Slide 1: Presentation Materials for the Earnings Briefing
Presentation Materials for the Earnings Briefing for the Fiscal Year Ended March 31, 2020 May 21, 2020
Slide 2: Table of contents
2 1 Overview of Consolidated Financial Results for FY3/20 2 Business Topics for FY3/20 Table of 3 Growth Strategies: Review and Future Development contents 4 Consolidated Earnings Forecast for FY3/21 and Other Information 5 Group Overview and Business Activities
Slide 3: Overview of Consolidated Financial Results for FY3/20
3 Overview of Consolidated Financial Results for FY3/20
Slide 4: Summary of consolidated financial results
4 Summary of consolidated financial results Sales: Sales decreased as lower than planned Shalom House orders offset growth of sales from general Shalom Business corporate customers Profit: Below plan because of more development personnel and cost of moving to the new Tokyo office Sales: Below plan a
Slide 5: Consolidated balance sheet
5 Consolidated balance sheet Current assets increased due to an increased balance of cash and deposits by improved operating cash flows Software decreased due to start of amortization triggered by releases of New Shalom V5.0 and DirectHR (Thousands of yen, %) FY3/20 FY3/19 Change % Change Notes (Mar
Slide 6: Consolidated statement of cash flows
6 Consolidated statement of cash flows Income taxes refund on top of cash flows provided by ordinary operating activities has contributed to significantly positive operating cash flow (Thousands of yen, %) FY3/20 FY3/19 YoY Change Notes Cash flows from operating activities 814,299 (244,710) +1,059,0
Slide 7: Operating results of the Shalom Business
7 Operating results of the Shalom Business (Thousands of yen, %) YoY YoY FY3/20 FY3/19 Notes Change % Change Net sales 1,771,842 1,508,829 +263,013 +17.4% (ASP service) ・Basic Plan (renamed from Net de Shalom) 422 million yen (+6.0%) Cloud service 1,658,019 1,398,611 +259,408 +18.5% ・House Plan (ren
Slide 8: Operating results of the CuBe Business
8 Operating results of the CuBe Business (Thousands of yen, %) YoY YoY FY3/20 FY3/19 Notes Change % Change Net sales 608,774 566,520 +42,253 +7.5% Breakdown of contracted developments: Contracted Develop-and-deliver projects 564,149 534,857 +29,292 +5.5% 357 million yen (+9.9%) development Maintenan
Slide 9: Business Topics for FY3/20
9 Business Topics for FY3/20
Slide 10: Sales promotion activities for labor and social security attorney offices
10 Sales promotion activities for labor and social security attorney offices Seminars for Labor and Social Security Attorneys (19 times), and Shalom User Meetings (8 times) May 2019 in Osaka May 2019 in Fukuoka Oct. 2019 in Tokyo – Seminar for Labor and Social Security Attorneys – Seminar for Labor
Slide 11: Online Seminars (April 2020)
11 Online Seminars (April 2020) MKSystem started offering nationwide online seminars in April for the first time The seminars are very popular as a way for people anywhere in Japan to participate in these events with ease. Many seminars are planned for labor and social security attorneys and for com
Slide 12: Sales promotion activities for general corporations
12 Sales promotion activities for general corporations Participated in the event sponsored by Nikkei and co-hosted seminars Total of 189 (97 for MKSystem and 92 for BNC) professionals from the personnel and general affairs divisions of major companies attended the co-hosted seminars. MKSystem sponso
Slide 13: Target markets and market shares (1)
13 Target markets and market shares (1) Labor and Social Security Attorney Office Market Large-scale offices Offices with our systems introduced*2 2,494 offices (10 or more workers) 2,963 offices YoY change Up 86 offices Other Our market share 9.4% 14,761 offices Small- to medium-scale offices Numbe
Slide 14: Target markets and market shares (2)
14 Target markets and market shares (2) General Corporate Market 62,820 companies with 100 or more 5,000 or more employees employees 636 companies 2,000 to less than 5,000 employees 1,375 companies End-Mar 2020 1,000 to less than 2,000 employees Introductions in 2,454 companies 300 to less than 1,00
Slide 15: Trends in services for labor and social security attorneys
15 Trends in services for labor and social security attorneys Users of the mainstay products are increasing steadily. Basic Plan (including Lite Plan) House Plan MYNABOX 1,800 1,778 1,685 1,657 1,629 1,601 1,600 1,477 1,429 1,400 1,346 1,347 1,200 1,000 834 800 653 600 549 566 446 467 400 200 0 FY3/
Slide 16: Trends in services for general corporations
16 Trends in services for general corporations As the government is promoting online one-stop social security and tax procedures, the number of systems introduced by general corporations is showing an increasing trend. Number of customers 140 137 120 109 100 87 80 66 60 39 40 20 0 FY3/16 FY3/17 FY3/
Slide 17: IR news
17 IR news Sep. 17, 2019 Notice on Execution of Agreement on Mutual Support of Business with SCS Labor and Social Security Attorney Corporation Oct. 7, 2019 Change in Service Names & Logos and Renewal of Website Oct. 9, 2019 Notice on Start of Linkage with “Jinji-Romu (HR) freee” Nov. 18, 2019 Notic
Slide 18: Growth Strategies: Review and Future Development
18 Growth Strategies: Review and Future Development
Slide 19: FY3/20 business segment strategy review
19 FY3/20 business segment strategy review Shalom Business: CuBe Business: Market-specific strategies Service-specific strategies Maintained a Demand remains Labor and social security stable revenue Contracted development very strong attorney market stream type semi-customized Improved profit servic
Slide 20: Shalom Business: Market overview
20 Shalom Business: Market overview Overview of the current market In terms of the number of labor and social Given that our market share is 9.4%, there is a 630,000 security attorney offices: large market waiting to be tapped. 3,850,000×30% In terms of the number of companies involved by The number
Slide 21: Shalom Business: Market-specific strategies (general corporations)
21 Shalom Business: Market-specific strategies (general corporations) Promote market-specific strategies (General corporations) corporate Expand the customer base Approx. Expand the range of service 1,160,000 offerings Strengthen the tuning support companies service Enrich service offerings Strength
Slide 22: CuBe Business: Service-specific strategies
22 CuBe Business: Service-specific strategies Promote service-specific strategies Contracted development type semi-customized services → Continue stable operation as a key revenue driver by: Steadily improving and maintaining existing systems for existing customers Efficiently developing services wi
Slide 23: Consolidated Earnings Forecast for FY3/21 and Other Information
23 Consolidated Earnings Forecast for FY3/21 and Other Information
Slide 24: Consolidated earnings forecast
24 Consolidated earnings forecast Sales: Demand of systems to support diverse work styles is expected to grow in line with the “digital Shalom Business government initiatives” and “work style reform.” Costs: Lower profit margin due to higher expenses caused by increase in labor cost for strengthenin
Slide 25: Earnings forecast by segment: Shalom Business
25 Earnings forecast by segment: Shalom Business (Millions of yen, %) FY3/21 FY3/20 YoY YoY Forecast Actual Change % Change Net sales 2,144 1,771 +372 +21.0% Forecast consistent growth in sales of services for labor and social security attorneys as in Cloud services 2,032 1,658 +374 +22.6% prior yea
Slide 26: Earnings forecast by segment: CuBe Business
26 Earnings forecast by segment: CuBe Business (Millions of yen, %) FY3/21 FY3/20 YoY YoY Forecast Actual Change % Change Forecast no change in contracted Net sales 605 608 (3) (0.6)% development sales, with many system improvement and maintenance projects, Contracted development 565 564 +0 +0.1% an
Slide 27: Trends in business performance and forecast
27 Trends in business performance and forecast Sales: We will achieve a consecutive year-on-year increase by enhancing a new market for general corporations. Profit: The operating margin will be lower due to an increase in depreciation attributable to improvement of products and higher expenses caus
Slide 28: Dividend forecast for FY3/21
28 Dividend forecast for FY3/21 Our profit distribution policy is “to implement a stable dividend payment with the baseline payout ratio of 20%.” For FY3/19, we put a priority on the stable dividend payout as the extraordinary loss recognized during the period was of one-time nature. Dividends for F
Slide 29: Group Overview and Business Activities
29 Group Overview and Business Activities
Slide 30: Company profile
30 Company profile ◆Company name MKSystem Corporation ◆Business ・ The Shalom Business The business of providing software to support business processes associated with social insurance and labor insurance as a cloud service provider. ・ The CuBe Business The business of developing and providing front-
Slide 31: Summary of the Group's lines of business
31 Summary of the Group’s lines of business • Provision of cloud services including software to support business processes associated with social insurance, labor insurance, and payroll ASP service • Provision of cloud services with applications aimed at clients of labor and social security attorney
Slide 32: Our mainstay service (Shalom)
32 Our mainstay service (Shalom) Database for IDC Clients of Labor (Internet Data Center) Employee Client and Social Security Database Database Attorney Office Client Company Labor and Social Security Attorney Office Administrative Agencies (Shalom) ⃝ Social insurance procedure Public Employment ⃝ A
Slide 33: Our mainstay service (MYNABOX)
33 Our mainstay service (MYNABOX) Operation Login Labor and authentication API Linkage Social Security Decryption key Print Shalom Attorney Various legal forms Electronic application Outsource Register/Cross-check/ View history Shalom Login Database authentication API Reference • Referring app • Ope
Slide 34: Our mainstay service (Shalom Company Edition)
34 Our mainstay service (Shalom Company Edition) Intra-company personnel management system Company Administrative Database Agency Automatic generation of necessary procedures Electronic Employee application Database CSV DATA Application Application processing on forms Procedure Employment Shalom Sta
Slide 35: Our mainstay service (DirectHR)
35 Our mainstay service (DirectHR) A labor management system for employment contracts and individual tax adjustments and returns Distribution/receipt of forms Application function API for external links Linking employees A brighter future Online receipt of job Employees use a PC or Application progr
Slide 36: Our mainstay service (eNEN) (1)
36 Our mainstay service (eNEN, renamed from Nenmatsu-chosei CuBe Cloud) (1) Fully supporting year-end tax adjustment operations by reducing tax filling input and implementing progress management function Division in charge Tax filer of operation Simple & easy! Accurate & efficient! The system tell
Slide 37: Our mainstay service (eNEN) (2)
37 Our mainstay service (eNEN, renamed from Nenmatsu-chosei CuBe Cloud) (2) Fully supporting year-end tax adjustment operations by reducing tax filling input and implementing progress management function 1. It makes the operation easy to understand! Enhanced control with authority settings The scree
Slide 38: Our mainstay services (Contracted development type semi-customized services)
Our mainstay services 38 (Contracted development type semi-customized services) Jinzai CuBe Shugyo CuBe Human resource profile Attendance management Target and performance management Salary / bonus detail inquiry Self-assessment CuBe Employee profile inquiry Business process event guidance Private B
Slide 39: Our mainstay service (GooooN)
39 Our mainstay service (GooooN) evaluation and training tool that you can use on-site on a day-to-day basis, The latest crystalizing know-how that has been used by large companies for over 20 years. GooooN coordinates the above three business operations, deepens communication with employees, and su
Slide 40: We provide cloud solutions that benefit you
40 “We provide cloud solutions that benefit you” The plans, estimates and other forward-looking statements contained in this material are forecast based on information available at the time this material was prepared, and these statements include risk and uncertainty. Actual performance may differ f