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2018年3月期決算説明会資料

© TOPPAN FORMS CO.,LTD. 2017 : CONFIDENTIAL

Material for the Financial Results

Presentation for Fiscal 2018

May 11, 2018

Financial Results Presentation for

the Year Ended March 31, 2018





1

Million yen

Consolidated Business Performance for Fiscal 2018

Consolidated Financial Results

Year ended

March 31, 2018

YoY

Change Rate of

change

Net sales

Operating income

Ordinary income

Profit attributable

to owners of

parent

Compared to the forecast

(2,682)

+114

+404

+684

98.9

101.6

105.6

121.4

Change Achievement

rate

Year ended

March 31, 2017

257,734

9,474

5,876

10,065

237,317

7,114

3,884

7,604

(2,359)

(2,460)

(1,992)

(20,416)

(24.9)

(24.4)

(33.9)

(7.9)

Consolidated Financial Summary





2

Million yen

Year ended

March 31, 2017

Year ended

March 31, 2018 Change

Net sales Operating

income Net sales

Operating

income Net sales

Operating

income

DigitalHybrid 181,467 11,893 161,849 8,341 (19,617) (3,552)

IT Innovation 26,649 2,660 26,975 2,880 325 219

Business

Products 31,705 414 31,922 975 217 561

Global 17,911 172 16,569 820 (1,341) 647

Elimination of inter-

company transaction (5,666) (5,903) (236)

Consolidated total 257,734 9,474 237,317 7,114 (20,416) (2,359)

Business Performance by Business Segment

for Fiscal 2018 事業別業績

(10.8)

+1.2

+0.7

(7.5)

(29.9)

+8.3

+135.5

+375.7

(7.9) (24.9)






3

Contracts for data print services (DPS) such as transactional communications mainly from financial institutions increased steadily while segment sales declined from the previous year, due in part to the reduced sales volume

and price falls.

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 from the previous year, primarily because of declining unit prices and decreasing demand.

In digital solutions, both sales and operating income increased due to the increased sales of electronic delivery services and attendance management systems.

DigitalHybrid Business

Both sales and operating income increased due to the expansion in the range of orders for the system operation management service and the full-scale provision of payment services, which offset declines in cards

and others.

IT Innovation Business

Sales increased from the previous year, due in part to increased demand for custom-order equipment from the logistics industry. Operating income rose considerably due to increased sales of equipment and products with

high added value.

Sales decreased from the previous year, primarily because demand decreased for computer-related products and cards for financial institutions in the Hong Kong market. However, operating income increased

significantly due to an increase in orders received for government-related ID cards in Thailand.

Business Products Business

Global Business

Earnings Highlights by Business Segment

for Fiscal 2018






4

Cost reductions made more progress than planned, but the impact of the decline

in sales from large projects in the DigitalHybrid business was excessive.

Analysis of Change in Operating Income (Result)

9,474

7,114

3,300

600

1,600

260

3,000

400

Year ended

March 31, 2017

Others

Decline in

unit prices

Down ¥2,359 million

Million yen

Decline in

sales

Year ended

March 31, 2018

Cost

increases

Cost

reductions

Reduction

of SG&A




5

Management Policies for the

Year Ending March 31, 2019

Management Policies



6

Market Environment

Domestic Market

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

Management Policies



7

Basic Policy

New Era of DigitalHybrid®

Create new value by mobilizing the pioneer spirit.

Rename the DigitalHybrid Business

to the Data & Documents Business.

Make DigitalHybrid a domain that

embraces all the businesses of the

Toppan Forms Group.

Begin to take full-scale initiatives in

the frontier domain.

Global Business




Management Policies

Data & Documents




Global Business

Frontier Business

+

Life Care Energy Matching

DPS DS BPO BF

Thailand Hong Kong

Singapore New

Ereas

Information Equipment

Developed Equipment

Supply

Payment Services

System Operation

RFID Cards



8

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

Management Policies



9

Data & Document Business

※当社基準

Expanding the Customer Base in the Mainstay Business

Sales: Reorganization for strengthening measures for making forays into and deeply cultivating specific

industries and revitalizing the organization.

Manufacturing: Increasing earning power by consolidating manufacturing bases and optimizing equipment.

Staff: Enhancing the support system in digital solutions. Promoting non-face-to-face sales activities using

IT, such as the online purchase management service.

Reorganization and structural reinforcement aimed

at expanding the customer base

(Deliv

ery

perio

d)

(Scale)

Lo

ng

S

ho

rt

Small Large

- Domain in which we are strong.

Advanced functions and high level

of security

- Focus on the financial industry.

Making projects at existing

customers into composite projects

- Increase scale of projects

- Domain on which we will begin

to put our focus. Subsequently

launch generalized package

merchandise of standard

functions and standard

security.

- Manufacturing, logistics, retail,

etc.

Establishing an approach to each target

1) Made-to-order Approach

Increasing sales of digital solutions and BPO to companies

from which we have received orders for DPS. Expanding the

scale of projects to composite large outsourcing projects.

2) Package Approach

Catering to needs for low prices and short delivery by

enhancing and standardizing generalized merchandise for

digital solutions, which is effective for new business

development and the expansion of sales channels in industries

of focus.

Made-to-order approach

(contract-based

approach)

Package approach

(generalized

approach)

Shifting Back to a Growth Trajectory: Strategy in Each Business



10

Hokkaido Plant

BPO Satellite Sendai

Fussa Plant

Takiyama Plant

BPO Hino Center

Joto Center

Nagoya Plant

Kyushu Plant

JSC/Shinjuku

JSC/Sendai

JSC/Nagasaki BPO base

DPS base

JSC/Etchujima

Osaka Sakurai

Plant

Expansion of

space for BPO

Sendai Center

JSC/Shin Osaka

Data & Document Business

Improving the growth ability of digital solutions

Strengthening measures for capturing demand for digitization in the fields of input, delivery and storage, where

needs are high

Deep cultivation and acceleration

of the BPO market

Accelerating measures for winning projects throughout

Japan

■ DPS/ BPO bases of the TOPPAN FORMS Group

Expanding high-value added BPO services based on

DPS by targeting financial institutions and municipal

governments

Expanding the space at Osaka Sakurai Plant to build a

system for receiving orders for conposite projects in DPS

and BPO in the Kansai area. Subsequently begin to

receive orders for BPO at existing DPS bases in Japan.

Deep cultivation of the market high-value added BPO

Entering the data distribution business by building the VRM/ PDS platform*. Starting demonstration experiments in

the second half of the year with the aim of providing services in the sports and healthcare field.

* VRM/PDS platform is a platform that connects consumers with multiple companies. Data

including personal information entrusted by consumers are managed and used on the platform.


Fields of Focus in Data & Document Business



11


Expansion of Payment Services

0

5

10

15

20

25

30

Fiscal 2017(Result)

Fiscal 2018(Result)

Fiscal 2019(Forecast)



Number of terminals

(Ten

thousand

units)

5,000 20,000

80,000

160,000

260,000 FY2021 targets (consolidated)

Net sales: ¥5.0 billion

Operating income: ¥1.5 billion

■ Number of connected terminals for payment services

Source Outline

Cashless Vision (Ministry of

Economy, Trade and

Industry)

Released in April 2018

Target: Achieving a cashless payment

ratio of 40% by 2025

Increasing the ratio to 80% in the future

Payment and Settlement

Statistics (February 2018)

(Bank of Japan)

Released in March 2018

Environment of the domestic electronic

money market

- Value of transactions

2017: ¥5,199.4 billion

2016: ¥5,143.6 billion

2015: ¥4,644.3 billion

- Volume of transactions

2017: ¥5,423 million

2016: ¥5,192 million

2015: ¥4,678 million

■ Environment of the cashless payment market

“Takeoff Phase” of Thincacloud

Increasing the number of terminals connected to Thincacloud, a cloud-based e-money payment platform, to 260,000

units by the end of the year ending March 31, 2021

Promoting sales in the amusement, logistics and retail, taxi and other industries

Providing a wide variety of payment methods, including an integrated terminal that also permits credit card payments




12

Communication

sectionSensor section

When exposed to water

Recording

When the sensor section is electrified

–> Judged as “Not wet”

When exposed to water, only the

sensor section is disconnected

--> Judged as “Exposed to water”

DisconnectionDuring normal operation

Communication

sectionSensor section

Recording


To the Domain of RFID + Sensor Devices

■ Water detection label that permits the use of a simple sensor

Deep cultivation of the manufacturing, medical and logistics industries

with high-performance RFID Accelerating the market deployment of high-performance RFID featuring high precision, high durability,

sensing functions and other functions

Expansion into new business domains by using LPWA*

Use of LoRa Private, a telecommunication technology owned by mtes Neural Networks

Expanding the business into new domains including energy management and building structure condition monitoring

Developing an IoT solution that combines RFID and LPWA, and expanding the business into the infrastructure

industry in addition to manufacturing, medical care and logistics

Internet

Cloud

Parent device (gateway)

- Lowers the barrier to the

introduction of IoT

- Permits a smaller number of

parent devices to be installed

- Low cost of introduction

■ Conceptual image of using of LPWA

* LPWA: Low Power Wide Area

Using LPWA

communication to upload

the data aggregated in

the parent device to the

cloud via the internet

Use of printed antenna wiring technologies




13


Enhancing High Value-added Products that Suit the Times

Improving planning and development capabilities by

integrating the information equipment division into J-SCube inc.

Integrating the information equipment division into J-SCube Inc. to

centralize planning and development and other functions

Increasing the Group’s synergy by optimizing resources and

improving efficiency

Expansion of service menu of temperature

management solutions

Launch of environmental monitoring services for managing temperature, humidity

distribution and other elements during transportation

Increasing sales of Ontrasys Tag, a temperature logger

Main targets: Pharmaceutical manufacturers, pharmaceutical wholesalers, etc.

who require high-quality transportation of pharmaceutical products urgently

Awareness of strict quality control during transportation has also been growing

in Japan due to the influence of international quality control standards for the

pharmaceutical distribution process.

PASiD scan

Mailing equipment OCR system




14

Sri Lanka

Indoneesia

Thailand

MalaysiaVietnam

Hong Kong

Global Business

アジア横断的な成長戦略の推進

Expanding the area DPS and BPO contract orders Hong Kong: Capturing demand for DPS and BPO mainly in Hong Kong and the surrounding areas of Greater China

Also strengthening measures for cultivating focus industries

Singapore: Expanding the area DPS and BPO contract orders with a focus on the financial industry

Promoting Trans-Asian Growth Strategies

Establishing a competitive advantage in existing areas

Developing and starting to provide services of digital merchandise

Forming alliances aggressively with Singapore at the starting point to

enhance the lineup of services

Expanding the base of the digital solutions business

Building a card-manufacturing organization that covers all of Asia Promoting the expansion of the card business to the growth markets of ASEAN countries, where infrastructure

development is in progress, through the cooperation of card manufacturing bases in Hong Kong and Thailand




15

Global Business

Promoting Borderless Business Expansion

Expanding the business over a wide area and beyond borders by collaborating

with global companies

Year ended March 31, 2018 Year ending March 31, 2021

Expanding the Data & Documents domain

beyond borders

Increasing sales of digital

solutions and BPO

Expanding the market areas

in ASEAN countries

Full-scale entry to the digital domain

Capturing demand for BPO

Borderless operation of DPS

Digital solutions (DS)

BPO

BF and DPS DSBPOBF･DPS

DSBPOBF･DPS

DSBPO

BF･DPS

DSBPOBF･DPS

DSBPOBF･DPS

DSBPOBF･DPS

香港

シンガポール

タイ

マレーシア

インドネシア

その他

DSBPOBF･DPS

ベトナム

2018/3 2019/3 2020/3 2021/3

Hong Kong

Singapore

Thailand

Malaysia

Indonesia

Other

Vietnam




16

System Planning Phase Service Provision Phase

Introduction of tools

Distributor agreement

Starting to provide RPA tools

Starting to provide RPA tools

201920182017

Provision of services including operation analysis, support forintroduction and training services

Initiatives in New Domains

Creation of New Business Models

Frontier domain: Creating a domain of businesses for providing solutions to social issues

Creating new businesses for providing solutions to social issues, such as life care (rehabilitation), energy

(renewable energy/energy saving) and matching (effective use of IT)

The creation and selection of themes were commenced in October last year. We aim to achieve

commercialization within the current fiscal year.

Entering the RPA business, that contributes to improving the productivity and operating

efficiency of companies

Building a business model for working in the domains of consultation and training, including operation

analysis, support for introduction and the provision of training services, in addition to providing multiple RPA

tools and AI OCR services jointly with TOPPAN FORMS OPERATION

Shifting Back to a Growth Trajectory



17

Structural Reform

Implementing Structural Reform Aimed at Continuous Growth

Consolidating manufacturing bases centered on the Tokai area

Construction of the Tokai Plant (tentative name) to be started in August 2018 and completed at the end of 2019 (plan)

Reinforcing the system for producing IoT-related products such as BF and RFID tags so as to improve productivity

Introducing RPA internally to improve operating efficiency

Expanding operations to which RPA is applied to improve productivity and ensure appropriate resources

Shifting the axis in the Global Business

Liquidation of SHENZHEN RUIXING PRINTING

COMPANY LTD. and business domain

reorganization in Hong Kong

Making business investments in the IT and BPO

domains boldly in ASEAN countries

Ensuring appropriate manpower management by managing the ratio of total personnel

expenses to sales




18

Strategic Business Investment

Making Business Investments Based on Growth Strategies

Investing a total of around 30 billion yen in light of market and technology trends

Planning both M&A and minor investments to make optimal investments

Strengthening initiatives for creating synergy with capital investment destinations

New

New

Expanding the global territory and taking initiatives for growth in emerging countries

Existing

Existing

Acquiring expertise in specific industries or operations

Expanding the BPO domain, improving

productivity and acquiring expertise

Finding partners for providing generalized

services for responding to the digitization of

existing domains

Joint creation and development of

new business models and frontier domains

Enhancing lineups of technologies and

services for responding to the information

revolution

Technologies

Market

Domains and companies that are likely to undergo a

destructive impact due to leading-edge technologies

will be avoided.

Potential M&A targets Rapid expansion of destructive technologies,

resulting in fierce competition for survival

It is important to create opportunities through minor

investments while also hedging risk




19

Future Outlook



20

Performance Forecast for Fiscal 2019

Million yen

Ordinary income

Operating income

Net sales

Year ended

March 31, 2018

Year ending

March 31, 2019

YoY

233,000

6,500

7,000

3,500

(614)

(384)

(8.6%)

(9.9%)

Change Growth

rate

(4,317)

(604)

(1.8%)

(8.0%)

237,317

7,114

7,604

3,884 1.5

2.8

3.0

1.6

3.0

3.2

Profit attributable to

owners of parent

Future Outlook



21

Forecast for Change in Operating Income

7,114 6,500

1,200

200

1,300

214

2,000

300

Year ended

March 31, 2018

Others

Decline in

unit prices

Down ¥614 million

Million yen Decline

in sales

Year ending

March 31, 2019

Cost

increases

Cost

reductions

Reduction

of SG&A

Future Outlook



22

Compound

Average

Growth Rate

+8.9%

+0.1%

+14.9%

+0.2% 161,849 157,500 158,500 163,000

26,975 29,000

33,500

39,000

31,922 31,000

30,000

32,000

16,569 15,500

18,000

21,000

100,000

150,000

200,000

250,000

Result for the year endedMarch 31, 2018

Forecast for the year endingMarch 31, 2019



Data & Document Business IT Innovation Business

Business Products Business Global BusinessMillion yen

237,317 233,000

240,000

255,000

Three-Year Outlook (Net Sales)

Future Outlook



23

Million yen

7,114

6,500

8,000

10,000

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

Result for the year endedMarch 31, 2018




Operating income

Operating income margin

Three-Year Outlook (Operating Income)

Future Outlook



24

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0.00

5.00

10.00

15.00

20.00

25.00

30.00

99/3 00/3 01/3 02/3 03/3 04/3 05/3 06/3 07/3 08/3 09/3 10/3 11/3 12/3 13/3 14/3 15/3 16/3 17/3 18/3 19/3

Dividend Consolidated Payout Ratio

Graph: Amount of Annual Dividend and Consolidated Payout Ratio

Yen

Shareholder Returns

Basic Approach

We will allocate profits primarily to research and development, capital expenditures, and business

investments, aiming for a sustained improvement in corporate value.

For dividends, we will attach importance to continuity and stability and will keep the amount

unchanged even in a difficult business environment.

Future Outlook



25

Reference



26


224,357

169,220

(1,553)

+2,676

+1.6p

Total assets

Net assets

Equity ratio

March 31, 2018

74.4%


10,957

(8,615)

+1,624

+3,933

(74)

Net cash provided by operating activities

Net cash used in investing activities

Net cash used in financing activities (2,822)

Cash equivalents +4,932 58,919

March 31, 2018

Financial Status and Cash Flows

Status of Cash Flows Million yen

222,803

171,897

76.0%

12,582

(4,681)

(2,897)

63,852

Reference

Total Assets and Net Assets Million yen



27

Capital Expenditure and Depreciation

Actual capital expenditure

7,132 million yen (Planned annual amount: 9,000 million yen)

Actual depreciation

8,334 million yen (Planned annual amount: 9,000 million yen)

Major capital expenditures in the year ended March 31, 2018

Expenditures related to production equipment such as variable printers

Expenses for reorganizing bases, such as expanding the space of Osaka

Sakurai Plant

Infrastructure development and production equipment in IT Innovation Business

Investment in IT system equipment for business infrastructure development

Capital expenditures at overseas bases

¥3.4 billion

¥1.6 billion

¥0.6 billion

¥0.7 billion

¥0.8 billion

Actual Capital Expenditures and Depreciation

Reference



28

Outlook for Capital Expenditures and Depreciation

Reference

Capital Expenditure and Depreciation

Capital expenditure

7,300 million yen (excluding business investments)

Depreciation

8,700 million yen

Major capital expenditures planned for the year ending March 31, 2019

Expenditures related to production equipment such as variable printers

Infrastructure development and production equipment in IT Innovation Business

Development of information system infrastructure for optimizing business

administration

Capital expenditures at overseas bases

¥5.0 billion

¥0.7 billion

¥0.8 billion

¥0.8 billion



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.