FY2020
Briefing on Consolidated Financial Results for theSix Months Ended September 30, 2019
November 14, 2019

TDC SOFT Inc.
President and Representative Director

Hiroyoshi Kobayashi© 2019 TDC SOFT Inc.

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Key Points of the Briefing
Consolidated Financial Results for
the Six Months Ended September 30, 2019
・Increased earnings, driven by strong sales in the financial field・Progress as planned on initiatives for the next-generation system
integration business, etc.

Topics⚫ Started the “Shift to the Smart SI” Medium-Term Management Plan・ Agile Business:
Concluded a partnership agreement with Scaled Agile, Inc. of the US

・ Security Business:
Formed a business and capital alliance with LTE-X Inc., which has acompetitive edge in the network security field

・ TDC Futech Corporation started after two subsidiaries weremerged to optimize management resources© 2019 TDC SOFT Inc.

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Contents● Medium-Term Management Plan,Fiscal 2019 Plan
● Overview of Financial Results for theSix Months Ended September 30, 2019
● Business by Field● Next-Generation System Integrator● Full-Year Forecast for the Fiscal YearEnding March 31, 2020
© 2019 TDC SOFT Inc.

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Management PlanVisionMain strategies
Performancetargets

Management
policy for theMedium-Term Management Plan current fiscal year

Aim to become aNext-Generation System Integrator
Pursue high-value-added
system integration services

Advance transformation of thesystem integration model

・Newly establish DX(*)-driven organization,
strengthen propulsion power

・Newly establish a dedicated organization
reporting directly to the president

・Expand the agile and security businesses aspriority strategic fields

・Advance ecosystem building throughalliances with other companies(*)Digital Transformation

Expand net sales to ¥30 billion by FY2021
with high-value-added system integration services
accounting for about 20%

Focus on building a foundation
for continued growth© 2019 TDC SOFT Inc.

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Overview of Consolidated
Financial Results(Unit: \ millions)

FY2019 2Q
13,128

Profitratio

Rate ofchange

FY2018 2Q-+7.0%

12,274Gross profit

2,580 19.7%

+0.6%

2,565

Operating profit

1,019

7.8%

△8.1%

1,109

Ordinary profit

1,038

7.9%

△12.3%

1,183

687

5.2%

△11.9%

780

Net sales

Profit attributable toowners of parent【Highlights】➢ Increased earnings, driven by strong sales in the financial field➢ Moved ahead on building a framework for sustained growth andactively invested in high-value-added business, centered on priority
strategic fields. Results as planned in spite of reduced earnings on
the profit front in the six months ended September 30, 2019.

© 2019 TDC SOFT Inc.

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Net Sales by Field
FY2018 2Q¥12,274 million

FY2019 2Q¥13,128 million

1,151（9.4％）

1,868（15.2％）
2,701（22.0％）

1,190（9.1％）

1,671（12.7％）

6,553（53.4％）

2,832（21.6％）

7,433（56.6％）

Financial IT solutions field

Infrastructure and network solutions field

Public corporation IT solutions field

Package solutions field© 2019 TDC SOFT Inc.

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Highlights by Field
Financial IT solutions field(Unit: ¥ millions)
8000

6,506

6,553

7,433

7000
6000

Large-scale system development projects
for the insurance and credit industries
remained solid

Earnings increased 13.4% YoY5000
20172018

2019

Public corporation IT solutions field(Unit: ¥ millions)

2,188

2,701

2,832

3000

2000

Development projects for themanufacturing and logistics industries
remained solid

Earnings increased 4.8% YoY1000
201720182019© 2019 TDC SOFT Inc.

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Highlights by Field
Infrastructure and network solutions field(Unit: ¥ millions)
2000

1,636

1,868

1,671

1500
1000

IT infrastructure construction projects forthe manufacturing industry remained solid
while the network integration field
decreased

Earnings decreased 10.5% YoY

500
2017

2018

2019

Package solutions field(Unit: ¥ millions)
1500

1,002

1,151

1,190

1000

Original cloud services and solutions
for CRM, etc. remained solid

Earnings increased 3.4% YoY

500
02017

2018

2019

© 2019 TDC SOFT Inc.

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Next-Generation System Integrator
Newly establish an organization to build a foundation
for sustained growth
Digital Technology Headquarters
Assemble highly skilled human resources, collaborate with business divisions anduse high-value-added businesses such as DX as a driver
・Advancing business in priority strategic fields(agile business/security business)

Business Innovation Headquarters
Conduct M&A and open innovation with venture capital・Concluded partnership agreement with Scaled Agile, Inc. of the US
・Concluded business and capital alliance with LTE-X Inc.

Smart SI Promotion Office
Build a TDC SOFT original system integration model establishing efficient project
operation methods through homogenous autonomy, etc., sharing highly skilledhuman resources and promoting transformation outside of conventional bounds
Expand the ratio of high-value-added system
integration services in sales to beyond 6.4%
(112% of plan)
Aim to expand to about 20% after three years© 2019 TDC SOFT Inc.

Sales composition
2.5%

FY20186.4%

FY201920%

FY20219

Priority Strategic Fields I:
Agile Business⚫ Concluded a partnership agreement with Scaled Agile, Inc. of theUS, which provides the large-scale agility framework SAFe® andleads the enterprise agile market⚫ Increased the number of agile technicians to around 50 (ofwhom 23 are also certified Scrum technicians)⚫ Started an agile-related training service utilizing certifiedtechnicians⚫ Progressed as planned (58% increase YoY) toward three-yearsales target (¥2 billion)
Organization
operationBusiness
Systemdevelopment

Supported realization of a highly agileorganization through consulting andeducation services using SAFe®
Realized a flexible and speedy
development system through agile
development centered on Scrum
certified technicians© 2019 TDC SOFT Inc.

10Priority Strategic Fields Ⅱ:
Security Business⚫

Started a business alliance with LTE-X Inc., which has strengths in
the network security field, to establish a competitive edge in thelocal 5G market ahead of the arrival of the full-scale IoT/5G era.
RetailMobilitySports

ClosednetworkAI&IoT

MobileSchools anduniversities⚫

Transport

Construction
Factories

Added security services that create safety and security for customers
to enhance added value in the system integration business.

Total security solutions that consider system life cycles© 2019 TDC SOFT Inc.

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Consolidated Financial Results Forecasts for theFiscal Year Ending March 31, 2020
(Unit: \ millions)

FY2019 2Q

Profit ratio Rate of change

FY2018 2Q

27,000-+1.5%

26,590Operating profit

2,200

8.1%+2.0%

2,157

Ordinary profit

2,250

8.3%

+0.1%

2,248

Profit attributable toowners of parent

1,490

5.5%

+1.4%

1,469

EPS(\)

61.85-+1.4%

61.02

Net sales

Moved ahead on investment policies based on
the Medium-Term Management Plan for adding
high value to business and transforming thesystem integration model.
© 2019 TDC SOFT Inc.

12FY2020
Briefing on Consolidated Financial Results for
the Six Months Ended September 30, 2019

Details of Financial Results

Kunihiko Adachi,
Accounting Department Manager, Executive Director© 2019 TDC SOFT Inc.

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目次
● Statements of Income● Analysis of Net Sales● Analysis of Operating Profit● Balance Sheet● Statements of Cash Flows© 2019 TDC SOFT Inc.

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Statements of Income(Unit: \ millions)
Net Sales

FY2019 2Q

changeFY2018 2Q

13,1284,902
5,589
418361
10,5482,580

12,274

+7.0%

4,623

+6.0%

5,047

+10.7%

375+11.4%

337

+7.1%

9,709

+8.6%

2,565

+0.6%

Selling, general andadministrative expenses

1,560

1,455

+7.2%

Operating profit

1,019

1,109

△8.1%

1874

△62.9%

1,038
1,038

1,183

△12.3%

1,183△12.3%

687780△11.9%

28.53

32.39

△11.9%

Labor costs
Subcontract expenses
Other expenses
Work in progress change

Cost of sales
Gross profit

Non-operating income
and expenses

Ordinary profit
Profit before income taxes

Profit attributable toowners of parent
EPS

Note: The Company conducted a two-for-one stock split of its common shares effective October 1, 2018. Accordingly, basic
earnings per share has been calculated under the assumption that the stock split was conducted at the beginning of thefiscal year ended March 31, 2018.
15© 2019 TDC SOFT Inc.

Overview of Sales by Customer Industry(Unit: ¥ millions)
FY2017 2Q

FY2018 2Q

FY2019 2Q

3,128
2,673

2,4472,382

2,048

2,593

2,850

2,678

2,535
2,249

2,194
1,939

1,1581,223

1,211

1,324 1,284814© 2019 TDC SOFT Inc.

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State of Orders Received/Unfilled Orders(Unit: ¥ millions)

Orders received

Net sales

Unfilled orders

12,365

12,937

13,796

11,334

12,24713,128

6,269

6,498

6,551

FY2017 2Q
2018年3月期…

FY20182Q
2019年3月期…

FY20192Q
2020年3月期…

© 2019 TDC SOFT Inc.

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Analysis of Operating Profit(Unit: ¥ millions)

1,109

Gross profit
SG&A upup+15＜Gross profit＞

-105

1,019

Increased alongside anincrease in net sales＜SG&A＞
Increased in conjunction withinvestments to build afoundation for sustainablegrowth and to create highvalue-added system
integration services towardrealization of the MediumTerm Management Plan

FY2018 2Q

FY2019 2Q© 2019 TDC SOFT Inc.

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Balance Sheet（Unit：\ million）

Total assetsCurrent assets
Non-current assets

Total liabilities
Current liabilities
Non-current liabilities

Total net assets
Total liabilities
and net assets
Equity ratio
Net assets per share

Six months ended
September 30, 2019

31-Mar-19

Change15,74012,597
3,143
4,239
4,053
185
11,501

16,353
12,930
3,422
4,887
4,717
169
11,466

-3.7%
-2.6%
-8.2%
-13.3%-14.1%+9.5%+0.3%

15,74016,353

-3.7%

73.1%
477.2570.1%
475.93+0.3%

The Company conducted a two-for-one stock split of its common shares effective
October 1, 2018. Accordingly, net assets per share has been calculated under theassumption that the stock split was conducted at the beginning of the fiscal year19© 2019 TDC SOFT Inc.
ended March 31, 2018.

Statements of Cash Flows
438

93

△391

7,957

Cash and cash equivalents at
beginning of year

7,816

Profit before income taxes

1,038
44925
7
△361
△183
△398
1△467

Depreciation and amortization
Notes and accounts receivable

7,816

Notes and accounts payable
Inventories
Accounts payable

Cash flows
fromoperatingactivities

Cash flowsfrominvestmentactivities

Cash flows
fromfinancial
activities

Accrued expenses
Other
Income taxes payable
Cash flows from operating
activities

438

Acquisition of tangible assets△54

Acquisition of investment
securities
Proceeds from distribution ofinvestment in partnerships△33

Interest and dividend income

22

Proceeds from transfer ofbusiness
Other

Cash and cash
equivalents at
beginning of year

Cash flows from investment
activities
Increase (decrease) in shortterm borrowings

Cash and cash
equivalents at
end of period© 2019 TDC SOFT Inc.

Dividends paid
Other15142093150△538-

Cash flows from financial
activities△391

Cash and cash equivalents atend of period

7,957

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TDC SOFT Inc.
https://www.tdc.co.jp /*Cautionary note about these materials
This report contains forward-looking statements such as
forecasts for the TDC SOFT Group that are based on information
available to the Company at this point in time. Actual results
may differ significantly from these forecasts due to various
unforeseen factors or operations going forward.
© 2019 TDC SOFT Inc.

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