TSE 1st Section Code:3992

Needs Well Inc.

Financial Results for the Fiscal Year 2019
(October 2018 – September 2019)

November 29, 2019

ContentsSep-2019

1. FY 2019 Financial Highlights
1) Summary2) Sales by service line3) Operating profit analysis
4) Profit & Loss results5) Balance Sheet results
2. Growth Strategies
1) Management philosophy
2) Trails of growth3) Basic policy4) Targets
5) Our strengths6) Growth strategies

3. Action to support growth strategies
1) ESG/SDGs
2) Human resources development
4. FY 2020 Financial Forecasts
1) Summary
2) Profit & Loss Forecasts
3) Dividends and shareholder returns
5. Reference Materials
1) Company profile
2) Business field
3) Comparison with our companyand other companies
4) Performance trends

2

FY2019 Financial Highlights

31) Summary -1Achieved record high sales and profit for

8 consecutive terms!

[Millions of JPY]

6,000

Net sales

5,000

Net sales

4,000
3,000

5,517million JPY(Year on Year107.3%)

2,000
1,000
0
FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019[Millions of JPY]

600

Ordinary profit / Net profit/ Ordinary profit ratio

500(%)
10%

Ordinaryprofit

505million JPY(Year on Year108.1%）

8%

4006%

3004%

200
1002%

00%

Netprofit

347million JPY(Year on Year106.8%）

FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019

Ordinary profit

Net profit

Ordinary profit ratio

41) Summary -2Solution business is on a growth track. Year on Year 166.7%
NWSP / Cooperation solutions
OurSolutions

UTM

Asset management

Work-AI Service
Sales education solution

Concur / Cooperation solution
Othercompanies’
Solutions

Solution business is on agrowth track and increaseof orders from customers.
Leveraging the strengths ofdevelopment companies,
we offer unique linkage
functions with our own
solutions and othercompanies' solutions.

AI-OCR
5

WinActor / Cooperation solution
AI-OCR

Improving thecompetitivenessthrough differentiation.
52) Sales by service line
Increase “Business systems SI” & “Solutions / Products etc.”.
4,354

Business
systems SI

4,050

521
568

Infrastructureservices

Embeddedsystems

Solutions /Products etc.

385
368

Improved retain engineers. As a result ofefforts to train engineers, new financial
projects were acquired and expandedbusiness with existing customers.
YonY107.5%

Aimed for total orders in cooperation with “Business systems SI” butstruggled to retain engineers. YonY91.8%

Specialized in the fields of future automobiles and medical devices.
YonY104.8%
Expand the product lineup of “Information security solutions” and“Work efficiency solutions”.
Various linkage functions that take advantage of our softwaredevelopment strength are popular. YonY166.7%

255
153
FY2019FY2018[ Millions of JPY ]63) Operating profit analysis[ Millions of JPY ]508

YoY +31

Recruitment feeand training
expenses increased.

Gross profit increase due tosales expansion andproductivity improvement.

Other expenses
increased.

Head office relocation,
Nagasaki Development
Center opening costs
increased.

74) Profit & Loss results
Increased sales growth by 7.3%, ordinary profit margin 9.2%,
realized high profitability
Millions of JPY
FY2018FY2019Net sales
ratio

AnnualNet sales
ratio

ResultYear on Year

5,140-

5,517-

107.3%

Business systems SI

4,050

78.8%

4,354

78.9%

107.5%

Infrastructure services

568

11.1%

521

9.5%

91.8%

Embedded systems

368

7.2%

385

7.0%

104.8%

Solutions / Products etc.

153

3.0%

255

4.6%

166.7%

1,150

22.4%

1,300

23.6%

113.1%

SG&A expenses

673

13.1%

792

14.4%

117.7%

Operating profit

476

9.3%

508

9.2%

106.6%

Non-operating profit

10.0%

1

0.0%

69.9%

Non-operating expense

110.2%

40.1%

38.3%

Ordinary profit

467

9.1%

505

9.2%

108.1%Net profit

325

6.3%

347

6.3%

106.8%Net sales

Gross profit

85) Balance Sheet results
Millions of JPY
As ofSep 30,2018
ResultAssets
Cash and deposits

As ofSep 30,2019ResultYear on Year

1,693

1,548

-144

691

705

13

7

25

17

2,416

2,326

-89

107

102

-5

Total fixed assets

280

361

80

Total assets

2,697

2,688

-9

Accounts payable254

146-108

Payable

170

128

-42

Income taxes payable

80

100

20

Provision for bonuses

274

241

-33

972

714

-257

00

0

972

714

-257

Common stock

411

414

2

Additional paid-in capital

267

270

2

Retained earnings

1,045

1,287

242

Total retained earnings

1,046

1,288

242

Total shareholders’ equity

1,725

1,973

248

Total net assets

1,725

1,973

248

Total liabilities and net assets

2,697

2,688-9

Accounts receivable
Work in process
Total current assets
Deferred tax assets

Liabilities

Total current liabilities
Total non-current liabilities
Total liabilities

Net assets

Continued stable financial position
Capital adequacy ratio 73.4％
YonY9.5pts UP
AssetsCurrent
assets,2,416

Fixedassets, 280

As ofSeptember 30,2018

Millions of JPY
Current
assets,2,326
Fixedassets, 361
As ofSeptember 30,2019Liabilities & Net assets
Current
liabilities,
972

Millions of JPY
Current
liabilities,
714

Net assets,
1,725

Net assets,
1,973

As ofSeptember 30,2018

As ofSeptember 30,20199Growth Strategies

101) Management Philosophy

Contributing broadly andSustaining to society.

Night view from Mt. Inasayama. (Nagasaki Pref.)112) Trails of growthJun-2019 TSE 1st Section
Net sales
Number of Employees

Oct-2017 Started Solution Business
Jun-2018 TSE 2nd Section
Sep-2017 JASDAQ IPO

Apr-2013 Started Embedded systems
Oct-2012 Started Infrastructure services,
Started business with major telecom carriersApr-2005 Started business with major hotels

Apr-1998
Started businesswith major life insurance company
Aug-1992
Started Business systems SI

Employee

538

FY2019est.
Oct-1986
Started business consulting▲FY2019123) Basic policy

Breakthrough from the dispatch business,
Become a true System Integrator.

134) Targets
2010: Growth
Sales growth rate
２０％
Ordinary profit margin １０％2510: Management constitution
Gross profit margin
２５％
SG&A expenses rate １０％

Near future
TargetMarket capitalization

25 billion JPY

Net sales

10 billion JPY

FY 2019

Dispatch business >>> Become a true System Integrator.
145) Our strengths
Well of strength ~ 3 “High” and know-how, performance.
1. High Financial system development capabilities.
The financial sector accounts for 50% of sales in our main
business “System development”.
Especially, we have strengths in Life insurance, Accident
insurance systems, and we have many performance in Bank,Credit card systems.

2. High End-user direct sales ratio.

3. High Proposal and provision
capabilities of solution business.

Over 50% of sales composition.
For life insurance companies, major hotels,
and telecommunications carriers etc.,
end-user direct sales ratio Over 50%.

Related to 5G and AI, RPA so on,We provide optimal solution services tailoredto customers' business objectives.

High quality system development
Knowledge + know-how
accumulated over 20 years of systemdevelopment.

Performance in a wide range of industries
and technologies.
Approx. 300 customers.

156) Growth strategies

6 Priority items.
Improve corporate value

1

Establish business foundation

256

3

Expansion of solution business4

Expansion of end-user direct sales
Start up AI businessStart up nearshore development
166) Growth strategies - 1. Improve corporate value

Various approaches to improve corporate value.
- Institutional investor- Individual investors- Media- Promotes CI, VIIRCapital policy

CI: Corporate Identity
VI: Visual Identity

PerformanceImprove
corporatevalue

Future Goals- Sales growth rate 20%
Ordinary profit margin10%- Gross profit margin 25% SG&A expenses rate 10%- Market capitalization 25 billion JPY- Net sales 10 billion JPY- Public offering- Issuing new share- Buyback- M&A

Sustainability- ESG, SDGs
- Corporate governance176) Growth strategies - 2. Establish business foundation

Establishing a business foundation
for stable development to the future as a listed company.

Business systems SI- Accumulating financial business knowledge- Train high-skilled engineersfrom upstream processes

Infrastructure services- Cooperation with business systems SI

Embedded systems- Automobile,
specialized in the field of medical equipment.

Expansion
Financialsector

Order from
Large project

Order from
specialized
field186) Growth strategies - 3. Expansion of solution business

Differentiate by providing linkage functions with various products.
Information security solutions

LinkDisarmer

UTMAssetmanagement

Work efficiency solutions

Work-AISystem

IPA (AI & RPA) X
development

Information security measures become even more
important with the arrival of the 5G era

Web Isolation

Promote work style reform andsolve labor shortages by utilizing IPA (AI x RPA)

Link

EAI
AI-OCR
Workflow

Link

AI-OCR
RPA196) Growth strategies – 4. Expansion of end-user direct sales

Stabilize orders and improve profitability,
maintain and expand end-user direct sales ratio Over 50%.
1. Maintain and expand exist-customer- Maintain ongoing projects

End-userdirect sales ratio- Train high-skilled engineers andexpand the scale of project.

2. New customer development- Introduce our development results andbusiness know-how to similar/existing companies,
horizontal expansion.

3. Expansion solution business

60%
55%

FY2019Future- Focus on solution business with high sales ratio to end users.

206) Growth strategies – 5. Start up AI business

Established AI Group in July 2019.
Started AI business in earnest and provide of AI solutions by industry.

RPAWinActorX

AI-OCR

License agreement
Consulting andscenario introduction

Data generation withbusiness characteristics

AI engine by industry

Cleansing unnecessary data

Data analysis service for
improving AI accuracy

AI solutions by industry [For Financial

Development oforiginal AI engine

Data analysis

For Distribution/ Services

Assortment of AI engines
specialized for eachindustry

Work - AI Service ]For Social
Infrastructure

For Telecom
CarrierFor
Manufacturingindustry216) Growth strategies – 6. Start up nearshore development

Opened Nagasaki Development Center in October 2019.
Aiming for 100 employees in FY2024.
Promote recruitment of new graduatesand U-turns in Nagasaki and retain
talented people who want to findemployment.

Promote lump sum contract andovercome opportunity loss due to solve
labor shortages by nearshoredevelopment.

22

Action to support growth strategies

231) Human resources development
Work style reform and efforts to improve skills and motivation.
We are working on human resource development using various programs and tools.

Work style reform
Incentive
date fortaking paid
leavePremium
FridayOvertime
target20 hours

New
graduates
training

Get certified
encourage
program

BPR
program

Improving motivation

Improving skills
Preemploym
ent training

Utilize
RPA

Management
traininge-learning

Shufflemeeting

MentorprogramBusiness
improvement
committee

NeedsWellconference

Appointedleader
programPresident's
award242) ESG/SDGs -1To realize our management philosophy“Contribute broadly sustaining to the society.”
ESG / SDGs Committee has begun working on a sustainable society.
IT education using AI

AI experience seminar for students will be held during FY2020.
Our AI engineers and general affairs dept are planning a program that it canfeel attractive of AI.

Supporting regional revitalization projects
We have been supporting the local revitalization project in Nagasaki Prefecturesince 2018.

Promoting diversity and gender equality
Board of Directors

New Graduate 2020 (Plan)
As of Nov-2019

All of Employee
New Graduate 2019(Results)

13%

17%

41%

50%
FemaleMale252) ESG/SDGs -2Reduce electricity and paper usage

ESG committee members appointed from each department
are carrying out reduction activities.
- Power saving- Digitalization of internal documents and workflows etc.

Promote collaboration with partners
We are promoting cooperation with partner companies andaiming for it can develop together for a long time.

- Core partner program- Partner meeting etc.

Create a high transparent governance system

We are constantly reviewing our governance system to create a moretransparent and fair corporate structure.
- Board effectiveness evaluation- Think about advisory committees, etc.

26

FY2020 Financial Forecasts

271) Summary
Furthermore stable growth.
We aim to increase sales and profit
for 9 consecutive terms.
6,000 (8.7%UP)

Net sales

5,517

Operating profit

549 (8.1%UP)
508

Operating profit ratio 9.2%

Ordinary profit

550 (8.9%UP)
505

Ordinary profit ratio 9.2%

Net profit

379 (9.1%UP)
347

Net profit ratio 6.3%
Millions of JPY

FY2020(Forecast)( ): Year on Year

FY2019282) Profit & Loss forecasts
Millions of JPY
FY2019Net sales
ratio

AnnualNet sales

FY2020Net sales
ratio

Forecast

Year on Year

5,517

-

6,000-

108.7%

Business systems SI

4,354

78.9%

4,364

72.7%

100.2%

Infrastructure services

521

9.5%

611

10.2%

117.3%

Embedded systems

385

7.0%

443

7.4%

115.1%

Solutions / Products etc.

255

4.6%

579

9.7%

226.6%

1,300

23.6%

1,469

24.5%

113.0%

SG&A expenses

792

14.4%

920

15.3%

116.1%

Operating profit

508

9.2%

549

9.2%

108.1%

Non-operating profit

10.0%

10.0%

77.1%

Non-operating expense

40.1%

00.0%

8.4%

Ordinary profit

505

9.2%

550

9.2%

108.9%Net profit

347

6.3%

379

6.3%

109.1%

Gross profit

293) Dividends and shareholder returns
Dividend per share +2.50 JPY(YoY) increase forecast
Dividend annual forecast

16.00 JPY/share, Dividend payout ratio forecast 35.8%

Annual Dividend per share

Dividend payout ratio

18.00 JPY

16.00

16.00
14.00

12.5012.50

13.50

35.8

12.00

10.00

3635
3433

32.98.00

32

32.2

6.00
4.00

37 %

31

30.6302.00

290.0028
FY2017FY2018Annual Dividend per share

FY2019FY2020

Dividend payout ratio

We split 100 shares per share on May 12, 2017, split 2 shares per share on April 1, 2018, 2 shares per share on January 1, 2019 A stock split
is conducted at the share ratio.
The annual dividend per share in the past is calculated based on this stock split.

30

Reference Materials

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

Company NameNeeds 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 ofEmployees *538

Memberorganizations

Japan Information Technology
Service Industry Association (JISA)

Qualification

Worker dispatch businessPrivacymark

ISO27001 (ISMS) Certified
ISO9001 (QMS) Certified

Board of Directors *FAX: +81-3-6265-6764

URL: https://www.needswell.com

Kozo Funatsu

President and CEO
Kozo Funatsu
Executive Vice President Yukio Kubota
Executive Director
Takeshi Tsukada
Director
Hiromi Kimura
Director
Kazuhiko Kato
Director
Nobumasa Goto

Director
Hiroki Yanagawa External
External
Director
Hideaki Sakaue
Audit & Supervisory
Board Member
Toshio Yamamoto External
Audit & Supervisory
External
Board Member
Yuji Dai
Audit & Supervisory
External
Board Member
Kotaro Niwa

Independent
Independent

Independent322) Business field
Needs Well focused on Business systems SI for finance
4 services provide total IT services.

Business
systems SI

Solutionbusiness

Finance
Distribution / Services

SolutionsSocial Infrastructure

Telecom CarrierWebAIIT Infrastructure

Embedded

Infrastructureservices

Embeddedsystems333) Comparison with our company and other companies
ROIC

ROE

25%

25%20%20%15%15%

10%

10%

5%5%0%0%

FY2017FY2018

Needs Well

AFY2019
BC14%12%

10%8%6%
4%2%0%FY2017FY2018

Needs Well

APERC
14.50

A
19.26

16 % Needs Well
17.13
14 %
12 %
10 %8%FY2019BCPBR

20 %

18 %ROA

32B
10.03

1

Need Well
3.0

FY2017FY2018

Needs Well

A

FY2019BC- We selected and compared companies
with near close our business domains andmarket capitalization from the Information& Communication.

A
2.7

C
1.9

- PER and PBR are calculated using theclosing price on November 5, 2019.

B
1.00344) Performance trends -1Net sales

FY2015FY2016

Millions of JPY

FY2018FY2019

Q1

1,217

1,341

Q2

2,470
3,801

5,063

Q3
Annual

3,986

4,586

FY2017

Ordinary profit

FY2015FY2016FY2019Q1121110

2,724

Q2255

266

3,739

4,097

Q3

387354

375

5,140

5,517

Annual

443

476

508

408

FY2017

Net profit

Q18276

266

Q2

174

185

343

370

Q3248

236

255

467505

Annual

287

325

347

110

Q2255
382
426

FY2015211

FY2016256

FY2017

Millions of JPY

FY2019121405FY2016FY2018Q1350355

Millions of JPY

FY2019Annual

FY2015

Millions of JPY

FY2018FY2018Q3FY2017

Operating profit354) Performance trends -2Basic earnings per share

FY2015FY2016JPY

FY2018FY2019Q19.88

9.04

Q1Q220.85

22.02

Q2

35.51

28.18

30.22

Q3

40.81

38.78

41.15

AnnualQ3
Annual

30.21

36.74

FY2017

Rate of return on equity- After adjustment of 100 splits as of May 12, 2017,2 splits as of April 1, 2018, and 2 splits as of January 1, 2019.

Total assets

FY2015FY2016FY2019

Q1

2,220

2,478

Q2

2,507
2,062
2,438

Annual

1,594

1,661

FY2015FY2016FY2017FY2018FY201943.936.7

24.8

20.2

18.8

- This indicator is updated by annual year.

Net assets

Millions of JPY

FY2018Q3FY2017%FY2015

FY2018FY2019

Q1

1,480

1,697

2,764

Q2

1,573

1,809

2,772

2,629

Q3

1,042

1,635

1,878

2,697

2,688

Annual

1,496

1,725

1,973

580

FY2016820

FY2017

Millions of JPY364) Performance trends -3Capital adequacy ratio

Net assets per share%

FY2015 FY2016 FY2017 FY2018 FY2019
Q1

66.7

68.5

Q1

Q2

62.8

65.4

Q250.559.0

71.4

Q361.464.0

73.4

AnnualQ3
Annual36.4

49.3- Q2 is cumulative total from Q1 to Q2.
- Q3 is cumulative total from Q1 to Q3.

Stock price : JPY

900800700600500
400
300200Stock chart

JPY

FY2015FY2016FY2017FY2018FY201982.98

117.21179.63204.99232.63- After adjustment of 100 splits as of May 12, 2017,2 splits as of April 1, 2018, and 2 splits as of January 1, 2019.

- This indicator is updated by annual year.
Trading volume

Closing price

Trading volume: Share

1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
037

- 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.
Management Planning Division IR Section

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