アドバンテッジリスクマネジメント（8769） – [Delayed]Financial Results Briefing Materials for FY2021(Fiscal Year Ended March 31, 2022)

Financial Results Briefing Materials for FY2021(Fiscal Year Ended March 31, 2022)ADVANTAGE Risk Management Co., Ltd.[Securities code: 8769 TSE Prime Market]May 13, 2022AGENDA0102Overview of Financial ResultsState of Each Business(1) Mental Health Management Service(2) Health and Productivity Management Service(3) LTD Service (Long Term Disability)(4) Work-Life Balance Support Service(5) Risk Financing Service03 Financial Results Outlook for FY2022Topics0405Progress of Medium-term Management Plan©2022 Advantage Risk Management201 Overview of Financial Results©2022 Advantage Risk Management3Overall Business ResultsNet sales of 5,792 million yen: Increased by 339 million yen YoY (% change +6.2%)Investments for achieving the Medium-term Management Plan were made as planned.Ordinary profit of 362 million yen: Decreased by 368 million yen YoYFY2020FY2021YoY(Millions of yen)ResultsResultsChange% ChangeComponent of net sales(%)Component of net sales(%)Net sales5,452 -5,792 -+339 +6.2% Gross profit4,256 78.1% 4,273 73.8% +17 +0.4% Operating profit726 13.3% 352 6.1% -375 -51.5% Ordinary profit730 13.4% 362 6.3% -368 -50.3% Profit attributable to owners of parent496 9.1% 201 3.5% -295 -59.3% * Loss on valuation of investment securities of 46 million yen was recorded in extraordinary losses.©2022 Advantage Risk Management4Net Sales – Trends (1)(Millions of yen)6,0005,0004,0003,0002,0001,00003,964 370 806 2,787 +6.2%+3.6%5,263 335 989 5,452 338 1,089 5,792 327 1,147 4,897 340 930 4,482 358 848 3,275 3,625 3,938 4,024 4,317 Net sales increased by 6.2% YoY despite falling short of the initial planNet sales increased YoY, although slowdown of sales activities mainly due to an increase in workload for the transition to the new ADVANTAGE TOUGHNESS system, and the impact of the COVID-19 pandemic such as people in charge at client HR departments prioritizing workplace vaccinations during 1H, led to net sales for the full year also falling short of the initial plan.FY2016FY2017FY2018FY2019FY2020FY2021Mental Health Management ServiceDisability Support ServiceRisk Financing Service©2022 Advantage Risk Management5Net Sales – Trends by Quarter(Millions of yen)Net sales grew in 4Q (January to March) for all servicesNet sales increased albeit falling short of the initial plan, as the LTD Service, which carried significant weight in 2H, as well as ADVANTAGE INSIGHT, EQ assessments for recruitment, of the Mental Health Management Service posting robust results; the Health and Productivity Management Service also continued to grow.In addition, the previously-delayed adoption of ADVANTAGE HARMONY made progress, with 4Q results performing strongly as a result.FY2018FY2019FY2020FY2021©2022 Advantage Risk Management6Trends in Mental Health Management Users and LTD SubscribersMental health management users: approx. 2,870 thousand, LTD subscribers: approx. 760 thousand(Ten thousands of persons)Robust increaseNote: The above figures do not represent the number of unique subscribers, because mandatory LTD subscribers and non-mandatory LTD subscribers are counted separately.The totals are calculated by simply adding the number of LTD subscribers and the number of mental health management users, and thus include some overlap.©2022 Advantage Risk Management7Trends in Operating Profit(Millions of yen)Investments made as plannedOperating profit decreased YoYSystem-related expenses increased due to improvement of existing main services, such as ADVANTAGE TOUGHNESS and ADVANTAGE HARMONY, working toward achieving the Medium-term Management Plan.In addition, costs increases from hiring employees to prepare for future growth and making investment in development of other new systems generally progressed as planned. These factors combined with net sales falling short of the initial plan led to a decline in profit.Note: Operating profit for each segment is the reportable segment profit for financial accounting purposes after allocating corporate expenses (*) on a certain basis such as the share of each reportable segment in net sales.(*) Mainly selling, general and administrative expenses for administrative and other departments that do not belong to any reportable segment©2022 Advantage Risk Management8Trends in Expenses(Millions of yen)©2022 Advantage Risk ManagementOthersMarketing costsSystem-related expensesPersonnel expensesCarried out various measures to enhance competitivenessExpenses increased YoYEnhancing human resourcesAdoption of ESOP to increase corporate value over the medium to long term, hiring of IT personnel for advancing various development projects necessary to achieve the Medium-term Management Plan, and hiring of employees to expand each serviceEnhancing productsIncurring transition expenses associated with system renewals for existing main services including ADVANTAGE TOUGHNESS, expenses for doubling up with the former system, and amortization expenses after starting operation of the new systemEnhancing marketingMore active promotion programs including TV commercials and taxi advertisements and sales promotion programs9System-related Expenses(Millions of yen)Amortization of softwareSystem maintenance costs+158+79-62Amortization of software and system maintenance costsIn addition to incurring amortization expenses associated with the system renewal for ADVANTAGE TOUGHNESS and improvement of existing main services including ADVANTAGE HARMONY as well as system maintenance costs, transition expenses and one-off costs for FY2021 from overlapping operation of the former system (88 million yen) continued to be incurred.Moreover, health checkup system usage fees increased due to increased sales of the Health and Productivity Management Service, and amortization expenses and system maintenance costs for new services including ADVANTAGE pdCa and ADVANTAGE Well-being DXP were incurred.On the other hand, amortization expenses for the former ADVANTAGE TOUGHNESS and transition expenses for HARMONY decreased.15088One-off costs©2022 Advantage Risk Management10Financial Position and State of Cash FlowsCash outflows from investing activities increased mainly due to the purchase of investment securities of 1,186 million yen for the purpose of expansion into the BtoBtoE field and formation of capital and business alliances as well as the purchase of intangible assets such as software of 954 million yen associated with system development. Free cash flow was an outflow of 1,569 million yen.Cash flows from financing activities amounted to an outflow of 469 million yen mainly due to the purchase of treasury shares following the adoption of J-ESOP.Financial position (Millions of yen)* Figures in parentheses are changes from the end of the previous fiscal yearCash flowsTotal assets5,678(-187)Liabilities2,253(+79)Net assets3,425(-266)(Millions of yen)FY2020FY2021 DifferenceOperating CFInvesting CF712578-133(772)(2,148)-1,375Free CF(60)(1,569)-1,508Financing CF(166)(469)-303©2022 Advantage Risk Management1102 State of Each Business(1) Mental Health Management Service(2) Health and Productivity Management Service(3) LTD Service(4) Work-Life Balance Support Service(5) Risk Financing Service©2022 Advantage Risk Management12Summary of State of Each BusinessBusinessState of FY2021 (fiscal year ended March 31, 2022)Mental Health Management ServiceHealth and Productivity Management ServiceLTD ServiceWork-Life Balance Support ServiceNew initiatives for future growth©2022 Advantage Risk Management• Results significantly fell short of the initial plan due to setbacks in sales activities from the workload for the transition associated with a system renewal of ADVANTAGE TOUGHNESS in 1H and a delay in reorganizing the sales structure. Solution sales grew in 4Q, showing signs of recovery. Full-year results were largely unchanged YoY.• Buoyed by market tailwinds, the health checkup system and occupational physician / health nurse service both continued to grow with an increase of 37% YoY, although the number of new contracts acquired was fewer than the initial plan.• Net sales increased by 4.5% YoY as projects in the pipeline were steadily accumulated with greatly increased prospects of large projects, despite falling short of the initial plan mainly due to lost orders.• Adoption was significantly delayed from the plan largely due to the impact of the COVID-19 pandemic on • The number of companies that executed contracts for or decided to adopt ADVANTAGE HARMONY sales activities.increased toward the end of the fiscal year.• We updated the system by adding functions for solving and addressing issues faced by corporate HR and labor relations staff in line with the amendments to the Childcare and Caregiver Leave Act coming into effect in stages from April.• We released ADVANTAGE Well-being DXP Phases 1.0 and 1.5 and ADVANTAGE pdCa for pulse surveys*.• The number of companies deciding or considering adoption of multiple services increased due to comprehensive proposals centered around ADVANTAGE Well-being DXP.• Through partnership with RESOL LIFE SUPPORT CO., LTD., we launched sales of ADVANTAGE WellGage, our unique package service selling benefits and welfare services as a set.* Pulse survey is a survey method in which simple surveys are conducted repeatedly over a short period of time.13(1) Mental Health Management Service – Business ResultsNote: Operating profit is the reportable segment profit for financial accounting purposes after allocating corporate expenses (*) on a certain basis such as the share of each business in net sales and number of staff.(*) Mainly selling, general and administrative expenses for administrative and other departments that do not belong to any reportable segmentNet salesSegment profit / Operating profit(Millions of yen)(Millions of yen)⚫ Costs were incurred as planned, including Net sales slightly increased by 3.1% YoY, falling short of the initial plan⚫ Net sales remained almost flat YoY. Sales activities slowed down mainly due to workload for the transition associated with a system renewal of ADVANTAGE TOUGHNESS in 1H. Solution sales were on a recovery trend in 4Q, but have yet to fully recover. Net sales were significantly below the initial plan.development costs associated with the system renewal of ADVANTAGE TOUGHNESS, the impact of operation expenses for both new and former systems, and increased personnel expenses from more active hiring. As a result, profit declined with a significant YoY increase in expenses.©2022 Advantage Risk Management14(Millions of yen)FY2020FY2021YoY changeNet sales3,534 3,643 +3.1%Expenses2,650 3,010 +13.6%Segment profit884 633 -28.4% Operating profit485 210 -56.7% (1) Mental Health Management Service – Sales Trends by Product• Sales of the main TOUGHNESS system remained almost flat. Newly acquired contracts increased YoY, but not enough contracts • Solution sales recovered (increased) in 2H, although sales activities were affected by increased workload for the system transition in 1Q were acquired and some were lost.and 2Q.(Millions of yen)Note: Figures in parentheses are totals excluding the Other category.Note: Figures in parentheses are totals excluding the Other category.+3.1%(Millions of yen)©2022 Advantage Risk ManagementFY2019FY2020FY202115(1) Mental Health Management Service – Breakdown of Solution Sales• Sales were significantly lower than the plan, partly due to increased workload for the system transition continued from 1H. 4Q performed strongly and full-year sales increased by 9.1% YoY, but are still midway toward recovery.•INSIGHT (aptitude tests) recovered with an increase of 29 million yen YoY for the full year, but EQ-related solutions sales were sluggish. We are planning a renewal of the EQI system in FY2022.(Millions of yen)(Millions of yen)+9.8%©2022 Advantage Risk ManagementFY2019FY2020FY202116(1) Mental Health Management Service – Trends in Solution Add-on RateSolution add-on rate: 20.5%Midway toward recoverySolution add-on rate declined in FY2020 due to the impact of the pandemic. Despite increased demand in FY2021 for post-stress checkup solutions, we are still midway toward recovery partly due to the impact of increased workload for the system transition continuing from 1H.Note: TOUGHNESS client companies are based on the number of counterparties on contract.Not all companies that we provide service to are included (e.g., group companies).©2022 Advantage Risk Management17(1) Mental Health Management Service – Trends in Number of Training Sessions Provided• Recovered from FY2020, when the impact of the COVID-19 pandemic hit. With online training taking hold, the number of training sessions increased.(Number of sessions)(Number of sessions)FY2019FY2020FY2021©2022 Advantage Risk Management18(2) Health and Productivity Management Service – Business ResultsNote: Operating profit is the reportable segment profit for financial accounting purposes after allocating corporate expenses (*) on a certain basis such as the share of each business in net sales and number of staff.(*) Mainly selling, general and administrative expenses for administrative and other departments that do not belong to any reportable segmentNet salesSegment profit / Operating profit(Millions of yen)(Millions of yen)Kept strong growth in net saleswith an increase of 37.3% YoYalbeit below the initial plan⚫ The health checkup system and the occupational physician / health nurse service both kept growing, although acquisition of new contracts fell short of the initial plan.⚫ Tailwinds continue in the market, backed by corporate demand for promotion of health and productivity management and the trend to digitalize health checkup results. The number of inquiries continued to increase for physically minded health seminars as well (including lifestyle, smoking, and sleep). ©2022 Advantage Risk Management19(Millions of yen)FY2020FY2021YoY changeNet sales490 673 +37.3%Expenses475 645 +35.8%Segment profit15 28 +86.7%Operating profit(32)(38)-(2) Health and Productivity Management Service – Sales Trends by ProductSales of the health checkup management system grew substantially, and performance of the occupational physician / health nurse service was also robust.Occupational physician / health nurse serviceHealth checkup system (usage fees)Health checkup system (temporary sales incl. initial expenses)Others (e.g. solutions)+37.3% YoYHealth checkup system+157% YoY(54)(24)(8)Occupational physician / health nurse+18% YoYFY2019FY2020FY2021FY2019FY2020FY2021Occupational physician / health nurse serviceOthers (e.g. solutions)Health checkup management system©2022 Advantage Risk ManagementNote: Figures in parentheses for health checkup management system are temporary sales such as initial registration fees, which are included in the corresponding primary figures.20(2) Health and Productivity Management Service – Trends in Number of Client Companies and Offices for Occupational Physician / Health Nurse Referral Service(Number of entities)+20% YoYBoth number of client companies and number of client officesincreased steadily at +20% YoY©2022 Advantage Risk Management21(2) Health and Productivity Management Service – Health Checkup System Add on Rates andOccupational Physician / Health Nurse Service Add on RatesAdd-on rates on ADVANTAGE TOUGHNESS. Continuously increasing albeit slowly.Adding on the occupational physician / health nurse service after stress checkups remains robust.Health checkup system add-on ratesOccupational physician / health nurse service add-on ratesNote: Health checkup system add-on rate = number of companies that adopted health checkup system (with TOUGHNESS) / number of companies that adopted ADVANTAGE TOUGHNESSNote: Occupational physician / health nurse service add-on rate = number of companies that adopted occupational physician / health nurse service (with TOUGHNESS) / number of companies that adopted ADVANTAGE TOUGHNESS©2022 Advantage Risk Management22(3) LTD Service – Business ResultsNote: Operating profit is the reportable segment profit for financial accounting purposes after allocating corporate expenses (*) on a certain basis such as the share of each business in net sales and number of staff.(*) Mainly selling, general and administrative expenses for administrative and other departments that do not belong to any reportable segmentNet salesSegment profit / Operating profit(Millions of yen)(Millions of yen)Net sales increased by 4.5% YoY albeit below the initial plan⚫ Net sales increased YoY, but fell short of the initial plan. This was because of negative factors such as some clients reducing employees and cutting costs due to the COVID-19 pandemic, as well as start of contracts from new acquisitions getting postponed to the next fiscal year.⚫ The market remains favorable. The pipeline is stronger with prospective large projects, and is expected to remain robust.©2022 Advantage Risk Management23(Millions of yen)FY2020FY2021YoY changeNet sales1,012 1,058 +4.5%Expenses645 714 +10.7%Segment profit366 343 -6.3% Operating profit249 213 -14.5% (3) LTD Service – Sales Trends(Millions of yen)System startup delayed in new-client salesSame-client sales decreased due to COVID-19➢ The number of prospective clients is increasing remarkably, but some companies, particularly large companies, pushed back the timing of system startup more than expected, leading to postponements until FY2022. As a result, sales to new clients declined. ➢ Same-client sales decreased by 21 million yen. Some contracts were lost as companies cut costs amid the pandemic, and subscribers decreased as there were fewer employees.(-11 YoY)(-21 YoY)Note: YoY change of same-client sales = same-client sales for FY2021 – (same-client sales for FY2020 + Note: Other comprises revenue other than agent fees, including insurance outsourcing fees and collection new-client sales for FY2020)and administrative service fees.©2022 Advantage Risk Management24(4) Work-Life Balance Support Service – Business ResultsNote: Operating profit is the reportable segment profit for financial accounting purposes after allocating corporate expenses (*) on a certain basis such as the share of each business in net sales and number of staff.(*) Mainly selling, general and administrative expenses for administrative and other departments that do not belong to any reportable segmentNet salesSegment profit / Operating profit(Millions of yen)(Millions of yen)©2022 Advantage Risk ManagementNumber of new contracts increased from 4Q, but significantly less than the initial plan⚫ On the sales side for FY2021, the number of new contracts fell significantly short of the initial plan, because of delayed sales activities mainly due to HR departments of client companies prioritizing workplace COVID-19 vaccinations from 1H. Although sales were pushed back, the number of new contracts in 4Q increased with still more in the pipeline.⚫ As for expenses, amortization expenses associated with the renewal as well as personnel expenses and marketing costs increased ahead of business expansion. Updates in line with the amendments to the Childcare and Caregiver Leave Act and other development projects were carried out as planned.25(Millions of yen)FY2020FY2021YoY changeNet sales77 89 +15.6%Expenses280 325 +16.1%Segment profit(203)(236)-Operating profit(221)(258)-(4) Work-Life Balance Support Service – Adoption of ADVANTAGE HARMONY(Millions of yen)Sales (usage fees)Sales (temporary sales incl. initial adoption costs)Number of clients(Number of companies)Handshake deals64 clients52 clientsHeavily delayed, butnumber of client companies increased to 52Renewed to a new service in January 2021.Sales activities for new adoption slowed down due to the pandemic and were heavily delayed from the plan. However, the number of client companies increased from 4Q onward.We have handshake deals with 12 clients that have decided to adopt the service in FY2022.End of FY2019End of FY2020End of FY20210 clients1 client12 clientsNumber of handshake deals at the end of fiscal year (adoption in the next fiscal year)FY2019FY2020FY2021FY2022©2022 Advantage Risk Management26(4) Work-Life Balance Support Service – Added New Functions to ADVANTAGE HARMONYWe updated the system by adding functions to address the amendments to the Childcare and Caregiver Leave Act coming into effect in stages from April 2022. We are helping HR and labor relations staff to solve issues such s “establishing an environment for taking childcare leave” d “more complex management due to splitting childcare leave into multiple periods.”Amended Childcare and Caregiver Leave Act comes into effect in stages from April 2022Establishing an environment for taking childcare leave, providing information, and ch ck l y s’ w sh s become mandatoryPrerequisites for fixed-term workers to be eligible for childcare and caregiver leave are relaxed→1+ year of continued employment no longer requiredAllows childcare leave to be split into multiple periodsCreating a framework on childcare leave for male workers shortly after a baby is born→Allows workers to flexibly take childcare leave shortly after a baby is born→Disclosure on the state of childcare leave taken becomes mandatory©2022 Advantage Risk ManagementADVANTAGE HARMONY will simultaneously enable administrative streamlining and work-life balance support for childcare!Totally paperless leave managementManage leave of absence schedule and history, and handle everything from receiving childcare leave applications to notifying agreements and taking care of social security paperwork all in one place; compatible with online applications.Connected via communicationFacilitate communication with employees on leave through My PageCheck the work being done with To Do listsAutomatically generate To Do lists and send alerts according to each application periodCompliant with mandatory Individual notices and intent confirmationsCapable of confirming the wishes of every eligible individual, providing various training sessions, and establishing consultation contact points27(5) Risk Financing Service – Business ResultsGenerally as plannedNote: Operating profit is the reportable segment profit for financial accounting purposes after allocating corporate expenses (*) on a certain basis such as the share of each business in net sales and number of staff.(*) Mainly selling, general and administrative expenses for administrative and other departments that do not belong to any reportable segmentNet salesSegment profit / Operating profit(Millions of yen)(Millions of yen)©2022 Advantage Risk Management28(Millions of yen)FY2020FY2021YoY changeNet sales338 327 -3.3% Expenses67 71 +6.0%Segment profit270 255 -5.6% Operating profit242 225 -7.0% 03 Financial Results Outlook for FY2022©2022 Advantage Risk Management29Full-year Financial Results Outlook for FY2022FY2022: Net sales of 6,640 million yen (+14.6%) and ordinary profit of 600 million yen (+65.4%)©2022 Advantage Risk Management30Fiscal year ended March 31, 2021Fiscal year endedMarch 31, 2022YoY change(Millions of yen)AmountComponent of net salesAmountComponent of net salesChange% ChangeNet sales5,792 100.0% 6,640 100.0% +847 +14.6% Mental Health Management Service3,643 62.9% 3,921 59.1% +277 +7.6% Health and Productivity Management Service673 11.6% 874 13.2% +200 +29.7% LTD Service1,058 18.3% 1,257 18.9% +198 +18.8% Work-Life Balance Support Service89 1.5% 266 4.0% +176 +197.4% Risk Financing Service327 5.6% 322 4.8% -5 -1.6% Operating profit352 6.1% 600 9.0% +247 +70.1% Ordinary profit362 6.3% 600 9.0% +237 +65.4% Profit attributable to owners of parent201 3.5% 400 6.0% +198 +98.2% Full-year Financial Results Outlook for FY2022• We will make significant progress in the rollout of ADVANTAGE Well-being DXP we have been working on and account-based sales through comprehensive sales with DXP at the core, to further advance business activities based on the Medium-term Management Plan 2023.• We will maintain a certain level of growth investments, but unlike FY2021, a gap between investment and its return is not expected. Profit margin is expected to improve rapidly as we increase the top line, especially from recurring revenue, with the effects of investment.(Millions of yen)Net salesOperating profitGrowth rateOperating profit margin(Sales growth rate)(Operating profit margin)Expansion from stress checkups becoming mandatoryStable phaseActive investment phaseInvestment return phase / growth with revenueRelease of new HARMONY●Release of revamped TOUGHNESS●Release of DXP Phase 1.0●Release of DXP Phase 1.5●Release of ADVANTAGE pdCa●● Release of eRework● Addition of new functions to HARMONY● Release of revamped EQI● Release of DXP Phase 2.0● Release of ADVANTAGE WellGageCapital and business alliance with ●RESOL LIFE SUPPORT CO., LTD. ● Capital and business alliance with Wellness Communications Corporation©2022 Advantage Risk Management3104 Topics©2022 Advantage Risk Management32Topics – Topics on Health and Productivity Management (1/3)To ensure the well-being of employees, we have worked on health and productivity management.Having established the “health checkup anomaly observance rate” and the “proportion of productivity lost owing topresenteeism” as KPIs, we are carrying out a variety of programs with the idea that improving the four indicators of “exercise ”“eating ” “sleep ” and “non-smoking” particularly lead to better KPI figures.The entire group, as “ALL ADVANTAGE ” worked on various measures and strived for inclusion in the Health & ProductivityStock Selection by utilizing our own services and incorporating advice from internal experts.[Using our own systems in health and productivity management]□ ADVANTAGE Well-being DXPA data management platform for consolidating and visualizing HR and labor relations information such as l y s’ hys c l d l h l h d d c d l v bs c . W h k y cus ADVANTAGE TOUGHNESS results, identified trends by cross-referencing with other items such as work hours.Used to streamline various surveys including the Survey on Health and Productivity Management and the preparation of other documents.Administrative workload on compiling information was reduced, allowing staff to focus more on examining and implementing programs.□ ADVANTAGE TOUGHNESS for stress checkups / engagement surveysM su s d v su l z s ly s ss c d s h c uld s sk bu ls “ ” h d c ly c bu s v duc v y s w ll s “ l s l cy ” wh ch s u y d c s the capacity to cope with stress. We conduct surveys twice a year, beyond the legal requirement of once a year. By capturing how our organizational and workplace environments are changing, we ensure we can address issues faster.□ Health Checkup Results Management SystemSystemize and digitalize the overall work process including health checkup appointments, management of results, and coordination with occupational health staff. We were able to create more time for programs and measures by shortening time required to collect and compile various data.©2022 Advantage Risk Management33Topics – Topics on Health and Productivity Management (2/3)Selected under the 2022 Health & Productivity Stock SelectionRecognized as a 2022 Certified Health & Productivity Management Outstanding Organization (large enterprise category, White 500)In March 2022, the Company was selected for the first time under the 2022 Health & Productivity Stock Selection, a joint program of the Ministry of Economy, Trade and Industry and the Tokyo Stock Exchange.The Company was also recognized as a 2022 Certified Health & Productivity Management Outstanding Organization (large enterprise category, White 500; recognized for five consecutive years).©2022 Advantage Risk Management34Topics – Topics on Health and Productivity Management (3/3)◼ The Company’s Health and Productivity Management Promotion Policy (Health and Productivity Management Declaration) and Promotion SystemsAt ADVANTAGE Risk Management Co., Ltd. and our Group companies, we believe that employees continuing to live healthily and work with a sense of well-being is the most important foundation for the long-lasting happiness of employees and their families as well as increased energy within the company. We declare that we will focus all our efforts on making this a reality and strive to achieve this goal at a higher level. W ls b l v h h c l y s’ h l h d v l y w ll h l us ch v u c ss “c well-b c s ” s w ll s u c ss “b w s d d w ll-being to the u u c s!” d h s c bu enhancing the value we offer to customers. Th u h h “w ll-b ” l y s w w ll w k w h h c u y c “ v s wh l c w k w h c d” d c s wh “ d v du ls d s h v v l y.”Health and Productivity Management OfficePersons responsible for business sites and promotersPerson responsible for health and productivity management(Chief Executive Officer and Representative Director)Health Committee members©2022 Advantage Risk Management3505 Progress of Medium-term Management Plan©2022 Advantage Risk Management36Understanding of Business EnvironmentTrends in Japan regarding human capital management•There is an increased interest “hu c l ” practice to achieve sustainable increase in corporate value by regarding human resources as “c l”Oct. 2017Sep. 2020METI published Ito Review 2.0From the perspective of improving earning power, emphasized the importance of intangible assets (e.g., human resources, technologies and branding) and non-financial information, which is the main focus of ESG investmentMETI published Ito Review: Human Resource EditionProposed the 3P/5F Model, a human resource strategy that leads to improving corporate valueJun. 2021TSE revised Japan’s Corporate Governance CodeIncluded matters on disclosure of human capital• Backed by the national government, a corporate trend toward disclosing human capital information is acceleratingMar. 2022Jun. 2022METI published Ito Review 2.0: Human Resource Edition (draft)Presented specific initiatives and effective methods based on deeper researchCabinet decision by the Kishida cabinet (planned)Guidelines on visualizing non-financial information are planned to be determined and announced©2022 Advantage Risk Management37Understanding of Business EnvironmentTrends outside of Japan regarding disclosure of human capital information• Europe and the U.S. are ahead of Japan in terms of disclosing human capital information•In Europe and the U.S., moves toward disclosing human capital information were active since before the COVID-19 pandemicEurope2014Under the Non-Financial Reporting Directive, the EU mandated disclosure of information including “social matters and treatment of employees” (scope of companies with 500 or more employees)ISO compiled guidelines for internal and external human capital reporting (ISO30414) regarding human resource managementEU published a proposal for the revised Non-Financial Reporting Directive (extends the scope and specify information to be disclosed) 20192021U.S.2019The Sustainability Accounting Standards Board published the Revised SASB Standards (requires disclosure of important items in the human capital domain)2020U.S. Securities and Exchange Commission mandated disclosure of information on human capital (revision to the Regulation S-K)©2022 Advantage Risk Management38Overseas, corporate boards are emphasizing “people” as a priority issue for Understanding of Business EnvironmentPriority issues at companies outside of Japan• Overseas companies are placing an emphasis on human capital as a management issue•The Company’s services correspond to:Board and/or workforce DEI*Human capital managementBoard and/or workforce DEIPandemic response and recoveryHuman capital management (e.g., workforce strategies/ wellness/wellbeing/welfare)Climate and other environmental and sustainability mattersBusiness continuity and crisis managementCorporate social purpose/ corporate culture* DEI: Diversity, Equity, and Inclusion( u c ) D l “B d P c c s Qu ly – b d d ” (Publ sh d b u y ) u c : METI “B u v y Hu C l M ”©2022 Advantage Risk Management39Understanding of Business EnvironmentGap between state of disclosures by companies and investors’ disclosure needs•There is a gap between the disclosure needs expressed by investors and the state of disclosures by companies regarding human capital-related information.State of practicing health and productivity managementIndividual health outcomesWork performance•The Company’s services correspond to many of these d scl su s by c s (Th u v y H l h d P duc v y M Q 9. Q3. “D scl su s c u l ures ch d c ”) (n=2,449)N ds v s s (Qu s u v y I s u l I v s s Q “D ls h sh uld b d scl s d ss ss health and productivity management) (n=16)Blue dotted lines indicate survey responses “ su d bu d scl s d”lempoyeespersonnelprogramhours)iiRate of recevng stress checkupsiirecevng period health checkupsRate of recevng detaiiiled exams after iiRate of recevng periodc health checkupsiiParticpation in programs for hgh-risk iiParticpation in programs wdey offered to illEmpoyee satisfaction on eachState of work hours (e.g. overtime(e.g. ratio of smokers)Health checkup intervewi results (rate of continung treatment)iiManagement of hgh-risk personnel lE y s’ h l h l cyHealth checkup results l(e.g. anomay observance rate)ijnuries and illnessesLeave of absence due to Retirements and resgnations iil(incudng average years of service)PresenteesmiAbsenteesmiWork engagementStress checkup results z ’s h l h d productivity management practiceIndividual health outcomesWork performanceSource: Materials for the fourth meeting of the Health Investment Working Group of the Healthcare and Medical Care New Industrial Council (December 1, 2021)©2022 Advantage Risk Management40Progress of Medium-term Management Plan – Company-wide Focus ThemesAim to become the number one platform provider in the well-being market with the company-wide focus themes as the foundationDevelop DX platformsReleased ADVANTAGE Well-being DXPEnter the BtoBtoE fieldFormed a capital alliance with RESOL LIFE SUPPORTCO., LTD.3Accelerate capital alliances and open innovationEstablished a corporate venture capital function2514Accelerate growthfoundation for growthStrengthen theEnhance human resource development /promote health and productivitymanagementBecome a trailblazer in health and productivity management with high engagementEnhance IT capabilitiesEstablished DX Division responsible for planning,development, and IT control©2022 Advantage Risk Management41Progress of Medium-term Management Plan – Company-wide Focus ThemesToward achievement of the Medium-term Management Plan, made a progress in creating a foundation in line with focus themesCompany-wide focus themesFY2021FY20221. Develop DX platformsPhase 1.0 (Dashboard function for HR and frontline operation staff, etc.)2. Enter the BtoBtoE fieldCapital and business alliance with RESOL LIFE SUPPORT CO., LTD.ADVANTAGE WellGagePhase 1.5 (Dashboard function for employees)Phase 1.5 (cross analysis function)ADVANTAGE pdCaPhase 2.0Expand cross analysis, support for formulating action plansPhase 2.0Expand dashboard function for employees3. Accelerate capital alliances and open innovationCapital and business alliance with RESOL LIFE SUPPORT CO., LTD.Capital and business alliance with Wellness Communications CorporationIntegration with third-party systems*©2022 Advantage Risk Management*Integrated with Human Technologies, Inc. and exploring system integration opportunities with other companies42Progress of Medium-term Management Plan – 1. Develop DX PlatformsProvide support for promotion of human capital management and initiatives of individual employeeswith ADVANTAGE Well-being DXPEmployee sideCompany sideIncrease employee well-beingIncrease employee happinessIncreaseengagementIncreasecorporatevalueIncreaseproductivity,increaseretention,promote hiring©2022 Advantage Risk Management43Progress of Medium-term Management Plan – 1. Develop DX PlatformsADVANTAGE Well-being DXPBasic concept• Provide support for implementation of PDCA from integrating key HR data to identifying and solving issues• Comprehensively cover subjective and objective data* that forms the foundation for human capital management• Enable performance improvements from both fronts of organizational measures and self-management by employees themselves* Subjective data: Stress checkups, engagement surveys, pulse surveysObjective data: Health checkup database, data related to employees on leave and reinstated employees, attendance data, etc.HR and labor dataHR and labor databaseStress checkupsEngagement surveysHealth checkup resultsData on employees on leavePulse surveysExternal data sourcesAttendance dataCan connect with external toolsDMP&dashboardFor HR and labor personnelFor occupational health staffFor employeesOrganization / employeesSolutionsHR / managementfrontline operation staffImprove individual and organizational performanceIndividual employeesSupport for employees’ well-being environmentSupport for self-management of well-beingCounselingTraining &e-learningOrganizationalconsultingSupport forleisure activitiesHealth supportWork-life balancesupport©2022 Advantage Risk ManagementPhysical health-related solutionsSupport for nursing care and childcareSelf-developmentMutual aid /risk coverage* Includes functions currently in development.44Progress of Medium-term Management Plan – 1. Develop DX PlatformsReleased in Phase 1.0HR dashboardStreamline aggregation and analysis of HR data• Collects scattered data to reduce time required for aggregation and analysis•Integrates various types of data to reveal essential issues, leading to discovery of appropriate solutions©2022 Advantage Risk Management45Progress of Medium-term Management Plan – 1. Develop DX PlatformsReleased in Phase 1.0Dashboard for frontline operation staffAssists with the tasks of line managers and occupational health staff• An alert is displayed when certain conditions such as overwork and health checkup results are detected• Employees’ health conditions and issues can be checked©2022 Advantage Risk Management* The above screen is for reference only and is subject to change due to ongoing development.46Progress of Medium-term Management Plan – 1. Develop DX PlatformsReleased in Phase 1.5Cross analysis functionData analysis based on the C y’s ss l x s • Conducts rich analysis based on professional expertise by utilizing a database with accumulated knowledge• Analysis specific to each enterprise’s needs can also be made©2022 Advantage Risk Management47Progress of Medium-term Management Plan – 1. Develop DX PlatformsPhase 2.0 to be released in summer 2022 Cross analysis functionAdditional analysis themes and more• Enables theme-based analysis from the HR dashboardHealth and productivity managementActive participation of women and seniorsIncrease retention• Enables all-in-one management from registration of issues identified in analysis reports to verification of results using pulse surveys©2022 Advantage Risk Management48Progress of Medium-term Management Plan – 1. Develop DX PlatformsReleased in Phase 1.5ADVANTAGE pdCaShort-cycle pulse surveys• Questions can be selected in accordance with targets and issues and each organization can confirm the current situation in an efficient, suitable manner• Actions can be advanced while checking results in a short cycle©2022 Advantage Risk Management49Progress of Medium-term Management Plan – 1. Develop DX PlatformsHow recommendation worksPhase 2.0 to be released in Summer 2022 Support for formulating action plansAutomatically recommend solutions• Make use of the Company’s expertise and knowledge in organizational improvements and health and productivity management fields• Automatically recommend programs that would be effective for each enterprise’s issuesCollect data on DXPAnalyze organizational issuesPropose solutions that would be effective©2022 Advantage Risk Management50Progress of Medium-term Management Plan – 2. Enter the BtoBtoE fieldPropose solutions to identified issues, optimized for individual employeesSolutions with a focus on companies (BtoB)Solutions for employees (BtoBtoE)ADVANTAGE HARMONYManagement view forHR and labor staffADVANTAGE TOUGHNESS, DXPADVANTAGE Healthcare, pulse surveysManagement view for HR andfrontline operation staffADVANTAGE TOUGHNESS DXPADVANTAGE HealthcareIndividual viewADVANTAGEHARMONYMy Page foremployees on leave andreinstated employeesADVANTAGE TOUGHNESSPulse surveysEngagement portionVarious datalEmpoyeesthe impactCompanies verifyHR / managementfrontline operation staffVarious solutionsCounselingTraininge-learningOrganizationalconsultingPhysical health-related solutionsSupport fornursing careand childcareIndividualemployeesExclusive website forbenefits and welfare service membersSupportfor leisureactivitiesHealthsupportWork-lifebalancesupportSelf-developmentMutualaid / riskcoverageVarious dataCompanieslSoutions©2022 Advantage Risk Managementconfirm the impactIndividual empoyeesl51Progress of Medium-term Management Plan – 2. Enter the BtoBtoE fieldReleased in Phase 1.5Dashboard for employeesAssists with actions of individual employees• Visualize each employee’s physical and mental conditions and issues based on various kinds of health data• Display a variety of content based on the visualized detailsAdvice for improvementsVideos to improve health literacyCounselingPartner services, etc.©2022 Advantage Risk Management52Progress of Medium-term Management Plan – 2. Enter the BtoBtoE fieldPhase 2.0 to be released in Summer 2022Dashboard for employeesProvide more comprehensive health information by adding lifestyle indicators• Provide comprehensive feedback on health-related informationMental healthLifestylePhysical healthOvertime hours, etc.• Offer support to induce employee’s own actions©2022 Advantage Risk Management53Progress of Medium-term Management Plan – 2. Enter the BtoBtoE fieldService launched in 2021Benefit and welfare serviceExpanded offerings that directly lead to employee productivity improvements• Benefit and welfare service for simultaneously achieving corporate productivity and employee well-being• Focus on expanding offerings related to health support, work-life balance support, and support for energetic activity of womenLeisureWork-life balance support(ex. nursing care andChildcare)Health and mental supportSupport for energeticactivity of women[Effective for work engagement]Well-being support typeemployee benefit outsourcingLife Support Clubש2022 Advantage Risk Management54Progress of Medium-term Management Plan – 2. Enter the BtoBtoE fieldService launched in April 2022ADVANTAGE WellGageNew benefit and welfare services for a new era• Provides services mainly targeting large enterprises to small and medium-sized enterprises• Directly leads to improving productivity, strengthening recruitment abilities, and increasing employee retentionImproving engagementBenefit and welfare package directly leading to improving productivity,strengthening recruitment abilities, and increasing employee retentionWork-life balance support(ex. nursing care andchildcare)Remove disincentives to workingSupport for working at the companywith a sense of securityLeisureHealth and mental support[Effective for work engagement][Effective for employee engagement]Support for energeticactivity of women(Group Long Term DisabilitySupplemental Income Insurance)Well-being support typeemployee benefit outsourcingDX PlatformRecommend benefit and welfare menus based on health data of each employee (planned)[Enabling visualization of engagement (work/employees)]Stress Checkupsש2022 Advantage Risk Management55Progress of Medium-term Management Plan – 3. Accelerate capital alliances and open innovationFurther strengthen functions of ADVANTAGE Well-being DXP through integration with third-party products and servicesIntegratedExploring system integration opportunitiesHealth managementCommunication tool*Health managementIntegrated HR systemBenefits and welfareTalent managementAttendance managementLabor management©2022 Advantage Risk Management*Microsoft Teams56Appendix©2022 Advantage Risk Management57Understanding of Business EnvironmentChanges in the environment surrounding companies• As the environment surrounding companies change drastically, required initiatives are becoming more diverse•Institutional investors in and outside Japan are increasingly emphasizing ESG for sustainable improvement of corporate value©2022 Advantage Risk Management<>Human resource / managementManagement of human resources. Operation- d. “C s ” h h “ v s .”Purpose of human resource managementHuman capital / value creationMake use of and grow human capital. Creation-oriented. C s d d “ v s ” with effects to be visualized.Human resourcesAimed at operating and improving various HR systems. Not in line with management strategies.HR departmentHR matters are left in the hands of HR departments.No attention paid to the link with management strategies.IntrovertiveHoarding-type HR with highly homogenous hiring community.ActionsInitiativeDirectionHuman resource strategiesAimed at sustainable improvement of corporate value.Formulate based on management strategies.Executives (SC) / Board of DirectorsExecutives (SC: CEO, CSO, CHRO, CFO, COO) take initiative in creating a link with management strategies. Monitored by the Board of Directors.Active dialogueHuman resource strategies are value creation stories.Actively send messages to and communicate with investors and employees.Mutually dependentCompanies hoard human resources and individuals depend on companies.Lack of innovation due to stagnant culture.Relationship betweenindividuals and organizationsIndividual autonomy / activationChoose each other and grow together.Incorporate diverse experiences to induce innovation.Hoarding-typeHoarding-type community with employment for life and seniority.Hiring communityRelationship to choose and be chosenDiverse and open community with expertise as the foundation.Source: Excerpt from Ito Review58©2022 Advantage Risk Management59DisclaimerPlans, outlook, strategies, and other forward -looking statements included in this material are based on information available to the Company and assumptions deemed reasonable by the Company as of the date of preparation of this material, and they contain various risks and uncertainties.Therefore, actual business results may differ significantly from these statements due to factors such as changes in the management environment, and there is no guarantee that the statements will be accurate.Furthermore, information about entities other than the Company and its group companies stated in this material is generally based on public information, and the Company makes no guarantees on its accuracy.©2022 Advantage Risk Management60