Nihon Enterprise Co., Ltd.Full Fiscal Year May 2013
July 10, 2013
Presentation on Financial Results
2013 © Nihon Enterprise Co., Ltd. All RIGHTS RESERVED.11
Earnings Overview for May 2013
Business Strategies of FY 2014 for Domestic Markets
Business Strategies of FY 2014 for Overseas Markets
Earnings Forecast for FY 2014
2013 © Nihon Enterprise Co., Ltd. All RIGHTS RESERVED.2
Business Highlights for FY 2013
Mobile Content
Segment
Overseas
(China)
■Expanded sales of mobile contents with alliance-type businessExpansion of monthly smartphone subscribers by collaborating with mobile phone sales
companies through alliance-type monthly content billing
■Provided mobile contents to smartphones as fixed-rate services
Provided more mobile contents for au Smart Pass and Yahoo! Premium
■Acquired more smartphone subscribers on monthly-basis
Attracted more subscribers for smartphone contents through “shop affiliations”*
■Expanded “shop affiliations” advertising businessIncreased sales of mobile contents in line with the increased growing popularityof smartphones
■Expanded business solutions to businessesIncreased the number of orders regarding websites and smartphone apps
■Launched corporate cost-cutting solutionStarted new business (reverse auction) and acquired and One Inc.
Solutions Segment
*Advertising business in collaboration with mobile phone sales companies.
■Business alliance with China TelecomOpened mobile phone shops in Dongfang Road and Huangjincheng Avenue
■Delivered digital comics translated from a popular novelDigitalized a popular novel “JiuDingJi” to comics from SNDA
2013 © Nihon Enterprise Co., Ltd. All RIGHTS RESERVED.3
Consolidated Statements of Income
FY 5/12(June/11~May/12)
FY 5/13(June/12~May/13)
FY 5/11(June/10~May/11)
Value Share
Mobile Content Segment 1,533 2,142 609 39.8%
Solutions Segment 1,257 1,991 733 58.3%
Net sales 2,790 4,134 1,343 48.1%
Cost of sales 1,224 2,235 1,010 82.5%
% 43.9% 54.1%
Gross profit 1,565 1,898 332 21.2%
% 56.1% 45.9%
SG&A 1,261 1,526 264 21.0%
% 45.2% 36.9%
Operating income 304 372 68 22.4%
% 10.9% 9.0%
Non-operating income 15 23 7 50.3%
% 0.6% 0.6%
Non-operating expenses 1 4 2 126.7%
% 0.1% 0.1%
Ordinary income 318 391 73 23.1%
% 11.4% 9.5%
Extraordinary income 25 354 328 1,267.2%
% 0.9% 8.6%
Extraordinary losses 3 46 42 1,210.7%
% 0.1% 1.1%
Net income 170 354 184 108.7%
% 6.1% 8.6%
(Millions of Yen)
2013 © Nihon Enterprise Co., Ltd. All RIGHTS RESERVED.4
Quarterly Consolidated Earnings Trend(Net Sales)
281 282 301 314 309 317
553592
275 287
331 296 321 294
278
362
422
487
543
537
438
516479467
0
200
400
600
800
1,000
1,200
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Solutions Segment
Mobile Content Segment
902
569
632
Continue to Increase Sales
611631
612
716
830
FY 5/11
557
1,004
1,097
1,129
FY 5/13FY 5/12
(Millions of Yen)
2013 © Nihon Enterprise Co., Ltd. All RIGHTS RESERVED.5
000
100
200
300
400
500
600
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Traffic Info 0 0 0 0 0 0 147 143 143 159 171 173
Lifestyle 17 20 26 24 30 30 31 58 77 96 98 101
E-Book 0 0 0 22 19 31 16 15 23 39 50 80
Overseas 10 11 10 11 13 30 13 11 11 7 6 12
Games 17 15 17 15 15 11 10 8 7 7 8 12
Mail 102 103 114 110 103 94 105 115 103 93 102 98
Music 134 132 131 131 127 120 112 115 112 113 116 111
Mobile Content Segment Consolidated Earnings Trend
281 282301
Mobile Content Segment: Increased Traffic Info, Lifestyle and E-Book
314309
317
438467
479
516
FY 5/11
553
FY 5/13FY 5/12
FY 5/12
(6/11~5/12)FY 5/13
(6/12~5/13)
YY Change
Value Share
Traffic Info 291 648 357 122.7%
Lifestyle※ 150 374 223 148.6%
E-Book 83 193 110 133.6%
Overseas 68 38 ▲29 ▲43.8%
Games 45 35 ▲10 ▲22.0%
Mail 418 397 ▲20 ▲5.0%
Music 475 454 ▲21 ▲4.5%
Total 1,533 2,142 609 39.8%
592
※Lifestyle: Mobile contents in health, voice messages, and employee benefit administration programs.
(Millions of Yen)
(Millions of Yen)
2013 © Nihon Enterprise Co., Ltd. All RIGHTS RESERVED.6
Solution Segment Consolidated Earnings Trend
0
100
200
300
400
500
600
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Overseas 2 4 9 18 7 5 6 3 2 0 0 112
Advertising 50 75 110 93 67 69 80 143 170 181 254 197
Retail 9 10 9 9 30 12 11 6 4 4 3 4
Business Solution 212 196 201 174 216 207 179 209 245 301 284 222
275287
FY 5/12
(6/11~5/12)FY 5/13
(6/12~5/13)
YY Change
Value Shares
Overseas 22 115 92 409.0%
Advertising 360 803 443 123.0%
Retail 61 17 ▲43 ▲71.2%
Business Solution 813 1,054 241 29.6%
Solutions Segment 1,257 1,991 733 58.3%
331
Solutions Segment: Increased Advertising and Overseas(China & Mobile Phone Sales)
296321
294
278
362
422
487
543 537
FY 5/11 FY 5/13FY 5/12
(Millions of Yen)
(Millions of Yen)
2013 © Nihon Enterprise Co., Ltd. All RIGHTS RESERVED.7
0
100
200
300
400
500
600
700
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
COS 232 236 266 261 271 268 304 380 462 537 623 612
COS (%) 41.7 41.5 42.0 42.7 43.0 43.9 42.5 45.8 51.3 53.5 56.8 54.2
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Cost of sales (COS) SG&A
0
100
200
300
400
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
Ad 29 34 45 44 29 27 78 74 59 76 88 67
Others 252 240 228 232 260 246 275 270 288 293 302 350
SG&A (%) 51.0 48.0 43.0 45.4 46.0 44.6 49.4 41.5 38.5 36.8 35.7 37.0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
281
274 273277
Developed New Services and Actively Hired Competent Workers in China
290
273
354
344 347
369
391
418
FY 5/13FY 5/12FY 5/11 FY 5/13FY 5/12FY 5/11
Consolidated Cost of Sales and SG&A Trend
(Millions of Yen)
2013 © Nihon Enterprise Co., Ltd. All RIGHTS RESERVED.8
FY 5/13FY 5/12
Consolidated Ordinary Income Trend
43
65
101
71 72 75
64
105
92
105
88
105
9.4%
8.0%
10.5%10.2%
12.7%
7.8%
11.6%
16.1%
11.7%
11.5%
12.4%
9.0%
0
25
50
75
100
125
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
0%
5%
10%
15%
20%
Ordinary Income
Ordinary Income(%)
Rise Ordinary Income based on Earnings Growth & Cost Reduction
FY 5/11
Millions of Yen
2013 © Nihon Enterprise Co., Ltd. All RIGHTS RESERVED.
9
Consolidated Financial Results by Segment
(Millions of Yen)
FY 5/12(6/11~5/12)
FY 5/13(6/12~5/13)
YY Change
Value Shares
Mobile Content SegmentNet Sales 1,533 2,142 609 39.8%
Segment Income 494 621 127 25.8%
Solutions SegmentNet Sales 1,257 1,991 733 58.3%
Segment Income 317 304 ▲12 ▲4.0%
*Segment income was adjusted based on operating income on the consolidated PL, SG&A (494 million yen) and amortization of goodwill (13 million yen) from administration
department for FY 5/12 and SG&A (522 million yen) and amortization of goodwill (31 million yen) from administration department for FY 5/13.
Mobile Content Segment Solutions Segment
Increased Sales & Profit based on Traffic Info & Lifestyle / Increased Ad Sales & Upfront Inv. in Mobile Phone Sales in China
0
500
1,000
1,500
2,000
2,500
0.0%
25.0%
50.0%
75.0%
100.0%
Net Sales 1,533 2,142
Segment Income 494 621
Segment Income
(%)
32.2% 29.0%
FY 5/12 (6/11-5/12) FY 5/13 (6/12-5/13)
Mobile Content Segment Solutions Segment(Millions of Yen) (Millions of Yen)
0
500
1,000
1,500
2,000
2,500
0.0%
25.0%
50.0%
75.0%
100.0%
Net Sales 1,257 1,991
Segment Income 317 304
Segment Income
(%)
25.2% 15.3%
FY 5/12 (6/11-5/12) FY 5/13 (6/12-5/13)
2013 © Nihon Enterprise Co., Ltd. All RIGHTS RESERVED.
10
Consolidated Balance Sheets
FY End of 5/12 FY End of 5/13Changes Main reasons
Value Shares Value Shares
Current assets 2,506 70.1% 3,445 68.0% 938Increased cash and deposits, and accounts receivable
Fixed assets 1,070 29.9% 1,624 32.0% 553 Increased investments in securities
Total assets 3,577 100.0% 5,069 100.0% 1,492
Current liabilities 361 10.1% 840 16.6% 479Increased consumption taxes payable and accounts payable-trade
Long-term liabilities 35 1.0% 275 5.4% 240 Increased deferred income tax liabilities
Total liabilities 396 11.1% 1,116 22.0% 719
Common stock 595 16.7% 595 11.8% -
Capital surplus 473 13.2% 473 9.3% -
Retained earnings 1,938 54.2% 2,260 44.6% 322Net income and cash dividends paid
Total shareholders’ equity 3,008 84.1% 3,330 65.7% 322Total accumulated other comprehensive income 57 1.6% 486 9.6% 429 Increased net unrealized gains
on other securities
Share acquisition rights - - 0 0.0% 0
Minority interests 114 3.2% 134 2.7% 20
Total net assets 3,180 88.9% 3,953 78.0% 772
Total liabilities & net assets 3,577 100.0% 5,069 100.0% 1,492
(Millions of Yen)
Increased Asset such as “Cash and Deposits”, “Investments in Securities”
2013 © Nihon Enterprise Co., Ltd. All RIGHTS RESERVED.1111
Business Strategies of FY 2014 for Domestic Markets
Business Strategies of FY 2014 for Overseas Markets
Earnings Forecast for FY 2014
Earnings Overview for May 2013
2013 © Nihon Enterprise Co., Ltd. All RIGHTS RESERVED.1212
Reference: Nihon Enterprise made this data based on official data from MM Research Institute, Ltd.
Forcast of SP Sucscribers and Trend in Ratio
25
43
59
7180
8793
99
87
73
9
3438
44
51
60 73.2%69.4%
64.5%
58.1%49.3%
37.2%
22.5%
8.8%
0
20
40
60
80
100
120
140
End of 3/11 End of 3/12 End of 3/13 End of 3/14 End of 3/15 End of 3/16 End of 3/17 End of 3/18
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%Number of FP subscribers
Number of SP subscribers
SP(%)
Change in Mobile Phone Market Environment
126
109112
116119
122 124
Business Strategies of FY 2014 for Domestic Markets
Move on Smart Device Era
128
(Millions of Subscribers)
2013 © Nihon Enterprise Co., Ltd. All RIGHTS RESERVED.13
Business Strategies of FY 2014 for Domestic Markets
Cost-cutting solution
Chaku Mero
Chaku Uta
Chaku Uta Full
Deco-mailGames E-Book
Lifestyle
BusinessAlliance
BusinessEfficiencySolution
Messenger Apps
BYOD
EC
ShopAffiliations
Expands Business Domains in the Smart Device Era
FP Era
2013 © Nihon Enterprise Co., Ltd. All RIGHTS RESERVED.14
Business Strategies of FY 2014 for Domestic Markets
Mobile Content Coping with Smart Device Era
Mobile ContentSegment
Mobile Phone
Sales Companies
Discount member services
Instore selling of monthly charge mobile contents developed in cooperation with mobile phone sales companies
Life support
Information
E-Book
E Commerce
Online shopping
Restaurant view blog
Streaming music English study
SolutionsSegment
Introducing apps
2013 © Nihon Enterprise Co., Ltd. All RIGHTS RESERVED.15
Provides Contents of “Fixed-Price Services”Mobile Content
Segment
Business Strategies of FY 2014 for Domestic Markets
For smartphones
ATIS Traffic InfoDeco Deco Mail Josei no Kirei RizumuUta & Mero Tori hodai Decome★Tukuri Hodai Emoji★Tukuri Hodai GAME RUSH
・Can be used them without worrying about
・Users can use multiple contents at the fixed price
⇒ Create a different market from CPs’ market
Reconstruction of mobile content marketprovided by mobile telecommunication companies
Fixed-price
services
Cope with strategies from mobile telecommunication
companies for smart device era
2013 © Nihon Enterprise Co., Ltd. All RIGHTS RESERVED.16
Business Strategies of FY 2014 for Domestic Markets
Expands Advertising Business due to Rapid Growth in Smartphones
Ads (shop affiliations)Quarter Trend in subscribers
82%
18%
0
50,000
100,000
150,000
200,000
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
SP FP
SolutionsSegment
FY 5/11 FY 5/12 FY 5/13
Sell mobile contents
Sales commission
Ad rate
Nihon Enterprise
Mobile Phone Sales Company
Customers
Provide mobile contents
Pay fees
Create new sales routes in
different industries based
on a business model of
shop affiliations.
CP(Number of Subscribers)
2013 © Nihon Enterprise Co., Ltd. All RIGHTS RESERVED.17
Business Strategies of FY 2014 for Domestic Markets
Started Nippon Open Market (Reverse Auction)SolutionsSegment
Paid-membership at ¥3,000/month
Plan to increase suppliers to 8,000
Resister Check
Check
Check
Company A
Company B
Company C
http://www.open-markets.jp
Register
★Easy to find new suppliers
★Enables procurements at reasonable prices★Easy to get info about new bidding items
★Helps find new business partners
BuyerSupplier
Paid-membershipProcure items
with “Profair”*
*Reverse auction service
2013 © Nihon Enterprise Co., Ltd. All RIGHTS RESERVED.1818
Business Strategies of FY 2014 for Domestic Markets
Business Strategies of FY 2014 for Overseas Markets
Earnings Forecast for FY 2014
Earnings Overview for May 2013
2013 © Nihon Enterprise Co., Ltd. All RIGHTS RESERVED.1919
Reference: IDC(U.S.)
Global Trend and Forcast in Volume of Shipment for SP
301.2
457.9
137.5
183.0
47.5
37.7
66.3
155.6
352.5
35.5
35.2
28.9
27.8
568.1
0
200
400
600
800
1,000
1,200
1,400
1,600
Yr 2013 Yr 2017
Others
India
Brasil
Japan
U.K.
U.S.
China
Change in Mobile Phone Market Environment [Overseas]
Business Strategies of FY 2014 for Overseas Markets
Overseas markets (esp. China) move into the smart device era
(Millions of Subscribers)
2013 © Nihon Enterprise Co., Ltd. All RIGHTS RESERVED.20
Business Strategies of FY 2014 for Overseas Markets
Worked with publishers and cartoonists
Translated “JiuDingJi”a Chinese popular novel into comic
盛大文学
Expands to Deliver Digital ComicsChina
Provided as digital comic forMobile Animations(China Mobile)
Increasedsubscribers
Business model ~Translate popular novels into comics~
Plan 1) Add new titles
Increase the number of
platforms such as
China Telecom, China Unicom
Plan 2)Increase platforms
Utilize business model
of “JiuDingJi”
2013 © Nihon Enterprise Co., Ltd. All RIGHTS RESERVED.21
Business Strategies of FY 2014 for Overseas Markets
Overview of Mobile Phone Sales BusinessChina
Sells China Telecom’s devices
including mobile phones
Creates new business
by actual shop openings
Improves customer satisfactionProvides sales
knowledge
Introduces mobile content
sales (Future plan)
Works with Mobile Telecommunication Companies
Expands shop affiliations
・Japanese Hospitality
・Experienced-Based Shops
・Japanese Innovative Designs
※Nihon Enterprise has 100% ownership of this subsidiaryBusiness partnership
2013 © Nihon Enterprise Co., Ltd. All RIGHTS RESERVED.22
0百万円
250百万円
500百万円
750百万円
1,000百万円
1Q 2Q 3Q 4Q 1Q
Business Strategies of FY 2014 for Overseas Markets
Expands Mobile Phone Sales BusinessChina
①Dongfang road shop
(Flagship shop)
Target sales volume
1,000 units/month
③Further expansion of existing shops
④ Increases the new business model into China :
selling mobile contents with devices in addition
to increasing sales
②Huangjincheng ave.
(New shop)
Target sales volume
250 units/month
~4 Main Strategies for Business Expansion~
2013 © Nihon Enterprise Co., Ltd. All RIGHTS RESERVED.2323
Business Strategies of FY 2014 for Domestic Markets
Business Strategies of FY 2014 for Overseas Markets
Earnings Forecast for FY 2014
Earnings Overview for May 2013
2013 © Nihon Enterprise Co., Ltd. All RIGHTS RESERVED.24
Earnings Forecast for FY 2014
FY 5/13 FY 5/14
Value Shares Value Shares
Mobile Content Segment 2,142 39.8% 2,527 17.9%
Solutions Segment 1,991 58.3% 2,473 24.2%
Net sales 4,134 48.1% 5,000 20.9%
Operating income 372 22.4% 520 39.7%
% 9.0% 10.4%
Ordinary income 391 23.1% 500 27.7%
% 9.5% 10.0%
Net income 354 108.7% 315 ▲11.3%
% 8.6% 6.3%
Consolidated Earnings Forecast
(Millions of Yen)
2013 © Nihon Enterprise Co., Ltd. All RIGHTS RESERVED.25
Earnings Forecast FY 5/14
Trend in EPS
206
448 451
941
835
0
250
500
750
1,000
FY 5/10 FY 5/11 FY 5/12 FY 5/13 FY 5/14(Exp)
DPS and Trend in DPS
80
130 130
180
200
23.9%
38.7%
28.8%29.0%
19.1%
0
100
200
FY 5/10 FY 5/11 FY 5/12 FY 5/13 FY 5/14(Exp)
0.0%
10.0%
20.0%
30.0%
40.0%
※Consolidate result※Consolidated result
Dividend Forecast
YenYen
2013 © Nihon Enterprise Co., Ltd. All RIGHTS RESERVED.26
Nihon Enterprise and our group strive to bring you customer satisfaction
through digital contents.
Information contained in this document including current plans, forecasts and strategy are not actual figures but predictions of Nihon Enterprise's future performance and should not be looked at as such. Predictions are not limited to future sales, company’s performance, events or situations explained by phrases such as “assurance”, “expectations”, “plans”, “strategies”, “probability”, “anticipation”, “possibility”, as well as their synonyms. Other publications may contain oral or written predictions. Information and predictions contained in this document are based on management judgment made from available data. Do not rely on these financial forecasts as actual business results may differ.
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