カナミックネットワーク（3939） – Earnings Results Briefing for the Second Quarter, FY2022 And Corporate Profile

Earnings Results Briefing for theSecond Quarter, FY2022A n d C o r p o r a t e P r o f i l eMay 17, 2022Kanamic Network Co., LtdAgendaCompany ProfileEarningsTOPICS1234Growth Strategy / M&Acopyright ©Kanamic Network Co., Ltd All Rights Reserved.21-1.Company ProfileCompany NameKanamic Network Co., LtdDate of EstablishmentOctober 20th, 2000Paid in CapitalJPY 324,120,000Transitioned to TSE Prime Market on April 4, 2022Stock ListingTSE Prime Market (Ticker: 3939)Ticker: 3939LocationBusiness AreaProvision of core-systems cloud services and platform-based auxiliary services to the medical care, long-term care, and childcare industriescopyright ©Kanamic Network Co., Ltd All Rights Reserved.41-2.Purpose & Values“Cloud technology for all stages of life” Purpose & ValuesWe strive to contribute to people and society through“cloud technology for all stages of life”.Going forward, we will capitalize on opportunities forbringing Digital Transformation (DT) to aging populationsin Japan and the rest of the world with our cloud platform.In doing so we seek to contribute to the development ofa more sustainable and healthier future for humanity.Origin of our name“Kaigo” （Japanese for “elderly care”) + “Dynamic” +”Network”copyright ©Kanamic Network Co., Ltd All Rights Reserved.52. Earnings2-1. FY 2022, 1H ResultsTargets for 1H Were Met1,0431,0601,068Operating Profit418400435Net SalesYoY102.4％OB100.8％1,0008006004002000YoY103.9％OB108.8％4003002001000FY20221HEstimateFY20221HActualFY20211HYoYFY20211HFY20221HEstimateFY20221HActualFY 2022, 1HDifferenceActualEstimateActualMargin (%)YoY (%)Achievement Rate (%)1,0431,0601,068100.0Net SalesOperating ProfitOrdinary ProfitProfitEBITDA418423295482400400275－5.804354352995116.3140.740.728.0－102.4103.9102.9101.4106.0100.8108.8108.8108.9－Profit Per Share（Unit ： million JPY, %）*EBITDA was calculated as follows: Operating Profit+ (Depreciation + Amortization of Goodwill)copyright ©Kanamic Network Co., Ltd All Rights Reserved.72-2. FY 2022, 1H Progress*A contract with a major elderly care service provider has been secured with implementation scheduled for FY 2023. Ahead of this, preparatory investments will be made during FY 2022.Targets for 1H Were Met＝Net Sales＝Operating Profit2,0002,0001,685 1,881 2,080 2,350 1H Result1,0681H Estimate1,060841 930 1H Result4351H Estimate4001,0001,00000544 654 FY20192019年9月期FY20202020年9月期FY20212021年9月期FY2019FY2020FY2021FY2022, 1H2022年9月期2Q予想値FY2022 Full-YearEstimate1QResult2QResult1HResultNet SalesOperating ProfitOrdinary ProfitProfitEBITDA1,6851,8812,0802,3505445433576746546764727898418295799779309306401,1305192032031392415492312311592701,068435435299511*The Company changed to consolidated accounting from FY2020, so results from FY2019 and earlier are standalone figures.*EBITDA was calculated as follows: Operating Profit + (Depreciation + Amortization of Goodwill)(Unit: million JPY)copyright ©Kanamic Network Co., Ltd All Rights Reserved.82-3. FY2022, 1H Results (by product)■Net Sales (YOY, %)■Net Sales■Composition of Net Sales1,0431,068CloudYoY111.0％PlatformOtherYoY50.3％YoY53.2％1,0008006004002000Other 2.7％Platform 4.5 ％Cloud 92.8 ％FY2021 1HFY2022 1HFY20211HFY20221H（Unit ： million JPY, %)YoYNet SalesComposition Ratio (%)Net SalesComposition Ratio (%)Change(%)CloudPlatformOtherTotal893955585.69.15.3991472992.84.52.71,043100.01,068100.098-47-2525111.050.353.2102.4＊Platform Services include the production, operation, and management of websites of long-term care providers through directly solicited contracts as well as through the CareWork Foundation. These website services provide a stable base income. Platform Services also include an advertising service and services provided through the Group’sinformation sharing platform, such as the sale of products intended for use against COVID-19. Unfortunately, competition within the COVID-19 countermeasure products spacehas intensified and sales of these products greatly decreased, causing net sales for Platform Services to come in at 47,842 thousand yen (down 47,247 thousand yen (49.7%)year on year).＊With regards to Other Services, The Company secured a contract to undertake customization related development work for a large customer, but due to the length of thedevelopment period, this revenue was not recorded to net sales for the six months ended March 31, 2022, and net sales for Other Services came in at 29,306 thousand yen(down 25,795 thousand yen (46.8%) year on year).copyright ©Kanamic Network Co., Ltd All Rights Reserved.92-4. Medical and Nursing Care Cloud Service Overview132The Company is a single segment business but sales by service are disclosed.FY 2022, 1H1CloudNet Sales：JPY 991mm（Weighting (%) ： 92.8%)（YoY(%) ： 111.0%)2PlatformNet Sales： JPY 47mm（Weighting (%) ： 4.5%)（YoY(%) ： 50.3%)3OtherNet Sales： JPY 29mm（Weighting (%) ： 2.7%)（YoY(%) ： 53.2%)copyright ©Kanamic Network Co., Ltd All Rights Reserved.102-5. Number of Regions Using Our Cloud ProductsSixmonths1,2411,3231,159Contracted for Portal Site forAll Regions of TokyoGrowth106.6％（Six months）8177611,4001,2001,0008006004002000FY2018FY2019FY2020FY2021FY20222Q*One region consist of an area with a population of 30,000 people, roughly the size of a junior high school district as defined within the community comprehensive care framework envisioned by the Ministry of Health, Labour and Welfarecopyright ©Kanamic Network Co., Ltd All Rights Reserved.112-6. User Growth & Number of Care Facilities＝Paying users＝Free users=Care facilitiesTOTAL170,895TOTAL152,14132,155Care facilitiesTOTAL135,250TOTAL122,51828,95343,554TOTAL114,32526,56538,18830,53652,41662,874FY20221HSixmonths33,71835,000Growth73,49330,000112% 40,00025,00020,00015,0005,0000TOTALGrowth117%Growth109% Paying Users76,13778,96482,83489,26710,000Free Users97,402FY20202QFY20204QFY20212QFY20214QFY20222Qcopyright ©Kanamic Network Co., Ltd All Rights Reserved. 12(Number ofuser IDs)160,000140,000120,000100,00080,00060,00040,00020,00002-7. DividendsFrom FY 2020, the target dividend payout ratio has been 20% or better■ Dividend（Reflects Share Splits）20.420.722.23.002.502.0017.7Payout Ratio（％）15.613.41.000.830.8332120151050(unit: %)(unit: yen)0Reference：Actual Dividend Amount）5.00 JPY2.50 JPY1.00 JPY2.00 JPY2.50 JPY3.00 JPYFY2017FY2018FY2019FY2020FY2021FY2022Estimatecopyright ©Kanamic Network Co., Ltd All Rights Reserved.132-8. Shareholder Benefits ProgramTo increase the attractiveness of our shares、and attract more shareholders Kanamic Network has implemented a lottery style shareholder benefit programBenefit ①Benefit ②Shareholders recorded in Registry of Shareholders as of September 30th of each year who hold 100 or more shares200,000 JPY worth of JCB Gift Cards presented to 10 shareholders by lotteryWチャンス【 社名の由来 】Shareholders who have held 100 or more shares continuously for 1 year or longer (recorded in the company’s year end/interval Registry of カナミックネットワークの社名は、「介護を生き生きと活性化させるネットShareholders with the same shareholder number ワークサービスを提供する」という理念から「介護（カイゴ）」と「活性化for at least 3 consecutive times)（ダイナミック）」そして「ICT（ネットワーク）」の３つのキーワードを掛200,000 JPY worth of JCB Gift Cards presented to 3 shareholders by lotteryけ合わせて誕生しました。The lottery will be impartially conducted at a lottery event, which follows the Ordinary General Shareholders’ meeting, and in the presence of Mitsubishi UFJ Trust and Banking Corporation, the Company’s shareholder registry administrator. The lottery results will be announced by posting successful shareholders’ shareholder numbers on the company website. We plan to send the JCB Gift Cards during the 2nd third of January each year. 当社は「超高齢社会における地域包括ケアをクラウドで支える」という経【 経営理念 】営理念の基、医療・介護・健康情報等を法人・職種の枠を超えてリア*Please note that in cases where all shares are disposed, subsequently purchased shares will be assigned a different shareholder number.*For this fiscal year, the program is implemented for shareholders who are recorded or listed in the Registry of Shareholders as of September 30, 2022 and hold 100 or more shares and ② is applicable for shareholders recorded or listed in the Registry of Shareholders with the same shareholder number for all of the following reference dates: September 30, 2021, March 31, 2022, and September 30, 2022.ルタイムに「情報共有」＋「コミュニケーション」＋「利活用」ができるICTプラットフォームを提供することで、患者・家族がより質の高い医療・介護サービスを受けられることを目指して事業を展開しております。copyright ©Kanamic Network Co., Ltd All Rights Reserved.143.Topicscopyright ©Kanamic Network Co., Ltd All Rights Reserved.153-1. Transition to TSE’s Prime MarketTransition to the “Prime Market”Announced April 4, 2022Previous Market Structure(Prior to 4/4/22)New Market Structure(From 4/4/22)TSE 1st SectionTSE 2nd SectionTransition to the “Prime Market”JASDAQStandardGrowthMothersPrimeStandardGrowththe TSE’s marketAccompanying the reorganization ofsegments, Kanamic has transitioned to the “Prime Market“.into the new marketcopyright ©Kanamic Network Co., Ltd All Rights Reserved.163-2. Improving Kanamic’s workplace environment and promoting employee healthKanamic Network Recognized under the “2022 Certified Health & Productivity Management Outstanding Organizations Recognition Program”Announced March 9, 2022Through this award, the Ministry of Economy, Trade and Industry (METI), theMinistry of Health, Labour and Welfare (MHLW), and Nippon Kenko Kaigi jointlyrecognize outstanding large enterprises, SMEs and other organizations engagingin strategic efforts to advance employee health and productivity.copyright ©Kanamic Network Co., Ltd All Rights Reserved.173-3. Digitally Transforming the Long-Term Care IndustryKanamic Releases “Easy Electronic Payments by Kanamic”Announced March 8, 2022With“EasyElectronicPaymentsbyKanamic”, bills to long-term care servicerecipients that were created with TheCompany’s Cloud Service (including thosetransmittedovertheinternetvia”Kanamic Easy Web Statements”), can bepaid not only through the previousmethod of bank wire transfer, but nowalso through fintech solutions includingcredit card payments, QR Code Payment(PayPay App), and convenience storepayments.This results in a reduction of operationalburdens and allows for quicker collectionof payments within the long-term careindustry. To compliment this, the KanamicCloudService’saccountsreceivablesmanagement tool facilitates the reductionof human errorsvia its automatedclearing functionality.copyright ©Kanamic Network Co., Ltd All Rights Reserved.184. Growth Strategy / M&A4-1. Kanamic’s Growth Strategy■The Growth Blueprint We will expand on our “Contents”, “Reach”, and “Platform” in line with our corporate purpose and values as we continue to grow existing businesses organically and pursue new business opportunities. We are also actively pursuing M&A opportunities as a method of strengthening and expanding our business.Kanamic’s Purpose & Values:“Helping People and Communities with a Cloud Service for ALL Stages in Life”PHR Solutions: Empower children, adultsand seniors alike with Personal Health DataContentsFor a GLOBAL Userbase (Japan and Abroad) ReachHealthcare Platform for Adding Value to People AND BusinessesPlatformcopyright ©Kanamic Network Co., Ltd All Rights Reserved.204-2. Kanamic’s Growth Strategy■ “Helping People and Communities with a Cloud Service for ALL Stages in Life”Developing PHR-based health management solutions for people of all biological ages and constructing a healthcare platform for use around the world childhoodadult-hoodactiveseniorPrevent Disease;Extend Healthy LifespanNursing Carechildworking-ageseniorseniorseniordoctornursedentistdietitianconsultantcareplannercaregiver(all members of the care team regardless of profession)municipality childrearing servicessocial workers & public health workerssocial servicesfor seniorscopyright ©Kanamic Network Co., Ltd All Rights Reserved.21KanamicHealthcarePatformlERP PackageInformation-sharingsystemCommunicationsSystemPlatform AdvertisementsAI/IoTTalent recruitmentservice Extendhealthylifespan Smart (AI/IoT powered)brick-and-mortar4-3.Growth Strategy / Platform Strategy copyright ©Kanamic Network Co., Ltd All Rights Reserved.224-4. New Service Areas■Kanamic has begun expanding into new service areas where it can capitalize on healthcare/LTC expertise 【Web Statements＆BPO】【Electronic Health Record Handbook】【 Easy Electronic Payments by Kanamic 】【AI System for Helping Children】copyright ©Kanamic Network Co., Ltd All Rights Reserved.234-5. Acquisition of Urban Fit, a Fitness Gym Business Aimed at Extending the “Healthy-lifespan” Brand Name:URBAN FIT24Announced May 10, 2022Slogan:Shaping Active and Healthy Bodies and MindsURBAN FIT isn’t just about losing weight.URBAN FIT provides a high-quality environment at a reasonable priceand delivers the maximum fitness experience to all of its members. URBAN FIT allows members to build healthy bodies for health lives. copyright ©Kanamic Network Co., Ltd All Rights Reserved.244-6. Kanamic Vision 2030(This Acquisition)copyright ©Kanamic Network Co., Ltd All Rights Reserved.254-7. Kanamic’s Business Areas■ “Helping People and Communities with a Cloud Service for ALL Stages in Life”Developing PHR-based health management solutions for people of all biological ages and constructing a healthcare platform for use around the world Target CustomersKanamicHealthcarePatformlCurrent BusinessesThis Acquisition4-8.Expansion Into New Business Areas via this AcquisitionExpansion into brick-and-mortar businesses to increase the “healthy lifespan”Until now, we have focused on cloud solutions catered to the medical and long-term care industries, but going forward, we will also develop a wellness business focused on disease prevention. As we enter the “age of the centenarians”, we aim to contribute tosociety by providing services that help extend the “healthy-lifespan“ of people.Smart (AI/IoT powered)brick-and-mortar facilities businessThis AcquisitionServices for longer healthy lifespans(nutrition, exercise, community)Services for medical care providers, long term care providers, and pharmacists Healthcare&We llness BusinessThis AcquisitionHealth technology,AI technology,Health examination system,Custom development projectsElectronic health records,Long-term care cloud-based system,Pharmacy cloud-based system Childrearing cloud-based system*includes services targeting the governmentIT Servicecopyright ©Kanamic Network Co., Ltd All Rights Reserved.2727Business supporting the long-term care industry, etc.4-9.Overview of Company to be AcquiredThe main business of the target company, Urban Fit Co., Ltd., is the operation of”URBAN FIT24“, a brand of 24-hour fitness gyms which features 14 locations(including franchises), mainly in Osaka. Urban Fit Co., Ltd. also conducts sales of thewell-known training apparel, “Gorilla Wear“.NameUrban Fit Co., Ltd.Location1-2-1 Dojimahama, Kita-ku, OsakaShin-Daibiru 15th floorRepresentativeEisuke UchijimaDate of EstablishmentNovember 19, 2015Capital40,000,000 yenBusiness DescriptionNumber of employeesPrimary customersPrimary suppliersOperation of 24-hour fitness gyms*14 locations (8 directly-operated and 6 franchise locations)93 (As of March 31, 2022)*Includes full-time, temporary, and part-time employeesIndividuals and corporationsTECHNOGYM Japan, SECOMcopyright ©Kanamic Network Co., Ltd All Rights Reserved.284-10. Overview of Company to be Acquired (Locations) Highly convenient locations, mainly in Osaka (Plans to expand nationwide from 2022)Higashi Mikuni storeAT Ibaraki Ota storeTakatsuki storeHirakata storeName:Urban Fit Co., Ltd.Tachibana storeShigino storeNishiyodogawa storeTenmanbashi storeNoda Hanshin storeImazato storeMarch 2021[Osaka] Urban Fit 24 Higashi Mikuni store openedUmeda storeMinamihorie storeNamba storeNagahoribashi storeMarch 2016March 2017March 2018May 2018March 2019March 2019March 2020[Osaka] Urban Fit 24 Nagahoribashi store opened[Osaka] Urban Fit 24 Umeda store opened[Osaka] Urban Fit 24 Namba store opened[Osaka] Urban Fit 24 Takatsuki store opened (FC store)[Osaka] Urban Fit 24 Tenmanbashi store opened[Osaka] Urban Fit 24 Hirakata store opened (FC store)[Osaka] Urban Fit 24 Nishiyodogawa store opened (FC store)September 2020[Osaka] Urban Fit 24 Shigino store opened (FC store)January 2021[Osaka] Urban Fit 24 Minamihorie store openedApril 2021May 2021February 2022April 2022[Osaka] Urban Fit 24 Aeon Town Ibaraki Ota store opened (FC store)[Osaka] Urban Fit 24 Imazato store opened[Osaka] Urban Fit 24 Noda Hanshin store opened[Hyogo] Urban Fit 24 Tachibana store opened (FC store)2022 (planned)[Tokyo] Urban Fit 24 Morishita store scheduled to open (1st Tokyo FC store)2022 (planned)[Chiba] Urban Fit 24 Funabashi store scheduled to open (Tokyo FC store)2023 (planned)[Osaka] Urban Fit 24 Fukushima store scheduled to opencopyright ©Kanamic Network Co., Ltd All Rights Reserved.294-11. Overview of Company to be Acquired (Facility Features) URBAN FIT24 gyms feature a high-quality environment complete with fitness equipment provided by Italian firmTechnogym. Various rental services allow members to go to the gym emptyhanded.URBAN FIT24 keeps customers highly satisfied 24-hours a day.copyright ©Kanamic Network Co., Ltd All Rights Reserved.304-12. Group structure and business synergies Capitalize on each group company’s strengths to advance Kanamic’s corporate mission of “Developing a global healthcare platform” 24-hourFitness＋Extend “healthy-life-span” anddecrease chance of needing nursing care later in lifeCoordination with healthcare providersDigital Transformation (DT) for Wellness（App）Speed up facility expansion（Franchise / Global）Synergies with business to be acquiredBusiness to “extend healthy-lifespans”Provide experiencewith operating brick-and-mortarBusinesses 【Primary Business】Provision of core-systems cloud services and platform-based auxiliary services to the medical care, long-term care, and childcare industriesBtoBBtoCManagement ResourcesProvide IT / DT experience 【Strengths】・Strong network of municipal governments, medical 【Clients】・ Municipalities/associations, and clinics ・Strong network of long-term care facilities and home-visit-care providers・Technical prowess in developing cloud systems/ICTMedical Associations・ Medical providers / long-term care providersBtoG【Primary Business】Operation of Urban FIT24 (24-hour ・fitness gyms) / Franchise BusinessBusiness Synergies【Strengths】・・QualityPrice・Equipment・・24-hour fitness【Clients】Consumers【Primary Business】・Develop net-based systems specialized in the medical care, long-term care, and childcare industries【Strengths】【Clients】・ Systems Development・ Capitalize on China’s high-quality talent pool・Kanamic Network GroupBtoCKanamic (Dalian China) Technology Co., Ltd.BtoBProvide Technical Prowess in Systems Development copyright ©Kanamic Network Co., Ltd All Rights Reserved.314-13. Financial TargetsMedium-term Management Plan■3-year growth targets (FY 2022 – FY 2024)The effect of the acquisition of the shares of Urban Fit Co., Ltd. on the Company’s consolidated financial results for FY 2022 is expected to be minor. However, this acquisition aligns with the Group’s medium-term management plan (FY 2022-2024) which calls for expansion into brick-and-mortar businesses via M&A as part of the Group’s vision to engage in business that extends the “healthy-lifespan”. The Group has judged, moreover, that this acquisition will provide a major driving force in delivering high-added-value services as a healthcare / health technology company.＝Net Sales＝Operating ＝EBITDAProfit2,080 2,350 2,800 841 977 1,130 930 1,400 1,150 5,300 M&A【Reference】3,300 2,100 1,700 1,800 1,500 5,0004,0003,0002,0001,0000FY2021（Prev FY）FY2022（Current FY）FY2023FY2024（with M&A）FY2024（without M&A）（Unit: 1 million yen）FY2021（Prev FY） FY2022（Current FY）FY2023FY2024 (with M&A)FY2024 (without M&A)ActualYoYTargetYoYTargetYoYTargetYoYTargetYoYNet Sales2,080 110.6%2,350 112.9%2,800 119.1%5,300 189.3%3,300 117.9%Operating Profit841 128.6%930 110.5%1,150 123.7%1,700 147.8%1,500 130.4%EBITDA977 123.8%1,130 115.6%1,400 123.9%2,100 150.0%1,800 128.6%copyright ©Kanamic Network Co., Ltd All Rights Reserved.32Neither Kanamic Network nor any of its applicable affiliates makes any representations or warranties, express or implied, as to the accuracy or completeness of the information in this presentation (this “Presentation “), other than the historical financial performance set forth herein. The Presentation speaks as of the date hereof. Kanamic Network and its respective affiliates, members, partners, stock holders, managers, directors, officers, employees and agents do not have any obligation to update any part of this Presentation.This presentation contains forecast / forward looking statements. These statements are based on information that is available to the Company, as well as certain assumptions that are deemed to be reasonable, and we make no promise that such statements will prove to be correct. Actual results may differ materially due to a variety of factors.copyright ©Kanamic Network Co., Ltd All Rights Reserved.33