Explanation of Latest Financial Results（April 1.2011-September 30.2011）

Business Summary

During the first half of the fiscal year under review, the Japanese economic outlook remained highly uncertain, reflecting the repercussions of the strong yen and concerns over the world economy principally caused by the financial turmoil in Europe, despite signs of a recovery in consumer spending and corporate production activities from the slump associated with the Great East Japan Earthquake.

Meanwhile, economic growth in China, where the Group has operations, has sustained its momentum of rapid expansion, although domestic demand growth has slowed. External demand also shows signs of decelerating with a slowdown in exports to the EU given the economic weakness and sovereign debt crisis in Europe.

To respond to these challenging conditions, the SJ Group improved its business operating ratio thanks to the dynamic assignment (flexible staff allocation to projects), which was made possible by the implementation of a functional division system intended to allow flexible organizational operation as part of the organizational restructuring project in Japan. The Group also took steps to reduce fixed expenses, continuing its efforts from the previous fiscal year. In China, the Group showed a strong performance overall, with the highs and the lows depending on Group companies, while it recorded foreign exchange rate losses due to the strong yen.

The SJ Group also sustained a profit and loss on the sale of its subsidiary as part of the business structuring initiative in China, profit on the revaluation of the equity of its equity-method affiliate upon the change to a subsidiary, and the investment gain on equity method before the change of the equity-method affiliate to a subsidiary.

Overview of Reported Segments

※Sales as described above include 505million yen,the amount applicable to the item,"inter-company eliminations."

Explanation of Latest Financial Results(April 1.2010-March 31.2011)

Business Summary

The Japanese information service industry remained a challenging environment, lagging behind the recovery trend of the domestic economy, as customers continued to reduce or scale back their IT investments due to the uncertain economic outlook.
Meanwhile, the Chinese information service industry grew markedly, tapping into the growth of the domestic economy. However, it now faces the rising specter of higher costs due to rising labor costs. Also, in offshore development operations, a number of development projects were postponed or downsized, as our major customers based in Japan scaled back their IT investments.

In the Japanese market, we made sustained efforts to meet customer demands, 365 days a year. Meanwhile, in China, we built our business to become a bridge between Japan and China in the IT industry, centered primarily on the tie-up with the Digital China Group. In its Japanese operations, the Group continued to expand package contract development, promote offshore development operations, and reduce costs. In the Chinese market, we focused on accelerating the development of operations in China, primarily by strengthening the alliance with the Digital China Group, and on managing investment and funds thoroughly. We also made personnel changes for the rationalization of management, including representative director and executive officer changes. As part of structural reforms to change our profit structure in view of the operating environment that lies ahead, we also offered voluntary redundancies and transferred our Hokkaido operations.

Overview of Reported Segments

※Sales as described above include 1,187million yen,the amount applicable to the item,"inter-company eliminations."