Slide 1: Financial Results for the Fiscal Year 2019
TSE 1st Section Code:3992 Needs Well Inc. Financial Results for the Fiscal Year 2019 (October 2018 – September 2019) November 29, 2019
Slide 2: Contents
Contents Sep-2019 1. FY 2019 Financial Highlights 3. Action to support growth strategies 1) Summary 1) ESG/SDGs 2) Sales by service line 2) Human resources development 3) Operating profit analysis 4) Profit & Loss results 4. FY 2020 Financial Forecasts 5) Balance Sheet results 1) Summary 2) Profit &
Slide 3: FY2019 Financial Highlights
FY2019 Financial Highlights 3
Slide 4: 1) Summary -1-
1) Summary -1- Achieved record high sales and profit for 8 consecutive terms! [Millions of JPY] Net sales 6,000 5,000 4,000 Net sales 5,517million JPY 3,000 (Year on Year107.3%) 2,000 1,000 0 Ordinary 505million JPY FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 (%) [Millions of JPY] 600 Or
Slide 5: 1) Summary -2-
1) Summary -2- Solution business is on a growth track. Year on Year 166.7% Solution business is on a NWSP / Cooperation solutions growth track and increase of orders from customers. Our UTM Asset management Solutions Leveraging the strengths of development companies, Work-AI Service we offer unique
Slide 6: 2) Sales by service line
2) Sales by service line Increase “Business systems SI” & “Solutions / Products etc.”. Improved retain engineers. As a result of Business 4,354 efforts to train engineers, new financial systems SI 4,050 projects were acquired and expanded business with existing customers. YonY107.5% Infrastructure 5
Slide 7: 3) Operating profit analysis
3) Operating profit analysis [ Millions of JPY ] 508 YoY +31 Recruitment fee and training Other expenses expenses increased. increased. Head office relocation, Gross profit increase due to Nagasaki Development sales expansion and Center opening costs productivity improvement. increased. 7
Slide 8: 4) Profit & Loss results
4) Profit & Loss results Increased sales growth by 7.3%, ordinary profit margin 9.2%, realized high profitability Millions of JPY FY2018 FY2019 Net sales Net sales Annual Result Year on Year ratio ratio Net sales 5,140 - 5,517 - 107.3% Business systems SI 4,050 78.8% 4,354 78.9% 107.5% Infrastructur
Slide 9: 5) Balance Sheet results
5) Balance Sheet results Millions of JPY As of As of Continued stable financial position Sep 30,2018 Sep 30,2019 Result Result Year on Year Capital adequacy ratio 73.4％ YonY9.5pts UP Assets Cash and deposits 1,693 1,548 -144 Accounts receivable 691 705 13 Work in process 7 25 17 Assets Millions of J
Slide 10: Growth Strategies
Growth Strategies 10
Slide 11: 1) Management Philosophy
1) Management Philosophy Contributing broadly and Sustaining to society. Night view from Mt. Inasayama. (Nagasaki Pref.) 11
Slide 12: 2) Trails of growth
2) Trails of growth Jun-2019 TSE 1st Section Net sales Oct-2017 Started Solution Business Jun-2018 TSE 2nd Section Number of Employees Sep-2017 JASDAQ IPO Apr-2013 Started Embedded systems Oct-2012 Started Infrastructure services, Started business with major telecom carriers Apr-2005 Started busines
Slide 13: 3) Basic policy
3) Basic policy Breakthrough from the dispatch business, Become a true System Integrator. 13
Slide 14: 4) Targets
4) Targets 2010: Growth Near future Sales growth rate ２０％ Ordinary profit margin １０％ Target Market capitalization 2510: Management constitution Gross profit margin ２５％ 25 billion JPY SG&A expenses rate １０％ Net sales 10 billion JPY FY 2019 Dispatch business >>> Become a true System Integrator. 14
Slide 15: 5) Our strengths
5) Our strengths Well of strength ~ 3 “High” and know-how, performance. 1. High Financial system development capabilities. The financial sector accounts for 50% of sales in our main business “System development”. Especially, we have strengths in Life insurance, Accident insurance systems, and we hav
Slide 16: 6) Growth strategies: Priority items
6) Growth strategies 6 Priority items. 1 Improve corporate value 2 Establish business foundation 3 Expansion of solution business 4 Expansion of end-user direct sales 5 Start up AI business 6 Start up nearshore development 16
Slide 17: 6) Growth strategies - 1. Improve corporate value
6) Growth strategies - 1. Improve corporate value Various approaches to improve corporate value. - Institutional investor - Individual investors IR Capital policy - Public offering - Issuing new share - Media - Buyback - Promotes CI, VI - M&A CI: Corporate Identity VI: Visual Identity Improve corpor
Slide 18: 6) Growth strategies - 2. Establish business foundation
6) Growth strategies - 2. Establish business foundation Establishing a business foundation for stable development to the future as a listed company. Business systems SI Expansion - Accumulating financial business knowledge - Train high-skilled engineers Financial from upstream processes sector Infra
Slide 19: 6) Growth strategies - 3. Expansion of solution business
6) Growth strategies - 3. Expansion of solution business Differentiate by providing linkage functions with various products. Information security solutions Information security measures become even more important with the arrival of the 5G era Link UTM Disarmer Asset Web Isolation management Work ef
Slide 20: 6) Growth strategies - 4. Expansion of end-user direct sales
6) Growth strategies – 4. Expansion of end-user direct sales Stabilize orders and improve profitability, maintain and expand end-user direct sales ratio Over 50%. 1. Maintain and expand exist-customer End-user - Maintain ongoing projects direct sales ratio - Train high-skilled engineers and expand t
Slide 21: 6) Growth strategies - 5. Start up AI business
6) Growth strategies – 5. Start up AI business Established AI Group in July 2019. Started AI business in earnest and provide of AI solutions by industry. Development of RPA Data analysis original AI engine Data generation with Win business characteristics AI engine by industry X AI-OCR Actor Cleansi
Slide 22: 6) Growth strategies - 6. Start up nearshore development
6) Growth strategies – 6. Start up nearshore development Opened Nagasaki Development Center in October 2019. Aiming for 100 employees in FY2024. Promote recruitment of new graduates and U-turns in Nagasaki and retain talented people who want to find employment. Promote lump sum contract and overcome
Slide 23: Action to support growth strategies
Action to support growth strategies 23
Slide 24: 1) Human resources development
1) Human resources development Work style reform and efforts to improve skills and motivation. We are working on human resource development using various programs and tools. Work style reform Incentive Overtime date for Premium Utilize BPR target taking paid Friday RPA program 20 hours leave Improvi
Slide 25: 2) ESG/SDGs -1-
2) ESG/SDGs -1- To realize our management philosophy “Contribute broadly sustaining to the society.” ESG / SDGs Committee has begun working on a sustainable society. IT education using AI AI experience seminar for students will be held during FY2020. Our AI engineers and general affairs dept are pla
Slide 26: 2) ESG/SDGs -2-
2) ESG/SDGs -2- Reduce electricity and paper usage ESG committee members appointed from each department are carrying out reduction activities. - Power saving - Digitalization of internal documents and workflows etc. Promote collaboration with partners We are promoting cooperation with partner compan
Slide 27: FY2020 Financial Forecasts
FY2020 Financial Forecasts 27
Slide 28: 1) Summary
1) Summary Furthermore stable growth. We aim to increase sales and profit for 9 consecutive terms. 6,000 (8.7%UP) Net sales 5,517 549 (8.1%UP) Operating profit ratio 9.2% Operating profit 508 550 (8.9%UP) Ordinary profit ratio 9.2% Ordinary profit 505 379 (9.1%UP) Net profit ratio 6.3% Net profit 34
Slide 29: 2) Profit & Loss forecasts
2) Profit & Loss forecasts Millions of JPY FY2019 FY2020 Net sales Net sales Annual Forecast Year on Year ratio ratio Net sales 5,517 - 6,000 - 108.7% Business systems SI 4,354 78.9% 4,364 72.7% 100.2% Infrastructure services 521 9.5% 611 10.2% 117.3% Embedded systems 385 7.0% 443 7.4% 115.1% Soluti
Slide 30: 3) Dividends and shareholder returns
3) Dividends and shareholder returns Dividend per share +2.50 JPY(YoY) increase forecast Dividend annual forecast 16.00 JPY/share, Dividend payout ratio forecast 35.8% Annual Dividend per share Dividend payout ratio 18.00 JPY 37 % 16.00 16.00 36 14.00 13.50 35 12.50 12.50 35.8 12.00 34 10.00 33 32.9
Slide 31: Reference Materials
Reference Materials 31
Slide 32: 1) Company profile
1) Company profile * As of September 30, 2019 Company Name Needs Well Inc. Head Office 13F, New Otani Garden Court, 4-1 Kioi-cho, Chiyoda-ku, Tokyo, 102-0094 Japan - Shinjuku Office : 5F, South Tower, 13-15 Tomihisa-cho, Shinjuku-ku, Tokyo, 162-0067 Japan Office - Nagasaki Office: 5F, Meijiyasudasei
Slide 33: 2) Business field
2) Business field Needs Well focused on Business systems SI for finance 4 services provide total IT services. Business Finance Solution systems SI business Distribution / Services Solutions Social Infrastructure AI Infrastructure Telecom Carrier IT Infrastructure services Embedded Web Embedded syste
Slide 34: 3) Comparison with our company and other companies
3) Comparison with our company and other companies ROIC ROE ROA 25% 25% 14% 12% 20% 20% 10% 15% 15% 8% 10% 10% 6% 4% 5% 5% 2% 0% 0% 0% FY2017 FY2018 FY2019 FY2017 FY2018 FY2019 FY2017 FY2018 FY2019 Needs Well A B C Needs Well A B C Needs Well A B C PER PBR - We selected and compared companies with n
Slide 35: 4) Performance trends -1-
4) Performance trends -1- Net sales Operating profit Millions of JPY Millions of JPY FY2015 FY2016 FY2017 FY2018 FY2019 FY2015 FY2016 FY2017 FY2018 FY2019 Q1 1,217 1,341 Q1 121 110 Q2 2,470 2,724 Q2 255 266 Q3 3,801 3,739 4,097 Q3 387 354 375 Annual 3,986 4,586 5,063 5,140 5,517 Annual 355 408 443 4
Slide 36: 4) Performance trends -2-
4) Performance trends -2- Basic earnings per share Rate of return on equity JPY % FY2015 FY2016 FY2017 FY2018 FY2019 FY2015 FY2016 FY2017 FY2018 FY2019 Q1 9.88 9.04 Q1 Q2 20.85 22.02 Q2 Q3 35.51 28.18 30.22 Q3 Annual 30.21 36.74 40.81 38.78 41.15 Annual 43.9 36.7 24.8 20.2 18.8 - After adjustment of
Slide 37: 4) Performance trends -3-
4) Performance trends -3- Capital adequacy ratio Net assets per share % JPY FY2015 FY2016 FY2017 FY2018 FY2019 FY2015 FY2016 FY2017 FY2018 FY2019 Q1 66.7 68.5 Q1 Q2 62.8 65.4 Q2 Q3 50.5 59.0 71.4 Q3 Annual 36.4 49.3 61.4 64.0 73.4 Annual 82.98 117.21 179.63 204.99 232.63 - Q2 is cumulative total fro
Slide 38: - All statements described in these material are based on our judgment by currently
- All statements described in these material are based on our judgment by currently available information. - Actual results may differ from forecasts due to various factors in the future. Management Planning Division IR Section TEL: +81-3-6265-6763 e-mail: ir-contact@needswell.com