Slide 1: Presentation Materials for the Earnings Briefing
Presentation Materials for the Earnings Briefing for the First Half of the Fiscal Year Ending March 31, 2020 November 20, 2019
Slide 2: Table of contents
2 1 Overview of Consolidated Financial Results for First-half of FY3/20 2 Business Topics for First-half of FY3/20 Table of 3 Growth Strategies: First-half Review and Future Development contents 4 Consolidated Earnings Forecast for FY3/20 and Other Information 5 Company Overview and Business Activit
Slide 3: Overview of Consolidated Financial Results for First-half of FY3/20
3 Overview of Consolidated Financial Results for First-half of FY3/20
Slide 4: Summary of consolidated financial results
4 Summary of consolidated financial results Sales: Despite lower-than-expected orders of Shalom House, growth in sales for general corporation customers helped achieve more-than-expected total segment sales. Shalom Business Costs: Despite an increased cost of sales as a result of increased depreciat
Slide 5: Consolidated balance sheet
5 Consolidated balance sheet Current assets increased due to an increased balance of cash and deposits. Intangible assets decreased due to start of amortization triggered by releases of the next-generation Shalom and new products. (Thousands of yen, %) 1H FY3/20 FY3/19 Change % Change Notes (Sep. 30
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, %) 1H FY3/20 1H FY3/19 YoY Change Notes Cash flows from operating activities 345,758 (490,753) +
Slide 7: Operating results of the Shalom Business
7 Operating results of the Shalom Business (Thousands of yen, %) YoY YoY 1H FY3/20 1H FY3/19 Notes Change % Change (ASP service) Net sales 874,594 711,714 +162,879 +22.9% ・Net de Shalom 209 million yen (+9.2%) Cloud service 817,622 661,104 +156,517 +23.7% ・Shalom House 209 million yen (+16.1%) ASP s
Slide 8: Operating results of the CuBe Business
8 Operating results of the CuBe Business (Thousands of yen, %) YoY YoY 1H FY3/20 1H FY3/19 Notes Change % Change Net sales 313,174 235,458 +77,715 +33.0% Breakdown of contracted developments: Contracted Develop-and-deliver projects 293,487 229,170 +64,317 +28.1% 195 million yen (+54.3%) development
Slide 9: Business Topics for First-half of FY3/20
9 Business Topics for First-half of 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 (12 times), and Shalom User Meetings (4 times) Apr. 2019 in Tokyo May 2019 in Osaka May 2019 in Fukuoka – Seminar for Labor and Social Security Attorneys – Seminar for Labor
Slide 11: Sales promotion activities for general corporations
11 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 12: Development and sales of new cloud services in the CuBe Business
12 Development and sales of new cloud services in the CuBe Business Realized integration of MKSystem’s experience on cloud services and BNC’s know- how for business process Released in Oct. 2017 Released in Apr. 2018 Renamed from Jinzai (human resources) CuBe Cloud Nenmatsu-chosei (year-end tax adju
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 2,408 offices (10 or more workers) 2,963 offices YoY change Up 22 offices Other Our market share 9.1% 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 Aggregated by MKSystem based on the 2016 Economic Census for 62,820 companies Business Activity (Tabulation of Enterprises, etc. and Tabulation with 100 or more across industries) conducted by the Ministry of Internal Affairs and 5,000
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. Lite Plan (renamed from Net de Shalom (including Net de Shalom Lite)) House Plan (renamed from Shalom House) MYNABOX (renamed from MyNum de Shalom) 1,800 1,685 1,721 1,643 1,629 1,60
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. Shalom CE 124 120 109 100 87 80 66 60 39 40 20 0 FY3/16 FY3/17 FY3/18 FY3/19 1H F
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: First-half Review and Future Development
18 Growth Strategies: First-half Review and Future Development
Slide 19: Strategy review by segment in 1H FY3/20
19 Strategy review by segment in 1H FY3/20 Shalom Business: CuBe Business: Market-specific strategies Service-specific strategies Achieved steady Maintained a Contracted development results thanks to Labor and social security stable revenue type semi-customized the campaign attorney market services
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 9.1%, there is a 610,000 security attorney offices: large market waiting to be tapped. 3,900,000×30% 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) Establish the positioning in the corporate Expand the labor and social security customer base attorney market Approx. Expand the range of service 1,150,000 offerings Streng
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 the services
Slide 23: Consolidated Earnings Forecast for FY3/20 and Other Information
23 Consolidated Earnings Forecast for FY3/20 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 government initiatives” and “work style reform.” Shalom Business Costs: The operating margin will be lower due to an increase in amortization as we are going to rel
Slide 25: Earnings forecast by segment: Shalom Business
25 Earnings forecast by segment: Shalom Business (Millions of yen, %) FY3/20 FY3/19 YoY YoY Forecast Actual Change % Change Net sales 1,800 1,509 +290 +19.3% The segment expects sales to increase by more than 19% year on year, through Cloud services 1,694 1,399 +295 +21.1% capturing strong corporate
Slide 26: Earnings forecast by segment: CuBe Business
26 Earnings forecast by segment: CuBe Business (Millions of yen, %) FY3/20 FY3/19 YoY YoY Forecast Actual Change % Change The contracted development business expects Net sales 696 567 +129 +22.8% a 47 million yen increase in sales due to delivering more small- to medium-scale Contracted development
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 developing a new market for general corporations. Profit: The operating margin will be lower due to an increase in amortization attributable to a release of new products. (Millions of yen) 2,
Slide 28: Dividend forecast for FY3/20
28 Dividend forecast for FY3/20 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: Company Overview and Business Activities
29 Company 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 an application service provider (ASP). ・ The CuBe Business The business of developing and pro
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 • Out
Slide 34: Our mainstay service (Shalom Company Edition)
34 Our mainstay service (Shalom Company Edition) 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 Procedur
Slide 35: Our mainstay services (Contracted development type semi-customized services)
Our mainstay services 35 (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 36: Our mainstay service (Nenmatsu-chosei CuBe Cloud) (1)
36 Our mainstay service (Nenmatsu-chosei CuBe Cloud) (1) Fully supporting year-end tax adjustment operations by reducing tax filling input and implementing progress management function Nenmatsu-chosei Cube Cloud Division in charge Tax filer of operation Simple & easy! Accurate & efficient! The sys
Slide 37: Our mainstay service (Nenmatsu-chosei CuBe Cloud) (2)
37 Our mainstay service (Nenmatsu-chosei CuBe Cloud) (2) Fully supporting year-end tax adjustment operations by reducing tax filling input and implementing progress management function Nenmatsu-chosei Cube Cloud 1. It makes the operation easy to understand! Enhanced control with authority settings T
Slide 38: Our mainstay service (GooooN)
38 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 39: We provide cloud solutions that benefit you
39 “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