Nihon Enterprise Co., Ltd.1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Solutions Segment Mobile Content...

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


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


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)


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)


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)


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)


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)


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”







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


Move on Smart Device Era

128

(Millions of Subscribers)



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



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


Provides Contents of “Fixed-Price Services”Mobile Content

Segment


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



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

１Ｑ２Ｑ３Ｑ４Ｑ１Ｑ２Ｑ３Ｑ４Ｑ１Ｑ２Ｑ３Ｑ４Ｑ

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)



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

http://www.open-markets.jp/







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]


Overseas markets (esp. China) move into the smart device era

(Millions of Subscribers)



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”



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


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


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～








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)


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


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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Nihon Enterprise Co., Ltd.1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Solutions Segment Mobile Content...

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