COMPANY RESEARCH AND ANALYSIS REPORT

FUJI SOFT INCORPORATED
9749
Tokyo Stock Exchange First Section

16-Apr.-2019
FISCO Ltd. Analyst

Yoshihiro Maeda

FISCO Ltd.
http://www.fisco.co.jp

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

FUJI SOFT INCORPORATED
9749 Tokyo Stock Exchange First Section

16-Apr.-2019https://www.fsi.co.jp/e/index.html■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. Company outline and business description. ................................................................................................

01

2. Its core competencies are “technological capabilities + proposal capabilities”. ..........................................

01

3. While strengthening the financial structure, has renewed its record-high sales from their peak before
the economic downturn precipitated by the Lehman Brothers bankruptcy for two consecutive periods....

01

4. Aiming to further improve profitability in the long term, while also focusing on upfront investment andwork-style reforms. . ............................... ......................................................................................................

02■Company overview--------------------------------------------------------------------------------------------------------------------------------------------------- 03■Business overview---------------------------------------------------------------------------------------------------------------------------------------------------- 06
1. Embedded / control software is the biggest earner......................................................................................

07

2. The operations software profitability is recovering. ......................................................................................

08

3. Narrowly defined products and services that seem to be addressing unique challenges ............................

09

4. Outsourcing faces competition with cloud services. ....................................................................................

10

5. The Facility Business has high earnings.. .....................................................................................................

11

6. In the regenerative medicine business, which is included in Other Businesses, has successfullyacquired certification for implanted regenerative cartilage. .........................................................................

12

7. Taking on the challenge in its business strategy of creating new products and businesses for AIS-CRM....

12■Results trends--------------------------------------------------------------------------------------------------------------------------------------------------------------- 13■Outlook-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 17
1. The announced FY12/19 results forecasts are positioned as targets that must be achieved. ......................

17

2. Productivity is improving from the focus on upfront investment and work-style reforms. ............................

17

We encourage readers to review our complete legal statement on “Disclaimer” page.

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

FUJI SOFT INCORPORATED
9749 Tokyo Stock Exchange First Section

16-Apr.-2019https://www.fsi.co.jp/e/index.html██Summary
A major, independent IT solutions vendor established in 1970.
Aiming to further improve profitability in the long term, whileworking to “create new value”
1. Company outline and business description
FUJI SOFT INCORPORATED <9749> (hereafter, also “the Company”) is a major, independent IT solutions vendor
established in May 1970. It has its roots in FUJI SOFTWARE LABORATORY, Ltd., which was established in his home
by Mr. Hiroshi Nozawa, the Company’s current Chairman and Representative Director, and two other employees.
Today, nearly half a century after this establishment, the Group has grown to consist of more than 14,000 employees
in 29 consolidated subsidiaries, 2 equity-method non-consolidated subsidiaries, and 2 equity-method affiliates.
The Company has three reporting segments; the SI (systems integration) Business, the Facility Business, andOther Businesses. In the mainstay SI Business, it provides a diverse solutions menu, centered on the developmentof embedded / control software and operations software. The Facility Business entails rentals of office buildings,
and Other Businesses includes a BPO services business, a contract center business, and a regenerative medicine
business.
2. Its core competencies are “technological capabilities + proposal capabilities”
The Company considers that the reasons why it is chosen by customers are its “high-level technological capabilities and proposal capabilities that continue to evolve every day.” It is highly confident in its core competencies,of “technological capabilities and proposal capabilities,” that it demonstrates in aspects such as its advanced
technological expertise acquired through the development of embedded / control software that requires extremely
high levels of precision, such as for vehicles and semiconductor manufacturing equipment; systems construction
capabilities cultivated through the solutions it has provided to a wide range of industries; and its ability to provide
flexible proposals as an independent solutions provider.
3. While strengthening the financial structure, has renewed its record-high sales from their peak before theeconomic downturn precipitated by the Lehman Brothers bankruptcy for two consecutive periods
Following its establishment, the Company’s sales peaked before the economic downturn precipitated by the Lehman
Brothers bankruptcy (FY3/06), but it set a new record high for sales in FY12/17 and then achieved double-digit sales
growth in FY12/18 as well. So while it actually took more than 10 years to renew its peak sales, the Company canbe highly evaluated on the point that during that time, it not only recovered flow profits, it also worked to strengthen
its financial structure and growth potential.
Specifically, the Company achieved major improvements for the representative financial indicators, including that theequity ratio rose from 47.3% at the end of FY3/06 to 54.6% at the end of FY12/18, and the current ratio increased
from 96.4% to 161.8%. On the other hand, due to the significant increase in the recruitment of new graduatesfrom FY12/15 onwards, the number of employees increased by 1.6 times in the same period, from 9,415 people to14,910 people. Looking at the percentage of certified technicians on a stand-alone basis (the percentage of certified
specialists and certified product managers, based on the Company system, to the total number of employees), it hadrisen from 22.8% at the end of FY12/14 to 29.2% at the end of FY12/18. From this, it can be understood that growthpotential as seen from the aspect of human resources has been enhanced both in terms of quantity and quality.

We encourage readers to review our complete legal statement on “Disclaimer” page.

01 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

FUJI SOFT INCORPORATED
9749 Tokyo Stock Exchange First Section

16-Apr.-2019https://www.fsi.co.jp/e/index.html

Summary

4. Aiming to further improve profitability in the long term, while also focusing on upfront investment andwork-style reforms
The FY12/19 results forecasts announced by the Company in February 2019 are for net sales to increase 3.0%
year-on-year (YoY) to ¥210,500mn, operating income to rise 2.6% to ¥11,700mn, ordinary income to grow 1.1%
to ¥12,200mn, and profit attributable to owners of parent to increase 2.8% to ¥6,700mn. Compared to the results
forecasts announced in February 2018 (net sales: ¥193,000mn, operating income: ¥10,300mn), net sales havebeen upwardly revised by 9.1% and operating income by 13.6%.
The FY12/20 results forecasts have also been upwardly revised with net sales increasing from ¥199,000mn to¥217,000mn (up 3.1% YoY) and operating income from ¥10,600mn to ¥12,000mn (up 2.6%). The revised forecast
simply added the excess from the FY12/18 results, which posted a double-digit increase in both sales and profits.
There is the sense that this might be disappointing considering the operating income margin is expected to remainunchanged (FY12/18 result, 5.6%→FY12/19 forecast, 5.6%→FY12/20 forecast, 5.5%) while being in a phase ofa sales increase.
With regards to these points, the Company considers that 1) the announced results forecasts are the targets thatmust be achieved, and results may exceed them, and 2) it is aware of the issue of profitability, and it is aiming tofurther improve it in the long term. It can be highly evaluated on the point that it is maintaining the gross profit marginand operating income margin even while focusing on upfront investment and work-style reforms, and it has been
improving productivity per employee, so we will look forward to how earnings trend in the future.
Key Points
A major, independent IT solutions vendor established in 1970. Its active investment in human resources andcomplementary M&A strategy are proving successful, and it has exceeded the ¥100bn barrier for net sales. At
the end of FY12/18, it had almost 15,000 consolidated employees.
• Its core competencies are “technological capabilities and proposal capabilities,” as seen in its abundant trackrecord and corporate philosophy. Results stagnated for a period after the economic downturn precipitated by
the Lehman Brothers bankruptcy, but it has strengthened its financial structure and growth potential and isaccelerating “Challenges and Creation” while aiming to be an innovative corporate group.
• The results forecasts announced by the Company are slightly disappointing, but it has positioned them astargets that must be achieved. The fact that it is maintaining the gross profit margin and operating income
margin even while focusing on upfront investment and work-style reforms can be highly evaluated, while it isalso working to improve productivity per employee, so we will look forward to how earnings trend in the future.
•

We encourage readers to review our complete legal statement on “Disclaimer” page.

02 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

FUJI SOFT INCORPORATED
9749 Tokyo Stock Exchange First Section

16-Apr.-2019https://www.fsi.co.jp/e/index.html

Summary㻾㼑㼟㼡㼘㼠㼟㻌㼠㼞㼑㼚㼐㼟㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕㻔¥㼙㼚㻕㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㻔㼞㼕㼓㼔㼠㻕㻝㻝㻘㻠㻜㻜㻌

㻞㻠㻜㻘㻜㻜㻜

㻝㻝㻘㻣㻜㻜㻌

㻔¥㼙㼚㻕㻝㻞㻘㻜㻜㻜

㻥㻘㻣㻜㻤㻌
㻞㻜㻜㻘㻜㻜㻜

㻤㻘㻠㻝㻤㻌

㻝㻜㻘㻜㻜㻜

㻤㻘㻣㻥㻤㻌

㻝㻢㻜㻘㻜㻜㻜

㻤㻘㻜㻜㻜㻝㻞㻜㻘㻜㻜㻜
㻤㻜㻘㻜㻜㻜

㻢㻘㻜㻜㻜㻝㻡㻟㻘㻢㻢㻝

㻝㻤㻜㻘㻣㻣㻟

㻝㻢㻠㻘㻞㻝㻤

㻞㻜㻠㻘㻟㻞㻥

㻞㻝㻜㻘㻡㻜㻜
㻠㻘㻜㻜㻜㻠㻜㻘㻜㻜㻜

㻞㻘㻜㻜㻜

㻜

㻜

㻲㼅㻝㻞㻛㻝㻡

㻲㼅㻝㻞㻛㻝㻢

㻲㼅㻝㻞㻛㻝㻣

㻲㼅㻝㻞㻛㻝㻤

㻲㼅㻝㻞㻛㻝㻥㻌㻱

Source: Prepared by FISCO from the Company’s financial results██Company overview
Based on its corporate motto of “Challenge and Creation,” achieved
net sales in excess of ¥100bn through organic growth and acomplementary M&A strategy, while remaining independent
The Company is a major, independent IT solutions vendor established in May 1970. It has its roots in FUJI
SOFTWARE LABORATORY, Ltd., which was established in his home by Mr. Hiroshi Nozawa, the Company’s
current Chairman and Representative Director, who at that time was a teacher in a computer vocational schooland started a business focusing on the prospects for the computer industry with two other employees who he had
previously been his students. Today, nearly half a century after this establishment, the Group has grown to consistof more than 14,000 employees in 29 consolidated subsidiaries (of which, 4 are listed companies), 2 equity-method
non-consolidated subsidiaries, and 2 equity-method affiliates.
Even while achieving rapid development in terms of size, the Company, in accordance with its basic philosophy of“Being a corporate group that is more useful for society, makes customers more happy, and that is more considerate
to the Earth, and that provides ‘relaxed and worthwhile’ work environments,” has consistently conducted theenlightened management that its founder aimed for to contribute to society through business, and it aims to formulize
the knowledge expressed by its corporate philosophy, such as through the Group’s corporate charter and thesystems to have executives and employees understand it.

We encourage readers to review our complete legal statement on “Disclaimer” page.

03 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

FUJI SOFT INCORPORATED
9749 Tokyo Stock Exchange First Section

16-Apr.-2019https://www.fsi.co.jp/e/index.html

Company overview

The Company has three reporting segments; the SI Business (systems construction and products and services),the Facility Business, and Other Businesses. In the mainstay SI Business, it provides a diverse solutions menu,
centered on the development of embedded / control software and operations software. The Facility Business entails
rentals of office buildings, and Other Businesses includes a data entry business, a contract center business, and aregenerative medicine business. Although the entry into the regenerative medicine business appears at first glance
to be an entry into an unrelated business area, it can be said to be a typical example of business creation basedon its corporate philosophy.

Its complementary M&A strategy is proving successful, making it
one of few independent companies in Japan
Has become a super group with net sales in excess of ¥100bn
At the time it was established, the Company’s business was founded on the dispatch of computer operators.
Subsequently, it entered-into the software development and systems construction businesses and achieved rapid
development supported by the explosive expansion of the computer industry. But what should not be overlooked
as a factor behind this growth is the founder Chairman Nozawa’s conviction that the time of the computer society
had arrived, and while bearing a considerable risk, the Company actively invested in recruiting and training engineersand pursued a complementary M&A strategy to incorporate into itself the technologies and customer bases it did
not have.
Even as the computer society has become a reality and the Japanese IT services market has expanded in scale to be
worth more than ¥5 trillion, the major IT services companies with sales of more than ¥100bn are comprised almost
entirely of manufacturers (such as Fujitsu Ltd. <6702>), user-related companies (such as NTT DATA Corporation<9613>), trading companies (such as SCSK Corporation <9719>), and overseas-related companies (such as IBM
Japan, Ltd.). Including the Company, there are only three so-called independent companies. It has become oneof groups with over ¥100bn in net sales in FY3/02, but on looking at the number of employees to achieve this, of
3,426 people on a stand-alone basis and 6,353 on a consolidated basis, we can see that its business expansion
has been supported by its active recruitment of human resources and training of engineers since its establishment.
Also, in 1996, it merged with ABC Co., Ltd., which has strengths in finance-related operations systems, and subsequently also, it made consolidated subsidiaries of Cybernet Systems Co., Ltd., which has its origins in an overseas
company in 1999, and Vinculum Japan Corp. (currently VINX Co., Ltd.), whose main business is distribution-related
business systems, in 2002. In such ways, the Company has advanced an M&A strategy to incorporate into itself
the technologies and customer bases to supplement its strengths in embedded /control software development. It isconsidered that it would not have been able to exceed net sales of ¥100bn solely from riding the favorable externalwave, but that its bold decision making has also been vital to achieving this.

We encourage readers to review our complete legal statement on “Disclaimer” page.

04 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

FUJI SOFT INCORPORATED
9749 Tokyo Stock Exchange First Section

16-Apr.-2019https://www.fsi.co.jp/e/index.html

Company overview

Since its establishment in May 1970, the Company’s size has expanded dramatically

Source: From the Company’s 2018 FACT BOOK

With “technological capabilities and proposal capabilities” as
its core competencies, the Company is aiming to be a CSV-styleinnovative corporate group
The Company considers that the reasons why it is chosen by customers are its “high-level technological capabilities
and proposal capabilities that continue to evolve every day.” It is highly confident in its core competencies, of “technological capabilities and proposal capabilities,” that it demonstrates in aspects such as its advanced technologicalexpertise acquire through the development of embedded / control software that requires extremely high levels of
precision, including for vehicles and semiconductor manufacturing equipment; its systems construction capabilities
cultivated through the solutions it has provided to a wide range of industries; its ability to provide flexible proposals
as an independent solutions provider; and its construction of a network of bases close to customers (40 bases inJapan + a global network). Also, the Company believes that its important mission is for its various business activities
to lead to the development of society, alongside sustainable growth and the creation of corporate value in themedium to long term. As its medium-term policy, it is aiming to be “an innovative corporate group that connects thedevelopment of ICT to the improvement of value for customers.”
What can be read from the messages disseminated by the Company would seem to be “its conviction in the effectiveness and potential of utilizing ICT and its sense of mission to progress this,” and having a “customer-oriented andCSV-type (a company that increases enterprise value through social contributions via its businesses) management
policy.” Of course, corporate activities will have CSV-type aspects to a greater or lesser extent, even if the company
itself is unaware of this. But in the Company’s case, the fact that the founder’s strong intentions, based on thecorporate motto of “Challenge and Creation,” have been incorporated into its corporate culture, is worthy of note.

We encourage readers to review our complete legal statement on “Disclaimer” page.

05 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

FUJI SOFT INCORPORATED
9749 Tokyo Stock Exchange First Section

16-Apr.-2019https://www.fsi.co.jp/e/index.html

Company overview

One of the Company’s unique initiatives as a CSV-type company is the All Japan Robot-Sumo Tournament, which
it has held continuously since 1990 and which has grown to become Japan’s largest robot competition. It started
with the aim of providing a place to experience the enjoyment of building things and to improve technologies
through building robots. But it is currently recognized to be an excellent example of support for developing humanresources through manufacturing; for example, since a section for high school students established in 1993, theNational Association of Principals of Technical Senior High Schools has joined the operation, and the organizations
including the Ministry of Education, Culture, Sports, Science and Technology, and METI are also known as thesponsors as well.
Business structural diagram

Source: From the Company’s securities report██Business overview
The mainstay SI Business provides a varied solutions menu
The Company has three reporting segments; the SI Business, the Facility Business, and the Other Businesses. The
mainstay SI Business is broadly divided into systems construction, and products and services. Further, systems
construction is subdivided into embedded / control software and operations software, while products and services
are subdivided into narrowly defined products and services, and outsourcing. Also, the Facility Business entails
rentals of office building, while Other Businesses includes a data entry business, a contract center business, and aregenerative medicine business.

We encourage readers to review our complete legal statement on “Disclaimer” page.

06 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

FUJI SOFT INCORPORATED
9749 Tokyo Stock Exchange First Section

16-Apr.-2019https://www.fsi.co.jp/e/index.html

Business overview

Segment breakdown

Source: From the Company’s results briefing material㼀㼞㼑㼚㼐㼟㻌㼕㼚㻌㼜㼑㼞㼏㼑㼚㼠㼍㼓㼑㼟㻌㼛㼒㻌㼠㼛㼠㼍㼘㻌㼚㼑㼠㻌㼟㼍㼘㼑㼟㻌㼎㼥㻌㼟㼑㼓㼙㼑㼚㼠㻱㼙㼎㼑㼐㼐㼑㼐㻌㻛㻌㼏㼛㼚㼠㼞㼛㼘㻌㼟㼛㼒㼠㼣㼍㼞㼑㻼㼞㼛㼐㼡㼏㼠㼟㻌㼍㼚㼐㻌㼟㼑㼞㼢㼕㼏㼑㼟㻲㼍㼏㼕㼘㼕㼠㼥㻌㻮㼡㼟㼕㼚㼑㼟㼟
㻝㻜㻜㻑
㻥㻜㻑

㻻㼜㼑㼞㼍㼠㼕㼛㼚㼟㻌㼟㼛㼒㼠㼣㼍㼞㼑㻻㼡㼠㼟㼛㼡㼞㼏㼕㼚㼓㻻㼠㼔㼑㼞㻌㻮㼡㼟㼕㼚㼑㼟㼟㼑㼟
㻝㻚㻢㻑
㻝㻜㻚㻝㻑

㻡㻚㻥㻑
㻝㻚㻡㻑
㻤㻚㻟㻑

㻡㻚㻥㻑

㻝㻚㻡㻑
㻝㻟㻚㻜㻑

㻡㻚㻡㻑
㻝㻚㻢㻑
㻝㻝㻚㻞㻑

㻞㻠㻚㻤㻑

㻞㻣㻚㻝㻑

㻞㻢㻚㻢㻑

㻞㻣㻚㻤㻑

㻞㻤㻚㻝㻑

㻞㻤㻚㻤㻑

㻞㻤㻚㻟㻑

㻞㻣㻚㻠㻑

㻞㻤㻚㻜㻑

㻞㻢㻚㻟㻑

㻞㻢㻚㻥㻑

㻞㻣㻚㻟㻑

㻞㻢㻚㻢㻑

㻞㻡㻚㻡㻑

㻞㻣㻚㻞㻑

㻞㻤㻚㻤㻑

㻞㻥㻚㻠㻑

㻞㻥㻚㻞㻑

㻔㻶㼍㼚㻚㻙㻰㼑㼏㻚㻌㻞㻜㻝㻟㻕㻲㼅㻝㻞㻛㻝㻠

㻲㼅㻝㻞㻛㻝㻡

㻲㼅㻝㻞㻛㻝㻢

㻲㼅㻝㻞㻛㻝㻣

㻲㼅㻝㻞㻛㻝㻤

㻡㻚㻜㻑
㻝㻚㻠㻑
㻝㻟㻚㻥㻑

㻡㻚㻡㻑

㻡㻚㻟㻑

㻝㻚㻠㻑
㻣㻚㻠㻑

㻤㻜㻑
㻣㻜㻑
㻢㻜㻑
㻡㻜㻑
㻠㻜㻑
㻟㻜㻑
㻞㻜㻑
㻝㻜㻑
㻜㻑

Source: Prepared by FISCO from the Company’s results briefing material

1. Embedded / control software is the biggest earner
Embedded / control software, which belongs to the systems construction category in the SI Business, accounts
for 29.2% of Company-wide sales (FY12/18) and 37.2% of operating income, and its segment profit margin is also
the highest within the SI Business.

We encourage readers to review our complete legal statement on “Disclaimer” page.

07 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

FUJI SOFT INCORPORATED
9749 Tokyo Stock Exchange First Section

16-Apr.-2019https://www.fsi.co.jp/e/index.html

Business overview

Embedded / control software is software that runs on a microcomputer or other device, embedded into the device
to provide specific functions. The Company's technologies are used in a variety of products and devices, including
vehicles and mobile phones, home appliances such as TVs and air conditioners, office automation (OA) equipment
including printers, robots and semiconductor manufacturing device production equipment, infrastructure equipment
such as traffic lights, and medical equipment like CT and MRI.
The Company has accumulated top-class results in Japan in this area, and it has strengths in FA and other machine
control systems and automotive-related. If limited to vehicles installations, in practical terms it delivers products toevery vehicle manufactured in Japan, and it has the top share of the domestic market.
The developments in the productivity revolution through CASE (Connected, Autonomous, Shared / Service, Electric),
AI and robots in the automotive industry is presently proving to be advantageous for the Company, and at the endof FY12/18, its orders backlog had increased 11.6% on the end of the previous fiscal year.

㼀㼞㼑㼚㼐㼟㻌㼕㼚㻌㼑㼙㼎㼑㼐㼐㼑㼐㻌㻛㻌㼏㼛㼚㼠㼞㼛㼘㻌㼟㼛㼒㼠㼣㼍㼞㼑㻌㼚㼑㼠㻌㼟㼍㼘㼑㼟㻌㼍㼚㼐㻌㼛㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㼙㼍㼞㼓㼕㼚㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕㻔¥㼙㼚㻕㻤㻜㻘㻜㻜㻜

㻣㻜㻘㻜㻜㻜

㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㼙㼍㼞㼓㼕㼚㻌㻔㼞㼕㼓㼔㼠㻕

㻣㻚㻝

㻣㻚㻝

㻢㻚㻟

（㻑）
㻤㻚㻜

㻣㻚㻜

㻢㻚㻝

㻢㻜㻘㻜㻜㻜

㻢㻚㻜㻡㻜㻘㻜㻜㻜

㻡㻚㻜㻠㻜㻘㻜㻜㻜

㻠㻚㻜㻟㻜㻘㻜㻜㻜
㻞㻜㻘㻜㻜㻜

㻠㻝㻘㻤㻜㻢

㻡㻟㻘㻜㻢㻡

㻠㻣㻘㻟㻞㻥

㻡㻥㻘㻢㻞㻞

㻟㻚㻜㻞㻚㻜㻝㻜㻘㻜㻜㻜㻝㻚㻜㻜㻜㻚㻜㻲㼅㻝㻞㻛㻝㻡

㻲㼅㻝㻞㻛㻝㻢

㻲㼅㻝㻞㻛㻝㻣

㻲㼅㻝㻞㻛㻝㻤

Source: Prepared by FISCO from the Company’s results briefing material

2. The operations software profitability is recovering
Operations software, which is in the systems construction category in the SI Business, is a major pillar of earnings,
contributing 27.3% of Company-wide net sales (FY12/18) and 23.9% of operating income. In FY12/16, sales
stopped growing, but after that, the growth rate has exceeded that of the overall Company-wide results for two
consecutive years, while the segment profit margin is also recovering. Moreover, the order backlog is steadily
increasing, and at the end of FY12/18 it had risen 16.0% on the end of the previous fiscal year.
In this area, in addition to organic business growth, the complementary M&A strategy is proving successful, andthe Company has established a system that is able to provide a one-stop service, from consulting through todevelopment, systems construction, and support, for various solutions, such as for backbone systems like store
and ordering systems and production, sales, inventory, and accounting systems, and also information systems andonline services. It provides these solutions to a wide range of industries, including distribution, financial, services,manufacturing, online businesses, social infrastructure, education, medicine, and public institutions.

We encourage readers to review our complete legal statement on “Disclaimer” page.

08 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

FUJI SOFT INCORPORATED
9749 Tokyo Stock Exchange First Section

16-Apr.-2019https://www.fsi.co.jp/e/index.html

Business overview

In the operations software area, which is positioned as the main battlefield in the domestic IT services market,
there have been structural changes in the market that could prove to be disadvantageous to the existing players,
including 1) the shift from on-premises (operating IT systems, such as servers, through equipment installed within acompany) to the use of cloud services, and 2), the evolution from “defensive IT (mainly to improve work efficiency)
to offensive IT (mainly to create businesses).” Within this situation, the Company, based on a spirit of seeing“changes as opportunities,” has clearly set-out and is implementing an approach of strengthening the developmentof outsourcing through actively investing in human resources. Further, it makes management decisions in accordancewith the Company motto, of “Challenge and Creation,” and we will be paying attention to developments in the future.

㼀㼞㼑㼚㼐㼟㻌㼕㼚㻌㼛㼜㼑㼞㼍㼠㼕㼛㼚㼟㻌㼟㼛㼒㼠㼣㼍㼞㼑㻌㼚㼑㼠㻌㼟㼍㼘㼑㼟㻌㼍㼚㼐㻌㼛㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㼙㼍㼞㼓㼕㼚㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕㻔¥㼙㼚㻕㻢㻜㻘㻜㻜㻜

㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㼙㼍㼞㼓㼕㼚㻌㻔㼞㼕㼓㼔㼠㻕
（㻑）
㻢㻚㻜

㻡㻚㻤
㻠㻚㻥

㻡㻜㻘㻜㻜㻜

㻡㻚㻜

㻠㻚㻡
㻠㻚㻝

㻠㻜㻘㻜㻜㻜

㻠㻚㻜㻟㻜㻘㻜㻜㻜
㻞㻜㻘㻜㻜㻜

㻡㻡㻘㻣㻞㻥
㻠㻞㻘㻥㻢㻥

㻟㻚㻜㻠㻤㻘㻡㻡㻞

㻠㻟㻘㻞㻟㻣

㻞㻚㻜㻝㻜㻘㻜㻜㻜

㻝㻚㻜

㻜

㻜㻚㻜

㻲㼅㻝㻞㻛㻝㻡

㻲㼅㻝㻞㻛㻝㻢

㻲㼅㻝㻞㻛㻝㻣

㻲㼅㻝㻞㻛㻝㻤

Source: Prepared by FISCO from the Company’s results briefing material

3. Narrowly defined products and services that seem to be addressing unique challenges
In the SI Business, products and services are subdivided into narrowly defined products and services, and outsourcing. Narrowly defined products and services provide 28.8% of total net sales (FY12/18) and 14.9% of operating
income.
While the percentage of total net sales has risen in each of the last three years, the overall segment profit margin was
below the Company-wide level. The reason for this is that the majority of the segment’s net sales are from productsales and related, whose product margins are low on a Company-wide basis. Practically all of the remainder of sales
are equally from Company products and the license business. Sales increased and profits decreased in FY12/18,
but the reason for the major fall in the segment profit margin was the significant increase in upfront investment tostrengthen product quality, so it would not seem to be a cause for excessive concern. Also, at the end of FY12/18,
the orders backlog had risen 11.1% on the end of the previous fiscal year.

We encourage readers to review our complete legal statement on “Disclaimer” page.

09 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

FUJI SOFT INCORPORATED
9749 Tokyo Stock Exchange First Section

16-Apr.-2019https://www.fsi.co.jp/e/index.html

Business overview

Narrowly defined products and services are comprised of 1) the Company’s own products (including moreNOTE, apaperless system; Mirai School Station, a comprehensive education solution for the information society; smartBYOD,
a tool for utilizing employees’ personal smartphones and other devices for a company’s operations; and PALRO,
a communication robot), 2) the license business (Microsoft products, AWS, VMware, etc.), 3) product sales, etc.
(PCs, servers, etc.) Looking at the YoY increases in sales in FY12/17 and FY12/18, sales of the Company’s own
products increased from up 4% to up 7%, license business sales fell from up 29% to up 26%, and product sales,
etc., grew from up 8% to up 17%, so the strong performance of the license business stands out. Sales related tosupport for introducing licensed products is recorded in the Company’s own products, and it seems to be securing
a high profit margin.
One of the Company’s strengths is that, as an independent SIer, it is able to construct systems flexibly without
being tied to specific hardware, but launching proprietary products, including hardware such as the communication
robot PALRO, seems to pose unique challenges. The strategy of working to create new added value through theCompany’s own products that are infused with its core competencies, of “technological capabilities and proposal
capabilities,” acts in accordance with its corporate moto, of “Challenge and Creation.” But we shall be paying close
attention to the high profitability the Company is seeking for after the upfront investment phase.

㼀㼞㼑㼚㼐㼟㻌㼕㼚㻌㼚㼍㼞㼞㼛㼣㼘㼥㻌㼐㼑㼒㼕㼚㼑㼐㻌㼜㼞㼛㼐㼡㼏㼠㼟㻌㼍㼚㼐㻌㼟㼑㼞㼢㼕㼏㼑㼟㻌㼚㼑㼠㻌㼟㼍㼘㼑㼟㻌㼍㼚㼐㻌㼛㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㼙㼍㼞㼓㼕㼚㻔¥㼙㼚㻕㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㼙㼍㼞㼓㼕㼚㻌㻔㼞㼕㼓㼔㼠㻕

（㻑）

㻟㻚㻤

㻠㻚㻜

㻤㻜㻘㻜㻜㻜
㻟㻚㻜㻢㻜㻘㻜㻜㻜

㻞㻚㻥㻞㻚㻣㻠㻜㻘㻜㻜㻜

㻟㻚㻜㻞㻚㻜㻡㻤㻘㻤㻤㻟

㻞㻜㻘㻜㻜㻜

㻠㻜㻘㻤㻝㻡

㻡㻜㻘㻣㻝㻢

㻠㻡㻘㻢㻥㻞㻝㻚㻜㻜㻜㻚㻜㻲㼅㻝㻞㻛㻝㻡

㻲㼅㻝㻞㻛㻝㻢

㻲㼅㻝㻞㻛㻝㻣

㻲㼅㻝㻞㻛㻝㻤

Source: Prepared by FISCO from the Company’s results briefing material

4. Outsourcing faces competition with cloud services
Outsourcing provides various services, such as data centers and systems operations and maintenance, and it
provides 7.4% of total net sales (FY12/18) and 9.0% of operating income. The reasons why the segment operating
profit margin rose 6.8% in FY12/18 include that data center repair costs, which had increased in FY12/17 decreased
in FY12/18. The declining trend in sales in recent years is mainly due to the decrease in continuous projects
for distribution and services, and at the end of FY12/18, the orders backlog had also fallen 14.5% YoY. This isconsidered to be due to the intensification of competition with other companies’ cloud services, and the situation
going forward can be said to be difficult to predict.

We encourage readers to review our complete legal statement on “Disclaimer” page.

10 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

FUJI SOFT INCORPORATED
9749 Tokyo Stock Exchange First Section

16-Apr.-2019https://www.fsi.co.jp/e/index.html

Business overview

㼀㼞㼑㼚㼐㼟㻌㼕㼚㻌㼛㼡㼠㼟㼛㼡㼞㼏㼕㼚㼓㻌㼚㼑㼠㻌㼟㼍㼘㼑㼟㻌㼍㼚㼐㻌㼛㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㼙㼍㼞㼓㼕㼚㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕㻔¥㼙㼚㻕㻞㻝㻘㻜㻜㻜

㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㼙㼍㼞㼓㼕㼚㻌㻔㼞㼕㼓㼔㼠㻕
㻢㻚㻤

㻢㻚㻟

㻢㻚㻜

㻝㻤㻘㻜㻜㻜

㻢㻚㻜㻠㻚㻢㻝㻡㻘㻜㻜㻜

㻡㻚㻜㻝㻞㻘㻜㻜㻜
㻥㻘㻜㻜㻜

（㻑）
㻣㻚㻜

㻠㻚㻜

㻝㻣㻘㻝㻥㻝

㻟㻚㻜㻝㻢㻘㻡㻢㻡

㻝㻡㻘㻜㻠㻟

㻝㻡㻘㻜㻠㻝

㻢㻘㻜㻜㻜

㻞㻚㻜

㻟㻘㻜㻜㻜

㻝㻚㻜

㻜

㻜㻚㻜
㻲㼅㻝㻞㻛㻝㻡

㻲㼅㻝㻞㻛㻝㻢

㻲㼅㻝㻞㻛㻝㻣

㻲㼅㻝㻞㻛㻝㻤

Source: Prepared by FISCO from the Company’s results briefing material

5. The Facility Business has high earnings
The Facility Business, which obtains rental income from the office buildings the Company owns, provides 1.4% of
total net sales (FY12/18) and 9.9% of operating income. The segment profit margin is high, at 38.9%, and it stably
supports the Company’s profit level.
According to the Company’s securities report, there are four properties; the Yokohama Head Office (land-acquisition
year: 2000, land and property book value: ¥11,399mn), the Akihabara Office (2005, ¥32,635mn), the Kinshicho
Office (2000, ¥6,065mn) and the Monzen Nakacho Office (2003, ¥1,760mn).

㼀㼞㼑㼚㼐㼟㻌㼕㼚㻌㼠㼔㼑㻌㻲㼍㼏㼕㼘㼕㼠㼥㻌㻮㼡㼟㼕㼚㼑㼟㼟㻌㼚㼑㼠㻌㼟㼍㼘㼑㼟㻌㼍㼚㼐㻌㼛㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㼙㼍㼞㼓㼕㼚㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㼙㼍㼞㼓㼕㼚㻌㻔㼞㼕㼓㼔㼠㻕
（㻑）

㻔¥㼙㼚㻕
㻟㻘㻡㻜㻜

㻠㻝㻚㻞
㻟㻢㻚㻢

㻟㻣㻚㻥

㻠㻡㻚㻜
㻟㻤㻚㻥

㻞㻘㻤㻜㻜

㻟㻢㻚㻜

㻞㻘㻝㻜㻜

㻞㻣㻚㻜

㻝㻘㻠㻜㻜

㻞㻘㻠㻣㻤

㻞㻘㻣㻜㻤

㻞㻘㻢㻥㻢

㻞㻘㻥㻜㻥

㻣㻜㻜

㻥㻚㻜

㻜

㻜㻚㻜

㻲㼅㻝㻞㻛㻝㻡

㻲㼅㻝㻞㻛㻝㻢

㻲㼅㻝㻞㻛㻝㻣

㻲㼅㻝㻞㻛㻝㻤

Source: Prepared by FISCO from the Company’s results briefing material



㻝㻤㻚㻜



We encourage readers to review our complete legal statement on “Disclaimer” page.

11 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

FUJI SOFT INCORPORATED
9749 Tokyo Stock Exchange First Section

16-Apr.-2019https://www.fsi.co.jp/e/index.html

Business overview

6. In the regenerative medicine business, which is included in Other Businesses, has successfully acquired
certification for implanted regenerative cartilage
Other Businesses provides 5.9% of total net sales (FY12/18) and 5.0% of operating income. The main reasons forthe higher sales and profits are the strong performances of the BPO (business process outsourcing) business andcontract center business.
The regenerative medicine business began the "the cartilage and bone regenerative medicine donation course"
at the University of Tokyo Hospital in November 2005, and in 2007, it was commissioned by the Japan Scienceand Technology Agency (since April 2015, it has been commissioned by the Japan Agency for Medical Researchand Development). At first glance, the entry into this business would appear to be unconnected to the rest of thebusinesses, but it is also a “Challenge and Creation” business that focuses on the effectiveness of utilizing ICT in
the medical field.
The Company received a technology transfer from the University of Tokyo and succeeded in researching anddeveloping the world's first “implant-type regenerated cartilage” using autologous cells. In 2015, it conductedcompany trials to evaluate its efficacy and safety for patients with cleft lips and palates toward improving appearance
and functions. Then in September 2018, it acquired a certificate of success for implant-type regenerative cartilage
and realized a production and sales business in 2019, and it is aiming to achieve sales of ¥4bn in 5 years’ time.

㼀㼞㼑㼚㼐㼟㻌㼕㼚㻌㼠㼔㼑㻌㻻㼠㼔㼑㼞㻌㻮㼡㼟㼕㼚㼑㼟㼟㼑㼟㻌㼚㼑㼠㻌㼟㼍㼘㼑㼟㻌㼍㼚㼐㻌㼛㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㼙㼍㼞㼓㼕㼚㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕㻔¥㼙㼚㻕㻝㻤㻘㻜㻜㻜

㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㼙㼍㼞㼓㼕㼚㻌㻔㼞㼕㼓㼔㼠㻕

（㻑）
㻢㻚㻜

㻡㻚㻝
㻠㻚㻣

㻝㻡㻘㻜㻜㻜
㻝㻞㻘㻜㻜㻜
㻥㻘㻜㻜㻜

㻡㻚㻜
㻠㻚㻜

㻞㻚㻣

㻞㻚㻥
㻟㻚㻜

㻢㻘㻜㻜㻜

㻝㻜㻘㻢㻥㻥
㻤㻘㻠㻜㻜㻝㻞㻘㻝㻠㻞

㻞㻚㻜

㻤㻘㻢㻤㻠

㻟㻘㻜㻜㻜

㻝㻚㻜

㻜

㻜㻚㻜
㻲㼅㻝㻞㻛㻝㻡

㻲㼅㻝㻞㻛㻝㻢

㻲㼅㻝㻞㻛㻝㻣

㻲㼅㻝㻞㻛㻝㻤

Source: Prepared by FISCO from the Company’s results briefing material

7. Taking on the challenge in its business strategy of creating new products and businesses for AIS-CRM
The Company has set AIS-CRM (A: AI / I: IoT / S: Security / C: Cloud / R: Robot / M: Mobile & AutoMotive) to be a
key technological area, and it is working to improve added value in this area. At first glance, it seems to be just a listof currently popular words, but the superordinate concept for AIS-CRM includes the Company’s core competencies,
so we can expect it to produce the seeds of new products and businesses.

We encourage readers to review our complete legal statement on “Disclaimer” page.

12 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

FUJI SOFT INCORPORATED
9749 Tokyo Stock Exchange First Section

16-Apr.-2019https://www.fsi.co.jp/e/index.html

Business overview

Summary of AIS-CRM

Source: From the 2018 CSR Report██Results trends
After strengthening the financial structure, the Company has
resumed to offensive management
In FY12/17, net sales were ¥180,773mn, which was the first new record high for net sales in 11 years since theirpeak before the economic downturn precipitated by the Lehman Brothers bankruptcy (FY3/06, ¥179,505mn).
Sales and profit increased by double digits in the FY12/18 results, with net sales rising 13.0% YoY to ¥204,329mn
and operating income growing 17.4% to ¥11,400mn, and the Company has in its sights the previous record highoperating income (FY3/06, ¥12,078mn). So while it took more than 10 years to renew the peak net sales, theCompany can be highly evaluated on the point that during this time it not only recovered flow profits, it also worked
to strengthen the financial structure and the growth potential.
First, looking at the trends in the representative indicators showing the stability of the financial structure, the equity
ratio rose trended from 47.3% at the end of FY3/06, 60.3% at the end of FY12/15, and 54.6% at the end of FY12/18,
the current ratio trended from 96.4%, 199.7%, and 161.8%, respectively, and net interest bearing debt (interest
bearing debt – cash and cash equivalents) trended from ¥21,285mn, ¥-479mn (excess cash), and ¥4,938mn,
respectively, so every indicator has been greatly improving.
Also, due to the large-scale recruitment since FY12/15, the number of employees has increased by 1.6 times, from9,415 people the end of FY3/06 to 14,910 people the end of FY12/18. On the other hand, looking at the percentage
of certified technicians on a stand-alone basis (the percentage of certified specialists and certified product managers,
based on the Company system, to the total number of employees), it had risen from 22.8% at the end of FY12/14
to 29.2% the end of FY12/18. So the Company has realized both large-scale recruitment and the early training anddevelopment of new and young human resources.

We encourage readers to review our complete legal statement on “Disclaimer” page.

13 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

FUJI SOFT INCORPORATED
9749 Tokyo Stock Exchange First Section

16-Apr.-2019https://www.fsi.co.jp/e/index.html

Results trends

In addition, the capital investment amount increased from ¥3,028mn in F12/14 to ¥22,608mn in FY12/18, while
R&D expenses also rose from ¥712mn to ¥945mn. So the Company has been expanding upfront investment,
which together with its investment in human resources, indicates its intention to strengthen growth potential toward“Challenge and Creation.”
Looking here at the relationship between the financial indicators and the management strategy, in FY12/15, which iswhen the Company embarked on the large-scale recruitment and increased upfront investment, the equity ratio wasaround the 60% level, the current ratio had improved to nearly 200%, and net interest bearing debt had been reduced
to a level of excess cash. This indicates that FY12/15 was when the Company realized a string financial structure.
It can be said that the Company’s strengths include its ability to make and implement management decisions quickly
through strong leadership, including that of its founder. It did not hesitate to change to “offensive management(actively conducting upfront investment)” precisely because it had progressed “defensive management (strengthening
the financial structure)” during a phase of slumping results. So the Company can be highly evaluated for taking
dispassionate management decisions that accurately reflect the changes to its business environment.

㼀㼞㼑㼚㼐㼟㻌㼕㼚㻌㼠㼔㼑㻌㼒㼕㼚㼍㼚㼏㼕㼍㼘㻌㼕㼚㼐㼕㼏㼍㼠㼛㼞㼟㻌㼛㼒㻌㼟㼠㼍㼎㼕㼘㼕㼠㼥（㻑）㻯㼡㼞㼞㼑㼚㼠㻌㼞㼍㼠㼕㼛㻌㻔㼘㼑㼒㼠㻕（㻑）㻱㼝㼡㼕㼠㼥㻌㼞㼍㼠㼕㼛㻌㻔㼞㼕㼓㼔㼠㻕

㻞㻞㻜㻚㻜

㻢㻡㻚㻜

㻞㻜㻜㻚㻜

㻡㻠㻚㻢㻞

㻝㻤㻜㻚㻜

㻢㻜㻚㻜
㻡㻡㻚㻜

㻝㻢㻜㻚㻜 㻠㻣㻚㻞㻢

㻡㻜㻚㻜
㻝㻢㻝㻚㻤

㻝㻠㻜㻚㻜

㻠㻡㻚㻜

㻝㻞㻜㻚㻜

㻠㻜㻚㻜

㻝㻜㻜㻚㻜

㻥㻢㻚㻠

㻟㻡㻚㻜

㻤㻜㻚㻜

㻟㻜㻚㻜

㻢㻜㻚㻜

㻞㻡㻚㻜

Source: Prepared by FISCO from the Company’s securities report and financial results

We encourage readers to review our complete legal statement on “Disclaimer” page.

14 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

FUJI SOFT INCORPORATED
9749 Tokyo Stock Exchange First Section

16-Apr.-2019https://www.fsi.co.jp/e/index.html

Results trends㼀㼞㼑㼚㼐㼟㻌㼕㼚㻌㼚㼑㼠㻌㼕㼚㼠㼑㼞㼑㼟㼠㻙㼎㼑㼍㼞㼕㼚㼓㻌㼐㼑㼎㼠㻌㼍㼚㼐㻌㼠㼔㼑㻌㼚㼡㼙㼎㼑㼞㻌㼛㼒㻌㼏㼛㼚㼟㼛㼘㼕㼐㼍㼠㼑㼐㻌㼑㼙㼜㼘㼛㼥㼑㼑㼟㻔¥㼙㼚㻕㻡㻜㻘㻜㻜㻜

㻺㼑㼠㻌㼕㼚㼠㼑㼞㼑㼟㼠㻙㼎㼑㼍㼞㼕㼚㼓㻌㼐㼑㼎㼠㻌㻔㼘㼑㼒㼠㻕㻺㼡㼙㼎㼑㼞㻌㼛㼒㻌㼏㼛㼚㼟㼛㼘㼕㼐㼍㼠㼑㼐㻌㼑㼙㼜㼘㼛㼥㼑㼑㼟㻌㻔㼞㼕㼓㼔㼠㻕㻔㻺㼡㼙㼎㼑㼞㻌㼛㼒㻌㼑㼙㼜㼘㼛㼥㼑㼑㼟㻕㻝㻢㻘㻜㻜㻜
㻝㻠㻘㻜㻜㻜

㻠㻜㻘㻜㻜㻜

㻝㻞㻘㻜㻜㻜

㻟㻜㻘㻜㻜㻜

㻝㻜㻘㻜㻜㻜

㻞㻜㻘㻜㻜㻜

㻤㻘㻜㻜㻜㻝㻜㻘㻜㻜㻜

㻢㻘㻜㻜㻜

㻜

㻠㻘㻜㻜㻜

㻙㻝㻜㻘㻜㻜㻜

㻞㻘㻜㻜㻜㻙㻞㻜㻘㻜㻜㻜

㻜

Source: Prepared by FISCO from the Company’s securities report and results briefing material㼀㼞㼑㼚㼐㼟㻌㼕㼚㻌㻾㻒㻰㻌㼑㼤㼜㼑㼚㼟㼑㼟㻌㼍㼚㼐㻌㼏㼍㼜㼕㼠㼍㼘㻌㼕㼚㼢㼑㼟㼠㼙㼑㼚㼠㻔¥㼙㼚㻕㻞㻡㻘㻜㻜㻜

㻯㼍㼜㼕㼠㼍㼘㻌㼕㼚㼢㼑㼟㼠㼙㼑㼚㼠㻌㻔㼘㼑㼒㼠㻕㻾㻒㻰㻌㼑㼤㼜㼑㼚㼟㼑㼟㻌㻔㼞㼕㼓㼔㼠㻕

㻔¥㼙㼚㻕
㻞㻘㻡㻜㻜

㻞㻜㻘㻜㻜㻜

㻞㻘㻜㻜㻜㻝㻡㻘㻜㻜㻜

㻝㻘㻡㻜㻜㻝㻜㻘㻜㻜㻜

㻝㻘㻜㻜㻜

㻡㻘㻜㻜㻜

㻡㻜㻜

㻜

㻜

Source: Prepared by FISCO from the Company’s securities report and results briefing material

We encourage readers to review our complete legal statement on “Disclaimer” page.

15 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

FUJI SOFT INCORPORATED

16-Apr.-20199749 Tokyo Stock Exchange First Section

https://www.fsi.co.jp/e/index.html

Results trends

Simplified income statements(¥mn)
FY12/15

FY12/16

FY12/17

FY12/18

FY12/9 (E)Net sales

153,661

164,218

180,773

204,329

210,500

YoY

3.5%

6.9%

10.1%

13.0%

3.0%

117,552

126,024

138,708

156,808

-

YoY

3.3%

7.2%

10.1%

13.0%

-

Gross profit

36,10938,19342,06547,520

-

YoY

4.2%

5.8%

10.1%

13.0%

-

Gross profit margin

23.5%

23.3%

23.3%

23.3%

-

27,691

29,39432,357

36,119

-

YoY

5.1%

6.2%

10.1%

11.6%

-

SG&A expenses ratio

18.0%

17.9%

17.9%

17.7%

-

8,418

8,798

9,708

11,40011,700

YoY

1.4%

4.5%

10.3%

17.4%

2.6%

Operating margin

5.5%

5.4%

5.4%

5.6%

5.6%

9,093

9,166

10,26012,071

12,200

-1.9%

0.8%

11.9%

17.7%

1.1%

4,922

5,042

5,797

6,516

6,700

1.0%

2.4%

15.0%

12.4%

2.8%

Cost of sales

SG&A expenses

Operating income

Ordinary income
YoY
Profit attributable to owners of parent
YoY

Source: Prepared by FISCO from the Company’s financial results

Simplified balance sheets(¥mn)
End-FY12/15

End-FY12/16

End-FY12/17

End-FY12/18

Change55,032

67,35072,457

79,977

7,519

Cash and deposits

12,784

19,13418,851

22,554

3,702

Notes and accounts receivable - trade

31,48536,72740,28844,456

4,167

98,80096,513102,110

114,302

12,191

Property, plant and equipment

67,01365,79665,22082,356

17,136

Intangible assets

6,273

5,949

6,821

4,738

-2,082

Investments and other assets

25,51324,76630,06827,206-2,862

Total assets

153,833

163,863

174,568

194,279

19,710Current liabilities

10,230Current assets

Non-current assets

27,556

37,46139,19749,428Notes and accounts payable - trade

7,625

9,444

9,977

9,526

-450

Short-term loans payable

3,967

9,410

8,464

16,207

7,742

22,197

17,40016,95925,1808,221

11,242

6,723

4,182

13,3199,137

49,75454,861

56,156

74,60818,451

Non-current liabilities
Long-term loans payable
Total liabilities

15,21016,134

12,64729,527

16,880104,078

109,001

118,411

119,6701,259Interest-bearing debt
Total net assets

Source: Prepared by FISCO from the Company’s financial results

Simplifies cash flow statements
FY12/15

FY12/16

FY12/17

Net cash from operating activities (a)

7,595

9,530

9,244

FY12/18
11,192

Net cash from investing activities (b)-549-4,337-4,524-23,424

Net cash from financing activities-7,414

1,076-4,462-14,766

Free cashflow (a)+(b)

7,045

5,192

4,720

-12,232

Cash and cash equivalents at end of period

15,68821,79022,157

24,587

Source: Prepared by FISCO from the Company’s securities report and financial results

We encourage readers to review our complete legal statement on “Disclaimer” page.

16 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

FUJI SOFT INCORPORATED
9749 Tokyo Stock Exchange First Section

16-Apr.-2019https://www.fsi.co.jp/e/index.html██Outlook
Can expect the effects of productivity improvements to bematerialized, including from the work-style reforms,
1. The announced FY12/19 results forecasts are positioned as targets that must be achieved
The FY12/19 results forecasts announced by the Company in February 2019 are for net sales to increase 3.0%
year-on-year (YoY) to ¥210,500mn, operating income to rise 2.6% to ¥11,700mn, ordinary income to grow 1.1%
to ¥12,200mn, and profit attributable to owners of parent to increase 2.8% to ¥6,700mn. Compared to the results
forecasts announced in February 2018 (net sales: ¥193,000mn, operating income: ¥10,300mn), net sales havebeen upwardly revised by 9.1% and operating income by 13.6%.
The FY12/20 results forecasts have also been upwardly revised with net sales increasing from ¥199,000mn to¥217,000mn (up 3.1% YoY) and operating income from ¥10,600mn to ¥12,000mn (up 2.6%). The revised forecast
simply added the excess from the FY12/18 results, which posted a double-digit increase in both sales and profits.
There is the sense that this might be disappointing considering the operating income margin is expected to remainunchanged (FY12/18 result, 5.6%→FY12/19 forecast, 5.6%→FY12/20 forecast, 5.5%) while being in a phase ofa sales increase.
With regards to these points, the Company considers that 1) the announced results forecasts are the targets thatmust be achieved, and results may exceed them, and 2) it is aware of the issue of profitability, and it is aiming tofurther improve it in the long term. It can be highly evaluated on the point that it is maintaining the gross profit marginand operating income margin even while focusing on upfront investment and work-style reforms, and it has been
improving productivity per employee, so we will look forward to how earnings trend in the future.
Results forecast(¥mn, %)Net sales

Operating income

Profit attributable toowners of parent

Ordinary income

Net income
per share(¥)

Amount% changeAmount% changeAmount% changeAmount% change

FY12/18

204,32913.0%

11,40017.4%

12,071

17.7%

6,516

12.4%

208.22

FY12/19 (E)210,500

3.0%

11,7002.6%

12,200

1.1%

6,700

2.8%

214.10FY12/19 (E)217,000

3.1%

12,000

2.6%

-

-

-

-

-

Source: Prepared by FISCO from the Company’s financial results and results briefing material

2. Productivity is improving from the focus on upfront investment and work-style reforms
On the one hand, the Company is focusing on investing in human resources, centered on the large-scale recruitmentof new graduates, while on the other hand, it is assiduously implementing work-style reforms that are tailored toa variety of lifestyles, and providing support for these reforms, toward realizing “relaxed and worthwhile” working
environments.

We encourage readers to review our complete legal statement on “Disclaimer” page.

17 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

FUJI SOFT INCORPORATED
9749 Tokyo Stock Exchange First Section

16-Apr.-2019https://www.fsi.co.jp/e/index.html

OutlookSpecifically, based on the upgraded version of the Super Flex System, introduced in 1990 that had no core working
hours, the Company introduced the Ultra Flex system (the Super Flex system + a system enabling acquisition of
paid leave on units of 30 minutes without fixing the time period, and ‘refresh time’ of 10 minutes),” and working toestablish a working environment for remote locations and also on the fully fledged management of a teleworking
system for which all employees are eligible. As a result of these efforts, in 2017 (the totaling period was April to
March), it achieved the following results; 1) the paid-leave acquisition rate: 73.2% (private-sector average, 51.1%;
government target, 70% by 2020), 2) number of employees using the teleworking system: 3,975 in total, 3) number of
employees taking child-care leave: 164, and 4) number of people working more than 80 hours of overtime a month:
0. It has also been positively evaluated and recognized by external organizations, including the Top Hundred Telework
Pioneers (Ministry of Internal Affairs and Communications), certified as a company actively supporting work andchildcare balance (Ministry of Health, Labour and Welfare), Certified Health & Productivity Management Outstanding
Organizations Recognition Program (Ministry of Economy, Trade and Industry), and a Kanagawa business that
promotes the support of children and child raising (Kanagawa Prefecture).
What we should pay attention to here is that the Company is realizing improvements to productivity through workstyle reforms even while providing labor-intensive IT services.
In the short term, work-style reforms, which will cause a reduction in the working hours of existing employees, andthe large-scale recruitment of new graduates will lead directly to a dilution in the fighting strength of employees andan increase in upfront costs. So in many cases, these are factors keeping down the productivity indicator of operating
income per employee (operating income / the average number of employees at the end of the period). In the caseof the Company, in the two years after FY12/15, when it began the large-scale recruitment of new graduates while
producing positive effects from work-style reforms, operating income per employee decreased but since FY12/17,
it changed direction and has been increasing.
Specifically, when simply calculating the new graduate inclusion rate (the number of recruited new graduates/thenumber of employees at the end of the previous year) has risen each year, from 1.5% in FY12/14, 4.3% in FY12/15,
4.6% in FY12/16, 5.1% in FY12/17, 7.2% in FY12/18. At the same time, progress was made in reducing overtime
hours and increasing the number of employees taking paid leave. On the other hand, in FY12/18 operating income
per employee increased 3.0% compared to FY12/14, to more than ¥800,000. The internal management indicatorthat the Company calls one-hour productivity improved by 1.6 times compared to FY12/16, which is when the record
high operating income was achieved and operating income per employee was ¥1.35mn. So it would seem that,through implementing measures to utilize ICT and the continuous reviews of work forms and the work environment,
the improvements to the work framework and the creation of workplaces that are “relaxing and worthwhile” is leading
to improved productivity.
Going forward, there remains room to further reduce overtime and increase the number of people taking paid leave,
while the new graduate inclusion rate is expected to peak-out. Therefore, the positive effects from improving hourly
productivity will become easier to realize. We can have high expectations for the future of the Company, which isaiming to further improve profitability in the long term.

We encourage readers to review our complete legal statement on “Disclaimer” page.

18 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

FUJI SOFT INCORPORATED

16-Apr.-20199749 Tokyo Stock Exchange First Section

https://www.fsi.co.jp/e/index.html

Outlook㼀㼞㼑㼚㼐㼟㻌㼕㼚㻌㼠㼔㼑㻌㼚㼡㼙㼎㼑㼞㻌㼛㼒㻌㼚㼑㼣㼘㼥㻌㼓㼞㼍㼐㼡㼍㼠㼑㼐㻌㼞㼑㼏㼞㼡㼕㼠㼟㻌㼍㼚㼐㻌㼛㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㼜㼑㼞㻌㼑㼙㼜㼘㼛㼥㼑㼑㻔㻺㼡㼙㼎㼑㼞㻌㼛㼒㻌㼚㼑㼣㻌㼞㼑㼏㼞㼡㼕㼠㼟㻕㻝㻘㻞㻜㻜㻺㼡㼙㼎㼑㼞㻌㼛㼒㻌㼚㼑㼣㼘㼥㻌㼓㼞㼍㼐㼡㼍㼠㼑㼐㻌㼞㼑㼏㼞㼡㼕㼠㼟㻌㼛㼚㻌㼍㻌㼏㼛㼚㼟㼛㼘㼕㼐㼍㼠㼑㼐㻌㼎㼍㼟㼕㼟㻌㻔㼘㼑㼒㼠㻕㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㼜㼑㼞㻌㼑㼙㼜㼘㼛㼥㼑㼑
㻣㻣㻚㻣㻠

㻔¥㼙㼚㻕
㻥㻜㻚㻜㻜

㻤㻜㻚㻜㻣

㻣㻡㻚㻤㻠

㻣㻟㻚㻣㻠

㻣㻠㻚㻟㻝

㻤㻜㻜

㻢㻜㻚㻜㻜

㻥㻣㻟
㻠㻜㻜

㻟㻜㻚㻜㻜
㻠㻣㻜

㻡㻞㻜

㻲㼅㻝㻞㻛㻝㻡

㻲㼅㻝㻞㻛㻝㻢

㻢㻠㻟

㻝㻡㻡
㻜

㻜㻚㻜㻜
㻲㼅㻝㻞㻛㻝㻠

㻲㼅㻝㻞㻛㻝㻣

㻲㼅㻝㻞㻛㻝㻤

Source: Prepared by FISCO from the Company’s securities report and results briefing material㼀㼞㼑㼚㼐㼟㻌㼕㼚㻌㼍㼢㼑㼞㼍㼓㼑㻌㼟㼜㼑㼏㼕㼒㼕㼑㼐㻌㼛㼢㼑㼞㼠㼕㼙㼑㻌㼔㼛㼡㼞㼟㻌㼍㼚㼐㻌㼠㼔㼑㻌㼜㼍㼕㼐㻙㼘㼑㼍㼢㼑㻌㼍㼏㼝㼡㼕㼟㼕㼠㼕㼛㼚㻌㼞㼍㼠㼑㻭㼢㼑㼞㼍㼓㼑㻌㼟㼜㼑㼏㼕㼒㼕㼑㼐㻌㼛㼢㼑㼞㼠㼕㼙㼑㻌㼔㼛㼡㼞㼟㻌㻔㼘㼑㼒㼠㻕㻼㼍㼕㼐㻙㼘㼑㼍㼢㼑㻌㼍㼏㼝㼡㼕㼟㼕㼠㼕㼛㼚㻌㼞㼍㼠㼑㻌㻔㼞㼕㼓㼔㼠㻕㻔㼠㼕㼙㼑㻦㻌㼙㼕㼚㼡㼠㼑㼟㻕
㻟㻢㻦㻜㻜

㻔㻑㻕

㻝㻜㻜㻚㻜

㻞㻣㻦㻜㻜

㻢㻢㻚㻣
㻡㻤㻚㻢

㻢㻜㻚㻝

㻟㻜㻦㻝㻡

㻟㻜㻦㻠㻥

㻢㻥㻚㻡

㻣㻟㻚㻞
㻣㻡㻚㻜

㻝㻤㻦㻜㻜

㻡㻜㻚㻜
㻞㻤㻦㻞㻡

㻞㻠㻦㻡㻞

㻞㻟㻦㻡㻤

㻥㻦㻜㻜

㻞㻡㻚㻜

㻜㻦㻜㻜

㻜㻚㻜
㻲㼅㻝㻞㻛㻝㻟

㻲㼅㻝㻞㻛㻝㻠

㻲㼅㻝㻞㻛㻝㻡

㻲㼅㻝㻞㻛㻝㻢

㻲㼅㻝㻞㻛㻝㻣

Note: calculated based on the April-to-March period.
Source: Prepared by FISCO from the Company’s CSR report

We encourage readers to review our complete legal statement on “Disclaimer” page.

19 19

Disclaimer
FISCO Ltd. (the terms “FISCO”, “we”, mean FISCO Ltd.) has legal agreements with theTokyo Stock Exchange, the Osaka Exchange,and Nikkei Inc. as to the usage of stock priceand index information. The trademark and value of the “JASDAQ INDEX” are the intellectual
properties of the Tokyo Stock Exchange, and therefore all rights to them belong to the Tokyo
Stock Exchange.
This report is based on information that we believe to be reliable, but we do not confirm or
guarantee its accuracy, timeliness,or completeness, or the value of the securities issued bycompanies cited in this report. Regardless of purpose,investors should decide how to use
this report and take full responsibility for such use. We shall not be liable for any result of its
use. We provide this report solely for the purpose of information, not to induce investment or
any other action.
This report was prepared at the request of its subject company using information provided
by the company in interviews, but the entire content of the report, including suppositions andconclusions, is the result of our analysis. The content of this report is based on informationthat was current at the time the report was produced, but this information and the content of
this report are subject to change without prior notice.
All intellectual property rights to this report, including copyrights to its text and data, areheld exclusively by FISCO. Any alteration or processing of the report or duplications of thereport, without the express written consent of FISCO, is strictly prohibited. Any transmission,
reproduction, distribution or transfer of the report or its duplications is also strictly prohibited.
The final selection of investments and determination of appropriate prices for investment
transactions are decisions for the recipients of this report.
FISCO Ltd.