In the fiscal year ended June 2010, net sales amounted to 9,730 million yen (a fall of 6.4% year on year), influenced by reduced project scales and the longer time taken to confirm orders, as orders received by the consulting and package sales businesses, which we had expected to increase from the third quarter, grew at a sluggish pace. Looking at profits, operating income was 507 million yen (down 30.1% year on year) and ordinary income was 437 million yen (a decline of 29.5%), reflecting pressure on income attributable to a fall in gross profit associated with the unexpected drop in orders and net sales, and the posting of a new provision for losses on orders from the fiscal year under review to prepare for contract-related losses in the future. Nonetheless, we kept our gross margin in line with the level of the previous fiscal year, thanks to efforts to improve profitability, for instance by reducing outsourcing expenses. Given an extraordinary loss of 790 million yen, however, we registered a net loss of 215 million yen. The extraordinary loss was a lump-sum amount recorded to cover damages caused by defects in the structural design provided by a subcontractor in October 2007, following a settlement reached with the client in May 2010. As the payment of the settlement will be spread evenly over four years and we have ample capacity to pay the obligation, there is no financial concern at all.

We plan to enhance our corporate value through sustained and stable growth, continuing to improve our ability to provide high value-added services and proposals, while taking further steps to bolster our sales and marketing capabilities and strengthen our risk management system. To present our forecasts by business segment, we expect net sales in the Engineering Consulting business to reach 3.9 billion yen (an increase of 7.4% year on year), in the System Solutions business we anticipate net sales of 3.9 billion yen (down 3.4%), and in the Product Service business, we forecast net sales of 2.2 billion yen (up 6.7%). Looking at overall forecast results for the fiscal year ending June 2011, we anticipate net sales of 10 billion yen (up 2.8% year on year), operating income of 720 million yen (up 41.9%), ordinary income of 640 million yen (up 46.3%), and net income of 350 million yen.

Since its founding in 1956, Kozo Keikaku Engineering has been fostering a host of innovations, staying ahead of changes of the times and society, based on its principle of “contributing to society by amalgamating diverse knowledge gained from theories and practices.” The source of our innovation lies in the construction of a chain of knowledge, including the validation of advanced business themes and technologies as well as the creation of new businesses with the technologies and expertise cultivated during this process. We persistently repeat a cycle of questioning conventional wisdom with the open mind of an independent company, sharing knowledge by actively meeting people and organizations with ideas and perspectives that are different from ours, and validating these ideas through joint research with our customers and overseas partners and academic organizations.

Our goal is to be a “professional engineering solutions firm.” This means we aim to be a company that proposes technologies and scientific approaches tailored to customer needs, using our own experience and delivering high added value. With the aim of becoming a firm that is capable of making high value-added proposals to solve the complex and sophisticated problems that confront our customers even within an increasingly uncertain environment, we will vigorously push forward with our aim of becoming a world-class, multidiscipline engineering firm, expanding our business opportunities and our domains.

We seek to build long-term relationships based on trust with our stakeholders as our supporters and partners. In that spirit, we ask for your continued support in the years to come.