As an advanced IT service provider, our corporate philosophies are to help create an affluent society, to respond to the expectations of our affiliates including customers and shareholders, and to commit to the creation of new values for achieving constant growth. In addition, we regard our approach to social responsibility to be the basis of our management, and shall continue to actively promote this stance.
In our business deployment, our slogan is 'Your Success is Our Pride'. With a user-oriented mind, we believe it is always our mission to assist our customers to utilize IT. It is our aim to grow together with our customer.

2.Company’s medium-to-long-term management policies

a. Business environment and recognition of the current situation

The current state of the information services industry remains tough, even though Japan’s economy seems to have been picking up due to increases in exports and corporate earnings growth. Under these conditions, our company has worked hard to improve earnings and increase sales over the previous year.

Still facing a difficult situation this year, we will continue to be committed to improve the profitability and to prepare for returning to the growth tracks by defining this fiscal year, before the scheduled acquisition of the steel business from EXA Corporation in the next year, as the starting point.

b. Priority issues on corporate strategy
-Steel business transfer from EXA Corporation-

In line with the corporate goal for the growth in medium-to-long-term, JFE Systems has decided to take over the steel business of EXA Corporation in April 2011. Succeeding in this business will enable us to integrate the technology and knowledge of the two affiliated System Integrator companies of JFE Steel Corporation and to spur on our technological strengths in large scale SI (*1) business.
This is a proactive measure for the “reinforcement and expansion of the steel sector business ” and the “expansion of the core SI business by deploying the model of ‘J-Smile’ (Integrated management systems for sales, production & distribution of JFE Steel newly born from the merger)(*2)” as well as the “expansion of highly profitable product sales” and “strengthening of the operational capability for the globalization of the business”.

Two key points for our company are the smooth business transfer from EXA Corporation and the early harvesting of the synergistic effects from integration. Not only will there be synergies through technology exchanges between the two companies, but also we will energize a new corporate culture and develop the human resources that live up to the expectations of our customers.
We will do this by blending together the employees of both companies, even though they have different cultural backgrounds and characteristics.

(*1) SI (System Integration)
The service providing planning, designing, development, testing and operation of information systems.

(*2) J-Smile (JFE Strategic Modernization and Innovation Leading System)
This system is recognized one of leading cases of advanced information systems in Japan. It has been awarded by MITI (Ministry of Economy, Trade and Industry) of Japan, Nikkei Business Publications, Inc., World Information Technology and Services Alliance (WITSA), and others.

Reinforcing and expanding steel business operations: As the solely responsible company for the development and maintenance of application systems for JFE Steel Corporation and its group companies, JFE Systems will support for the medium-to-long-term business strategy of JFE Steel Corporation from the IT aspects, and for that purpose, it will improve its capability and reliability as an IT vendor.

As a result of establishing JFE Steel Corporation, J-Smile, a core system, was jointly developed by JFE Systems and EXA Corporation to support restructuring the new corporation.
This information system is best characterized by the following two attributes: It was built in a “green field” situation and it is intended to help “integrating and innovating,” instead of favoring either of the previous systems at Kawasaki Steel or NKK.It was the first “open” systems for the core corporate information systems in world’s steel industry; in addition, it provides a rapid response to the needs of business management by using data modeling and parts assembly technology.
J-Smile also flexibly adapts to changing business environments.

Moreover, we believe the technology and knowhow obtained through the development of this system will be an asset to our customers who want to revamp their own business systems as they restructure or integrate their own processes in case of merger and acquisition which is expected to be an increase in demand in Japan in the near future.

We will further improve our technology and knowhow to satisfy our customers through the business succession of EXA Corporation, and we will upgrade the “strategy for customers with an account” to “expand core SI operations.”

Expansion of highly profitable product sales: We aim to improve highly profitable products with significant social need or customer demand. These include “systems for the food industry” and “cost management systems,” as well as already established “electronic document management systems.” We will also go forward on the development of unique new products that contribute to society.

Promoting global business : We will look outward to acquire a wide range of competent human resources that will be responsible for our overseas operating bases.
We will then be better able to respond to our customers’ global business strategies. As well, we will foster global human resources within the company. In addition, to expand our business operations, we will introduce products from abroad while proactively selling our own products in foreign markets.

We will do our best to reinforce our corporate values over the medium term as we set up our business enterprise based on the above mentioned business initiatives so that we can deliver favorable results that will satisfy our shareholders and investors. We look forward to your continued guidance and support.