Business Engineering : FY2021 2nd Quarter ended September 30, 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 Six Months Ended September 30, 2021

[Japanese GAAP]

November 12, 2021

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: November 12, 2021

Scheduled date of commencing dividend payments: December 2, 2021

Availability of supplementary briefing materials on quarterly financial results: Available

Schedule of quarterly financial results briefing session: Scheduled (for securities analysts)

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

1. Consolidated Financial Results for the Six Months Ended September 30, 2021 (April 1, 2021 to September 30, 2021)

(1) Consolidated Operating Results		(% indicates changes from the previous corresponding period.)
		Net sales	Operating profit		Ordinary profit		Profit attributable to
				owners of parent
	Six months ended	Million yen	%	Million yen	%		Million yen	%		Million yen	%
	September 30, 2021	8,850	(1.5)	1,154	1.5	1,160	1.5		790	4.5
	September 30, 2020	8,981	-	1,137	-	1,142	-		756	-
	(Note) Comprehensive	income: Six months ended September 30, 2021: ¥718 million [(30.4%)]
		Six months ended September 30, 2020: ¥1,032 million [-%]
		Basic earnings	Diluted earnings
		per share	per share
	Six months ended		Yen		Yen
	September 30, 2021		132.61		-
	September 30, 2020		128.10		-

(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 six months ended September 30, 2020 indicate amounts after retrospective application of the said accounting standard, etc. Accordingly, year-on-year percentage changes for the six months ended September 30, 2020 are not provided.

(2) Consolidated Financial Position

	Total assets	Net assets	Equity ratio
	Million yen	Million yen	%
As of September 30, 2021	10,374	6,867	66.2
As of March 31, 2021	10,481	6,312	60.2

(Reference) Equity: As of September 30, 2021: ¥6,867 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

-

35.00

70.00

(Forecast)

(Note) Revision to the most recently

announced dividends forecast: No

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	16,800	(5.1)	2,100	10.4	2,100	10.8	1,400	8.6	234.17

(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 six months ended September 30, 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):

September 30, 2021: 6,000,000 shares

March 31, 2021: 6,000,000 shares

1. Total number of treasury shares at the end of the period: September 30, 2021: 15,543 shares
   March 31, 2021: 56,443 shares
2. Average number of shares during the period:

Six months ended September 30, 2021: 5,961,889 shares

Six months ended September 30, 2020: 5,904,655 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 4.

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	.... 4
2. Consolidated Quarterly Financial Statements ...........................................................................................	5
(1)	Consolidated Quarterly Balance Sheets ................................................................................................	5
(2)	Consolidated Quarterly Statements of Income and Comprehensive Income ........................................	7
(3)	Consolidated Quarterly Statements of Cash Flows ...............................................................................	9

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 six months ended September 30, 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 six months ended September 30, 2021, 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 six months ended September 30, 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 ¥8,450 million (down 7.9% year on year), and net sales were ¥8,850 million (down 1.5% 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 ¥1,154 million (up 1.5% year on year), ordinary profit was ¥1,160 million (up 1.5% year on year), and profit attributable to owners of parent was ¥790 million (up 4.5% 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 six months ended September 30, 2020. Segment profit decreased due to the unprofitable project. As a result, orders received were ¥5,262 million (down 22.0% year on year), net sales were ¥5,655 million (down 8.9% year on year), and segment profit was ¥533 million (down 50.6% 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 ¥3,018 million (up 32.5% year on year), net sales were ¥3,016 million (up 16.4% year on year), and segment profit was ¥1,114 million (up 59.1% 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 second quarter under review reached ¥1,879 million (up 31.4% year on year), marking a new record high.

2