May 18, FUJI SOFT ABC., Inc. Hiroshi Nozawa Representative Director, Chairman and President

Transcription

1 May 18, 2005 FUJI SOFT ABC., Inc. Hiroshi Nozawa Representative Director, Chairman and President

2 1.Company Profile Name :FUJI SOFT ABC Incorporated (FSI ABC: Fuji Soft ABC Inc.) Listed in the 1 st st Section of TSE Securities Code No Head Office Address :1-1 SAKURAGI-CHO,NAKA-KU,YOKOHAMA KANAGAWA , JAPAN Established on:may 15,1970 Capital:26,200,289,482(YEN)(as of March 2005) Number of Employee:8473 (as of March 2005) Performance: Consolidated Financial Results for FY 2005 Consolidated Sales: 166,644,000,000(YEN) Consolidated Ordinary Income: 10,951,000,000(YEN)

3 2.FSI Group Summary New Subsidiary FSI Group Consolidated Subsidiary (11) Company Accounted for by the Equity Method (2) Non-Consolidated Subsidiary (2) Total (15) June, 2004 FUJISOFT SSS., INC--- Outsourcing Business of bank-affiliated affiliated (Financial Results for FY2004: Sales: 583,000,000 Ordinary Income: 42,000,000) September, 2004 Tosho Computer Systems Co., Ltd.--- Software Development for Securities Operations and Outsourcing Business (Financial Results for FY 2004: Sales: 7,296,000,000 Ordinary Profit:779,000,000) *The Tosho Computer System Co Ltd. is consolidated from the second half of FY 2004

4 3. Management Topics for the Term Ended March 2005 April, 2004 Headquarters operations were moved to the Company s new building in April, 2004 Sakuragi-cho, Yokohama-City Corporate Reorganization (Division system was adopted) May, 2004 Hiroshi Nozawa became Representative Director, Chairman of the board and CEO of the Company May, 2004 CITYASCOM acquired capital in the Company June, 2004 The Company accquired the stocks of SHINWA SYSTEM SERVICE COMPANY LIMITED (present FUJISOFT SSS, INC) and made it to the subsidiary July,2004 The Company set up booth with "Hospital Management Support System" as a joint development with Takeda Hospital at the Modern Hospotal Show September, 2004 The Company accquired the stocks of Tosho Computer Systems CO., Ltd and made it to the subsidiary October, 2004 Corporate Reorganization (Solution Division was established for advancement of the end user oriented service) October, 2004 Operation SAKEBR was launched December, 2004 Full-scale entry into screen production business for program propaganda ( Gozilla movie by Toho Co.,Ltd) February, 2005 The actual proof experimentation began aiming at servicing an epoch-making technology of delivering the image of the high-definition television quality on the Internet April, 2005 Operation 55 was launched Note: FUJI SOFT ABC is referred to as the Company

5 We will present the Financial Results for the Term Ended March 2005

6 Performance for the Term Ended March 2005 (Consolidated)

7 Result for the Term Ended March 2005 (Consolidated) March 2005 March 2004 Sales 166, ,031 Operating Profit (Profit Rate) Ordinary Profit (Profit Rate) Net Income (Profit Rate) Net Income per Share 10,945 (6.6%) 10,951 (6.6%) 5,336 (3.2%) 10,388 (7.3%) 10,324 (7.2%) 4,838 (3.4%) Change 23, Year-on on-year comparison 116.5% 105.4% (In millions of yen) Forecast fluctuation ratio 139,79 126,32 13, % 84.2% ROE 6.8% 6.5% 0.3% % 88.8% % 89.6% % 86.8% * This table shows the forecast fluctuation ratios in relation to the modified results published on February 7,

8 Cause of Changes in the Consolidated Results for the Term Ended March 2005 (as compared with the preceding fiscal year) Causes of Increase in the Sales (Year-on-year comparison) +23,613 million yen 1. The number of consolidated subsidiary increased (Tosho Computer Systems., Inc and Fuji Soft SSS., Inc) 4,378 million yen 2. The sales of embedded software development for telecommunication cation control system as a core and machine control system increased 4,251 million yen 3. The financial industry grew at a sluggish pace,, but the sales of software development of operational applications used in the distribution ibution industry increased 4,052 million yen 4. The system maintenance and operation service in the outsourcing business increased 4,986 million yen 5. The sales of hardware and software products increased 7,833 million yen

9 Cause behind the failure to achieve operating margins of 10% Minus factor (3.7%) 1. Narrowing profit margin caused by the outbreak of underperforming operation 1,489 million yen (profit rate -0.8%) 2. Investment in R&D projects 2,616 million yen (profit rate -1.6%) 3. Reduction of profit ratio caused by the increase in product sales 1,558 million yen (profit rate -0.9%) 4. Reduction of profit ratio caused by the price pressure 666 million yen (profit rate -0.4%) The Company marks drastic increases both in sales and profit for 2 consecutive fiscal years, despite narrowing profit margin.

10 Performance for the Term Ended March 2005 (Consolidated Subsidiary) (In millions of yen) Sales Ordinary Profit Net Income FUJI SOFT ABC Incorporated 99, % 6, % 88.3% 3, % 83.6% Cybernet Systems Co.,.,Ltd 13, % 2, % 114.6% 1, % 116.0% FUJI SOFT DIS Co., Ltd 31, % 1, % 121.1% 1, % 142.9% Vinculum Japan Corporation 10, % % 115.2% % 151.7% Cyber Com Co., Ltd FUJI SOFT KCS Co., Ltd FUJI SOFT ABC Service Bureau Co., Ltd 5,396 4,718 3, % 110.5% 115.3% Profit Rate Profit Rate Year-on on- year comparison Year-on on- year comparison Year-on on- year comparison % 132.0% % 141.7% % 128.7% % 185.6% % 119.1% % 104.8% OA Laboratory Co., Ltd 2, % % 203.4% % 550.8% Fujisoft Kikaku., Ltd 1, % % 114.2% % 110.6% Nihon Business Soft Inc % % 85.7% % 85.9% FUJI SOFT SSS., Inc % % - Tosho Computer Systems Co., Ltd 3, % % - 1 Consolidation to Non Consolidation Ratio Sales 1.68 times Net Income 1.36 times 2 Consolidated Subsidiary (11)

11 Sales by Segment for the Term Ended March 2005 (Consolidated) Software Development Related Businesses March 2005 Component ratio March 2004 (In millions of yen) Change Year-on on-year comparison Control system Operation application system Telecommunicatio ns system Others 17, % 15,114 2, % Subtotal Financial 13, % 14, % Distribution Manufacturing Public Medical Others 30, % 48, % 43,859 4, % 12, % 9,377 2, % 5, % 4, % 2, % 1,504 28,744 1, % % 1, % 1, % 5, % 5, % Subtotal 40, % 36,483 4, % Others 7, % 6,111 1, % Total 95, % 86,453 9, %

12 Outsourcing businesses Solution service businesses Sales by Segment for the Term Ended March 2005 (Consolidated) System Maintenance and Operations March 2005 Component rate March 2004 (In millions of yen) Change Year-on on- year comparison 28, % 24,619 4, % Consulting 3, % 3, % Office Services 3, % 3, % Others % % Sub Total 36, % 31,915 4, % Others 8, % 6,841 1, % Sub Total 25, % Commodity Sales 17,772 33, % 24,614 17,772 7, % 9, % Others % % Total 70, % 56,577 14, % 166, % SUM TOTAL 143, ,031 23, %

13 Trend of the Total Assets (Consolidated) (In millions of yen) 200, , , ,000 10, , ,000 64,730 80,000 The blue figures are component ratios(%) Investments Fixed Assets Current Assets 133, % 48.6% 152,835 13,206 75, % 49.2% 171,633 16,452 79, % 46.3% Investments Investment Securities +1,212 Increase of new entry of Tosho Computer Systems Co., Ltd into the consolidated financial results +1,653 Fixed Assets Cost for the construction of the Akihabara Building Datacenter maintenance +1,000 60,000 40,000 20,000 57, % 64, % 75, % Current Assets Deposits in cash +6,652 Bonds sold +3,744 Securities -985 Inventories +1,229 0 March 2003 March 2004 March 2005 Ratio for current assets Ratio for fixed assets (%) Ratio for preceding year to total assets

14 Trend for Liabilities and Stockholder s s Equity (Consolidated) (In millions of yen) 200, , , , , ,000 80,000 60,000 40,000 20,000 0 Stockholder's equity Fixed Liabilities Current Liabilities 133,205 71,570 14,379 47,255 The blue figures are component ratios.(%) 53.7% 10.8% 35.5% 152,835 76,783 15,799 60, % 10.4% 39.4% 80,433 19,621 71,578 March 2003 March 2004 March 2005 Loan Ratio (%) Stockholders equity ratio (Minority interest is included in Fixed Liabilities) 171, % 11.4% 41.7% Stockholders Equity Increase in retained earnings +3,943 Fixed Liabilities Increase in liabilities for retirement benefits of employees (Due to the new entry of Tosho Computer System CO., Ltd into the consolidated financial result ) +3,334 Current Liabilities Decrease in accrued corporate taxes -3,617 Increase in short-term loans payable balance +13,082 Increase in account payable and others +2,174

15 Trends for Cash Flow for the Term Ended March 2005 (Consolidated) 25,000 20,000 15,000 10,000 5, ,000 10,000 15,000 20,000 25,000 (In millions of yen) 18,206 11,352 10,173 10,517 9,682 3,102 13,346 16,731 March 2004 March 2005 Business Operations Financial Operations Investment Operations Term-end Balance Business Operations Depreciation +2,056 Increase in consumer tax payable +1,311 Increase in inventories +1,439 Payments for corporate taxes and others -3,995 Investment Operations Proceeds from purchases and sales of securities +3,486 Financial Operations Income from loans +5,314

16 Future Targets and Strategies

17 Mid-term Management Targets (Consolidated) (In millions of yen) March 2006 (Forecast) March 2007 (Planned) March 2008 (Planned) Sales <Year-on-year Comparison> Operating Profit (Profit Rate) Ordinary Profit (Profit Rate) Net Income (Profit Rate) <Year-on-year comparison> Net Income per Share 190,000 <114.0%> 12,000 (6.3%) 12,000 (6.3%) 6,000 (3.2%) <112.4%> 219,000 <115.3%> 14,500 (6.5%) 14,500 (6.5%) 7,000 (3.3%) <116.7%> 252,000 <115.1%> 17,500 (7.0%) 17,500 (7.0%) 9,000 (3.5%) <128.6%> yen yen yen

18 Sales Targets by Segment (Consolidated) (In millions of yen) Software Development related business Control Operation Total Telecommunic ations system Others Sub Total Finance Distribution Manufacturin g Public Medical Others Sub total March 2006 (Forecast) March 2007 (planned) 34,140 38, % 21,859 56,000 15,992 12,858 5,596 2,140 1,835 6,467 44,890 8,380 25,207 63,400 18,331 13,836 6,259 2,255 2,241 6,875 49,800 9,570 Component ratio 11.5% 29.0% 8.4% 6.3% 2.9% 1.0% 1.0% 3.1% 22.7% 4.4% Year-on on- year comparis on Year-on on- year comparis on 111.9% 115.3% 113.2% 114.6% 107.6% 111.8% 105.4% 122.1% 106.3% 110.9% 114.2% March 2008 (planned) 43,307 29,592 72,900 20,966 14,798 7,006 2,357 2,790 6,940 54,860 10,820 Component ratio 17.2% 11.7% 28.9% 8.3% 5.9% 2.8% 0.9% 1.1% 2.8% 21.8% 4.3% 113.4% 117.4% 115.0% 114.4% 107.0% 111.9% 104.5% 124.5% 100.9% 110.2% 113.1% SUM TOTAL 109, , % 112.4% 138, % 112.9%

19 Sales Target by Segment (Consolidated) (In millions of yen) Outsourcing Business Solution Service Business System Maintenance and Operations March 2006 (Forecast) 35,655 March 2007 (planned) Component rate March 2008 (planned) Consulting 4,669 5, % 116.5% 6, % 118.0% Office Services 4,268 Others % 98.8% % 99.0% Sub Total 45,000 56, % 124.7% 68, % 121.7% Sales of Goods 27,120 Others 8,530 8, % 105.0% 9, % 104.9% Sub Total 35,650 45,369 4,890 31,080 40, % 2.2% 14.2% 18.3% Year-on on- year comparison 127.2% 56, % 114.6% 112.3% Other Business % 112.5% % 111.1% Total 80,730 96, % 119.2% 113, % 117.9% 5,189 35,620 45,020 Component rate 22.3% 124.1% 2.1% 106.1% 17.9% Year-on on-year comparison 14.2% 114.6% 112.4% SUM TOTAL 190, , % 115.3% 252, % 115.1%

20 Trend of Sales (Consolidated/Non-consolidated) (In millions of yen) 250, , , ,000 50,000 0 Consolidated Non-consolidated 47,881 80,584 61, , , , ,751 80,412 64,005 79,080 28,157 39,339 15,233 44,005 51,189 35,904 11,545 25, , , ,000 99,047 86, , , ,000 95/3 96/3 97/3 98/3 99/3 00/3 01/3 02/3 03/3 04/3 05/3 06/3 07/3 08/3 (Forecast) (Planned) (planned)

21 Trend of Ordinary Profit (Consolidated/Non-consolidated) (In millions of yen) 18,000 Consolidated 16,000 Non-consolidated 14,500 17,500 14,000 12,000 10,000 8,000 6,000 4,000 2, , ,623 7,011 6,587 9,506 7,011 4,736 5,609 6,189 4,497 11,305 9,322 9,311 7,223 10,951 10,324 7,178 6,334 12,000 7,500 9,000 11,000 95/3 96/3 97/3 98/3 99/3 00/3 01/3 02/3 03/3 04/3 05/3 06/3 07/3 08/3 (Forecast) (Planned) (Planned)

22 Trend of Sales in Information Service Industry Sales in Information Service Industry 250, , , ,000 50,000 0 FSIABC Group Sales (6.2%) (Growth Rate) (29.2%) 98,006 75,880 (3.6%) (5.6%) 101, ,228 3 year-long average growth rate in the industry: 10.4% 3 year-long average growth rate in FSI ABC Group: 12.7% (Average growth rate from FY2003 to FY2005) Sales of information service industry after FY2005 is based on the average growth rate of 10.4% from FY2002 to FY2004. (27.8%) (2.0%) (1.4%) 137, , ,731 (10.4%) 156, , , ,506 (In billions of yen) 232,399 (10.4%) 256,568 98/3 99/3 00/3 01/3 02/3 03/3 04/3 05/3 06/3 07/3 08/3 09/3 10/3 (forecast) (forecast) (forecast) (forecast) (forecast) ,128 1,331 1,430 1,666 1,900 2,141 2,413 2,719 3,064 Year-to-year comparison 139.7% 121.7% 129.0% 130.4% 139.9% 118.0% 107.5% 116.5% 114.0% 112.7% 112.7% 112.7% 112.7%

23 Ranking Financial Results of companies ranked in the top 10 in Information Service Industry for the Term Ended March 2005 (Consolidated) Company Name Sales Ordinary Profit (In millions of yen) Net Income Year-on on- year comparison Year-on on- year comparison Year-on on- year comparison 1 NTT Data 854, % 32, % 20, % 2 CSK 319, % 27, % 33, % 3 Nomura Research Institute 252, % 30, % 16, % Itochu Techno-Science 226, % 18, % 10, % TIS 199, % 15, % 7, % Hitachi Software Engineering 180, % 9,246-11,225 - Hitachi Information Systems 175, % 8, % 4, % 8 FUJI SOFT ABC 166, % 10, % 5, % 9 10 NS Solutions Corporation 146, % 11, % 6, % NEC Soft Ltd 129, % 7, % 3, %

24 Note: 55 is a Japanese major league player Hideki Matsui s uniform number. Operation 55 is otherwise known as Operation Godzilla in the office.

25 Trends for performance in companies of Information Service Industry (Consolidated) 10,000 9,500 9,000 8,500 8,000 4,000 3,500 3,000 2,500 2,000 1,500 (In billions of yen) NTT Data The growth rate is based on average rate from 2007 onward FUJI SOFT ABC Average rate of growth over the past 3 years (FY2005~FY2007) NTT Data 1.9% CSK 10.5 % Itochu Techno-Science Corporation Nomura Research Institute Hitachi Software Engineering 1.9% 3.8% 10.3 % TIS 8.6% Hitachi Information Systems NS Solutions Corporation 2.6% 0.7% NEC Soft 6.0% This table shows that as for the company that has negative rate of average growth, the average rate is shown flat from 2007 onward. 1, CSK Itochu Techno-Science Corporation Nomura Research Institute Hitachi Software Engineering TIS Hitachi Information Systems NS Solutions Fuji Soft ABC NEC Soft March 2003 March 2004 March 2005 March 2006 March 2007 March 2008 March 2009 March 2010 FSIABC status March 05 March 10(forecast) Sales Rank 8th Rank 2 nd 166,6 billion 306,4 billion Year-on-year comparison Rank 2nd Rank 1st Calculated on 3 year-long average growth rate of 12.7% (FY2003-FY2005)

26 Forecast Performance of companies ranked in the top 10 in Information Service Industry for the Term Ending March 2006 (Consolidated) Sales Ordinary Profit (In millions of yen) Net Income Ranking Company Name Year-on on- year comparison Year-on on- year comparison Year-on on- year compariso n 1 NTT Data 880, % 41, % 27, % 2 Itochu Techno-Science 265, % 20, % 11, % 3 Nomura Research Institute 260, % 33, % 19, % 4 CSK 250, % 28, % 14, % 5 TIS 209, % 18, % 8, % 6 FUJI SOFT ABC 190, % 12, % 6, % 7 Hitachi Information Systems 176, % 8, % 4, % 8 Hitachi Software Engineering 154, % 4,700-1,900-9 NS Solutions Corporation 150, % 12, % 6, % 10 NEC Soft 135, % 9, % 4, % Note: The figures in the NEC Soft are based on the most recent contents of the SHIKIHO (Japanese Company Handbook) as the assessment figure is not yet announced for the group reorganization.

27 Business Strategy Reform of Business Model

28 1. Focus on enhancing our response capacities to the end-user side ~Aim Aim for greater customer satisfaction~ To explore customer needs, improve planning and creativity abilities and strengthen the comprehensive capabilities to increase orders received To shift our response capabilities more to the end-use side To improve a professional training for employees to enhance customer satisfaction

29 2. Expansion of Solution Business Enhancement of the Company s sales capabilities Enhancement of the Company s coordination capabilities Enhancement of the Company s consulting capabilities Enhancement of the senior SE s capabilities

30 3. Enhancing to secure qualified human resources Management Staff Administrative Staff Planning Staff R&D Staff

31 4. Aim to Increase Software Productivity and Establish Development Process (To Improve Corporate Performance at Low Cost) Development Process Standard Establishment of FS Framework Practical and Effective Component-based Reuse System Reuse System for Application Package Cost Reduction for Development by Use of Tools

32 Trends for Research and Development Expense 3,000 2,616 (In millions of yen) 2,870 2,500 2,000 1,911 1,500 1,159 1,442 1,479 1,115 1, March 2000 March 2001 March 2002 March 2003 March 2004 March 2005 March 2006 (Forecast)

33 5. Key Solutions SAKEBR (SAKE/BEER) Plan S: Security Solutions A: Azo Delivery Distribution (High Speed Streaming) A is pronounced as ei in Japanese here. Azo means Image in English. K: Kosoku Search Engine Kosoku means High-speed in English E: Embedded-type Technology B: Byoin System Solution Byoin means Hospital in English. R: Retail Financial System Solution

34 S : Security Enforcement of Personal Information Protection Law Company's information management operations are being reviewed. Information Security Market is boosted. Entry into the Market FS Gate (Security Gate System) FS Info Guard (Security Enhancement products with the Company s own encryption library FS Ango ) Basic Security Assessment Service Consulting Service

35 A: Azo (Image) Distribution (High Speed Streaming) Market Cultivation by Integrating Leading-edge edge Technology H.264 FS3150v + FSLinux Fastest-growing <Leading-edge <Leading-edge Technology Technology for for Data Data Compression> Compression> We We will will provide new new image image delivery solutions through tune-up FS FS 3150V 3150V + FS FS Linux Linuxas ash264 and and delivery server. server streaming market In billions of yen 2000 Web Education Entertainment Live Shopping 770 Observation Mobile Advertisement Broadcasting Reference: NRI

36 K : Kosoku (High-speed) Search Engine Advance reform in the operation system through super-high speed data processing Super-high speed search engine Development of new products with high speed diesel, Kosoku-Kikan and provision of high h speed diesel solutions Hospital Management Support System Major Capital Consumer Finance Company Karuwaza Web Super

37 E: Embedded-type Technology Most home information appliances, key part of ubiquitous information society adopt embedded technology We will provide total solution for embedded software through "Embedded Linux" in "FS Embedded/Linux Service!! We will maintain embedded development platform!! We will achieve productivity promotion and quality improvement through component-based reuse system and maintenance of tools and others!!

38 B: Byoin (Hospital) System Solution We will provide total solution for hospital management support system through Kosoku-kikan and EAI-HUB as a key technology, which can correspond to a multi-vender. -Case Example of System Architecture Hospital Management Support System Data Warehouse (Kosoku-Kikan) Medical Accounting System Hospital s point of Distribution System Accounting System Data Linkage System EAI-HUB Hoko ERP (OBC) Payroll Control of Fixed Assets ETC. HAPPY CS-Ⅱ (Toshiba Medical System Group) Electronic Medical Chart Kameda Healthinformatics Institute Ordering Flexibly respond to system expansion in the future through multi-vendor system Nursing Information

39 R: Retail Finance Solution Development and operation of one-stop system for custom development from call center to hosting service Development and sales of software packages for consumer banking Establishment of operation center for retail finance Creation of card solution Market cultivation of CTI (Computer Telephony Integration) Support for representative commissioned business Market Cultivation in the credit industry

40 The Company will be fixated to software manufacturing Software Product Manufacturer 40

41 Unquenchable Enthusiasm for Challenge and Unceasing Drive for Creation Within 5 Years The Company will achieve a sale of 300 billion and aim at ranking 5 in the industry within 5 years.

42 Thank you very much for your attention.