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Copyright 2016 Cross Marketing Group Inc. All Rights Reserved. Ver.1.0e

FY2016 Q1 Financial Results 2016.5.16

1 Copyright 2016 Cross Marketing Group Inc. All Rights Reserved.

Content

１. Fiscal Year Ending December 31, 2016 Q1 Financial Results

Fiscal Year Ending December 31, 2016 – Highlights of Q1 Results

Fiscal Year Ending December 31, 2016 - Points of Quarterly Results

Situation by Business Segment ①．②

２. Fiscal Year Ending December 31, 2016

Overview of Q1 Financial Statements

Consolidated Statements of Income (Overview)

Consolidated Balance Sheets (Overview)

・・・3

・・・・4

・・・・5, 6

・・・・8

・・・・9

３. Fiscal Year Ending December 31, 2016

Q1 Business Topics

Business Topics ・・・・11

４. Earnings Forecast for Fiscal Year Ending December 31,

2016

Overview of Earnings Forecast for Fiscal Year Ending December 31, 2016

Causes of Increase in Profit in Fiscal Year Ending December 31, 2016

Measures and Policies by Business Segment in Fiscal Year Ending December 31, 2016

・・・・13

・・・・14

・・・・15

５. Progress of the Mid-term Management Plan

Progress of the Mid-term Management Plan ・・・・17

６. Changes to Dividend Policy, Dividend Amount

Changes to Dividend Policy

Dividend Forecast for Fiscal Year Ending

December 31, 2016

・・・・19

・・・・20

Reference Materials

Company Overview

Business Areas

List of Main Group Companies

List of Offices

Sales Trends

History

Trends in Consolidated Results and

Main Indicators

・・・・22

・・・・23

・・・・24-26

・・・・27

・・・・28

・・・・29

・・・・30

2

１. FY2016 Q1 Financial Results


FY2016– Highlights of Q1 Results

Upfront investment in personnel, etc., absorbed, steady profit levels continuing

Other businesses are performing well, and running an operating profit

Due to strong performance in the IT solutions business and the contribution

of other businesses, etc., sales and profit levels are both remaining strong

→ Sales by segment are shown on page 5

Profit is at around 90% compared to the cumulative earnings forecast for Q2

Revisions to earnings forecasts will be made as necessary, while keeping a

close eye on progress moving forward

The web marketing and promotion businesses are both performing well → In terms of other businesses, operating profit has now been reached (Segment profit and loss for the previous fiscal year showed an operating loss)


FY2016 - Points of Quarterly Results

（Unit：JPY Million）

FY2015 Q1 FY2016 Q1 FY2016

Q2 cumulative forecast

Due to the growth of existing business companies and the

contribution of newly consolidated subsidiaries, consolidated net

sales have increased 5.4%

As recruitment was suppressed in the previous fiscal year, profit

levels are lower than in the previous year.

With regard to quarterly net income, since the gain on negative

goodwill, etc., related to the acquisition in the shares of the R&D

company recorded last period (JPY 166 million) did not occur this

period, net income has declined compared to the previous fiscal year

Compared to Previous Fiscal Year Differences from Business Forecasts

Consolidated net sales have continued as forecast

Due to the contribution of strong performing subsidiaries and

exhaustive cost management in the research business, gross

profit is exceeding initial forecasts

With regard to SG&A expenses, due to the control of various

expenses, these are not proceeding as well as planned

In terms of results, profit levels have shown steady progress

against the earnings forecasts, and are at around 90% against

cumulative profit for Q2

Quarterly Net

Income

Down 59.7％ (Compared to previous

fiscal year)

Operating Income at

85.9％（Compared to Q2 cumulative

earnings forecast )

Forecast （Achievement）

Revenue +198 +5.4% 50.0%

Operating Profit -108 -23.1% 85.9%

Ordinary Profit -148 -31.3% 81.3%

Net Profit -259 -59.7% 95.6%

472 324 399

434 175 183

3,677 3,875 7,757

467 359 418

Actual Actual （Amount/% Change）


Financial Results by Business Segments

・・・Marketing Research Business

・・・Software/Application/Web services planning and development (mainly mobile/smartphones)

Research Business (Japan/Other)

IT Solution Business

・・・Web marketing business, Promotion business Other Businesses


※Each Segment Sales only reflects external sales.

Revenue 3,677 100.0% 3,875 100.0% +198 +5.4%

Research Business（Japan） 2,321 63.1% 2,392 61.7% +71 +3.1%

Research Business（Overseas） 981 26.7% 903 23.3% ▲78 ▲7.9%

IT Solution Business 327 8.9% 444 11.5% +117 +35.8%

　Other Businesses 48 1.3% 136 3.5% +88 +181.4%

FY2015 Q1 FY2016 Q1（Amount/% Change）


Financial Results by Business Segments

Research Business

IT Solution Business

Other Businesses

Domestic sales are roughly at the same level as planned, and are higher than for the previous fiscal year.

With regard to domestic companies, proposals for comprehensive marketing research services are being promoted

for both existing and new clients, and we are providing services, with each service working together.

With regard to the overseas companies, although there is some variance by country, each company is progressing

roughly as planned. In addition to promoting the recruitment of sales personnel at each company, we are promoting

the establishment of comprehensive fieldwork services (offline services) in Asia.

With regard to segment profit, as a result of the active recruitment of personnel, mainly within Japan, after the

suppression of recruitment in the previous fiscal year, profit levels are lower than at the previous year.

Through aggressive business development, we have received orders from new and existing clients in excess

of forecasts

In addition, the contributions of companies that have been newly consolidated with the group during the

previous and current years have resulted in a significant increase in sales compared to the previous fiscal year.

Personal expenses have increased in association with the increase in personnel proactively hired over the

previous year and segment profit in excess of the previous fiscal year has been recorded (difference in

consolidated subsidiaries compared to the previous fiscal year: Cross Propworks, Cross J Tech)

In both the web marketing and promotion businesses, sales have progressed at a higher level than planned

thanks to aggressive business development.

With regard to segment profit, although there was an operating loss during the previous fiscal year, a profit

has now been reached due to the increase in sales.

7

２. FY2016 Overview of Q1 Financial Statements


Consolidated Statements of Income (Overview)


% %

Revenue 3,677 100.0% 3,875 100.0% +5.4%

Cost of goods sold 2,063 56.1% 2,242 57.9% +8.7%

Gross Profit 1,615 43.9% 1,633 42.1% +1.1%

SG&A 1,148 31.2% 1,274 32.9% +11.0%

Employee Expense 644 17.5% 758 19.6% +17.7%

Depreciation and

amortization32 0.9% 36 0.9% +11.0%

Advertisement 17 0.5% 25 0.6% +42.5%

Recruting expense 22 0.6% 49 1.3% +123.7%

amortization of goodwill 37 1.0% 37 1.0% +1.1%

Maintenance costs 13 0.3% 24 0.6% +92.9%

Others 382 10.4% 344 8.9% ▲9.9%

Operating Profit 467 12.7% 359 9.3% ▲23.1%

Ordinary Profit 472 12.8% 324 8.4% ▲31.3%

Net Profit 434 11.8% 175 4.5% ▲59.7%

FY2015 Q1 FY2016 Q1 % Change

Increase in personal expense ratio（2.1pt↑）

Due to the suppression of recruitment in the previous fiscal

year (Q1 of FY2015), the personal expense ratio has increased

due to the increase in costs for recruited staff since the second

half of FY2015, and the increase in newly consolidated

subsidiaries

Difference in special gains and losses (▲JPY 170 million）

Due to the difference in gain on negative goodwill, etc. (JPY 166

million), caused by obtaining shares in the R&D company

during Q1 of the previous year, in Q1 of this year, there has

been a reduction in quarterly net income

Increase in various costs （+JPY 38 million）

Various costs (Recruting costs, maintenance costs, etc.)

increased due to the increase in personnel costs caused by the

active hiring of personnel since the second half of FY2015,

including Q1 of FY2016


Current liabilities 4,090 3,426 -664

Notes payable 1,047 973 -74Short-term debt 542 534 -8Bonds payable within one year 578 578 +0Current portion of bonds 30 20 -10Accounts payable - other 716 549 -167Income taxes payable 428 183 -245Other 749 589 -159

Noncurrent liabilities 1,935 1,710 -226

Long-term debt 1,677 1,532 -145asset retirement obligation 107 107 -Net defined benefit liability 63 58 -5Deferred tax liability 68 2 -66others 20 10 -10

Total liabilities 6,025 5,194 -832

Net assets 3,945 3,875 -69

Capital stock / Capital reserve 1,095 1,095 -Legal retained earnings 2,619 2,695 +76Other 59 -62 -121Subscription rights to shares 16 16 -minority interests 156 132 -24

Equity ratio 37.8% 41.1% +3.3p

FY2015 FY2016 March Change

Consolidated Balance Sheets (Overview)

Current assets 6,423 5,655 -767

Cash and deposits 2,384 1,749 -636Notes and accounts

receivable-trade2,993 2,838 -155

Others 1,045 1,069 +24

Noncurrent assets 3,548 3,413 -134

Buildings 285 282 -4

Tools, furniture & fixtures 167 159 -8

Software 283 261 -22

Good will 1,956 1,859 -97

Investment securities 114 117 +3Stocks of subsidiaries

and affiliates209 179 -31

Security deposits 416 422 +6

deferred tax asset 42 38 -4

Other 75 97 +22

Total assets 9,970 9,069 -901

FY2015 FY2016 March Change

Noncurrent Assets (Goodwill)

Goodwill balance has decreased due to the

recording of goodwill amortization and foreign

currency translation during this period

Retained earnings increased due to obtaining a

quarterly net profit

Foreign currency translation amounts have

changed due to fluctuations in exchange rates

Net Assets


10

３. Business Topics


Business Topics

≪February 18, 2016 Announcement≫

On April 28, we completed the acquisition of shares in Mixi

Research, a company that is strong in mystery shopper and

undercover investigations. With the expansion of services in the

research business, we are constructing a system that can handle

various needs.

We have changed the company’s name to “Shopper’s Eye, Inc.”.

Trade Name: Shopper’s Eye, Inc.

Established: January 4, 2014

Capital: JPY 50 million

Main Business: Planning and operation of mystery shopping services, planning and operation of various forms of marketing research

■ Acquisition of shares in Mixi Research

(Company name changed to Shopper's Eye)

≪January 21, 2016 Announcement≫

We are entering into a business partnership with Sentan, which

has technology and know-how that can be used in neuro

marketing. By adding neuro marketing to our service lineup, we

will construct a system that can consistently provide support all

the way from research to promotion.

[Overview of Partnership Company]

Trade Name: CENTAN Inc.

Established: May 2010

Main Business: Provision of marketing and consulting services based on brain science and cognitive neuroscience knowledge

■Business partnership with Sentan towards the

provision of Neuro Marketing Services

12

４．Earnings Forecast for FY2016


Revenue 14,859 100.0% 16,535 100.0% +1,676 +11.3%

Research business(Japan) 8,223 55.3% 9,050 54.7% +827 +10.1%

Research business(Overseas) 4,679 31.5% 4,782 28.9% +103 +2.2%

IT solutions business 1,704 11.5% 2,094 12.7% +390 +22.9%

Other businesses 253 1.7% 609 3.7% +356 +140.6%

Operating Profit 1,233 8.3% 1,251 7.6% +18 +1.5%

Ordinary Profit 1,185 8.0% 1,213 7.3% +28 +2.3%

Net Profit 559 3.8% 640 3.9% +81 +14.6%

FY2015

(Results)

FY2016

(Forecast) (Amount/%Change)

Earnings Forecast for FY2016

The plan is to maintain robust growth in each business, and to increase consolidated revenue by 11%

In the overseas research business, in addition to ending temporary income associated with the change in

progression standards at the Kadence Group, plans will be formulated in consideration of the economic

environment and exchange rate, particularly in the Asia region.

With regard to profit levels, these are expected to be in line with the mid-term management plan

※ Only external sales are stated for sales by business.


Causes of Increase in Profit in FY2016

FY2016 （Forecast ）

FY2015 （Actual Results）

Operating Income

JPY 1,251 million

(Profit Margin 7.6%)

Operating Income + JPY 18 million Operating Income

JPY 1,233 million

(Profit Margin 8.3%)

[IT Solutions Business]

Profit increase due

to increased sales

+ JPY 38 million

[Research Business]

Profit increase due

to increased sales

+JPY 231 million

[Other Businesses]

Profit increase due

to increased sales

+ JPY 218 million

[SG&A Expenses]

Increase in PR and

advertising expenses

+JPY 67million

Temporary increase in revenue

due to the amendment of the

Kadence accounting standards

JPY 191 million

[SG&A Expenses]

Increase in hiring

costs

+JPY 66 million [SG&A Expenses]

Other cost increases

+JPY 145 million

(Effective Operating Income)

JPY 1,041 million

If the special factors of the previous fiscal year are excluded,

effective operating income is expected to

increase by 20％


Measures and Policies by Business Segment in FY2016

Research Business

IT Solutions Business

Other businesses (web marketing business, promotion business)

Improve productivity and added value

Cultivate the North American market, strengthen Asian synergy

Expand service areas → Brand diagnostics, workshops, neuro, etc.

Promote customer cultivation by strengthening proposals

Improve productivity and quality

Develop new services, expand business areas

→ Promote group partnerships, use of research, etc.

Expansion of top line by aggressive hiring practices

Promote service improvements, service differentiation

16

５．Progress of the Mid-term Management Plan


Progress of the Mid-term Management Plan

With regard to the mid-term management plan, this is proceeding better than expected.

In 2016, we are expecting earnings forecasts to be roughly in line with the mid-term management plan.

(JPY Million)

0

500

1,000

1,500

2,000

0

5,000

10,000

15,000

20,000

2015年 2016年 2017年

(JPY Million)

14,733

16,287

17,985

900

1,200

1,500

2015 2016 2017 (Mid-term Plan) (Actual) (Mid-term Plan) (Forecast) (Mid-term Plan)

1,185

14,859

1,251

16,535

Ordinary income (right axis)

Sales (left axis)

18

６．Changes to Dividend Policy, Dividend Amount


When consolidated ordinary income of JPY 1 billion is achieved,

gradually increase the consolidated dividend ratio to around 20%

Previous Dividend Policy

Changes to Dividend Policy

Amended Dividend Policy [NEW]

While continuing to stably return profits to shareholders through the payment of dividends,

to take into account the current strong demand for funds and future business investment plans, etc.

"Determine a dividend amount towards a consolidated dividend ratio of

around 15%"

Change in dividend policy in association with consolidated

ordinary income reaching JPY 1 billion


0

5

10

15

20

25

30

35

40

0

2

4

6

8

10

2010 2011 2012 2013 2014 2015 2016

7.9％ 9.7％

12.6％ 13.5％

（％）（JPY）

Dividend amount per share (left axis)

Dividend ratio (right axis)

4.5

*The company split the shares into two parts on February 18, 2013, and into three parts on June 1, 2014, and a retroactive amount has been stated for the dividend amount per share.

*With regard to past dividend amounts per share, these have been stated retroactively, upon rounding off to one decimal place.

3.3 2.1 1.7

0.9

5.0

The dividend amount for the fiscal year ending December 31,

2016, based on the new dividend forecast, is expected to be JPY 5.0 per share (interim JPY 2.5, year-end JPY 2.5)

Dividend Forecast for FY2016

33.1％

19.5％

15.2％

6.0

21

Reference Materials


Company Overview

Company Name Cross Marketing Group Inc.

President Miki Igarashi

Established June 3, 2013

Capital JPY 562,2850,000

Number of Employees (consolidated)

1,382 (including 253 temporary staff)

Main Business Research business, IT solutions, etc.

Newly established due to the shift to a holding company structure Cross Marketing Inc. established on April 1, 2003


Business Areas

Online Research

Marketing

Solutions

Marketing Research +

IT Solutions

Online Research +

Offline research

Marketing

Research


Marketing Research(Japan)

Cross Marketing is the pioneer in online

research with full service marketing

research capabilities spanning both

qualitative and quantitative methodologies.

R&D offers value added information (insights)

through market research planning, design,

implementation and consultation services.

Medilead is full service MR agency focused

on delivering insights derived from from key

stakeholders in the global healthcare industry.

With expertise in consumer behaviors and

insights ,UTIL offers customer behavior

analysis and business consulting services.

Envirosell Japan offers analyses of shopper

behavior and business consulting services.

Our Companies

Consulting and marketing support which

specializes in overseas expansion


Marketing Research(Overseas)

Kadence International is a global insight

agency engaged in marketing research with

offices in the UK, the USA, UAE, and

throughout Asia.

Markelytics is a leading market research

agency providing end-to-end research

solutions to clients around the world.

MedePanel manages and operates

proprietary healthcare panels, and provides

insights from key stakeholders in the

healthcare industry.

Cross Marketing Asia offers a full spectrum

of marketing research related services for

the South East Asian Market.

Headquartered in Bangkok with marketing

offices in Singapore and India, Jupiter is the

research hub to the Asian markets-

Our Companies

http://www.google.co.jp/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwiHxbjw4P3KAhXldqYKHSEZBuQQjRwIBw&url=http://world.1sbc.com/office/%E3%82%B7%E3%83%B3%E3%82%AC%E3%83%9D%E3%83%BC%E3%83%AB%E3%80%80%E3%83%90%E3%83%BC%E3%83%81%E3%83%A3%E3%83%AB%E3%82%AA%E3%83%95%E3%82%A3%E3%82%B9/&bvm=bv.114195076,d.dGY&psig=AFQjCNFdQtVW12wMU4jkhZmX6PEQcwK7Ug&ust=1455762710660134

http://www.google.co.jp/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwiautSg3_3KAhUGraYKHRfVCDEQjRwIBw&url=http://mery.jp/132610&psig=AFQjCNGgrzvBw7MRf26m6eZahWc6YVLQ8A&ust=1455762252294732


Our Companies

Panels IT Solution etc.

関連会社

Union Panels is a one-stop-shop for

global online research with a

current focus on the Asia region.

Research Panel owns and operates

high quality online survey panels while

offering other B2C and B2B research-

related services.

D&M utilizes consumer data to offer

cutting edge marketing services.

UNCOVER TRUTH are experts in Web and

mobile marketing and UI/UX consulting.

Cross Communication are IT specialists engaged in the

planning, development and operation of mobile and

smartphone oriented websites and systems.

Cross Propworks offers development and

design of multi-device oriented websites

and systems, as well as a variety of data

processing services.

Specialists in systems development

and engineering services


Our Locations

Tokyo Osaka

Hakodate

Shanghai

Bangalore

Singapore

New York

New Delhi

Mumbai

Hong Kong Dubai

Boston San Francisco

Ho Chi Minh City

Hanoi

London Sofia

Barcelona

Bangkok

Los Angels

Jakarta

Cross Marketing Group has a global presence of

over twenty business locations, in twelve countries worldwide


0

500

1,000

1,500

0

5,000

10,000

15,000

2008 2009 2010 2011 2012 2013 2014 2015

Steady growth while expanding the overseas and IT solutions businesses, as well as business regions and areas,

based on the domestic research business

Sales Trends (By Business Segment)

Sales Trends (By Business Segment)

IT solutions business

Research business(Overseas)

Research business(Japan)

Other business

【Revenue(left)】

(JPY Million) (JPY Million)

【Ordinary profit (right)】

October 2008 Listed on TSE Mothers

Jun 2013 established Cross Marketing Group


History

2013

2012 Cross Marketing China Inc. established as a Chinese subsidiary

Received a portion of Index Inc.'s mobile solutions business Cross Communication Inc. begins sales operations

2011

2003 Cross Marketing established Formed a research alliance with Axiv.com (now Voyage Group)

2008 Listed on the Mothers section of the Tokyo Stock Exchange

2006 Specialist research panelist management company Research Panel, Inc. established

UNCOVER TRUTH established Holding company Cross Marketing Group Inc. established Transferred to stock holding system Acquired capital stake in Markelytics Solutions India Pte. Ltd. Cross Marketing Asia Pte. Ltd. established in Singapore and began operations as a consolidated subsidiary Acquired UTIL Inc. as a consolidated subsidiary

2014 Established UNION PANELS in Singapore Headquarters relocated to Nishi-Shinjuku in Shinjuku, Tokyo Acquired shares in KADENCE Int’l Business Research Pte. Ltd

2015 Acquired Research & Development, Inc. as a consolidated subsidiary Cross Communication established Cross Propworks as a subsidiary in Hakodate, Hokkaido Medilead, Inc. established D&M, Inc. established

2016 Acquired Mixi Research Inc. as a consolidated subsidiary , changed the company’s name to “Shopper’s Eye, Inc.”.


Trends in Consolidated Results and Main Indicators

Revenue

FY2011

4,424 5,446 6,293 8,141

436 555 725 536

544 581 751 521

330 313 438 245

1,826 2,017 2,558 2,897

2,831 3,088 4,012 7,872

6,663 1,372

106

5,400 876

17

4,619 827

－

4,114 310

－

Dividend per share(JPY)

EPS(JPY)

BPS(JPY)

ROE(％)

ROA(％)

4.5

13.61

150.54

9.5

3.1

3.3

24.62

136.45

19.7

11.01

2.1

17.18

112.42

16.4

10.14

1.7

17.97

99.55

20.1

11.65

14,859

1,233

1,185

559

3,945

9,970

12,902 1,704

253

6.0

30.81

193.17

17.2

5.6

FY2012 FY2013 FY2014 FY2015

Research business

IT solutions business

Other businesses

Operating profit

Ordinary Profit

Net Profit

Net assets

Total assets

※Consider a stock split that was carried out in Feb 2013 , June 2014


Copyright 2016 Cross Marketing Group Inc. All Rights Reserved.

Cross Marketing Group Inc.

http://www.cm-group.co.jp

Copyright 2015 Cross Marketing Group Inc. All Rights Reserved.

Cross Marketing Group does not guarantee the accuracy of the information contained in this presentation, which reflects judgments made by Cross Marketing Group management based on currently available information.

Given that the business environment may vary significantly in the future due to a number of factors, please be aware that the performance and results in this presentation may differ from Cross Marketing Group ’s actual performance and results.

For inquiries regarding one information contained in this presentation:

Cross Marketing Group Corporate Planning Unit

Tel：03-6859-2259 E-mail：[email protected]