financial results presentation for the first half of the year ending … · 2018-12-13 ·...

2018年3月期決算説明会資料 Material for the Financial Results

Presentation for the First Half of

the Fiscal 2019

November 7, 2018

Financial Results Presentation for

the First Half of the Year Ending

March 31, 2019



the Fiscal 2019

1

Financial Summary for

the First Half of the Year

Ending March 31, 2019



the Fiscal 2019

2

Million yen

First half of the

year ending

March 31, 2019

YoY

(251)

+128

(8.5)

(8.2)

+8.5

Change Rate of change

Net sales

Operating income

Ordinary income

Profit attributable

to owners of

parent

First half of the

year ended

March 31, 2018

(5.9) 110,780

2,501

1,633

2,808

Financial Summary for the First Half of the Year Ending March 31, 2019: (1)

Consolidated Financial Results

117,750

2,732

1,504

3,060

(6,970)

(231)



the Fiscal 2019

3

Million yen

First half of the year ended

March 31, 2018

First half of the year ending

March 31, 2019 Change

Net sales Operating

income Net sales

Operating

income Net sales

Operating

income

Data & Document 81,274 3,997 75,204 3,839 (6,070) (157)

IT Innovation 12,865 1,122 14,121 1,443 +1,256 +320

Business

Products 15,946 479 13,700 (122) (2,246) (601)

Global 7,663 17 7,753 112 +89 +94

Elimination of inter-

company transaction (2,885) (2,773) 112

Consolidated total 117,750 2,732 110,780 2,501 (6,970) (231)

Business Performance by Business Segment

(7.5)

+9.8

(14.1)

+1.2

(3.9)

+28.6

–

+534.8


(8.5) (5.9)



the Fiscal 2019

4

In DPS, sales increased and operating income rose considerably despite a reduced sales volume and price falls, which were offset by a steady increase in contracts for transactional communication and direct mail mainly from financial institutions.

In digital solutions, sales increased and operating income rose considerably due to the increased sales of digital communication services of a variety of business documents and the regulations publication/management system for financial institutions.

In BPO, both sales and operating income declined significantly from the previous year given the rapid reduction in temporary benefit-related orders and large projects from some clients.

In BF, sales declined slightly and operating income decreased, primarily because of declining unit prices and decreasing demand.

Data & Document Business

Both sales and operating income rose considerably, due in part to the expansion in the range of orders for the system operation management service, the sales expansion of card-related equipment and RFID tags, and expansion in the payment service.

IT Innovation Business

Sales declined and operating income plunged significantly, primarily because of reduced sales from high-functionality labels for product management and a reactionary drop in demand for custom-order equipment

from the logistics industry.

Operating income rose significantly, despite lower revenue from the sale of PCs, servers, and related products in Hong Kong, which was offset by strong demand for DPS and BPO and the growth in orders

received for high value-added cards in Hong Kong and Thailand.

Business Products Business

Global Business

Sales by Business Segment




the Fiscal 2019

5

2,732

1,162

2,232 2,501

820

750 1,070

269

Growth and cost reduction of DPS, digital solutions, and the IT Innovation Business

and other factors contributed to operating income, but it decreased due to reductions

in large projects from some clients, a decline in sales from custom-order equipment,

and a sharp rise in distribution costs.

First half of the year

ended March 31, 2018


ending March 31, 2019

Cost

decreases

Change

in sales

Cost

increases

Reduction of

SG&A and

others


Analysis of YoY Change in Operating Income

Down ¥231 million

Labor costs,

distribution costs,

and others

Including

decrease of IT

costs

Material for the Financial Results


the Fiscal 2019

6

Initiatives in Fields of Focus



the Fiscal 2019

7

Profitability

Gro

wth

po

ten

tial

Payment services

1

2

4 3

HighLow

Low

High

BF

BPO

Global

Digital solutions

System operationmanagement

DPS

Supply productsEquipment

IoT/cardsDevelopingbusinesses innew domains

Improving profitability byincreasing our proprietaryproducts

Business expansion through growthinvestment aimed at improvingcompetitiveness, developinginfrastructure, etc.

Maintaining profitability byincreasing market sharesand reducing costs

Direction of Each Business Domain

■Payment services

FY2021 targets

Net sales: ¥5.0 billion

Operating income: ¥1.5 billion

■IoT/cards

FY2021 target

Increase sales to 200% or

more compared to the

FY2018 level

■Digital solutions

FY2021 target

Increase sales to 200% or

more compared to the

FY2018 level

■Global

FY2021 target

Increase sales to 150%

or more compared to the

FY2018 level



the Fiscal 2019

8

+17.7%

181,467

161,849 157,500 158,500 163,000

26,649

26,975 29,000

33,500

39,000

31,705

31,922 31,000

30,000

32,000

17,911

16,569 15,500

18,000

21,000

100,000

150,000

200,000

250,000

Result forthe year ended…

Result for the year endedMarch 31, 2018

Forecast for the year endingMarch 31, 2019



Data & Document Business IT Innovation Business

Business Products Business Global Business19/3-21/3

Compound

Average

Growth Rate

+1.6%

+17.2%

+1.7%

Business Performance (Net Sales)

Million yen

233,000 240,000

255,000

237,317

257,734

Result for the year ended March 31, 2017


Forecast for the year ending March 31, 2019





the Fiscal 2019

9

9,474

7,114

6,500

8,000

10,000

3.7%

3.0% 2.8%

3.3%

3.9%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

0

2,000

4,000

6,000

8,000

10,000

2017年3月期実績 2018年3月期実績 2019年3月期計画 2020年3月期計画 2021年3月期計画

Operating income Operating income margin

Business Performance (Operating Income) Million yen








the Fiscal 2019

10

Market Environment

Domestic Market

Unclear economic outlook attributed to political and economic uncertainty

Decline in the labor force attributed to the declining birthrate and aging population

Measures to improve productivity strengthened by companies through workstyle reforms,

with progress made in automatization and labor-saving by utilizing AI and RPA

Evolution and use/application of digital technologies accelerated toward 2020

Momentum for structural reforms increased in the financial industry and various other

industries

Increasing threat of cyber attacks due to the spread of digitization, with increasing

importance of information security

The time has come to replace social infrastructure.

ASEAN countries are seeing the expansion of the middle-income class in addition to

population growth.

High economic growth rate supported by high interest rates

Commencement of full-scale development of social infrastructure

Overseas Market



the Fiscal 2019

11

Initiatives for Increasing Composite Projects: (1)

Promotion of Data & Document Business: (1)

Target for the year ending March

2021 (compared to the forecast

for the year ending March 2019):

¥10.0 billion increase in sales

from DPS, BPO, and DS

Digital Products: “Select and Focus” through rebranding

Systematizing and generalizing lineups in the fields of input, output, and storage, where market needs are

high

Capturing demand for DPS and BPO as the first step for the creation of large composite projects

Output Storage

経費精算給与計算

Solutions related to

personnel/general affairs

Fast

Input Operational solutions

• Certificates for deduction

• Digitalization of payment

slips and others

Creating composite projects with a focus on DPS

Increase in DPS + digital solution projects

・Differentiating ourselves with optimal solutions combining existing and new products

Introduction of new methods utilizing IT

・Developing new DM services utilizing marketing automation (MA)

・Strengthening non-face-to-face sales activities utilizing the Web

■ Lineup of generalized services in digital solutions

• Attendance management

• Salary statement and

others



the Fiscal 2019

12

Initiatives for Increasing Composite Projects: (2)

Strengthening the structure for receiving orders for BPO

Conforming to PCI DSS* Conformity to the global security standard, which will be a major differentiator

Expanding sales channels to a wide variety of industries, such as energy and mail order, by taking advantage

of our solid customer base

Opening new centers in regional cities

(Aomori Operation Center and BPO Satellite Himeji)

Establishing structure for receiving orders for BPO at our manufacturing locations across Japan

Strengthening the BCP system through cooperation with existing bases


Fact-finding

surveys and

analyses Acceptance of

the form

Scanning of

the form

Screening

Data entry

Credit Check

Response to orders

and inquiries made via

telephone (Contact center)

Differentiators created by conformity to PCI DSS

We will handle voice communications with end users as well. We will also be ready to provide contract-based services of assuming contact center functions, including the input of sensitive information.

Conforming to PCI DSS:

Achieving safe, secure operations in an environment with a high level of security

In addition to our solid customer base, the environment with a high level of information security will be our differentiator. Inquiries from a wide variety of industries, such as mail-order and energy, will increase.

1 2

* PCI DSS: A global standard of the credit card industry that was formulated

to ensure that information on credit card holders is handled safety

Establishing

operations

Establishing

environment



the Fiscal 2019

13

Entering the Data Distribution Business

Building a data distribution platform

Taking advantage of our expertise in information security that was cultivated through DPS and other businesses,

we will build a data distribution platform with a focus on personal data store (PDS), an infrastructure for data

storage and management.

Moving forward, we will promote the use of the platform in the field of healthcare, and connect with blockchain,

which achieves secure, highly convenient data distribution, and other measures.

Conceptual rendering of connection linkage between

PDS and blockchain


生活者

Applications for users Managing and storing personal

data, sensitive information,

etc.

PDS

Managing procedure

history, information,

etc.

Permission for registration and linkage

of necessary data

Applications, contracts, changes to notifications,

etc.

Achieving a Smart Contract

Consumers

Blockchain

TOPPAN FORMS



the Fiscal 2019

14

Expansion of IT Innovation Business: (1)

Visualizing and Optimizing Work Sites by Introducing IoT

Increase in the adoption of RFID solutions in the fields of

manufacturing, healthcare, and logistics

Adoption of solutions from TOPPAN FORMS, which combine reader/writer and system based on high-quality

RFID, in a wide variety of settings including process management and parts logistics management

Introduction example: A system that collects manufacturing performance automatically by using RFID


2021 (compared to the forecast for

the year ending March 2019):

IoT/Cards: Increase of sales by

¥5.0 billion

Real-time check of the progress of each process and immediate response to abnormal circumstances

Contributing to work efficiency improvement with accurate data collection

Head office

Abolishment of hand-written daily production report

Visualization of work sites

Process A Process B Process C

PLC

Manufacturing result Manufacturing result Manufacturing result

Confirmation of manufacturing performance

Output of daily production report

Abnormality monitoring Operational availability

monitoring Defect monitoring Traceability

Remote monitoring

Manufacturing performance is registered simply

by passing the RFID Kanban over the reader

every time manufacturing is completed.

In the event of an abnormality, abnormality alert

is given to the supervisor simply by placing a

stop card.

Linkage with the equipment permits the

automatic registration of performance of

manufacturing with the equipment.



the Fiscal 2019

15


Expanding Business Domains with IoT

Using LPWA to expand our sales channel to the infrastructure industry

Additional investment in mtes Neural Networks, to make the company our equity method affiliate

Creating synergy in the field of IoT centered on Structural Health Monitoring

SAMPLE Vibrations and tilts are detected

by the sensors mounted on the

bridge piers.

Obtained data are sent to the parent device via LPWA.

Data aggregated in the parent

device are sent to the

cloud via 3G or LTE.

Managing and analyzing

data stored in the cloud

Cloud

How Structural Health Monitoring is used

LoRa PrivateHGW

Contributing to infrastructure maintenance through measurement and constant remote monitoring of changes to structures,

such as bridge piers, tunnels, and buildings



the Fiscal 2019

16


Expansion of the Card Business Attributed to the Growth of Security-Related Demand

Expanding sales of laser-printed ID cards

Expanding sales of laser-printed ID cards, which are effective for preventing falsification and counterfeiting

because the characters printed on the card surface cannot be scraped off

Capturing security-related demand from international events and similar events, in addition to demand for laser-

printed ID cards such as health insurance cards, employee ID cards, and admission cards

It has been informally decided that multiple

health insurance unions will place orders for

the issuance of health insurance cards.

We will introduce equipment for issuing

laser-printed cards.

The card surface becomes worn

or is otherwise damaged, which

may make it difficult to identify the

characters.

The surface is resistant to wear and

other damage because the colors

are part of the card.

ID function is retained.

Benefits of laser printing

[Conventional printing method] [Laser printing]

We will begin to accept orders for the bulk

issuance of cards in the second half.



the Fiscal 2019

17


Expansion of use in such fields as amusement, taxis, and

vending machines

The number of terminals connected to the payment platform, which was around 20,000 on March 31, 2018,

increased rapidly to around 43,000 as of September 30, 2018.

Many development projects will be generated due to the rapid increase. We will try to handle projects more

quickly by securing resources.

Rapid Increase in the Number of Terminals Connected to Thincacloud

Readers/writers from TOPPAN FORMS and Thincacloud were

adopted for the new tablet with payment function, which is

mounted on the back of the front seat of the taxi.

Introduction example: JapanTaxi Co., Ltd.




Payment services: Increase of sales

by ¥3.0 billion

17/3

（実績）

17/9

（実績）

18/3

（実績）

18/9

（実績）

19/3

（期初想定）

19/3

（見込み）

5,000

10,000

20,000

43,000

80,000

The target set at the

beginning of the fiscal

year is expected to be

achieved.

Number of terminals connected to

Thincacloud

FY2021 targets (consolidated)

Net sales: ¥5.0 billion

Operating income: ¥1.5 billion

Mar. 2017

(Result)

Sept. 2017

(Result)

Mar. 2018

(Result)

Sept. 2018

(Result)

Mar. 2019

(Initial forecast)

Mar. 2019

(Forecast)



the Fiscal 2019

18

Businesses That Contribute to Solving Social Issues

Participating in the Smart Card Common Usage Demonstration Project in Vietnam

A project adopted as a Project for Nurturing New Industries in ASEAN and Japan, which was

publicly solicited by JETRO

Conducting technology verifications for infrastructure development at commercial facilities and

similar facilities

Aiming to actualize the potential requirements of cashless payment in Vietnam

Contributing to overcoming the labor shortage with automation systems

Mail sorting system (eliminating delivery errors and solving the labor shortage at mail centers)

Reception counter support system

(Saving labor for branch operations of financial institutions and other organizations in conjunction with PASiD

scan)

Differentiator: Total support for processes from introduction to maintenance, which is provided by specialized

engineers via a nationwide sales network

[Business Products Business] Developing New Markets: Information Equipment

[Global Business] ASEAN: Initiatives for Infrastructure Development

Launching products that cater to needs of the times



the Fiscal 2019

19

Creation and Promotion of New Businesses: (1)

Early Commercialization of New Business Projects

Foray into the healthcare field

Making our foray into the healthcare field by forming a capital tie-up with Hirotsu Bio Science Inc.

Providing comprehensive support for achieving the practical application of the cancer screening test

service that was developed by the company

Features of the test service • Affordable

• Exhaustive cancer screening of the

entire body

• Simple and easy

• Permits early detection

• Painless

Analysis Laboratory

Collaborations with medical institutions

Awareness campaign

Consumables for inspection

Inspection

Sales promotion to attract

corporate customers

Area worked on

by TOPPAN FORMS

Taking advantage of our

expertise in information

security cultivated through

DPS and BPO



the Fiscal 2019

20

Creation and Promotion of New Businesses: (2)

Full-Scale Operation of RPA Business: Contributing to Workstyle Reform

Improving clients’ productivity with RPA total support service

Providing support for the processes from process selection through

demonstration experiment to introduction and operation.

Ready to select and provide the optimal RPA tool for the use environment, including the subject process and size

of the business establishment

Opening the RPA Lab, a facility for RPA training/tests, in early December

Planning to start providing full-scale training and support services in January 2019

Planning

introduction

Selection of tools

Support for trial

RPA service menu

Capable of

providing three RPA

tools with different

features

Support for

full-scale

introduction

Technical

support

Training and

instruction services

Support for

demonstration

experiment

1 2 3 4 5




RPA service: Increase of sales by

¥1.5 billion

* WinActor is a registered trademark of NTT Advanced Technology Corporation.

Patrol Robocon



the Fiscal 2019

21

Structural Reform: Profitability Improvement

Implementing Structural Reform Aimed at Continuous Growth

Profitability improvement

Speeding up the manufacturing process for DPS by using full-color digital printers

Subsequently expanding the subject orders at production locations nationwide

At Takiyama Factory, which is our core factory, a faster process has been achieved for more than 70%

of subject orders.

Structural Reform

Optimizing businesses and organizations: Restructuring the BPO business/Optimizing the sales and

manufacturing systems

Reviewing existing businesses: Disposing of unprofitable businesses in Japan and other countries

Reform of personnel system and operational reforms: Promoting optimization of personnel distribution

Promoting personnel shift to growth fields

Improving operational efficiency by introducing RPA internally

Initiatives for productivity improvement and cost reduction in the

manufacturing division

Reviewing businesses and organizations and promoting systemic reforms

Expected effect of structural reform:

¥3.0 billion



the Fiscal 2019

22

Business Investments

Making Business Investments Aimed at Continuous Growth

Collaborations and tie-ups through the creation of synergy in growth domains

Making investments mainly in start-ups, aiming to create synergy of their businesses with ours

Measure taken in the first half under review: Additional investment in mtes Neural Networks to make

the company became our equity-method affiliate

Investments for expansion of the Global Business

Planning collaborations with strong local companies in Indonesia and other ASEAN countries with the

aim of strengthening DPS and BPO

Collaborations and tie-ups in new business domains

Investing in start-ups with unique technologies, aiming to promote the Frontier Business for creating

businesses that will be our mainstay businesses for the next generation.

Measure taken in the first half under review: Formation of a capital tie-up with Hirotsu Bio Science Inc.



the Fiscal 2019

23

Reference



the Fiscal 2019

24

Change

(2,690)

+683

+1.2p

Total assets

Net assets

Equity ratio

September 31, 2018

Total Assets and Net Assets Million yen

Change

+376

(3,066)

+4

Net cash provided by operating activities

Net cash used in investing activities

Net cash used in financing activities

Cash equivalents +2,267

Financial Status and Cash Flows

Status of Cash Flows Million yen

219,777

172,580

77.3%

6,703

(5,426)

(1,429)

63,622

March 31, 2018


ended March 31,

2018

222,467

171,897

76.1%

6,327

(2,360)

(1,434)

61,354


ending March 31,

2019



the Fiscal 2019

25

Capital Expenditure and Depreciation

Actual capital expenditure

4,831 million yen (Planned annual amount: 7,300 million yen)

Actual depreciation

3,710 million yen (Planned annual amount: 8,700 million yen)

Major capital expenditures in the first half under review

Expenditures related to the construction of Fukuroi Factory ¥2.5 billion

Expenditures related to production equipment such as variable printers ¥0.8 billion

Capital expenditures at overseas locations ¥0.4 b¥illion

Actual Capital Expenditures, Depreciation and

Shareholder Returns

Shareholder Returns

Measure for shareholder returns

Payment of interim dividend of ¥12.5 (to be ¥25.0 in total for the full year)



the Fiscal 2019

26

Takaaki Hirotsu, President & CEO

Representative

• Biological diagnostics research:

Research, development, manufacturing,

and sale of cancer diagnostic testing

equipment utilizing C. elegans and C.

elegans olfactory sensors

Business overview

August 2016

Established

Corporate Profile

About Hirotsu Bio Science: (1)

1,642,077,000 yen (including capital reserve; as of November 2018)

Capital

Hirotsu Bio Science Inc.

Company name

To all

黄色マーカー箇所は同社の「会社概要」より引用しました。

Yellow parts are from the following.

日

https://hbio.jp/company/

英

https://hbio.jp/en/company/

https://hbio.jp/company/

https://hbio.jp/en/company/



the Fiscal 2019

Note on Forward-Looking Statements

Please note that performance forecast and future outlook contained

in this presentation material are forward-looking statements made

by the Company based on currently available information, and its

actual business performance may differ from such statements

depending on the future business environment.

financial results presentation for the first half of the year ending … · 2018-12-13 ·...

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