NEXT Co., LTD.
TSE Mothers: 2120

Explanation of financial results

Full-year financial results for fiscal year ended March 2009
(April 2008 through March 2009)
The opinions and projections contained in this document were
formulated based on assessments by NEXT CO. LTD at the time thedocument was created. We cannot guarantee the accuracy of theinformation contained herein. Please note that actual company
performance and results may vary significantly based on changes in avariety of factors.

Consolidated financial results for the 4thQ ・・・P 3-15
Full-year financial results for term ended March 2009 ・・・P 16-25
Business performance predictions for full financial year ending
March 2010ーMid-term Corporate Vision 2nd term ・・・P 26-36

NEXT Co., LTD.

Returning Profits to Shareholders

TSE Mothers: 2120

Management principles ・・・P 38

・・・P 37

FullFull-year results
Reference ・・・P 39-54
Mid-term Corporate Vision ・・・P 40-46
Consolidated subsidiary ・・・P 47-49
Our business model ・・・P 50-51
Issues in IR activities ・・・P 52
Corporate profile ・・・P 53-54

1

QuarterlyNEXT Co., LTD. TSE Mothers: 2120

Quarterly

Consolidated fiscal period: 4thQ
－For financial year ended March 2009
Financial results

Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

Quarterly

Consolidated

Po int4thQ Financial Results

Increase
Increaseinin revenue
revenue

Fall
Fall inin
profits
profits

Item

Sales

2,518 million yen

Consolidated fiscal period: 4thQ

Sales increased 21.1% on a year-to-year basis, while Operating Income fell by 17.1%
due to prior investment

YearYear-toto-year change(comparison in JanJan-Mar period)

Contributing factors: Launched warranty affairs business last September

21.1% UP
+438 million yen: Increase in almost all services due to accumulated sales boosted byincreased number of net customers*For detailed sales data by service sector, see Page 7

Operating Income

325 million yen

17.1% DOWN
-67 million yen

No. of affiliated stores

10,120 stores: Placed prior investment to materialize Mid-term Corporate Vision"Dominantly No. 1"Î Labor cost and advertisement expenses increased: Profitability of warranty affairs business improved*For detailed SG&A data, see Page 4. For profit and loss data by segment, see
Page 6: Increased throughout Japan except Shikoku area, marking a recordhigh number of affiliated stores.

1,359 stores UP*For a distribution map of affiliated stores, see Page 25*Increase from end of Mar 2008

: Sales of special seasonal goods stopped in the 4th quarter.

Average sales at affiliated stores

55,564 yen

46 yen DOWN

: Thanks to year-round option sales, NEXT achieved a record-high option
ratio
Î “Sales personnel search”, “Condominium evaluation/sellout”, etc*Increase from Mar 2008

Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

3

Quarterly

Consolidated

Po intChange in operating profit and loss
through the 4thQ

4thQ Financial Results

Achieved record-high quarterly sales. Moderate increase in expenses other than labor costs andadvertisement expenses required for prior investment
FY ended Mar 2008
Unit: million yen

FY ended Mar 2009

4Q
(Jan-Mar)

Sales

1,852

2,080

1,997

2,135

2,276

2,518

Cost of goods sold

84

90

60

61

60

75

SG & A

1,476

1,597

1,693

1,834

2,025

2,117

Labor costs

612

584

669

687

753

824

Advertisement expenses

293

372

411

563

570

585

Operational costs

70

68

87

83

91

99

Depreciation costs

63

69

67

73

97

94

Allowance for bad debt
loan/guarantee obligation

22

99

25

44

54

42

414

402

432

381

457

471

Operating income

291

392

243

239

190

325

Current net earnings

139

-29

104

105

5

159

Operating Income ratio

15.7%

18.8%

12.2%

11.2%

8.3%

12.9%

Other SG&A

*1

1Q
(Apr-Jun)

2Q(Jul-Sep)

4Q(Jan(Jan-Mar)

3Q(Oct-Dec)

3Q(Oct-Dec)*2*3*1 The current net earnings fell into the red due to an extraordinary loss of 171 million yen caused by goodwill amortization.
Major factors: (1) Goodwill amortization for NEXT F. S. Co., Ltd. (consolidated subsidiary) : 96 million yen, (2) Goodwill amortization for Renters Co.,
Ltd. (consolidated subsidiary): 51 million yen ÎFor details of goodwill, see Page 19*2 Extraordinary loss of 60 million yen recorded as a result of termination of HOME’S Auction service.
*3 During this quarterly period, labor costs increased due to 19 newly hired permanent employees. At the same time, the number of temporary andpart-time workers decreased by 27.
Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

4

Consolidated

Quarterly

Po intUnit:millionyen

Quarterly change in expense-sales
structural ratio

4thQ Financial Results

Drastic increase in labor costs and advertisement expenses required for prior investment, structural
ratio of fixed costs decreased
Structural ratio

AmountFY ended Mar 2009

FY ended Mar 2008

100%

2,500

Improved by 4.0p

90%
783

2,000
730

1,500

500

644

761

291

60%

411

563

35.1%

669

243

33.7%

30.2%

33.4%

31.1%

15.8%

17.9%

33.0%

28.1%

20.6%

26.4%

25.0%

23.2%

40%

687

239

0

753

190

30%

Costs andother
expenses

Advertiseme
nt expenses

Increased by 9.9p

50%

570

824

584

392

35.3%

70%
585

293

612

80%

673

654
372

1,000

FY ended Mar 2009

FY ended Mar 2008

Labor costs

33.5%

32.2%

32.7%
33.1%

20%
325

3Q
4Q
1Q
2Q
3Q
4Q
Oct-Dec Jan-Mar Apr-Jun Jul-Sep Oct-Dec Jan-Mar[Current
term]

10%

15.7%

18.8%

Operating
Income

12.2%

0%

11.2%

8.3%

12.9%

3Q
4Q
1Q
2Q
3Q
4Q
Oct-Dec Jan-Mar Apr-Jun Jul-Sep Oct-Dec Jan-Mar[Currentterm]: FY ended Mar 2009 was established as an “investment phase”, as the first term of “FY ending Mar 2011: Mid-term Corporate Vision”.
: The sales-Labor cost ratio (blue) and Sales-Advertisement expenses ratio (green) remained at a high level.
: On the other hand, the Cost price-Other expenses ratio (pink) decreased Î Fundamental profitability is in the process of improving.
*Basic criteria for upper limit: Sales-Labor cost: 30%, Sales-Advertisement expenses: 20%
Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

5

Quarterly

4thQ Financial Results

Consolidated

Po intQuarterly change in profit and loss
by segment

Operational deficit for warranty affairs business reduced, while the financial status of otherbusinesses showed quarterly profit for the first time

Unit: million yen
700

FY ended Mar 2008

FY ended Mar 2009

Other businesses
500

2

3

Other
businesses
Real estate portal
business

619

300
473

458

410

386

388

-60

-47

-77

-93

-88
-20

-79
-21

-106

-44

1Q
Apr-Jun

2Q
Jul-Sep

100
-53
-100

-138

-48
-158

-15

-27

*

Local communityrelated business
Warranty affairs
business-300
3Q
Oct-Dec

4Q
Jan-Mar3Q
Oct-Dec

4Q
Jan-Mar[Current term]: Profit growth in real estate portal business was low, due to concentrated investment in labor costs and advertisement expenses to implement“HOME’S Dominantly No.1” strategy inaugurated in the current term.
: Degree of deficit for warranty affairs business was improved due to a better Ratio of allowance for Guarantee Obligation brought by improved
collection rate of advance money*Factor contributing to increase in deficit: Introduction of store database
Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

6

Quarterly

Consolidated

Po intQuarterly change in sales byservice sector

4thQ Financial Results

Sales growth marked for almost all services on a year-to-year, quarter-to-quarter basis
FY ended Mar 2009

FY ended Mar 2008
Unit: million yen

Service

3Q
4Q(Oct-Dec) (Jan-Mar)

1,407

1,505

1,658

New condominium

249

272

270

299

280

291

New house

85

102

124

141

160

174

24

49

20

21

44

48

84

85

87

90

95

101

1,731

1,943

1,862

1,961

2,087

2,274

0

4

3

8

7

6

Other

*1

“Lococom”
Warranty affairs

*2

18

32

41

53

74

108

Renters net
Renters entrusted development

*3

56

52

54

58

61

71

Other

*4

46

48

36

53

45

57

1,852

2,080

1,997

2,135

2,276

2,518

Grand total*1

4Q of FY ended
Mar 2009(Jan(Jan-Mar)

1,358

Subtotal

Other businesses

3Q(Oct-Dec)

1,431

Custom-built house, renovation

Local communityrelated business
Warranty affairs
business

2Q(Jul-Sep)

1,287

Real estate lease and transaction

Real estate portal
business

1Q(Apr-Jun)

This includes real estate portal businesses (e.g. HOME’S property investment, HOME’S Auction, HOME’S nursing care).

*2 Consolidated subsidiary NEXT F. S. Co., Ltd. newly established in July 2007. Launched business in Sep of the same year after taking overbusiness rights through a merger & acquisition.
*3

This includes advertisement agency business sales, and “Other businesses” includes equivalents.

*4 Starting this term, “advertisement agency business sales” is included under “Other businesses”, due to lowered priority of these sales.

Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

7

Quarterly

Consolidated

4thQ Financial Results

Quarterly change

Continuing record-high-level quarterly sales thanks to steady development despite severe economic
depression

Po int

Unit: million yen

FY ended Mar 2008

FY ended Mar 2009
2,518

2,500

2,276
2,080

2,000

Other (Other businesses)

2,135
1,997

Renters net

1,852
291

1,500

272
249

270

299

Lease bondLococom

280

Custom-built house, renovation
Other (real estate portal business)

1,000

New house

1,287

1,431 *1

1,358 *1

1,407

1,505

1,658

500

New condominium apartment
Real estate lease and transaction

0
3Q
Oct-Dec

4Q
Jan-Mar

1Q
Apr-Jun

2Q
Jul-Sep

3Q
Oct-Dec

4Q
Jan-Mar[Current quarter]*1 Major contributing factor: Sale of seasonal goods stopped in April 2008.
(Sold seasonal goods in the 4thQ of fiscal year ended Mar 2008 for the first time, boosted sales by approx. 100 million yen.)

Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

8

Quarterly

Consolidated

Po intMonthly change in major indicators for“Real estate lease and transactions”: 1

4thQ Financial Results

Sales growing at a steady pace due to an increased No. of affiliated stores and strong option sales

No. of affiliatedstores
Unit: stores

FY ended
Mar 2007

FY ended Mar 2008

Average sales
at affiliated store
Unit: yen

FY ended Mar 2009
Average sales dropped because a larger firm (withSales/affiliated cheaper prices) that had once left our network rejoined.
store (right axis)

10,00055,0009,000

50,0008,000

45,0007,000

40,000No. of affiliatedstores (left axis)
Unit: million yen
403 413 417 420
330 346424 427 436

464 481489

455 449 455 459 466

479 492

500 513538

557 562355 357 358

330 347 356 357

317

358 363 367 368 371 373

378

387 397400

392 386 386 389 392

418
398 404 408

430 441 444

Real estate
information
postingsales“Option”
sales

116 11878 84 89 63 64 69 70 74 82 88 93 95 109
42 46 50 51 53 53 54 59
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Major indicators for HOME’S Real estate lease and transactions (As of Mar 2009)
No. of affiliated stores: 10,120 stores Sales/ affiliated store: 55,564 yen(Record high)Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

Monthly sales: 562 million yen Option ratio: 21.1%(Record high)(Record high)9Consolidated

Quarterly

Po int4thQ Financial Results

Option sales ranking for real estate leaseand transactions

New Service: Sales personnel search newly ranked at No. 5！

Previous
Previousterm
term

Rank
Rank

OptionOption name
name

Check
Still in 1st place HOME’S special advertising box (ad points)

1

1 HOME’S special advertising box (ad points)

2

2 Search engine information

3

3 HOME’S panorama postings

44 “Station Navigator” company promotion box

New

5 Sales personnel search information

10

6 Account inquiry information

5

7 Detailed screen ranking information！

Displayed at the top of
the search results pagefor high exposure
5,000yen and up/10pt

！

Check
3rd place HOME’S panorama postings
7th place Detailed screen ranking information

Check

Newly ranked! 5th place Sales personnel search information

Units explained by sales
personnel for increased
customer peace of mind
3,000 yen/month
up to 10 cases/customer

Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

More realistic
information presented
through video stills
10 case sets 5,000 yen

Ranked information on
floor plans based onmatch with search results
10 case sets 5,000 yen

10QuarterlyMonthly change in major indicators for“Real estate lease and transactions”: 2

4thQ Financial Results

Consolidated

Sharp increase in number of articles posted due to launch of a billing system according to the numberof PVsPo int

Unit: 10,000 cases

Unit: million PV

FY ended Mar
2007

FY ended Mar 2008

FY ended Mar 2009

175
175

150

No. of PV by previous
calculation system(right axis)

125

Number of PV

150(right axis)
127

125
102 104 101 104

100

100
23

24

24

25

24

94

96

96

97

23

23

24

24

97

98 101

24

24

23

105 106
24

25

101 100 97 101 99
26

25

25

26

26

106
102 103
27

27

27

107
27

113

119

75
28

27

100
122

28

28

No. of house
0 rent

75

50
78

80

76

79

75

71

50No. oftransaction
25

73

72

73

73

74

77

81

81

75

75

72

75

73

75

76

79

80

86

90

98

93

-25
-50

25
-75
-100

0
Jan

Feb Mar Apr May Jun

Jul

Aug Sep

Oct Nov Dec Jan

Feb Mar Apr May Jun

Jul

Aug Sep

Oct Nov Dec Jan Feb Mar
Nationwide service for a billingsystem according to the No. of
inquiries

Number of posted articles and page views (PVs) for “HOME’S Real estate lease and transactions” (as of Mar 2009)
No. of posted articles:

Rental houses: 930,000

Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

Transactions (existing homes): 280,000 No. of PVs: 122,785,000

11Quarterly

Consolidated

Po int4thQ Financial Results

Other topics: Summary

Contribution from booming mobile-phone viewing of “Real Estate Portal”, improved collection rate for“warranty affairs”

Real estate portal business
Larger firm that had left our network in Jun 2008 rejoined in Feb 2009.
No. of affiliated stores came to 10,120 stores (end of Mar 2009), maintaining record high growth but still not reaching the initial target.

Strong option sales started in JanÎRecord-high option-sales ratio: 21.1% (Mar 2009)
Booming mobile PVs boosted acquisition of customers unable to access the website via PC

Local community-related business
Delay in profitability improvement for Lococom
Enhance HOME’S function useful (linking HOME’S Real Estate Search and local information, word-of-mouth marketing for
local community)
Number of Individual members exceeded 500,000 (as of May 14, 2009)

Warranty affairs business
Improved allowance ratio due to improved collection ratio and ratio of allowance for guarantee obligation (allowance forcontingency liability)
No. of warranty affairs exceeded 39,000 (increased by 6,668 compared to previous term-end figure) due to drastic increasein contractors
Eliminated duplicated costs during 3rdQ (Increased in-house operation ratio)
Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

12

Quarterly

Consolidated

Po intOther topics(Real estate portal business): 1

4thQ Financial Results

Organizing on-site events led to advertising effectiveness and stimulated demand for changing
residences！

(1) Jan 24-25, 2009
“HOME’s Fukuoka Living Fair＠Tenjin”

Check(2) Mar 14, 2009: HOME’S Property Investment Fair

(2) Mar 14, 2009
“HOME’S Property Investment Fair”
！

Check

http://toushi.homes.co.jp/fair/(1) Jan 24-25, 2009: “HOME’s Fukuoka Living Fair @Tenjin”

Seminar participants

Sex
Experience in real estate investment

Age■ Booth exhibition:15 companies
Booth cost: 600,000 yen/company

http://realestate.homes.co.jp/contents/fukuoka

Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

Real estate companies: 13
Financial institutions: 3
Booth cost: 500,000 yen/company■ Visitors: 550

13

Quarterly

Consolidated

4thQ Financial Results

Other topics(Real estate portal business): 2

Implemented a new style of information distribution for HOME’S and took measures to prevent
membership withdrawals, targeting in April

Po int！
(1) Feb 3, 2009
Started “HOME’S Market Report”

Check(2) Apr 1 to Jun 30, 2009: Implementing promotion
campaign (Total cash award: 20 million yen)

(2) Apr 1–Jun 30, 2009
Implementing promotion campaign (Total cash award: 20 million yen)
(3) Apr 2, 2009
Launched a mobile website “HOME’S New house”

！

Check

http://www.homes.co.jp/contents/2000/(1) Feb 3, 2009: Started “HOME’S Market Report”

！

Check

(3) Apr 2, 2009: Launched a mobile website“HOME’S New house”

http://k.homes.co.jp/
Updated on the 25th of each month (next business day for Sat, Sun, holidays)

http://www.next-group.jp/csr/report/
Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

14

Quarterly

Consolidated

Po int4thQ Financial Results

Other topics(Local community-related business)

Enhanced service for individual affiliates！

(1) Feb 3, 2009 (Local community-related business)
Commissioned: METI’s “Survey for Local Business and Industry
Revitalization Measure”(2) Mar 23, 2009 (Local community-related business)
Alliance: leading welfare outsourcee, BenefitOne Partners Inc.
ÎProvide BenefitOne’s benefit program at monthly fee of 525 yen (taxincluded)

！

Check

Check

(1) Feb 3, 2009: (Local community-related business)
Commissioned: METI’s “Survey for Local Business andIndustry Revitalization Measure”

Story about inheritance andword-of-mouth information(2) Mar 23, 2009 (Local community-related business)
Alliance: leading welfare outsourcee, BenefitOne Partners Inc.

http://www.lococom.jp/prl/

Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

http://www.lococom.jp/features/ht/

15

Cumulative

NEXT Co., Ltd. TSE Mothers: 2120

Full-year results for term
Cumulative
ended March 2009
Financial results

Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

Cumulative Consolidated

Po intFinancial results for term
ended March 2009

Increase
Increaseinin revenue
revenue

Fall
Fall inin
profits
profits

Consolidated fiscal term

Sales increased by 20.1% on a year-to-year basis, while Operating Income fell by 20.1%
due to prior investment

Item

YearYear-toto-year change(comparison in AprApr-Mar period)

Contributing factors

20.1% UP

: Services demonstrated high rates of growth both in amount and rate: “Realestate lease and transactions”, “New house”, and “Warranty affairs”

Sales

8,927 million yen+1,494 million yen: However, almost all services showed high growth.
*For detailed sales data by Service Sector, see Page 23

Operating Income

20.1% DOWN

998 million yen-252 million yen: This is prior investment to achieve the Mid-term Corporate Vision "Dominantly
No.1": Achieved 97.1% gross margin rate (improved by 2.3p in comparison withprevious fiscal year), due to enhancement of NEXT’s own media.
: Profitability of warranty affairs business improved*For detailed data on itemized SG&A, see Page 18. For profit and loss data by segment,
see Page 22

Labor costs

2,934 million yen

30.9% UP+692 million yen

Advertisement expenses

51.6% UP2,130 million yen+725 million yen: Consolidated number of employees increased to 525 (increased by 91 vs.
previous term end). This includes 76 employees for the Real Estate Rentals &Sales Division (increased by 31 in comparison with previous term end)
: Sales expanded in Warranty affairs business. Number of employees increased
drastically to 52 (up 28 vs. previous term end), due to enhanced in-houseorganization: Branding campaign practiced via various media (e.g. TV commercials,
transportation advertisements, magazine advertisements, Internet
advertisements): Enhanced measures encouraging mobile phone users to browse NEXT’s
website*Arrows show impact against profit

Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

17

Cumulative Consolidated

Po intFinancial results for term ended
March 2009

Change in operating profit andloss

While sales increased by 20.1%, labor costs also rose by 30.9% and advertisement expenses soared
51.6%[Current term](Reference only)[Previous term]
FY ended Mar 2007 FY ended Mar 2008 FY ended Mar 2009

Increment value overthe previous year

Increase over theprevious year

Sales

4,459

7,433

8,927

+

1,494

+

20.1 %

Costs of goods sold

269

384

257

-

127

-

33.1 %

SG&A

3,443

5,797

7,670

+

1,873

+

32.3 %

Labor costs

1,165

2,242

2,934

+

692

+

30.9 % *1

Advertisement expenses

1,055

1,405

2,130

+

725

+

51.6 % *1

Operational costs

147

242

361

+

119

+

49.2 % *2

Depreciation costs

120

242

332

+

90

+

37.2 %

Allowance for bad debt
loan/guarantee obligation

12

140

167

+

27

+ 19.3 % *3

942

1,523

1,743

+

220

+

14.4 %

Operating income

746

1,250

998

-

252

-

20.1 %

Current net earnings

409

406

375

-

31

-

7.6 %

Operating Income ratio

16.7 %

16.8 %

11.2 %

Other SG&A

- 5.6p*4―*1 Current term: this shows a substantial increase (vs. the previous fiscal year) due to concentrated investment in labor costs and advertisement expenses toimplement "HOME's Dominantly No. 1" strategy.
*2 Caused by an increase in sales promotion costs, travel costs to improve sales performance in rural areas, and sales commissions required to expand thebusiness range of NEXT F. S. Co., Ltd..
*3 Increase in allowance for bad debt loan/guarantee obligation caused by increased customer bankruptcies due to the aggravated real estate market as wellas increased warranty affairs business sales (in terms of the number of guarantee obligations).
*4 Fiscal year ended Mar 2008: Extraordinary loss of 171 million yen recorded for goodwill amortization (NEXT F. S. Co., Ltd. and Renters Co., Ltd.) .
Fiscal year ended Mar 2009: Extraordinary loss of 58 million yen recorded due to the termination of HOME’S Auction service.
Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

18

Cumulative Consolidated

Po intFinancial results for term
ended March 2009

Consolidated balance sheet
and goodwill status

Fixed assets increased by 15.3% due to various capital expenditures[Term[Term-end results [Term[Term-end results Increase over
Unit: million yen for previous term] for current term]
the previous
End of Mar 2008 End of Mar 2009year

Assets

7,153

7,496

+

4.8%

Current assets

5,650

5,764

+

2.0%

Fixed assets

1,502

1,732

+ 15.3%

Debt

1,599

1,810

+ 13.2%Current debt

1,590

1,804

+ 13.5%

Fixed debt

86

- 25.0%Net assets

5,553

5,685

+

2.4%

Net asset worth

29,671.40 yen

31,554.16 yen

+

6.3%

Contributing factors"Condominium 100%" development cost: 64 million yen/ (increased fixed
assets)Development cost for Lococom’s RTM version: 128 million yen/ (increased
fixed assets)
Development cost for backbone system: 220 million yen/ (increased fixed
assets)Payment of rental deposit, etc/ 191 million yen (increased fixed assets)
Asset retirement for HOME’S Auction: 58 million yen/ (decreased fixed assets)
Increased accrued liability due to business expansion: 102 million yen/(increased current debt)
Increased advance receipt due to booming warranty affairs business: 237
million yen (increased current debt)
No debt with interest

During current term, 7,800 common stocks (240 million yen) were repurchased

Residualbalance

Residual
periodUnit: 1000 yen
Amortization
completes on

Total goodwill

Initial balance

Amortization value between
Apr 2008-Mar 2009

Willnic Co., Ltd.

50,00040,00010,00030,00036 months

Mar, 2012

Renters Co., Ltd.

199,235

81,364

40,682

40,682

12 months

Mar, 2010

Goodwill amortization data

Goodwill amortization for Next F.S. Co., Ltd. was fully completed by Mar 2008.
Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

19

Cumulative Consolidated

Po intFinancial results for term
ended March 2009

Consolidated cashflow

Operating cashflow remains stable, consolidated cashflow suffering losses due to repurchased
common stock (240 million yen)

Unit: million yen

Operating cashflow[Previous term]
FY ended Mar 2008

[Current term]
FY ended Mar 2009

+1,363+847

Current term: decreased income before tax: 172 million yen
Increase in income taxes paid during the previous term due toincreased taxable earnings: 387 million yen
Previous term: Expenditure due to assignment of business forNEXT F. S. Co., Ltd.: 193 million yen
Current term: invested in "Condominium 100%“, a backbone
computer system, Lococom, etc.
Payment of rental deposit, etc: 240 million yen
Future terms: capital expenditure for business expansion andadditional investment for software requires 400 to 600 million yen

Investment cashflow

-921

-770

Financial cashflow

+5

-237

Increment value incash/cash equivalents

+447

-160

Balance of cash/cash
equivalents

4,580

4,420

Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

Major factors

Current term: During current term, common stocks of 240 million
yen equivalent were repurchased

20

Cumulative Consolidated

Financial results for term
ended March 2009

Change in Cost-Sales
structural ratio

Despite a drastic increase in labor costs and advertisement expenses due to prior investment, thefixed cost structural ratio decreased

Po int
Unit: million
yen

Structural ratio

AmountFY ended Mar 2007 FY ended Mar 2008 FY ended Mar 2009

FY ended Mar 2007 FY ended Mar 2008

8,927

FY ended Mar 2009

Improved by 2.0p

9,000

100%
8,000

7,433
2,862

7,000

4,000

29.4%

34.1%

80%
2,534

6,000
5,000

90%

1,405

60%

Costs and otherexpenses

Increased by 7.7p

70%
2,130

4,459

32.1%

23.7%

18.9%

30.2%

30.2%

16.7%

16.8%

FY ended Mar
2007

FY ended Mar
2008

23.9%

Advertisement
expenses

50%

1,313

40%

3,000
1,055
2,000

2,242

2,934

30%

32.9%

Labor costs

20%

1,345
1,000
0

746

1,250

998

FY ended Mar 2007 FY ended Mar 2008 FY ended Mar 2009
[Current term]

10%

11.2%

Operating Income

0%
FY ended Mar
2009[Current term]: FY ended Mar 2009 was established as an “investment phase”, as the first term of “FY ending Mar 2011: Mid-term Corporate Vision”.
: The sales-Labor cost ratio (blue) and Sales-Advertisement expenses ratio (green) remained at a high level.
: On the other hand, the Cost price-Other expenses ratio (pink) decreased Î Fundamental profitability is in the process of improving.
*Basic criteria for upper limit: Sales-Labor cost: 30%, Sales-Advertisement expenses: 20%
Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

21

Cumulative Consolidated

Po intFinancial results for term
ended March 2009

Change in profit and loss by segment

Almost all sectors recorded profit decline due to prior investment

Unit: million yen

FY ended Mar 2008

FY ended Mar 2009

Unit: million yen

2,000

Increment value over Increase over thethe previous year
previous year

1,800

Real estate portal-

185-10.1 %

1,600
1,400

Local communityrelated business

-

65

―

1,200

Warranty affairs

-

23

―

Other

+

30

―

1,000

1,829

800

1,644

600
400
Real estate portal
business

200

Figures other than the real estate portal business do
not show increases over the previous year since they
resulted in an operational deficit

0
-200

-215

-400

-296

-600

-83

-280

Local communityrelated business-319

Warranty affairs
business
Other businesses

-53

-800
FY ended Mar 2008

FY ended Mar 2009
[Current term]: Major contributing factors to the operational deficit of the local community-related business are as follows (year-to-year comparison):
Increased sales force due to reorganization
Increased depreciation costs for renewed “Lococom” website
Costs required to introduce store database

Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

22

Cumulative Consolidated

Po intFinancial results for term
ended March 2009

Change in sales by service sector

Real Estate Lease and Transaction core sector remains healthy, while New house, warranty affairs
showed large increases
Service sector

FY ended Mar
2007

FY ended Mar
2008

FY ended Mar
2009

Real estate lease andtransactions

3,139

5,090

5,930

+

840

+ 16.5 %New condominium

798

1,049

1,142

+

93

+

New house

134

317

600

+

283

+ 89.3 %

110

148

134

-

14

-

66

308

374

+

66

+ 21.4 %Subtotal

4,250

6,914

8,183

+ 1,269+ 18.4 %Lococom

0

4

26

+

22

+550.0 %

―

54

278

+

224

+414.8 %

―

264

246

-

18

-

6.8 %

209

195

192

-

3

-

1.5 %

4,459

7,433

8,927

Unit: million yen

Real estate portal
business

Other

*1

Custom-built house,renovation

Local communityrelated business
Warranty affairs
business

Other businesses

Warranty affairs*2

Renters net
Renters entrusted
development
Other

Grand total*4*3Increment value over Increase over thethe previous year
previous year

+ 1,494

8.9 %

9.5 %

+ 20.1 %*1 This includes real estate portal businesses (e.g. HOME’S property investment, HOME’S Auction, HOME’S nursing care).
*2 Consolidated subsidiary NEXT F. S. Co., Ltd. newly established in July 2007. Launched business in Sep of the same year after taking over businessrights through a merger & acquisition.
*3 1H includes a one-time sale for entrusted development of 70 million yen; however, the current term had no such large jobs. Sales for Renters net
increased by 42 million yen vs. the previous fiscal year.
*4 Beginning this term, “advertisement agency business sales” are included under “Other businesses”, due to lowered priority of these sales.
Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

23

Cumulative Consolidated

Po intFinancial results for term
ended March 2009

Actual figures for prior investments(labor costs, advertisement expenses)

The first term of "HOME’S Dominantly No. 1" results were almost as planned

Net increase in number of affiliate stores boosted due to enhanced new affiliate store development efforts
FY ended Mar
2008

Advertisement
expenses

Labor costs

FY ended Mar
2009

Increment value over Increase over thethe previous year
previous year

Advertisement expenses

1,405

2,130

+725

+51.6%

Sales-Advertisement expenses
ratio

18.9%

23.9%

+5.0p

―

Labor costs

2,242

2,934

+692

+30.9%

Sales-Labor cost ratio

30.2%

32.9%

+2.7p

―

Term-end number in sales force(Real Estate Rentals & Sales
Division)

45

76

+31

+68.9%Net increase in number of affiliate
stores(full-year total)

1,028

1,359

+331

+32.2%

Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

24

Cumulative Consolidated

Po intFinancial results for term ended Distribution of affiliated stores andpotential market
March 2009

A market exploration ratio of 4.0% (our estimate) means there is profound potential for increasing thenumber of affiliated stores
Explanatory
note:NEXT’s sales activities are implemented in the four areas shown below:
Tokyo

Eastern Japan

Metropolitan districts
other than Tokyo

Western Japan

Hokkaido& Tohoku
318 (0.9%)

1 Hokkaido &Tohoku2 318 (0.9%) 3

+95

+95

1

Area

2

Number ofaffiliates as ofend of Mar 20093

Marketexploration ratio*

4

Increase fromend of Ma, 2008

4

Kita-Kanto

Kyushu312 (1.3%)

Chugoku

Kinki

+70

+271

125 (0.8%)
178 (2.6%) 1,606 (3.4%)

249 (2.2%)+112

As of end Mar 2009
No. of affiliated stores

10,120 stores+33

Metropolitan districts[Branch]Tokai

6,884 (8.9%)

Shikoku

396 (1.5%)+503

52 (0.4%)

+199

±0

[Office]+76[Branch]Hokuriku &Koshinetsu* Market exploration ratio=Number ofaffiliates/potential market size

Tokyo [HQ](+1,359)
Nationwide number ofreal estate stores(estimate)

255,000 stores*Source: Potential market size is extracted from a report issued by Ichiyoshi Research Institute Inc.

・The Tokai (Nagoya) branch was established during the current term (May 2008) to expand our sales activities. Sales activities inthis area have been successfully launched by adopting community-based sales techniques.
・The number of affiliate stores surged in larger cities, including metropolitan districts.
Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

25

EstimateNEXT Co., Ltd. TSE Mothers: 2120

Full-year business performance predictions
for FY ending Mar 2010
Estimate
Mid-term Corporate Vision: 2nd term

Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

Estimate

Consolidated

Business performance prediction
for FY ending Mar 2010

Consolidated financial term

Sales are predicted to increase by 26.2% (year-to-year comparison), with apredicted 71.8% increase in Operating Income
Sales exceeded 10 billion yen for the first time.
Aim for profit increase by achieving record-high profit, taking advantage of prior investments

Po intIncrease
Increaseinin revenue
revenue

Increase
Increaseinin profit
profitItem

Sales
11,266 million yen
Operating Income
1,716 million yen

YearYear-toto-year change(comparison in AprApr-Mar period)

26.2 % UP+2,339 million yen

71.8 % UP+718 million yen

Current net earnings
1,093 million yen

190.9 % UP

EPS
6,139.31 yen

198.9 % UP

+718 million yen+4,085.20 yen

Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

Contributing factors
・End of March 2010: Target number of affiliate stores: 12,300
Increased by 2,180 stores (vs. previous fiscal year)
・March 2010: Target average sales for affiliated stores: 59,840 yen
Increased by 4,276 yen (year-to-year comparison)*For detailed data on sales estimates by service sector, see Page 33.
・Labor cost: 3,709 million yen: Increased by 26.4% (year-to-yearcomparison)Î End of Mar 2010: Consolidated number of employees (estimate): 576,
increased by 51 (vs. previous fiscal year)*Includes 38 new graduates, an increase of 10 (vs. previous fiscal year)
Number in sales force for Real estate lease and transactions: 79 (planned),
an increase of 5 (vs. previous fiscal year)
・Advertisement expenses: 2,142 million yen. 0.5% increase (year-to-yearcomparison)・Lease bond business: 10 million yen surplus (planned) * 319 million yen
deficit in the previous fiscal yearÎ Current profit was boosted by another 210 million yen due to tax effectaccounting*For detailed data on itemized SG&A (consolidated), see Page 29.
*For detailed data on itemized SG&A (non-consolidated), see Page 31.
・Aim for record-high business performance in Sales, Operating Income, andCurrent net earnings.

27

Estimate

Consolidated

Business performance prediction
for FY ending Mar 2010

Change in Sales andOperating Income

Target increases in revenue and profit, aim to achieve record-high business performance by taking
advantage of completion of prior investments

Po int

Unit: million yen
12,00011,266

Sales
10,00026.2% UP

Operating income
8,927

20.1% UP
8,000

7,433

66.7% UP
6,000
4,459
4,000

1,716

2,000

1,250
746

67.5% UP

20.1% DOWN

998

71.8% UP0FY ended Mar 2007

Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

FY ended Mar 2008

FY ended Mar 2009

FY ending Mar 2010
(Estimate)28

Estimate

Po intConsolidated

Business performance prediction
for FY ending Mar 2010

Change in operating
profit and loss

Advertisement expenses remain flat, profit showed huge expansion(reference only)
FY ended Mar 2008

Current termPrevious term
FY ended Mar 2009 FY ending Mar 2010

Increment value
over the previous
year

Increase over theprevious year

Sales

7,433

8,927

11,266

+

2,339

+

26.2 %

Costs of goods sold

384

257

304

+

47

+

18.3 %

SG&A

5,797

7,670

9,244

+

1,574

+

20.5 %

Labor costs

2,242

2,934

3,709

+

775

+

26.4 %

Advertisement expenses

1,405

2,130

2,142

+

12

+

0.6 %

242

361

478

+

117

+

32.4 %

242

332

411

+

79

+

23.8 %

140

167

163

-

4

1,523

1,743

2,339

+

596

+

34.2 %

Operating income

1,250

998

1,716

+

718

+

71.8 %

Current net earnings

406

375

1,093

+

718

+ 190.9 %Operating Income ratio

16.8 %

11.2 %

15.2 %+

4.0p―

Operational costs
Depreciation costs
Allowance for bad debt
loan/guarantee obligation
Other SG&A

- 2.4 %
*1

*2

*1 Major contributing factors are: system usage fee (up by 217 million yen), subcontracting costs (up by 89 million yen), R&D expenses (up by
74 million yen), office and other rent (up by 76 million yen)
*2 Current net earnings were boosted by 210 million yen due to NEXT F. S. Co., Ltd.’s tax effect accounting.
Î During the fiscal year ending Mar 2010, losses carried forward are expected to be eliminated on the basis of taxable earnings (cash base).

Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

29

Estimate

Consolidated

Po intBusiness performance prediction
for FY ending Mar 2010

Change in Cost-Sales
structural ratio

Total share of labor costs and advertisement expenses drastically decreased after completing priorinvestment

Unit:
million yen

AmountFY ended Mar
2008

FY ended Mar
2009

12,000

Structural ratio
FY ending Mar
2010

FY ended Mar 2008 FY ended Mar 2009 FY ending Mar 2010

11,266100%
90%

10,000

8,000

6,000

8,927

3,698

80%

34.1%

32.1%

32.8%

Costs andother
expenses

Improved by 4.9p

7,433

70%

2,862
2,142

2,534

60%

18.9%

23.9%

19.0%

Advertisement
expenses

50%

2,130
4,000

2,000

3,709
2,242
1,250

0

40%

1,405
2,934
998

30%

30.2%

32.9%

Labor costs

32.9%

20%

1,716

10%

16.8%

11.2%

15.2%

Operating
Income0%

FY ended Mar 2008 FY ended Mar 2009 FY ended Mar 2010
(Estimate)

FY ended Mar 2008 FY ended Mar 2009 FY ending Mar 2010
(Estimate): Profitability improved due to significant improvement in the Sales-Advertisement expenses ratio (green).
: Sales-Labor cost is predicted to remain on the same level, considering the cost of J-SOX countermeasures and expansion of NEXT F. S. Co., Ltd’s
business span.
*Basic criteria for upper limit: Sales-Labor cost: 30%, Sales-Advertisement expenses: 20%

Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

30

Estimate

Po intBusiness performance prediction
for FY ending Mar 2010

NonNon-consolidated

Change in Operating
profit and loss

For non-consolidated performance too, advertisement expenses remain at about the same level andprofitability improved(Reference only)
FY ended Mar 2008

Current termPrevious term
Increment value over
FY ended Mar 2009 FY ending Mar 2010 the previous year

Increase over theprevious year

Sales

6,770

8,000

9,623

+

1,623

+

20.3 %

Costs of goods sold

300

198

213

+

15

+

7.6 %

SG & A

4,927

6,535

7,764

+

1,229

+

18.8 %

Labor costs

1,925

2,460

3,071

+

611

+

24.8 %

Advertisement expenses

1,344

2,047

2,023

-

24

-

1.2 %

Operational costs

171

228

279

+

51

+

22.4 %

Depreciation costs

210

301

363

+

62

+

20.6 %

Allowance for bad debt

32

72

45

-

27

Other SG&A

1,243

1,424

1,980

+

556

+

39.0 %

Operating income

1,542

1,266

1,645

+

379

+

29.9 %

Current net earnings

683

915

970

+

55

+

6.0 %

Operating Income ratio

22.8 %

15.8 %

17.1 %+

1.3p- 37.5 %*―* For the fiscal year ended Mar 2009, extraordinary profit was recorded as caused by returned Provision of allowance for loss on an assistantgrant and allowance for bad loan debt for NEXT F. S. Co., Ltd..
ÎOffset for consolidated business results
Factors causing discrepancy are almost same as for consolidated financial results (Page 29)

Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

31

Estimate

NonNon-consolidated

Po intUnit:million yen

Business performance prediction
for FY ending Mar 2010

For non-consolidated performance, profitability will improve despite increased labor cost due to a
drastic decrease in the advertisement expenses ratio

FY ended Mar
2008

AmountFY ended Mar
2009

FY ending Mar 2010

9,623

10,000

2,882

6,770

4,000

1,957
1,344

2,023
2,047

2,000

1,542
0

80%
60%

2,460
1,266

27.5%

29.9%

Costs and otherexpenses

Improved by 3.6p

19.9%

25.6%

21.0%

30.8%

31.9%

Advertisement
expenses

50%
40%

3,071
1,925

28.9%

FY ending Mar 2010

70%

2,196
6,000

FY ended Mar
2008

Structural ratio
FY ended Mar
2009

100%
90%

8,000
8,000

Change in Cost-Sales
structural ratio

28.4%

30%

Labor costs

20%

1,645

10%

22.8%

15.8%

17.1%

FY ended Mar
2009

FY ending Mar
2010(Estimate)

Operating
Income0%

FY ended Mar 2008 FY ended Mar 2009 FY ending Mar 2010
(Estimate)

FY ended Mar
2008

Factors causing discrepancy are almost same as for consolidated financial results (Page 30)

Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

32

Estimate

Consolidated

Po intBusiness performance prediction
for FY ending Mar 2010

Change in sales byservice sector

An overall sales increase can be expected, avoiding the full impact of the market situation
FY ended Mar
2009

FY ending Mar
2010

Real estate lease andtransactions

5,090

5,930

7,203

+

1,273

+

21.5%

New condominium

1,049

1,142

1,219

+

77

+

6.7%

317

600

870

+

270

+

45.0%

148

134

207

+

73

+

54.5%

308

374

533

+

159

+

42.5%

Subtotal

6,914

8,183

10,034

+

1,851

+

22.6%

Lococom

4

26

51

+

25

+

96.2%

Warranty affairs

54

278

810

+

532

+ 191.4%

Service sector

New house
Real estate portal
business

Other

*1

Custom-built house,renovation

Local communityrelated business
Warranty affairs
business

Other businesses

Increment value
Increase over theover the previous
previous year
year

FY ended Mar
2008

Unit: million yen

Renters net
Renters entrusted
development

*2

264

246

278

+

32

+

13.0%

Other

*3

195

192

90

-

102

-

53.1%

7,433

8,927

11,266

+

2,339

+

26.2%

Grand total*1 This includes real estate portal businesses (e.g. HOME’S property investment, HOME’S Auction, HOME’S nursing care).
ÎHOME’s Auction terminated its operations at the end of March 2009.
*2

Fiscal year ended March 2008 includes one-time sale of a entrusted development of 70 million yen*3

For the fiscal year ending March 2010, “advertisement agency business sales” are not expected.

Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

33

Estimate

Consolidated

Business performance prediction
for FY ending Mar 2010

Change in half-yearbusiness performance

Second-half performance is expected to be superior, due to the adopted stock business model andseasonal influences

Po intSummary of Profit and loss statement
Unit: million yen

Sales by service sector

FY ended MarFY ended Mar FY ending
FY ending
2009
2009
Mar 2010
Mar 2010(1H, actual) (2H, actual) (1H. Estimate) (2H, estimate)

Service sector

FY ended FY ended FY ending FY ending
Mar 2009 Mar 2009
Mar 2010
Mar 2010(1H, actual) (2H, actual) (1H, estimate) (2H, estimate)

Real estate leaseand transaction

2,765

3,165

3,154

4,049

New condominium

569

573

581

638

New house

265

335

384

486

Other

41

93

82

125

1,916

Custom-built
house, renovation

177

197

242

291

1,127

1,015

Subtotal

3,823

4,360

4,451

5,583

191
192

222
189

256
222

Local
community

Lococom

11

15

15

36

70

97

68

95

Warranty
affairs

Warranty affairs

94

184

324

486

814

929

1,191

1,148

Renters net
Renters entrusted
development

112

134

136

142

Other

89

103

18

72

Grand total

4,132

4,795

4,945

6,321

Sales

4,132

4,795

4,945

6,321

Cost of goods sold

122

135

149

155

SG&A

3,527

4,143

4,593

4,651

Labor costs

1,356

1,578

1,793

Advertisement
expenses

975

1,155

Operational costs

170
140

Allowance for bad
debt loan/guarantee
obligation
Other SG&A

Depreciation costs

Unit: million
yenReal estate
portalbusiness

Other
Operating income

482

516

202

1,514

Current net earnings

210

165

74

1,019

Operating Income
ratio

11.7%

10.8%

4.1%

24.0%

*

* For 2H in the fiscal year ended Mar 2009, an extraordinary loss of 58 million yen was recorded due to the termination of “HOME’s Auction
operation.

Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

34

Estimate

Consolidated

Real estate portal

Check

1. Accelerate acquisition of member shops
2. Increase PVs (boost media value)
3. Offer value beyond PVs
4. Focus on the rental market, which is particularly
resistant to the economic slump

・Expand business particularly in Tokyo and other major metropolitan
areas
・Strengthen business framework with organizational changes
・Bring even more customers to the mobile site
・Establish a new customer follow-up division
Î Minimize membership cancellations through increased customers
satisfaction and increase per-member revenue through option sales

1. Support for HOME’S functionality and ability to
attract customers
2. Wrap up Lococom investment phase(Previous term: PC, Current term: Mobile)
3. Increase media value by being a local site

・Aim for 1 million affiliates (critical mass)・Strengthen database by enhancing town information
・Offer word-of-mouth information and information on areas
surrounding HOME’S properties
・Offer Lococom’s “MACHICOM” service to all HOME’S members
・Update the mobile site (planned)

Check
Warranty affairs！

Promotion
Promotion ofof "HOME’S"HOME’S Dominantly
Dominantly No.
No.
1“
1“ strategy
strategy

Check
Local communityrelated business！

Directionality of Current term

Focus the portal business while further expanding peripheral businesses to boost the real estate portal
business

Po int！

Business performance prediction
for FY ending Mar 2010

1. Move towards full-year profitability

Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

・Keep basic expansion of no. of underwriters (no. of contracts)
unchanged
・Expect to come to a break-even point with profit and loss (monthly)
during the second half of the year
・Improve collection of receivables through strengthened businessframework35

Estimate

Consolidated

Po intBusiness performance prediction
for FY ending Mar 2010

Market size (estimate)Internet market size: 40 billion yen

Real estate advertising market for lease and transactions: 95 billion yen/year (our estimate)

Above figure includes Approx. 40 billion yen/yearof internet market (our estimate)－NEXT’s share calculated on the assumption of stable market size

Target: FY ending Mar 2011
Sales: 11.4 billion yen[Share: 28.5%]

Market size expands as online
business develops
Internet advertising for the realestate business is expected to
expand by

15% annually *Target: FY ending Mar 2010
Sales: 7.2 billion yen[Share: 18.0%]
Actual: FY ended Mar 2009
Sales: 5.93 billion yen[Share: 14.8%]*Source: Survey issued by Ichiyoshi Research Institute Inc.

Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

36

Estimate

Consolidated

Po intBusiness performance prediction
for FY ending Mar 2010

Returning Profits toShareholders

A dividend payout ratio of 10% and annual dividend of 610 yen (a 400 yen increase) are expected

FY
FY ended
ended MarMar 2009
2009！

Annual dividend(plan)

210 yen

Repurchase ofcommon stock

240 million yen(7,800 shares)

FY
FY endingending Mar
Mar 2010
2010
Dividend payout ratio(Planned)

10 %Current net earnings (estimate)

610 yenCheck

Basic profit distribution policy
As we work towards actively expanding our businesses andsteadily increasing profit, we will turn our attention to internal reserveand investment in future growth as a way to enhance and fortify our
financial strength. At the same time, we are making returning profits
to our stakeholders a key part of our management policy.

In terms of dividends, our basic policy is
to maintain resilient levels of performancewith results to be distributed each term
while considering our mid-range businessplans.

*The above figures are subject to change due to future performance results and external factors.

Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

37

Management principles

NEXT management principles
Create a social structure that brings true
peace of mind and joy to thegreatest number of people throughconstant innovation.

Corporate motto
Altruism
Always consider everyone’s happiness,everyone around us

Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

38

Reference

Mid-term Corporate Vision ・・・Page 40-46
Consolidated subsidiary ・・・Page 47-49
Our business model ・・・Page 50-51
Issues in IR activities ・・・Page 52
Corporate profile ・・・Page 53-54

Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

39

Mid-term Corporate Vision*No change has been made from the previous term

FY ending Mar 2011 Mid-term Corporate Vision

NEXT
GROUP
targets:

Achieve “Dominantly No. 1” for HOME’S Real estatelease and transactions
Consolidated business performance for FY ending Mar 2011

Sales: 17 billion yen Operating Income: 4 billion yen“Lococom” local community website as infrastructure
By the end of March 2011

Number of Lococom affiliates: 250,000
Lococom will provide lifestyle information on “living”, “health”,“working”, “medical care”, etc.

Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

40

Mid-term Corporate Vision
Po intConsolidated business performance: Target

Enter a growth-oriented phase from the fiscal year ending March 2010 after completing an
investment-oriented phase◎ FY ended Mar
2009

Investment phase to achieve HOME’S Dominantly No. 1◎ FY ending Mar
2011

Target consolidated business performance: 230% UP for Sales, 320% UP for operating Income

FY ended Mar 2008
(actual)FY ended Mar 2009(actual)r
230% UP fo

Sales,

8.92 billion yen

FY ending Mar 2010
(estimate)

FY ending Mar 2011
(target)g Income
n
ti
a
r
e
p
o
r
o
320% U P f
17.0 billion yen
11.26 billion yen

7.43 billion yen

4.0 billion yen
1.71 billion yen

1.25 billion yen

Consolidated sales

0.99 billion yen

Consolidated operating Income

・No change has been made in the Mid-term Corporate Vision or targets for the fiscal year ending Mar 2011
Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

41

Mid-term Corporate Vision
Po intHOME’S target index for real estatelease and transactions

Accelerate growth of main service―HOME’S real estate lease and transactions◎ FY ending Mar
2011
FY ended Mar 2008
(actual)Achieve 17,000 affiliate stores for HOME’s real estate lease and transactions by doubling thisnumber (in comparison with the end of Mar 2008)
FY ended Mar 2009(actual)FY ending Mar 2010
(estimate)

FY ending Mar 2011
(target)11.4 billion yen
7.20 billion yen
5.93 billion yen
5.09 billion yen
8,761 stores

55,610 yen

10,120 stores
55,564 yen

HOME’S Real estate lease and transaction sales

12,300 stores
59,840 yen

No. of affiliated stores

17,000 stores
58,000 yen

Sales/affiliate store

・No change has been made in the Mid-term Corporate Vision or targets for the fiscal year ending Mar 2011

Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

42Mid-term Vision
Po intWhat is “Lococom”?: 1

1.16 million monthly visitors to the local community-related business site<http://www.lococom.jp>[Outline of Lococom]■ URL: http://www.lococom.jp/■ Launch date: Oct 16, 2006
■ Posting target: Separated by the 1,850 cities, towns, andvillages in Japan■ Registered members: 480,000■ Number of users: 1,160,000/month (According to NetRatings Japan Inc.)■ Monthly page views: 12,190,000(As of Mar 2009)[Features of Lococom]
Plentiful tie-up content with other companies
INTELLIGENCE LTD. (work)
Interworks, Inc. (work)
SYSTEM FORWARD, INC.
(GOTO-CHI.com=Farm-fresh produce information)
AIIDA, Inc. (CHIKITABI＝Local tourism information)

Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

・In addition to SNS function (blog, etc.)
Lococom enables locally-based word-of-mouth entries andinformation gathering
・Also includes lifestyle functions such as home finances andhealth management support

43

What is Lococom?: 2

Mid-term Corporate Vision
Po intNumber of monthly viewers exceeds the number of individual affiliates◎ FY ending Mar 2011

Lococom aims to increase number of affiliates to 2.5 million yen

Comparison
Comparison with
with leading
leading SNS
SNS service
service provider,provider, mixi
mixi

Lococom
Mar 2011 Target
Registered member: 2,500,000

mixi
Registered member: 16,830,000
No. of users/month 7,040,000

Number ofusers/month

Lococom
Registered member: 480,000
No. of users/month: 1,160,000

Characteristics of Lococom

Registered member <Number of users/month*This is because Lococom allows to unregistered members to browse word-of-mouth information

Male
48%

Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

Other
10's
50's
40's
20's

30’s - 40’s
50%
30's

10’s : 4%
20’s : 37%
30’s : 35%
40’s : 15%
50’s: 5%
Other: 4%

Profession distribution
distribution
Profession

Female52%

Age distribution
distribution
Age

User profile

Male-female ratio
ratio
Male-female* Registered members are officially disclosed figures (as of end of Mar 2009), figure of number of users/month isreleased by NetRatings Japan Inc. (Mar 2009)
Number of registered members

Enemployed 3%

Other
10%

Company
employee

Student
22%

30%

Housewife
26%

Other
salariedworkers
9%44

Mid-term Corporate Vision
Po intWhat is “Lococom”?: 3

Leading SNS website shows accelerated growth after achieving one million affiliates

Comparison of periods required to achieve 5 million affiliates

Number of affiliates (10,000)

500
450

mixi

400

Mobage-town

350

GREE

Mar 2011 (target)

300
250
200
150
100
50

Mar 2010 (target)

0
0

2

4

6

8

10

12

14

16

18

20

22

24

26

28

30

32

34

36

38

40

42

44

46

48

50

52

54

Period required to achieve 5 million enrollments (months)

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45

What is “Lococom”?: 4

Mid-term Corporate Vision
Po intMoving towards “Lococom,” infrastructure for living

Future vision

Create a real community space where three-dimensional expansion can be seen and that
includes the local community

Local community-related business, or “Lococom” is a community site that adds “local community” as a core
part of the former SNS by linking people, the local community, and web content in three dimensions.
Lococom provides a space for communication to take place organically, using real people, the local
community, and content via website (including mobile-access site).
Local
community

Implemented

Implemented

Implemented

Residence

HealthWorking

PeopleSchoolLeisureMoney

Infrastructure for living

Contents (interests, thoughts, concerns)

Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

46

Willnic Co., Ltd.

Consolidated subsidiary
ITOCHU Corporation’s joint business ventures
Willnic Co., Ltd.
Willnic Co., Ltd. main page<http://www.willnic.co.jp/>

Renters, Co., Ltd.

Next F.S. Co., Ltd.

Established through joint financing with ITOCHU Corp.
NEXT(our company)

ITOCHU Group
Investment
68 million yen

Investment
132 million yen

ITOCHU Corp.
Custom-built housing
and renovation
information services

IEZUKURI-NET
business
Businesstransfer
ITOCHUElectronics Corp.
Reform-net
business

About Willnic Co., Ltd.
Willnic began its business in custom-built housing
and renovation information services in April, 2007.
The company runs a total of four types of
information sites, two specializing in custom-built
housing (HOME’S Custom Homes and IEZUKURINET), and two specializing in renovation (HOME’S
Renovation and Reform-net).
The Willnic site provides corporate information,
sample construction projects, customer feedback,renovation quotes and other information forcomparison and research, providing a simple way
for customers to request documents from or ask
questions to custom-built housing or renovationcompanies.
Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

Businesstransfer
Sale of assets

Housing/renovation
portal business

Investment ratio
ITOCHU:NEXT
34: 66(Est. Feb 2007)

Businesstransfer
Sale of assets(1) Example of a completed custom-built house (2) Renovation quotes(3) IEZUKURI-NET

47

Renters Co., Ltd.

Consolidated subsidiary

ASP offers sales support services to real estate companies
Willnic Co., Ltd.

Renters main page

Renters Co., Ltd.

Next F.S. Co., Ltd.

Renters net functions(1) Converter function for portal listings<http://www. www.ra1.co.jp/>
Real estatecompanies

Real estate company’s website
HOME’S

ISIZE

at home AD PARK REINS

E.g. HOME’S
members

Real estate companies tend to list property information on 2-3 portalsites. This process is simplified if companies register property data withRenters net, as it allows them to post on multiple portals via acentralized system.

Renters net primary functions:(1) Property data management, converter
function for portal listings(2) Management of intermediary company
information, central faxing functions(3) Management of PV and customer data,
operations management functions

Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

View/research/
analyze/manage
data

Renters became a wholly-owned subsidiary in
April 2007 through a share exchange. The
company offers the ASP services, a sales
support system for real estate companies called
Renters net. The company also aids in making
real estate companies’ operations more efficient.

Registerproperty
information

About Renters, Co., Ltd.

Renters net
Offer/manage
ASP service(2) Intermediary company management, central faxing functions
Intermediary companies
working with the
management company

The system automatically totals and manages separate performance
results for intermediary real estate companies, allowing users to selectthe intermediary with the best performance for the job. When rooms
become available at the property, the system automatically sends
drawings to the intermediary via PC.

(3) PV data/customer management function
HOME’S

ISIZE

at home AD PARK REINS

Inquiry
Response
Inquiries to each portal site are consolidated. The system includes
search history and automatic response functions, allowing prompt
responses that increase customer satisfaction.

48

Next F.S. Co., Ltd.

Consolidated subsidiary
Expansion of warranty affairs business
Willnic Co., Ltd.
NEXT FS CO. LTD. main page<http://financial.homes.co.jp/>

Next F.S. Co., Ltd.

Renters Co., Ltd.
Offering HOME’
HOME’S Warranty Affairs
IssuesTenantJoy of living where you want

● Cannot rent without a joint
guarantor● Initial payments are
expensive (security deposits,
gratuities)

Lessor (owner)

About NEXT FS CO., LTD.
The company began its rental warranty
business under the HOME’S Warranty
Affairs brand in September 2007, having
acquired this business through merger andacquisition of a major rental warranty
corporation.
The company serves as guarantor whenrental agreements are signed, enabling
those without guarantors to live in therental properties they want. The real estate
management firm does not have to worry
about unpaid rent, allowing them to leasewith confidence.
Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

● Income from monthly rent isunstable● Trouble with rental fees
● No peace of mind regarding
tenants

Lessor (management company)● Unpaid rent notices are timeconsuming work
● Uncertainty as to whether
rent money will be paid

Merits ofengaging in
M&A business

NFS solutions● Joint guarantor becomes unnecessary
with the use of warranty affairs

Introduce
warranty
affairs● Since the security deposit is insurance
against default of payment, it can hopefully
be reduced with the use of warranty affairsÎLess switching costs

Joy of leasing with confidence● NFS reimburses unpaid rent
● NFS also handles screening, reducing
workloadLess work allows focus on otherbusiness operations● Reimbursement makes unpaid rent
notices and collections management work
unnecessary¾ Compatible with the infrastructure of HOME’S members, boasting
the most affiliated stores in Japan¾ Acquire screening and collection expertise¾ Ability to provide the peace of mind and joy outlined in ourmanagement principles

49

Our business model
ClientReal estate intermediary/management companies

Major real estate companies, developers

Builders, homebuilders, renovation companies

ＨＯＭＥ’Ｓ No. of affiliated stores
10,120 stores

ＨＯＭＥ’ＳNew condominium
condominium
Corporate clients: 240542 companies

1 building: 50,000
yen/month and up

50,000 yen/moth
Inquiries: 10,000 yen each *40 properties:
15,000yen/month and up

Place banner ads

Post blog of shops

Willnic Co., Ltd.

Local communityrelated business
Providemanagement tools(Home accounting,registering address,etc.)

Search for andpost local
information

Search and view
sampleconstruction
projects andplanning
information

InquireRequestdocuments

Search andview property
information

Free

InquirePaid service

Properties listed: 1.216 million

Requestdocuments•HOME’S Custom-built house priceRenovation: 25,000 yen/month,
Inquiries: 5,000 yen each

Post sample construction
projects, planning
information

Next F.S. Co., Ltd.
Warranties: 39,761

Post property information

Real estate company sales
support tool

Post property information

Warranty affairs

Renters, Co., Ltd.

Post property information

ASP service

TenantMiscellaneouscompanies(FC chains, food &drink establishments,
HR companies, etc.)

Internet users(Number of affiliates:
480,000)

Total page views (PVs) (for all HOME’S brand sites)

1,399.1 million/month

Total PVs 12.97 million/month(End of Mar 2009)

Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

50

HOME’S Real estate lease and transactions

Billing system
Po intEnsure steady income as monthly billing is not dependent on commission
Shop

HOME’
HOME’S Real estate lease and transactions billing system
Property information
Billing

Real estate intermediary company
Real estate management company

Up to 40 properties can be posted■ Initial cost
35,000 yen■ Monthly fee
15,000 yen～
Fees increase depending on numberof size of posting area used
Sales per member shop 55,564 yen(Mar 2009)■ Services included in monthly fee
・ 20 rental property postings・ 20 sale property postings
・ 2 investment property postings
・ Panorama pictures for 5 properties
・ Special advertisement 5pt
・ Company promotion box (by area) 5pt
・Offer a property posting area on the website that works just like foldout inserts in home information magazines ornewspapers—no commission
・Billing model uses automatic renewal to collect monthly usage fees
Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

51

Issue in IR activities
Po int！

NEXT will continue to provide investor-friendly information

Check

Number ofshareholders
increased！

Check

Enforced
information
volume andquantity！

1,734 Î 3,000

・Enhance web content for individual investors
・Organize presentation meeting for individual
investors (three sessions planned)
・Implement contentious profit return to shareholders

Post necessary information
for making investment
decisions on website

・Post financial data (EXCEL format) to website
・Improve Q&A and terminology
・Post additional information as needed

1. Improve liquidity
2. Increase trading volume

・Increase number of visits per corporate investor(Previous term: 114 total investors)
・Ultimate target to be listed in the first section of theTokyo Stock Exchange

Check

Secureappropriate
market share
price

Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

52

Corporate profile

Corporate profile

Company NameNEXT Co., Ltd.

President

Takashi Inoue

Date of establishment

Mar 12, 1997 (month of settlement: March)

Capital Stock

1,984 million yen
Shares issued: 185,803 (including 7,800 outstanding stocks)

Number of employees (consolidated)

525 (including 72 temporary workers and part timers)
Increased by 91 in comparison of previous term-end (end of Mar, 2008)

Description of business

Real estate portal business (primarily business, over 90% of net sales)
Local community-related business
Warranty affairs business
Other businesses

Number of shareholders

1,734 (as of end Mar 2009)

Number of Stock Holders

NEXT’s board of directors, Rakuten, Inc.
(Next is an equity-method affiliate of Rakuten, Inc.)

Head office

Office Tower, Harumi Island Triton Square, Harumi 1-8-12, Chuo-ku,
TOKYO, Japan

Consolidated subsidiaries*Numberinbracketshareholding ratio(TSE Mothers:2120)

Willnic Co., Ltd. (66.0%)
shows Renters Co., Ltd. (100%)
NEXT F.S. Co., Ltd. (hereinafter called “NFS”) (100%)*As of Mar 2009

Copyright (c) 2009 NEXT CO.,LTD. All Rights Reserved.

53

Corporate profile

President’s profile and NEXT’s award history■ NEXT’s Award History
October 2004
First place in the 2004 Fall Real Estate Leasing Site Ranking from Gomez
Consulting Co., Ltd. (“Gomez”)

President of NEXT Co., Ltd.
Takashi Inoue
Born on: November 23, 1968 (age 39)
Raised in: Yokohama, Kanagawa
Education: Graduated from Aoyama Gakuin University (Economics) in 1991. In
April of the same year, joined Recruit COSMOS Co., Ltd. (now COSMOS INITIA
Co., Ltd.).
After three months with the company, Inoue was transferred to Recruit, Co., Ltd. towork in the job placement magazine business.
Taking cues from the personnel matching business, Inoue conceived of thebusiness model for HOME’S.
Convinced that he would like to change the way the real estate industry was set up,
Inoue left his job in July 1995 and went on his own. He established NEXT, Co., Ltd.
in March 1997 after implementing the verification test for beginning business
operations.
Launched the home and real estate information portal site HOME’S with the aim ofestablishing an information infrastructure that made use of the internet and resulted
in mutual profit for both end users and those in real estate industry.
HOME’S grew to the largest home and real estate information portal site in Japan,
reaching over one million property postings and spanning all 47 prefectures.
Increased convenience through the development of multiple group sites that not
only handle a large volume of information, but allow users to search for homes
based on their individual lifestyles.
Launched the Local community-related business site (Lococom Beta Version) in
October 2006.
Continues to innovate, focusing on residential life by offering the Living One-stop
Service.

October 2005
Awarded the 3rd Technology Fast 50 Japan for the first time for our technology
business growth rate ranking
March 2006
Received double first-place overall awards in the “rental” and “used property”
categories in the March 2006 Real Estate Information Site Ranking from Gomez
April 2006
Received the 2005 New Business Award for outstanding performance from theincorporated company The Japan New Business Conference New Business
Award
October 2006
Received the 4th Technology Fast 50 Japan for our technology business growthrate ranking
February 2007
HOME’S received the 2nd JWDA Web Design Award for outstanding
performance from the Japan Web Designers Association
October 2007
Received the 5th Technology Fast 50 Japan for our technology business growthrate ranking for the third straight year
Awarded first place overall for the Oct 2007 Mobile Real Estate Lease
Information Site Ranking from Gomez
March 2008
Received the 2nd IPO Award in the newcomer category from the incorporated
company The Kanto New Business Conference
October 2008 Received the 6th Technology Fast 50 Japan for our technology
business growth rate ranking for the fourth straight year
April 2009 Received 3rd place in the emerging market category as an
outstanding IR site company under the Gomez IR Site Ranking 2009 fromGomez

Oct 31 2006: Listed on the TSE Mothers

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54