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Meitec Corporation Still Feeling Earthquake Effects

Meitec Corporation Still Feeling Earthquake Effects

Meitec Corporation of Japan has announced its results for the 12 months ending 31st March 2012.

The company recorded sales of Y66,955 (&pound521 million) and made a net income of Y2,827 (&pound22 million).

Economy Overview

Throughout the fiscal year ended March 31, 2012 (from April 1, 2011 to March 31, 2012), the Japanese economy continued to face significant uncertainty about its prospects due to power shortages and the disruption of supply chains in the wake of the Great East Japan Earthquake during the first half, and the deceleration of overseas economies and the sharp appreciation of the yen during the second half.

Overview of Consolidated Operating Results

During the fiscal year ended March 31, 2012, domestic production activities among leading Japanese manufacturers, which are the major customers of Meitec Group (the Company), were affected by the Great East Japan Earthquake and other factors .Nonetheless, investments in technological development, which resumed after Lehman Shock, continued on the whole. However yen appreciation and other factors led to more cost reductions trend among these customers.

Under these circumstances, the utilization ratio significantly improved in the Group’s core business—temporary engineer staffing as many customers continued investments in technological development and the Company was able to continue to land new contracts from the previous fiscal year.

Primarily for this reason, consolidated net sales for the year under review increased &yen5,164 million from the previous year to &yen66,955 million. Consolidated cost of sales rose &yen1,042 million to &yen49,875 million, mainly reflecting increased labor costs due to the improvement of the utilization ratio. Consolidated selling, general and administrative expenses advanced &yen1,292 million to &yen11,629 million, primarily due to an increase in strategic investments. As a result, consolidated operating income jumped &yen2,829 million from a year earlier to &yen5,450 million.

Consolidated ordinary income increased &yen943 million to &yen5,531 million compared with a year earlier, although non-operating income declined &yen1,886 million due to a decrease in subsidies for the temporary staffing business as a result of the expiry of employment adjustment subsidies.

Consolidated net income for the period under review decreased &yen862 million to &yen2,827 million due to a decrease in extraordinary income and a rise in tax expenses that included the reversal of deferred tax assets resulting from the promulgation of a law related to a reduction of income taxes. The effect of the reversal of deferred tax assets amounted to &yen520 million.

Overview of Results by Business Segment - Temporary Staffing Business

The Temporary Staffing Business accounts for more than 90% of consolidated net sales. Particularly in

temporary engineer staffing, the core business of this segment, many customers continued investments in technological development, and the Company was therefore able to continue to land new contracts steadily, which helped significantly improve the Meitec’s non-consolidated average utilization ratio (overall) from 85.1% a year earlier to 93.2% in the period under review.

As a result of these improvements of the utilization ratio, consolidated net sales in the Temporary Staffing Business segment for this consolidated fiscal year had increased &yen5,151 million compared to the previous fiscal year to &yen63,827 million.

The rise in net sales raised operating income by &yen2,855 million to &yen5,225 million.

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