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First Half of Fiscal 2017
(Six month ended September 2016)

Interim Financial Results
Supplementary Explanation Material
Focus Systems Corporation
November 2016
This document uses information available as of November 11, 2016, and contains forward-looking statements that represent
management’s expectations or beliefs relating to future events. Actual results could differ materially from those stated or implied inthese forward-looking statements. The Focus Systems Group does not guarantee the information’s accuracy.

ht tp: / / www. f o c us –s. c o m1&RS\ULJKW¤ )RFXV6\VWHPV&RUSRUDWLRQOverview of the Operational Results for the 1st Half of Fiscal Year(¥ million)

1st half of FY
ending March
2016
Results

1st half of FY
ending March2017
Results

Amount

Ratio

7,494

8,383

889

11.9%

Public Sector

2,496

2,931

434

17.4%

Private Sector

4,600

4,897

297

6.5%

Security Equipment

397554

157

39.7%

Operating Income

201

201

(0)

-0.1%

Ordinary Income

197

199

10.5%

Net Income

280

138(142)-50.6%Net Sales

Year-on-year change

In public sector business, net sales marked a record high backed by steady orders from existingcustomers.
Net sales in private sector business also set a record high, indicating continuation of a recovery
trend in willingness to invest in information systems.
Security equipment business saw an increase in orders from public offices.

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Copyright¤ Focus Systems Corporation

Non-consolidated Balance Sheets(¥ million)

As of Sep. 30,
2015

As of Mar. 31,
2016

As of Sep. 30,
2016

7,589
6,458

7,597
7,339

8,203
6,765

3,479
218
2,760
14,048

3,473
234
3,631
14,936

3,478
232
3,054
14,969

4,131
3,561
7,692

4,064
3,456
7,520

4,050
3,998
8,049

Treasury shares
Valuation and Translation
Adjustments

2,905
1,468
1,281(706)
1,407

2,905
1,468
1,739(706)
2,009

2,905
1,468
1,656(706)1,596

Total Net Assets

6,355

7,415

6,920

Total Liabilities and Net Assets

14,04814,936

14,969Item(ASSETS)
Current Assets
Non-current Assets
Property, Plant and Equipment
Intangible Assets
Investments and Other Assets
Total Assets(LIABILITIES)Current Liabilities
Non-current Liabilities
Total Liabilities

Total assets increased by ¥32 million comparedwith the end of the previous fiscal year.
This was mainly because of increases of ¥421
million in work in process and ¥1,058 million incash and deposits, despite decreases of ¥864
million in notes and accounts receivable – tradeand ¥594 million in investment securities.

(NET ASSETS)
Capital stock
Capital surplus
Retained earnings

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Copyright¤ Focus Systems Corporation

Non-consolidated Income Statements(¥ million)
First Half of
FY2015(ended Sep. 30,2014㻕

First Half of
FY2016(ended Sep. 30,2015㻕

First Half ofFY2017(ended Sep. 30,2016㻕

7,286

7,494

8,383

Cost of Sales

6,392

6,638

7,481

Gross Profit893

856902

SG & A Expenses

598

654

700

Operating Income

295

201

201

Non-operating Income

2635

29

Non-operating Expenses

51

3932

270

197

199

Extraordinary Incomeʷ

235

14

Extraordinary Losses
Income before
Income Taxes

11ʷ

269

432

213

104

151

75

165

280

138

ItemNet Sales

Ordinary Income

Income Taxes
Net Income

4

Net sales climbed ¥889 million from the same
period of previous fiscal year.
This was due to a ¥434 million increase ofpublic sector business, a ¥297 million increaseof private sector business and a ¥157 million
increase of security equipment business.

Operating income remained roughly the sameas the previous year due to advanced costs forfacilitating the development environment to
respond to an increase of orders, preparation
for making proposals to gain new orders, etc.

The extraordinary income for the fiscal year
ended March 31, 2016 was primarily comprisedof ¥208 million in gain on sales of investment
securities.

As a result, net income was ¥138million,
decreased ¥142 million from the same period ofprevious fiscal year.

Copyright¤ Focus Systems Corporation

Non-consolidated Performance (Last 5 years)(¥ million)
Net sales

10,000
8,000

7,286
5,704

Gross profit

8,383

7,494

1,000

6,442

800

6,000

600

4,000

400

2,000

200

0893

856902

1st half of
FY2015

1st half of
FY2016

1st half of
FY20177685470
1st half of
FY2013

1st half of
FY2014

1st half of
FY2015

1st half of
FY2016

1st half of
FY2017

Operating income (loss)

400

1st half of
FY2013

Ordinary income (loss)

295 270

248 240300

Net income (loss)

280
165201 197

201 199
138

115

200

1st half ofFY2014

1000(100)

(30)
(32)

(200)

(212)

(300)
1st half of FY2013

1st half of FY2014

5

1st half of FY2015

1st half of FY2016

1st half of FY2017

Copyright¤ Focus Systems Corporation

Non-consolidated Statements of Cash Flows(¥ million)

First Half of FY2016(ended Sep. 30,
2015㻕

First Half of FY2017(ended Sep. 30,
2016㻕Ϩ Cash Flows from Operating Activities

182

339

ϩ Cash Flows from Investing Activities

331

(22)

Ϫ Cash Flows from Financing Activities

398

785

IV Net Increase in Cash and Cash Equivalents911

1,102

V Cash and Cash Equivalents at Beginning of Period

3,106

2,930

VI Cash and Cash Equivalents at End of Period

4,018

4,033

Item

Ϩ Cash Flows from Operating Activities
Net cash provided by operating activitieswas ¥339 million. The main factors were¥833 million of decrease in notes andaccounts receivable - trade and ¥213
million of income before income taxes,
which offset ¥417 million of increase ininventories and ¥303 million of income tax
paid.

ϩ Cash Flows from Investing Activities
Net cash used in investing activities was¥22 million. The main factors were ¥43
million of decrease in time deposits and¥30 million in proceeds from cancellationof insurance funds, which offset ¥48
million in payments for purchase ofproperty, plant and equipment, ¥35 million
in payments for purchase of insurance
funds and ¥19 million in payments forpurchase of intangible assets.

Ϫ Cash Flows from Financing Activities
Net cash provided by financing activitieswas ¥785 million. The main factors were¥950 million in proceeds from long-termloans payable and ¥592 million in proceedsfrom issuance of bonds, which offset ¥507
million in repayment of long-term loans
payable, ¥229 million in payments forredemption of bonds and ¥219 million inpayments for cash dividends.

ϭ Cash and Cash Equivalents at End of Period
As a result, cash and cash equivalents at period-end increased ¥1,102 million from beginning of the period to ¥4,033 million.
6Copyright¤ Focus Systems Corporation

Segment Information(¥ million)
Net sales of first half period (6 month ended September)

FY2013

1,951

FY2014FY2015

2,005

2,518

FY20162,496

FY20172,931Backed by steady orders
from existing customers, netsales set a record high,resulting in increase of bothrevenue and profits.

Public sector

3,451

3,842

4,248

4,600

4,897

302

595

518

397

554

Private sector

Profits decreased due toadvanced costs for facilitating
the development environment
to respond to an increase oforders, preparation formaking proposals to gain neworders, etc., despite setting arecord-high sales figure
through steady demand.

Although revenue increased
due to the increase in orders
from public offices, profits
decreased due to the impactof product replacement byexisting users.

Securityequipment

7Copyright¤ Focus Systems Corporation

Sales to Key Customers
IBM Japan-related sales
were mostly unchanged
but the overall private
sector business performedwell.

By customer group(¥ million)
3500
3000
2500

NTT DATA related
IBM Japan related
CTC related
OKI related
SoftBank related
Product sales

2000

1500
1000
500
0

1st half of FY2013 1st half of FY2014 1st half of FY2015 1st half of FY2016 1st half of FY2017(¥ million)

By key customer

Public sector businessdemonstrated growth.

1800
1600
1400
IBM Japan1200

NTT DATA

1000

NTTD i800

CTC600

SoftBank

4002000

1st half of FY2013 1st half of FY2014 1st half of FY2015 1st half of FY2016 1st half of FY2017
8Copyright¤ Focus Systems Corporation

Projections for Fiscal Year Ending March 2017

Fiscal 2017(from April 1, 2016– March 31, 2017)

Projections

Net Sales(¥ million)

Operating Income Ordinary Income(¥ million)(¥ million)

17,000800

9770

Net Income(¥ million)

Cash Dividends
per Share (¥)

490

12.50

Copyright¤ Focus Systems Corporation