Consolidated Summary Report of Operating Results for Second Quarter of Fiscal 2020
(Year Ending December 2020) [Japan GAAP]
July 31, 2020

Company name:
Future Corporation
Security code number: 4722
URL: https://www.future.co.jp
Representative:
Yasufumi Kanemaru, Chairman and President
Contact:
Shinichi Iwata, Head of Financial & Accounting Group
Scheduled date for filing the quarterly report:
Scheduled date for distribution of dividend payments:
Creation of supplemental material on quarterly financial results:
Holding of quarterly results briefing:

Shares listed on: First Section of Tokyo Stock Exchange

Tel. 03-5740-5724
August 13, 2020
September 18,2020
No
Yes (For institutional investors and analysts)(Amount rounded off to million yen)

1. Consolidated Results for Second Quarter of Fiscal 2020 (January 1, 2020 to June 30, 2020)(1) Consolidated operating results (cumulative)(Percentage figures indicate year-on-year changes)

Net sales
Million yen

Second quarter, fiscal 2020
Second quarter, fiscal 2019
(Note) Comprehensive income

Quarterly profit attributable toowners of parent

Operating income%

Million yen%

22,135
(0.4)
3,239
(2.9)
22,215
16.7
3,336
27.7
Second quarter, fiscal 2020: 4,620 million yen (73.7%)
Second quarter, fiscal 2019: 2,659 million yen (12.4%)%

Million yen

2,366
2,130

11.1
4.2

Quarterly profit per share
Yen

Second quarter, fiscal 2020
Second quarter, fiscal 2019

53.14
47.67

(2) Consolidated financial position
Total assets
Million yen

Second quarter, fiscal 2020
Fiscal 2019
(Reference) Shareholders’ equity

Shareholders’ equity
ratio

Net assets
Million yen

Net assets per share%

42,98433,25639,03930,296
Second quarter, fiscal 2020: 33,231 million yen

Yen

77.3
751.1477.6
677.50Fiscal 2019: 30,296 million yen

2. Dividends
End of first quarter

Dividends per share
End of second quarter End of third quarter

Yen

Yen

Year-end

Yen

Fiscal 2019
–
18.00
–
Fiscal 2020–
20.00
Fiscal 2020 (Forecast)–(Note) Changes from the previous release of dividends-per-share forecasts: None

Total
Yen

Yen

21.00

39.00

20.00

40.00

3. Projected Consolidated Results for Fiscal 2020 (January 1, 2020 to December 31, 2020)(Percentage figures indicate year-on-year changes)

Net sales
Million yen

Profit attributable toowners of parent

Operating income%

Million yen

Full year
45,000(0.9)
6,500(Note) Changes from the previous release of earnings forecasts: Yes

Profit per share%

Million yen

%

Yen

(0.4)

4,400

(3.5)

99.45

* Notes(1) Changes in significant subsidiaries during the consolidated period under review (changes in specified subsidiaries that involved changes
in the scope of consolidation): None
(2) Application of accounting treatment peculiar to quarterly consolidated financial statement preparation: None
(3) Change in accounting policies or estimates and retrospective restatements
1) Change in accounting policies in accordance with revision of accounting standards:
2) Change in accounting policies other than item 1) above:3) Change in accounting estimates:
4) Retrospective restatements:(4) Number of outstanding shares (common stock)1) Total outstanding shares as of the end of theperiod (including treasury shares)
2) Total treasury shares as of the end of the period
3) Average number of outstanding shares during
the period under review (cumulative total)

Second quarter,
fiscal 2020
Second quarter,
fiscal 2020
Second quarter,
fiscal 2020

None
None
None
None

47,664,000 shares Fiscal 201947,664,000 shares

3,422,611 shares Fiscal 2019

2,946,587 shares

44,543,772 shares

Second quarter,
fiscal 201944,705,497 shares* Quarterly financial results reports are outside the scope of auditing by Certified Public Accountants or audit firms.
* Points to note about the proper use of projections, and other noteworthy events
Any forward-looking statement, including earnings forecasts, contained in this document is based on information currently held by the Company and assumptions theCompany considers as reasonable, and the Company does not promise to achieve any of them. Actual results may differ significantly from forecasts due to various
uncertain factors.

Future Corporation (4722) Consolidated Summary Report of Operating Results for Second Quarter of Fiscal 2020

 Contents

1.

Qualitative Information Regarding Quarterly Financial Results .............................................................................................................. 2(1) Explanation on business performance .............................................................................................................................................. 2(2) Explanation on qualitative information about consolidated earnings forecast .................................................................................. 3

2.

Consolidated Quarterly Financial Statements and Key Remarks ............................................................................................................. 4(1) Consolidated quarterly balance sheets .............................................................................................................................................. 4(2) Consolidated quarterly statements of income and comprehensive income ....................................................................................... 6(First six-month period) ................................................................................................................................................................... 6(3) Consolidated quarterly statements of cash flows .............................................................................................................................. 8(4) Notes to consolidated quarterly financial statements........................................................................................................................ 9(Note on premise of a going concern) .............................................................................................................................................. 9(Significant changes in shareholders’ equity) ................................................................................................................................... 9(Segment information) ..................................................................................................................................................................... 93.

Additional Information ........................................................................................................................................................................... 10
Status of orders received......................................................................................................................................................................... 10- 1 -Future Corporation (4722) Consolidated Summary Report of Operating Results for Second Quarter of Fiscal 2020

1. Qualitative Information Regarding Quarterly Financial Results(1)

Explanation on business performance
The group’s consolidated net sales for the first six months came to 22,135 million yen, down 0.4% from a year ago; operating income was3,239 million yen, down 2.9% year on year; and quarterly profit attributable to owners of parent increased to 2,366 million yen, up 11.1%
from a year ago.
In the first half of the fiscal year under review, the business environment remained uncertain, reflecting concerns over an economic
downturn caused by the spread of the novel coronavirus, the deteriorating business performance of companies and other factors. However,
the impact of this risk on the group's business activities was relatively slight.
During the first six-month period, both the sales and operating income of our IT Consulting & Service Business decreased due mainly to
lower sales and earnings of Future Architect, Inc. (including the technology division of Future Corporation) compared to the results of thesame period of the previous fiscal year. Meanwhile, in Business Innovation Business, all companies improved their operating income/loss,
which resulted in posting operating income as a business segment. As a result of the above, consolidated net sales and operating income
declined 0.4% and 2.9%, respectively, from the same period of the previous fiscal year. In addition, quarterly profit attributable to ownersof parent increased 11.1% year on year.
Details of the performance of each segment are as follows.

1) IT Consulting & Service Business
Future Architect, Inc. (including the technology division of Future Corporation) saw an increase in sales from financial institutions that
continued to work on improving business efficiency, as well as in orders for core system enhancements and DX promotion projects inconsideration of 2025 Digital Cliff. However, net sales declined due to the postponement of the start of new projects. Operating income
also declined due to an increase in costs resulting from the addition of incremental staff to some challenging existing projects.
Future Inspace, Inc. posted lower sales and operating income year on year mainly due to a decrease in new development orders although
the maintenance and operation service deals for projects set by Future Architect, Inc. were favorable.
Both net sales and operating income of FutureOne, Inc. decreased from the results of a year ago due to a partial delay in delivery in thelarge-scale SI project, which made it difficult to focus on winning new orders.
YDC Corporation’s net sales and operating income both increased from a year earlier mainly due to greater sales of its original software,“YDC SONAR,” which integrates and analyzes quality information in the manufacturing industry.
Regarding dit Co., Ltd., both net sales and operating income increased significantly year on year thanks to the strong performance of
security services such as vulnerability diagnosis.
As a result, net sales of the segment amounted to 18,030 million yen, down 2.8% from a year earlier, and operating income came to 3,061
million yen, down 7.5% from a year ago.
2) Business Innovation Business
Regarding eSPORTS Co., Ltd., both net sales and operating income increased from the same period of the previous fiscal year, due tofactors such as growth of private brand products resulting from increased demand for staying home and indoor training associated withthe spread of the novel coronavirus, the recognition of outdoor product brands, and the effect of campaigns at mall stores.
CodeCamp, Inc. saw a significant increase in both sales and operating income compared with the results of a year earlier. This was due toan increase in the number of individuals taking online courses during the period when people were asked to refrain from going out due tothe spread of the novel coronavirus as well as a move by companies that are reviewing working styles to switch from group training toonline courses.
Regarding Tokyo Calendar Inc., net sales increased from a year earlier as its online services, such as "Tokyo Calendar Date," performed
well and covered the decrease in advertising revenues caused by the spread of the novel coronavirus. As a result, the firm posted operating
income in contrast to the operating loss recorded in the same period of the previous fiscal year.

- 2 -Future Corporation (4722) Consolidated Summary Report of Operating Results for Second Quarter of Fiscal 2020
LaiBlitz, Inc.’s net sales and operating income both increased from a year earlier as a result of steady progress in consulting services andcloud services for several professional baseball teams.
As a result, Business Innovation Business managed to be in the black as a segment, with net sales rising 11.4% year on year to 4,139
million yen and operating income coming to 209 million yen (in contrast to an operating loss of 89 million yen in the same period of theprevious fiscal year).
(Note) Segment result figures mentioned above are before adjustment for intersegmental sales and transfers.
(2)

Explanation on qualitative information about consolidated earnings forecast
At the meeting of the Board of Directors held on July 31, 2020, the Company decided, in light of recent business performance trends andother factors, to revise its consolidated earnings forecasts for the full year ending December 2020 (January 1, 2020 to December 31, 2020),
which were disclosed at the time of the April 28, 2020 announcement of the financial results for the first quarter of the fiscal year ending
December 2020. For details, please refer to the "Notice Regarding Revision to the Full-Year Earnings Forecast" released today.

- 3 -Future Corporation (4722) Consolidated Summary Report of Operating Results for Second Quarter of Fiscal 2020

2. Consolidated Quarterly Financial Statements and Key Remarks(1)

Consolidated quarterly balance sheets(in thousands of yen)Previous consolidated
fiscal year
(December 31, 2019)

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Merchandise and finished goods
Work in process
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Land
Other
Accumulated depreciation
Other, net

Consolidated second quarter
under review(June 30, 2020)

14,929,901
7,087,190
995,544351,639
1,363,881(3,007)

15,571,374
6,568,973
987,986
1,008,055
1,463,868(3,000)24,725,149

25,597,258

1,710,429(965,749)

1,732,489(1,004,431)

744,679

728,057855
2,888,097(2,247,982)

855
2,741,880(2,123,150)

640,115

618,730

1,385,650

1,347,644

Intangible assets
Goodwill
Software
Customer-related assets
Other

178,023
1,673,554
624,000
5,608

158,200
1,663,642
520,000
5,885

Total intangible assets

Total property, plant and equipment

2,481,186

2,347,729

Investments and other assets
Investment securities
Lease and guarantee deposits
Deferred tax assets
Other
Allowance for doubtful accounts

8,779,498
1,433,233
16,680237,322(19,502)

12,038,691
1,447,282
12,776
205,085(11,751)

Total investments and other assets

10,447,232

13,692,083

14,314,070

17,387,457

39,039,219

42,984,716

Total non-current assets
Total assets- 4 -Future Corporation (4722) Consolidated Summary Report of Operating Results for Second Quarter of Fiscal 2020
(in thousands of yen)Previous consolidated
fiscal year
(December 31, 2019)
Liabilities
Current liabilities
Accounts payable - trade
Current portion of long-term loans payable
Current portion of bonds
Accounts payable - other
Income taxes payable
Provision for bonuses
Provision for quality assurance
Provision for loss on projects
Other

Consolidated second quarter
under review(June 30, 2020)

1,305,448
11,4728,000
1,326,754
854,922238,574
65,617
254,804
2,487,069

1,042,686
6,100–
1,227,931
998,193
246,743
65,826
660,7082,507,296

Total current liabilities

6,552,663

6,755,485

Non-current liabilities
Long-term loans payable
Asset retirement obligations
Deferred tax liabilities
Other

3,320
406,303
1,635,440
145,237–
407,8812,387,123
177,503

Total non-current liabilities

2,190,301

2,972,508

Total liabilities

8,742,965

9,727,993

Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury shares

1,421,815
2,525,165
23,232,499(1,493,579)

4,000,000
21,33324,607,402(2,235,662)

25,685,901

26,393,073

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment

Total shareholders’ equity

4,598,333
586
11,432

6,826,174
398
11,950Total accumulated other comprehensive income

4,610,352

6,838,522–

25,12530,296,254

33,256,722

39,039,219

42,984,716

Non-controlling interests
Total net assets
Total liabilities and net assets- 5 -Future Corporation (4722) Consolidated Summary Report of Operating Results for Second Quarter of Fiscal 2020
(2)

Consolidated quarterly statements of income and comprehensive income(First six-month period)(in thousands of yen)First six months of the previous
consolidated fiscal year
(from January 1, 2019
to June 30, 2019)

First six months of the consolidated
fiscal year under review(from January 1, 2020
to June 30, 2020)

Net sales
Cost of sales

22,215,342
12,941,930

22,135,781
12,739,861

Gross profit

9,273,412

9,395,920

Selling, general and administrative expenses
Directors’ compensation
Salaries and bonuses
Training expenses
Research and development expenses
Depreciation
Recruiting expenses
Other

238,179
2,341,322
184,477
223,477
180,907
221,695
2,546,910

257,746
2,354,403
275,274
278,484
192,237
249,1712,549,468

5,936,969

6,156,785

3,336,442

3,239,134

357
74,70327,350
4,270
2,500

417
71,697
9,340
1,191
3,530

109,182

86,176

4,761

198

Total selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Share of profit of entities accounted for using equity method
Foreign exchange gains
Other
Total non-operating income
Non-operating expenses
Interest expenses
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of investment securities
Total extraordinary income
Extraordinary losses
Loss on realized foreign currency translation adjustment

4,761

198

3,440,863

3,325,112–

93,278–93,278

175,312–

Total extraordinary losses

175,312–

Quarterly profit before income taxes

3,265,551

3,418,390

Income taxes

1,117,557

1,026,278

Quarterly profit

2,147,993

2,392,112(Quarterly profit attributable to)
Quarterly profit attributable to owners of parent
Quarterly profit attributable to non-controlling interests

2,130,896
17,0972,366,987
25,125- 6 -Future Corporation (4722) Consolidated Summary Report of Operating Results for Second Quarter of Fiscal 2020
First six months of the previous
consolidated fiscal year
(from January 1, 2019
to June 30, 2019)
Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Share of other comprehensive income of entities accounted
for using equity method
Total other comprehensive income
Quarterly comprehensive income(Quarterly comprehensive income attributable to)
Quarterly comprehensive income attributable to owners ofparentQuarterly comprehensive income attributable to non-controllinginterests- 7 -First six months of the consolidated
fiscal year under review(from January 1, 2020
to June 30, 2020)

401,970(236)
109,966

2,227,841
(188)
187

(124)

330

511,575

2,228,170

2,659,569

4,620,282

2,642,494

4,595,157

17,07525,125

Future Corporation (4722) Consolidated Summary Report of Operating Results for Second Quarter of Fiscal 2020
(3)

Consolidated quarterly statements of cash flows(in thousands of yen)First six months of the previous
consolidated fiscal year
(from January 1, 2019
to June 30, 2019)

Cash flows from operating activities
Quarterly profit before income taxes
Depreciation
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for quality assurance
Increase (decrease) in provision for loss on projects
Interest and dividend income
Interest expenses
Share of (profit) loss of entities accounted for using equity
method(Gain) loss on sales of investment securities
Loss on realized foreign currency translation adjustment
Decrease (increase) in notes and accounts receivable - trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable - trade
Other

First six months of the consolidated
fiscal year under review(from January 1, 2020
to June 30, 2020)

3,265,551
455,897(1,477)
7,607
32,731(12,058)(75,061)
4,761

3,418,390
523,366(1,636)8,169
209
405,903(72,114)198(27,350)(9,340)–175,312(413,038)
3,155
2,196
286,515(93,278)–
518,216(648,858)(262,761)(138,485)

Subtotal

3,704,740

3,647,979

Interest and dividend income received
Interest expenses paid
Income taxes paid

75,077(4,761)(1,527,639)

72,114(283)(998,421)

Cash flows from operating activities

2,247,417

2,721,389

75,231(425,988)(272,238)(6,050)––(6,464)20,9081,559–(111,383)(252,631)–(50,000)
99,900(15,874)
601
1,767

Cash flows from investing activities
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Purchase of intangible assets
Payments for asset retirement obligations
Purchase of investment securities
Proceeds from sales of investment securities
Payments for lease and guarantee deposits
Proceeds from collection of lease and guarantee deposits
Other
Cash flows from investing activities(613,043)(327,620)

Cash flows from financing activities
Repayments of long-term loans payable
Repayments of finance lease obligations
Redemption of bonds
Purchase of treasury shares
Cash dividends paid

(368,335)(13,936)(128,000)(157)(756,216)(8,692)(40,710)(8,000)(758,502)(938,056)

Cash flows from financing activities(1,266,646)(1,753,961)

Effect of exchange rate changes on cash and cash equivalents(7,036)

1,665

Net increase (decrease) in cash and cash equivalents

360,690

641,473

Cash and cash equivalents at the beginning of the period

13,908,840

14,929,901

Cash and cash equivalents at end of the quarterly period

14,269,530

15,571,374- 8 -Future Corporation (4722) Consolidated Summary Report of Operating Results for Second Quarter of Fiscal 2020
(4)

Notes to consolidated quarterly financial statements(Note on premise of a going concern)
Not applicable.

(Significant changes in shareholders’ equity)
Not applicable.

(Segment information)[Segment information]
I. First six months of the previous consolidated fiscal year (from January 1, 2019 to June 30, 2019)
1. Information on amounts of net sales and income or loss by reportable segment(in thousands of yen)
Reportable segments
IT Consulting &Service BusinessNet sales(1) Net sales tooutside clients(2) Inter-segment
sales or transfer
Total
Segment income(loss)

BusinessInnovation
Business

Other(Note 1)

Total

Total

Amount stated infinancialstatements(Note 3)Adjustments(Note 2)

18,516,077

3,699,264

22,215,342–

22,215,342–

22,215,342

28,17815,14443,322–

43,322(43,322)–

18,544,255

3,714,409

22,258,664–

22,258,664(43,322)

22,215,342

3,308,511(89,293)3,219,218

1,180

3,220,398

116,043

3,336,442(Note 1) “Other” is a segment not included in the reportable segments and includes securities investment, holding, and management activities.
(Note 2) Adjustments to segment income (loss) represents the amount of inter-segment transactions eliminated and income and expenses of theholding company excluding the technology segment.
(Note 3) Segment income (loss) is adjusted with operating income in the consolidated quarterly financial statements.

II. First six months of the consolidated fiscal year under review (from January 1, 2020 to June 30, 2020)
1. Information on amounts of net sales and income or loss by reportable segment(in thousands of yen)
Reportable segments
IT Consulting &Service BusinessNet sales(1) Net sales tooutside clients(2) Inter-segment
sales or transfer
Total
Segment income(loss)

BusinessInnovation
Business

Other(Note 1)

Total

Total

Amount stated infinancial statements(Note 3)Adjustments(Note 2)18,016,416

4,119,345

22,135,761

20

22,135,781–

22,135,781

14,241

19,75733,999–33,999(33,999)–

18,030,657

4,139,103

22,169,761

20

22,169,781(33,999)

22,135,781

3,061,727

209,178

3,270,906(10,620)

3,260,285(21,151)

3,239,134(Note 1) “Other” is a segment not included in the reportable segments and includes securities investment, holding, and management activities.
(Note 2) Adjustments to segment income (loss) represents the amount of inter-segment transactions eliminated and income and expenses of theholding company excluding the technology segment.
(Note 3) Segment income (loss) is adjusted with operating income in the consolidated quarterly financial statements.

- 9 -Future Corporation (4722) Consolidated Summary Report of Operating Results for Second Quarter of Fiscal 2020

3. Additional Information
Status of orders received

Segment

IT Consulting & Service BusinessBusiness Innovation Business
Total

Segment

First six months of the previous
consolidated fiscal year
(from January 1, 2019 to June 30, 2019)(in thousands of yen)First six months of the consolidated
fiscal year under review(from January 1, 2020 to June 30, 2020)

Orders received

Orders received

Business Innovation Business
Total

Order backlog

17,983,704

11,378,484

15,921,402

10,428,710

815,919

317,498

1,039,501

335,636

18,799,623

11,695,983

16,960,904

10,764,347

First quarter of the consolidated
fiscal year under review(from January 1, 2020 to March 31, 2020)
Orders received

IT Consulting & Service Business

Order backlog

Order backlog

7,956,502

11,392,066

Second quarter of the consolidated
fiscal year under review(from April 1, 2020 to June 30, 2020)
Orders received
7,964,900

Order backlog
10,428,710

589,320

408,086

450,180

335,636

8,545,823

11,800,153

8,415,081

10,764,347- 10 -