Information Meeting For Financial
Results For the Second Quarter of FY2012

July 31, 2012
Future Architect, Inc.

Copyright ©2012 by Future Architect, Inc. Japan

Contents

1. Overview of Earnings for the Second
Quarter of FY2012(Yuji Higashi, Executive Senior Vice President)

2. Topics Related to the Second Quarter of
FY2012(Yutaka Anma, Executive Senior Vice President )3. Future Outlook for the Second half of
FY2012(Yutaka Anma, Executive Senior Vice President )Copyright ©2012 by Future Architect, Inc. Japan1. Overview of Earnings for the Second
Quarter of FY2012(Yuji Higashi, Executive Senior Vice President)

Copyright ©2012 by Future Architect, Inc. Japan

Overview of the First Half of FY2012
Future Architect, Inc. which designs management and IT.

1. Consolidated net sales were almost as forecast, although slightly below theoriginal target. The ratio of sales in the development phase decreased, whilethat in the grand design phase increased. (Future Architect)
2. Profit margin declined in 1Q, due to increased costs for improving quality ofsome projects underway. The margin picked up a little in 2Q, but was still in
the process of a recovery. (Future Architect, Future One)
Besides, excess costs were incurred for overseas and new businesses, suchas healthcare and Tokyo Calendar Inc., in which we made strategic
investments, because they were still at the start-up stage.
3. We received orders for VAO, financial cloud computing, lisnar+, global ERP
and related projects, which are among the key services of our new growthstrategy, so related businesses are expected to expand.

Copyright ©2012 by Future Architect, Inc. Japan-4-

Consolidated Results for the First Half of FY2012
Future Architect, Inc. which designs management and IT.

(Million yen)

Net sales
OperatingincomeOperatingincome margin
Ordinary
incomeOrdinary
income margin
Net income
Net income
marginFY2011
results
for the first
half

FY2012 planforthe first half

FY2012
results
for the firsthalfYear-onyearchangeCompared
to plan

11,768

11,48011,126

-5.5%

-3.1%

1,629

1,280

724

13.8%

11. 1%

6.5%-55.5%-43.4%

1,711

1,300

804

14.5%

11. 3%

7.2%-53.0%-38.1%

1,073

780

463

9.1%

6.8%

4.2%

-56.8%-40.5%

Copyright ©2012 by Future Architect, Inc. Japan-5-

Balance Sheets
Future Architect, Inc. which designs management and IT.

End of Jun.
2011

End of Dec.
2011

End of Jun.
2012

Current assets

10,596

10,52910,055-473

Fixed assets

3,695

3,924

4,433

+509

Total assets

14,292

14,453

14,489+35

Currents liabilities

2,807

2,716

2,735

+19

360

326

324

-2

Total liabilities

3,168

3,042

3,059

+17

Total Net Assets

11,124

11,41011,429+18

Shareholders’ equity
ratio

77.8%

78.9%

78.0%

-0.9 pt(Million yen)

Non-current liabilities

Main changes(Millions of yen)

Current
assets:Decrease in cash and deposits
Increase in accounts receivable
Decrease in securities
Fixed assets: Increase in software
Increase in goodwill
Increase in investment securities

Copyright ©2012 by Future Architect, Inc. Japan-6-

End of Dec.
2011
5,076
2,770
701
386
145
1,523

End of Jun.
2012
4,713
3,135
1
684
228
1,631

ChangeChange
-363
+365
-699
+297
+82
+107

Cash Flows
Future Architect, Inc. which designs management and IT.

FY2011 results
for the first half

(Million yen)

FY2012 results
for the first half

ChangeCash flows from operating activities

1,216

-22

-1,239Cash flows from investing activities

87

-256

-344

Cash flows from financing activities

-562

-584

-21

0

0

-0

742

-862

Cash and cash equivalents at the beginning of the period

5,153

5,526

Cash and cash equivalents at the end of the period

5,895

4,663

Effect of exchange rate changes on cash andcash equivalents
Changes in cash and cash equivalents

Main changes(Million yen)

Operating CF:

Investing CF:

Financing CF:
Copyright ©2012 by Future Architect, Inc. Japan

Net income before taxes
Increase (decrease) in
accounts receivable
Acquisition of intangible fixed
assetsProceeds from sale ofinvestment securities
Purchase of treasury stock-7-

First half of
FY2011First half of
FY2012

Change

1,714

832

-881

524

-165

-689

-18

-321

-302

228

-

-228

-

-223

-223

Results by Segment
Future Architect, Inc. which designs management and IT.

FY2011 results
for the first half

FY2012 results
for the first half

Year-on-yearchange11,768

11,126-5.5%

IT Consulting

7,413

7,068

-4.7%

Package & Service

2,193

1,992

-9.1%

Corporate Revitalization

2,324

2,249

-3.2%

55

100

80.1%

-219

-285

-

1,629

724

-55.5%

1,450

754-48.0%

Package & Service

120

10

-91.1%

Corporate Revitalization

47

32-13.9%

Other

-2

-89

-

Adjustments

13

16

-

(Million yen)

Net Sales

Other
Adjustments

Operating Income
IT Consulting

Copyright ©2012 by Future Architect, Inc. Japan-8-

Orders Received and Backlog by Segment
Future Architect, Inc. which designs management and IT.

Orders received

BacklogYear-onyear
changeFirst halfof
FY2011Year-onyear
changeFirst halfof
FY2011First halfof
FY2012IT Consulting Business

6,336

7,035

+11. 0%

3,597

3,552

-1. 2%

Package & Service
Business

2,252

1,380

-38.7%

958

831-13.2%

Other

47

107

+128.8%

10

11

+3.8%

Total

8,635

8,523

-1. 3%

4,565

4,395

-3.7%

(Million yen)

Trends of orders received (excluding those in Other)

Copyright ©2012 by Future Architect, Inc. Japan2012

Trends of backlog (excluding that in Other)

IT Consulting

IT Consulting

Package & Service

Package & Service

Total

Total

-9-

Results by Segment (IT Consulting Business)
Future Architect, Inc. which designs management and IT.

Net
sales
売上高

(Million yen)
Net Sales
Operating Income

Operating
営業利益 income

8000

1750

First half of
FY2011First half of
FY2012

7500

1500

7000

1250

7,413

7,064

6500

1000

6000

750

5500

500

1,450

754

5000

250
First
half of FY2011
2011年上半期

First
half of FY2012
2012年上半期

Increase in investment costs
 Costs were incurred to improve the quality of some projects in 1Q.
 We made advance investments in overseas and new businesses such as healthcare.

Cultivating new clients
 We won orders for several large projects in the financial area (see Slide 11).
 Projects in the grand design phase, which are likely to lead to a rise in sales during and after thesecond half, increased. (See Slide 12).

Expansion of new services (details to be described later) We launched projects relating to new services, such as VAO, financial cloud computing, lisnar+,and global ERP.
 We started projects in new fields, such as establishing the EC base.
Copyright ©2012 by Future Architect, Inc. Japan- 10 -

Non-consolidated Analysis of Sales from IT Consulting
Business (1/2)

Future Architect, Inc. which designs management and IT.

Nonconsolidated

Trends of sales by Industry
Fiscal year

39.5%

45.7%

First half of
11上期
2011

46.2%

Second half of
11下期
2011

32.0%

30.5%

27.8%

First half of
12上期
2012

-

1,000

2,000

Service
サービス

3,000

15.3%

Distribution
Financial
流通
金融

6.5%

15.7%

26.0%

4,000

1.8%

13.0%

5,000

6,000

7,000

Manufacturing
製造その他
and others(Note) As a result of reviewing industry categories, data for 2011 and before may differ from those in previous briefing materials.
Copyright ©2012 by Future Architect, Inc. Japan- 11 -

Million yen

Non-consolidated Analysis of Sales from IT Consulting
Business (2/2)

Future Architect, Inc. which designs management and IT.

Nonconsolidated

Trends of sales by phase
Fiscal year

11.9%

First half of
11上期
2011

6.6%

18.0%

Second half of
11下期
2011

24.6%

First half of
12上期
2012

-

1,000

70.0%

61.1%

7.8%

12.9%

2,000

Grand design
グランドデザイン

Copyright ©2012 by Future Architect, Inc. Japan

11.6%

13.1%

20.6%

41.9%

3,000

Design設計

4,000

Development
開発- 12 -

5,000

Maintenance/operati
保守運用他
on and others

6,000

7,000

Million yen

Results by Segment (Package & Service Business)
Future Architect, Inc. which designs management and IT.

Net
sales
売上高
Net
sales

(Million yen)
Net Sales
Operating Income

First half of
FY2011First half of
FY2012

2,193

1,992

120

10

Operating income
営業利益

2400

140

2200

120

2000

100

1800

80

1600

60

1400

40

1200

20

1000

0
2011年上半期
First
half of FY2011

First
half of FY2012
2012年上半期

ERP packages for mid-size companies and SMEs (FutureOne)
 Earnings recovered in 2Q, although profit margin decreased in 1Q due to increased costs for
quality improvements.
 To improve quality, organizational changes were made and structure was strengthened.

Outsourced development and regional business (Ascendia)
 Earnings continued to be stable, backed by strong orders received.
 Operation services were enhanced in cooperation with Future Architect.
 Near-shore development and operations, which use regional bases, moved into high gear.

Copyright ©2012 by Future Architect, Inc. Japan- 13 -

Results by Segment (Corporate Revitalization Business)
Future Architect, Inc. which designs management and IT.

Net
sales
売上高

(Million yen)

Net Sales
Operating Income

First half of
FY2011

2,324
47First half of
FY2012

2,249
32

Operating
営業利益 income

2400

70

2200

60

2000

50

1800

40

1600

30

1400

20

1200

10

1000

0
First
half of FY2011
2011年上半期

First
half of FY2012
2012年上半期

Operating income remained positive Positive operating income was posted for five months of the six-month period, resulting inoperating income remaining positive for the half period.
 Some stores expanded sales floor space to increase product lines that satisfy the needs ofcustomers.
 Gross profit margin continued to be stable due to the use of automatic order placement andnew EDI systems.
 Selling, general and administrative expenses were reduced due to an efficient advertisingstrategy.

Copyright ©2012 by Future Architect, Inc. Japan- 14 -

2.Topics Related to the Second
Quarter of FY2012(Yutaka Anma, Executive Senior Vice President )Copyright ©2012 by Future Architect, Inc. Japan

Market Changes and Growth Strategy~ Revised from Briefing Meeting on Financial
Results for FY2011 (February 9, 2012) ~Future Architect, Inc. which designs management and IT.

Application to Company’s growth strategy
1. Increasing services provided(VAO, financial cloud computing, lisnar+, and global ERP)

2. Broadening client base(Modeling solutions, responding to needs for system integration, and entry into newmarkets)

3. Expanding operating areas through globalization(Support for overseas expansion of Southeast Asian and Japanese companies)

Various measures implemented since last year as part of
new strategies are steadily producing results. This is
expected to lead to an increase in sales during and after
the second half.
Copyright ©2012 by Future Architect, Inc. Japan- 16 -

1. Increasing Services Provided (1/2)
Future Architect, Inc. which designs management and IT.

 VAO (Value Added Outsourcing)
We are providing new clients such as Internet-based securities companies
and foreign exchange retail trading firms with services to switch systems
built by other companies, as well as establishing new systems for them.
In addition, inquiries are increasing for this service from other companies, towhich we are making proposals on the service.

 Financial cloud computing
We received orders from several leading regional banks for consulting
services on the introduction of this service.
The first financial cloud computing service is expected to be launched next
spring.

Copyright ©2012 by Future Architect, Inc. Japan- 17 -

1. Increasing Services Provided (2/2)
Future Architect, Inc. which designs management and IT.

 lisnar+
Inquiries about this service are increasing steadily, with the numbers of both inquiries
and introductions of the service in the past six months marking record highs.
We expanded sales channels for this service, for example, through business partners.
We aim to establish a stable earnings structure, under which we will provide, forexample, maintenance services for and win additional orders from existing customers.

 Global ERP
We won orders for this service from leading Japanese companies, which areexpanding their businesses overseas.
We won orders for total solutions including ERP.
Inquiries about this service are increasing, and we are making proposals for theservice and implementing related projects.

Copyright ©2012 by Future Architect, Inc. Japan- 18 -

2. Broadening Client Base
Future Architect, Inc. which designs management and IT.

 Model high-level solutions using the Companyʼs expertiseand technologies
Inquiries have increased about downsizing-related projects that use expertise andexperience from the distribution business.
We provide the EC base, including a back office, using knowledge of the retailbusiness.
We provide solutions promptly by modeling other companies’ results.

 Responding to needs for system integration in relation toindustrial reorganization
We assist client companies in the financial and manufacturing industries to integrate
their systems.

 Entry into new markets and enhancing businesses there
We acquired Life Sciences Computing Corporation, making a full-scale entry into thehealthcare field, where demand is expected to rise.
Copyright ©2012 by Future Architect, Inc. Japan- 19 -

3. Expanding Operating Areas through Globalization
Future Architect, Inc. which designs management and IT.

 Establishing local units and acquiring local firms inSoutheast Asia (global ERP from overseas)
In Singapore, sales are increasing, and profits are expected to be achieved on amonthly basis in the second half.
In Malaysia, both sales and profits continued to be strong.
We are conducting activities to win orders from local companies in close collaboration
with global ERP corporations.

 Support for overseas expansion of existing Japanese
corporate clients
We are supporting corporate customers to establish systems at overseas bases.

Copyright ©2012 by Future Architect, Inc. Japan- 20 -

3.Outlook for the second half of
FY2012(Yutaka Anma, Executive Senior Vice President )Copyright ©2012 by Future Architect, Inc. Japan

Earnings Outlook for FY2012 (1/2)
Future Architect, Inc. which designs management and IT.

IT Consulting Business Sales are projected to rise due to continuation and expansion of projects for which
we won orders from new clients last year.
 Profits are likely to increase due to the cancelling of projects with low profit
margins.
 Earnings from new services (VAO, financial cloud computing, lisnar+, and global
ERP) under the growth strategy, which were launched last year, are expected tofurther increase from the first half.
 We will establish solid earnings structures in Southeast Asia (Singapore, Malaysia,
and Thailand).

Copyright ©2012 by Future Architect, Inc. Japan- 22 -

Earnings Outlook for FY2012 (2/2)
Future Architect, Inc. which designs management and IT.

Package & Service Business Profit margin is expected to improve by enhancing operations of projects(through the use of Future Architect’s tools and personnel exchanges). (FutureOne) To meet the latest needs of clients, upgraded products are planned to bereleased. (Future One)
 Aggressive recruiting activities will be conducted in response to an increase instable orders received. (Ascendia) Efforts will be made to win orders directly, including those from the public sector.
(Ascendia)
Corporate Revitalization Business We will begin to reestablish our own IT systems including mission-critical systems.
 We will optimize costs through efficient distribution, appropriate lineup of products,
and review of advertising expenses.
Copyright ©2012 by Future Architect, Inc. Japan- 23 -

Reference

Copyright ©2012 by Future Architect, Inc. Japan

Value Added Outsourcing (VAO)
Future Architect, Inc. which designs management and IT.

Adoption of operation and maintenance of systems built by other companies: achievedby dynamic switching service
Optimization of customers’ IT costs by supporting IT operations together with them
Formulation and implementation of IT strategies for the next fiscal year while taking
into account current issues (short-term measures)
Proposal and introduction of next-generation IT model to further optimize costs(medium- to long-term measures)
Provision of new services

Supporting operationand maintenanceby taking over othercompanies’
operations including
their systems

Copyright ©2012 by Future Architect, Inc. Japan

Examination ofthemes and issues

Formulation of short-term IT strategies for
optimizing operating and maintenance costs,
and enhancing medium- to long-termcooperation with customers

Support for IT sector operations
Optimization of total costs
Formulation and implementation of
IT strategies
Business and system reforms
Introduction of
next-generation IT models
Planning, design, and development- 25 -

Financial cloud

Future Architect, Inc. which designs management and IT.

Wide-ranging cloud support for strategic (informational) solutions for banking operations
The main menu is provided by the Company, and the option menu is provided jointly by theCompany and its partners
Operationalrisk

Creditrisk

Financialanalysis

PersonalIB

Administrative
supportSales promotion

Corporate
IB

Collateralappraisal

Main menu*

Consultation and Consultation and
Proposals
Proposals
for corporations for individuals

Sales of assets Credit ranking and
Self-assessment
In custody
Contract-related
Office work

Loans
Cell phone

Integrated
DB

Productivity
analysis

E-mail andgroupware

Copyright ©2012 by Future Architect, Inc. Japan

Accounting
Softwarelinkage

Solutions

Business management
Earnings
management

BI

BPO

Internetconnection- 26 -

Accounting
SystemadapterABC

Personnel
and salaries
Cost
management

Management
portal for
SMEs

Application Cloud lisnar+

Future Architect, Inc. which designs management and IT.

lisnar+ (a system for collecting and using customers’ opinions): Multifaceted collection,
analysis, and reporting customers’ opinions from call center, sales division, services
division, operation division, and via the Internet• Adopted in many industries, including financial institutions, department stores, andMinistry of Health, Labor and Welfare.
• Features multilingual support for overseas users(English, Korean, and Chinese).
• Added function to automatically collect information
Blogs
scattered over the Internet.
SNS

Sales division

Complaints

Internet

Information
leakage

Administrative
accidents

Call center
Awareness andcompliments

Division
responsible forcustomer service

Copyright ©2012 by Future Architect, Inc. Japan

Employees’
opinions

Products andservices division- 27 -

Corporateplanning division

Risk management
divisionGlobal ERP from Japan

Future Architect, Inc. which designs management and IT.

Full-scale launch of ERP introduction service in addition to conventional component-type
development
Launch of teams specializing in SAP and Oracle
Provision of planning, design, development, introduction, and operation services withoverseas business expansion in mind from the startAchieve global rollout from Japan

Global ERP
Formulationof IT
strategies

Global businessexpansion
strategy

Formulation of plansto select andintroduce ERP

Grand design
Businessstrategies

Redesigning ofoperational processes

Systemplanning

Introduction of ERP

System development
Plan to systematize
preparation for proposal
requestSelection of integrator
manufacturer

Project management and quality control
Operational Reform
Team
System Reform Team
Customers

Copyright ©2012 by Future Architect, Inc. Japan- 28 -

Systemconstruction

Supportfor
operations

Operation
Operation

Global ERP from Asia

Future Architect, Inc. which designs management and IT.

Establishment of North Consulting Group (NCG)
Service: ERP introduction consulting, and application management
Customers: Large and mid-size companies and SMEs in Southeast Asia, governmentrun corporations, Japanese companies expanding into the rest of Asia
Operating in: Singapore, Malaysia, Thailand, Vietnam, and Hong Kong

Global ERP
Formulationof IT
strategies

100%

Future Global
Pte. Ltd.

Global businessexpansion
strategy

Formulation of plansto select andintroduce ERP

Grand design
Businessstrategies

Redesigning ofoperational processes

Systemplanning

Introduction of ERP

System development
Plan to systematize
preparation for proposal
requestSelection of integrator
manufacturer

100%
Project management and quality control

North Consulting
Group Pte. Ltd.

Operational Reform
Team
System Reform Team

Customers(1) Future Global Pte. Ltd.
Country: Singapore
Representative: Yasufumi Kanemaru
Main business: Regional supervisory company in Southeast Asia
Shareholder: Future Architect: 100%

Copyright ©2012 by Future Architect, Inc. Japan(2) North Consulting Group Pte. Ltd.
Country: Singapore
Representative: Francis Lee
Main business: Introduction of ERP and consulting
Shareholder: Future Global: 100%

- 29 -

Systemconstruction

Supportfor
operations

Operation
Operation

Financial Topics (non-consolidated)
Future Architect, Inc. which designs management and IT.

 Changes in net sales(Million
yen)
(百万円）

 Changes in selling, general and administrative expenses
First half of 20112011年上半期

Total
net sales
売上高
合計First half of 20122012年上半期(Million
yen)
（百万円）

Y-o-Y
ratio
前期比

7,504

6,772

△9.8%

IT
Consulting
ITコンサルティング

7,231

6,392

△11.6%

HW
Procurement
HWプロキュアメント

124

380

206.3%

Package& Service
パッケージ＆サービス

148

-

-

First half of 20122012年上半期

Y-o-Y
ratio
前期比

Selling, general and administrative
販売費及び一般管理費
expenses

1,690

1,851

9.5%

Personnel
人件費 expenses

868

992

14.3%

Strategic
expenses
戦略経費

189

185

△1.9%

R&D
expenditures
研究開発費

23

11

△53.7%

Depreciation
減価償却費expenses

23

24

2.6%

Employee training
研修費
expenses

46

77

67.4%

Recruiting
採用費 expenses

9774△23.5% Average sales and average value added (IT consulting) per
consultant) Changes in cost of sales(Million
yen)
（百万円）

First half of 20112011年上半期

First half of 20112011年上半期

First half of 20122012年上半期

Y-o-Y
ratio
前期比

(Million
yen)
（百万円）

First half of 20112011年上半期

First half of 20122012年上半期

Y-o-Y
ratio
前期比

Total
cost of sales
売上原価
合計

4,308

4,044

△6.1%

Net
sales (IT Consulting)
売上高（ITコンサルティング）

7,231

6,392

△11.6%

IT
Consulting
ITコンサルティング

4,137

3,752

△9.3%

Outsourcing
外注費 expenses

1,562

1,374

△12.0%

Labor
expenses
労務費

2,007

1,858

△7.4%

Balance:value added*
差引：付加価値（※）

5,669

5,018

△11.5%

Outsourcing
外注費 expenses

1,562

1,374

△12.0%

Average number of consultants
平均コンサルタント数（人）(persons)

613

610

△0.5%

568

519

△8.7%

Averagesales per consultant
一人あたり平均売上高

1210△11.2%

Costof sales of HW Procurement
HWプロキュアメント売上原価

106

292

175.7%

Averagevalue added per consultant
一人あたり平均付加価値

98△11.1%

Costof sales of Package & Service
パッケージ＆サービス売上原価

64

-

-

Others
その他

Copyright ©2012 by Future Architect, Inc. Japan- 30 -*Value added = Net sales – Cost of sales – Subcontracting expenses

Future Architect, Inc. which designs management and IT.

You can also check the summary report of operating results,
supplementary materials, briefing materials and other various IR
materials on the Company’s website.
http://www.future.co.jp/ir/
Investor Relations, Future Architect, Inc.
Tel: +81-3-5740-5724
Fax: +81-3-5740-5820
E-mail：ir@future.co.jp
The forecasts in this material are based on currently available information; actual results may differ from such forecasts
depending on the future direction of the Japanese economy and the IT service industry. It should be noted that the Company does
not guarantee or promise the accuracy of these forecasts.
In this materials, the figures in the summary report of operating results, etc., described in units of thousand yen, are stated in unitsof million yen. Hence, disparity may be found in some of totals and differences. For detailed figures, please refer to the summary
report of operating results.
Copyright ©2012 by Future Architect, Inc. Japan- 31 -