Briefing on Financial Results
for the Second Quarter of FY2016

August 1, 2016
Future Corporation
Copyright ©2016 by Future Corporation

Contents

1. Earnings Results for the Second
Quarter of FY2016
2. Topics Related to the Second
Quarter of FY2016

3. Future Outlook for the Second
Half of FY2016
Copyright ©2016 by Future Corporation

-2-

1.

Earnings Results for the Second
Quarter of FY2016

Copyright ©2016 by Future Corporation-3-

Consolidated Earnings Highlights

Net sales stood at 17,220 million yen, up 1.1% year-on-year
Operating income amounted to 1,930 million yen, down
7.5% year-on-year
Consolidated net sales
 Higher net sales were recorded year-on-year by the IT Consulting Business, New
Media & Web Service Business and Corporate Revitalization Business, but the
Package & Service Business posted a year-on-year decrease in net sales

Consolidated operating incomeHigher operating income was recorded year-on-year by the IT Consulting Business and Corporate
Revitalization Business, but the Package & Service Business posted a significant year-on-year decrease inoperating income.
New Media & Web Service’s operating income decreased due to upfront investment in new business.

Orders received

Order backlog grew year-on-year in the IT Consulting Business and New Media & Web Service
Business, yet decreased year-on-year in the Package & Service Business.
On a quarter-on-quarter basis, order backlog grew in all of these three segments.

Copyright ©2016 by Future Corporation-4-

Consolidated Results for the First Half of FY2016(Million yen)

FY2016
Results forthe first half

Year-on-year comparison
FY2015Results forthe first half

ChangeCompared withprojected results
FY2016
Plan forthe first half

ChangeNet sales

17,225

17,033+1.1%

17,980-4.2%

Operatingincome

1,937

2,093

2,400

(Operating income
Margin)(11.3%)(12.3%)-7.5%-19.3%

Ordinary
income

1,900

2,102

2,410

(Ordinary income
Margin)(11.0%)(12.3%)-9.6%

Profit attributableto owners ofparent

1,129

1,197

(6.5%)(7.0%)(Profit margin)

Copyright ©2016 by Future Corporation

-5.7%

-5-

(13.3%)(13.４%)

1,355(7.5%)-21.2%-16.7%

Consolidated Balance Sheets
End of Jun. 2016

End of Dec. 2015

17,812

17,696

＋116

4,787

5,132

-344

22,60022,828-228

Current liabilities

4,316

5,082

-765

Non-current liabilities

1,428

1,445

-17

Total liabilities

5,745

6,527

-782

Total net assets

16,85516,301+553

Shareholders’ equity ratio

74.1%

70.6%

+3.5pts(Million yen)

Current assets
Non-current assets

Total assets

Main changes

End of Jun.
2016

End of Dec.
2015

Increase in cash and deposits

10,7849,650+1,133

Decrease in notes and accounts receivable – trade

3,867

5,020

-1,153

797

969

-171

1,190

1,303

-113

777

1,243

-465

14,281

13,756+524(Million yen)

Current assets:

Non-current assets: Decrease in goodwill
Current liabilities:

Decrease in notes and accounts payable – trade

Decrease in income taxes payable
Net assets:
Copyright ©2016 by Future Corporation

ChangeIncrease in retained earnings-6-

ChangeConsolidated Cash FlowsFY2016 Results
for the first half

FY2015 Results
for the first half

Net cash provided by (used in) operating activities

1,776

1,038

＋737

Net cash provided by (used in) investing activities

-34

-462

＋427

Net cash provided by (used in) financing activities

-683

-438

-244

Effect of exchange rate changes on cash and cash
equivalents

-5

-68

+63

Increase (decrease) in cash and cash equivalents

1,053

69

＋983

Cash and cash equivalents at beginning of the period

9,757

8,614

＋1,142

10,8108,683＋2,126(Million yen)

Cash and cash equivalents at end of the period

Main changes

First half of
FY2016(Million yen)
Operating CF:

Profit before income taxes and non-controllinginterests
Decrease in notes and accounts receivable - trade
Income taxes paid

Investing CF:

Purchases of investment securities

Proceeds from sales of investment securities
Financing CF:
Copyright ©2016 by Future Corporation

Cash dividends paid

-7-

ChangeFirst half of
FY2015

Change

1,879

2,105

-226

1,130
-1,238
100
-603

618
-1,359
-298
22
-491

+511
+121
+298
+77
-111

Consolidated Results by Segment
FY2016 Results
for the first half

FY2015 Results
for the first half

Year-on-yearchangeNet Sales

17,225

17,033

IT Consulting
Package & Service
New Media & Web Service
Corporate Revitalization
Other
Adjustments

10,767
1,640
2,601
2,272
-56

10,370
2,095
2,394
2,243
-69

+1.1%
+3.8%
-21.7%+8.7%+1.3%-19.2%

Operating Income

1,937
2,200
-179
-146
23
-11
50

2,093

(Million yen)

IT Consulting
Package & Service
New Media & Web Service
Corporate Revitalization
Other
Adjustments
Copyright ©2016 by Future Corporation

-8-

1,938
151
-59
12
0
50

-7.5%
+13.5%+88.4%-0.2%

Consolidated Orders Received and Backlog by Segment

Orders received(Million yen)BacklogFirst half of
FY2016First half of
FY2015Year-onyearchangeFirst half of
FY2016First half of
FY2015Year-onyearchangeIT Consulting Business

10,075

10,618

-542

6,494

6,468

＋26

Package & Service
Business

1,739

2,094

-355

1,042

1,157

-114

321

134

＋186

133

19

＋114

712,136

12,847

-710

7,670

7,644

＋26

New Media & Web Service
Business
Total

Note: eSPORTS and Uoei are not included in the above table because they do not engage in order-based production.

Copyright ©2016 by Future Corporation-9-

Trends of Half-Yearly Consolidated Results
18,50010,000
Net
sales
売上高

営業利益 income
Operating

9,000

18,00016,00014,000Orders
受注高received
Backlog
受注残高

8,000

12,00017,500

7,000

6,000

17,00016,50010,000

5,000

8,000

4,000

6,000

3,000

16,000

4,000
2,000

15,500

2,000
1,000

15,000002014.1H

2014.2H

Copyright ©2016 by Future Corporation

2015.1H

2015.2H

2014.1H 2014.2H 2015.1H 2015.2H 2016.1H

2016.1H- 10 -

Results by Segment (IT Consulting Business) Future Architect, Inc. posted higher net sales year-on-year due to strong performance of
projects for major customers in the distribution, services and manufacturing sectors aswell as for projects such as SKYBANK for financial services companies including
regional banks.
 Operating income also grew year-on-year as the segment achieved improved project
quality while streamlining its operation, based on the efforts to push forward scientificproject operation methods.
12,00010,000Trends of orders received and backlog

Trends of net sales and operating income
Net
sales
売上高

Operatingincome
営業利益10,3701,938

10,7672,200

2,400 12,000

1,600

8,000

6,000

1,200

6,000

4,000

800

2,000

400

0

6,468

Ordersreceived
受注高
Backlog
受注残高

6,494

4,000

2,000
0

0

Copyright ©2016 by Future Corporation

10,0752,000 10,000

8,000

First
half of FY2015
2015年上期

10,6182015年上期
First
half of FY2015

First half of FY2016
2016年上期- 11 -

2016年上期
First
half of FY2016

Results by Segment (Package & Service Business) FutureOne Inc. posted a year-on-year decrease in both net sales and operating income
as new order intake was delayed due to quality issues for some projects and thecompany continued its unprofitable business unit reorganization initiative.
 Micro CAD Co., Ltd. posted a year-on-year decrease in both net sales and operating
income due to the lagging pace for project starts in spite of many customer inquiries
received on its proprietary comprehensive intellectual property management system.
Trends of net sales and operating income
4,000

Net
sales
売上高
Operating
営業利益
income3,000

Trends of orders received and backlog
800

2,095

1,000

400

1,640

Orders
受注高
received

2,094

600

2,000

2,500

Backlog
受注残高

2,000

1,739

1,500

1,157

1,042

1,000

151

200
500

0

0
2015年

-1,000

Copyright ©2016 by Future Corporation

2016年
-179

0

-200

- 12 -First2015年上期
half of FY2015

First2016年上期
half of FY2016

Results by Segment (New Media & Web Service Business)
 eSPORTS Co., Ltd. posted a year-on-year increase in net sales as online sales ofoutdoor and private brand products were strong although the company ceased to
distribute fitness-related goods which recorded significant sales for the previous fiscal
year.
 Tokyo Calendar Inc. recorded higher revenues from web-based advertisement withmonthly page views exceeding approximately 20 million for May 2016.
Trends of net sales and operating income
4,000

売上高
Net
sales
Operating
営業利益
income

3,000
2,394

2,601

800

600

2,000

400

1,000

200

0

 Although CodeCamp Inc. achieved
increasing sales, its upfront investment
costs remained high.

0
2015年
-59

-1,000

Copyright ©2016 by Future Corporation

2016年
-146

-200

- 13 -

Results by Segment (Corporate Revitalization Business)
 Uoei Corporation posted higher sales thanks to efforts to stimulate customer traffic to its
stores such as sales of freshly-baked pizzas.
 The company recorded a significant year-on-year increase in operating income, which
was attributable to improved gross profit margin achieved by using IT systems to analyze
sales, purchasing value and inventory data of all merchandise.
Trends of net sales and operating income
2,500

2,272

2,243

Net
sales
売上高
Operating
営業利益
income

2,000

1,500

50

40

30

23
1,000

20
12

500

10

0

0
First2015年上期
half of FY2015

Copyright ©2016 by Future CorporationFirst
half of FY2016
2016年上期- 14 -

Consolidated Analysis of Changes in Net Sales(Million yen)

Package & Service
Business

+397

-454
+207

IT Consulting
Business

New Media& Web Service
Business

Others0

Corporate
Revitalization
Business-12

Adjustments

17,225

17,033(+1.1%)First half of FY2016First half of FY2015

Copyright ©2016 by Future Corporation＋29- 15 -

Consolidated Analysis of Changes in Operating Income
Package & Service
Business+262
IT Consulting
Business-331(Million yen)

New Media& Web Service
Business＋11-86

Corporate
Revitalization
Business

0-12

Adjustments

1,937

2,093

(-7.5%)First half of FY2016First half of FY2015

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Others- 16 -

Sales Analysis [IT Consulting Business (Future Architect, Inc.)](Excluding Procured Articles) (1/3)

Trends of sales by industry
ServiceFirst halfof
FY2014First halfof
FY2015First halfof
FY2016

1,803（20.9%）

2,064（23.1%）

2,468（25.5%）

1,567（18.1%）

2,915（33.8%）

1,899（21.3%）

2,532（26.2%）

Distribution

Financial

Manufacturing

2,348（27.2%）

2,207（24.8%）

2,431（25.1%）

2,744（30.8%）

2,245（23.2%）

Note: Figures for the first half of FY2015 and FY2016 include projects transferred to Future Inspace.
Copyright ©2016 by Future Corporation- 17 -

Sales Analysis [IT Consulting Business (Future Architect, Inc.)](Excluding Procured Articles) (2/3)

Trends of sales by phase
Grand designFirst halfof
FY2014

DesignDevelopment

3,286

498

3,387

1,463

(38.1%)(5.8%)(39.2%)(16.7%)

Maintenance/operation

First halfof
FY2015

1,749

1,847

3,814

1,504

(19.6%)(20.7%)(42.8%)(16.9%)First halfof
FY2016

1,866

1,069

5,232

1,509

(19.2%)(11.1%)(54.0%)(15.6%)

Note: Figures for the first half of FY2015 and FY2016 include projects transferred to Future Inspace.
Copyright ©2016 by Future Corporation- 18 -

Sales Analysis [IT Consulting Business (Future Architect, Inc.)](Excluding Procured Articles) (3/3)

Trends of sales composition ratios by scale of project (account)Less than 100
million yen

9.9%

24.8%

Over 100 million to lessthan 500 million yen

34.4%

Over 500 million yen to lessthan 1,000 million yen

Over 1,000
million yen

30.9%First half of
FY2014First half of
FY2015

18.4%

26.1%

8.8%

First half of
FY2016

17.0%

22.6%

6.0%

46.7%

54.4%

million yen

Note: Figures for the first half of FY2015 and FY2016 include projects transferred to Future Inspace.
Copyright ©2016 by Future Corporation- 19 -

２．Topics Related to the Second
Quarter of FY2016
Holding company structure
Major Press Releases in theFirst Half of the Year

Copyright ©2016 by Future Corporation

Holding company structure• Effective April 1, 2016, the Group migrated to a holding
company structure.
– Holding company: Future Corporation– Future Architect, Inc. became one of its subsidiaries

Future strategy– From a platform of large parent company Future Architect, Inc. with a group of
subsidiaries
 To a platform of the smart, nimble and compact parent company withgroup entities– Future Architect, Inc. to remain the major pillar for the Group’s businessendeavors– Create the second and third major pillars and transform the Group into a teamof venture capital companies– Transform the Group into a team of professionals in real-time, cloudcomputing, big data, AI and IoT services
Copyright ©2016 by Future Corporation- 21 -

Holding company structure• Future Corporation’s role (smart, nimble and compact)– Plan and pursue group business strategies and healthcare strategybased business management– Allocate staff, assets, financing, information and technologies in an
optimal manner– Pursue merger and acquisition strategies– Serve as an incubation (development) center for venture capitalcompanies– Ensure the succession and evolution of our corporate culture– Lead the efforts to promote diverse ways of working

Copyright ©2016 by Future Corporation- 22 -

Holding company structure

Copyright ©2016 by Future Corporation- 23 -

Press Releases
Major press releases: 14 cases during the first half offiscal year ending December 31, 2016

9 cases
1 case3 cases

1 caseCopyright ©2016 by Future Corporation- 24 -

Press Releases
Solutions for bank customers
Customer information comprehensive
security(including for so-called the “My Number” national personal
identification number scheme)

Anti-cyberattack open tool
Online fitness service

Web-based service

Copyright ©2016 by Future Corporation- 25 -

Press Releases• Assist banking operation/sales and loan provision activities and provide
information data warehousing service• Launched in December 2012. Won orders from six banks over a period of
three and a half years• Continued to expand functions– Functions for personal customers (housing and non-collateral loans) in addition
to functions for corporate customers– Information data models– Electronic signature-based face-to-face procedure simplification and document
dematerialization

SKY cloud computing service series
 Highly-specialized application cloud computing service• SKYBANK• SKYRETAIL• SKYLOGI• SKYCOMMERCE• SKYRUNNER
Copyright ©2016 by Future Corporation- 26 -

Press Releases
Integrated security system(including for so-called the “My Number” national personal identification number scheme)•

Conforms to so-called the “Act on National Personal Identification Number Scheme” thatcame into force in January 2016•

Controls, monitors and inspects not only national personal identification number information
but also other types of customer security handling information in a centralized manner•

Delivers high and reasonable levels of security through a combination of open source
technologies
Integrated security system
Security inspector

Technical measures

Customer

System manager

Physical measures
Service officer

Identify theft

Copyright ©2016 by Future Corporation

MaintenanceservicevendorHuman andorganizational
measures

Unauthorized Falsification
accessWiretapping- 27 -

Information
leakage

Virus

Serviceobstruction

Press Releases
Cyberattack countermeasure open tool “Vuls (Vulnerability Scanner)”••••

Vulnerability scanning tool Vuls was released on April 1, 2016 as a free-of-charge open-source
tool for worldwide users
Gathers, inspects and reports failure information fully automatically in order to enable
managed servers to be maintained and run properly
Curbs the risk of being exposed to targeted cyberattacks
Is ranked 4th globally by GitHub Trending
Managed system
Softwareinformation

Vulnerability
information

Vulnerable databasein JapanCollateNotify vulnerability causedby e-mail or a slack
Vulnerable database in
the U.S.

Copyright ©2016 by Future Corporation- 28 -

Press Releases
Online fitness service••••

Launched online service Pocket Gym (“Pockegym”) on May 10, 2016
Allows the user to achieve an ideal body through nimbly using spare time to receive aremote lesson anywhere
Expands the Company’s service offerings to include user experience service, in addition tomerchandise sales, and enables loyalty points to be used interchangeably
Is provided to corporate customers as an employee welfare service program• Is able to be used anytime and anywhere with a tablet• One-on-one lesson of at least 10 minutes by a professional trainer• Torso training, stretching, yoga and aerobics lessons

Copyright ©2016 by Future Corporation- 29 -

Press Releases
Tokyo Calendar web service•••

Achieved 10 million monthly page views for November 2015
Recorded 20 million monthly page views for May 2016, marking a rapid growth of 200% within
six months
Orders for promotion service have been growing due to the expansion of the company’s
contents lineup and fans ten thousand

1,000

Copyright ©2016 by Future Corporation- 30 -

3. Future Outlook for the Second
Half of FY2016

Copyright ©2016 by Future Corporation

Measures for the Second Half of FY2016
1.

SKY cloud computing service series
Assurance and management ofquality2.

Innovation of product lineup

3.

Next-generation architecture

Copyright ©2016 by Future Corporation- 32 -

Measures for the Second Half of FY2016• SKY cloud computing service series
 Highly-specialized application cloud computing service- Bank operation assistance, loan support and information DWH
systems- Won orders from six banks within three and a half years• To be announced shortly
 SKYRETAIL SKYLOGI SKYCOMMERCE
 SKYRUNNER

Copyright ©2016 by Future Corporation

Retail and wholesale industry cloud computing
systemLogistics industry cloud computing system
EC cloud computing system
High-capacity parallel distributed batch cloudcomputing system- 33 -

Measures for the Second Half of FY2016
Quality management and assurance• In-house developed tool for scientific project operation: a tool applied to theCompany’s entire internal projects(i) Elaborate analysis of existing systems(ii) Consistency assurance and automatic generation of deliverables(iii) Quantitative project management
Grand design
GD

Requirement
definition RD(i) Elaborate
analysis ofexisting
systems
Analytical tool for existing systems

Standard
design SD

Programdesign PD

Development/
unit testing
PG/UTJoint testingJT

Systemtesting(ii) Consistency assurance and automatic generation of deliverables(iii) Quantitative project management
Development efficiency and quality improvement tool

Project management tool

Future Formula

Future fraqta

Future NASA

 Analysis of screen images, documents, IF,data, and STEP count of existing systems
 Highly precise system development plan
based on analysis results Definitions of existing functions required to
be assured

 Consistency assurance for design
information and automatic generation ofsource codes
 QCD visualization and future forecasting Function mapping for existing and new
systems

Copyright ©2016 by Future Corporation- 34 -

 Management of tasks
 Management of deliverables

Measures for the Second Half of FY2016
Quality management and assurance• From 100% internal application to external sales(i) Commissioned analysis(ii) System creation
Your company

Your company
Deliverables

Your company
InquiryFA

Your
company

Analysis
resultYour
companyFA
AnswerUse
fraqtaUseCreatefraqtaInquiryYour
companyFA
AnswerUseCreatefraqtafraqta-checker (automatic consistency checking)fraqta-loader (Document analysis)
Design sheet

fraqta repository
Copyright ©2016 by Future Corporation(iii) Service provision- 35 -

fraqta repository

Measures for the Second Half of FY2016
Innovation of product lineup• InfiniOne, a new brand scheduled to be announced in
October 2016
– Multiple database and language handling service and enhanced
external collaboration function• Addition of MoneyOne, a cloud accounting function– Project and receivables management and automatic bankbook
reading• Expanded templates for different industries– Enhancement of industry-dedicated functions (equipment work and IT
services)
Customer inquiry
management- 36 -

Customer

POS– Expand to 50 companies,
up from eight companies
currently
Copyright ©2016 by Future Corporation

InfiniOne
Order placement

Order intake

Equipment work and IT
services

Project plan
Execution budget

Individual cost calculation

Sales
Periodic invoicing
Invoicing

HHT

Operating budget

Advance received

Completion and project
conclusion

Project profit/loss
Shipment and cost transfer

Labor cost

Purchasing
application
Purchasing

Expenses

Incoming payment
Payment
Individual elimination
Accounts receivable

Shipment

Receipt

Transfer

Inventory checking

MoneyOne cloud computing accounting

Accounts payable

Supplier & outsourcing
service provider• Inception ofpartnership system

Measures for the Second Half of FY2016
Next-generation architecture
Ordinary technologies

Future Corporation’s technologies

Batch processing

Real-time processing

Individual optimization(separation)

Total optimization (integration)

Administrative work processing(four arithmetic operations)

Analysis and optimization
processing (advanced
mathematics or AI)

Slip data

Cyber physical data (IoT)

Copyright ©2016 by Future Corporation- 37 -

Measures for the Second Half of FY2016
Next-generation architecture
Data Processing Layer
Transaction processing
External
API

File data check-in
processing

Non-synchronizedprocessing (noncritical)

UI

Message data
check-in processing

Synchronizedprocessing (critical)

SensorStream data checkin processing

Streaming processing

Actuator

AI intelligence

Unlimited scalability

Minimum core

1/
670K

11
100,000
TPS

Steps

RtFA

3,000

62K

Copyright ©2016 by Future Corporation

Data Store Layer

Structured data
storage processing
HumanInterface•

RtFA evolution version of existingarchitecture
Project release scheduled for thestart of 2017

MachineInterface•

Network
InterfaceGateway Layer

1,000 TPS

- 38 -TPS

Non-structured
data storage
processing

Achievement of Plan for the Full Fiscal Year

(Million yen)Compared with the first half
(progress)

Full-year
forecast for
FY2016FY2016
Results for the
first half

Achievement
rate

Net sales

37,00017,225

46.6％

Operatingincome

5,200

1,937

(14.0%)(11.3%)

37.3％

5,220

1,900

(14.1％)(11.0%)

2,880

1,129

(7.7%)(6.6%)(Operating income
Margin)Ordinary
income(Ordinary income
Margin)Profit attributable toowners of parent(Profit margin)

Copyright ©2016 by Future Corporation- 39 -

36.4％
39.2％

The summary report of operating results, supplementarymaterials, briefing materials and other various IR materials
are also available on the Company’s website.
http://www.future.co.jp/hd-ir/
Investor Relations, Future Corporation
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 material, the figures in the summary report of operating results, etc. described in units of thousand yen, are stated in unitsof million yen. Hence, a disparity may be found in some of the totals and differences. For detailed figures, please refer to thesummary report of operating results.
Copyright ©2016 by Future Corporation- 40 -