Hikari Tsushin, Inc. · TSE:9435

Hikari Tsushin — H1 FY2007.3 Earnings Presentation

34 slides from Hikari Tsushin's earnings presentation, Nov 28, 2006

  1. Slide 1: The 2nd Quarter Financial Results of the Fiscal Year 2007.3

    The 2nd Quarter Financial Results Of the Fiscal Year 2007.3 (April 2006 ～ September 2006) November 28, 2006 HIKARI TSUSHIN, INC. Copyright (c) 2006 Hikari Tsushin, Inc. All Rights Reserved. 1

  2. Slide 2: Financial Results Highlight

    Financial Results Highlight Copyright (c) 2006 Hikari Tsushin, Inc. All Rights Reserved. 2

  3. Slide 3: Consolidated Financial Results ①

    Consolidated Financial Results ① FY2006.3 H1 FY2007.3 H1 Year-on-Year （\ Millions） （2005/4 ～ 2005/9) （2006/4 ～ 2006/9) Net Sales 99,516 91,476 △8.1% Gross Profit 59,125 50,997 △13.7% GP Margin 59.4% 55.7% Operating Income 15,582 7,810 △49.9% OP Income Margin 15.6% 8.5% Ordinary Income 17,559 9,875 △

  4. Slide 4: Consolidated Financial Results ②

    Consolidated Financial Results ② FY2007.3 H1 FY2007.3 Forecast Progress Rate （\ Millions） （2006/4 ～ 2006/9) （2006/4 ～ 2007/3) Net Sales 91,476 200,000 45.7% Gross Profit 50,997 - - GP Margin 55.7% Operating Income 7,810 18,000 43.3% OP Income Margin 8.5% 9.0% Ordinary Income 9,875 21,000 47.0% Net I

  5. Slide 5: Business Segment

    Business Segment 【Net Sales】 Sales】 （¥ （ Millions） Millions） 【Operating Income】 Income】 （¥ （ Millions） Millions） 105,000 16,000 7,061 782 95,000 Venture Fund 1,670 14,000 85,000 4,806 12,000 Corporate or Elimination 75,000 Corporate 38,407 48,376 65,000 10,000 Venture Fund 55,000 8,000 91 45,000 890

  6. Slide 6: Cash Position / Shareholders' Equity

    Cash Position / Shareholders’ Equity 【Balance of Net Liquidity】 Liquidity】 （¥ （¥ Billions） Billions） 【Shareholders' Equity 】 （ ¥ Billions） Billions） 120 ¥116.4 B Market value of e-machitown Co. ¥100.7 B 120 100 20% increase per annum 8.2 over the past 10 years 14.0 B （Cash） Cash） 80 ¥14.0 100 100.2

  7. Slide 7: Business Results & Strategy

    Business Results & Strategy Copyright (c) 2006 Hikari Tsushin, Inc. All Rights Reserved. 7

  8. Slide 8: Sales Network of Hikari Tsushin Group

    Sales Network of Hikari Tsushin Group Hikari Tsushin Group Call Centers 62 call centers 6,800 seats Direct Sales Branches 53 sales branches Expansion of Call Center SHOPs 454 outlets Partners Beijing Dalian 251 dominant sales agents Sales Subsidiaries 53 subsidiaries, 64 offices Taiwan Hong Kong Cal

  9. Slide 9: Cell Phone Outlets

    Cell Phone Outlets 【 Breakdown of 454 Outlets, as of Sep. ‘06 】 Other: 2 Multi- Multi-brand （Roadside） Roadside） Multi- 82 Multi-brand （In- In-store） store） 153 60 au SoftBank 156 Multi-brand （Roadside） Multi-brand （In-store） Other Copyright (c) 2006 Hikari Tsushin, Inc. All Rights Reserved. 9

  10. Slide 10: Regional Sales Subsidiaries

    Regional Sales Subsidiaries Cell Overwhelming OverwhelmingShare Share ＯＡ Cell ＯＡ Phones Phones Equipments Equipments ６４ offices （５３ subsidiaries) nationwide Hikari Hikari Tsushin Tsushin Group Group Local Local Dominant Dominant Companies Companies Provision of know-how's Local Brand Dispatch of str

  11. Slide 11: High-Quality Call Centers

    High-Quality Call Centers Compliance Database Recording system Database Strategy Prevention of improper sales activities Prohibition of repetitive calls Improvement of performance Improvement of quality Improvement of security Security HR Management License system Enhancement of information control

  12. Slide 12: Database Strategy

    Database Strategy Analysis Data mining Total number of telephone numbers in use: 96 million Telephone numbers to be acquired: Available telephone numbers in our database: 42 million 54 million Accumulation of customer needs Acquisition of new Customer support telephone number lists Ma x im iz a t i

  13. Slide 13: Delegation of Power

    Delegation of Power Give chances to employees with youthful vitality ■Companies listed on the 1st section of TSE Ranking of young executives Name Company Title Age Representative Director, President and COO Takeshi Tamamura 36.2 yrs 1 Yuzo Endo Geo Co., Ltd. Director 28.7 2 Kota Kim Credit Saison Co

  14. Slide 14: Engagements of Hikari Tsushin Group

    Engagements of Hikari Tsushin Group 1950～ 1950～1980 ～1990 2000～ 2000～2006 2007～ 2007～ Ubiquitous Ubiquitoussociety society FMC FMC 【国内における規制緩和・自由化、技術革新の歩み】 【History of Deregulation, Liberalization and Technology Innovation】 】 Fixed- Fixed-Mobile Convergence Fixed-Mobile Convergence Ecological Ecolog

  15. Slide 15: Sales of Copiers

    Sales of Copiers 【Sales Volume 【Installed Copiers & Ratio of Color Copiers】 & Ratio of Color Copiers】 44.3% 50% 22.6% 25% 40% 31.0% 20% 30% 16.2% 15% 16.7% 20% 12.5% 8.8% 9.4% 10% （Units） Units） 10% （Units） Units） 1.0% 3.3% 6.3% 45,000 100,000 0% 5% 40,000 90,000 35,000 30,000 80,000 25,000 15,198 7

  16. Slide 16: Telecom: Potential Customers

    Telecom: Potential Customers 【Households with Broadband Internet Connection】 Connection】 （millions of subscribers） subscribers） 50 45 40 Potential Customers: 28 million households 35 without broadband Internet connection 42 million households ※Includes ADSL Subscribers 30 25 20 ADSL 15 14.5 10 Major

  17. Slide 17: Insurance Business

    Insurance Business 【Net Sales】 Sales】 【Operating Income】 Income】 （¥ Millions） Millions） （¥ Millions） Millions） 9,000 2,500 8,000 ％ 1.4 2,000 7,000 +5 ％ 6,000 1.2 1,500 +19 5,000 8,905 2,327 4,000 1,000 3,000 5,879 2,000 3,222 500 864 799 1,000 1,528 138 0 0 2003.9 2004.9 2005.9 2006.9 2003.9 2004.9

  18. Slide 18: Insurance Business

    Insurance Business 【Number of Employees】 【Expansion of Insurance Business】 4,000 3,500 Target: Diversification of 120 million individuals 3,000 sales channels 2,500 Shops 2,000 Internet 3, 300 Face to face 1,500 3, 000 marketing Tie- Tie-ups In operation with other agents 1,000 Call center In operat

  19. Slide 19: SHOP Business

    ＳＨＯＰ Business 【 Retained Subscribers & Sales of Handsets 】 ・October 24th, 2006 Retained Subscribers （Million Handsets） Handsets） 1.98 Introduction of Mobile Number Portability System (Millions) 2.0 1.87 1.9 （Thousand Handsets） Handsets） 1.83 1.81 ■Number of Outlets 300 1.75 1.8 1.72 SoftBank shops:

  20. Slide 20: Mobile Market: Big Business Opportunity

    Mobile Market: Big Business Opportunity 【Share of Subscribers as of Oct. 2006】 2006】 Reference: The Telecommunications Carriers Association 1.9% (MoM -152,100 handsets) 16.3% (MoM +23,800 handsets) 55.4% (MoM +40,800 handsets) 26.4% (MoM +352,600 handsets) 【Hikari Tsushin Group Weekly Sales of Hands

  21. Slide 21: Venture Fund Business

    Venture Fund Business ※ The venture capital funds operated by our subsidiaries has been consolidated since FY 2006.3 【 Balance of Funds 】 （¥ （¥ Billions） Billions） Plan to increase 20 ¥10 Billion Recent IPOs 18 ●XCE ●XCE Co., Ltd Date of IPO July 21st, 2006 16 Stock Exchange KOSDAQ Capital 1.6 billi

  22. Slide 22: Venture Fund Business

    Venture Fund Business Last year’s big gain: IPO of Ikyu Corporation ＜Reference＞ High performance issues since 2003 （¥ Millions） 2,144％ 1,942％ ¥100Million ⇒ ¥9.3Billion 9,300％ 6,000 【Company Ｎ】 5,000 【Company Ｋ】 5,000 4,000 4,000 （¥ Millions） 3,000 10,000 3,000 5,610 4,470 2,000 2,000 1,000 1,000 8,0

  23. Slide 23: Venture Investments

    Venture Investments 【【10 10 years years of of experience experience and and know -how's】 know-how's】 【【 List List of of IPOs IPOs –– Total Total 80 80 】】 Domestic Domestic Overseas Overseas I-cf I-cf Skymark SkymarkArilines Arilines Ask AskJeeves, Jeeves,Inc. Inc. Stratech Stratech Estore Estore Sno

  24. Slide 24: Forecast of FY 2007.3 (Apr 2006 ～ Mar 2007)

    Forecast of FY 2007.3 (Apr 2006 ～ Mar 2007) FY 2007.3 FY 2007.3 FY 2006.3 (\ Billions) H1 Results Full Year Forecast Full Year Results Net Sales 91.4 200.0 192.8 Operating Income 7.8 18.0 27.3 Ordinary Income 9.8 21.0 29.9 Net Income 7.7 17.0 20.5 ① Only the determined sales and income, at the time

  25. Slide 25: Privacy Mark

    Privacy Mark October 23rd 2006 Granted the Privacy Mark by the Japan Information Processing Development Center (JIPDEC). About Privacy Mark Certification system for private enterprises that have sufficient sufficient measures for appropriate protection of personal information and approves the use of

  26. Slide 26: Disclaimer

    Disclaimer This material contains “forward-looking” information, including the Company’s plans, strategies, forecasts or beliefs. Hikari Tsushin cautions readers that forward-looking statements are based on Hikari Tsushin’s current expectations, which have been deprived from information that is avai

  27. Slide 27: Appendix

    Appendix Copyright (c) 2006 Hikari Tsushin, Inc. All Rights Reserved. 27

  28. Slide 28: Cash Flow

    Cash Flow （\ Millions） FY 2005.3 FY 2006.3 FY 2007.3 H1 Operati ng Cash Flow 48,081 17,341 4,558 Investi ng Cash Flow △26,360 △43,522 △2,764 Fi nanci ng Cash Flow △3,989 12,065 4,302 Cash an d its Equ ivalen ts 28,111 14,915 21,014 Copyright (c) 2006 Hikari Tsushin, Inc. All Rights Reserved. 28

  29. Slide 29: Consolidated Balance Sheet

    Consolidated Balance Sheet （¥ Millions） Millions） （¥ Millions） Millions） Mar-05 Mar-06 Sep-06 Mar-05 Mar-06 Sep-06 Current Assets 64,623 53,559 55,252 Current Liabilities 30,677 39,243 39,202 Cash 29,763 14,807 20,628 Acct Payables 12,587 14,298 10,252 Acct Receivables 20,618 22,346 20,469 Borrowing

  30. Slide 30: 3-Year Financial Summary

    3-Year Financial Summary （¥ Millions） Millions） FY 2004.3 FY 2005.3 FY 2006.3 2003/4～2004/3 2004/4～2005/3 2005/4～2006/3 Net Sales 145,995 171,009 192,837 Gross Profit 66,887 90,636 109,547 GP Margin 45.8% 53.0% 56.8% Operating Income 17,068 21,702 27,344 Operating Margin 11.7% 12.7% 14.2% Ordinary I

  31. Slide 31: FY2004-06 Business Segment Transition

    FY2004-06 Business Segment Transition 【Net Sales】 Sales】 （¥ （¥ Millions） Millions） 【Operating Income】 Income】 （¥ （¥ Millions） Millions） 192,837 11,359 28,000 27,344 190,000 Venture 171,009 Fund 1, 149 26,000 524 170,000 Corporate 24,000 or elimination 145,995 21,702 6, 359 150,000 22,000 726 84, 217

  32. Slide 32: Low Marketing Cost

    Low Marketing Cost Young Age ・・・・・・・・・・・ Average age: 27 yrs old Average age: 27 yrs old Lowest Cost Per Capita ・Cheapest rent in Ikebukuro area Cost Management ・・・・・・・・・・・ ・Cheapest rent in Ikebukuro area ・Least possible administration staff ・Least possible administration staff Low Marketing Accumu

  33. Slide 33: High Customer Satisfaction

    High Customer Satisfaction ・Support Centers Inquiry Contact ・・・・・・・・・・・ ・Support Centers ・Opinion Box on the Web ・Opinion Box on the Web Customer Responsiveness Recording of System for ・・・・・・・・・・・ System for All Communication avoiding troubles avoiding troubles ・Entry/exit monitoring Security ・・・・・・

  34. Slide 34: Hikari Tsushin Group Overview

    Hikari Tsushin Group Overview Business Segments Basic Business Model Building core businesses on “Stock Model” for stable and long-term growth. Bu sin ess Maj or Produ cts S a les Ch a n n els Target U sers Segmen ts Direct Sales Branches Cellular phones OA Equipments Copiers Insurance etc Corporate

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