Results Briefing For the Year Ended March 31, 2017 May 16, 2017 *NOTICE: This document is a translation of the original Japanese document and is only for reference purposes. In the event of any discrepancy between this translated document and the original Japanese document, the latter shall prevail.
Overview of FY2016 2
Results for the Year Ended Mar. 17 (billion JPY) Net sales 96.2 (118%) Operating income 4.8 (103%) (Before amortization of goodwill) Profit after tax 3.7 (118%) (Before amortization of goodwill) 3
Results for the Year Ended Mar. 17 (Consolidated) Both fundamental businesses and spot businesses continue to expand. Sales significantly increased due to consolidation of SPi CRM (quarter year). Net Sales Gross Profit (margin) SG&A expenses Operating income (margin) Forecast Results for the year Results for the year ended Mar. 17 Achievement ended Mar. 16 % Change 94,000 - - 5,250 96,188 13,377 13.9% 9,005 4,371 4.5% 102.3% - - 83.3% 81,500 12,141 14.9% 7,519 4,621 5.7% (million JPY) +18.0% +10.2% +19.8% Included amortization of goodwill - 434-37 x11.4-5.4% Ordinary income 5,250 4,371 83.3% 4,685-6.7% Profit attributable to owners of parent 3,550 3,264 92.0% 3,101 +5.2% (Reference) Operating income before amortization of goodwill - 4,806-4,659 +3.2% Profit before - 3,698-3,139 amortization of goodwill +17.8% *Operating income before amortization of goodwill=operating income + amortization of goodwill, Profit before amortization of goodwill= Profit attributable to owners of parent + amortization of goodwill 4
Transition of Consolidated Sales (billion JPY) Sales<Overseas> Large spot business Recurring business 43.4 3.3 45.5 4.4 50.7 3.3 2.9 38.1 1.6 36.5 40.1 41.1 44.5 Fundamental businesses continue to expand. SPi CRM and Infocom consolidated capture start from 4Q. FY2015 1H FY2015 2H FY2016 1H FY2016 2H 5
Main Fluctuation Factors of Sales(yoy) (billion JPY) 96.2 3.3 8.2 0.8 Fundamental businesses on non-consolidated base and large spot business continue to grow. 81.5 4.9 7.3 Covered the decrease in income due to Field Operation business by the rest company. Mar. 16 Termination of spot business Large spot business Increases in fundamental business Expansion of domestic subsidiaries businesses Oversea subsidiaries business Mar. 17 Increases sales with acquisition of SPi CRM and Infocom from 4Q. Non-Consolidated Consolidated 6
Main Fluctuation Factors of Operating income (billion JPY) 4.66 1.58 0.95 Increase in SGA costs due to temporary costs such as acquisition related 0.37 0.11 costs, employee benefit 0.04 4.81 designated by law 0.16 0.41 0.43 0.12 New business launch takes time to achieve steady operation Decreased profit and temporary cost of Field Operation Business Mar. 16 Business expansion Startup cost Temporary increases in SGA cost Non-Consolidated Others increase in SGA cost Subsidiaries Except Field Operation Subsidiary Field Operation Overseas related Acquisition related costs Consolidated Other Mar. 17 SPi profit contribution from Q4 *1 Including loss on large spot business *2 Costs of acquisition related and increases of benefit *3 Effect due to strengthened pro forma standard taxation 7
Transition of Consolidated Sales For Contact Center Business 45 Segment profit (Right axis) Overseas related business Large spot business 1.9 (billion JPY) 2 Recurring business 40 35 1.3 2.0 1.5 2.7 3.3 1.4 1.3 1 30 0.9 28.7 31.4 32.2 35.2 0 FY2015 1H FY2015 2H FY2016 1H FY2016 2H 0 8
10 5 Transition of Consolidated Sales For Back Office Business Segment profit (Right axis) Large spot business Recurring business 0.7 0.7 1.3 0.7 1.7 0.8 1.5 (billion JPY) 1.0 0.5 0.2 4.5 5.0 5.5 6.0 0 FY2015 1H FY2015 2H FY2016 1H FY2016 2H 0.0 9
Transition of Consolidated Sales by Service for Field Operation Business 5 4 Segment profit (Right axis) OTC service Visiting service (billion JPY) 0.5 0.4 3 1.1 1.1 0.2 1.2 1.2 2 0.2 0.2 0.3 1 2.2 2.6 2.2 2.1 0.1 0.1 0 0.0 0.0-1 FY2015 1H FY2015 2H FY2016 1H FY2016 2H -0.1 10
Consolidated Sales by Industry Telecommunication 20.2 Financial service Utilities / infrastructure Government / municipal offices Broadcasting Manufacturing Information Distribution Services 3.0 2.7 6.7 5.5 4.6 3.9 3.0 3.3 9.1 8.8 10.7 11.2 13.1 18.6 17.5 16.8 15.8 Almost all industries experienced growth FY2016 FY2015 (billion JPY) Government and municipal offices, utility industry and telecommunication have expanded 11
Progress of Mid-term Business Plan 12
Progress of Business Strategy 2018 Satisfy various customer needs Batch orders have grown for multi-channel operations Expand introduction of automation platform Grow with society Business expansion for operations of utilities industry due to electricity liberalization Capital alliance for Back Office Business Challenge new possibilities Acquisition of SPi CRM,Inc. Prepare for the Relia ICT Suite Strengthening of core Competence The number of regional full-time employees reached 300. They are contributing to regional areas. Capital alliance with Tokyo Otaku Mode,Inc. 13
Progress of Business Strategy 2018 Relia Global Services China/Dalian Korea Japan 7Countries 11 Languages Thailand Malaysia Singapore Taiwan Vietnam Philippines Indonesia International standard business operation (COPC,6σ)+ Hospitality of Japan Create the best Customer Experience through NPS&VOC Analysis US Nicaragua Australia Supported languages Relia s Delivery Center SPi s Delivery Center Handling through multi-language center Future plan Chinese (Cantonese) Chinese (Mandarin) Korean Vietnamese Thai English Tagalog Indonesian (Bahasa) Melayu Spanish Japanese More than 36,000 employees work in 40 BPO centers in APAC and U.S.
Progress of Business Strategy 2018 Contribution from SPi Asia North America 108.2 5.8 8.6 Over seas 7.7 1.8 1.7 (billion JPY) Amortization of goodwill Japan 93.8 Domestic 5.9 Account for 13 % of group Net sales in Mar. 18 Contribute to 23 % of Operating income after amortization of goodwill 5 orders received for synergy proposals FY2017 Net Sales Operating income before amortization of goodwill 15
Progress of Business Strategy 2018 Capital and business tie-up Back Office Back Office DENTSU OPERATION PARTNERS INC. Marketing Works Applications Co.,Ltd. Human Resorce Tokyo Otaku Mode Inc. Mama square 16
Progress of Business Strategy 2018 Automation platform Virtual Agent Mobile Select Relia Voice Cloud Communication agent on the web that uses AI technology Starting to offer Virtual Agent that utilizes Japanese version of IBM Watson. Introduced to LOHACO.* Conversation engine is Manami-san. 30 clients have introduced (including basic model) Upgrade call center operation efficiency via smartphone Introduce proprietary intercept function of calls from users to Web and SNS. 19 clients have introduced Cloud voice recognition platform Naturally spoken Interactive Voice-Recognition system has been utilized for contact center automation and optimization. Commercial service started in April of 2016. 5 clients have introduced 17
Business Plan for FY2017 18
Budget for Fiscal Year 2017 Net Sales 108.2 (113%) (billion yen) Operating income 7.7 (160%) (Before amortization of goodwill) Profit after tax 5.6 (151%) (Before amortization of goodwill) ROE * 10.1% / 8.5% (Before amortization of goodwill) (After amortization of goodwill) *Calculate simply on the forecast of Shareholders' equity 19
Budget for Fiscal Year 2017 Results for the year ended Mar. 17 Annual forecast Change % change (million JPY) Net sales 96,188 108,200 +12,011 +12.5% Operating income before amortization of goodwill (margin) Operating income (margin) 4,806 5.0% 4,371 4.5% 7,700 7.1% Amortization of goodwill 1,700 6,000 5.5% +2,893 +1,628 +60.2% 434 +1,265 x3.9 +37.2% Ordinary income 4,371 6,000 +1,628 +37.2% Profit attributable to owners of parent 3,264 3,900 (Reference) Profit before amortization of goodwill 5,600 +635 +19.5% 3,698 +1,901 +51.4% Assumed exchange rates(fy2017) : 110 to the U.S. dollar, 2.24 to the Philippine peso *amortization of goodwill before Operating income=operating income+ Amortization of goodwill, Profit after amortization of goodwill=profit attributable to owners of parent after amortization of goodwill 20
Transition of consolidated sales(plan) Sales <Overseas> Large spot business <Japan> Recurring business <Japan> 81.5 4.9 76.6 96.2 108.2 14.4 3.3 2.6 7.3 91.2 85.6 5.8 8.6 93.8 (billion JPY) Asia Domestic business North Expanding net sales to quality of net America sales - Monetization of new business - Improve profitability of fundamental business -Rebuilding field operation business Operating profit ratio in Japan Japan 6.3% (FY2016 plan 5.6%, Actual 4.7%) Oversea business SPi CRM contributes to full business year FY2015 FY2016 FY2017 E FY2017 E Other areas 21
Progress of Med-term management plan 140 120 100 80 60 Operating income before amortization of goodwill Profit before amortization of goodwill Consolidated Net sales 74.2 81.5 96.2 108.2 7.7 40 4.7 4.8 5.6 3.7 20 3.7 0 3.1 2.5 FY2014 FY2015 FY2016 FY2017 E Business Strategy2018 Mid-term management plan 12.0 127.0 FY2019 objective (billion JPY) 12 9 Accomplished the base case Challenging 6 to Up side 3 0 22
Change of dividend policy Considering net income without amortization of goodwill, as well as overall cash flow and cash equivalents, we changed dividend policy to avoid the dividend payout affected by amortization of goodwill related to the acquisition of SPi CRM, Inc. and Infocom Technologies, Inc. Past : Our dividend policy is 50% consolidated dividend payout ratio unless drastic change occurs in the business environment such as another large-scale investment. Current : New dividend policy is a dividend ratio of 45% calculated after excluding amortization of goodwill related to the acquisition of SPi CRM, Inc. and Infocom Technologies, Inc. The policy can be changed flexibly, in case of drastic change in the business environment. 23
Return to Shareholders Dividend forecast : Annual : JPY 36 per share Interim : JPY 18 per share, year-end 18 per share (JPY) 60 81% Dividend payout ratio (%) DPS 80 50 58% 64% 61% 64% 60 40 36 30 29 29 29 29 40 20 20 10 0 FY2013 FY2014 FY2015 FY2016 FY2017E 0 24
Cautionary Statement This material contains statements (including figures) regarding Relia, Inc. ( Relia )'s corporate strategies, objectives, and views of future developments that are forward-looking in nature and are not simply reiterations of historical facts. These statements are presented to inform stakeholders of the views of Relia's management but should not be relied on solely in making investment and other decisions. You should be aware that a number of important risk factors could lead to outcomes that differ materially from those presented in such forward-looking statements. These include, but are not limited to, (i) change in economic conditions that may lead to unforeseen developments in markets for products handled by Relia, (ii) fluctuations in currency exchange rates that may cause unexpected deterioration in the value of transactions, (iii) adverse political developments that may create unavoidable delays or postponement of transactions and projects, (iv) changes in laws, regulations, or policies in any of the countries where Relia conducts its operations that may affect Relia's ability to fulfill its commitments, and (v) significant changes in the competitive environment. In the course of its operations, Relia adopts measures to control these and other types of risks, but this does not constitute a guarantee that such measures will be effective. All rights reserved. 25