Nihon M&A Center Holdings Inc. ($2127)

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.]