Slide 1: Financial Results for the Second Quarter of Fiscal Year 2021
Tokyo Stock Exchange 1st Section: Securities Code 3992 Needs Well Inc. Financial Results for the Second Quarter of Fiscal Year 2021 (October 1, 2020 – March 31, 2021) May 12, 2021
Slide 2: Agenda
1. 2021/9 2Q Financial report summary 2. 2021/9 Results forecast 3. Growth strategy 4. Reference FY2021/9 2Q Financial Results 2
Slide 3: Financial highlights
1.1) Financial highlights Sales and profits both reached record high levels on a second quarter basis since Needs Well’s establishment in 1986 (Unit: million JPY) Net sales (Unit: million JPY) Ordinary profit (Unit: million JPY) Net profit 2,850 350 350 300 300 2,820 301 250 267 250 2,818 +12.7% 2,8
Slide 4: Performance progression rate
1.2) Performance progression rate Sales progression was on a level 1.8pts higher year on year Profits have already achieved over 50% by 2Q Despite the negative impact of the Progression 2Q performance spread of COVID-19, sales for rate, (FY21/9 target) telecommunications remained strong Net sales 48
Slide 5: Ordinary profit analysis
1.3) Ordinary profit analysis Ordinary profit increased 12.7% year on year with the contribution of increased gross profit due to improved productivity ■ Increase ■ Decrease Unit: million JPY 301 267 +12.7% Gross profit increased Advertising expenses YoY with successful measures increased with focus
Slide 6: Profit & loss statement
1.4) Profit & loss statement Ordinary profit ratio remained at a high level of 10.7% （Up 1.2 pts year-on-year) FY2020/9 2Q Financial Results FY2021/9 2Q Financial Results Unit: million JPY Result Net Sales Result Net Sales Year-on-year Net sales 2,809 - 2,818 - 100.3% Business Systems SI ※ ※ 2,156 7
Slide 7: Balance sheet
1.5) Balance sheet Equity ratio at 75.7% *Selection of significant entries only FY2020/9 FY2021/9 2Q Unit: million JPY Result Result Year-on-year Up 1.2 pts YoY Cash and deposits 1,780 2,038 258 Accounts receivable 689 871 181 Prepaid expenses 34 45 11 Total current assets 2,553 2,970 417 Software 5
Slide 8: Agenda
1. 2021/9 2Q Financial report summary 2. 2021/9 Results forecast 3. Growth strategy 4. Reference FY2021/9 2Q Financial Results 8
Slide 9: Results forecast
2.1) Results forecast Plan to increase sales and profits through newly launched Logistics Business, strengthening solutions, etc. * There has been no revision to the results forecast announced on November 12, 2020 Business Systems SI Infrastructure Services Connected Systems* Solutions/Products, etc
Slide 10: Dividends and shareholder returns
2.2) Dividends and shareholder returns Dividend per share: +1 JPY (YoY) increase forecast (FY2021/9 ) * There has been no revision to the dividend forecast announced on November 12, 2020 Annual dividend forecast: 17.00 JPY/share Dividend payout ratio forecast: 39.0% Annual dividend per share (JPY) D
Slide 11: Agenda
1. 2021/9 2Q Financial report summary 2. 2021/9 Results forecast 3. Growth strategy 4. Reference FY2021/9 2Q Financial Results 11
Slide 12: Management philosophy
3.1) Management philosophy Contributing Broadly to the Economy and Society FY2021/9 2Q Financial Results 12
Slide 13: Growth track
3.2) Growth track Oct 2020 Started Logistics, Connected Businesses Net sales Aug 2019 Started AI Business Number of personnel Jun 2019 Tokyo Stock Exchange 1st Section Jun 2018 Tokyo Stock Exchange 2nd Section Oct 2017 Started Solution Business Sep 2017 JASDAQ-IPO Apr 2013 Started developing Embedde
Slide 14: Medium-Term Basic Policy
3.3) Medium-Term Basic Policy Breaking away from the dispatch business, becoming a true system integrator FY2021/9 2Q Financial Results 14
Slide 15: Our three strengths
3.4) Our three strengths Capacity for Financial sector accounts for 50% of net sales in financial system main service line, Business Systems SI. development Particularly advanced in life insurance and accident Capacity for insurance sectors. financial Strong performance record in developing systems
Slide 16: Performance targets FY2023/9
3.5) 1 Performance targets FY2023/9 Net sales 10.0 Ordinary profit 1.0 billion JPY billion JPY Billion JPY CAGR (compound annual growth rate) 10.0 Billion JPY CAGR (compound annual growth rate) 1.0 23.1 24.8 10.0 1.0 % % 5.0 0.5 0.0 0.0 2020 2021 2022 2023 2020 2021 2022 2023 Existing businesses M&A
Slide 17: Promotion policies: Sales growth
3.5) 2 Promotion policies: Sales growth Unit: billion JPY Logistics Business Market scale (our forecast) Logistics IoT software solutions market Logistics industry is facing a serious labor shortage +1.2 10.0 (WMS, etc.) as the selection of diversifying needs continues to 2025 123.0 bil. JPY increas
Slide 18: Growth strategy focus points
3.6) Growth strategy 1 Promote improvement of corporate value 2 Launch Logistics & Connected Businesses 3 Expand AI Business Focus 4 Expand nearshore development points 5 Establish business foundation 6 Expand Solutions Business 7 Increase direct sales to end users FY2021/9 2Q Financial Results 18
Slide 19: Promote improvement of corporate value
3.6)-1 Promote improvement of corporate value Promote our management philosophy of “Contributing Broadly to the Economy and Society” through improvement of the NeedsWell Value • Institutional investor Capital • Public offering • Issuing new • Individual investors • Media IR policy shares • M&A • Pro
Slide 20: Launch Logistics & Connected Businesses
3.6)-2 Launch Logistics & Connected Businesses Logistics ▶▶▶ Facing labor shortages as the needs of the Internet society continue to increase → Increased demand for system development Warehouse Packaging WMS （warehouse management systems) AGV Scheduled for release in (automated guided WMS (warehouse
Slide 21: Expand AI Business
3.6)-3 Expand AI Business Expand AI Business by expanding the lineup AI Remote Education Quantitative visualization of business talks with numerical values and graphs. AI comparison of information with top-performing models to provide feedback on points needing improvement. Utilizing know-how in int
Slide 22: Expand nearshore development
3.6)-4 Expand nearshore development Nagasaki Development Center aims to maintain 100 employees in FY2024/9 Utilize nearshore bases to acquire highly competent personnel and provide solutions for labor shortages Personnel acquisition • Recruiting and training highly competent engineers who seek local
Slide 23: Establish business foundation
3.6)-5 Establish business foundation Establishing a business foundation for stable development into the future as a listed company ▶▶▶ Service line composition Business Systems SI Service lines that establish • Expand into the financial sector by the business foundation accumulating business knowled
Slide 24: Expand Solutions Business
3.6)-6 Expand Solutions Business Expanding the Solutions Business to accelerate business expansion and increase added value Expansion strategy Net sales • Add Needs Well’s unique integration functions for AI, RPA, etc. composition ratio to solutions provided by other companies. 15.0% 5.6% • Package
Slide 25: Increase direct sales to end users
3.6)-7 Increase direct sales to end users Stabilize orders and improve profitability, maintain and expand end user direct sales ratio to over 50% Maintain and expand existing users • Secure repeat customers End user composition ratio • Train highly skilled engineers and expand the scope of expertise
Slide 26: Initiatives directly linked to business
3.7) 1 Initiatives directly linked to business Aim for sustainable management through business strategies that incorporate the perspectives of SDGｓ, ESG, and CSR Nearshore Development Promotion: Nagasaki Development Center to maintain 100 employees by 2024 Promote development by committing to QCD (q
Slide 27: Initiatives supported by systems and activities
3.7) 2 Initiatives supported by systems and activities Work style reform & personnel development • Incentive dates for paid leave, Premium Friday, overtime target of 20 hours • Expand selection of employees eligible for remote work • System for encouraging skill improvement and motivation Increase r
Slide 28: Agenda
1. 2021/9 2Q Financial report summary 2. 2021/9 Results forecast 3. Growth strategy 4. Reference FY2021/9 2Q Financial Results 28
Slide 29: Company profile
Company profile Company Name Needs Well Inc Head Office 13F, New Otani Garden Court, 4-1 Kioi-cho, Chiyoda-ku, Tokyo, 102-0094 Japan Office - Shinjuku Office : 5F, South Tower, 13-15 Tomihisa-cho, Shinjuku-ku, Tokyo, 162-0067 Japan - Nagasaki Office: 5F, Meijiyasudaseimei Nagasakikozenmachi building
Slide 30: Business fields
Business fields Needs Well provides total IT services through four services focused on Business Systems SI for finance. Finance Business Systems SI Automobiles/ medical devices/IoT Connected Systems Solution Solutions Business IT platforms AI Infrastructure Services Solutions Business Distribution/s
Slide 31: Business system diagram
Business system diagram Clients Needs Well Subcontractor Business Direct transaction* /supplier Systems SI Infra- Partner structure company System Services End user integrator Connected Supplier Systems Manufacturer Solutions/ Products, etc. Order Provision of services/products, etc. * High level of
Slide 32: Business results ①
Business results ① Net sales Operating profit Unit : million yen Unit : million yen 2016 2017 2018 2019 2020 2021 2016 2017 2018 2019 2020 2021 １Q 1,217 1,341 1,418 1,348 １Q 121 110 92 136 ２Q 2,470 2,724 2,809 2,818 ２Q 255 266 267 306 ３Q 3,801 3,739 4,097 4,078 ３Q 387 354 375 337 total 4,586 5,063 5
Slide 33: Business results ②
Business results ② Profit per share ROE unit：Yen unit：% 2016 2017 2018 2019 2020 2021 2016 2017 2018 2019 2020 2021 １Q 9.88 9.04 7.04 10.52 １Q ２Q 20.85 22.02 21.19 23.81 ２Q ３Q 35.51 28.18 30.22 27.30 ３Q total 36.74 40.81 38.78 41.15 40.99 total 36.7 24.8 20.2 18.8 16.5 * Figures are after sprit adju
Slide 34: Business results ③
Business results ③ Capital adequacy ratio Net assets per share unit：% unit：Yen 2016 2017 2018 2019 2020 2021 2016 2017 2018 2019 2020 2021 １Q 66.7 68.5 71.3 74.5 １Q ２Q 62.8 65.4 73.6 75.7 ２Q ３Q 50.5 59.0 71.4 71.2 ３Q total 49.3 61.4 64.0 73.4 74.5 total 117.21 179.63 204.99 232.63 262.41 * 2Q is tot
Slide 35: • All statements described herein have been prepared by Needs Well based on the
• All statements described herein have been prepared by Needs Well based on the currently available information. • Actual results may differ from forecasts due to various factors in the future. Corporate Communication Division e-mail: ir-contact@needswell.com