FY2015 Financial Results Briefing - Fujitsu Global · April 27, 2016 . 1. Consolidated. Financial...

FY2015 Financial Results Briefing ― FY2015 Financial Results and FY2016 Targets ―

Bunmei Shimojima President and Representative Director Fujitsu Frontech Limited April 27, 2016

1. Consolidated Financial Results for FY2015

Copyright 2016 FUJITSU FRONTECH LIMITED 1

Consolidated Results of Operations

Net sales Operating income

Ordinary income

Net income attributable to

owners of parent

Net income per share

FY2015 120.1 5.5 4.7 3.3 135.93 Yen

FY2014 108.9 4.4 4.8 2.8 116.68 Yen

Year-on-Year +11.2 +1.1 -0.１ +0.5 Figures announced

in January 118.5 5.5 5.0 3.0 125.19 Yen

Change from the figures announced

in January +1.6 ±0 -0.3 +0.3

FY2015 35.2（29.3％）

FY2014 33.2（30.5％）

Overseas sales （ Overseas ratio) Average exchange rate during

period(1USD=)

FY2015 １２０ Yen

FY2014 １１０ Yen

[Billion Yen]

Copyright 2016 FUJITSU FRONTECH LIMITED

※ Marked highest records for net sales and net income attributable to owners of parent for two years in a row

※ Marked highest record [Billion yen]

2

Major Factors for Changes in Operating Income

Year-on-Year increase ＋1.1

4.4

+0.4

＋1.9

-0.6

Profit increase due to sales increase

FY2014 FY2015

[Billion Yen]

Increase of business efficiency

Strategic investment

Upfront investment

-0.5


Sales by Business Segment [Billion Yen]

1 1 17.7 17.4

21 20.4

19.5 18

49.7 63.3

0

20

40

60

80

100

120

140

FY2014 FY2015

Financial Business : 63.3 Billion Yen (year-on-year increase of 13.6 billion yen, up 27%)

Retail Business : 18.0 Billion Yen (year-on-year decrease of 1.5 billion yen, down 8%)

Industrial/Public Business : 20.4 Billion Yen (year-on-year decrease of 0.6 billion yen, down 3%)

Service Business: 17.4 Billion Yen (year-on-year decrease of 0.3billion yen, down 2%)

Financial Business Retail Business

Industrial/Public Business Service Business

Other

108.9


120.1 Increase of replacement demand of domestic ATMs and

banking terminals

Expansion of mechanical component business

Increase of demands in mobile terminals and overseas SCOs

Change of commercial distribution for POS in Europe and

Americas (Changed from April, 2015)

Expansion of large-scale display system for public racing and

bidding system

Saturation in demand for totalizator terminals

Slower growth of number of retail store ATM users

Increase of LCM installation service, such as kitting service

4

Sales / Operating income by Business Segment

FY2014 FY2015 Change

Net Sales Operating Income Net Sales Operating

Income Net Sales Operating Income

Financial Business 49.7 3.6 63.3 5.8 +13.6 +2.2

Retail Business 19.5 -0.9 18.0 -1.0 -1.5 -0.1

Industrial/ Public Business

21.0 1.6 20.4 1.6 -0.6 ±0

Service Business 17.7 1.1 17.4 1.0 -0.3 -0.1

Other 1.0 0.1 1.0 0.1 ±0 ±0

Corporate - -1.1 - -2.1 ‐ -1.0

Total 108.9 4.4 120.1 5.5 +11.2 +1.1

[Billion Yen]


External Sales by Location of Customers

[Billion Yen]


Japan 75.7 84.9 +9.2

Overseas (Overseas sales ratio)

33.2 (３０.５%)

35.2 (２９.３％)

+2.0

Americas 11.1 9.6 -1.5

Europe 10.0 12.3 +2.3

Asia 11.6 13.2 +1.6

【China】【8.3】【9.7】【+1.4】

Other 0.5 0.1 -0.4

Total 108.9 120.1 +11.2


Consolidated Financial Positions and Cash Flows

Total Assets Total Liabilities (Loans Payable) Total Equity Capital Adequacy

Ratio

FY2015 72.8 32.4 ( - ) 40.4 55.1％

FY2014 72.7 34.4 (1.4) 38.3 52.4％

Change +0.1 -2.0 (-1.4) +2.1

C/F from operating activities

A

C/F from investing activities

B

Free C/F A＋B

C/F from financing activities

C

Ｃ/Ｆ A+B+C

Cash and cash equivalents at the end of the

year

FY2015 8.1 -2.2 5.9 -3.0 2.9 10.9

FY2014 6.7 -3.5 3.2 -1.6 1.6 8.1

Change +1.4 +1.3 +2.7 -1.4 +1.3 +2.8

[Billion Yen]

[Billion Yen]

Consolidated Financial Position

Consolidated Cash Flows


※ Decrease due to paying off loans payable

※ Non-debt management from FY2015

7

2.Results of Midterm Business Plan（2013～2015）


Results of Midterm Business Plan（1）


Performance Target

FY2015 Results

Net sales 120 120.1 Operating income 6 5.5 Operating income ratio 5.0％ 4.6％ Overseas sales ratio 30％ 29.3％

FY2012 FY2013 FY2014 FY2015

Net Sales 100.5 107.9 108.9 120.1

Operating income 2.4 4.1 4.4 5.5

Midterm Strategic Themes (B to B to Front) Promoting total business ranging from products to solution / services Strategic expansion of global business Creation of new business and new products Strict continuation of efforts to increase business efficiency

Performance Targets and Results

Transition of Net sales and Operating Profit

(Billions of Yen)

(Billions of Yen)

9



Promoting total business ranging from products to solution / services

Strategic Expansion of Global Business

Net Sales FY2012：100.5 Billion Yen → FY2015：120.1 Billion Yen （20% Increase） Including Solution / Service 27.3 Billion Yen → 28.3 Billion Yen（4％ Increase） Surely corresponding to replacement demands of ATM and banking terminals in

Japan（ATM：75% increase, Banking terminal：65% increase （ number of units compared to FY 2014 ）) Expanding service oriented business （Cash management service, commodification of RFID platform） Next Step ⇒ Corresponding to the “New Frontline”, further innovation of providing value ⇒ Enhancement of solution and service business

Overseas sales ratio FY2012：19.7% → FY2015：29.3% Expansion of ATM mechanical component business Started deployment of ATM outside of Japan

Next Step ⇒ Expansion of business areas (region and business fields)

10



Creation of new business and products

Strict continuation of efforts to increase business efficiency

Established new structure for developing solution business Newly set up “strategic investment” and increased investments that lead to

company’s growth (Settlement using palm vein authentication, Cash management system business in North America, and others)

Next Step ⇒ Accelerating commodification of solutions and services utilizing front core products.

Gross margin rate FY2012: 18.0% → FY2015: 19.5%

Enhancement of production capability by establishing Plant No.2 in Philippines

Achieved positive figures in overseas retail business by reexamination of business structure, and also finished reexamination of SCM of domestic POS business (New operation from April 2016)

Enhancing competitiveness of products by reinforcing cost management

Next Step ⇒ Continuation of innovation in the development and production process

11

3. New Midterm Business Plan and Measures for FY2016


Evolving Digital Innovation Transformation of financial

channel Retail digital marketing

Creating new business opportunities by vertically integrating front-end technologies, solutions, and services.

Rolling out our front-end technologies to other countries/regions and business fields.

Transformation of market Transformation of front-end

business

Our competitive front-end technologies: Bill validation, banknote transportation, palm vein authentication, and sensing devices including RFID, beacon, etc.


New Midterm Business Plan


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％

Overseas Sales Ratio 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

14

New Business Segments


Frontline Solution Business

Service Integration Business

Public Solution Business

Reorganized the organization and business segments in order to realize the mid-term business plan, correspond to changes in existent market and new technologies, and create strategic business

Global Product Business

15

Midterm policies and measures for FY2016（1）



Banking terminals（Japan） Surely corresponding to large replacement demand（80% increase in number of sales (in

units) compared to FY2015） Aggressively promoting specific suggestions of banking terminals for mini banks

ATMs（Japan） Surely corresponding to replacement demands Pursuing new value such as correspondence to overseas IC credit card and linkage with

mobile terminals Mechanical components

Strengthening partnership with overseas ATM vendors and expanding business further in Chinese, European and American market

Rolling out of small sized BRU for SCO in North America Development of next generation BRU for developing countries

Systems and solutions for overseas market Expanding sales of cash management solution for retail storefront and back office Enhancing function of ATM for Europe and promoting development of TCR in China

Expand global business areas utilizing knowhow of cash handling accumulated from ATM and overseas mechanical component business 【Midterm aim ⇒ Overseas sales ratio: 40%】

16



Enhancing proposal activities and support at one-stop, along with expansion of service and system integration linkage business 【Midterm aim ⇒ Solution / Service sales ratio 30%】


Financial Solution Enhancing contact point with customers, and provide new value ⇒ Adding our products to Finplex (Fujitsu’s new financial solution system) ⇒ Approaching to European and North American market

Solutions and Services

Expanding cash management service market (Gas station, hotels, hospitals, etc.)

Expanding help desk and acquiring new BPO business utilizing service base Expanding SI / LCM business utilizing synergy of solutions and services

17



Expansion of business areas, utilizing our core technologies for industrial/public solution business and metal molds and high-precision cutting business, and creation of solution business 【Midterm aim ⇒ 30% growth of sales】


Public racing solution Developing 8th generation totalizator terminal and toto terminal Driving forward service business for servers for public racing （Cashless, points, gifts）

Display system solution Acquiring and expanding big business deals for bidding system Surely corresponding to deals for digital signage, sports stadiums and etc.

18



Creating solution business utilizing advanced devices, including RFID, beacon, and palm vain authentication sensor, in addition to enhancing retail products 【Midterm aim ⇒ Creation of new business; targeting 30 Billion Yen】


Expanding front core product business area Expanding business in Japan, and expanding overseas business by next generation linen

tag Expanding market for built-in palm vain authentication sensor (development of

authentication engine for embedded system) Enhancing products by combining tablets and our I/O products

Expanding solution business with cutting-edge platforms IoT system / Cloud service with RFID, beacon and other sensor platforms Cardless payment platform by palm vein authentication

19



Promotion of Business Efficiency by Process Innovation

Development and Production Process Innovation by digital manufacturing Zero Defect：Inexhaustible pursuing of quality

20

Consolidated Earnings Forecast

Net Sales Operating Income

Ordinary Income

Net income attributable to

owners of parent

Net income per share

FY2016 Forecast

First Half 52.6 1.2 0.7 0.5 20.86 Yen

Full Year 113.5 5.7 4.9 3.4 141.88 Yen

FY2015 Results

First Half 55.7 2.0 1.9 1.3 53.67 Yen

Full Year 120.1 5.5 4.7 3.3 135.93 Yen

Change First Half -3.1 -0.8 -1.2 -0.8

Full Year -6.6 +0.2 +0.2 +0.1

[Billion Yen]

FY2016 Forecast 34.0（30.0％） FY2015 Results 35.2（29.3％）

Overseas Sales(Over seas sales ratio) [Billion Yen] Average Exchange Rate During Period(1USD=)

FY2016 Assumption

110 Yen

FY2015 120 Yen


※ Aim for highest records for all incomes

21

Forecast of Sales and Operating Profit by Business Segments


Net Sales Operating

Income Net Sales

Operating Income

Net Sales Operating

Income


57.0 3.7 53.4 2.3 -3.6 -1.4


28.3 3.5 28.4 3.5 +0.1 ±0


17.8 1.5 19.1 1.6 +1.3 +0.1


16.9 -1.2 12.5 0.4 -4.4 +1.6

Other / Corporate

0.1 -2.0 0.1 -2.0 ±0 ±0

Total 120.1 5.5 113.5 5.7 -6.6 +0.2

[Billion Yen]


Forecast of Sales by Regions [Billion Yen]


Japan 84.9 79.5 -5.4

Overseas 35.2 37.3 +2.1

Americas 9.6 10.8 +1.2

Europe 12.3 13.5 +1.2

Asia 13.2 13.0 -0.2

【China】【9.7】【9.7】【±0】

Other 0.1 0.0 -0.1

Currency Exchange － -3.3 -3.3

Total 120.1 113.5 -6.6


Investments Investments in Japan

Development of new services corresponding to increasing inbound visitors to Japan Development of new cash delivery services Development of new system for public lots market Provision of cardless payment service utilizing palm vein authentication system (Cloud platform)

Overseas Investments



Dividends

Dividend policy:

16 yen 17 18 20 22

0.4 billion yen

1.8

2.8 3.3 3.4

05

101520253035

FY2012 FY2013 FY2014 FY2015 FY2016

Item Interim Year-end Full year

FY2015 9 yen 11 yen (scheduled) 20 yen (scheduled)

FY2016 11 yen (planned)

11 yen (planned) 22 yen (planned)

Placing a focus on stable dividend payouts, dividends are decided in consideration of profits in each fiscal year and future business developments.

Past dividend distributions

Dividend per share (left axis)

Net income (right axis

[Billion yen] [Yen]

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0

25

<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.

26


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