2Q FY3/19 Financial Results Materials for Institutional Investors COMTURE CORPORATION Transforming needs into solutions October, 2018 Koichi Mukai Chairman & CEO Founder-Owner 1
FY ending March 2019: 2 nd Quarter 1 Outline of Financial Results 2
1-1 N e t Financial Highlights (Announced on October 29 th ) S a l e s O p e r a t i n g I n c o m e O r d i n a r y I n c o m e Achieved 8 consecutive years of sales growth and 7 consecutive years of earnings growth, hitting a fiscal year end record high FY2018 Mar. 2Q Results(total) FY2019 Mar. 2Q Results(total) Amount Rate Amount Rate 7,843 783 799-10.0% 10.2% 8,484 1,214 1,220 Year-onyear rate - +8.2% 14.3% +55.1% 14.4% +52.7% In te r im Net i n c o m e a t t ributable to owners of p a r e n t 625 8.0% 812 9.6% +29.8% In te r im Net i n c o m e p e r s h a r e 42.95 yen - 55.59 yen - +29.4% 3
1-2 FY2019 Contributing Factors Net Sales + + + + - Operating Income + + + - YOY YOY +8.2%, increase in sales Cloud computing business YOY +26%, 549 increase Big data/ai business YOY +29%, 141 increase Business expansion in new technology initiatives such as RPA, +140 increase Core systems (ERP) by large enterprises YOY +25%, +136 increase Decrease in sales due to the transfer of consolidated subsidiaries +55.1% earnings Adoption of a high added value strategy contributed to higher sales per employee and increased earnings(7.8%) Increased earnings driven by business expansion Improve efficiency of operations through merger, Reduction of SG & A expenses due to the transfer of consolidated subsidiaries Increased labor cost per employee and investment on expanding and strengthening business 4
1-3 (Unit: ) 1,400 1,100 800 Reasons for Fluctuations in Operating Income Operating Income 783 million yen +428 Earnings growth due to high added value initiatives Order received from processes such as consulting strengthen assertive proposals +91 Impact from business expansion Expansion of the business of the digital domain which is the growth area 478 +129 Impact from organizational restructuring Improve efficiency of operations through merger The transfer of consolidated subsidiaries 217 Increase in labor cost Investment for expanding business YOY + 431 million yen Operating Income 1,214 500 FY2018 Mar. 2Q Total FY2019 Mar. 2Q Total 5
1-4 Order backlog(the end of September 2018) For this term Sales YoY +11% 5000 4000 3000 For Sales after the next term For 4Q sales For Sales after the next term For 4Q sales 2000 1000 For 3Q sales For 3Q sales 0 FY2018. Mar 2Q end Order backlog FY2019. Mar 2Q end Order backlog 6
1-5 Business Segment Performance FY2018 Mar. 2Q Results million-yen FY2019 Mar. 2Q Results million-yen Year-on-year rate Net sales 7,843 8,484 +8.2% Groupware Solutions Business 1,401 1,455 +3.9% ERP Solutions Business 534 671 +25.7% Web Solutions Business 3,341 3,642 +9.0% Network Services Business 2,567 2,716 +5.8% Gross profit 1,719 2,023 +17.7% Groupware Solutions Business 269 303 +12.6% ERP Solutions Business 99 158 +59.6% Web Solutions Business 836 942 +12.7% 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 2,500 2,000 1,500 1,000 500 Groupware Solution Business ERP Solution Business Web Solution Business Network Services Business Net sales FY2018 Mar. 2Q Results Gross profit (Unit:) FY2019 Mar. 2Q Results (Unit:) Network Services Business 515 620 +20.4% 0 FY2018 Mar. 2Q Results FY2019 Mar. 2Q Results 7
FY ending March 2019 2 Earnings Forecast No change from the Earnings Forecast for May 7, 2018 8
2-1 Earnings Forecast for fiscal year ending March 2019 Aim for 9 consecutive years of sales growth and 8 consecutive years of earnings growth reaching new record highs N e t S a l e s FY2018 Mar. Results FY2019 Mar. Forecast Year-onyear Amount Rate Amount Rate rate 16,383-18,025 - +10.0% O p e r a t i n g I n c o m e 1,968 12.0% 2,200 12.2% +11.8% O r d i n a r y I n c o m e 2,010 12.3% 2,215 12.3% +10.2% P r o f i t attributable to owners of p a r e n t 1,395 8.5% 1,560 8.7% +11.8% Net income p e r s h a r e 95.69 yen - 106.90 yen - +11.7% 9
2-2 (Unit: ) 3,000 2,500 Fluctuation on Operating Income forecasted for the full year High added value initiatives contributable to sales growth Higher sales per employee Increase in productivity +767 +430 Impact from business expansion 548 Increase in labor cost Investment for expanding and strengthening business Strengthen recruitment activities Employee training R&D M&A related activities 418 +232 YOY +11.8% 2,000 1,500 Operating Income 1,968 FY2018 Mar. FY2019 Mar. 1 2 3 4 5 6 Operating Income 2,200 million yen (Previous term) (Current term) 10
2-3 Business Segment Forecast FY2018 Mar. Results million-yen 2019 Mar. Forecast million-yen Year-on-year rate Groupware Solution Business ERP Solution Business Web Solution Business Network Services Business Net sales 16,383 18,025 +10% Groupware Solutions Business 3,291 3,780 +14.9% ERP Solutions Business 1,093 1,186 +8.5% Web Solutions Business 6,643 7,201 +8.4% Network Services Business 5,356 5,858 +9.4% Gross profit 3,746 4,223 +12.7% Groupware Solutions Business 678 885 +30.5% ERP Solutions Business 237 246 +3.8% Web Solutions Business 1,713 1,797 +4.9% Network Services Business 1,118 1,295 +15.8% 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Net sales FY2018 Mar. Results Gross profit FY2018 Mar. Results (Unit:) FY2019 Mar. Forecast (Unit:) FY2019 Mar. Forecast 11
2-4 High Levels of ROE (net income / shareholders' equity) We aim to retain a standard level of over 20% ROE will remain extremely high compared to the average of companies listed on TSE first section Unit: % 30.0 25.0 20.0 15.0 10.0 5.0 COMTURE ROE The average ROE of companies listed on TSE first section(*) (*Source: Mizuho Securities) 11.2 18.5 4.8 5.5 20.6 21.7 27.7 29.7 Adoption of a high added value strategy will contribute to higher sales per employee and a higher profit margin 8.1 7.7 7.3 7.9 31.9 9.1 29.0 9.2 (Forecast) 0.0 FY2012 Mar. FY2013 Mar. FY2014 Mar. FY2015 Mar. FY2016 Mar. FY2017 Mar. FY2018 Mar. FY2019 Mar. (forecast) 12
3 Topics 13
Defined KPI/External evaluation of goal achievements Tokyo Stock Exchange Corporate Value Improvement Award candidate 50companies Approx. 3,600companies Tokyo Stock Exchange JPX-Nikkei Mid and Small Cap Index (3 consecutive years) 200issues Approx. 2,900issues Forbes Asia Best Under A Billion (Excellent small listed company in Asia-Pacific region) 200companies Approx. 24,000companies Evaluation criteria: High added-value management Over 5% annual increase in sales per employee High profit company ROE=31.9%, Operating profit rate=12.0% High payout ratio Over 35% 14
4 Shareholder returns 15
4-1 Unit: yen 35 30 25 20 15 10 5 0 Dividend 11.9 12.4 14th consecutive periods of increased dividend (forecast) We will maintain a dividend payout 4Q dividend per share 3Q dividend per share 2Q dividend per share 1Q dividend per share Payout ratio (%) 13.2 ratio of over 35% 15.9 16.4 22.6 25.5 0.7yen Commemorative dividend for being listed on TSE first section 1.7 2.2 2.4 2.9 3.1 3.3 4.1 28.7 5.0 3.7 36.1 0.7yen Commemorative dividend for COMTURE s 30th anniversary 8.7 14.0 8.7 5.3 39.6 1.7yen Dividend increase 16.0 8.0 8.0 38.9 35.2 22.0 12.7 9.3 3.0yen Dividend increase 25.7 7.7 6.0 6.0 6.0 YOY 5.53yen Dividend increase 32.5 33.9 10.4 7.4 7.3 7.3 38.0 2019/03 2006/03 2007/03 2008/03 2009/03 2010/03 2011/03 2012/03 2013/03 2014/03 2015/03 2016/03 2017/03 2018/03 (forecast) COMTURE conducted a 3-for-1 stock split effective on October 1, 2017. Dividend amounts before 2Q FY2018 are retroactively adjusted to reflect the stock split. 35.5 9.5 9.5 9.5 9.5 Unit: % 40 35 30 25 20 15 10 5 0 16
4-2 Dividend payment schedule Due to stable quarterly performance driven by sound management, COMTURE will implement quarterly dividend payments. Dividend record date Dividend payment date 1Q dividend per share Jun. 30th, 2018 Aug. 31st, 2018 2Q dividend per share 3Q dividend per share 4Q dividend per share Sep. 30th, 2018 Dec. 31st, 2018 Mar. 31st, 2019 Nov. 30th, 2018 (planned) Feb. 28th, 2019 (planned) The next business day following approval at the general shareholders' meeting (planned) 17
4-3 Returns to Shareholders Scheme As part of COMTURE s returns to shareholders scheme, we have a shareholder special benefit plan Twice a year, at the end of September and March, shareholders who own more than 300 shares will receive prepaid QUO cards worth 1,000 yen (2,000 yen annually). *Dividend of 11,400 yen + prepaid QUO cards worth 2,000 yen = 13,400 yen annually *Total payout ratio including special benefits are expected to be 41.8% for fiscal year ending March 2019 (for 300 shares) 18
Precautions about This Presentation This presentation was prepared to provide information about Comture and is not a solicitation to invest in Comture. Comture exercised care regarding the accuracy of information in this presentation but does not guarantee that this information is complete. Comture assumes no responsibility whatsoever concerning any losses or damages resulting from the use of information in this presentation. Forecasts and other forward-looking statements in this presentation are based on the judgments of Comture using information that was available when this presentation was prepared and incorporate risks and uncertainties. As a result, actual performance may differ significantly from the forward-looking statements in this presentation due to changes in market conditions or many other reasons. Inquiries Investors Relations, Corporate Planning Department Tel: +81-(0)3-5745-9702 COMTURE CORPORATION E-mail: ir-info@comture.com 16