FY2017 1Q Financial Results and Management Policies · in the financial field to retail and public fields Providing an emphatic response to the revolution taking place financial front-end

FY2017 1Q Financial Results and Management PoliciesJuly 26, 2017FUJITSU FRONTECH LIMITED

1. Summary of FY2017 1Q Consolidated Financial Results

Copyright 2017 FUJITSU FRONTECH LIMITED

Consolidated Results of Operations Sales / Operating Income by Business Segment Sales by Business Segment Sales by Regions Consolidated Financial Positions and Cash Flows

1


Net sales

Operating income

Ordinary income

Profit attributable to

owners of parent

Net income per share

FY20171Q

２３.４０.８０.８０.５２１.２６ yen

FY20161Q

２１.５０.１ -０.６ -０.５ -１９.６６ yen

Year-on-Year

＋１.９＋０.７＋１.４＋１.０

FY20171Q

５.８（24.7％）

FY20161Q

４.６（21.2％）

Sales Outside Japan（ Ratio） [Billion yen]Average exchange rate during period

（1USD=）FY2017

1Q１１１ yen

FY20161Q

１０８ yen

[Billion Yen]

Consolidated Results of Operations

2


Sales / Operating income by Business Segment

FY2016 1Q FY2017 1Q Change

Net sales Operating income Net sales Operating

income Net sales Operating income

Global ProductBusiness

８.９ -０.３９.００.０＋０.１＋０.３

Service Integration Business ６.９０.７６.４０.７ -０.５ ±０

Public Solution Business ３.５０.２５.１０.４＋１.６＋０.２

Frontline Solution Business ２.１ -０.２２.８０.０＋０.７＋０.２

Other / Corporate(Including strategic

investments)０.０ -０.３０.０ -０.３ ±０ ±０

Total ２１.５０.１２３.４０.８＋１.９＋０.７

[Billion yen]

3

Sales by Business Segment[Billion Yen]

2.1 2.83.5

5.1

6.96.4

8.99

0

5

10

15

20

25

FY2016 1Q FY2017 1Q

Global Product Business 9.0 Billion Yen(year-on-year +0.1 Billion Yen, +1%)

Service Integration Business 6.4 Billion yen(year-on-year -0.5 Billion Yen, -7%)

Public Solution Business 5.1 Billion Yen(year-on-year ＋1.6 Billion Yen,＋46%)

Frontline Solution Business 2.8 Billion yen(year-on-year +0.7 Billion Yen, +33%)

23.4


21.5 Peak out of cash handling components for cash

management systems for retail stores in US Good performance of cash handling component business

for Europe and China Decrease of banking terminals in Japan due to peak out

of large replacement demand

Decrease of ATM software packages and system integration business

Decrease due to completion of large scale entrusted development

Growth of totalizator related products and operation service due to acceleration of schedule

Increase of flight information display system and used car auction system

Increase of mobile terminals due to large demands Growth of palm vein authentication outside Japan Growth of RFID in Japan

Global Product BusinessService Integration BusinessPublic Solution BusinessFrontline Solution Business

4


Sales by Regions

[Billion yen]

FY2016 1Q FY2017 1Q Change

Japan １６.９１７.６＋０.７

Outside Japan（ Ratio)

４.６（２１.２％）

５.８（２４.７％）

＋１.２

Americas ２.８２.２ -０.６

Europe １.０１.９＋０.９

Asia ０.８１.７＋０.９

China ０.４１.０＋０.６

Other ０.００.０ ±０

Total ２１.５２３.４＋１.９

5

Consolidated Financial Positions and Cash Flows

Total Assets Total Liabilities Total Equity Capital Adequacy

Ratio

FY2017 1Q ６９.２２４.８４４.４６３.８％

FY2016 ７４.６３０.６４４.０５８.６％

Change -５.４ -５.８＋０.４

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

FY2017 1Q ３.５ -１.４２.１ -０.６１.５２０.３

FY2016 1Q ５.２ -０.５４.７ -０.６４.１１４.９

Change -１.７ -０.９ -２.６ ±０ -２.６＋５.４

[Billion yen]

[Billion yen]

Consolidated Financial Position

Consolidated Cash Flows

Copyright 2017 FUJITSU FRONTECH LIMITED6

2. Management Policies


Our vision Evolving Digital Innovation Midterm Business Plan Results of FY2016 Business Environments and Our Correspondence Midterm Policies of Each Segment and Measures for FY2017 Enhancement of Business Basis

7


Our vision

B to B to FrontInnovation and growth in our role as a company supporting the burden of the ever-changing frontline

The horizontal expansion of “products” for “services” amid the general flow of “from products to services”, through to the vertical integration of solutions and services in our specialized fields of business

The globalization of our front technology strengths

8

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.


Midterm Business Plan


Midterm Strategic Themes (B to B to Front)

FY2016 Results

Midterm Target

Consolidated NetSales 111.2 130.0

Operating Income 5.7 7.8

Operating Income Ratio 5.2% 6.0％

Overseas Sales Ratio 25.2% 40.0％

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

[Billion yen]

10

Entered the market of cash management system for large scale retail stores Launched small-sized BRU which can be used in various markets (retail, traffic, etc.) Started operation of used car auction system in Indonesia

Launched cash management system for mini banks ATM corresponding to internationally issued IC credit cards started operation Expanded cash management service to new business areas

(ex. Gas station, Wedding hall, etc.) Started cloud service for gambling in Japan(horse race, cycling, motor boat, etc.)

Started vertically integrated business (sensor platform, integrated authentication solution)

Expanded product lineups of RFID and palm vein authentication

Driving forward digital innovation of manufacturing (3D printer, 3D scanner, VPS, process management using tablet PC)


Results of FY2016Expansion of overseas business areas

Promotion of Business Transformation in Japan

Promotion of Business Efficiency by Process Innovation

Strengthening and Developing Front-end Technologies

11

Digital Innovation by ICT (IoT, Fintech, AI, etc.) Bringing innovation to work style corresponding to manpower

shortage Growing demands for safety and security in ICT


Business Environments and Our Correspondence

Setting technologies and products as the core, which brings digital innovation to the frontlines, and enhance and develop them from service oriented way of thinking

Supporting changes of customers’ front with both products and solution services

Broaden our business areas from the perspectives of business category (domain) and region (global) and from product to solution services

12

Midterm Policies of Each Segment and Measures for FY2017


ATMs, Banking terminals, Mechanical components, Global system and solutions

Global Product BusinessATMs, Banking terminals, Mechanical components, Global system and solutions

Global Product Business

ATM / Financial / Industrial solutionsVertically integrated solution(New organization)LCM services, Financial services, Retail services

Service Integration Business

ATM / Financial / Industrial solutionsVertically integrated solution(New organization)LCM services, Financial services, Retail services


Totalizator systems, Display systems,Auction system, Metal molds and precision cutting

Public Solution BusinessTotalizator systems, Display systems,Auction system, Metal molds and precision cutting

Public Solution Business

Palm vein authentication, RFID, Mobile systems,Retail systems

Frontline Solution BusinessPalm vein authentication, RFID, Mobile systems,Retail systems

Frontline Solution Business

Changes in customers’ front

Labor-saving and Automation

Safety and Security

Changes in customers’ front

Labor-saving and Automation

Safety and Security

・Service oriented・Solution oriented

13

Changes in customer’s front Developing cash management solution for retail stores Expanding business regions for ATM business Expanding product lineup for various industries and regions

⇒ Recycling type ATM for developing countries⇒ Small size ATM for rural part in China⇒ SCO for North America and ticket vending

machine for Chinese subway⇒ Cash management system for retail

stores’ back office Safety and security

Enhancement of accuracy and speed of validationand increasing variations of handling bill by developing next generation bill validation technology

MSS（Retail store’s front）


Global Product Business（1） Expanding our efforts in products and solutions for global market using

the technologies we have developed in Japan for ATMs and banking systems Expanding the technologies and know-how of cash handling we have developed

in the financial field to retail and public fields Providing an emphatic response to the revolution taking place financial front-end

business in Japan, such as mini banks and next-generation contact points

Cash management system for retail stores

（Back office）

CBM（Retail store’s front）

Next generation Large scale BRU

Small size BRUfor various use

【Global Business】

CBM：Cash Box ModuleMSS：Micro Self ServiceBRU：Bill Recycle UnitSCO：Self Check Out

14

Global Product Business（2）


Changes in customer’s front Changing functions of the bank from office functions to sales

functions⇒ form less（Enhancement of customer’s convenience, labor-saving ）⇒ Quick counter（Promotion of streamlining of bank’s

operations utilizing ATM)⇒ Recycle casher（Promoting efficiency of cash handling business)

Next generation ATM：Providing new contact point functions⇒ Cardless settlement utilizing smartphones⇒ Web promotion⇒ Provision of security utilizing line-of-sight detection and AI

Safety and security Expanding markets by commercializing ATM applied products

⇒ Enter to markets where there are cash transaction such as hospitals, retail stores, restaurants, starting from hotels.

Recycle casher

Linkage of ATM and smartphones

【Business in Japan】

Hotel adjustment machine

15



Providing various solutions utilizing front technologies, and services that support the whole life cycle of systems of SoR and SoE

Changes in customer’s front Changing functions of banks to sales functions and providing solutions that support next

generation ATMs Sensor platform ～utilizing IoT and big data～

⇒ Accumulating IoT sensor data (RFID, beacon, etc.) on cloudProviding platform which enables linkages with customer’s business systems

Expanding RFID and palm vein authentication globally, collaborating with local SIers

Labor saving and automation Expanding targeting industries of cash management operation service, collaborating with

secure transporting vendors Expansion of ATM service business (corresponding to globally published IC card, PCIDSS, launching new ATM

for stores) Expansion of maintenance service for retail stores

(Corresponding to multi-vendor, providing repair service in Japan for global vendors)

Safety and security Integrated authentication service ～Authentication service platform～

⇒ Integrating Biometric, FIDO, and multi-factor authentication on cloud

Integrated authentication solution/service

16

Public Solution Business


Expanding business areas utilizing our core technologies and creating solution business

Changes in customer’s front Auction system ～from auction terminal to business

system～⇒ Improvement of operation by new solution

utilizing tablet Creating various services for public racing

（cashless betting, point service, and gift voucher service) Improving efficiency and labor saving by utilizing

knowhow of comprehensive management of government-operated gambling facilities

Large scale image solution (B league, Rugby World cup, etc.) Digital signage system

Labor saving and automation Launching 8th generation totalizator terminal and Soccer

lottery terminal⇒ Developing industrial knowhow to other markets

Eco-friendly outdoor display system(New eco-board)

Suspended large display system（B league）

Soccer lottery terminal（test model）

17

Frontline Solution Business


Expanding functions and use of sensor for IoT and high-security society Creating and developing multi settlement method solution and services

Changes in customer’s front Providing settlement solution corresponding to IC credit card(PCIDSS corresponded multi settlement terminal, security enhancement solution, operation management service) Enhancement of convenience by card-less settlement

Labor saving and automation(IoT sensor ex. RFID） Expansion of usage scene by enhancement of RFID tag performance

（Downsizing ⇒ jewelry goods, chemical proof ⇒ cleaning equipment,Hydric environment ⇒ convenience stores, etc.）

Expanding sensor lineups（RFID, beacon）

Safety and security（Palm vein authentication） Enhancing functions and expanding use of palm vein sensor

（Outdoor environment, building into tablet, hospitals, restaurants, etc.) Authentication board for built-in equipment

（Expanding usage to copying machines, door management machine, cars） Promoting cloud authentication by enhancing security of biometric information

Card-less settlement by palm vein authentication

Bundle reading by counter sensor

18

Quality Zero Defect：Endless pursuit for quality

・Enhancement of quality process and management (quality of upper process, inspection tool, risk management)

・Further enhancement of solution and service quality・Global quality assurance system

Enhancement of cost competency and efficiency Driving forward digitalization through development ～ SCM ～ production Streamlining global SCM and thorough cost reduction

Human resource training and innovation of work style Automation of white collar’s routine works utilizing RPA (Robotic Process

Automation) Innovation of work style utilizing ICT (Virtual desktop, overtime work application

system, telework ,etc.)

Environments Contributing to reducing customers’ environmental load by energy efficient

products and environmentally contributing solutions and services Reduction of greenhouse effect gas through our business activities and whole value

chainCopyright 2017 FUJITSU FRONTECH LIMITED

Enhancement of Business Basis

19

3. Summary of FY2017 Full-year Targets


Consolidated Earnings Forecast for FY2017 Forecast of Sales and Operating Income by

Business Segments Sales Forecast by Regions

20

Consolidated Earnings Forecast for FY2017

Net Sales Operating Income

Ordinary Income

Net income

attributable to owners

of parent

Net income per share

FY2017Forecast

1st Half ４８.６１.８１.６１.１４５.８６ yen

Full-year １１０５.６４.８３.４１４１.７６ yen

Change vs Previous Forecast

1st Half -１.４＋０.７＋０.８＋０.７

Full-year ±０ ±０ ±０ ±０

Change vs FY2016

1st Half -２.８ -１.１ -０.５ -０.４

Full-year -１.２ -０.１ -０.３ -０.３

[Billion Yen]


Revision of forecast for FY2017 first half

We envisage net sales 1.4 billion yen lower due to postponement of several deals. We revised operating profit upward, considering the improvement in the 1Q and cost reductions and efficient use of expenses in 2Q.

As for full-year forecast, we have not changes the figures due to uncertainness in exchanges and business environments

21

Forecast of Sales and Operating Income by Business Segments

FY2016 FY2017 Change

Net SalesOperating

IncomeNet Sales

Operating Income

Net SalesOperating

Income

Global Product Business ５０.５２.９４６.６１.４ -３.９ -１.５

Service Integration Business ２９.８２.３２９.６３.２ -０.２＋０.９

Public Solution Business １９.２１.８２１.３１.６＋２.１ -０.２

Frontline Solution Business １１.６０.３１２.４０.６＋０.８＋０.３

Other / Corporate ０.１ -１.６０.１ -１.２ ±０＋０.４

Total １１１.２５.７１１０.０５.６ -１.２ -０.１

[Billion Yen]


Sales Forecast by Regions[Billion yen]

FY2016 FY2017 Change

Japan ８３.２８０.６ -２.６

Outside Japan２８.０

（２５.２％）２９.４

（２６.７％）＋１.４

Americas １５.９１１.８ -４.１

Europe ７.６９.５＋１.９

Asia ４.４８.１＋３.７

China ３.０５.３＋２.３

Other ０.１０.０ -０.１

Total １１１.２１１０.０ -１.２


Average exchange rate during period

（1USD=）１０８ yen 1st Half：１０８ yen

2nd Half：１０５ yen

23

<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.



Documents

FY2017 1Q Financial Results and Management Policies · in the financial field to retail and public fields Providing an emphatic response to the revolution taking place financial front-end