COMPANY RESEARCH AND ANALYSIS REPORTJBCC Holdings Inc.
9889
Tokyo Stock Exchange First Section

15-Aug.-2018
FISCO Ltd. Analyst

Takayuki Uchiyama

FISCO Ltd.
http://www.fisco.co.jp

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

JBCC Holdings Inc.
9889 Tokyo Stock Exchange First Section

15-Aug.-2018https://www.jbcchd.co.jp/english/fiscal-year/index.html■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. Business overview ......................................................................................................................................

01

2. FY3/18 results..............................................................................................................................................

01

3. Outlook.................................................. ......................................................................................................

01■Company profile---------------------------------------------------------------------------------------------------------------------------------------------------------- 03
1. Company profile.. ................................... ......................................................................................................

03

2. History................................................... ......................................................................................................

03

3. Business description. . ..................................................................................................................................

05

4. Main customers .................................... ......................................................................................................

06■Business overview---------------------------------------------------------------------------------------------------------------------------------------------------- 08
1. The previous medium-term management plan, Innovate2016. ....................................................................

08

2. The new medium-term management plan, Transform2020. .........................................................................

10■The market environment and strengths----------------------------------------------------------------------------------------------- 14
1. The market environment ....................... ......................................................................................................

14

2. Strengths.....................................................................................................................................................

15■Business performance------------------------------------------------------------------------------------------------------------------------------------------ 15
1. FY3/18 results..............................................................................................................................................

15

2. Financial condition................................. ......................................................................................................

17■Outlook-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 18
1. FY3/19 forecast...........................................................................................................................................

18

2. Medium- to long-term growth strategy.. ......................................................................................................

19■Shareholder return policy---------------------------------------------------------------------------------------------------------------------------------- 19

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

JBCC Holdings Inc.
9889 Tokyo Stock Exchange First Section

15-Aug.-2018https://www.jbcchd.co.jp/english/fiscal-year/index.html██Summary
Achieved the forecasts for net sales and operating incomeannounced for FY3/18, the first fiscal year of the medium-term
management plan. Is working to improve profitability and is riding
the wave of digital transformation.
JBCC HOLDINGS Inc. <9889> (hereafter, also “the Company”) is a pure holding company of independent solutions
providers that has a business history of more than 50 years, and its Group has a track record of supporting IT
utilization by more than 20,000 companies. The 11 business companies in the Group utilize each of their respective
strengths to provide one-stop solutions for IT utilization by customers in a wide range of industries. The Group has
a strong relationship with IBM Japan, Ltd., including that it has leading shares for hardware and software producttransactions with IBM Japan, and five companies in the Company’s Group have the technological capabilities to be
designated “premier level,” which is IBM Japan’s highest level of business partner.
1. Business overview
The Company Group develops its business in two business fields, Information Solutions and Product Development
and Manufacturing. In Information Solutions, it provides total support for IT utilization, from consulting through tosystems development, construction, operations, and maintenance. In Product Development and Manufacturing,in addition to the Company Group’s proprietary software, it is developing products not only for hardware, such as
printers, but also intended to integrate software and hardware.
2. FY3/18 results
In the FY3/18 results, net sales were ¥63,107mn (down 24.2% year-on-year (YoY), up 0.2% compared to forecast),
operating income was ¥2,060mn (up 11.1% YoY, up 8.5% compared to forecast), ordinary income was ¥2,034mn(up 5.3% YoY, up 4.4% compared to forecast), and profit attributable to owners of the parent was ¥1,186mn(down 6.5% YoY, down 5.1% compared to forecast). In order to optimize Group management, at the end of June
2017, the Company sold all the shares it held in IGUAZU Corporation, which was responsible for the Distribution
business, so overall sales declined. However, it is steadily improving profitability and the fields it is focusing on are
solid. Consequently, it still increased profits in spite of sales declining, more than 20%.
3. Outlook
The FY3/19 forecasts are based on the medium-term management plan Transform2020. Due to the transfer of theDistribution business, net sales will be ¥57,300mn (down 9.2% YoY) and below the previous fiscal year. But due
to the continuous measures to improve profits, the forecasts are for increases in operating income to ¥2,100mn(up 1.9%), ordinary income to ¥2,150mn (up 5.7%), and profit attributable to owners of the parent to ¥1,300mn(up 9.5%).

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01 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

JBCC Holdings Inc.
9889 Tokyo Stock Exchange First Section

15-Aug.-2018https://www.jbcchd.co.jp/english/fiscal-year/index.html

Summary

From the measures in the medium-term management plan Innovate2016, which ran from FY3/15 to FY3/17, theCompany established a foundation for growth and progressed reforms toward a strong corporate constitution, andprofitability improved. Based on this achievement and also the external environment, in which IT investment is active
and the growth in the use of ICT is expected, it started Transform2020 as the new medium-term management plan torun from FY3/18 to FY3/21. Transform2020 advances its support for “digital transformation,” in which technologies
will reform the existing business processes for the more than 20,000 cliant companies of the Company. Specifically,
it plans to further strengthen and expand the seven growth businesses of WILD7 (Cloud services, New SI (newsystems development), security services, JB software (original solutions), healthcare, 3D business, human resourcesand development services). Through these efforts, the Company intends to strengthen profitability, from results of net
sales of ¥83,272mn and profit attributable to owners of the parent of ¥1,269mn in FY3/17, to net sales of ¥60,000mn
and profit attributable to owners of the parent of ¥1,800mn in FY3/21, and to further optimize Group management.
Key Points
A long-established IT solutions provider with more than 50 years of business history and a track record of
introductions in more than 20,000 companies• Achieved the forecasts for net sales and operating income announced for FY3/18, the first fiscal year of themedium-term management plan.
• Is focusing on highly profitable businesses and aiming to optimize Group management and promote its
customers’ digital transformations•㻾㼑㼟㼡㼘㼠㼟㻌㼠㼞㼑㼚㼐㼟㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕㻔¥㼙㼚㻕㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㻔㼞㼕㼓㼔㼠㻕㻔¥㼙㼚㻕㻝㻜㻜㻘㻜㻜㻜

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Note: Does not include the Distribution business from FY3/18 Q2 onwards
Source: Prepared by FISCO from the Company's financial results

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02 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

JBCC Holdings Inc.
9889 Tokyo Stock Exchange First Section

15-Aug.-2018https://www.jbcchd.co.jp/english/fiscal-year/index.html██Company profile
A long-established IT solutions provider with more than 50 years ofbusiness history and a track record of introductions in more than
20,000 companies
1. Company profile
The Company, which was established in 1964, is a pure holding company for independent IT solutions providers,
while the Group has a track record of supporting IT utilization by more than 20,000 companies. The 11 businesscompanies within the Group each utilize their respective strengthens to provide one-stop solutions for IT utilization by
their customers from a wide range of industries. The Group has a strong relationship with IBM Japan, Ltd., includingthat it has leading shares for hardware and software product transactions with IBM Japan, and five companies in
the Company’s Group have the technological capabilities to be designated “premier level,” which is IBM Japan’shighest level of business partner. With the aim of promoting shift from products to services in its business portfolio,
the Company sold all the shares it held in IGUAZU at the end of June 2017, and now has two business fields,
Information Solutions and Product Development and Manufacturing.
2. History
The Company was founded in 1964 as Japan Business Computer Corporation (JBCC) and it has a history of morethan 50 years. Its history is divided into three large phases. In the Initial phase, the Company developed, manufactured, and sold original products, including JBC System-1 Kanji, Japan’s first office computer able to process kanji,
and C-200, Japan’s first network distributed processing system, and it worked to establish its own brand. Continuing
to the Second phase, it aimed to strengthen its business foundation, including by establishing a capital and businessalliance with IBM Japan. In 1999, it was listed on the Tokyo Stock Exchange (TSE) Second Section, and then in
2000, its listing was upgraded to the TSE First Section. In the Third phase from 2006, it transitioned to a holding
company structure and it has been aiming to achieve additional growth and further expand its businesses. In 2017
it sold IGUAZU, which carried out the Distribution business, and it is now focusing on highly profitable businesses.

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03 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

JBCC Holdings Inc.
9889 Tokyo Stock Exchange First Section

15-Aug.-2018https://www.jbcchd.co.jp/english/fiscal-year/index.html

Company profile

History*Initial phase (extract)
1964

Japan Business Computer Corporation founded.
Developed and marketed "TOSBAC-1100D," which set a precedent for microcomputers.

1978

Developed and started marketing Japan's first kanji processing system, "JBC System-1 KANJI."

1982

Introduced corporate identity and adopted the new brand name "JBCC."
Developed and marketed a decision support system, "JUSMATE Series."

1983

Established a marketing alliance with IBM Japan, Ltd., and started marketing of "IBM Multi-station 5550."
Developed and marketed Japan's first network distributed processing system, "C-200."* Second phase (extract)
1983

Established a capital and business partnership with IBM Japan, Ltd.

1988

Started marketing of IBM AS/400.

1990

Registered its shares as over-the-counter stock.

1999

Opened an operations center (SMAC).
Listed on the Second Section of the Tokyo Stock Exchange.

2000

Listed on the First Section of the Tokyo Stock Exchange.

2004

Obtained ISO140001 (Yokohama office).
Founded JBCC Healthcare Consortium (JBHC).

* Third phase
2006

JBCC Holdings Inc. was started as a pure holding company.

2008

Started globalization by establishing a business base in Dalian, China.

2009

Opened Cloud Integration Center (“CLIC” verification center).

2011

Opend a BtoB EC website "Suppliesbank.com" specialized in printer supplies.

2014

Celebrated 50th year since foundation.

2015

Founded a consortium named “ORENO (My) Cloud Club” to provide the most suitable cloud services to customers.

2016

Changed company structure to have an Audit and Supervisory Committee from a Board of Company Auditors.

2017

Transferred all the shares of IGUAZU Corporation to a fund.

Source: Prepared by FISCO from the Company Profile and the Company's website

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04 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

JBCC Holdings Inc.
9889 Tokyo Stock Exchange First Section

15-Aug.-2018https://www.jbcchd.co.jp/english/fiscal-year/index.html

Company profile

3. Business description
The Company’s business structure since July 2017 is as shown below. With the aims of change in its businessportfolio, concentrating management resources, and improving profits, it sold IGUAZU (Distribution business) to
IG Holdings PLC at the end of June 2017. This means it now has two business fields, Information Solutions andProduct Development and Manufacturing.
The JB Group’s business fields

Source: reprinted from the Company’s introduction booklet

Information Solutions provides total services for IT utilization (including consulting, application development, systems
development, operations, maintenance, monitoring, and outsourcing). Product Development and Manufacturingentails developments that only the Company’s Group is capable of, including for software solutions, printing systems,
and systems-cooperation solutions, and it also provides hardware that is optimized to meet customers’ requests. In
Shared Service, the aim is to avoid duplicated staff work within the Group and to realize highly efficient operations,and it brings together various tasks, such as personnel and general affairs, accounting and finance, information
systems, and work services (support and management), thereby supporting each Group company.
List of the business companies by field

Source: The Company's results briefing materials

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05 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

JBCC Holdings Inc.
9889 Tokyo Stock Exchange First Section

15-Aug.-2018https://www.jbcchd.co.jp/english/fiscal-year/index.html

Company profile

The percentages of total net sales by business in FY3/18 were that Information Solutions provided 85.4%, Distribution
10.7%, and Product Development and Manufacturing 3.9%. Distribution only recorded net sales in Q1 and did notrecord sales from FY3/18 Q2 onwards, as this business was sold.

Net sales by business (FY3/18)
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Source: The Company's results briefing materials

4. Main customers
Looking at the customers in FY3/17 of JBCC Corporation, which is the Company Group’s core business company,
about 50% of customer companies had fewer than 100 employees, and around 70% had net sales of less than
¥10bn, so medium-sized companies are the Group’s main customers. Also, looking at the industries it covers, it
provides solutions to companies in a diverse range of industries, including manufacturing, wholesale and retail,eating and drinking establishments, and services, from which we can understand the strength of its problem-solving
abilities and the breadth of the solutions it proposes.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

JBCC Holdings Inc.
9889 Tokyo Stock Exchange First Section

15-Aug.-2018https://www.jbcchd.co.jp/english/fiscal-year/index.html

Company profile

JBCC’s customer categories (FY3/17)

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¥10bn to less than
¥50bn
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¥1bn to less than
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Source: created by FISCO from the Data Book㻼㼑㼞㼏㼑㼚㼠㼍㼓㼑㼟㻌㼛㼒㻌㼏㼡㼟㼠㼛㼙㼑㼞㻌㼚㼡㼙㼎㼑㼞㼟㻌㼎㼥㻌㼞㼑㼓㼕㼛㼚㻌㻔㻲㼅㻟㻛㻝㻣㻕㻱㼍㼟㼠㻌㻶㼍㼜㼍㼚
㻢㻞㻚㻥㻑



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07 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

JBCC Holdings Inc.
9889 Tokyo Stock Exchange First Section

15-Aug.-2018https://www.jbcchd.co.jp/english/fiscal-year/index.html██Business overview
Aiming to reform the business structure and focus on growth fields
The Company Group has been aiming to reform its business structure in consecutive medium-term management
plans from FY3/15, one of three year’s length and the other of four. The flow of these reforms is explained below,
followed by an explanation of the business fields it is newly focusing on.
1. The previous medium-term management plan, Innovate2016
The main point of Innovate2016, the plan implemented from FY3/15 to FY3/17, was that the Company aimed to
improve profitability through reforms to establish a foundation for growth and to strengthen the corporate constitution.
The main point for the previous medium-term management plan, Innovate2016

Source: reprinted from the medium-term management plan materials(1) Establishing a foundation for growth
In terms of the measures to establish a foundation for growth, in order to create originality and high added value,
the Company worked on accelerating the shift to Cloud services and on reforming the SI (systems development)
business.
With regards to the Cloud, it expanded ORENO (My) Cloud* 1 cloud services, which are the cloud Ecosystemservices*2, and accelerated the track record of introductions up to a cumulative total of 20,000 users (as ofAugust 2017).
*1	ORENO (My) Cloud: the general name for the Company Group’s Cloud services.
*2	Ecosystem: a structure in which companies form partnerships, cooperate to utilize each other’s technologies, and provide
and mutually develop services of value.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

JBCC Holdings Inc.
9889 Tokyo Stock Exchange First Section

15-Aug.-2018https://www.jbcchd.co.jp/english/fiscal-year/index.html

Business overview

ORENO (My) Cloud

Source: reprinted from the Company’s leaflet

Also, with regards to the reforms to the SI (systems development) business, through the utilization of upstream
process tools and high-speed development tools, and the use of the development method called agile*, it has
surely and quickly conducted confirmations at the time of systems development with customers, and by eliminating
rework arising from inconsistencies in specifications, it has worked to shorten development periods and to reduce
unprofitable projects. Through these efforts, in the SI (systems development) business, the gross profit marginrose from 17.1% in FY3/14 to 31.4% in FY3/17, and profitability has greatly improved.
*	Agile : in the IT industry, it refers to a flexible information system that can respond quickly to changes in the management
environment, and to an efficient systems development method

Image of the Company’s SI business reforms

Source: reprinted from the medium-term management plan materials

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

JBCC Holdings Inc.
9889 Tokyo Stock Exchange First Section

15-Aug.-2018https://www.jbcchd.co.jp/english/fiscal-year/index.html

Business overview(2) Reforms for a strong corporate constitution
Accelerating the shift to the Cloud and reforming the SI business also required changing the sales style anddevelopment style. In order to respond to such changes, the Company has been working on developing humanresources and changing the evaluation system, and it has tried to also reform employee awareness. At the sametime, it has worked to improve productivity by consolidating services in the Staff Department.
2. The new medium-term management plan, Transform2020
Based on the results of the previous medium-term management plan Innovate2016, the Company is implementing
the new medium-term management plan Transform2020 for the four fiscal years from FY3/18 to FY3/21, towardrealizing its customers’ digital transformations*.
*	Digital transformation: transforming (changing, converting) everything with digital technology as the starting point, or by
fully utilizing it. Based on the premise of digital technology, it entails fully reconsidering the ways of thinking on existing
businesses and organizations, the ways of progressing work, the ways of gathering information and learning, and the waysof living.

On implementing the measures in Transform2020, at the end of June 2017 the Company sold all of its shares in
IGUAZU with the aims of concentrating management resources and improving profits. Then, in the Group’s businesslifecycle by field, it named the fields that are expected to grow in the future as WILD7 and it is now focusing on them.
The new medium-term management plan: Transform2020

Source: reprinted from the medium-term management plan materials

In these seven fields, the Group is aiming to increase net sales by 2.5 times and total profit by 3 times between
FY3/17 and FY3/21 by developing not only existing customers with who it already has relations, but new customers
also.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

JBCC Holdings Inc.
9889 Tokyo Stock Exchange First Section

15-Aug.-2018https://www.jbcchd.co.jp/english/fiscal-year/index.html

Business overview

WILD7 target values

Source: reprinted from the medium-term management plan materials

Business structural reforms

Source: reprinted from the medium-term management plan materials

Below, the WILD7 businesses are explained.
(1) Cloud services
Under the general name of ORENO (My) Cloud, the Company is operating and providing solutions in a Cloudenvironment that forms the base for customers’ business. It also established the consortium ORENO (My) CloudClub in October 2015 to provide optimal Cloud services for customers. One of the features unique to the Company
is that it is able to provide customers with optimal Cloud services by coordinating on the Ecosystem with thesolutions specialized in industry and operations, and with the solutions of partner companies that have knowledgeof Cloud security. It also supports the utilization of core systems on the Cloud.
The Company provides optimal services on the Cloud by coordinating on the Ecosystem for its own Group’s
solutions and the solutions of each partner company that specialize in a certain industry and operations. By utilizing
the comprehensive power of the Group, it is supporting digitization by companies in various ways, including forwork and businesses centered on the Cloud, and for ways of working.

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11 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

JBCC Holdings Inc.
9889 Tokyo Stock Exchange First Section

15-Aug.-2018https://www.jbcchd.co.jp/english/fiscal-year/index.html

Business overview(2) Security
On the one hand, the utilization of the Cloud and mobile devices are progressing and needs are rising forconvenience in companies’ systems operations and ways of working. But the other hand, the security domain
is expanding and the required measures are diversifying, and the reality is that it is getting harder for customers
to respond to this situation by themselves. At the Company’s management center SMAC (Solution Management
and Access Center), it monitors customers’ IT environments 24 hours a day and 365 days a year, and it also
works to enhance SOC* functions and to strengthen security technologies, while its specialist engineers support
customers’ safe and secure systems operations.
*	SOC: security operations center

The Company Group’s security integrated brand OPTi Secure provides operations monitoring services, and in
addition, offers a variety of security services based on the five steps that form the basis for security measures(identification, defense, detection, response, and recovery). This enables it to provide the optimal combination of
security measures as a service for each customer. As well as monitoring and operations services, the Company’s
strengths include that it is able to understand customers’ server environments and network environments andreduce the work load on customers, and it is highly capable of analyzing and responding to logs from its trackrecord with many customers. In addition, it plans to grow results by aiming to conduct reforms, from sales andconstruction through to operations services, and by advancing the creation of stock businesses.
(3) New SI (new systems development)
The Company Group is combining new technologies and various Cloud services and advancing measures todevelop systems that can respond rapidly and flexibly to customers’ requests. Based on actually operating
systems, it is advancing developments in a short cycle while discussing and confirming with customers. It is also
coordinating with tools for upstream process management and automatic program generation to realize quality
improvements and speedy development.
In terms of its track record in ultra-high-speed development, it has an achievement of realizing a service in justone and a half years for a project that another company proposed a period of four years. The Company is further
improving its proprietary JBCC Agile Development and aiming to expand more and more by increasing unit prices
by combining it with Cloud and other elements.
In addition to the fact that it already has a plentiful customer base, the Company plans to grow results by utilizing
its competitive advantages over other companies, including that it is unlikely to be dragged into price competition,
while also ascertaining the operations at these customers and maintaining relations of trust.
(4) JB software (original solutions)
The Company is bringing together hardware and software development technologies to develop and provide its
Group’s proprietary solutions. It reflects the voices of customers to continuously strengthen and improve functions,and it works together with customers to provide them with products and services that are tailored to their needs.
Also, based on the Cloud, it is working on advanced technologies including IoT, AI (artificial intelligence) androbots, and it is also actively moving ahead on consideration of utilizing them for new-technology businesses.

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12 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

JBCC Holdings Inc.
9889 Tokyo Stock Exchange First Section

15-Aug.-2018https://www.jbcchd.co.jp/english/fiscal-year/index.html

Business overview(5) Healthcare
In 2013, the Company entered-into a business alliance with Kameda Healthcare Informatics Corp., which specializes in medical information, including electronic medical records, and it began the fully fledged developmentof solutions that connects patients to communities and to hospitals. Kameda Healthcare Informatics, which isstrong in electronic medical records, works together with JBCC Corporation, the Company’s Group company
that is able to provide products and IT services including IT infrastructure as a one-stop solution, and they arecoordinating with various companies that are partners of the JBCC Healthcare Consortium. This is enabling it todevelop various solutions toward realizing “community integrated care systems” not just for the core product ofelectronic medical records, but also for various other products and services, from prevention through to nursing.
(6) 3D business
Due to the improvements to the technologies and their accuracy and the diversification of materials that can beused for modelling, the fields in which 3D printers are utilized are expanding, from the previous use of by R&D
facilities for the purposes of verification and prototyping, to production machinery to create the final product.
Centered on JB Service, the Company Group is not only selling and maintaining 3D printers, it is also utilizing
the expertise it has acquired over many years to provide total services, focused on 3D printers. It is utilizing its
strength of being able to provide support through a one-stop service, from the selection of the optimal machinerymodel through to support for its introduction, operations and maintenance, the construction of systems utilizing
3D data, the provision of new solutions, the education and development of engineers, and agency molding
services. In addition, it is promoting multi-vendor* maintenance through its advanced technological capabilities
and thereby aiming to grow results.
*	Multi-vendor: handles the products not only of a single manufacturer, but of multiple manufacturers.

(7) Human resources development
i-Learning Co., Ltd., provides these services. As a company that supports the development of the next generationof human resources, it offers high quality training solutions tailored to customers’ needs, from the training of new
employees through to management training, and IT training from upstream through to downstream.
Its strengths include that it can provide an abundance of training services in various fields, from planning throughto development and implementation, and from individual skills training through to comprehensive capabilities
development, including for human resources development training, sales training, IT training, PM training, andIBM product training.
Recently, in addition to business skills, employees are required to have digital skills. So this company is also
promoting its digital business school and offering micro-learning*, in which students can learn according to theirown schedules.
*	Micro-learning: a learning method in which digital teaching materials are provided frequently so that the student can learneven in a short period of time.

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13 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

JBCC Holdings Inc.
9889 Tokyo Stock Exchange First Section

15-Aug.-2018https://www.jbcchd.co.jp/english/fiscal-year/index.html██The market environment and strengths
IT budgets are trending upward
1. The market environment
According to the Survey on Investment Trends in 2018 by the market research company ITR, in FY17 (April 2017
to March 2018), more than 30% of companies increased their IT budgets. In FY18 (April 2018 to March 2019), thepace of this increase is slowing slightly, but the upward trend is continuing. On indexing this increase or decrease
trend in IT budgets, we find that FY17 had the highest value in the last 10 years. The positive trend is expected tocontinue in FY18 also, so it is thought that companies are increasing their IT budgets.
The IT budgets of companies conducting IT investment within Japan
will continue to trend upward in FY18 also.

Source: The Company's results briefing materials

On the other hand, the contraction of the economy alongside the decline in the productive-age population is aproblem, and it is especially noticeable in regional communities. Going forward, it is considered that ICT will be greatly
utilized to reform ways of working and in regional revitalization, which will be necessary in order to solve this problem.
Utilization of ICT

Note: RPA: Robotics Process Automation technology to automate the simple, indirect work of white-collar workers
Chat bots: automated conversation programs that utilize artificial intelligence
Source: The Company's results briefing materials

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14 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

JBCC Holdings Inc.
9889 Tokyo Stock Exchange First Section

15-Aug.-2018https://www.jbcchd.co.jp/english/fiscal-year/index.html

The market environment and strengths

2. Strengths
The Company’s strengths in its business history of more than 50 years include its track record of supporting the IT
utilization of more than 20,000 companies, the expertise and solutions it has acquired from this experience, andalso the relations that it has built with many customers and partner companies during this time.
By having relations of trust with customers, competition with other companies is unlikely to occur, so it can also
avoid getting dragged into price competition. As its understanding of its customers’ specifications is high, it is able
to respond over a short period of time and over a wide range of areas through preparing skills and mechanisms
capable of high-speed development and providing an abundance of solutions, including those of partner companies.
In addition to this sort of stable customer base, it is considered that the Company’s strengths include that it can
combine its highly profitable development mechanism with an extremely detailed service structure and is thereby
able to provide total support and services.

██Business performance
Achieved the forecasts for net sales and operating incomeannounced for FY3/18, the first fiscal year of the new medium-term
management plan
1. FY3/18 results
For FY3/18, which is the first fiscal year of the medium-term management plan Transform2020, the Company
set “changing the business structure,” “clarifying the fields to focus on,” and “new initiatives” as the basis for
management, and it is strengthening the seven WILD7 growth businesses as the pillars to support its customers’
digital transformations. Net sales declined YoY, mainly because at the end of June 2017, it sold all of its shares in the
consolidated subsidiary IGUAZU, and also because of a decline in hardware sales, and therefore also in maintenancesales, due to the acceleration of the shift to the Cloud. However, profitability improved through the growth of the
Cloud business and the reforms to the SI (systems development) business, while SG&A expenses were reduced
from the sharing of services by the Staff Department. Due to these and other efforts to improve profitability, theCompany was able to increase profits despite a decline in sales of more than 20%, and it seems that it is making
steady progress in its efforts to strengthen profitability.
In the FY3/18 results, net sales were ¥63,107mn (down 24.2% YoY, up 0.2% compared to forecast), operating
income was ¥2,060mn (up 11.1% YoY, up 8.5% compared to forecast), ordinary income was ¥2,034mn (up 5.3%
YoY, up 4.4% compared to forecast), and profit attributable to owners of the parent was ¥1,186mn (down 6.5%
YoY, down 5.1% compared to forecast).

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15 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

JBCC Holdings Inc.

15-Aug.-2018

9889 Tokyo Stock Exchange First Section

https://www.jbcchd.co.jp/english/fiscal-year/index.html

Business performance

FY3/18 results(¥mn)
FY3/17

FY3/18ResultRatio to net
sales

Forecast

ResultRatio to net
sales

YoY

Net sales

83,272100.0%

63,00063,107100.0%-24.2%

0.2%

Cost of sales

65,334

78.5%-

46,906

74.3%

-

-

SG&A expenses

16,082

19.3%-

14,14022.4%-12.1%-

Operating income

1,855

2.2%

1,900

2,060

3.3%

11.1%

8.5%

Ordinary income

1,932

2.3%

1,950

2,034

3.2%

5.3%

4.4%

Profit attributableto owners of theparent

1,269

1.5%

1,250

1,186

1.9%

-6.5%

-5.1%

vs. forecast

Source: Prepared by FISCO from the Company's financial results and results briefing materials

Looking by business, in the Information Solutions field, which includes the construction of companies’ information
services and the provision of operations and maintenance services, in the services business, security services
grew from the strengthening of introduction services and measures for customers’ security. In systems, net sales
declined slightly YoY due to the shift to the Cloud, even though businesses such as the provision of next-generation
virtualization solutions that integrate servers and storage performed solidly, and that the number of IoT and AI
business projects increased greatly.
Sales declined in systems development due to the fall in large projects. In the Product Development andManufacturing field, which involves the development, manufacture and sale of the Company Group’s proprietary
software and information devices such as printers, sales from introductions and development of the production
management system R-PiCS increased. In JB software, sales grew of information-coordination support solutions,which increase the efficiency of linkages between systems inside and outside of companies and realize the utilizationof information. For hardware, in the 2H there were sales from large orders for Optimized PC 2.0*, but sales of themainstay impact printers declined due to the contraction of demand.
*	A client terminal, and also its environment, that combines the characteristics of both existing PCs and thin clients. It offers
convenience and confidentially and it is optimized for the customer’s form of usage.

FY3/18 results trends by business(¥mn)
FY3/17 result

FY3/18ResultYoY

83,272

63,107-24.2%

Information solutions

55,18353,861-2.4%

Distribution

25,6796,758-73.7%Net sales

2,409

2,488

3.3%

17,938

16,201-9.7%

Information solution

13,89914,2502.5%

Distribution

2,928

698

-76.2%

Product development and manufacturing

1,110

1,252

12.8%

Product development and manufacturing
Gross profit

Source: Prepared by FISCO from the Company's results briefing materials

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16 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

JBCC Holdings Inc.
9889 Tokyo Stock Exchange First Section

15-Aug.-2018https://www.jbcchd.co.jp/english/fiscal-year/index.html

Business performance

Looking at the progress made for WILD7, the FY3/18 net sales target achievement rate was 90.6%. The achievement
rate for the New SI domain, of 66.6%, stands out as being particularly low. The reasons for this were that sales
slumped as although there were many projects, most of them were small on the scale of only a few million yen.
Going forward, the Company plans to recover the unit price per contract by increasing the number of engineers
within the Company capable of responding to the New SI Cloud native development, thereby increasing the numberof projects that they can respond to, and also through combination proposals, including for the shift to Cloud ofcore systems, AI, and Cloud.
Progress made for WILD7 (net sales)

Source: The Company's results briefing materials

2. Financial condition
At the end of FY3/18, total assets were ¥30,956mn (down ¥7,394mn on the end of the previous fiscal year). This was
because although investment securities increased ¥935mn, there were decreases of notes and accounts receivableof ¥4,441mn, goods and products of ¥1,091mn, prepaid expenses of ¥997mn, other receivables included in current
assets of ¥473mn, and deferred tax assets of ¥480mn.
Total liabilities were ¥16,071mn (down ¥8,413mn on the end of the previous fiscal year). This was mainly due todecreases in notes and accounts payable of ¥4,254mn, accrued expenses of ¥244mn, income taxes payable of¥323mn, advances received of ¥615mn, and liabilities related to retirement benefits of ¥2,767mn. Total net assets
were ¥14,884mn (up ¥1,019mn on the end of the previous fiscal year). The main factors were increases in profit
attributable to owners of the parent of ¥1,186mn and unrealized gain on other marketable securities of ¥293mn,
and a decrease in dividends paid of ¥478mn. The current ratio and the shareholders’ equity ratio both increased,
and the Company’s financial stability was further strengthened.

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17 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

JBCC Holdings Inc.
9889 Tokyo Stock Exchange First Section

15-Aug.-2018https://www.jbcchd.co.jp/english/fiscal-year/index.html

Business performance

Consolidated Balance Sheet and Key Management Indicators(¥mn)
FY3/17

FY3/18Change29,67922,198-7,480

7,293

7,232

-61

Non-current assets

8,671

8,758

86

Total assets

38,35030,956-7,394Current liabilities

17,152

11,519-5,632

Non-current liabilities

7,332

4,551

-2,781

Interest-bearing debt

450

370

-80

Total liabilities

24,485

16,071-8,413

Net assets

13,865

14,884

1,019

Current ratio

173.0%

192.7%

19.7ptEquity ratio

35.9%

48.0%

12.1ptCurrent assets(Cash and deposits)(Stability)

Source: Prepared by FISCO from the Company's financial results and results briefing materials██Outlook
Is focusing on highly profitable businesses, aiming to optimize
Group management, and advancing customers’ digitaltransformations
1. FY3/19 forecast
From FY3/19 onwards, the economy is expected to continue its moderate recovery, and it is also forecast that
IT investment by medium-sized companies, which are the Company’s main customers, will improve even further.
Based on the medium-term management plan, for FY3/19 the Company intends to focus on highly profitablebusinesses. It has sold the Distribution business, so net sales are set to decline to ¥57,300mn (down 9.2% YoY). But
the forecasts are for operating income of ¥2,100mn (up 1.9%), ordinary income of ¥2,150mn (up 5.7%), and profit
attributable to owners of the parent of ¥1,300mn (up 9.5%). It will aim to achieve the plan’s targets by continue tosupport its customers’ digital transformations and pursuing the further strengthening and expansion of the WILD7
growth businesses.
FY3/19 forecast(¥mn)
FY3/18 results

FY3/19Forecast

YoY

63,10757,300-9.2%

Information solution

53,861

54,7001.6%

Distribution

6,758

-

-

Product development and manufacturing

2,488

2,600

4.5%

16,201

15,750-2.8%

14,25014,450

1.4%

698

-

-

1,252

1,300

3.8%

Net sales

Gross profit
Information solution
Distribution
Product development and manufacturing

Source: Prepared by FISCO from the Company's financial results and results briefing materials

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18 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

JBCC Holdings Inc.
9889 Tokyo Stock Exchange First Section

15-Aug.-2018https://www.jbcchd.co.jp/english/fiscal-year/index.html

Outlook

2. Medium- to long-term growth strategy
In Transform2020, by focusing on highly profitable businesses, the aim is to strengthen profitability, from resultsof net sales of ¥83,272mn and profit attributable to owners of the parent of ¥1,269mn in FY3/17, to net sales of¥60,000mn and profit attributable to the owners of ¥1,800mn in FY3/21, and to optimize Group management.

㻾㼑㼟㼡㼘㼠㼟㻌㼠㼍㼞㼓㼑㼠㼟㻔¥㼙㼚㻕㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕㻼㼞㼛㼒㼕㼠㻌㼍㼠㼠㼞㼕㼎㼡㼠㼍㼎㼘㼑㻌㼠㼛㻌㼛㼣㼚㼑㼞㼟㻌㼛㼒㻌㼠㼔㼑㻌㼜㼍㼞㼑㼚㼠㻌㻔㼞㼕㼓㼔㼠㻕 㻔¥㼙㼚㻕㻝㻜㻜㻘㻜㻜㻜

㻝㻘㻤㻜㻜

㻞㻘㻜㻜㻜

㻝㻘㻡㻤㻜

㻤㻜㻘㻜㻜㻜

㻝㻘㻢㻜㻜

㻝㻘㻟㻤㻜

㻝㻘㻞㻢㻥

㻝㻘㻝㻤㻢

㻢㻜㻘㻜㻜㻜
㻠㻜㻘㻜㻜㻜

㻝㻘㻞㻜㻜㻤㻟㻘㻞㻣㻞

㻤㻜㻜㻢㻟㻘㻝㻜㻣

㻡㻣㻘㻟㻜㻜

㻡㻤㻘㻡㻜㻜

㻢㻜㻘㻜㻜㻜

㻞㻜㻘㻜㻜㻜㻠㻜㻜㻜㻜㻲㼅㻟㻛㻝㻣
㻔㼞㼑㼟㼡㼘㼠㼟㻕㻲㼅㻟㻛㻝㻤
㻔㼞㼑㼟㼡㼘㼠㼟㻕㻲㼅㻟㻛㻝㻥
㻔㼠㼍㼞㼓㼑㼠㼟㻕㻲㼅㻟㻛㻞㻜
㻔㼠㼍㼞㼓㼑㼠㼟㻕㻲㼅㻟㻛㻞㻝
㻔㼠㼍㼞㼓㼑㼠㼟㻕

Source: Prepared by FISCO from the Company's results briefing materials

A point of concern is that a large part will depend upon the growth of WILD7. If the speed of the declines in theexisting businesses is faster than the Company anticipated, and should there be delays in the launches of WILD7,
it is possible that the expected results will not be obtained. As the measures to address this, it will launch WILD7
and implement measures for them at an early stage by securing the human resources to support its growth andcooperating with external companies. The Company is also working to create new businesses and aiming to realize
them at an early stage to steadily achieve the targets in the medium-term management plan.

██Shareholder return policy
The dividend per share at the end of FY3/18 was increased by ¥4, from ¥14 to ¥18, for a full-year dividend of ¥32.
This was based on a comprehensive consideration of factors including that profits exceeded the targets in the firstfiscal year of the medium-term management plan, the financial condition, and the dividend payout ratio. The forecast
for FY3/19 is an annual dividend of ¥36.

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19 19

Disclaimer
FISCO Ltd. (the terms “FISCO”, “we”, mean FISCO Ltd.) has legal agreements with theTokyo Stock Exchange, the Osaka Exchange,and Nikkei Inc. as to the usage of stock priceand index information. The trademark and value of the “JASDAQ INDEX” are the intellectual
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This report is based on information that we believe to be reliable, but we do not confirm or
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This report was prepared at the request of its subject company using information provided
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