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July 28, 2006
 
Summary Report on Financial and Business Results (Consolidated) for the First Quarter of the Fiscal year ending March, 2007

List of Company Daiwabo Information System Co., Ltd. Listing Stock Exchange (Section)
Osaka Securities Exchange
Tokyo Stock Exchange (1st)
Code No. 9912
Location of Head Office 3-2-5, Hommachi, Chuo-ku, Osaka
(URL http://www.pc-daiwabo.co.jp/english/index.html)
Representative Hirokazu Matsumoto, President and CEO
Inquiry Section Osamu Koyama, Managing Director
PHONE +81-6-6281-1161  

1.Matters concerning the preparation of summary report on performance for the first quarter
(1) Are any convenient accounting methods adopted?
The standard for allocating reserves are based on convenient method.
YES
(2) Are there any changes in the accounting method compared to the one applied in the most recent fiscal year? NO
(3) Are there any changes in the scope of consolidation and the equity method? NO
  Consolidated subsidiaries: New: 0, Excluded: 0
Firms accounted for under the equity method: New: 0, Excluded: 0
 

2.Summary of business results for the first quarter of the fiscal year ending March, 2007 (April 1, 2006 - June 30, 2006)
(1)Progress in business results (consolidated) (Fraction less than 1 millions of yen omitted)
  Net Sales Operating Income Ordinary Income Net Income
March 2007, first quarter
March 2006, first quarter
millions of yen %
82,080 -1.6
83,378 0.5
millions of yen %
266 - 38.6
433 - 24.5
millions of yen %
195 - 46.9
367 - 26.0
millions of yen %
50 - 79.9
252 57.5
(Reference)
Fisical year ending March
375,759  
4,739  
4,679  
2,765  

  Net Income per Share Net Income per Share(Diluted)
March 2007, first quarter
March 2006, first quarter
Yen Sen
2 64
14 33
Yen Sen
2 61
13 85
(Reference)
Fisical year ending March
143 15
132 77
Note) Percentages shown in the columns of sales volume, operating profit, and others indicate the rate of increase/decrease relative to the same period of the preceding year.

[Qualitative information on the business results (Consolidated)]
During the first quarter of the current term, Japanese economy continued to enjoy a steady recovery driven by increased capital investment attributable to improved corporate profitability and brisk personal consumption, though there remained such uncertainties as lengthening high oil price, increasing interest rate, and unstable stock market.
The Japanese domestic PC market also enjoys stable demand thanks to growing capital investment by companies and increasing personal spending. However, sales of personal users are declining greatly from the same period of the previous term due to the World Cup soccer game, and those of corporate users are also declining because intensifying price competition keeps PC prices going down as PCs are commoditized.
In these difficult situations, our group has been deployed to improve the quality of our service besides increasing sales volume under the theme "Challenge to a new growth - quality and quantity - toward next stage" that is the campaign slogan we used last year, and wish to become a distributor selected by customers in pursuit of the customer creed, basic policy of community-based marketing, and low-cost operation.
We are promoting the "Over the Million 2006" campaign for PC and the "Challenge Server 60,000 units" campaign for server to expand sales of these two products. The two campaign slogans helped us sell 1,178,000 PCs and 54,000 servers last years. Besides these two products, we exerted energy to increase sales of such products as security, service & support, digital consumer electronics, IP telephone-related products, database software, middleware, software licenses, products with exclusivity, and back up-related products.
Our efforts resulted in consolidated sales of ¥82,080 million, operating profits of ¥266 million, ordinary profit of ¥195 million, and net profit of ¥50 million in the first quarter of the current term.

[Characteristics of our corporation results in the quarter]
Both sales and profit of our group tend to concentrate in the second and fourth quarters not only because equipment and instruments are mostly delivered in September and March but also because systems are mostly introduced and inspected in these two months.

(2) Changes in financial position (consolidated) (Fraction less than 1 millions of yen omitted)
  Total Assets Shareholder's Equity Ratio of Shareholders' Equity to Total Assets Shareholders' Equity per Share
March 2007, first quarter
March 2006, first quarter
millions of yen
108,499
111,086
millions of yen
35,650
32,213
%
32.9
29.0
Yen Sen
1,854 40
1,778 57
(Reference)
Fisical year ending March
134,072 35,965 26.8
1,872 33

[ Cash Flows ] (Fraction less than 1 millions of yen omitted)

Net Cash from Operating Activities Net Cash from Investing Activities Net Cash from Financing Activities Cash and Cash Equivalents at Term End
 
March 2007, first quarter
March 2006, first quarter
millions of yen
- 625
millions of yen
- 230
millions of yen
- 407
millions of yen
2,149
(Reference)
Fisical year ending March
1,136
- 3,935
- 479
3,413
Note) Results of the first quarter of the previous year are not mentioned because cash flow is disclosed beginning in the current quarter.

[Quantitative information on change in financial condition (Consolidated)]
Total assets at the end of the first quarter of the current term decreased ¥2,586 million from the same period of the previous year to ¥108,499 million, mainly because of decreased cash and cash equivalents caused by payment of liabilities.
Net assets increased ¥3,435 million over the same period of the previous year to ¥35,650 million because bonds with share warrant were converted to stocks, increasing the equity ratio greatly to 32.9% from 29.0% over the same period of the previous year.

(Consolidated cash flow statement)
Consolidated cash flow from operating activities at the end of the first quarter of the current term was ¥625 million in deficit because payment for corporate tax and others amounted to ¥1,035 million, that from investment activities was ¥230 million in deficit because we acquired fixed assets, and that from financial activities was ¥407 million in deficit because debt loan was repaid and because dividends were paid. As a result, the ending balance of cash and cash equivalents of the first quarter of the current term decreased ¥1,263 million from the end of the previous term to ¥2,149 million.

3. Forecast of consolidated business results for fiscal year ending March 2007(April 1, 2006 - March 31, 2007)
  Net Sales Ordinary Income Net Income
Mid-term
Entire fiscal Year
millions of yen
178,000
392,000
millions of yen
1,600
5,600
millions of yen
950
3,200
Note) Estimated net income per share for the fiscal year (full year):¥166.45
  * Actual business results may differ from estimates mentioned above due to various factors.

[Qualitative information on expected results]
No modification was made on the forecast of earnings published on May 11, 2006 because business is going on almost as expected in the first quarter.
Expected net profit per share for the current term was revised because outstanding shares increased in number due to the conversion of corporate bonds with share warrant to stocks in the first quarter.


Reference
Daiwabo Information System Co., Ltd.
Osamu Koyama,
Director of Finance Dept
PHONE +81-6-6281-1161
Fax +81-6-6258-1164

DAIWABO INFORMATION SYSTEM CO., LTD.