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FY2020 was the final year of the three-year Medium-Term Management Plan "Opening New Horizons-To See a New Landscape," which is designed to play a role in the evolution of the IT industry as a leading company. In the fiscal year, the company reached new record highs in all key profit items, with the exception of revenue. I am pleased to report on our performance in FY2020 ( to ) and explain the Medium-Term Management Plan for the new period from FY2021.
Thank you for your continued support.
Analysis and Assessment of the Market and Results in FY2020
The economy was buffeted by COVID-19 and conditions remain challenging. In the information service industry, investments were made in anticipation of future developments, against a backdrop of growing demand related to remote work and the start of telecom carriers' 5G commercial services as a positive aspect. Meanwhile, it has been seen that some business activities were restricted, and companies that were significantly affected by COVID-19, in particular, curbed or postponed investment. In this environment, the CTC Group achieved record highs in all key profit items, with the exception of revenue. The operating margin exceeded 9%, reaching its highest level since CTC adopted IFRS. Net profit attributable to CTC's shareholders hit a record high for the seventh consecutive year and reached its target. Orders and backlogs also hit new record highs.
Review of the Previous Medium-Term Management Plan (FY2018 to FY2020)
In our previous Medium-Term Management Plan, we set quantitative targets: net profit attributable to CTC's shareholders of ¥30.0 billion (strengthening profitability), growth of ¥60.0 billion in the cloud and IT outsourcing businesses, growth of ¥60.0 billion in the global businesses (growth in focus businesses), and an ROE of 12% or more (improving capital efficiency). We achieved all of these targets. We also made progress largely in line with or exceeding expectations toward four qualitative targets, which are priority themes to achieve the quantitative targets. The qualitative targets are "Expand upward: a challenge of business innovation," "Extend forward: strengthening strengths," "Go outward: developing new fields and regions," and "Consolidate the foothold: strengthening the management base."
Review of previous Medium-Term Management Plan (Quantitative)
Review of previous Medium-Term Management Plan (Qualitative)
Overview of the new Medium-Term Management Plan (FY2021 to FY2023)
To achieve further growth, we have developed a new Medium-Term Management Plan "Beyond the Horizons: To the Future Ahead" for FY2021 to FY2023. The previous Medium-Term Management Plan was, in a sense, for a run-up period. We took on the challenges of increasing profitability by building on our strengths, and business transformation for three years. In the next three years, we will go on to the realm of designing customers' business with them and creating a new kind of richness in society, while continuing the activities we have conducted, such as creating added value for customers and providing optimal information technology, under three basic policies in the new Medium-Term Management Plan. Our quantitative targets for FY2023 are an operating margin of 10, net profit attributable to CTC's shareholders of ¥40.0 billion, and an ROE, which indicates capital efficiency, of 13% or more.
Basic policies of the new Medium-Term Management Plan
Message to Shareholders
We believe that shareholder returns are a priority in management and strive to pay stable dividends. Our basic policy is emphasizing returning profits according to results and increasing dividends, taking into consideration the balance between dividends and retained earnings. We have decided to pay a year-end dividend per share of ¥32.5, up ¥1 from the initial forecast, for FY2020. The annual dividend per share, including an interim dividend of ¥31.5, is ¥64, an increase of ¥6 from the previous fiscal year. The annual dividend increases for the 12th consecutive fiscal year. For FY2021, we plan to pay an annual dividend of ¥70 per share. In pursuit of this goal, we respectfully ask for the continued understanding and support of all shareholders.
President and Chief Executive Officer