President Kazuhiro Miyazawa
Kazuhiro Miyazawa
Corporate Profile
Code No.
TSE 2nd
Kazuhiro Miyazawa
HQ Address
Uchisaiwaicho 1-1-7, Chiyodaku, Tokyo
Stock Information
Share Price Shares Outstanding Market Cap. ROE (actual) Trading Unit
¥1,722 9,727,846 shares ¥16,751 million 11.3% 100 shares
DPS (Est.) Dividend Yield (Est.) EPS (Est.) PER (Est.) BPS (actual) PBR (actual)
¥48.00 2.8% ¥95.08 18.1x ¥838.43 2.1x
* Stock price as of the close on October 3, 2014. Number of shares outstanding at the end of the most recent quarter excludes treasury shares.
Consolidated Earnings Trends
Fiscal Year Net Sales Operating Profit Current Profit Net Profit EPS Dividend (¥)
June 2009 3,881 593 629 308 3,785.99 1,200.00
June 2010 4,541 597 546 2,591 23,030.08 2,200.00
June 2011 5,343 775 849 365 3,642.42 1,600.00
June 2012 6,254 1,198 1,278 728 72.63 2,000.00
June 2013 6,866 1,393 1,420 759 75.64 25.00
June 2014 7,600 1,473 1,488 913 92.52 47.00
June 2015 FCST 8,200 1,550 1,540 925 95.08 48.00
* From fiscal year June 2012, a change in the accounting procedure to a method of displaying sales by subtracting a part of cost of sales of the online business was adopted and data prior to this period was adjusted to reflect this change.
* Estimates are those of the Company. A 100 for 1 stock split was implemented on July 1, 2012.
EPS is calculated based on the post stock split number of shares, assuming undertaken at the beginning of the fiscal year.
We present this Bridge Report on WELLNET CORPORATION reviewing its earnings results for the fiscal year June 2014, earnings estimates for the fiscal year June 2015 and the interim report of its medium term business plan.
Key Points
Company Overview
WELLNET provides electronic payment settlement services for merchants selling various products and services.
Based on the key concepts of "real time" and "one stop", the Company provides "convenient direct sales platforms" to merchants that "maximize their opportunities for sales" by allowing consumers to make purchases "conveniently" at any time and from any place without any restrictions.
The main multiple payment service has been implemented by major Japanese airline and bus companies, in addition to large mail order catalog merchants. Ever since its founding, WELLNET has endeavored to maintain the spirit of taking on new challenges which is engrained in its corporate DNA.
<Corporate History>
WELLNET CORPORATION got its start as a subsidiary of a gas and fuel merchant called Ichitaka Takahashi Co., Ltd. in Hokkaido for the purpose of developing new businesses.
At the time of its founding, utility bill payment services at convenience stores had already begun. However the Company began preparations for the expansion of payment settlement services to include mail order catalog sales.
WELLNET developed an integrated "convenience store consigned bill payment settlement service" that included the functions of printing and mailing of invoices, and bill payment information processing which could be used 24 hours a day, 365 days a year. This system quickly became widely diffused amongst product and service merchants because it was distributed free of charge and allowed them to avoid having to make large outlays to develop their own payment settlement systems.
Furthermore, WELLNET is currently developing systems that allow customers to avoid having to print out paper copies of invoices and allows for customers to make real time connections for electronic invoices and payments. Furthermore, the system's ability to eliminate development costs and to allow customers make electronic payment settlement connections with convenience stores and other payment outlets without the need to sign agreements has contributed to its strong reception and numerous implementations by airline and bus companies, in addition to boosting WELLNET's earnings. In 2004, the Company listed its shares on the JASDAQ market.
Thereafter, WELLNET has expanded the provision of its "multiple payment service" to include large companies such as Amazon, Yahoo! Shopping, Rakuten Auction, and low cost carrier (LCC) airlines. In addition, the Company has also focused its attention upon developing applications for the rapidly growing electronic ticket service market including a cellular telephone ticket service, having many good track records.
<Market Conditions>
According to the Ministry of Economy, Trade and Industry's report entitled "2012 Facilitation of the Japanese Information Society and Economy" (Market report about electronic commerce issued on September 27, 2013), the Japanese electronic commerce market (B to C) for consumers rose by 12.5% year-over-year to ¥9.5 trillion in 2012. This also translates to an average annual growth rate of about 10% over the period from 2007, when the market was only ¥5.3 trillion in size, to 2012.
According to Nomura Research Institute data announced on November 21, 2012, the major information technology (IT) related markets are expected to grow by an average annual growth rate of 11.1% year-over-year from 2012 to 2017, with the size of the market growing to ¥17.3 trillion in 2017 from ¥10.2 trillion in 2012.

At the same time, the Ministry of Economy, Trade and Industry cites that while the diffusion rate of EC (The amount of transactions conducted over the Internet as a percentage of all commercial transactions) is still small at only 3.11%, EC transactions are expected to grow by 10% on an average per year for the foreseeable future.
<Business Descriptions>
WELLNET maintains the basic concepts of "real time" and "one stop" in its businesses to provide its customers selling products and services over the Internet with a "convenient direct sales platform" that has the capability of "maximizing sales opportunities" and enables consumers to make purchases at any time and from any place.

WELLNET business is comprised of the three main segments of (1) multiple payment services, (2) online business, and (3) electronic authentication services.
(1) Multiple Payment Services
"Accounted for 92.8% of total sales or ¥7,056 million (FY6/14)"
Because WELLNET provides the necessary software free of charge, merchants to whom systems are provided are able to reduce their system development expenses by large margins. The Company derives sales from fees received for the initial setup, monthly usage fees, and commissions per each transaction. In addition, initial investments required by the merchants are reduced because fees are based on both a fixed and variable rates.
① E-Billing(Electronic Payment) Service
E-billing service differs from billing service in that the invoice creation and mailing functions are replaced by interconnected KIOSK terminals, POS registers, ATMs, and Internet banking systems to allow customers to pay bills electronically using cash or credit cards.
<Various Usages>
◎ KIOSK Terminals
Consumers input bill payment code numbers issued at the time of purchase of products or services over the Internet into kiosk terminals. After confirming details of the purchase provided on the screen of the kiosk, a bar code invoice is printed out at the kiosk for the customer to use to make payment at cash registers.

◎ POS Register and ATMs
There is a function at POS registers that allows customers to use touch panel displays to electronically input invoice numbers to pay bills using cash or bank account cards. The same process is also available using bank ATMs.
<Strengths and Characteristics>
The ability to create invoices and payment receipts, simplify the mailing process and reducing costs, and the provision of one stop bill payment services that allows real time electronic invoice and bill payment functions by connecting to only a single company.
Merchants are not required to develop various systems for each bill payment channel (Convenience stores, banks, post offices), and can easily provide bill payment settlement services to customers by entering into an agreement with WELLNET.
WELLNET provides information processing module free of charge.
WELLNET develops the most up to date payment systems, eliminating the need for merchants to develop their own systems.
WELLNET's systems account for various changes including late charges, additional purchases or other factors in "real time" to ensure that the most up to date payment can be made.
This payment service was launched in May 2000, and has been introduced by many major domestic airline, bus, power, and mail order companies.
② Billing (Payment/Invoices at Convenience Stores) Services
A: Convenience store bill payment service
WELLNET's bar code payment invoice issuance system and accounts receivable recovery via convenience store consigned bill payment service. WELLNET's bar code payment invoice system available at convenience stores and post offices uses a internally developed payment receipt issuance and payment information processing software called "ConPay Kun" to allow merchants to easily print out invoices and receipts, easily process payment information and make ledger notes of payment receipt.
Payment information is transmitted on the next business day after the payment is made (For payment at post offices, two business days), and automatically makes ledger notes of the payment.
Currently, bills for mail order sales, fuel and other expenses can be paid using this system.
<Various Usages>
Payments can be made 24 hours a day, 365 days a year at nationwide convenience stores (Available at 16 different convenience store chains as of June 2013), allowing bill paying customers to avoid having to rush to post offices and banks during normal business hours.
The packaged software "ConPay Kun" is provided free of charge, allowing merchants to begin operating the payment systems within one month of application.
Merchants can print out their own bill payment receipts, and avoid leakage of customer information because the payment information is based on numerically coded bar code information.
B: Consigned Invoice Issuance Service
WELLNET provides total comprehensive bill payment issuance and payment settlement support services including consigned bar code invoice payment printing and mailing functions, payment confirmation, and payment ledger note.
In particular, its bill payment services are used commonly for payment of services (gas bills, various membership fees) which do not entail shipment of goods.
In addition, automatic payment and other information receipt (Invoice issuance, payment service packaged software "Tokoro Kun") services are also provided.
③Cash transfer service to the bank account
This service allows merchants to use the Internet to efficiently make payments to customers for refunds and cancelations. WELLNET operates a website that allows consumers to input their own bank account information for merchants to make payments to.
<Strengths and Characteristics>
The ability of consumers to input their own bank account information and automatic processing of this information allows merchants to reduce their work load by eliminating the need to input account information.
Increase customer satisfaction by allowing merchants to make payment of refunds within the same day.
Eliminates the need for merchants to develop their own refund systems.
Eliminates the need to retain bank account information of customers and reduces the risk of leakage of personal information.
④Cash receipt (Transfer) service at Convenience Stores
As with the Cash transfer service to the bank account, this service concerns payment refunds when consumers cancel an order from a merchant. It differs from the Cash transfer service to the bank account in that a bank account is not required.
The consumer inputs a cash pickup number and ID (provided by the merchant) into a Lawson convenience store "Loppi" multimedia terminal, which issues a cash exchange ticket, and this cash exchange ticket can be exchanged for cash at the register.
<Strengths and Characteristics>
Merchants can avoid risks related to possessing customer bank account data
Cost reduction due to no handing charges of postal transfers or bank transfers
Smooth refunds with no risk of errors in handling bank account information
⑤Other Services
Multiple payment services can be customized to match the needs of individual merchants and consigned operational support services can also be provided.
(2) Online Services Business
"Accounted for 6.6% of total sales or ¥500 million (FY6/14)"
①PIN Online Sales Service
An online service linking WELLNET servers to POS registers and KIOSK terminals at convenience stores for the sale of cellular telephone, international telephone, electronic money and other prepaid cards. The ability to buy prepaid cards online eliminates the need to go to stores in advance to make purchases. At the same time it contributes to improved cash flow of merchants because it eliminates the need to physically stock cards, and prevents opportunity losses resulting from a shortage of inventory. Furthermore, the ability to stock a wider range of cards and the ability to easily make changes are other advantages of online systems.
②Prepaid Gift Card Sales Service
Gift card sales service using the Gift Card Mall available in convenience stores. By activating the PIN at the POS register, the gift card becomes usable for purchasing games or music.
<Strengths and Characteristics>
Using online sales, it is not necessary to physically stock cards in advance.
By eliminating the need to physically stock cards, it contributes to improved cash flow and preventing opportunity losses resulting from a shortage of inventory.
The ability to stock a wider range of cards and the ability to easily make changes are other advantages of online systems.
③Various Application Services
The kiosk terminals located at convenience stores allow users to fill out various applications for Japanese character proficiency tests, English language proficiency tests, university entrance examinations, and other various application forms. In addition, they provide one stop comprehensive services by also allowing for payment of various applications.
(3) Electronic Authentication Services
"Accounted for 0.6% of total sales or ¥43 million (FY6/14)"
①Electronic Ticket Service
A system that allows two dimensional codes displayed on smartphones and other cellular telephone displays to be used as tickets.
When combined with the multiple payment service, the system allows customers to apply, purchase and receive tickets electronically over their smartphone and other cellular telephones and personal computers.
When consumers complete the multiple payment service over the Internet for tickets reservations, they are sent an email to their cellular telephone. By accessing the url listed in the email, they can acquire a two dimensional code which can be used in place of a ticket for entrance to the event.
<Strengths and Characteristics>
Eliminates the need to issue and mail physical tickets, coupons, and membership cards.
The ability to provide reservations and issue tickets online allows promoters of events to sell tickets until just before the events are held.
The ability to avoid issuing paper helps to protect the environment.
Electronic records of event participants allows for easy use of entrance data for marketing purposes.
WELLNET has translated QR code for airline ticket into practical applications for the first time in Japan. Subsequently, it has bountiful track records in large -sized entrance authentication system for the J-League and the Sapporo Dome.
②"SUPERSUB" Service
An online ticket solution that provides one stop, comprehensive services ranging from ticket issuance, payment, and authentication functions.
This system eliminates the need for merchants to develop individual systems that connect to servers, allowing for easy use by not only merchants but also individuals holding events.
In addition to airline and bus companies, and other large existing customers, this system was launched in June 2012 and targets an expansion in the number of business users through its efficient operation and low cost.
<Strengths and Characteristics>
Basic information relating to events such as ticket pricing, location, date of commencement, and other information can be input into the registration page to create pages for the event ticket reservation, application and sales. (Currently only available to PCs)
A link to this ticket page can easily be affixed to the event page for the launch of ticket sales.
Customers seeking to participate in an event can purchase tickets via PCs, smartphones, and cellular telephones.
The tickets use QR codes and special applications can be used for authentication of these codes for admittance to events. The system allows for smooth operations at events through accurate authentication.
Similar to multiple payment services, this service provides a multitude of various payment settlement methods.
The system can be launched within three weeks from application for ticket sales.
There are no initial costs or monthly operating fees. In exchange, a commission of 5% of ticket sales is collected to help keep operational costs low.
Not only for permanent facilities, this system has applications for limited time events, concerts, lectures, seminars, regional events, parties, reunions and other events that range from 10 to 5,000 attendants.
The ROE of WELLNET is at a high level, above the market average. With leverage over 2 times (capital ratio of 38.2% previous year), this may appear to be the reason, but in the case of WELLNET, it is because deposits received as a payment agent are cross posted as cash and deposits and current liabilities. Considering this, the financial situation is extremely stable, and that high net profit margin is the main reason for the high ROE.

As mentioned later, WELLNET has a target for fiscal year June 2016 of operating profit of ¥2,000 million and ROE of 15%.
Equity capital at the end of fiscal year June 2014 was ¥8,156 million, with net profit for the year of ¥913 million. With ¥456 million, 50% of the ¥913 million, coming from equity capital, equity capital becomes ¥7,700 million.
WELLNET explains that passing on all profit this year and the next means equity capital cannot increase, so if operating profit is ¥2,000 million in fiscal year June 2016 then net profit for the year will be approximately ¥1,200 million, with an ROE of 15%.
Characteristics and Strengths
①Strong Track Record of Implementations, Strong Customer Base
WELLNET's multiple payment service has developed a highly favorable reputation for its ability to eliminate development expenses at the time of their implementation and the need to form contracts with each payment institution. In addition it has become the leading company within the industries described below.
One of WELLNET's largest assets is the highly favorable reputation received from airline and bus companies for their system's real time capabilities.
It is this strong customer base that lies at the core of its highly favorable reputation, which is considered to be a "non-visible asset".
②Corporate DNA: Always Taking On New Challenges
E-Billing Service, Billing Service, cellular telephone ticket service and other services and systems developed by WELLNET represent the first applications of their kind to be commercialized within Japan.
Furthermore, the above implementation examples of systems are validation of their superiority. As WELLNET is not an affiliate or subsidiary of a large company, it started out without large amounts of business resources, including money, people and assets.
Despite this fact, the spirit of "always taking on new challenges" engrained in the corporate DNA of WELLNET allowed it to become the "de facto standard" of electronic bill payments.

President Miyazawa believes that the meaning and appeal of business is "to continue to believe in your own ability, to envision and take on the risk of developing structures that would be convenient to have, and to provide them in concrete forms."
In addition, Miyazawa also states that "the reason for our Company to exist is to come up with systems that only we can create."

Because WELLNET is a small organization with less than 80 employees, the maintenance of the spirit of taking on new challenges engrained in its corporate DNA and as reflected in the corporate principle of "WELLNET Alete" is vital to the company's existence.
Fiscal Year June 2014 Earnings Results
Sales and Profit Increase and Exceed Plans, Supported by Multiple Payment Service
Sales rose by 10.7% year-over-year to ¥7,600 million. This growth was led by the multiple payment service, supported by the expansion of the electronic commerce (EC) market.
Cost of goods sold increased 12.5% and SG&A expenses increased 9.3%, but these were absorbed by sales increase, allowing operating profit to increase 5.8% to ¥1,400 million. Sales and profit exceeded plans.
Considering the target payout ratio of 50% in the 3 year medium-term business plan, dividends for each share were set at ¥47. Normally dividends were ¥40. Previous fiscal year they were ¥25.
<Multiple Payment Service>
The multiple payment service showed strong growth, supported by the expansion of the electronic commerce (EC) market.
Results were favorable with not only low cost carriers like Jetstar and Peach Aviation, but also major airlines such as JAL and ANA.
Regular bus companies, WELLNET's primary clients, also showed favorable growth.
The "cash receipt service at convenience stores" was started in October 2013. The maximum amount for the service is set at ¥9,999 now, in order to ensure smooth operations. The service is expected to be established and contributing to sales and profit in latter part of this fiscal year (fiscal year June 2015).
<Online Business Service>
Sales of prepaid PIN online electric money (for social networking services and online games) declined.
On the other hand, the new gift card service, where customers activate their PIN with POS (charging money at the register at convenience stores) showed steady growth. However, since the number of convenience stores handling the product is still limited, this growth was not enough to cover the loss in PIN online electric money.
<Electronic Authentication Service>
Depreciation burden decreased due to the ending of the J-League electronic ticket service. From the perspective of adding value to electronic transactions, focus was put on expanding and making a series out of the Super Sub package that handled everything from reservation to electronic payment and printing the ticket.
Increases in cash and deposits allowed current assets to rise by ¥800 million. Cash and deposits include ¥10,400 million in settlement deposits related to payment services (to be transferred to merchants the following month). Settlement deposits related to payment services increased by ¥1,400 million.
Noncurrent assets increased by ¥100 million from an increase in long-term accounts payable and software, and total assets increased by ¥900 million.
With regards to liabilities, operating expenses payable (liabilities from PIN face value for PIN online sales service) decreased and settlement deposits related to payment services increased, for a ¥800 million increase in current liabilities. Total liabilities increased by ¥700 million.
As a result, the capital ratio declined by 1% to 38.2% compared to 39.2% at the end of the previous fiscal year.
(However, when calculating without settlement deposits related to payment services from assets and liabilities, capital ratio was 69.8% at the end of the previous fiscal year, and 74.7% this year.)
Decrease in settlement deposits related to payment services led to a smaller positive operating cash flow. Acquisition of securities and fixed deposit payments increase the negative investing cash flow, and the free cash flow was also less positive.
(4) Topics
◎ Shares Retired
On August 14, 2014, in order to increase capital efficiency and shareholder profit per share, the decision was made to retire 300,000 treasure shares (common shares. Before retirement, 2.97% of total shares issued), and they were retired on August 29.
After the retirement, the total number of shares issued is 9,800,000, with 72,154 treasury shares.
◎ Implementing Multiple Payment Service for Purchasing and Issuing Concert Tickets for New Japan Philharmonic
WELLNET's payment and ticket issuing service is now used by the New Japan Philharmonic orchestra for purchasing concert tickets through their web site, with payment by credit card or at convenience stores.
With implementation of the service, having tickets issued at convenience stores became an option for credit card payments as well as convenience store payments.
Fiscal Year June 2015 Earnings Estimates
Expected Increase in Sales and Profit. Returning 100% of ¥900 Million Net Profit to Shareholders.
Sales are expected to rise by 7.9% year-over-year to ¥8,200 million. Despite continued decreased income from online business, favorable growth is expected in the core multiple payment service, primarily with airlines and bus companies. Gross profit will decrease due mainly to decreased PIN sales, but operating profit is estimated to increase 5.2% by decreasing SG&A expenses with the decreased outsourcing fees of approximately ¥300 million yearly due to the development system in Sapporo being reformed from emphasizing speed to improving competitiveness and efficiency and converting to self-manufacture.
WELLNET's "Bus IT Promotion Project" has been delayed slightly at the end, but it has reached the implementation stage.
Following the dividend policy of the 3 year medium term business plan, the entirety of the ¥925 million net profit is planned to be returned to shareholders.
With a dividend payout ratio of 50% (50.8% last year), dividends per share will increase by ¥1 to ¥48/share. All remaining profit will be used to purchase and retire treasury stock.
3 Year Medium-Term Business Plan Interim Report
◎ 3 Year Medium-Term Business Plan Growth Strategy
The two pillars supporting growth ①Establishing a business scheme to support the next generation, and ②Kaizen (expanding functions, improving system stability, increasing cost-effectiveness=building a strong corporation).
Next Generation Business Model Development
① Promote revolutionary sales model in conjunction with bus companies
WELLNET in March 2001 introduced the first long distance bus ticket reservation and purchase service operating 24 hours a day at convenience stores. Currently over 100 bus companies have subscribed to this ticket service for several hundreds of routes. Furthermore, a track record and knowhow in cellular telephone tickets for the airline industry and event tickets for Sapporo Dome, have been cultivated.

As the culmination of this knowhow and expertise, a large scale comprehensive model for inter-city high-speed buses is being developed.
The market for inter-city high-speed buses is estimated to be worth between ¥1 to ¥1.5 trillion.
This is a revolutionary service that has greatly increased the convenience of the ticketing function for both bus companies and their customers.
In order to cultivate new demand, a new system is expected to be released.
This system allows customers searching and booking bus tickets to get safely and securely to their destination. At the same time, this system helps bus companies to realize efficient inventory control in real time to increase opportunities to book sales.
WELLNET will conduct promotions and marketing in close cooperation with bus companies with which it has developed a long standing relationship of trust.
The release is slightly later than originally scheduled, but the project has reached implementation stage.
② Development, Provision of Consumer Services
The core settlement services have become the mainstream fee payment collection model for merchants. In addition, a convenient bill payment system provided in the form of a smartphone application that takes into consideration the needs of consumers is expected to be released.
The release is behind the original schedule.
Improvement (Functionality fortification, operational stability,
increases in value)
③ Value Transfer Platform Function Fortification (Existing service fortification)
WELLNET is developing methods of transferring funds other than to bank accounts in addition to its current "Cash transfer service to the bank account" which allows instant refunds to be made to customers' bank accounts.
The ability to transfer funds other than to bank accounts will increase the range of monetary transfers.
The addition of new functions to the multiple payment service is expected to lead to an expansion in the consigned bill payment services.
Release "Cash receipt at Convenience stores service" (October 2013)
④Increase in System Operation Stability, Value for Money
The amount of data processed at data centers has grown tremendously in recent years. And because WELLNET's services boast of real time processing capabilities, the ability to operate systems stably is very important.
Therefore, creating an internal structure with the ability to realize "stable operations" and "operational cost reductions" at the Sapporo office is an important issue.
Specifically, the "cost structure analysis system" developed during the past two years will be used to visualize capital investment efficiency and cost analysis, promote automated and optimized operations, and consolidate services as needed.
Has reached implementation stage.
◎ Progress on Transfer of Data Center
The data center transfer, as part of improving system stability and cost-effectiveness as indicated above, was delayed but the entire transfer is planned to be completed in April 2015, after completing database transfer in October 2014 and completing multiple payment transfer in December 2014.
◎ Structure and Governance to Achieve Growth Scenario
In order to quickly and powerfully proceed with the two pillars of the growth strategy ("business development" and "kaizen"), related projects will be carried out under direct control of the CEO.
In addition to active recruitment of young employees, necessary personnel who share ideals will be sought outside of the company as well in order to develop a structure to accomplish WELLNET's goals, with stock options and other policies effective to increase motivation for meeting goals.

Effort is also being put into employee education, with the Wellnet Arete specifying the reason for being of the company and guidelines for employees, along with a functioning governance system.
(Alete is a Greek term for "virtue," "superior being," or "predominant being.")
Contributing to society by creating "mechanisms that are convenient to have"
Proposing and spreading those "mechanisms" throughout the world
Allocating profit to employees, shareholders and investments in the future
WELLNET Employee Alete
To avoid being held back by stereotypes and to think freely
Thinking for one's self, proposing the best solution
Promoting open discussions, while clearly defining the factors of "who" will do "what" by "when."
Repeating the process of validation and improvement.
Making honest, accurate and quick reports.
Conducting business after documenting services to be provided and compensation to be received
Non-acceptance of entertainment and gifts
◎ Numerical Targets
Strategic investment will be carried out in the first and second years, with a goal of ¥2,000 million operating profit for fiscal year June 2016, the final year of the plan. The target for fiscal year June 2014 was ¥1,450 million, but results surpassed the target and reached ¥1,470 million. This demonstrates how the entire company is working together to reach its targets.
◎ Return to Shareholders
○ Return 100% of Profits During Midterm Business Plan to Shareholders
Adequate amounts of cash on hand will be maintained as a source for funding fortification of core businesses and development of new businesses to maintain the Company's credibility. But with adequate financial soundness already achieved, WELLNET will return an even higher level of 100% of profits to its shareholders as defined in its midterm business plan. Specifically, the following two measures will be implemented.
A) With the exception of special factors, WELLNET will endeavor to achieve a stable and high level of dividend payment with the target payout ratio established in the midterm business plan to be raised from 33.3% to 50%.
B) 100% of profits are expected to be returned to shareholders with net profits left remaining after paying dividends expected to be used for the acquisition and retirement of treasury shares.
With the exception of treasury shares owned to be used as stock for sale and for "J-ESOP" stock trust, newly acquired treasury shares will either be retired or used as shares for stock options issued as performance based compensation.
○ Return On Equity Target: 15% (FY6/16)
WELLNET seeks to raise its return on equity and earnings per share, in addition to steadfastly promoting a growth strategy, strengthening its earnings, increasing its dividends and acquiring and retiring treasury shares. As called for by the three year midterm business plan (FY6/16), an ROE target of 15% has been established.
In the same way as the previous report, below are comparisons of WELLNET and competitors, in performance, market capitalization, stock indexes and stock prices.
At that time when the previous report was released, WELLNET's P/E ratio and P/B ratio did not reach that of GMO Payment Gateway, but exceeded DSK and weighted average of Tokyo Stock Exchange First Section. However, recently WELLNET's P/E ratio and P/B ratio was lower than DSK's, with market capitalization of nearly identical levels.
Relative share prices for the last 3 and 6 months have also been underperforming on TOPIX. A possible factor is business results this fiscal year will not increase as much as the other two companies. (Due to adjustment from the recent sudden increase of GMO Payment Gateway, in the last 3 months it has been outperforming WELLNET.)

However, this year is set as a year for preparation to meet the goal of "operating profit of ¥2,000 million" in the final year of the 3 year plan, and medium to long-term investors need to see the progress of this plan. That is one of the reasons the official release of the slightly delayed "Bus IT Promotion Project" is the focus of attention.
This report is intended solely for information purposes, and is not intended as a solicitation to invest in the shares of this company. The information and opinions contained within this report are based on data made publicly available by the Company, and comes from sources that we judge to be reliable. However we cannot guarantee the accuracy or completeness of the data. This report is not a guarantee of the accuracy, completeness or validity of said information and or opinions, nor do we bear any responsibility for the same. All rights pertaining to this report belong to Investment Bridge Co., Ltd., which may change the contents thereof at any time without prior notice. All investment decisions are the responsibility of the individual and should be made only after proper consideration.

Copyright(C) 2014 Investment Bridge Co., Ltd. All Rights Reserved.