results of operations for the second quarter of fiscal year ...27 metal product processing kansai...

http://www.nihon-ma.co.jp/

東証１部： 2127

本資料における業界の動向や分析、今後の計画、見通し等は、現在入手可能な情報による判断に基づいております。今後、将来の事業を取り巻く環境が大きく変動するリスクや不確実性が存在します。従いまして、今後の計画や見通しの実現を保証するものではありません。

http://www.nihon-ma.co.jp/

東証１部： 2127

本資料における業界の動向や分析、今後の計画、見通し等は、現在入手可能な情報による判断に基づいております。今後、将来の事業を取り巻く環境が大きく変動するリスクや不確実性が存在します。従いまして、今後の計画や見通しの実現を保証するものではありません。

Results of Operations for the Second

Quarter of Fiscal Year Ending Mar 31, 2014 November 13, 2013

Nihon M&A center Inc. Assisting companies to grow and prosper through M&As

The information included in this presentation, such as industry trends and analysis, future plans, and

forecasts, is based on data available at the time of release. We make no guarantees regarding future plans or

forecasts since the operating environment is subject to risks and uncertainties, meaning it could change

substantially in the future.

TSE 1st section: 2127

(c) Nihon M&A center Inc. http://www.nihon-ma.co.jp/ 1

Long-term profit growth can be expected.

Introduction

Nihon M&A center Inc. specializes in providing M&A intermediary services between small- and medium-sized companies, among which competition is not significant.

The market is forecast to grow considerably as the issue of business succession becomes more serious in Japan.

The company can efficiently obtain M&A-related information by drawing upon its M&A information network,* one of the largest in Japan.

* Through business alliances with 516 accounting firms, 285 regional financial institutions,

and other organizations throughout Japan (as of September 30, 2013)


137.2% of a year-ago level (1,517 million yen)

130.1% of the forecast released at start of period (1,600 million yen)

FY13

2Q Results YoY

FY13

Full-year forecast

FY12

2Q Results FY12

Full-year Results

Total % % Total % Total % Total %

Sales 4,152 100.0 127.1 7,850 100.0 3,268 100.0 7,214 100.0

(M&A sales) (4,073) (98.1) (3,196) (97.8) (7,064) (97.9)

cost of sales 1,301 31.3 1,162 35.6 2,487 34.5

(Referral fees and outsourcing expenses)

(441) (10.6) (487) (14.9) (891) (12.4)

(Personnel and transportation costs) (827) (19.9) (655) (20.1) (1,537) (21.3)

Gross profit 2,851 68.7 2,105 64.4 4,726 65.5

SGA expenses 769 18.5 588 18.0 1,321 18.3

Operating income 2,081 50.1 137.2 3,700 47.1 1,517 46.4 3,405 47.2

Non-operating income 5 0.1 16 0.5 32 0.4

Non-operating expenses 2 0.1 6 0.2 1 0.0

Ordinary income 2,085 50.2 136.5 3,700 47.1 1,527 46.7 3,437 47.6

Extraordinary gain - - - - - -

Extraordinary loss 21 0.5 4 0.1 4 0.1

Income before taxes for the quarter 2,063 49.7 1,523 46.6 3,432 47.6

corporate tax 834 20.1 598 18.3 1,358 18.8

Net income for the quarter 1,228 29.6 132.9 2,240 28.5 924 28.3 2,074 28.7

Achieved record operating income

Summary of Income Statement

(Million yen, percent,

cumulative base)

(c) Nihon M&A center Inc. http://www.nihon-ma.co.jp/

FY 2010 FY 2011 FY 2012

(cumulative 2Q) FY 2012

FY 2013 (cumulative 2Q)

Total % Total % Y o Y Total % Total % Y o Y Total % Y o Y

Sales 5,008 100.0% 6,005 100.0% 119.9% 3,268 100.0% 7,214 100.0% 120.1% 4,152 100.0% 127.1%

Direct costs*1 572 11.4% 673 11.2% 117.6% 506 155% 950 13.2% 141.1% 473 11.4% 93.6%

Direct profit 4,435 88.6% 5,332 88.8% 120.2% 2,761 84.5% 6,264 86.8% 117.5% 3,678 88.6% 133.2%

M&A Sales 4,901 100.0% 5,877 100.0% 119.9% 3,196 100.0% 7,064 100.0% 120.2% 4,073 100.0% 127.4%

M&A cost of sales*2 550 11.2% 638 10.9% 116.1% 478 152% 891 12.6% 139.6% 441 10.8% 90.6%

M&A gross profit 4,351 88.8% 5,239 89.1% 120.4% 2,709 84.8% 6,172 87.4% 117.8% 3,632 89.2% 134.0%

Other sales 107 100.0% 127 100.0% 119.5% 71 100.0% 150 100.0% 117.7% 79 100.0% 110.9%

cost of other sales 22 21.1% 34 27.2% 153.9% 19 27.4% 58 38.8% 167.7% 32 41.6% 168.3%

Other gross profit 84 78.9% 93 72.8% 110.3% 51 72.6% 92 61.2% 99.0% 46 58.4% 89.3%

Non-allocable cost of sales*3

1,070 21.4% 1,343 22.4% 125.5% 655 20.1% 1,537 21.3% 114.4% 827 19.9% 126.1%

Gross profit 3,365 67.2% 3,988 66.4% 118.5% 2,105 64.4% 4,726 65.5% 118.5% 2,851 68.7% 135.4%

3

(¥mn)

Breakdown of consolidated sales into M&A sales and Other sales

(Reference) Sales and Profits by Business

*1 Direct cost includes M&A cost of sales (referral fees and outsourcing expenses) and cost of other sales

*2 M&A cost of sales consists of referral fee and outsourcing expense

*3 Non-allocable cost of sales includes personnel cost and transportation cost etc.


[Assets] End of

FY13 2Q

% change End of

FY12

I current assets 9,460 85.2 562 8,897

(cash and deposits) (7,118) (64.1) (785) (6,333)

(Other current assets) (2,341) (21.1) (-223) (2,564)

II Fixed assets 1,639 14.8 -26 1,666

Total assets 11,100 100.0 536 10,564

[Liabilities

and net assets]

End of

FY13 2Q %

change End of

FY12

I current liabilities 1,493 13.5 -325 1,818

II Fixed liabilities 404 3.6 24 380

Total liabilities 1,898 17.1 -301 2,199

(Interest bearing liabilities) (100) (0.9) (-) (100)

Net assets 9,202 82.9 837 8,364

(Retained earnings) (7,215) (65.0) (830) (6,385)

Total assets 11,100 100.0 536 10,564

Balance Sheet Summary

Maintaining a sound balance sheet => Enhancing returns to shareholders through dividend increase

(¥mn, %)


Average M&A sales per deal closed were strong

FY2011 FY2012 FY2013

1Q 2Q 3Q 4Q FY

Total 1Q 2Q 3Q 4Q

FY

Total 1Q 2Q

Total deals (individual) *1 39 55 48 52 194 48 52 58 49 207 43 58

cumulative total in the same fiscal year 39 94 142 194 - 48 100 158 207 - 43 101

Sell side 18 28 23 25 94 23 26 27 26 102 21 29

Buy side 20 26 23 25 94 25 26 31 23 105 22 28

Other deals closed (e.g., reorganization) 1 1 2 2 6 - - - - - - 1

M&A sales 1,122 1,794 1,385 1,575 5,877 1,153 2,043 2,079 1,787 7,064 1,992 2,080

M&A sales per deal *2 28.8 32.6 28.9 30.3 30.3 24.0 39.3 35.9 36.5 34.1 46.3 35.9

Total deals (transactions) *1 21 32 26 27 106 26 27 31 26 110 22 30

cumulative total in the same fiscal year 21 53 79 106 - 26 53 84 110 - 22 52

Number of Deals closed

* 1 Total deals (individual) is the number of sell-side deals added to the number of buy-side deals (based on contingent fees).

Total deals (transactions) is the total number of transactions.

* 2 M&A sales divided by the number of total deals, includes retainer fees

(Number of cases, ¥mn)


Sellers Buyers

Transaction scheme Business outline Offices Business outline Offices

1 System operation Kanto System operation Kansai Stock transfer

2 Food production Kansai Food production Kyushu, Okinawa Stock transfer

3 Logistics Kanto Logistics Hokkaido, Tohoku Stock transfer

4 Electric work Kanto Facility design and work Kanto Stock transfer

5 Web production Kansai Advertising agency Kanto Stock transfer

6 Printing Kanto Printing Kanto Stock transfer

7 Travel Kanto Education service Kanto Stock transfer

8 Senior citizen home Kanto Nursing facility Kanto Stock transfer

9 Transportation Kanto Harbor transportation Kanto Stock transfer

10 Auto parts manufacturing Koshinetsu Machinery and tool wholesaling Kansai Stock transfer

11 Electronic parts manufacturing Kyushu, Okinawa Telecommunication equipment manufacturing Kanto Stock transfer

12 Accounting office Tokai, Hokuriku Accounting office Kansai Business transfer

13 construction work Kyushu, Okinawa Real estate management Chugoku, Shikoku Stock transfer

14 Medical corporation Koshinetsu Medical corporation Kanto Equity interest transfer

15 Gas Hokkaido, Tohoku Gas Hokkaido, Tohoku Stock transfer

16 Transportation equipment manufacturing Hokkaido, Tohoku Facility work Hokkaido, Tohoku Stock transfer

17 Dispensing pharmacy Kansai Dispensing pharmacy Kansai Stock transfer

18 Apparel Kanto Mail-order business Kanto Stock transfer

19 Auto parts manufacturing Kanto Auto parts manufacturing Tokai, Hokuriku Stock transfer

20 Press processing Overseas Precision parts manufacturing Kanto Stock transfer

21 Medical corporation Kansai Medical and welfare services Tokai, Hokuriku Equity interest transfer

22 construction consulting Tokai, Hokuriku Civil engineering work Tokai, Hokuriku Stock transfer

23 Automobile maintenance Kansai Automobile retailing Chugoku, Shikoku Stock transfer

24 consumer good manufacturing Kanto Beauty care Kansai company split

25 Nursing Kansai Nursing Chugoku, Shikoku Stock transfer

26 Metal wholesaling Kanto Recycling Kanto Stock transfer

27 Metal product processing Kansai Machine parts manufacturing Kansai Stock transfer

28 Game production Kansai Book retailing Kanto Stock transfer

29 FA equipment manufacturing Kansai Metal processing machine manufacturing Tokai, Hokuriku company split

30 Textile processing Chugoku, Shikoku - - Stock swap

Introduction to Deals closed in 2Q


End of

March

2006

End of

March

2007

End of

March

2008

End of

March

2009

End of

March

2010

End of

March

2011

End of

March

2012

End of

March

2013

End of

September

2013

cost of

sales

consultants 32 38 49 63 71 74 87 95 108※c

Non-

consultants *a - 3 4 5 4 5 6 7 9

SGA

expenses

Non-

consultants 8 9 12 8 10 10 11 13 13

Total 40 50 65 76 85 89 104 115 130

Average number of consultants *b 27 35 43.5 56 67 72.5 80.5 91 -

The number of job offer recipients increased

steadily from October onwards

*a Non-consultants in the cost of sales are administrative staff in the sales division who formerly belonged to the administration office (used to be included in SGA expenses). *b Average number of consultants = (number of consultants at start of year + number at end of year) / 2 *c As of October 30, four mid-career hires had joined the company ,and separately four others accepted our job offers. * Seconded persons are not included in the number of staff shown above.

Employee Numbers (consolidated)

(No. of employees)


TOPICS(1) Stepping up the provision of our M&A transaction-related assistance to client firms operating in

an industry experiencing active realignment

An example of assistance by Nihon M&A center:

An M&A transaction between two listed companies resulting from industry realignment

(Left) Mr. Inao Tajiri, Representative Director,

Medical System Network co., Ltd.

(Center) Suguru Miyake, President, Nihon M&A center

(Right) Mr. Shigeki Ohno, Representative Director,

Total Medical Service co., Ltd.

A takeover bid of Total Medical Service co., Ltd. (JASDAQ and Fukuoka Stock Exchange) by Medical

System Network co., Ltd. (TSE 1st Section) that was announced on September 27, 2013

Total Medical Service co., Ltd. (Listed on JASDAQ and the Fukuoka

Stock Exchange)

Medical System Network co., Ltd. (Listed on the TSE 1st Section)

Industrial

sector Dispensing pharmacy (the third

largest in the Kyushu area)

Dispensing pharmacy (the sixth

largest in the country)

Region Fukuoka

Prefecture Hokkaido


0

100

200

300

400

500

600

2010/9期 2011/9期 2012/9期 2013/9期

225 249

358

516

9

The number of our partner accounting offices (Executive Board Members of the Nihon

M&A Association) increased by 37.6% in six months

375 as of March 31, 2013 516 as of September 30, 2013

Newly graduated consultants who joined us in April have

been engaged in activities to develop information on

accounting firms

Historical numbers of our

partner accounting offices

Membership grew by more

than 140 in six months

2010/9 2011/9 2012/9 2013/9

Initiative to Revitalize the Network of Accounting Firms

TOPICS(2)

• Nihon M&A Association is an organization established for Nihon M&A center Inc. and tax accountants and CPA offices

to collaborate with the aim of facilitating the spread of amicable M&A of small- and medium-sized companies.


TOPICS(3)

Collaboration with Development Bank of Japan (DBJ)

Step up our business platform by newly adding Development Bank of Japan (DBJ) to the

shareholders’ list of Japan Private Equity co., Ltd. (our equity-method affiliate engaging in MBO fund

investment business), and aim to further expand MBO fund investment operations

Nihon M&A center and DBJ are also considering collaborations with each other in the M&A support

business in the coming years (in overseas market, in particular)

Shareholders of Japan

Private Equity

Previous equity

interest ratio

Post-capital policy

implementation

equity interest ratio

Nihon M&A center Inc. 46.6% 36.1%

DBJ - 35.6%

Japan Asia Investment co., Ltd. 46.0% 20.8%

Treasury stock 6.5% 6.5%

Directors 0.9% 0.9%

100.0% 100.0%

A business succession fund worth a total of 3 billion yen is to be established by Japan Private Equity

co., Ltd., and the fund is planned to be increased to a total of 5 billion yen as Bank of Kyoto, Juroku

Bank, Nihon M&A center, DBJ and Sumitomo Mitsui Banking Corporation have decided to take

equity participation in the fund (the names are shown in order of the Japanese syllabary)


4,009

3,655

5,008

6,005

7,214

4,152

3,820

4,400

4,800 5,280

6,500

7,850

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

09/3 10/3 11/3 12/3 13/3 14/3

実績

当初予想

1,651

1,376

2,171

2,834

3,437

2,085

1,650

1,800

2,000

2,200

3,000

3,700

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

09/3 10/3 11/3 12/3 13/3 14/3

実績

当初予想

11

(2Q cumulative,

actual)

(2Q cumulative,

actual)

(Full year forecast) (Full year forecast)

Trends of Long-term Results

Forecasting the posting of a record profit in FY2013

(the fourth consecutive fiscal year this will have occurred)

changes in Sales (¥mn) changes in Ordinary Income (¥mn)

Results

Original forecast

Results

Original forecast


12.5

25.0

25.0 25.0

32.5

42.5

55.0

0.0

10.0

20.0

30.0

40.0

50.0

60.0

07/3 08/3 09/3 10/3 11/3 12/3 13/3

3,205

3,886

4,440

4,940

5,764

6,932

8,364

2,000

3,000

4,000

5,000

6,000

7,000

8,000

07/3 08/3 09/3 10/3 11/3 12/3 13/3

Financial conditions and Dividend Increase

Improving financial strength continuously enhancing returns to

shareholders through dividend increase

changes in net assets changes in annual dividend per share

* Actual changes after factoring in the 200-for-1 share split on April 1, 2012 ¥mn

Net assets

Annual dividend per share

* Including commemorative dividend

yen


25

30

35

50

60

12.5 15

17.5

25

30

¥0.0

¥10.0

¥20.0

¥30.0

¥40.0

¥50.0

¥60.0

FY2009 FY2010 FY2011 FY2012 FY2013

FYE dividend (results)

Interim dividend (results)

Original forecast for FYEannual dividend

Original forecast for interim dividend

Dividend growth is expected to continue on the back of strong business results

25

32.5

42.5

Original forecasts Results Actual payout ratio Amount

Dividend breakdown

Amount Dividend

breakdown

FY2013 ¥60 Interim ¥30 FYE ¥30

- - 35.7%

(forecast)

FY2012 ¥50 Interim ¥25 FYE ¥25

¥55 Interim ¥25

FYE ¥30 35.3%

FY2011 ¥35 Interim

¥17.5 FYE ¥17.5

¥42.5 Interim ¥17.5

FYE ¥25 35.2%

FY2010 ¥30 Interim ¥15

FYE ¥15 ¥32.5

Interim ¥15 FYE ¥17.5

36.1%

FY2009 ¥25 Interim

¥12.5 FYE ¥12.5

¥25 Interim ¥12.5

FYE ¥12.5 41.8%

55

Forecast of Dividend

Trends in dividend per share (after factoring in the 200-for-1 share split)

Annual dividend (results)

Unit: yen

(Forecasts only)

results of operations for the second quarter of fiscal year ...27 metal product processing kansai...

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