Lib Work : Explanatory materials for financial results for the second quarter of the fiscal year ending June 2021

Explanatory materials for financial results for the second quarter of the fiscal year ending June 2021

March 17, 2021

Fukuoka Stock Exchange Q-Board/Tokyo Stock Exchange Mothers Board Securities Code: 1431

Explanatory materials for financial results for the second quarter of the fiscal year ending June 2021

01	Highlights of results	P.03
02	Business report	P.10
03	Growth strategy	P.16

Performance summary: 2Q cumulative

Cumulative business performance through the second quarter of the fiscal year ending June 2021

2Q of FY ended June 2020 (nonconsolidated)	Revised forecasts for 2Q of FY ending June 2021 (consolidated)	Results for 2Q of FY ending June 2021 (consolidated)	YoY	Full-year forecasts for FY ending June 2021 (consolidated)
Change	Change (%)
Net Sales	―	4,544 million yen	4,545 million yen	―	―	9,500 million yen
Ordinary Profit	―	299 million yen	296 million yen	―	―	400 million yen
Net income attributable to owners of the parent	―	168 million yen	163 million yen	―	―	246 million yen

Quarterly consolidated financial statements were prepared from the first quarter of the consolidated fiscal year ending June 2021. Thus, the figures above omit figures for the quarter ended June 2020 and year-on-year changes.

Performance summary: Trends in net sales and ordinary profit

2019/6 2020/6 2021/6 2021/6

2010/6

2011/6

2012/6

2013/6

2014/6

2015/6

Net Sales

2016/6

2017/6

2018/6

Ordinary Profit

2Q consolidated

consolidated forecasts

Performance summary: Quarterly trends

Trends in business results for each quarter of the past year

Period	Net Sales	Ordinary Profit	Final Profit
Nonconsolidated: October-December 2019	2,140 million yen	271 million yen	175 million yen
Nonconsolidated: January-March 2020	962 million yen	-57 million yen	-31 million yen
Nonconsolidated: April-June 2020	1,230 million yen	-71 million yen	-42 million yen
Consolidated: July-September 2020	1,011 million yen	-178 million yen	-139 million yen
Consolidated: October-December 2020	3,534 million yen	474 million yen	302 million yen
YoY change	+65.1%	+74.9%	+72.6%

New record highs for net sales and profits on a quarterly basis

YoY growth of 74.9% vs. ordinary profit of 270 million yen in the same period one year earlier

(nonconsolidated)

Performance summary: Trends in net sales and ordinary profit (by quarter)

(Unit: millions yen)

4000

3000

2000

1000

0

-1000

19.10-12

3,534

20.1-3

Net Sales

20.4-6

20.7-9

Ordinary Profit

20.10-12

Performance summary: Trends in operating cash flow

(Unit: millions yen)

1,000

933

-200

800

600 400

200

0

2018/6

2019/6

2020/6

2021/6 (2Q)

Highlights

•  Cumulative consolidated ordinary profit through 2Q was 296 million yen, accounting for 74% of the planned full-year figure of 400 million yen. Quarterly ordinary profit grew to 474 million yen (up 74.9% YoY from the same quarter of the previous nonconsolidated fiscal year).

•  Operating cash flow rose dramatically to 930 million yen.

•  The corporate website was overhauled with a focus on expanding the IR and HR pages and improving user experience through video.

•  We began moving on efforts involving the joint development of the new Afternoon Tea HOUSE detached houses through a partnership with Sazaby League, Ltd. The first model of these houses will open in September 2021 in the city of Oita.

•  The number of LibWork Ch YouTube channel subscribers passed 10,000.

Business report

＞ ＞ ＞

Comprehensive overhaul of the corporate website

SDG initiatives

New product development through cross-industry partnerships

＞ YouTube channel surpasses 10,000 subscribers

Business report: Comprehensive overhaul of the corporate website

We overhauled our website to provide information on our detached-house products with the goal of achieving a digital transformation (DX). The changes focused on expanding the IR and HR pages and improving the user experience through extensive video content.

IR

Tour of completed houses

HR

Experiencing home performance

Business report: SDG initiatives

We initiated various initiatives to address the Sustainable Development Goals (SDGs).

On November 6, 2020, in partnership with Higo Bank, we held a presentation ceremony for a list of donations related to the issue of Higin SDG private placement bonds. A portion of the investment will be donated to the Health Promotion Department of the city of Yamaga. Simultaneously, we started our internal SDG programs. To further enhance our initiatives, we joined the Cabinet Office's Public-Private Partnership Platform for Realizing SDGs Through Community Cocreation.

Public-Private Partnership Platform for Realizing the SDGs

We support the Sustainable Development Goals (SDGs).

Realizing SDG Goal 17 ("Revitalize the global partnership for sustainable development") by promoting the sharing and complementation of expertise and technology through collaboration among different fields and industry, academia, and government

Business report: New product development through cross-industry partnerships

Joint development of new Afternoon Tea HOUSE detached house products in partnership with the Sazaby League Afternoon Tea brand

We're targeting March 2021 for the completion of this new product. Plans call for the first Afternoon Tea HOUSE model house to open in September 2021 in the city of Oita. This project will also help stimulate local creativity and community vitalization in Kyushu by sourcing parts and materials from the region.

Later plans call for opening model houses in Fukuoka, the Kanto area, and other regions. We plan to deploy this new brand nationwide.

Past track recordMUJI HOUSE network partner "Mujirushiryohin no Ie"

(Kumamoto, Fukuoka)

Partnership with talent Suzanne: "coquette"

Adastria "niko and . . ." collaboration: "ink"

Partnership with Uchida Yoko: "Ienaka × Office"

Business report: YouTube channel surpasses 10,000 subscribers

The number of subscribers to our YouTube channel LibWork Ch rose past the 10,000 mark in about six months.

We've also begun streaming virtual tours of completed houses, popular programming that attracts more than 300,000 views per episode, for a cumulative total of three million views.

The LibWork Ch YouTube channel

* Screen shots of LibWork Ch pages as of February 22, 2021

(Number of subscribers)

Steady growth in views and subscribers (cumulative)

(Unit: 10,000 views)

12000

10000

8000

6000

4000

2000

0

June 2020

December 2020

300

200

100

0

Dividend forecasts (after April 1, 2021 stock split)

A planned stock split will issue two shares per share of Company stock owned by shareholders listed or registered on the final shareholder registry as of the basis date of March 31, 2021.

FY ended June 2016	FY ended June 2017	FY ended June 2018	FY ended June 2019	FY ended June 2020	FY ending June 2021 (forecast)
End of 1Q	―	―	―	5.5 yen	9 yen	4.50 yen
End of 2Q	―	―	15 yen	6 yen	9 yen	2.25 yen
End of 3Q	―	―	―	6 yen	4.5 yen	2.25 yen
Year-end	10 yen	20 yen	10 yen	7.5 yen	4.5 yen	1.125 yen
Total	10 yen	20 yen	ー	25 yen	ー	ー
Payout ratio	63.1%	14.9%	17.4%	16.2%	69.6%	38.4%

The Company implemented a two-for-one stock split effective January 1, 2020. Dividends per share shown above for the end of 3Q and the year-end in the FY ended June 2020 reflect the effects of that stock split. Total dividends per year are not indicated for the FY ended June 2020. The Company implemented a two-for-one stock split effective October 1, 2020 again. The dividends per share shown above for the end of 2Q and 3Q in the FY ending June 2021 reflect the effects of that stock split; year-end dividends per share for the FY ending June 2021 reflect the effects of that stock split, in addition to the planned stock split. For this reason, total dividends per year are not indicated for the FY ending June 2020.

Growth strategy

• ＞ Toward nationwide business development

• ＞ Expanding digital-based customer approach strategies

• ＞ Toward establishing a vertically integrated model to increase profitability

＞

New business: Subscription services leveraging AI

Growth strategy: Toward nationwide business development

Accelerating nationwide business development to grow the number of showrooms to 25 in three years, along with entering the Kanto area and growing market share in Fukuoka

Opening a model house in a general exhibition area in Chiba within the Kanto area and building a MUJI HOUSE model house as the second facility in Fukuoka

FY ending June 2023 (planned)

16 showrooms

As of March 17, 2021

+

General exhibition areas: 8 showrooms Independent exhibition areas: 5 showrooms Portable exhibitions: 10 showrooms

Head office, affiliate companies: 2 showrooms

FY ending June 2022

Chiba showroom and MUJI HOUSE Fukuoka showroom planned to open

Growth strategy: Toward nationwide business development

Growing the Sketch brand of showrooms in shopping centers

in

New visitors (July-December 2020)

5.3 times＜

New visitors to our showrooms in general exhibition areas (average)

Growing the MUJI HOUSE business

Opening the largest MUJI HOUSE model house center in Japan in Kita Ward, Kumamoto with three model houses (wood,window, and sunlight home designs)

Wood home

Window home

May 2021 (planned)

Sunlight home

Opening a MUJI HOUSE model house center in Nishi Ward, Fukuoka (wood and window homedesigns)

September 2021 (planned)

Wood home

Window home

FY ending June 2023

(planned)

Growth strategy: Expanding digital-based customer approach strategies

Growth in digital-based customer base (actual results)

FY ended June 2020

2Q, FY ending June 2021

1.8 times ＜

Growth strategy: Expanding digital-based customer approach strategies

Continuing to accelerate growth of the LibWork Ch YouTube channel since January 2021

As of February 15, 2021: 4.64 million views, 16,192 subscribers

(Unit: 10,000 views)

(Unit: subscribers)

500

Accelerating 20000

2020/6

2020/6

2021/1/1 2/15

Channel subscribers

Accelerating

2021/1/1 2/15

FY ending June 2023

(planned)

Growth strategy: Expanding digital-based customer approach strategies

Expanding and enhancing portal sites for the detached house category

Searching for land for sale (e-toti.net)

Releasing versions for other areas in line with plans to open showrooms

Matching consumers with registered architects and builders (www.e-kenchikushi.net)

＋

Releasing versions for other areas in line with plans to open showrooms

Growth strategy: Toward the establishment of a vertically integrated model to increase profitability

Increasing gross profit margins on detached houses to 35% by insourcing major construction work

Progress so far:

Improvement of the gross profit margin

Foundation work and water supply and drainage facilities successfully insourced (launched December 2020)

From this point, we will proceed to insource carpentry work, exterior wall work, and other tasks in succession.

Growth strategy: Subscription business

Applying AI to support construction companies and builders nationwide

We're making steady progress on the joint development of a subscription service with Anshin Project Japan, a CAD developer.

April 2021: beta testing

June 2021: commercial release planned

FY ending June 2023 (planned)

Operating

Profit

100

million yen

Forward-Looking Statement

This document contains "forward-looking statements" regarding the intent, belief or current expectations of us and our management with respect to our future financial condition and results of operations. In many cases, but not all, these statements contain words such as "forecast," "believe," "estimate," "expect," "intend," "may," "plan," "probability," "risk," "project," "should," "seek," "target," "will" and similar expressions. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ from those expressed in or implied by such forward-looking statements contained or deemed to be contained herein. Given the risks and uncertainties, you should not place undue reliance on forward-looking statements, which speak only as of the date of this document. We undertake no obligation to update or revise any forward-looking statements.

Contact:

Administration Department

Lib Work Co., Ltd.

TEL: [phone]https://www.libwork.co.jp/