Nihon M&a Center Holdings In Aktie

Good afternoon, everyone. Thank you very much for joining our earnings briefing session for the Fiscal Year 2025. This earnings briefing session is provided in both Japanese and English languages to the audience from the entire world. I believe it's early in the morning for people living in Europe and it should be at midnight in the U.S. and for people in Asia it's the evening. Thank you very much for joining this session despite the time difference. I am Suguru Miyake, the President and Representative Director. Together with me are Mr. Naraki and Takeuchi.

Hello, I am Naraki. Thank you for your time.

I am Takeuchi. Thank you for joining this session.

Now let's get started with our earnings briefing session. We would like to start with some congratulatory or the remarks of appreciation. On the 25th of April, we celebrated the 35th anniversary since our founding. Our company was founded in April 1991 and we got listed on the Mothers Section in October 2006 and we got listed on the First Section of the TSE in December 2007. This is all thanks to your support. Thank you very much for your continued support.

We would like to have regrowth as a company. We had our accounting inappropriate incident in FY '21 and then after that; we've had introduction, development, change and conclusion. We experienced these 4 phases and through these 4 phases, we renewed ourselves. And in the fiscal year 2025, I think that we made enough preparation for our next journey. When you look at our ordinary profit, we had JPY 16.8 billion at the time of the accounting incident and that went down and after that, we had a growth from JPY 15.4 billion.

And on the fourth year, this time we've had JPY 19.1 billion ordinary profit, a major growth. And the new fiscal year, we are celebrating the 35th anniversary and we are going to have the second founding as a company, Next Genesis. In 2032, we would like to achieve JPY 30 billion in ordinary profit in that year. That's Vision 300, Next Genesis, and under this vision, we would like to make a huge growth.

Now for the fiscal year 2025, I would like to call this the current year and I am going to call FY '26, the ongoing fiscal year. I would like to provide the executive summary of the fiscal year 2025. Now we've had a hard time after the corporate accounting incident. But after a recovery phase, finally we were able to end this fiscal year with growth in both sales and profit. Our sales ended at JPY 50.25 billion, up by 14% year-on-year and ordinary profit was JPY 19.15 billion, up by 13.2% year-on-year. We have regained our momentum that allows us to achieve our target ahead of the plan towards our midterm target.

And also our original performance achievement cycle of reaching the peak in December and spending the fourth quarter to prepare for the year after. We are recovering towards the cycle and I think that we had a good transition toward the new phase of regrowth. About the current fiscal year or the FY '26, the full year guidance of sales JPY 52.8 billion and ordinary profit of JPY 19.3 billion was set and we are going into a growth phase. So the premise we have for this target is that we're going to exceed this target.

And since it's the 35th anniversary since founding, we set Vision 300 as the start of the second founding phase and in fiscal year 2032, we would like to reach ordinary profit of JPY 30 billion. This is the target that we have set and to get there, I think that employees and executives should share the same values together with investors. We should all be on the same boat. That's the reason why we've decided to introduce new stock-type stock compensation plans -- new trust-type stock compensation plans rather.

And in order to introduce this, we have to get approval at the upcoming General Shareholders' Meeting to be held in June. And also, we have formulated our new vision and core value that's based on our purpose. About shareholder return contribution, JPY 29 per share of dividend is planned to be continued. Other reporting: Batonz is one of our equity-method affiliate. And this company, Batonz, on April 21 got listed on the Growth Segment or Section of the TSE. Compared to our offering price JPY 660, the opening price was JPY 1,674. Batonz has received huge expectation for future growth.

Let's start with a summary of FY '25. Starting with positive factors. I believe that we restored fully to the performance achievement cycle of reaching a peak in December and preparing for the next fiscal year in the fourth quarter. We got back to this original cycle and the mandates we receive should be prepared early on so we can match the mandates with other ones and I think that we did well on this. And also, we have to do thorough management of our progress by holding kickoff meeting and thoroughly managing the progress, et cetera, and we've been doing this fully as well.

With these initiatives, we are starting to see really good signs. For example, budget achievers and budget achieving departments grew significantly in number especially the number of the departments that achieved budget. The ratio was only 29.7% last fiscal year; but this fiscal year this ratio increased to 67.4%, more than 2/3. This improves the momentum as a company. Employees talk and departments talk with each other about the status of each other and they encourage each other. And we achieved 80% of the whole year target at the end of the third quarter and I believe that this creates positive momentum for the fiscal year 2026, the ongoing fiscal year.

We're not saying that we are free of any issues. For example we had a really small, but a slight decline in the number of transactions closed. And also, we had a decline in new sell-side mandates year-on-year. However, I think that you can see these items positively. And also M&A consultants declined in number this time. But this is an item that we've been taking actions already with enough sense of an issue and I'm going to elaborate this later. The reason why we've had smaller number of the new sell-side mandates is because we are now more focusing on the quality of the mandates we receive.

To improve the quality, we started to not accept the kind of mandates that we used to receive. And thanks to this new policy, I believe that we now have been accepting a growing number of mandates with high likelihood of being closed in the future. And we used to be not able to be focused enough on trying to grow or develop people with tenure of no more than 3 years. And we have been reflecting back on this that we should have done better and we are taking -- we have to take necessary action.

And about actual results: sales-wise we achieved 108.5% in sales compared to target and ordinary profit was 112.7%. And we achieved 49% of whole full year target by the end of the first half and 50.4% when it comes to ordinary profit. And at the end of December, 82% in sales and 92% in ordinary profit were achieved compared to the full year targets. I think that with this, we can say that we are now fully back to the original cycle of achieving performance. As I've been saying, sales were JPY 50.2 billion, up by 14%. The number of transactions closed was 1,061. This indicates 17 less transactions closed compared to the year before.

And JPY 45.7 million is the M&A sales per transaction, up by 15%. And we closed 115 large transactions, this was up by 45.6%. Especially mid-cap mandates and large mandates were closed a lot and that contributed a lot to multiple points, for example M&A sales per deal. And about cost of sales JPY 19.9 billion, up by 15%. I think that this should be considered as a positive news because we have received enough mandates from the partner network, which is a good news. And SG&A was JPY 11.5 billion, up by 15%.

We've been making IT investments and other kinds of positive forward-looking investments. So please consider this as a positive investment result. And ordinary profit was JPY 19.1 billion, up by 13%. This is our income statement with more exact and clear numbers. This page shows the status of our various leading indicators that I think many investors are interested in. The decline in the number of new sell-side mandates, I believe that there are some and many investors who are worried about this. But in the fiscal year 2024, the last fiscal year, we focused on more volume to improve the motivation level of the entire company.

Therefore, we kind of welcomed all sorts of mandates back then and as a result, we had the largest volume of mandates since the founding. And I think that that was effective in the sense of creating the momentum of the company. And based on that, this fiscal year our focus is now on closing more deals and having a breakthrough. That has been the target of the current fiscal year. And in the first half of the fiscal year, we aim to have a rugged start to the extent where we could have upward revision. And when it comes to receiving mandates, we didn't have too much focus on that.

And at the same time small mandates, the kind of mandates with the sellers' annual sales of less than JPY 100 million, we started to shift these mandates to Batonz. Therefore, the volume of the mandates we received declined. And about the second half of the fiscal year, we had a turnaround in policy. We started to accept and receive mandates that we think we can close and we started to be more responsible of the final result. That has been the new policy. For example insolvent and loss-making company, this can be a company that we find it difficult to be fully responsible.

For example in the financing or the likelihood of not being able to release the warranty of the owner could be higher than other mandates. So we started to avoid these kind of mandates. We started to be more focused on promising companies or promising deals. So the mandate number, the volume may have declined, but we have been focusing more on quality. So we don't think that this is actually a decline. We are bringing this toward improvement so please think of this as a positive factor. About sell-side mandates, there is a decline minus 11%.

But when you look at pipeline volume, this increased year-on-year. So no concern is needed for the first quarter of the fiscal year 2026. About new sell-side mandates, I have explained already and what I've explained is summarized on this page. And this page shows the quarterly transition of closings and mandates so you can read the major trends.

Next is the balance sheet. I will pass the floor over to Naraki-san to explain here.

Here's the balance sheet information talking about financial status. The top half, the asset side so the total is JPY 66.223 billion and that was the total assets. Line 3, the accounts receivable; a year ago it was JPY 2.633 billion as a balance. But this year March 2026, we had decreased down to JPY 808 million. So we completed the delivery and trying to complete the settlement by the end of the fiscal year and that actually resulted to see the huge reduction of the receivable. And the liabilities and net assets. Net assets was JPY 50.643 billion and so the percentage within the total liabilities and net assets is about 76.5%.

Next, about the number of employees. This is also another important KPI. As I mentioned, the number of headcount at the end of the year, the M&A consultants changed from 630 to 626. So it was a decrease and there was a need for us to take actions to address this drop. Especially for those who are within 3 years since joining the company, we see an increasing number of people leaving. And people who are with us for 3 years or more are increasing and so we have been able to capture them. So let me elaborate more on the net increase.

This is the most important element for us because in M&A, this requires the people engagement so excellent employees. We need to have the net increase of excellent talent not just having net increase. Well, it's important to also reduce the turnover rate at the same time to have the net increase. So this is directly supervised under President Takeuchi. We are taking actions to address the situation. So the current fact, we haven't really improved the turnover rate for those employees less than 3 years with us and we weren't able to accomplish the target in net increase because of this situation.

So as a background: for the last 4 years, we were quite focused on recovering our performance so not being able to pay enough attention to new employees. Also because of the misconduct, some of the mid-career employees have left and that actually weakened the support for developing talents and resources. And since we were also focused on recovering the business so we weren't able to set up a solid mid- and long-term vision for growth. And for those who are less than 3 years with us, it was difficult for them to picture and align their own growth along with a future career path inside the company. So we consider those are the reasons for the current situation.

So therefore, this year -- from the second half of this year, we have started to make changes. One is the midterm plan and Next Genesis is now clearly set up and established. It's been a while since we have clarified the midterm vision. By having a solid midterm vision, employees will have a good understanding of the growth the company is thinking and now we have been able to give more dream and vision for them. The budget for the employees with no more than 3 years of tenure, we have revised the budget and we also revised a follow-up framework for them and we are reinforcing recruitment activities.

So through these efforts, we will make sure to accomplish the net increases in the coming years along with the solid contents and results. And next, talking about the business performance forecast and the midterm management plan. Starting with guidance numbers. This year for fiscal 2026, the sales target is to be JPY 52.8 billion. Compared to this year actual, it will be the 5% increase. Compared to last year guidance, it will be up by 14%. The ordinary profit will be JPY 19.3 billion. Compared to the actual the past fiscal year, it will be increased by 0.8 percentage points and compared to last year forecast, it's going to be increasing by 13%.

So we always show the first guidance and first forecast number to be quite conservative of the number that we are sure to accomplish set out as the guidance. So that's why our original guidance tends to be conservative. First, we set out the sales forecast to be 5% increase from the year before. We want to promise that we will go beyond this growth and we will run the business to make sure we can outperform this guidance number. Regarding ordinary profit, we expect ordinary profit margin could be slightly declining because we need to make some advance investment, things into human resources or in IT and also branding.

This year will be our 35th anniversary. So we want to take this opportunity to focus more on branding so to improve our brand image. So we'll be spending in those areas. So that's why we will tend to see a somewhat conservative ordinary profit. But if the sales go stronger than the forecast, then we should see the increase in ordinary profit. So that's why we want to make sure to outperform this forecast in sales first. In the midterm management plan so what we had announced in the past, this year we were looking at JPY 17 billion ordinary profit, but we came out to be JPY 19.1 billion so the 12% increase.

And the sales went up to JPY 50 billion from JPY 46 billion so it's up by 8%. The current year, we originally expected the ordinary profit to be JPY 18 billion. We want to bring it up to JPY 19.3 billion meaning up by 7%. The sales to be JPY 54 billion from JPY 50 billion, it would be up by 5% in our new guidance year-on-year. Since we had a pretty good result the last year so we hope that we can outperform this fiscal year from what we see here. And Next Genesis, what is this Next Genesis that we just announced. Out of this misconduct, finally, we were able to recover our business.

Fiscal '26, this is actually the starting year of our second foundation, renewed growth. There are 2 parts within the second founding year. I became 74 years old this year so gradually -- I know I'm still good and healthy, but I am starting to think of the succession plan so we can gradually transfer the business over to next generation. Second, now it's been 35 years since we started this business. Things have changed a lot. There were no Internet 35 years ago. The mobile phones were started to be seen back then among the elite people.

But now AI has become quite common as a cautious nature and of course we're going to have to change our business model and that is the second founding year. So from the regional revitalization over to the renewal of Japan, then to be the #1 M&A company in the world. So we want to go over JPY 30 billion as an ordinary profit in the year ending March 2033. However, this takes many different actions to accomplish. One is the trust-type stock compensation plan. So with this system; management, employees and yourself like shareholders and investors; will be on the same boat.

And second is the expansion and relocation of the headquarters. Thirdly, we are redesigning our corporate vision and core values. Regarding trust-type stock compensation plan. So we will put our treasury stocks in a trust and for the target employees and senior management, we will grant the points to them. Once the targets are met, then we will provide the shares in line with the points provided. Regarding head office expansion, currently our sales team at head office are actually spread among 4 different floors. So we will consolidate them into 2 floors.

And at the same time, sales team to be consolidated on a single floor to allow them to have real communication to be more productive. So that's how we can drive our innovation. And the mission framework, the new vision core value. So we were talking about corporate ethos, purpose and philosophy. Through the M&A business, we contribute to preservation and sustainable growth. There's no change. And purpose: to bring best-in-class M&A ever closer, no change on this. We broke down the philosophy into 2 parts.

Vision starting with regional revitalization driving the renewal of Japan and ultimately becoming the world's #1 integrated M&A company. So we have clarified the vision. To realize this vision, we are talking about the core values to be a professional, utmost respect for clients and swing the pendulum in full. And if you swing the pendulum in full, that could create potential risks. That's why the right things in the right way is also needed. So those are defined as our core values. Regarding sales force, sales organization. In the past, we also made a change on here.

We had actually organized the sales team by channels so we actually consolidated them into 3 groups. So the alliance division will be talking to mega bank and accounting firms and regional banks and securities business . So we collaborate with them and then get the business through referral. So we put them together into a single division. Second, corporate business division. This is mainly for the sellers. So we will have a more detailed growth strategy for the selling businesses so we can implement a solid matching.

And thirdly, regional and industry strategy division. Right now there is no point on just sending out direct mails to anybody around there. So we need to focus on specific industry and specific regions and that's what they are doing here. And there are different size of businesses within this pyramid, large size and midsize and small sizes. And small businesses could be handled by our group company Batonz, but midsized business will be handled by M&A Center ourselves and for accomplishing further growth.

So the Capital Market division, we'll bring them into the Tokyo PRO market. Then also listed businesses will be covered by IB and Strategy division. IB Coverage team will be looking at midsized listed companies, then we'll make proposal to them as well. And Strategy division will be looking at the SaaS businesses, including various kinds of financial advisory businesses. JPY 29 dividend per share is planned to be kept. About 60% dividend payout ratio, we have promised this. So the exceed over this has declined from 7% to 6%, but our ROE has been hovering above 20%.

And there is no major change to shareholder mix. As a related business, Batonz is now listed on the Growth Market and our total core market business has been quite successful. Of 176 companies listed on the TPM, 49 got listed with our support and we would like to expand this business further. About PMI consulting business: with PMI, M&A becomes successful for the first time. So companies that are proactive in PMI, it's only our company who does that. And we exceeded more than 40% in growth year-on-year and we received 132 mandates and this is quite a big growth.

We would like to grow this further so we can create an era where PMI is taken for granted. And about overseas business, this is the 10th year since we founded our base abroad. So the third phase starts from the new fiscal year of authentic profit generation. This comes at the same timing as our second founding phase. So we are going into the third phase from this fiscal year. It's the same as fund business. We have finally built our base. J-Capital, an intermediate holding company was established. So we have all the funds underneath this J-Capital and so this is again the second founding phase.

So now we are moving into the growth phase where we want to accomplish a huge leap and so we can make this fund business as the second pillar. Topics, let me skip topics section and let me talk about the industries. As you know, SME agency 2 years ago announced a skill map and based on the skill map, this collocation exam for small or SME M&A is announced and we now got more details about the exam. And it's going to be basically a national qualification system going forward and a company that that operation is being gathered and looked for and it's in a bidding process.

So this qualification is going to be a national qualification system. This is indeed a really good news for us, for our company, and it's going to contribute a lot to having a more sound industry. So the inappropriate buyer. So we have reinforced a lot to take measures against them and we have really -- we started to hear a little about those businesses and now we hear less and less about them on magazines and newspapers. But we can't [indiscernible] lower the situation, could be a possibility of start seeing some new methodologies. So we want to continue watching as an industry.

And as a leading business in this area, we are taking efforts to prevent those problems. And with the collaboration among the business industry, academic and government; we are reinforcing the situation. We are seeing the spread of understanding within academia and we are seeing a stronger level of understanding by them. And also basically M&A was actually picked as the major research area by the Kansai University. So M&A, this is a place where employees and families still form lasting bonds. So no failures allowed.

We have to accomplish the best M&A and we will consider this as the major pillar to support the business. Starting from management all the way through the compensation system, we need to have a solid backbone to support the business. So from the completed mandate over to the success. So we'll make sure to solidify the contract, then we also execute the proper PMI. Then the person or the buyer to be the legendary business owner. So making sure buyers will not be in trouble. We need to have a smooth PMI, then we will also provide automatic insurance at the same time for the representation of warranty insurance.

And we want to support the second life of the seller present so we can make everyone involved happy. Not just about completing the contract, we also want to accomplish the success in the course of M&A process. I know I exceeded the time a little bit. But for March 2026 year, we shared our financial results and the guidance for the year under review so far. And from this fiscal year, we are now back on to the growth trajectory. And through fiscal 2032, we have set major targets in Next Genesis. So we are starting the second founding phase and we are going back to the growth business. That's what we explained today. Thank you for your attention.

Thank you, President Miyake, for the presentation.

We will start Q&A session. We accept your questions through the chat function at the bottom of the screen. Due to time constraints, we may not be able to cover all of the questions we receive. While we wait for receiving your questions, we would like to start with some of the questions that we often receive from investors in our IR meetings so far.

First question about your initiatives about hiring and retaining M&A consultants. Please talk to us about the issues that you think you have now and how that initiative is progressing. Also, please talk about the net increase plan in M&A consultants going forward. This is indeed one of the FAQs.

In order for us to receive investments, investors should be interested in where we will be in 3 years' time or 5 years' time and that will be determined by how effective we will be able to secure our resource. And since this is an initiative that's right under the supervision of the President Takeuchi, I would like to hand over to him.

Sure. This is Takeuchi. Recent hiring status and retention of employees as well as issues and plans about having a net increase in the number of consultants. I feel that -- we feel the effect of what we've been implementing. Since this is a matter right under the supervision of myself, the President, I've been involved in the recruiting and when it comes to final interview, basically almost all the final interviews are covered by myself. So I leave the entire day of Fridays for the final interviews and also I make myself available on Saturdays as well to have final interviews.

And with personnel agents, I disclose my own address to them so they can have direct communication with me to shorten lead time. And in the final interview, I try to talk about the vision I have with my own words. And we have been selective in recruiting the good personnel. And for that, it's really effective that I do the final interview and I feel that it's been effective so far. And to talk about development of the personnel we have hired, General Manager of the sales division and group leaders face and names, I know all of them.

So I think that important point about improving retention is that we hire matching personnel. We hire people who share the same mission as our company's mission. So matching is really important to have good retention. And by myself doing the assignment, I think that we have made some improvement or major improvement rather. But to talk about an issue, I think it's not good that I continue to do this all by myself as President. So I always require an attendance of channel General Manager and also we try to record the final interview or to record interviews with the agreement of the candidate.

So we can leave data of why we decided to not hire the person or what the performance was after hiring, et cetera. So I believe that we've been making good initiatives in doing effective hiring and retention. And about the net increase plan, 10% net increase is the plan that we have under fiscal year 2026 and we are fully committed to this. But the 10% net increase is the plan, but what's important is to have 20% in growth and we also have to be ready for 10% of the resignation so the net increase is 10%. And in the current fiscal year or FY '26, our plan is to have 25% growth through recruitment, 15% designation, so net increase can be 10%.

But we want to narrow the gap and that leads to productivity improvement of the company. And I think that making sure that the newly hired people are highly attached, emotionally attached to our company, that's very important. And we would like to do all these things together at the same time.

Next question. So among your partners, due to the difference in the conditions, is there a risk for them to maybe shift a collaboration with other M&A supporting company? What do you think about this possibility?

Thank you for the question. Let me answer this question. We are receiving attacks. So other players in the market, they are basically not able to implement direct marketing. And because they made calls too much directly, they send e-mails too much so the customers are fed up with such a direct marketing. And from customer perspective, receiving direct mails from tens of different companies, they had no idea where to talk to. And actually that situation -- so basically 3 or 4, 5 companies could be sent out as a nondedicated company and through that trying to find a partnership and that's what we are starting to see among the regional banks and accounting firms.

But first, regarding financial institutions, I believe we will be able to protect our business pretty much all of them because having business through the financial institution isn't that easy. Of course they will collaborate with you, but whether they will actually refer you over to any projects or not will all depend on the long-lasting relationship. Also from top management all the way down to the people on the field, you need to have the trust relationship at every level. And with the regional banks, I also talk to the head of those regional banks and the executive of regional banks and have meetings and have dinners with them quite a lot.

So such a relationship that I built has been there since I was with the previous business. So I have such a quite long relationship with them. So it's not that easy for others to break this relationship. And we are doing a lot for their sake not really for their merit like a qualification system and also award system for them. So many things that we're doing for them so we should be able to protect. Accounting firms, I think you can get the business if you could actually get the intention of the accountants. If you bring good conditions, for example with M&A Center, we actually provide this is the ratio that you receive. But if you work with us, we can give more than that.

That's what happens and the accountants, they will go for the better deals. But the accounting firm, not many of them are actually quite business person because they have the philosophy to run their accounting firms. So they want to actually be of help to the mid- and small-sized businesses. They also want to protect the regional businesses. They have such a high philosophy to become the tax accountants or the basically accountant business, corporate accountants. And so a lot of them are like that. Of course it's not just a condition, but also we actually talk to them with the philosophy and mission-driven business is what we offer.

We always think of what's the best practice for the sake of clients. For clients, who will be the best choice for the clients. That's what we value the most. It's not for the purpose of making revenue for the accounting firm. If they will look for other partner, then that can actually be a conflict of interest for them. The top rank accountants and tax accountants qualification hate to see that conflict of the interest. They want to focus first what's best for the customer and we will be there to allow that to happen and to accomplish that philosophy.

Of course we may lose 1 or 2 deals from certain situation. There are about 1,500 accounting firms, those core accounting firms. We basically are protecting our business likely not to be attacked by the others or we're even expanding our network. The other day we held a major conference gathering a lot of accounting firms in March. I think it was on the 18th of March, we held a major conference called as Accountant Hour. 2,600 participants we had. So by executing these actions, we should be able to capture the accounting firms as well.

Next question. Is there going to be any impact on the business from the development of the generative AI? Please talk to us about the threats and possibilities or potentials that AI have?

Okay. I would like to take this question together with Mr. Takeuchi. I think that AI can be a huge potential for us. I am very excited about what AI can do for us. I think that almost 0 negative effect we may receive from AI. Because when it comes to generative AI, they -- when it comes to AI gathering generic data, we can use AI at the same condition as a boutique company that's run by a single person. But what's more effective is more specific individual information. And here we have 600 M&A consultants who visit our clients' office every day and they gather data.

And we have been building a huge database with the data and we can use the database. And when it comes to negotiation with our clients; sometimes we succeed, sometimes we have a breakup of the negotiations. But we built all the knowledge or all the experience in the database. And with AI, we can enhance the level of the database we have. We can also improve productivity with AI. So I feel that potential that AI has is unlimited. What do you think, Mr. Takeuchi?

I feel exactly the same way. AI is indeed a tailwind for our company. M&A is a theme that could be important, but it could be low when it comes to emergency level. And when it comes to AI, I think that it doesn't drive the final decision-making. It should be human who makes the final ultimate decision-making when it comes to M&A. That should be the way of using AI in our field. And what I think is important is to accumulate potential information as much as possible. And we've been building 7,000 companies' or 9,000 companies' data. And we also built the information that's in the brains of the company owners of such companies. And I think it's really important that we stay ahead in using AI with AI-driven measures.

Next question. Talking about the decrease in number of transactions closed. If you were to continue to focus on quality, I believe it's possible to see a continuous decline on the number of closed transactions. So is it -- what is the view how you can actually increase the number of closed transactions while focusing on quality?

Thank you for the question. Takeuchi-san, can you maybe answer this question as well?

Great question. I believe it is exactly true. But there are 2 points to the answer. First, of course we'll continue to focus on quality. How do we increase the number of closed transaction? Quite natural. Well, throughout the whole process, we just want to have to take 1 step forward in a solid manner. So there is a value promotion department who will improve -- who will go through the potential risks and identifying them and then if there is a bid, then how do we move forward the project. So we'll take more meticulous actions by analyzing the data and set up a rule.

So that way last year after we conclude the agreement and up to the closure, we were able to actually improve the ratio by 10% up to 80%. So that is one thing to improve the ratio of completion. For receiving mandate, I believe we kind of hit the bottom already right now. That's what I'm feeling. So the year before last year, we tried to focus on the volume of mandates. The market -- so if we take the mandates whatever they are, we just take them. And if we were to be successful in closing transactions of large enough like JPY 100 million or the revitalization project, then we'll be also responsible for the result and outcome.

So we just also need to be selective in choosing the right project and mandates. So instead of -- we are thinking of increasing the number of closed transactions in a V-shaped manner or the U-shaped manner. So we want to focus on the quality mandates, the quality project and then increase the number of completion by 10%. And that's what we want to accomplish as part of the vision in the second funding phase.

Next question. Could you share with us the number of negotiation open deals at the end of March 2026, the number of active pipeline projects?

About back orders or open sell-side mandates. In March last year, it was 2,200 and at the end of the last month, it was 2,500. So this is not the number of negotiations. Back orders was 113% of what it was a year ago. So we have a lot of ingredients for future negotiations. And the question we have received, the number of pipeline deals or pipeline projects, it's growing as well. The number of pipelines last fiscal year was 305 and it became 425 this time, a growth of 20%. Especially we have 425 that's during or in negotiation now. So we are going to close them in Q1 and Q2.

Next question. For March 2027 regarding the forecast, the guidance number, the operating profit is expected to increase by 3% year-on-year whereas net income is expected to grow by 7%, which is larger. So can you explain this growth?

So the fund business AtoG exit, extraordinary profit is going to be posted which is actually increasing the amount of net income. Naraki, anything else?

Yes, that is exactly the reason why we see bigger growth of net income.

Since there is no additional question, we would like to make the next question the final question for today. Please talk to us about your initiatives toward FY 2032.

This is indeed a very important theme for us. I would like first Mr. Takeuchi to take this question.

I am simply excited about what lies ahead of us. In the 4 years since the financial misconduct, we had a lot of learnings in the good sense. And the M&A industry itself is having a major turnaround period and we started to take actions ahead of others. And we've transformed our entire company. And our headquarter system improved with the establishment of the administration headquarter as well. So we can stop what we should stop and we can proceed what we should proceed. We think that we have really a strong base now. So we would like to achieve JPY 30 billion in ordinary profit in 7 years' time and we would like to make a huge leap under this Vision 300.

About 2032, I am really excited about where we will be. We have fully recovered from the misconduct. We have some relatively minor issues such as talent issue, et cetera. But in the huge sense I think that we have made a full recovery since the misconduct. So this fiscal year is going to be the first year of the second founding and we're going to once again put ourselves on the growth track for huge growth. And I indeed enjoy this process and the necessary strategy and tactics for us to get there. We have refined the strategy and tactics that are required. We have put a lot of time on preparing them.

And to employees, a new stock-based compensation system is planned to be introduced. And with that, investors, employees and our executives will be on the same boat with the introduction of this new system. And we would like to realize what we formulate under the vision partially with the system. And we would like to be able to have a huge jump in the next 30 years and 50 years even. So maybe consultation targeting listed companies can start in M&A. And in our overseas business, I think that we will be able to grow significantly.

And fund business is going to be developed into a second major business or second major pillar rather. We're going to expand our business this way without failure and we plan to have a huge jump in both sales and profit. Please look forward to the story we have ahead. Please enjoy our journey together with us. Thank you for staying with us till the end and thank you for taking your time out of your busy schedule.

Thank you for being with us till the end for the earnings session for the March 2026. Participants in Japan, participants in Asia, the U.S., Europe; we thank all of you indeed. And besides that, we've been focusing on IR and we will continue to do that so you can fully understand where we are. And we welcome one-on-one IR meetings. We would like to have enough communications with investors to expand our market cap and our corporate value. Thank you and please continue to support our company. Thank you indeed.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Good afternoon, ladies and gentlemen. Thank you very much for coming to our third quarter results briefing for the fiscal year ending March 2026. And today, we also have a simultaneous translation. So we are communicating all around the world. For those in Europe, it must be in early morning. For those from the U.S., but I bet you are in very late at night. Thank you very much for joining this call for those hours. So I am the President of the company. And also, we also have Naraki-san and Takeuchi-san with me.

I am the Vice President for the company. My name is Naraki.

And I am a Senior Managing Director. I am Takeuchi.

Okay. So let's get started. In 2026, we are having the 35th anniversary of the company. So we made the anniversary logo, which we put on the front page. The bird in the middle is a Mascot character. She is called MAppy, M and A and happy. And those 2 words were combined together to be named as MAppy.

And let me first start with the summary. In this Q3, showing the 9 months total and Q3 alone, basically, we recorded the highest sales and recurring profit ever, and we were able to surpass 40% for our recurring profit margin. For 9-month total, we accomplished JPY 37.7 million, which is increasing by 26.5% year-on-year. And the recurring profit went up by 46.8% to be JPY 15.7 billion. The OP margin was 41.7%, which is up by 5.8 percentage points. The number of transactions closed increased by 9.8% to be 810 deals and also M&A sales per transaction increased by 15.3% to accomplish JPY 45 million.

On a Q3 alone results was JPY 15.1 billion revenue, and that was a record high number, up by 34.6% year-on-year. And ordinary profit was JPY 7.1 billion, which increased by 51.5% and OP margin was 47.2%. And number of transactions closed was 322 deals, which are progressing pretty good. And M&A sales per transaction was JPY 45 million, maintained at a very high level.

So where are we at for the overall against the guidance numbers? I think that is important to note it. And for the sales, our target was JPY 46.3 billion. We are at JPY 37.7 billion, which is 81.5% progress. And ordinary profit against the forecast of JPY 17 billion, we are at 15.7% with 92.5% progress. And even more, we are quite pleased to see a very steady progress in returning back to our growth cycle. So M&A jobs, we do see many different conditions and situations, and we do see a lot of extension of the deals. So in Q4, March, if we were to trying to target at Q3 to accomplish the target, then we tend to see some delays into the next year. So we need to accomplish the certain business performance while satisfying customers. We will need to bring up the high performance as much as possible in Q3. So we can work on more preparation work in Q4, so we can have a rocket start for the next fiscal year and matching and also receiving a lot of commission work. And so that way, we can accomplish the stable growth.

And finally, I believe we were able to come back to such a business cycle, and that is the most pleasing information that I have for this time briefing results. And let me go one by one, a little bit more in detail on the sales of 37.7% -- sorry, JPY 37.7 billion. And of course, we saw increases both in the number of transactions closed and also the unit sales, and that helped to see a substantial increase in the sales. The best part was the number of consultants who accomplished budget. We saw a substantial increase in such a number, such members and also department who accomplished the budget increased drastically. At the same time, Takeuchi-san, who is the President of M&A Center, always talks about each individual will need to accomplish the target to be happy and also each department to accomplish the target to be happy.

And as a result, the company to accomplish the budget to be happy. So he is always pursuing to accomplish both the individual and the whole group. And such a policy and thinking is now being understood and spreading among the employment -- employees, and that was accomplished this time. And I think now we were able to build a very solid foundation to accomplish that. And the number of transactions closed. I think we were quite successful in implementing a very scientific approaches. It wasn't the result of a coincidence to increase the number of success rate and also on time closure of the deals, and we implemented 2 measures to accomplish them.

One, when we start the deal negotiation, we had -- we are now having kickoff meetings, both sellers and from the buyers, the person in charge and their managers and accountants, lawyers and tax accountants and all these professionals, they all got together to confirm the schedule. We also confirm the stakeholders, and we also confirm the challenges, which is more important. So we identified those challenges ahead of the project kickoff, and that is very important. And we are making a smooth flow in the deal procedure. We conducted an M&A audit. And if we were to find the challenges at the time, then that could actually cause a situation that people might wonder, maybe they were hiding this information or they were deceiving us. And such a concern will be rising.

So at the beginning of the whole deal, we need to assume what the challenges are so that way, both sellers and buyers can prepare themselves to be able to take action towards them. And that will actually increase the trust in us and also trust in between sellers and buyers, and that helps to have a smooth process going forward. The other thing is, and since this scandal we had, we actually increased the number of managers drastically. Of course, some of the -- a lot of managers are still not fully experienced, but we created a role for the deal management in place. So every Monday, we instructed them to give right instruction of the deals to their subordinates. So those are the 2 actions we implemented, which supported us to have such successful results, which were led by the President Takeuchi as well as the sales General Manager and their leadership actually worked quite well to permit this type of thinking among all the staff members to increase the number of transactions closed as well.

And we are also able to maintain a very high M&A sales per transaction. And as I've been talking in the past, we're not trying to grow the sales per transaction. That's not our main purpose. Our target is to maintain around JPY 40 million per deal. But as we grow the number of deals, the unit sales goes down. So to stop that, we basically trying to capture the mid-cap business deals as much as possible, and that was quite successful, and that's also sustaining good unit prices. And the number of large deal was 85 cases. We did see a huge increase, increased by 66%. So our volumes on the midsized deals are properly secured. And but also for small deals, actually, we passed those deals over to our affiliate companies, the companies by the equity method, the patents. We have patents to handle those smaller deals.

And I think that was also effective at the same time. And because of that, the percentage of smaller deals are now declining with us, and that is actually helping to see a stronger performance. That's how we understand right now.

And talking about the cost and expenses, I pass the floor over to Naraki-san.

On this page, so we are showing the cost of sales and SGA expenses. So those costs and SGAs for this year, starting from March 2026, we have changed the classification of human resources that actually changed some of the number changes. And so we are talking about comparison after the reclassification change. Then cost of sales was increased by 19.1% to be JPY 13.7 billion. SGA expenses was JPY 8.37 billion, increased by 7.7%. Referral fees ratio was 13.1%, increased by 0.9 percentage point. For the SGA expenses, the IT cost was JPY 848 million, and it increased by 46.7%.

And let me also touch on the overview of the expenses and numbers. This is the total income statement. And towards the top on the cost level in total as Line 3, JPY 13.725 billion, and it was 36.4% of the sales. Last year, it was 38.6% and this ratio went down year-on-year. And 2 lines down from here. the SGA and operational cost, so it was 22.5% with JPY 8.49 billion. It was 25.6% last year. So percentage reduced this year because of the sales increase. So as I mentioned, ordinary profit came out to be 41.7%. So now it's back in the 40s.

And next is talking about the commission status. So it's very important to understand how many that we are receiving as mandates. In total, we received 328 mandates, which is down by 3% year-on-year. Of that mid-cap mandates were the 58 deals, which is down by 10.8%. For the buy-side mandate was 383 mandates, which is down by 6.6%. And number of new transaction negotiations was 295 deals, which is down by 13.2% compared to last year. I will have more details to come later on. This is nothing really negative. Actually, in the first half last year, we did have a huge amount of mandates that we received. And based on that, we decided to focus on the business performance. We wanted to revive our business performance. That was the main purpose of this fiscal year.

So the number of transactions closed, and we try to focus also on the track record of the closed contracts. So we did not focus too much on receiving mandates in the first half. But second half, we will focus more on the quality of the mandates. And that was the policy we had in the second half. For those with no possibility of getting concluded, we try not to pursue to conclude them and close them. And so that is why the number is declining, but this is not because of a negative situation. So I hope you can understand this is still a result of positive effort, and this is the overall flow.

Mandates in the central area are in green. These are the mandates in the city areas. We've been acquiring city area mandates quite well and local area mandates are about 45% of the total. So revitalizing the local economy and also contributing to the central area I believe that we have a really good balance of achieving mission and achieving good results at the same time. And about the fourth quarter, when it comes to receiving mandates or matching, we will put in bigger efforts. So I believe that we will be able to have overall good performance in the whole year. And the summary of the status of acquiring mandates is this. These are detailed figures. So please take a look at this later. And about the number of new mandates we have acquired, we believe that we're not experiencing a deterioration. We think that we are in a transitional period.

About last year, we, as a company, were finally trying to be revitalized. So our focus back then was on acquiring more mandates. We were going after volume. However, since the start of this fiscal year, our focus is more on closing mandates and eliminating troubles. Therefore, when it comes to acquiring mandates, we've been refraining from the mandates with limited possibility of closing them after -- later on. And also, there can be inappropriate buyers. So really delegate projects that are close to renewal type of mandates, we've been cautious in receiving those mandates to improve customer satisfaction rate and also to improve our productivity. So we've been raising our productivity, and we've also been trying to improve customer satisfaction. And also, we plan to further improve the quality of the mandates we receive. And at the same time, we plan to improve the quality of our business and our service and the customer satisfaction level. This is going to be our direction.

And I would like to hand over to Naraki-san for summary.

Okay. About our balance sheet assets. JPY 60.011 billion. And below that, total net assets, JPY 48.257 billion. So ratio of this was 80.4%. And we have the same for the previous fiscal year on the right-hand side, JPY 47.5 billion in net assets. The ratio of net asset was 77%. So there is an increase by 3.4%. And about headcount, as I said, we had a reclassification of employees. So at the top of this table, we have the role for M&A consultants. These are the sales representatives belonging to the sales headquarter of Nihon M&A Center and the sales staff at local -- foreign local entities. And as I said, we've been doing effective hiring in M&A consultants. However, we have the increase in turnover of our employees with tenure of less than 3 years. So we've been implementing measures to improve retention of our employees. And we plan to provide more information about that later.

Next page, Page 14. This one is about our current fiscal year. This fiscal year, we've been showing numbers both as reported and both -- and also on a reclassified basis as well.

Thank you. About our headcount. We've been doing a lot of things. And headcount is the area -- the only area where we feel there's an issue, especially turnover ratio of the employees with tenure of no more than 3 years is declining or rather it's worsening this fiscal year. So we have already started taking measures to address this. However, we have a lead time, about half year's lead time until we start to benefit from these initiatives. So until then, we are going to continue root cause analysis, and we've been taking measures. And we have multiple issues, but the issue of the increase in the turnover of the people with tenure of less than 3 years, this is the largest issue we think we have in our company.

So we want to address this immediately. We want to reduce turnover. We want to have a net increase in sales representatives. Just having a net increase itself is not good because when there are a lot of turnover, that means that we have relatively beginners -- more beginners in the company that leads to lower productivity. So we have to reduce turnover while securing enough personnel. And we've been taking measures. So we think that we'll be able to have major improvement next fiscal year.

Next, let me touch on the shareholder returns. So for this fiscal year, we try to face the change in the external environment and trying to go back to the accomplishing cycle that we used to do in the past. So we intend to continue sustaining the dividend JPY 29 same year. So we had JPY 29 for March 2025. Therefore, for March '26, we intend to go with JPY 29 with no change from the beginning. In during the midterm plan period, the dividend payout ratio is to be 60% or higher. So we maintain this basic policy as well.

And next, the ROE trend. In 2024 March, we conducted share buybacks. And with that, we were able to get back on 20% -- and also March 2026, we expect to be at 22.9%. And next, shareholder situation and also the market cap trend. And shareholder mix is shown here. Individuals are decreasing. And now we see increases from institutional investors in this pie chart. Individuals showed 30.7%. And last year, a year ago, it was 33%, but it came down to 30.7%, down by 3.2 percentage points. For financial institutions, sales 30.2%. Last year, it was 25.1%. So it increased by 5.1 percentage points. The foreign investors -- foreign institutional investors was 28.9%. The last year, it was 30.4%. So it went down by 1.5%.

And next, talking about the forecast number, there is no change to our forecast numbers. We maintain the same number. And so we can move forward according to the guidance numbers. In a midterm target, there is no change in our midterm target. And of course, we will make sure to have an upside to the midterm target to be accomplished. So we ensure to accomplish them, and we will try to have as much upside as possible so we can lead to the next phase from there on.

And related activities. Currently, the other sales is about JPY 1.2 billion. This is only about 3.3% within total sales that's coming from fund business and PMI business. And so this is still a small business, and our intention is to grow this with other business. And also TOKYO PRO Market, we are making good progress. And this year, the number of IPOs were not that many. The listing to the market, it takes about 2 to 3 years for preparation. So those deals that came 3 years ago and 4 years ago are going to be IPO this year. With the scandal, right after the scandal, TPA commissioned project have decreased. So therefore, we see less IPOs this year, but we intend to accelerate the number of IPOs, and we do have enough backlog of the potential IPOs to come in, in the coming years.

The most important thing is the PMI. Both FSA and SME agencies, they say not just closing M&A. What they need is having a successful PMI activities as well. That's their direction. And we think that we are the only company in Japan who is doing M&A consulting, but is also doing PMI support activities. And the plan for this fiscal year is to receive 120 mandates, and we have already acquired 95 mandates. 120. We think that we're going to -- we'll exceed 120 this fiscal year. And we think that this is going to be a major differentiating factor going forward for our company. So we're going to do more aggressive sales activities. And at the same time, we would like to enrich our activities or enrich our support to customers, but we cannot do this on our own.

Therefore, we would like to do more collaborations of private, public and academia collaboration. And we have ASEAN-based local entities. And they have been working really well. they closed their financial years in December. And this fiscal year, they achieved their budget sufficiently. So from the next fiscal year, they are going to enter into the next stage of growth.

So I have been really counting on this overseas business, and I am excited to see the development of this business going forward. And about our fund business, its contribution in terms of profit may be limited. However, A2G Capital, J-Search and Japan Investment Fund, they are all going quite successfully, respectively. And about J-Search, they have already established companies in 4 locations, and they've been working together with local banks. And Japan Investment Fund, they have launched their second fund that's been working effectively. And roll-up activities are done, which are the add-ons of generating synergies with companies with good affinity after acquiring a company. And we have done 2 of such roll-ups this fiscal year at the Japan Investment Fund.

Topics. DX and AI usage, especially AI-based activities have expanded quite significantly. And Takeuchi-san has been talking about data-driven management. Bring out is a name of our analysis soft of conversations and discussions. With this AI-based software, we've been collecting a huge volume of various information that's used for our sales approach improvement. And we've been also accumulating customers' qualitative information. When it comes to quantitative information, we can accumulate the data by receiving financial documents. But when it comes to qualitative information, we have to do interviews to customers.

And just like in human marriage, qualitative information can be more important than quantitative information. This is the same in M&A. So when we get more qualitative information, eventually, we believe that we will be able to have more accurate AI-based auto matching. So activities that we've been doing based on DX and AI are -- have huge potentials, and we've been doing all of what we can do. And about seminars, we've been holding physical marketing, and we've been getting a lot of applications. We had 80% more applications compared to the same time last year for these kind of events and 2 major reasons. One is that our planning has been quite getting better. And the second is that customers' interest in M&A are growing. And in the next fiscal year, we would like to do such real marketing more actively. And we've been having successful area marketing activities as well.

For example, signage advertising that you often see at stations, railway stations, like you can find in the photo on this page, we've been doing advertising there. For example, in Tokyo, Osaka, Nagoya, Fukuoka, Hiroshima, Hokkaido, Okinawa as well. And it seems that we have one at Haneda Airport. I saw the video of our ad there. And also, we've been doing things that are based on the local communities. For example, local representative office with discussion desk. We now have one Yamaguchi, Niigata, Miyagi, Ibaraki, Shizoka and Yamaguchi finally. This is the fifth one that we have established.

Thanks to customers' support and thanks to our efforts. We are recognized by Guinness World Records for 5 consecutive years. The number of closures last year was 1,088. This was the highest in the world. We would like to use such track records and awards for our branding activities. And the next one is about integrated report that I hope everybody will read. We publish them or we have published them at the same time in Japanese version and English version. And we plan to do the same in the same manner this year as well. And this is not just about senior management thinking.

We have been including the dialogues and stories and thinking of the various people, including external directors, executive offices, et cetera. I hope that you will feel our culture and momentum. And about our industry trends, we are experiencing increasing the number of intermediary agencies and SME agency had the second revision of their guidelines and also introduction of qualification systems. So in such initiatives, they announced their skill map and qualification system committee was established and inappropriate buyers. We've been enhancing our activities to avoid getting involved by them at the M&A association. And also, we would like to be an exemplified or we would like to be a model in this industry. And our 3-party collaboration, tri-party collaboration, we've been doing that quite widely with University of Kobe, Kyoto, Waseda, Hitotsubashi, et cetera. We've been doing joint research with them. And also with Kwansei Gakuin University, we're going to do the same going forward. So we've been inviting many universities to do this.

So the company is not an object. It is a place where we create and look at the lives of many different people. It's not just completing all the contract to be closed, but we hope to be able to be successful in accomplishing the best M&A to make everyone involved to be happy. So in order to accomplish such a success and the best closure, we intend to implement various measures, as I mentioned.

So this is all for the results briefing. And now we want to move on to a Q&A session.

Thank you very much. So let's move on to the Q&A session. [Operator Instructions]. While we are waiting for your questions, first, we want to pick up some of the major questions that we received in our shareholder interviews in the Q&A session.

This is a question first. So regarding your initiatives to maintain high retention, is there any issue in your hiring policy and hiring environment?

Okay. Thank you for the question. This is the only challenge I am feeling the most and also the largest challenge that we are facing. And we are making a very detailed analysis and taking various actions. So we want to have Takeuchi-san to explain more details on this.

Thank you very much. Regarding the hiring environment, in the last time results briefing, so we are getting a good response in terms of receiving applications. But of course, we need to look at the conditions in market. So we have a close watch on the market situation. But currently, we are receiving good application, and we are selecting the right candidate. When it comes to hiring policy, so the turnover rate is on the rise. So -- what we did to address that for the past 6 months or 3 months, we try to understand the reason why they left the company and where they went. And what was the reason they decided to leave the company. So I myself went into more details to understand one by one.

And the major reason for leaving the company was that they had an expectation for M&A Center before joining the company. But after joining the company, they saw a huge gap against the ideal they had. That's what we found, let's say, they thought, okay, they could do more, they could work a lot and hard. But due to the compliance and the governance, it wasn't really giving enough flexibility to do a lot of work. And some people thought this was a large company, but why do we have to be bound by certain behavioral rules. So those gaps, we thought that they were in the different directions.

So basically, the major challenge was that in a final interview with those candidates, we needed to communicate our company core value to the full extent to them. So therefore, since February, every Friday, and I spent half day every week, I decided to be part of the final interview with a potential candidate, every interview. And we also had the channel General Manager as well. So in the final interview session, first, I'm trying to eliminate those gaps that they may have in the future. So that's why I'm now involved in a hiring process that we are able to improve the hiring situation. That is where we focus the most.

May I add one more? Yes, there is one more thing. This is the biggest challenge I'm facing right now. So the other thing is once they join the company, once they start working, and then those who decide to leave the company. Of course, if they are not able to perform fully during the first year, they tend to leave. And what is the definition of being successful? So I think the important thing is to have closing the deal within a year. So last year, also the year before and even this year, for those who joined the company for the past year and only 60% of those members have accomplished closing deals. So we first want to raise this percentage to 80%. For those members who accomplished the first closure, those 60 members are not leaving. But the remaining 40 are the ones who are leaving.

So that's why we are focused on increasing the number of success rate up to 80% during the first year. So as you can read on the slide, of course, I look at all the members, I see all the members through the hiring process interview. And then I myself will have an interactive communication with all the people so I can give them more confidence. And a year later, even with the channel General Manager, if they are having hard time getting closer, then we think about reassigning them to a different channel. So we want to show the value to those employees for the first year as a part of the flow. So we need to pay extra attention and proper care of those who joined -- who just recently joined the company and so we can develop their capability, and this will be led and adopt top-down manner.

Next question. M&A sales per deal has been trending at a high level. Is this a onetime trend? And how reproducible are mid-cap mandate-related initiatives? How do you see your current M&A sales per deal and the level you'd like to be in the future?

Thank you. I have always been talking about JPY 40 million as our target M&A sales per deal. Our social mission is to grow in volume so we can save as many companies as possible. When we have more volume, it's natural that, that sacrifices our M&A sales per deal. That means lower productivity. So we want to acquire mid-cap mandates, both them so we can maintain M&A sales per deal. This is what we've been trying to do as mid-cap measure. And this measure has been actually been more successful than we had anticipated. Fortunately or unfortunately, it's not really coming from the mid-cap mandates per se. It's rather coming from the fact that we have established a team of mid-cap dedicated consultants and targeting all sales representatives, these mid-cap -- we have established a system where they can educate and instruct about acquiring mid-cap mandates.

Actually, companies have only 2 ways of closing their business or getting acquired. These are the 2 only scenarios they have. However, with us, they have new options, for example, fund option and others or maybe handing over the business to their sons, owner, sons and so on, IPO possibly. So in order to convince customers, we need to create proposal documents and however, beginners are shy about those options. And we have established a consultant team that can make such proposal documents when they receive referrals about those mid-cap potential mandates. So this has been working effectively and leading to the improvement of our closure rate.

Things have been more smoother -- more smooth than we had anticipated. And of course, increase in M&A sales per deal is something that we welcome. But we want to maintain this. And the level that we would like to be is JPY 40 million, in my opinion, basically JPY 40 million. So maybe JPY 42 million, JPY 43 million should be enough as our M&A sales per deal. So when it comes to JPY 45 million or JPY 46 million, I think that's too good for us.

Next question. Could you tell us the number of the deals under negotiation, which are left open at the end of December?

Thank you for the question. So the number of deals under negotiation, currently, there are about 944 -- right now, 449 deals, 449 deals are under negotiation. and 295 are newly opened deals. I believe this is a pretty good condition. We are coming to the end of the fiscal year in March. We are able to have enough negotiation. We have secured enough pipelines, which are those deals under negotiation. And for the next year, to have a rocket start in Q1, we want to actually increase more of such a pipeline. So in Q4, in February and March, we will be working more on matching activities that is going to be quite important.

Next question, leading indicators that determine your business results from the next fiscal year. So the number of new negotiation starts and the number of consultants, these indicators are deteriorating for 2 consecutive quarters. Is there going to be any negative impact from this on the likelihood of exceeding your budget in the midterm plan?

I don't have a concern about this because our productivity is increasing and our closure rate has been growing solidly, meaning that we are more capable of doing effective management than before. And also, the quality of our pipeline mandates or pipeline projects are improving as well. So I do not have a concern or anxiety about not being able to exceed our budget under the midterm plan. And about the number of new negotiation starts, I think there is limited possibility of not being able to achieve this indicator target. And even so, the shortfall -- potential shortfall can be covered enough by good closure rate. And also the number of consultants, I have a major concern about that. So we're going to reduce turnover rate enough, and we will establish a system where new people can grow sufficiently. And at the same time, we want to do more recruitment so we can have net increase.

This cycle is something that we have been establishing in the recent 3 months. And we think that the level of success in this measure will impact the level of how much we can achieve our midterm guidance -- midterm plan targets. So we will do more about this.

Next question. Regarding the decrease in number of sell-side mandates, do you think SME agency policy is affecting because they encourage the regional banks to be the intermediary for M&As. So can you tell us the current status of the direct network ratio in the sell-side mandates? And what do you think is the forecast?

Regarding the first part, that is nothing to do with the situation. Actually, their policy is working on a positive way. The SME agency and FSA and they are talking regional banks to work on revitalizing regional economy and trying to accelerate M&As and also asking them to develop the businesses, which is making more than JPY 10 billion. And so regional banks are actually collaborating and working in tandem with us. So that's why the regional bank team in our company are going quite well so far. They're receiving a lot of mandates and having a lot of closures as well. So the decrease in number of sell-side mandate is because in the first half, as I mentioned earlier, so this year, we had -- this year will be almost a conclusion year coming out of the scandal. So it's going to be the year for recover from -- fully from the scandal 4 years ago.

So first, we wanted to focus on the number of closures and also the amount, the yen amount as well. And so that's where we focused on first half. And that was affecting the result in the first half. But second half, now we are focusing on improving quality of the mandates, and that's what's also putting some pressure on the number of mandates. And so that's also causing a slight decline. But there is no major impact by them. And rather, we see a much positive impact on our business with those policies by the governments. And so the ratio between direct and network, the network is increasing for the mandates.

And right now, in Q3 of fiscal '25, regarding sell-side mandates, in ratio-wise, 37% versus -- no, correction. 74% versus 26%. Network, 74% and 26% for direct. So ratio for network is increasing. And the network is increasing more. Of course, we need to increase the ratio -- direct ratio. But recently, pretty recently, direct market is exposed to very fierce competition. So, so many, too many boutiques out there in the market. And it's very difficult to obtain mandates. So that's why for network channels, we pretty much have an exclusive relationship, and we receive also the retainer fee as well from them. So we are receiving good revenue through the network. So that's where we can leverage on our strength.

Next question. About dividend, do you have a plan to change your dividend of paying JPY 29, including special dividend of JPY 6?

Thank you for the question. Of course, we have to make a decision to announce. So we cannot say anything definite on this occasion. But to share with you my thinking, we're not planning to cut dividends. At least when we are steadily growing and when our share price and our market cap are growing steadily, we would like to make sure that shareholders can enjoy capital gains. And until we go into that phase, we're not going to cut our dividends at least. So I would like our shareholders to be believed about the possibility of dividend cut.

Next question. And so regarding returning to your normal performance achievement cycle, how do you think its repeatability or continuity for next year onward? Takeuchi-san, can you answer this question?

We next year beyond, repeatability and continuity have such a cycle. So this year, we are looking at this progress. And the answer could be a little abstract, but I think the people in the field did great work. You don't misunderstand this -- my comment, but I think it was actually too good to be true, but still, we are making such a great progress so far. And we have taken every strategy measures that we are able to take in details. The important thing is not to rush too much. If you rush too much, if you just try to accelerate the performance, that can actually cause too much pressure or the burden on the field members. So we need to avoid that. We need to focus on completing good quality M&A.

And so the whole industry is focused more on safety and security and the responsibility accountability for the result. So we need to be seriously addressing that trend and what's been required by the society, and that will lead us over to a strong performance. So repeatability and continuity will be accomplished by pursuing this policy.

Next question. Your interim fee grew by 28% year-on-year. When does that lead to you receiving contingency fee or a success fee? If you go along with the flow that you were in, in the recent few years, I can assume that this level -- this increase in interim fee will lead to an increase in success fee in the next quarter. However, since your company seems to be able to get back to the customary cycle of achieving results earlier than planned, do you think that -- do you plan to carry this over to Q1 next fiscal year?

This is not something that we're going to make a decision about because for M&A, we need a buyer and a seller. These are our customers and they have their schedule. They have their conveniences and they have emotions as well. So timing is not something we adjust. They determine the timing of M&A closure. So in accordance with the normal cycle, we tend to close deals in the following quarter. However, unlike major M&A, like an M&A between listed companies, they actually make decisions at respective Board meetings. So there is no change basically. But when it comes to M&A among SMEs, there can be pretty natural doubts. There can be a half month or 1 month deferral of closure and also buyer can be involved in a sudden major trouble and President of the buyer may have to go on a business trip to foreign country.

So there are many cases where there is about a 1-month lag in closing deals. This can happen to us as well. There can be deals that can be closed smoothly by the end of this fiscal year. Takeuchi-san, what do you think?

I completely agree with what he has said. It's our customers who form and decide on market results. So of course, we pay attention to the expected results on a quarterly basis, but we pay attention to our customers. Our senior management will, at the same time, closely monitor our results. So I completely agree with what Miyake-san has said. Thank you.

Today, thank you very much for staying with us for a long time. We have explained our results for the third quarter, and we had a Q&A session as well. Thank you for staying with us till the end. And finally, from the appropriate incident, we experienced many things. And in FY '22, we had a shift to a compliance-based management, and we implemented many prevention measures. And in FY '23, we tried to be a more united company and a more cheerful company. And in FY '24, we received a huge volume of mandates in this fiscal year '25 is about recovering in our financial results and getting back to the primary customary cycle of achieving results.

This has been the direction of our company's management. And thanks to these efforts, we had a rocket start, really good start in Q1 this fiscal year. And we had an upward revision in the second quarter. And in the third quarter, I think that we had good enough results that matches with what we have been doing, and we are now almost back to the customary cycle and the level of enthusiasm among our employees is quite high. It's been rising. And of course, we have some issues, including an issue of higher turnover rate. There can be some potential issues. However, we are trying to be transparent to shareholders and investors and we've been discussing with them about our issues. And we will continue to do the same as our manager company going forward. And our Q4, the next briefing session will be the full year briefing session -- full year results briefing session. So our company will be united and make efforts and also acquiring mandates, so we will be able to have a rocket start next fiscal year. We will not ease up on our efforts for that.

Please continue to support us. Thank you.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

[Audio Gap]

[Interpreted]

Sales stood at JPY 22.5 billion, and this was an increase year-on-year by 21.5%. Ordinary profit this time was JPY 8.1 billion, and this was up by 43.1%. And as a result, we released an upward revision on our forecast for the first half of October 23.

This page shows our progress compared to our whole-year forecast. And as you see, our sales and ordinary profit are almost 50% of our target for the whole year.

To talk about the breakdown of sales and so on, I would like to talk about the number of transactions closed and M&A sales per transaction. We closed 488 transactions, up by 7.5% year-on-year.

M&A sales transaction was JPY 44.6 million, and this was an increase of 12.6% and part of the factors that led to the increase in M&A sales per transaction is the number of large transactions closed, which was 46 this time, up by 58.6%

About the factors that have led to these results, we believe that the fact that we've ensured thorough project management from the start of negotiations through to closure worked well.

About the improvement in M&A sales per transaction, we believe that this is a result of providing a company-wide support system through a specialized department, which is the Growth Strategy Development Center.

Next page. I would also like to report on the cost of sales and SG&A. As we reported when we released our results for the first quarter, we have done a reclassification of what we record as cost of sales and what we record as SG&A, and this reclassification has been applied since the beginning of the current fiscal year.

As a result of the reclassification, the cost of sales declined by 943 million, while the same amount increased in the category of SG&A expenses for the first half of FY 2024.

In the first half, our cost of sales was 8.601 billion, and the cost of sales ratio was 38.1%. And at the same time, the previous year was 7.502 billion at 40.4%. And this indicates that, thanks to growth in sales and other factors, our cost-of-sales ratio declined.

Of the items included in the cost of sales, our referral fee and outsourcing expenses stood at JPY 3.2 billion this time, and the ratio of that out of sales was 14.2%.

Compared to that, the same time last year was JPY 2.562 billion at 13.8%. This indicates a slight increase in the ratio of referral fees out of sales.

About our SG&A expenses this time, they were JPY 5.586 billion at this time, at 24.7% out of the sales. And the same for the previous fiscal year was JPY 5.164 billion at 27.8%. So the SG&A expenses amount increased while the ratio of SG&A out of sales declined.

Summary of the stand-alone quarter of the second quarter. The summary is as we've written at the top, that the further benefits occurred from the implementation of policies for mid-cap companies, resulting in a significant increase in M&A sales production.

To talk about our leading indicators on the next page, about the number of our new sell-side mandates, this was 327, and this is a decrease of 15.9% year-on-year.

About the number of new buy-side mandates, that was 388, down by 4%. Below that, the number of new transaction negotiations was 297, down by 4.8%.

The reason why we have declined in the number of new mandates, be it sell side or buy side, is a result of our focus we put in Q1 and Q2 on growing sales and the number of transactions we closed.

Another factor that I should mention is that to increase the success rate of completing transactions, some sales channels became far structured in screening new mandate opportunities.

This means that out of the many more mandates that we could have accommodated, we decided to be more selective and decided to choose the mandates that we believe have a higher ratio, a higher likelihood of getting closed eventually. So we have to have a more thorough or more strict screening process.

However, in order to generate solid results in the second half and for the next fiscal year onward, it is necessary that we have a recovery in the new mandate numbers.

Therefore, we have launched a campaign that's active this month and the month after, especially targeting young employees or consultants with relatively limited tenure at our company. So they'll acquire more new mandates.

Please move on to Page 12. On the balance sheet, total assets stood at 60.520 billion, which was an increase compared to 10x last year. And our net assets this time were 48.341 billion.

This was an increase of 752 million compared to the end of the previous fiscal year.

The ratio of the net assets this time was 79.9% which was an increase of 2.9% compared to the end of the previous fiscal year.

I'll talk about headcount on the page after. In talking about headcount, we first would like to talk about the transition of our headcount in accordance with the new classification we've introduced from the first quarter of the current fiscal year.

Then on the right-hand side, we have a table of the different categories of our personnel. The top row says M&A consultants. This is a category that includes our sales representatives at Nihon M&A Center, as well as the sales representatives at our overseas local subsidiaries or local entities.

At the end of the second quarter, the number of M&A consultants that came into this category was 640, an increase of only 10 compared to the end of the previous fiscal year.

To share with you the breakdown of the net increase in people, during the first half of the fiscal year, 97 people joined our company.

However, there was a decrease of 87, which includes 73 people who left our company and 14 people who got classified into other areas because of department shuffling. And as a result, we had a net increase of 10 in M&A consultants.

There are people who come into the cost of sales category of M&A support. Who comes to the category of M&A support cost of sales, this includes people at their promotion headquarters, these are people, for example, who are lawyers or CPA, the M&A Deal Dedicated Professionals.

Other people who are included in the cost of sales of M&A support are Japan PMI consulting people, people at the TPM division, people at the Corporate Value Laboratory, and the Special People Association.

After the reclassification, other people's sites to be classified as SG&A expenses of M&A support. And this page shows our transition of headcount in accordance with the previous classification method.

So starting from the current fiscal year, or for the current fiscal year rather, we are releasing the headcount transition and the breakdown in accordance with the previous and the new reclassification or classification method.

Before I wrap up my presentation, I will talk about shareholder return and shareholder structure. There is no change to the dividend forecast we have for the current fiscal year.

We're still planning to pay JPY 29 per share for the current fiscal year, which is the same as the amount we paid in the previous fiscal year. And this is translated into our dividend payout ratio of 83.6%.

Our policy of dividend payout ratio of 60% or more will be continued during the midterm management plan period. And our ROE this time is planned to be 22.9% and our ROE has been progressing over 20%.

On the left-hand side of this page shows our share ownership structure. There was a bit of a change to the share ownership structure. The ratio of individuals or individual investors declined slightly, while the ratio of financial institutions and foreign institutions increased.

This is the end of the summary of our performance this time.

[Operator Instructions] [Interpreted] To translate the first question from the audience. This is about headcount. The number of consultants decreased in the first quarter.

Is this because there are many people who left your company with a tenure of less than 1 year? And what about the transition of the ratio of consultants with tenure of 3 years or longer? And what about the turnover rate this time?

Turnover rate in the second quarter was 18.7% and this 18.7% is a 2.5-point increase compared to the previous turnover rate of 16.2%.

About the type of people who have decided to leave our company or who have actually left our company, the main people are the people with limited tenure at our company.

As a result, relatively experienced consultants, the kind of consultants who have been with us for more than 3 years, are 45.3% of the total.

The same ratio in the second quarter last fiscal year was 40.2%. So the ratio increased by 5.1%. About the fact that we are having more inexperienced people leaving our company, we've been taking action.

The action is for our Miyake-san and Takeuchi-san to have periodical communication, bilateral communication with relatively new people at the points of 7 months after or 7 months after and 12 months after joining our company, through holding meetings such as one-on-one meetings and group meetings.

When 12 months pass and after a new employee joins our company, we decide to do a review of what to do with the employee, especially for the employees who have not been able to generate good results at that moment. And the options include assigning them to a more appropriate department and assigning more appropriate pauses.

Does anybody have additional question?

Since this is a very good opportunity, we welcome and appreciate your questions. But if there are no more questions, then we can close this session early.

We've one more question, so we continue. You have explained that the focus of the efforts up to the third quarter is on growing sales and not much on acquiring new mandates.

But do you believe that by acquiring more orders from the fourth quarter, you'll be able to convert them into your sales by the end of the next fiscal year?

When we started this fiscal year, we had to lower our budget, and that was the last thing that we could do. So we were desperate when we started out this fiscal year.

Accordingly, our focus was on growing sales and on closing as many transactions as possible. As a result, we started to gain bigger confidence from around the middle of the second quarter that we'll be able to close the second quarter or the first half in a very good state.

We are not waiting until the fourth quarter to start acquiring more mandates. We've already started to put a bigger focus on new mandates acquisition from August. And this is especially targeting the employees with tenure of no less than 3 years at our company, and targeting these people, we've launched a campaign to acquire at least 3 mandates starting from October, and we are making company-wide movements to acquire more mandates.

Therefore, we are hoping to have a new mandate number recovery from the third quarter.

Another factor that we should explain is that the way that we've been acquiring new mandates is completely different in nature compared to before, in the sense that, be it buy-side mandates or sell-side mandates, when we acquire new mandates, we decide which mandates to receive and which mandates to rather decline at our sales department and marketing department.

And the threshold has become tighter or more careful, and we are being more selective than before in choosing which mandates to receive.

At any rate, for the current fiscal year, we're going to strike an even better balance among creating good results for the current fiscal year in terms of sales and closing transactions, but also with creating pipelines, which will be converted into closures in the next fiscal year after.

The next question is, what's the likelihood of achieving the continued double-digit growth going forward, and the likelihood of achieving the forecast you have going forward?

We have an explanation of our midterm plan targets on Page 21 of the presentation material.

Of course, we are trying to achieve double-digit growth, but we have minimum must targets that we have to achieve, and they are on this page.

Our first focus is on making sure that we will be able to achieve at least 7% to even higher than 10% growth. And also, we will try to exceed these targets.

The next question. Even in the case of recovery in your financial performance, is it safe to assume that the company plans to continue to pay commemorative dividends and other sorts of dividends?

About this, we are going to consider this in our company going forward. It was in the previous fiscal year that we introduced dividends, and that was also at the time when we discontinued the policy of providing shareholder benefits.

The reason why we are keeping this dividend guidance for the current fiscal year as well is because we believe that we have not been able to contribute to shareholders in terms of income gain.

So, since we believe that we have not been able to sufficiently contribute to shareholders in terms of income gains, we are going to make a decision on whether or not we will continue to pay dividends or not.

In making the decision, we're going to take into consideration TSR or total shareholder return.

We welcome additional questions.

[Operator Instructions]

Since we are receiving no more questions, we're closing this session. And before we close this session, we have a comment from Mr. Naraki, and his comment is going to be on the timing delay that he mentioned at the end of the presentation briefing session yesterday.

This is a topic that the company receives questions about in every presentation briefing, basically. And in the second quarter, the amount of the project that experienced a time lag was worth JPY 150 million.

JPY 150 million is far less compared to JPY 560 million experienced in the second quarter last year. Although we have been making our deal progress more complex and complicated than before, including our screening process, we feel that in the second quarter, our sales representatives and consultants have become more mature.

And we believe that that's part of the reason why we had limited the amount of the project that we didn't get to close this time.

About the changes in the environment that the entire industry is facing, we believe that we have been taking the necessary and appropriate actions. So we would ask investors to count on us to deliver solid results in the second half as well.

Thank you very much for being with us through the end today.

[Interpreted] Hello, everyone. Today, we are holding a financial results briefing session for the first quarter of FY 2025. Thank you very much for joining this session. This session is broadcasted simultaneously to audiences in the entire world.

I believe it's midnight in the U.S., and it should be early in the morning in Europe. Thank you very much for joining this session despite the time difference.

Today, including myself, we have the Vice President and the CFO of the Holdings, Mr. Naraki. And also, we have the Senior Managing Director of the Holdings and the President of Nihon M&A Center, Mr. Takeuchi. So we have 3 members to explain our results. Could you introduce yourself?

Sure. I am Naraki. I am the Vice President and the Director of the Holdings. Thank you.

I am Takeuchi. I am the Senior Managing Director of the Holdings.

Thank you for the introduction. We have 3 members today. So we hope to provide brief explanations. We would also like to communicate how the atmosphere is, and we would also like to talk about our financial positions, and we hope to receive such questions.

To start with, we would like to talk about the summary of how we have performed. For the first half of FY 2025, both sales and ordinary profit performed strongly. This is indeed thanks to the network people and the shareholders' support.

We indeed thank all those who support. And as a result, on October 23, we announced an upward revision to the first-half earnings forecast.

Compared to the last year, we have had a significant increase in both revenue and profit, and we substantially exceeded the original earnings forecast.

Sales, JPY 22.5 billion, which is 21.5% higher year-on-year. And compared to our original forecast or compared to our forecast, our achievement rate is 112.4%, and ordinary profit was JPY 8.5 billion, which is up by 43.1% year-on-year. The achievement rate in ordinary profit is 126%.

Ordinary profit ratio, the margin was 37.9%, up by 5.7 points year-on-year. We think that these results are quite favorable. About sales, we attribute this to closing many transactions and the average sales per M&A.

Both of these factors improved, and that worked to improve sales. About ordinary profit, since we grew in sales, that was positive for ordinary profit. And at the same time, we optimized cost, and we also optimized the ratio of client-facing employees.

To talk about our performance in the first half, we think it's really important to compare the first half to the whole year forecast. At the bottom of this graph, in green, we indicate our full-year forecast.

The full-year forecast for the sales is JPY 46.3 billion. And compared to that, we've achieved 48.8% in the first half. And about ordinary profit, our whole year forecast is JPY 17 billion, and we've achieved 50.4% of that.

Therefore, in the second half, we're going to manage our company even more strongly. To break down how we did in the first half, sales, JPY 22.5 billion, were 21.5% higher year-on-year.

One of the reasons for this is the number of transactions closed, which was 488. This number was higher year-on-year by 7.5%. This was quite significant.

Also, M&A sales per transaction also improved, and that was JPY 44.6 million, and this figure was higher by 12.6% year-on-year. About the reason why we have a higher number of transactions closed, in the Nihon M&A Center, they employed quite successful tactics.

Improving the successful closing rate was the focus and the reason why they held kickoff meetings at the beginning of negotiations to talk about the schedule to make sure that all the stakeholders are on the same page, and also to identify potential issues in the process.

Relatively inexperienced consultants can handle projects well, thanks to these kinds of initiatives, and also sell-side owners, due to the issue of inappropriate buyers, they are more cautious than before.

Therefore, we have to present solutions to many issues earlier than previously. Otherwise, there are cases where we cannot close deals. And we think that we've been taking the right actions.

Also, about the improvement in M&A sales per transaction, we've established a specialized department receiving mid-cap mandates, and this is a supporting department.

This department gives suggestions to all departments. And thanks to their effort, we believe that we have received many mid-cap mandates quite successfully, and that contributed to the improvement in M&A sales per transaction.

About the small-scale deals, we've been introducing and referring them to Batonz. So there will be online handling of such cases. These factors were translated into a favorable ordinary profit.

Of course, we've paid attention to optimizing cost. Starting from this year, Naraki-san is Vice President and also CFO, and he's been paying attention from those positions to optimize costs. About our results in the first half, I would like to ask our CFO, Mr. Naraki, to explain.

Sure. Sales, cost of sales and ordinary profit, and SG&A, I think that we have explained quite a lot. But from the first quarter, as you see on the right-hand side, we have changed the classification of cost of sales and SG&A.

As a result, as you see on the right-hand side, about cost of sales, minus JPY 943 million, and SG&A increased by JPY 943 million in the first half of the previous fiscal year.

We used to include in the costs those that are not about our sales representatives. However, we've reclassified our personnel, so those people are now recorded as SG&A.

On to the next page, despite that kind of reclassification, to show you our income statement for the first half, if you look at the cost of sales, the third row from the top, we have JPY 8.6 billion in cost of sales this year. And this is 38.1% in the ratio.

Last year was JPY 7.5 billion in the first half. The cost of sales ratio in the first half of last year was 40.4%. This is partially thanks to our favorable sales progress. But we are having favorable sales progress, and we are also improving in the cost-of-sales ratio.

About the referral fees, this time, the referral fee and outsourcing expenses ratio was 14.2%, slightly higher than last year. If you pay attention to the SG&A, this time, 24.7% last year compared to 27.8% last year, the SG&A this time was JPY 5.5 billion compared to JPY 5.1 billion last year.

We've been reducing the ratio of the SG&A compared to the same time last year. 

Next is a summary. This is for mid-cap. We have been able to achieve results for mid-cap companies, and we have been able to achieve upside by far for M&N sales per transaction.

Looking at fiscal 2025 March, sales per transaction were JPY 47.6 million. And compared to last year, it was JPY 40.4 million. This is an increase of 17.7%.

M&A sales per transaction out of this, large transactions closed were 32. Last year, it was JPY 19. This is an increase of 68.4%, which is a significant increase. Thank you very much. 

Next, I would like to continue to talk about the leading indicators. First, looking at the number of new sell-side mandates, it was 327. Year-on-year, it was a decrease of around 16%.

Looking at the mid-cap mandate, it also decreased. And they have decreased. But I don't perceive this as something that's so negative. I believe there are 2 topics. 

One, in the first half of this fiscal year, we had to focus on performance. We had sufficient outstanding mandates, and therefore, we wanted to achieve results first. And this year should be a year to revive the performance.

We focused 100% on achieving performance. Therefore, we're not paying as much attention as we should have to new mandates. Therefore, for the second half and towards the next fiscal year, we would like to recover this. And therefore, we are not so worried.

The other topic is that we are relatively selective about the transactions, very small transactions, or poor performance companies. 

So, for companies that are hard to sell, we are selective because both companies will become unhappy if a transaction is closed. Having such mandates means harboring wrong expectations.

If the company is not sold, then our actions will be delayed and delayed, and that will cause unfortunate results. So M&A is difficult. We need to communicate that first. 

Also, for our side, when we receive mandates and accept mandates, we do matching appropriately, and we need to achieve results and close transactions. Otherwise, there will be so much burden on our work, and then we will fall into a loss-making business.

So for both companies, this is not favorable. Therefore, we are very selective. We have negotiations and discussions and receive mandates. And going forward, this trend will increase. That's what I expect. So we'll be narrowing down and focusing and being selective about mandates. 

For the companies that come to us to consult with us, we will not cause them trouble. We will be able to improve our productivity at the same time. This is what we would like to continue, but this is just something that we have just started, and there is such an impact.

This impact, I expect to become bigger going forward. And for mandates, we are not worried. For buy-side mandates, it's a slight decrease. It was 388, and it was a negative 4% year-on-year. As a result, a number of new transaction negotiations were 297. It was negative 5% year-on-year. 

I would like to use this diagram. This is a usual diagram, but it has been simplified a bit to make it easier to see. Looking at the new sell-side mandate, it has decreased by around 16%.

In the matching phase, new buy-side mandates show a slight decrease. In the negotiation phase, new transaction negotiations were roughly negative 5% year-on-year. 

However, looking at the bottom right of the slide, there is a lead time. We are doing great here. So, for the preparatory period, it used to take more than 90 days, but we have decided to reduce this to 60 days, and we have been able to achieve that.

Looking at the matching phase lead time, we would like to shorten this. We would like to start taking initiatives for this. This is something I always talk about. This is a number. So please refer to it by yourself. I would like to omit explaining this. 

From this point onwards, I would like to hand over to Mr. Naoki to talk about the balance sheet. 

About the balance sheet, please pay attention to the top half about the total assets at the end of the second half, JPY 60.5 billion we had in total assets.

At the end of the previous fiscal year, at the end of March 2025, this was JPY 61.7 billion. So there was a decline of JPY 1.2 billion. Compared to the end of the previous year, there are more outstanding payments, including incentives, and that's the reason why there is a decline in assets.

But we also would like you to pay attention to the latter half, the liabilities plus net assets. 

At the end of the second quarter, the total of net assets was JPY 48.3 billion compared to the end of the previous fiscal year. There was a positive JPY 752 million. So there was a 3% improvement in net assets.

To talk about the number of employees, headcount, as we've written, the recurring status of M&A consultants is quite favorable. However, there is an increase in turnover, especially among employees with tenure of no more than 3 years. So this remains our issue. 

On the right-hand side, we are presenting a new classification of our personnel, especially for M&A consultants at the end of the previous fiscal year. Compared to the end of the previous fiscal year, there was a net increase of 10 M&A consultants this time. 97 people joined our company during this period.

However, turnover or reshuffling of departments occurred, and there was a decline of 87 from that. And therefore, the net increase was 10. 

I would also like to talk about the new classification. According to the new classification, M&A consultants, as you see in the notes, are the pure sales representatives at Nihon M&A Center and the overseas local entities.

The next category, M&A support, they are the people who are recognized as our cost of sales, and they are the people at our value promotion department who the specialized CPA and so on. 

Also, we have Japan PMI Consulting, TPM division, and also corporate value laboratory and Special People Association, SPA, who do the valuation work who provide support.

These people are recorded as our cost of sales, and the remaining M&A support is recorded as SG&A. So once again, we reclassified our personnel, and that's been applied from the first quarter. 

On the next page, we are showing how we were according to the previous classification. We're making sure we show our personnel transition according to the former classification. And you can compare this with the new classification. 

Next, I'd like to talk about shareholder equity and shareholder breakdown. Looking at shareholder return contribution, we are providing dividends of JPY 29, including a special dividend of JPY 6.

We are going to continue this from last year. And as a result, the payout ratio for the fiscal year ending March 2026 is expected to be 83.6%.

Continuing on from last fiscal year, we are maintaining a high level. As described at the very bottom, during the midterm management plan period, we will continue with a dividend payout ratio of 60% or more. 

This is about ROE. As the chart shows, for the fiscal year ending March 2026, we are expecting to land at 22.9%, which is a 20% level. In March 2024, we have done a buyback of JPY 1.4 billion, JPY 14.9 billion, and we are going to be maintaining a 20% level.

This is about share ownership. The individual shareholders' ratio has declined, and the institutional investors' ratio has increased. In the pie chart at the right top, we have an individual ratio. It stands at 30.7%.

Compared to the last time, it decreased by 3.6%. Against that, looking at financial institutions, it stands at 32.2%, which is an increase of 3.6%. And for foreign institutions, 28.9%, which is a 0.9% increase compared to the last time. That is all from me. 

Thank you very much. And now we'd like to talk about the midterm management plan and others. This fiscal year, in terms of the forecast, compared to last fiscal year's forecast, we have lowered our forecast this fiscal year.

There are 2 objectives. One, we'd like to return to our customary cycle of attaining results targets. In the second quarter, we have been able to recover very much. And now we are going into the third quarter.

We'd like to make collective efforts as a company to achieve results. It's not that we will be able to fully recover in 1 year. But as much as possible, we would like to return to our customary cycle of attaining results targets.

We'd like to bring a peak in the Q3 and take pressure off in Q4 to be able to prepare for next fiscal year. So we'd like to return to such business management.

The second is to regain stakeholder confidence, especially employees, by reaching targets and gaining confidence. I think this is something that's extremely important.

In that sense, in Q2, we have been able to achieve good results. I do believe that many employees have regained confidence. Going into Q3, we'd like to accelerate this process. 

As a result, the midterm management plan, which was announced, we are aiming to achieve upside. We'd like to continue to achieve more and more.

First, sales, I believe, are the most important. And therefore, we'd like to generate sales. And this time, we have been able to make an upward revision with sales increase, and I'm very happy about this. As a result, profit, we will be achieving upside, and we would like to build such a structure. 

Since we are a holding company, we have other related businesses besides Nihon M&A Center. And about the updates on related activities, we believe that these kinds of relevant activities are starting to be more favorable. That is non-M&A sales ratio has been growing little by little.

To look at each item one by one, TOKYO PRO Market is quite successful. There are many J-Adviser companies, and of all the J-Adviser companies, we've been the top in supporting the largest number of TPM IPOs for 2 consecutive years.

We would like to generate star companies nationwide to contribute to local and national regeneration. Therefore, local banks and accounting firms have been supporting and cooperating with us. And we believe that that's part of the reason why we've got this result.

The PMI consulting business is the most important for us in this category. This business is really growing well. If we can have more people, we believe that this business can grow faster. 

SME agency established the PMI guidelines for SME, and the FSA also wants SME/M&A to be more active. So they've also revised their guidelines. And we've been doing the PMI consulting business from the early phase in the industry.

Therefore, we've been improving our track record of providing PMI from 66% to 93%. This year's target is quite high at 93%. But already in the first half, we've done 59%.

We hope to achieve this target this fiscal year. The new buy side, we would like all the new buy sides to receive PMI consulting service. That way, we believe that the transactions will be successful. 

About our overseas business, we feel that our overseas business is quite steady this year. And overseas business closed their fiscal year in December. So they finished the third quarter, and in the fourth quarter, we are expecting good results to come out.

Starting from this fiscal year, we believe that our overseas business will get back on the growth track. Our operation in Singapore is having its 10th anniversary.

Therefore, I visited 5 countries, and I would like to learn more about those operations. The fund business is also going quite well, be it the Japan Investment Fund or the search fund. We now have 3 search funds. And also, we have 2 in negotiation.

By the end of this fiscal year, we believe that we will be able to have 6 or 5, or 6 to be established. 

About our A2G capital, the preparation for exit is going on, as features, DX, digital transformation, and AI transformation, and full usage adoption of AI. This month, Salesforce, Dream Horse, we had around 4 people participate from our company.

In the past 3 years, we have been participating every year, and we are receiving great stimulation and direction as well. DX and AI, we'd like to continue to promote them. 

Seminars, we are making good progress as well. And number of participants compared to last year was totally different. There are so many participants. They are much more serious. And this is something that we observed.

Next year, we'd like to host much more enriched seminars to identify direct mandates and continue to hold seminars. For direct, it's a challenging situation right now.

The response rate is very low for direct. Therefore, we would like to do area marketing or industry marketing. This is what we're doing. And area marketing, regional marketing, we are very successful, especially in Ibaraki. It's very, very interesting.

We have a radio. We have our personality. And the personality, I'm talking about Miyagi [Suguru's] business management paradise, and we invite famous business management and top management, and we are building a network of business owners and managers.

We are starting to see success in some of the regions already. As for branding, Guinness, we have been recognized by Guinness World Records for 5 consecutive years. And we'd like to continue with this for the coming 5 years, 10 years, and more. 

We'd like to continue to make efforts and integrate the report. I think it's next week or the week after, they will be released both in Japanese and English at the same time. We are putting a lot of focus on this. 

I would like to ask the investors, you can choose Japanese or English. Please take a look at our integrated report. We have dedicated a lot of effort to this. And last of all, this is the industry trend. I have talked about this many times already.

M&A intermediaries are increasing. And against such a backdrop, morale is declining, or quality is declining. In order to discuss that, the SME agency will be revising the guidelines for the second time. Not only for the companies, individual players, M&A players, skills, how should they be?

A skill map has also been developed by SME agencies. The major trend will be from this year to next year. Based on the skill map, the qualification system may be launched. That's how I feel. This is something I perceive as positive.

Also, about inappropriate buyers, it's been talked about in the media. So, as an industry, we are taking quite strong actions. For example, creating the format of contract documents and creating a list of inappropriate buyers. These are the actions we're taking.

And of course, as a leading company, we would like to do even more, and we are doing even more than that. We should not be satisfied with being aware of these issues. We should fulfill our accountability.

However, just providing an explanation is not good enough. We should also leave results, good results, and we have to be responsible about delivering good results as well.

About delivering good results, it could be about releasing the personal guarantee, but that's not the whole. We want to make sure that everybody becomes happy in M&A.

The keyword here is a success. So success is the keyword for the responsibility we have. Therefore, we're going to, of course, take action on inappropriate buyers. And besides that, PMI representation, warranty insurance, and on other fronts, we're going to take more comprehensive measures.

Also, in the industry, academia, and government collaborations, we believe that we have to utilize such collaborations to take comprehensive measures. CPA or Chief Public Affairs Officer is Yokoi-san.

We've established this position, and he's been quite powerful. We feel that we've been receiving much guidance from him and also from the SME agency. And on the academia front, in April, the M&A research group was established as an academic society.

By enhancing our collaboration of trip parties of industry, government and academia, we would like to develop this industry into a more healthier one, more healthy one.

Last but not least, the company for the seller is the life of the seller itself. And there are employees working for that company. These people spend their lives at their company.

Therefore, it's important that everybody becomes happy through the M&A we support. We have to protect as many companies as possible. In that sense, we would like to deliver the optimum and the best M&A.

We would like to have the best transaction closure, and we would like to close as many as possible of such successful closures. And we hold impressive and emotional closing ceremonies, and we take the lead in the PMI activities.

Also, we support management in creating their autobiography. And we want to make sure that the buyers can manage the company with that confidence through the provision of representation and warranty insurance.

We would like to support the second life of the former seller through the NEX Navi. This is how we would like to achieve the M&A so that our customers can be satisfied with it.

This is the end of our presentation, and now we are going into the Q&A section.

Thank you very much for the presentation. Now we are going into the Q&A. We accept questions through the chat function. And due to time constraints, we may not be able to respond to all the questions.

Now we're going to start the Q&A part. We believe that you are still writing questions. So, based on the questions we have received in the past interviews, we have prepared some questions. So we would like to go through the questions we have received in advance.

The guideline was revised at the end of August last year. It's been a year since then. Are things settled down now, including the procedure of the internal procedures and the impact on productivity? And do you feel that the quality of the business has improved when you look at the entire industry?

I would like to provide a brief answer to this. And then, Takeuchi-san is going to provide his own experience.

I believe that the productivity issue is basically settled because it's a matter of how much time is spent and getting accustomed to it. About the business quality, I believe the business quality cannot improve suddenly. However, we feel that the employee morale has improved.

However, there is still a long way to go. Therefore, as a director and also as a leading company, we would like to continue to make efforts. However, at many boutique companies, they need to improve the quality of the business and their morale, their awareness.

About this, we feel that each management of the boutique companies now has better awareness and better morale. We have to make the entire industry an even better one, and that requires efforts on the side of each company.

This is the sense of awareness that the management of boutique companies now has, and that's how I feel. However, that does not directly lead to an immediate improvement in the quality of the business and the morale. Therefore, we would like to continue to do what we've been doing, including education and so on.

What do you think about the impact of the revision on productivity?

Okay. To talk about how things are at Nihon M&A Center about important contractual terms and about risk items at Nihon M&A Center, we've been explaining these already before the introduction of the revision.

However, with the revision, these contents are now documented, and now we have a format. And we've been introducing those revisions. But this is not a new thing to us. So we don't see any impact from the revision.

Rather, we believe that we now have better visibility, which is better for the awareness of the entire employees. So we believe that we have now become more lean compared to before. That's the atmosphere I feel in the company.

The next question. It seems like M&A consultants' retention has some issues. What are the factors? What are the countermeasures you're thinking of? Also, are there any issues with the recruiting environment? Have there been any changes in the attributes of the applicants?

This is a very important topic. First, I would like to answer. Looking at the hiring environment, it hasn't gotten worse.

Rather, looking at new graduates as of now, for the graduates who will be graduating in 2026, the Thinktank Research Consulting segment, we are #4 in terms of popularity.

Daiwa Research, Ain Consulting, Accenture. And then after that, we follow. And then Nomura and then Nomura Institute and Mitsubishi Research Institute. We are very popular.

Looking at this year's internship applications, we have received more than 6,000 applicants. It was close to 7,000 applicants. That's what I'm hearing. Therefore, our company remains to be very popular and very high.

Therefore, in terms of the environment, there are not many environments. But for mid-career, the reputation of the industry there is an issue with that. 3 to 4 years ago, the M&A industry had social missions and looked cool and good income, blue ocean; it used to be a very, very popular segment.

But there is a media report about inappropriate buyers. And there are many companies that are trying to generate so much money.

How is the morale, and how did such reputations start to emerge?

At around the same time, for example, consulting companies like Bakerrent, Accenture, and others, had hired people massively.

Nihon M&A's advantages, we are different. We need to communicate that to the mid-carriers market. We have come to an era where marketing is very important.

Against such a backdrop, we are taking measures. For example, I myself or Takeuchi-san, or Suzuki-san explained in the explanatory session ourselves and agents' explanatory sessions, we host them ourselves sometimes.

We are taking measures as such. And also referrals, we are focusing on this as well. Therefore, we do not have such a big concern. And the first part of the question about retention is an issue indeed.

Compared to last year, looking at the people who left, it has deteriorated slightly. There are 2 reasons, I believe. This is not always bad. What I mean is that the mode of the company is recovering to how it used to be, our company.

We are very particular about numbers. We want to grow. We are a growth-oriented company. This is because of 35 years of history, and this is exactly our DNA in the past 35 years.

However, in 2021, there was a scandal, and from 2022 to 2024, during these periods, there was low growth, a stagnation era for us. During this time, members who joined during this time with less than 3 years' tenure believe this is how the company is.

They believe this is the DNA, and this is the essence of our company. However, in 2025, we have moved on to a new chapter. We have a slogan to start growing again.

We are accelerating, and we are recovering to how we used to be. And then they are surprised. So in the past 2 to 3 years, these new joiners have become surprised. So they think what happened to this company? The atmosphere is different compared to before, and then they leave.

So this is what is happening. People who have been with us for less than 3 years are the ones who are leaving the most. And one point is that compared to our speed, we need to replace people who are slower compared to our pace.

This is something we capture as something that's positive. But misunderstanding and people who are really high performance, when they leave, that's a problem.

Therefore, from the second half, we'd like to follow up fully. For example, after 6 months of joining the company, Takeuchi-san, we call it key talk.

Any questions will be given to Takeuchi-san, and he will respond to all the questions, or even for the first-year joiners, we hold such sessions. And for the second year and third year joiners, I will be answering all the questions.

They can ask any questions. We will follow up very much in detail, and people who are passionate, who are high performance, we would like to make sure that we prevent them from leaving.

Takeuchi-san, would you like to add anything?

There might be some overlap. Simply said, for hiring, we have confidence. In mid-carriers in a year, 5,000 applications are sent to us.

We'd like to be selective and concentrate on talented people. For the M&A industry overall, there might be some concerns, but we are the biggest company in the industry.

This is a very big branding. And this is a very big advantage in terms of recruitment. I have very strong confidence about this. But on the other hand, looking at people who leave, this is a big challenge. We recognize this, especially in the past 2 years, people who left, we are plotting them.

Members who have joined us less than 3 years they account for 2/3, 66% of the people who leave. That about half are changing jobs to another industry.

Nihon M&A Center hires people who are not experienced, who are inexperienced in the M&A industry. We develop these talents to be able to do work in M&A. And they come from a different industry. And then within 3 years, they leave to go to work for another industry, which means in one word, they're not successful in hopping jobs.

So, as Miyake-san mentioned earlier, after 6 months of joining, this is a very big break point. The top players are the people we hire from different industries. And within 6 months, if they are not able to achieve performance, they lose confidence.

They start to feel that, oh, maybe I'm not good at this industry, so I should change. That's how I was myself. So after 6 months. So starting this month, every month, I will be having meetings with all the members to generate confidence.

Another point is 1 year later after joining. One of the major reasons why they changed jobs is that they like M&A. They like the M&A center very much.

But the department they're working at or the mission, they don't really match, or the sense of value does not match with the boss or the people they are working with.

So, 1 year after joining the channel, general managers will be taking the lead to hold matching meetings. We will have such thorough discussions. By introducing this from the second half of this year, the volume zone of the people who leave, these are the joiners within 3 years' time.

We need to take such measures and how a net increase expectation in the second half. So this means we can just increase the number of new hires, but this is a risk.

Of course, we can continue to hire more and more. But if we do that, then, of course, we need to develop these talents after hiring. 3 persons per department would be the right standard per department, I think.

As of now, there is a challenge because many people are leaving. And if we try to increase the number of new hires, then next year and the year after, there will be some impact on the development of such talents.

Therefore, we would like to maintain the hiring to achieve the target, plus 10% or so. And we'd like to stop people from leaving the top management, so we have to commit to that. I think this is something that we need to commit to right away. Therefore, we'd like to take measures.

Next question. You have kept your full-year forecast unchanged. Is there a lack of transparency or an issue with the second half forecast?

About our full-year forecast, that's not changed. That means things are going as planned, although slightly exceeding our initial plans. That's the reason why we've kept our full-year forecast unchanged.

If we are to accelerate our actual results, we're going to make timely disclosures. If we sense deterioration, we're going to disclose potential downward revision. However, to talk about how things are at the moment, I can only communicate the facts and how things are.

I am quite positive about the forecast for the second half because, first of all, of the pipeline results or the pipeline numbers, the number of negotiations we have, and also available for matching or the open sell-side mandates. These have been accumulated successfully. 

So, about December and March, we think that we have enough pipeline to generate good results. And this is a fact. Besides that, employees' motivation level we feel that this has improved quite a lot.

We believe that it's good enough to the level where I can report about this with strong confidence. We used to be at the bottom in 2022 or so, and we have improved step by step. 

And finally, we are united as a company. And that's the DNA we used to have as Nihon M&A Center that we are starting to see once again. In September, there was a strong momentum. And all our employees are quite enthusiastic. We didn't have to create this kind of momentum. 

In December, we have incentive travel planned based on the results for December. So, I believe that the employee momentum and enthusiasm are going to be strengthened further.

I hope to have a peak in December. About the lack of transparency or issue, I do not see that based on what I see in the front lines. 

Next question. M&A sales per transaction are improving substantially. Do you believe you will be able to maintain this high level in Q3 and onwards? Going forward, what is the level you are aiming for? 

Thank you for the question. I, myself, as holdings, it's not that we are aiming for such higher M&A sales per transaction. Rather, we'd like to maintain the M&A sales per transaction.

As we increase the number, the M&A sales per transaction decrease. In order to prevent that from happening, we'd like to make the pyramid overall larger, not just the bottom, because if the bottom part increases, only the M&A sales per transaction will decrease. 

And this time, the M&A sales per transaction are very good. The JPY 45 million, JPY 50 million, it's not that we are aiming for such numbers. We are aiming for JPY 40 million plus/minus alpha is good enough. That's my idea.

In terms of the number, the number multiplied by sales per transaction would be the performance. So, we'd like to maintain this level of M&A sales transactions. 

Takeuchi-san, how do you feel as the President of Nihon M&A Center? 

As for mid-cap, looking at the mandates from last year, this is increasing. Overall, mandates, we are selective. We are concentrating on loss-making companies.

We are not going to accept mandates. And in terms of sales, we are assuming that so high transaction price mandates are pulling up the overall, and the small amount of M&A sales per transaction is not dragging our feet. 

So, we'd like to increase the number of transactions. But rather than increasing the M&A sales per transaction, we'd like to maintain it. We'd like to maintain it at around the JPY 40 million level. And I think this is one of the key points. 

Next question. Can you share with us the number of negotiation open project at the end of September? 

Thank you for the question. We're checking this number. First of all, about the number of mandates, 2,360 an active contract we had in September.

In September 2024, compared to September back then, it was 1,960. So, the number increased by 10% or 20%. The number of mandates that are available for matching grew by 120%.

So, we believe that there are ample chances for negotiations. The mandates that have come into the pipeline compared to the same time last year is 102% at 420. 

The next question. Looking at new sell-side mandates, it's continuing to decline year-on-year. Both are decreasing directly and network. Are they seeing big decreases? 

Thank you for the question. There are 2 factors, as I mentioned earlier. Takeuchi-san, can you comment?

Thank you for the question. It is continuing to see a decrease year-on-year, both direct and network; they are decreasing at around the same rate.

However, I am not that worried about these mandates. We are very selective about this. And that, in the end, will lead to productivity improvement for everything. 

For example, loss or excess debt or getting mandates for small companies, then Nihon M&A Center will do value promotion, and the headquarters. And so, many members will be involved in this transaction, and that will decrease the productivity overall. 

So, there is an inappropriate buyer. And for the M&A industry, at Nihon M&A Center, we are looking at each of the transactions very much in detail. And if we receive mandates for companies that we cannot sell, that will hinder our productivity and worsen our productivity. And this is a different note compared to the question. 

Then what are we focusing on very much? 

I'd like to talk about this. For the sell-side mandate, close to 50% will be closed. And out of the remaining 50%, 25% will remain.

The remaining 25%, we stop the contract. This is a waste. And M&A industry inactive mandates are around 25%. So, we'd like to put more effort into inactive transactions.

This is where we are allocating the most resources. We'd like to improve the closing rate, and that will lead to an increase in sales, not just the new mandates. 

But then, after KPIs, we should be taking measures for this part. I think this is an inflection point. This is a paradigm shift. Things are changing very much right now. And we need to control to be able to achieve the midterm plan while taking measures here. This is what is required the most for us right now. 

When we achieve numbers, we'd like to report to you in the future.

Direct and network, looking at the ratio between the 2, last year first half, direct was 34%, referral was 66%. And now it's 38:62. So 35% to 65% is the rough ratio, 35% to 65%, plus/minus 2% to 3%. So direct is increasing just slightly. That is the current situation. 

Next question. Average M&A sales per deal increased. How many large transactions did you close? 

About large deals, the number that we've closed in the second quarter this year was 46 pairs. Q2 last year was 27. So, the number increased by 19 in pairs.

Next question. I'm hearing that the M&A loan screening is becoming stricter at financial institutions. Are there any impacts on the lead time? Are you taking any countermeasures? 

Yes, we are taking measures against this. Interest rate does exist nowadays and financial institutions.

But before, there were no interest rates hardly. And therefore, loans for M&As, they could get some interest, and it was very positive, and a quick screening was done before.

However, the CapEx loans, financial institutions are able to charge interest. Therefore, for M&A loans, the screening has become stricter, and it is taking a bit longer. And it does impact our lead time. 

But with our internal efforts, I do believe it's possible for us to shorten the lead time with a number of financial institutions. We had discussions. And also from financial institutions, we have experienced members who we have invited from financial institutions. And having them as a contact person, we are discussing how to shorten the lead time.

There are 2 processes in the screening. One is a collection of documents. The other is screening itself and the collection of documents; it does require some time, like registration or financial results have to be collected, and due diligence results are needed. And these are documents that we have internally.

Therefore, it's a loan package. We compile them as a loan package. And financial institutions no longer need to collect documents because we can already submit the documents.

So once the interview is done, they can start screening right away. And if we are well prepared, then financial institutions will be able to do the screening quickly. 

So screening can be accelerated. As such, we are making efforts to shorten the lead time. This is something we are already taking action on.

We need to apologize that, due to time constraints, the next question is going to be the final one that we're taking up today. 

About leading indicators on your presentation material, there's basically only talk about volume, and all of such volume figures are negative year-on-year. And you say that, that's the result of your selective screening. So you do not have a concern there. So I would like to ask how things are in leading indicators based on values, not in volume.

According to Tanshin, the intermediary fee is JPY 2.4 billion in the first half. Q2 alone was JPY 1.3 billion, which is up by 19% year-on-year. I believe that this figure is more meaningful as a leading indicator. Is my understanding correct? 

Thank you very much for pointing out a very important theme for us. As we've said, our leading indicators are going down. However, we've said that there are 2 themes behind this.

One is that we were fully focused on generating results in the first half. So in the second half, we're going to put a bigger focus on acquiring more mandates, and that's why we don't have much concern about these leading indicators. And we have a very strong capability in acquiring mandates.

Therefore, as long as we put enough focus on trying to acquire mandates, we are confident that we can acquire many. And this is based on our track record of 35 years' experience. 

Another theme is that we've been selective in acquiring mandates. About being selective, we're going to be even more selective going forward. Therefore, there is going to be a potential decline in the mandate volume.

However, we can, at the same time, expect an improvement in quality, and that will eliminate unnecessary processes in our company, which improves our productivity and eventually our overall performance. 

Therefore, when it comes to leading indicators, we may need investors to review our leading indicators from a different perspective than before. So we would like to consider what better KPIs we should be presenting, and we are considering exactly that. 

About value-based, we're not tracking value-based figures, or rather, we don't have the values that we can readily present to you immediately. However, I basically assume that the values change in line with the volume.

Therefore, at the moment, I believe it's safe to assume that, in terms of value as well, we have negative leading indicators, but we're going to recover this. 

About interim fees, thank you for pointing this out. This is a positive topic that we've been successfully closing on LOI. So, as a leading indicator, this intermediary fee can be considered to be the topic that will be converted into closure.

However, the success rate after closing LOI, I mean, since we've received intermediary fees and retainer fees from the sellers, we have enough information that's with.

Therefore, we believe that the successful closure rate is quite high. However, we cannot close all of the mandates we've received through this process.

However, the 19% increase in intermediary fee is very positive news, and we will do our best in schedule management to convert this into actual closure. And we're going to perform some checks in line based on the schedule. 

Thank you very much for being with us through the end of this session despite your busy schedule. We've talked about the first half results for the current fiscal year.

Before we wrap, from Mr. Naraki and Mr. Takeuchi, we're going to give a bit of comment to share with you the ambiance on the front lines. 

So, to talk about the topic that has not been covered today, there is usually a question about the time lag and about the time lag in the second quarter; we had a very limited time lag, one of the smallest in recent years.

We now have a more complex deal process compared to before, but our employees are taking the right actions and making the right communications. I believe that this can be considered as positive materials leading to positive results in the future. 

What about Mr. Takeuchi?

So thank you always for your time. As usual, it's the first time in 3 years that we have been able to make an upward revision this time.

I am very happy about this. And I feel a bit secure as well. Our employees are very happy about this, and they're very excited, and they are very much encouraged.

And based on this happiness, in the third quarter, we'd like to continue to do our best. Q3, Q4, we'd like to accelerate and promote our performance. And I ask for your continued support. Thank you very much.

In the first half, we have been able to come up with an upward revision. And towards December and for the full year, we'd like to leave this good momentum to be able to live up to your expectations.

We will continue to do our best. And I ask for your continued support. Thank you very much for your time today.

Good morning, everyone. I am Miyazaki. I am the General Manager of the IR Department at Nihon M&A Center. Together with me is Mr. Naraki, who is the Vice President and Director as well as the CFO of the company. And Naraki-san is going to provide the briefing explanation on the most recent results, the first quarter for the fiscal year to March 2026. Today, we have investors from abroad as well. So we're going to provide this session with consecutive interpretation. And the first 15 -- or 10 to 15 minutes will be a briefing from Mr. Naraki on the results. And this is Naraki.

Thank you for joining. I would like to provide a summary of how we did in the first quarter of the fiscal year 2025. Our sales were JPY 9.01 billion, which was up by 18.1% year-on-year, and our ordinary profit also grew to JPY 2.533 billion, and this was up by 63.8%. We closed 212 transactions, and this number was higher than Q1 last year by 11%. And our M&A sales per transaction was JPY 40.8 million, and this was higher than Q1 last year by 6.1%. So we achieved a meaningful and quite a significant increase in both sales and profit.

And this is basically thanks to a meaningful increase in the number of transactions to be closed and also in the average revenue per M&A transaction. And about the reasons why our transactions closed got higher is partially thanks to the instigation of what we call kickoff meetings that the meetings we hold for mandate analysis at the beginning of the transaction negotiations.

And about the reason why our average revenue per M&A transaction grew, this is thanks to our measures that we have been taking from before to acquire more mid-cap mandates. And about the large transactions whose definition in our company is that transactions that gives us a success fee of at least JPY 100 million. Such transaction volume grew from 10 in Q1 last year to 14 this time.

Now on summary of our leading indicators. Our new sell-side mandates was down by 11.6% to 289. And our new buy-side mandates was 335, which was down by 2.9%. And on to the new transaction negotiations. This was up by 10% year-on-year to 329. And we believe that this indicator quite represents what we did in the first quarter. In the first quarter, we were focused on trying to close the transactions for the mandates that we have had. And also another area of our focus was on proceeding and executing our mandates. We have had to a negotiation start phase. However, in the second quarter, we're also going to have an additional focus on acquiring more new mandates, so we can have an even better result in the second half.

Next page. And this is a reference phase, the latest results or the latest status of our leading indicators to show in line with or together with the flow of M&A deals. The left-hand side is the onset of the whole deal. The very left-hand side box in the center is the number of new sell-side mandates. This one and the new buy-side mandates, the second from the right, got decreased from Q1 last year. However, the new transaction negotiation, the very right box grew by 10%.

But I need your attention on the bottom right corner. This shows our preparatory period that got record low or short. And this is the period that requires from the time that we received mandates. And this used to be 85 days, but it got shorter by 28 days to 57.

And on to our income statements. I have earlier talked about our sales, JPY 9 billion and ordinary profit, JPY 2.5 billion. And in between these 2 indicators, there are cost of sales and SG&A expenses, and we have made change to what we include in these. In the current financial year to March 2026, we're starting a classification of our employees that is new, so we can make categorization that's more explicit and so we can promote more optimum use of our resource. So with this reclassification, cost of sales got lower by JPY 533 million and SG&A expenses growth for the same amount. And I will provide more detailed explanation on this categorization change.

And I would like to note that the numbers that we are showing on this presentation document and the numbers that we are showing in the separate sanction document that we released together with this yesterday, they have the numbers from the previous year, but the numbers of the previous years are restated according to the latest, the new classification definition. So we can provide an apple-to-apple comparison.

This page is on transactions closed, M&A sales and new mandates. The top row is the total number of transactions closed. And please look at the very right-hand side column. So how we read this table is that we closed 212 transactions this Q1. And in Q1 last year, we closed 191, the number that you can see to the left. And the next indicator is M&A sales per transaction. This is the third row from the bottom, and please pay attention to the right column.

This first quarter, we had JPY 40.8 million M&A sales per transaction. This is higher by JPY 2.3 million from compared to JPY 38.5 million in Q1 last year. And this Q1, we had or we acquired 289 new sell-side mandates. And in Q1 last fiscal year was 327. So this is down by 28 -- 38.

Please move on to Page 11. Final page. This is on the change of the employee classification. And recently, our company has been expanding the scope of our businesses, and we have become a total and more comprehensive M&A company. So previously, we basically had only 2 departments of the sales department and the admin department with staff, but now we have various departments. And about the people who are working at the newly added department, we used to include them in the cost of sales.

And however, we have decided on the reclassification of employees, so we can optimize the resource we have -- optimize the allocation of the resource we have by adjusting the allocation between the cost of sales and SG&A expenses. The top row in this table are the M&A consultants who do sales and marketing activities in the front lines.

And we also have M&A support people. And the M&A support people that get categorized into cost of sales are the people in -- for example, in the value promotion headquarters. Value promotion headquarters has specialists such as accountants and lawyers. And also Japan PMI consulting people as well as TPM people get included in the cost of sales portion of M&A support. And these are the people who do the external sales activities for non-M&A and about the people in or at Special People Association as well as Corporate Value Laboratory, these are the people that are included in our holdings as well.

And the people that I have just explained are going to be included in the cost of sales, although they are part of M&A support people. And everyone else, everyone from the next row and below will be included in SG&A support, be it M&A support people, corporate or financial people. The people who we used to recognize as SG&A expenses before this reclassification were only the people that you can find from the second row from the bottom, the Corporate Headquarter people, Compliance Division people and Internal Audit Office people. But going forward, we are recognizing the people for the bottom 3 major rows as our SG&A expenses.

Moving to Page 10, please. At the end of the first quarter, we had 1,118 personnel, and they got categorized according to the new reclassification, and you can find the table on the right-hand side.

Page 12. Page 12 shows the transition of the share of our employee in accordance with the previous classification standards. For the current fiscal year to March 2026, we'll be disclosing the breakdown of our employee in according with both old and the new classification standard. And from the year to March 2027 onwards, our current policy is to disclose only the figures according to the new categories. And about our shareholder returns and other policies, there is no major change from the previous fiscal year. So I'm going to skip an explanation on that. And this is the end of my briefing.

We would like to take questions.

[Operator Instructions] Mr. [ Sugiura ], please.

This is [ Sugiura from ] Daiwa Asset Management. I have 2 questions. Starting with my first question, which is on the reclassification of employees. And you have explained that there was a reclassification of employees between the administration staff and the staff included in the cost of sales. And I assume that you did the reclassification to resolve an issue or issues you have had. And I would like to know what that issue is. For example, potentially the issue could be that you had excessive personnel at the administration department, and this is just my assumption. So please let us know why you introduced this change.

Right. Simply put, there were issues or issue that we have recognized, but we didn't address that. And this time, we addressed that finally. In our company, internally, we have been analyzing the transition and changes of that staff number on a monthly basis. And there have been reportings and analysis provided at important meetings, including our Board of Directors meeting. And we have been following the trends, for example, of our client-facing employees from before. So we have been monitoring such important personnel-related numbers internally, but we have not shown that to external parties. So we have decided to have this optimization.

So we have been able to track the changes in the personnel mix from before. However, we believe that the issue we had is that we were not disclosing that. And honestly speaking, I feel that this reclassification came a bit late, but by showing our breakdown of employees according to new and old standards, we believe that going forward, we will be able to provide better disclosure to investors about the changes in our personnel mix.

I assume that, that means that previously, your company had not been able to optimize personnel breakdown. And I assume that there will be the reallocation going forward. I would like to know what kind of impact the allocation is going to give on our profit and loss and the content of the allocation that we should be expecting. And please explain to the extent you can explain at the moment?

To talk about our company's history, we made a disclosure about the incidents we had at the beginning of 2022. And following the disclosure of the incident, we stopped recruiting consultants for M&A. However, we continued recruitment for the staff in the administration department, and that changed the mix of direct and indirect employees. We were left with higher nonclient-facing employee ratio. So we have decided to optimize that.

And therefore, from the fiscal year 2023 onward to the current, we have been basically keeping the number of the staff people, the admin people or just slightly increasing the admin people, the staff people, while trying to expand the number of the frontline consultants meaningfully. So about staff, we have been quite selective in recruiting them. And about the breakdown of employees, we have been trying to lower the turnover rate of consultants and to improve the ratio of our consultants who have been with our company for at least 3 years. And this policy has been implemented from 2023.

My next question is on the new sell-side mandates that got lower by 11% year-on-year. I would like you to explain how we should be interpreting this. And I also would like to know that -- you have explained that the -- it's because the company had a focus on trying to close in transactions that you had a negative sell-side mandate acquired this time. And please explain what exactly happened as a result of your focus on the closing mandates on the front lines? And also, please explain to us if you had done the new mandates acquisition activities at the usual normal pace, then please explain if you could have had a positive or the growth in the number of new sell-side mandates. So please explain to us what you think the market environment was in terms of acquiring new sell-side mandates?

I think that there are 2 important factors that one important factor is coming from the changes in the environment with the start of the news coverage on the inappropriate value issue. And with the start of such media coverage from around last year, we have made our examination process for buy-side mandates more strict. For example, whenever we doubt that the buyer, the potential buyer doesn't have enough capital sufficiency or capital power to acquire or sell a company, there have been cases where we do not allow them to become our mandates, and we are seeing an increase in the number of the buy-side projects that we have decided not to receive as our mandates.

The same trend is applied to the sell-side mandates as well. There have been an increase in number of cases where we have decided that we cannot help the potential sellers as our company, partially because of their earnings results and financial conditions. So there have been an increase in number of cases where we reject potential new sell-side mandates. So simply put, we have become more strict in examining the new mandates to acquire.

However, we think that there was an even more important factor. It's that our company got united in trying to close as many transactions as possible because we have lowered our guidance, and we have also lowered our targets in the midterm plan. So we feel that we did everything that we could do. We did the last result, and that led to the more -- bigger reserve or firm resolve in our company to close more transactions.

So to explain this factor, this time in this first quarter, we were more focused than before in trying to close transactions. And we were also focused on trying to proceed the mandates that we had acquired to the latter half of the whole deal flow. And so we would say that our focus on these 2 points is part of the reason why we had a decline in the new mandates acquired.

Follow-up question. Please explain if the decline you had in Q1 in new sales mandates was within your expectation. And please also explain if we should be expecting a continued negative year-on-year decline in new sales mandates from the second quarter onward.

Basically, we plan to continue the same actions as what we did in the first quarter. So we assume that we will probably struggle to grow in the number of new sell-side mandates year-on-year. However, that does not mean that we will not do anything. It's probably going to be from the second half of the second quarter that we will start putting a bigger focus on trying to grow in the new sell-side mandate numbers.

This is Yanagisawa. I have 3 questions. My first question is regarding the new negotiation starts. In the -- at the end of the fourth quarter in the previous fiscal year, I believe you had [ 280 ] of the new transaction negotiations. And this time, you have closed 212. So I assume that the closing rate got lowered. Please explain to us the reason for this. And I believe that the -- in Q1, you had 329 negotiations start. And given this number, I assume that it's probably difficult to close more than 300 transactions. So please talk to us about the reasons for this trend and also actions required and actions you're taking?

I believe that there has been a change in environment. It's that the customer -- clients' literacy has improved, and they started approaching more M&A intermediary companies to pick one. And through the process, they have listened to various opinions and have become more careful in decision-making. And our company's policy is to capture this change in customer trend and to take more contact and take more detailed contact and communication so we can convert our mandates into transactions closed.

And the actions that we have been taking, including this first quarter are the -- trying to do a more detailed work. For example, our general managers manage the project in progress. And in this work, general managers are now applying more detailed processes or that we used to break down the whole process into -- whole flow into 9 processes, but now that's broken down into 16 processes. So our current general managers are managing our mandates and project in accordance with the more detailed and smaller processes so they can manage project more thoroughly.

And also at the onset of the whole flow, we started holding kickoff meetings with a paper that has a summary on important discussion points. So all our stakeholders are aware of the important points to pay attention to. And these are just some of the examples of the actions we're taking to manage our mandates and project with more detailed care. And in this way, we will continue to make efforts to convert new transaction negotiations into closed transactions.

And also about the number of consultants, I would like to know how many you have newly acquired and the breakdown of the new graduates and mid-career people as well as the people who have left your company. So we know that net increase.

In Q1, we recruited 85 people, of which 20 were mid-career and 65 were new graduates. And in Q1, we had a net increase of [ duty ]. Therefore, in Q1, we made 63% progress compared to our annual target in recruiting. And however, the numbers that I have explained only cover the people who have entered our company by the end of June. And there are other people who have entered our company in July and the people from whom we have received or to whom we have given an official offer for recruiting by the end of June, and there are 19 of such people. So if I add the 19, the progress rate compared to our annual recruiting target is 77%.

[ The opinion from Yanagisawa-san is that ] the Q1 should be the quarter with more number of people leaving the company or deciding to leave the company with bonus payments. So there's a possibility that the net increase on an annual basis could be only plus 70. And she thinks that, that] could be quite difficult.

[ And to this opinion, Naraki-san agreed and said that ] the company will continue efforts to try to reduce the number of people who departs from the company.

And this is considered to be a top management matter to be addressed mainly by Miyake-san and Takeuchi-san. And especially the focus is the people who have been with our company for at least 3 years. And they have been trying to have more one-on-one sessions. So the company knows more about the next vision of the people who have more experienced in our company. And also, there have been actions taken such as regular meetings held at each group to try to identify potential issues that each group may have in relation to personnel.

And about the people who depart from our company, the people who have been with our company for more than 3 years, they're not really leaving our company. The number of people been with us for more than 3 years and deciding to and have left our company is declining. It's rather more new people who are leaving our company. And at the end of March, we had 716 consultants and of which 330 are the people who have been at our company for at least 3 years, and this number was up by 64.

And for this category, the people who have been with our company for at least 3 years, the number of people who left our company in this category got lower by 13 from last year. Of course, it's a major issue when a person leaves our company in the early days after joining our company because we spend time and we use our personnel and we use our cost as well in recruiting. However, our current bigger focus is on trying to retain the people who have become able to gain sales by themselves by staying at our company for more than 3 years.

Please talk to us about the trend at the end of the first quarter or the trend for the first quarter about the number of people who have left our company, especially the people who are more experienced in your company.

Trend was basically the same in Q1. The question is on the number of open sell-side mandates or available sell-side mandates. And at the end of June, the company had 2,280 of such open sell side mandates. And at the end of June 2024, 1 year ago, was 2,010 and at the end of March 2025 was 2,200.

Does anybody else have any questions? There seems to be no more questions, we are closing this session. Thank you very much for staying with us till the end.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Hello, everyone. Thank you for joining our earnings briefing session for the first quarter of the fiscal year 2025 or the fiscal year to March 2026. I am the Representative Director and the CEO of the company, Miyake.

Today, in addition to myself, we have the Vice President and Director of the Holdings, Naraki-san, as well as Takeuchi-san, who is the Senior Managing Director of the company. So, the 3 of us are here to explain and to take your questions. And Takeuchi-san is the President of Nihon M&A Center. Please give us some comments.

I am Naraki. Thank you for joining this session.

I am Takeuchi. Thank you.

Okay. Today, we are broadcasting this session simultaneously and globally. And today, we are broadcasting this not just in the Japanese language. We're also providing the same content in the English version with simultaneous interpreters.

Now I would like to kick off my explanation. Let's start with the summary of the first quarter of the fiscal year 2025. In the first quarter, sales were JPY 9 billion, which was up by 18.1% year-on-year. And ordinary profit likewise grew to JPY 2.5 billion, and this is an increase of 63.8% year-on-year. And this is because of an increase in the number of transactions closed, which was 212, up by 11% year-on-year. And M&A sales per transaction also grew to more than JPY 40 million, which was higher by 6.1% from the same time previous year. So, thanks to these 2, sales grew by 18%.

About the factors for an increase in the number of transactions closed, at the beginning of the fiscal year, we got committed to 2 things, and we implemented the 2 actions. One is that when we start negotiations, we have decided to hold kickoff meetings to identify various issues that we expect we would face during the process. The second thing that we have done is that we have started a more detailed case management system. And we have formalized general manager systems for managing mandates that's more detailed and dedicated than before. And also, around mid-cap mandates, we have a specialized department. And the specialized department started providing a company-wide support to receive more mid-cap mandates, and that has led to a steady increase in the number of transactions closed. And about ordinary profit, we have continued our efforts to optimize cost.

Now on to leading indicators. Starting with the number of new sell-side mandates. This was 289, down by 11.6% year-on-year. And about the number of new buy-side mandates, this was 335. This was a slight decrease of 2.9% year-on-year. And mid-cap mandates we have acquired from the sell side was 49, and this was also down year-on-year by 19%. However, in order to get more contracts in the second and the third quarter, we have 329 new transaction negotiations, which was up by 10% year-on-year. And the fact that our new mandates declined year-on-year is attributable to a single factor. It's that in the first quarter, we wanted to make a rocket start or a very good start of the fiscal year. So, the number of transactions closed and sales became our focus as we started the fiscal year.

However, that alone would lead to a decline in the number of negotiation pipelines. So, we decided to secure enough number of pipelines. So, we were able to have a 10% increase in the number of new transaction negotiations. And this is as we had planned. And to break this down by the different processes, we first received sell-side mandates, the new sell-side mandates. And then we make sure that the mandates get ready for matching. And then mandates are registered for matching, and this was quite solid, up by 5.5%. And we make proposals to buyers, and this was up by 12.2%. And this is a representation of our strategy to try to close more mandates. And as a result, we had new pipeline, which was 329, which was up by 10% year-on-year.

And in the right bottom corner, we have a preparatory period, which is from the time we received mandates to the start of matching. This used to be 85 days previously, but this is now shorter to 57 days. Our target is 60 days, but we were able to have an even shorter preparatory period than our target. And we have shortened this period by 28 days, but we are not satisfied with this. We're going to make this more efficient through the usage of DX and other techniques. And also, for matching as well, we would like to shorten our lead time as the next phase.

And the overall summary, our P&L statement. Our sales were -- sorry, once again, our sales was JPY 9 billion, and this was up by 18%. And about our cost of sales. Cost of sales were JPY 3.6 billion, up by 9.2% and SG&A was JPY 2.8 billion, up by 6.2% year-on-year. And as a result, we had an ordinary profit of JPY 2.5 billion, up by 63.8%. And I would like to explain to you about an important theme. It's about the allocation of our personnel expense. We are now using a new categorization for personnel. we have included sales-related staff into cost of sales. However, before IPO, when we got a support from an auditor, we decided on this previous classification or categorization. And after that, we added more subsidiaries, and we now have much more personnel. So, the previous categorization, we believe, was not based on or aligned with our latest reality. So, this fiscal year, we have decided on a reclassification and that is adopted now. And the detail, the contents of this new classification or categorization will be explained by our -- by us later. But under the new categorization, we will also go into SG&A.

Next, the number of transactions closed, new mandates, and let me show the trend of them. The number of transactions at the right top, saying 212. So, 191 compared to the previous year. The year before, there was 230 or 226. And so last year, it went down a lot. And this year, I think we have been recovering this number quite much. In Q1, M&A sales was JPY 8.6 billion. Last year was JPY 7.3 billion, the year before, JPY 7.6 billion. The year before that year was JPY 8.6 billion. So, we are getting closer to where we were in a few years ago. The actual sales per transaction is coming above JPY 40 million. So, this is going quite well. Recently compared to the past, JPY 38 million, JPY 33 million and JPY 38 million, and this year, JPY 40 million. So, I think it's been making pretty good progress. The number of new sales side mandates, it came out to be 289, as I mentioned, because of the strategy that we've taken, we focus on the number of transactions closed in the sales figure.

Next slide, please. Here's the income statement. And then we also have balance sheet on the following page. And basically, the classification change to personnel cost will be explained by Naraki.

Starting with Slide 8, income statement. Sales came out to be JPY 9.18 billion. It increased by 18.1%. And the ordinary profit was JPY 2.5 billion, and it increased by 63.8% year-on-year. So, the third line, talking about the cost of sales. So, this year came out to be JPY 3.6 billion this year. And towards the right, last year, it was JPY 3.3 billion. So, the number increased year-on-year, but the ratio percentage within the sales this year came out to be 40.3%, whereas the year before was 43.6%. So, the percentage-wise it declined.

The next point is the referral fees and outsourcing expenses within the cost of sales. So basically, the cost paying to the network company, as you can see in dotted line, 13%. So, the ratio inside -- within the revenue stayed the same compared to last year. And also, the 3 lines below that below gross profit, SG&A expenses. This year, this Q1 came out to be JPY 2.8 billion. Last year was, as you see move to the right, JPY 2.7 billion. So, the number increased. But looking at the percentage within the sales, so this quarter was 31.8%. The year before, it was 35.4%. So, the expense ratio came down. So that is the main points on the income statement.

Next, balance sheet. So, we are maintaining a healthy balance sheet. Top half on assets, total asset this quarter came out to be JPY 53.4 billion. And going to the bottom, liabilities and net assets, right in the middle, the total net assets, JPY 44.18 billion. So, the ratio of net asset came out to be 82.6%. That is the current balance sheet status. And the total net asset, usually in Q1, so we had JPY 44.1 billion. And to the right, the end of last year, JPY 47.5 billion. So, it came down by about JPY 3.4 billion. In Q1, the net income attributable to the parent company, the net income increased by JPY 1.5 billion. And we also had a payment of dividend in Q1, that was JPY 4.8 billion. So, talking about retained earnings compared to last year, it was reduced by JPY 3.2 billion. And this was the case with usual year, but this is the current balance sheet situation.

Next slide, please. The number of employees. So, as you can read, so this year, we are emphasizing more on growth and stability in the workforce. And we plan to increase about 70 consultants on a net basis, including graduates, new graduates. So left is showing the trend of the employee numbers at the far-right bar, this -- at the end of this first quarter, so we came out to be at 1,118 people. To the right, here is a breakdown of 1,118 in 4 groups. So, from this year, we have reviewed and changed the classification of the personnel, so we can optimize the resource allocation, utilizing these 4 groups. Top is M&A consultants; second, M&A support, cost of sales and SG&A expenses. And thirdly, corporate personnel and fourthly, financial personnel. So, these are the 4 categories. And we have 2 under M&A support. So basically, it's more like 5 different categories. So let me explain more details how we are categorizing them into these 5 groups.

As Miyake mentioned earlier, after being listed to the market, we expanded our businesses, and we are accepting many different resources from a different background and expertise. And as you can see on this slide, these are the kinds of different personnel we are having. At the very top, M&A consultants, these are the frontline salespeople. And M&A support, the second one from the top are considered to be cost of sales. And they are the people from like a value promotion headquarters, like lawyers, accountants, those experts who are sustaining our quality and PMI consulting, Japan PMI Consulting or the next line, GPM division. So non-M&A sales activities are conducted at these divisions. Also, our corporate value laboratory who is conducting corporate values and also SPA, the Special People Association. So, these are considered as the cost of sales. So, these basically would be considered as cost of sales now. But below that, we also have M&A support and then corporate financial personnel, those staff members that are considered to be SG&A expenses.

This is how now we are clarifying, categorizing the resources to have more proper control over the personnel. So, all categories from the second from the bottom, the corporate headquarters compliance division, internal audit office, only this line was considered to be SG&A. The rest were all considered as cost of sales. So, we've corrected that situation. And as explained by Miyake, so JPY 533 million is now actually, was used to be counted as SG&A instead of cost of sales. So now we are reflecting the reality into the cost calculation.

Next slide, please. So, this is the change in number of employees up until last year, this is showing based on the old classification until last year. So, for this fiscal year, for March 2026, we will be disclosing both classification, the former classification, the new classification. That way you have better understanding for next year onward, for March '27, we will only show new classification. So that is all for the change to the employee classification.

Thank you. For your reference, as we have explained, like on Page 7, cost of sales and SG&A, year-on-year number. Also, we have revised last year as well according to the new classification. So instead of comparing all the classification with the new classification, we have also revised the last year number according to the new classification to show the compare that way you know the changes this year versus last year. And from this page onward, we have actually explained the same contents in the shareholders' meeting. However, from the first quarter, I believe that we have had some new investors and there should be investors who are considering to newly invest in our company. So, we would like to spend a bit of time on this topic as well, starting with shareholder equity and shareholder breakdown.

This fiscal year is the same as the previous fiscal year in terms of JPY 29 dividend, including a JPY 6 special dividend. So, we are keeping the same policy, and that leads to 83.6% payout ratio. We think we'll be able to keep about this payout ratio. And about our ROE, we believe that we'll be able to maintain ROE of over 20%. Last fiscal year was 24%. And among listed companies, we believe that we were about 260 in ranking in terms of ROE among listed companies. And ROE of at least 20%, we believe is necessary for us. Somehow the right page does not show up.

Okay. Sorry for the confusion. I will just provide explanation orally. On the page of share ownership and market capitalization, individual shareholders were 34% of the total and financial institutions were 26.6%. Foreign institutions were 28% of our total shareholders. We believe that our share ownership is quite well-balanced among different types of investors. And in order to continue to improve our corporate value, we have to be invested by more foreign long investors. So, our progress of our performance against our target, we would like to improve our performance. And together with our performance improvement, we have been doing overseas roadshow, and we have visited U.S. And in November, we plan to visit Europe as well.

Next slide, please. So, the consolidated performance forecast and the guidance-wise. So, this fiscal year, for the first time since being listed to the market, we actually made a forecast to decline. And last year was JPY 48.9 billion, but it's expected to go down by 5.3% to be JPY 46.3 billion. That will be this year guidance number. The last year result was JPY 44 billion considering the actual results. It's going to go up by about 5%. That will be the JPY 46.3 billion. And there are several reasons for this number. First, we want to first return back to our customer sales of attaining results target. So, we want to have the peak in Q3 and in Q4, instead of having the last-minute recovery peak in Q4, we want to have the peak in Q3.

And also, we want to increase the number of employees who are able to accomplish the target that way we can have the employees to regain their confidence. And so, for them, by accomplishing that target, we also want to regain the trust from the investors at the same time. So, we want to go back to our normal trend of achieving sales forecast. And so, in the midterm management plan, we are setting a slightly conservative numbers now, but we will make sure to have that size every year within the midterm numbers.

About related activities, we have M&A sales and other sales. In the first quarter, M&A sales were JPY 8.6 billion and other sales were JPY 360 million. And about Tokyo Pro Market or TPM, I think it went quite well. When we joined Tokyo Pro Market, there were only 20 listed companies, but this is more reenergized, and the number of companies listed on TPM is now 145 and of which we have sponsored 45 companies. And in the past 2 years, as our -- we have continued to be the company that have provided the largest number of TPM IPO sponsorships for 2 years in a row among all the J-Advisers, because local rejuvenation is one of our corporate missions. We would like to create more star companies nationwide, including local areas. So, we will continue to put more focus on TPM support.

And about PMI, our current focus is on making sure that the M&A becomes more successful. And SME agency has issued a guideline, the PMI guidelines for SME. And also, SSA has revised the supervisory guidelines for small and regional financial institutions to encourage the M&A support to be strengthened. And we believe that we are the only company who have a team to provide PMI support in our arena in Japan, and this business is growing steadily. We would like to continue to grow this business. And at least about the buyers who are newly buying company, we are going to provide PMI instructions 100% so the buyer will have a successful M&A. And in the overseas market, in 5 -- we have local subsidiaries abroad at 5 basis. And Malaysia, why? YYC Group is the largest local accounting office in Malaysia and our subsidiary in Malaysia have formed a business alliance with this YYC Group. And in Japan, we have Nihon M&A Center model. And this model is finally to be applied abroad now that we have a stronger confidence and trust from the local entities.

And about our fund business, we have Japan Investment Fund, and we have formed the second Japan Investment Fund. And as our topics, we believe that J-Search is an important point to pay attention to. There are companies without the successors in local regions and targeting these companies, we send searchers and management together with local banks. In the Southern Kyushu, we have Higo Bank, Miyazaki Bank, Kagoshima Bank. And together with these, we have established Southern Kyushu Search Fund. And also, in Hokuriku region, we partnered with Hokuriku Bank and established the Hokuriku Search Fund. And in Hokkaido, together with the North Pacific Bank, we have established a Hokkaido search Fund. And by the end of the fiscal year, we plan to add 2 more funds. But M&A, local revitalization and the fund business, these 3 are integrated in these fund business activities, and we would like to continue to do more of these activities going forward.

So, topics. So, we are really emphasizing more on DX and AI. So, we are making a big shift into these technologies. So, we actually forecasted this could come a few years ago. There will be a need for database. We thought about it. So that's why we introduced Salesforce from early times, and we continue to accumulate the data. And also, a few years ago, we also started to use the AI on Salesforce. So, we actually replaced the sales force to the standard Salesforce from the modified version of Salesforce. So now we are preparing ourselves to be able to use AI on Salesforce, and we have been preparing data for over several years. And finally, this year, data capitalism, digital capitalism are emerging, and we are seeing that coming, meaning AI has seen a big evolution so far. So, the President Takeuchi at Nihon M&A Center is trying to implement a data-driven business management.

So, what it does is, of course, not just accumulating data, but also, for example, we are using this new AI called Bring Out. And so, we interview the strategy from sellers, and we record the information or all the processes of the negotiations are also recorded. So that way, we can reinforce our customer management, the client control management. And this will also help to train the employees to improve their skill sets. So, this is really effective. And there are many different phases as part of the negotiation and where we try to utilize AI, and we've already started using them. Not just that, also autonomous AI agent by Salesforce is utilized by us, like you see on the right bottom. And so basically, we are collaborating with Salesforce strongly and trying to introduce this AI technology for -- to reinforce our sales. This is a new action. And we're also emphasizing real marketing.

So, this year, at 40 locations nationwide, we are conducting seminar tour. This year, we are getting a slightly different reactions because now that we are out of COVID, right after the COVID, the management people were not really used to being at the seminar. And even our employees, they were not used to the seminars, the real seminars because they weren't conducting much seminars during COVID. So, we were not fully benefiting from the seminars -- until last year, we weren't able to gather enough people. We weren't able to provide deep content in a seminar. But this year, totally different. We saw a complete difference in the atmosphere. Let's say, as you see in this venue on the slide, you see the full people at this venue. This was from Tokushima. So, we have 377 participants at this seminar in Tokushima, and we had the President of our bank, also the President of Unison Capital. He's from Tokushima Prefecture. So, we held a panel discussion with them.

At Nagoya, we also had the Chairman of Toyoda Gosei, Mr. Miyazaki joining this Nagoya venue. We had a lot of fans of Mr. Miyazaki. So, there was full of passion at his venue. So, we made a lot of changes, but also we saw the change in the sentiment of participants. Also, another perspective, we are conducting regional marketing in each different region, we are supporting -- could be local sport teams. Also, in relation to that, this is an example from Ibaraki Prefecture. This is a radio program. This is called [indiscernible] by Miyake. So, we are inviting famous big name in Ibaraki as a business people and to have discussions with them.

And we are actually inviting super famous people. And so, this radio program has been a big hit. And a lot of people are listening to these radio programs right now. And there's been -- also there is a basketball team called Ibaraki Rocket. This is a local sport team, and we are supporting them. And that's also helping us to increase reinforcement recognition in the local market and branding, both from quality and volume-wise, we are #1 in Japan. We are trying to be #1 in Japan and #1 in the world.

On the right-hand side, as we have showed Guinness record in terms -- so we are holding #1 in completed mandates 4 years in a row. From a quality perspective, according to the Japan marketing research company, we are gaining #1 position in overall customer satisfaction. There are different kinds of satisfaction level. We are obtaining #1 positions as overall customer satisfaction. So, we are trying to be #1, both in quality and volume quantity. So, I think we have been growing and reinforcing our capability to be able to be #1.

And lastly, on network, there's been some evolutions in network in Q1, we are working -- we are forming the joint venture with Okinawa -- Bank of Okinawa, which is called as Okigin Success Partners. This is the third joint venture. The first was in [ Kihu ], working with Juroku Financial Group, we formed a joint venture called Nobunaga Succession. This joint venture has been acting quite strongly so far. And another important joint venture with Bank of Higo, Higo Bank, also working with E.SUN Venture Capital from Taiwan, and we built Kyushu M&A Advisors. And this is the third joint venture in Okinawa now. So that way, we are reinforcing the relationship with the network.

About industry trends, we can provide additional explanation when we receive questions. And it is time. So, from this point onward, we would like to answer questions from the audience.

Thank you for the explanation. Now it's time to take and answer questions. We are accepting questions through chat function. Due to time constraints, we may not be able to answer all the questions that we receive.

First question. We believe that you are still posting questions. So, we would like to start with the questions that we have received in our past meetings and -- or the questions that we have prepared based on the questions that we have received from investors in the past meetings. Question. As an M&A comprehensive company to differentiate yourself from competitors, what's the subsidiary that you are putting the biggest focus on currently?

Okay. So, this is a subsidiary that we are putting a big focus on to differentiate ourselves from our competitors. This is on PMI. Earlier, I have explained already, but in M&A -- just doing M&A is not a success because growth strategy is needed for buyer and business succession is a theme for a seller. So, these are the themes that are important as the M&A process starts. And by having a successful completion of M&A, the growth strategy is achieved for buyer. And for seller, their succession plan is resolved. And by generating synergetic effects, the seller can grow, and sellers' employees become happier. For buyers' owner and seller's owner, this is what they hope for. Therefore, just completing an M&A transaction just put us and put sellers and buyers at the starting point. We have to lead them to a higher and bigger success, and we remain to be responsible for that. We are responsible in leading them to a bigger success, and this is exactly where we differentiate ourselves. And we have PMI consultants or PMI -- the Japan PMI Consulting is the subsidiary that we would like to continue to put the biggest focus on.

Next question. It seems like there's been an issue of inappropriate buyer company having a big impact on the business situation. So, what are you doing for the potential seller owners can be more proactive of M&A?

Thank you for your question. This is a very important question, I believe. Inappropriate buyer, of course, the numbers are not that much. However, it's been reported by the media a lot. And if you were to face such an inappropriate buyer, the seller side, the owners will have to go through the bankruptcy in a worst case and the company will have to also go bankrupt, then employees will be at a loss. And such example has been reported by the mass media a lot. So, sellers are very much concerned about the situation. As an intermediary business, we think it's very important to have a pre-confirmation solidly.

So receiving the financial statements from the buyers and from those financial statements from the buyer, trying to confirm their capital level, also the credit level and try to visit the buyers' company and to see if they are in the actual operation and if their business is active. If they have any inventories, if the equipment's are operating, all this need to be confirmed. And as a negotiation moves forward -- and you need to also check the scheme. If there is no funding, the buyers' credit will have to be utilized. So that will be the scheme they will request -- seller will request. So, we need to understand if that request is appropriate or not. So, we have to confirm them.

Thirdly, that's a contract. So, we have to make sure that contract will cover solidly all the details to make sure there's no loopholes. So, there is no regret later on after the contract is concluded. And then fourthly, you need to implement the follow-up if there is any -- no more the personal guarantee, if there is any retirement fee issue or not, if the payment was made or not. So, we need to communicate with the President of the seller to make sure all these items. So, from the start, all the process on the way also until the exit, we will need to be on the side of the seller, trying to support them. That's what we are doing. That way, sellers can be relieved to ask us to welcome these acquisitions. I think we are ready for that.

Next question. Do you feel that the difficulty of closing transactions is rising? And what do you attribute that to?

Thank you for the question. This is another important theme. And I plan to answer this together with Takeuchi-san. And to answer this from my end, based on my gut feeling or how I'm feeling is that I think that sellers have become more knowledgeable, or sellers have become more aware that they have to think what is right by themselves. A few years ago, sellers really didn't know about M&A. And I understand that's quite natural because the owners of SMEs, they are the people who have put a focus on sales activities, the people who have put a focus on technologies -- so their knowledge in M&A or their knowledge in financial matters tend to be quite limited. Therefore, sellers have tended to trust us for the entire process.

However, with the media report of fraudulent buyers, they got scared. They got scared of entrusting everything to M&A intermediary companies. So, they have started to think for themselves at important milestones and started to get consultations and advice from specialists such as lawyers. And even after that, sometimes they have some concerns still, and these concerns can be basically addressed by our know-how. But with the sudden change in customers' attitude, we have not been able to provide the perfect kind of support. And that's the reason why we started holding kickoff meetings. So, we know in advance what are the potential concerns that customers may get. And we have started to take actions in advance of customers actually feeling anxieties. And that's by us proposing. And so, we believe that the customers' anxieties have been resolved, but the Takeuchi-san is closer to the front line. So, I would like to hand over to him.

Thank you. I am Takeuchi, about the difficulty of closing transactions, we do feel that it's getting more difficult to close transactions, but we see this more positively, meaning that the M&A industry has become more democratized. So compared to a few years ago, knowledge on M&A and becoming more careful about M&A, we feel that this is a positive trend, considering that the M&A has become more common. And that's exactly the reason why closing transactions has become more difficult. So quality, safety, peace of mind, these are the areas that we would like to improve on. So, PMI is one action that we have earlier explained, and we have been strengthening and adding touch points with clients. And through these measures, we believe that these measures have led to the improved performance we have had this time. Next question. So now that we are starting the new fiscal year, has there been a major change in your organization system? So, if there is a change in the system of the organization, what could be the potential impact on your business performance?

Thank you for your question. So major change was we did not have a major change this fiscal year. Of course, we did have a transfer of personnel. When there was a change in the structure of the company that was last year. So, the person of Japanese Holding M&A Center was changed to Mr. Takeuchi. So according to his thinking, so the company instead of having a division the structures, but now we are having a channel teams. So, from different channels like accounting firms and different channels. That's what we have started. And from a holding's perspective, in last year, Takeuchi wasn't really used to operating under such a new structure and the head of channels were not also used to this new structure, and they were not recognizing the meaning of the new structure.

But from the latter half of last year, this new structure started to work quite effectively. So, they are the head of the channel, which is their expertise. So now they have a deeper thinking in their actions, and they can come up with a proper action plan, and they were able to grow and nurture our capability to execute them. And that helped to see the improvement in the atmosphere and that also increased the ownership of the business, and that is actually leading to this upward trend that we are seeing this fiscal year. I believe so it was quite a success for us to have such a major change in the structure. What do you think Mr. Takeuchi, who is operating this new structure?

Now that I am the President, it's been the 15 months so far. So, when we started last year, I was also confused when we started the new structure. But we decided to have a closer look at the market conditions, and we try to communicate with the members as much as possible more than before, so we can have more solid base to accommodate the changes in the environment, and we were able to implement that. So, I hope that we can continue on this new structure. Thank you so much. We need to apologize that we are running out of time. So, the next question will be the final question that we address today. Now that you have the Q1 results out, please give us your latest comments in the level of confidence in achieving the first half guidance.

Thank you for this question. So now that the result is out for the first quarter, I am satisfied with the level of our achievement this time. I feel that finally, we have got momentum. Last fiscal year, our leading indicators have become almost 100%. And this shows the momentum of our company and the success of our sales strategy. they both improved and that showed in our leading indicators that I call almost perfect. However, leading indicators, they need to be converted into actual results. And there are cases where they don't directly get converted into actual results. So, there is a toll mountain between them or there used to be a toll mountain in between them.

And finally, that is starting to be removed, and we started to show the results. So, about the results of the first quarter, I feel that we wanted to do even better, but I am quite satisfied, very satisfied about the results of Q1 and this momentum. And we need to manage well. So, our leading indicators numbers will be converted into actual results through measures such as holding kickoff meetings and providing a more detailed management method with our general managers in managing mandates.

So, in the second quarter, to the extent possible, we would like to exceed our guidance as much as possible. And we are having a very hot summer. The person who masters or who has a success in a hot summer, I believe, can have an overall success for the whole year. So, I say to employees, it's been really hot, right? But we have to have a successful summer. In that way, we will be able to have a perfect second quarter. And in December, we will also be able to have good results. And I think that it's going to take about 2 to 3 more years, but we would like to get back to the previous cycle where we have a peak in the third quarter and spend in the fourth quarter in preparing for a success in the year after. And we believe that our actions are becoming the first step in going toward that previous cycle. And please understand that we will be getting toward a peak in the second quarter and the third quarter. Takeo-san, please give us some comments.

Sure. Important points are shown on this page. I would say that the frontline atmosphere is very good because since our listing, for the first time, we have lowered our guidance year-on-year. And since our customers have become more cautious and careful, we started to be more closer to clients. For example, there is an M&A deal -- and there is an M&A deal that's been open for 4 months. And when we have had 40 meetings with the customers in this deal, that shows that the customers have become more cautious. So, we will do more meetings so our customers get satisfied and get believed.

And also, we have been holding study sessions targeting consultants, so they have better knowledge and know-how. And these efforts take time, and we have to secure enough time to do these. And we have to adjust budget so we can do that. And we are having changes in the market, and we see changes in the front lines, and we believe that we have been catching up with these changes. And our frontline members are enjoying the change in the times, change in the M&A market. So, I would repeat myself, but including myself, we would like to continue to enjoy this work. Thank you.

Thank you very much. So, from all over the world, thank you very much for participating in this Q1 results briefing meeting. Those who are in Asia, well, it would be early morning, for those who are in Europe and those in the U.S., it's right in the middle of the night. Thank you very much for your participation. So, I really hope that we will try to continue running the business so we can't meet your expectations. So, I have to continue to receive your support. Thank you so much.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]