System Research Co., Ltd. · TSE:3771

System Research — 1H FY3/25 Earnings Presentation

43 slides from System Research's earnings presentation, November 2024

1. Slide 1: First Half FY3/25 Results Briefing

   First Half of Fiscal Year Ending March 2025 (1H FY3/25) Results Briefing SYSTEM RESEARCH CO., LTD. (TSE Prime: 3771 ) © SYSTEM RESEARCH CO.,LTD.

2. Slide 2: Contents

   Contents 1．Company Profile 2．First Half of FY3/25 Results 3．Medium-Term Management Plan 4．Sustainability 5．Solutions 6. Shareholder Return 7. References Head office building, front entrance (Iwatsukahontori, Nakamura-ku, Nagoya) © SYSTEM RESEARCH CO.,LTD. 1

3. Slide 3: 1. Company Profile

   Contents 1．Company Profile Head office building (Iwatsukahontori, Nakamura-ku, Nagoya) © SYSTEM RESEARCH CO.,LTD. 2

4. Slide 4: Company Profile

   Company Profile Established March 1981 Listed stock exchange TSE Prime * Listed on the First Section of the Tokyo Stock Exchange in December 2016 Representative Toshiyuki Yamada, Representative Director and Chairman Hiroshi Hirayama, Representative Director and President Capital 550.15 million yen N

5. Slide 5: Branches and Sales Locations

   Branches and Sales Locations Number of employees (Consolidated): 1,527 Number of employees Main Sales (Non-consolidated): 1,505 locations network Sowel Co., Ltd.: 22 (As of September 30, 2024) Osaka Branch 202 Tokyo Branch 370 Nagoya Head Office 933 © SYSTEM RESEARCH CO.,LTD. 4

6. Slide 6: Business Activities of Subsidiaries

   Business Activities of Subsidiaries Business of Special Subsidiary Sowel Co., Ltd. Address: 6-52-18 Imajuku, Ogaki-shi, Gifu Investment ratio: SYSTEM RESEARCH CO., LTD. 75%, Weltechnos Co., Ltd. 25% Purpose - Providing opportunities for people with disabilities, to support their independence and enj

7. Slide 7: Corporate Vision

   Corporate Vision Corporate Vision An IT Partner that is Close to Your Business Become professionals who customers can rely on Refine our area of expertise and create new value, with technologies we can be proud of Grow through work and feel that we are contributing to society and playing an activ

8. Slide 8: Major Customers

   Major Customers ●TOYOTA Group ●Computer Manufacturers Toyota Motor Corporation Approx. 30% of Fujitsu Limited Toyota Systems Corporation total sales Hitachi, Ltd. Toyota Industries Group Hitachi Solutions, Ltd. Toyota Tsusho Group IBM Japan, Ltd. Denso Corp. , etc. Toshiba Digital Solutions Corporat

9. Slide 9: 2. First Half FY3/25 Results

   Contents An IT Partner that is Close to Your Business Our mission is to contribute to our customers' business through solutions. We aim to be close to our customers' business. To do that, the most important thing is to have 2. First Half FY3/25 Results a good understanding of our customers. Going fo

10. Slide 10: Summary of First Half of FY3/25 Results (Consolidated)

    Summary of First Half of FY3/25 Results (Consolidated) (Million yen) Net sales increased by 11.7% year on year, setting a new record. We also achieved record operating profit and ordinary profit. Percentage of net sales (%) Percentage of net sales (%) 1H FY3/24 1H FY3/25 YoY changes (April 2023 – Se

11. Slide 11: First Half of FY3/25 Sales by Category

    First Half of FY3/25 Sales by Category (Million yen) 1H FY3/24 1H FY3/25 Business Increased orders for Sales fields Changes description contract-based projects Net sales Net sales SI service SI services 4,279 5,071 +18.4% Securing repeat orders SI service Software development 6,482 6,938 +7.0% Softw

12. Slide 12: FY3/25 Results Forecast (Consolidated)

    FY3/25 Results Forecast (Consolidated) (Million yen) FY3/24 FY3/25 [Full year] Results Forecast YoY changes Net sales 23,320 26,718 3,398 +14.5% Operating profit 2,703 3,084 380 +14.0% Ordinary profit 2,768 3,114 346 +12.4% Profit attributable 1,969 2,198 229 +11.6% to owners of parent © SYSTEM RESE

13. Slide 13: Net Sales (First Half/Full Year) (Consolidated)

    Net Sales (First Half/Full Year) (Consolidated) (Million yen) Full First 通期 year 中間期 half 26,718 23,320 (+14.5%) 21,556 (+8.1%) FY3/25 Forecasts 18,405 (+17.1%) 16,158 (+13.9%) 12,635 11,308 10,489 (+11.7%) (+7.8%) 8,512 (+23.2%) 7,781 (+9.3%) 2021年３月期 FY3/21 2022年３月期 FY3/22 2023年３月期 FY3/23 2024年３月期

14. Slide 14: Operating Profit (First Half/Full Year) (Consolidated)

    Operating Profit (First Half/Full Year) (Consolidated) (Million yen) Full First 通期 year 中間期 half 3,084 (+14.0%) 2,703 2,501 (+8.0%) FY3/25 Forecasts (+20.3%) 2,078 (+32.6%) 1,567 1,186 1,221 1,068 (+2.9%) (+11.0%) 740 (+44.3%) 533 (+38.8%) 2021年３月期 FY3/21 2022年３月期 FY3/22 2023年３月期 FY3/23 2024年３月期 FY3

15. Slide 15: 3. Medium-Term Management Plan

    Contents 3．Medium-Term Management Plan © SYSTEM RESEARCH CO.,LTD. 14

16. Slide 16: Medium- and Long-term Targets

    Medium- and Long-term Targets Long-term target 100 billion yen Medium-term target 50 billion yen Plan for 46th term (FY3/26) 30 billion yen 40th term (FY3/20) 15 billion yen 35th term (FY3/15) 10 billion yen 100 billion yen Sales Profit Employees TSE Prime Tokyo stock exchange, 1st Section © SYSTEM

17. Slide 17: Next Vision 50th Five Initiatives

    Next Vision 50th With Next Vision 50th, we aim to secure continuous profits, enhance corporate value, and create employment opportunities, while taking into account changes in the external environment (economic conditions and technological innovations). Expansion and increased sophistication of core

18. Slide 18: Medium-Term (3-year) Management Plan

    Medium-Term (3-year) Management Plan (Consolidated Net Sales and Consolidated Operating Profit) (Million yen) (Million yen) 33,974 35,000 6,000 30,057 30,000 26,718 5,000 25,000 23,320 21,556 4,000 20,000 3,921 3,000 3,453 15,000 3,084 2,703 2,000 10,000 2,501 1,000 5,000 0 0 FY3/23 FY3/24 FY3/25 FY

19. Slide 19: Medium-Term (3-year) Management Plan: Employees

    Medium-Term (3-year) Management Plan (Consolidated Employees) 2,000 1,850 1,700 1,572 1,488 2023年04月 April 2023 2024年04月 April 2024 2025年4月 April 2025 2026年4月 April 2026 April2027年4月 2027 （計画） (Plan) （計画） (Plan) （計画） (Plan) © SYSTEM RESEARCH CO.,LTD. 18

20. Slide 20: Construction of New Office Buildings

    Construction of New Office Buildings Opening new offices to keep pace with business expansion and increased staff First Development Center Second Development Center Opened in April 2024 Scheduled to open in summer of 2025 Site area/total floor area: 624.58m2/1,484.01m2 Site area/total floor area: 1,

21. Slide 21: 4. Sustainability

    Contents 4. Sustainability © SYSTEM RESEARCH CO.,LTD. 20

22. Slide 22: Sustainability Initiatives

    Sustainability Initiatives Encourage diversity and inclusion Health and productivity management initiatives Relationship with the SDGs (focus goals) Relationship with the SDGs (focus goals) Main Initiatives Main Initiatives Promote active participation of diverse individuals Promote diverse working

23. Slide 23: Results of Initiatives in Numbers

    Results of Initiatives in Numbers (as of March 31, 2024) Percentage of female Percentage of female Percentage of employees employees in management employees in continuous taking childcare leave positions employment Female 100% 8.9% 95.5% Male 66% Percentage of male employees taking Target 7.0% Targe

24. Slide 24: Recognition and Certification (External Evaluation)

    Recognition and Certification (External Evaluation) Received certification of Received DX Health & Productivity 「DX認定事業者」 Certified Business Management Outstanding ［経済産業省・日本経営会議］ Operator Organizations 2024 by the 認定取得 certification Ministry of Economy, Trade Digital Transformation Certification and

25. Slide 25: 5. Solutions

    Contents 5. Solutions © SYSTEM RESEARCH CO.,LTD. 24

26. Slide 26: SI Service and Software Development

    SI Service and Software Development We face up to customer management issues and provide services that satisfy them, using the know-how and advanced technologies that we have cultivated. Automotives Logistics Distribution Telecommunications and control Plant and production line control ICT base Cons

27. Slide 27: Main Development Achievements in the SI Services (1)

    Main Development Achievements in the SI Services (1) A sales information management system for an automobile dealer Client: Major automobile manufacturer Development of a system for managing business negotiations/quotations and receipt and placement of orders, and for managing sales support and cust

28. Slide 28: Main Development Achievements in the SI Services (2)

    Main Development Achievements in the SI Services (2) A control and management system for automated warehouses Client: Major & manufacturing company Development of a system that automates the management of processes from receipt to shipping at logistics centers The system is also equipped with invent

29. Slide 29: E-commerce Support

    Easy My Shop Creator's Mall E-commerce Support QR code ALULU QR Code A shopping promotion site where you can encounter works Online store creation and operation web service instilled with the passions of creators Easy My Shop Creator's Mall ALULU  Easily create an online store the way you want  A

30. Slide 30: ilii Solutions (Business Package for Small and Medium Enterprises)

    ilii Solutions (Business Package for Small and Medium Enterprises) Leveraging know-how accumulated over more than 40 years of experience in business software development, we have introduced software to many customers, from back-office systems such as finance and payroll to front-end systems such as

31. Slide 31: AI Solution / Document Solution

    AI Solution The Spirit of Revolution Document Solution Image recognition Paperless solutions RPA Digitalizing large amounts of paper-based documentation AI support for visual product inspection and and input work sorting operations Paperless digitalization System integration High recognition accurac

32. Slide 32: Example of Introduce with AI Solutions

    Example of Introduce with AI Solutions The Spirit of Revolution JI Accident & Fire Insurance Co., Ltd. RPA Support for development of the automatic insurance benefit payment service in the event of suitcase damage Automatic insurance benefit payment service in the event of suitcase damage AI image I

33. Slide 33: Other Solutions

    The Spirit of Revolution Other Solutions Document solutions RPA BI Operations packages Development platform "FLEXSCHE" is a registered trademark of FLEXSCHE Corporation. Other logo marks are registered trademarks of their respective owners. "WinActor®" is a registered trademark of NTT Advanced Techn

34. Slide 34: 6. Shareholder Return

    Contents 6. Shareholder Return © SYSTEM RESEARCH CO.,LTD. 33

35. Slide 35: Shareholder Return

    Shareholder Return In terms of dividend payouts to shareholders, in order to ensure that our shares are held in a long-term and stable manner, we intend to maintain stable dividends. To increase distributions to shareholders, we are targeting a dividend payout ratio of 40%. FY3/25 FY3/22 FY3/23 FY3/

36. Slide 36: Stock Chart

    Stock Chart 2,000 (Yen) March 2024 ROE (Return on equity) 20.0% 1,800 September 2024 PBR (Price book-value ratio) 2.2 times 1,600 September 2024 PER (Price-earnings ratio) 10.7 times 1,400 1,200 1,000 800 600 400 200 0 June June June June June June June June June June June June June June June June J

37. Slide 37: 7. References

    Contents 7. References © SYSTEM RESEARCH CO.,LTD. 36

38. Slide 38: Appendix (1) History (Non-consolidated Net Sales)

    Appendix (1) History (Non-consolidated Net Sales) (Million yen) 25,000 2023 Merger with General Software, Inc. 2022 Made General Software, Inc. a 20,000 consolidated subsidiary 2016 2022 Changed to the 2nd Section of the Tokyo Stock Exchange Shifted to the TSE Prime Listed on the 1st Section of the

39. Slide 39: Appendix (2) Consolidated Statements of Income

    Appendix (2) Consolidated Statements of Income First Half of FY3/25 (Million yen) Non-consolidated Consolidated Item Amount Percentage Amount Percentage Net sales 12,611 100.0% 12,635 100.0% Cost of sales 9,856 78.1% 9,892 78.2% Gross profit 2,755 21.8% 2,742 21.7% Selling, general and 1,540 12.2% 1

40. Slide 40: Appendix (3) Consolidated Balance Sheets

    Appendix (3) Consolidated Balance Sheets As of September 30, 2024 (Million yen) Amount Amount Amount Amount Item (Non- Account item (Non- (Consolidated) (Consolidated) consolidated) consolidated) Accounts payable- Cash and deposits 7,523 7,599 trade 995 995 Accounts receivable- Short-term interest-

41. Slide 41: Appendix (4) Consolidated Cash Flows

    Appendix (4) Consolidated Cash Flows (Million yen) 1000 ◼ Comparison with 1H FY3/24 798 800 Cash flows from operating activities 600 Net cash provided by operating activities decreased by 511 million yen year on year, due to increases in 400 287 trade receivables and accrued expenses. 200 0 Cash flo

42. Slide 42: Appendix (5) Medium-Term (3-year) Management Plan

    Appendix (5) Medium-Term (3-year) Management Plan (Consolidated) (Million yen) Item FY3/25 (plan) FY3/26 (forecast) FY3/27 (forecast) Net sales 26,718 30,057 33,974 Operating profit 3,084 3,453 3,921 Ordinary profit 3,114 3,480 3,947 Profit 2,198 2,414 2,738 Operation category FY3/25 (plan) FY3/26 (

43. Slide 43: Contact Information

    An IT Partner that is Close to Your Business * Note pertaining to this data: IR information E-mail distribution service • The purpose of these materials is to provide information about the Group's financial results https://rims.tr.mufg.jp/? sn=3771 and business strategies. They are not intended to s

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