fy2016 1st half financial results briefing - fujitsu · promoting sales of cash handling units for...

FY2016 1st Half Financial Results BriefingBunmei ShimojimaPresident and Representative DirectorFujitsu Frontech LimitedOctober 26,2016

1. Summary of FY2016 1st HalfConsolidated Financial Results

Copyright 2016 FUJITSU FRONTECH LIMITED1

Consolidated Results of Operations

Net sales Operating income

Ordinary income

Net income attributable to

owners of parent

Net income per share

FY2016

First half51.4 2.9 2.1 1.5 62.44 yen

FY2015

First half55.7 2.0 1.9 1.3 53.67 yen

Year-on-Year -4.3 +0.9 +0.2 +0.2Figures announced

in April52.6 1.2 0.7 0.5 20.86 yen

Changes from the figures announced in April -1.2 +1.7 +1.4 +1.0

FY2016 First half 12.3 （23.8％）

FY2016 First half 16.8 （30.1％）

Sales Outside Japan (Ratio of Sales Outside Japan)

[Billion yen]

Average exchange rate during period

(1USD =)

FY2016

First half105 yen

FY2015

First half122 yen

[Billion yen]

Copyright 2016 FUJITSU FRONTECH LIMITED

（Including -2.1 Billion yen effect of currency fluctuation）

2

Sales / Operating income by Business Segment

FY2015First half

FY2016First half

Change

Net sales Operating income Net sales Operating

income Net sales Operating income

Global Product Business 27.5 1.3 23.7 0.9 -3.8 -0.4

Service Integration Business 14.3 2.0 14.8 1.8 +0.5 -0.2

Public Solution Business 8.0 0.2 8.5 1.0 +0.5 +0.8

Frontline Solution Business 5.8 -0.8 4.3 0.1 -1.5 +0.7

Other/ Corporate (Including strategic

investments)0.1 -0.7 0.1 -0.7 ±0 ±0

Total 55.7 2.0 51.4 2.9 -4.3 +0.9

[Billion yen]


Major Factors for Changes in Operating Income

Changes from the figures announced in April＋1.71.2

Expansion ofcash managementbusiness in the US

[Billion yen]

Advancement of business

in Japan


Sales Increase in

Japan

Sales decrease in

overseas

Figures announced in April

FY2016 First half (Result)

Cost reduction

Currencyfluctuation

＋1.3

＋0.4

+0.5

-0.5

-0.3

+0.3

4

Sales by regions

[Billion yen]

FY2015 First half FY2016 First half Change

Japan 38.9 39.1 +0.2

Outside Japan(Ratio of Sales Outside Japan)

16.8(30.1%)

12.3（23.8％）

-4.5※

Americas 4.4 7.9 +3.5

Europe 5.3 2.5 -2.8

Asia 7.0 1.9 -5.1

[China] [5.2] [0.9] [-4.3]

Other 0.1 0.0 -0.1

Total 55.7 51.4 -4.3


※Effect of Currency Exchange -2.1 Billion yen

5

Consolidated Financial Positions and Cash Flows

Total Assets Total Liabilities Total Equity Capital Adequacy

Ratio

FY2016 First half 71.2 29.9 41.3 57.6%

FY2015 72.8 32.4 40.4 55.1%

Change -1.6 -2.5 +0.9

C/F from operating activities

A

C/F from investing activities

B

Free C/FA + B

C/F from financing activities

C

C/FA + B + C

Cash and cash equivalents at

the end of year

FY2016 First half 3.9 -1.6 2.3 -0.8 1.5 12.2

FY2015 First half 4.9 -1.3 3.6 -2.2※2 1.4 9.5

Change -1.0※1

-0.3 -1.3 +1.4 +0.1 +2.7

[Billion yen]

[Billion yen]

Consolidated Financial Position

Consolidated Cash Flows


※Non-debt management from FY2015

※1 Decrease of recovery due to strong yen ※2 Payment of debt loan6

2. Business Overview


Midterm Business Plan(From FY2016)


Midterm Strategic Themes (B to B to Front)

FY2015 Results

Midterm Target

Consolidated Net Sales 120.1 130.0

Operating Income 5.5 7.8

Operating Income Ratio 4.6％ 6.0％

Ratio of Sales Outside Japan 29.3％ 40％

Financial Objectives

Expansion of overseas business areas

Promotion of Business Efficiency by Process Innovation

Promotion of Business Transformation in Japan

Strengthening and Developing Front-end Technologies

8

Global Product Business


Sales of banking terminals increased by large replacement demands.

ATM’s large replacement demands peeked out last year, but the sales were as planned.

Cash handling component business Chinese market: Sales decreased due to

several postponed businesses. US market: Showed large growth by the

expansion of cash management systems for the retail store back offices.

Surely corresponding to demands for banking terminals and ATMs in Japan. Aggressive proposals of banking terminals for mini branches. Further expansion of cash management systems in the US. Considering solution

business utilizing cash management systems. Starting development of next generation small size BRU for global market. (SCO

and small size ATM)

Business Circumstances for the 1st Half

Measures and Prospects for the 2nd Half

【Sales】

【Operating Income】 [Billion yen]

FY2015 1st Half FY2016 1st Half

27.5 23.7

1.3 0.9

[Billion yen]


9

Service Integration Business


Sales of ATM software packages decreased due to peek out of large replacement demands.

Large scale SI business in financial and industrial fields showed steady performance.

ATM services for retail stores showed steady performance. LCM services showed growth mainly by kitting services.

Multi-vendor maintenance support for retail stores showed good performance. Started provision of new maintenance scheme service for a large mass retailer.

Starting development of ATM service corresponding to internationally issued credit cards with Resona Bank.

Expanding branch operation reforming solution business (ex. Quick counters, etc.). Enhancing functions of cash management services (linkage with POS and accounting systems),

and promoting consideration of new sales channel. Expansion of SI and LCM business maximizing synergy of Solution and Service group being one

organization.



【Sales】


14.3 14.8

2.0 1.8

[Billion yen]



10

Public Solution Business


Cloud based used car auction system promoted.

Systematization of medical integrated service solution for hospitals promoted.

Replacement of new large scale display systems developed.

Demands for totalizator related systems advanced.

Promoting integration of cashless betting and gift ticket management server, applying to cloud service, for public racing business.

Development and expansion of stadium solutions (display systems, entrance and exit control systems, etc.).

Advancing development of 8th generation totalizator terminals, and toto terminals. Advancing development of digital signage for outdoors, corresponding to inbounds.



【Net Sales】


8.0 8.5

0.2 1.0

[Billion yen]



11

Frontline Solution Business


Sales decreased, but operating income improved due to changes in supply chain scheme of POS in FY2015.

RFID business showed good performance globally.

Palm vein authentication system showed growth globally, especially for municipal organizations in Japan.

Released small-sized and high performance palm vein authentication sensor and built-in authentication control board.

RFID and palm vein authentication systems will continue to show good performances.

Promoting development of sensor (RFID, beacon) platform.

Enhancement of palm vein authentication business (apply to cloud and services).



【Net Sales】

【Operating Income】

[Billion yen]

5.8 4.3 [Billion yen]

-0.8 -0.1



12

3. Summary of FY2016 Full-year Targets


Net sales Operating income

Ordinary income

Net income attributable to

owners of parent

FY2016Forecast 112.5 6.2 4.9 3.4

FY2015Results 120.1 5.5 4.7 3.3

Change -7.6 +0.7 +0.2 +0.1

Change vs Previous Forecast -1.0 +0.5 ±0 ±0

[Billion yen]

Consolidated Earnings Forecast

Average Currency Exchange Rate During

Period(1USD=)

FY2016 Assumption※

100 yen

FY2015 120 yen

Net income per share

141.86 yen

135.93 yen

• Decrease due to currency fluctuation and decrease in Chinese and European business

• Expansion of cash management business for retail markets in the US• Promotion of cost reduction and efficient use of expenses

※Assumption rate from 3Q


Forecast of Sales and Operating Income by Business Segments

FY2015 FY2016 Change

Net Sales Operating Income



Global Product Business 57.3 3.9 51.8 2.7 -5.5 -1.2

Service Integration Business 28.3 3.5 28.2 3.5 -0.1 ±0

Public Solution Business 18.2 1.3 20.4 1.6 +2.2 +0.3

Frontline Solution Business 16.2 -1.2 12.0 0.4 -4.2 +1.6

Other / Corporate 0.1 -2.0 0.1 -2.0 ±0 ±0

Total 120.1 5.5 112.5 6.2 -7.6 +0.7

[Billion yen]


Sales Forecast by Regions

[Billion yen]

FY2015 FY2016 Change

Japan 84.9 81.5 -3.4

Outside Japan 35.2 36.5 +1.3

Americas 9.6 18.1 +8.5

Europe 12.3 8.3 -4.0

Asia 13.2 10.1 -3.1

［China］ [9.7] [7.6] [-2.1]

Other 0.1 0 -0.1

Impact of Currency Fluctuation － -5.5 -5.5

Total 120.1 112.5 -7.6


4. Topics


1．Development of Cash Management Business in the US

2．Circumstances of Business in China

3．Enhancement of IoT Sensor Solution

4．Expansion of Palm Vein Authentication Business

17

Development of Cash Management Business in the US


Retail stores in the US Needs of re-examining cash management costs High interest in installing self-service and solutions

⇒ Starting development of cash management solution

Frontline of retail stores：Expanding product portfolio by developing Cash Box Module（CBM）､Micro Self Service（MSS）.

Back Office：Starting business for cash management systems.

Promoting automation and efficiencyby unified management of data andcash.

⇒ Expanding business to cash management solution includingstore’s frontline and back office.


Measures and Prospects for the Future

～ Expanding Business Area Utilizing Cash Handling Technologies, which are our strength ～

18

Circumstances of Business in China


Mainly developing cash handling unit business for ATM

The ATM market expanded at high speed due to economic development.Our business also expanded due to needs in corresponding to bank note serial number reading.

Circumstances changed from FY2015 Escalation of price competition due to aggressive adoption of domestic

products. Banks reducing investments from unclearness in future of Chinese economy.

⇒ Sales in China are expected to decrease in FY2016 due to escalation of price competition and so on.

Promoting sales of cash handling units for ATM which the delivery has been extended.

Focusing on expansion of small-sized ATM for rural part. Expanding cash handling unit business to high-speed bank note acceptor, TCR and

exchange machine. Steady promotion of public transit (subway) ticket vending machine.

（Operating at 60 lines）

Circumstances of Chinese ATM Market and Our Business

Measures and Prospects for the Future

19


Providing sensor platform on Fujitsu cloud. Supporting realization of new added value utilizing information from sensors such as RFID, beacon, and other sensors on business systems, at low cost and short term

Enabling easy connection to RFID and sensors and collecting information by utilizing sensor platform

Enabling load sharing of cloud and enhancement of edge terminal’s processes by utilizing sensor platform

Improvement of customers’ presence by cooperating with smartphone (push delivery)

Enhancement of IoT Sensor Solution

Management of goods（goods, documents, uniforms, etc.） Management of people（customers, employees, laborers, etc.） Noticing information

（products, locations, facilities discount tickets, etc.）

Overview

What the Solution Can Do

Merits

Image

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Providing integrated authentication service on Fujitsu’s cloud, by developing palm vein authentications business.

Totally supporting various verifications, such as biological, seal, personal number card, FIDO, etc.

Enabling unified management of various authentications such as FIDO

Enabling quick installation and management, and operation of biological information by customers are unnecessary

Enabling smooth change from verifications using objects (seals, cards, etc.) to biometric authentications

Expansion of Palm Vein Authentication Business

Safe and secure verification（Palm vein authentication, FIDO authentication, public

personal authentication） High convenience（Cardless authentication, smartphone

authentication） Flexible correspondence by usage scenes（different usage by scenes, combination of authentications）

Overview

What the Solution Can Do

Merits

Image

21

<Notes Regarding Forward-Looking Statements>

●This material contains certain statements about projections and forecasts for the future plans, strategies, and performance based on assumptions made using information available to Fujitsu Frontech at that time.

● In addition, this material contains various risks and uncertainties (including economic trend, fierce competitions in the related industries, market demands, foreign exchange rates, tax rules and other regulations). Accordingly, please be informed that the actual results may materially differ from the forecasts made by the Company.

<Trademark>

The proper nouns herein including product names are the trademarks or registered trademarks of the respective companies.

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