Change : Financial Results of the 3rd Quarter of Fiscal Year Ending September 2020

Financial Results of the 3rd Quarter of Fiscal Year Ending September 2020

CHANGE Inc.

Security Code: 3962

[Notes of caution] This document is an English translation of the Japanese original. In the event of any differences or inconsistencies between the Japanese and English versions, the Japanese language version shall take precedence.

Our mission

Change People, Change Business, Change Japan.

[Notes of caution] This document is an English translation of the Japanese original. In the event of any differences	‐ 1 ‐
or inconsistencies between the Japanese and English versions, the Japanese language version shall take precedence.

Our Issue

Change People, Change Business, Change Japan.

Now, here

Less than and equal 14

15 - 64 years

Higher than and equal 65 Aging ratio

Source："Table 1-1-1-1 Japan's population transition" White Paper Information and Communication in 2016 MIC http://www.soumu.go.jp/johotsusintokei/whitepaper/ja/h28/html/nc111110.html※based on data from the "Census" (MIC) until 2015 and the "forecasted population in Japan " (National Social Security and Population Problem Research Institute (2013 forecast)(median estimate for birth and death)

[Notes of caution] This document is an English translation of the Japanese original. In the event of any differences	‐ 2 ‐
or inconsistencies between the Japanese and English versions, the Japanese language version shall take precedence.

Our Vision

Changing Productivity

Human	x Tech
(Education & Training)	(NEW-IT)

[Notes of caution] This document is an English translation of the Japanese original. In the event of any differences	‐ 3 ‐
or inconsistencies between the Japanese and English versions, the Japanese language version shall take precedence.

Efforts for ESG

Our mission of "Productivity Innovation" is to change Japan sustainable. In considering long-term sustainability, the ESG perspective is essential.

Labor	Improving	Local	Maintaining
resource	aging
productivity	communities
inefficiency	infrastructure

Human resource	DX		Access to the	Region	Resilience to and
Traceability	recovery from
development	market	Creation
		natural disasters
	Governance			Governance

Optimizing	Eliminating	Stability and
evaluation
maturity of
information-gap
and reward
local companies

Sustainable

Local finance

ESG is the very center of the business theme we pursue.

We will change how to do business so that the business will be sustainable.

[Notes of caution] This document is an English translation of the Japanese original. In the event of any differences	‐ 4 ‐
or inconsistencies between the Japanese and English versions, the Japanese language version shall take precedence.

Efforts for ESG

~ [E] Local Production and Local Consumption of Electric Power and Donation of FIT Electric Power ~

We provide a system in which people can donate and consume electricity generated and not used in individual houses, such as photovoltaic power.

Usual

purchase for

surplus

electricity

House, etc.		Giant power companies		Nationwide users

Power sales (e.g. ¥7.0 /kWh)

Supply

Payment

House, etc.		ENECHO		Regional new power		Local users
		companies

Donation

through

"Enecho"

(energy choice)

Donation (¥0/kWh)

Gift Brokerage

• Contributing to the	• Zero cost procurement
community	• No need for individual
• Gift items (not cash)	payment operation

Supply

• Lowering electricity cost
• Enhancing environmental value
• Contributing to regional economy

[Notes of caution] This document is an English translation of the Japanese original. In the event of any differences	‐ 5 ‐
or inconsistencies between the Japanese and English versions, the Japanese language version shall take precedence.

Efforts for ESG

~ [E][S] Crowd-funding through Donations to Solve Community Issues ~

We provide frameworks to find solutions for issues in local communities through the power of people's empathy and donations.

Local governments become the main body for crowd- funding

Creating "projects" for approaching to the issues in local communities

More specify the "usage" of donations collected through hometown tax payment

system to "projects"

A system to collect donations from people who feel empathy to the project

Total donations (cumulative) Exceed 7.9 billion yen

Hokkaido

Furusato

Donation

"It's a yell to Northern Healthcare!"

北海道ふるさと寄附金 「今こそエールを北の医療へ!」

Reborn! Takashi Nagai Memorial, author of "The Bell of Hiroshima"

Okinawa's symbol "Shuri Castle" reconstruction support project

Protect Teuri Island, the world's largest seabird breeding site!

Set a world record in Tendo, the town of Shogi! 4000 people play at the same time! 2000 Games Project

Tawaramoto-cho (Nara) Mutual cooperation Japan Toilets that make everyone happy

Revive the bowls that collapsed in the Kumamoto earthquake by "patching with gold"!

Protect the nature of the damaged miracle island Shunkunitai and pass it on to future generations

Project to prepare for a power outage Protect the safety with solar power!

Support people who lost their homes. Ease the severe evacuation lives, like "sleep outdoors" "sleep in a car"…

Do not abandon children in any situation! "Place to stay" for children suffering from relationship poverty!

[Notes of caution] This document is an English translation of the Japanese original. In the event of any differences	‐ 6 ‐
or inconsistencies between the Japanese and English versions, the Japanese language version shall take precedence.

Efforts for ESG

~ [S] Smoothly Assisting Handicapped Passengers Getting On and Off the Train with the "Barrier-free app" ~

We created the app which streamlines station staff's assistance for handicapped passengers, enabling their smooth guidance without errors, which had been carried out by phone call in the past.

I want to go	Certainly
xx station

Boarding

station

Select destination

Let me lead the way

Read QR on the door

(Track the Door Position)

Exit

station

Arrival notice

Alarm

Automatic linkage

Stand ready at the specified time and the position

Welcome! I'm already

prepared.

[Notes of caution] This document is an English translation of the Japanese original. In the event of any differences	‐ 7 ‐
or inconsistencies between the Japanese and English versions, the Japanese language version shall take precedence.

Efforts for ESG

~ [S] Human resource development and comprehensive regional care in the Super-aging society ~

In the future, it will be difficult for many elderly people to be on their deathbed in the hospital. So, we will accumulate "nursing" knowledge and human resources doing the service to meet their needs for terminal-care in their homes and nursing care facilities.

What can you do for a person who is on one's deathbed?

Let's change from feeling awkward to having confidence for end-of-life

May everyone can feel, "I'm glad I've been alive."

May everyone can meet the end of their life with proud.

When there is someone who understands one's suffering, a person can be peaceful even on one's deathbed.

Everyone from children to the elderly may live calmly despite suffering.

Support each other.

Learn from each other through the community.

Create a sustainable co-exist society.			656	6,560+
					persons
			252	2,376+			40+
			persons	3503
	105			20+	persons
	291+	2334
	persons			159
		5	persons
	1358	89
568 persons	persons	10					656
			436
80		223
2015	2016		2017	2018

		Training of helpers
		Basic course
	Workshop	(in-house)
	Participant	2500 persons
12,894+ people
2074
persons	ELC
	Community
	50+ points	Training of helpers
4433
	Basic course
persons	ELC	(Open course)
	6500 persons
	Facilitator

257 persons

ELC

Assistant

927 persons

20192020

(Estimate)

treatment.

Japan is facing the super-aging society, in which many elderly people are supported by a small number of working-age population. As social resources become ubiquitous and people's bondages in local areas become scarce, more and more people will suffer in obscurity . Consequently, there are limits regarding what traditional social security systems can solve.

In particular, in the face of the suffering of people and their families who have reached the final stage of their lives, various measures have been taken so far, but the current situation is that no drastic solution has been reached. In the future, it will be difficult to to be in the hospital until the end, and it will be necessary to be at home or in nursing care facilities. In fact, the number of people who want to stay at home or in nursing care facilities is increasing, but not all hope will come true for the reasons of limited environment and resources. It is expected that there will be an increasing number of working generations who suffer for balancing work and home nursing care, as well as people who are less connected to the local community and have isolation and fears in their individual lives.

[Notes of caution] This document is an English translation of the Japanese original. In the event of any differences	‐ 8 ‐
or inconsistencies between the Japanese and English versions, the Japanese language version shall take precedence.

Efforts for ESG

~ [G] Full compliance to the Corporate Governance Code ~

In this FY, we will fully satisfy the four pending issues regarding the compliance matter in FY 2019.

English

Disclosure

Planning

Successor

Performance-

based

compensation

Valuation on

the board

effectiveness

Explain

Explain

Explain

Explain

FY2019

Although we already disclosed some of our financial statements in English, we did not disclose securities reports, convocation notices, or other disclosure documents in English.

We did not prepare a successor plan regarding CEO.

We have not adopted performance-based remuneration.

We did not regularly analyze and evaluate the board of directors.

FY2020

We will satisfy the requirements for English disclosure. We will translate and disclose the summary regarding

Comply the financial report,securities reports and the convocation notices in English as soon as possible after the release of the Japanese original.

We first describe our

Comply requirements (personality, quality, skills, etc.) for the successor before preparing it

We will introduce performance-

Comply based compensation since FY 2021.

We will implement evaluation

Comply on effectiveness of the board of directors.

[Notes of caution] This document is an English translation of the Japanese original. In the event of any differences	‐ 9 ‐
or inconsistencies between the Japanese and English versions, the Japanese language version shall take precedence.

3rd Quarter Overview

Future prospects

[Notes of caution] This document is an English translation of the Japanese original. In the event of any differences	‐ 10 ‐
or inconsistencies between the Japanese and English versions, the Japanese language version shall take precedence.

(supplemented on

The 3rd Quarter Results (Consolidated)

Although we revised the forecasts upward in the first half period of this fiscal year, performances of the Group are further growing mainly in the Publi-tech business.

5.12 Revised full-year	1-3Q performance
target (Consolidated)	(Consolidated)

Breakdown for business segment

(unit：million yen)

amount

%

amount

%

Net sales	10,500	100.0%	8,762	100.0%
Cost of goods sold	3,674	35.0%	2,604	29.7%
Gtoss profit	6,825	65.0%	6,157	70.3%
SG&A expenses	4,205	40.1%	2,870	32.8%
└goodwill among them	374	3.6%	277	3.2%

(Reference)

1st Half Cumulative

(unit：million yen) Net sales

• Sales to customers
• Between segments

Segment profit

NEW-IT	Investment	Publi-tech	Adjusted
Transformation
1,412	―	4,772	―
1,412	―	4,772	―
―	―	―	―
263	△10	2,861	△505

Operating income	2,619	24.9%	3,286	37.5%
Non-operating income		22	0.2%		24	0.3%
Non-operating expenses		18	0.2%		14	0.2%
Ordinary income	2,623	25.0%	3,296	37.6%
Pre tax income	2,623	25.0%	3,296	37.6%

1-3Q Cumulative

(unit：million yen) Net sales

• Sales to customers
• Between segments

Segment profit

NEW-IT	Investment	Publi-tech	Adjusted
Transformation
2,143	0	6,623	△4
2,138	0	6,623	―
4	―	―	△4
449	△15	3,648	△796

Coreporate taxes	1,062	10.1%	1,239	14.1%
Net income	1,561	14.9%	2,057	23.5%
Profit attributable to	1,022			1,412
parent shareholders
Profit attributable to	539			644
uncontrolling shareholders
(reference) EBITDA	3,283	31.3%	3,816	43.6%

• Due to the rounding, the sum value may not match.
• Adjustments to segment income are primarily general and administrative expenses related the whom group.

Regarding NEW-IT, we are rapidly reviewing and upgrading services and customer portfolio(supplemented on the next page).

Regarding, investment, no EXIT in this quarter.

Regarding Publi-tech, we are further support local governments for their countermeasures against the Covid-19

next page).

[Notes of caution] This document is an English translation of the Japanese original. In the event of any differences	‐ 11 ‐
or inconsistencies between the Japanese and English versions, the Japanese language version shall take precedence.

Supplement to Summary of Activities

~ NEW-IT Transformation Business ~

We quickly revised the "winning strategy" prepared before the Covid-19, and the positive results have already begun to arise.

Review the

service

systems

Before the Covid-19 spread

Human resource		Creation of PJ
development	Startup support
organized by DX
Hands-on type	organized by DX
Workshop		organizations

A positive cycle in which trainees of training services become new "buyers" in the customer's organization

Traditional thick training services of a classroom type with an "entry" function

became unavailable.

After the Covid-19 spread

Focus on complete online form by digitizing the entire services

"Introduction" is replaced and enhanced through E-learning and open-type webinars.

Not starting from DX promotion but we reached customers who are working as an urgent issue to promote remote setting and transformation under the Covid-19.

	Before the Covid-19 spread
	Transportation		■ Railway ■ Aircraft
Replace	industry
Customer	Retail trade		■ Department store ■ Fashion
Portfolio
Commercial	■ General trading company
		■ Wholesaling

Manufacturing	■ Automotive
■ Heavy machine industries
industry
■ Office equipment ■ Chemicals

After the Covid-19 spread

		■ Central Government
Public offices		■ Education ■Local government
		■ Public entities
Finance	■ Life and non-life insurance
	securities ■ Securities
Information and		■ SI ■ Telecom carriers
communications		■ Cloud services

Focus on industries that maintain comparatively strong investment under the Covid-19, and projects are progressing.

[Notes of caution] This document is an English translation of the Japanese original. In the event of any differences	‐ 12 ‐
or inconsistencies between the Japanese and English versions, the Japanese language version shall take precedence.

Supplement to Summary of Activities

~ Publi-tech Business ~

We support local governments who are committed to responding to the Covid-19 disaster in all directions, including financial, industrial, and business operations.

 Crowd-funding that has been

	projected more concretely for the
	"usage" of donations using our
	"Furusato" (hometown) tax system
	 A number of Covid-19-related
	projects launched nationwide and
	collected a number of donations.
	 Furusato (hometown) tax payment donating
	clothes or bags that users no longer wear or
	carry
	 Commonly known as the "Dan Chari Project"
	(Decluttering (Danshari) + Charity)
	 New Furusato tax payment that leads to
Furusato Choice	support local governments through donating
disused articles

 Support producers of reginal staples

	which have no way to go because the
	food-service industry has dropped due
	to Covid-19.
	 More "return gifts" can be received for
	now by making good use of the subsidy
	system supported by the Ministry of
Yell gift items	Agriculture,Foresty and Fisheries.

• Enterprise applications series that can be used through LGWAN, an integrated administrative network for dedicated administrative lines.
• Promoting the prompt transmission, sharing and collecting of information required to respond the Covid-19 and support decision making.
• Platform services for local governments to manage local currency
• Nishi-Izucity government (Shizuoka) announced that it distributes 10,000 yen of the local currency, "Sunset Coin", to all citizens.

[Notes of caution] This document is an English translation of the Japanese original. In the event of any differences	‐ 13 ‐
or inconsistencies between the Japanese and English versions, the Japanese language version shall take precedence.

Major Topics in the 3rd Quarter

~ Support Customer's DX which Help Promote their Telework Environments to Prepare for the 2nd Wave of the Covid-19 ~

Taking advantage of the lessons learned when responding to the Covid-19 First Wave, we have packaged a telework environment that meets the requirements of "Secure", "Simple", and "BYOD"

Cloud collaboration

Easy Telework

environment

Measures against

cyber-attacks

Data leakage prevention

Non-touching PC

deployment

Basic consulting

Stay productive with teamwork, even remotely

Use office PCs and virtual desktops securely, even remote from home

Protect home PC usage that is vulnerable to attacks

Reduce the risk of "absent-minded" leakage in confidential documents

Complete kitting without touching (zero touch)

Support of environment equipment, security, rules, usage, etc. entirely

※ The logo is a trademark or registered trademark of each company.

[Notes of caution] This document is an English translation of the Japanese original. In the event of any differences	‐ 14 ‐
or inconsistencies between the Japanese and English versions, the Japanese language version shall take precedence.

Major Topics in the 3rd Quarter

~ Analyzing Data regarding Telework Productivity ~

We originally developed this service for the retail industry, and we renovated and provided them even for telework.

Adoption rate

Analysis of measurement data regarding productivity

Rapid
diffusion of	All companies	Large enterprise
Telework
18,002 companies	2,907 companies
	Approx. 56.4 %	Approx. 83.0 %

※Source: Shoko Research 2020.6.16 5th Survey on the Covid- 19, "Did you perform telecommuting and remote work?"

	Difficulty in managing employee
Personnel	work status...
Unable to assess job performance

and labor	properly...
issues	→ Difficulties due to "not be able to
	see" each other's work are obvious

For Retail

trade

(conventional

service)

For

Telework

(newly

established)

Compound analysis of POS data and attendance data

Visualization of individual contribution of gloss profit including backyard employees

Proper recruitment and evaluation of human resources

Analysis of log data of PCs and internal systems

Visualization of the content based on the "atmosphere" in the traditional workplace by means of data

Bringing the problem encountered by employees in unfamiliar telework environment into the open

[Notes of caution] This document is an English translation of the Japanese original. In the event of any differences	‐ 15 ‐
or inconsistencies between the Japanese and English versions, the Japanese language version shall take precedence.

Major Topics in the 3rd Quarter

~ Investing in beBit, Inc.~

We invested in beBit, Inc, which provides DX/UX support for large companies. (Announcement on July 27)

Name

Businesses

CEO

Address

Foundation

Investors (this time)

(Unordered)

beBit, Inc

UX Intelligence business

UX design consulting

UX Growth Hack support service

Naoki Endo

10th floor of the Shin-Otemachi Building 2-1,Otemachi2-chome,Chiyoda-ku, Tokyo

March 2000

[Notes of caution] This document is an English translation of the Japanese original. In the event of any differences or inconsistencies between the Japanese and English versions, the Japanese language version shall take precedence.

• The logo is a trademark or registered trademark of each company.

‐ 16 ‐

Major Topics in the 3rd Quarter

~ Aid for Torrential Rain Disasters in July ~

Even after the torrential rain disaster that hit various places in July, many donations and cheers gathered at the earliest opportunity.

Furusato Choice's support for disasters

The "Application Form for Emergency Donation for Disaster" was established in July 4, 2020 to support disaster-stricken areas.

Reached to 100 million yen in four days after the start of the application.

Total donations exceeded 560 million yen *as of August 11.

230 million yen or more was donated by proxy donation *as of August 11.

Accepting donations to 62 provinces and cities of Kumamoto, Kagoshima, Miyazaki, Nagasaki, Fukuoka, Oita,

Saga, Gifu, Shimane, Nagano and Yamagata * as of July 30.

Proxy

Donation

Proxy donation is the system that greatly reduces the workload of local governments affected by the disaster, and promptly delivers the support of public to the disaster area, by accepting donations on behalf of local governments that are not affected by the disaster.

[Notes of caution] This document is an English translation of the Japanese original. In the event of any differences	‐ 17 ‐
or inconsistencies between the Japanese and English versions, the Japanese language version shall take precedence.

Major Topics in the 3rd Quarter

~ LoGo Series Supporting the Covid-19 Measures ~

While local governments are busily working on the Covid-19 measures, digitization is rapidly progressing due to necessity.

Number of "LoGo Chat" introduced		"LoGo Form" used for the Covid-19 Measures

Business chat for both LGWAN and the Internet

Quick and leak-free coverage of extensive information within governmental offices

Increase response speeds with the shift to teleworking for governmental staff

It also serves as a platform for sharing knowledge across multiple local governments.

Work volume reduction equivalent to 98 hours per employee per year. (due to reducing coordination for a series of reports and meetings, and reducing e-mail responses, etc.)

Form tools used for both LGWAN and the Internet

No knowledge or skills are needed, and staffs can create them quickly and easily

Forms (= Knowledge) can be shared between multiple local governments

71 local governments introduced this Form from the start of our service on March 2 to August 7.

Many local governments utilize the Form for operations regarding the Covid-19 related 100,000yen subsidy.

Speed of payment improved through the check functions, etc.

Number of
accounts
250,000
200,000
150,000	157,667
100,000	261
50,000
0	April

※ Figures are at the end of the month

※ Include the number of relevant organizations

Number of

local governments

243,139	500
446	400
	300
	200
	100
July	0

Hamamatsu City (Shizuoka) Staff

• LoGo Form's agile style has enabled us to release production environments in just four days from the start of construction. LoGo Form enables multiple-entries, so simultaneous inputs of account information from several ward offices have been carried smoothly.

In addition, we were able to reject the input regarding "No one-byte character and lowercase" in the JBA format, which dramatically improved the granularity and accuracy of the transfer data. In addition, the risk of double payments can be reduced by the multiple input check function, and we can enter data safely.

[Notes of caution] This document is an English translation of the Japanese original. In the event of any differences	‐ 18 ‐
or inconsistencies between the Japanese and English versions, the Japanese language version shall take precedence.

Major Topics in the 3rd Quarter

~ Effects of Cost Saving due to LoGo Chat ~

We conducted a survey on approximately 1,300 local government employees. Amid they are extremely with the Covid-19 measures, we can see that they select LoGo Chat as a truly effective NEW-IT solution.

			Before		After			Work reduction (cost saving) equal to 24.6
	Calling, receiving, transferring						minutes a day = 98 hours a year
	67.6 minutes per day
	Sending, receiving						58.4 minutes
						△ 9.2 minutes, 14% reduction
	40.3 minutes per day	Telephone						Calculated from reduced travel time
	Filing paper, etc.						33.1 minutes			Fuel charges for official vehicles
	17.2 minutes per day			Telephone			△ 7.2 minutes, 18% reduction			¥3,380 reduction
								per person per year
								15.9 minutes			Reduction of time for driving is converted to
	Scheduling of meetings, etc.						△ 1.3 minutes, 8% reduction			gasoline cost: 1.3 minutes x 240 days = 5.2 hours
								per year,
17.8 minutes per week	Mail								50 km/h travel distance = 260 km when λ (130
							Yen) driving 10km with 1 of energy-saving
	(3.9 minutes per day)						13.8 minutes			gasoline
	Reporting, meeting, discussing			Mail			△ 4.0 minutes, 23% reduction
					(3.0 minutes/△ 0.9 minutes per day)
	82.3 minutes per week
	(17.8 minutes per day)	Data					64.4-minute
			collection					△ 17.9-minute, 22% reduction			Items other than time
				Data
	Inside or outside conferences					(14..0 minutes/△ 3.8 minutes per day)			Cost of printing and copying paper
	Scheduling		collection
									Reduce 478 sheets
126.7 minutes per month	Reporting,		Scheduling			107.1 minutes			per person per year
	(6.3 minutes per day)	etc.		Reporting,			△ 19.6 minutes, 15% reduction			¥3,887 reduction
					etc.			(5.4 minutes/△ 0.9 minutes per day)
	Movements on cars, etc.	Conference							Printing and copying of paper materials
		Conference
	276.9 minutes per month						249.3 minutes			Reduced by 9.2 sheets per week
	Movement							9.2 sheets × 52 weeks = 478 sheets per year
		Movement			△ 27.6 minutes,10% reduction
	(13.8 minutes per day)
						(△ of 1.3 minutes per day per 12.5 minutes)			Calculation method:
	Printing, coping paper	Graph is displayed per day						printing cost + paper purchase cost
						410.0 sheets pf paper			Assuming that black & white 70% (2 yen) and
	419.2 sheets per week						△ 9.2 sheets, 2% reducion			color 30% (20 yen), and one copy paper unit: ¥350

[Notes of caution] This document is an English translation of the Japanese original. In the event of any differences	‐ 19 ‐
or inconsistencies between the Japanese and English versions, the Japanese language version shall take precedence.

Major Topics in the 3rd Quarter

~ Progress in Preparation for Transition to IFRS ~

We made further progress in transition to IFRS which we started preparation since we adopted the consolidation in December 2018.

We will prepare securities reports for financial results of the fiscal year ending September 2020 in accordance with IFRS at the earliest.

Profit/sales ratio

Operating	Cost of sales
income
	33.6%
30.9%
	Net sales
		11,000
	Millions of yen
Amortization
of goodwill		SGA cost
3.4 % (Excluding goodwill)
		32.1%

※ Calculated based on the revised target later to be explained

Initial purpose for adopting IFRS

To mitigate the impact of goodwill amortization

In order to make it easier to select M&A as an effective management tool in the future

As part of our efforts to enhance IR for overseas investors

• In the current environment where we more advanced our operations, the shift to IFRS is more important.

[Notes of caution] This document is an English translation of the Japanese original. In the event of any differences	‐ 20 ‐
or inconsistencies between the Japanese and English versions, the Japanese language version shall take precedence.

Other Topics in the 3rd Quarter ~ CHANGE ~

We quickly reviewd our services in order to respond to the urgent challenges of customers.

April to Jun. 2020 (3Q)

04.06 We developed and provided the application dedicated for Tokyo Metro Co., Ltd. for sharing information during an emergency.

04.08 Reacting to the COVID-19 emergency declaration by the government, we started to provide the "telework start-up integrated package" for companies who are at an early stage for adopting telework systems.

04.16 We started providing solutions of full online shift for training sessions by companies.

04.22 We officially started selling the "StrcutionSite", or the 360 degrees image solution to promote DX for construction companies, which is titled ~ Special free trial of this product as a measure for preventing infection by the COVID-19 ~.

04.28 We started providing online training for companies that continue closure after May due to the COVID-19.

05.11 We recommend the "Zero Touch Kitting", a non-contact type PC deployment method, to promote telework and protect employees.

05.14 We were designated by the IPAS to make research of the "diffusion of DX use case and improvement of DX promotion model" and released the results.

05.27 We allied with TrustBank to promote the digitization of administration by using Blockhive and knowhow of Estonia (the electronic nation). 05.28 We reported the progress of the Group's business development toward the realization of the Super City.

06.01 We announced the extension of the available period for shareholder benefits.

06.02 We began to provide the E-learning named "basics of learning 5G for the first time" that can be learned in a short-term intensive manner. ~ Expansion of E-learning content to promote understanding of digital utilization in businesses ~

06.04 We launched the "DX human resource development system consulting package" to build a DX human resources in a short period of time.

06.19 Key points of DX-based telework environments that support the way we work after/with Covid-19 in preparation for the second wave ~ We provide a secure telework environment in one-stop manner from now to after-sales. You are not late ~.

06.24 We start data analysis service for productivity-measurement in telework.

From July 2020

07.14 We announced share splits and a partial amendment to the Articles of Incorporation and the Shareholder Benefit System. 07.27 We invested in beBit, Inc. which has an overwhelming strength in the UX design consulting market.

[Notes of caution] This document is an English translation of the Japanese original. In the event of any differences	‐ 21 ‐
or inconsistencies between the Japanese and English versions, the Japanese language version shall take precedence.

Other Topics in the 3rd Quarter ~ TRUSTBANK ~

As the effects of the Covid-19 infection spread, we keep on providing supports for local governments and local industries.

April to Jun 2020 (3Q)

04.13 200 local governments (amounting to 100,000 accounts) have adopted the "LoGo Chat", our chat system using the LGWAN dedicated for them.

04.21 The Fukaya city government in Saitama Prefecture announced the cost saving effect is about 44 hours a year per an employee by adopting the "LoGo Chat".

04.27 Regarding the Hokkaido government's fund-raising for regional medical care related to the COVID-19 through our hometown tax (donation) payment system (hereinafter, the "Furusato Choice System"), they succeeded in raising ¥50 million (the goal) only in a day.

04.28 We started a campaign in which we would give JTB travel tickets equivalent to yen10,000 to 100 persons who would be chosen by drawing when they "stay home" during the Golden Week.

04.29 We urgently held a free online hometown tax seminar for the first time since we started the Furusato Choice.

04.30 We launched the "wide area allied local governments cloud funding" using the Furusato Choice System.

04.30 We broadcasted live programs through the "Furusato Choice Cannel", our official Youtube channel from May 1 for 5 consecutive days.

05.01 We started the new initiative to support major industries that are affected of the COVI-19 through the Furusato Choice System.

05.01 We started the "Kizuna (bonds of people）PJ connected by Matsuzaka Beef" to protect livestock farmers and brands affected by the COVID-19 in Taki-cho in Mie Prefecture through the Furusato Choice System.

05.01 We started services for supporting local restaurant measures and other economic measures taken by the Fukaya city government in Saitama Prefecture to prevent expansion of the COVID-19.

05.01 The Kamakura city government in Kanagawa Prefecture started fund-raising of ¥10 million to support regional industries affected by the COVID-19 through the Furusato Choice. 05.01 The Takashima city government in Shiga Prefecture started the project for sharing rice in accordance with their win (buyer)-win(seller)-win (local community) culture.

05.01 We completed registration for starting electricity retailor business with the Ministry of Economy, Trade and Industry.

05.07 The Sakaimachi town government in Ibaraki Prefecture and Gigi are developing a nationwide project to "convert local restaurants" into restaurants for children by utilizing the Furusato Choice System.

05.08 We, the Committee to realize donating the COVID-19-related subsidy of ¥100,000, public resources, and Yahoo Japan opened special websites to search the place to which people donate their money.

05.15 The Kanagawa prefecture government started to accept donation through the Furusato Choice System for support for workers engaged in healthcare, elderlycare, and well-being and volunteer groups working on the forefront against the Covid-19.

05.18 The Nishi-Izu cho government in Shizuoka Prefecture started to distribute regional currencies to all citizens and local businesses affected by Covid-19 as financial support measures. 05.21 The Shizuoka prefecture government started to accept donation for support for workers engaged in healthcare, elderlycare and welfare.

05.26 The Hamamatsu city government in Shizuoka Prefecture succeeded in efficient transfer of subsidy(¥100,000) to all citizens by using our LoGo Form, a tool for creating document form.

05.26 Nationwide local government officials participated in the "TrustBank Academia".

05.27 We allied with Blockhive which is promoting GovTech and Estonia (E-Nation) to promote the digitization of administration using their know-how.

05.29 We launched the "Niihama Akagane Point", digital money that can be used in local member stores in Niihama City in Ehime Prefecture.

[Notes of caution] This document is an English translation of the Japanese original. In the event of any differences	‐ 22 ‐
or inconsistencies between the Japanese and English versions, the Japanese language version shall take precedence.

Other Topics in the 3rd Quarter ~ TRUSTBANK ~

(continued)

April to Jun 2020 (3Q)

06.01 300 local governments have adopted the "LoGo Chat", our chat system using the LGWAN dedicated for them.

06.02 We and JA Group expanded the primary industry support project affected by the Covid-19 and launched the second campaign.

06.04 The total of donations of the the Covid-19 related subsidy and other donations related to countermeasures against the Covid-19 reached ¥100 million.

06.04 We began the fashion charity project and services in which people can donate in-kind (other than money) to local government working for Covid-19 prevention.

06.09 The Maibara city government in Shiga Prefecture started fund-raising to support the Covid-19 countermeasure project by utilizing our Furusato Choice System

06.12 We started receiving an application for a new gift from Higashikawa -cho government in Hokkaido named the "Luxurious gourmet gift consisting of Higashikawa rice and grilled eels ", an irregular collaboration between the North and South.

06.15 The Kamakura city government in Kanagawa Prefecture attained ¥10 million funding through the Furusato Choice for support for Covid-19 affected businesses.

06.15 The Hanman city government in Osaka released a special page about the "return list thanks to collaboration" to support businesses affected by Covid-19.

06.23 We announced questionnaires whether interested in living in local areas. 56% of 1000 males and females in their 20's or higher in Tokyo area surveyed :"interested."

06.24 The Nishi Izu cho government in Shizuoka Prefecture announced support by using the digital regional currency "Sunset Coin" for economic revitalization in collaboration with the "My Number Point" business

06.25 Regarding the Covid-19 related subsidy donation project, we decided individuals, companies, and organizations who helped collecting ¥100 million.

06.30 Awa City and Yoshinogawa city governments in Tokushima Prefecture began accepting hometown tax payment for returning the "Shine Muscats" raised by high school students as the "common gift" for the first time.

From July 2020

07.01 Regarding the Covid-19 related subsidy donation project, we began the second public invitation for support in four areas, including the medical care, small and medium-sized businesses, etc.

07.03 The Hokkaido government begins raising ¥100 million to protect Hokkaido's cultural, arts, and entertainment activities by using the Furusato Choice System.

07.04 Through the Furusato Choice Disaster Support, we began accepting donations for the Kumamoto and Kagoshima Prefectures' heavy rain disasters in 2020. 07.07 The Furusato Choice Disaster Support reached ¥100 million related to the above Kumamoto and Kagoshima heavy rain disasters.

07.07 400 local governments have adopted the "LoGo Chat", our chat system using the LGWAN dedicated for them.

07.07 Natural Lawson launched the "Travel Aid" project to support local agricultural producers affected by the Covid-19.

07.14 Our Furusato Choice Disaster Support through Furusato Choice System exceeded ¥300 for the heavy rain disasters which occurred in Kyushu in July.

07.22 We launchd the "Niconico (smiling) yale products" project to support agricultural producers in areas affected by the Covid-19.

07.29 The LoGo Chat calculated the effect of cost saving equal to 98 hours per employee per year [Survey from approximately 1300 local government employees]. 07.30 Our Furusato Choice Disaster Support through Furusato Choice System exceeded ¥500 for the heavy rain disasters which occurred in Kyushu in July

07.31 The Fukaya city government in Saitama Prefecture adopted "Chiica", digital currency for local areas, to support families having small children.

[Notes of caution] This document is an English translation of the Japanese original. In the event of any differences	‐ 23 ‐
or inconsistencies between the Japanese and English versions, the Japanese language version shall take precedence.

[Reference] Status of the IPO Acceleration Program

We announced on July 27 that we invested in beBit, Inc.

	Investment portfolio		Time		Main Businesses and Services		Main purpose		Trend after investment
	Headwaters		2018.4		Providing applications for humanoids,		Providing new services		We continue to hold.
			robots, and providing solutions coordinated		knowhows) and doing joint
					building AI platforms for communication		(integrating this and our
					with smartphones and IoT devices		marketing activities
	Voistart				Developing and providing services based on		Proving and developing services		2019.9 we recognized the
		2018.7		AI (smart) speakers especially for senior		and businesses (integrating this
			people (supporting their daily lives and		and our knowhows) and creating a		valuation loss in Sept.2019.
	※ Joint ownership with Mitsui & Co., Ltd.				communications with their family and		synergy in public and regional		We continue to support
	Creation of a new company				community)		revitalization
	AI CROSS				Providing B2B mobile communication		Providing and developing services		2019.10 Listed on TSE
		2018.7		services, such as "In Circle" or AI based		and businesses based on AI and
	(formerly AOS Mobile)			business chat and "AOSSMS" or two-way		supporting a public sector's		Mothers (We cntinue to hold)
				SMS for entities		efficient operations
					Providing general purpose AI engines based		Developing use cases of various
	GAUSS					fields, including forecasting,
		2019.7		on its own algorisms and developing			We continue to hold.
				image recognition, natural
			comprehensive platforms necessary for
					continuous integration of AI		language processing, and
						analyzing voices
					Promoting advanced research on drone		Promoting full-fledged social
	Aeronext					implementation of industrial drone
		2019.8		of its unique gravity-center control			We continue to hold.
				through their DaaS* development
					Architecture and developing license business
					technology globally		and drone ecosystem construction
						* Drone as a service
					Its motto is "the essence of the digital age is		Providing new services
	beBit				the UX," and supports DX/UX of large
	2020.6			(integrating this and our		We continue to hold.
		corporations. Providing UX-Team Cloud
			knowhows) and doing joint

product, "USERGRAM", in addition to	marketing activities
domestic and overseas consulting services.

[Notes of caution] This document is an English translation of the Japanese original. In the event of any differences	‐ 24 ‐
or inconsistencies between the Japanese and English versions, the Japanese language version shall take precedence.

3rd Quarter Overview

Prospects

[Notes of caution] This document is an English translation of the Japanese original. In the event of any differences	‐ 25 ‐
or inconsistencies between the Japanese and English versions, the Japanese language version shall take precedence.

Basic Thought for Revising Forecasts

for the Fiscal Year Ending September 2020

We are confident that we will achieve the mid-term business plan* ahead of schedule due to significant improvements in the monthly figures in July. (*Operating income base)

Regarding this 3rd time revision this year, we conservatively revised it to be achievable within the remaining period in this fiscal year.

Net sales

※ Millions of yen

Operating

income

※ Millions of yen

	10,500			11,000	July Monthly*Preliminary Report
9,352		9,463
	8,762			701
				About
				86.0%	352
				progress
				Approx. 99.1 %
	5.12	1-3Q	1-3Q		2019.7	2020.7
	results	This time
Beginning	revised	Cumulative
+July	re-revision
	target	results
	preliminary
		3,286	3,360	3,400	July Monthly*Preliminary Report
	2,619			About		73
				98.8%
1,300				progress	Dramatically
					Improvement
					△22
	5.12	1-3Q	1-3Q		2019.7	2020.7
	results	This time
Beginning	revised	Cumulative
+July	re-revision
	target	results
	preliminary

[Notes of caution] This document is an English translation of the Japanese original. In the event of any differences	‐ 26 ‐
or inconsistencies between the Japanese and English versions, the Japanese language version shall take precedence.

After-revised Target

for the Fiscal Year Ending September 2020

We revised the target as follows:

FY09/2020

5.12 revised target

This time revised target

This time increase

Change in %

Initial target (consolidation)

(Consolidated)

(Consolidated)

(decrease) from 5.12

(unit：million yen)

amount

%

amount

%

amount

%

amount

％

Net sales		9,352	100.0%		10,500	100.0%		11,000	100.0%		500		4.8%
Cost of goods sold	3,640	38.9%	3,674	35.0%	3,694	33.6%	20	0.5%
Gross profit	5,711	61.1%	6,825	65.0%	7,305	66.4%	479	7.0%
SG&A expenses	4,411	47.2%	4,205	40.1%	3,905	35.5%		△300		△7.1%
└goodwill among them	362	3.9%	374	3.6%	374	3.4%	0	0.0%
Operating income	1,300	13.9%	2,619	24.9%	3,400	30.9%	780	29.8%
Non-operating income	0	0.0%	22	0.2%	24	0.2%	1	7.7%
Non-operating expenses	18	0.2%	18	0.2%	19	0.2%	0	4.3%
Ordinary income	1,281	13.7%	2,623	25.0%	3,405	31.0%	781	29.8%
Pre tax income	1,281	13.7%	2,623	25.0%	3,405	31.0%	781	29.8%
Corporate taxes	558	6.0%	1,062	10.1%	1,322	12.0%	259	24.5%
Net income	723	7.7%	1,561	14.9%	2,082	18.9%	521	33.4%
Profit attributable to		520				1,022				1,421				399		39.1%
parent shareholders
Profit attributable to	203			539			661			122	22.7%
uncontrolling shareholders
(reference) EBITDA	1,942	20.8%	3,283	31.3%	4,076	37.1%	792	24.1%

[Notes of caution] This document is an English translation of the Japanese original. In the event of any differences	‐ 27 ‐
or inconsistencies between the Japanese and English versions, the Japanese language version shall take precedence.

Progress of the Medium-Term Business Plan

We will achieve the target one year ahead of schedule on operating income level.

We will consider revising the medium-term business plan at the time for preparing the fiscal year ending September 2020.

Net sales	Operating income
(Millions of yen)	(millions of yen)

20,000						18,986	7,000
18,000							6,000
16,000
14,000							5,000
12,000						4,700	4,000
				(old: 10,500)
10,000
				3,400	3,400	3,000
8,000				7,054
			(old: 2619)
6,000							2,000
4,000				2,604			1,000
2,000	1,400	1,550	1,980
1,081
0	134	186	331	513			0
	2015 2016 2017 2018 2019 2020 2021 2022

(Target) (Target) (Target)

N.B.: TrustBanks made a full contribution from the 2020.9 period

[Notes of caution] This document is an English translation of the Japanese original. In the event of any differences	‐ 28 ‐
or inconsistencies between the Japanese and English versions, the Japanese language version shall take precedence.

TRUSTBANK Became Our Wholly-owned Subsidiary

The Board of Directors decided to organize TrustBank as the wholly-owned subsidiary through a share exchange in order to accelerate the growth of Publi-tech business (*subject to the approval of extraordinary

shareholders meetings of both companies).

DX

		Decrease of EPS due to		Increase of EPS due to
			the increase in profit
		new issue of shares
			attributable to owners of parent
		New
	992,365 shares	Approx.	About 68.2%	Approx.
Region
		5.93 %		46.51 %
	Existing			100 %
Creation
		15,749,178 shares

Current ownership of voting rights is 70.23%.

Steady progress in business expansion through collaboration of two companies

By making TrustBank a wholly-owned subsidiary, we will further improve the agility and flexibility of the Group's management structure and realize sustainable business growth and enhancement of corporate value.

We eliminated the deduction of non-controlling interests in our consolidated results and will contribute to the improvement of consolidated net income from the next fiscal year.

We requested SBI SECURITIES CO., LTD., an independent third-party calculation institution, to calculate the share exchange ratio.

Total impact on EPS

		124.40
	90.26
64.89	Approx.
	37.83 %
Based on	Based on	After becoming
5.12 revised	8.12 revised	the wholly-owned
target	target	subsidiary

• EPS = Profit attributable to owners of parent / number of shares
• Profit is estimated by applying the revised forecasts for FY2020 announced on May 12 and this time.
• The number of shares is calculated by applying the weighted-average number of shares (after deducting treasury shares) for FY2020 estimated on the above days when we revised financial forecasts.
• The current percentage of profit attributable to owners of the parent does not match the simple percentage of shareholding due to the attribution of costs related to the acquisition of shares of TrustBank.

[Notes of caution] This document is an English translation of the Japanese original. In the event of any differences	‐ 29 ‐
or inconsistencies between the Japanese and English versions, the Japanese language version shall take precedence.

Disclaimer

Any forecasts, estimates, etc. in the future appearing on this material were decided by us based on available information when we prepared this material, so they may be uncertain.

Actual performances in the future may depend on various factors, so they may largely differ from any forecasts, etc. herein.

[Notes of caution] This document is an English translation of the Japanese original. In the event of any differences	‐ 30 ‐
or inconsistencies between the Japanese and English versions, the Japanese language version shall take precedence.