Business Engineering : Summary of Consolidated Financial Results for the Nine Months Ended December 31, 2021

Notice: This document is an excerpt translation of the original Japanese document and is for reference purposes only. In the event of any discrepancy between this translated document and the original Japanese document, the latter shall prevail.

Consolidated Financial Results

for the Nine Months Ended December 31, 2021

[Japanese GAAP]

February 10, 2022

Company name: Business Engineering Corporation

Stock exchange listing: Tokyo Stock Exchange, First Section

Code number: 4828

URL: https://www.b-en-g.co.jp/

Representative: Masakazu Haneda, President & CEO

Contact: Shigeaki Betsunou, Managing Director and Division General Manager, Corporate Administration & Planning Div.

Phone: [phone]

Scheduled date of filing quarterly securities report: February 14, 2022

Scheduled date of commencing dividend payments: -

Availability of supplementary briefing materials on quarterly financial results: None

Schedule of quarterly financial results briefing session: None

(Amounts of less than one million yen are rounded down.)

1. Consolidated Financial Results for the Nine Months Ended December 31, 2021 (April 1, 2021 to December 31, 2021)

(1) Consolidated Operating Results		(% indicates changes from the previous corresponding period.)
		Net sales	Operating profit		Ordinary profit	Profit attributable to
			owners of parent
	Nine months ended	Million yen	%	Million yen	%		Million yen	%	Million yen	%
	December 31, 2021	13,238	(1.2)	1,913	26.4	1,917	26.2	1,304	29.9
	December 31, 2020	13,405	-	1,514	-	1,519	-	1,004	-
	(Note) Comprehensive	income: Nine months	ended December 31,	2021: ¥1,185 million [1.5%]
		Nine months ended December 31, 2020: ¥1,165 million [-%]
		Basic earnings	Diluted earnings
		per share	per share
	Nine months ended		Yen		Yen
	December 31, 2021		218.50		-
	December 31, 2020		170.06		-

(Note) The "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020), etc. has been adopted from the beginning of the first quarter under review, and figures for the nine months ended December 31, 2020 indicate amounts after retrospective application of the said accounting standard, etc. Accordingly, year-on-year percentage changes for the nine months ended December 31, 2020 are not provided.

(2) Consolidated Financial Position

	Total assets	Net assets	Equity ratio
	Million yen	Million yen	%
As of December 31, 2021	10,435	7,168	68.7
As of March 31, 2021	10,481	6,312	60.2

(Reference) Equity: As of December 31, 2021: ¥7,168 million As of March 31, 2021: ¥6,312 million

2. Dividends

					Annual dividends
		1st		2nd			3rd		Year-end		Total
		quarter-end		quarter-end			quarter-end
		Yen		Yen			Yen		Yen		Yen
Fiscal year ended March 31, 2021		-	22.00			-		48.00	70.00
Fiscal year ending March 31, 2022		-	35.00			-
Fiscal year ending March 31, 2022									49.00	84.00
(Forecast)
(Note) Revision to the most recently	announced dividends forecast: Yes

3. Consolidated Financial Results Forecast for the Fiscal Year Ending March 31, 2022 (April 1, 2021 to March 31, 2022)

(% represent changes from the previous fiscal year for full year)

	Net sales	Operating profit	Ordinary profit	Profit attributable	Basic earnings
	to owners of parent	per share
	Million yen	%	Million yen	%	Million yen	%	Million yen	%	Yen
Full year	17,500	(1.2)	2,400	26.1	2,400	26.6	1,630	26.5	272.64

(Note) Revision to the most recently announced financial results forecast: Yes

From the beginning of the fiscal year ending March 31, 2022, the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020), etc. is applied, and the consolidated financial results forecast above indicates amounts after application of the said accounting standard, etc. Changes from the previous fiscal year is calculated based on comparison with the figures for the fiscal year ended March 31, 2021 after retrospective application of the said accounting standard, etc.

* Notes:

(1) Changes in significant subsidiaries during the nine months ended December 31, 2021: No (Changes in specified subsidiaries resulting in changes in scope of consolidation)

New subsidiaries: -

Excluded subsidiaries: -

1. Accounting policies adopted specially for the preparation of quarterly consolidated financial statements: Yes
2. Changes in accounting policies, changes in accounting estimates and retrospective restatement
3. 1. Changes in accounting policies due to the revision of accounting standards: Yes
   2. Changes in accounting policies other than 1) above: No
   3. Changes in accounting estimates: No
   4. Retrospective restatement: No
4. Total number of issued shares (common shares)
5. 1. Total number of issued shares at the end of the period (including treasury shares):

December 31, 2021: 6,000,000 shares

March 31, 2021: 6,000,000 shares

1. Total number of treasury shares at the end of the period: December 31, 2021: 67 shares
   March 31, 2021: 56,443 shares
2. Average number of shares during the period:

Nine months ended December 31, 2021: 5,971,525 shares

Nine months ended December 31, 2020: 5,908,068 shares

(Note) "Total number of treasury shares at the end of the period" and "Average number of shares during the period" are calculated by including the Company's shares held by the Employee Stock Ownership Plan Trust in the treasury shares that are deductible.

• These quarterly financial results are outside the scope of quarterly review by certified public accountants or audit firms.
• Explanation of the proper use of financial results forecast and other notes
  The earnings forecasts and other forward-looking statements herein are based on the information currently available to the Company and certain assumptions that are deemed reasonable. They are not a pledge by the Company to achieve the forecasted results. Actual results, etc. may differ significantly from these forecasts due to a wide range of factors. For more details on the above forecasts, please refer to "1. Qualitative Information on Quarterly Financial Results for the Period under Review (3) Explanation of Consolidated Financial Results Forecast and Other Forward-Looking Information" on page 3.

Table of Contents
1. Qualitative Information on Quarterly Financial Results for the Period under Review .............................	2
(1)	Explanation of Operating Results ..........................................................................................................	2
(2)	Explanation of Financial Position .........................................................................................................	3
(3)	Explanation of Consolidated Financial Results Forecast and Other Forward-Looking Information	.... 3
2. Consolidated Quarterly Financial Statements ...........................................................................................	4
(1)	Consolidated Quarterly Balance Sheets ................................................................................................	4
(2)	Consolidated Quarterly Statements of Income and Comprehensive Income ........................................	6

1

1. Qualitative Information on Quarterly Financial Results for the Period under Review

The "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020), etc. has been adopted from the beginning of the first quarter. Accordingly, figures for the nine months ended December 31, 2020, and the previous fiscal year are those after retrospective application of the said accounting standard, etc. Comparison and analysis have been made based on the figures for the previous corresponding period and the previous fiscal year after retrospective application.

(1) Explanation of Operating Results

During the nine months ended December 31, 2021, it became clear that the Japanese economy picked up on the back of a trend of overall continuing improvement in corporate earnings and business sentiment, while there were concerns about the impact of the COVID-19, global supply constraints, and others.

In the information services industry, customers' willingness to invest in digital transformations (DX) is robust, and investments in information technology in the manufacturing industry are expected to continue to remain strong. However, with the economy showing downside risks, concerns over a decline in customers' willingness to invest in information technology cannot be dispelled.

Under the 6-year management plan "Management Vision 2026" that started from the fiscal year ending March 31, 2022, the Group is working to resolve management issues such as the promotion of DX and global expansion in the manufacturing industry, in order to support the changing business environment facing companies in the manufacturing industry, our main customers, with products and services that leverage the strengths of the Group.

During the nine months ended December 31, 2021, orders received and net sales fell year on year due to a decrease in the Solutions Business despite an increase in the Products Business. Orders received were ¥12,866 million (down 5.5% year on year), and net sales were ¥13,238 million (down 1.2% year on year). In terms of profit, despite the unprofitable project in the Solutions Business, the Products Business saw significant growth in license sales and the Systems Support Business became more profitable. As a result mainly of these factors, operating profit was ¥1,913 million (up 26.4% year on year), ordinary profit was ¥1,917 million (up 26.2% year on year), and profit attributable to owners of parent was ¥1,304 million (up 29.9% year on year), achieving record-highs in each profit indicator for four consecutive quarters.

Operating results by business segment are as follows.

1. Solutions Business

The Solutions Business mainly engages in the consulting and system construction services, which are based on ERP package products developed by other companies. We provided complex solutions that contribute to the resolution of customers' issues, and actively engaged in proposal activities based on customer needs. Orders received and net sales decreased due to a reactionary decline from large-scale projects in the nine months ended December 31, 2020. Segment profit decreased due to the unprofitable project. As a result, orders received were ¥8,057 million (down 17.1% year on year), net sales were ¥8,479 million (down 8.9% year on year), and segment profit was ¥1,048 million (down 31.9% year on year).

(ii) Products Business

The Products Business mainly engages in sales of the in-house developed ERP package "mcframe" series products through business partners as well as consulting and system construction services based on these products. We continued our efforts to strengthen our relationships with customers and business partners, focused on license sales, and implemented initiatives to continuously enhance brand power. As a result, orders received were ¥4,562 million (up 24.7% year on year), net sales were ¥4,511 million (up 18.9% year on year), and segment profit was ¥1,603 million (up 65.4% year on year). As we have worked on increasing the number of business partners and strengthening our relationships with them over the long term, license sales significantly grew against the backdrop of robust software investment trend, and net sales of mcframe licenses in the third quarter under review reached ¥2,688 million (up 31.9% year on year), marking a new record high.

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