The Tokyo Stock Exchange (TSE) plans to begin operation of a next-generation system to increase processing speed at the beginning of 2010. Due to the TSE's increasing speed of data processing of securities market information and the spread of automated ordering through computers, etc., securities companies need to update their market information delivery systems. The company has a track record of more than ten years building systems for securities companies, and received orders for market information delivery systems that handle high-speed processing from large securities companies during 2008.
In the future, we would like to expand our sales activities for "FACE," a market information delivery system that is packaged especially for securities companies, and at the same time would like to further enhance its functions.
Security Systems Business
Amid the increasing interest of companies towards information security measures, we began sales of the CWAT 4.0 version in order to promote information security measures, mainly for global companies. As we have announced previously, Murata Manufacturing Co., Ltd. has introduced our CWAT in order to deal with management issues, such as the protection of R&D information and manufacturing expertise. Besides this case, more manufacturing companies are beginning to introduce this software platform. A year has passed since the enforcement of the Financial Instruments and Exchange Law, and it is our understanding that this increase is the result of the beginning of actual efforts being made to implement information security measures as part of upgrading internal controls. Thus, we have expectations that this presents further opportunities for the company.
Furthermore, on February 25, 2009, we held a massive company event named the "Intelligent Wave Security Day 2009," and we are strengthening sales activities towards capturing new clients.
In addition, in order to fortify our business alliance with Dai Nippon Printing Co., Ltd., to promote the introduction of SSFC office security and to plan new products, we established an SSFC Business Promotion Department in November 2008.
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To Our Shareholders
Regarding the loss of a laptop by a Company employee at the end of 2008, we sincerely apologize to all our shareholders for the significant concern and problems created by this incident. We would like to strengthen our security management system on a company-wide basis and to continue educating all our employees so that they become more knowledgeable about and aware of security. Therefore, we would like to create a system that realizes no risk of information leakage.
Furthermore, we will continue pouring all our efforts into achieving the performance forecasts as previously announced and would like to pay a stable dividend to all our shareholders.
Despite the severe management environment, the company's policy is to remain steadfast in performing the following: further strengthening our structure with the aim of establishing a strong management base and preparing ourselves for the opportunity to make a further leap forward. Therefore, we kindly ask for the continued understanding and support of all our shareholders.
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March 2009 |
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