SMS CO., LTD.

(Securities Code: 2175 / TSE1 )Presentation Material for Investors

Financial Results Summary for the First half of
the Fiscal Year Ending March 31, 2018 (the 15th Fiscal Year)

October 27, 2017

Table of Contents

1

1H FY03/18 Consolidated Financial Results

2

Appendix© Copyright SMS CO.,LTD.

P3-P9

P11-P48

1

1

1H FY03/18 Consolidated Financial Results

2

Appendix© Copyright SMS CO.,LTD.

P3-P9

P11-P482

1

Historical Financial Results and FY03/18 Forecasts

 Expects to achieve growth in both net sales and ordinary income for the 14th
consecutive year since the 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)

3

1

1H FY03/18 Consolidated Financial Results

 Net sales increased, and incomes decreased YoY due to investments, including new
hirings.
 Incomes have been below the forecasts due to additional investments in the highperforming Elderly Care Career Segment.
 Incomes are in line with the forecasts on a full-year basis.
P/L Statement [¥ million]
1H FY03/17
Actual1H FY03/18
Forecasts

1H FY03/18
ActualYoY Change

vs. Forecasts

Net sales

11,99013,484

13,162＋10%- 2%Operating
Income

2,311

2,311

2,146

- 7%

- 7%

Ordinary
Income

2,930

2,793

2,690

- 8%

- 4%

Net Income

1,843

2,009

1,859

＋1%

- 7%

© Copyright SMS CO.,LTD.

4

1Career Segment (1H)

 Net sales increased 15% YoY.
 Grew steadily as planned.
Year-on-Year Comparison of Net Sales [¥ million]_

1H FY03/17 1H FY03/18 YoY Change

Elderly Care
Career

2,084

2,771

+33%

Medical Care
Career

5,590

6,076

+9%

Total

7,675

8,847

+15%

Highlights• Net sales in the Elderly Care Career Segment has been growing significantly.
- Recruiting Agent for care workers has been growing significantly in 1H by increasing the number of consultants.
- Recruiting Agent for rehabilitation therapists has been growing significantly.
• Net sales in the Medical Care Career Segment has been growing steadily.
- Recruiting Agent for nurses has been growing steadily.

© Copyright SMS CO.,LTD.

5

1

Elderly Care Operators Segment (Kaipoke,1H）

 Net sales increased 19% YoY.
 Grew steadily as planned.

中堅事業者の総数、定義等

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

1H FY03/17 1H FY03/18 YoY Change

1,339

1,593

+19%

Highlights• The number of Kaipoke membership locations has been increasing YoY.
- The number of the membership has increased by 800 locations YTD.
(As of October 1, 2017: 14,300 locations [ 20,100 service offices*1])- Net sales for the factoring service and also for the optional services such as providing additional tablet PCs
have increased.
*1. # of locations: the number of service office locations# of service offices: the number of elderly care services provided based on the public elderly care insurance scheme
e.g. When an operator provides two types of elderly care services, home care support services and home-visit elderly care, at one specific address, the number of locations should be
one and the number of service offices should be two. The subscription fee is charged for every membership location. Normally, the number of locations would be smaller than thenumber of service offices.

© Copyright SMS CO.,LTD.

6

1Overseas Segment（1H）

 Net Sales decreased YoY due to the sell-offs of overseas businesses in the previous

fiscal year and the difference of the sales recording timing in MIMS from the previous
fiscal year.

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

1H FY03/17 1H FY03/18 YoY Change

2,219

2,011

- 9％

Highlights• The sell-offs of the overseas businesses such as eChannelling (Sri Lanka) conducted in the previous fiscal year and thedifference of the MIMS Book publication timing resulted in the YoY net sales decrease.
• Net sales has not reached the forecast as the acquisition of Melorita was delayed from the original schedule.

© Copyright SMS CO.,LTD.

7

1

Topic: Elderly Care Career Strategy

 Leveraging our database of 700 thousand registered care workers, expands not only

Recruiting Ads but also Recruiting Agent and the temporary staffing service in order tomaximize the value offered to the care workers and service operators.
 Contributes to the increase of care workers with high social needs by supporting themto acquire qualifications.

Recruiting Ads(Web/Paper/Event)

Elderly carecertification course
Started in FY2015

Member Database
Approx.

700 thousand

registered care workers

Recruiting Agent
Started officially in FY2016

Certification course
Information
Temporary staffing
for care workers
Started in FY2017© Copyright SMS CO.,LTD.

8

1Topic: Progress in Elderly Care Career Strategy（1H） With its strong strategic progress, additional investments have been executed in the
Elderly Care Career Segment.

Attracting job
seekers
Successive
openings of newschools

Recruiting Ads(Web/Paper/Event)

Elderly carecertification course
Started in FY2015

Attracting job
seekers

Member Database
Approx.

Optimal
700 thousand
Allocationofregisteredcare workers
Job Seekers

Recruiting Agent
Started officially in FY2016
Hiring a large

number of
consultants

Certification course
Information
Temporary staffing
for care workers
Started in FY2017© Copyright SMS CO.,LTD.

9

1

1H FY03/18 Consolidated Financial Results

2

Appendix© Copyright SMS CO.,LTD.

P3-P9

P11-P48

10

2

Our Mission

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

11

2Market Segments and Stakeholders

 Provide an information infrastructure which fills in information gaps among stakeholders
in an aging society.

Market segments in an aging society

Stakeholders covered by an information infrastructure

Senior Life*2

Business
Operators
Healthcare

Healthcare*1

Professionals
Healthcare

RelatedCompanies

Healthcare

RelatedWorkers

End
Users
PeopleFacility
Care

Elderly Care

Medical Care

Home Care
SupportOperators
Developing
Care Plans

EU

with
健康に関心がInterest
in Health
ある方

Care
Workers

家族

家族

The elderly
CareManagers

Home-visit
Elderly Care

Pharmaceutical
Companies
Doctors

Patients

要介護者

患者

Other
Co-medicals
Pharmacies

Pharmacists

Rehabilitation
Therapists

NursesClinics

DaycareElderly Care© Copyright SMS CO.,LTD.

Home-visit
Nursing*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

Hospitals

Medical Care12

2Overseas Operations

 Started our businesses and have already established strong positions with high growthpotential 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

13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 billion in Japan andAsia.

Market size of healthcare related information services in Japan and Asia (USD billions)bn

671 USDJapan

Elderly and medical care
Expenditures*1

315
Medical care

454

491

1％*

359

258

Elderly care

57

95

2005

2015

Asia

6.7 bn USD

180

Total market sizein 20252025
bn

29.4 bnUSD

2,269 USD

Healthcare expenditure*2

1％*

22.7 bn USD

1,152
295
2005

2015

2025

* Information services would accountfor at least 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.

14

2

Growth Track Our growth so far has been driven by Career Businesses.
 Kaipoke and Overseas Businesses have been growing as the second and the third
pillars of our business portfolio.

Strategic Units

Breakdown of Net Sales(JPY millions)

Career Businesses• No.1 player in the market of elderly and medicalcare recruiting services
23,054

Kaipoke• The only player providing cloud-based businesssupport service for elderly care operators

Overseas Businesses (MIMS)• Led by the MIMS group that SMS acquired in
October 2015
• MIMS is No.1 drug information service provider inAsia

New Businesses• Developing a series of new businesses© Copyright SMS CO.,LTD.

15,0565%
10%

7%

10,181
1%

7%(New
Businesses)

4%(Overseas
Businesses)(Kaipoke)

78%

88%

FY03/13

FY03/15

1,514

7%

4,786

21%

2,782

12%

13,972 61%

FY03/17

Career Businesses

KaipokeOverseas Businesses

New Businesses

15

2Growth 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 pillars of our businesses, which
will further drive our growth in the future.

Profit4. Growth of New businesses

3. Growth of Overseas Businesses
driven by MIMS

2. Growth of Kaipoke

1. Growth of Career BusinessesNow© Copyright SMS CO.,LTD.

Future16

2Changes in Segments

 Change the segments based on the strategy.
Former segments

New 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 Businesses© 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.

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%

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)

All Industries

1.00
0.00

All Industries

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 Association

19

2

Business Models of Recruiting Agent and Recruiting Ads
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

FeeBusiness 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

Elderly care
operators

20

2

Our Strengths

 As a pioneer, created these attractive markets and continue to lead them going forward
as 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:(percentage of registered members for ourservices among the number of people whochange their jobs annually)

NursesOver 100%(Recruiting Agent)

Care workers
40%(Recruiting Ads)

We receive orders from:

Created the market as a pioneer
andlead the market as No.1 player
Nurse
No.1 share with 30%(Recruiting Agent)

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

Accumulated online
marketing know-how byconducting it in house*1.
© Copyright SMS CO.,LTD. *1. Our competitors traditionally outsourced their web marketing.

Hospitals
70%(Recruiting Agent)

Major elderly
care operators
50%(Recruiting Ads)

Developed strong relationshipwith operators and theirheavy dependence on us21

2

Growth Scenario

 No.1 career services for healthcare professionals will continue to grow.
 Expands career services for care workers on a full scale.
Our current and future sales by segment*1*2*3
Current sales: 4,025(JPY millions)

Current sales: 9,946:Current sales: Sales estimatesin the future

RAG forRehabilitation
Therapists
RAG for
Care
Managers

RAG for Care
Workers

RAG for Nurses
RAG forOther
Co-medicals

Full-scale expansioncommenced in FY03/17.

RAD forCare Workers
Elderly CareRAD forNursesRAD for
NewlygraduatedNursesMedical Care

*1. The figures of “Current sales” are actual figures of FY03/2017.
*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%).
© Copyright SMS CO.,LTD. *3 .RAG: Recruiting Agent service RAD: Recruiting Ads service

22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 agent services*1# of jobseekers
390,000# of Workers
1,630,000

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.

23

2

Topic: Elderly Care Career Strategy

 Leveraging our database of 700 thousand registered care workers, expands not only

Recruiting Ads but also Recruiting Agent and the temporary staffing service in order tomaximize the value offered to the care workers and service operators.
 Contributes to the increase of care workers with high social needs by supporting themto acquire qualifications.

Recruiting Ads(Web/Paper/Event)

Elderly carecertification course
Started in FY2015

Member Database
Approx.

700 thousand

registered care workers

Recruiting Agent
Started officially in FY2016

Certification course
Information
Temporary staffing
for care workers
Started in FY2017© Copyright SMS CO.,LTD.

24

Kaipoke© Copyright SMS CO.,LTD.

25

2

Environment: Elderly Care Operators

 Many of the elderly care operators are small and mid-sized.
 Most of the elderly care services are in-home care, and facility care services are fairly few.
 The number of the elderly care operators has been increasing along with the elderly
population growth.

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 statistics of MHLW; Population of the seniors – IPSS.

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

2

Business Model of Kaipoke･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.
systemRecruitment

Allows customers to use SMS’s industry leading
Recruiting Ads

Operation
improve- Lends an iPad for free. Care workers can complete
documentation at their customer sites
mentMarketingMakes flyers and a list of care managers who are
the sales target of elderly care operators.

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.

27

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
player 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• Many other competitors provide on-premises
insurance claim system• Fierce competition• Entered the market with cloud-based insurance
claim system as a discounter© Copyright SMS CO.,LTD.

Recruiting
Ads
MarketingBusiness support service
Finance
Improvement

Operation
improvement

Other Contents(Approx. 40
contents)(ARPU) JPY 20,000 / month• The only player providing cloud-based businesssupport service with approx. 40 contents including
the No.1 recruiting ads service (Kaigojob)

28

2

The Strategy of Kaipoke 2/3

 The number of members is increasing in accordance with our strategy, despite somemembers leaving our service when we changed the concept and raised the priceby 7 times.

Number ofmembershipsof Kaipoke

Only insurance claim system

Business support

13,60014,300（20,100 service offices)

10,400Many companies
entered the market
Public elderly careinsurance started

1,500

Changedthe service concept

2000

Apr.
2010

Feb.
2014

© Copyright SMS CO.,LTD.

Apr.
2015

Oct.
2017

Future29

2

The Strategy of Kaipoke 3/3

 Expand the business further by increasing elderly care operators types and developing
new contents.

Services provided

Maximize the value
provided to elderly
care operators

Develop newcontents

Business support
service

Increase elderly care
operators types
Number ofmemberships© Copyright SMS CO.,LTD.

30

Overseas Businesses(MIMS)© Copyright SMS CO.,LTD.

31

2MIMS Group Profile

MIMS Group global coverage

MIMS group profile

Founded

1963

Businessmodels･Pharma Marketing･Healthcare Data

Globalcoverage

13 countries and regionsin Asia and Oceania

Number ofApprox. 2.3 million memberships
memberships including 0.5 million doctors© Copyright SMS CO.,LTD.

Acquisition
date

Oct. 7, 2015

Shareholding
ratio

SMS 60%, Mitsui 40%

32

2

Business Models of MIMS

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 Professionals(e.g. doctors, nurses,
pharmacists)© Copyright SMS CO.,LTD.

Healthcare Institutions(e.g. hospitals, clinics,
pharmacies)

33

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

 Approx. 2.3 million healthcare professional memberships- Including approx. 0.5 million doctors© Copyright SMS CO.,LTD.

 Most manufacturers of new drugs in the region post
information of their drugs on MIMS’s database34

2Strategy of MIMS 1/2: Creating a strong Platform Strengthen the MIMS platform by providing healthcare professionals with a wide range
of information and services.
 Develop new services for healthcare business operators, utilizing the strong MIMS
platform.
Healthcare
professionals

Healthcare
business operators

Drug information E-learning

News

Marketing support
services

Academic
conferences/events

Onlinecommunity

Research

SMS’s careerbusinesses
know-how

Platform

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

Career information

Registration
SMS’s platform
operation knowhow© Copyright SMS CO.,LTD.

Pharmaceuticalcompanies

Business support services
Mitsui’s Medical/
Healthcare network

Clinics35

2Strategy of MIMS 2/2: Global Career Business Full-scale expansion starts in FY03/18, leveraging the strong healthcare professional(HCP) platform of MIMS.
 Establish a dominant position as HCP supply platform.

© Copyright SMS CO.,LTD.

36

2Progress of Global Career Business Strategy

 Acquired Melorita, a company introducing Malaysian nurses to hospitals in Saudi

Arabia.
 MIMS HCP platform enables Melorita to accomplish further growth by making full use of
its plentiful hospital recruitment orders in Saudi Arabia.

Platform

Job Seekers(Nurses)

Attracting nurses
at its own Website© Copyright SMS CO.,LTD.

Significant Increasein the Numberof Job Seekers
Significant Increase in
the Number of Matchings

Matching/Operation

Possessing know-howsfor matching/operation
between the two countries

Hospital Recruitment
Orders

Possessing plentiful hospitalorders in Saudi Arabia

37

New Businesses© Copyright SMS CO.,LTD.

38

2Business Portfolio*1*2*3

 Provide more than 40 services.
 Constantly develop new businesses to create the next pillars of our businesses.
Subsegment

Segment

Elderly Care
Career
CareerMedical Care
CareerElderly Care
Operators－

Overseas－

Services
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-graduatednurses－Com 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

Information portal of
housing for the elderly

Business
Development

RAG for care workers Certification course information

RAG for care managers

Com and RAG/RAD
Doctor consultation
RAG for nurses
Medical ad services Medical ad services
for nurses (South Korea)(Indonesia)(Malaysia and Saudi Arabia,(Indonesia)(Philippines)
etc.)
Com for families with
Magazines for
Home-delivered
Com for care managers
Com for care workers
those requiring elderly care hospital management
meal search site

Housing renovation
operators search site

Mail order/online
sales of nursing goods

Publishing for nurses

Online academic media
for nurses

Information portal ofdementia

Information portal of diabetes

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

Com for managers ofelderly care operators

User review site regarding
elderly care operators

Information portal for
Livelihood support
search site
hospital Admin. managers
Com for nutritionists*1. As of June, 2017 *2. RAG stands for Recruiting Agent; RAD stands for Recruiting Ads; Com stands for online community

Com for pharmacists© 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%).

39

2

Advantages in Business Development

 Develop new businesses making use of the established bases of service operators andhealthcare professionals 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

40

Other Information© Copyright SMS CO.,LTD.

41

2

Dividends

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

FY03/1742

2

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

Seasonal Volatility of Net Sales and Operating Income

Businesses with Seasonal Volatility and Reasons

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

Businesses whose net sales and operating
income increase in Q1

Net Sales

7,000

Operating Income

6,000

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

■ 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

Q1
1Q

Q2
2Q

Q3
3Q

Q4
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 is consolidated to SMS P/L following a three-month timelag.)Both net sales and operating income increasesignificantly in Q1 and Q4© Copyright SMS CO.,LTD.

43

2

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.

44

2

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

03/18

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. 2009

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 Kaigo Job Academy Oct. 2015

© Copyright SMS CO.,LTD.

Temporary staffing for care workers Kaigo job Partners Dec.201645

2

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

03/18

Business support service for elderly care operators: Kaipoke July 2006

(Korea) Com for nurses: Nurscape Sep. 2011
(Indonesia) Doctor consultation: MeetDoctor Jul. 2013
(Philippines) : Medical ad services Jan. 2015

Overseas(Indonesia) : Medical ad services Feb. 2015(13 countries and regions in Asia and Oceania)
Drug information service for healthcare professionals and institutions: MIMS Oct. 2015
（Malaysia, Saudi Arabia and Singapore）RAG for nurses: Melorita June 2017
Com for elderly care professionals: Care Tomo Oct. 2005
Information portal of housing for the elderly: 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

© Copyright SMS CO.,LTD.

46

2

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

03/18

Mail order/online sales of nursing goods: PURE NURSE Sep. 2011
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
Livelihood support search site: Help You Oct. 2015
Online academic media for nurses: Nurse Press Apr.2016
Housing renovation operators search site: Hapisumu Apr.2016
Information portal of diabetes: Tonyobyo Net Jul. 2016

© Copyright SMS CO.,LTD.

47

2

Number of Employees and Shareholder Composition
Number of employees
 Number of employees and its breakdown as of September 30, 2017
Employees (consolidated)

1,953

SMS CO., LTD.

300

SMS Career CO., LTD.

714

Subsidiaries and Sub-subsidiaries

939

Japan

223

Overseas

716

Shareholder composition*1[as of September 30, 2017]

6% 6%Number of stock
holders
4,556
45%

19%

1%

22%

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

Founders
Director, Employees and Shareholding association
Domestic Institutional Investors
Foreign Institutional Investors
Individual Investors
Other

48

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
September 30, 2017. These forward-looking statements are not guarantees of future performance and involve known and unknown risks,
uncertainties and other factors that may cause the Company’s actual results, performance, achievements or financial position to be materiallydifferent 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, trademark right and customer-related assets recognized in connection of theacquisition 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

49