Tokyo Stock Exchange First Section：Securities Code 3992

Needs Well Inc.

Financial Results
for the second quarter of fiscal year 2020
(October 2019 – March 2020)

May 14, 2020

１．

2020/09 2Q Financial report summary

２． 2020/09 Forecast

３． Growth Strategy

４． Action plans of growth strategy

５． Reference

FY2020/9 ２Q Financial Results

21) Summary
Net Sales+ ３.1％ year on year

Ordinary profit
Compensated onetime expense incurred bymoving HQ and opening Nagasaki Development Centerin 1Q. + 0.3% year on year■■１Q ■■２Q

Net sales
3000（Unit： million yen）

Ordinary profit
300

2500

1,382

1,391

2000

250

155

174

200

1500

150
1,341

1000

1,418
100

500

110

50

0
FY19/09

FY2020/9 ２Q Financial Results

FY20/0992

0
FY19/09

FY20/093

２) Performance rate
２Q Actual・ Performance rate・ FY20 plan （Unit： million yen）
Net Sales【Sales details】

2,809 46.8%

Business Systems
SI

2,214 50.7%

Infranstructureservices

273 44.7%

Embeddedsystems
Solutions /Products etc.

Operating Profit

167 37.8%

154 26.7%

267 48.7%

6,000

4,364

611

Aimed for total orders
coordinated with business
operation system development,
but faced difficulty securing
human resources.
－1.0% year on year

443

579

Although specialized in potential
fields such as “automobile” and“medical device”, but faceddifficulty securing humanresources.
－10.1% year on year

549

Ordinary Profit

267 48.6%

550

Profit179 47.4%379

FY2020/9 ２Q Financial Results

Won new financial projects andexpanded transactions withexisting customers by securingpersonnel and training engineers.
+2.7% year on year

Expanded the products line up
with ‘Information Security
Solutions’ and ‘Operation
Optimizing Solutions’ products.
Highly acclaimed with various
integration system provided byutilizing software development.
＋４５.７% year on year4３） Sales by the service lineup
Sales transition by service
lineup
1600
Unit : million yen

FY20/9 2Q
Sales by service lineup

1400
Solutions / Products etc.
1200
1000

Business
Systems SI

800

For FinancesectorOther thanFinance sector

600
400
200

Infrastructure services
Embedded systems

0● Approx. 50% of Business Systems SI areprojects for finance sectors

Solutions / Products etc.

Embedded systems

Infrastructure services

Business Systems SI

FY2020/9 ２Q Financial Results● Especially going strong with life insurance/Non-life insurance

5４） Analysis of operating profit
fluctuation factors■ Gain ■ Loss

Unit： million yen

267

266

Year on Year

Gross Profit
increased fromsales growthProfit increased
by cost reduction+０．７

Profit decreased due totemporal expenses for
HQ moving and Nagasaki
development center opening

Covered up-front investment costs
at １Q

Slight increase year on year
FY19/９ 2Q Operating Profit
FY2020/9 ２Q Financial Results

FY20/９ 2Q Operating Profit
6５） Profit & loss results
Covered up-front investment costs on １Q.
Ordinary profit ratio increased +2.9pts year on year

Millions of JPY
Net sales
Business systems SI

FY19/9 ２Q
Net sales
Result
ratio
2,724
-

period-to-date periods
FY20/9 ２Q
Net sales
Year
Resultratio
on year2,809
103.1%

2,155

79.1%

2,214

78.8%

102.7%

Infrastructure services

276

10.1%

273

9.7%

99.0%

Embedded systems

186

6.8%

167

6.0%

89.9%

Solutions / Products etc.

106

3.9%

154

5.5%

145.7%

Gross profit

634

23.3%

653

23.3%

103.0%

SG&A expenses

368

13.5%

386

13.7%

104.9%

Temporary cost

0

0.0%

24

0.9%

ー

Others

368

13.5%

361

12.9%

98.1%

Operating profit

266

9.8%

267

9.5%

100.3%

Non-operating profit

0

0.0%

0

0.0%

352.4%

Non-operating expenses

0

0.0%

0

0.0%

55.7%

Ordinary profit

266

9.8%

267

9.5%

100.3%

Profit

185

6.8%

179

6.4%

96.8%

FY2020/9 ２Q Financial Results

7６） Balance sheet results
As of
Sep 30,2019Millions of JPY

ResultAs of
Mar 31,2020
ResultContinuous stable financial structure

Year on Year

Cash and deposits

Equity Ratio at ７３．６％

766

60

2,326

2,348

21

65

58

-7

0

52

52

102

100

-1

Leasehold and guarantee
deposits

85

86

1

Current
AssetsCurrent
AssetsInsurance funds

76

76

0

2,326

2,348

Total non-current assets

361

423

62

2,688

2,771

83

Accounts payable

146

136

-9

Payable

128

119

-8

Income taxes payable

100

98

-2

Provision for bonuses

241

258

16

714

731

16

0

0

0

Total liabilities

714

731

16

Net assets

0.2pts increase vs previous FY

705

Share capital

414

414

Legal capital surplus

270

Accounts receivable
Total current assets
AssetsSoftwareInvestment securities
Deferred tax assets

Total assets

Liabilities

Total current liabilities

AssetsUnit : mil. yen

Non-current
AssetsNon-current
Assets361

423

End of FY2019

End of FY2020/09 2Q

Liability. Net Assets

Unit : mil. yen

Current
Liabilities

Current
Liabilities

714

731

0

Net
AssetsNet
Assets

270

0

1,973

2,040

1,287

1,353

65

Total net assets

1,973

2,040

66

Total liabilities and net assets

2,688

2,771

83

End of FY2019/09

End of FY2020/09 2Q

Total non-current liabilities

Retained earnings
brought forward

FY2020/9 ２Q Financial Results8

１．

2020/09 2Q Financial report summary

２． 2020/09 Forecast

３． Growth Strategy

４． Action plans of growth strategy

５． Reference

FY2020/9 ２Q Financial Results

9１） Forecast
It’s too early to assess the full impact of the COVID-19 at this time
and we don’t change the annual forecast of FY 2020.

Projecting increase in sales and earnings for
9 consecutive years
6,000 (８．７% increase)

Net sales

5,517

Operating
Profit549 (８．1％
508 increase)

Operating Profit Margin 9.2％

Ordinary
profit550 (８．9％505 increase)

Ordinary profit Margin 9.2％

379 (９．１％
347 increase)

Profit

FY20/09(forecast)
FY2020/9 ２Q Financial Results

Profit Margin ６．３％

FY19/09

Unit : million yen () is YoY
10２） Dividends and shareholder returns
Expecting dividend per share as 16.00 yen
which is 2.50 yen more than the previous year
Annual dividend forecast

16.00 yen/per share

Payout ratio 35.8％

18.00 yen

16.00 yen

16.00
14.00

36
13.50
12.50

35

12.50

12.00

35.8 ％

10.00

34
33

32.8

8.00

32

32.2

6.00
4.00

37 ％

31

30.6

30

2.00

29

0.00

28
FY17/09

FY18/09

FY19/09

Annual dividend per share
Dividend(yen)FY20/09(Projection)

Payout Ratio

Payout Ratio(%)

The company conducted stock split on 12th May 2017 at a ratio of 100 shares per share, the company conducted stock split on
1st April 2018 at a ratio of 2 shares per share, the company conducted stock split on 1st January 2019 at a ratio of 2 shares
per share. The past annual dividend per share has been adjusted for any stock splits retrospectively.

FY2020/9 ２Q Financial Results

11

１．

2020/09 2Q Financial report summary

２． 2020/09 Forecast

３． Growth Strategy

４． Action plans of growth strategy

５． Reference

FY2020/9 ２Q Financial Results

12１） Management philosophy

Extensive Contribution to the Society

Night view from Mt.Inasa, Nagasaki
FY2020/9 ２Q Financial Results

13２） Our growth track
Jun 2019 Tokyo Stock Exchange First
Section
Sales

Number of personnel

Oct 2017 Start Solution Business
Jun 2018 Tokyo Stock Exchange Second Section
Sep 2017 JASDAQ-IPO
Apr 2013 Start develop embedded system
Oct 2012 Start infrastructure services, transaction withleading telecommunication carriersApr 2005 Start transaction with leading hotels
Apr 1998
Start transaction with leading insurancecompany
Aug 1992
Start developing
Business System SI

538
employees

2019/09

Establish-ed

Oct 1986
Start business consulting

FY2020/9 ２Q Financial Results▲
2020/0914

３） Fundamental policy

Transformation of business style
from personnel dispatching toSystem integration

FY2020/9 ２Q Financial Results

15４） Target“2010 Growth”
TargetSales Growth Ratio 20%
Ordinary Profit Margin 10%“2510 Management Structure”
Gross Profit Rate 25%
SG&A Rate 10%

Near
FutureMarketCapitalizationor
Liquidity Market
Capitalization

25bil yen
10bil yen

Net sales

10bil yen

2019/09

Personnel Dispatching Business

FY2020/9 ２Q Financial Results▶▶▶ System Integration Business16５） Our strength
Source of our strength- 3 superiorities with industry and technical knowledge① High level of finance system SI ability
50% of sales of our main business system development
are for finance sector.
We have successfully achieved a number of systemdevelopment projects in insurance, bank, and credit cardcompanies.

② More than 50% of

direct sales ratio
More than 50% of sales are
direct sales with end-usersuch as life insurancecompanies / leading hotels /telecommunication carriers.

High quality system development
Knowledge that accumulated with morethan 20 years of system development
experiences.
FY2020/9 ２Q Financial Results③ High level ofproposals / ability
to provide solutions
We provide the most suitable
solution service for thecustomers’ business purposessuch as
5G, AI, RPA, Remote work, etc.

Wide range ofbusiness field / technical experiences
More than 300 company trade records

17６） Growth strategy
６ Key Focus Points
１

Improvement of corporate value
Establishment of business foundation

２

５

６

３

Expansion of solution business４

Increase in direct sales with end users
Launching of AI business

Establishment of nearshore development

FY2020/9 ２Q Financial Results

18６） Growth strategy –1. Improvement of corporate value ①
Pursuing advancement of corporate value from various approach・Institutional investors
・Private investors
・Correspondence withthe media
・Promoting CI, VI

Capital
PolicyIR・Public offering
・Issuance of shares・Share buyback
・M&A

CI: Corporate Identity
VI: Visual Identity

Performance
Target・Sales growth 20%
・Ordinary profit margin 10%・Gross profit margin 25% SG&A 10%
・Sales 10 billion yen

FY2020/9 ２Q Financial Results

Advance
Advancement
ment ofof corporate
corporate
value
value

Sustainability

・ESG、SDGｓ
・Corporate governance19６） Growth strategy –1. Improvement of corporate value ②
Aggressively pursue
alliances and acquisitions to leverage our strength

PolicyActively pursue alliances and M&A with high synergies
to increase corporate value and expand businessperformance
Collaborate with counter parties, grow and prosper
together

PurposeAcquire new technologies, customers, and traderegions to strengthen our capability and brands

Secure development staff as a nearshore foothold

SchemeFY2020/9 ２Q Financial Results

Business alliances, capital alliances, acquisitions,
etc.

20

６） Growth strategy –２．Establishment of business foundation
Establish business foundationthat supports continuing growth.
Business Systems SI
・Accumulate financial business knowledge
・Develop highly skilled technician
who could participate in upstream
process

Infrastructure services
・Coordination with Business Systems SI

Embedded systems
・Specialized in automobile andmedical equipment

FY2020/9 ２Q Financial Results

Expandingof financial
field

Winningorders forlarge scale

Winningorders for
specialized
field
21

６） Growth strategy –３．Expanding solution businessBest Solutions for Customers
Solutions for securing information
Information security measures that will become more important with arrival of 5G andRemote work

Disarmer

Web Isolation

Solutions for efficient operation
Promote work style reforming and eliminate labour shortages by utilizing IPA (AI x RPA).
Automates routine work and streamlines telework

Solutions utilizing AI
Assist for the DX(Digital Transformation) by AI technology

FY2020/9 ２Q Financial Results

22６）Growth strategy –４．Increase in direct sales with end users
Stabilizing orders and revenue improvement
Maintain and expand over 50% of end-user ratio① Maintain and expand existing users

Sales composition ratio
End-user ratio

・Securing of repeat customers
・To develop highly skilled engineers andexpand the scope of their own field of work
・Develop into work fields outside of their own field② Cultivation of new users
・Cross expansion by introducing development
experiences and business knowledge

60％
55%
2019

Future③ Expanding solution business・ Focusing on solution business that is high in sales ratio to the end-users

FY2020/9 ２Q Financial Results

23６）Growth strategy –５．Launching of AI businessWe develop an original brand for our AI solutions whichassist the DX（Digital Transformation）,
named ‘Work AI’.
For finance sector
For distribution

service

For public

For manufacturingFor

For other industry

infrastructure
telecommunicationsindustryFirst solution of Work AI (sales start on April 9, 2020).
Speak Analyzer analyzes and evaluates for business talk of sales staffs,
operators of call-center, and so on. Compare to the best talk model andclarify the user’s issues. Easy to use in telework. A model that can analyze
facial expressions and emotions will be developed.

FY2020/9 ２Q Financial Results

24６） Growth strategy –６．Establishment of near shore development
Opened Nagasaki Development Center in Oct 2019
Target100staff by September 2024
Promote hiring newly grads/
U-turn hiring in Nagasaki, andacquire highly competentpersonnel who want to be
employed locally

Overcome lost opportunityfrom lack of personnel by ｎearshore development
FY2020/9 ２Q Financial Results

25

１．

2020/09 2Q Financial report summary

２． 2020/09 Forecast

３． Growth Strategy

４． Action plans of growth strategy

５． Reference

FY2020/9 ２Q Financial Results

26１） Human resource development
Promoting work style reformation, increase skills and motivation
Utilize various system and tools to develop human resource
Work style reformation
Promotepaidholidays

Premium
FridayOvertime
target20 hours

Utilize RPA

BPR system

Remotework

ｅLearning

Qualification
Promoting
SystemOperation
improvement
committee

Needs Wellconference

Skill improvement
Trainings
for new
hire/newemployees

Trainings
for themanagement

Motivation Improvement
Shufflemeeting

FY2020/9 ２Q Financial Results

MentorsystemLeader任命
appointing
リーダー
system制

President’s
SpecialPrize27２） ESG/SDGｓ①
To realize management philosophy“Continue to contribute extensively for economic community“.
We are initiating for sustainable society with ESG・SDGs committee.
Sport promotion support.
Concluded sponsor support agreementwith V・Varen Nagasaki of Succor J League.
Supporting the promotion of sports

culture and revitalization of local
community.

©２００５ VVN

©２０１８ VVN

IT Education・IT Promotion by utilizing AI
We hold an AI experience seminar for students with a program toexperience the appeal of AI
Provincial generating project support
We are supporting Nagasaki province generating project “Human
resource development for young people who support the future of

region”
FY2020/9 ２Q Financial Results

28２） ESG/SDGｓ②
Promoting diversity・gender equality
We are aiming for 30% female employees and managers ratio.
Director

2020Graduates

Employees

Managements

1７%

50%

１７%

６%

Target 30%■Female ■MaleIn April 2020, We made a voluntary declaration for the active participation of
women at the Nagasaki Women's Promotion Council.

Reducing electricity・paper usage
Nominate ESG committee member from each division,and educate・build ecology awareness within thecompany・Energy saving activity
・Digitalizing internal documents and workflow etc.
FY2020/9 ２Q Financial Results

29２） ESG/SDGｓ③
Promote cooperation with partners

Promote cooperation with partners and aim to establish
structure to develop together for many years to come・Core partners system

・Opening of partners meeting etc.
In March 2020, we signed a core partner agreement with Meiji Yasuda Life Insurance
Company, Meiji Yasuda System Technology Co., Ltd., for the purpose of building a strong
future partner relationship and maintaining long-term development engineers.

Establish governance structure with high transparency
To establish corporate structure with more transparency and fair,
we are constantly implementing self-evaluation and reviewing ofgovernance structure
・Reviewing of effectiveness of Board of Directors
・Reviewing of advisory committee etc.

FY2020/9 ２Q Financial Results

30

１．

2020/09 2Q Financial report summary

２． 2020/09 Forecast

３． Growth Strategy

４． Action plans of growth strategy

５． Reference

FY2020/9 ２Q Financial Results

311) Company profile* As of September 30, 2019

Company Name

Needs Well Inc.

Head Office

13F, New Otani Garden Court, 4-1 Kioi-cho, Chiyoda-ku, Tokyo, 102-0094 Japan

Office- Shinjuku Office : 5F, South Tower, 13-15 Tomihisa-cho, Shinjuku-ku, Tokyo, 162-0067 Japan- Nagasaki Office: 5F, Meijiyasudaseimei Nagasakikozenmachi building, 2-21 Kozen-machi,
Nagasaki-shi, Nagasaki, 850-0032 Japan

Contact

TEL: +81-3-6265-6763

Representative

President and CEO

Established

October 1, 1986

Stock Listing

Tokyo Stock Exchange, 1st Section (3992)

Paid-in Capital *414 million JPY

Net sales *5,517 million JPY

Number of
Employees *538

Qualification

Worker dispatch businessPrivacymark

Board ofDirectors *FAX: +81-3-6265-6764

Kozo Funatsu

ISO27001 (ISMS) Certified
ISO9001 (QMS) Certified

President and CEO Kozo Funatsu
Executive Director Takeshi Tsukada
Executive Director Nobumasa Goto
Director Hiromi Kimura
I
Director Hiroki Yanagawa E
E
I
Director Hideaki Sakaue
E ：External officer
I ：Independent officer

FY2020/9 ２Q Financial Results

URL: https://www.needswell.com

Audit & Supervisory
Board Member Kazuhiko Kato
Audit & Supervisory
Board Member Toshio Yamamoto
Audit & Supervisory
Board Member Yuji Dai
Audit & Supervisory
Board Member Kotaro Niwa

E

I

E
E

32

２） Business scope
Needs Well provides total IT services with four services
focused on the Business Systems SI for finance sector.

Business Systems
SI

Solutions /Products etc.

Finance
Distribution・Service

Infrastructure

Information security
solution

Solutions for operation
efficiency

Communication

AI

InfrastructureservicesWeb
IT Platform
Car・
Medical Equipment

FY2020/9 ２Q Financial Results

Embedded systems

33３）Business system diagram
Clients

Direct transaction※

End-user

Systemintegrator

Manufactur-er

Needs Well

Business
SystemsSI

Subcontractor /Supplier

Infrastructureservices

PartnerCompany

Embeddedsystems

Supplier

Solutions/
Productsetc.
Order
Provision of services andproducts※High level of direct transactions with End users.
For 55% of transactions.
FY2020/9 ２Q Financial Results

34４） Comparison between industry peers
ROIC

ROE

25%

25%

20%

20%

ROA
14%
12%
10%

15%

15%

8%

10%

10%

6%

5%

5%

0%

0%

4%

2017

2018

NeedsWell

A

2017

2018

C

NeedsWell

A

B

A
19.0

C

NeedsWell
3.0
C
14.0

2

NeedsWell
15.1

12%
%

B

3

16%

10

2019

1
B
9.1

%

8

FY2020/9 ２Q Financial Results

2017

2018

NeedsWell

A

2019
B

C

PBR（result）

20%

14%

0%

2019

PER（forecast）

18%

2%

C
1.7

A
2.5

B
0.9

■ Comparison by selecting
companies that conducts
business operation similar andsimilar market capitalizationfrom information andcommunication sector■ PER and PBR calculated on
the basis of the closing priceof May 12, 2020

035

５） Business results ①
Operating profit

Net sales
Unit : million yen

2016
１Q

2018
1,217

2019
1,341

2020
1,418

２Q

2,470

2,724

2,809

3,739
5,140

4,097
5,517

３Q
Total 4,586

2017

3,801
5,063

Unit : million yen

2016
１Q

2018
121

2019
110

2020
92

２Q

255

266

267

354
476

375
508

３Q
Total

408

Ordinary profit

2017

387
443

ProfitUnit : million yen

Unit : million yen

2016
１Q

2018
121

2019
110

2020
92

２Q

255

266

267

343
467

370
505

３Q
Total

405

2017

382
426

FY2020/9 ２Q Financial Results

2016
１Q

2018
82

2019
76

2020
59

２Q

174

185

179

236
325

255
347

３Q
Total

256

2017

248
287

36

５） Business results ②
Profit per share

ROE
Unit : Yen

2016
１Q

2018
9.88

2019
9.04

2020
7.04

１Q

２Q

20.85

22.02

21.19

２Q

28.18
38.78

30.22
41.15

３Q
Total 36.74

2017

Unit ： %

35.51
40.81

３Q
Total

* Figures are after sprit adjusted as of May 12, 2017 ratioof 100 shares per share, as of Apr 1, 2018 ratio of 2 shares
per share, as of Jan 1, 2019 ratio of 2 shares per share.

2016

2017

2018

2019

36.7

24.8

20.2

18.8

* This index is updated every year

Total assets

Net assets

Unit : million yen

2016
１Q

2018
2,220

2019
2,478

2020
2,692

２Q

2,507

2,764

2,771

2,772
2,697

2,629
2,688

３Q
Total 1,661

2017

2,062
2,438

FY2020/9 ２Q Financial Results

2020

Unit : million yen

2016
１Q

2018
1,480

2019
1,697

2020
1,918

２Q

1,573

1,809

2,040

1,635
1,725

1,878
1,973

３Q
Total

820

2017

1,042
1,496

37

５） Business results ③
Capital adequacy ratio

Net assets per share

Unit ： %

2016
１Q

2018
66.7

2019
68.5

2020
71.3

１Q

２Q

62.8

65.4

73.6

２Q

59.0
64.0

71.4
73.4

３Q
Total

49.3

2017

Unit ： Yen

50.5
61.4

* 2Q is total of 1Q and 2Q* 3Q is total of 1Q to 3Q

stock price：yen

900
800
700
600
500
400
300
200

Stock chart

FY2020/9 ２Q Financial Results

2016

2017

2018

2019

2020

３Q
Total 117.21 179.63 204.99 232.63* Figures are after sprit adjusted as of May 12, 2017 ratio of
100 shares per share, as of Apr 1, 2018 ratio of 2 shares per
share, as of Jan 1, 2019 ratio of 2 shares per share.
* This index is updated every year

■volume■closing pricevolume：shares

1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
038

- All statements described in these material are based on our judgment by currently
available information.
- Actual results may differ from forecasts due to various factors in the future.
Corporate Communication Division

TEL: +81-3-6265-6763 e-mail: ir-contact@needswell.com