Funai Soken Incorporated : Financial Results for the 2nd Quarter of the Fiscal Year Ending December 2020

Consolidated Financial Results for the First Half of the Fiscal Year Ending December 31, 2020

(January 1, 2020 - June 30, 2020)

		August 20, 2020
Company name:	Funai Soken Holdings, Inc.	Stock Exchange listing: Tokyo Stock Exchange
Stock code:	9757	URL: https://hd.funaisoken.co.jp
President & Group CEO:	Sakae Takashima
	Takahisa Okumura, director and senior vice president,
Contact:	Head of Management Administration Divisional Headquarters
	Telephone: [phone]

Scheduled date of payment of dividend:	September 14, 2020
Scheduled date of filing quarterly report:	August 21, 2020
Supplementary materials compiled to explain 1st-quarter financial statements?		/	No
Yes
Briefing to be held to explain 1st-quarter financial results?			/	No (For institutional investors and analysts)
	Yes

(Figures are rounded to the nearest million yen; fractions of one million discarded rather than rounded up or down)

1. 2020 1st Half Consolidated Financial Results (January 1, 2020 - June 30, 2020)

(1) Consolidated Results of Operations			(Percentages represent change from the same quarter last year)
		Net sales	Operating income	Ordinary income	Net income attributable to
		owners of the parent
Six months ending	Million yen	%	Million yen		%	Million yen	%	Million yen		%
12,234	1.2	2,584		10.1)	2,640	9.4)	1,745		9.0)
Jun. 30, 2020
			(			(14.8			(12.3
Jun. 30, 2019	12,087	21.1	2,874	14.9	2,914	1,918
Notes:	Comprehensive income: 1,672 million yen (down 15.4%) in the six months ending Jun. 30, 2020
		1,977 million yen (up 9.9%) in the six months ending Jun. 30, 2019
		Earnings per share	Earnings per share
		(basic)	(diluted)
Six months ending		Yen			Yen
	35.06		34.68
Jun. 30, 2020
Jun. 30, 2019		38.02		37.66
(2) Consolidated Financial Position
		Total assets	Net assets		Equity ratio
			Million yen		Million yen		%
As of Jun. 30, 2020		27,466		23,765		84.1
As of Dec. 31, 2019		28,419		23,165		79.4
Reference:	Shareholders' equity:	23,102 million	yen as of Jun. 30, 2020
		22,573 million yen as of Dec. 31, 2019

2. Dividends

				Dividend per share
		1Q-end	2Q-end	3Q-end	Year end		Total
		Yen	Yen	Yen	Yen		Yen
Year ending Dec. 31, 2019	－	17.00	－	23.00		40.00
Year ending Dec. 31, 2020	－	20.00
	FY2020 forecast			－	25.00		45.00
Notes:	Amendments to dividend numbers compared to most recently announced forecasts?	None

Notes: FY2019 dividend per share comprised an ordinary dividend of 20.00 yen and a commemorative bonus dividend of 3.00 yen. The bonus dividend was to commemorate the group's 50th anniversary.

3. Forecast Consolidated Financial Results for FY2020 (January 1, 2020 - December 31, 2020)

(Percentages represent year-on-year change)

	Net sales	Operating income	Ordinary income	Net income attributable to	Earnings per
		owners of the parent	share
	Million yen	%	Million yen	%	Million yen	%		Million yen	%	Yen
Full year	24,000	Down 6.8	4,300	Down 24.6	4,350	Down 24.4		2,900	Down 25.0	58.26
to 25,760	to 0.0	to 5,150	to 9.7	to 5,200	to 9.6		to 3,500	to 9.5	to 70.31
Notes: Amendments to performance numbers compared to most recently announced forecasts?	Yes

Please refer to our Notice Regarding Revision of Financial Result Forecast released on August 20, 2020, for information relating to consolidated forecasts for the fiscal year ending December 31, 2020.

Remarks

(1) Changes in consolidated subsidiaries in 1Q and 2Q: Changes in scope of consolidation:

No. of new companies added: Names of new companies added: No. of companies removed: Names of companies removed:

1. Application of specific accounting procedures when compiling 2Q consolidated financial statements:
2. Changes in accounting policies; changes in estimates; re-statement of amendments
3. 1. Changes in accounting policies caused by revision of accounting standards:
   2. Other changes in accounting policies:
   3. Changes in accounting estimates:
   4. Re-statementof amendments:
4. Number of issued shares (common stock)

None

None

None

None

None

None

None

None

1)	Number of shares issued at end of three-month period (including treasury stock)	Jun. 30, 2020	53,000,000	Dec. 31, 2019	53,000,000
2)	Number of treasury shares at end of three-month period
Jun. 30, 2020	3,220,157	Dec. 31, 2019	3,220,991
3) Average number of shares during three-month period (cumulative total)
Jun. 30, 2020	49,779,095	Jun. 30, 2020	50,458,177

Notes: This financial summary is excluded from quarterly review by a CPA or auditing company.

Statement Regarding the Use of Forward-Looking Statements

Forecasts in these materials regarding future performance are based on reasonable judgments made in accordance with information currently available. Actual results may differ greatly from these forecasts for a number of factors. Please refer to "Results of Operations" on page 2 of the appendix for further information concerning the conditions on which these forecasts are based and further cautions with respect to the use of forward-looking statements.

Appendix Contents

1.	Qualitative Information Regarding the Six Months Ending Jun. 30, 2020..................................................................	2
	(1)	Results of Operations ............................................................................................................................................	2
	(2)	Financial Position ..................................................................................................................................................	3
	(3)	Consolidated Forecast and Other Forward-Looking Information ..........................................................................	4
2.	Consolidated Financial Statements and Notes ............................................................................................................	5
	(1)	Consolidated Balance Sheet ..................................................................................................................................	5
	(2)	Consolidated Statements of Income and Comprehensive Income .........................................................................	7
	(3)	Consolidated Cash Flow Statement .......................................................................................................................	9
	(4)	Notes on Consolidated Financial Statements.........................................................................................................	10
		Notes on Going Concern Assumptions................................................................................................................	10
		Notes on Significant Changes to Shareholders' Equity .......................................................................................	10
		Segment Information...........................................................................................................................................	11
3.	Other Information .......................................................................................................................................................	12
	(1)	Orders and Sales....................................................................................................................................................	12

- 1 -

1. Qualitative Information Regarding the Six Months Ending Jun. 30, 2020

(1) Results of Operations

The second quarter was severe for the Japanese economy, as a state of emergency was declared due to COVID-19, causing the economy at home to deteriorate suddenly, corporate profits to decline, and the effective job-to-application ratio to fall. With an uncertain outlook, it is necessary to pay attention to further impact of the infectious disease both in Japan and overseas.

We at the Funai Soken Consulting Group sought to make the best of the restricted circumstances with online seminars, web-based consulting, and telecommuting.

As a result, for the six months ended June 30, 2020, net sales were 12,234 million yen (up 1.2% over the same quarter in the preceding year); operating income was 2,584 million yen (down 10.1%); ordinary income was 2,640 million yen (down 9.4%); and net income attributable to owners of the parent was 1,745 million yen (down 9.0%).

I. Net sales: 12,234 million yen (up 1.2% over the same period of the preceding year)

Sales of online advertisement agency services (part of our consulting business) grew, as did sales in our direct recruiting business, even though we were not able to secure sufficient sales activities due to COVID-19.

Consequently, net sales rose 1.2% over the same period of the previous year to 12,234 million yen.

II. Operating income: 2,584 million yen (down 10.1% over the same period of the preceding year)

Cost of sales increased to 8,081 million yen from 7,750 million yen in the same period of the preceding year, and SG&A rose to 1,568 million yen from 1,462 million yen

Consequently, operating income decreased 10.1% over the same period of the previous year to 2,584 million yen.

III. Ordinary income: 2,640 million yen (down 9.4% over the same period of the preceding year)

Non-operating income was 65 million yen (48 million yen in the same period of the preceding year), mainly due to gains on sales of investment securities acquired by investing surplus funds, while non-operating expenses were 9 million yen (8 million yen in the same period of the preceding year).

Consequently, ordinary income decreased 9.4% over the same period of the previous year to 2,640 million yen.

IV. Net income attributable to owners of the parent: 1,745 million yen (down 9.0% over the same period of the preceding year)

Income taxes totaled 890 million yen (989 million yen in the same period of the preceding year), and net income attributable to owners of the parent was 1,745 million yen, down 9.0% over the same period in the preceding year.

Segment-Specific Performance

The performance of each business segment is outlined below.

I. Consulting

Sales of performance improvement consulting for our main housing and real estate industry, as well as education, childcare, and school industry, increased over the same period in the previous year. Sales of online advertisement agency services also grew, as the percentage of website use among our clients increases as the way to attract customers. However, in many other sectors, new orders were sluggish due to restrictions on sales activities and the suspension of face-to-face seminars caused by the outbreak of COVID-19. As a result, sales for the second quarter decreased year on year. Sales at Funai Consulting Shanghai Inc., based in Shanghai, China, declined due to significant restrictions on business operations from the beginning of the fiscal year, although operations resumed gradually from April.

Profits declined as fixed cost increase due to a rise in the number of employees and sales decline were not fully made up for by a significant reduction in travel expenses and seminar venue expenses due to restrictions on commuting to offices and business trips.

Consequently, net sales decreased 2.1% from the same period of the preceding year to 9,071 million yen, and operating income decreased 12.1% from the same period of the preceding year to 2,513 million yen.

- 2 -

II. Logistics

Deeper mining of existing clients and spot orders resulted in increased sales for our logistics operations compared with the same period in the preceding year. In the logistics consulting business, although new orders were sluggish, we were able to secure an increase in revenue. However, in the logistics trading business, sales decreased compared with the same period of the preceding year due to a decrease in fuel sales volume resulting from a decrease in the transfer of companies and employees, and a decrease in the fuel unit price. Profits declined due to a decrease in the overall profit margin resulting from a decline in the percentage in the overall sales of the logistics consulting business, which has a high profit margin, and also due to an increase in personnel expenses associated with an increase in the number of employees.

Consequently, net sales rose 9.4% over the same period of the preceding year to 1,279 million yen, while operating income decreased 0.5% from the same period of the preceding year to 165 million yen.

III. Direct Recruiting

Net sales increased 24.4% over the same period in the preceding year as the base contracts increased year on year even though COVID-19 caused the cancellation of seminars, which resulted in a decrease in new clients and in help-wanted ads. The direct recruiting business ran an operating loss in 1Q and 2Q due to continuous upfront investments aimed at early sales expansion. The investments are made mainly in sales promotions, and personnel costs and system development costs related to our operating framework. The loss amount was smaller than that in the same period last year.

Consequently, net sales rose 24.4% over the same period of the preceding year to 1,358 million yen, with operating loss of 66 million yen (153 million yen loss in the same period of the previous year).

IV. Other Businesses

Sales and operating income were both down as COVID-19 resulted in restrictions on operations and delayed work.

Consequently, net sales decreased 6.3% from the same period of the preceding year to 513 million yen with operating loss of 51 million yen (operating income of 6 million yen in the same period of the preceding year).

(2) Financial Position

Assets

Total assets at the end of the second quarter decreased 953 million yen from the end of FY2019 to 27,466 million yen.

Current assets decreased 896 million yen from the end of FY2019 to 15,798 million yen. This was mainly due to an increase in cash and deposits, and a decrease in trade notes and accounts receivable and short-term investment securities.

Noncurrent assets decreased 56 million yen from the end of FY2019 to 11,667 million yen. This was mainly due to a decrease in buildings and structures.

Liabilities

Total liabilities decreased 1,553 million yen from the end of FY2019 to 3,700 million yen at the end of the second quarter. Current liabilities decreased 1,521 million yen from the end of FY2019 to 3,410 million yen. This was mainly due to a decrease

in current portion of bonds and a decrease in accounts payable and deposits received, which are included in other current liabilities. Noncurrent liabilities decreased 31 million yen from the end of FY2019 to 290 million yen. This was mainly due to a decrease

in deferred tax liabilities.

Net Assets

Total net assets increased 600 million yen from the end of FY2019 to 23,765 million yen at the end of the second quarter.

Equity Ratio

Equity ratio increased 4.7 points from the end of FY2019 to 84.1% at the end of the second quarter.

(2) Cash flow

Cash and cash equivalents (hereinafter "net cash") increased 379 million yen from the end of FY2019 to 12,009 million yen at the

- 3 -

end of the second quarter.

Trends in cash flow during the first half of FY2020 are described below.

(Net cash provided by (used in) operations)

Net cash provided by operations totaled 1,562 million yen (2,168 million yen in the same period of the preceding year).

This was mainly due to net income before income taxes and other adjustments of 2,635 million yen, and income taxes paid of 1,108 million yen.

(Net cash provided by (used in) investment)

Net cash provided by investments totaled 271 million yen (net use of 435 million yen in the same period of the previous year). This was mainly due to net proceeds of 395 million yen from the purchase, sale and redemption of investment securities, and

expenditure of 123 million yen on purchases of property, plant, and equipment, and intangible assets.

(Net cash provided by (used in) financing)

Net cash used in financing totaled 1,453 million yen (net use of 1,019 million yen in the same period of the previous year). This was mainly due to 1,142 million yen distributed as dividends.

(3) Consolidated Forecast and Other Forward-Looking Information

During the current fiscal year, the Japanese economy remained in a difficult situation due to the COVID-19 infection. Its impact on the domestic and overseas economies is expected to last long, affecting to a certain degree SMEs, our main source of clients. The Funai Soken Consulting Group is changing the style of seminars for proprietors from the traditional in-person style to an online style, and promoting a shift in our consulting activities from visiting-based consulting to remote consulting using web conferencing system. In addition, our early uptake of web-based operations and telecommuting as part of our digital shift has ensured hiring and back-office operations remain intact.

In the consolidated financial summary for the first quarter of FY 2020, we expressed our decision not to announce the full-year business performance forecast for FY2020, considering the difficulty in reasonably forecasting our performance and dividends to be paid, as it was uncertain, in the midst of COVID-19 infection, when the restrictions on consulting activities would be lifted or when the impact of the viral spread on SMEs would diminish. Although the outlook for the end of the infection is still uncertain at this point, we have forecast the earnings based on information and prospects available now. For details, please refer to our Notice Regarding Revision of Financial Result Forecast and Dividend of Surplus (Interim Dividend) released on August 20, 2020.

The revised forecast of the full-year consolidated results is as follows: net sales of 24,000 million to 25,760 million yen, operating income of 4,300 million to 5,150 million yen, ordinary income of 4,350 million to 5,200 million yen, and net income attributable to owners of the parent of 2,900 million to 3,500 million yen.

- 4 -

2. Consolidated Financial Statements and Notes

(1) Consolidated Balance Sheet

					(Unit: Thousand yen)
		FY12/19			First half of FY12/20
		(As of Dec. 31, 2019)	(As of Jun. 30, 2020)
Assets
Current assets
Cash and deposits	11,630,554	12,009,933
Trade notes and accounts receivable	2,870,051	2,266,403
Short-term investment securities	1,001,132	504,781
Work in process	155,685	162,784
Raw materials and supplies			5,759			7,307
Other current assets	1,071,147	890,119
Allowance for doubtful accounts		39,543)		43,204)
Total current assets	16,694,787	15,798,126
(			(
Noncurrent assets
Property, plant, and equipment
	Buildings and structures, net	1,311,009	1,270,334
	Land	4,602,643	4,602,643
	Other property, plant, and equipment, net	196,280	178,268
	Total property, plant, and equipment	6,109,933	6,051,246
Intangible assets
	Leasehold rights	322,400	322,400
	Software	274,379	295,157
	Other intangible assets	177,210	126,211
	Total intangible assets	773,990	743,768
Investments and other assets
	Investment securities	3,907,279	3,885,945
	Assets related to retirement benefits	473,196	494,561
	Other investments and other assets	468,046	502,039
	Allowance for doubtful accounts			8,006)			9,612)
	Total investments and other assets	4,840,516	4,872,935
		(			(
Total noncurrent assets	11,724,440	11,667,950
Total assets	28,419,227	27,466,076

- 5 -

		(Unit: Thousand yen)
	FY12/19	First half of FY12/20
	(As of Dec. 31, 2019)	(As of Jun. 30, 2020)
Liabilities
Current liabilities
Trade notes and accounts payable	347,821		297,991
Current portion of bonds payable	500,000		－
Short-term loans payable	－		200,000
Income taxes payable	1,159,020		948,550
Provision for bonuses	－		152,464
Other current liabilities	2,925,055	1,811,041
Total current liabilities	4,931,897	3,410,047
Noncurrent liabilities
Long-term loans payable	100,000		100,000
Retirement benefit liabilities	60,876		63,669
Deferred tax liabilities	109,949		80,186
Other noncurrent liabilities	51,377		46,825
Total noncurrent liabilities	322,203		290,681
Total liabilities	5,254,101	3,700,729
Net assets
Shareholders' equity
Capital stock	3,125,231	3,125,231
Capital surplus	2,947,675	2,951,287
Retained earnings	19,731,165	20,331,733
Treasury stock	3,342,957)	3,345,503)
	(22,461,115	(23,062,748
Total shareholders' equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities	211,575		127,075
Foreign currency translation adjustments	16,146		15,620
Accumulated adjustments for retirement benefits	114,954)		103,214)
Total accumulated other comprehensive income	( 112,766	(	39,481
Subscription rights for shares	591,243		663,116
Total net assets	23,165,126	23,765,346
Total liabilities and net assets	28,419,227	27,466,076

- 6 -

(2) Consolidated Statements of Income and Comprehensive Income

Consolidated Statement of Income

First Half

			(Unit: Thousand yen)
		First half of FY12/19	First half of FY12/20
		(Jan. 1 - Jun. 30, 2019)	(Jan. 1 - Jun. 30, 2020)
Net sales	12,087,880	12,234,202
Cost of sales	7,750,723	8,081,952
Gross profit	4,337,156	4,152,249
SG&A expenses	1,462,648	1,568,071
Operating income	2,874,508	2,584,178
Non-operating income
Interest income	4,525	8,521
Dividend income	5,013	4,709
Gain on sales of investment securities	18,891	36,305
Gain on valuation of investment securities	1,464	2,893
Consumption taxes refund	11,429	－
Other non-operating income	7,440	13,218
Total non-operating income	48,766	65,649
Non-operating expenses
Interest expenses	2,590	1,652
Loss on valuation of investment securities	1,914	887
Foreign exchange losses	757	4,398
Investment partnership management expenses	2,047	1,824
Other non-operating expenses	1,047	435
Total non-operating expenses	8,358	9,198
Ordinary income	2,914,915	2,640,629
Extraordinary income
Gain on sales of investment securities	626	32
Total extraordinary income	626	32
Extraordinary losses
Loss on retirement of noncurrent assets	394	5,135
Loss on sales of investment securities	6,807	－
Total extraordinary losses	7,201	5,135
Net income before income taxes and other adjustments	2,908,341	2,635,525
Current income taxes	1,017,542	901,389
Deferred income taxes	27,843)	11,349)
Total income taxes	(989,699	(890,040
Net income	1,918,641	1,745,484
Net income attributable to owners of the parent	1,918,641	1,745,484

- 7 -

Consolidated Statement of Income

Second Quarter

			(Unit: Thousand yen)
	First half of FY12/19		First half of FY12/20
	(Jan. 1 - Jun. 30, 2019)	(Jan. 1 - Jun. 30, 2020)
Net income	1,918,641	1,745,484
Other comprehensive income			(
Valuation difference on available-for-sale securities		84,499)
45,008
Foreign currency translation adjustments		918)		525)
Adjustments for retirement benefits	14,921		11,740
(			(
Total other comprehensive income	59,011		73,284)
Comprehensive income	1,977,653	1,672,199
(
Details
Comprehensive income attributable to owners of the	1,977,653	1,672,199
parent

- 8 -

(3) Consolidated Cash Flow Statement

													(Unit: Thousand yen)
								First half of FY12/19		First half of FY12/20
								(Jan. 1 - Jun. 30, 2019)	(Jan. 1 - Jun. 30, 2020)
Net cash provided by (used in) operations
	Net income before income taxes and other adjustments	2,908,341		2,635,525
	Depreciation							132,626			142,357
	Amortization of goodwill						33,417			22,569
	Share-based compensation expenses					95,275			78,473
	Increase (decrease) in allowance for doubtful accounts					300				5,266
	Decrease	(increase)	in	assets	related	to	retirement				9,495)				9,623)
	benefits
									(12,504			(
	Increase (decrease) in liabilities related to retirement					2,793
	benefits
	Increase (decrease) in provision for bonuses			120,941			152,596
															(
	Loss (gain) on valuation of investment securities					449			2,006)
	Loss (gain) on sales of investment securities				12,710)			36,337)
	Interest and dividend income					(		9,539)			(13,231)
	Interest expenses								(	2,590			(	1,652
	Loss (gain) on exchange									367)					863)
	Loss on retirement of property, plant, and equipment				(	394				2,427
							(
	Loss on retirement of intangible assets							－				2,708
	Decrease	(increase)	in	trade	notes	and	accounts			31,213)			603,482
	receivable
	Decrease (increase) in other assets				453,610)			265,605)
								(	(
	Increase (decrease) in other liabilities				13,486)		1,129,053)
	Other cash provided by (used in) operations		(		4,274	( (		5,036
	Subtotal							2,780,692		2,198,169
	Interest and dividends received						20,003			20,369
	Interest paid						(		(	2,601)	(		(	1,619)
	Income taxes paid						972,367)	1,108,372)
	Income taxes refund						343,175		454,299
	Net cash provided by (used in) operations		2,168,902		1,562,846
Net cash provided by (used in) investments
	Purchase of securities						(	100,067)					－
	Proceeds from sale and redemption of securities	100,000			600,000
	Purchase of investment securities			(	163,405)		(	205,550)
	Proceeds from sale and redemption of investment		14,272				797
	securities
	Purchase of property, plant, and equipment			221,369)			36,472)
	Purchase of Intangible assets				(		73,809)			(87,278)
	Proceeds from cancellation of insurance funds		(		8,938			(		－
	Net cash provided by (used in) investments		(	435,439)			271,496
Net cash provided by (used in) financing
	Increase (decrease) in short-term loans payable					－			200,000
	Redemption of bonds										－		(	500,000)
	Repayment of lease obligations							7,376)			5,102)
	Purchase of treasury shares						(7,021)			(5,538)
	Proceeds from sale of treasury shares					(		148			(		2
	Dividends paid						1,005,609)		1,142,610)
			(1,019,860)	(1,453,247)
	Net cash provided by (used in) financing
Effect of exchange rate changes on cash and cash	(		(	1,791)	(		(	1,715)
equivalents
Net increase (decrease) in cash and cash equivalents		711,810			379,379
Cash and cash equivalents at start of fiscal year		11,022,585	11,630,554
Cash and cash equivalents at end of quarter			11,734,395	12,009,933

- 9 -

(4) Notes on Consolidated Financial Statements

Notes on Going Concern Assumptions

None to report.

Notes on Significant Changes to Shareholders' Equity

None to report.

- 10 -

Segment Information

I. First Half of FY12/19 (Jan. 1 - Jun. 30, 2019)

Information About Net Sales, Income, and Losses for Each Segment

(Unit: Thousand yen)

												Amount listed
			Consulting	Logistics	Direct	Other	Total	Adjustment(2)	in consolidated
					recruiting	businesses(1)					statement of
												income (3)
	Net sales
	Sales to external	9,267,413	1,169,556	1,091,494	547,584	12,076,049		11,831	12,087,880
	customers
	Inter-segment sales	98,870	289,287		7,079	12,761	407,999		407,999)	－
		transfers
	and							(
		Total	9,366,284	1,458,844	1,098,574	560,345	12,484,048	396,167)	12,087,880
	Segment income	2,859,256	166,664	(	153,502)	6,858	2,879,277	(	(	4,768)	2,874,508
	Notes

1. The "other businesses" category includes income from IT consulting, contact center consulting, and systems development.
2. Adjustments of segment income/losses include elimination of inter-segment transactions and whole-group revenues and expenses that are not attributable to any segment. Whole-group income is comprised of outsourcing fees, consulting fees, and rental income from group companies, and whole-group expenses are comprised of those incurred in the operations of the group's holding company not attributable to any segment.
3. Income/losses are adjusted against operating income in the consolidated statement of income.

II. First Half of FY12/20 (Jan. 1 - Jun. 30, 2020)

Information About Net Sales, Income, and Losses for Each Segment

(Unit: Thousand yen)

												Amount listed
			Consulting	Logistics	Direct	Other	Total	Adjustment(2)	in consolidated
					recruiting	businesses(1)				statement of
												income (3)
	Net sales
	Sales to external	9,071,551	1,279,621	1,358,033	513,164	12,222,370		11,831	12,234,202
	customers
	Inter-segment sales	70,968	135,590		2,280		1,552	210,391		210,391)	－
		transfers
	and								(
		Total	9,142,520	1,415,211	1,360,313	514,716	12,432,762	198,560)	12,234,202
	Segment income	2,513,083	165,823	(	66,305)	(	51,637)	2,560,963	(	23,215	2,584,178
	Notes

1. The "other businesses" category includes income from IT consulting, contact center consulting, and systems development.
2. Adjustments of segment income/losses include elimination of inter-segment transactions and whole-group revenues and expenses that are not attributable to any segment. Whole-group income is comprised of outsourcing fees, consulting fees, and rental income from group companies, and whole-group expenses are comprised of those incurred in the operations of the group's holding company not attributable to any segment.
3. Income/losses are adjusted against operating income in the consolidated statement of income.

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3. Other Information

(1) Orders and Sales

1. Orders
   Orders won by each operating segment in the first half of FY2020 are as follows.

	Segment	Orders received	Change from same	Orders outstanding	Change from same
	(unit: 1,000 yen)	period last year (%)	(unit: 1,000 yen)	period last year (%)
	Consulting	6,213,032	12.3)	6,487,496	5.6)
			(		(
	Logistics	183,143	40.7)	214,595	6.3)
			(		(
	Other businesses	152,825	51.0)	164,370	23.1
	Notes		(

1. Consulting orders above include only consulting revenues; membership fees and seminar fees are excluded as they are recurring revenues.
2. Logistics revenues include only that earned from logistics consulting activities.
3. Direct recruiting entails no consulting revenues and is therefore not included in the above table.
4. Other income includes only that earned from IT and contact center consulting.
5. The above amounts are based on sale prices.
6. The above amounts do not include consumption tax.

II. Sales

Sales made by each operating segment in the first half of FY2020 are as follows.

Segment	Sales (unit: 1,000 yen)	Change from same period last year (%)
Consulting	9,071,551	(	2.1)
Logistics	1,279,621	9.4
Direct recruiting	1,358,033	24.4
Other businesses	513,164	(	6.3)
Total	12,222,370	1.2

Notes

1. Sales amounts indicate sales to external customers.
2. The above amounts do not include consumption tax.
3. No single customer accounted for 10% or more of aggregate net sales.

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