SMS CO., LTD.

(Securities Code: 2175 / TSE1 )Presentation Materials for Investor Relations
Financial Results Summary for
the Fiscal Year Ended March 31, 2017 (the 14th Fiscal Year)

April 28, 2017

Table of Contents

1

FY03/17 Consolidated Financial Results

P3-P7

2

FY03/18 Strategy, Consolidated Financial
Forecasts

P9-P403

Reference

P42-P51© Copyright SMS CO.,LTD.

1

1

FY03/17 Consolidated Financial Results

P3-P7

2

FY03/18 Strategy, Consolidated Financial
Forecasts

P9-P403

Reference

P42-P51© Copyright SMS CO.,LTD.

2

１ FY03/17 Consolidated Financial Results Both net sales and incomes increased YoY significantly.
 Both net sales and incomes were in line with forecasts.

P/L Statement [¥ million]
FY03/16
ActualFY03/17
Forecasts*1

FY03/17
ActualYoY Change

vs. Forecasts

Net sales

19,06924,051

23,054+21%-4%Operating
Income

2,756

3,650

3,646

+32%

-0%

Ordinary
Income

3,509

4,450

4,430

+26%

-0%

Net Income

2,265

2,800

2,801

+24%

+0%

© Copyright SMS CO.,LTD. *1. Revised forecasts announced on October 28, 2016.

3

1

Historical Financial Results Achieved growth in both net sales and ordinary income for the 13th consecutive years
since our establishment.

Trends in net sales and ordinary income(Net Sales, JPY millions)(Ordinary Income, JPY millions)

30,0008,000

27,0007,200

23,05424,00021,00015,05615,00012,046

12,000

10,181

9,000
6,000
3,000
0

5,600

19,06918,000

835
58
383
108
49
(5)
FY03/04

FY03/05(3,000)© Copyright SMS CO.,LTD.

FY03/06

2,715
1,545
415
269
FY03/07

FY03/08

2,340
8,692
7,618
1,990
7,172
1,734
5,177
1,530
1,238 1,266

6,400

4,430 4,800
4,000

3,509

3,200

2,693

2,400
1,600
800

FY03/09

FY03/10:Net Sales (in black font)

FY03/11

FY03/12

FY03/13

FY03/14:Ordinary Income (in blue font)

FY03/15

FY03/16

FY03/17

0
(800)

4

1

Career Segment (Full-year) Net sales increased 10% YoY.
 Both Recruiting Agent and Media services in the Elderly Care achieved significant
growth.

Year-on-Year Comparison of Net Sales [¥ million]
FY03/16

FY03/17

YoY changes

Elderly
Care

Recruiting Agent

1,438

1,790

+24％

Media

1,833

2,234

+22％

MedicalCare

Recruiting Agent

8,229

8,758

+6％

Media

1,223

1,187

-3％

12,725

13,972

+10％

Total

Highlights• In Elderly Care, both Recruiting Agent and Media achieved significant growth.
⁃ Existing Recruiting Agent services continued to grow steadily.
⁃ The number of sales orders for the Recruiting Agent for care workers(launched this fiscal year) started to increase.
The number of consultants have been increased looking ahead of the growth from the next fiscal year.
• Medical Care Recruiting Agent continued to grow steadily.

© Copyright SMS CO.,LTD.

5

1

Elderly Care Segment (Full-year) Net sales increased 19% YoY.
 Kaipoke continued to grow.
Year-on-Year Comparison of Net Sales [¥ million]_

FY03/16

FY03/17

YoY changes

Management Support
for Service Operators

2,551

3,040

+19%

New Businesses

421

487

+16%

Total

2,972

3,528

+19%

Highlights• Management support for elderly care operators “Kaipoke” achieved significant growth due to the rise in memberships.
Increase 1,500 memberships from previous fiscal year
(As of April, 2016: 12,000 → As of April, 2017:13,500)• In New Businesses, the home-delivered meal search and renovation support increased.

© Copyright SMS CO.,LTD.

6

1

Medical Care, Healthcare and Overseas (Full-year) In Overseas segment, MIMS group acquired in October 2015 contributed to net sales
increase.

Year-on-Year Comparison of Net Sales [¥ million]_

FY03/16

FY03/17

YoY changes

Medical Care

652

591

-9％

Healthcare

117

176

+50％

Overseas*1

2,601

4,786

+84％

Highlights
MedicalCare• Net sales of “Mail order/online sales of nursing goods” decreased YoY, but the profitability improved bydiscontinuing catalog sales and focusing on online sales

Healthcare• Services for the prevention of dementia, lifestyle-related diseases, etc. contributed to an increase in net sales.

Overseas• The MIMS group contributed to an increase in net sales.
• Restructured the overseas businesses portfolio in line with the acquisition of the MIMS group.

*1: The MIMS group was acquired in October 2015. MIMS Group’s P/L is consolidated following a 3-month lag. (For full-year, the P/L of the MIMS group for January to December was
included in the scope of consolidation. For details, refer to p.45.) In addition, the results of net sales for FY03/17 were ¥4,476 million.

© Copyright SMS CO.,LTD.

7

1

FY03/17 Consolidated Financial Results

P3-P7

2

FY03/18 Strategy, Consolidated Financial
Forecasts

P9-P403

Reference

P42-P51© Copyright SMS CO.,LTD.

8

2

Our Mission

We create value and contribute to society by providing
an “information infrastructure for an aging society.”© Copyright SMS CO.,LTD.

9

2Business Segments and Service Recipients

 Define our market segments as Elderly Care, Medical Care, Healthcare and Senior Life.
 Provide values through organically connecting service operators, professionals, and end
users.

Market segments in an aging society

Stakeholders covered by an information infrastructure
Related-Business
Operators？
？

Senior Life*2
Healthcare*1

Medical Care

Helpers？

Meal
deliveryRealestates

Facilitycare

Factoring？

HealthPharmacists Dental Commodities
careclinics
Elderly
care

DiseaseStudnets

Home
care

*1. Covers health-related services that are not subject to public elderly care insurance or medical care insurance*2. Covers services related to daily life in an aging society

Doctors

NursesHome-visit
nursing

Communication
carriers Rehabilitation
Elderly care
goods
goods

© Copyright SMS CO.,LTD.

？

ChildrenCaremangers？

Warehouses

Grand Users Nutritionists
End
?
？

PT/OT

？

？

Professionals？

？

Medicaltechnologists？

Welfarevehicles？
？

Renovation

Healthfoods

Service Operators？

Healthclubs

HousingElderly Care？

Travels

Pharmaceutical
Dispensaries companies
Clinics

Hospitals?

？

Medicaldevices

Educationagencies

102Overseas Operations

 Started our businesses and have already established with high growth potential in
Japan.
 Expanding our businesses into the growing Asian*1 markets.

■ AsiaJapan

Thailand

Korea

Malaysia

China

Indonesia

Hong Kong

VietnamSingapore

MyanmarPhilippines

India

Australia

New Zealand■Oceania© Copyright SMS CO.,LTD. *1. Includes Oceania

112Size of Our Target Market

 Healthcare related expenditures continue to rise both in Japan and Asia.
 In 2025, the size of our target market will be at least over $29.4 billionand Asia.

in JapanMarket size of healthcare related information services in Japan and Asia (USD billions)
671

Japan

Elderly and medical care
Expenditures*1

315
Medical care

454

491

1％*

359

258

Elderly care

57

95

2005

2015

Asia

6.7

180

Total market sizein 2025

2025

29.4B
USD

2,269

Healthcare expenditure*2

1％*

22.7

1,152
295
2005

2015

2025

* Information services account for atleast 1% of the total expenditure© Copyright SMS CO.,LTD. *1. Sources: 2005 – MHLW; 2015,2025 - MHLW estimates. *2. Sources 2005 – WHO; 2015,2025 - SMS estimates.

12

2Growth Track Our growth so far has been driven by Career businesses.
 The Elderly Care Operators (Kaipoke) and Overseas segments are established as thebasis for further growth.

Strategic Units

Breakdown of Net Sales by Segment(JPY millions)

Career segment• Overwhelming No.1 player in the market of elderly
and medical care recruiting services
23,054

Elderly Care Operators segment (Kaipoke)• The only player providing business support service
for elderly care operators

705, 7%

10,181
105, 1%360, 4%(Overseas)

Overseas segment• Led by the MIMS group that SMS acquired in
October 2015
• MIMS is the No.1 drug information service provider
in Asia

Business Development segment• Developing a series of new services© Copyright SMS CO.,LTD.

(Businessdevelopment)

15,056 7%
1,092
5%
741
1,525 10%

(Elderly Care
Operators)

9,009

88%

11,696 78%

1,514

7%

4,786

21%

2,782

12%

13,972 61%

FY03/13

FY03/15

FY03/17

Career segment

Elderly Care Operators segment

Overseas segment

Business Development segment

13

2

Growth Scenario

 On top of the career businesses' stable growth, accelerate Kaipoke’s growth and put
MIMS on the growth track.
 Develop a series of new businesses to create the next core businesses, which willfurther drive our growth in the future.

4. Growth of new businesses(Business Development segment)

3. Growth of overseas businesses
driven by MIMS
(Business Development segment)
2. Growth of Kaipoke(Elderly Care Operators segment)

1. Growth of career business(Career segment)Now© Copyright SMS CO.,LTD.

Future14

2

FY03/18 Consolidated Financial Forecasts

 Expecting 21% growth in net income.
P/L Statement [¥ million]
FY03/17
Actual© Copyright SMS CO.,LTD.

FY03/18
Forecast

Difference(Amount)

YoY
Changes

Net Sales

23,05427,804+4,749+21％

Operating
Income

3,646

4,378

+732

+20％

Ordinary
Income

4,430

5,137

+706

+16％

Net Income

2,801

3,396

+595

+21％

15

2

Historical Financial Results and Forecasts

 Expecting to achieve growth in both net sales and ordinary income for the 13th
consecutive year since our establishment.

Trends in net sales and ordinary income(Net Sales, JPY millions)(Ordinary Income, JPY millions)

30,00027,80427,0007,200

23,05424,00021,00015,05615,00012,046

12,000

10,181

9,000
6,000

0

58
383 835108
49(5)
FY03/04

FY03/05(3,000)© Copyright SMS CO.,LTD.

FY03/06

2,715
1,545
415
269
FY03/07

FY03/08

2,340
8,692
7,618
1,990
7,172
1,734
5,177
1,530
1,238 1,266

6,400

5,137 5,600

19,06918,000

3,000

8,000

4,430

4,800
4,000

3,509

3,200

2,693

2,400
1,600
800

FY03/09

FY03/10:Net Sales (in black font)

FY03/11

FY03/12

FY03/13

FY03/14

FY03/15:Ordinary Income (in blue font)

FY03/16

FY03/17

FY03/18

0
(800)

16

2

Changes in Disclosed Segments

 Change the disclosed segments based on the strategy.
Former disclosed segments

New disclosed segments

Career

CareerElderly Care
Recruiting Agent
Elderly CareMedia
Medical Care
Recruiting Agent
Medical CareMedia

Elderly Care Career

Medical Care Career

Elderly CareManagement Support
for Service Operators

Elderly Care Operators

New Businesses
Medical Care

Business Development

Healthcare
Overseas© Copyright SMS CO.,LTD.

Overseas17

Career Segment© Copyright SMS CO.,LTD.

18

2

Environment: Care Workers and Nurses

 Labor shortages continue to be a serious issue despite an increase in both care workers
and nurses.

The number of care workers and their turnover rate*1# of care workers CAGR: 5%

1900
1800
1700
1600
1500
1400
1300
1200
1100

1,696

1,773

1,866

(thousands) 1900
1,925
1800# of nurses CAGR: 2%

1,555

16.1%

17.0%

16.6%

16.5%

The number of nurses and their turnover rate*3

16.5%

50.00%
1700
40.00% 1,495
1600
1500
30.00%
1400
20.00%
1300
10.00%10.9%
1200
1100
0.00%

2011

2012

2013

2014

2015

Jobs-to-applicants ratio of care workers*2

4.00

3.00

3.00

0.00

1,634

40

1,603

1,571

30
20

11.0%

11.0%

10

10.8%

10.8%

0.
2011

2012

2013

2014

2015

Nurses

2.00

2.00
1.00

50

Jobs-to-applicants ratio of nurses*2

4.00

Care workers

1,537(thousands)

Industry total

1.00
0.00

Industry total

1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q
FY03/12 FY03/13 FY03/14 FY03/15 FY03/16 FY03/17

1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q
FY03/12 FY03/13 FY03/14 FY03/15 FY03/16 FY03/17'12年3月期'13年3月期'14年3月期'15年3月期'16年3月期'12年3月期'13年3月期'14年3月期'15年3月期'16年3月期© Copyright SMS CO.,LTD. *1. Sources: Number – MHLW; Turnover rate - Care Work Foundation *2. Sources: MHLW *1. Sources: The Japanese Nursing Association19

2

Our Strengths

 As a pioneer, created these attractive markets and continue to lead them going forward
as the No.1 player.
 With strong competitive advantages in attracting customers and receiving orders,create a virtuous cycle that draws more job seekers and business operators.
Job seekers

Operators

Our customers are:Orders we receive:(percentage of registered members for ourservices among the annual number of people
who changed their job in the entire market)

NursesOver 100%

Created the market as a pioneer
andlead the market as the No.1 player(Recruiting Agent)

Nurse
No.1 share with 30%(Recruiting Agent)

Care workers
40%

Care worker
No.1 share with no major competitors(Recruiting Ads)

(Recruiting Ads)

Accumulated online
marketing know-how byconducting it in house.
© Copyright SMS CO.,LTD.

Hospitals
70%(Recruiting Agent)

Major elderly
care operators
50%(Recruiting Ads)

Strong relationship with
operators and their heavy
dependence on us

20

2

Growth Scenario

 Services that have already established the top positon will continue to grow.
 Develop Recruiting Agent for care workers on a full scale. Create markets and achievesignificant growth.

Our current and future sales by service*1(JPY millions): Current sales

Recruiting Agent forrehabilitation

Recruiting Agent forcare workers: Sales estimatesin the future

Recruiting Agent for
nurses

Recruiting Agent forcare managers

Full-scale expansioncommences in FY03/17.

Recruiting Ads forcare workers

Recruiting Agent forother co-medicals

Current sales*2
13,972

Recruiting ads fornurses
Recruiting Ads for
newly-graduated nurses

Elderly Care Career: 4,025*2*1. The numbers of “Current sales” are actual number of FY03/2017.

Medical Care Career: 9,946*2© Copyright SMS CO.,LTD. *2. Career businesses for doctors and pharmacists are operated by M3 Career, Inc. which is a joint venture between M3, Inc. (51%) and SMS(49%).

21

2Market Potential of Recruiting Agent for Care Workers

 Market size of Recruiting Agent for care workers is expected to become as large as thatof nurses.

Potential number of users of care worker recruiting services*1# of jobseekers
390,000# of Workers
1,610,000

10%# of jobseekers
160,000

25%

Nurses# of workers using
a recruiting agent
service

40,000# of workers using a
recruiting agent
service# of Workers
1,920,000

20%

10%

40,000(assumption)

Care Workers© Copyright SMS CO.,LTD. *1. Sources: # of workers: care workers - MHLW; nurses - Japanese Nursing Association. Others: SMS estimates.

22

2

The Strategy of Elderly Care Career Expand uncovered market with a series of services for unmet needs through our

information assets, such as approximately 70 thousand member database, andmaximize the value for our customers.
 Also support the acquisition of certifications/qualifications and contribute to increasing
the number of care workers who are in high demand in society.

Recruiting Ads(Websites, paper-form ads, andevents)Elderly carecertification course
Commenced in FY03/16

Member database
Approx.

700 thousand

Recruiting Agent
Full-scale expansioncommences in FY03/17.

Certification course
information
Temporary staffing
Commence in FY03/18© Copyright SMS CO.,LTD.

23

2

Career Segment FY03/18 Forecasts

 Elderly Care Career will grow significantly based on the full-scale expansion of the
Recruiting Agent for care workers.
 Recruiting Agent for nurses will drive the growth of the Medical Care Career.
Year-on-Year Comparison of Net Sales [¥ million]_ FY03/17
FY03/18
YoY
Forecasts

Changes

4,025

6,099

+52%

9,946

11,001+11%

13,972

17,100+22%

ActualElderly Care
CareerMedical Care
CareerTotal

Highlights• Recruiting Agent for care workers achieves significant growth. Increase more consultants than previous year.
• Both Recruiting Ads for care workers and Recruiting Agent for rehabilitations continue to grow steadily.
• Recruiting Agent for nurses achieves high growth based on recent strong business.

© Copyright SMS CO.,LTD.

24

Elderly Care Operators
segment(Kaipoke)© Copyright SMS CO.,LTD.

25

2

Environment: Elderly Care Operators

 The number of elderly care operators continues to increase as the population of theseniors increases.

The number of elderly care operators locations andpopulation of the seniors*1

Number of care operators: thousands
Population of the senior: millions# of elderly care operators locations CAGR:5%

130

90

96

35 Services offered by Kaipoke
・ Home care support services
・ Home-visit elderly care・ Day care・ Home-visit nursing
116
・ Outpatient rehabilitation etc.

*2

102

34

33

32

31

30

29
86

143

136

162

153

179

172

108

113

Services not offered by Kaipoke*2
43

45

48

51

54

2010

2011

2012

2013

2014

Not included in Kaipoke service

Included in Kaipoke service

59

63

2015

2016

・ Commuting care for elderly withdementia
・ Short stay・ Daily life care for elderly in specificfacilities
・ Small-sized multifunctional in-home care・ Facilities, etc.

Population of the seniors (over 65)*1. Source: Number of elderly care operators locations – SMS estimates based on statistic of MHLW; Population of the seniors – IPSS.

© Copyright SMS CO.,LTD. *2. As of March, 201726

2

The Strategy of Kaipoke 1/3

 Penetrated the market as a discounter of the insurance claim system.
 Turned the insurance claim system into the business support and became the only
company to provide the service of this kind to elderly care operators.
Prior to February 2014

Starting in February 2014

Insurance
claim
systemInsurance
claim
system(ARPU) JPY3,000 / month

Recruiting
Ads
MarketingBusiness support service
Finance
Improvement

Operation
improvement

Other Contents(Total approx. 40
contents)(ARPU) JPY 20,000 / month• Many other companies provide on-premise services• Fierce competition• The only player providing business support
service with no competitors• Enter the market with cloud-based service as a
discounter• Strong competitive advantage due to strong
position in Recruiting Ads for care workers© Copyright SMS CO.,LTD.

27

2

The Strategy of Kaipoke 2/3

 The number of members is steadily increasing in accordance with the initial strategy,
despite some members cancelling when the concept changed.

Number ofmembershipsof Kaipoke

Only insurance claim system

Business support

13,60013,50010,400Many companies
entered the market
Public elderly careinsurance started

1,500

Changedthe service concept

2000

Apr.
2010

Feb.
2014

© Copyright SMS CO.,LTD.

Apr.
2015

Apr.
2017

Future28

2

The Strategy of Kaipoke 3/3

 Maximize the value provided to elderly care operators through expansion ofcorresponding elderly care operators types and development of new peripheral services
Services provided

Maximize the value
provided to elderly
care operators

Develop new
peripheralservices

Business support
serviceExpand corresponding
elderly care operators
types
Number ofmemberships© Copyright SMS CO.,LTD.

29

2

Elderly Care Operators Segment FY03/18 Forecasts

 Kaipoke continues to grow due to the rise in memberships.

Year-on-Year Comparison of Net Sales*1 [¥ million]_ FY03/17
FY03/18
YoY
ActualElderly Care
Operators

2,782

Forecasts

3,316

Changes+19%

Highlights• The rise in memberships contributes to sales growth.
- Increase of 2,500 membership locations (from 13,500 in April 2017 to 16,000 in April 2018)- Continue to acquire small-sized operators by developing the member acquisition process.
- On the top of acquiring large-sized operators, strengthen each sales office to also acquire
med-sized operators*1 Due to changes in the disclosed segments, the elderly care business in the former Management Support for Service Operators of Elderly Care segment
is transferred to Business Development segment. The accounting method of sales in the purchasing service in Kaipoke is changed to one that records© Copyright SMS CO.,LTD. the service fees portion only.

30

Overseas Segment© Copyright SMS CO.,LTD.

31

2MIMS Group Profile

MIMS Group global coverage

MIMS group profile

Founded

1963

Businessmodels･Pharma Marketing･Healthcare Data

Globalcoverage

Singapore, China, Hong Kong, South
Korea, India, Indonesia, Philippines,
Thailand, Malaysia, Vietnam,
Myanmar, Australia and
New Zealand

Number ofApprox. 2.0 million memberships
memberships including 0.45 million doctors
Acquisition
date
Investment
ratio© Copyright SMS CO.,LTD.

Oct. 7, 2015
SMS 60%, Mitsui 40%

32

2Strengths of MIMS Group Strengths of MIMS Group include its overwhelming brand value in the region, its strong
membership base of healthcare professionals, and its business relationships withpharmaceutical companies.

1. Overwhelming Brand Value

 50 years of history
 Utilized by healthcare institutions/professionals to get drug information
on a daily basis

Healthcare
Professionals

Pharmaceutical
Companies

2. Strong MembershipBase of HCPs

3. Business Relationships
with Pharma Companies

 Healthcare professional memberships approx. 2.0 million- Including approx. 0.45 million doctors© Copyright SMS CO.,LTD.

 Most manufacturers of new drugs in the region post
information of their drugs on MIMS’s database33

2

Goals of MIMS

 Strengthen the MIMS platform by providing healthcare professionals with a wide rangeof products and services.
 Provide a range of services based on the strong platform for healthcare business
operators.
 Add the strengths of SMS and Mitsui to develop businesses for significant growth.
Healthcare
professional

Healthcare
business operators

Drug information E-learning

Marketing support
Pharmaceuticalcompanies

News

Academic
conferences/events

Onlinecommunity

Research

SMS’s career
Businesses
know-how

Platform

Career services
Hospitals
SMS’s management
Support businesses
know-how

SMS platform
operation knowhow© Copyright SMS CO.,LTD.

Business support system
Mitsui’s Medical/
Healthcare network

Clinics34

2

Global Career Business Full-scale expansion starts in FY03/18 using the strong platform of MIMS.
 Establish a dominant position as healthcare professionals supply platform which

supports career changes made not only within a country but also among Asia and from
Asia to other areas.

© Copyright SMS CO.,LTD.

35

2Overseas Segment FY03/18 Forecasts

 Full-scale expansion of the global career business commences in this fiscal
year(FY03/18).

Year-on-Year Comparison of Net Sales*1 [¥ million]_ FY03/17
FY03/18
YoY
ActualOverseas

4,786

Forecasts

5,695

Changes+19％

Highlights• Full-scale expansion of the global career business commences, which will contribute to sales growth.
• Strengthen the MIMS platform more powerfully which is already established a dominant position.

© Copyright SMS CO.,LTD.

36

Business Development Segment(Formerly disclosed as New Businesses in Elderly
Care segment, Medical Care segment and Healthcare
segment)© Copyright SMS CO.,LTD.

37

2Business Portfolio*1*2*3

 Providing over 40 services.
 Constantly develop new businesses to create the next core businesses.
Segment

Subsegment
Elderly Care
Career

CareerMedical Care
CareerElderly Care
Operators－

Overseas－

Business
Development－

Services
RAG for care workers Certification course information

RAG for care managers

RAG for PT/OT/ST

RAD for care workers

RAD for newly-graduatedelderly care professional

Temporary staffing
for care workers

RAG for nurses

RAG for medical
technologists

RAG for radiological
technologists

RAD for nurses

RAD for newly-graduatednursesCom for PT/OT/ST

Elderly care certification course

RAG for medical engineers

RAG for nutritionists

Solution service
for hospitals

Scholarship information portal Com for nurses andstudent nurses

Business support service for
elderly care operators
Drug information service forhealthcare professionals andinstitutions

Com for nurses(South Korea)

Doctor consultation(Indonesia)

Information portal of
housing for seniors

Home-delivered
meal search site

Renovation support

Medical ad services(Philippines)

Medical ad services(Indonesia)

Com for care managers

Com for care workers

Com for families withthose requiring elderly care

Magazines for
hospital management

Mail order/online
sales of nursing goods

Publishing for nurses

Online academic media
for nurses

Regional partnershipsupport system

Livelihood support
search site

Information portal ofdementia

Information portal of diabetes

Q&A site on healthNews column regarding
pregnancy, childbirth andchild-raising

Com for nutritionists

Com for pharmacists

Com for managers ofelderly care operators

User review site regarding
elderly care operators

Information portal for
hospital Admin. managers*1. As of March, 2017 *2. RAG stands for Recruiting Agent; RAD stands for Recruiting Ads; Com stands for online community© Copyright SMS CO.,LTD. *3. Career businesses for doctors and pharmacists are operated by M3 Career, Inc. which is a joint venture between M3, Inc. (51%) and SMS(49%).

38

2

Advantages in Business Development

 Develop new businesses making use of the established bases of service operators andprofessionals in the elderly and medical care markets.

Shares of each customer
Large-sizedelderly care operators

Small and mid-sizedelderly care operators

Hospitalsof them are our
Recruiting Ads clientsof them are our
Kaipoke membersof them are our
Recruiting Agent clientsof them are our
Recruiting Agent clients

Care managers

Care workers

NursesStudent Nurses

45％

40％

35％

65％

50％

10％

of them are ouronline community membersof them are our
Recruiting Ads members

70％

Clinics

10％of them are ouronline community membersof them are ouronline community members

PT/OT/ST*1

Nutritionists

70％

70％

Hospital Admin.
managersof annual job seekers
register in our Recruiting Agentof them are ouronline community members© Copyright SMS CO.,LTD. *1. PT stands for Physical Therapist, OT stands for Occupational Therapist and ST stands for Speech Therapist

20％of them are ouronline community members

39

2

Dividends

 Plan to pay a dividend of ¥11 per share
Trends of the amount and the payout ratio of dividends*1

11.6%

12.3%

13.6%

14.8%

16.3％
15.6%
12.5%
¥7

¥11

18.0%

16.0%

14.0%

12.0%

¥7

10.0%

6.8%

¥4
¥2.50

¥5

8.0%

¥3

6.0%

4.0%

¥1.25
2.0%

0

0.0%

FY03/10

FY03/11

FY03/12

FY03/13

FY03/14

FY03/15© Copyright SMS CO.,LTD. *1.The stock splits we had in the past are taken into account for the dividend amount calculation.

FY03/16

FY03/17(forecast)40

1

FY03/17 Consolidated Financial Results

P3-P7

2

FY03/18 Strategy, Consolidated Financial
Forecasts

P9-P403

Reference

P42-P51© Copyright SMS CO.,LTD.

41

3

Business Models of Recruiting Agent and Recruiting Ads (Career segment)
Business model of Recruiting Agent
Receive a certain percentage of an annual salary from a hiring business operator
as a fee when an applicant joins it.
WebsiteCare Workers

NursesAttract new customers

Sales activity

Registration

Request recruiting

Matching

Matching

Consultants

Hospitals

Elderly care
operators

Fee (A unit price: 700K – 800K yen)

Business model of Recruiting Ads
Receive a fee for each application for a job via our Recruiting Ads
WebsiteAttract new customers

Sales Activity

Registration

Post recruiting ads

Application
Care workers© Copyright SMS CO.,LTD.

Fee (A unit price: 25K yen)

Elderly care
operators

42

3

Business Model of Kaipoke (Elderly Care Operators segment)･Main contents out of approx. 40 contents･Provides these contents as a package

Provide cloud-based
business
support service

Elderly care
operators

Pay monthly subscription
fee(fixed price*1)

Insurance
claim
Generates claims for the elderly care insurance.
systemRecruiting
Ads

Allows customers to use SMS’s industry leading
Recruiting Ads

MarketingMakes flyers and a list of care managers who are
the sales target of elderly care operators.

Operation
improve- Lends an iPad for free. Care workers can complete
documentation at their customer sites
ment
Finance
Provides factoring service that helps business
Improveoperators improve their cash flows
ment© Copyright SMS CO.,LTD. *1 Additional payment is applied for factoring, purchasing service, etc.

43

3Business Models of MIMS (Overseas segment)

Pharma Marketing

Healthcare Data

Pharmaceutical
Companies

Posting Fee

Drug information
Usage fee

• Drug database• Database can be integrated
into core systems ofhealthcare institutions

Drug information via various media(mainly paper based)
Healthcare Institutions(e.g. hospitals, clinics,
pharmacies)

Healthcare Professionals(e.g. doctors, nurses,
pharmacists)

Service Area

Singapore, China, Hong Kong, South Korea, India,
Indonesia, Malaysia, Philippines, Thailand, Myanmar
and Vietnam© Copyright SMS CO.,LTD.

Service Area

Largely in Australia and New Zealand
Expanding in Asian countries44

3

Consolidation of MIMS Financial Results (Overseas segment) MIMS P/L statement is consolidated to SMS P/L statement following a time lag of threemonths.

Image of Consolidating MIMS P/L to SMS Consolidated P/L (excl. MIMS)*1
FY16

FY17

1Q

2Q

3Q

4Q

1Q

2Q

Apr.-June P/L

July-Sep. P/L

Oct.-Dec. P/L

Jan.-Mar. P/L

Apr.-June P/L

July-Sep. P/L

Jan.-Mar. P/L

Apr.-June P/L

July-Sep. P/L

Oct.-Dec. P/L

Jan.-Mar. P/L

Apr.-June P/L: SMS Consolidated P/L (excl. MIMS)

・・・

・・・

: MIMS P/L© Copyright SMS CO.,LTD. *1: Q1-4 presented here are those of the fiscal year of SMS. SMS fiscal year ends in March, while MIMS fiscal year ends in December.

45

3

Seasonal Volatility Net sales and operating income tend to increase in Q1 and Q4.

Seasonal Volatility of Net Sales and Operating Income
Quarterly Net Sales and Operating Income (FY03/17)[¥ million]

Net Sales

7,000

Operating Income

6,000

Businesses whose net sales and operating
income increase in Q1■ Recruiting Agent Service
 Net sales are booked when a job seeker joins a company;
therefore, net sales and operating income increase in April (Q1)
when personnel changes often happen

Businesses whose net sales and operating
income increase in Q4

5,000
4,000

■ Recruiting Ads Service
 Net sales are booked when a job seeker applies for a recruiting ad;
therefore, net sales and operating income increase in Q4 whencompanies publish recruiting ads targeting the beginning of a fiscal
year when job seekers are likely to be motivated to change jobs

3,000
2,000
1,000
0

Businesses with Seasonal Volatility and Reasons

1Q
1Q

2Q
2Q

3Q
3Q

4Q
4Q

■ MIMS group
 The client (pharmaceutical companies) tend to increase theirexpenditure for advertising expenses toward December;therefore, net sales and operating income increase in Q4.
(MIMS P/L statement is consolidated to SMS P/L statement following
a three-month time lag.)

Both net sales and operating income increasesignificantly in Q1 and Q4© Copyright SMS CO.,LTD.

46

3

Historical Financial Results(JPY million)
FY03

FY04

FY05

FY06

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

58

383

835

1,545

2,715

5,177

7,172

7,618

8,692

10,181

12,046

15,056

19,06923,054

0

5

20

38

77

149

375

319

431

700

952

1,332

2,204

3,727

SG&A
Expenses

63

326

705

1,237

2,211

3,796

5,534

5,818

6,740

7,910

9,363

11,644

14,10815,681

Operating
Income

▲5

52

109

269

426

1,230

1,261

1,480

1,519

1,570

1,730

2,079

2,756

3,646

Ordinary
Income

▲5

49

108

269

415

1,238

1,266

1,530

1,734

1,990

2,340

2,693

3,509

4,430

Net Income

▲5

31

63

157

244

719

717

876

1,004

1,226

1,380

1,824

2,265

2,801

Total Assets

59

357

566

1,016

1,806

3,118

3,645

4,672

5,716

6,948

8,406

11,421

41,68943,231

Liabilities

55

166

196

489

822

1,410

1,266

1,430

1,579

1,794

2,331

4,497

28,532

21,648Net Assets

4

190

369

527

983

1,708

2,379

3,242

4,136

5,153

6,074

6,923

13,157

21,583

7.5

53.3

65.3

51.9

54.4

54.8

65.2

69.2

72.3

74.1

71.5

59.7

20.5

39.6

▲124.9

31.8

22.8

35.1

32.3

53.4

35.1

31.2

27.3

26.4

24.7

28.4

29.5

21.8

-

-

-

-

-

1.25

1.25

2.5

3

4

5

7

7

11

-

-

-

-

-

6.8

6.8

11.6

12.3

13.6

14.8

15.6

12.5

16.3

Net Sales
Cost of Sales

Equity Ratio(%)
ROE (%)DPS (¥)*1

Dividend Payout
Ratio(%)© Copyright SMS CO.,LTD. *1：The stock splits we had in the past are taken into account for DPS calculation.

47

3

Launch of Services 1/3
03/04

03/05

03/06

03/07

03/08

03/09

03/10

03/11

03/12

03/13

03/14

03/15

03/16

03/17

RAG for care managers: Care Jinzai-bank May 2003
RAD for newly graduated elderly care professionals: Kaigo Job Gakusei-ban July 2003
Certification course information: Sikatoru Nov. 2003
RAD for elderly care professionals: Kaigo Job Mar. 2004
RAG for nurses: Nurse Jinzai-bank Sep. 2005
RAD for nurses: Nurse-senka Kyujin-navi July 2006
Com for nurses and student nurses: Nurse-senka Community Aug. 2006
RAG for doctors and pharmacists: M3 Career Agent Aug. 2006
RAG for pharmacists: Yaku Kyari Agent Apr. 2007

CareerCompany split andsucceeded to M3 career atthe end of Dec. 2012

RAG for PT/OT/ST : PT/OT Jinzai-bank Sep. 2008
RAD for newly-graduated nurses: Nurse-senka Shusyoku-navi Aug. 2009
Solution service for hospitals Apr. 2011
RAG for nutritionists: Nutritionist Jinzai-bank May 2012
Scholarship information portal: Kango Shogakukin-navi Oct. 2012
RAG for medical technologists: MT Jinzai-bank Sep. 2013
Com for PT/OT/ST: Ryohoushi.com Dec. 2013
RAG for radiological technologists: RT Jinzai-bank June 2014
RAG for medical engineers: ME Jinzai-bank July 2014
RAG for care workers Kaigo Job Agent Aug.2014
Elderly care certification course Care Professional Academy Oct. 2015

© Copyright SMS CO.,LTD.

Temporary staffing for care workers Kaigo job Partners Dec.201648

3

Launch of Services 2/3
03/04

03/05

Elderly
Care
Operators

03/06

03/07

03/08

03/09

03/10

03/11

03/12

03/13

03/14

03/15

03/16

03/17

Business support service for elderly care operators: Kaipoke July 2006

(Korea) Com for nurses: Nurscape Sep. 2011
(Indonesia) Doctor consultation: MeetDoctor Jul. 2013

Overseas(Philippines) : Medical ad services Jan. 2015
(Indonesia) : Medical ad services Feb. 2015
(Singapore and 11 other countries)
Drug information service for healthcare professionals and institutions: MIMS Oct. 2015
Com for elderly care professionals: Care Tomo Oct. 2005
Information portal of housing for seniors: Kaigo DB July 2006）
Com for care managers: Care Mane.com Sep. 2006

Business
Development

Com for pharmacists: Cocoyaku May 2009
Com for families with those requiring elderly care: Anshin Kaigo June 2009
Publishing for nurses: Nurse-senka Books Aug. 2009
Com for nutritionists: Eichie June 2011
Information portal of dementia: Ninchisho Net Aug. 2011
Mail order/online sales of nursing goods: PURE NURSE Sep. 2011

© Copyright SMS CO.,LTD.

49

3

Launch of Services 3/3
03/04

03/05

03/06

03/07

03/08

03/09

03/10

03/11

03/12

03/13

03/14

03/15

03/16

03/17

Information portal for hospital management: GALENUS May 2013
Home-delivered meal search site: Lifood Nov. 2013
Q&A site on health: Narukara Dec. 2013
User review site regarding elderly care operators: Tonari no Kaigo Apr. 2014
News column regarding pregnancy, childbirth and child-raising Ixil July 2014

Business
Development

Information portal for hospital Admin. managers: Jimcom Sep. 2014
Com for managers of elderly care operators: Kaigo Mast Feb. 2015
Regional partnership support system: EIR Apr. 2015
Livelihood support search site: Help You Oct. 2015
Online academic media for nurses: Nurse Press Apr.2016
Renovation support: Hapisumu Apr.2016
Information portal of diabetes: Tonyobyo Net Jul. 2016

© Copyright SMS CO.,LTD.

50

3Number of Employees and Shareholder Composition
Number of employees
 Number of employees and its breakdown as of March 31, 2017
Employees (consolidated)

1,781

SMS CO., LTD.

257

SMS Career CO., LTD.

615

Subsidiaries and Sub-subsidiaries

909

Japan

254

Overseas655

Shareholder composition*1[as of March 31, 2017]

7%

Number of stock
holders
4,984

8%Founder
Director, Employees and Shareholding association

22%
1%

44%

18%

© Copyright SMS CO., LTD. *1: This graph shows the ratio of the number of stocks hold by each category.

Domestic Institutional Investors
Foreign Institutional Investors
Individual Investors
Other

51

Cautionary Statement with Respect to Forward-Looking Statements
These materials contain forward-looking statements, including estimates, projections, and statements related to the business operations of SMS CO.,LTD. (hereinafter, “the Company”) based on current expectations and assumptions in light of the information available to the Company as of March
31, 2017. These forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties andother factors that may cause the Company’s actual results, performance, achievements or financial position to be materially different from any future
results, performance, achievements or financial position expressed or implied by these forward-looking statements. These factors include, but are
not limited to:・changes in economic conditions, market demand, and the competitive environment affecting Japan, Asia and other markets inwhich the Company operates;
・reliance on digital and information technology, including with respect to the handling of elderly care, medical care and otherclient information and operation of the Company’s online community services;・inability to effectively execute M&A/business alliance and overseas expansion strategies;
・changes in the laws, regulations and government policies in the markets in which the Company operates, particularly relating toemployment placement, elderly care and medical care;・any damage to the brand image;・risk of infringing intellectual property rights;
・fluctuations in currency exchange rates, particularly with respect to the value of the Japanese yen, the US dollar, the Singapore
dollar, the Hong Kong dollar and the Australian dollar; and・risk of impairment losses, particularly with respect to goodwill recognized in connection of the acquisition of a 60% interest in
Medica Asia (Holdco) Limited in October, 2015.
A discussion of these and other factors which may affect the Company’s actual results, performance, achievements or financial position is describedin “Business Risks” contained in the Company’s corporate website*1.
We do not intend, and disclaim any duty, to update or revise any forward-looking statements contained in these materials to reflect new information,
future events or otherwise. We caution you not to place undue reliance on any forward-looking statements contained in these materials.
*1. http://www.bm-sms.co.jp/eng/ir/policy/risk/© Copyright SMS CO., LTD.

For any inquiries on the materials, please contact below:
Finance & Accounting Department
E-mail: irinfo@bm-sms.co.jp
Phone: +81-3-6721-2403

52