financial results · ifrs ifrs ifrs ifrs corporate 192.0 196.3 ＋2％ corporate 18.7 20.7 ＋11％...

Financial ResultsFor the nine months ended on December 31, 2016

February, 2017

©2017 HIKARI TSUSHIN,INC. All Rights Reserved


FY2015Q1-3

FY2016Q1-3

FY2017Q1-3 YoY

J-GAAP J-GAAP IFRS IFRS Increment Ratio

Net Sales 404.1 421.2 328.7 313.7 (15.0) (4%)

Operating Profit 18.1 26.0 26.5 29.2 ＋2.7 ＋10%

Net Income attributable to owners of the parent

16.3 22.0 20.9 31.8 ＋10.9 ＋52%

Consolidated Results

1

（in billions of JPY）

*Q1-3 = For the nine months ended on December 31th


FY2016Q1-3

FY2017Q1-3 YoY FY2016

Q1-3FY2017Q1-3 YoY

IFRS IFRS IFRS IFRS

Corporate 192.0 196.3 ＋2％ Corporate 18.7 20.7 ＋11％

Shop 116.2 97.1 (16％) Shop 8.0 9.2 ＋14％

Insurance 22.4 21.7 (3％) Insurance 3.6 2.8 (22％)

Consolidated Net Sales 328.7 313.7 (4％)

ConsolidatedOperating Profit

26.5 29.2 ＋10％

Profit Increase Corporate segment

2


©2017 HIKARI TSUSHIN,INC. All Rights Reserved3

Recurring Profit Increase Corporate segment

FY2015Q1-3

FY2016Q1-3

FY2017Q1-3

Corporate 27.1 32.6 36.8

Shop 15.5 14.8 14.2

Insurance 1.1 3.4 4.0

Total 43.8 51.0 55.0

Average annualgrowth rate

12%


438

510550

FY2015 Q1-3 FY2016 Q1-3 FY2017 Q1-3


FY2015Q1-3

J-GAAP

FY2016 Q1-3IFRS

FY2017 Q1-3IFRS

Corporate (13.1) (13.9) (16.0)

Shop (7.8) (6.8) (5.0)

Insurance (0.2) +0.1 (1.2)

Reconcil-iations (4.5) (3.8) (3.5)

Total (25.7) (24.4) (25.8)

4

Acquisition Cost Reduction Good selling of in-house products

(25.7)(24.4)

(25.8)

FY2015 Q1-3J-GAAP

FY2016 Q1-3IFRS

FY2017 Q1-3IFRS



Business Divisions

5


Business Divisions

Sales of water coolers

MVNO business, Sales of optical fiber line, etc.

Sales of photocopy machines, etc. Contents, IT Solutions, Electricity, etc.

Sales of mobile phones, etc.

Sales of insurance products etc.

Insurance

SHOP SHOP Corporate

New Business

OfficeEquipment

Communication Line

Water

Inside : SegmentOutside : Business Divisions

6

Insurance


Communication Line Business(MVNO, In-house Internet Service etc.)

7

2) Net Sales （JPY: billions） 3) Operating Profit （JPY: billions）

5053 51

J-GAAP J-GAAP IFRS

FY2015Q1-3

FY2016Q1-3

FY2017Q1-3

Outline ： Sales of optical fiber line etc.Products ： Mobile Wi-Fi Routers, SIM cards, etc.Model ： In-house Products, External Products

1) Image

5

10 10

J-GAAP J-GAAP IFRS

FY2015Q1-3

FY2016Q1-3

FY2017Q1-3


1314

15

Q1-3 Q1-3 Q1-3

FY2015 FY2016 FY2017

8

4) Recurring Profit（in billions of JPY）

Q1-3 Q1-3 Q1-3

FY2015 FY2016 FY2017

5) Sales Units （in thousands）

※In-house Products

363

423

332

Fixed Lines

MVNO

We expect an increase in recurring profit due to good selling of MVNO products.


Water Business

9

0.6

13

16

J-GAAP J-GAAP IFRS

FY2015Q1-3

FY2016Q1-3

FY2017Q1-3

(0.8)

(1.4)

(0.5)

J-GAAP J-GAAP IFRS

FY2015Q1-3

FY2016Q1-3

FY2017Q1-3

①事業イメージProduct development, pumping natural water, quality control, sales, and after sales services

Due to M&A

Outline ： Sales of water coolers etc.Products ： Water CoolersModel ： In-house Products

2) Net Sales （JPY: billions） 3) Operating Profit （JPY: billions）1) Image


4) Sales Units （thousands）

※Water Coolers

10

38

129

160

Q1-3 Q1-3 Q1-3

FY2015 FY2016 FY2017

5) Cumulative Subscribers

(thousands)

42

337

442

3Q 3Q 3Q

FY2015 FY2016 FY2017

Due to M&A

Due to M&A

Share No.1

ShareNo.3

We are continuing to maintain high market share and reduce more costs by improving the sales efficiency.


Outline ： New businessProducts ： Contents, IT Solutions, Electricity, etc.Model ： In-house Products, External ProductsNew Business

11

ElectricityContents Industry Specific IT Solutions

1)Image


2) Net Sales （JPY: billions） 4) Recurring Profit（in billions of JPY）

12

19

29

39

J-GAAP J-GAAP IFRS

FY2015Q1-3

FY2016Q1-3

FY2017Q1-3

(4.4)

(2.0)

(0.9)

J-GAAP J-GAAP IFRS

FY2015Q1-3

FY2016Q1-3

FY2017Q1-3

1

4

7

Q1-3 Q1-3 Q1-3

FY2015 FY2016 FY2017

Focused on future growth in various businesses

3) Operating Profit（in billions of JPY）


Office Equipment Business

13

108 106

89

J-GAAP J-GAAP IFRS

FY2015Q1-3

FY2016Q1-3

FY2017Q1-3

1312

11

J-GAAP J-GAAP IFRS

FY2015Q1-3

FY2016Q1-3

FY2017Q1-3

due to changes in accounting standards

1)Image 2) Net Sales (JPY: billions） 3)Operating Profit （JPY: billions）

Outline ： Sales of office equipmentProducts ： Photocopy Machines, Mobile Phones, LED Lights etc.Model ： External Products


1110 10

Q1-3 Q1-3 Q1-3

FY2015 FY2016 FY2017

14

577 603 621

3Q 3Q 3Q

FY2015 FY2016 FY2017


We are focusing on selling in-house products in order to re-growth of operating profit and recurring profit.

5) Subscribers（in thousands）


SHOP Business

217198

97

J-GAAP J-GAAP IFRS

FY2015Q1-3

FY2016Q1-3

FY2017Q1-3

7 7

9

J-GAAP J-GAAP IFRS

FY2015Q1-3

FY2016Q1-3

FY2017Q1-3

due to changes in accounting standards

1)Image 2) Net Sales （JPY: billions） 3)Operating Profit （JPY: billions）

Outline ： Sales of Mobile Phones through telecom shopsProducts ： Mobile Phones, MVNO etc.Model ： External Products


2,3722,219

2,083

3Q 3Q 3Q

FY2015 FY2016 FY2017

16

1514 14

Q1-3 Q1-3 Q1-3

FY2015 FY2016 FY2017

519

378

317

3Q 3Q 3Q

FY2015 FY2016 FY2017

⑥直営店舗数（単位：店舗）4) Recurring Profit（in billions of JPY）

5) Mobile Phone Stores 6) Directly managed stores

Transfer control of assets through selling directly managed stores to our independent agents. Leverage the existing networks of independently managed stores


Insurance Business

17

9

2221

J-GAAP J-GAAP IFRS

FY2015Q1-3

FY2016Q1-3

FY2017Q1-3

0.9

3.2

2.8

J-GAAP J-GAAP IFRS

FY2015Q1-3

FY2016Q1-3

FY2017Q1-3

Due to M&A

1)Image 2) Net Sales （JPY: billions） 3)Operating Profit （JPY: billions）

Outline ： Sales of insurance products etc.Products ： Insurance products etc.Model ： External Products


1.1

3.4

4.0

Q1-3 Q1-3 Q1-3

FY2015 FY2016 FY2017

200 210

264

3Q 3Q 3Q

FY2015 FY2016 FY2017


5) Directly managed stores

Due to M&A

Due to M&A

Despite a decline in both sales and operating profit due to transient reasons.


0.54

0.660.70

FY2015Q1-3

FY2016Q1-3

FY2017Q1-3

19

0.19 0.18

0.24

15/33Q

16/33Q

FY20173Q

Quarter Period Q1-3 period

In-house Products = ISP, Mobile Wi-Fi Routers, Mobile Phones (Reselling), IT Solutions, Water Coolers, Internet Service, SIM, Electricity

Sales Units of In-house Products（in millions）

（for the six months ended on September 30th ）（for the three months ended on September 30th ）


22%24%

26%

FY20153Q

FY20163Q

FY20173Q

1.6

2.12.2

FY20153Q

FY20163Q

FY20173Q

20

Cumulative Subscribersof In-house Products

Recurring Profitper user /month

Over ¥1,000

（million）Cumulative Subscribers Shareof In-house Productsin our main Products

Main Product・In-house Products = ISP, Mobile Wi-Fi Routers, Mobile Phones (Reselling), IT Solutions, Water Coolers, Internet Services, SIM, Electricity・External Products = Photocopy Machines, Fixed-line Internet, Mobile Phones (Corporate, Shop)


FY2017 FY2017 Q1-3

Expectation ResultProgression

Rate

Net Sales 410.0 313.7 76%

Operating Profit 42.0 29.2 69%


35.0（Previous Forecasts: 30.0）

31.8 90%（Previous Forecasts: 106%）

Good Forecasted Progress for FY2017（¥ billions）


FY2016 Q1-3

FY2017 Q1-3 Notes

Cash Flows fromOperating Activities +1.6 +9.1 Working Capital Improvement

Cash Flows fromInvesting Activities +10.8 (2.2) Decrease in investment securities sold

Free Cash Flow +12.4 +6.9 -

Cash Flows fromFinancial Activities (5.6) +26.5 Issuance of corporate bonds etc.

22

Consolidated Cash Flow（¥ billions）


107

84 86

6981

97

1Q 2Q 3Q 1Q 2Q 3Q

FY2016 FY2017

Cash + Listed Securities – Interest bearing Liabilities

23

（¥ billions）


non-controllinginterest

Net Income Pre-Tax Net IncomeOperating Profit

FinancialIncome

Equity inEarnings ofaffiliates

Others

Corporate incometax expenses

FinancialExpense

Gain on step acquisitions

etc.

Non-Operating Profit（¥ billions）


3.4

8.47.4

5.2

10.2

12.6

8.6

11.0

13.8

FY2008 FY2009 FY2010 FT2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017(E) Total

Dividends Paid 3.4 3.4 3.2 3.2 4.7 5.1 6.6 7.3 8.0 10.1 55.6

Total Shares Repurchased 0 5.0 4.2 2.0 5.6 7.6 22.0 1.3 3.0 37 54.1

Total Return Rate 122% - 1057% - 132% 75% 98% 42% 44% 39% 83%

25

28.6Return to Shareholders

Return Rate for 10 years

83％

（¥ billions）

Total Amount of Shares Repurchased and Approved Amount at Shareholder’s Meeting

Dividends Paid


References

26


Extensive Sales Network

Indirect Sales

approx.1,000 Companies

Direct and Indirect

Sales Staff

approx. 30,000 employees

Subscribers (Individual)

approx. 1.2 million

Sales Branches

89 Branches

Call Centers

30 Bases

Subscribers (Corporate)

approx. 0.9 million

Mobile Phone Stores

2,083 Stores

Insurance Stores

326 Stores

27


Main Products1) Water Coolers 2) Mobile Wi-Fi Routers 3) Internet Service 4)Industry Specific IT Solutions

Ｎｏ.１sales units per month


Ｎｏ.１among independent companies Over 14 million members

5) MVNO 6) Contents 7)LED Lights for Corporate clients 8) Photocopy Machines

Increase in sales units Selling wellＮｏ.１

sales units per monthＮｏ.２

among independent companies

9) Mobile Phones 10) Insurance 11) Fixed-line Internet ・・・

Ｎｏ.３Sales units per month

Ｎｏ.１among independent companies


・・・

In-house Products

28


Business dividends Products/Service Target Sales network Business Model

Corporate

CommunicationLine

Mobile Wi-Fi Router

SMEs Individual TMS Web VNOSIM

FTTH, ISP

Water Water Cooler SMEs Individual Booth In-house

New business

IT Solutions

SMEs

Door-to-door salesIn-house

Contents VNO

Electricity TMS Door-to-door sales VNO

OfficeEquipment

Mobile Phone (Corporate) SMEs Individual

Door-to-door sales AgentOA EquipmentSMEs

LED Light

SHOP SHOP

Mobile Phone (Shop)

Individual ShopAgent

Mobile Wi-Fi Router

SIM VNO

Insurance Insurance Insurance Individual TMS Shop Agent

Segments


Standard Earnings Model

IN ・・・

Recurring profits

OUT

CancelContract (Sales)

Month 1 Month 2 Month 3 Month 4 Month 5

Period of use

・・・

Time

Time

- Payroll cost for sales people

- Commission for independent sales agents

- Cost for store operation

Figure of earnings model per unit

30


③ High Recurring Profit

ModelMVNO, Water Coolers, In-house ISP, etc.

HikariTsushinUser Carrier

UsageFee

Cost ofInternet Service

② Low Recurring Profit

ModelMobile Phones (Shop), Insurance etc.

HikariTsushinUser Carrier

Usage Fee

Commissions

① Lump-sum Profit

ModelOA Equipment, LED Lights, etc.

CommodityFee

MerchandiseCost

・・・

1st

month2nd

month・・・ time

・・・

・・・ time

・・・

・・・ time

Lump-sum Profit

RecurringProfit

Very Large Very Small

Lump-sum Profit

RecurringProfit

Large Small

Lump-sum Profit

RecurringProfit

Small or None Large

HikariTsushinUser Manufac

turer

1st

month2nd

month1st

month2nd

month0

month0

month0

month

Business Models

31


Breakdown of Operating Profit

32

※FY2016 IFRS ①Recurring ②Lump-sum Total（①＋②）

Net Sales

Predictable and stable sales paid monthly by end users,

etc.Lump-sum Sales

447.6152.8 294.8

Cost of sales, andSelling, general and administrative expenses

Cost of customer retention such as billing

Lump sum cost, personal expenses, sales commission

for our agents, etc..

(410.0)(84.2) (325.8)

Operating Profit

Recurring Profit Acquisition Cost

37.668.6 (30.9)

（¥ billions）


Operating ProfitRecurring

Profit

０

After Acquisition

AcquisitionDiscontinuationAfter the Break-Even

Time

Price

Decrease due to Cancellations

Moderation in New AcquisitionBEP

Products

33

Internet Services

Water Coolers

IT Solutions

Mobile Wi-Fi Routers In-house ISP

Trends of Operating Profit for High Recurring Profit Model

Mobile Phones(Reselling)

Acquisition Cost

Products Products


12/3J-GAAP

13/3J-GAAP

14/3J-GAAP

FY2015J-GAAP

FY2016J-GAAP

Net Sales 499.3 500.3 565.1 562.5 574.5

Operating Profit 18.3 24.5 31.7 32.0 37.4

Ordinary Income 17.6 27.1 39.7 36.5 38.3

Net Income Pre-tax 16.5 27.4 49.6 45.8 51.1


7.8 16.8 29.3 20.7 25.0

EPS(Earnings per share) ¥149 ¥343 ¥623 ¥450 ¥538

ROS(Return on sales) 3.6% 4.9% 5.6% 5.7% 6.5%

Consolidated Income Statement（¥ billions）


Consolidated Balance Sheet

14/3J-GAAP

FY2015J-GAAP

FY2016J-GAAP

Cash and Deposits 23.6 40.6 50.6

Accounts Receivable 100.0 92.4 96.4

Inventories 17.2 16.1 14.8

Total Current Assets 171.3 194.3 212.1

Investments in Securities 133.1 138.6 129.3

Total Fixed Assets 167.4 198.9 198.2

Total Assets 338.8 393.3 410.3

35

14/3J-GAAP

FY2015J-GAAP

FY2016J-GAAP

Accounts Payable 48.2 42.3 41.1

Other Payables 53.4 51.6 49.6

Interest-bearing Liabilities 59.4 76.7 97.5

Total CurrentLiabilities 156.1 159.8 172.6

Total Fixed Liabilities 38.9 58.0 57.3

Total Liabilities 195.1 217.8 230.0

Total Hikari Tsushin Shareholder’s Equity 104.7 121.7 136.5

Difference in Revaluation 25.3 39.3 30.3

Non-controlling Interest 12.4 13.5 12.7

Total Shareholders' Equity 143.6 175.5 180.3

Total Liabilities and Shareholders' Equity 338.8 393.3 410.3

14/3J-GAAP

FY2015J-GAAP

FY2016J-GAAP

Owned Capital 130.0 161.2 166.7

Capital Ratio 38.3% 40.9% 40.6%

（¥ billions）


Hikari Tsushin’s Strengths

① Strength from the beginning ② Sales Channels

③ Recurring Profit ④ Hikari Tsushin’s Own Customer

Stable income each month enables investments for new business.

Expansion in Sales Market Share:Sales channel is extending by acquiring new agencies.

Large Number of Sales creates efficiency in gaining profit by cross-selling.

ExpandMarket Share

MoreCommission

IncreaseAgencies

RecurringProfit

OperatingIncome

AcquisitionCost

6830

37

Corporate

900,000

36

Corporate philosophy and culture have enhanced earnings since the time of establishment.

LowCost

MeritSystem

CustomerData Base

Flexibility

Individual1,200,000

（March, 2015）

(in billions of JPY)


Used Stamp Donation

Bottle Cap Collectionfor vaccine donations

We collect and donate plasticbottle caps to Japan CommitteeVaccines(NPO), who providesvaccines for children around theworld. More than 291 millioncaps were collected by Feb.2016.

TC Team from Hikari Tsushin,clean the Ikebukuro area bypicking up littered garbage onevery Thursday. We wereaddressed as “Toshima cleansupporter” on Toshima-kuofficial website.

We have been donating usedstamps to Toshima WardResidents Council of SocialWelfare since March, 2013.Collected stamps changed intocash for donation.

Paperless Project

Hikari Tsushin’s CSR

37

Cleaning Activity in Toshima ward

We have implemented PaperlessProject in Hikari Tsushin Group.Tablets PCs and projectors areused instead of hard copydocuments.


DisclaimerThis material contains “forward-looking”information, including the company’splans, strategies, forecasts and beliefs.Hikari Tsushin cautions readers thatforward-looking statements are basedon Hikari Tsushin’s currentexpectations, which have been derivedfrom information that is currentlyavailable and involve a number of risksand uncertainties. Actual results maydiffer significantly from informationshown here.

financial results · ifrs ifrs ifrs ifrs corporate 192.0 196.3 ＋2％ corporate 18.7 20.7 ＋11％...

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