million % million % , % million 3,727 3,617 Cash flow from investment activities

Transcription

1 Consolidated Financial Results for ended February 29, 2008 Name of Company: DIP Corporation Listed on: TSE Mother s Market Code No URL: Representative: Hideki Tomita, President and CEO Contact: Eiichi Otani, Executive Officer, Manager of Business Management Division and Head of Management Planning Office Phone Number: Projected date for general meeting of shareholders: May 24, 2008 Projected date for beginning of payment of dividends: May 26, 2008 Projected date of filing financial statements: May 26, 2008 (All figures are rounded down to the nearest million yen) 1. Consolidated Operating Results for (from March 1, 2007 to February 29, 2008) (1) Consolidated Operating Results (Percentage of change from the previous year) Sales Operating Income Ordinary Income (Current) Net income million % million % million % million % 9, , (Current) Net Income per Share Yen 1, , Fully Diluted (Current) Net Income per Share Yen 1, , ROE ROA Operating income to net sales ratio % % % (2) Consolidated Financial Position Total Assets Net Assets Equity Ratio Net Assets per Share million 5,741 5,617 million 3,727 3,617 Reference: Equity: : 3,727 million : 3,602 million Yen 28, , (3) Consolidated Cash Flow Cash flow from operating activities million 1, Cash flow from investment activities million 604 1,063 Cash flow from financial activities million 1, Balance of cash and cash equivalents at the end of period million 1,547 1, Dividends (Record date for dividends) End of First Quarter Yen Dividends per Share End of End of End of First Third Fiscal Half Quarter Year Yen Yen Yen Annual Yen Total Dividends (annual) million Dividend Payment Ratio (consolidated) % Ratio of Dividends to Net Assets (consolidated) % FY 2009 (Expected results) Consolidated Operating Results Forecast for FY 2009 (from March 1, 2008 to February 28, 2009) (Percentage of change from the previous year for the full year or from the corresponding period last year for the first half) Sales Operating Income Ordinary Income Net Income Net Income per First Half Full Year million % 5, , million % 200-1, million % 200-1, million % Share Yen ,

2 4. Other (1) Changes in significant subsidiaries during the period (changes in designated subsidiaries resulting in adjustments to the scope of consolidation): Yes Excluded: 2 companies (E-engine Co., Ltd., and Book Design Co., Inc.) Note: For details, see Overview of the DIP Group on p. 7 (2) Changes in accounting standards and procedures and method of representation etc. in preparation of the consolidated financial statements (described in Changes in Important Items Forming the Basis for Preparation of Consolidated Financial Statements) 1 Changes resulting from amendments to accounting standards: Yes 2 Changes excluding 1: Yes Note: For details, see Important items forming the basis for preparation of consolidated financial statements on p. 17 and Changes in important items forming the basis for preparation of consolidated financial statements on p. 20 (3) Number of shares outstanding (common stocks) 1 Number of shares outstanding at the end of period (including treasury stocks): : 133,020 shares : 133,020 shares 2 Number of treasury stocks at the end of period: : 2 shares : 2 shares Note: For number of shares forming the basis for calculating current net income per share (on a consolidated basis), see Per share information on p. 27 Reference: Summary of Non-consolidated Operating Results Non-consolidated Operating Results for (from March 1, 2007 to February 29, 2008) (1) Non-consolidated Operating Results (Percentage of change from the previous year) Sales Operating Income Ordinary Income (Current) Net Income million % million % million % million % 9, , (Current) Net Income per Share Yen 3, , Fully Diluted (Current) Net Income per Share Yen 3, , (2) Non-consolidated Financial Position Total Assets Net Assets Equity Ratio Net Assets per Share million million % Yen 5,851 5,359 3,837 3, Reference: shareholders equity: : 3,837 million : 3,502 million 28, , Non-consolidated Operating Results Forecast for FY 2009 (from March 1, 2008 to February 28, 2009) (Percentage of changes from the previous year for the full year or from the corresponding period last year for the first half) Sales Operating Income Ordinary Income Current Net Income Current Net Income per Share million % million % million % million % Yen 5, , , , , First Half Full Year * Appropriate use of operating results forecast and other special instructions The forecasts stated herein are based on information available as of the date of release. Actual results may differ from the forecasts depending on a variety of factors going forward. For assumptions regarding the above forecast, see section 1 Operating Results (1) Analysis of Operating Results on p. 3. 2

3 1. Operating Results (1) Analysis of operating results During the current consolidated fiscal year, Japan saw continued economic recovery due to an increase in capital investments driven by exports mainly by large companies. However, an economic slowdown began to emerge tied to concerns about the prospects of the sub-prime mortgage problem in the United States as well as a sharp rise in crude oil prices and a disruption in the capital markets. In the labor market in Japan, we see a downward trend in recruitment following uncertain economic conditions yet structural problems in Japanese society related to the large-scale retirement of the baby-boom generation and the decrease in young workers due to the declining birthrate helped maintain solid demand for human resources. In such an environment, the Company endeavored to gain market share by focusing on the enhancement of the sales force and its core products, factors which the Company has consistently emphasized since the listing. Until the previous consolidated fiscal year, sales were allocated on a monthly basis from the start of the contract to the month that the contract expired. For small and short-term contracts, sales were recorded in a lump sum on the date of the beginning of the contract term. Beginning in, all sales contracts are allocated on a daily basis over the contract term. The change results in a 837 million decline in sales, operating income, ordinary income, and net income before taxes compared with the former method. As a result, for the current consolidated fiscal year, the Company recorded sales of 9,374 million (up 11% from the previous fiscal year), ordinary income of 711 million (up 12.9%), and net income of 232 million (up 23.2%). Expenses in the operating support division, which had previously been included as common operating expenses (unallocated expenses) under Elimination or entire company were directly allocated to the relevant sections for each of the segments under the operating support division established in. On an unconsolidated basis, the Company recorded sales of 9,008 million (up 13.5% from the previous fiscal year), ordinary profit of 763 million (up 18.5%), and net income of 441 million (up 53.0%). The Company posted a loss from the write-down of investments in affiliates of 159 million as an extraordinary loss due to a deficiency in assets for Dip Agent Corporation, the consolidated subsidiary. The operating results by business segment are as follows: 1 Hatarako.net Hatarako.net posted sales of 2,596 million for the current consolidated fiscal year (up 11.2% from the previous fiscal year) and operating income of 886 million (down 23.6%). The difference in operating income is due to the effects of the change in sales allocation from a monthly basis to a daily basis (down 209 million) and the change in the allocation of common operating expenses (down 381 million). During we strengthened site functions by adding the Hatarako.net Kyushu and Okinawa job offer pages, which we launched the previous fiscal year, offering a free nationwide computer skill testing service for members, and conducting an overall site redesign to improve usability. As a result, we took the number one ranking in the categories of User recognition and Employment secured in a mobile site usage survey of temp jobs searches conducted by the mobile research firm Net Asia. For promotion activities during, we continued to broadcast TV commercials and post traffic advertisements. The Hatarako.net Catch the Dream contest was held to support temp staff during the site redesign in the current consolidated fiscal year, and also attracted a lot of media attention. These activities resulted in a steady increase in the number of contracted companies to 1,210 (up 87.3% including contracted companies of Shokai Hatarako.Net) at the end of February Baitoru.com The division performed well with sales of 5,319 million for the current consolidated fiscal year (up 18.6% from the previous fiscal year) and operating income of 1,952 million (up 23.7%). These impressive results were posted despite the effects of the change in sales allocation from a monthly basis to a daily basis (down 566 million) and the change in the allocation of common operating expenses (down 637 million). We enhanced website functions by launching the Kyushu and Okinawa job offer pages for Baitoru.com during the previous fiscal year and redesigned the overall site to improve usability by adding the first GPS (global positioning system) based job information search function in the industry to the mobile site during the current fiscal year. As a result of these and other improvements made to the site, Baitoru.com was the recipient of several accolades this year. The site took the top slot in the November 2007 ranking of part time job sites conducted by the Internet research firm Gomez - the second time the division has won the same award since In a mobile site usage survey of part time jobs searches conducted by Net Asia, Baitoru.com was ranked first in the categories of User recognition, Site application rate, and Employment secured. For promotion activities during, we continued to broadcast TV commercials and post traffic advertisements in order to improve brand recognition. These activities resulted in a substantial increase in the number of contracted companies to 3,484 (up 40.2% from the previous fiscal year) at the end of February 2008 and the volume of published information to 44,592 (up 108.1%), the largest in the industry. 3

4 3 Job Engine The division posted sales of 1,348 million for the current consolidated fiscal year (down 4.4% from the previous fiscal year) and an operating loss of 209 million (operating loss of 296 million for the previous fiscal year). In part this can be attributed to the effects of the change in sales allocation from a monthly basis to a daily basis (down 60 million) and the change in the allocation of common operating expenses (down 94 million). Due to the introduction of a new one year RHP package during the current fiscal year a portion of sales made during the current fiscal year will be carried forward to the next fiscal year. This year Job Engine become the first site in the industry to introduce behavior-targeted advertisements to improve usability. For promotion activities during, a free work personality diagnosis test, Che-chara, which analyzes applicant values with regard to companies and jobs, was offered on the Job Engine site to improve recognition and acquire users while promotional activities, such as traffic advertisements, were also conducted. These activities resulted in a steady increase in the number of contracted companies to 919 (up 46.6% from the previous fiscal year) at the end of February Other The division recorded sales of 110 million in the current fiscal year, mainly from the consolidated subsidiaries Book Design Co., Inc., and DIP Agent Corporation. The Company merged with Book Design Co., Inc., on January 1, 2008, with the Company as the surviving corporation. Forecast for FY 2009 In accordance with our goal of becoming a leading company in the online recruiting market, we will continue to strengthen our core products, sales force, and organization. For core products, we will further enhance the functions of each site and target improvements in recognition and acquisition of applicants through aggressive TV commercial campaigns and promotional activities, such as advertisements on the helmets of the Seibu Lions baseball team, around the ring at K-1 competitions and on large outdoor signs in major cities. We bolstered our sales force with the addition of 157 new graduates in April 2008 and plan to increase customers and market share by expanding our presence in key regions and deploying our manpower effectively. On the organizational front, we will introduce a new personnel system to improve training for the recent graduates among our sales force. We will also continuously endeavor to enhance compliance by constructing internal controls in accordance with the J-SOX law and aim to gain confidence and appreciation from society. Based on the prospect that near term economic outlook remains uncertain, we expect growing concerns about company prospects to be accompanied by a decline in the heretofore high demand for new employees by Japanese companies. Given this environment, we expect sales of 11.7 billion, operating income and ordinary income of 1 billion, and net income of 550 million on a consolidated basis for the full year. (2) Financial position For the current consolidated fiscal year, cash and cash equivalents (hereinafter called funds ) amounted to 1,547 million, down 256 million from the end of the previous fiscal year. For the current consolidated fiscal year, cash flow breakdown is as follows: 1 Cash flow from operating activities For the current consolidated fiscal year, operating activities resulted in a gain of 1,467 million in funds (as compared to the consumption of 155 million during the previous fiscal year). This was mainly attributed to 636 million in net income before income taxes and an increase of 765 million in deferred revenues. 2 Cash flow from investing activities For the current consolidated fiscal year, investing activities consumed 604 million in funds (down 43.2% from the previous fiscal year), which was primarily due to the acquisition of intangible fixed assets of 480 million and payment of leasehold deposits of 88 million. 3 Cash flow from financing activities For the current consolidated fiscal year, financing activities resulted in the consumption of 1,119 million in funds (as compared to a gain of 893 million during the previous fiscal year), which was mainly attributable to a net decrease in short-term borrowings of 1,000 million and dividends paid of 103 million. 4

5 The trend in the indexes related to cash flow is shown in the table below. Previous consolidated fiscal year Current consolidated fiscal year Shareholders equity ratio (%) Shareholders equity ratio (%), on a fair value basis Ratio of Cash Flow to Interest-bearing Debt) (%) - - Interest coverage ratio Shareholders equity ratio: Shareholders equity/total assets Shareholders equity ratio (%), on a fair value basis: Market capitalization/total assets Ratio of Cash Flow to Interest-bearing Debt: Interest-bearing debts/cash flow from operating activities Interest coverage ratio: Cash flow from operating activities/interest payments Notes:1 Data for the cash flow from operating activities is based on the consolidated statement of cash flow. Interest-bearing debts refer to any debts posted on the consolidated balance sheet that bear interest. Interest payments are based on data recognized on the consolidated statements of cash flow. Note:2 Ratio of Cash Flow to Interest-bearing Debt and Interest coverage ratio are not stated since cash flow from operating activities was negative in the previous consolidated fiscal year. Note:3 Ratio of Cash Flow to Interest-bearing Debt are not stated since there is no balance for interest-bearing debt in the current consolidated fiscal year (3) Basic policy on profit sharing and dividends for the current and next fiscal years In addition to the profit distribution to shareholders, the Company considers maintaining a competitive edge to be one of the most important management tasks. In FY2007 the Company offered dividends of 800 per share for the second consecutive year, appropriately reflecting management results while the Company endeavored to increase the internal reserves for business expansion. Based on the above policy, we plan to pay ordinary dividends of 800 per share at the end of the current consolidated fiscal year. For the next consolidated fiscal year, we expect to pay dividends of 800 per share given operating results and financial position for the full year and other conditions. (4) Risk factors relating to the businesses 1 System Due to the nature of the business of operating information websites on the Internet, the Company is likely to be substantially affected by developments in communication networks that connect systems on websites. If our computer systems fail due to large-scale and wide-area natural disasters, such as earthquakes or floods, or due to local fires, computer viruses, loss of electrical power, communication failures, and other causes that are unpredictable at this point, we may be forced to suspend business. In addition, there are other types of risks, such as disabling of the services by us or our ISP due to temporary overload, unauthorized access to the servers by third parties, or network failure due to an operational error by an employee. If any of these occur, a suspension in transactions due to the lost credibility of the Company and actions or claims for damages may arise. In the event of such a failure, the Company s operating results and financial position may be substantially affected. 2 Protection of personal information and information security Since our clients seek staff and our users search for jobs using our websites, we employ the SSL (Secure Sockets Layer) protocol as the security mode for the utilization of our systems and to provide security when transmitting data. SSL encodes the data between the company and the job seeker, ensuring that all information is protected from interception, alteration, and spoofing attacks. If a serious problem occurs, such as the unauthorized disclosure of personal information, DIP may have to assume legal responsibility, regardless of the terms and conditions of any membership contract. Even if DIP is able to avoid legal responsibility, DIP will lose credibility with job seekers and companies seeking employees. In addition, DIP s business and operating results may be affected negatively by the damage to the brand image. To prevent the occurrence of such a situation, DIP acquired the TRUSTe Mark and the Privacy Mark to enact strict personal data control. Furthermore, DIP acquired ISMS Conformity Assessment System certification on October 14, Thereafter, ISMS certification standards were transferred to ISO 27001, an international standard issued on October 15, 2005 (JISQ 27001, a domestic standard issued on May 20, 2006). DIP applied for evaluation for transfer to ISO (JISQ 27001) and certification was granted on November 27, Intellectual property rights In the business of providing information services on the Internet, DIP may face severe competition if a competitor acquires the relevant utility model rights or a patent, and if the utility model rights or patent overlaps with an area of our business, DIP may be sued, which could have a negative impact on our business. We do not recognize the potential for an actual case at this time, but we cannot completely rule out the possibility that someone in Japan or abroad might have acquired utility model rights or a patent related to the whole or a part of the business, and we might be obligated to compensate for violation of such rights. 5

6 4 New business Many companies are involved in the job information service field for temp staff, part-time workers, and permanent employees using the Internet. The job information service market is expanding, and competition is becoming more severe. Therefore, DIP will proactively review the possibility of aggressively entering new business fields in order to obtain new ideas, services, and technologies. However, if DIP fails to differentiate itself from competitors as expected or if our superiority is weakened due to the entry of new companies, business cannot be expanded as scheduled and DIP s business and operating results may be substantially affected. In addition, DIP s new business fields are closely related to the Internet, and we must adapt to constantly advancing trends in IT technologies to satisfy the needs of our clients. However, if difficulties arise in recruiting system experts, including IT engineers, or if system development falls behind schedule, the timely launch of a new business will be impaired and DIP s business and operating results may be substantially affected. 5 Legal restrictions DIP is subject to a variety of different legal restrictions, such as the Law for Securing the Proper Operation of Worker Dispatching Undertakings and Improved Working Conditions for Dispatched Workers, the Employment Security Law, Labor Standards Law, and Law on Securing, Etc. of Equal Employment Opportunity and Treatment between Men and Women in Employment. DIP operates in compliance with these laws; however, the revision and enhancement of these or other laws may lead to the possibility of limiting business and an increase in expenses to comply with the new legal restrictions. This may result in negative effects on DIP s business and operating results. 6

7 2. Overview of the DIP Group The DIP Group consists of the DIP Corporation and the wholly owned subsidiary DIP Agent Corporation. Our main business is to provide job information via the Internet. E-engine Co., Ltd., which develops, operates, and administers our job information websites, and Book Design Co., Inc., which produces recruiting websites and plans and develops media, merged with DIP on January 1, The purpose of the merger was to enhance the JobEngine business, accelerate decision making, make more efficient use of human resources, and improve business efficiency by combining management resources. (1) Hatarako.net: Operation of the portal sites Hatarako.net, which provides information about temporary positions, and Shokai hatarako.net, which specializes in job postings for temporary to permanent employment offered by employment agencies. (2) Baitoru.com: Operation of the portal site Baitoru.com, which focuses on offering part-time employment information from both employment agencies and individual companies. (3) JobEngine: Operation of the search engine website JobEngine, which offers information on permanent job postings, and JobEngine Agent, which is a companion site to JobEngine and provides job information about permanent job postings by recruitment service agencies. (4) Other business (Main Business) Career-change agent service: Outplacement service for registered career-change seekers provides interviews with our career advisers and employment counseling as well as providing companies with information about the best potential job seekers. Service fees are collected for successful employment. <Business flow diagram> *1 DIP Agent Corporation is a consolidated subsidiary of DIP Corporation 7

8 Affiliated company Consolidated subsidiary Corporate name Location Common stock (yen in DIP Agent Corporation Notes: 1. Roppongi Minato-ku,Tokyo Main business Percentage of voting rights (%) Details of relationship 80,000 Other business Human resources Concurrent serving executives Equipment lease Notes: 1. The company has not filed financial statements or registration statements with the authority. 2. The space for main businesses includes the name of segments by type of business. 3. DIP merged the consolidated subsidiaries E-engine Co., Ltd., and Book Design Co., Inc., on January 1,

9 3. Management Policy (1) Basic management principles DIP s basic management policy is to contribute to the creation of a more convenient and affluent society by striving to promote marketing efficiency. Recently, the Japanese style of life time employment and seniority systems have collapsed, and indirect employment by using temporary employment agencies and outsourcing has become more widely accepted in Japan. Furthermore, workers values have diversified, and the needs of both job seekers and companies seeking workers are intensifying and becoming more complex. Under these circumstances, DIP aims to effectively match the needs of the individual with those of our corporate clients at higher levels. DIP focuses on building and providing an advanced and more convenient infrastructure for both job seekers and companies seeking workers, as well as promoting the distribution of as much job information as possible on a real time basis using the Internet and mobile phones. By doing so, DIP is making an all-out effort to realize our motto of One to One Satisfaction. (2) Target management benchmark The DIP Group views sales growth rate and ordinary income to net sales ratio, relative to market expansion, as important target management benchmarks. In order to expand DIP s market share in a highly competitive environment, growth of net sales is necessary and requires the recruitment and training of a large number of sales personnel. In addition, advertising activities and the continuous improvement of products are essential to attract more job seekers and recruiting companies and increase the awareness of the benefits of using the products and services of the DIP Group. Taking into account the comprehensive balance of advertising expenses and personnel costs necessary for sales growth, DIP s policy is to improve ordinary income to net sales ratio in medium- to long-term, rather than in the short term. (3) Medium- and long-term corporate management strategy In our quest to be a leader in the expanding online job advertisement market DIP has developed three leading sites; Hatarako.net for temporary positions, Baitoru.net for part time work, and JobEngine for recruiting homepage searches. We continue to improve the sales force, organizational strength, and product planning capabilities for each site. Our goal is for all three websites to be ranked number one by our customers. We have also achieved high sales growth by investing in large scale recruitment of new graduates and advertising. Given the improvement in awareness of our product brands and in the skills of our new graduates, DIP also intends to realize high earnings growth. We plan to be number one in employee satisfaction by turning new graduates into professionals at an early stage and by introducing a new personnel system that offers employees career options. We also plan to earn high credibility and appreciation from society by continuously enhancing the construction of internal controls for compliance with the Japanese SOX law (Financial Products and Exchange Law). We will also acquire users and clients from existing businesses, improve the services of the DIP group, and actively consider entry into other businesses through M&A in order to increase our enterprise value, focusing on effective utilization of existing management resources, synergy with current businesses, and our corporate philosophy of marketing efficiency. In addition, we will strive to maintain a vibrant organization by improving the employee training system, reinforcing knowledge management, and fostering entrepreneurship in order to maintain the venture spirit and a willingness to take on challenges. (4) Issues requiring DIP action The potential for rapid growth in the online job information industry is expected to continue. To ensure competitive superiority and achieve higher growth, DIP is aggressively committed to focusing on the important management issues of (1) enhancement of core products, management structure and sales force, (2) the launch of new businesses for value creation, (3) improvement in stability and reliability of systems, (4) reinforcement of protection of private information and information security. To enhance and improve our core products, we will strive to increase the quality and volume of information and continue to develop websites for greater usability. To improve the sales force, we intend to expand internship training and on-the-job training focused on meeting our client s various needs, develop a sales force of new graduates as soon as possible, and improve productivity. For new businesses, measures will be taken to generate synergistic effects with existing businesses and create new value. We will continuously intensify the operation system by adding servers, enhancing security, and increasing the ability of employees through internal training. For private information protection and information security, DIP views all information as important business assets and strives to build and maintain information security protocols that ensure its protection. To enhance the management structure, we will expand programs for leadership training, promote the establishment of a management system, and accelerate the decision-making processes. 9

10 4 Consolidated Financial Statements 1)Consolidated Balance Sheets (As of February 28, 2007) (As of February 29, 2008) Changes from the previous year Title of account note Amounts (%) Amounts (%) Changes (yen in Assets I. Current assets 1. Cash and deposits 1,804,075 1,547, Notes and accounts 1,807,735 1,926,418 receivables (trade) 3. Deferred tax assets 111, , Other 110, ,115 Allowance for 18,406 74,017 doubtful accounts Total current assets 3,815, ,745, ,235 II Fixed assets 1. Tangible fixed assets (1) Buildings and 231, ,017 structures Accumulated depreciation 50, ,931 75, (2) Machinery and 4,775 5,493 vehicles Accumulated 4, ,144 4,349 depreciation (3) Tools, furniture 380, ,240 and fixtures Accumulated 149, , , ,976 depreciation (4) Other 408 1,373 Total tangible fixed assets 411, , , Intangible fixed assets (1) Goodwill - 308,949 (2) Consolidated 443,004 - adjustment account (3) Software 364, ,631 (4) Other 14, ,847 Total intangible 821, ,022, ,916 fixed assets 3. investment and other assets (1) Long-term loans - 13,123 (2) Deferred tax 68,432 52,762 assets (3) Deposits 482, ,283 (4) Other 28,968 34,851 Allowance for 11,395 18,039 doubtful accounts Total investment and 568, , ,373 other assets Total fixed assets 1,801, ,996, ,330 Total assets 5,617, ,741, ,095 10

11 (As of February 28, 2007) (As of February 29, 2008) Changes from the previous year Title of account note Amounts (%) Amounts (%) Changes (yen in Liabilities I. Current liabilities 1. Notes and 50,831 47,212 account payable (trade) 2. Short-term 1,000,000 - borrowings 3. Current portion 2,052 - of long-term borrowings 4. Income tax 201, ,471 payable 5. Deferred - 910,901 revenues 6. Reserve for 126, ,878 bonus 7. Other 605, ,170 Total current 1,985, ,012, ,237 liabilities II Long-term liabilities 1. Long-term 13,766 - borrowing 2. Deposits 1,200 1,100 received Total long-term 14, , ,866 liabilities Total liabilities 2,000, ,013, ,371 Net assets I. Shareholders equity 1. Common stock 1,080, ,080, Capital surplus 1,782, ,782, Retained 739, , ,588 earnings 4. Treasury stocks Total shareholders equity 3,602, ,727, ,588 II. Minority 14, ,864 interests Total net assets 3,617, ,727, ,723 Total liabilities and net assets 5,617, ,741, ,095 11

12 2)Consolidated Statement of Income (from March 1, 2006 to February 28, 2007) Title of account note Amounts (from March 1, 2007 to February 28, 2008) (%) Amounts 12 Changes from the previous year (%) Changes (yen in I. Sales 8,434, ,374, ,425 II. Cost of sales 653, , ,245 Gross margin 7,781, ,826, ,044,670 III. Selling, general and administrative expenses 1. Directors 108, ,943 remuneration 2. Salaries and 2,266,508 2,592,197 allowances 3. Provision for 126, ,410 accrued bonus 4. Advertising 1,551,690 1,798,905 expenses 5. Provision for 13,790 64,150 doubtful receivables 6. Depreciation 118, , Land and offices 565, ,793 rental expenses 8. Amortization of - 129,116 goodwill 9. Amortization of 129,363 - consolidated adjustment account 10. Other 2,269,537 7,150, ,491,049 8,114, ,995 Operating income 631, , ,675 IV Non-operating income 1. Interest income 213 2, Dividend income of insurance - 4, Refund of - 15,821 cancellation of insurance, etc. 4. Other 8,571 8, ,347 26, ,823 V. Non-operating expense 1. Interest expenses 8,483 22, Other 1,655 10, ,421 27, ,020 Ordinary income 629, , ,477 VI. Extraordinary gains 1. Gains on the sale of fixed assets VII. Extraordinary losses 1. Losses on the 138,640 67,303 disposal of fixed assets 2. Losses on the sales of fixed assets Expenses for - 4,800 restoration to former state 4. Losses on - 138, ,000 75, ,322 cancellation of contracts Net income before income taxes 491, , ,316 Income taxes - 381, ,746 current Income tax 85, , , , ,053 deferred Minority interests 6, ,

13 Net income 188, , ,701 3)Consolidated Statement of Changes in Net Assets (from March 1, 2006 to February 28, 2007) Shareholders equity Common stock Capital surplus Retained earnings Treasury stock Total shareholders equity Equity warrants Minority interests Balance as of February 1,077,190 1,778, , ,512, ,512,579 28, 2006 (yen in Changes in Issuance of new shares 3,710 3,744 7,454 7,454 Dividends for retained 106, , ,102 earnings Note: Net income 188, , Changes in 34 14,864 14,830 except for shareholders equity (net) Total changes in 3,710 3,744 82,198 89, , ,483 Balance as of February 28, ,080,900 1,782, , ,602,198-14,864 3,617,063 Note: This is an appropriation of surplus item that was proposed at the general meeting of shareholders in May 2006 (from March 1, 2007 to February 29, 2008) Shareholders equity Balance as of February 28, 2007 (yen in Changes in Common stock Capital surplus Retained earnings Treasury stock Total shareholders equity Equity warrants Minority interests 1,080,900 1,782, , ,602,198 14,864 3,617,063 Dividends for retained 106, , ,414 earnings Net income 232, , ,002 Changes in except for shareholders equity (net) Total changes in Balance as of February 29, 2008 (yen in 14,864 14, , ,588 14, ,723 1,080,900 1,782, , ,727,787-3,727,787 Total assets net 13

14 4)Consolidated Statement of Cash Flow (from March 1, 2006 to February 28, 2007) Title of account note Amount (from March 1, 2007 to February 29, 2008) Amount Changes from the previous year Changes 1. Cash flow from operating activities Net income before income taxes 491, ,436 Depreciation 178, ,761 Amortization of goodwill - 129,116 Amortization of consolidated 129,363 - adjustment account Increase in the allowance of 7,676 62,255 doubtful accounts Increase in the reserve for bonus 26,493 14,723 Interest and dividend income 213 2,187 Interest expenses 8,483 22,738 Refund of cancellation of insurance, - 15,821 etc. Losses on the disposal of fixed 138,640 67,303 assets Gains or losses on the sale of fixed assets Expenses for restoration to former - 4,800 state Losses on cancellation of contracts - 3,000 Increase in notes and accounts 749, ,576 receivable (trade) Decrease in notes and accounts 6,145 3,619 payable (trade) Increase ( ) or decrease in notes 49,692 44,583 and accounts receivable (other) Increase in notes and accounts 30,312 43,176 receivable (other) Other items 10, ,925 Subtotal 314,537 1,739,147 1,424,609 Interest and dividends received 213 2,187 Interest paid 9,352 21,436 Received refund of cancellation of - 15,821 insurance, etc. Expenses paid for restoration to - 4,800 former state Cancellation loss paid - 3,000 Income taxes paid 460, ,473 Cash flow from operating activities 155,548 1,467,445 1,622,993 14

15 Title of account note Amount Changes from the (March 1, 2006 to (March 1, 2007 to previous year February 28, 2007) February 29, 2008) Amount II Cash flow from investment activities Expenditure for acquisition of shares in affiliated companies - 16,260 Proceeds from collection of long-term loans Expenditures for acquisition of 2 338,423 - shares in newly consolidated subsidiaries Expenditures for acquisition of 291,385 53,228 tangible fixed assets Proceeds from sale of tangible fixed assets Expenditures for acquisition of 342, ,296 intangible fixed assets Expenditures for deposits and 114,874 88,385 guarantee money Proceeds from the refund of deposits 28,532 34,703 Changes and guarantee money Other 4,705 2,028 Cash flow from investment activities 1,063, , ,929 III. Cash flow from financing activities Net increase or decrease ( ) in short-term borrowing 1,000,000 1,000,000 Decrease in long-term borrowing 8,208 15,818 Proceeds from the issuance of new 7,420 - shares Cash dividends paid 106, ,622 Cash flow from financing activities 893,128 1,119,440 2,012,569 IV. Decrease in cash and cash 325, ,408 69,354 equivalents V. Balance of cash and cash equivalents at the beginning of the period VI. Balance of cash and cash equivalents at the end of the period 2,129,837 1,804, , ,804,075 1,547, ,408 15

16 Important Items Forming the Basis for Preparation of Consolidated Financial Statements Title of account (from March 1, 2006 to February 28, 2007) 2008) 1. Scope of the consolidation Number of consolidated subsidiaries: Three companies E-engine Co., Ltd. Book Design Co., Inc. DIP AGENT Corporation. (from March 1, 2007 to February 29, Number of consolidated subsidiaries: One company DIP AGENT Corporation. 2. Settlement date of accounts for consolidated subsidiaries Book Design Co., Inc., and DIP Agent Corporation were consolidated during this period because the former was converted into the Company's subsidiary through an acquisition of shares and the latter due to establishment. E-engine Co., Ltd., and DIP Agent Corporation settle their accounts on January 31, which is different from the date of the consolidated settlement of accounts. In the preparation of consolidated financial statements for the fiscal year, DIP uses the financial statements for the fiscal year of E-engine Co., Ltd., and DIP Agent Corporation. Significant transactions occurred until the period from February 1 to February 28, the date of consolidated settlement of accounts, was adjusted for consolidation. Book Design Co., Inc. settles its accounts on May 31, which is different from the date of the consolidated settlement of accounts. In the preparation of consolidated financial statements for the fiscal year, Book Design Co., Inc., provisionally settles its accounts on February Accounting Standard (a)standard and method of valuation for important assets Inventories: Supplies valued on last cost method (b ) Method of depreciation for important depreciable assets (1) Tangible fixed assets : Declining balance method In addition, the major years of useful life are as follows; Buildings and structures: 3~18 years Machineries and vehicles: 2 years Tools, furniture, and fixtures: 2~20 years 16 E-engine Co., Ltd., and Book Design Co., Inc., were excluded from the scope of consolidation due to the merger with DIP effect on January 1, Profits and losses are consolidated until December 31, 2007, a day before the date of the merger. DIP Agent Corporation settles its accounts on January 31, which is different from the date of the consolidated settlement of accounts. In the preparation of consolidated financial statements for the fiscal year, DIP uses the financial statements of DIP AGENT Corporation as of January 31. Significant transactions occurred until the period from February 1 to February 28, the date of consolidated settlement of accounts, was adjusted for consolidation. E-engine Co., Ltd., had settled its accounts on January 31. In the preparation of consolidated financial statements for the fiscal year, DIP uses the financial statements of E-engine Co., Ltd., as of December 31 due to merger. Book Design Co., Inc., had settled its accounts on May 31. In the preparation of consolidated financial statements for the fiscal year, DIP uses the financial statements, which provisionally settled its accounts on December 31, 2007 due to the merger. (a)standard and method of valuation for important assets Inventories: Work in progress valued on identified cost method Supplies valued on last cost method (b ) Method of depreciation for important depreciable assets (1) Tangible fixed assets : Declining balance method In addition, the major years of useful life are as follows; Buildings and structures: 3~18 years Machineries and vehicles: 2~4 years Tools, furniture, and fixtures: 2~20 years

17 Change in accounting policy In relation to the amendment to the Corporate Tax Law (Law concerning partial amendment to the Income Tax Law (Law No. 6, March 30, 2007) and Cabinet order concerning partial amendment to the enforcement ordinance of the Corporate Tax Law (Cabinet order No. 83, March 30, 2007)), DIP and domestic consolidated subsidiaries have adopted the method of depreciation under the revised law for tangible fixed assets acquired on and after April 1, The change has few effects on operating income, ordinary income, and net income before income taxes for the consolidated fiscal year. (2) Intangible fixed assets Same as on the left 4. Valuation for consolidated subsidiaries assets and liabilities (2) Intangible fixed assets : Straight-line method In addition, software used in in-house operation is amortized based on the straight-line method (5 years), which is the useful life in years to DIP. (3) Long-term prepaid expenses : Straight-line method (c ) Standards for important allowances (1) Allowance for doubtful accounts To provide for potential losses due to trade receivable and loan receivable, DIP recognizes a provision for potential doubtful accounts based on the specific credit loss ratio for general receivables. As for the specific potential uncollectible receivables, DIP posts estimated losses for unrecoverable receivables by assessing the possibility of collection of individual receivables. (2) Reserve for bonuses Reserve for bonuses is posted based on the estimated amount of bonuses to be allocated in the fiscal year to prepare for payment of bonuses to employees. (d)accounting for important lease assets Finance lease, which excludes leased assets for which the ownership is recognized as being transferred to the lessees, are treated as ordinary rental transactions. (e)other important items forming the basis for preparation of the consolidated financial statement Accounting for consumption tax: Net-on-tax method Assets and liabilities of consolidated subsidiaries are valued using the all-fair-value method. (3) Long-term prepaid expenses Same as on the left (c ) Standards for important allowances (1) Allowance for doubtful accounts Same as on the left (2) Reserve for bonuses Same as on the left (d)accounting for important lease transactions Same as on the left (e)other important items forming the basis for preparation of the consolidated financial statement Accounting for consumption tax: Same as on the left Same as on the left 17

18 5. Amortization of goodwill Goodwill is amortized uniformly over five years from the date of occurrence. 6. Amortization of consolidation adjustment account 7. Scope of cash and cash equivalents in the consolidated statement of cash flow Consolidation adjustment account is amortized uniformly over five years from the date of occurrence. Cash and cash equivalents are composed of cash on hand, deposits withdrawable on demand, and short-term investments that are easy to change to cash and have minimum risk for volatility of principal and maturity within three (3) months after their acquisition. Same as on the left 18

19 Changes in Important Items Forming the Basis for Preparation of Consolidated Financial Statements (March 1, 2006 to February 28, 2007) (March 1, 2007 to February 29, 2008) Accounting standard for impairment of fixed assets Effective for, the Company adopted the Accounting Standard for Impairment of Fixed Assets (Opinion Concerning Establishment of Accounting Standard for Impairment of Fixed Assets) (Business Accounting Council, August 9, 2002) and the Implementation Guide for Accounting Standard for Impairment of Fixed Assets (Accounting Standards Board of Japan (ASB), ASB Guideline No. 6, October 31, 2003) This has no effect on profit and loss. Accounting standard for share-based payment Effective for, the Company adopted the Accounting Standard for Share-based Payment (ASB, Accounting Standard No. 8, December 27, 2005) and the Implementation Guide for Accounting Standard for Share-based Payment (ASB, ASB Guideline No. 11, May 31, 2006) This has no effect on profit and loss. Accounting Standard for Presentation of Net Assets on the Balance Sheet Effective for, the Company adopted the Accounting Standard for Presentation of Net Assets on the Balance Sheet (Accounting Standards No. 5, December 9, 2005) and the Implementation Guide for Accounting Standards for Presentation of Net Assets on the Balance Sheet (ASB Guideline No. 8, December 9, 2005) If the former classification of Shareholder's Equity had been applied, the shareholders' equity would have totaled 3,602,198,000. Due to the revision of consolidated financial accounting statement rules, shareholder's equity on the balance sheet is based on the revised rules for FY Accounting method for sales allocation Sales had been allocated on a monthly basis over the period from the effective month to the month that contracts expired. For small and short-term contracts, sales had been recorded in a lump sum on the date of the start of the contract term. For all contracts, sales are allocated on a daily basis over their contract term effective for. The adoption was based on the judgment that it is desirable for all contracts to allocate sales to each contract term on a daily basis and achieve appropriate attribution of sales for the period by establishing a system during the rapid growth in the job offer service contracts effective in later months and for small and short-term contracts. The adoption resulted in a decline in sales, operating income, ordinary income and net income before income taxes of 837,105,000 for from the figure based on the previous method. Accounting standard for business combination Effective for, the Company adopted Accounting Standard for Business Combinations (Business Accounting Council, October 31, 2003) and Accounting Standard for Business Separations (Accounting Standards Board of Japan (ASB), Accounting Standard No. 7, December 27, 2005) and the Implementation Guide for Accounting Standard for Business Combinations and Accounting Standard for Business Separations (ASB, ASB Guideline No. 10, November 15, 2007). 19

20 Changes in the Method of Presentation (March 1, 2006 to February 28, 2007) (March 1, 2007 to February 29, 2008) Consolidated Balance Sheet Effective for, Consolidated Adjustment Account, which had been represented for, is presented under Goodwill Effective for, Deferred Revenues, which had been included and represented under Other in Current Liabilities, is classified and recorded because the amount is above five-hundredths of the total assets. At the end of the previous consolidated fiscal year, Deferred Revenues under Other in Current Liabilities amounted to 145,403,000. Consolidated Statement of Income Effective for, dividend income of insurance, which had been included and presented under Other in Non-operating income for, is classified and recorded because the amount is above ten-hundredths of the non-operating income. Insurance dividends under Other in Non operating income amounted to 2,277,000 for FY2007. Effective for, Amortization of Consolidated Adjustment Account, which had been represented for, is presented under Amortization of Goodwill. Consolidated Statement of Cash Flow Effective for, Amortization of Consolidated Adjustment Account, which had been represented for, is presented under Amortization of Goodwill. Notes Consolidated Balance Sheet With respect to notes on the consolidated balance sheet, respective disclosure has been omitted due to little necessity to disclose them at the brief report on settlement of accounts. Consolidated Statement of Income With respect to notes on the consolidated statement of Income, the respective disclosure statements have been omitted because there was no need to disclose them on the brief report for settlement of accounts. 20