Briefing on Financial Resultsfor FY2018

February 8, 2019
Future Corporation
Copyright ©2019 by Future Corporation

Contents

1. Earnings Results for FY2018

2. Topics Related to FY2018

3. Plan for FY2019
Copyright ©2019 by Future Corporation

1. Earnings Results for FY2018

Copyright ©2019 by Future Corporation

1. Earnings Results for FY2018-(i) Earnings Highlights

Consolidated
earnings resultsfor FY2018

IT Consulting &Service

Record-high net sales, operating income, ordinary
income and profit
Net sales:
40,218 million yen (10.9% increase)
Operating income: 5,824 million yen (30.6% increase)
Ordinary income:
6,052 million yen (27.2% increase)
Profit
4,094 million yen (9.7% increase)attributable to owners of parent:
Owing to orders received from existing and new customers, the net
sales and income of Future Architect and other companies increased
Net sales:
Operating income:

32,953 million yen (10.8% increase)
5,651 million yen (18.3% increase)

BusinessInnovation

Operating loss decreased significantly

Inter-segment
adjustment

Net sales:
Operating income:Copyright ©2019 by Future Corporation*Refer to Appendix (i)Net sales:
7,357 million yen (8.6% increase)
Operating income: -146 million yen (-363 million yen for FY2017) *Refer to Appendix (i)-91 million yen
319 million yen-3-1. Earnings Results for FY2018(ii) Analysis of Earnings Results (Net Sales and Operating Income)*Refer to Appendix (ii)The operating income margins of companies in IT Consulting & Service and Business
Innovation Businesses have improved
10,000 (FY2017) to 14.5%
Operating income margin increased from 12.3%
40,21840,218Net sales

9,000(Million yen)

45.0%

Operating income

8,000

34,42436,26535,29340.0%

Operating income

7,000

33,6532014

2015

Copyright ©2019 by Future Corporation

2016

2017

3,642

3,352

30.0%

25.0%

4,458

4,342

20.0%

3,000

15.0%

2,000

14.5% 10.0%

11.2%

2013

5,824
5,824

4,869

5,000
4,000

35.0%

Operating income margin

6,000

30,049

50.0%

12.6%

13.8%

10.8%

12.3%

1,000

5.0%

0

0.0%

2018
2018

2013
-4-

2014

2015

2016

2017

2018
2018

1. Earnings Results for FY2018(ii) Analysis of Earnings Results (Orders Received and Order Backlog)*Refer to Appendix (iii)

The orders received and order backlogs of companies in IT Consulting & Service
Business increased, hitting record highs(Million yen)Ordersreceived

Orderbacklog

36,81036,81030,39824,40425,322

27,051

12,221
12,221

24,761

9,857
8,010

2013

2014

2015

Copyright ©2019 by Future Corporation

2016

2017

2013

2018
2018
-5-

7,325

2014

8,146

2015

7,648

2016

2017

2018
2018

1. Earnings Results for FY2018*Refer to Appendix (iv)

(ii) Analysis of Earnings Results (Balance Sheets)

Owing to increased profit and the collection of accounts receivable due to winning a lawsuit,
cash and deposits increased by 4,505 million yen
Net assets increased 3,619 million yen to 28,108 million yen(Million yen)

Balance sheets
Total assets: 37,435
Total assets: 32,522

Liabilities: 9,326
Cash anddeposits: 9,478

Liabilities: 8,033

Current assets
other than cash anddeposits:9,740
Property, plant andequipment: 985

Net assets:
24,488Cash anddeposits: 13,984

Current assets otherthan cash anddeposits:8,927
Property, plant andequipment: 974

Intangible assets: 3,151

Intangible assets: 2,583

Investments andother assets:
9,166

Investments andother assets:
10,965End of Dec. 2017
Copyright ©2019 by Future Corporation

Net assets:
28,108End of Dec. 2018-6-

 Major increase/decrease in
assetsCash and deposits: +4,505
Notes and accounts
receivable - trade: +347
Merchandise and work inprocess: +81
Accounts receivable - other: -1,339
Deferred tax assets: -40
Property, plant and equipment: -17
Intangible assets: +336
Goodwill: -904
Investment securities: +1,536
Other: +482Major increase/decrease in
assets: +4,912

 Major increase/decrease inliabilities
Accounts payable - trade
Accounts payable - other
Income taxes payable
Loans/bonds payable
Deferred tax liabilities
Other

:+326
:+39
:+605
:-471
:+380
:+414

Major increase/decrease:+1,293
in liabilities

1. Earnings Results for FY2018*Refer to Appendix (v)(ii) Analysis of Earnings Results (Cash Flows)
Year-end balanceof cash, etc.

Operating CF

13,984
13,908

7,952
7,965

9,478
2,459

2017

2017

2018

Financing CF

Investing CF
 Investing activities
Purchase of property,
plant and equipment: +565Purchase of intangible
assets: +192
Purchase of shares ofsubsidiaries: +1,640
Other
: -59
Change - investing
activities

2017

2017

2018
△ 1,118-1,1992018-1,209△ 3,537△ 2,315-3,537-2,333-7-

 Operating activities
Change in profit before: +1,344
income taxes: -38
Change in depreciation
Change in amortization of: +201
goodwill: +148Foreign exchange gains
Change in notes and: +906accounts receivable - trade: -176
Change in inventories: +3,121
Other
Change - operating
activities: +5,506

 Financing activities
Repayments of longterm loans
Dividends paid
Other

△ 1,209: +2,338

Copyright ©2019 by Future Corporation

2018(Million yen)

Change - financing
activities: -1,029: -111: +17: -1,123

1. Earnings Results for FY2018*Refer to Appendix (vi)(iii) Results by Segment (IT Consulting & Service)
Net sales
29,739Operating income(Million yen)

32,953
32,953

5,656
5,651
4,777

2017
Future Architect, Inc.
(including Future Corporation’sTechnology Division)
Net sales

Operating income

Future Inspace, Inc.
Net sales

Operating income

YDC Corporation
Net sales

2017

2018

• Increase in sales to customers engaging in distribution or apparel businesses owing to increasedorders mainly from new customers for the construction of next-generation core systems• Growth in new transactions with leading regional banks for a business-support and lendingsupport system “FutureBANK”• Increase in projects using AI technologies related to demand forecasting, borrower screening,
handwritten character recognition, etc.
• New orders received for development transactions owing to growth in the demand for the
maintenance and operation of projects built by Future Architect

Operating income• Increase in net sales related to a quality information analysis software “YDC SONAR” anddevelopment for manufacturers• Increase in logistics-related projects in collaboration with Future Architect

Operating income• Increase in net sales and operating income owing to product improvement (e.g., for an original
sales management software package “InfiniOne”) and the effects of building a system forpromoting sales to medium-to-large sized firms.

FutureOne, Inc.
Net sales

2018

Copyright ©2019 by Future Corporation-8-

1. Earnings Results for FY2018(iii) Results by Segment (IT Consulting & Service) - Sales Analysis(Million yen)

Trends of sales by industry
Service
2016

4,630

5,989

4,676

6,750

(24.6%)

2017(20.6%)

2018

3,848

(15.1%)(31.8%)(29.6%)

6,951(27.3%)

Distribution

4,607(24.5%)

Financial

Manufacturing

3,585(19.1%)

6,185(27.2%)

6,239(24.4%)

5,134(22.6%)

8,479(33.2%)

Note 1) Figures for FY2016 reflect total numbers combining sales in Future Architect and Future Inspace.
Note 2) Figures for FY2017 reflect total numbers combining sales in Future Architect, Future Inspace and YDC.
Note 3) Figures for FY2018 reflect total numbers combining sales in Future, Future Architect, Future Inspace and YDC.
Note 4) The above figures do not include sales in FutureOne and Micro CAD.
Note 5) Figures of procured goods and their maintenance are not included.

Copyright ©2019 by Future Corporation-9-1. Earnings Results for FY2018(iii) Results by Segment (IT Consulting & Service) - Sales Analysis(Million yen)

Trends of sales by phase
Grand design
4,454

2,021

2017

3,879

3,635

2018

4,289

2016

(23.7%)(10.7%)(17.1%)(16.8%)(16.0%)

4,904(19.2%)

DesignDevelopment

9,139

Maintenance/operation

3,197(48.6%)(17.0%)

4,306

10,924(48.0%)(18.9%)

11,652(45.7%)

4,673(18.3%)

Note 1) Figures for FY2016 reflect total numbers combining sales in Future Architect and Future Inspace.
Note 2) Figures for FY2017 reflect total numbers combining sales in Future Architect, Future Inspace and YDC.
Note 3) Figures for FY2018 reflect total numbers combining sales in Future, Future Architect, Future Inspace and YDC.
Note 4) The above figures do not include sales in FutureOne and Micro CAD.
Note 5) Figures of procured goods and their maintenance are not included.

Copyright ©2019 by Future Corporation- 10 -

1. Earnings Results for FY2018*Refer to Appendix (vi)(iv) Results by Segment (Business Innovation)
Net sales

Operating income (before goodwill amortization)

2017

6,774

7,357
7,357

(Million yen)

2018
43
43

-119
Operating income (after goodwill amortization)

2017

2017
Tokyo Calendar Inc.
Net sales

Operating income

eSPORTS Co., Ltd.
Net sales

Operating income

CodeCamp Inc.
Net sales

Operating income

LaiBlitz, Inc.
Net sales

Operating income

Copyright ©2019 by Future Corporation

-363
-363

2018

2018
-146
-146

• Increase in page views (including the number of video views) from 47 million in December 2017 to 62 million in
December 2018
• Increase in net sales of “Tokyo Calendar Date,” a service provided to users of Matchalarm (a company absorbed
and merged in April)• Operating income/loss worsened due to lower-than-expected advertising revenue• Increase in net sales after reformation including revision of product lineups and inventory reduction• Operating income/loss improved mainly due to absence of inventory write-down that was posted at the end of
FY2017 despite the increased sales promotion and distribution expenses• Significantly improved operating income/loss due to increased corporate sales relating to programing lectures,such as new employee training, and the offering of more online programing lectures to individuals• Improved operating income/loss and the turnaround achieved on a full-year basis due to expanded systemapplications for strengthening professional baseball teams and orders received for the construction of the first fan
club system- 11 -

1. Earnings Results for FY2018(v)Analysis of Changes in Net Sales(Million yen)

＋158

＋582
+3,2130

BusinessInnovation

Adjustments

Other

IT Consulting &Service40,21836,265(+10.9%)

2018

2017
Copyright ©2019 by Future Corporation- 12 -

1. Earnings Results for FY2018(vi) Analysis of Changes in Operating Income(Million yen)

+217
+873

+35

+239

Other

Adjustments

BusinessInnovation

IT Consulting &Service

5,824

4,458

(+30.6%)

2017

2018

Copyright ©2019 by Future Corporation- 13 -

2. Topics Related to FY2018
1. Construction of Next-generation System
2. The Mainichi Newspapers Group
3. Future AI
4. New orders received from regional banks
5. Group Synergy
6. CodeCamp Inc.
7. LaiBlitz, Inc.
8. Tokyo Calendar Inc.
Copyright ©2019 by Future Corporation

2. Topics Related to FY2018(i) Construction of Next-generation System• Constructed large-scale next-generation systems for a variety of businesses
and industries• Provided support for corporate reforms using real-time architecture

Banks
Distirbutors/
RetailersSecurities
firms

Next-generation system
not dependent on specificbusinesses and industries

ApparelcompaniesMedia
companies
Food
makersCopyright ©2019 by Future Corporation- 15 -

2. Topics Related to FY2018- (ii) The Mainichi Newspapers Group• As an IT strategy partner, Future provided support for a 145-year-old
company’s largest-ever reform– Maximized the value of content
using real-time architecture• Content first• Strategically distributing or sending digital and paper-based information

AS-IS

TO-BE

Content

Content
Real-time
distribution

Paper-based
content production

Distribute halfa day late
Copyright ©2019 by Future Corporation- 16 -

Paper-based
content
production

2. Topics Related to FY2018- (iii) Future AI• “Future AI” generating results in a short-period of time
– Took the initiative in operational verification and practical realization, regardlessof the type of business or industry– Designed next-generation models through collaboration between human and AI
Currently conducting verification experiments regarding
automated data entry on delivery slips using AI[INPUT] Handwritten slip

[Analysis] OCR-AI• Realize more precise data
entry than manual entry(99.8% or higher)• Read one million slips a
day during busy seasons“Size/Weight” spaceWith noise

Copyright ©2019 by Future Corporation

With printed
characters[OUTPUT] Outcome

With crossout- 17 -

2. Topics Related to FY2018- (iii) Future AI• Used “Future AI” also in the field of cutting-edge research– Joint research with Osaka University and FunPep Co., Ltd., a bio-venturecompany, aiming for commercialization– Social contribution also using AI, taking advantage of our experience inbuilding leading-edge systems in a variety of industries

Vaccine antigen exploration system• Used in the treatment of cancer, refractory diseases, lifestyle diseases, etc.
• Contributed to significantly reducing medical expenses and enabling early
treatment
Protein extraction

Copyright ©2019 by Future Corporation

Search for diseaserelated protein
information- 18 -

Vaccine production

2. Topics Related to FY2018(iv) New Orders Received from Regional Banks• Integrated business-support and lending-support systems covering sales
activities and lending operations in general• Provided support for financial institutions’ reforms, taking advantage ofreal-time architecture– New orders received from
3 banks

One other company

Copyright ©2019 by Future Corporation– Expansion ofservices to 29 banks
nationwide

2. Topics Related to FY2018- (v) Group Synergy• Future Architect provided total design of next-generation
logistics with the efficient use of YDC’s logistics know-how• Contributed to implementing real-time operations andimproving operational efficiency and productivity

Strategy

Copyright ©2019 by Future Corporation

Technology

×- 20 -

solution2. Topics Related to FY2018- (vi) CodeCamp•••

Amid the current situation where companies are focusing on digital strategies,
CodeCamp developed and offered new courses (e.g., IT literacy enhancement and skill
improvement courses) for the cultivation of personnel who can earn money
Expanded the scope of target customers to include corporate users as well as IT
companies
Provided Future Architect’s customers with total support including personnel cultivation

Python Data Science Course

WordPress Course

Technology Literacy Speed
Learning Course

Copyright ©2019 by Future Corporation- 21 -

2. Topics Related to FY2018- (vii) LaiBlitz• Expanded services for professional baseball teams– Provided the Fukuoka SoftBank Hawks with Fastmotion, an AI
tracking system– Analyze fielding and base running through the digitization of highresolution camera images– Contributed to the SoftBank Hawks winning four Japan Series titles
in five years• Started the EC/Marketing business– Set up the Yomiuri Giants’ fan club membership management
system and official online shopping site
– Contributed to the Yomiuri Giants improving fan services byanalyzing and using membership information and purchase data

• Created new services and provided relevant support– Built the NPB Baseball Data Innovation Platform together with NPB

Copyright ©2019 by Future Corporation- 22 -

2. Topics Related to FY2018- (viii) Tokyo Calendar• The net sales of a matching service “Tokyo Calendar Date” increased 62%
year-on-year– Absorbed and merged Matchalarm Inc. in April 2018
– Strengthened services using monthly magazines, websites and events• Further increase in Web users and sales of monthly magazines– Web users• December 2016: 30 million PV• December 2017: 40 million PV• August 2018: 57 million PV– The average sales volume of monthly
magazines increased 18% year-on-year• Carried out various collaborative projects– “Minato-ku OJISAN” with Minato-ku• “Minato-ku OJISAN THE MOVIE” was shown at TOHO Cinemas in Roppongi Hills• Promoted “MINATO City Half Marathon 2018,” Minato-ku’s first marathon race

– “Otonano Ren-aijuku (adult romance cram school),” a popular novel of Tokyo
Calendar, was aired as a short TV drama of Yomiuri Telecasting
Copyright ©2019 by Future Corporation- 23 -

3. Plan for FY2019

Copyright ©2019 by Future Corporation

3-1.Major strategy
Improvement in abilities to handlechanges, and entrepreneurship
IT Consulting & Service• Focus more on providing all consultants with AI education, and accelerate
short-term performance-oriented assessment• Provide customers with leading-edge designs that use AI, regardless ofbusiness or industry
Business Innovation• Appoint talented consultants as management members, create a career pathencouraging management’s use of IT, and accelerate personnel growth• Accumulate more practical know-how within the Group by carrying out
business based on the experience that Future has gained through theprovision of its consulting services and by achieving corporate growth
Copyright ©2019 by Future Corporation- 25 -

3-2. Numerical Plan for FY2019(Million yen)

Annualplan for
FY2019Annualresults for
FY2018Net sales

43,500Operatingincome(Operating
income margin)

Profitattributable toowners ofparentYoY

Plan for
1H
FY2019Resultsfor 1HFY2018YoY

40,218+8.2%

20,88019,034

+9.7%

6,400

5,824

2,920

2,612

(14.7%)(14.5%)+9.9%(14.0%)(13.7%)+11.8%

4,355

4,094

2,037

2,045

(10.0%)(10.2%)+6.4%(9.8%)(10.7%)(Profit margin)

Copyright ©2019 by Future Corporation- 26 --0.4%

3-3. Dividends
Scheduled to pay an ordinary year-end dividend of 17 yen per share, an increaseof 2 yen, for FY2018
Scheduled to pay an ordinary dividend of 36 yen and a commemorative dividend of
3 yen for FY2019
45
40

(Yen)
Dividends

39

Dividend payout ratio

35

32

30
25

23

26

85.0%
75.0%

Interim: 18 yen
Year-end: 18 yen
Commemorative:
3 yen

65.0%
55.0%
45.0%

50.6%

20
15

25

Interim: 15 yen
Year-end: 17 yen

95.0%

38.6%
31.1%

34.9%

40.0%

35.0%
25.0%
15.0%

10

2015
Copyright ©2019 by Future Corporation

2016

2017
- 27 -

2018 (Plan)

2019 (Plan)Appendix.

Copyright ©2019 by Future Corporation

Appendix - (i) Future GROUPIT Consulting& Service

Future Architect, Inc.
Future Inspace, Inc.
YDC Corporation
FutureOne, Inc.
Micro CAD Co., Ltd.
dit Co., Ltd.

Future Corporation(Holding company)
BusinessInnovation

Future Investment, Inc.

Copyright ©2019 by Future Corporation- 29 -eSPORTS Co., Ltd.
Tokyo Calendar Inc.
CodeCamp, Inc.
LaiBlitz, Inc.
TrexEdge, Inc.

Appendix - (ii) Analysis of Results (Comparison of Results)(Million yen)Compared with projected
results

Year-on-year comparison

Annualresults for
FY2018Annual plan for
FY2018ChangeAnnual resultsfor FY2017

ChangeNet sales

40,21837,9006.1%

36,265

10.9%

Operatingincome

5,824

5,170

4,458

(14.5%)(13.6%)

12.7%

30.6%

4,094

3,530

3,733

(10.2%)(9.3%)

16.0%(Operating income
margin)Profitattributable toowners of parent(Profit margin)

Copyright ©2019 by Future Corporation- 30 -(12.3%)(10.3%)

9.7%

Appendix - (iii) Orders Received and Backlog by Segment(Million yen)Orders received

Backlog
YoYchange2017

IT Consulting & Service

35,12829,209+5,918

11,8989,621+2,277

Business Innovation

1,682

1,188

+493

322

235

+86

36,81030,398+6,412

12,2219,857+2,363

Total

2018

2017

YoY
change2018

Note 1: eSPORTS is not included in the above table because it does not engage in order-based production.

Copyright ©2019 by Future Corporation- 31 -

Appendix - (iv) Balance Sheets(Million yen)

End of Dec. 2018

End of Dec. 2017

ChangeCurrent assets

22,911

19,218+3,693

Non-current assets

14,523

13,303+1,219Total assets

32,522
5,558+4,912Current liabilities

37,435
6,148

Non-current liabilities

3,178

2,475

+702

Total liabilities

9,326

8,033

+1,293

Total net assets

28,10824,488+3,619

74.8%

73.8%

Shareholders’ equity ratio

Mainchanges(Million yen)

Current assets:

Cash and deposits
Accounts receivable - otherNon-current
assetsIntangible assets (including goodwill)
Investment securities

Non-current
liabilities
Net assets:

Deferred tax liabilities
Retained earnings
Valuation difference on available-forsale securities

Copyright ©2019 by Future Corporation- 32 -+590

End of Dec. 2018 End of Dec. 2017
13,984
9,478
182
1,521
2,583
3,151

Change+4,505-1,339
-567

9,257
2,427

7,720
2,047

+1,536+380

20,2395,438

17,396
4,269+2,843+1,169Appendix - (v) Cash Flows
2018(Million yen)

2017

ChangeCash flows from operating activities

7,695

2,459

+5,506

Cash flows from investing activities-1,199-3,537+2,338Cash flows from financing activities-2,333-1,209-1,123-2

4-6

Increase (decrease) in cash and cash equivalents

4,430-2,283+6,713

Cash and cash equivalents at the beginning of the period

9,478

11,761-2,283

Cash and cash equivalents at the end of the period

13,9089,478+4,4302017

ChangeEffect of exchange rate changes on cash and cash equivalents

Mainchanges

2018
Operating CF Profit before income taxes
Decrease (increase) in notes and accounts
receivable - trade
Change in inventories(Million yen)

Investing CF: Purchase of property, plant and equipment
Purchase of shares of subsidiaries resulting ina change in the scope of consolidation
Financing CF: Repayment of long-term loans
Dividends paid

Copyright ©2019 by Future Corporation- 33 -+1,344

6,181

4,837

-24

-930

22

199

-176

-130

-695

+565

-41

-1,681+1,640-1,050-1,250-20-1,139+906-1,029-111

Appendix - (vi) Results by Segment(Million yen)

2018

2017

YoY

40,21836,265+10.9%IT Consulting & Service

32,95329,739+10.8%

Business Innovation

7,357

6,774

+8.6%

-91

-248

–

5,824

4,458

+30.6%IT Consulting & Service

5,651

4,777

+18.3%

Business Innovation

-146

-363

–

–

-35

–

Adjustments

319

80

+298.8%

Copyright ©2019 by Future Corporation- 34 -(Million yen)

Net sales

Adjustments

Operating income

Other

The summary report of operating results, supplementary materials,
briefing materials and other various IR materials are also available on the
Company’s website.
https://www.future.co.jp/investor_relations/
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 directionof 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. that are indicated in units of thousand yen are stated in units of million yen.
Hence, a disparity may be found in some of the totals and differences. For detailed figures, please refer to the summary report of operating results.
Copyright ©2019 by Future Corporation- 35 -