Nihon M&A Center Holdings Inc.

Thank you very much for gathering for our earnings briefing session for the second quarter of the fiscal year 2026. Thank you indeed. Today, we have myself and Mr. Naraki and Mr. Takeuchi. We have the three members to present. I am Naraki. Nice to see you. I am Takeuchi. To start off, we need to start with an apology. In the prior years, we paid interim dividends, and there's a matter regarding that. Part of the dividends exceeded distributable amount according to our findings, and we've already announced our press release about that. With the disclosure of this release, we apologize to stakeholders including our shareholders and investors that we have caused significant concern and inconvenience. About the content and the result of the investigation, Mr. Naraki is going to explain in detail. The detail about this matter lies. Today, October 30th, we have made a release about that, titled, Notice Regarding Receipt of the Investigation Report from the Special Investigation Committee and Future Actions. Please look at this notice. And I would like to provide an outline of what happened. This is a matter regarding interim dividends in prior fiscal years. Facts and Investigational Findings First of all, regarding the interim dividends of prior years, we confirmed that there were deficiencies in the verification process of calculating distributable amount, and it was found that part of the dividends exceeded distributable amount in accordance with the Companies Act, and we established special investigation committee and conducted investigation about the background. and the investigation of the third-party committee did not find intentional acts or misconduct of officers and employees, and we have confirmed that the primary cause was basically the deficiencies in the verification process. If provisional financial statements were appropriately created and approved, we would have been able to secure enough source of dividends in accordance with the Companies Act recurrence prevention measures. We're going to clarify the processes for calculating, confirming, and verifying distributable amount. And also, we're going to enhance the check and supervision functions at the Board of Directors and Auditing Supervisory Committee. And also we're going to conduct trainings to executives and employees. And also we're going to develop the framework for confirming using the help of external specialists and about impact on our financial performance and our shareholder actions wise. Our direction is not to seek repayment for this dividend in question to shareholders. And impact from this matter on the consolidated financial performance will be minimal. And there will not be a major impact on our future business operation and our shareholder returns policy. Together with it, there is a topic on voluntary return of executive compensation. This is to clarify the managerial responsibility. Current directors, including the president and representative director, as well as senior vice president and director, they have said that they're going to voluntarily return 10% to 30% of their monthly compensation in accordance with their respective roles and responsibilities. And at the board meeting held today, October 30th, Our audit and supervisory committee said that legal liability of our directors on this matter. Upon the report from the special investigation committee, there was a discussion at the supervisory and audit committee, and the failures of the directors and the future actions were considered and based on the assumption that recurrence prevention measures will be implemented going forward, this audit and supervisory committee reached a conclusion that they're not going to help hold directors liable for the restoration of the trust. We're going to implement recurrence prevention measures and we're going to enhance our corporate governance and we will do our best. We once again apologize for the inconvenience that we have caused. Continuing on the topic of dividend, as part of our showholder returns program, as originally planned, we plan to pay ¥29 dividend per share. The direction has not changed. And this ¥29 includes ¥4 of special dividend. And the estimated dividend for March 2027 is ¥29 per year. And this is 71.3% as dividend payout ratio. And on the right hand side of this chart, you can see the inclusion of ¥4 special dividend included in ¥29, so no change to the initial plan of our dividend. Thank you very much.

Well then, allow me to move over to explain the results for the first half of FY2026. First of all, as to the executive summary of this, the sales was to ¥22.599 billion, and this is 42.8% of progress for the full year, and this is an increase by 0.1% year by year. And the number of transactions closed was 478 cases per transaction, and the M&A sales had been ¥45.6 million. So therefore, the number of transactions as well as the M&A sales per transaction is almost the same as last year. The mid-cap is trending well on the increase, that is. Ordinary profit is on the decline, however. And that is very much attributable to the fact that we're reinforcing the recruitment of the talent coinciding our anniversary. And this is why we have been advertising ourselves and also organizing events. and as for AI DX investment is proceeding and from this year to the next and to the future beyond so we're making the advanced investment ahead of the time and we want to make sure to of course get a return on investment that we make So, in fact, the leading indicators are remaining to be strong. The pipeline is also expanding. As for the number of new sell-side mandates, they are 699 year-over-year, growth of 13.5%. And whereas the mid-cap mandate is at 155 cases, and this is growing at the pace of 30.3% year by year, which means that we are allowing ourselves to make sure that we can keep this M&A sales per transaction. And the number of new sales side mandates is also increasing as compared to the year before, 22% increase that is, and that is a record high. So in the months of December, March, in other words, at the time of third quarter, fourth quarter, we hope that these will be closed so that they'll constitute our earnings. Also at the same time, for the second quarter, there are some gaps in terms of the accrual, but in the third quarter, There are some delays into the third quarter in the month of October. So about 500 million yen worth of mid-cap that has been concluded or closed. So therefore the third quarter, so we hope to be able to enjoy the peak period around December. So in other words, this is going to be really the closing in the actual fact for the fiscal year so far as the sales department is concerned. And that's how we are working hard. And especially in the pipeline where the negotiation is underway, it is trending really well. So therefore, the third quarter, we would make sure that we will be able to uplift all numbers in all regard. And as for the P&L for the first half, Naraki is going to explain the details of the numbers. And the first sign, first of all, with regard to the sales, 22.599 billion yen. and that is almost the same as the last year's level and you can see that the slight decline in terms of the numbers of transactions closed but we managed to generate the sales amount that is almost the same as last year and 478 has been closed and so 290 in the second quarter that is So we managed to accelerate the speed of the closure of these transactions. But unfortunately, it was a decline on a year-by-year basis. So M&A sales per transaction is 45.6 million. So we did manage to keep this level up at the high level. And as for the mid-camp transactions closed, 43 cases or deals. and as to the contents the first quarter 1934 for the second quarter so in the second quarter we did manage to accelerate the speed and exceeded the last year's level so that was the the result and the next page we have shown the expenses and as for the cost of sales 8.494 billion yen and this is the decline by 1.2 percent year by year As for the personnel cost, consultant mainly, so 4.6 billion and this is an increase by 3.6%, 4.763 million in actual fact. Referral fees and outsourcing expenses, 2.83 billion and negative by 11.6%. Direct deals, had risen, and as a result, so the referral fee had declined by 1.7% year by year, from 14.2% to 12.5%. SG&A, 6.208 billion, increased by 11.1%. One of the attributing factor to this is the personnel cost, 2.068 billion, So it is a decline by 0.4% year by year. Commission expenses, $559 million. So last year was just over $400 million, so an increase by 38.7%. IT-related costs, $598 million. and so 517 million that was in the last year, so 15.5% of an increase year by year. As for the advertising expenses, 457 million, 347 million that was in the last year, so 31.3% of an increase year by year. IT related costs as well as advertising as well as the marketing, On page 20 to 24, there are further details which we would like to elaborate on later stage. P&L summary is just that I have explained. So in order to avoid redundancy, allow me to go over to the next page.

This is Q2 alone, the three-month worth results. And we show you a new comparison. One point to note is the number of transactions closed, 290. So for the three months, we closed 290 transactions. 188 was the number for Q1, and Q2 was 290. And mid-cap mandates, 34 in the three months of Q2. Q1 was 19, and that became 34. Okay, so this is in accordance with the flow of M&A deal starting from receiving mandates to closing. We show some leading indicators in accordance with this flow. First of all, seller companies, we start the process from receiving mandates from potential sellers. We close advisory agreements with them. And the new sell-side mandates this time was 352. This indicates an increase of 7.6%. Additionally, of them, mid-cap mandates, so middle-sized mandates, was 79. This increased by 29.5% year-on-year. So we received mandates, and the mandate number was quite solid. And the quality or the contents of the mandates were 61.8% were in the central area, the large city areas. And mandates in these areas are easy to sell, easy for closing, and the ratio of such central area mandates exceeded 60%, so we believe that the quality was high as well. and so after receiving mandates there'll be corporate valuation and there'll be creation of the teaser document as well besides the valuation documents before matching seller and buyers we examine the companies quite closely and the days number of days required for the process used to be three months previously but we're reducing that The next step is finding the matching buyer. and we make proposal to potential buyers and we also close advisory agreements with buyer companies. And we have about 400 of them. We've received 400 of new buy-side mandates and this 400 is an increase of 3.1%. So these leading indicators show good signs, really good signs. So we will have the third quarter, fourth quarter, and the Q1 next fiscal year. We would like to lead these mandates into closure in the coming quarters. We would like to have more higher quality matchings, we will have higher quality negotiations, and we would like to improve our successful closure rate. And this is how we believe we can improve our financial performance. about the number of closures and the new mandate numbers. We've been showing these trends every time. So please look at our trend. Next of all, balance sheet. I will hand over to Mr. Naraki. Right, we start with an asset on the first top half. 60 billion and 860 million was total assets and net assets was 51 billion 278 million standing at 84.3 percent in ratio last year was 50 billion 643 million so from the end of the previous fiscal year There was an increase of net assets by 635 million. We believe that we are keeping quite healthy balance sheet. Next topic is the transition of our number of employees. Our business Our revenue is decided based on the number of transactions closed time, M&A sales per deal, and also we can calculate that by per head times the number of people. So productivity times our headcount determines our revenue. And in that sense, headcount growth is very important for the company to grow. Last year, we We have failed in growing the number of employees and we actually had a net decline for the past two to three years recruiting and retention wise. We believe that we were not successful in recruiting and turnover and we see this quite seriously. Starting from the previous fiscal year, this recruiting has been supervised as a matter right under Mr. Takeuchi. At the moment, 626 became 640 as headcount, and already we have people who have joined our company after the start of October, that's 29, and 27 have accepted our offer, so there are 56 to be added. and this indicates a growth and also we have been enhancing our recruiting activities and honestly speaking there's a great news to share on a quarterly basis so july october january and may sorry in april We've been solidifying the new join numbers. Previously, we used to be joined by new people on a monthly basis, but we have consolidated that entry timing to a quarterly timing. And last month, employees who joined our company in October, there were 29 of them. In targeting the 29, I implemented my first training to them, spending 90 minutes, and I feel that the atmosphere has changed. Starting from this fiscal year, We've been trying to improve the quality of recruitment as a matter directly supervised by our president. And there are a few reasons that have led to higher turnover or high turnover. For example, not being able to provide enough follow up to the new people, not providing good education, and also bad quality of the people as well. And that leads to increase in turnover. So we are now improving the quality of recruiting. and we've been doing more in education and follow-up to the new people. And so as I did the training to the newly joined people, I feel that their reaction has changed. The atmosphere is different from before. So recruiting-wise, I feel that the quality has improved quite significantly. And I feel that this recruiting is a matter that we can count on to improve going forward.