Dentsu Soken Inc. · TSE:4812
Dentsu Soken — Information Services International-Dentsu — FY2018 Earnings Presentation
36 slides from Dentsu Soken's earnings presentation, Feb 8, 2019
Slide 1: Business Results Briefing for FY2018 (ended December 31, 2018)
BUSINESS RESULTS BRIEFING FOR FY2018 (ENDED DECEMBER 31, 2018) February 8, 2019 Information Services International-Dentsu, Ltd. Note: This English translation is solely for reference purposes and not a legally definitive translation of the original Japanese text. In the event a difference arises reg
Slide 2: Agenda
AGENDA Section 1 Outline of FY2018 business results, forecast for FY2019 and review of the previous medium-term management plan (FY2016–FY2018) Nobuo Uehara Senior Managing Director Section 2 Concerning the new medium-term management plan (FY2019–FY2021) Ryoichi Nawa President, CEO & COO 2
Slide 3: 1. Consolidated Results for FY2018
1. Consolidated Results for FY2018 ISID achieved record highs in net sales, operating income, ordinary income and net income attributable to owners of parent. Increase in net sales and profit primarily due to expansion in Financial Solutions, Engineering Solutions Year on year and Communication IT S
Slide 4: 2-1. Factors for Increase/Decrease in Operating Income (YoY)
2-1. Factors for Increase/Decrease in Operating Income (YoY) (100 million yen) YoY +27.5 Improvement Increase in in gross profit margin SG&A -16.6 +20.7 Effect of Operating sales increase income +23.4 82.3 Operating Elimination of impact from unprofitable projects Increase in personnel income expens
Slide 5: 2-2. Factors for Increase/Decrease in Operating Income (vs. initial forecast)
2-2. Factors for Increase/Decrease in Operating Income (vs. initial forecast) Vs. initial forecast +12.3 (100 million yen) Reduction Effect of Drop in gross profit margin in SG&A vs. Operating sales -4.1 forecast +6.3 increase income +10.1 82.3 Operating income 70.0 Gross profit margin R&D expense d
Slide 6: 3. Net Sales and Operating Income by Business Segment
3. Net Sales and Operating Income by Business Segment （Million yen） YoY Vs. initial forecast Business segments FY2018 Variance % change Overview Variance % change Net sales rose as sales from major clients expanded, Net sale 23,242 ＋1,829 +8.5 -158 -0.7 and the Company received new projects from gov
Slide 7: 4. Consolidated Net Sales by Service Category
4. Consolidated Net Sales by Service Category （Million yen） YoY Vs. initial forecast Service categories FY2018 Variance % change Overview Variance % change Digital marketing, design and Consulting Services 6,818 +1,303 +23.6 manufacturing domains sales significant +1,140 +20.1 growth Transportation
Slide 8: 5. Consolidated Balance Sheets
5. Consolidated Balance Sheets （Million yen） As of December 31, As of December 31, Variance Main Factors for Increase/Decrease 2018 2017 increases in Deposits paid（+3,778） Total current Assets 66,085 59,311 ＋6,774 increases in Advance payments（+1,532） increases in Accounts receivable–trade（+1,252） i
Slide 9: 6. Consolidated Statements of Cash Flows
6. Consolidated Statements of Cash Flows （Million yen） YoY FY2018 Main Factors FY2017 Variance Net income before income taxes（7,748） Depreciation（2,262） Cash flows from operating activities 9,319 Increase in accrued expenses（1,461） 4,265 5,054 Increase in advance payments（-1,541） Increase in notes a
Slide 10: 7. Orders received and Order backlog
7. Orders received and Order backlog • Both orders received and order backlog increased greatly in the Financial Solutions segment in the second quarter, thanks in part to large project orders from government-affiliated financial institutions (¥6.5 billion). （Million yen） Orders received Order backl
Slide 11: FY2019 Forecast
FY2019 Forecast Note: The Engineering Solutions Segment was changed to the Manufacturing Solutions Segment on January 1, 2019. 11
Slide 12: 1. Forecast for FY2019
1. Forecast for FY2019 (Million yen) YoY Main measures FY2019 FY2018 Variance % change Net sales Aim to cover for the reactionary Net sales 93,000 91,024 +1,976 +2.2 decline in sales to the Dentsu Group and increase net sales Operating income 8,500 8,239 +261 +3.2 Operating income Strive to maintain
Slide 13: 2. Factors for Increase/Decrease in Operating Income
2. Factors for Increase/Decrease in Operating Income (100 million yen) Improvement in gross profit Increase margin YoY +2.7 in SG&A +12.6 -16.4 Effect of sales Raise the gross profit increase margin by 1.3p year on year Operating +6.5 to 34.4%, primarily by raising the profit margin for income in-ho
Slide 14: 3. Net Sales Forecast by Business Segment
3. Net Sales Forecast by Business Segment (Million yen) YoY Business segment FY2019 Main measures FY2018 Variance % change ・System development for major financial institutions ・BANK R and lease and finance solution Lamp, Financial Solutions 23,790 23,242 +548 +2.4 financial operations support servic
Slide 15: 4. Net Sales Forecast by Service Category
4. Net Sales Forecast by Service Category (Million yen) YoY Service categories FY2019 FY2018 Variance % change Consulting Services 6,333 6,818 -485 -7.1 Custom System Development 25,269 24,188 +1,081 +4.5 In-house Software 15,763 15,070 +693 +4.6 Third-party Software 29,189 27,261 +1,928 +7.1 Outsou
Slide 16: 5. Earnings Forecast for the First Half of FY2019
5. Earnings Forecast for the First Half of FY2019 (Million yen) YoY First half of FY2019 Ratio to full year First half of (Jan. – Jun.) Variance % change FY2018 Net sales 46,264 43,086 +3,178 +7.4 49.7% Operating income 3,960 3,801 +159 +4.2 46.6% Operating margin 8.6% 8.8% -0.2p － － Ordinary income
Slide 17: 6. Net Sales Forecast for the First Half of FY2019
6. Net Sales Forecast for the First Half of FY2019 ■Net sales by business segment ■Net sales by service category (Million yen) (Million yen) YoY YoY First half of First half of Business segments FY2019 Service categories FY2019 First half of First half of (Jan. – Jun.) Variance % change (Jan. – Jun.
Slide 18: Review of Previous Medium-term Management Plan (FY2016–FY2018)
Review of Previous Medium-term Management Plan (FY2016–FY2018) 18
Slide 19: Outline of Previous Medium-term Management Plan ISID Open Innovation 2018
Outline of Previous Medium-term Management Plan ISID Open Innovation 2018 “Joint Value Creation” Help resolve the issues our customers and society face by generating new, forward-looking value through collaboration with a wide range of partners 1) Pursue Competitive Advantages 2) Develop New Busines
Slide 20: Summary 1. Performance Evaluation
Summary 1. Performance Evaluation Net sales target not achieved. Main factors were inability to achieve inorganic growth and changes in the Financial Solutions business environment. At the same time, profitability increased, with all profit target items achieved. Plan targets FY2018 actual Diffe
Slide 21: Summary 2. Performance Evaluation by Business Segment
Summary 2. Performance Evaluation by Business Segment FY2018 Plan targets actual Difference Reasons for difference (billion yen) Net sales 27.7 23.2 -4.5 Unachieved due to impact from restrained investment among financial institutions amid negative interest rate environment. Financial Operating So
Slide 22: For the New Medium-term Management Plan
For the New Medium-term Management Plan Realized stable growth since the fiscal year ended March 2011. Aiming for the next stage of growth, we are bringing in a new generation of management and plan to make further leaps forward. 91.0 93.0 ■ Consolidated net sales (billion yen) ■ Consolidated op
Slide 23: New Medium-term Management Plan (FY2019–FY2021)
New Medium-term Management Plan (FY2019–FY2021) 23
Slide 24: Business Environment Awareness
Business Environment Awareness Although we have grown steadily through the past three medium-term 1 plans, the business environment is changing rapidly amid the advance of technology. To sustain and increase growth, we ourselves must change to 2 accelerate opportunities through the start of innovati
Slide 25: Aims of Updated Corporate Philosophy
Aims of Updated Corporate Philosophy To head in the right direction (toward our idea state) and share our values (strengths, core values). Based on this new Corporate Philosophy, respond to environmental changes and accelerate innovations to achieve further growth. Technological Implementation H
Slide 26: New Corporate Philosophy
New Corporate Philosophy Mission Acting with sincerity, we contribute to progress and harmony among our customers, consumers, and society by exploring the unlimited potential of technology. Vision Humanology for the future Bringing people and technology together to shape the future. Understanding hu
Slide 27: ISID X (Cross) Innovation 2021
New Medium-term Management Plan (FY2019–FY2021) ISID X(Cross) Innovation 2021 Aim to create new value through collaboration with a wide range of partners and realize our corporate philosophy through the promotion of “X Innovation” going beyond technologies, industries, companies, organizations and r
Slide 28: Key Measures by Business Segment
Key Measures by Business Segment 1 Core business evolution: Maintain and expand businesses for core clients. Drive new clients in the life and non-life insurance, securities, leasing business and other industries. Enhance and expand proprietary software products such as BANK･R and Financial La
Slide 29: Key Measures by Business Segment
Key Measures by Business Segment 2 Core business evolution: Expand and link digital solutions supporting the manufacturing industry value chain. Promote and establish Model Based Systems Engineering (MBSE) through the Manufacturing strengthening and global deployment of iQUAVIS. Solutions New bu
Slide 30: New Business Creation through X Innovation
New Business Creation through X Innovation Realize sustainable society (SDGs, Society 5.0) Utilize IoT, AI and robots Cyber-physical system Connected industry Environment and energy resources Safe, secure society Digital transformation Smart Mobility as a FinTech Smart factory Information bank Digit
Slide 31: Business Foundation Innovations
Business Foundation Innovations Strengthen the quality and quantity of our human resource capabilities—the source of our strengths—aiming to employ more than Strengthen human 300 talents by 2021. resources Strengthen recruitment and education skills. Promote diversity and workstyle innovations
Slide 32: Quantitative Goals (consolidated)
Quantitative Goals (consolidated) FY2018 actual FY2021 targets Difference CAGR Net sales (billion yen) 91.0 110.0 +19.0 6.5% Operating income (billion yen) 8.2 11.0 +2.8 10.3% Operating margin 9.1% 10.0% +0.9p ROE 10.5% 12.5% +2.0p 32
Slide 33: Quantitative Goals: Net sales by Business Segment
Quantitative Goals: Net sales by Business Segment In addition to growth in each segment, create new X Innovation businesses. FY2021 FY2021 X Innovation (Billion yen) FY2021 Difference target target total FY2018 actual targets (CAGR) Financial Solutions 23.2 27.0 +3.8 (5.1%) Business Solutions 16.8
Slide 34: Growth Investments
Growth Investments Performance for the three-year period Targets for the three-year between 2016–2018 period between 2019–2021 Objective (Billion yen) Improve human resource capabilities, increase employee Human numbers. resources – +12.0 (investment amounts increased for the education, recruiting a
Slide 35: Returning Profits to Shareholders
Returning Profits to Shareholders To further strengthen the return of profit to shareholders, change the consolidated payout ratio from the “35%–40%” to “40% or more.” Going forward, maintain internal reserves for realizing sustainable growth, provide shareholder return under the basic policy of
Slide 36: Humanology for the future
isiD Humanology for the future COPYRIGHT /NFORMATION SERVICES INTERNATIONAL-DENTSU LTD. 36
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