Hikari Tsushin, Inc. · TSE:9435

Hikari Tsushin — Q1 FY2007.3 Earnings Presentation

31 slides from Hikari Tsushin's earnings presentation, Aug 25, 2006

  1. Slide 1: The 1st Quarter Financial Results of Fiscal Year 2007.3

    The 1st Quarter Financial Results (April 2006 ～ June 2006) Of the Fiscal Year 2007.3 August 25, 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

    Consolidated Financial Results Sales +11％, Operating Income +40％ （\ Millions） FY2006.3 Q1 FY2007.3 Q1 （ 2005/4 ～ 2005/6) （ 2006/4 ～ 2006/6) Net Sales 40,673 45,208 +11.2％ Gross Profit 22,205 25,333 GP Margin: +1.4 GP Margin 54.6% 56.0% Operating Income 2,911 4,088 +40.4％ OP Income Margin 7.2% 9.0% G

  4. Slide 4: Business Segment

    Business Segment 【Net Sales】 Sales】 （¥ （ Millions） Millions） 【Operating Income】 Income】 （¥ （ Millions） Millions） 4,500 45,000 80 3,500 Corporate or Elimination 789 35,000 22,161 16,788 SHOP SHOP 419 2,500 1,262 788 25,000 Insurance 2,555 Insurance 4,499 1,500 464 1,218 15,000 Corporate 500 21,982 73

  5. Slide 5: Cash Position / Shareholders' Equity

    Cash Position / Shareholders’ Equity 【Balance of Net Liquidity】 Liquidity】 （¥ （¥ Billions） Billions） 【Shareholders' Equity 】 （ ¥ Billions） Billions） 120 ¥116.4B Market value of e-machitown Co. ¥103.3B 120 100 9.7 20% increase per annum over the past 10 years +9.2B +9.2B （Cash） Cash） 80 100 +105.2B （

  6. Slide 6: Business Results & Strategy

    Business Results & Strategy Copyright (c) 2006 Hikari Tsushin, Inc. All Rights Reserved. 6

  7. Slide 7: Sales Network of Hikari Tsushin Group

    Sales Network of Hikari Tsushin Group Hikari Tsushin Group Call Centers 51 call centers 5,500 seats Direct Sales Branches 45 sales branches Expansion of Call Center SHOPs 467 outlets Partners Beijing Dalian Dominant sales agent network Sales Subsidiaries 53 subsidiaries, 61 offices Taiwan Hong Kong

  8. Slide 8: Cell Phone Outlets

    Cell Phone Outlets 【 Breakdown of 467 Outlets, as of Jun ‘06 】 Multi- Multi-brand Other: 2 （In- In-store） store） Multi- Multi-brand 62 au （Roadside） Roadside） Vodafone 49 154 TU-KA 46 Multi-brand （Roadside） Multi-brand （In-store） 154 Other Copyright (c) 2006 Hikari Tsushin, Inc. All Rights Reserved.

  9. Slide 9: 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

  10. Slide 10: Quick Response to Change

    HR Management Dynamic Flat responsive structure incentive systems Quick decision making Quick Response to Change Call Center License Training Programs Director License Manager License Sub-manager License Staff License Recruit License Copyright (c) 2006 Hikari Tsushin, Inc. All Rights Reserved. 10

  11. Slide 11: 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

  12. Slide 12: Business Segment Topics

    Business Segment Topics Additional Additional salessales force force OA OA Equipment Equipment Continued Continued rise rise inin ratio ratio of of color color copiers copiers Telecom Telecom Expansion Expansion of of Dalian Dalian call call center center Insurance Insurance Additional Additional 30

  13. Slide 13: Sales of Copiers

    Sales of Copiers 【Sales Volume 【Installed Copiers & Ratio of Color Copiers】 & Ratio of Color Copiers】 25% 46.9% 50% 20.5% 40% 20% 31.0% 16.2% 30% 15% 12.5% 16.7% 20% 9.4% 10% 8.8% 10% （Units） Units） 3.3% 100,000 6.3% （Units） Units） 1.0% 45,000 0% 5% 90,000 40,000 35,000 80,000 30,000 25,000 70,000 4

  14. Slide 14: Telecom: FMC (Fixed-Mobile Convergence)

    Telecom: FMC （Fixed-Mobile Convergence） 【Competition over 6 million corporate bodies, 130 million individuals and 50 million households】 Competition among carriers Cell Phones New My-line Service FMC My-line Plus ADSL FTTH Chance for International calls MNP sales agents Long-distance calls Fixed lin

  15. Slide 15: Telecom: Increasing Competition

    Telecom: Increasing Competition Services Provided by 3 Major Telecom Carriers Soft Bank & N T T Group KDDI Vodafone B FLET'S Hikari Plus & TEPCO Hikari Yahoo! BB FT T H 3.42M subscribers 0.4M subscribers 30 thousand subscribers FLET'S・ADSL DION ADSL Yahoo! BB ADSL 5.7M subscribers 1.5M subscribers ５

  16. Slide 16: Insurance Business

    Insurance Business 【Net Sales】 Sales】 【Operating Income】 Income】 （¥ Millions） Millions） （¥ Millions） Millions） 4,500 1,400 4,000 1,200 ％ 3,500 6. 0 1,000 ％ +7 1.9 3,000 +1 7 800 2,500 4,499 1,262 600 2,000 400 1,500 2,555 457 464 200 1,000 1,589 500 0 670 -66 0 FY2004.3 Q1 FY2005.3 Q1 FY2006.3 Q1 FY

  17. Slide 17: Insurance Business

    Insurance Business 【Gross Profit of Distributors （annual） annual）】 【Number of Employees】 〔TV Commercials + marketing cost + labor cost of sales reps + agency agency commission - merchandise cost〕 cost〕 4,000 Insurance 3,500 ¥1,500 Billion 3,000 Telecom OA Equipments ¥600 Billion ¥300 Billion 2,500 【

  18. Slide 18: Venture Fund Business

    Venture Fund Business ※ The venture capital funds operated by our subsidiaries has been consolidated since FY 2006.3 【Net Sales】 Sales】 （¥ （¥ Millions） Millions） 【 Balance of Funds 】 （¥ （¥ Billions） Billions） Plan to increase ¥10 Billion 20 1,000 800 FY 2007.3 Ｑ１ 15 1.7 New funds launched in FY 2006

  19. Slide 19: 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

  20. Slide 20: 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 75 75 】】 Domestic Domestic Overseas Overseas I-cf I-cf Skymark SkymarkArilines Arilines Ask AskJeeves, Jeeves,Inc. Inc. Stratech Stratech Estore Estore Sno

  21. Slide 21: SHOP Business

    ＳＨＯＰ Business 【 Retained Subscribers & Sales of Handsets 】 ・Oct. 24th 2006 Retained Subscribers （Million Handsets） Handsets） (Millions) Introduction of Mobile Number Portability 1.98 2.0 Increase of competition among carriers 1.87 Increase due 1.9 to M&A 1.83 （Thousand Handsets） Handsets） 1.81 280 ■

  22. Slide 22: Forecast of FY 2007.3 (Apr 2006 - Mar 2007)

    Forecast of FY 2007.3 (Apr 2006 ～ Mar 2007) (\ Billions) Progress H1 Full Year FY 2007.3 Q1 (H1 Forecast) Net Sales 90.0 195.0 45.2 50.2% Operating Income 6.5 20.0 4.1 62.8% Ordinary Income 7.5 21.0 5.0 66.1% Net Income 5.0 17.0 3.5 69.0% ① Only the t determined sales and income, at the time when th

  23. Slide 23: 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

  24. Slide 24: Appendix

    Appendix Copyright (c) 2006 Hikari Tsushin, Inc. All Rights Reserved. 24

  25. Slide 25: Cash Flow

    Cash Flow （\ Millions） FY 2005.3 FY 2006.3 FY 2007.3 Q1 Operati ng Cash Flow 48,081 17,278 △140 Investi ng Cash Flow △26,360 △43,006 △713 Fi nanci ng Cash Flow △3,989 12,031 2,076 Cash an d its Equ ivalen ts 28,111 14,915 16,142 Copyright (c) 2006 Hikari Tsushin, Inc. All Rights Reserved. 25

  26. Slide 26: Consolidated Balance Sheet

    Consolidated Balance Sheet （¥ Millions） Millions） （¥ Millions） Millions） Mar-05 Mar-06 Jun-06 Mar-05 Mar-06 Jun-06 Current Assets 64,623 53,559 50,849 Current Liabilities 30,677 39,243 36,215 Cash 29,763 14,807 15,525 Acct Payables 12,587 14,298 10,475 Acct Receivables 20,618 22,346 18,667 Borrowing

  27. Slide 27: 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

  28. Slide 28: 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

  29. Slide 29: 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

  30. Slide 30: 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 ・・・・・・

  31. Slide 31: 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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