Section title

Financial Closing Results Briefing
Document
September Term 2012 The First Quarter
netprice.com Ltd.
【TSE Mothers Securities Code : 3328】
The view and forecasts included in this document are the judgments of the Company when the document was prepared.
The Company does not guarantee the accuracy of the information. Please note that actual results may differ from the
information provided depending on various factors.
1
Contents
Koji Nakamura, Executive Vice President and Group CFO
1.
Summary of consolidated closing for the first quarter
Teruhide Sato, President and Group CEO
２
Review on the first quarter
Reference data
2
1. Summary of Consolidated Closing for the First Quarter
Koji Nakamura,
Executive Vice President and Group CFO
3
【Consolidation】 Summary of Consolidated Accounts (compared with previous quarter)
① Revenue increase
・Revenue increase in all businesses
② Decrease in gross profit rate
・Reduce gross profit rate in Value Cycle division
③ Deficit in operation profit
④ Emergence of extraordinary profit
・Decrease the deficit in Gathering division
・Did not turn into the black
・Profit on sale of investment securities
4
【Consolidation】 Profit and Loss Overview (compared with previous quarter)
Unit : million yen
Sales
Gross profit
Gross profit ratio
SG&A
SG&A ratio
Operating profit
Operating profit ratio
1Q/12
（10-12）
４Q/11
（7-9）
2,754
1,162
42.2%
1,224
44.4%
△ 62
△ 2.2%
Compared with
previous Q
2,579
+6.7%
1,114
+4.3%
43.2%
△ 0.9p
1,253
△ 2.2%
48.5%
△ 4.1p
△138
－
△ 5.3%
+3.1p
Non-operating revenue
74
7
+881.8%
Non-operating expense
15
56
△ 73.2%
Ordinary profit
Ordinary profit ratio
Extraordinary profit
Extraordinary loss
Net profit this quarter
Net profit ratio this Q
△3
△187
－
△ 0.1%
△ 7.2%
+7.1p
－
2
△ 39
337
－
△ 1.4%
5.5%
20
142
Increase of Gathering division
Decline gross profit rate
in Value Cycle division
Save on advertising expenses
Emergence of profit on sale of
investment securities
△ 86.7%
－
△ 6.9p
5
Change in Business Segment
Gathering Business
Value Cycle Business
Commerce Incubation
Business
netprice, Ltd.
Defacto standard, Ltd.
Shop Airlines, Ltd./tenso.com, Inc.
Ｅ-commerce Business
Gathering
Division
Value Cycle Division
Cross Border Division
netprice, Ltd.
Defacto standard, Ltd.
Shop Airlines, Ltd.
Incubation Business
tenso.com, Inc.
Other new businesses
6
By Business Segment Sales trend
(Unit : million yen)
《E-commerce Business》
Revenue increase in all divisions(+7%)
《Incubation Business》
Doing well in transfer service
(tenso.com, Inc.)
Decrease by business disposal （-34％）
3,043
3,000
2,699
2,585
2,511
2,500
2,240
2,000
1,500
close of an export business
to China
1,000
disposition of cosmetic
planning/retailing business
500
159
118
92
82
54
0
1Q
2Q
Sept term 2011
3Q
4Q
1Q
Sept term 2012
7
By Business Segment Trend in operating profit
《E-commerce Business》
Deficit in
Gathering and Value Cycle division
(Unit : million yen)
108
《Incubation Business》
Turn into the black
of transfer service
(tenso.com, Inc.) for the first time
100
50
20
△0
0
△14
△15
△27
△28
-50
-100
△31
△95
-150
△144
1Q
2Q
Sept term 2011
3Q
Q4
1Q
Sept term 2012
8
【 E-commerce Business】 Trends in Sales
《Gathering Division》
Revenue increase due to effect of
business conversion success（+７％）
(Unit : million yen)
2,500
《Cross Border Division》
Increase due to receiving boost
of high yen appreciation
（+21％）
1,613
1,438
2,093
2,000
1,688
1,500
1,000
803
《Value Cycle Division》
Slight increase due to shift
towards buying（+４％）
751
767
736
642
1,736
500
145
195
161
160
145
0
1Q
2Q
3Q
Sept term 2011
4Q
1Q
Sept term 2012
9
【 E-commerce Business】 Trends in Operating profit
《Gathering Division》
In recovery trend, but still unimproved
gross profit
(Unit : million yen)
150
《Cross Border Division》
Increase due to receiving boost
of high yen appreciation
（+50％）
44
42
94
100
64
50
31
《Value Cycle Division》
Deficit due to unexpected buying
demand than selling
31
66
0
△17
△17
△22
-50
△50
△74
△75
-100
△121
-150
1Q
2Q
3Q
Sept term 2011
△137
Q4
1Q
Sept term 2012
10
【Consolidation】
Consolidation
Asset and Liabilities summary (compared with previous quarter)
Unit : million yen
1Q/12（10-12）
Comparison with
previous Q
4Q/11（7-9）
Current Assets
5,361
5,378
▲17
Cash and deposits
3,908
4,074
▲165
Accounts receivable
837
662
175
Products
386
407
▲20
Fixed Assets
1,386
1,399
▲13
Tangible assets
177
160
16
Intangible assets
245
265
▲19
Investments etc.
963
974
▲10
Current liabilities
2,238
2,218
19
Accounts payable
686
600
86
Short-term loan
826
837
▲10
Long-term loan to be
paid within 1 yr
123
169
▲46
Fixed Liabilities
286
304
▲17
Long-term loan
206
226
▲20
Net Assets
4,222
4,255
▲33
Total equity
6,747
6,778
▲31
Decrease due to loan refund
Increase due to rise of
sales on Gathering Division
Decrease by refund
※Only valuable
accounts are shown.
11
【 Consolidation 】
Cash flow summary
・Decrease in cash flow from sales activities is mainly due to increase of trade receivables and
corporate tax payment.
・Increase in cash flow from investment activities is mainly due to some sale of investment securities.
・Decrease in cash flow from financial activities is mainly due to loan refund.
1Q/12
（10-12）
4Q/11
（7-9）
△132
△30
44
385
△76
△214
△1
△8
Increase and decrease of cash and
cash equivalents
△165
131
Cash and cash equivalents,
end of term
3,908
4,074
Unit : million yen
Cash flow from sales activities
Cash flow from investment
activities
Cash flow from financial activities
Effect of exchange rate changes
on cash and cash equivalents
12
2. Review on the first quarter
Teruhide Sato,
President and Group CEO
13
2-1. Review on Gathering Division
netprice, Ltd.
14
netprice, Ltd.
（Consolidated subsidiary）
Positioning Map of netprice
Discover your
inspiration
Specialty Shop
Products
lineup
（long tail）
ＴＶ shopping
Shopping Mall
Selected
products
（select）
Convenience Store
Search oriented
15
netprice, Ltd.
（Consolidated subsidiary）
Review on the first quarter ①
・Strengthen original products with value proposal
●Product production based on customer’s words.
●Shown customer’s words about the products
on web site.
Enzyme collagen Drink
Yo-deruno ” reduce constipation drink”
Created new value by engagement
from customers and value
proposal of goods from netprice.
home bakery
“bread-making machines”
収納
スツールボックス
MSミネラル
ファンデ
MSミネラル
ファンデ
MSミネラル
ファンデ
16
netprice, Ltd.
（Consolidated subsidiary）
Review on the first quarter ②
・Increasing customer satisfaction rating of our products/services.
（full point: 5.0）
▼Trend of customer satisfaction
Site renewal
3.8
10月 Nov
11月 12月
1月 Feb
2月 Mar
3月 Apr
4月 May
5月 Jun
6月 Jul
7月 Aug
8月 Sept
9月 10月
11月 Dec
１２月
Oct
Dec Jan
Oct Nov
Ask our customers who purchased products for the reviews and satisfaction rating.
Product production/development based on customer’s comments
focused on qualities.
customer’s comments
Customer rating
(average: 4.8)
add this product “favorite”
17
netprice, Ltd.
（Consolidated subsidiary）
Review on the first quarter ③
・Ｉmprove site usability by taking in customer’s comments.
We incorporate NPS 【Net Promoter Score】, an index generally used to measure customer loyalty
for product / service, brands and corporations , and by asking the question;
“Do you recommend ‘netprice’ to your friends and colleagues?”, the answers are observed
at fixed point at 11 levels from 0-10, and the results are utilized for service improvement.
Rate of full point（10 point） became the highest ever.
▼Rate of people who “want to recommend netprice
▼customer satisfaction survey
to others (over 8 point)”
32%
30%
28%
26%
24%
22%
20%
3月
Mar
5月
May
9月
Sep
12月
Dec
18
netprice, Ltd.
（Consolidated subsidiary）
Review on the first quarter ④
attracting
customers
・Expansion of orders via smartphones
▼Image of amount of orders received via smart phones
●Expanded the orders via smartphones
as the growth of smartphone users.
●Campaigns only for apps are in operation.
3Q
4Q
1Q
2Q
2010
attracting
customers
3Q
2011
4Q
1Q
2012
・Events of meeting off-line (Christmas party)・discussion meetings
●Events of meeting off-line (Christmas party)・discussion
meetings to listen to customer’s impression directly for
developing various products.
●Aiming our customers to be fans of netprice
more deeply.
19
netprice, Ltd.
（Consolidated subsidiary）
Annual Strategy of 2012
New value creation/forming a bond with customers
products
sales
attracting
customers
・Strengthen production of original products with value proposal.
・Strengthen sales style with customers engaging.
・Improve customer retention rate and strengthen smartphone
site application.
20
netprice, Ltd.
（Consolidated subsidiary）
Conversion trend for Gathering Division
Sales （million yen)
operating profit （million yen)
2,000
1,500
1,000
500
0
0
Aiming sales toward
profitability at an
early point
by re-growing trend
△50
△100
1Q
2Q
3Q
Sept term 2011
Q4
1Q
△150
Sept term 2012
21
2-2. Review on Value Cycle Division
Defacto standard, Ltd.
22
Value Cycle Division
（Consolidated subsidiary）
Positioning Map of Brandear
business category
ＷＥＢ
Price Range
reasonable
expensive
Pre-owned designer goods
shop
secondhand shop
SHOP
23
Value Cycle Division
（Consolidated subsidiary）
Review on the first quarter
TOPIC
●Started smart-phone application of brand and luxury items buying site“Brandear”.
（October 20th,2011）
●The number of customers exceeded 300,000 from establishment, March, 2007.
（November 25th, 2011)
●Expansion of business partners
→ “Co-op hiroshima”（November 22nd, 2011） and fashion e-commerse site “waja
Corporation”(November 1st, 2011).
Smartphone compatible site
Trend of number of purchased goods
（Unit:
pieces)
100,000
0
1Q
2Q
3Q
2009
4Q
1Q
2Q
3Q
2010
4Q
1Q
2Q
3Q
2011
4Q
1Q
2012
24
Value Cycle Division
（Consolidated subsidiary）
Customer’s comments
I was surprised for the quick contact with product valuation after sending some goods.
I am also satisfied with the careful customer care and valuation price itself!
（Female office worker, Hiroshima）
I sent my parents’ jewelries, elder sister’s Chanel clothes and my bag for valuation.
The valuation finished during watching the TV and it was easier than going to secondhand shop
to sell them. （Male student, Tokyo）
Your service is really helpful for me with 0 year old baby!
The process to sell the goods was quick, the customer service was polite and kind even though
I knew that there are a lot of valuation requests due to TV commercial and I was informed that
in advance. The home page is obvious with easy instruction and the quick response about inquiries
by-email relieved me a lot.
For my surprise, the purchase price was higher than local hock shop. Though I was nervous as
it was first time for me to sell my belongings with house delivery, it was so quick and nice.
I will ask for valuation at home next time as I still have a lot of Hermes and Chanel goods.
（House wife customer, Kanagawa）
25
Value Cycle Division
（Consolidated subsidiary）
Annual Strategy of 2012
① Strengthen the system of purchase and sell
・Strengthen recruitment and staff education.
② Pursue the maximum result of advertisement
・Strengthen the appeal power to customers by investment in the
spot of TV commercial with more effective timing.
26
2-3. Review on Cross Border Division
Shop Airlines, Ltd.
27
Cross Border Division
（Consolidated subsidiary）
Review on the first quarter
TOPIC
●Established a 100% owned subsidiary “Shop Airlines Europe B.V”
in Holland, as the major base in Europe (5th May, 2011).
⇒started handling eBay products from the U.K. (January, 2012).
⇒will start handling the products from other countries in Europe
such as Germany, France, Italy, etc. in summer this year.
●Attract more customers by working with TV, magazines and web media.
Trend in total distribution amount
Popular searched words of １Q
【fashion】
Oakley（sun-glasses）
【Sports】
Timberland
（out door goods）
【Instrument】
Paul Reed（Guitar）
【Hobby】
Gremlins（Toy）
（Unit: million$)
10
【Collection】
Helbros（Vintage watch）
0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
2009
2010
2011
2012
28
Cross Border Division
（Consolidated subsidiary）
Customer’s comments
I got a purchased product last day. It was packed carefully and was in a good condition.
I’m sure that I will do some shopping with you again. （Male customer in 40’s, Tokyo）
Thank you for checking the goods for me. I was relieved and I don’t think I could solve
the problem by myself. My decision to ask Sekaimon for a help was right.
（Male customer in 70’s, Hokkaido）
The laxity of American people sometimes sicken me but Sekaimon solved it easliy
if only I pay the commission.
（Male customer in 50’s, Kanagawa）
It was the first time for me to purchased a shoes with you. I’d been seeking for it very much so
I was so delighted when I received it. Thank you so much and I am looking forward to shopping
with you again. （Female customer in 30’s, Okayama）
The product I purchased was the one which I wanted 20 years ago and impossible to buy in Japan.
I fell really glad to get it for the fist time in 20 years. Also, I moved to the wide selection of
products in eBay. I am happy to be one of the Sekaimon customers.
（Male customer in 60’s, Aomori）
29
Cross Border Division
（Consolidated subsidiary）
Annual Strategy of 2012
① Strengthen world scale merchandise procurement
・Strengthen the merchandising in the US area of distribution channels.
・Will start handling the products from Germeny/France
(Summer 2012)
② Start the promotional activities
・Expand the recognition via social media such as facebook, etc.
・Strengthen online and media alliance such as magazines, etc.
③ Strengthen the system of global operation
・Strengthen the logistic operation in each country.
・Strengthen the global cash management.
30
2-3. Review on Incubation Business
tenso.com, Inc.
31
Incubation Business
（Consolidated subsidiary）
Review on the first quarter
TOPIC
●Deliver to 84 countries/regions.
●Increase both the number of customers and the delivery unit price
due to discount campaign with affiliated site.
●Decrease the sales cost by warehouse relocation.
●Turned into the black on the 1st quarter.
Transfer service achievement areas
Accumulated no. of registered members
(Unit: thousand people)
120
0
1Q
Delivery achievement to 84 countries/regions
2Q
3Q
2009
4Q
1Q
2Q
3Q
2010
4Q
1Q
2Q
3Q
2011
4Q
1Q
2012
32
Incubation Business
（Consolidated subsidiary）
Annual Strategy of 2012
① Diversification of delivery methods
・Develop effective delivery methods to meet cusomers’ needs
based on present method.
② Considering supplementary services
・Encourage the repeat business with some supplementary services.
33
Incubation Business
（Consolidated subsidiary）
Review on the first quarter
Open Network Lab, Inc.
TOPIC
●Support entrepreneurial engineers aiming to start internet business
on a global field (started in April 2010/Incorporated in September 2011).
10 teams in total has incorporated by December 2011.
●For the qualifier of business contest (Seed Accelerator) held twice
a year, we play a role as a gateway function to support overseas
advance, now 4th term is on progress.
●A regularly held event “Open network Live!”, promotes
communication between entrepreneurs and engineers.
giftee
Sassor
Wondershake
Find JPN
Feel on!
34
Incubation Business
（Consolidated subsidiary）
New Incubation Business
monosense, Ltd.
TOPIC
●Established as an incorporation-type company as licensing business
of celebrities which split from netprice,Ltd. on February 2nd, 2012.
●Offer a support from matching manufacturers and celebrities to
product development and promotion, exploring the new business
opportunities to logistics totally.
Collaborated products
Manufacturer
TVs
Magazines
Webs
Blogs
Joint development
of the products
among the 3
companies
Promote
the products
Percentery
Support to explore
the new business
opportunities/
logistics
■Aki Hoshino (pin-up girl) ■Chiharu Niiyama
Style up series
(TV personality)
(tights, trenca and leggings) Silicon cooking devices series
■Japanese restaurant
”Sanpi-ryoron”
Masahiro Kasamatsu (chef)
Real shops
EC sites
TV shoppings
Catalog shoppings
Wholesale dealers
Support partners totally in order to create hit products
35
Incubation Business
New Incubation Business
ＰＴ MIDTRANS （Joint venture in Indonesia）
TOPIC
●A joint project among 3 companies which offer a wallet service in
Jakarta (January 16th, 2012).
●Planning to offer the system of international payment service and
operation support for the companies in Indonesia, Japan and all over
the world which aim the business in Indonesian EC market.
Information of Indonesia
【population】
238 million people
【average age】
28.2 years old
（44.8 in Japan）
【adoption rate for internet】
approx 12％
⇒expected to grow into approx.
60% in 5 years.
※quoted by Ministry of Foreign Affairs of Japan
36
Reference data
37
【Consolidation】 Sales・operating profit trend
《operating profit》
《Sales》
(Unit : Million Yen)
(Unit : Million Yen)
150
3,500
3,225 3,209
3,147
2,910
3,000
2,819
107
2,754
2,735
89
100
75
2,579
2,327
2,500
44
50
36
2,000
0
1Q
1,500
2Q
3Q
4Q
Sept2010年9月期
term 2010
1Q
2Q
3Q
Sept 2011年9月期
term 2011
4Q
1Q
2012年9月期
Sept
term 2012
-50
1,000
△6 2
△7 4
500
-100
0
1Q
2Q
3Q
2010年9月期
Sept term 2010
4Q
1Q
2Q
3Q
2011年9月期
Sept term 2011
4Q
1Q
-150
△8 8
△1 3 8
2012年9月期
Sept term 2012
38
【Consolidation】 Gross profit trend
Gross profit
売上総利益
50%
1,297
1,232 1,224 1,278 1,256 1,210
1,200
1,324
1,181
1,133
43.2%
800
38.0%
46.2%
43.2%
42.0%
41.6%
39.1% 39.4%
1,076 1,114
1,162
45%
42.2%
40%
40.2%
39.6% 39.1%
38.7%
400
Gross profit rate
Gross profit (Million Yen)
1,350
Gross profit rate
売上総利益率
35%
-
30%
1Q
2Q
3Q
2009年9月期
Sept
term 2009
4Q
1Q
2Q
3Q
2010年9月期
Sept
term 2010
4Q
1Q
2Q
3Q
2011年9月期
Sept
term 2011
4Q
1Q
2012年9月期
Sept
term 2012
39
【Consolidation】 SG&A trend
1,200
800
50.0%48.5%
44.4% 50%
42.8%
41.8%
40.0%
38.7%
38.6%
38.5%39.5% 37.2%
37.1%36.9%
36.3%
34.9%
859 890 867 40%
34.1% 35.0%
822
817
817
34
31
36
755 784 769 742 768 46
36
74
38
717 685 694
147
56
127
50
45
86
89
51
648 664 45
45
30%
123
79
55
100
53
46
42
98
572 38
43
39
109
30
75
400
81
273
266
75
91
297
291
346
310
15.1% 14.9% 15.5% 15.6% 14.2%
200
0
1Q
255
2Q
264
237
3Q
4Q
257
1Q
Sept term 2008
SG&A toｔal
13.9%
260
2Q
335
363
15.1% 14.7%
315
3Q
285
4Q
368
355
391
375
404
402
13.4% 13.2% 13.6% 13.8% 12.6%
294
1Q
Sept term 2009
243
2Q
256
246
3Q
4Q
286
11.8% 13.0%
294
1Q
Sept term 2010
2Q
419
414
20%
14.0% 12.9% 10%
289
281
3Q
470
4Q
Sept term 2011
291
1Q
0%
Sept
term
2012
1,011 1,082 1,146 1,200 1,176 1,154 1,247 1,249 1,202 1,167 1,166 1,207 1,216 1,145 1,164 1253 1,224
Fixed cost total
572
648
664
717
685
694
755
784
769
742
768
817
817
822
859
890
867
Depreciation cost
30
38
43
45
42
46
51
56
50
45
45
46
38
36
36
34
31
Advertising cost
75
81
91
109
75
39
53
79
55
98
100
123
89
86
127
147
74
Labor cost
266
273
291
297
310
346
335
363
368
355
375
391
402
404
414
419
470
Other fixed cost
200
255
237
264
257
260
315
285
294
243
246
256
286
294
281
289
291
Variable cost ratio 15.1% 14.9% 15.5% 15.6% 14.2% 13.9% 15.1% 14.7% 13.4% 13.2% 13.6% 13.8% 12.6% 11.8% 13.0% 14.0% 12.9%
SG&A raio
34.9% 37.1% 36.9% 38.7% 34.1% 35.0% 38.5% 39.5% 37.2% 36.3% 40.0% 42.8% 38.6% 41.8% 50.0% 48.5% 44.4%
40
Formation of group executives and regular employees
End of Q4/12
Administration
Regular staff
Part-timers
etc.
Total
Regular staff
Part-timers
etc.
Total
Executive
（directorｓ・auditorｓ）
17
19
1
22 （+3）
1 （-）
Executive
（directorｓ・auditorｓ）
17 (-)
23 （+3）
Incubation Business
20
Regular staff
Gathering Business
Commerce
Incubation Business
Regular staff
23
Part-timers
2
etc.
Total
25
End of Q1/13
Administration
Regular staff
Part-timers
etc.
Total
Directors & employees 184
Part timers etc. 205
合計
389
99
33
132
Part-timers etc.
Total
3
14
Gathering Division
Regular
staff
Cross Border Division
Part-timers
Regular staff
13 Directors & employees 197 (+13) etc.
Part timers etc. 234 (+29)
Part-timers
Total
0
etc.
合計 431(+42)
Total
13
Value Cycle Business
Regular staff
Part-timers
etc.
Total
11
26
169
195
※Number of part timers etc. shown here is a round number converted by 8 working hours-a –day.
※ ( ) shows a comparison from previous quarter.
106 （+7）
33
（-）
139 （+7）
Value Cycle Division
Regular staff
Part-timers
etc.
Total
28 （+2）
197 （+28）
225 （+30）
41
Business profiles of group companies
Consolidated subsidiary
Operates Internet shopping site “netprice” and “Chibi-gather”, that “share good information” with customers and partners, by
“Gathering®” that does not only “gather and buy cheaper” but “gather and make something happen”.
Buys brand-name items, watches , apparel and accessories from customers via the Internet, provides maintenance, and puts them
to secondary sales via Internet auction channels. C to B to C model (Value Cycle).
Operates Sekaimon, a site that allows customers in Japan to purchase products around the world through collaboration with eBay,
the world’s largest auction site.
Operates a service of shipping Japanese products overseas for customers residing overseas. Currently serves in Japanese, English,
Chinese and Korean.
Operates a service offering a support from “matching manufacturer and talents” to “product development and promotion”,
“exploring the new business opportunities” to “logistics” totally in order to support partners totally to create hit products.
Equity method affiliate
Provides individual and corporate persons on the Internet with a selling system to operate internet stores, its system including
products, payment and distribution (drop shipping).
Sells 30,000 items to private customers through the Internet, from stationery, daily necessities, drink, food to electronic
consumable goods.
As well as operating Chinese cosmetics word-of-mouth communication site “LUCE luce.com.cn”, also develop business utilizing the
Internet, such as providing solution service for web sites, and planning and operating the shopping site “Luce mall”
Develop and support engineers and entrepreneurs who aim to start business using the Internet, with overseas advance in vision
and set goal to make global success.
Other investments
ＰＴ MIDTRANS
Planning to offer the system of international payment service and operation support for the companies in Indonesia, Japan and
42
all over the world which aim the business in Indonesian EC market.