Medium-Term Management Plan
Rolling Plan (FY2024/6 to FY2026/6)
System Support Inc. (Security Code: 4396)
August 9, 2023

Notice: This document is an excerpt translation of the original Japanese document and is only for reference purposes. In the event of any discrepancy
between this translated document and the original Japanese document, the latter shall prevail.

Medium-Term Management Plan Rolling Plan (FY2024/6 to FY2026/6)
Contents
1.

Formulation of Rolling Plan (FY2024/6 to FY2026/6)

2.

Review of the First Year of the Medium-Term Management Plan

3.

Corporate Creed, Management Philosophy, and Medium-Term Themes

4.

Medium-Term Management Indicators (Consolidated) - Summary

5.

Medium-Term Management Indicators (Consolidated) – Sales and Profit Plan

6.

Medium-Term Theme – Cloud Integration Business Measures

7.

Medium-Term Theme – Growth and Success of Diverse Human Resources

8.

Medium-Term Theme – Strengthening ESG Management

9.

Shareholder Return Policy

10.

Reference Materials
Company Profile
Net Sales Trends and History
Review: FY2019/6 to FY2023/6
Growth Strategy by Segment© 2023 System Support Inc.

2

Formulation of Rolling Plan (FY2024/6 to FY2026/6)
The 3-year Medium-Term Management Plan announced in August 2022 was reviewed to reflect external and internalchanges.

Background of formulation of "Rolling Plan (FY2024/6 toFY2026/6)"

Comparison of planned figures between
announcement in August 2022
and Rolling Plan (FY2024/6 to FY2026/6)Publishedin August 2023

[External Environment] The domestic IT market is expanding due to the rising demand for DX, etc.
 In particular, the market for the cloud segment is expected to continue to growsignificantly due to the migration of IT systems from on-premises as well as
increased utilization and multi-cloud support after migration.
 Recruitment accelerates competition.

■ Net Sales (consolidated)
19,26718,093[Internal Environment] The Cloud Integration Business continues to grow and the composition of thebusiness changes due to the expansion of resale, which is a stock-based revenue.
 Improvement of the organization mainly by engineers is generally progressing asplanned.

FY2023/6*

21,892

FY2024/6
FY2025/6
FY2026/6（Planned） （Planned） （Planned）■ Operating profit (consolidated) Unit: 1 million yen

 There is no change to the Medium-Term Themes (specific measures have beenslightly revised).
 The figures have been revised to the plan figures based on the results© 2023 System Support Inc.

19,90226,805

Published in August 2022
Published in August 2023

1,456

for the fiscal year ended June 2023.

21,78424,365

Unit: 1 million yen

1,456

FY2023/6*

1,763
1,763

2,189

2,407

2,189

FY2024/6
FY2025/6
FY2026/6（Planned） （Planned） （Planned）

Published in August 2022
Published in August 2023
* With respect to figures for the fiscal year ended June 2023, projected figures wereannounced in August 2022 and actual figures have been announced in August 2023.

3

Review of the First Year (FY2023/6) of the Medium-Term Management Plan
Item

Numerical planningMediumterm
themes

Review of the first year (FY2023/6)
 Net sales increased 6.5% compared with the plan (+ 18.9% YoY), whereas
operating profit increased 0.0% compared with the plan (+ 21.7% YoY).
 By segment, the Cloud Integration Business performed well, the System
Integration and Outsourcing Businesses generally performed as planned, and theProduct Business was sluggish.

Expansion of services that form
the foundation of DX promotion
for customers and society In addition to services related to ServiceNow, AWS, and Microsoft Azure, whichhave been the long-standing pillars of the Cloud Integration Business, services
related to Google Cloud have significantly expanded.
 Resale, a stock-based revenue, expanded as customers moved to the cloud andincreased data usage.

Growth and success of diverse
human resources Improvement of the organization mainly by engineers is generally progressing asplanned.
 Continue to develop an environment to meet the diversifying needs of employees

Strengthening ESG
management

 Continue efforts to enhance the quality of corporate governance Starting full-scale disclosure of sustainability information
 Support for the promotion of DX by industry, academia, and public and private
sectors through the provision of free DX education at Microsoft Base Kanazawa,etc.

© 2023 System Support Inc.

4

Corporate Creed, Management Philosophy, and Medium-Term Themes

Corporate creed (values)

Sincerity andCreationManagement philosophy

Medium-Term Themes

Growth and creation of further
innovation

Contributing toSociety
Advanced
Customer Service

Growth and success of diverse
human resources• Positioning human resources as the biggest source ofbusiness growth• Implementing aggressive investment in humanresources

Sharing Value
Expansion of services that form thefoundation of DX promotion forcustomers and society© ©20232023 System
SupportInc. Inc.
System
Support• Amid the growing momentum for DX promotion, our Groupwill focus on the cloud integration business, which is thefoundation for promoting DX for customers and society.
• In addition to the existing cloud services, we will be the firstto deploy new overseas services in the Japanese market.

Strengthening ESG management• Strengthening sustainability initiatives• Expanding regional business by developing DX
human resources• Complying with the revised Corporate Governance
Code

55

Medium-Term Management Indicators (Consolidated) – Summary
Planned CAGR of Net Sales: 11.6% or more
Planned CAGR of Operating Profit: 18.2% or more
Net sales

Net sales

13.37 billion yen
Operating profit

Net sales

26.80 billion yen or

Operating profit

Operating profit

19.26 billion yen

750 million yen

1.45 billion yen

Operating profit ratio

Operating profit ratio

5.6％

7.6%

FY2020/6
FY2023/6

more

2.40 billion yen or
more

Operating profit ratio

9.0% or more

FY2026/6 (Planned)

Medium-Term Management Plan Rolling Plan (FY2024/6 to FY2026/6)© 2023 System Support Inc.

6

Medium-Term Management Indicators (Consolidated) – Sales and Profit PlanAim for net sales of 26.8 billion yen or more and operating profit of 2.4
billion yen or more in FY2026/6.

■Net sales (consolidated) *1
30,00020,000

Unit: 1 million yen

CAGR

11.6％ or more

25,000■Operating profit/profit ratio (consolidated) *2

24,36526,8051.2
121,784
19,267

0.8

2,500

1,500

10,000

0.4

1,000

5,000

0.2

500

0

0

FY2024/6(Planned)■ Cloud integration© 2023 System Support Inc.

FY2025/6(Planned)

FY2026/6(Planned)

18.2％ or more

2,000

0.6

FY2023/6

20.0%

CAGR (Operating profit)

15,0000

Unit: 1 million yen

3,000■ System integration ■ Outsourcing

2,189

2,407

16.0%
14.0%

1,763

12.0%

1,456

7.6%

18.0%

10.0%
8.1%

9.0%

9.0%

8.0%
6.0%
4.0%
2.0%

FY2023/6■ Product

FY2024/6(Planned)■ Overseas*Segment profit is the amount before adjustment for gross profit in the consolidated financial statements.

FY2025/6(Planned)

FY2026/6(Planned)

0.0%

ー Operating profit ratio
7Medium-Term Theme – Cloud Integration Business MeasuresCloud platform services, which serve as the foundation for DX, are expected tocontinue to expand in the market.
Increase orders by focusing on growth of existing businesses and expansion ofbusiness areas, and secure stock-based revenue through resale
Developing cloud-related engineers expand
orders and maintain and improve a virtuous cycleof further growth of Our Company businessthrough market growth
Receives customer referrals
from global IT vendors andincreases orders

Engineertraining andknow-how
accumulation■ Net sales of Cloud Integration Business andratio of stock sales*1 against net sales
Unit: 1 million yen

Expansionof orders

Actively invests in training cloud-related engineers© 2023 System Support Inc.

*1 Ratio of resale sales in the Cloud Integration Business(100 million yen)

50%

8,000

40% CAGR

6,000

29%

31%

30%

5,319

3,388

20%

0

FY2020 to FY2026 (Forecast)

20.2%

31,70026,80022,40018,70015,60013,00010,50010%

2,000Strengthens relationships with
global IT vendors by gaining
technical certifications andrecognition■ Cloud platform services (IaaS/PaaS)
market trends and forecasts *2

10,0004,000

Strengthening
relationships
with global IT
vendors60%

12,000Background: cloud market growth

FY2022/6 FY2023/6 FY2024/6 FY2025/6 FY2026/6(Planned) (Planned) (Planned)

Net Sales

0%

Ratio of stock sales

2020

2021

2022

2023
2024
2025
2026
(Forecast) (Forecast) (Forecast) (Forecast)

Note 1: Business operator's net sales base
Note 2: Forecasts for 2023 and subsequent years
Note 3: Market size does not include Software as aService (SaaS)*2 Source: “Survey on the Cloud Platform (IaaS/PaaS) Services Market (2023),” by Yano Research Institute, Inc., announced on April 25, 2023

8

Medium-Term Theme – Growth and success of diverse human resourcesPositioning human resources as the source of business growth, we aim to create newcorporate value through “Active recruitment and promotion of diverse humanresources," “Human resource development," and “Comfortable working environment."

Recruitment and development measures

1
2
3

Active recruitment activities

Instead of recruiting all employees at the head office, we assign a recruiting
manager to each location for flexible recruiting and to prevent mismatches
between applicants.

Development of IT engineers

Investing to maintain and improve competitiveness, including acquisition ofvendor qualifications mainly in the cloud field.

Raising salary levels and creating a comfortableworking environment■Personnel plan (consolidated)
Unit: People

1800
1600
1400
1200

© 2023 System Support Inc.

1,126

1,233

800
600
400

949
5.9%

1,039

30.0%
25.0%

1,348

20.0%

1000

Aiming to improve salary levels and to promote health maintenance management 200
we set and achieve targets for the ratio of female employees, reduction of total0working hours, and percentage of employees taking childcare leave.
(Reference)
Ratio of women to total employees (non-consolidated) at the end of FY2022/6: 28.3%, at the endof FY2023/6: 29.8%
Percentage of women in managerial positions (non-consolidated) at the end of FY2022/6: 9.2%,
at the end of FY2023/6: 12.6%

1,495

1,633

1,785

15.0%

1,134

10.0%

4.9%

5.4%

177

194

214

FY2021/6

FY2022/6

FY2023/6

Sales, management, etc.

5.0%
FY2024/6 FY2025/6 FY2026/6(Planned) （Planned） （Planned）

Engineers

0.0%

Retirement rate9Medium-Term Theme – Strengthening ESG Management
 Addressing social issues through ESG management based on the management philosophy.
Efforts to date
Environment

E

Advanced
Customer
Service

Contributing
to Society• The Sustainability Committee was establishedto plan and study sustainability measures.
• Implement CO2 emission reduction activities
using renewable energy.
• Start of information disclosure on sustainability

S• Set CO2 emission targets and implement
further reduction measures• Expand a disclosure system in line with the
TCFD, and respond to CDP and improvescore• Development of IT engineers• Realization of diverse human resources
employment and work styles• Contribution to local communities andlocal administration• Expanding the activities of Microsoft BaseKanazawa with the aim of expanding local
businesses and revitalizing the economy
through development of DX humanresources.

• Establishment of various committees andimprovement of systems to improve corporate
governance• The Board of Directors is composed tostrengthen corporate governance and ensure
diversity (three independent outside directors
and two women out of eight directors).

• Aim to improve the response and quality of
the revised Corporate Governance Code.
• Continue to work to strengthen corporate
governance and ensure diversity in thecomposition of the Board of Directors.

Society

Management
philosophy

Efforts to strengthen

Sharing Value
GovernanceG© 2023 System Support Inc.

10

Shareholder Return Policy◆While maintaining the internal reserves necessary for future business development andstrengthening our management structure, we will continue to pay a stable dividend and improve thelevel of dividends according to our performance and profit levels.
The mid-term target for
dividend payout ratio is
30% to 35%.

■Dividend trend*

Unit: Yen

Shareholder
return32
25

Enhancement ofdividend amount due

17

Growthinvestment

21
12

10
FY2020/6

FY2021/6

Interim dividends© 2023 System Support Inc.

18

13

to business growth

Financialbase

36

FY2022/6

15
FY2023/6

18

FY2024/6（Forecast）

Year-end dividends
11Reference Materials

12Company Profile
Company name

System Support Inc. (STS)

Location

9F Rifare, 1-5-2 Honmachi, Kanazawa-shi, Ishikawa Prefecture

Founding

January 1980

Listed market

Tokyo Stock Exchange Prime Market (security code: 4396)

Capital

723 million yen

Net sales

19,267 million yen (FY2023/6, consolidated)

Representative

Ryoji Koshimizu, Representative Director

Number of
employees

1,348 (as of June 30, 2023, consolidated)

OfficesTokyo, Nagoya, Osaka, and Kanazawa (headquarters)

Business outline■Cloud Integration BusinessTechnical support for migration and use of cloud services (ServiceNow,
Microsoft Azure, AWS, Google Cloud, etc.) and resale of licenses, etc.

■System Integration Business

84% of employees
are engineers
Kanazawa:
271

Tokyo: 698

Nagoya: 173
Osaka: 194

Overseas (U.S. & Canada):
12

Number of employees by region(as of June 30, 2023, consolidated)

Technical support for the introduction and use of ERP packages, constructionof infrastructure such as Oracle database, and IT system consulting, design, development, operation, and maintenance■Outsourcing Business

Our Group’s private cloud and other data center services, data analysis and input, and near-shore system operation andmaintenance■Product Business

Development and sale of products (software) by Our Group, and customization according to user companies’
applications■Overseas Business© 2023 System Support Inc.

Overseas system integration, outsourcing of payroll and accounting services, recruitment services, and media
management

13Company Profile – Net Sales Trends and History(1 million yen)Entered a Celonis Partner Program Agreement with CELONIS K.K.
Entered a Subcontractor Agreement with Automation Anywhere, Inc.
Entered a Google Cloud & Google for Education Commercial Partner Program Agreement with Google Cloud Japan G.K.

18,00016,00014,000Received Microsoft Cloud Platform Gold Competency certification

12,000Received Microsoft Cloud Platform Silver Competency certification
Entered a PartnerNow Master Terms with ServiceNow Nederland B.V.

10,000Entered an APN Consulting Partner contract with Amazon Japan K.K.

8,000Entered a SAP Service Partner contract with SAP Japan Co., Ltd.

6,000
4,000

Entered an Oracle EBS Technical Partner contract with Oracle
Corporation Japan

2,000

1980/121982/12'80/12 '82/12 1984/6'84/6 1986/6'86/6 1988/6'88/6 1990/6'90/6 1992/6'92/6 1994/6'94/6 1996/6'96/6 1998/6'98/6 2000/6'00/6 2002/6'02/6 2004/6'04/6 2006/6'06/6 2008/6'08/6 2010/6'10/6 2012/6'12/6 2014/6'14/6 2016/6'16/6 2018/6'18/6 2020/6'20/6 2022/6'22/6●Established System Support Inc. in Kanazawa City, Ishikawa Prefecture●Listed on the Tokyo Stock Exchange
Mothers Index●eNet Solutions Co., Ltd. financed and founded●Nagoya Office opened●Tokyo Office opened●Osaka Office opened0●Listed on the First Section of theTokyo Stock Exchange●Moved to TSE Prime●Acquired shares of T4C Co., Ltd., andmade it a subsidiary●STS Medic Inc. financed and founded●Acquired shares of Across Solutions, Inc. and made it a subsidiary●STS Innovation, Inc. financed and founded in California, USA●STS Innovation Canada, Inc. financed andfounded in Vancouver, Canada© 2023 System Support Inc.

* Net sales are consolidated from FY2016/6, and unconsolidated before that.

14

Review: FY2019/6 to FY2023/6 (1)Net sales were driven by Cloud-related business and CAGR was 13.1%.
Operating profit grew at a CAGR of 28.8% and operating margin increased 3.1

percentage points due to the expansion of high-margin Cloud-related business.

25,000■Net sales (consolidated)■Operating profit/profit ratio (consolidated)20.0%

Unit: 1 million yen

CAGR
20,000

13.1％

28.8％

19,267

1,456

16,19815,00013,376

1,196

14,431

529

5,000

4.5%

FY2019/6© 2023 System Support Inc.

FY2020/6

FY2021/6

FY2022/6

FY2023/6

0FY2019/6

5.6%

16.0%
14.0%

10.0%

754

10,000

18.0%

12.0%

931

11,7620

Unit: 1 million yen

CAGR (Operating profit)

8.0%
6.5%

7.4%

7.6%

6.0%
4.0%
2.0%

FY2020/6

FY2021/6

FY2022/6

FY2023/6

0.0%

15

Review: FY2019/6 to FY2023/6 (2)Average salary(non-consolidated)

Investment-related expenses (consolidated)
Unit: 1 million yen

Unit: 1 thousand yen

500

400

5.0%

CAGR

18.6％

300

4.0%

3.0%

6,000

Return on equity (ROE) (consolidated)

CAGR

3.5％

5,000

27.2%

26.8%

4,000

25.0%

24.5%

FY2021/6

FY2022/6

20.5%
3,000

200

2.0%
2,000

100

0

1.0%

FY2019/6 FY2020/6 FY2021/6 FY2022/6 FY2023/6

Research and development expenses

0.0%

1,000
0

FY2019/6 FY2020/6 FY2021/6 FY2022/6 FY2023/6

FY2019/6

FY2020/6

FY2023/6

Training expenses
Recruitment-related expenses
Percentage of net sales© 2023 System Support Inc.

16

Growth Strategy by Segment (1)Cloud Integration BusinessBusiness outline: Technical support for migration and use of cloud services (ServiceNow, Microsoft Azure,
AWS, Google Cloud, etc.) and resale of licenses, etc. (Resale)

Growthstrategy■Flow of cloud platform migration and usage support

Expansion of thecorresponding area

Catch up with information on overseas
cloud services through overseas
subsidiaries, and quickly
commercialize them in the Japanesemarket by training engineers andaccumulating know-how, leading to theacquisition of new customers.

Expansion of existing
cloud business

Secure orders through cloud
migration and post-migration
optimization (lift & shift), focusing on
the world's three major clouds (AWS,
Microsoft Azure, Google Cloud) andServiceNow, which are the mainstaysof this business.
© 2023 System Support Inc.

Strengthen relationships
with cloud vendors bydeveloping engineers

Strengthen relationships and receive
customer referrals by investing actively
in training cloud-related engineers andachieving technical qualifications awards
and certifications from cloud vendors.

Our main services
Before cloud migration

After cloud migration

Proposal and design▶ Migration andusage support▶(Delivery)▶ Operation andMonitoring Resale(creation of cloud environment)

Regarding resale

Reselling cloud accounts (pay-as-you-go or bulk
purchases based on data usage) from Our
Company to customers to ensure stock revenue.
In the fiscal year ended June 2023, resaleaccounted for 31% of net sales of Cloud
Integration Business, and the Company aims tocontinue to expand it through customers’
moving to the cloud and their increase in data
usage.

17

Growth Strategy by Segment (2)System Integration BusinessBusiness outline: Technical support for the introduction and use of ERP packages, construction of
infrastructure such as Oracle database, and IT system consulting, design, development,
operation, and maintenance

Growthstrategy

Expansion of existing
businesses

Steadily recruit and train engineers
and secure orders for ERP-related,database-related, RPA-related, andother IT system development, which
are the mainstay of this business.

Strengthening project
management

Continue project management fromthe perspective of quality, duration,
cost, and risk control to curb theoccurrence of unprofitable projects
and improve service quality© 2023 System Support Inc.

Strengthening relationshipwith customers

Our Company engineers work closely withcustomers such as user companies toexpand projects and continue receiving
orders from existing customers■Efforts to secure stable orders

User
company

SIer

Our Group

Percentage of directtransactions: 67.1%*1
Customer repeat rate: 78.5%*2

Build close relationships with user
companies to expand projects andcontinue receiving orders*1 Percentage of our net sales for FY2023/6. *2 Percentage of customers with sales recorded by Our Company in FY2021/6 who continued to record sales in FY2022/6

18

Growth Strategy by Segment (3)Outsourcing BusinessBusiness outline: Our Group’s private cloud and other data center services, data analysis and input, and nearshore system operation and maintenance

Growthstrategy
Data center expansion

Target customers different from major
cloud users, and use AI-related and otherunique services as a hook tool to build up
the numbers of customers and subscription
fees per customer.

Expansion of ERP nearshore

With the need for maintenance of ERP
products, centered on SAP ERP,
expected to increase toward 2027, Our
Company is strengthening its system
by training near-shore personnel in the
Kanazawa area.

Continuous data center
facility expansion

Gradually expand facilities according tooperating conditions to both improve quality
and ensure profitability.

■Net sales of Outsourcing Business and ratio of stock sales(annual and monthly data center fees) against net sales
Unit: 1 million yen

100%

2,500
2,000
1,500

75%
1,541

73%
1,772

60%

1,000

40%

500

20%

0

FY2022/6 FY2023/6 FY2024/6 FY2025/6 FY2026/6(Planned) (Planned) (Planned)

Net Sales© 2023 System Support Inc.

80%

0%

Ratio of stock sales
19Growth Strategy by Segment (4)Product BusinessBusiness outline: Development, sales, and customization of products (software) by Our Group
Mainly cloud-based products (monthly billing system); sales expansion throughdistributors in addition to direct sales

Growthstrategy■Net sales of Product Business and ratio of stock sales(monthly usage fees, etc.) against net sales

Customer expansion

Unit: 1 million yen
In order to increase new customers, Our Company
1,000
will expand sales channels for agents andstrengthen advertising and publicity. In addition,
Our Company will aim to increase the number ofusers by expanding the number of divisions within
800
existing customers.
On a product basis, we plan to expand sales of
newly launched Smart Rabbit (food inventory
forecast system for restaurants), Tateyakusha, and
600
SHIFTEE.

Maintaining and improving stablehigh profitability

By increasing non-customized sales, we will
strengthen the structure in which increased
sales lead to higher profits. In addition, we
will accumulate stock sales such as monthly
usage fees to ensure stable high profit
margins.
* As of June 30, 2023 (cumulative)© 2023 System Support Inc.

Functional
enhancement

Continue to enhance existingproducts to reduce lead time until
introduction and improve
competitiveness against othercompanies’ products.

400

100%

670

80%

693

60%
52%

57%
40%

200
0

20%

FY2022/6 FY2023/6 FY2024/6 FY2025/6 FY2026/6(Planned) (Planned) (Planned)

Net sales

Ratio of stock sales

0%20Growth Strategy by Segment (5)Overseas BusinessBusiness overview: System integration overseas (in the U.S. and Canada), outsourcing of payroll andaccounting services, recruitment services, and media management

Growthstrategy

Our subsidiary
STS Innovation Canada(Vancouver, Canada)

Support forcompanies entering
North America
Expansion of
cutting-edge
services in Japan

Collecting cutting-edge IT
information to develop
promising businesses inJapan© 2023 System Support Inc.

Support for IT infrastructure,
recruitment, and marketing ofJapanese companies entering
North America

Strengthening
outsourcing services

Strengthen remote monitoring
services for Japanese companies
using the time difference between
Japan and North America andoutsourcing services for Japanesecompanies in the U.S.

Support for companies entering
North America and remotemonitoring service using timedifference★
★

Outsourcing
services forJapanesecompanies in
the U.S.
Our subsidiary
STS Innovation(Silicon Valley,
U.S.A.)
21

Disclaimer and Forward Looking Statements
This document has been prepared by System Support Inc. (hereinafter referred to as “Our

Company”) for the purpose of providing investors with an understanding of the current
status of Our Company.
The contents of this document are prepared based on economic, social, and otherconditions generally recognized as prevailing at the time this report was prepared, as wellas certain assumptions that we have judged to be reasonable, but may be subject to change
without notice due to changes in the business environment or other reasons.
The materials and information provided in this presentation include so-called “forward
looking statements.” These statements are based on current expectations, projections, andassumptions with risks and involve uncertainties that could cause results to differ materiallyfrom those in the statements.
Such risks and uncertainties include general industry and market conditions, and generaldomestic and international economic conditions such as interest rate and currency
exchange rate fluctuations.
For further information, please contact:
Investor Relations, Administrative Planning Department, System Support Inc.
TEL: 076-265-5151 E-mail: ir@sts-inc.co.jp© 2023 System Support Inc.

22

Thank you