FY2019 3rd Quarter...23 History of Cross Marketing Group Apr Cross Marketing was established in...

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FY2019

3rd Quarter

Financial Results

［November 14th 2019］


Contents

FY2019 Q3 Financial Results ・・・ 3

FY2019 Q3 Financial Results by Business Segment ・・・9

Revision of Financial Results Forecast for FY2019 ・・・14

Shareholder Return and Dividend Amount ・・・16

Reference Materials ・・・18

01.

02.

03.

04.

05.


FY2019 Q3

Financial Results 01


Calculation delay of large-scale project

in overseas research business

Calculation expected to be after 4Q

No revision for the FY2019

performance forecast due to the steady increase of each domestic

business

Delayed in calculating large-scale project of Kadence group

which was ordered in this term. Expected to be calculated

after 4Q.

Since the business performance of each domestic

business steadily increased, FY2019 performance forecast

was not revised.

The business performance of each domestic business

(Domestic research business, IT solution business and other

business) has grown steadily since 1st half, which resulted

revenue as 10,078 million JPY (YoY: 113.6 %).

Especially, Medilead, which is engaged in medical research,

IT solution business, and other businesses contributed to

the increase in revenue and profit of consolidated results.

Domestic business shows the steady growth ( Domestic Research Business, IT Solution Business,

and Other Business )

Q3: YoY 113.6％

FY 2019 Q3 Financial Results Executive Summary 01 FY2019 Q3

Financial Results


Because each domestic business has grown steadily,

consolidated revenue resulted in 102.0% and operating profit resulted in 123.2％ compared to the same period of the previous year.

01 FY2019 Q3

Financial Results

（Unit: JPY Million）

FY18.3Q

Actual FY19.3Q

Actual Change（YoY）

FY19 3Q Forecast（Achievement Ratio）

Amount Amount ％ Amount ％

Revenue 12,577 12,797 101.8% 20,000 64.0%

Operating Profit

429 529 123.2% 1,250 42.3%

Ordinary Profit 382 430 112.7% 1,109 38.8%

Net Income 249 △926 － △490 －

FY 2019 Q3 Financial Results


-200

0

200

400

600

800

1,000

1,200

-1,000

0

1,000

2,000

3,000

4,000

5,000

6,000

15.1Q 15.2Q 15.3Q 15.4Q 16.1Q 16.2Q 16.3Q 16.4Q 17.1Q 17.2Q 17.3Q 17.4Q 18.1Q 18.2Q 18.3Q 18.4Q 19.1Q 19.2Q 19.3Q

（JPY Million）

【Operating Profit(Line：Right)】

（JPY Million）

IT Solution

Research business (Overseas)

Research business (Domestic)

Other Business 【Revenue (Bar : Left)】

FY2015 FY2016 FY2017 FY2018

Mainstay domestic research business steadily increased, and the revenue resulted in 108.3% compared to the same period of the previous year. IT solution(YoY 130.2％) and

promotion business(YoY 123.6%) also showed great performance.

Revenue by Business Segment

And Consolidated Operating Profit

01

FY2019

Consolidated Kadance Inc. and R&D

Listed 1st Section

of TSE

FY2019 Q3

Financial Results


FY2019 Q3 Consolidated Profit and Loss Statement (Overview) 01 FY18.3Q

（Actual） FY19.3Q

（Actual） Change（YoY）

Revenue 12,577 12,797 101.8%

Costs of Goods sold 8,017 7,855 98.0%

Gross Profit 4,559 4,942 109.1%

Gross Profit Margin 36.3% 38.6% ＋2.4pt

SG&A 4,130 4,413 106.9%

Employee and Recruiting Fee 2,454 2,681 109.2%

Depreciation and Amortization 114 107 94.2%

Goodwill Amortization 139 129 92.8%

Other 1,422 1,496 107.4%

Operating Profit 429 529 123.2%

Operating Income Rate 3.4% 4.1% ＋0.7 pt

Ordinary Profit 382 430 112.7%

Extraordinary Profit 168 － -

Extraordinary Loss － △1,049 -

Corporate Tax and others 288 303 105.1%

Profit(Loss) attributable to non-

controlling interests (△：Loss） 13 4 31.3％

Net Income 249 △926 -

Calculation of Impairment Loss

on Goodwill and Decrease of

Goodwill Amortization

Regarding overseas research

business, although the revenue

remained almost unchanged

compared to the previous year,

outsourcing cost decreased and

gross profit margin increased since

the calculation of the large-scale

project delays to after 4Q.

Increase in Gross Profit Margin

Impairment loss on goodwill

oversea offices have summed

up in 2Q.

（Unit：JPY Million）

FY2019 Q3

Financial Results


FY2019 Q2 Consolidated Balance Sheet (Overview)

01

Decrease in Goodwill Balance Due to the impairment loss of goodwill, net asset

decreased by JPY 959 million and equity ratio

decreased by 2.1 points compared to those in the

end of Dec. 2018.

Decrease in net asset and in equity ratio

Unit：JPY Million FY2018.

End of 4Q

FY2019.

End of 3Q Change

Current Asset 7,130 6,036 84.7%

Cash & Deposit 2,606 1,780 68.3%

Notes and

accounts

receivable-trade

3,311 2,693 81.3%

Others 1,213 1,563 128.9%

Non-current Asset 3,300 2,236 67.8%

Goodwill 1,481 307 20.7%

Stocks of

subsidiaries and

affiliates

184 89 48.0%

Others 1,634 1,840 112.6%

Total Assets 10,429 8,272 79.3%

Unit：JPY Million FY2018.

End of 4Q FY2019.

End of 3Q

Current Liability 4,298 3,477 80.9%

Note payable 1,573 1,406 89.4%

Short-term Debt 272 349 128.6%

Others 2,453 1,722 70.2%

Non-current

Liability 2,231 1,854 83.1%

Long-term Debt 1,983 1,594 80.3%

Others 248 261 105.0%

Net Asset 3,900 2,941 75.4%

Capital Stock/Legal

retained earnings etc. 1,144 1,297 113.4%

Others 2,756 1,643 59.6%

Equity Ratio 36.3％ 34.2% △2.1pt

FY2019 Q3

Financial Results

Regarding overseas research business, the impairment loss of

goodwill was added up, and goodwill balance decreased, since

the estimated revenue of Kadence group companies, UK, US,

Indonesia, and Singapore were no longer expected.


02 FY2019 Q3 Financial Results

by Business Segment


Research (Domestic・Overseas)

IT Solution Others

Focus on digital marketing area

Domestic research contributes to the

revenue

Revenue and profit continue to grow by the

favorable progress of each subsidiary

New consolidation with SPT contributes to the performance

Success in obtaining projects and gross profit

management

Resulted in 212% increase in profit compared to the previous year

02

FY2018

3Q FY2019.

3Q Changes（YoY）％

Revenue

(Domestic) 6,616 7,167 +8.3%

Revenue (Overseas) 3,703 2,719 △26.6%

Segment Profit 1,245 1,250 +0.4％

(JPY Million)

FY2018

3Q FY2019.


Revenue 1,817 2,366 +30.2%

Segment Profit 180 236 +31.2%

FY2018

3Q FY2019.


Revenue 441 545 +23.6%


6,616 7,167

3,703 2,719

1,245 1,250

0

200

400

600

800

1,000

1,200

1,400

0

2,000

4,000

6,000

8,000

10,000

12,000

FY2018

Q3

FY2019

Q3

1,817 2,366

180

236

0

50

100

150

200

250

0

500

1,000

1,500

2,000

2,500

FY2018Q3

FY2019Q3

441

545

25

78

0

20

40

60

80

100

0

100

200

300

400

500

600

FY2018

Q3

FY2019

Q3

※Revenue by business segment is external revenue and does not include internal revenue.

Revenue (Left :Bar) Segment(Right : Line Graph)

Comparison of Revenue and Profit

by Business Segment

FY2019 Q3

Financial Results

by Business Segment

(JPY Million) (JPY Million) (JPY Million) (JPY Million) (JPY Million)


5,940 6,480 6,538 6,616 7,167

2,957 2,563 3,710 3,703 2,719

1,374 1,454

1,325 1,245 1,250

0

200

400

600

800

1,000

1,200

1,400

1,600

0

2,000

4,000

6,000

8,000

10,000

12,000

FY15 Q3 FY16 Q3 FY17 Q3 FY18 Q3 FY19 Q3

Domestic research business resulted in 108.3%

increase compared to the previous year. The

active development of new business in

mainstay Cross Marketing contributes to both the revenue and the profit.


Revenue (Left)

Segment Profit (Right)

Research Business 【Domestic / Overseas】

Domestic Research Business: Revenue JPY 7.17billion, YoY 108.3%

Overseas Research Business: Revenue and profit decreased due to the

large-scale project delay

Concerning overseas research business,

although the revenue decreased since the

calculation of large-scale projects delays to

after 4Q, they are on the track to recovery. This

is because the revenue from existing offices

overseas, except for the large-scale project,

increased compared to the previous year.

Medilead, which is engaged in Medical Research,

showed favorable progress due to active sales

worldwide and new service development.

Showed 41.7% increase in revenue and 109.3% increase in operating profit.

02 Business Status by Segment 【Research Business】

FY2018

3Q FY2019.


Revenue (Domestic) 6,616 7,167 +8.3%

Revenue (Overseas) 3,703 2,719 △26.6%

Segment Profit 1,245 1,250 +0.4％

FY2019 Q3

Financial Results

by Business Segment


1,133 1,348 1,365

1,817

2,366 112

100 97

180

236

0

50

100

150

200

250

0

500

1,000

1,500

2,000

2,500


Each company, led by mainstay Cross Communication,

keeps increasing revenue and profit

Revenue rises up to JPY 2.36 billion, YoY 130.2%

The revenue and profit on IT Solution

business has been increasing, due to the

consolidation with Supotant in 4Q, 2018,

and favorable progress of the existing

offices.

The revenue except for the impact by the

new consolidated company also keeps

double-digit growth, YoY 13%.

All four company in this segment are in

the black and contributes the whole

group’s profit to increase.

Business Status by Segment 【IT Solutions Business】

02

IT Solution Business

Revenue（Left）

Segment Profit（Right）

Unit：JPY Million

FY2018

3Q

FY2019.

3Q Change (YoY)％

Revenue 1,817 2,366 +30.2%


FY2019 Q3

Financial Results

by Business Segment


170

447 414 441 545

-50

19 32

25 78

-100

-50

0

50

100

150

200

250

300

-200

-100

0

100

200

300

400

500

600


Other Businesses

Thanks to the restructured operating system

and the aggressive sales for the

programmatic advertisement projects, which

were conducted in the 1st half, the revenue

showed 23.6% increase from the previous

year. In addition to the enhancement of

recruitment and education, trying to

accelerate the company growth by business

alliance and new service development.

The sales activity focused on profitability

helps to continuously improve the gross

profit margin. The segment profit rose up

about 53 million yen from the previous year.

Business Status by Segment 【Other Businesses】

02

Revenue rose up 23.6% from the previous year due to aggressive acquisition

of projects Gross profit margin showed great improvement

by strengthen sales structure and gross profit management

Revenue（Left）

Segment Profit（Right）

(Unit：JPY Million）

FY2018

3Q FY2019.

3Q

Changes (YoY)％)

Revenue 441 545 +23.6%


FY2019 Q3

Financial Results

by Business Segment


Revision of Financial Results

Forecast for FY2019 03


Decided to keep the Forecast revised in Q2,

since the domestic business are progressing steadily

though the large-scale project delay occurred in the overseas business

FY19

Forecast Announcement in

Feb. 14th 2019

FY19

Forecast Revision in

Aug. 14th 2019

Comparison with

FY2019 forecast in

Feb. 14th 2019

FY18 Actual

Change % Amount %

Revenue 20,000 20,000 －－ 17,492 114.3

Research Business

(Domestic) 10,220 10,220 －－ 9,551 107.0

Research Business

(Overseas) 5,456 5,456 －－ 4,742 115.0

IT Solution

Business 3,308 3,308 －－ 2,542 130.1

Other Businesses 1,017 1,017 －－ 656 155.1

Operating

Profit 1,250 1,250 －－ 955 130.9

Ordinary

Profit 1,109 1,109 －－ 840 132.0

Net Income 570 △490 △1,060 － 507 112.5


Revision of Financial Results

Forecast for FY2019 03 Financial Results Forecast for FY2019

※Revenue by business segment is external revenue which doesn’t include internal revenue.


Shareholder Return

and Dividend Amount 04


Shareholder Return

and Dividend Amount

04

Dividend Policy

Dividend forecast for FY2019：6.0 yen per share (Interim : 3.00 yen, Year-end : 3.00 yen ）

0

20

40

60

80

0

2

4

6

8

2013 2014 2015 2016 2017 2018 2019

（Forcast)

13.5％

(%) (JPY)

Dividend per share(Left)

Consolidated dividend payout ratio (Right)

JPY 4.5

JPY 3.3

JPY 5.5

33.1％

19.5％

12.8％

JPY 6.0 JPY 5.5

21.2％

JPY 6.0 JPY 5.5

As the impairment loss of overseas business was one-time and special factor, the dividend amount shall be kept as planned.

"Determine a dividend amount with the aim of a consolidated dividend payout ratio of approximately 15%"

*The company split the shares into two parts on February 18, 2013, and into three parts on June 1, 2014, and a retroactive amount has been stated for the dividend amount per share. *With regard to past dividend amounts per share, these have been stated retroactively, upon rounding off to one decimal place.


References 05


FY2019 Q3 Topics

Start providing data which enables analyzing patient’s insights by building

Japan’s largest disease information panel for about 350,000 people

・Largest questionnaire data on disease (1)

・ Follow-up research on major

diseases that hospitalize (2) ・Includes information that medical

records or receipt data does not include (health, height, etc.)

05 Reference Materials

Characteristic of the panel (1) Large scaled survey for the general public

(2) Follow-up survey on

major disease

About 350,000

About 80,000

<Optional service>

Further survey

/Ad hoc survey


Start business development and investiment to IT human resource field and launched a new brand

FY2019 Q3 Topics 05 Reference Materials

Fittio made a website which approches widely to the job applicants who have experiences in IT or Web industries. Three specialized web sites were also made, depending on the type of employment system as below:

◆Fittio Staff: Dispatching／Employment placement dispatiching ◆Fittio Career: Recruitment ◆Fittio Freelance: SES／Outsourcing


05 FY2019 Q3 Topics

Start new service “Virtual Ad Value”

New system for grasping evaluation of

advertisements by using VR

Digital Promoting Service linked with

consumer data

Start to provide new system which has

high precision for evaluating

advertisements by showing real living

environment by VR（Virtual Reality)

By aligning with the image purchasing

application “ONE”, advertising

campaigns for targeted users are now

being available.

360Channel Co., Ltd.

https://corp.360ch.tv/

HOLIDAY STUDIO Co., Ltd

https://holiday-studio.co.jp/

＜Partner Company＞＜Partner Company＞

One Financial Co., Ltd https://corp.wow.one/

CEO：Soto Yamauchi

Establishment：May, 2016

Upload Images

and

earn Money

Reference Materials

https://corp.360ch.tv/





https://corp.wow.one/

https://corp.wow.one/


05

Cross Marketing Group

Cross Marketing Group Inc. Company

Name

Miki Igarashi President & CEO

June 3, 2013

Established due to the shift to a holding company,

Cross Marketing Inc. established on April 1, 2003

Established

JPY 646,709,000 Capital

2,092 (Including 546 temporary staff) No. of Employees

[Consolidated]

Research Business, IT solutions Business and others Business

Reference Materials


History of Cross Marketing Group

Cross Marketing was established in Shibuya, Tokyo Apr

Main office transferred to Chuo-ku, Tokyo Jan

Cross Marketing enter into capital and business alliance with

EC Navi (Currently Voyage Group) and its subsidiary May

Received part of Index Inc.'s mobile solutions business

Cross Communication Inc. begins sales operations

Aug

Cross Marketing China Inc. established as a Chinese

subsidiary

May

Cross Marketing Group Inc. established and transferred

to holding company system

Jun

Acquired shares in Markelytics Solutions Private Limited

and MedePanel Online Inc.

Aug

Established Cross Marketing Asia Pte. Ltd. in Singapore Sep

Relocated the headquarters in Shinjuku-ku (Tokyo

Opera City Tower)

May

Acquired shares in KADENCE International Business

Research Pte. Ltd

Nov

Acquired Research & Development, Inc. as a

consolidated subsidiary

Feb

Cross Communication established a subsidiary,

Cross Propworks in Hakodate, Hokkaido

Apr

Medilead, Inc. established, D&M, Inc. established Jul

Listed on the Mothers Section of the Tokyo Stock Exchange Oct

2003

2004

2006

2008

2011

2012

2013

Cross Marketing （ Thailand ） Co., Ltd established

（Kadence International (Thailand) Co., Ltd.)

Cross Markeitng Thailand acquires share of Jupiter MR

Solution（Thailand）

Aug

Cross Communication acquired whole share of JIN

SOFTWARE Inc. (Currently, Cross J Tech)

Sep

Received Marketing business transferred by Japan

Publicity

Nov

Acquired whole share of Mixi Research Inc. and started

the business as “Shopper’s Eye, Inc.”

Apr

Listed to the first section of Tokyo Stock Exchange Mar

2014

2015

2016

2018

Cross Ventures Inc. established Apr

Cross Communication acquired whole share of

Supotant Co.Ltd,.

Oct

05 Reference Materials


Marketing Research

Cross Marketing is the pioneer in online research

with full service marketing research capabilities.

R&D offers value added information (insights)

through market research planning, design,

implementation and consultation services.

Medilead is full service MR agency focused on

delivering insights derived from key stakeholders

in the healthcare industry.

Envirosell Japan offers analyses of shopper

behavior and business consulting services.

Service standards are evaluated from the

perspective of the consumer through the use of

mystery shoppers

Kadence International is a global insight agency

engaged in marketing research with offices in the

UK, the USA, and Asia.

Markelytics is a leading market research agency

providing end-to-end research solutions to clients

around the world.

Medical World Panel manages and operates

proprietary healthcare panels, and provides

insights from key stakeholders in the healthcare

industry.

Headquartered in Bangkok with marketing offices in

Singapore and India, Jupiter is the research hub to

the Asian markets-

IT Solutions

Cross Communication are IT specialists

engaged in the planning, development and

operation of mobile and smartphone oriented

websites and systems.

Cross Propworks offers development and

design of multi-device oriented websites and

systems, as well as a variety of data processing

services.

Specialists in systems development and

engineering services

Supotant is a engineer placement agency

oriented Web/EC

Others

D&M utilizes consumer data to offer cutting

edge marketing services.

Management support and Investment toward

start-up which has unique technology and

know-how in Internet industry.

05

Group Companies Reference Materials



05

FY2014 FY2015 FY2016 FY2017 FY2018

Revenue 8,141 14,859 15,969 16,758 17,492

Research Business 6,663 12,902 13,373 14,058 14,293

IT Solutions Business 1,372 1,704 1,907 2,147 2,542

Other Business 106 253 690 553 656

Operating Income 536 1,233 1,342 727 955

Ordinary Income 521 1,185 1,267 597 840

Net Income 245 559 837 △703 507

Net Assets 2,897 3,945 4,474 3,598 3,900

Total Assets 7,872 9,970 9,932 9,564 10,429

Dividend per share (JPY) 4.5 6.0 5.5 5.5 5.5

EPS（JPY） 13.61 30.81 42.85 △36.00 25.92

BPS（JPY） 150.54 193.17 221.49 177.75 193.79

ROE（％） 9.5 17.2 20.7 △18.0 14.0

ROA（％） 8.8 13.3 12.7 6.1 8.4

Trends in Consolidated Results and Main Indicators

(FY2014-FY2018) Reference Materials


Cross Marketing Group Inc.

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

Cautionary Statement regarding the Material

Cross Marketing Group does not guarantee the accuracy of the information contained

in this presentation, which reflects judgments made by Cross Marketing Group

management based on currently available information.

Given that the business environment may vary significantly in the future due to a

number of factors, please be aware that the performance and results in this

presentation may differ from Cross Marketing Group ’s actual performance and results.

For inquiries regarding one information contained in this presentation:

Cross Marketing Group Corporate Planning Unit

E-mail：[email protected]

FY2019 3rd Quarter...23 History of Cross Marketing Group Apr Cross Marketing was established in...

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