– the quality of our engineers and consultants is superior to that of competitors,– our productivity improvement system is in place and functioning, and– the satisfaction of our clients with our services.The Simplex Group's industry-leading gross profit margin objectively indicates that all of the above factors are achieved at a high level. In other words, it indicates the high level of value-added services we provide to our clients.In addition, given an increasing proportion of revenue from Non-financial Solutions, in which we have been engaged since 2013, the fact that we have been able to maintain the highest gross profit margin in the industry indicates that we have been able to steadily reproduce our success in new business areas.Furthermore, as we manage the Group with capital efficiency in mind, we have set the ROE target as one of our KPIs and recognize shareholder return, which contributes to capital efficiency, as an important measure in our capital allocation. (▶Page 24 CFO Message)Gross profit margin, a measure of value addedTo achieve sustainable growth with high profitability, we place emphasis on three KPIs: revenue, gross profit margin, and operating profit. Among them, the gross profit margin is the most important KPI for us because we believe that in the labor-intensive IT and consulting industries, gross profit margin is an indicator that highlights the following:The IT industry average is calculated by the Group based on gross profit divided by revenue of “Software Industry” for FY3/2022 according to the Ministry of Economy, Trade and Industry’s Basic Survey on Corporate Activities in the “2022 Corporate Activity Basic Survey Confirmation Report: FY3/22 Results” released on June 29, 2023.Source: Ministry of Economy, Trade and Industry’s Basic Survey on Corporate Activities “2022 Corporate Activity Basic Survey Confirmation Report: FY3/21 Results”15IT industry averageSimplex GroupStrategy/DX ConsultingFY3/2022–Non-financial SolutionsFinancial SolutionsFY3/2014–FY3/1998–FY3/21275FY3/22FY3/23FY3/24407349305701020Strategy/DX ConsultingNon-financial SolutionsFinancial SolutionsComparison of gross profit margins (%)Revenue by business area (Billions of yen)Percentage of total revenue by business area (%)Most Important KPI28.042.9
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