NetOne Report 2014 Vol.32
Transcription
NetOne Report 2014 Vol.32
Securities Code: 7518 Shareholder Information Basic Information Procedures Relating to Share Transactions Shareholders who have an account with a securities firm Stock Listing First Section of Tokyo Stock Exchange Securities Code 7518 Procedures, inquiries, etc. Share Unit (Trading Unit) 100 shares Securities firm or equivalent where you hold your account Fiscal Year April 1 through March 31 esignating/changing the D dividend receipt method Requests to purchase fractional shares Annual Shareholders Meeting June Dates of Record • S ending and return of mailed material Dividends after the payment period Shareholder Registry Administrator Sumitomo Mitsui Trust Bank, Limited 1-4-1, Marunouchi, Chiyoda-ku, Tokyo, 100-8233, Japan Annual Shareholders Meeting March 31 Year-End Dividend March 31 • Interim Dividend September 30 • Method of Public Notice Electronic public notice (NetOne website) Announcement URL http://www.netone.co.jp/ Public notices of the Company shall be made via electronic notification. In the event that this method is not available due to accidents or other circumstances, the Company will publish announcements via the Nihon Keizai Shimbun. Contact address 14 April 1, 2014 to September 30, 2014 Vol. 32 S hares registered in special accounts (shareholders who do not have an account with a securities firm) Contact address Procedures, inquiries, etc. Postal address and telephone contact number Special Account Management Institution Sumitomo Mitsui Trust Bank, Limited 1-4-1, Marunouchi, Chiyoda-ku, Tokyo, 100-8233, Japan Stock Transfer Agency Business Planning Dept., Sumitomo Mitsui Trust Bank, Limited 2-8-4 Izumi, Suginami-ku, Tokyo 168-0063, Japan Tel: 0120-782-031 (toll free within Japan) CONTENTS Net One Systems Co., Ltd. JP TOWER, 2-7-2 Marunouchi, Chiyoda-ku, Tokyo 100-7024, Japan Tel: +81-3-6256-0615 (Investor Relations) http://www.netone.co.jp/english.html To Our Shareholders P. 1 Strategic Progress in FY2014 P. 3 Operating Results P. 5 Consolidated Financial Statements P. 7 Net One Systems Co., Ltd. Stock Information / Corporate Data P. 9 Securities Code: 7518 To Our Shareholders Initiatives in the First Half Promoting an Evolution from a Professional Group That Merely “Connects” to One That Is “Fully Utilized” I am pleased to report about the progress of our business and future strategy through this NetOne Report covering the first half of FY2014, ending March 31, 2015. President & CEO Takayuki Yoshino Highlights from the First Half of FY2014 Performance in the first quarter failed to meet forecasts, resulting in a first half that did not live up to expectations performance fell below expectations and we were company-wide matrix sales structure, shifting from a unable to recover and make up for this drop in the sector-specific approach to a vertical region-based second quarter. Two major factors were responsible and horizontal market-based approach. During the for this result. first half, our efforts in the Public Sector (PUB Sector) began to pay off, but we found that more First, in the Enterprise Sector (ENT Sector), due to the end of support for Windows XP, we saw robust time was required to prepare for sales and investment for replacement PCs between April and marketing activities under the new structure May, but other IT investment was largely held in for the ENT Sector and the Telecom Carrier Sector check. Our projects were therefore slow to take (SP Sector). 1st half 160,667 82,511 Revenue (unit: million yen) 2nd half 154,582 73,092 1st half 2nd half 140,000 146,216 (estimated) 157,633 154,869 72,256 87,881 73,188 (estimated) Operating income (unit: million yen) 1st half 136,000 142,427 (estimated) 2nd half 79,010 77,029 (estimated) 8,451 FY2011 1 81,490 73,959 FY2012 FY2013 66,812 FY2014 69,752 FY2011 76,997 63,417 FY2012 FY2013 58,971 FY2014 6,245 FY2011 building a network and cloud-based information Aichi Prefecture, as disclosed in January 2014. This infrastructure for storing and securing data over the prefecture is working to eliminate large computers Internet. At the same time, we expanded our reach (general-purpose machines) and rebuild its into domains where we can be “fully utilized,” in information systems to cut costs and achieve more addition to those where we merely “connect.” Since stable operations. Aichi Prefecture was highly launching our new sales system in April, we have impressed with our proposal for boosting reliability been addressing the challenge of creating a and cutting costs while enhancing efficiency across standardization structure, while reinforcing our the government’s entire system. These sales and proposals for effective and stable utilization based marketing activities focused on unified platform on the keywords of “shared” and “virtualization” infrastructures are also beginning to take hold in (a technology enabling computers to be used efforts aimed at the ENT Sector and SP Sector. and stable manner). Initiatives in the Second Half and the Annual Outlook Accelerating efforts in many markets under the keywords of “shared” and “virtualization” 3,142 4,595 In the ENT Sector, investments in new PCs have second half and beyond for the SP Sector, because run their course and demand should now rise for capital expenditures (capex) for network conventional system improvements. We are stepping development were lagging. However, central and up sales and marketing to expand cloud builder local governments are beginning to implement services that help customers to construct their own unified platform infrastructures to respond to the private clouds, and we are expanding cloud broker rollout of new systems, such as the “my number” services that connect customers’ private clouds with national identification number system. At the same the public clouds of Google or Amazon. In this manner, our efforts that started several connects Japan’s residential registration system, years ago to develop domains where we can be social insurance, and tax data. We anticipate that “fully utilized” are expected to deliver results in the PUB Sector sales will pick up robustly heading into second half and beyond. the next fiscal year, in line with the new keywords of 3,856 78,155 and remote backup system that we developed for time, plans are in place to develop a platform that 15,229 8,984 77,871 An example of this is the private cloud platform to develop the platform business, centered on We anticipated that sales would remain weak in the hold, resulting in weaker sales. Bookings (unit: million yen) Several years ago, we began stepping up our efforts simultaneously by multiple users in a more effective Second, since April we have organized a During the first half of FY2014, first-quarter Reinforcing value-added proposals to fully utilize the network 3,800 (estimated) 3,164 3,840 (estimated) –22 –40 FY2012 FY2013 FY2014 “unified platform infrastructure.” We are seeing a growing trend in which local governments are introducing our system of office environments to boost employee productivity. Consolidated Earnings Outlook for FY2014 Revenue Operating income Ordinary income Net income ¥136,000 ¥3,800 ¥4,000 ¥2,300 million million million million (down 4.5% yoy) (up 20.9% yoy) (up 13.1% yoy) (up 133.9% yoy) NetOne Report 2014 2 To Our Shareholders: Strategic Progress in FY2014 Develop human resources FY2014 Strategy Adapt to market changes Shift from Capex to Management of Operating Expenditure (Opex) Responding appropriately to the needs of users to improve operating efficiencies The ICT industry where we operate represents a Improve business processes Develop human resources Improve business processes Our Initiatives to Improve Productivity We introduced a new ERP system in April 2014 We have established our own in-house system using packaged software fully compliant with global standards. When this system was rolled out, I said world that fuses together the completely different that we should operate about 80% of our existing technologies of computers and networks. Since our business processes on this new system, and so we establishment, we have developed network infrastructure that connects these two technologies. used our existing business processes without modification on this new system. Such an approach The future of network infrastructure indicates a shift was the conventional thinking of a Japanese from capex for building future systems to a company, but we decided to dispense with this reduction in opex for operating these systems, due to Japan’s progressive population aging and the declining birthrate, as well as technological advances that have reduced equipment prices. Opex process and start over. To this end, we decided to fully utilize the new system after fundamentally rethinking our business processes. Raw data need to be processed and analyzed for system operations has increased significantly as to manage revenue and expenditures more network usage has risen and virtualization appropriately, and data management systems should technologies have been introduced. Moving be simple if the client wishes to take action using forward, demand is expected to grow further for quick cycles. One and a half years have passed since network operators to reduce opex. we relocated to our new headquarters, and we are As an ICT multi-vendor, we have built up our focused now on making simpler and more own data on the operations of a range of meaningful proposals by consolidating business equipment and accumulated the expertise to processes, such as those involving demonstrations to analyze these data. In addition, as reflected in our customers held in the Solutions Briefing Center. efforts to boost business efficiency at the Innovative Our experience gained from completely starting over Office at the new headquarters, we have put in will enable us to make better proposals to our place the means to use our own experience to customers in the years ahead. The Current Situation and Future Direction of Human Resource Investment When we launched operations in 1988, Japan had We are reinforcing human resource development and fundamentally changing our personnel system connecting servers and computers in an office Over the past two years, we have established systems in the cloud builder domain that combine computers, storage and software, while promoting the acquisition of technological certification from relevant manufacturers for the skills needed to introduce new business processes. In addition, we have sent junior engineers to the U.S. headquarters of several of our partner vendors each year to foster better interaction and networking with senior level engineers at the companies. As for new hires out of university, we used to place them in positions on the frontlines after they had completed only three months of classroom learning, but starting this year we have placed all of them in the Engineering Division for a period of nine months after their classroom learning to ensure that they receive practical on-the-job training. This system ensures that these new hires are assigned their first job only after building up a broad range of experience with customers. In terms of human resources, starting in April we changed our compensation system based on a reclassification of employee roles into (1) people who actively make proposals, (2) people who support the execution of such proposals, and (3) people who engage in standard work. We have also incorporated a system to rotate in external human resources and changed our personnel evaluations so make proposals to customers. Having shifted from a that they are equally weighted on efforts and focus on the creation of network infrastructure to results. This will enable us to make more proactive its use, as a professional ICT platform group that investments in the employees who promote and can be “fully utilized,” we will continue to respond implement our policies. rapidly to our customers’ needs to improve their operating efficiency. 3 Adapt to market changes Message to NetOne Shareholders yet to see the dawn of network development for environment. Subsequently, the scope of these connections broadened and connection speeds increased, and today a high-speed Internet environment is the norm. As a professional connector, we have continually advanced and evolved the network infrastructure since our establishment. The world has entered an era of full utilization of ICT platforms. For example, an emerging need is the wiser use of external platform and the maximization of platforms to enhance business efficiencies. I believe that transforming our business in these changing times and aiming to become a professional ICT group that is “fully utilized” will uncover a great number of potential markets for us to serve. I would like to thank all shareholders for your continued cooperation and unwavering support of NetOne, a group of companies that is paving the way in the utilization of networks. Operating Results Business Overview Overview by Market Sector NetOne validates and tests new products from a range of vendors in Japan and overseas using its own As customer needs diversify, the characteristics of ICT markets vary depending on the region and on proprietary technologies, and then creates the optimal solution to meet customers’ individual needs. We corporate conditions. To closely monitor the markets and provide the solutions best suited to our customers, we broadly divide support the growth of clients’ businesses by adding our unique value to next-generation ICT platforms, the markets into four sectors. combining the latest products and technologies based on our experience and expertise. Revenue by Product Category Enterprise: First half of FY2013 First half of FY2014 ¥63,417 million ¥58,971 million Service businesses 38.1% 17,633 Network products 45.7% Telecom Carrier: Platform products 11.7% First half of FY2013 First half of FY2014 Bookings Revenue (unit: million yen) 23,184 23,170 Our network products include relay The mainstay of our platform Our service businesses offer devices for controlling data products consists of highly efficient, consistent support from consulting transfers, such as routers and secure and robust ICT systems for for introduction of ICT systems to switches needed to build everything cloud businesses, comprising planning, designing, construction, from large-scale systems for servers and storage, loaded with maintenance, operations, and Public: telecom and Internet service virtualization technologies and optimization services. Across-the- providers to intra-network systems security technologies. We also board services are also available PUB Sector for business entities. We also promote unified collaboration that for oversight and management provide a host of other aids user communication in video of the entire life-cycle of an ICT telecommunications equipment, conferencing and other virtual system built for multi-vendor including optical transfer systems spaces, as part of our drive to help environments. and wireless control systems. customers boost productivity. Optimize Prepare ICT system Operate Implement Targets artner businesses P P rovision of platform solutions First half of FY2013 First half of FY2014 Bookings Revenue (unit: million yen) 22,344 20,275 12,934 13,455 Breakdown of sales (first half of FY2014) Performance ecrease in bookings due to a D continuing drop in capex for telecommunication lines 34.3% (first half of FY2014) Performance trong bookings from system S optimization, unified platform infrastructure, and authentication infrastructure projects for central and local governments 21.9% Breakdown of sales First half of FY2013 First half of FY2014 Bookings Revenue (unit: million yen) 9,236 8,525 10,625 9,373 (first half of FY2014) Performance teady revenue from ongoing S demand for network building and support services 15.9% elayed progress in platform D implementation Breakdown of sales First half of FY2013 5 27.8% Breakdown of sales NOP Targets ecline in both bookings and D revenue, reflecting sluggishness in overall projects t e a d y p ro m o t i o n o f c l o u d S platform development nified platform U infrastructure Improvements in work style Net One Partners: Plan Design 20,207 17,636 etwork infrastructure N S ervice delivery platform Service businesses Performance Increase in collaboration tool projects for virtualization and video conferencing Targets Platform products 16,195 16,381 L arge-scale ICT systems Improvements in work style SP Sector Network products (unit: million yen) 20,649 Targets Service businesses 42.6% Network products 49.7% Platform products 12.2% ENT Sector Bookings Revenue First half of FY2014 (first half of FY2014) NetOne Report 2014 6 Consolidated Financial Statements Net One Systems Co., Ltd. and Consolidated Subsidiaries Consolidated Balance Sheets (Summary) As of September 30, 2013 Consolidated Income Statements (Summary) (unit: million yen) As of March 31, 2014 As of September 30, 2014 (unit: million yen) First half of FY2013 First half of FY2014 Total assets Assets Current assets 78,953 78,580 78,269 Noncurrent assets 11,722 12,043 11,663 Property, plant and equipment 6,013 5,775 5,697 Intangible assets 1,427 1,860 1,750 Investments and other assets 4,281 4,407 4,214 Total assets were ¥89,932 million, down ¥692 million from the previous fiscal year-end, due to a decrease in notes and accounts receivable-trade, while cash and deposits and inventories increased. Total liabilities Total liabilities were ¥33,837 million, up ¥476 million, reflecting a decrease in notes and accounts payable-trade and an increase in prepayments. Earnings position Revenue Cost of revenue Gross profit Selling, general and administrative expenses 63,417 (100.0%) 58,971 (100.0%) 48,573 (76.6%) 45,178 (76.6%) 14,843 (23.4%) 13,793 (23.4%) Revenue decreased by 7.0% year on year to ¥58,971 million. The drop in revenue resulted in gross profit of ¥13,793 million. As a result, we recorded an operating loss of ¥40 million, despite efforts to rein in SG&A expenses. 14,866 (23.4%) 13,833 (23.5%) Cash flow from operating activities (22) (-0.0%) (40) (-0.1%) 87 (0.1%) 129 (0.2%) Ordinary income 64 (0.1%) 88 (0.2%) Extraordinary loss (1,012) (-1.6%) (14) (0.0%) Net cash provided by operating activities during the first half of FY2014 was ¥3,524 million, a year-on-year increase of ¥5,005 million. This was mainly attributed to an increase in income from a decrease in notes and trade receivablestrade, a decrease in expenditures from an increase in inventories, and an increase in expenditures from a decrease in notes and accounts payable-trade. Income (loss) before income taxes and minority interests (947) (-1.5%) 74 (0.1%) Cash flow from investing activities Net income (loss) Operating loss Non-operating income Total net assets Total assets 90,675 90,624 89,932 Liabilities Current liabilities Noncurrent liabilities Total liabilities 29,842 31,537 31,854 1,837 1,823 1,983 31,680 33,361 33,837 Total net assets were ¥56,094 million, down ¥1,168 million, due to the retirement of treasury stock and a decrease in retained earnings reflecting the payment of dividends. (873) (-1.4%) Consolidated Cash Flow Statements (Summary) Net assets First half of FY2013 58,770 57,141 55,736 Capital stock 12,279 12,279 12,279 Capital surplus 19,453 19,453 19,453 Retained earnings 28,555 28,926 25,160 Treasury stock (1,518) (3,518) (1,157) Accumulated other comprehensive income (35) 55 258 Subscription rights to shares 66 66 193 58,995 Shareholders’ equity Minority interests Total net assets 31 (0.1%) (unit: million yen) First half of FY2014 Net cash provided by (used in) operating activities (1,481) Net cash used in investing activities (2,371) Free cash flows (3,852) 2,628 Net cash used in financing activities (1,774) (1,822) Net increase (decrease) in cash and cash equivalents (5,627) 804 99 Cash and cash equivalents at beginning of period 29,580 21,183 — — Cash and cash equivalents at end of period 23,952 21,988 57,263 56,094 3,524 (896) Net cash used in investing activities was ¥896 million, a decrease of ¥1,475 million . This was primarily due to a decline in expenditures associated with the acquisition of plant, property and equipment for sales and marketing purposes. Cash flow from financing activities Net cash used in financing activities amounted to ¥1,822 million, an increase of ¥48 million. This was mainly attributable to an increase in expenditures from the repayment of lease obligations. For further details please visit our corporate website: http://www.netone.co.jp/english/ir.html Total liabilities and net assets 7 90,675 90,624 89,932 NetOne Systems IR Search NetOne Report 2014 8 Stock Information / Corporate Data Stock Information (As of September 30, 2014) Earnings results announcement and presentation Number of Shares Issued———————————————— 86,000,000 Number of Shareholders—————————————————— 26,178 Major Shareholders (Top 10) Number of Ownership shares held ratio (%) Name Japan Trustee Services Bank, Ltd. (Trust Account) 6,667,600 7.89 STATE STREET BANK WEST CLIENT-TREATY 6,477,700 7.66 GOLDMAN SACHS INTERNATIONAL NORTHERN TRUST CO. (AVFC) RE NVI01 2,639,141 3.12 2,240,300 Master Trust Bank of Japan, Ltd. (Trust Account) The Bank of Tokyo-Mitsubishi UFJ, Ltd. Meiji Yasuda Life Insurance Company 2.46 1,656,000 1.96 1,440,000 1,438,700 CBNY-ORBIS SICAV 1,359,810 Japan Trustee Services Bank, Ltd. (Trust Account 4) 2.65 2,080,700 Association of Net One Systems Employees participating the Employee Stock Ownership Program Corporate Data (As of September 30, 2014) Annual Investor Relations Schedule 1.70 1.70 Fourth Quarter 3 2 4 Corporate Name Net One Systems Co., Ltd. First Quarter 5 1 1.51 February 1, 1988 Capital Stock 12,279 million yen Business Activities Networking business 7 11 10 Third-quarter earnings results announcement and presentation Third Quarter 9 8 Annual Shareholders Meeting Number of Employees Consolidated: 2,419 (a decrease of 10 year on year) Non-consolidated: 2,151 (a decrease of 6 year on year) Major Banks The Bank of Tokyo-Mitsubishi UFJ, Ltd. Mizuho Bank, Ltd. The Company is established and inaugurated in Minato-ku, Tokyo. Oct. 1990 The Ukima Distribution Center (the Quality Control Center) opens. Feb. 1991 The Company is registered and certified as a systems services company (systems integrator) by the Ministry of International Trade and Industry (currently, Ministry of Economy, Trade and Industry). Oct. 1992 The Company is granted a license for a specific construction business (telecom engineering business) by the Tokyo Metropolitan Government. Oct. 1996 The Company registers its stock on the over-the-counter market of the Japan Securities Dealers Association. Apr. 2000 Network Service And Technologies Co., Ltd. is established as a consolidated subsidiary engaging chiefly in service business. Dec. 2001 The Quality Control Center gains ISO 9001 certification. Sumitomo Mitsui Banking Corporation Second Quarter Second-quarter earnings results announcement and presentation Feb. 1988 Network platform business Service business Mitsubishi UFJ Trust and Banking Corporation Sumitomo Mitsui Trust Bank, Limited First-quarter earnings results announcement and presentation Consolidated Subsidiaries Net One Partners Co., Ltd. Xseed Co., Ltd. Net One Systems USA, Inc. (subsidiary based in the United States) Indicators (FY) 2011 2012 2013 Earnings per share (yen) 94.56 48.89 11.40 Book-value per share (yen) 703.25 699.63 676.65 Dividends per share (yen) 31.00 34.00 34.00 Dividend payout ratio (%) 32.8 69.5 298.2 Return on equity (%) 14.3 6.9 1.7 1.61 1,275,100 Established 6 12 History Net One Systems Singapore Pte. Ltd. (subsidiary based in Singapore) The Company is listed on the First Section of the Tokyo Stock Exchange. Mar.2003 The Quality Control Center gains ISO 14001 certification. Mar.2004 The Company gains ISO 14001 certification. Nov. 2007 The Expert Operation Center (XOC) opens as a facility for integrated operation services. Nov. 2008 Net One Partners Co., Ltd. is established. Oct. 2009 The Technical Center is relocated and expanded. Feb. 2010 The Company acquires shares of Xseed Co., Ltd. and makes it a consolidated subsidiary. Apr. 2011 The Company takes over Network Service And Technologies Co., Ltd. Jul. 2012 The Company acquires System Solution Engineering K.K. and makes it a wholly owned subsidiary. Aug.2012 The Company establishes the Singapore Representative Office. Jan. 2013 The Quality Control Center and the Service Quality Center are relocated and merged. May 2013 The Company relocates its head office to Marunouchi in Tokyo’s Chiyoda Ward. The Company updates the corporate logo. Oct. 2013 The Company establishes Net One Systems Singapore Pte. Ltd. Mar.2014 The Company acquires shares of Xseed Co., Ltd., making it a consolidated subsidiary. Directors and Corporate Auditors (As of September 30, 2014) President & CEO Takayuki Yoshino Directors Shingo Saito Toru Arai Shunichi Suemitsu Tsuyoshi Suzuki (Note) The Company retains 1,470,825 shares of treasury stock; this amount is not included in the major shareholder figures above. (Note) T he Company carried out a 200-for-1 share split on April 1, 2012. The figure for FY2011 in the table above was adjusted for the share split. Norihisa Katayama Yoshiharu Horiuchi Distribution of Shares by Type of Shareholder Outside Directors Other domestic corporations 0.94% Securities companies 1.11% Treasury stock 1.71% Financial institutions 24.99% Individuals and other 43.20% Overseas corporations and others 28.03% Kunio Kawakami Masasuke Naito Mitsuo Imai Full-time Corporate Auditor Tadashi Arima Outside Auditors Masamichi Kikuchi Minoru Uchida Tadashi Nakaoka Interim Dividend (1) ¥15 per share (2) Effective date and start date of payment: Tuesday, November 25, 2014 9 NetOne Report 2014 10