GCA Savvian Group Corporation€¦ · GCA Savvian Group Corporation Financial Results for FY2012 (January 1 to December 31, 2012) February 14, 2013 （TSE 1st Section : Code 2174)

GCA Savvian Group CorporationFinancial Results for FY2012 (January 1 to December 31, 2012)

February 14, 2013

（TSE 1st Section : Code 2174)

FY2012 Financial Performance

2

Overview of FY2012 Results

Listed on the Tokyo Stock Exchange First Section. Increase of large transactions from leading companies.

Year-on-year growth in both revenues and profits. Fund nonconsolidated revenues increased 20% to JPY 9.56 billion, operating profits increased 62% to JPY 1.59 billion and net profits increased 150% to JPY 1.26 billion yen.

Revenues from Japan advisory segment increased 25% from prior year. Number of transactions increased especially for large transaction with the fee over JPY 100 million.

Revenues from the US advisory business also increased 20% from prior year, reaching 2008 level when it recorded its highest revenues.

The Mezzanine No 3 Fund which succeeded in raising its target capital, and executed 2 new investments making the total 4.

Paid out dividends of 1,500 yen per share to commemorate the First Section listing of the Tokyo Stock Exchange with a record date of October end. Cancelled 64,831 shares (18.45% of Company shares) as of October 15, 2012 and also repurchased JPY 2 billion worth of Company shares in December.

3

(Number)

(Value)

(Number)

Number

Value

(USD 0.1 billion )

Cross-border M&A by Japanese companies

Source: Thomson Reuters / Nikkei News paper

Market – Cross-border M&A by Japanese companies

In 2012, the value of cross-border M&A transactions (IN-OUT) by Japanese companies exceeded those of domestic M&A transactions (IN-IN)

4

No 2009 2010 2011 20121 US US US US2 France UK UK Japan3 China France Japan UK4 Germany Canada France Canada5 UK China China China6 Canada Netherlands Canada Switzerland

7 Switzerland Japan Hong Kong France8 Japan Spain Australia Hong Kong9 Hong Kong Hong Kong Switzerland Germany

10 Italy India Germany Belgium

Cross-border M&A buyer ranking by Country

Source: Thomson Reuters, GCA Savvian arranged

Cross-border M&A transactions buyer ranking by Country

Japan is increasing its presence in the global M&A market, exceeding China.

5

FY2012 Financial Performance

Notes:(1) Foreign exchange rates for FY2012 Actual Average: ¥79.83/US$ and ¥126.50/GBP: for FY2011 Actual Average: ¥79.84/US$ and ¥128.08/GBP(2) Foreign exchange rates for FY2012 Forecast: ¥75.00/US$ and ¥125.00/GBP

Both revenues and profits increased due mainly to successful completions of various cross-border transactions,well demonstrating the core strengths of the Company.

- Operating profits increased from JPY 979 mm to 1,588 mm (62% increase), net income increased from JPY 499 mm to 1,248 mm (150% increase)

Fund Consolidated Progress to Forecast (in ¥MM)Actual (1) Original Forecast (2)

FY2012 % Margin FY2011 % Margin Change FY2012 % Margin % of ForecastRevenue 10,813 14,950 (27.7)% 9,900 109.2%Operating Profit 2,746 25.4% 4,225 28.3% (35.0)% 2,430 24.5% 113.0%Net Income 1,259 11.6% 533 3.6% 136.2% 700 7.1% 179.9%

Fund UnconsolidatedActual (1) Original Forecast (2)

FY2012 % Margin FY2011 % Margin Change FY2012 % Margin % of ForecastRevenue 9,555 7,972 19.9% 8,673 110.2%Operating Profit 1,588 16.6% 979 12.3% 62.2% 1,219 14.1% 130.3%Net Income 1,248 13.1% 499 6.3% 150.1% 688 7.9% 181.4%

6

Net Income

0

200

400

600

800

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1,200

1,400

PY Forecast CY

EBIT

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PY Forecast CY

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Comparison of previous year, forecasts and actual performances (fund nonconsolidated)

FY2012 results outperformed initial earnings forecasts.

(Unit：Million Yen）

110%130%

181%

120% 162%

250%


7

Revenue growth was the major positive factor for the profit increase.

Bridge Analysis: EBIT (Plan vs. Actual)


2,430

913

278

120

14753

2,746

1,500

2,000

2,500

3,000

3,500

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inal

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cast

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enue

incr

ease

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ance

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ers

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Act

ual

Notes:(1) Foreign exchange rates for FY2012 Actual Average: ¥79.83/US$ and ¥126.50/GBP(2) Foreign exchange rates for FY2012 Forecast: ¥75.00/US$ and ¥125.00/GBP

8

FY2012 Financial Performance Detail


Progress to Forecast

(in ¥MM) Actual (1) Original Forecast (2)

FY2012 % Margin FY2011 % Margin Change FY2012 % Margin % of ForecastRevenueAdvisory Japan 4,395 3,512 25.1 % 3,831 114.7 % US 4,065 3,393 19.8 % 3,750 108.4 %Due Diligence 346 418 (17.2)% 420 82.4 %Asset Management 749 649 15.4 % 672 111.5 % Fund Unconsolidated 9,555 7,972 19.9 % 8,673 110.2 %Revenue from Fund 1,996 7,627 (73.8)% 1,899 105.1 %Elimination (738) (649) 13.7 % (672) 109.8 % Fund Consolidated 10,813 14,950 (27.7)% 9,900 109.2 %

EBIT Fund Unconsolidated 1,588 16.6% 979 12.3% 62.2 % 1,219 14.1% 130.3 % Fund 1,158 3,246 (64.3)% 1,211 95.6 % Fund Consolidated 2,746 25.4% 4,225 28.3% (35.0)% 2,430 24.5% 113.0 %

Net Income 1,259 11.6% 533 3.6% 136.2 % 700 7.1% 179.9 %

9

0

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7,000

8,000

9,000

10,000

FY2009 FY2010 FY2011 FY2012-1,000

-500

0

500

1,000

1,500

2,000

Asset Management

Due Diligence

Advisory

EBIT (w/o Funds)

Revenues and Operating profits FY2009-2012 (fund nonconsolidated)

Revenues and Operating profits FY2009-2012 (fund nonconsolidated)

The advisory business has fully recovered and back on growth mode. (Revenue) (EBIT)


10

0

1,000

2,000

3,000

4,000

5,000

FY2009 FY2010 FY2011 FY20120

1,000

2,000

3,000

4,000

5,000

FY2009 FY2010 FY2011 FY2012

Japan / US Advisory Revenues FY2009 - 2012

Japan Advisory Revenues US Advisory RevenuesUS M&A advisory reached peak level

Note (1) Foreign exchange rate for US revenues: ¥100/US$.

FY2009 FY2010 FY2011 FY2012Number of Professional (Average) 99 98 103 109Revenue per Professional 30 31 34 40

FY2009 FY2010 FY2011 FY201264 61 66 6632 71 65 78

(Unit：Million Yen） (Unit：Million Yen）

11

Strong Balance Sheet

Notes:(1) Ex-rate as of Dec 31, 2012: ¥86.58/US$ and ¥139.53/GBP(2) Ex-rate as of Dec 31, 2011: ¥77.73/US$ and ¥119.78/GBP(3) Accounts impacted by Fund Consolidation

・ Maintains a strong balance sheet with a capital ratio of 67% and working capital ratio of 82%.・ During the last quarter of FY2012, the Company cancelled JPY 4.2 billion of its shares and later

repurchased JPY 2 billion of its shares.・ ROE improved to 22%.

(in ¥MM) Fund Consolidated Fund UnconsolidatedAccounts 2011 (1) 2012(2) 2011 (1) 2012(2)

Cash and Cash Equivalent 8,754 5,556 5,931 4,781Accounts Receivable 929 1,033 929 1,033Operational Invest Security (3) 10,731 15,491 195 255Operational Invest Loan (3) 13,667 10,589 229 240Others 539 1,128 384 1,010

Current Assets 34,622 33,799 7,670 7,321Furniture etc. 265 235 265 235Investment Sec. 243 251 243 251Others 962 1,079 960 1,077

Fixed Assets 1,470 1,565 1,470 1,565Total 36,093 35,364 9,141 8,886Income Tax Payable 96 488 96 488Others 1,834 2,418 1,830 2,407

Liabilities 1,930 2,906 1,927 2,895Capital 11,317 7,644 11,263 7,580Treasury Stock -4,217 -2,000 -4,217 -2,000Exchange Valuation 166 412 167 411Minority Interest (3) 26,895 26,402

Net Assets 34,163 32,458 7,213 5,991Total 36,093 35,364 9,141 8,886

Actual Capital Ratio→ 67%

12

M&A Advisory Ranking - Japan

Notes:Source: Compiled by GCA Savvian from Mergermarket data. Based on completed number of deals.

GCA Savvian has constantly ranked within top 10 in the M&A league table.

(Rank）Financial Advisor

1 Nomura 2 1 1 1 2 Mizuho Financial 1 2 3 2 3 Sumitomo Mitsui FG 7 3 2 3 4 Mitsubishi UFJ Morgan Stanley 13 5 5 4 5 KPMG 8 8 6 5 6 Daiwa 3 4 4 6 7 Barclays 41 43 28 7 8 Deloitte Tohmatsu 10 7 9 8 9 GCA Savvian Group 5 10 7 9

10 Goldman Sachs 18 13 11 10

2009 2010 2011 2012

Other Topics

14

March 2012 August 2012 November 2012September 2012

Advised Sonosite, Inc. on its sales to

Fuji film Holdings.Advised Quest Software

on its sale to DELL

Advised TOSHIBA MACHINE CO. on acquisition of

L&T Plastics Machinery.

Advised Daikin Industrieson acquisition of Goodman Global

Advised complex transactions by leveraging our strengths:

Notable Transactions

15

FY2012 Actions Taken as Capital Management

Sep 2012 Listed on Tokyo Stock Exchange First Section

Oct 2012 Cancellation of Treasury shares (64,831 shares, 18.45%)

Oct 2012 Pay-out of memorial dividends- 1,500 yen per share as of October 31, 2012 （pre-split)

Oct 2012 Announced stock split effective Jan 1, 2013 (1:100)

Nov 2012 Announced merger of Japan region subsidiaries

Dec 2012 Share repurchase of 2 billion yen

Feb 2013 Increased dividends of 1,500 per share (pre-split)

16

Before Buy Back After Buy Back

FY2012 Net Income 1,259 1,259 （Million Yen）

Issued Share (Net of Treasury Stock) 286,498 266,498 （Share）　*1

EPS 4,394 4,724 (Yen）

Dividend (EPS x 30%) 1,318 1,417 (Yen）

Buy Back in December 2012

Share repurchase of JPY 2 billion (20,000 shares) resulted in an increase of 8% in shareholder value : 330 yen in EPS and 99 yen in year-end dividends.

Note (1) Number of shares as of December 31, 2012 (pre-split of 1：100)

17

Achieved ROE 20% - Exercisable Stock Options

Terms of exercise1) Exercisable upon attaining ROE 20% during any term within the next 4 fiscal terms

Exercisable SOP

FY2011 SOP : Exercise price 990 Yen (5,026,900 shares)FY2012 SOP : Exercise price 1,102 Yen (1,255,000 shares)

Note) Exercise price includes paid-in amount.

Goals of Stock Option PlanIncentivize employees to raise shareholder valueAlign the interests of employees and shareholdersUse to recruit talented senior, experienced professionalsCreation of long term shareholder value by employees

Achieved in FY2012 SOP is exercisable

18

Future Strategies for India

Mumbai

Tokyo

GCA Savvian India Private Ltd.

• Maintains leading shares in Japan/India cross-border M&A deals since 2011.

• In November 2011, GCA terminated the exclusive alliance agreement with Kotak Investment Banking which became a SMBC group company. This now allows us to work with various investment banks and M&A boutiques without limitation which enable us to access more information.

19

Summary of the Mezzanine Business for FY2012

• Mezzanine business continues to be stable.

• Its first fund (MCo No 1) successfully recovered 8 investments out of 12 as of FYE2012, with an 80% cumulative recovery rate.

• Fund raising for the new fund (MCo No 3) which started 2011 was successfully completed in FY2012 and has made 4 investments to date, equivalent to approximately 40% of the total fund value.

• Both buyout transaction involving mezzanine led by PE funds and corporate mezzanine needs have provided continuous new deal flows and pipeline is strong.

20

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FY2009 FY2010 FY2011 FY20120

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350

Revenue

EBIT (Pre-elimination)

Revenues and EBIT of the Asset Management business

Revenues and profits of the Asset Management business (fund nonconsolidated)Favorable performance trends for the asset management business.

Revenues come from management fees and investment banking fees, but success fees can also be expected in the near future.

（Revenue）（EBIT）


21

8.1 8.09.6

6.8 7.01.3

5.7

4.1

0.0

5.0

10.0

15.0

20.0

25.0

FY2010 FY2011 FY2012

Subordinated LoanPreferred Share/Interest/DividendM&A Advisory (w/o Funds)

Impact of Mezzanine fund on Revenue

Recovery of subordinated loans is NOT accounted for as revenue under the current accounting policy.However, recovery of preferred share interests is accounted as revenue but there were no recoveries from this class in FY2012. Therefore, only interests/dividends were accounted for in FY2012, resulting less revenue in FY2012 as compared to FY2011.Total revenue would have been 15 billion yen if the subordinated loan was accounted for as revenue.

Reported revenues

Recovery is not accounted for as revenue

Revenue w/o funds

Notes:(1) Foreign exchange rate for FY2010 Actual Average: ¥87.81/US$ and ¥135.60/GBP(2) Foreign exchange rate for FY2011 Actual Average: ¥79.84/US$ and ¥128.06/GBP(3) Foreign exchange rate for FY2012 Actual : ¥79.83/US$ and ¥126.50/GBP

(Billion Yen)

Earnings forecast

23

Non-disclosure of earnings forecast and goals for FY2013

Non-disclosure of earnings forecast

M&A advisory business, the main business of the Company, is influenced by various factors such as the economic environment, stock markets, political climates of the country, etc. Furthermore, the performance of the Company is highly impacted by the timing of the completion of large transactions especially at the end of a fiscal period. In consideration of these factors, the Company has decided to cease its disclosure of the earnings forecast going forward.

Approach for FY2013

1) Win mandates for increasing cross-border M&A by Japanese companies.- Further enhance joint US-Japan deal efforts in the largest global cross-border M&A market.- Win mandates in Asian transaction by leveraging alliances with local M&A firms.- Dispatch Japanese representative to an alliance firm in Europe to access primary information and

proactively propose M&A opportunities to clients.

2) Establish an organizational framework that can generate revenues of JPY 20 billion by proactive recruiting and internal growth.

3) Establish capital management philosophy that increase shareholder value.

24

Global M&A Market and Advisory Revenues

Revenues were in line with global M&A trends up to 2011. In FY2012, however, revenues increased despite the drop in the overall global market.

Note) Average exchange rate at ¥90.00/US$.

0

0.5

1

1.5

2

2.5

3

2009 2010 2011 20120

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

Global M&A MarketAdvisory Revenue

(Unit : Million Yen)(Unit : Trillion USD)

25

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

2009 2010 2011 20120

500

1,000

1,500

2,000

2,500

In-Out M&ARevenue : Joint PJ

Growth: Focus on our strengths in cross-border transactions

US-Japan joint transactions have increased in line with the growth of M&A by Japanese companies targeting US companies

(Unit : Million Yen)(Unit : Trillion Yen)


26

572

1,011

1,224

2,188

0

500

1,000

1,500

2,000

2,500

2009 2010 2011 2012

Revenues from US-Japan joint transactions

Number 7 10 13 13

July 2009 December 2010 July 2011 November 2012

Cross Border Deal Synergies

(Unit : Million Yen)

Large Transactions

The firm continues to realize synergies promised from mergerThis exhibits our strength as an advisory firm that focuses on Japan-US cross border transactions.

27

3.2

2.1

2.9 3.0

2.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2008 2009 2010 2011 2012

JapanUS/CanadaEuropeGlobal

M&A market size – Estimated fees

Total global M&A advisory fees are estimated at JPY 2.5 trillion and JPY 150billion for Japan. GCA Savvian’s current market share is approx 0.4%.

1% share = JPY 25 billion, 5% share = JPY 125 billion

Significant room for growth

(Unit : Trillion Yen)


Appendix

29Notes:(1) Large represents transaction fee greater than ¥0.1bn and less than ¥0.8bn, Mega represents transaction fee greater than ¥0.8bn.

Ratio of Large Deal (Fee)

Number of Professionals

2010 20122009 2011

US : Hired 1 Managing Director and 1 director in April, 1 director in August

Transaction Size and Number of Professionals

Large (1)40%

Others60%

Large (1)43%

Large (1)41%

Mega (1)52%

Others57%

Others59%

Others39%

Japan : Hired 1 Director and 1 VP in June

(Unit : Person)

Large (1)29%

Number of Professionals FY2011 FY2012 FY20121Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q End

Advisory Japan 66 74 76 75 75 80 80 78 77Advisory US 64 64 67 68 65 67 65 65 65Advisory Europe 5 4 4 2 2 2 1 1 1Due Diligence 30 31 30 30 30 31 31 31 31Asset Management 11 11 11 11 11 11 11 11 11

176 184 188 186 183 191 188 186 185

30

“Trusted Advisor For Client’s Best Interest”

Statements made at this presentation and in these materials include forward-looking statements that are based on our current forecasts, assumptions, estimates and projections about our business and the industry. These forward-looking statements are subject to various risks and uncertainties. These statements discuss future forecasts and plans, identify strategies, contain projections of results of operations and of our financial condition, and state other “forward-looking”information. Known and unknown risks, uncertainties and other factors could cause the actual results to differ materially from expected results contained in any forward-looking statements. Potential risks and uncertainties include, without limitation, our ability to continue to attract and retain customers: our ability to make our operations profitable: our ability to continue to expand and maintain our computers and electronic systems to avoid failures of these systems, and our ability to maintain our relationship with our founding shareholders. The financial information presented in not in accordance with US GAAP. Forward-looking statements are made based upon the best information available to us on the day of presentation and we will not revise or update any forward-looking statements for any new information or future events.

This is an English translation of Japanese presentation materials prepared for investor relations purpose. If there is any discrepancy between a statement in English and a statement in Japanese, the Japanese version will be the controlling document.

As the world’s global public M&A solutions group and public institution, GCA Savvian Group Corporation aims to contribute to the growth and development of clients and the world economy by

continuously providing value creating M&A solutions.

Documents

GCA Savvian Group Corporation€¦ · GCA Savvian Group Corporation Financial Results for FY2012 (January 1 to December 31, 2012) February 14, 2013 （TSE 1st Section : Code 2174)