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Meitec announces full year results

Hideyo Kokubun, CEO, Meitec Group presented the following statement.

1. Business Outline

 (1) Results of Operations

The Japanese economy for the consolidated fiscal year ended March 31, 2014 (April 1, 2013 to March 31, 2014) witnessed uncertain perspectives of the world economy with decelerated growth in emerging markets, etc. However, on the back of the favorable effects of the government’s economic measures and financial policies, rising stock prices and the improvement in corporate revenues contributed to a moderate upward trend in the country’s economy.

During the fiscal year under review, many leading manufacturers, which are the major clients of the Company, continued steady investments in technological development looking to the next generation despite the business conditions. Under these circumstances, the utilization ratio rose steadily due to an increase in the number of engineers resulting from aggressive recruiting activities as well as a strong order environment.

Primarily for this reason, consolidated net sales increased Y4,575 million from a year earlier to Y74,906 million. Consolidated cost of sales advanced Y3,731 million from a year earlier to Y55,370 million, chiefly because of increased labor costs due to an increase in the number of engineers. Consolidated selling, general and administrative expenses rose Y218 million from a year earlier to Y12,556 million. As a result, consolidated operating income jumped Y625 million from a year earlier to Y6,979million. Consolidated ordinary income increased Y550 million from a year earlier to Y6,978 million. Consolidated net income suffered a year-on-year decline of Y2,019 million to Y3,973 million, as tax expenses that had decreased due to temporary factors in the previous fiscal year returned to their original level.

Results by business segment were as follows:

?.Temporary Staffing Business

Net sales in the Temporary Staffing Business segment for the fiscal year under review increased Y4,305 million from a year earlier to Y71,587 million. The reason for this increase was an increase in the number of engineers assigned to clients in the Temporary Staffing Business, which accounts for more than 90% of consolidated net sales, particularly in temporary engineer staffing, the core business of this segment.

Operating income increased Y543 million from a year earlier to Y6,687 million.

Due to aggressive recruiting activities, etc., the number of engineers assigned to clients increased, reflecting the growth in the number of engineers, whereas the Company’s non-consolidated average utilization ratio (overall) fell marginally to 94.7% (95.4% in the previous fiscal year). Also, working hours were steady at 8.93 hours/day (8.88 hours/day for the previous fiscal year).

2?.Engineering Solutions Business

In the Engineering Solutions Business, the Company provides engineering services related to analytical technologies, prototype production, casting/metal mold production and technology support for printed-circuit boards.

Net sales in the Engineering Solutions Business for the fiscal year under review increased Y129 million from a year earlier to Y2,790 million, and operating income increased Y6 million from the previous fiscal year to Y94 million.

Sales increased at MEITEC CAE CORPORATION from a year earlier, but profits decreased due to deterioration in cost of sales ratio. While the Apollo Giken Group recorded net sales almost unchanged and operating loss as in the previous fiscal year, its loss shrank. APOLLO GIKEN CO.,LTD. plans to liquidate its subsidiary in China by the end of this year.

?. Global Business

The Global Business engages in job placement and vocational training for students to supply human resources for Japanese manufacturers that operate in the coastal areas of China.

Net sales in the Global Business for the fiscal year under review increased

Y15 million

from a year earlier to Y84 million, and an operating loss of Y100 million was posted compared with a loss of Y59 million a year earlier.

In light of such circumstances, as part of a review of the Group’s business strategy, we plans to close and liquidate our vocational training business (Xian,

Chengdu) on June

30, 2014 upon completion of the required procedures. The job placement business

(Shanghai) will be continued, and reclassified into the Recruiting & Placement Business domain from the first quarter of the fiscal year ending March 31, 2015.

?. Recruiting & Placement Business

The Recruiting & Placement Business involves the job placement and an information portal site business intended for engineers.

Net sales in the Recruiting & Placement Business advanced Y188 million from a year earlier to Y927 million, and operating income increased Y107 million to Y284 million.

MEITEC NEXT CORPORATION achieved sales and profit growth due to an increasing number of job placements.

Note: 1: All Sales figures are exclusive of consumption taxies.

Note 2: Sales figures for each segment include intersegment transactions and transfers.

3 (2) Capital Investment for the Meitec Group During the consolidated fiscal year under review, we have made capital investment mainly to improve our business supporting system, and total amounted to 374 million yen.

And, capital investment by segments were, Y318 million for the Temporary Staffing Business, Y8 million for the Engineering Solution Business, and Y20 million for the Recruiting & Placement Business.

These capital investment amounts include the cost for software.

(3) Financing for the Meitec Group

The Company meets its capital requirements with its own funds. The Company did not procure capital through the issuance of new shares or bonds during the consolidated fiscal year under review.

(4) Issues to Be Addressed

Main business of our corporate group is the temporary engineer staffing business. Based on our group management concept “Mutual Growth & Prosperity”, we, the Meitec Group, with cooperation of all the employees, shall improve the five values (Value to Engineers, Value to Employees, Value to Clients, Value to Shareholders, Value to the

Society) continuously from the "Value to Engineers" as a starting point.

Future performances of the temporary engineer staffing business depend on higher number of engineers and higher utilization ratio. Therefore we recognize that most important objective is to realize the sustainable growth by continued strengthening the sales effort to obtain new orders, recruitment and increasing the employee and supporting employee carrier advancement in consideration of the environmental changes.

?.Sales effort to obtain new orders

Main business of our corporate group, temporary engineer staffing business, is also a business of supporting carrier advancement of the engineers. Not limited to obtaining the orders to sustain or increase the number of engineers on job and utilization ratio, it is most important to continue providing the chance and place for expansion of their work segments so that they can widen their selection of carrier advancement.

Therefore, we

will try to build stronger clients basis where we can obtain orders in any economic conditions regardless of under crisis or not. We will continue to improve our sales system to strengthen our sales ability.

?.Recruitment and increasing employee

For Meitec Group, as largest “Group of professional engineers” in Japan, hiring more excellent engineers and staffs would be the source of growth. Therefore, we will establish a brand name with reliability and sense of security as the leader of the industry in the human resource market, and reinforce our recruiting ability. We will continue to execute efficient recruiting effort and increase the employee to meet with the changing market condition regardless of under crisis or not.

4?. Supporting employee carrier advancement It is essential to provide close support to each and every engineer for their carrier advancement in order to sustain and improve the quality of the largest “Group of professional engineers” in Japan. To provide proper and timely support, we have determined that the quality of services which the engineers provide to be “Technological strength multiplied by Human strength equals Total Strength”. We will continue our effort to provide the extended support to the carrier advancement needs initiated from the engineers and strengthen the carrier advancement support led by the company. We will continue our effort in strengthening the efficient support for the carrier advancement by timely catching the changes and expansion of the clients needs.


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