(en)【開示用表紙なし】32期4qプレゼン資料 190524(mvno, in-house internet service...

Financial Resultsfor the fiscal year ended March 2019

May 17, 2019

©2019 HIKARI SUSHIN,INC. All Rights Reserved

©2019 HIKARI TSUSHIN,INC. All Rights Reserved

FY2017 FY2018 FY2019

YoY [Reference]FY2019Forecast

Announced on February 13,

2019

Notes％

Change

Net Sales 428.9 427.5 484.3 +13% 450.0 －

Operating Profit 41.5 51.0 64.2 +25% 59.0

Increase in Recurring Profit, Productivity Gains, etc.

Net Income Attributable to Shareholders

39.0 42.9 49.5 +15% 40.0

Increase in Financial Revenue and a decrease in Investment Returns from Affiliate Companies Accounted by Equity Method.

1

Consolidated ResultsIncrease in Net Sales by 13%, record high results

（Billions JPY）


Net Sales and Operating ProfitIncrease in Sales and Profits in the Corporate Segment

2

FY2017 FY2018 FY2019 % Change

Corporate 269.5 306.0 369.2 +20%

SHOP 131.9 94.5 87.3 (7%)

Insurance 29.4 28.6 29.4 +2％

Total(Including company wide expenses)

428.9 427.5 484.3 +13%

FY2017 FY2018 FY2019 % Change

Corporate 26.6 34.2 50.6 +48%

SHOP 14.1 13.1 10.5 (19%)

Insurance 5.5 5.6 5.2 (7％)


41.5 51.0 64.2 +25%

Net Sales Operating Profit（Billions JPY）


Recurring Profit Increase in Profits mainly in the Corporate Segment

3

（Billions JPY）

FY2017 FY2018 FY2019%

Change

Corporate 50.3 60.0 73.5 +22%

SHOP 18.2 15.2 12.2 (19%)

Insurance 5.4 5.9 6.3 +5%


74.1 81.1 92.0 +13%

74.181.1

92.0

FY2017 FY2018 FY2019


Recurring Profit In-house Products led growth

60.4

68.674.1

81.1

92.0

15/3 16/3 17/3 18/3 19/3

■ External Products

■ In-house Products

⇒ External Products

(5)% CAGR

⇒ In-house Products

+26％ CAGR

4

（Billions JPY）

(Compound Average Growth Rate)


(32.5) (30.1)(27.8)

FY2017 FY2018 FY2019

5

Acquisition CostOperating profits grew due to increased productivity and cost reduction, etc.

■ In-House Products ■ Other

988

1,169 1,148

FY2017 FY2018 FY2019

Sales Units of In-House Products（Billions JPY）（Thousand Units）

We had a decrease in low profitability products, Whilst a increase in high profitability products

©2019 HIKARI TSUSHIN,INC. All Rights Reserved6

FY2017 FY2018 FY2019 Notes

Operating Profit 41.5 51.0 64.2 -

Financial Income and Financial Expense 8.1 (7.5) 1.1 Increase in dividend income

Share of profit ofInvestments accounted for using the equity method

4.9 1.6 2.3 -

Others 7.6 8.6 3.8Decrease in profits from re-calculation of Equity Method Application

Net Income Pre-tax 62.7 53.7 71.5 -

Corporate incometax expenses (21.3) (8.0) (18.6) -

Non-controllinginterests (2.3) (2.7) (3.3) -

Net Income 39.0 42.9 49.5 -

（Billions JPY）

Non-Operating Profit


FY2017 FY2018 FY2019 Notes

Cash Flow fromOperating Activities +17.1 +27.8 +63.2 Decrease in trade liability

and other liabilities

Cash Flow fromInvesting Activities (9.0) (44.9) (89.0)

Acquisition of Tangible and Non-Tangible Fixed Assets.Acquisition of Investment Securities

Free Cash Flow +8.0 (17.1) (25.7) -

Cash Flow fromFinancial Activities +56.5 +86.2 +21.2 Increase in Interest

Bearing Debt

7

（Billions JPY）

Consolidated Cash Flow


5062

77 74 8094

117 115124

139

111

139

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

FY2017 FY2018 FY2019

Net Cash Assets(Cash + Listed Securities) – Interest Bearing Liabilities

8

（Billions JPY）

(Not including listed subsidiaries)


Business Divisions

9


Business Divisions

From the collection of Natural Water to the sales of Water Coolers

Sales of MVNO business, Sales of optical fiber line, etc.

Sales of photocopy machines, etc. Sales of contents, IT Solutions, Electricity, etc.

Sales of mobile phones, etc.

Sales of insurance products etc.

Insurance

SHOP SHOP Corporate

New Business

OfficeEquipment

Communication

Water

Inner Ring: SegmentsOuter Ring: Business Divisions

10

Insurance


Communication Business(MVNO, In-House Internet Service etc.)

11

2) Net Sales(Billions JPY)

3) Operating Profit (Billions JPY)

74.6

92.999.7

FY2017 FY2018 FY2019

1) Figure

14.3

17.9

26.6

FY2017 FY2018 FY2019

Description： Sales of optical fiber line etc.Main Products： Mobile Wi-Fi Router, SIM card, etc.Classification： In-House Products, External Products

Carrier User


20.4

23.1

28.0

FY2017 FY2018 FY2019

12

4) Recurring Profit(Billions JPY)

The numbers acquired of MVNO fell compared to the last fiscal year. However, due to the increase in the total number of users, which leads to stable long-term earnings, there was a increase in profits.

478

579

505

FY2017 FY2018 FY2019

5) Sales Units(Thousand Units)

※In-house Products


Water Business

13

21.9

27.7

37.7

FY2017 FY2018 FY2019

(0.3)

(1.0)

0.8

FY2017 FY2018 FY2019



Description： From product development to Sales of Water Coolers etc.Main Products： Water CoolerClassification： In-House Products

1) FigureProduct development, manufacturing, quality control, sales, and after-sales services


4) Sales Units (Thousand Units)

※Water Coolers

14

212

291 287

FY2017 FY2018 FY2019

5) Cumulative Subscribers

(Thousand Units)※Water Coolers

472

650

810

FY2017 FY2018 FY2019

Increase in sales and profits as a result of a steady increase in both the number of subscribers and profits per contract.

1st in Market

1st inMarket


Description： IT Solutions, etc.Main Products： Contents, IT Solutions, Electricity, etc.Classification： In-House Products, Retail ProductsNew Business

ElectricityContents Industry-Specific IT Solutions

1) Figure

Electricity Retailer Division

Electricity ServiceSupply of Electricity

CustomerPower Generation


Continue to maintain stable revenue and earnings

52.1

83.2

139.1

FY2017 FY2018 FY2019

(2.4)

2.3

8.2


3) Operating Profit(Billions JPY)

10.5

16.3

23.6

FY2017 FY2018 FY2019


FY2017 FY2018 FY2019


Office Equipment Business

17

15.1 15.0 14.9

FY2017 FY2018 FY2019


3) Operating Profit(Billions JPY)

Description： Sales of Office Automation EquipmentMain Products： Photocopy Machine, Mobile Phone, LED Light etc.Classification： External Products

1) Figure

120.7

102.1

92.5

FY2017 FY2018 FY2019


13.312.6

11.1

FY2017 FY2018 FY2019

18


Recurring Profits have declined sharply.However, Operating Profit grew due to Cost Reduction and Increased Sales Productivity.


SHOP Business

131.9

94.587.3

FY2017 FY2018 FY2019

14.113.1

10.5

FY2017 FY2018 FY2019



Outline ： Sales of Mobile Phones through telecom shopsProducts ： Mobile Phone, MVNO etc.Model ： External Products

1) Figure


2,006 1,954

1,758

FY2017 FY2018 FY2019

5) Total Stores(Number of Stores)

20

18.2

15.2

12.2

FY2017 FY2018 FY2019

Profits decreased as the mobile communication market has matured. We have been focusing on increasing productivity and improving customer service at the telecom shops.



29.4 28.6 29.4

FY2017 FY2018 FY2019

5.5 5.65.2

FY2017 FY2018 FY2019

Insurance Business

1) Figure 2) Net Sales(Billions JPY)

3)Operating Profit (Billions JPY）

Description： Insurance products distribution through shopsMain Products： Life, medical, property insurance, etc. Classification： Retail Products


5.45.9

6.3

FY2017 FY2018 FY2019

266 285 278

FY2017 FY2018 FY2019

Increase in revenue due to expansion of call centers and strengthened collaboration among different sales networks, which consist of shops, online, and door-to-door.


5) Directly Managed Stores(Number of Stores)


Forecast for FY2020


Appointment Change of President and Chief Operating Officer

Name Current position New position

Takeshi Tamamura President and Chief Operating Officer

Vice Chairperson and Head of IT Solutions Business Division

Hideaki Wada Executive Vice President President and Chief Operating Officer

The following executive appointments have been appointed as a management structure to further promote the realization of sustainable growth of the Group business and to further improve our corporate value. (Planned appointment date: June 21, 2019)


Stock Options and Treasury Stock

Performance Based

Condition Paid Stock

Option

Main Performance Conditions

Treasury Stock

Purchase through the

MarketRetirement

FY2018 0.08％Operating income, 5 years, 10%

Annual Growth41.5 Billions JPY (FY2017)→ 66.9 Billions JPY (FY2022)

0.42％ -

FY2019 0.23％Operating income, 5 years, 8% Annual

Growth55.0 Billions JPY(FY2019E)→ 74.8 Billions JPY(FY2023)

0.64％ 2.51％

FY2020 0.50％Operating income, 5 years, 10%

Annual Growth70.0 Billions JPY(FY2020E)→ 102.5 Billions JPY(FY2024)

Not implemented as of May 17, 2019

Total 0.81％ - 1.06％ 2.51％

On May 2019, we resolved to issue Performance Based Conditional Paid Stock Options. We also took into consideration the decline in the shareholder value per share, so we retired and repurchased our own shares.


Recurring Profit

68.674.1

81.1

92.0

104.5

FY2016 FY2017 FY2018 FY2019 FY2020(E)

Over 100.0 Billions JPY

（Billions JPY）


FY2019

FY2020(E)

Forecast % Change

Net Sales 484.3 530.0 +109％

OperatingProfit 64.2 70.0 +108％

Net ProfitAttributable to Shareholders

49.5 46.0 92％

Forecast of Consolidated Results （Billions JPY）


FY2018 FY2019 FY2020(E)

Return on Equity ※1 21.2％ 20.5％ 17.9％

Return on Assets ※2 8.5％ 8.6％ 8.7％

Operating Profit Margin 11.9％ 13.3％ 13.2％

Earnings per Share (JPY) 927 1,075 1,002

28

Capital Efficiency

※1 The capital and total assets of FY 2020 are not the average forecast for the period, but are actual results at the end of FY 2019.※2 Operating Profit ÷ Total Assets


40 45 51 69 81 9340 45

6075

8793

4045

60

75

9093

4051

69

81

9393

160186

240

300

351372

FY2015 FY2016 FY2017 FY2018 FY2019 FY2020(E)

Ｑ1

Ｑ2

Ｑ3

Ｑ4

Quarterly increase of ¥3 from the

expected ¥90

Steady Increase in Dividends（JPY）


5.2

10.2 12.6

28.5

8.6 11.1

14.3 16.3

21.5

16.9

30

(Billions JPY)

Returns over 10 years

52%

StockRepurchase

DividendPaid

Return to Shareholders

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020(E) Total

Dividend Paid ３.２４.７５.１６.６７.３８.１１０.０１３.３１５.５１６.９９１.１

Stock Repurchase ２.０５.６７.６２２.０１.３３.０４.３３.０６.０－５４.９

Return Ratio - １３２% ７５% ９８% ４２% ４４% ３６% ３８% ４３% ３６% ５２%


Company Overview


Overview of the Business

32

Sales network

Agencies approx. 1,000Sales staff(Incl.agencies)

approx. 30,000

Locations approx. 90Call Centers 22

Mobile Phone Stores

1,758Insurancestores 320

Customers(Corporates) 1.0M Customers

(Individuals) 1.4M

Needs

- Expand market share- Acquire sales staff

Solutions

Provide sales and marketing capabilities

SMEs

Individual Customers

Needs

- Optimize business efficiency

- Select the best plan

Solutions

Provide products and services

Agency contractWholesale contract Sales

Cons.Subsidiaries 175

Equity-Method Affiliates

137

Telecom Carriers

Manufacturers

Insurance Companies

Planning and development of in-house productsCarriers Customers


Business Division Product/Service Image Classification Target Main Sales

Network

Corporate

CommunicationLine

Mobile Wi-Fi Router

In-house Products

SMEIndividual

WebTMSFixed-Line

InternetIn-house ProductsThird-party Products

Water Water Cooler In-house ProductsSME

IndividualBoothTMS

New Business

IT Solutions

In-house Products SMEDoor-to-door sales

TMSContents

Electricity

Office Equipment

Mobile Phone (Corporate)

Third-party ProductsSME

IndividualDoor-to-door sales

OA Equipment

SHOP SHOP

Mobile Phone (Shop)

Third-party Products

Individual ShopMobile Wi-Fi

RouterIn-house ProductsThird-party Products

Insurance Insurance Insurance Third-party Products Individual ShopTMS

Segments


Expansion of In-House Product Line

34

※Excluding Test Periods

2010 2015 2017

Electricity

2018~

SIM

Water Coolers

Water Coolers

Water Coolers

SIM

Internet Service

Internet Service

Internet Service

ContentsContentsContentsContents

IT Solutions

IT Solutions

IT Solutions

IT Solutions

IT Solutions

Mobile Wi-Fi

Routers

Mobile Wi-Fi

Routers

Mobile Wi-Fi

Routers

Mobile Wi-Fi

Routers

Mobile Wi-Fi

Routers

Mobile Wi-Fi

Routers

Mobile Wi-Fi

Routers

Mobile Wi-Fi

Routers

ISPISPISPISPISPISPISPISPISP

2016


Conceptual Diagram Of Our Typical Recurring Income Earnings Model

IN ・・・

Recurring Profit

OUT

CancellationContract (Sales)

Month 1 Month 2 Month 3 Month 4 Month 5

Period of use

・・・

(Time)

(Time)

- Personnel expense

- Agency commission

- Rent and other store costs

35


・・・

・・・

・・・

・・・

Business Models

① In-house ProductsMobile Wi-Fi router, Water Cooler, Electricity…

② Third-party productsFTTH, Office equipment, LED lighting, Mobile phone, Insurance…

E/UHikari

Tsushin Carrier

Usage FeeCost ofService

time0 month

1st

month2nd

month

Lump-sum Profit Recurring Profit

Small or None Large

E/UHikari

Tsushin Carrier

CommissionCommodityFee

MerchandiseCost

0 month

1st

month2nd

monthtime

Lump-sum Profit Recurring Profit

Substantially Large / Large

Extremely Small / Small

Usage Fee


Recurring Profits

０

Acquisition StopStability in Acquisition

Time

Profit&

Loss

Decrease in Profits as per

the cancellation rate.

Various Products

37

Operating Profit Model for In-House Products

AcquisitionCost

Electricity

Decrease in Acquisition

Increase in Acquisition

Increase Acquisition Cost As per the efficiency, improvements in acquisition cost price

Decrease in Acquisition Cost, Increase in Profit

OperatingIncome

EPARKWater

ServerSIM

Hikari

CollaborationContents

Mobile

Wi-Fi

Router

ISPMobile

Phone

Reselling


Recurring Profit and Acquisition Cost

38

VolumeRecurring Lump-sum

Net Sales 484.3

Data usage revenue from subscribers, commission from service providers, and insurance companies.

267.1Upfront commission,Sales of hardware, etc.

217.2

Cost of Goods Sold +Selling, General and Administrative Expenses

(420.1)

Cost of the service provided, Cost of customer retention such as billing, etc.

(175.0)

Lump sum cost, personnel expenses, sales commission for distributors, etc.

(245.0)

Operating Profit 64.2 Recurring

Profit 92.0 Acquisition Cost (27.8)

（Billions JPY）


FY2016 FY2017 FY2018 FY2019

J-GAAP IFRS IFRS IFRS IFRS

Net Sales 574.5 447.6 428.9 427.5 484.3

Operating Profit 37.4 37.6 41.5 51.0 64.2

Ordinary Income 38.3 - - - -

Net Income Pre-tax 51.1 47.9 62.7 53.7 71.5

Net IncomeAttributable to Shareholders

25.0 22.5 39.0 42.9 49.5

Earnings Per Share (JPY) 538 485 840 927 1,075

Operating Profit Margin 6.5％ 8.4％ 9.7％ 11.9％ 13.3％

Consolidated Statements of Profit or Loss （Billions JPY）

※The results of FY2018 is after incorporating IFRS 15.


Consolidated Statement of Financial Position

FY2018 FY2019

Cash and Cash Equivalents 185.8 186.3

Accounts Receivables and Other Receivables 166.1 178.1

Total Current Assets 374.5 388.2

Investments Accounted for using Equity Method 50.1 65.7

Other Financial Assets 173.8 244.7

Total Non-Current Assets 311.1 415.9

Total Assets 685.6 804.2

FY2018 FY2019

Own Capital 225.2 257.2

Capital Adequacy Ratio 32.9% 32.0%

40

FY2018 FY2019

Accounts Payables and Other Payables 124.4 153.5

Short-term Interest-bearing Debt 36.7 59.9

Total Current Liabilities 175.9 228.2

Long-term Interest-bearing Debt 233.2 260.1

Total Non-Current Liabilities 268.1 302.4

Total Liabilities 444.1 530.6

Total Hikari Tsushin’s Shareholder’s Equity 179.3 257.4

Accumulated other comprehensive income 45.9 (0.1)

Total Equity 241.5 273.5

Total Liabilities and Equity 685.6 804.2

（Billions JPY）

※The results of FY2018 is after incorporating IFRS 15.


Strengths

1) Corporate Philosophy 2) Sales Channels

3) Recurring Profit Business Model 4) Our Customers

Stable income each month, enables us to invest in expanding our business.

We are rapidly expanding our market share by strengthening our network of sales agencies.

Our diversified costumer base allows us to increase our profits by virtue of extensive cross selling.

ExpandMarket Share

MoreCommission

IncreaseAgencies

RecurringProfit

OperatingIncome

AcquisitionCost

92.027.8

64.2

Corporate1,000,000

41

Our unique corporate philosophy and work culture have enhanced our earnings since our establishment.

LowCost

MeritSystem

CustomerData Base

Flexibility

Individual1,420,000

（March, 2019）

(Billions JPY)

※After incorporating IFRS 15


4) Bottle Cap Collection for vaccine donations

We collect and donate plastic bottle caps toJapan Committee Vaccines (NPO), whichprovides vaccines for children around theworld. More than 4 million Bottle caps weredonated by March 2019, resulting inprovision of 4,256 vaccines.

We were recently acknowledged by the JapaneseLabor Bureau as a business focused onpromoting the next generation of workers. Wereceived the “Kurumin” certification mark, andwe continue to work and take pride in ouryounger generation of employees.

Hikari Tsushin’s CSR

42

42

5) Used Stamp Donation

6) Toshima ward Cleaning Drive

Improving our Work Environment

3) Acquisition of “Kurumin” Certificate

2) Compliance with the Toshima Ikuboss Declaration

The Ikuboss Declaration is intended to alterJapan’s work culture to encourage and fosterindividual happiness along with work productivity.We are proud supporters of this movement.

※ The Toshima Ikuboss Declaration (commonlyknown as “The Ikuboss Declaration”) wascreated in September, 2016 by a team ofbusiness leaders, politicians, and academics.

1) Promoting Diversity

In line with our rapidly diversifying businesssociety, we are committed to promotingdiversity within the Hikari Tsushin Group. Weare also active in our support of childcare andreinstatement.

Corporate Social Responsibility

We have been donating used stamps toToshima Ward Residents Council of SocialWelfare. Collected stamps are convertedinto cash for donation. A total of 7,963grams of stamps were donated by March2019.

We have declared the 9th of every monthas “Clean Day”, when we conduct acleaning drive around Ikebukuro Station.In FY 2016 we were awarded the “Letter ofAppreciation” from the Toshima WardOffice, commending us as an organizationthat promotes Environmental Activities.


DisclaimerThis material contains “forward-looking” information,including the company’s plans, strategies, forecasts,and beliefs. Hikari Tsushin cautions readers that saidforward-looking statements are based on HikariTsushin’s current expectations, which have beenderived from information that is currently available andinvolve a number of risks and uncertainties. Actualresults may differ significantly from the informationshown here.

Disclaimer Regarding Insider Trading

In accordance with Article 166 of the FinancialInstruments and Exchange Act (FIEA), No CorporateInsider of a Listed Company, etc. who has obtained,under the specified circumstances, knowledge ofnonpublic Material Facts shall Trade SpecifiedSecurities, etc. of the Listed Company, etc., until andunless such Material Facts have been made Public.

(en)【開示用 表紙なし】32期4qプレゼン資料 190524(mvno, in-house internet service...

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(en)【開示用表紙なし】32期4qプレゼン資料 190524(mvno, in-house internet service...