Information Meeting For Financial
Results For the Second Quarter of FY2011

August 2, 2011
Future Architect, Inc.

Copyright ©2011 by Future Architect, Inc. Japan

Meeting Agenda
1. Overview of Earnings for the First Half of FY2011
2. Summary of the First Half of FY2011
3. Earnings Outlook for FY2011
4. Growth Strategy (New Services)

Copyright ©2011 by Future Architect, Inc. Japan-2-

1. Overview of Earnings for theFirst Half of FY2011

Copyright ©2011 by Future Architect, Inc. Japan

Overview of the First Half of FY2011
1. Net sales and operating income slightly fell short of the original
targets, while ordinary income and net income exceeded the original
goals. All of these figures, however, were higher than in the same
period of fiscal year 2010.
Profits, among others, increased significantly from a year ago.
Operating income rose 50.9%, ordinary income advanced 49.2% andnet income jumped 102.8%. (Refer to the next page.)
2. On a non-consolidated basis, only sales of the consulting service,excluding externally procured products such as hardware in relation
to system introduction, increased 19.9% from a year earlier. Orders
received, which have been strong since the latter half of last year,
steadily pushed up sales.
3. On a consolidated basis, major companies’ performance was strong.
Uoei Shoten Corporation posted operating income for the first time
for any first half. The amount obtained by subtracting nonconsolidated profits from consolidated profits turned positive fromnegative.
Copyright ©2011 by Future Architect, Inc. Japan-4-

Consolidated Results for the First Half of FY2011(Millions of yen)

FY2010 results
for the first half

FY2011 plan for
the first half

FY2011 results
for the first half

Year-on-yearchangelower line: comparedwith the plans+7.6%

Net sales

10,93812,00011,768Operatingincome

1,080

1,650

1,629

+50.9%

9.9%

13.8%

13.8%

(1.2%)

1,147

1,680

1,711

+49.2%

10.5%

14.0%

14.5%

+1.9%

Net income

529

950

1,073

+102.8%Net income margin

4.8%

7.9%

9.1%

+13.0%

Operatingincome margin

Ordinary
incomeOrdinary income
marginCopyright ©2011 by Future Architect, Inc. Japan-5-(1.9%)

Consolidated Results by Segment for the First Half of FY2011
Corporate Revitalization Business(Millions of yen)

Results

IT Consulting BusinessNet sales

2,324Operatingincome47

Net sales

7,413

2.0%

Operatingincome1,450

Operatingincome margin

19.6%

Operatingincome margin(Millions of yen)

Package & Service Business(Millions of yen)

Results

Net sales

2,193

Operatingincome120

Operatingincome margin

Copyright ©2011 by Future Architect, Inc. Japan

5.5%
-6-

Results

Orders Received and Backlog by Segment for the First Half of
FY2011 (Consolidated)
Orders received(Millions of yen)First half of
FY2010First half of
FY2011

BacklogFirst half of
FY2010Change from ayear earlierFirst half of
FY2011

Change from ayear earlier

IT Consulting Business

8,184

6,336

(22.6%)

4,468

3,597

(19.5%)

Package & Service Business

2,033

2,252

+10.8%

829

958+15.5%

3947+17.7%

10

10

+5.6%

10,2588,635(15.8%)

5,308

4,565

(14.0%)

Other
Total orders received

Trends in orders received (excluding those in Other)Trends in backlog (excluding that in Other)

IT Consulting
Package &Service
Total

Copyright ©2011 by Future Architect, Inc. Japan-7-

2Q 2011

1Q 2011

4Q 2010

3Q 2010

2Q 2010

1Q 2010

4Q 2009

3Q 2009

2Q 2009

1Q 2009

2Q 2011

1Q 2011

4Q 2010

3Q 2010

2Q 2010

1Q 2010

4Q 2009

3Q 2009

2Q 2009

1Q 2009

IT Consulting
Package &Service
Total

Consolidated Balance Sheets
End of Jun. 2010

End of Dec. 2010

End of Jun. 2011

Change from theend of Dec. 2010

Current assets

8,915

10,274

10,596+322

Fixed assets

3,974

3,657

3,695

+38

Total assets

12,88913,931

14,292

+360

2,944

3,171

2,807

(363)

306

98

360

+261

Total liabilities

3,251

3,269

3,168

(101)

Total net assets

9,638

10,662

11,124+462

12,88913,931

14,292

+360

74%

77%

78%

—

(Millions of yen)

Currents liabilities
Non-current liabilities

Total liability and assets
Shareholders’ equity ratio

Main reasons for the changeCurrent assets: Increase in cash and deposits(End of FY2010: 5,233 million yen; End of 1H FY2011: 5,945 million yen)
Currents liabilities: Decrease in income tax payable, etc.
(End of FY2010: 880 million yen; End of 1H FY2011: 668 million yen)
Non-current liabilities: Increase in asset retirement obligations(End of FY2010: - million yen; End of 1H FY2011: 309 million yen)
Net assets: Increase in retained earnings (End of FY2010: 7,836 million yen; End of 1H FY2011: 8,361 million yen)

Copyright ©2011 by Future Architect, Inc. Japan-8-

Consolidated Cash FlowFirst half of
FY2010First half of
FY2011

Change from ayear earlier

Cash flows from operating activities

339

1,216

+877

Cash flows from investing activities

248

87

(161)

Cash flows from financing activities

(243)

(562)

(319)

Effect of exchange rate change
on cash and cash equivalents

(2)

0

+2

Change in Cash and cash equivalents

342

742

+399

Cash and cash equivalents
at beginning of the period

3,585

5,153

+1,567

Cash and cash equivalents at end of the period

3,928

5,895

+1,967(Millions of yen)

Main reasons for the changeCash flows from operating activities: Increase in net income before taxes (quarterly period)(1H FY2010: 996 million yen; 1H FY2011: 1,714 million yen)
Cash flows from operating activities: Increase in accounts receivable (1H FY2010: -430 million yen; 1H FY2011: 524 million yen)
Cash flows from investing activities: Decrease in proceeds from collection of deposits and guarantees(1H FY2010: 191 million yen; 1H FY2011: 14 million yen)
Cash flows from financing activities: Net decrease in short-term borrowings (1H FY2010: 500 million yen; 1H FY2011: - million yen)

Copyright ©2011 by Future Architect, Inc. Japan-9-

2. Summary of the First Half of FY2011

Copyright ©2011 by Future Architect, Inc. Japan

Summary of the First Half of FY2011
Industry trends
Net sales at the information service industry decreased from a year
earlier for 24 consecutive months.
(Current Survey of Selected Service Industries: Definite Report for
May 2011)
Forecast for the domestic IT market taking into account the effects ofthe earthquake: Downward revision from a year-on-year growth rate ofplus 0.6% (forecast before the earthquake as of February 2011) tominus 4.5% (IDC Japan)
The Group
Major Group companies have been recovering since last year’s latter
half.
The effects of the earthquake and such like have not led to serious
postponement or cancellation of existing projects. Currently, ourbusiness is faring well as power shortages are having little effect on
our operations.
Copyright ©2011 by Future Architect, Inc. Japan- 11 -IT Consulting Business

FutureArchitect

Copyright ©2011 by Future Architect, Inc. Japan- 12 -

ABM

North
ConsultingGroupMain Results (IT Consulting Business)
First half of
FY2010First half of
FY2011Year-on-yearchangeNet sales

6,816

7,413

+8.8%

Operatingincome

1,161

1,450

+25.0%(Millions of yen)

Appropriate project management has taken hold
 Despite many large projects reaching their peak, steady deliveries were achieved
through a solid implementation of the project management that we have cultivated.
 Most projects progressed on schedule.

Improvement in the utilization rate The utilization rate was higher compared with the same period of the previous year.

Winning new orders
 We won several new orders for projects that are expected to expand to the level of 1.0
billion yen.

Copyright ©2011 by Future Architect, Inc. Japan- 13 -

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

Trends in sales by Industry
Fiscal year

42.0%

36.2%

43.1%

40.4%

45.7%

Copyright ©2011 by Future Architect, Inc. Japan

20.6%

39.5%

- 14 -

1.2%

15.3%

13.0%

1.1%

1.8%

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

Trends in sales by phase
Fiscal year

16.7%

11.3%

34.0%

34.8%

27.4%

50.2%

11.9% 6.6%

Copyright ©2011 by Future Architect, Inc. Japan

70.0%- 15 -

14.5%

11.0%

11.6%

Package & Service Business

FutureOne

Copyright ©2011 by Future Architect, Inc. Japan- 16 -

Ascendia

Main Results (Package & Service Business)(Millions of yen)First halfof FY2010

First halfof FY2011

Net sales

1,894

2,193

Operatingincome(65)

120Year-on-yearchange+15.7%—

Business solution for midsize companies and SMEs (FutureOne)
 Enhanced direct sales to the users and cultivated new sales channels under the newcorporate structure (with new trade name and president).
 Integrated and reorganized Future Architect’s IT solution business for midsize
companies and small and medium enterprises through absorption-type split, andestablished the integrated brand “FUTUREONE” Series.

Outsourced development, Regional Business (Ascendia) Strengthened cooperation with Future Architect, under the new management structure.
 Outsourced development and operation service grew steadily, and earnings increased
from a year ago when earnings were also strong.
 Received more inquiries about near-shore development that uses regional bases inJapan.
Copyright ©2011 by Future Architect, Inc. Japan- 17 -

Corporate Revitalization Business

Uoei
ShotenCopyright ©2011 by Future Architect, Inc. Japan- 18 -

Main Results (Corporate Revitalization Business)(Millions of yen)First halfof FY2010

First halfof FY2011

Net sales

2,257

2,324

Operatingincome(0)47Year-on-yearchange+3.0%—

Improvement in operational efficiency by promoting IT measures

Expanded the application of the automatic ordering system to daily articles that require difficult merchandise
management (test operations are being conducted).
Distribution BMS (new EDI system) was implemented steadily, which resulted in accelerating real-time inventory
management.

Enhancement of the role played as a local grocery supermarket
Played an important role of supplying foods to local people after the earthquake, except shortly after it, without
seriously running out of stock. Also, provided foods for the sufferers.
Through the review of advertising strategy, improved customer attracting capability by effectively using
leaflets.

Establishment of strong earnings structureThe gross profit margin continued to be stable due to appropriate inventory and earnings management thatwas realized through the promotion of IT measures.
Posted the first operating income for any first half, owing to appropriate control of selling, general &administrative expenses combined with the above.

Copyright ©2011 by Future Architect, Inc. Japan- 19 -

3. Earnings Outlook for FY2011

Copyright ©2011 by Future Architect, Inc. Japan

Earnings Outlook for FY2011 (1/2)
IT Consulting Business

Status of major projects
 Several major projects are progressing steadily.
 F-Cube (a project for SGH Group) will be finished next year. However,given orders are increasing for other projects than F-Cube, partnershipwith the SGH Group is expected to continue without any change.

New services
 VAO (Value Added Outsourcing) Cloud services
 Global ERP

Status of resources The utilization rate of employees will continue to be high given the
anticipated scale and number of projects.
 The delivery system is being strengthened by actively hiring mid-career
persons.
Copyright ©2011 by Future Architect, Inc. Japan- 21 -

Earnings Outlook for FY2011 (2/2)
Package & Service Business
FutureOne: Strengthening marketing capabilities and products
 Improvement and expansion of the “FUTUREONE” Series including cloud-based services
 Continued enhancement of direct sales to users, and a further strengthening of marketing
capabilities by cultivating sales channels
 Implementation of questionnaire to customers aiming at increasing their satisfaction

Ascendia: Deepening trustful relationships with clients by enhancing technical capability
 Aiming to increase business performance by continuing to cooperate with Future Architect Development and expansion of solutions that meet market needs, including smart phones andnear-shore development

Corporate Revitalization
Business
Maintaining stable earnings structure Maintenance and improvement of the gross profit margin and increase in product freshness, byfurther strengthening and accelerating inventory management and the automatic orderingsystem Continued review of selling, general and administrative expenses to build and keep a profitablestructure

Promotion of IT measures to increase sales
 Beginning to consider new services that provide customers with optimum solutions, as the next
IT measures following automatic ordering and distribution BMS
 Aiming to further raise profitability through sales increase achieved by the above measures
Copyright ©2011 by Future Architect, Inc. Japan- 22 -

Consolidated Earnings Outlook for FY2011
FY2010 Results

FY2011 Plan

Year-on-yearchange22,63924,500+8.2%

Operating income

3,141

3,400

Operating income margin

13.9%

13.9%

+8.2%

Ordinary income

3,281

3,450

Ordinary income margin

14.5%

14.1%

Net income

1,591

1,950

7.0%

8.0%

(Millions of yen)

Net sales

Net income margin

Copyright ©2011 by Future Architect, Inc. Japan- 23 -+5.1%+22.5%

4. Growth Strategy (New Services)

Copyright ©2011 by Future Architect, Inc. Japan

Growth Strategy: 2015
- Based on materials for the Information Meeting for Financial Results for FY2010 (Feb. 10, 2011)

30 billion yen

10 billion yen

Enterprise market

Markets of midsize
companies and
SMEs

ＶＡＯ
Cloud services
gＥＲＰ

ＦｕｔｕｒｅＯｎｅ
organization
Cloud services

10 billion yen
10 billion yen
Operating income

Copyright ©2011 by Future Architect, Inc. Japan- 25 -

Asian market
gＥＲＰ

New Services
VAO (Value Added Outsourcing)
Cloud services
Global ERP

Copyright ©2011 by Future Architect, Inc. Japan- 26 -

VAO (Value Added Outsourcing)Operation and maintenance costs account for 70% of IT costs
Optimization of operation and maintenance costs a priority issue
Optimizing operation and maintenance costs by adopting systems
established by other companies
Proposing a further optimization of costs to customers byrecognizing IT issues at their sites
Provision of new services

Adoption of operation and maintenance ofother companies’ built systems
Provision of existing services
Operation
andmaintena
nce

Operation and maintenance of
the Company’s built systems

GranddesignDesignanddevelopm
ent

Grand design

Designanddevelopment

Operation
andmaintena
nce

Operation

andmaintena
nce

Optimization process of operation and maintenance costs

Copyright ©2011 by Future Architect, Inc. Japan- 27 -

VAO (Value Added Outsourcing)
Adoption of operation and maintenance of other companies’ built systems: achieved bydynamic 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 the 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 ©2011 by Future Architect, Inc. Japan

Examination ofthemes and issues

Formulation of short-term IT strategies for the
optimization of operation and maintenance costs,
and enhancement of 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- 28 -

Cloud Services
Cloud support for innovative solutions– Application cloud– Industry cloud

Copyright ©2011 by Future Architect, Inc. Japan- 29 -

Application Cloud Lisnar+ - New development of CRM solution•••

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

Call center

Complaints

Information
leakage

Administrative
accidents

Employees’
opinions

Awareness andcompliments
Division
responsible forcustomer service

Copyright ©2011 by Future Architect, Inc. Japan

Internet

Products andservices division- 30 -

Corporateplanning division

Risk management
divisionIndustry Cloud Financial cloud: Future Banking Cloud
Wide range of cloud support for strategic (informational) solutions for banking operations
The main menu is provided by the Company, and the option menu jointly by the Company
and its partners
Operationalrisk

Creditrisk

Financialanalysis

Administrative
supportSales promotion
Corporate
IB

Collateralappraisal

Main menu*

Personal
IB

Consultation and Consultation andproposal
proposalfor corporations for individuals

BPO

Sales of assets
in custody

Credit ranking and
Self-assessment

Loans

Contract-related
office work

Accounting
softwarelinkage

Cell phone

Integrated
DB

Solutions
Productivity
analysis

Business management
Earnings
management

BIE-mail andgroupware

Copyright ©2011 by Future Architect, Inc. Japan

Internetconnection- 31 -

Accounting
systemadapterABC
Personnel
and salary
Costmanagement

Management
portal for
SMEs

Industry Cloud Financial cloud: Future Banking CloudSupport for maximizing the lifetime value of(individual and corporate) customers
Strategic solutions
covering a wide range offinancial operations

 Integrated coverage of sales promotion,
sales of assets in custody, loan screening,earnings management, risk management,
ABC management, BI, integrated DB, etc.
 Support for efficient and effective sales
activities

1
Realization of low costs
and short-period
5
introduction
 Reduction of total costs by 60%
compared to the Company’s
conventional systems
 Only takes 6 months even if all thefunctions are introduced

FutureFutureBanking
Banking CloudCloud
4

Copyright ©2011 by Future Architect, Inc. Japan

Support for PDCA cycle ofbusiness improvement

 Visualization of fieldwork throughproductivity monitoring Continued review of the effects ofmeasures and the status of improvement

3

Cloud-based service
ensuring solid security
 Japan’s highest-level data center Fully equipped with security measuresthat also can handle disasters

2

Ease of use
 Quick access thanks to minimum entry and operation, allowing
customers to use to the maximum extent possible
 Enabling free-style operation through the use of mobile devices
 Navigation menu that also guides customers to educational content- 32 -

Global ERP
Hybrid-type approach- Based on materials for the Information Meeting for Financial Results for FY2010 (Feb. 10, 2011)

Japan

Asia

Copyright ©2011 by Future Architect, Inc. Japan

Non-ERP

Non-ERP- 33 -ERPJapan

ERP Asia

Global ERP from Japan
Full-scale start 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, with overseas business expansion in mind from the start
Realization of global rollout from Japan
Global ERP
Formulationof IT
strategies

Globalbusiness
expansion
strategy

Formulation of plansto select andintroduce ERP

Grand design
Businessstrategies

Redesigning ofoperational
processes

Systemplanning

Introduction of ERP

System development
Plan to systematize
preparation of
proposal request

Selection of integrator
manufacturer

Project management and quality control
Operational Reform Team
Customers

Copyright ©2011 by Future Architect, Inc. Japan

System Reform Team- 34 -

Systemconstruction

Supportfor
operations

Operation
Operation

Global ERP from Asia
Establishment of North Consulting Group (NCG)
Service:
Customers:

Operating in:

ERP introduction consulting, application management
Large and midsize companies and SMEs in Southeast Asia,
government-run finance corporations and banks, Japanese companies
expanding into the rest of Asia
Singapore, Malaysia, Thailand, Vietnam, Hong Kong
Global ERP
Formulationof IT
strategies

Globalbusiness
expansion
strategy

Formulation of plansto select andintroduce ERPIntroduction of ERP

Supportfor
operations

100%

Future Global
Pte. Ltd.

Grand design
Businessstrategies

Redesigning ofoperational
processes

Systemplanning

System development
Plan to systematize
preparation of
proposal request

Selection of integrator
manufacturer

Systemconstruction

100%

Project management and quality control

North Consulting
Group Pte. Ltd.

Operational Reform Team
System Reform Team

Customers(1) Future Global Pte. Ltd.
(2) North Consulting Group Pte. Ltd.
Country: Singapore
Country: Singapore
Representative: Yasufumi Kanemaru
Representative: Francis Lee
Main business: Regional supervisory company in Southeast Asia
Main business: Introduction of ERP and consulting
Shareholder: Future Architect: 100%
Shareholder: Future Global: 100%
Copyright ©2011 by Future Architect, Inc. Japan- 35 -

Operation
Operation

Reference

Copyright ©2011 by Future Architect, Inc. Japan

Non-Consolidated Results for the First Half of FY2011(Millions of yen)

FY2010 results forthe first half

FY2011 plan for
the first half

FY2011 results forthe first half

Year-on-year change
lower line: comparedwith the plans+8.1%

Net sales

6,941

7,800

7,504

Operatingincome

1,127

1,520

1,505

+33.5%

16.2%

19.5%

20.1%

(1.0%)

1,172

1,550

1,544

+31.8%

16.9%

19.9%

20.6%

(0.3%)Net income

668

892

896

+34.1%Net income margin

9.6%

11.4%

12.0%

+0.5%

Operating income
marginOrdinary
incomeOrdinary income
marginCopyright ©2011 by Future Architect, Inc. Japan- 37 -(3.8%)

Financial Topics (non-consolidated) Increase (decrease) in net sales(Millions of yen)First half of
FY2010First half of
FY2011

6,941
6,029
709
202

7,504
7,231
124
148

Net sales
IT consulting
HW Procurement
Package & Service

 Average sales and average value added (IT consulting) per(Millions of yen)consultant

Y-o-Y
ratio

+8.1%
+11.9%(82.6%)(26.8%)First half of
FY2010First half of
FY2011

6,941
578
410
5,953
707
9.8
8.4

7,504
106
1,323
6,075
613
12.2
9.9

Net sales
Cost of sales
Outsourcing expenses
Balance: value added*
Average number of consultants
Average sales per consultant
Average value added per consultant

 Changes in cost of sales(Millions of yen)First half of
FY2010First half of
FY2011

3,204
1,968
698
537
578
115
3,899

4,137
2,006
1,565
565
106
64
4,308

IT consulting service
Labor expenses
Outsourcing expenses
OthersCost of sales of HW procurement
Cost of sales of Package & Service
Total

Y-o-Y
ratio

First half of
FY2011

1,914
1,014
167
20
23
93
30

1,690
868
189
23
23
46
97

Selling, general and administrative expenses

Personnel expenses
Strategic expenses
R&D expenditures
Depreciation expenses
Employee training expenses

Recruiting expenses

Copyright ©2011 by Future Architect, Inc. Japan+8.1%(81.7%)+222.6%+2.0%(13.3%)+24.5%+17.9%*Value added = Net sales – Cost of sales – Subcontract expenses

 Shareholder composition+29.1%+1.9%+124.2%+5.2%(81.7%)(44.4%)+10.4%

Overseas

外国人
shareholders
6%
Financial
金融機関
institutions
7%● Changes in selling, general and administrative(Millions of yen)First half of
FY2010

Y-o-Y
ratio

Individuals,

個人その他
others
54%

Y-o-Y
ratio

(11.8%)(14.4%)+13.1%+15.0%+0.0%(50.6%)+223.3%- 38 -

General
一般
33%

Note

The forecasts in this material are based on currently
available information, and actual results may differ
from such forecasts depending on the future directionof the Japanese economy and the IT service industry.
It should be noted that the Company does notguarantee or promise the accuracy of these forecasts.

Copyright ©2011 by Future Architect, Inc. Japan- 39 -

Copyright ©2011 by Future Architect, Inc. Japan- 40 -