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Densan System Co., Ltd.
Presentation Materials for the FY2016 Results Briefing
Securities Code: 3630 Tokyo Stock Exchange, First SectionNagoya Stock Exchange, First Section
情報サービス事業
1
Ⅰ. FY2016 Summary of Results* Figures in tables and graphs are expressed in units of one million yen, with amounts less than one million yen rounded down
* Values expressed as a per cent are rounded off to two decimal places
2
FY2015Actual Plan Actual
Sales 28,956 31,500 30,369 1,412 4.9% -1,130 -3.6%Operating income 1,042 1,270 1,125 83 8.0% -144 -11.4%
Operating profitmargin 3.6% 4.0% 3.7% 0.1 -0.3
Ordinary income 1,071 1,278 1,157 85 7.9% -120 -9.5%Ordinary profit
margin 3.7% 4.1% 3.8% 0.1 -0.2Net income 660 810 732 71 10.9% -77 -9.6%
Year-over-year(YoY) change
Compared to planFY2016
Consolidated
Sales
Operating income
Sales rose around 5% from the previous FY but missed plan by somewhat over 3% due to weakness in 2H.
Favorable operating income in 2H compared with the previous FY covered for 1H but failed to attain plan.
FY2016 Financial Summary
Unit: million yen (Amounts less than one million yen are rounded down)
<FY2016 Full-year Earnings Highlights>
31H and 2H compared with the previous FY and Plan
14,149 14,777
14,808 15,591
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
FY2015 FY2016
Sales
2H
1H
14,733 14,777
16,766 15,591
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Plan for FY2016 Actual for FY2016
Sales
2H
1H
475 409
794 715
0
200
400
600
800
1,000
1,200
1,400
Plan for FY2016 Actual for FY2016
Operating income
2H
1H
Year-over-year change Compared to plan
465 409
576 715
0
200
400
600
800
1,000
1,200
FY2015 FY2016
Operating income
2H
1H
4
Sales of information services were almost flat compared with the previous FY, missing plan.However, sales of payment agency services developed to plan, contributing to the increase in consolidated sales.
While operating income from information services missed plan, payment agency services posted favorable growth in operating income both compared with the previous FY and relative to plan, contributing to consolidated earnings. The reason was a rising number of transactions due to the Company's strength in paper invoices.
Sales
Operating income
FY2015
Actual Plan Actual Change % Change %
Information servicesSales 15,122 16,500 15,320 197 1.3% -1,179 -7.2%Operating income 484 700 516 32 6.6% -183 -26.2%Profit margin 3.2% 4.2% 3.4% 0.2 - -0.9 -Payment agency servicesSales 13,834 15,000 15,049 1,214 8.8% 49 0.3%Operating income 543 600 643 99 18.3% 43 7.2%Profit margin 3.9% 4.0% 4.3% 0.3 - 0.3 -
FY20151H actuals Plan Actual
Adjustments for segmentincome -52 -30 -34
Compared to planSegment
Year-over-year changeFY2016
FY2016
Net sales and Operating Income by SegmentUnit: million yen
5
FY2015
Actual Plan Actual
Net sales 15,122 16,500 15,320 197 1.3% -1,179 -7.2%(breakdown by service)
SI and softwaredevelopment 9,053 9,823 9,040 -12 -0.1% -782 -8.0%
Information processingservices 4,553 5,560 5,034 481 10.6% -525 -9.5%
Product sales 1,515 1,116 1,245 -270 -17.9% 128 11.5%Operating income 484 700 516 32 6.6% -183 -26.2%
Informationservices business
FY2016 Year-over-year change Compared to plan
59.0%32.9%
8.1%FY2016 Sales by Type of Service
SI and software developmentInformation processing servicesProduct sales
1 In information processing services, sales rose steadily in agency services for issuing invoices and processing for local public organizations, etc., additionally aided by newly started gift processing services.
2 In SI and software development, cloud related services such as G Suite (the previous Google Apps for Work), as well as projects such as automatic auction systems and ERP packages performed well. Even so, however, sales declined mainly due to the absence of the large-scale equipment sales to local public organizations booked on consolidated accounts in the previous fiscal year.
3 Earnings rose thanks to high-margin projects in SI and software development, covering for pressure on income at information processing services affected by cost increases from the newly launched gift processing services as well as price competition surrounding pre-existing services.
Information Services SegmentUnit: million yen (Amounts less than one million yen are rounded down)
6
85 198 176 275 737
1,458 938
1,915
0
200
400
600
800
1,000
1,200
0
500
1,000
1,500
2,000
2,500
Mid-term Term end Mid-term Term end
FY2015 FY2016
Million yen Cloud services sales breakdownGoogle事業
Google事業以外のクラウドサービス
Number of companies with installations
Cloud services other than Google business
Google business
Effects from the collaboration with Google further strengthened.Likewise, trade inquiries and introductions of large-sale projects in cloud-driven signage systems have been expanding to leisure facilities and traffic advertisement, with growth expectations for the current FY.
7,396 81.7%
1,656 18.3%
FY2015
SI・ソフト開発
クラウドサービス
SI and software development
Cloud services
6,849 75.8%
2,190 24.2%
FY2016
SI・ソフト開発
クラウドサービス
SI and software development
Cloud services
9,0499,05332.2%
+ ¥534 million
Cloud ServicesCloud services for system integration
and software development
Cloud Services● Net sales:
¥534 million, +32.2% YoY● In SI and software development:
2014 2015 201615.1% → 18.3% → 24.2%
Cloud services are growing steadily.
Google Business● Companies with installations:
1,040 companies, +18% YoY● Net sales: ¥457 million, +31.3% YoY
7
39,000
7,435
22,478
37,668
51,053
0
10,000
20,000
30,000
40,000
50,000
60,000
Term end Cumulativeas of 1Q
Mid-term Cumulativeas of 3Q
Term end
FY2015 FY2016
1,000 operationsYoY Comparisons of Number
of TransactionsOrder
acceptance agency services
1%Data entry
services19%
Printing agency services (invoice printing)
45%
Issuing invoices agency services
12%
Other services
23%
Percentage of processed items by service type
2,324
516
1,215
1,901
2,720
0
500
1,000
1,500
2,000
2,500
3,000
Term end Cumulative asof 1Q
Mid-term Cumulative asof 3Q
Term end
FY2015 FY2016
Million yen YoY Comparisons in BPO Net Sales ● Gift processing for large-lot
customers launched in 4Q of the previous FY contributed to sales and the number of transactions on a full-year basis with higher growth rates. However, partly due to start-up cost rising above budget, earnings declined relative to plan.
Up 17%
Up 31%
BPO Segment (business process outsourcing)
8
1. The acquisition of new customers including local governments developed successfully. Despite fluctuations in monthly growth rates unseen in a normal year caused by factors such as the earthquake in Kumamoto and the sequence of public holidays, results throughout the FY were generally favorable.
2. Moreover, the number of stores adopting at-the-counter remittance services for supermarkets and drugstore chain stores increased almost to plan.
FY2015
Actual Plan Actual
Net sales 13,834 15,000 15,049 1,214 8.8% 49 0.3%(breakdown by service)Payment services sales 13,461 14,332 14,499 1,038 7.7% 166 1.2%
Paper invoice services 11,843 12,486 12,718 874 7.4% 232 1.9%Paperless services 1,063 1,256 1,173 110 10.4% -82 -6.6%Account transfer services 554 590 607 53 9.6% 16 2.9%
Payment innovation sales* 373 667 550 176 47.3% -117 -17.5%
Operating income 543 600 643 99 18.3% 43 7.2%
Payment agencyservices business
FY2016 Year-over-yearchange Compared to plan
Paper invoice services84.5%
Paperless services
7.8%
Account transfer services
4.0%
Payment innovation
2.7%
FY2016 Sales by Type of Service
* Payment innovation comprises smart remittances, international remittances, and at-the-counter remittance services.
Payment Agency Services Segment (by service)Unit: million yen (Amounts less than one million yen are rounded down)
9
6,114 6,191 6,766 7,183
12,368 12,564 13,724
15,049 145,439 151,622
167,535 182,116
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
FY2013 FY2014 FY2015 FY20160
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
Net Sales and Number of Transactions
Net sales (first half) Net sales (full year)
No. of transactions (full year: in 1,000's)
Sales: million yen
3,681 4,031 4,389 4,531
3.9%
9.4%9.0%
3.0%2.7%
11.0%
6.7%7.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
0
1,000
2,000
3,000
4,000
5,000
FY2013 FY2014 FY2015 FY2016
Growth rate (%)Companies Number of Business Partners
No. of partners Growth rates (private sector businesses)Growth rates (local public organizations)
Up 8.1%
Up8.8%
6.8%
1.6%
8.7%
7.4%
8.1%
-12.2%
22.2%
10.3%
5.2%2.8% 6.9%
9.6%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
FY2013 FY2014 FY2015 FY2016
YoY Comparison of Net Sales by Service
払込票決済サービス
ペーパーレス決済サービス
口座振替サービス
Paper invoice services
Paperless services
Account transfer services
● Payment services overall posted growth in excess of 8% both for sales and the number of transactions.
● Among the individual services, the high income-margin business in account transfer services posted gains.
● The decline in the growth rate for the number of business partners (contrasting with the year-over-year increase in the number of newly acquired customers) reflects the elimination of inactive accounts (termination).
Payment Services
Operations: in 1,000’s
10
320
0
50
100
150
200
250
300
350
0
100,000
200,000
300,000
400,000
500,000
600,000
2013 2014 2015 2016
Net sales: million yen
No. of operations
Sales of remittance services
Sales
No. of remittances
230
0
500
1,000
1,500
2,000
2,500
0
50
100
150
200
250
2013 2014 2015 2016
No. of storesSales/¥1 millionCounter Payment Collections
Sales
No. of stores with installations
0
5
10
15
20
25
30
35
40
45
50
0
50,000
100,000
150,000
200,000
250,000
2013 2014 2015 2016
No. of stores
No. ofremittances
Number of Remittances and Stores with Will Call
Pre-registered remittancesNo. of Will Call remittancesStores with Will Call
Up 75.2%
Up 72.0%
Up 18.8%
Down 3.3%
Up 62.5%
Up 26.4%
Up 2.8% ● In remittance services, contributions came from growth in smart remittances (domestic remittance services). (The higher number of account transfer transactions and growth in remittance services both significantly contributed to the attainment of operating income targets.)
● In at-the-counter remittance services, sales and store numbers increased strongly from introductions at large drugstore chains.
Payment Innovation Segment
11
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
Fe
b. 2
012
Ma
r. 2
012
Ma
y 20
12Ju
l. 2
012
Sep
. 201
2N
ov. 2
012
Jan.
20
13M
ar.
201
3M
ay
2013
Jul.
201
3S
ep. 2
013
Nov
. 201
3Ja
n. 2
014
Ma
r. 2
014
Ma
y 20
14Ju
l. 2
014
Sep
. 201
4N
ov. 2
014
Jan.
20
15M
ar.
201
5M
ay
2015
Jul.
201
5S
ep. 2
015
Nov
. 201
5Ja
n. 2
016
Ma
r. 2
016
Ma
y 20
16Ju
l. 2
016
Sep
. 201
6N
ov. 2
016
Dec
. 201
6
People
Registered Users for International Remittances (Cumulative Total)
0.0
200.0
400.0
600.0
800.0
1000.0
1200.0
Jan. Feb. Mar. Apr. May. Jun. Jul. Aug. Sep. Oct. Noc. Dec.
No. permonth
Number of RemittancesNo. of remittances in 2013 (per day) No. of remittances in 2014 (per day)No. of remittances in 2015 (per day) No. of remittances in 2016 (per day)
0
200
400
600
800
1,000
1,200
1,400
Jan. Feb. Mar. Apr. May. Jun. Jul. Aug. Sep. Oct. Noc. Dec.
Million yen
Value of Remittances (Monthly)
2014 month-basis 2015 month-basis 2016 month-basis
●Growth slowed in the numbaer of pre-registered users due to the introduction of the personal tax number system, with a decline in the number of remittance transactions at stores offering Will Call.
●Lower growth rates in the number of transactions due to remittances put on hold owing to yen depreciation.
●Intensified market competition from competitors.
As a result of the above factors, growth in international remittances posted a mild decline.
International Remittance Services
12
FY2015 FY2016Year-end Year-end
Current assets 25,509 39,746 14,236
Non-current assets 4,555 5,244 689
30,064 44,991 14,926
Current liabilities 21,230 35,012 13,782
Non-currentliabilities 859 1,365 505
Total liabilities 22,090 36,377 14,287Shareholders'equity 7,657 8,284 626Accumulated othercomprehensive income 209 159 -209Equity of non-controllingshareholders 107 169 62Net assets 7,974 8,613 638
30,064 44,991 14,926Total liabilities andnet assets
Consolidated balance sheet
[Reason for increase]Money held in trust 12,908 million yenCash and deposits 703 million yenGoodwill 429 million yenNotes and accountsreceivable-trade 336 million yen
[Reason for decrease]Short-term loans payable 212 million yen[Reason for increase]Payment collectiondeposits 13,356 million yenLong-term loans payable,including current portion 560 million yenOther currently liabilities 274 million yen
[Reason for increase]Retained earnings 497 million yen[Reasons for decrease]Teasury shares 125 million yen
Change Main reasons for change
Total assets
Financial Information (1) Balance Sheet
Unit: million yen
13
8,444 5,244
169
9,243
5,873
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
Assets Capital
Million yen
8,444 5,244
169
27,738
2,766 2,889
30,504
6,354 5,873
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
Assets Capital
Million yen
68.765.1 64.7 65.7 65.7 66 65.5 64.5 64 61.3 59.9 60.9 61.4 58.3
28.8 25.819
31.2 31.225.5
32.426.4 28.5 27.7 25.8 26.2 23.5
18.8
0
10
20
30
40
50
60
70
80
1H Full yr. 1H Full yr. 1H Full yr. 1H Full yr. 1H Full yr. 1H Full yr. 1H Full yr.
FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
%Trends in the Equity Ratio
Equity ratio (vs. debt + equity)
Equity ratio (vs. total balance sheet,from quarterly earnings reports)
(Cash and deposits)
(Money held in trust)
(Payment collection deposits)
* The decline is magnified by the unusually large portion of payment collection deposits in FY2016.
[Reference] Equity Ratio Details
The equity ratio (after excluding any payment collection deposits) has been running at an average of 60% or higher.
Current assets
Non-current assets
Liabilities
Equity
14
FY2015 year-end FY2016 year-end
Cash flows fromoperating activities 806 1,354
[Increased funds]Income before income taxes 1,169 million yenDepreciation 492 million yenIncrease in other current liabilities 194 million yen[Decreased funds]Income taxes paid 336 million yenIncrease in notes and accountsreceivable-trade 189 million yen
Cash flows frominvesting activities -685 -1,118
[Increased funds]Sale of investment securities 52 million yen[Decreased funds]Expenditures for the acquisition ofshares in subsidiaries associated withchanges in the scope of consolidation 382 million yenPurchase of property, plant and equipment 373 million yenPurchase of intangible assets 325 million yen
Cash flows fromfinancing activities -335 18
[Increased funds]Proceeds from long-term loans payable 820 million yen[Decreased funds]Repayment of long-term loans payable 439 million yenPayment of cash dividends 234 million yenNet decrease in short-term loans 212 million yen
Increase (decrease) incash and cash equivalents 205 255Cash and cash equivalentsat the start of the period 2,746 2,531Cash and cash equivalentsat the end of the period 2,531 2,787
Financial Information (2) Cash FlowsUnit: million yen
情報サービス事業
15
Ⅱ. FY2017 Earnings Forecast
16
The reasons for the lower growth in income relative to sales growth are mainly proactive budgeting for M&A starting with the current FY as well as anticipated special costs. Moreover, the lower net income compared with the previous FY is due to extraordinary gains recognized in the previous FY and effects from the equity percentage held in share of subsidiaries.
FY2016
Full-year actuals Full-year plan Variance Growth rate
Sales 30,369 33,700 3,330 11.0%Operating income 1,125 1,170 44 3.9%Ordinary income 1,157 1,180 22 2.0%Net income 732 675 -56 -7.7%
ConsolidatedFY2017
FY2017 Earnings Forecast
Unit: million yen (Amounts less than one million yen are rounded down)
<Highlights of the FY2017 Full-year Earnings Forecast>
17
1H14,777
1H15,987
2H15,591
2H17,712
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
FY2016 actuals FY2017 plan
Sales
1H409
1H470
2H715
2H699
0
200
400
600
800
1,000
1,200
1,400
FY2016 actuals FY2017 plan
Operating Income
1H432
1H479
2H724
2H701
0
200
400
600
800
1,000
1,200
1,400
FY2016 actuals FY2017 plan
Ordinary Income
1H287
1H267
2H444 2H
408
0
100
200
300
400
500
600
700
800
FY2016 actuals FY2017 plan
Net Income
FY2017 Forecast (with first/second half details)
18
1H actuals 2H actuals Full-year actuals 1H plan 2H plan Full-year plan
Information servicesSales 7,362 7,957 15,320 7,980 9,519 17,500 2,179 14.2% 617 8.4% 1,562 19.6%Operating income 106 410 516 183 436 620 103 20.1% 77 73.2% 26 6.3%Payment agency servicesSales 7,414 7,634 15,049 8,006 8,193 16,200 1,150 7.6% 591 8.0% 559 7.3%Operating income 306 336 643 257 292 550 -93 -14.5% -49 -16.1% -44 -13.1%Adjustments for segmentincome -2 -31 -34 29 -29 0
SegmentFY2016 FY2017
1H 2HFull yearYear-over-yearYear-over-year
30,369 30,369
2,179 1,150 3,330
20,000
22,000
24,000
26,000
28,000
30,000
32,000
34,000
36,000
FY2016 actuals Informationservices
Payment agencyservices
FY2017 plan
Million yen Sales
1,125 1,125
103
-93
34 44
-200
0
200
400
600
800
1,000
1,200
1,400
FY2016 actuals Informationservices
Payment agencyservices
HQ adjustments FY2017 plan
Million yen Operating Income
FY2017 Earnings Forecast by Half and Segment
Unit: million yen (Amounts less than one million yen are rounded down)
19
106 183
410 436 306
257
336 292
-2
29
-31 -29 -100
0
100
200
300
400
500
600
700
800
FY2016 1H actuals FY2017 1H plan FY2016 2H actuals FY2017 2H plan
Operating IncomeHead office adjustment cost
Operating income from payment agencyservicesOperating income from informationservices
7,362 7,980 7,957 9,519
7,414 8,006 7,634
8,193
02,0004,0006,0008,000
10,00012,00014,00016,00018,00020,000
FY2016 1Hactuals
FY2017 1H plan FY2016 2Hactuals
FY2017 2H plan
SalesSales of payment agency servicesSales of information services
1H plan
45.6%
2H plan
54.4%
Info. Sales
1H plan
49.4%
2H plan
50.6%
Pymt. Sales
1H plan
29.6%2H plan
70.4%
Info. Op. Income
1H plan
46.8%2H
plan53.2%
Pymt. Op. Income
FY2017 Earnings Forecast by Half and Segment
20
In SI and software development, expectations are for contributions to full-year sales from newly consolidated GOGA, Inc., whose synergy effects should lead to a higher growth rate in the Google business handled thus far. Moreover, given strong demand surrounding development as well as active order inflow for digital signage, caught in a lull last FY, estimates call for 14% growth in sales.
<Highlights of the FY2017 Full-year Earnings Forecast>
Sales
Operating income
1H actual 2H actual Full-year actual 1H plan 2H plan Full-year plan Change %
Net sales 7,362 7,957 15,320 7,980 9,519 17,500 2,179 14.2%(breakdown by service)
SI and software development 4,368 4,671 9,040 5,137 6,087 11,225 2,185 24.2%Information processing 2,379 2,655 5,034 2,270 2,821 5,092 57 1.1%
Product sales 614 630 1,245 572 609 1,182 -63 -5.1%Operating income 106 410 516 183 436 620 103 20.1%Operating profit margin 1.4% 5.2% 3.4% 2.3% 4.6% 3.5% 0.2 -
Information servicesbusiness
Year-over-year (full year)FY2016 FY2017
Without the red figures from maintenance projects posted last FY and given the shift to projects with high income margins since 2H of last FY, as well as strong demand for development services curbing unused human resources, projections are for a 20% earnings expansion.
Forecast by Individual Information ServiceUnit: million yen (Amounts less than one million yen are rounded down)
21
1H actuals 2H actuals Full-year actuals 1H plan 2H plan Full-year plan Change %
Sales 7,414 7,634 15,049 8,006 8,193 16,200 1,150 7.6%Payment services 7,183 7,315 14,499 7,721 7,855 15,577 1,078 7.4%(breakdown by payment service)
Paper invoice services 6,289 6,428 12,718 6,795 6,938 13,734 1,016 8.0%Paperless services 596 577 1,173 604 589 1,194 21 1.8%Account transfer services 298 309 607 321 327 648 40 6.7%
Payment innovation 230 319 550 284 337 622 72 13.1%Operating income 306 336 643 257 292 550 -93 -14.5%Operating profit margin 4.1% 4.4% 4.3% 3.2% 3.6% 3.4% -0.9% -
Payment agencyservices
FY2017FY2016 Year-over-year (full year)
For payment innovation, plans take into account constraints on international remittances due to the continuing effects of the personal tax number. However, set targets anticipate coverage coming from growth in domestic remittances and at-the-counter payment agency services. Growth assumptions take into account the effects from special factors in paperless payment services.
The outlook is for significant improvements in the red figures from international remittances. However, the virtual platform creation and transition work in payment agency system scheduled for the current FY, and plans for full-scale overseas initiatives and M&A budgeting, will have significant impact on income going forward, with an expected decline in segment earnings.
Forecast by Individual Payment Agency Service
<Highlights of the FY2017 Full-year Earnings Forecast>
Sales
Operating income
Unit: million yen (Amounts less than one million yen are rounded down)
情報サービス事業
22
Ⅲ. Progress status of the Medium-Term Management Plan (2017 - 2019)
and PLAN 2020
23
FY2016 FY2017 FY2018 FY2019
Actual Plan Plan Plan
Sales 30,369 33,700 37,500 41,300 10.8%Operating income 1,125 1,170 1,500 1,800 17.4%Ordinary income 1,157 1,180 1,510 1,810 16.6%Net income 732 675 872 1,047 13.8%
Growth rate(YoY)
Consolidated(Average rate)
Medium-term plan (FY2017 to FY2019)
3.7%
3.5%4.0%
4.4%3.8%
3.5%4.0%
4.4%
2.4%2.0%
2.3% 2.5%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
FY2016 FY2017 FY2018 FY2019
Profit MarginsOperating profit marginOrdinary profit marginNet profit margin
Medium-term Business Plan (3-year plan: FY2017 to FY2019)
Unit: million yen
Highlights of the FY2017–FY2019 3-year Plan
Driving structural transformation● Primary actions
・Overseas development・From a "flow business" to a "stock business“・Proactive M&A
24
15,320 17,500 19,900 22,300
15,04916,200
17,600
19,000
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
FY2016 FY2017 FY2018 FY2019
SalesInformation services business
Payment agency services business
516 620 800
1,040643 550
700760
-34
3.4%3.5%
4.0%4.7%
4.3%
3.4%4.0% 4.0%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
△ 100
100
300
500
700
900
1,100
1,300
1,500
1,700
1,900
FY2016 FY2017 FY2018 FY2019
Operating Income営業利益(情報) 営業利益(収納代行)
Adjustments for segment income Operating profit margin (Info.)Operating profit margin (Pymt.)
Operating income (Info.) Operating income (Pymt.)
Operating income: million yen
Information services
Payment agency services
3-year Plan by Segment: FY2017 to FY2019
Unit: million yen Operating profit margin: %
<Highlights of 3-year Earnings Outlook (FY2017–FY2019)>
・ Expanding the BPO business.・ Expanding the cloud services business.・ Increasing the relative weight of our stock businesses.
・ Promoting overseas business development.・ Increasing the convenience of our offerings through growth in at-the-counter
services for payments and remittances.・ Enhancing our initiatives towards new payment collection methods (FinTech).
-
25
PLAN2020
戦略3分野8事業
ストック型ビジネス
8割で実現
● Business processing field (5) BPO business(6) Development, operation
and maintenance business(7) Agribusiness(8) Medical business
● Payment field(1) Payment agency services
business(2) Remittance services
business(3) New settlements business
● Cloud field(4) Cloud services business
Progress status of the Long-term Management Plan (PLAN 2020)
Unit: million yen
1997Start of payment agency services
2020Net sales:¥50 billion
Information services business
Information services business
Payment agency
services business
Payment agency services
business
Cloud services business
1986Opened Tokyo Office
2008IPO
2013 Cloud service started
2012Listed on
first section
2020
Sales (unit: ¥100 million)
Remittances infrastructure
Information infrastructure
(business platform)
Founded 1967Founding spirit of
"Independence, uniqueness, and creativity"
Business structure up until now
Formation of a three-pronged business structure
Information and communication
technology
PLAN 20203 strategic fields
with 8 businessesStock-type
business 80% realized
26
March 10, 2016Signing of the MoA with CBCI
at the Ogaki Techno Center of the Company
Meralco Head Office CBCI Bayad Center Store
Payment business field (promotion of overseas initiatives)
Philippines selected as first country for overseas initiatives
Conclusion of a memorandum of agreement on cooperation with CIS Bayad Center, Inc., the largest operator in the Philippines with at-the-counter payment collection in 4,400 locations countrywide and a 30% transaction handling share.
FY2016 Progress StatusDevelopment of the Biz@gent system for the
Philippines with operations start-up under preparation As to development, the Biz@gent server (telecommunications and management) has as
of the end of 2016 passed user testing at the location, with the environment for actual operations being under preparation.
27Efforts in the payment business field going forward
Electronic bar code
Fintech Overseas initiatives
New payment collection methods
28
About GOGA, Inc.Established in 2006 and from the first approved as partner in the map development of Google. As a frontrunner in Google Map business application services, active as developer of location-based services.
Acquisition of the share capital of GOGA, Inc. (integration as subsidiary)
Efforts geared at ONE Google
×
Case examples from the track record of GOGA, Inc.●Seven & i Food Systems Co., Ltd.
Operator of the nationwide "Denny’s" restaurant chain in Japan, adopted the GOGA Store Locator comprised of the "Denny’s" website and store search system.
●NTT DOCOMO, INC.For the "Docomodake" design wrapped-trolley buses operated in Hawaii by the international business division of NTT DOCOMO, INC., creation of a system for visually checking on the bus locations at all times.
Cloud business field
Google Business Solutions
(Advertisement)
Strengthen
Enter
Market size of the geolocation information industry in Japan *
(Trillions of yen)
(Estimate)
Category Case examples from fields of application
Mining and manufacturing
Agricultural, forestry, and fishery production
Retailing
Services
Transportation and logistics
Construction, real estate, and infrastructure
Automated mining, IT driven resource search, robotics, etc.
Automated agriculture, sensor-based dairy farming, IT driven forestry and fishery production
Sales promotion (promotion, O2O, etc.)
Tourism, metered automobile insurance, personal property security, surveillance, geo-position information games, etc.
Navigation (optimal-route search), traffic regulations, unmanned driving, automated warehousing, etc.
Computerized construction (automated construction), real estate trading, infrastructure management, etc.
* Market size is defined as sales turnover of products and services related to the geolocation information industry.
Source: "Geospace × ICT Promotion Conference Report," Ministry of Internal Affairs and Communications
© BBT Research Institute
29Business expansion
What can be done with maps:Location information, static and dynamic IOT
These are actively used across all types of industries
[Transportation]- Real-time display of
moving objects such as trucks, etc.
- Display of shortest routes- Display of traffic
congestion information
[Retailing]- Real-time display of map-
linked sales data- Marketing strategies- Inventory checks
[Self-governing bodies]- Information sharing and
visual display in case of accident
- Management and joint use of own facilities
- Pipeline simulations- Power grid plotting- Tie-ins with pre-existing
systems
[Construction consulting][Electric power and resource development]
- Plotting travel locations on maps- Sharing and practical use of
completed drawings and simulation results
- Support tools for sales people- Display of object data- BCP creation (verification that
employees are unharmed, etc.)
[IT, real estate, business agency]
30Efforts in the cloud business field going forward
One Google-based business expansion
Business platform enhancement by using the Company's data center
Cloud transitioning of the SI business
31
In November 2016 the Company concluded a share underwriting agreement for a capital participation and cooperative arrangement with Works Applications Co., Ltd., a leading company in the ERP package industry.
Content of the cooperative arrangementThe arrangement opens the possibility of service provision for small and medium-sized enterprise (businesses with up to 800 employees) regarding the "COMPANY" series for large companies, hitherto available only through direct sales.
* SaaS license will be specially provided for the Company.
COMPANY Human Resources Series
DSK BPO Services×
Support for the introduction and operation of AI-driven ERP packages
Business processing field
32Efforts in the business processing field going forward
Stock business increase through BPO business expansion
Share expansion through improvements to automatic auction platforms
Promotion of business consolidation and augmentation of synergy effects
情報サービス事業
33
Ⅳ. Stock Information
34
7 8.5 10 11 11 12 127
910 11 12 12 132.5
0
5
10
15
20
25
30
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017…
Special dividend Annual Interim
● ¥25 per share annual dividend on common stock
Ordinary dividend:¥24 → ¥25
Up 4.1% ★ Continuous dividend
increases on ordinary dividend since the stock exchange listing
Ordinary dividend:
¥25
%
28.1
34.8 31.4 31.2
33.9 31.8
36.2
20.022.024.026.028.030.032.034.036.038.0
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017…
Dividend Payout Ratio
Dividend payout ratioAverage 32.5%
Shareholder Returns
● Dividend payout ratio: 36.2%
Unit: yen
35
48.1%
20.5%
27.2%
1.1% 0.5% 2.5%
End of 50th Period - Distribution of Ownership
Individuals and others
Financial institutions
Other JapanesecorporationsForeign owners
Securities companies
Held by company
株主総数14,401人
15,654shareholders
47.0%
20.2%
28.6%
1.1%0.6%2.5%
End of 49th Period - Distribution of Ownership
14,401shareholders
Number ofshares Ratio
HIROTA Co.Ltd. 890,100 8.87%Densan System employeestock plan 869,566 8.66%
The Juroku Bank, Ltd. 441,900 4.40%Ogaki Kyoritsu Bank Ltd. 424,900 4.23%Masanao Miyachi 414,770 4.13%The Gifu Shinkin Bank 359,900 3.58%Kazuhiro Uchiki 212,670 2.12%TOKAI Corp. 207,180 2.06%TIS Inc. 200,000 1.99%The Master Trust Bank ofJapan, Ltd. 151,500 1.51%
ShareholderOwnership
Stock-related InformationTop 10 Shareholders (as of December 31, 2016)
* Total number of shares issued: 10,040,000* Excluding 254,854 shares held by the company
36
42nd period 43rd period 44th period 45th period 46th period 47th period 48th period 49th period 50th period
FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
Net sales (million yen) 16,872 16,785 19,153 21,027 23,369 24,559 26,494 28,956 30,369
Ordinary income (million yen) 1,013 603 802 829 928 1,021 1,163 1,071 1,157
Net income (million yen) 563 324 422 450 516 593 685 660 732
Net assets (million yen) 5,027 5,172 5,549 5,791 6,207 7,072 7,678 7,974 8,613
Total assets (million yen) 17,277 19,221 19,026 29,998 24,011 26,396 27,350 30,064 44,991Net assets pershare (yen) 1,088.22 1,138.54 1,207.19 1,271.21 1,363.27 723.51 776.68 812.42 866.6
Net income pershare (yen) 145.3 70.81 92.94 99.6 115.07 63.7 70.43 67.81 75.42
Equiry ratio (%) 29.1 26.9 28.8 19 25.5 26.4 27.7 26.2 18.8Return on equity (%) 12.7 6.4 7.9 8.1 8.7 9.1 9.4 8.6 9.0Price-earningsratio (multiple) 3.9 8 8.3 6.9 10.3 22 22.4 28.3 23.2
Marketcapitalization (million yen) 2,605 2,566 3,488 3,095 5,319 13,518 15,795 19,224 17,590
Ordinary profitmargin (%) 6.0 3.6 4.2 3.9 4.0 4.2 4.4 3.7 3.8
Current ratio (%) 128.7 122.9 124.7 113.6 120.7 120.7 121.4 120.2 113.5
Fiscal year
Reference Materials: Business Indicators
Total number of shares issued: 10,040,000Average number of shares during the fiscal year: 9,710,925