Consolidated Summary Report of Operating Resultsfor Fiscal 2017 (Year ended December 2017) [Japan GAAP]
February 8, 2018
Company name:

Future Corporation

Shares listed on:First Section of Tokyo Stock Exchange

Security code number:

4722

Website:http://www.future.co.jp/hd

Representative:

Yasufumi Kanemaru, Chairman and President

Contact:

Yoshihiko Nakajima, Executive Officer

TEL:+81-3-5740-5724

Scheduled date of annual generalshareholders’ meeting:March 26, 2018

Scheduled date for filing the securities
report:March 27, 2018

Scheduled date for distribution of dividend
payments:

March 27, 2018

Creation of supplemental material on financial results:

Yes • No

Holding of financial results briefing:Yes • No (For institutional investors and analysts)(Amount rounded off to million yen)

1.
Consolidated Results for Fiscal 2017 (January 1, 2017 to December 31, 2017)(1) Consolidated operating results(Percentages are year-on-year changes)
Net sales

Operating income

Million yen

Fiscal 2017
Fiscal 2016
(Note) Comprehensive income%

Profit attributable to owners of parent

Million yen%

36,2657.8
4,458
33,653(4.6)
3,642
Fiscal 2017: 7,875 million yen (242.6%)
Profit per share

Million yen

%

22.4
3,743
(25.2)
2,208
Fiscal 2016: 2,299 million yen (-16.2%)

Return on equity

69.5(17.0)

Operating income ratio

Yen%

Fiscal 2017
83.74
Fiscal 2016
49.40
(Reference) Equity in (earnings) losses of affiliates Fiscal 2017: 84 million yen

%

18.1
13.2
Fiscal 2016: (30) million yen

12.3
10.8

(2) Consolidated financial position
Total assets

Net assets

Million yen

Fiscal 2017
Fiscal 2016
(Reference) Shareholders’ equity

Shareholders’ equity ratio

Million yen

32,48923,063Fiscal 2017: 24,011 million yen

Net assets per share%

Yen

24,49873.9
17,331
75.0
Fiscal 2016: 17,302 million yen

537.10387.04(3) Consolidated cash flow position

Fiscal 2017
Fiscal 20162.

Net cash provided by(used in) operating
activities
Million yen
2,459
3,268

Net cash provided by(used in) investing
activities
Million yen(3,537)(24)

Net cash provided by(used in) financing
activities
Million yen(1,209)(1,240)Cash and cash equivalents at theend of the period
Million yen
9,478
11,761Dividends
End of the
firstquarter
dividend

Fiscal 2016
Fiscal 2017
Fiscal 2018 (Forecast).

Dividends per share (yen)End of the End of thesecondthird
Year-endquarterquarter
dividend
dividend
dividend

Total

Annualdividends(Total)Dividend
payout ratio(consolidated)

Ratio ofdividends to
net assets(consolidated)

Yen

Yen

Yen

Yen

Yen

Million yen

%

%

–
–
–

12.50
13.00
14.00

–
–
–

12.50
13.00
14.00

25.00
26.00
28.00

1,117
1,162

50.6
31.0
35.5

6.7
5.6

3.

Projected Consolidated Results for Fiscal 2018 (January 1, 2018 to December 31, 2018)
Net salesFirst six months(accumulated total)
Full year(Percentages are year-on-year changes)
Profit attributable to owners
Profit per shareof parent

Operating income

Million yen%

Million yen%

Million yen%

Yen

18,19037,900

5.4
4.5

2,427
5,170

26.9
16.0

1,645
3,530

10.6
(5.7)

36.68
78.96

* Notes(1) Changes in significant subsidiaries during the period under review (changes in specified subsidiaries that involved
changes in the scope of consolidation): Yes • No
New: 1 company (company name) YDC Corporation
Exclusion: - companies (company names)(2) Change in accounting policies or estimates and retrospective restatements
1)
Change in accounting policies in accordance with revision of accounting standards: No
2)
Change in accounting policies other than item 1) above: No
3)
Change in accounting estimates: No
4)Retrospective restatements: No(3) Number of outstanding shares (common stock)
1)
2)
3)

Total outstanding shares as of the end of the period(including treasury shares)
Total treasury shares as of the end of the period
Average number of outstanding stocks during theperiod under review

47,664,000
shares2,958,907
shares44,705,125
sharesFiscal 2017
Fiscal 2017
Fiscal 2017

Fiscal 2016
Fiscal 2016
Fiscal 2016

47,664,000
shares2,958,872
shares44,705,147
shares(Reference) Overview of non-consolidated results
Non-consolidated Results for Fiscal 2017 (January 1, 2017 to December 31, 2017)(1) Non-consolidated operating results
Net sales(Percentages are year-on-year changes)
ProfitOperating income

Million yen%

Million yen%

Million yen

%

2,986
5,841

(48.9)(69.3)

2,010
1,359

47.9
(68.9)

2,156
180

1,094.5(93.6)

Fiscal 2017
Fiscal 2016

Profit per share
Yen
48.24
4.04

Fiscal 2017
Fiscal 2016

(2) Non-consolidated financial position
Total assets
Million yen

Fiscal 2017
Fiscal 2016
(Reference) Shareholders’ equity**

Net assets
Million yen

Shareholders’ equity ratio

Net assets per share%

Yen

23,903
19,84683.0
16,53814,65088.6
Fiscal 2017: 19,846 million yen Fiscal 2016: 14,650 million yen

443.94327.71This financial results report is not subject to audit.
Points to note about the proper use of projections, and other noteworthy events
The earnings forecasts and other information concerning the future contained in these materials are based on information currently
obtained by the Company and on certain premises the Company judges to be rational. The Company does not intend to guarantee theirrealization. Actual results may differ significantly from forecasts due to various uncertain factors.

 Contents
1.

2.
3.
4.

Overview of Operating Results and Other ......................................................................................................................... 2(1) Overview of operating results for fiscal 2017 ........................................................................................................... 2(2) Overview of financial position for fiscal 2017 ......................................................................................................... 4(3) Overview of cash flows for fiscal 2017 .................................................................................................................... 4(4) Future outlook .......................................................................................................................................................... 5(5) Dividend policy and dividends for the current and next year ................................................................................... 6
The Future Group............................................................................................................................................................... 7
Basic Approach to Selection of Accounting Standards ...................................................................................................... 8
Consolidated Financial Statements and Major Notes ......................................................................................................... 9(1) Consolidated balance sheets ..................................................................................................................................... 9(2) Consolidated statements of income and comprehensive income ............................................................................ 11(3) Consolidated statements of changes in net assets ................................................................................................... 13(4) Consolidated statements of cash flows ................................................................................................................... 15(5) Notes to consolidated financial statements ............................................................................................................. 17(Notes regarding the premise of surviving company) ...................................................................................................... 17(Additional information) .................................................................................................................................................. 17(Segment information) ..................................................................................................................................................... 18(Per share data) ................................................................................................................................................................ 20(Significant subsequent events)........................................................................................................................................ 20

5.

Other ................................................................................................................................................................................ 20

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1.

Overview of Operating Results and Other(1) Overview of operating results for fiscal 2017
(Overview of fiscal year under review)
The Group’s consolidated earnings results for fiscal 2017 (from January 1, 2017 to December 31, 2017)
are as follows.
Net sales¥36,265 million (up 7.8% year-on-year)
Operating income¥4,458 million (up 22.4% year-on-year)
Profit attributable to¥3,743 million (up 69.5% year-on-year)
owners of parent
Details of the performance of each segment are as follows.
1. IT Consulting & Service Business
Future Architect, Inc. started a large number of new projects with apparel companies, supermarkets, news
media, and automobile companies, including cutting-edge technology-based projects using AI and IoT,
such as image analysis. It also started to develop systems for supporting the sales and lending activities ofmultiple banks, mainly in the Tokyo metropolitan area, and increased sales generated by projects with
Forex brokers and online securities companies. Although the company experienced a year-on-year
decline in net sales due to the completion of development of some projects, operating income increased
year-on-year attributed to improved margins of projects in the fiscal year under review.
YDC Corporation showed a strong performance primarily in system development under entrusted
contracts and sales of YDC SONAR, its in-house manufactured software for integrating and analyzing
quality information, centered on the manufacturing business and achieved higher-than-expected increases
in net sales and operating income.
FutureOne, Inc. marked significant growth in both net sales and operating income year-on-year, which is
attributable to the renewal of in-house manufactured sales management packages and an increase in thenumber of project orders it received by focusing on medium-sized companies with sales of ¥5 billion to¥10 billion as target customers, with smooth progress in the related development process.
Micro CAD Co., Ltd. achieved a year-on-year increase in both net sales and operating income throughsales of in-house manufactured intellectual property management software to new customers and increasein software development for customers in the manufacturing business.
As a result, the IT Consulting and Service Business showed a year-on-year increase in both net sales andoperating income, posting net sales of ¥29,739 million (up 19.9% year-on-year), and operating income of¥4,777 million (up 22.7% year-on-year).
2. Business Innovation BusinessTokyo Calendar Inc. saw a stable increase in page views and number of users and also increased the salesof magazines during and after the second quarter as a result of focusing the content on lifestyles of people
aged 30 to 49 and strengthening a framework to quickly create and publish video content internally.
Consequently, the company posted increased sales from both web-based and magazine advertisements,
with a 20.2% increase year-on-year in net sales, thereby achieving an operating profit for the full year for
the first time. Matchalarm Inc., an online marriage-hunting information provider acquired at the end of
March 2017, also increased the number of users through collaboration with Tokyo Calendar Inc. andachieved an operating profit for the nine months since April.
CodeCamp Inc. logged a 43.4% increase year-on-year in net sales, attributed to continued growth inparticipants of online programming education services, and strong sales performance in engineer
education and related company referral programs for job seekers. Although operating loss increased in
the first half due primarily to upfront investments in service development and advertisement expenses,
the company posted an operating profit for the first time in the fourth quarter as a result of reinforcing theframework in the second half.
eSPORTS Co., Ltd. posted a 13.7% increase year-on-year in net sales driven by sales of private brandproducts centered on outdoor goods and fitness training products, whereas operating income declined due
to factors including a lower gross profit margin resulting from fierce price competition affected by bad
weather in the summer which continued until year-end as well as disposal and devaluation of inventory.
As a result, the Business Innovation Business showed a year-on-year increase in net sales and a reduction
in operating loss, posting net sales of ¥6,774 million (up 19.7% year-on-year) and an operating loss of¥363 million (against a loss of ¥391 million a year earlier).
(Note) Segment business results stated in the paragraphs above are before adjusting for internal sales andtransfers among segments.
-2-

Effective April 1, 2016, the Company shifted to a holding company structure to realign its organizational
platform. Accordingly, starting from the second quarter of the previous fiscal year, we migrated to amethod of: 1) recording as costs under segment income adjustment, Group operation costs which werepreviously included in the costs of the IT Consulting Business; and 2) recording business outsourcing
service fees and group growth subsidies received from individual Future Group companies as income
under segment income adjustments. In addition, from the first quarter of the fiscal year under review, theGroup integrated the IT Consulting Business and the Package & Service Business into the IT Consulting& Service Business. Year-on-year changes were calculated for comparison upon adjusting the values forprevious fiscal year for the revised reporting segment categorization and measurement methods. The
name of the New Media & Web Service Business was changed to Business Innovation Business,reflecting an increase in the number of companies subject to incubation.

-3-

(2) Overview of financial position for fiscal 2017
Assets, liabilities and net assets
The following are the status of assets, liabilities and net assets as of the end of fiscal year underreview.
Assets¥32,489 million (up 40.9% year-on-year)
Liabilities¥7,990 million (up 39.4% year-on-year)
Net assets¥24,498 million (up 41.4% year-on-year)
The following is the analysis of financial position for the fiscal year under review.
1) Assets
Current assets were ¥19,185 million on a consolidated basis at the end of the fiscal year underreview, up ¥26 million from the preceding year, and non-current assets amounted to ¥13,303 million,up ¥9,399 million, with total assets standing at ¥32,489 million, up ¥9,425 million. The mainunderlying factors were an increase of ¥6,310 million in investment securities and ¥1,023 million insoftware attributed to the listing of SG Holdings Co., Ltd. on the Tokyo Stock Exchange First
Section.
2) Liabilities
Current liabilities were ¥5,497 million at the end of the fiscal year under review, up ¥1,039 million
from the preceding year, and noncurrent liabilities were ¥2,493 million, up ¥1,219 million, whichbrought total liabilities to ¥7,990 million, up ¥2,258 million. The main factors included an increaseof ¥2,065 million in deferred tax liabilities.
3) Net assets
Net assets were ¥24,498 million at the end of the fiscal year under review, up ¥7,167 million fromthe preceding year. The main factors included an increase of ¥2,603 million in retained earnings and¥4,205 million in valuation difference on available-for-sale securities.
(3) Overview of cash flows for fiscal 2017
The following is the analysis of the Group’s consolidated cash flows for the fiscal year under review.
1) Net cash provided by (used in) operating activities
Net cash from operating activities was an inflow of ¥2,459 million (compared to an inflow of ¥3,268
million in the previous fiscal year), chiefly due to payment of ¥930 million caused by an increase innotes and accounts receivable – trade and payment of income taxes paid of ¥1,737 million despite
the posting of income before income taxes of ¥4,837 million and an inflow of ¥199 million due to adecrease in inventories.
2) Net cash provided by (used in) investing activities
Net cash from investing activities was an outflow of ¥3,537 million (compared to an outflow of ¥24
million in the previous fiscal year), chiefly due to the posting of an outflow caused by purchase ofproperty, plant and equipment of ¥695 million, purchase of intangible assets of ¥1,094 million, andpurchase of shares of subsidiaries resulting in change in scope of consolidation of ¥1,681 million.
3) Net cash provided by (used in) financing activities
Net cash from financing activities was an outflow of ¥1,209 million (compared to an outflow of¥1,240 million in the previous fiscal year), mainly reflecting payments for cash dividends paid of¥1,139 million.
4) Cash and cash equivalents at end of the period
Cash and cash equivalents outstanding at the end of the fiscal year under review were ¥9,478 million,
with a decrease of ¥2,283 million in cash and cash equivalents resulting from operating, investing
and financing activities.

-4-(4) Future outlook
The Group’s earnings forecast for the fiscal year ending December 2018 is as follows.

Net sales
Operating income
Profit attributable toowners of parent¥37,900 million (up 4.5% year-on-year)¥5,170 million (up 16.0% year-on-year)¥3,530 million (down 5.7% year-on-year)

Profit attributable to owners of parent for the fiscal year ending December 2018 is expected to decline by
5.7% from the previous fiscal year. This is because one-off factors such as generation of gain on sales of
securities and reduction of tax burden rate due to write-off of receivables for tax purposes which boosted
the profit in the fiscal year under review are not included in the forecast.
Noteworthy events in each business segment for the following fiscal year are as follows.
1. IT Consulting & Service Business
Future Architect, Inc. and Future Inspace, Inc. aim to contribute to clients’ businesses and renovating IT
frameworks by offering the Future Group’s unique high value-added services under the following
strategy:- Providing consistent services from overall design to detailed design, development, maintenance, andoperation by using cutting-edge IT and in-house manufactured components (Future Component), whichenable data processing in real time, while considering business innovation, operational reforms, andsystem improvements as a three-part initiative- Scientifically analyzing legacy IT systems, which have been made into black boxes, and renovating
customers’ complex and multi-layered core systems by using a unique reconstruction method into thelatest open systems (Future Formula)- Designing and developing high-quality systems within a short time by using unique project monitoringand management methods (FutureNavi and Futurefraqta)- Strengthening relationships with customers by providing human resources, including an advisor to theChief Information Officer (CIO), and establishing joint ventures as a long-term strategic partner inbusiness and IT in realizing their growth strategy
The Group has started projects designed to realize image analysis, demand forecasting, cost reduction,and other processes using cutting-edge technologies such as AI and IoT. It aims to meet customer needs
by consistently focusing on research and development of these cutting-edge technologies and applying
the results of such research to actual projects.
The Group started projects centered on new customers in 2017 and aims to make sure that these new
projects are completed by using aforementioned scientific project management and monitoring systems
such as FutureNavi and Futurefraqta during the next fiscal year.
YDC Corporation will provide IT consulting using AI, IoT, and other technologies for the manufacturingbusiness while focusing on operational reform consulting in the development and design area. It will also
fully facilitate collaboration with Future Group companies in order to integrate technologies and services
within the Group.
FutureOne aims to increase orders for a renewed version of in-house manufactured packaged softwarefrom medium-sized companies by promoting operational reform consulting services for medium-sizedcompanies by using these packages while expanding collaboration with external sales partners.
Furthermore, to meet extensive customer needs, Future Corporation will strengthen theprovision of strategic consulting services including corporate reorganization/businesscreation, global market development, and total risk management through the newly
established Strategy Innovation Group.
2. Business Innovation BusinessTokyo Calendar aims to boost revenue from advertising activities using its strengths to attract customers
and promote content, as can be seen from gaining 47 million monthly page views and high-quality
in-house video advertisements, coupled with its presence in multiple media such as monthly magazines,
websites, and events. The company will also strive to strengthen provision of services in collaboration
with Matchalarm Inc., an online marriage-hunting information provider. Furthermore, the company aims
to build a marketing platform by leveraging the Future Group’s IT technologies based on customers’
behavioral data which will be accumulated in the future.
CodeCamp aims to become profitable on a yearly basis by focusing on further expanding online andoffline programming education services tailored for corporations, extending outplacement services which-5-are linked to programming education services designed to improve skills, and enhancing programming
education services for children.
eSPORTS will work on enhancing product lines for casual sports products that are not easily affected byseason or weather, and unique private brand products. The company will enhance research and analysesof prices and top-selling items, as well as responses to customers using the Future Group’s technologies.
At the same time, it aims to increase sales on its e-commerce website by striving to improve customer
loyalty through such measures as collaborative work with Tokyo Calendar.
(5) Dividend policy and dividends for the current and next year
The Company determines its dividend by comprehensively taking into account the state of its accounting
period profit and loss, cash flows and treasury stock purchasing while placing shareholder return as its
priority management issue and securing a proper level of internal reserves for the organization to continue
growing in a sustainable manner.
The Company plans to apply a dividend payout ratio standard of at least 35% of consolidated earnings.
Under the above-mentioned policy, we plan to pay a year-end dividend of surplus for the fiscal year
ended December 31, 2017 of ¥13.00 per share. The full fiscal year dividend comprising the year-end
dividend and the previously-paid interim dividend is expected to be ¥26.00 per share (consolidated
dividend payout ratio of 31.0%).
The Company’s planned payment of dividends of surplus for the next fiscal year is ¥28.00 per share(interim dividend of ¥14.00).

-6-

2.

The Future GroupThe Group (the Company and its related companies) has introduced a holding company structure, andconsists of 19 consolidated subsidiaries and six equity-method affiliates as of December 31, 2017.
The Company, as a holding company, establishes the Group’s growth strategy, monitors management of
the Group companies, and provides specialty service to these companies. Details of the business segmentsof the Group and how major related companies in charge are positioned in the relevant segment are as
follows.
(IT Consulting & Service Business)
In this business, the Group helps clients solve problems, by sharing management issues with them from amanagerial perspective, understanding the essence of the clients’ businesses and establishing information
systems for them using advanced IT.
Company nameBusiness activities

Future Architect, Inc. (subsidiary)

Provision of IT consulting services from an objective andindependent standpoint by using leading-edge information
technology

Future Inspace, Inc. (subsidiary)

Additional development as well as maintenance and operation
services for projects primarily developed by Future Architect, Inc.

YDC Corporation (subsidiary)

Provision of IT consulting services, including a solution for
integrating and analyzing quality information, mainly to customers in
the manufacturing business

FutureOne, Inc. (subsidiary)

Development, sales and maintenance of mission-critical packaged
software for sales management, production management, accounting
and other processes as well as provision of cloud-based services

Micro CAD Co., Ltd. (subsidiary)

Development, sales and maintenance of and support for intellectual
property management software packages, and consigned
development of design control systems for manufacturers

Logizard Co., Ltd. (affiliate)

Development and sales of and support for cloud-based logistics andinventories management software (WMS)(Business Innovation Business)
In this business, the Group provides original services using IT and creates business innovations.
Company nameBusiness activitieseSPORTS Co., Ltd. (subsidiary)

Sales of sports, outdoor and fitness gear on the Internet

Tokyo Calendar Inc. (subsidiary)

Publication of the magazine “Tokyo Calendar,” provision of
information using websites and smartphone applications, andservices including reservations for tables at restaurants

Matchalarm, Inc. (subsidiary)

Planning and operation of various information provision services
including marriage-hunting information using mobile and Internet
technologies

CodeCamp Inc. (subsidiary)

Online and offline educational service including operation of theonline programming school “CodeCamp”

LaiBlitz, Inc. (subsidiary)

Development of sports and entertainment related software andoperation of online services

TrexEdge, Inc. (subsidiary)

Provision of platform services using leading-edge IT such as AI andIoT

Among affiliated companies engaged in businesses that are not included in the two businesses mentioned above,
such as investing in, as well as holding and managing securities, the main companies are as follows:
Major affiliated company
Future Investment Corp. (subsidiary)

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3.

Basic Approach to Selection of Accounting Standards
Taking into consideration the comparability of consolidated financial statements among enterprises, theGroup prepares consolidated financial statements under Japanese GAAP.
The Company intends to apply International Financial Reporting Standards (IFRS) appropriately inconsideration of circumstances inside and outside of Japan.

-8-

4.

Consolidated Financial Statements and Major Notes(1) Consolidated balance sheets(in thousands of yen)Previous consolidated
fiscal year
(December 31, 2016)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Securities
Merchandise and finished goods
Work in process
Deferred tax assets
Accounts receivable - other
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
Total property, plant and equipment

Consolidated fiscal year
under review(December 31, 2017)

11,761,815
4,242,997
1,800
796,354
59,435
197,714
1,549,740
554,818(5,022)

9,478,336
5,887,600–
696,273
238,904
318,306
1,518,421
1,051,338(3,263)

19,159,655

19,185,917

855,840(674,904)

1,279,666(801,002)

180,935

478,6635,430
1,840,179(1,618,314)

5,430
2,298,708(1,797,260)

221,864

501,448408,230

985,542

Intangible assets
Goodwill
Software
Customer-related assets
Other

350,312333,201–
18,855

656,654
1,356,891
1,120,000
17,754

Total intangible assets

702,369

3,151,300

1,409,923
1,168,231
191,330
89,011(64,950)

7,720,274
1,208,396–
262,602(24,547)

Investments and other assets
Investment securities
Lease and guarantee deposits
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets-9-2,793,545

9,166,727

3,904,145

13,303,570

23,063,800

32,489,488

(in thousands of yen)Previous consolidated
fiscal year
(December 31, 2016)
Liabilities
Current liabilities
Accounts payable – trade
Current portion of long-term loans payable
Accounts payable – other
Income taxes payable
Provision for bonuses
Provision for quality assurance
Provision for loss on projects
Asset retirement obligations
Other

Consolidated fiscal year
under review(December 31, 2017)866,932–
795,562
883,527
197,318
90,593
1,863
35,763
1,586,389

959,274
1,000,000
1,090,085
453,764
195,484
19,994
7,234–
1,771,266

Total current liabilities

4,457,951

5,497,105

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

1,000,000–
259,509
15,097–2,065,978353,495
74,136

Total non-current liabilities

1,274,607

2,493,609

Total liabilities

5,732,558

7,990,714

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

1,421,815
2,507,763
14,802,799(1,499,494)

1,421,815
2,507,763
17,406,623(1,499,538)

17,232,883

19,836,663

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

Total shareholders’ equity

63,691
402
5,798

4,269,144
738(95,460)

Total accumulated other comprehensive income

69,892

4,174,421

28,466487,687

17,331,242

24,498,773

23,063,800

32,489,488

Non-controlling interests
Total net assets
Total liabilities and net assets- 10 -

(2) Consolidated statements of income and comprehensive income(in thousands of yen)Previous consolidated
fiscal year
(from January 1, 2016
to December 31, 2016)

Consolidated fiscal year
under review(from January 1, 2017
to December 31, 2017)

Net sales
Cost of sales

33,653,168
20,233,354

36,265,778
21,525,524

Gross profit

13,419,813

14,740,253

Selling, general and administrative expenses
Directors’ compensations
Salaries and bonuses
Other salaries
Rents
Training expenses
Research and development expenses
Depreciation
Recruiting expenses
Amortization of goodwill
Other374,562
3,958,914
239,258
880,842
300,130
332,440
93,739256,885
342,9032,997,345

430,081
3,711,390
241,990
1,028,701
382,429
339,508
358,113364,367
373,535
3,051,929

9,777,023

10,282,048

3,642,790

4,458,205

1,949
33,382–

1,071
62,184
147,396–

84,527

15,866

10,234

51,198305,414

7,912
65,545

7,099–

30,786–

Total selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Foreign exchange gains
Share of profit of entities accounted for using equity
methodOther
Total non-operating income
Non-operating expenses
Interest expenses
Foreign exchange losses
Share of loss of entities accounted for using equity
methodTotal non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of investment securities
Gain on sales of shares of subsidiaries and associates
Total extraordinary income
Extraordinary losses
Loss on valuation of investment securities
Loss on sales of share of subsidiaries and associates
Provision of allowance for doubtful accounts
Amortization of goodwill
Loss on change in equity
Litigation expenses
Other
Total extraordinary losses
Income before income taxes and minority interests- 11 -

104,244

7,099

3,589,743

4,756,519

11,907294,160

173,905–

306,067

173,905

150,010808
30,000275,686
1,270
33,00012,463

93,278––––––503,238

93,2783,392,572

4,837,146

(in thousands of yen)Previous consolidated
fiscal year
(from January 1, 2016 to
December 31, 2016)

Consolidated fiscal year
under review(from January 1, 2017 to
December 31, 2017)

Income taxes - current
Income taxes - deferred

1,242,257(37,773)

1,172,858(106,626)

Total income taxes

1,204,484

1,066,232

Profit2,188,088

3,770,914

2,208,321(20,232)

3,743,805
27,109(1,848)97
92,3304,225,112
603(101,146)

20,399(19,946)

110,978

4,104,622

2,299,066

7,875,537

2,324,315

7,848,334(25,248)

27,203(Profit attributable to)Profit attributable to owners of parent
Profit (loss) attributable to non-controlling interests
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
Comprehensive income(Comprehensive income attributable to)Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests- 12 -

(3) Consolidated statements of changes in net assets
Previous consolidated fiscal year (from January 1, 2016 to December 31, 2016)(in thousands of yen)
Shareholders’ equity

Balance at the beginning of the period

Capital stock

Capital surplus

1,421,815

2,507,763

Retainedearnings
13,756,812

Treasury shares

Total shareholders’equity(1,499,428)

16,186,962

Changes of items during the period
Dividends from surplus(1,162,334)(1,162,334)

Profit attributable to owners ofparent2,208,321

2,208,321

Purchase of treasury shares

(66)

(66)

Net changes of items other thanshareholders' equity
Total changes of items during theperiod

––1,045,986(66)

1,045,920

Balance at the end of the period

1,421,815

2,507,763

14,802,799(1,499,494)

17,232,883

Accumulated other comprehensive income
Valuation
Deferreddifference on
gains or losses
available-for-sal
on hedges
e securities
Balance at the beginning of the period

45,431–

Foreigncurrencytranslation
adjustment(108,510)

Total
accumulated
othercomprehensive
incomeNoncontrollinginterests(63,078)

177,602

Total net
assets

16,301,486

Changes of items during the period
Dividends from surplus(1,162,334)

Profit attributable to owners ofparent2,208,321

Purchase of treasury shares
Net changes of items other thanshareholders' equity(66)
18,260402

114,308

132,971(149,136)(16,164)

Total changes of items during theperiod18,260402

114,308

132,971(149,136)

1,029,755

Balance at the end of the period

63,691402

5,798

69,892

28,466

17,331,242- 13 -

Consolidated fiscal year under review (from January 1, 2017 to December 31, 2017)(in thousands of yen)
Shareholders’ equity

Balance at the beginning of the period

Capital stock

Capital surplus

1,421,815

2,507,763

Retainedearnings

TreasurysharesTotal shareholders’equity14,802,799(1,499,494)

17,232,883

Changes of items during the period
Dividends from surplus(1,139,980)(1,139,980)

Profit attributable to owners ofparent3,743,805

3,743,805

Purchase of treasury shares

(43)

(43)

Net changes of items other thanshareholders' equity
Total changes of items during theperiodBalance at the end of the period––

2,603,824(43)

2,603,780

1,421,815

2,507,763

17,406,623(1,499,538)

19,836,663

Accumulated other comprehensive income

Balance at the beginning of the period

Valuationdifference on
available-forsale securities

Deferred gains
or losses onhedges63,691402

Foreigncurrencytranslation
adjustment
5,798

Total
accumulated
othercomprehensive
incomeNoncontrollinginterests

69,892

28,466

Total net
assets17,331,242

Changes of items during the period
Dividends from surplus(1,139,980)

Profit attributable to owners ofparent3,743,805

Purchase of treasury shares
Net changes of items other thanshareholders' equity(43)
4,205,452

335(101,258)

4,104,528

459,221

4,563,750

Total changes of items during theperiod4,205,452

335(101,258)

4,104,528

459,221

7,167,531

Balance at the end of the period

4,269,144

738(95,460)

4,174,421

487,687

24,498,773- 14 -

(4) Consolidated statements of cash flows(in thousands of yen)Previous consolidated
fiscal year
(from January 1, 2016 to
December 31, 2016)
Net cash provided by (used in) operating activities
Income before income taxes
Depreciation
Amortization of goodwill
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
Foreign exchange losses (gains)Share of (profit) loss of entities accounted for using
equity method
Loss (gain) on change in equity
Loss (gain) on valuation of investment securities
Loss (gain) on sales of investment securities
Loss (gain) on sales of shares of subsidiaries andassociates
Litigation expenses
Decrease (increase) in notes and accounts receivable trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable trade
Increase (decrease) in accounts payable - other
Decrease (increase) in other assets
Increase (decrease) in other liabilities

Consolidated fiscal year
under review(from January 1, 2017 to
December 31, 2017)

3,392,572
418,015
618,590
19,429(15,678)
2,433
1,863
(35,331)
7,912
67,187

4,837,146
811,282
373,535(51,284)(1,834)(70,599)
5,371(63,255)
7,099(147,396)

30,786(84,527)1,270
150,010(11,907)–
93,278(173,905)(293,351)–

33,000–575,411(930,975)(245,836)

199,778(40,640)(153,715)

57,637(76,182)364,610233,313(287,946)(474,966)

Subtotal

5,021,798

4,120,400

Interest and dividend income received
Interest expenses paid
Income taxes paid
Litigation expenses paid

35,227(7,883)(1,747,176)(33,000)

83,362(7,099)(1,737,376)–

Net cash provided by (used in) operating activities

3,268,965

2,459,286- 15 -

(in thousands of yen)Previous consolidated
fiscal year
(from January 1, 2016 to
December 31, 2016)
Net cash provided by (used in) investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Payments for asset retirement obligations
Purchase of shares of subsidiaries resulting in change
in scope of consolidation
Proceeds from sales of shares of subsidiaries resulting
in change in scope of consolidation
Payments for sales of shares of subsidiaries resulting inchange in scope of consolidation
Purchase of shares of subsidiaries and associates
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

Consolidated fiscal year
under review(from January 1, 2017 to
December 31, 2017)(127,389)(71,313)(5,839)(695,590)(1,094,205)(37,540)–(1,681,201)

243,922–(3,770)––(30,000)
194,405(270,728)(12,000)(299,900)
193,756(23,318)

40,663

107,000

5,177

5,501

(24,873)(3,537,497)(18,000)(66)(1,160,875)(61,922)(20,500)(43)(1,139,635)(49,210)(1,240,863)(1,209,389)

1,560

4,121

Net increase (decrease) in cash and cash equivalents

2,004,788(2,283,478)

Cash and cash equivalents at beginning of the period

9,757,026

11,761,815

Cash and cash equivalents at end of the period

11,761,815

9,478,336

Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities
Repayments of long-term loans payable
Purchase of treasury shares
Cash dividends paid
Dividends paid to non-controlling interests
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash
equivalents- 16 -

(5) Notes to consolidated financial statements(Notes regarding the premise of surviving company)
Not applicable.
(Additional information)(Application of “Implementation Guidance on Recoverability of Deferred Tax Assets”)
The Company has applied “Implementation Guidance on Recoverability of Deferred Tax Assets”(ASBJ Guidance No. 26, issued on March 28, 2016) from the fiscal year under review.
(Adoption of consolidated taxation system)
From the fiscal year under review, the Company and some of its consolidated subsidiaries in Japan
have adopted the consolidated taxation system with the Company as the taxable parent company.

- 17 -

(Segment information)
Segment information
1. Overview of reportable segments
The reportable segments of the Group are constituent units of the Company for which separate
financial information can be obtained, and the Board of Directors examines such information
on a regular basis to determine the allocation of management resources and evaluate businessperformance.
The Group defines the classification of business segments by comprehensively taking into
account main services, solutions, customers and markets, and has two reportable segments: theIT Consulting & Service Business and Business Innovation Business.
The business operations of the two reportable segments are as follows:
Reportable segments

Business operations

IT Consulting & Service BusinessIn this business, the Group helps clients solve problems, by sharing
management issues with them from a managerial perspective,
understanding the essence of the clients’ businesses andestablishing information systems for them using advanced IT.

Business Innovation BusinessIn this business, the Group provides original services using IT and
creates business innovations.

2.

Methods of calculating net sales, income or loss, assets, liabilities, and other items byreportable segment
The accounting method applied to the above-mentioned business segments is a method in
accordance with the accounting policy applied to the preparation of the consolidated financial
statements.
Income of reportable segments is based on operating income.
Inter-segment sales and transfers are based on market prices.

3.

Matters related to changes in reportable segments(Changes in reportable segments)
1) Effective April 1, 2016, the Company shifted to a holding company structure to realign its
organizational platform. Accordingly, starting from the second quarter of the previous
fiscal year, we migrated to a method of. 1) recording, as costs under segment income
adjustment, Group operation costs previously included in the costs of the IT Consulting
Business; 2) recording business outsourcing service fees and group growth subsidies
received from individual Future Group companies as income under segment income
adjustment.
Using the opportunity of making YDC Corporation a consolidated subsidiary, the Company
reviewed the management structure to take advantage of the holding company structure
introduced during the previous period and strengthen collaboration among the IT-related
business subsidiaries. Therefore, from the first quarter of the fiscal year under review, theformer “IT Consulting Business” and “Package & Service Business” have been
consolidated into a single segment renamed “IT Consulting & Service Business.”
Segment information shown above for the previous fiscal year is adjusted for the revised
reporting segment categorization and measurement methods.
2) As of September 7, 2016, the Group sold all the shares of UOEI Corporation that wereformerly categorized into the “Corporate Revitalization Business.” As a result, the segment
was excluded from the reportable segments from the first quarter of the fiscal year underreview.
3) The name of the New Media & Web Service Business was changed to the Business
Innovation Business, reflecting an increase in the number of companies subject toincubation.

- 18 -

4.

Information on amounts of net sales, income or loss, assets, and other items by reportablesegment
Fiscal 2016 (from January 1, 2016 to December 31, 2016)(in thousands of yen)
Adjustment(Note 2)

Amountstated infinancialstatements(Note 3)

Reportable segments
BusinessInnovation
Business

IT Consulting &Service BusinessCorporate
Revitalization
Business

Total

Other
(Note 1)Total

Net sales
Net sales to outsideclients

24,605,287

5,658,120

3,389,760

33,653,168–

33,653,168–

33,653,168

Inter-segment sales ortransfer

196,938

157

6,030

203,126–

203,126(203,126)–
33,653,168

Total

24,802,225

5,658,277

3,395,791

33,856,294–

33,856,294(203,126)

Segment income (loss)

3,894,318(391,309)

33,1353,536,144(21,323)

3,514,841

127,968

3,642,790

Segment assets

14,651,944

2,002,323–

16,654,268

3,655,796

20,310,065

2,753,734

23,063,800

Other items
Depreciation

391,087

7,532

16,370414,989–

414,989

3,025

418,015

Amortization of
goodwill

107,328

511,19169

618,590–

618,590–

618,590

Increase in property,
plant and equipment andintangible assets

125,792

7,083–

132,876–

132,876

8,296

141,173(Notes) 1.
2.
3.

“Other,” a segment not included in the reportable segments, includes securities investment, holding, and management activities.
Adjustments to segment income (loss) and segment assets represent the amount of inter-segment transactions eliminated andincome, expenses and assets of the holding company.
Segment income (loss) is adjusted with operating income in consolidated financial statements.

Fiscal 2017 (from January 1, 2017 to December 31, 2017)(in thousands of yen)
Adjustment(Note 2)

Amountstated infinancialstatements(Note 3)36,265,778–

36,265,778

Reportable segments
IT Consulting & Service
Business

Business Innovation
Business

29,520,022

6,745,755

Other(Note 1)

Total

Total

Net sales
Net sales to outsideclients

36,265,778–Inter-segment sales ortransfer

219,526

29,066

248,593–248,593(248,593)

–

Total

29,739,549

6,774,822

36,514,371–

36,514,371(248,593)

36,265,778

Segment income (loss)

4,777,380(363,491)

4,413,889(35,965)

4,377,924

80,2804,458,205

Segment assets

18,733,251

2,544,984

21,278,246

4,354,373

25,632,619

6,856,868

32,489,488

Depreciation

782,380

10,660793,040–

793,040

18,241

811,282

Amortization of
goodwill

129,682

243,852

373,535–

373,535–

373,535

3,167,664

21,0903,188,755–

3,188,755

340,8143,529,569

Other items

Increase in property,
plant and equipment
and intangible assets(Notes) 1.
2.
3.

“Other,” a segment not included in the reportable segments, includes securities investment, holding, and management activities.
Adjustments to segment income (loss) and segment assets represent the amount of inter-segment transactions eliminated andincome, expenses and assets of the holding company.
Segment income (loss) is adjusted with operating income in consolidated financial statements.

- 19 -

(Per share data)
Fiscal 2016
(from January 1, 2016 to
December 31, 2016)

Fiscal 2017(from January 1, 2017 to
December 31, 2017)

Net asset value per share¥387.04¥537.10

Profit per share¥49.40¥83.74(Notes) 1. Diluted profit per share is not recorded because there are no potential shares.
2. Net income per share is calculated based on the following:
Fiscal 2016
(from January 1, 2016 to
December 31, 2016)

Fiscal 2017(from January 1, 2017 to
December 31, 2017)

Profit per share
Profit attributable to owners ofparent (thousands of yen)

2,208,321

3,743,805––

Profit attributable to owners ofparent related to common stock(thousands of yen)

2,208,321

3,743,805

Average outstanding shares ofcommon stock during the period(shares)

44,705,147

44,705,125

Amount not available for commonshareholders to common shares(thousands of yen)

(Significant subsequent events)
Not applicable.
5.

Other
Orders received(in thousands of yen)
Fiscal 2016
(from January 1, 2016 to
December 31, 2016)
Orders received

IT Consulting & Service BusinessBusiness Innovation Business
Total(Nots)

Order backlog

Fiscal 2017(from January 1, 2017 to
December 31, 2017)
Orders received

Order backlog

24,047,454

7,520,947

29,209,807

714,531

127,914

1,188,737

235,529

24,761,985

7,648,861

30,398,544

9,857,280

Orders received include adjustments for exchange rate fluctuations.

- 20 -

9,621,750