Bridge Report (9416) February 21, 2020

https://www.bridge-salon.jp/

Vision Inc. (9416)

President Kenichi Sano

Company Information
MarketIndustryCEO
HQ Address
Year-end
HP

TSE 1st Section
Information and telecommunications
Kenichi Sano
Shinjuku i-Land Tower, 6-5-1 Nishi-Shinjuku, Shinjuku-ku, Tokyo
Decemberhttps://www.vision-net.co.jp/en/ir_information.html

Stock Information
Number of Shares Issued(Treasury stock excluded)¥1,14047,988,156 shares
DPS (Est.)
Dividend Yield (Est.)
EPS (Est.)¥55.73

Share Price

Total Market Cap

ROE（Act）

Trading Unit

¥54,706 million
PER (Est.)
20.5x

21.5%
BPS (Actual)¥226.80

100 shares
PBR
5.0x

* Stock price as of the close on February 21, 2020. Number of shares issued at the end of the most recent quarter excluding treasury shares.

Consolidated Earnings Trends
Fiscal Year
Dec. 2016 (Actual)Dec. 2017 (Actual)Dec. 2018 (Actual)Dec. 2019 (Actual)Dec. 2020 (Forecast)

Net Sales
Operating Income Ordinary Income
14,843
1,290
1,298
17,554
1,788
1,795
21,5032,484
2,499
27,3183,325
3,358
31,3964,003
4,005

Net Income
812
1,208
1,529
2,226
2,674

EPS (¥)
16.70
24.76
31.40
46.05
55.73

DPS (¥)-* The forecasted values were provided by the company.
*Unit: ¥mn.
*In October 2019, we split one share into three shares (EPS retroactively adjusted).

This Bridge Report outlines Vision's results for the fiscal year ended December 2019 and the forecast for the fiscal year ending December
2020.

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Table of Contents
Key Points
1．Company Overview
2．Fiscal Year December 2019 Earnings Results
3．Fiscal Year December 2020 Earnings Estimates
4．Conclusions<For reference: Initiatives for ESG・SDGs><Reference: Regarding corporate governance>

Key Points⚫

For the fiscal year ended Dec. 2019, sales and operating income grew 27.0% and 33.8%, respectively, year on year. While
the sales of the Global WiFi business increased 31.3% year on year due to the rise in the number of rental transactions andthe improvement in ARPU (sales per rental transaction), the sales of the Information and Communications Service
business rose 15.2% year on year through up/cross-selling. They offset the costs for increase of staff, the investment forbusiness growth in the fiscal year ending Dec. 2020, and the new business “Pro Drivers.”⚫

For the fiscal year ending Dec. 2020, sales and operating income are estimated to increase 14.9% and 20.4%, respectively,
year on year. The sales of the Global WiFi business are projected to increase 18.9% year on year, due to the sales promotionof Global WiFi for Biz and the increase in rate of selection of Unlimited Plan, and the Information and Communications
Service business is forecasted to be healthy, due to the expansion of the existing business and the promotion of thecompany’s original services. As for profit, the estimated profit rate of the Global WiFi business is conservative, but “Pro
Drivers” will start contributing to profit, and the profit rate of the Information and Communications Service business will
improve through the change in the sales composition.

⚫

For the earnings forecast for the fiscal year ending Dec. 2020, the impact of the spread of the novel coronavirus has notbeen taken into account, because it is difficult to estimate it as of the disclosure of the earnings forecast.

1. Company Overview
Under the management philosophy of “Contributing to the Information and Communications Revolution,” Vision conducts the Global
WiFi business, which leases the personal Wi-Fi (wireless LAN) routers which can be used in over 200 countries and regions on a flatrate basis, and as an Information and Communications Service distributor, it also provides Information and Communications Service
business of arranging telecommunications infrastructure and office equipment necessary for business activities, such as fixed-line
telecommunications, mobile telecommunications, broadband etc.
The company forms a group with its 19 consolidated subsidiaries, both inside and outside Japan. Of those, the 7 based in Japan are
Members Net Inc. (which conducts the business of charging agency, fixed-line telephone service subscription agency, etc.) and Best
Link Inc. (which carries out the business of broadband service subscription agency), etc. There are 12 overseas subsidiaries that operate
as overseas hubs for the Global WiFi service in South Korea, Singapore, UK, Hong Kong, Hawaii, Taiwan, China (Shanghai), France,
Italy, California and New Caledonia; there is also a local subsidiary in Vietnam, which is an offshore hub for database construction andsystem development.
【Corporate slogan - More vision, More success】
The present era, where information and telecommunication technology are rapidly advancing, is full of business and communication
opportunities, and the company continues to be the No.1 distributer in many fields related to Information and Communications Service.
The company believes that it is because the company was able to “provide the best value by considering a customer’s perspective.” The
future of telecommunication will be for the betterment of everyone’s future. The company will support customers in realizing many
dreams by creating new services that customers can use with more peace of mind, convenience and efficiency.
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https://www.bridge-salon.jp/【Vision Group’s management philosophy – Contributing to the Information and Communications Revolutions in the world】
This philosophy is put in with Vision’s determination to “actively promote the Information and Communications Revolution in the world,bring innovations to an individual’s lifestyle and the company’s business style, and contribute to the advancement of humanity andsociety by continuing to be an distributor that effectively and efficiently connects the client companies with end users and makes surethat its employee’s unlimited ambition, dreams and thoughts are contributing to the stakeholders, without compromising nor everforgetting the venture spirit.”
1-1 Business Description
Global WiFi business
The company offers services including “Global WiFi” (a Wi-Fi router rental service that allows people traveling overseas to use local
internet services at a competitive rate through its partnerships with the overseas operators) and “NINJA WiFi” (a Wi-Fi router rental
service for overseas visitors to Japan, etc.), while also engaging in services for the travelers between foreign countries in overseas bases(South Korea, Taiwan and California).
The term-end number of leased Wi-Fi routers that are equipped with the next-generation telecommunication technology (Cloud WiFi)
capable of managing Subscriber Identity Modules (SIMs) on the cloud accounts for over 90% of all leased devices (Depending on
telecommunication carriers, some countries are not supported, thus the company has almost reached the upper limit).

（From the reference material of the company）

Advantages(1) Affordable fixed-rate system, (2) the most comprehensive area coverage, (3) comfort, (4) safety/security, and (5) substantial support
bases and corporate sales capabilities ⇒ One of the largest customer bases in the industry
The advantages of “Global WiFi” and “NINJA WiFi” include the following: (1) cost benefits of up to 89.9% (the rental fee per day is
300 yen at the minimum, depending on the travel destination) compared to the overseas fixed-rate packet plans offered by other Japanese
mobile carriers, (2) the industry’s most comprehensive coverage of over 200 countries and regions, (3) high-speed telecommunications
services through partnerships with telecommunication operators all over the world, (4) available at 24 hours a day, 365 days a year, at
47 bases worldwide, and (5) the industry’s largest number of available spots at airport counters.
Furthermore, from the business perspective, another advantageous point is the fact that use by corporations, through which stable demandcan be expected, has accounted for about 30%~40% in this business segment. As a result, the company has secured a great number ofusers, which is one of the largest market shares in the industry.
The store digitalization strategy and establishment of the super last-minute online order receipt system
The company is proceeding with the strategy of making stores digitalized by (1) installing automatic delivery lockers (Smart Pickup),(2) adopting self-registration KIOSK terminals with multilingual support and payment settlement functions (Smart Entry), and (3) the
QR code-based reception counter that features immediate customer identification (Smart Check), while expanding the number ofmanned counters in Japan. The company aims to evolve its stores to ones that can be used by Japanese tourists travelling abroad andforeign tourists visiting Japan, more conveniently, more comfortably, and with greater peace of mind, as well as strengthen its efforts
toward the increase of routers on lease (number of routers delivered) and increase of optional services (such as insurance services andaccessories).

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https://www.bridge-salon.jp/（From the reference material of the company）

In addition to strengthening the contact point with users, the store digitalization will make it possible to optimize the level of services
according to user needs (reducing the waiting time for repeat users who do not require explanations while making airport staff deal withusers who need it). As it is difficult to expand and install more airport counters, the company is planning to increase SmartPickup lockers,
which will save labor, and improve throughput and reduce costs by utilizing the limited space effectively.
Furthermore, the combination of the store digitalization strategy, Cloud WiFi, and the customer database has established a “super lastminute online order receipt system,” enabling the company to provide services for customers who are about to depart (the system has
made it possible for the company to cope expeditiously with online application submitted right in front of airport counters by linking itwith the database).

（From the reference material of the company）

Earnings structure
Title
Sales

Cost of sales

Outline①Rental fee per day × No. of days a router is used
*Average: 1,000 yen/day; average number of days of use: 7* Optional services, such as the insurance services and mobile batteries②Basic monthly fee (1,970 yen) + Charges for data telecommunications (plan) × No. of days of use
・Data telecommunications fee (to carriers in each country)
・Price of terminals (mobile Wi-Fi routers)*It is posted in rental assets (depreciation costs are recorded; the depreciation period is 2 years).
・Outsourcing expenses (commission for distributors), etc.

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・Personnel cost・Advertising cost・Operation costs and land and building rent of shipping centers, airport counters, customer centers, etc.
・Other SG&A expenses

SG&A expenses(Created based on company data. Same below).

Comparison of means of connecting to the Internet at overseas destinations (1)Connection method“GLOBAL WiFi”“NINJA WiFi”
International roaming
SIM(Local procurement)
Free Wi-Fi spot

Price

Area

Communication
Management
Security
speed
〇
〇
〇
〇
〇
Procurement in partnership with local high-quality lines. Local fastest. Reliable Price. Safe. Easy (apply and use).
×
△
△
〇
〇
There are problems with price and quality. (High price of 980 – 2,980 yen. Users may be charged even more.)
△
△
〇
×
〇
Need knowledge and management. (Local purchase, problem in capacity, recharge regularly, etc.)
〇
×
△
〇
×
Limited location. The speed may be slow depending on the facility line and the number of people connected.
Security concerns.

Comparison of means of connecting to the Internet at overseas destinations (2)Wi-Fi router rental
300 yen/day – 1,970 yen/day
Apply on the web and rent

Reliable flat-rate system and stablecommunication speed
・Enhanced security and compensation
・Flat-rate system
・Capacity can be selected according to therental scene.
More luggage
It is necessary to carry a Wi-Fi router in
addition to the smartphone.

・For those who want to communicate at astable transmission speed without worrying
about additional charges with the flat-rate
system. (Can be used by multiple people,
even cheaper by splitting)・If you carry it, you can use it in various
places.
・Access is not concentrated and difficult toconnect.

Comparison
table
ChargeMerit

Demerit

Recommended

Roaming(Telecom carriers’ fixed-rate)
980 yen/day – 2,980 yen/day
Prior confirmation of constructdetails, compatible models, andsetting is required according to theplan (depending on contract mobile
company)
Easy connection (tethering is also
possible)

The price is expensive
・Pricing is more expensive than rental
WiFi.
・Incorrect data roaming setting canresult in high charges.
Those who want to use it easily with
their own devices

Free Wi-Fi spot/ Hotel Wi-Fi
Free Wi-Fi spot: Free
Hotel Wi-Fi: included inaccommodation fee or 500-3,000
yen

Easy to use
Available area is limited, butmany places are provided free ofcharge and easy to connect

Careful about unauthorized access
While easy to use, there is a risk ofunauthorized access and virus
infection and personal information
being stolen
Use area is limited but it is cheap.
Overseas Internet is sufficient in alimited time.

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Trends by attribute (FY Dec. 2019)
Ratio of overseas usage (outbound Japan → overseas) by individuals and corporations
No. of rentals FY 2016 FY 2017
FY 2018
FY 2019
AmountCorporation
50.8%
43.6%
37.4%
36.9%
Corporation
Individual
49.2%
56.4%
62.6%
63.1%
Individual

FY 2016 FY 2017 FY 2018 FY 2019
54.4%
50.9%
46.4%
45.8%
45.6%
49.1%
53.6%
54.2%

Ratio of overseas usage (outbound Japan → overseas) by repeat users and new users
No. of rentals

FY 2016 FY 2017 FY 2018 FY 2019

Repeat users
New users

53.9%
46.1%

53.1%
46.9%

54.4%
45.6%

55.3%
44.7%

AmountFY 2016

FY 2017

FY 2018

FY 2019

Repeat users
New users

53.0%
47.0%

53.1%
46.9%

53.6%
46.4%

53.6%
46.4%

50-54

55-59

8.9%

6.4%

6.7%

1.4%

9.9%
7.9%

7.3%
5.5%

9.1%
4.4%

2.2%
0.6%

Ratio of total overseas usage (outbound Japan → overseas) by age composition
18 or younger 19-24 25-29
30-34
35-39
40-44
45-49
Male
1.1% 13.9% 14.7% 13.2% 11.8% 10.6% 11.4%
FemaleMale
0.7%
8.2% 11.2% 12.7% 13.0% 12.4% 13.3%
Female1.4% 19.4% 18.1% 13.7% 10.6%
8.9%
9.7%

60 or more Unknown

Information and Communications Service businessWith Best Link Inc., a consolidated subsidiary, at its core, the group offers services aimed mainly at newly established corporations,venture businesses and multi-store development enterprises such as food-service chains, from its 15 offices nationwide and incooperation with its partner companies. The services include subscription agency operations for various telecommunications services
such as business phones, agency operations of arranging lines for landline telephones, subscriber telephones, and NTT Hikari telephones,
corporate mobile phones, broadband lines, sales and maintenance of mobile telecommunication devices, OA equipment and security
products (UTM), etc., designing websites, and agency operations for new power services targeting enterprises.
The company has advantages in prospecting for corporations newly established (within 6 months), one of its major targets, and it isestimated, according to the data by the Ministry of Justice (the number of newly registered companies was 116,208 in Japan in 2018),
that the company has conducted transactions with one in every 7-8 corporations newly founded in Japan. These advantageous points arebacked by the company’s strong power to attract customers through its unique online marketing (Internet media strategy), through which
the company maximizes running yield (recurring revenue-type business) and conducts additional sales with high productivity (up/crossselling) through the Customer Relationship Management (CRM; customer relationship and ongoing transactions) strategy.
For example, the company receives commission from operators for telephone line arrangements unless contracts for the service arecancelled, and it can earn maintenance fees for multifunction photocopiers on a continuous basis. Moreover, the follow-up service by its
customer loyalty team has enabled the company to establish a recurring revenue-type business model, in which earnings are accumulated
by taking in demand for lines and equipment that increases with customers’ business growth, and providing optimal services according
to customers’ growth stage (additional sales with high productivity through up/cross selling). The company will evolve its recurring
revenue-type business model while expanding the target customer from enterprises with growth potential to ones in the growth stage.
Earnings structure
Title

Sales

Fixed-line telecommunications, mobile
phones, electric power・Commission fee (brokerage)
・Renewal commission (depending on thecustomer usage status)*Deposited by telecommunication operatorsand distributors

Overview
OA equipment (multifunction machine, business phones), websites,
security・Sales proceeds: deposited by leasing companies and credit cardcompanies
・Maintenance cost: deposited and factoring (for maintenance ofwebsites) by manufacturers,

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Cost of sales

SG&A
expenses

https://www.bridge-salon.jp/

・Price of terminal (mobile phones)
・Price of equipment (OA equipment, security)*No cost of sales for fixed-line*Payment to manufacturers
telecommunications and electric power・Outsourcing expenses (commission for distributors), etc.
*Payment to telecommunication operators anddistributors
・Outsourcing expenses (commission for
distributors), etc.
Personnel cost, advertising cost (websites), land and building rent of call centers, etc., and other SG&A expenses

Competitive advantage
Startups

Web strategy
Customer loyalty

Products and services

The company has conducted transactions with one in every 7-8 corporations* newly founded in Japan.
The number of newly registered companies was 116,208 in Japan in 2018. (according to the Ministry ofJustice).
It has strong power to attract customers through its unique online marketing (Internet media strategy)
Customer Relationship Management (CRM; customer relationship and ongoing transactions) strategy based on
unique knowhow.
Maximization of continuous earnings = recurring-type revenue business.
Additional sales with high productivity (up/cross selling).
Products and services that lead to customers’ “sales improvement,” “cost reduction,” “increased operational
efficiency,” “enhanced communication” and “promotion of DX” (products that are not likely to be influenced
by economic environment).
It is possible to change the business structure according to the situation (economic environment, trends,
economic conditions, etc.) as the company has multiple business segments (a flexibly-changeable businesssystem).

*The total number of corporations (including sole proprietors) established within 6 months that have started trading with the company (according to the company’sdata).
*The number is subject to change due to changes in handled services and products.

1-2 Growth strategy
In the Global WiFi business, the company will work toward expansion (exploring a new market: growth of each stage, global expansion),
extension (improving profitability) and utilization (business development: platform for travel-related services) of the customer andbusiness bases, and in the Information and Communications Service business, strengthen the channels, products/services and thebusiness model.
Global WiFi business
About 31.88 million foreign tourists visited Japan (inbound travelers) in 2019 (according to the Japan National Tourism Organization).
Meanwhile, the number of Japanese tourists traveling to overseas nations (outbound travelers) is about 20.08 million per year. The
number of tourists travelling from one overseas country to another has exceeded 1.4 billion (according to the reference material of thecompany; source: officially published material by the United Nations World Tourism Organization), and the market scale estimated by
the company is over 9 trillion yen.
The company is growing rapidly, but its market share is still 17.3% for overseas use (outbound: from Japan to overseas) and 3.1% for
domestic use (inbound: from overseas to Japan, including Japanese people). Accordingly, their share in the Japanese market (outboundand inbound travelers) is 8.6%, which indicates that there remains room for increasing the market share. The company will endeavor tofurther increase the percentage by not only prospecting for new users, but also offering services to repeat users and taking in corporate
demand. Furthermore, it will strengthen the business foundation through cost reduction and productivity improvement in an attempt toboost profitability.
In the medium and long term, the company plans to develop a new business, “a travel-related service platform,” using the customer
bases of “Global WiFi” and “NINJA WiFi.”
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Information and Communications Service businessAccording to the data of the Ministry of Justice, the number of newly registered companies was 116,208 in Japan in 2019. It is continuing
to grow thanks to the support for starting business and companies provided by the government, and the company plans to implement the
backward integration strategy by attracting customers through utilization of the know-how of online marketing, which has 15 years ofsuccess.
Also, the (total) number of registered head and branch offices for transfer was 144,597 (excluding the offices not requiring registration
for transfer). In addition to taking in demand for change procedures at the time of adding commodities and transferring offices, etc., thecompany will conduct up/cross selling through high-level operations of the Customer Royalty Team (CLT).
Furthermore, the company will utilize the business model that it established in 25 years since its foundation and corporate sales strengths(structure, know-how, various sales channels) in all the businesses including the Global WiFi business (adopting the Vision Hybrid
Synergy model).

（From the reference material of the company）

2．Fiscal Year December 2019 Earnings Results
2-1 Consolidated Business Results
Sales
Gross profit
SG&A expenses
Operating income
Ordinary income
Net income

FY 18/12

Ratio to Sales

FY 19/12

Ratio to Sales

21,503
12,65010,165
2,484
2,499
1,529

100.0%
58.8%
47.3%
11.6%
11.6%
7.1%

27,31815,69012,365
3,325
3,358
2,226

100.0%
57.4%
45.3%
12.2%
12.3%
8.1%

YoY

+27.0%+24.0%+21.6%+33.8%+34.4%+45.6%

Revised forecast at 2Q

Compared with the forecast

25,79315,094
11,830
3,264
3,248
2,116

+5.9%
+4.0%
+4.5%
+1.9%
+3.4%
+5.2%

*Unit: ¥mn

Sales and operating income grew 27.0% and 33.8%, respectively, year on year.
Sales were 27,318 million yen, up 27.0% year on year. While the sales of the Global WiFi business increased 31.3% year on year due tothe rise in the number of rental transactions and the improvement in ARPU (sales per rental transaction) through the rise in the rate of
selection of Unlimited Plan, the sales of the Information and Communications Service business rose 15.2% year on year throughup/cross-selling.
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Operating income was 3,325 million yen, up 33.8% year on year. Cost of sales augmented 31.3% year on year to 11,627 million yen,
due to the change in the product lineup in the Information and Communications Service business and the effects of the new business“Pro Drivers.” SGA increased 21.6% year on year to 12,365 million yen, due to the investment for business growth in the fiscal year
ending Dec. 2020, including the increase in the number of employees (from 708 to 795) and the establishment of a collection center(which will be described later), but it was offset by sales growth, and operating income hit a record high.
The augmentation of cost of sales was mainly caused by the rise in the ratio of products that require procurement costs, such as mobile
communication devices (cellphones) and OA equipment (all-in-one copiers), in the Information and Communications Service business,and the posting of personnel expenses for drivers (new costs) in the new business “ProDrivers.” which was launched in the third quarterof the fiscal year ended Dec. 2018. Cost rate rose 1.4 points to 42.6%. As for the Global WiFi business, cost rate declined about 2.9
points, due to the improvement in the procurement conditions through the volume discount, cost reduction and streamlining of operation
through the utilization of Cloud WiFi.
SGA increased due to business expansion and upfront investment, but the ratio of personnel expenses to sales declined about 3.1 points
due to the streamlining of business operation by using AI chatbots and RPA in the Global WiFi business. Accordingly, SGA ratio
decreased 2.0 points to 45.3%.
Quarterly Net Sales and Operating Income
17/12-1Q
2Q
3Q
4Q
Net sales
4,326 4,024 4,827 4,377
Operating
513
336
688
249
Income18/12-1Q
2Q
3Q
4Q
4,922 4,933 5,961 5,686
736

499

900

348

19/12-1Q
2Q
3Q
4Q
6,470 6,467 7,610 6,770
980

710 1,280

354*Unit: ¥mn

2-2 Trends by segment

Global WiFi
Information andCommunications Service
OthersAdjustments
Consolidated Sales
Global WiFi
Information andCommunications Service
OthersAdjustments
Consolidated
Operating Income

FY
Compositio
18/12
n Ratio
13,505
62.8%

FY
19/12
17,732Composition Ratio
64.9%

7,775

36.2%

8,955

32.8%

231

1.1%

637

2.3%

-8
21,5032,413

100.0%
17.9%-7
27,318
3,301

1,218

15.7%

-194
-954
2,484

+31.3%

Revised forecast
at 2Q
16,395Compared withthe forecast+8.2%+15.2%

8,587

+4.3%

YOY

814

-21.7%

100.0%
18.6%+175.8%+27.0%+36.8%-4
25,7932,916+5.9%+13.2%

1,363

15.2%

+11.9%

1,543-11.7%--266-1,073---69-1,126

-

11.6%

3,325

12.2%

+33.8%

3,264

+1.9%

*Unit: ¥mn

Global WiFi business
While the number of travelers from Japan to overseas and the number of foreign visitors to Japan hit a record high, new users increased
thanks to stable repeat users, and the company’s shares in the markets of outbound and inbound travelers expanded. The number of rental
transactions grew and ARPU rose, thanks to the outcomes of measures, including the rise in the rate of selection of Unlimited Plan(released in February 2019) and the increase in shipments of “Global WiFi for Biz,” which is installed in each corporation for regularuse. Continuous efforts for improving profitability bore fruit, as cost efficiency and operation improved.
Eight new counters were established, and 12 units of SmartPickup were installed. They include unstaffed shops as new-style ones, which
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are equipped with SmartPickup, a box for receiving and returning devices, and a vending machine for prepaid SIM cards to be used inJapan (Kitakyushu Airport and Shimojishima Airport). The vending machines for prepaid SIM cards to be used in Japan are strongly
demanded by foreign visitors to Japan and those who return to Japan temporarily. By running unstaffed shops, it is possible to meetneeds 24 hours a day, including the early morning and midnight, as this has been difficult from the viewpoint of staffing, and it is also
possible to accelerate the increase of touch points at low cost while saving space (improvement in convenience and revenue).
As of the end of the term, the company has installed 38 counters, 31 units of SmartPickup, and return boxes in 18 airports in Japan(automatic delivery lockers in 10 airports).
Number of rentals per year
FY 12/12
Overseas use
4
Domestic use0
Overseas business
0
Sum
5

FY 13/12
220
1
24

FY 14/1246
3
1
51

FY 15/12 FY 16/12 FY 17/12 FY 18/12 FY 19/12
64
88
130
175
216
9
19
28
40
59
4
6
6
6
7
78
114
165
223
283

Unit: ten thousand（From the reference material of the company）

Information and Communications Service business
As the number of major clients, including newly established corporations and venture firms, is steadily rising, the company increased
the retention rate of existing clients through CRM and received more orders through up/cross-selling strategies. The company increasedtransactions for its original services, including the cloud-type workflow service, and consultation tailored to each growth stage.
In detail, the number of orders for communications infrastructure lines and shifts to new electric power did not grow well, but theperformance of mobile communication (cellphones), OA devices (all-in-one copiers), etc. was healthy. In addition, the sale of the cloudtype workflow service “VWS” (which contributed to the increase in recurring revenue), which was developed by the company and forwhich users are charged monthly, produced good results. As for profit, the company strived to enhance profitability by raising the averagespending by selling multiple products as sets, reducing the costs for installation of OA devices, etc. and producing websites by promoting
in-house production, but the ratio of products that require procurement costs increased, so profit rate declined.
2-3 Financial Condition and Cash Flow
Financial Condition
December 2018 December 2019
Cash and deposits
7,563
8,485 Trade payables
Trade receivables
1,966
2,218 Income taxes payable
Current assets
10,262
11,792 Provision for bonuses
Property, plant and equipment
1,071
1,200 Current liabilities
Intangible fixed assets
676
666 Noncurrent liabilities
Investments and Other
1,541
1,514 Net assets
Noncurrent assets
3,289
3,381 Total liabilities Equity

December 2018 December 2019
877
1,203
598
634
242
280
3,748
4,222
0
46
9,803
10,905
13,552
15,173*Unit: ¥mn

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Term-end total assets were 15,173 million yen, up 1,621 million yen from the end of the previous term. Cash and deposits account for
55.9% of total assets (55.8% at the end of the previous term), indicating debt-free management. 73.6% (62.6% at the end of the previousterm) of rental assets, which are dominant in tangible fixed assets, have been depreciated. Capital-to-asset ratio is 71.7% (72.2% at theend of the previous term).
Cash Flow
FY 12/18
Operating Cash Flow (A)Investing Cash Flow (B)Free Cash Flow (A+B)
Financing Cash Flow
Balance of cash and cash equivalents at end of period

FY 12/19
2,888-1,457
1,430
-312
7,563

YOY
+661 +22.9%+22+683 +47.8%-852+922 +12.2%

3,549-1,435
2,114-1,164
8,485*Unit: ¥mn

The company secured an operating CF of 3,549 million yen, as pretax profit was 3,199 million yen (2,192 million yen in the previousterm), depreciation was 1,053 million yen (830 million yen in the previous term), increase in accounts receivable was -257 million yen(-496 million yen in the previous term), and so on. Investing CF is attributable to the purchase of property, plant and equipment, including
rental assets, the purchase of intangible assets, etc. while financing CF is due to the acquisition of treasury shares, etc.
Reference: Trend of ROE
FY 12/15
13.94%
4.69%
2.01 times
1.48x

ROE
Net profit margin on sales
Total asset turnover [times]
Leverage [times]

FY 12/16
11.79%
5.48%
1.61 times
1.34x

FY 12/17
15.23%
6.89%
1.64 times
1.35x

FY 12/18
16.67%
7.11%
1.72 times
1.36x

FY 12/19
21.55%
8.15%
1.90 times
1.39x＊ROE(Return on Equity) is obtained by multiplying “net income margin(net income/sales)”, “Total asset turnover(sales/total asset)”, and ”leverage(total
asset/equity capital, or the reciprocal of capital-to-asset ratio)”. ROE ＝ Net income margin × Total asset turnover × Leverage＊The above calculations are based on the data in the summary of Financial statements and the Annual securities report, but the total assets and shareholders'equity required for the calculations are the average of the balance at the end of the previous fiscal year and the balance at the end of the current fiscal year (thecapital adequacy ratios in the Summary of Financial Statements and the Annual Securities Report are calculated based on the balance at the end of the fiscal year,
so the reciprocal of these ratios does not necessarily match the above leverage).

3．Fiscal Year December 2020 Earnings Estimates
3-1

Consolidated Earnings
FY 12/19 (actual)

Sales
Gross Profit
SG&A
Operating income
Ordinary income
Net income

27,31815,69012,365
3,325
3,358
2,226

Ratio to sales

100.0%
57.4%
45.3%
12.2%
12.3%
8.1%

FY 12/20 (forecast)

31,396
18,256
14,253
4,003
4,005
2,674

Ratio to sales

100.0%
58.1%
45.4%
12.8%
12.8%
8.5%

YOY

+14.9%+16.4%+15.3%+20.4%+19.2%+20.1%*Unit: ¥mn

Sales are estimated to rise 14.9% year on year, while operating income is projected to increase 20.4% year on year.
Sales are estimated to be 31,396 million yen, up 14.9% year on year. The sales of the Global WiFi business are projected to increase
18.9% year on year, due to the sales promotion of Global WiFi for Biz and the increase in rate of selection of Unlimited Plan, throughthe improvement in popularity based on promotional activities. The sales of the Information and Communications Service business is
forecasted to increase 2.8% year on year, due to the expansion of the existing business and the promotion of the company’s original
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service SaaS (cloud application service). The new business “Pro Drivers” is expected to grow steadily.
Operating income is estimated to be 4,003 million yen, up 20.4% year on year. The profit rate of the Global WiFi business will decline
due to promotional campaigns and upfront investment, including the improvement of touch points and handover sites/methods, but the
profit rate of the Information and Communications Service business will increase due to the change in sales composition, and “Pro
Drivers” will become profitable, so other losses are estimated to drop significantly.
Trends by segment

Global WiFi
Information and Communications
Service
OthersAdjustments
Consolidated Sales
Global Wifi
Information and Communications
Service
OthersAdjustments
Consolidated Operating Income

FY 12/19(actual)17,732Composition
Ratio
64.9%

FY 12/20(forecast)
21,076Composition
Ratio
67.1%

8,955

32.8%

9,210

29.3%

+2.8%

637
-7
27,3183,301

2.3%
100.0%
18.6%

1,108
0
31,396
3,736

3.5%
100.0%
17.2%+74.0%+14.9%+13.2%

1,363

15.2%

1,497

16.3%

+9.8%

-266
-1,073
3,325

12.2%

-35
-1,194
4,003

12.8%

+20.4%

YOY+18.9%*Unit: ¥mn

3-2 Activities in each business segment
As for the Global WiFi business, the company will promote Global WiFi for Biz and strive to increase the rate of selection of Unlimited
Plan by improving the popularity through promotional campaigns, and enrich services for travelers. In addition, the company will open
shops and operate the FC business according to regional characteristics and markets, and proceed with overseas (global) business bycooperating with other companies in each area (offering lines), etc. The company will make continuous efforts to improve convenienceby improving touch points and handover sites/methods.
As for the Information and Communications Service business, the company will work on the expansion of the existing business(communication lines, OA devices, website production, etc.) and the sales promotion of SaaS (cloud application services). For SaaS, thecompany will actively conduct investment (in-house development, acquisition of companies, and business and capital tie-ups), to enrich
the lineup of its services.
In addition, the company will actively operate services and businesses that exert synergy (including the acquisition of companies andbusiness/capital alliances), and reconsider operations and management systems that are not linked with the increase of orders received(reducing the ratio of SGA).
Global WiFi business
Promotion of use of Cloud WiFi
The rented Wi-Fi routers mounted with the next-generation communications technology (Cloud WiFi) for managing SIM in the cloud
account for a slightly less than 94% of the total number of rented terminals (which is near to the upper limit, because they cannot be usedin some countries according to communications carriers). Cloud WiFi is a differentiation service utilizing SIM based on their own
contract, and users can use communications lines around the world with a single terminal without inserting or replacing a SIM card.
There exists a high hurdle from the aspect of security for connecting a single terminal with carriers in many countries and regions
seamlessly via Cloud WiFi, but the company made it possible to use the terminal in over 100 countries and regions.
On the other hand, Cloud WiFi is beneficial, because it reduces the ratio of costs for communications (improving the efficiency of useof communications lines), saves labor for shipping and operation (reducing SGA), and offers services based on it and new methods(increasing revenue).
In August 2019, the company launched the rental service of the cloud-compatible smartphone-type Wi-Fi router “GW01,” down 59%
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https://www.bridge-salon.jp/

in thickness and down 25% in weight from the previous model, to meet users’ request for improvement in the weight and thickness ofterminals. It keeps the previous models’ function to get connected to over 108 areas automatically, and has an upgraded battery, and canutilize ad distribution and location information. The battery can be used continuously for up to 12 hours. Therefore, users can check thestate of use with a big display without worrying about the remaining battery power.
Effects of utilization of Cloud WiFi
Reduction of rate of cost for Allocation of an appropriate line when usedcommunications
Since the number of rented terminals exceeds the number of terminals in operation, it is possible to(Improvement in efficiency of offer the appropriate number of communications lines and capacities.
use of communications lines)
Labor saving in shipping and Plentiful inventory of terminals not in operation
operation (reduction of SGA) By stocking them at airport counters, etc., it is possible to eliminate out-of-stock cases.
Promotion of Global WiFi for Biz (installed in each office with a monthly charge of 1,970 yen)
By adopting Cloud WiFi, it became possible to offer “Global WiFi for Biz,” which is expected to promote the continuous use bycorporate users (improving convenience and satisfaction level). “Global WiFi for Biz” is installed in each office, so it is unnecessary torent devices for use. In addition, for domestic communications, it is possible to transmit up to 3GB per month free of charge, so users
can use the device for their daily lives. This leads to the adoption of services and new methods, including the incorporation into productsof travel agencies and overseas travels, the enrichment of inventory at airport counters, the expansion of target areas (minimization ofloss of opportunities), and the provision of services to departing customers (increase of cases of use).
Increase in the rate of selection of Unlimited Plan
Recently, data communication volume has been increasing, due to the diversification of smartphone apps, the transmission of heavy
images and videos, the posting in SNS, etc. In addition, an increasing number of users share services with their friends, family members,
and others, so there was strong demand for a plan that can be used without worrying about communication volume. To meet such demand,the company released Unlimited Plan in February 2019, and the service could be used in 73 countries as of the end of October 2019.
Enrichment of services for travelers
To support anxiety-free, safe, comfortable travel, the company will meet users’ requests and enrich its services for travelers, including
optional services. The company has already released limousine services, translation devices (Pocketalk and ili), compact photo printers,
noise cancelling earphones, 360 ° cameras, ultralight folding umbrellas, safety compensation (insurance covering breakdown,
submersion in water, loss, and theft), connecting flights, advertisement (information on travel distances), emergency locational
information check services, etc. In the fiscal year ending Dec. 2020, the company added “GoPro HERO8,” which is the latest model ofthe popular camera GoPro, to the lineup of services for travelers, and started renting out it as an optional service of Global WiFi on Jan.
28, 2020. GoPro is a hit product, but it’s expensive and there are many fans who cannot afford to buy it, so the company will meet theirdemand with affordable rental services.
Establishment of a collection center (Aomi, Tokyo)
The company established a collection center in Aomi, Kōtō-ku, Tokyo, for the purpose of streamlining the backend process (improving
capacity without augmenting personnel costs). With the effects of integration, it became possible to handle a large number of devices
while improving capacity and quality without augmenting overall operation costs. The center uses wire performance checkers, rechargers,
etc. that were developed in house. It can handle over 10,000 devices per day, and recharge 1,080 Wi-Fi routers concurrently as ofDecember 2019.

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Bridge Report (9416) February 21, 2020

https://www.bridge-salon.jp/（From the reference material of the company）

Alice Hirose chosen as a poster girl
The company chose the actress Alice Hirose as a poster girl, in order to improve the image and popularity of “Global WiFi.” From now
on, the company will feature her in TV commercials, special websites, promotional goods, in-store panels, etc.
Information and Communications Service business
While expanding the existing business (lines, OA devices, website production, etc.), the company will promote SaaS (cloud application
service). For SaaS, the company will actively conduct investment (in-house development, acquisition of companies, and business andcapital tie-ups), to enrich the lineup of its services.

SaaS is a business of offering services developed or used in house to users. Since services are offered via the cloud, users can reduce
required costs for installation and running. The company plans to expand the business by utilizing the customer base and sales channels
it has, and grow it as the revenue base in the Information and Communications Service business.

（From the reference material of the company）

Travel-related service platform
Based on the customer base composed of about 4.06 million people staying 31.22 million nights (outbound: about 3.47 million people
staying 24.29 million nights; inbound: about 0.99 million people staying 6.93 million nights in 2019; surveyed by the company), thecompany offers helpful information (media) and services for solving troubles during overseas travel. “ProDrivers”, a pickup/drop-off
service launched in 2019, had a good start, and moved into the black in the fourth quarter of the fiscal year ended December 2019.
“ProDrivers” can be used in units of 2 hours, and users can travel with their luggage. One limousine can be used by up to 9 travelers, so
expense per person can be reduced by going Dutch. This service was started in Tokyo, and the company plans to start it in major cities
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around Japan, while utilizing partnerships. It is currently increasing drivers. The company will first utilize the customer base (including
foreign travelers to Japan) of the Global WiFi business, but it also targets the customers of the Information and Communications Service
business. Needless to say, the company will also make efforts to reel in new customers. Outside Japan, the company will meet needs byoffering “SmartRyde,” a pickup/drop-off service of DLGB Inc. (Chuo-ku, Tokyo; representative: Sota Kimura), with which the company
formed capital and business tie-ups.

4．Conclusions
For the earnings forecast for the fiscal year ending Dec. 2020, the impact of the spread of the novel coronavirus has not been taken into
account, because it is difficult to estimate it as of now. Unless it lingers and spreads to Europe, the U.S., and the entire Asia, its effects
are considered to be limited. We would like to expect that it will wind down soon. The company is enriching services of Cloud WiFi,
Unlimited Plan, etc. and taking measures for meeting special demand by establishing and streamlining the backyard by constructing acollection center. In the fiscal year ending December 2020, the company plans to meet demand by increasing popularity throughenhanced marketing.
We would like to expect from future developments, including the Information and Communication Services business, which entered a
new stage with the SaaS (cloud application service) business, and ProDrivers, which made a good start.

<For reference: Initiatives for ESG・SDGs>
In a desire to contribute to “the future of telecommunication will be for the betterment of everyone’s future,” the company aims toincrease its corporate value and for continuous growth through management and business strategies giving consideration to ESG(“Environment, Social, and Governance.”) Further, it will contribute to the revolution in telecommunications technology and sustainable
development of the society by taking measure to solve major social issues included in the SDGs provided by the United Nations. The
SDGs are global goals intended to be achieved between 2016 and 2030, specified in the “2030 Agenda for Sustainable Development”
adopted in the United Nations Summit held in September 2015.
Environmental

The company has acquired “Green Site License” that offsets carbon emissions via websites and an environmental certification forprevention of global warming by “Green Power” as part of CO2 reduction activities of websites (SDGs 7, 12, 13, and 15).
Additionally, the company carries out information transmission, support activities in affected areas, and cooperates with and provides
support for “Shinsai Regain,” a specified NPO supporting various activities, to achieve “realization of a society where as many people
as possible can survive at the time of earthquake” (SDGs 3 and 11).
SocialPeople with disabilities have different handicaps and situations. The company is establishing an environment where people willing towork can do enjoyable and fulfilling work, and will continue to put efforts to be a company making the best use of employees’ uniquetalents in the future as well (SDGs 3, 8, and 10).
Also, the company is making efforts to ensure an environment where employees can focus on their work by running “Vision Kinds
Nursery,” a company-led nursery and hire human resources with childcare responsibilities and motivation to work, in addition to making
work rules flexible and enhancing the leave system for employees at the time of childbirth or with small children, in order to support
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Bridge Report (9416) February 21, 2020

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their child care and create a working environment with comfort (SDGs 8 and 11).
In addition to the above, the company supports the activities of Japan Heart, which works based on the idea of “delivering medical care
to where it does not reach” to realize a society where everyone can receive medical care equally regardless of their countries, regions,race, politics, religion or circumstances and feel “grateful to have been born,” as one of the corporate members (SDGs 1, 3, 10, and 16).
GovernanceThe company has obtained “ISO/IEC 27001,” the ISMS international standard, and is taking measures for information assets’ correctand safe handling, operation, monitoring, revision, maintenance, and continuous improvement, in order to protect them within theapplicable range from the threats related to information security (SDGs 12 and 16).
Furthermore, the company promotes risk management in business activities and thorough compliance to strengthen governanceconsidering the importance to win continuous trust from the stakeholders, and also appoints 3 out of 6 directors from outside who areenterprise managers, and all 4 auditors too from outside who are accountants or lawyers to ensure transparency and soundness inmanagement (SDGs 10 and 16).

<Reference: Regarding corporate governance>◎ Organization type, and the composition of directors and auditors
Organization type
Directors
AuditorsCompany with an audit and supervisory board
6 directors, including 3 outside one
4 auditors, including 4 outside ones

◎ Corporate Governance Report ： Updated on September 18, 2019
Basic policy
Our corporate group improves ourselves to change clients’ expectations into impression, pursues innovation without hesitation to actualize theideal, always feels grateful about the support of many people (stakeholders), and operates its business activities with a humble mindset. Under
this code of conduct, Vision observes laws, in-company regulations, and policies, carries out business in good faith, and strives to realize optimal
corporate governance.

<Main Reasons for Non-compliance with the Principles of the Corporate Governance Code (Excerpts) >【Principle 4-1-3 Roles and responsibilities of the board of directors (1) (To oversee the planning by a successor to the chief executive officer
and others)】
Under a business environment that will change from time to time, our company will have thorough discussion before appointing top executives.
For instance, in our company the board of directors will designate top executives from candidates who are considered appropriate for the positionin terms of their personality, knowledge, business performance, and other factors, in accordance with our management philosophy and businessstrategies. We will hold discussion on supervision of succession planning.
【Supplementary Principle 4-10-1 Involvement and advice from independent directors on the matters of nomination and remuneration by
establishing a voluntary independent advisory committee.】
Regarding the nomination and appointment of candidates for directors and corporate auditors, we comprehensively take into account theknowledge, experience, capabilities, etc. and decide upon deliberation at the Board of Directors. Remuneration is determined in accordancewith the Board of Directors Regulations established by the Board of Directors including external directors within the framework of the total
remuneration resolved at a shareholders’ meeting. Based on these facts, we believe there is no need to establish a voluntary advisory committee
and the current system is functioning properly.

16Bridge Report (9416) February 21, 2020

https://www.bridge-salon.jp/<Disclosure Based on the Principles of the Corporate Governance Code (Excerpts)>【Principle 1-4 So-called strategically held shares】
The basic policy of Vision is not to hold the shares of other companies strategically, unless it is considered beneficial for improving corporate
value in the medium to long term. If we hold listed shares for cross-shareholding, we will examine all the shares individually at the Board of
Directors every quarter. As for the shares of companies that are no longer expected to contribute to the improvement of our corporate value overthe medium to long term, we will sell the shares taking into consideration stock prices and market trends. Regarding the exercise of voting rights,
we have a policy to decide whether or not to approve for each case, and the decision is made based on its potential contribution to theimprovement of our corporate value over the medium to long term.
Regarding disclosure of the verification results of purposes of cross-shareholding, we do not disclose them because they are linked with ourbusiness strategies and benefits of the company and shareholders may be damaged by the disclosure.
【Principle 5-1 Policy for constructive dialogue with shareholders】
If shareholders or others want to have a dialogue with Vision, the company will respond positively within a reasonable range, to contribute to
the sustainable growth of the company and the medium to long-term improvement in corporate value. As of now, Vision holds a briefing session
attended by the president or a director in charge of IR two or more times per year, meetings with institutional investors, briefing sessions forindividual investors several times a year, and so on. The information on their results is properly shared through meetings of the board of directors,
etc. In addition, Vision takes thoroughgoing measures for preventing the leakage of insider information.

This report is intended solely for information purposes, and is not intended as a solicitation for investment. The information and opinions contained within
this report are made by our company based on data made publicly available, and the information within this report comes from sources that we judge to bereliable. However, we cannot wholly guarantee the accuracy or completeness of the data. This report is not a guarantee of the accuracy, completeness orvalidity of said information and opinions, nor do we bear any responsibility for the same. All rights pertaining to this report belong to Investment Bridge Co.,
Ltd., which may change the contents thereof at any time without prior notice. All investment decisions are the responsibility of the individual and should bemade only after proper consideration.
Copyright(C) 2020 Investment Bridge Co., Ltd. All Rights Reserved.

For back numbers of Bridge Reports on Vison Inc. (9416) and Bridge Salon(IR seminar), please go to our website at the following URL:
http://www.bridge-salon.jp/

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