セラク（6199） – [Delayed]Results of Operations for the First Half of the Fiscal Year Ended August 31, 2022

Results of Operations for the First Halfof the Fiscal Year Ended August 31, 2022April 2022Copyright © SERAKU CO.,LTD. All Right Reserved.I. Company Overview2Copyright © SERAKU CO.,LTD. All Right Reserved.Company OverviewManagement PolicyCreate and foster businesses through IT education/training services and contribute to the advancement of society.Company name:SERAKU Co., Ltd.Established:December 1987Representative:Tatsumi Miyazaki, Representative DirectorCapital:305,266,300 yen (as of March 31, 2022)Employees:3,091 on a consolidated basis (as of February 28, 2022)Location:Nishishinjuku Prime Square Bldg. 7-5-25 Nishishinjuku, Shinjuku-ku, TokyoGroup companies:P’s Engineering (wholly owned subsidiary)SERAKU ECA (wholly owned subsidiary)Listed exchange:Tokyo Stock Exchange, Prime Market (stock code 6199)3Copyright © SERAKU CO.,LTD. All Right Reserved.Our Business ModelBased on an “education-oriented IT human resources creation model” that focuses on new technologies, we have a continuously expanding profit structure and invest in growth fields to achieve strong growth.IT System Construction and OperationNetwork ServicesSystem integration (SI) domainDigital transformation (DX) domainAgricultural IT domainDigital healthcare domain Construction/operation of IT systems (long term projects) Industry specific IT support (for substantial IT needs) Cloud domain, customer success domain (DX domain where companies’ needs emerge and expand)Unified three-way growth (recruiting, training, operations) in step with changes in technological trends and the nature of companies’ requirementsUse our own education programs to create experts in new technology domains where markets are growing and there is a shortage of peopletechnoogyl resources Sharingof personnel and Midori CloudA beta version was releasedin August 2021.Focusing investments on social issues with the best prospects for growthEducation-based IT professional creation Internal recruiting and training allow quickly creating large numbers of IT engineers Invest aggressively in human resources when the market is strong, leading to medium to long- term sales growth Limit recruiting when market conditions are unfavorable in order to place priority on earningsRecruiting skill×Training skill×Sales skillTrack record of human resource training for 4,000 engineers and practical know-how obtained from the latest projects.4Copyright © SERAKU CO.,LTD. All Right Reserved.SERAKU’s Competitive StrengthsRecruiting skillTraining skillSales skill Recruiting activities that promote the shift of human resources to the IT sector, a growth industry (hiring people with work experience but no IT experience who have growth potential) Recruiting not only new graduates, but also human resources for full-time positions throughout the year on a nationwide Training programs and a lineup of appealing services to allow SERAKU to offer attractive career opportunities; up to 3,000 scaleapplications received each month The initial training program structured to place newly hired people in actual projects after only two to three months Practical training that uses the same equipment and environments as those for The SERAKU Jonetsu University as a platform for sharing knowledge and actual projectsupgrading skills More than 100 new corporate customers added each year A stable transaction base with major system integrators Corporate customers with IT operation issues, in a wide range of industries and businesses5Annual total of customers with whom we engage in transactions 75050025002017/82018/82019/82020/82021/8Copyright © SERAKU CO.,LTD. All Right Reserved.Business Segments and Service DomainAim to provide high value added and achieve significant growth in the DX business area by building on our strengths in SI, a business area that will grow stably over a long term.Digital Transformation (DX)Midori Cloud (DX)Facilitate social reform and fast growth with a focus on areas with strong growth potential.Support the primary industry by leveraging the power of IT.Midori CloudCloud & Solutions BusinessCustomer Success Solutions BusinessMidori Cloud Business Infrastructure solutions IoT cloud support center Cybersecurity Introduction and support services for operation of Salesforce.com Design of marketing activities Data science Agricultural IoT service (Midori Cloud) Livestock IoT service (Farm Cloud) Solutions for the agriculture and fisheries sectorSystem Integration (SI)Aim to expand the size of business through the stable operation and maintenance of IT systems over the long term and the provision of support to industries that have strong needs for IT.Construction, operation and maintenance of IT systemsIndustry-specific IT support Operation of IT infrastructures Operation of IT systems Financial/social systems Information communication systems Enterprise systems Service management Quality assuranceMechanical Design and EngineeringP’s Engineering6Copyright © SERAKU CO.,LTD. All Right Reserved.DX: Cloud & Solutions Business Total support for cloud computing in the corporate ICT environment (infrastructure, the Internet of Things) from designing Shifting the focus to DX and cultivating engineers, while strengthening alliances to achieve growth in response to rapidly and building to operation, monitoring and security.expanding market demand amid the COVID-19 pandemicIoT cloud support centerCybersecurityCloud infrastructure solutions24-hour Cloud infrastructure and IoTservices every dayVulnerability diagnosis service, support from installation to operation of security productsA broad spectrum of support for creating a cloud corporate ICT environmentDiagnosis service to identify vulnerabilitiesSOC operation supportAssistance for assembling a framework (SOC engineer on site)Installation of security productsEndpoint/UTM/CASB/VDI/others24-hour/365 day operationFacilities with outstanding security and resilience to disastersManaged service provider (MSP) for IoT systemsBusiness alliancesAutomation of system operations and use of AIDesign and construction servicesServerLinux／Windows／UNIXNetwork infrastructuresVirtualization/Hyperconverged infrastructure (HCI)CloudKittingSOCSecurity operations center*Planning on adding more security products (alliances)We started to use the Cloud & AI Engineer Development Program of Microsoft Japan in September 2020.We will aim to increase the number of engineers with Microsoft certificates to 250in the fiscal years ending August 31, 2022.7Copyright © SERAKU CO.,LTD. All Right Reserved.DX: Customer Success Solutions BusinessSpecializing in the Salesforce platform, which has a high market share in the SFA/CRM domain and strengthening the shift from engineers in the SI domain to those in the DX domainSalesforce.com utilization support servicesDesign of marketing activitiesAlready assisting more than 300 companies due to rapid market growthProviding utilization support both on site and remotely Salesforce Pardot/Marketing Cloud operation Digital marketing support using a company’s customer dataUtilization assessment programUtilization support serviceSalesforce manager support serviceData science Tableau operation using data science engineers Data science and business intelligence support centered on customer dataCapital participation in Resona Digital Hub, a solution provider answering the diverse DX needs of small and medium enterprises SERAKU invested in Resona Digital Hub Co., Ltd. (RDH), established on April 1, 2022, to commence the operations of the joint venture. RDH will construct a platform to open the way for one-stop proposals of diverse IT solutions to the Resona Group’s small and medium corporate customers to help them increase productivity and competitiveness. SERAKU staff will provide Salesforce.com utilization support through RDH’s unique customer success plan. SERAKU will support DX solutions and internal production using the cloud services of Salesforce, Microsoft and others. It has worked to develop these solutions. Strengthening collaboration with NTT Data and others, DX acceleration support through utilization support services× In April 2021, SERAKU jointly launched a business reform support service with NTT Data In July 2021, SERAKU strengthened Pardot utilization support service in collaboration with Netyear In July 2021, SERAKU extended utilization support services in collaboration with WingArc1st Inc. In December 2021, SERAKU increased Tableau utilization support service in collaboration with Corporation. Group Cooperation. Intage Technosphere Inc.8Copyright © SERAKU CO.,LTD. All Right Reserved.DX: Customer Success Solutions BusinessUpdating the curriculum in consideration of market trendsAs a market trend, increasing numbers of companies combine MA tools and BI tools and use Salesforce Platform.In proportion to that trend, needs have increased for cross-cloud human resources, who are versed in multiple products.Existing trainingAdding new contentNew added valueStrong in SFA and CRM, the core area of Salesforce＋Creating cross-cloud staffCultivating human resources that will enable advanced utilization support＝ The creation of cross-cloud staff at an early stagewill be able to offer customers engineers at a higher unit price.Engineers’ skills have improved due to the assignment of full-time trainers, support for acquisition of qualifications, and knowledge sharing.Sales CloudConsultants110PardotConsultants31Experience CloudConsultants46Tableau CRM and Einstein Discovery Consultants7Service CloudConsultants50Advanced Administrators35Administrators202PardotSpecialists89Made the greatest contribution to expanding Salesforce’s resources in terms of the number of higher level qualifications acquired and the growth rate of qualifications acquired. Won a Partner Award, “Top Certification of the Year.”9Copyright © SERAKU CO.,LTD. All Right Reserved.DX: Digital Healthcare Business Released a beta version of a corporate healthcare cloud service in August 2021. The beta version can be used for promoting health-oriented management, promoting employees’ health, and increasing productivity in the organization.AI measures and quantifies health performance based on a simple questionnaire that will be answered weekly, in a minute or two.Released a beta version of Vital Program, a cloud-based digital healthcare service, in August 2021.Conducting user tests primarily at IT companies, seeking to release a commercial version in 2022Making health condition visibleThe program identifies employees’ health issues that have not been visible and assigns scores to mental risks directly linked to the productivity of teams and individuals.Risk alertProposing improvement measuresIf there is any issue to address, AI will sound a risk alert as appropriate.Assisted by AI, the program proposes realistic and reasonable improvement measures to teams and individuals.Based on previous studies selected by WHO and other organizations, SERAKU has created an original analysis method.We have identified factors that affect physical and mental conditions, employing statistical techniques (factors analysis, cluster analysis, recuperation model, etc.) and have developed a system to measure employees’ health performance.HealthcareEconomicsData scienceMake health performance visible, which is possible through simple operation, and promote health-oriented management at companies.10Copyright © SERAKU CO.,LTD. All Right Reserved.Midori Cloud BusinessAgriculture and Fisheries DX Platform(IoT device x Cloud service × Data science)A platform for agricultureA platform for pig and chicken farmingEnvironmental measurement and recordsRemote automated environmental controlLivestock environment measurement and recordsMidori monitor/Midori boxMidori Monitoring Environmental Control OptionMidori CloudIoT devices measure environmental parameters at an agricultural operation, store data in the cloud and generate notices of abnormalities.Total installed locations exceeded2,700Production plans and work recordsMidori noteControlling windows, curtains, ventilation and other equipment automatically in combination with other companies’ products and remotely via an appCoordination opportunities environmental controlSales supportFarming support appFarm CloudMeasuring the environment in livestock buildings using IoT devices and storing measurement data on the cloud to detect abnormal environments and equipment in livestock buildingsUsed at more than 130 locations Livestock building environment controlUse PCs and smartphones for production plans and records of work performed. Farm management system recommended by the Japan GAP Foundation11Visually displaying latest market data and price trends in the past ten years or more, and offering chemicals search and weather forecastsAutomatically controlling the environment in connection with curtains and PLC systems used in livestock farmingCopyright © SERAKU CO.,LTD. All Right Reserved.Midori Cloud BusinessPrimary industry DX by using agricultural production support platforms and SERAKU technologiesAgriculture and Fisheries solutions SERAKU technologiesDigitalizationBoosts productivityImproves managementAgricultural production support platformsMidori CloudFarm Cloud× AI/machine learning UI/UX optimization System/applications Communication/network Hardware/IoT Sensing IoT device installation Data collection Use of smart devices to record data BI tools for visualization Development of UI/UX AI for automation/laborsaving measures Control by using the IoT Optimization of equipment and animal feed Support for receiving certifications Higher efficiency Sales channel optimizationDevelop an environment for remote agricultural guidance using smart agriculture technologiesFunctional extension in combination with other companies’ products and systemsThe Shimane Prefectural Government’s Agriculture, Forestry and Fisheries Dept.Functional extension in combination with other companies’ products and systemsLivestock operators and agricultural producersCreate a growing manual based on quantitative dataMinamishimabara City GovernmentIssuesDifficulty offering on-site growing guidance to new farmers during the pandemicIssuesDesire to remotely monitor the status of equipment operating on production sitesSensors for a pig farm’s septic tank are connected to Farm Cloud to remotely monitor its operating status.Sensors for a pig farm’s septic tank are connected to Farm Cloud to remotely monitor its operating status.IssuesFailure to effectively use data collected through smart agricultureData from tens of farmers introducing smart agriculture technologies are analyzed to report to them what should be improved in growing. A growing manual using smart agriculture technologies is created by standardizing the methods of installing and using different sensors.New farmers in the prefecture are being introduced to Midori Cloud for the development of an environment where data-based remote growing guidance can be provided. Data analysis by data scientists and the reporting of results encourage prefectural promotion staff to use data. Management indicator goals are presented to producers by offering environmental data from the Agricultural Technology Center.IoT solutions are installed in poultry houses linking PLC systems for data collection to Farm Cloud.12Copyright © SERAKU CO.,LTD. All Right Reserved.Midori Cloud BusinessInteraction between services and research and development develops the whole Midori Cloud businessSolutionsSolve problems in the primary industry and other industrial sectorsSupport activities aimed at ubiquitizing smart agriculture in Shimane PrefectureDevelop connectivity functions for environmental control equipmentSystem for digital livestock management and more.Manufacturers, system integrators, local governments, Japan Agricultural Cooperatives (JA) and agricultural production corporationsProducersDistributorsConsumersSalesagenciesPlatformOffer a mechanism for realizing a data-driven primary industryUse the platformIncrease added valueStudy DXin agriculture and fisheriesIntroduce seeds to society to solve problems in the primary industryMinistry of Agriculture, Forestry and Fisheries’ smart agriculture demonstration projectMinistry of Agriculture, Forestry and Fisheries’ project for increasing international competitivenessDX platform for distribution of fruits and vegetables and moreApplying the Ministry of Agriculture, Forestry and Fisheries’ introduction support project for nationwide spread of smart agriculture, forestry and fisheries.Agricultural production areaAsparagus production system using smart agriculture technology (Minamishimabara, Nagasaki Prefecture)Yield increases by amaximum of 47.3% in places where Midori Cloud is introduced.Experienced producersNew farmersConventional sectionDemonstration section*Ministry of Agriculture, Forestry and Fisheries‘ project for development and demonstration of smart agriculture technologies (Task Number: Shi-2H04)13Incorporate functions to increase added valueProvide technology assetsFruit and vegetable distribution areaVisualization of macroscopic data (weather, past results and changes in growing area) affecting the distribution of fruits and vegetables and forecast of shipments from individual areas of productionResearch and development efforts up to the end of FY2022From FY2023 onwards, shipment forecast services will be offered to consuming companies and agricultural production corporations.Government and research Institutions Alliance companies*Ministry of Agriculture, Forestry and Fisheries‘ technology development project for increasing international competitivenessDevelopment of Innovative Farming Support Model)(Task Number: Mo-3-Ya-3, Task Title: Copyright © SERAKU CO.,LTD. All Right Reserved.System Integration Businessprofessional development model Expand services matched to wide-ranging market needs using abundant resources according to the education-type IT Operate a stock-type business centering on the enduring operation of IT infrastructure and systems to achieve stable growthOperation of IT infrastructure/systemsIndustry-specific IT support One-stop services including system construction, operation and maintenance More than 75% of business are large scale operation projects that require long term continuous operation. The number of customers at locations other than Tokyo (Yokohama, Nagoya, Osaka, Fukuoka) is growing.Assigning engineers matched to customer needs to enduing IT infrastructure and system operation projects Promoting projects working as a subcontractor for large projects of major system integrators or receiving orders from prime contractors. Aim for growth by using collaboration and alliances with partners. Train IT professionals with operational knowledge.Cultiexperts primarily in fields where there are strong needs for IT.Expand business by expanding trading platforms with major system integrators.Financial/social systemsInformation communication systemsEnterprise systemsSteady growth under the education-based IT professional creation model and the provision of greater added value by shifting human resource to the DX domain SERAKU’s exclusive IT professional creation model underpins growth by using introductory lessons and then lessons using actual working environments to train people with no experience so they can be assigned to projects within two to three months To provide greater added value, experienced people acquire more advanced skills for DX activities, project management and other higher level jobsPositive recruiting activities and well-developed education system for working more intensively to expand scale14Copyright © SERAKU CO.,LTD. All Right Reserved.Ⅱ. 1H FY8/22 Results of Operations15Copyright © SERAKU CO.,LTD. All Right Reserved.1H FY8/22 Financial Highlights1H net sales in comparison with forecast97%Consolidated net sales for 1H of FY8/22 stood at 8.48 billion yen.The figure was almost the same as the forecast net sales for 1H (8.75 billion yen).Quarterly net salesRecord high4.3 billion yenHighest-ever quarterly net sales recordedNet sales are steadily rising in proportion to the number of engineers.Number of engineersEngineer utilization rate2,80899%Good progress was made in comparison to the full-year goal of 2,880.Steady progress in the recruitment of inexperienced workersA high utilization rate was maintained despite positive recruiting activities.Steady assignment of inexperienced employees after initial training16Copyright © SERAKU CO.,LTD. All Right Reserved.1H FY8/22 Financial Highlights (1) Net sales for 1H of FY8/22 showed healthy year-on-year growth that was near the planned level. Regarding profit, upfront investments in recruitment and education increased hugely. Active recruitment was intended to build a foundation for the growth of profit in 2H and later.(Millions of yen)Net salesGross profitOperating profitOrdinary profitProfit1H FY8/21 (Results)1H FY8/22 (Plan)1H FY8/22 (Results)Year on yearVersus plan7,2688,7508,485 +16.7％△3.0％1,7907161,110703-1,890+5.6％-440640400391 △45.3％ △10.9％694 △37.5％+8.6％457 △34.9％ +14.5％17Copyright © SERAKU CO.,LTD. All Right Reserved.1H FY8/22 Financial Highlights (2) Net sales, which are in proportion to the number of engineers operating, rise mainly in the second half every year. For FY8/22, a large number of employees were hired in 1H. Accordingly, greater focus than usual will be placed on 2H. A strong net increase in engineers was achieved towards the fulfillment of the full-year target.(Millions of yen)Sales forecast1H forecast 8,75046.1%2H forecast 10,25053.9％（1H forecast:44.6%）FY8/22Actual sales4,110（1Q）(Progress rate)（21.6%）4,375（2Q）（23.0%）Net increase in the number of engineers196（1Q）191（2Q）1H forecast:387459FY8/21Actual sales3,520（1Q）3,748（2Q）4,044（3Q）3,950（4Q）FY8/20Actual sales3,161（1Q）3,389（2Q）3,546（3Q）3,674（4Q）18Copyright © SERAKU CO.,LTD. All Right Reserved.1H FY8/22 Financial Highlights (3) Both in the SI segment and in the DX segment, newly hired engineers began operating. This increased total net sales. While continuously accelerating the DX shift, we carried out active recruiting efforts in the DX segment to increase staff. The Midori Cloud segment strengthened the development system with a view to business expansion.Sales by Business SegmentOperating Profit by Business SegmentMidori Cloud1.8%Mechanical Design and Engineering3.1%0.0%OthersMidori Cloud2.0%Mechanical Design and Engineering3.1％Mechanical Design and Engineering3.0%Others0.0%Digital Transformation22.7%Digital Transformation22.3%Digital Transformation28.5%Digital Transformation37.2%System Integration72.4％System Integration72.6%System Integration68.5%System Integration62.8%1H FY8/211H FY8/221H FY8/211H FY8/22(* Excluding sales and profits of the segments that are in red)(* Excluding sales and profits of the segments that are in red)19Copyright © SERAKU CO.,LTD. All Right Reserved.Quarterly Sales Growth Net sales are in proportion to the number of operating engineers and the utilization rate, continued to rise. For 2Q of FY8/22, the highest quarterly net sales ever were recorded, following the growth in number of engineers.(Millions of yen)4,4003,6003,143 3,161 2,984 2,8002,700 2,581 4,375 4,044 3,950 4,110 3,674 3,748 3,546 3,520 3,389 2,0001Q3Q2QFY20194Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2QFY2020FY2021FY202220Copyright © SERAKU CO.,LTD. All Right Reserved.Quarterly Earnings Growth For 1H of FY8/22, we carried out unprecedented intense recruitment efforts. Accordingly, investments in growth rose massively. Amid a continued increase in engineers, gross profit margin stayed over 20%.Operating 営業利益profitGross profit 売上総利益率margin24.4%24.5%SG&A expense 販管費率ratioOperating profit 営業利益率margin26.3%25.0%23.7%24.1%23.1%22.8%17.9%16.3%14.9%15.0%15.2%15.2%13.4%10.7%14.4%14.1%11.9%10.9%9.4%8.0%5.9%6.6%6.8%8.5%7.6%21.9%22.5%22.1%17.7%17.6%16.9%20.0%30.0%10.0%5.1%4.8%4.4%(Millions of yen)1,200Gross profit 売上総利益22.6%23.0%21.5%20.2%16.7%8004001.3%1Q03Q2QFY20192Q3QFY20202Q3QFY20214Q1Q4Q1Q4Q1Q0.0%2QFY202221Copyright © SERAKU CO.,LTD. All Right Reserved.Number of Engineers and Utilization Rate The normal occupancy rate of 98-99% was maintained, after the second quarter of the fiscal year ended August 31, 2021. For 1H of FY8/22, we will maintain the utilization at high levels in the fiscal year ending August 31, 2022 even while strengthening recruitment.(Number of personnel)3,00098.7 98.2 98.4 98.2 98.6 98.4 98.6 98.5 99.0 98.6 99.0（%）100.096.8 95.0 95.7 2,8082,617Total number of エンジニア総数engineersEngineer utilization rate稼働率2,2712,1822,4362,3792,3112,2692,3392,4212,0001,8991,9702,0802,04190.080.01,00001Q2Q3Q4Q1Q4Q1Q4Q1Q2Q3QFY20202Q3QFY2021FY201970.02QFY2022* The utilization rate is for engineers who have completed initial training.22Copyright © SERAKU CO.,LTD. All Right Reserved.Number of Engineers and Categories The number of engineers grew solidly in the SI segment, reflecting stronger efforts to recruit personnel with no experience. Recruitment of DX engineers was also strengthened mainly in the Customer Success Solution business and in the Midori Cloud business.(Number of personnel)3,0002,5001,5005000Digital transformation engineersMechanical design engineersSystem integration engineers(including Midori Cloud engineers)2,2712,1822,4362,3792,3112,2692,3392,4212,0001,8991,9702,0802,0411,0001,6951,7371,8051,7631,9911,9411,7861,7491,7821,8491,8511,908DX engineer ratio was 20.0% in 1H FY8/2286829010643943848249493464351691Q57176622132Q3QFY2019642144Q872441Q9127299993463392Q3QFY20204Q1Q4Q1Q2Q2Q3QFY20212,8082,6172,1252,017122561FY202223Copyright © SERAKU CO.,LTD. All Right Reserved.Recruitment activitiesAs of the end of 1H of FY8/22, the number of engineers was 2,808, with a net increase of 387, in comparison with the planned number of 2,880 at the end of FY8/22. It is very likely that the plan for the number of engineers for FY8/22 will be met. Recruitment was increased at a much higher speed than planned. The increase in the number of engineers will significantly contribute to sales growth rates in the future.(Number of personnel)3,0002,7002,4002,1002,8802,808 ＋3872,421 24Copyright © SERAKU CO.,LTD. All Right Reserved.ResultsNumber of engineers as of August 31, 2021ResultsNumber of engineers as of the end of the Second quarter of the fiscal year ending August 31, 2022Education for Engineers Practical training that uses the same equipment and environments as those for actual projectsimproved engineers’ skills. We focused on encouraging engineers to acquire certifications in the DX domain. By putting in place engineer training environments, we aim to increase the unit rate per engineer.Number of Microsoft Azure CertificationsNumber of Salesforce CertificationsSERAKU ‘s technology and the use of Microsoft Azure proven by itstrack record in the introduction of Microsoft Azure were acknowledged,and SERAKU achieved Gold Cloud Platform Competency, the highestaccreditation in the cloud platform field.SERAKU earned high marks for making the greatest contribution toexpanding Salesforce’s resources in terms of the number of higher levelqualifications acquired as well as the growth rate of qualificationsacquired, and won Top Certification of the Year in Salesforce PartnerSummit 2021.• AZ-900: Microsoft Azure Fundamentals• AZ-103: Microsoft Azure Administrator• AZ-104: Microsoft Azure Administrator• DP-100: Designing and Implementing a Data Science Solution on Azureof certificationsExampes lof certificationsExampes l• Sales Cloud consultant• Experience Cloud consultant• Field Service Lightning consultant• Community Cloud consultant• Tableau CRM and Einstein Discovery consultant• Pardot consultantand many moreand many moreSalesforce certificationsAdvanced Salesforce certifications4444705242163086673063611Q FY8/22 Ending2022/1Q末2Q FY8/22 Ending2022/2Q末1Q FY8/22 Ending2022/1Q末2Q FY8/22 Ending2022/2Q末25Copyright © SERAKU CO.,LTD. All Right Reserved.Topics• Mar. 30, 2021 Cooperation with NTT Data for Creating 500 Business Reform Personnel over Three YearsStarted in April 1, 2021 a joint business reform support service starting with service utilization support for companies using Salesforce• Apr. 30, 2021 Midori Cloud and a Produce Distribution Support Project Using AI SelectedMidori Cloud and a produce distribution support project using the cloud and AI is selected as an innovative farming support model development project bythe Ministry of Agriculture, Forestry and Fisheries.• May 10, 2021 A Partner Agreement with Tableau Software ConcludedA formal alliance contract is concluded with Tableau Software, which provides a reading analysis platform.• Jun. 2, 2021Top Certification of the Year Achieved at Salesforce Partner SummitSelected from among more than 500 domestic companies that participate in the partner program of Salesforce.com Co., Ltd.• Jul. 13, 2021 Cooperate with Netyear Group Cooperation to Strengthen Pardot Utilization Support ProjectCultivate human resources having Salesforce Platform skill to have 100 certified Pardot engineers by April 2022.• Jul. 27, 2021 Achieve Microsoft’s Gold Cloud Platform CompetencySERAKU’s technology and use of Microsoft Azure proven by its track record of Microsoft Azure introduction were acknowledged, and SERAKU achieves thehighest accreditation in the cloud platform field.• Aug. 31, 2021 Release a Beta Version of Vital Program, a Digital Healthcare ServiceRelease a cloud-based digital healthcare service using AI for employees’ health promotion and mental healthcare, and the improvement of productivity.• Oct. 28, 2021 We entered into a business collaboration with Toto Kogyo Co., Ltd., which has a high market• Feb 1, 2022share in greenhouse products.We entered into a business collaboration with Toto Kogyo Co., Ltd, a company which has engaged in the greenhouse product business for nearly 60 years, to develop IoT technologies for electric ventilation systems used in greenhouses.Investment in the DX Support Subsidiary Set Up by Resona Holdings to Participate in the Joint VentureA business offering Salesforce.com and other solutions to meet diverse DX implementation needs has been launched in collaboration with Resona Group companies and others.26Copyright © SERAKU CO.,LTD. All Right Reserved.III. FY8/22 Initiatives and Growth Forecast27Copyright © SERAKU CO.,LTD. All Right Reserved.FY8/22 Plan We forecast a 24.5% year-on-year sales increase as the number of engineers is growing. We will actively invest in recruitment in a renewed growth phase. Meanwhile, the operating profit margin will remain at 8% or higher. We will monitor trends in the market. If the market condition deteriorates significantly, we will curb investment in recruitment to ensure profitability.FY8/21 resultsFY8/22 plan(Millions of yen)(% to sales)(% to sales)(YoY change)Net salesOperating profitOrdinary profitProfit15,2631,3561,8361,240Dividends5.6 yen8.8%12.0%8.1%–19,0001,5501,9001,2508.6 yen8.2%+14.3%–10.0%6.6%+24.5%+3.4%+0.7%-28Copyright © SERAKU CO.,LTD. All Right Reserved.FY8/22 Plan The number of engineers will rise, and the sales growth rate will remain high. The phase changed from the profit creation phase to a renewed growth phase in the third quarter of the fiscal year ended August 31, 2021. Growth has been accelerating.Scale growth phase(Millions of yen)20,000Net salesOperating profit売上高 営業利益Number of engineersNumber of engineers2,041 15,0001,162 1,718 1,478 Profit creation phaseRenewed growth phase2,880 2,379 2,421 19,000 15,263 13,771 1,550 11,410 1,356 10,0009,017 1,134 7,500 6,317 727 5,000536 532 543 (Millions of yen)2400180012006000029FY8/16FY8/17FY8/18FY8/19FY8/20FY8/21FY8/22Consolidated results from hereCopyright © SERAKU CO.,LTD. All Right Reserved.Growth Forecast in Fiscal Year Ending August 31, 2022sector.IT professional creationIn a growth phase, we will expand the scale of operations through active recruitment, education and sales and increase digital transformation engineers. Prioritize increasing the number of engineers through recruitment and education and expect the number of engineers to be 2,880 at the end of the fiscal year. Continue to advance the DX shift of engineers, focusing on cultivating human resources who have advanced Salesforce and Microsoft certificates, and boost our highly profitable structure. Focus on creating solutions in the agriculture and fishery sector, aiming to become the No. 1 company in the Start to provide a beta version of Vital Program, a digital healthcare service, and focus on developing the service for some time to come. In addition to hiring engineers who have experience in the IT industry, increase the number of engineers by hiring inexperienced engineers and training them. Expand practical project education at Tech Lab, a new training facility.Number of engineers at end of termCurrent businesses Focus on becoming a prime contractor and strengthening partnerships. Continue an engineer’s DX shift and strive to increase profit margins and expand high growth projects. Develop alliances to create projects in all business fields. Expand business responding to technological trends, for instance in the verification field. Expand COMPANY, an ERP package for large companies, and the operation support business.New businessespublic sector. Focus on expanding the scale of solutions in agriculture and fishery for companies and in the Focus on developing new services in the digital healthcare field.Infrastructure Continue to strengthen the management system and system infrastructure.2,880 (a net increase of 459)Salesforce certificates acquiredIncreased by 400Number of Microsoft certificatesIncreased by 250Solutions in the agriculture and fishery sectorIncreased by 5030Copyright © SERAKU CO.,LTD. All Right Reserved.Medium-term VisionThe medium-term plan has the goal of raising sales to 50 billion yen in FY8/25Made progress as planned in the first fiscal year. Expect to make steady progress in the second year, the fiscal year ending August 31, 2022. Based on our IT professional creation and the diverse job opportunities that we provide to engineers, we have created an environment in which engineers can fulfill their potential, leading to the sustained growth of the company. Establish a business to raise both profit margins and the speed of growth by shifting engineers to the DX domain while achieving stable growth in the System Integration business, where demand is expected to remain firm. Utilize alliances with major cloud platform companies in order to use operational and utilization support for more growth. M&A in market sectors with the potential for synergy with existing businesses and the provision of SERAKU’s recruiting, education and sales expertise to newly acquired companies and businesses for growth. Launch businesses based on IT that target social issues with growth potential in order to add more sources of growth.(100 millions of yen)After 4 yearsMade progress as planned in the first fiscal year.In progress31Copyright © SERAKU CO.,LTD. All Right Reserved.FY8/21FY8/22FY8/23FY8/24FY8/25Features and Superiority of the Education based IT Professional Creation ModelOur education-based IT professional creation model continues to have a competitive edge. Starting to create professionals to be prepared for markets that have high Use horizontal expansion of recruiting, education and sales skills to expand 2021-Solving issues in the primary industry through agricultural and fishery solutions, realizing corporate health management through digital healthcare services, we will enter into alliances with major platform companies and supporting the ongoing digital transformation in all aspects of society Business growth by taking service formats to a higher level to reflect 2020-Looking ahead to growth of the Microsoft platform, started training programs for the Microsoft certifications of at least 200 people every yearpotential for growthour technology domainsthe growth of markets2018-Looking ahead to growth of the DX market, started training programs for robotic process automation (RPA), security, data science, verification and other activities2013-2013-Looking ahead to the growth of the cloud systems market, started Looking ahead to the growth of the cloud systems market, started training activities for Salesforce training activities for Salesforce engineersengineersCurrently expanding Customer Success Solutions Business2008-Looking ahead to the widespread use of smartphones and the IoT, started training programs for smart technology engineersCurrently expanding the Midori Cloud business and other activities in the data science domain2002-Anticipating growth in demand for IT utilization services at companies, started training programs for IT infrastructure and network engineersCurrently expanding the System Integration business1997-Anticipating growth of the web systems domain, started a system development business and training programs for system development engineersCurrently expanding the System Integration business1995-Started an internet business before the internet became widely used and started training programs for web engineersCurrently expanding business operations in the digital marketing domain32Copyright © SERAKU CO.,LTD. All Right Reserved.DX: Cloud & Solutions Business Growth ScenarioCreate a highly profitable structure consisting of continuously cumulative managed services and Microsoft platforms. Use the alliance with Microsoft Japan to continuously develop engineers with Microsoft certificates. Focus on creating projects in the fiscal year ending August 2022. Expand the workforce for managed services (a center operates companies’ cloud infrastructures 24 hours a day, every day), which have high growth potential. Start maintenance and operation and managed services at regional sites. Implement a highly profitable platform resale and license resaleNet salesGoal is growth by a factor of at least 2.5during the next three years(Millions of yen)4,0003,0002,0001,000033Copyright © SERAKU CO.,LTD. All Right Reserved.FY8/212021/8FY8/222022/8FY8/232023/8FY8/242024/8DX: Customer Success Solutions Business Growth ScenarioSalesforce engineers has been created successfully. We will accelerate the development of human resources, aiming to become the leader in Japan in the new and growing Salesforce use and operation services market. In the cloud IT systems field, we expect that the market is expanding with the keywords of “utilization,” “operation” and “digital transformation.” SERAKU aims to achieve greater business growth as a leader in this field. SERAKU will develop no-code/low-code platform engineers who will be the main source of utilization, operation and DX services Through strengthening alliances with NTT Data and other partners, receive more utilization and support orders from large and growing companies in JapanNet salesGoal is growth by a factor of at least 3during the next three years(Millions of yen)4,0003,0002,0001,000034Copyright © SERAKU CO.,LTD. All Right Reserved.FY8/212021/8FY8/222022/8FY8/232023/8FY8/242024/8DX: Midori Cloud Business Growth ScenarioBecome the primary industry DX leader, a sector with significant growth potential, by combining production support platforms and SERAKU’s system integration expertise Continuously increase production support experience and agricultural IT expertise through the steady expansion of the use Receive orders for large agriculture/fisheries solutions during the phase of implementing the primary industry DX by Become the primary industry DX leader by leveraging synergies between the platform business and agriculture/fisheries of production support platformscompanies and the public sectorsolutions businessNet salesGoal is growth by a factor of at least 6during the next three years(Millions of yen)3,0002,0001,000035Copyright © SERAKU CO.,LTD. All Right Reserved.FY8/212021/8FY8/222022/8FY8/232023/8FY8/242024/8System Integration Business Growth ScenarioMaximize the expansion of operations using our recruitment, education, and sales capabilities. Aim to expand IT operations in a continuously cumulative IT structure management and projects in industries where stable IT needs are expected. Plan to achieve steady increases in sales and profit, prioritizing expanding the scale of operations by increasing the number of IT engineers Speed up business growth using our sales skills along with an increase in the number of partner companies and the strengthening of through recruitment and education.alliances. For IT needs for different industries, create large projects and subcontracting projects by giving engineers practical training and developing engineers with business process knowledge. Responding to these technological trends, expand the new business domain, including the verification field.Net salesGoal is growth by a factor of at least 2during the next three years(Millions of yen)24,00016,0008,000036Copyright © SERAKU CO.,LTD. All Right Reserved.FY8/212021/8FY8/222022/8FY8/232023/8FY8/242024/8SERAKU’s Initiatives for ESG and SDGsThe SERAKU Group will build a long-term foundation for growth by promoting ESG activities. As a company that creates social value, the Group will strengthen initiatives to help achieve a sustainable society.Safe operation of systems in the IT societyHuman resources developmentCreation of new value in society Building sustainable and strong IT Cultivating human resources who have Enhancing the value of industry using IT security Providing IT environments and services tailored to customers Helping maintain social activities using ITadvanced expertise Providing ongoing education for IT engineers Ensuring employment for young people and utilizing a variety of human resourcestechnology Achieving regional revitalization through recruitment and IT technology Achieving high productivity and low workload by using ITUse of IT in agriculture field Realization of a physically and mentally healthy societySophistication of corporate governance Advancing smart agriculture to improve productivity in agriculture Revitalizing the primary industry using IT Producing abundant food stably Providing digital healthcare services Solving social issues using IT Cooperating with academic institutions Ensuring compliance Strengthening corporate governance Improving information disclosure37Copyright © SERAKU CO.,LTD. All Right Reserved.Forward looking StatementsDocuments and information provided at today’s presentation include forward-looking statements.These statements are based on assumptions that include current expectations, forecasts and risk factors. As a result, forward-looking statements include many uncertainties that may cause actual performance to differ from these statements.Risk factors and uncertainties include the condition of industries and markets where SERAKU operates, changes in interest rates and foreign exchange rates, and other items involving the Japanese and global economies.SERAKU has no obligation to update or correct these forward-looking statements even if there is subsequently new information or an event that affects these statements.An announcement will be made promptly if there are revisions to the FY8/22 forecasts or differences between the results of operations and these forecasts that require disclosure.38Copyright © SERAKU CO.,LTD. All Right Reserved.