Expanding SR Consulting

「Against this backdrop, in addition to conventional shareholder identification research and SR advisory services aimed at securing stable voting support, we will strengthen and expand the Group's sophisticated proprietary equity consulting services, including corporate value enhancement advisory services, B/S simulations and Strategic Review.」

「During the fiscal year under review, projects involving routine responses, such as beneficial shareholder identification surveys, increased 1.6% year on year to ¥3,713 million.」

「Business-as-usual projects, including beneficial-owner identification research, in the interim consolidated fiscal year increased 9.6% year on year to ¥1,989 million. Since the second half of the previous fiscal year, new and additional equity consulting project mandates, including annual retainer contracts, have increased based on strong relationships of trust with clients.」

「Projects addressing ordinary conditions, including investigations to identify beneficial shareholders, during the consolidated fiscal year increased 16.7% year on year to ¥3,653 million. New and additional engagements for beneficial-shareholder investigations and equity consulting increased substantially, based on strong relationships of trust with customers and in light of changes in the external environment.」

「Mandates for event-driven projects related to activist response, contests for control and M&A in the interim consolidated fiscal year declined 20.4% year on year to ¥1,107 million, due to a decrease in mandates for PA and FA projects involving contests for control. Business-as-usual projects, including beneficial-owner identification research, increased 8.4% year on year to ¥1,815 million. Since the second half of the previous fiscal year, new and additional equity consulting project mandates, including annual retainer contracts, have increased based on strong relationships of trust with clients.」

「Mandates for event-driven projects related to activist response, contests for control and M&A in the current consolidated fiscal year increased 1.8% year on year to ¥2,532 million. … Business-as-usual projects, including beneficial-owner identification research, declined 11.2% year on year to ¥3,131 million.」

「Mandates for event-driven projects related to activist response, contests for control and M&A in the first nine months of the current consolidated fiscal year increased 13.5% year on year to ¥2,049 million. … Business-as-usual projects, including beneficial-owner identification research, declined 14.0% year on year to ¥2,420 million. From the third quarter onward, in the second half, new and additional equity consulting project mandates based on strong relationships of trust with clients have been increasing.」

「Mandates for event-driven projects related to activist response, contests for control and M&A in the first half of the current consolidated fiscal year increased 42.9% year on year to ¥1,392 million. Mandates continued to be received, particularly for PA and FA projects addressing activists. As corporate and business reorganisations are expected to become more active and capital risks increase, mandates also grew for PA and FA services focused on contests for corporate control. In addition, as event-driven projects became more sophisticated and complex, the fee per project increased, resulting in higher event-driven project revenue. Business-as-usual projects, including beneficial-owner identification research, declined 20.5% year on year to ¥1,674 million.」

「Mandates for event-driven projects related to activist response, contests for control and M&A in the first quarter of the current consolidated fiscal year increased 68.9% year on year to ¥839 million. Although the company was unable to actively propose and execute the diverse corporate reorganisations and M&A transactions related to PA and FA services, particularly those involving contests for corporate control, mandates continued to be received, especially for PA and FA projects addressing activists. In addition, as event-driven projects became more sophisticated and complex, the fee per project increased, resulting in higher event-driven project revenue. Business-as-usual projects, including beneficial-owner identification research, declined 20.7% year on year to ¥1,163 million.」

「Although some clients cancelled their contracts, the Group's sophisticated proprietary equity consulting services related to corporate defence and enhancing corporate value, in addition to conventional shareholder identification research and SR advisory services aimed at securing stable voting support, progressed at the same level as in the previous year.」

「Mandates for large projects of ¥50 million or more in the first half of the current consolidated fiscal year declined 75.5% from the previous fiscal year to ¥414 million. Mandates declined substantially because the company was unable to actively propose and execute the diverse corporate reorganisations and M&A transactions related to PA and FA services, particularly those involving contests for corporate control. By contrast, mandates for regular projects of less than ¥50 million increased 5.0% from the previous fiscal year to ¥2,665 million.」

「Mandates for large projects of ¥50 million or more in the first quarter of the current consolidated fiscal year declined 86.4% from the previous fiscal year to ¥121 million. Although shareholder proposals from activists and others increased at the annual general meetings of companies with March fiscal year-ends held in June 2022, many targeted companies with small market capitalisations and relatively high stable-shareholder ratios, resulting in few mandates for large projects exceeding ¥50 million. By contrast, mandates for regular projects of less than ¥50 million increased 5.3% from the previous fiscal year to ¥1,842 million.」

「Regular equity consulting projects of less than ¥50 million continued to generate a high level of mandates, as in the previous consolidated fiscal year, but revenue growth stalled.」

「Regular equity consulting projects of less than ¥50 million continued to expand steadily. However, completion of certain large PA and FA projects of ¥50 million or more, including those related to contests for corporate control, was delayed until the fourth quarter, while large activist-response projects remained at approximately the previous year's level amid the easing of the COVID-19 pandemic. As a result, although revenue reached a record high, the rate of revenue growth remained low.」

「Equity consulting services for activist response, including core services such as shareholder identification research and voting simulations, grew steadily. However, as activists initiated fewer large-scale events during the COVID-19 pandemic, mandates for related large projects remained sluggish.」

「Total mandates for regular projects of less than ¥50 million in the first quarter of the current consolidated fiscal year increased substantially, by 33.4% from the previous fiscal year, to ¥1,750 million. In addition to conventional shareholder identification research and SR advisory services aimed at securing stable voting support, the Group's sophisticated proprietary equity consulting services, including capital policy, B/S management, Strategic Review® and advisory services tailored to the Tokyo Stock Exchange's market-segment review, broadened the client base and expanded mandates.」

「IR and SR consulting revenue for the current consolidated fiscal year reached a record ¥7,614 million, an increase of 9.2% year on year.」

「During the first nine months of the current consolidated fiscal year, demand for regular SR advisory services, excluding activist activity, lacked momentum because overseas and domestic institutional shareholders had relaxed their voting guidelines. By contrast, strategic buyers and activists were active in corporate reorganisations and contests for control, and the Group's PA and FA businesses related to contests for control grew steadily. Activist activity has also become active again recently, increasing the Group's mandates for activist response services. FA mandates related to MBO transactions also increased steadily.」

「During the first half, demand for SR advisory services was sluggish, as voting by overseas and domestic institutional shareholders was affected by the relaxation of their voting guidelines and activist activity was superficially quiet. By contrast, corporate reorganisations and contests for control led by strategic buyers and major shareholders were active, and our PA and FA businesses grew substantially.」

「SR advisory services aimed at securing stable voting support, including shareholder identification research, voting research, cross-border engagement with institutional shareholders, board evaluations, shareholder returns, corporate governance improvement, ESG disclosure improvement and shareholder club management, grew steadily as the Group's unparalleled accuracy and speed in providing voting information on institutional shareholders worldwide were highly valued. However, the growth rate in revenue for the first quarter of the current consolidated fiscal year remained low, partly because voting guidelines of overseas and domestic institutional shareholders were temporarily relaxed due to the downturn in corporate earnings caused by the COVID-19 pandemic, and because the shift to remote work following the declaration of a state of emergency resulted in lost opportunities to make appropriate proposals.」

「IR and SR consulting revenue for the current consolidated fiscal year increased substantially, by 72.1% year on year, to a record ¥6,974 million. Demand from listed-company clients, with whom we have built close relationships through SR advisory services, rapidly increased for more advanced and comprehensive investment banking PA and FA services, resulting in numerous large project mandates.」

「Our SR advisory business covers a wide range of consulting services, all drawing on our proprietary expertise, including shareholder identification and voting research as core services, engagement-related services with institutional shareholders, activist defence, corporate governance improvement, capital policies aimed at optimising shareholder returns, board effectiveness evaluations conducted as an independent third party, and introductions of independent outside directors. This has led to a further expansion in the range of mandates from both existing and new clients.」

「IR and SR consulting revenue for the first half of the current consolidated fiscal year increased 41.4% year on year to ¥2,965 million. In addition to the steady growth of core voting-related SR consulting services for existing listed-company clients, mandates increased for newly developed services addressing various capital risks, as the company sought to expand into financial advisory services by using the extensive data accumulated through its SR operations.」

「IR and SR consulting revenue for the first quarter of the current consolidated fiscal year increased substantially, by 65.3% year on year.」

「Against this backdrop, the Group's unparalleled accuracy and speed in providing voting information on institutional shareholders worldwide, a capability unique to our equity consulting firm, were highly valued, leading to a substantial increase in mandates for SR consulting services aimed at securing stable voting support.」

「Revenue from IR and SR consulting for the first nine months of the current fiscal year increased 17.2% from the same period of the previous fiscal year. The group’s SR consulting services for beneficial shareholder identification surveys and stable voting, which have been highly rated for their accuracy, speed, and outstanding track record, significantly expanded mandates and increased market share. In addition to these existing services, the cutting-edge product “アクティビスト・アナリティクス,” which uses AI to analyze activist risks, is being increasingly adopted by large-cap companies. The group’s independently developed consulting services for dealing with individual shareholders are also growing steadily.」

「Revenue from IR and SR consulting for the first six months of the current fiscal year increased 14.2% from the same period of the previous fiscal year.」

「These circumstances have clearly demonstrated to the group’s existing customers the outstanding accuracy, speed, and performance of its SR consulting services, including beneficial shareholder identification surveys, voting simulations, and vote-securing activities. As the group’s reputation has grown further, its services have also gained wider adoption among new customers.」

「In addition to these services, the company aims to further promote SR consulting by responding swiftly to the various corporate governance issues faced by companies, including services to evaluate boards from an objective third-party perspective now that three years have passed since the Corporate Governance Code came into effect, and support for companies seeking to actively recruit independent outside directors to promote diversity.」

「Revenue from IR and SR consulting for the first nine months of the current fiscal year increased 15.4% from the same period of the previous fiscal year, supported by the expansion of high-value-added solution services for securing votes centered on beneficial shareholder identification surveys, as well as the expansion of investment banking operations.」

「Revenue from IR and SR consulting for the first six months of the current fiscal year increased 13.6% from the same period of the previous fiscal year, reflecting the company’s steady capture of rising capital-related risks through its core SR consulting operations and the recognition of investment banking M&A advisory fees.」

「Revenue from IR and SR consulting for the current consolidated fiscal year increased 14.2% from the previous fiscal year.」

「Revenue from IR and SR consulting for the first nine months of the current fiscal year increased 19.4% from the same period of the previous fiscal year. In the market environment, listed companies are increasingly addressing the Corporate Governance Code in earnest. More companies are conducting shareholder structure analyses, including beneficial shareholder identification surveys, with greater frequency and simulating votes on general meeting proposals in advance. In addition, the group’s independently developed consulting offerings, including board effectiveness evaluations, new equity-based executive compensation plans such as Restricted Stock and Performance Share, and services introducing independent outside directors, have matched customer needs appropriately, resulting in steady growth in mandates from both existing and new customers.」

「Demand for the group’s voting-related consulting services in shareholder relations and corporate governance has strengthened further.」

「More companies are engaging in dialogue with institutional investors and identifying their shareholder structures, increasing the use of investigations to identify beneficial shareholders in Japan and overseas, engagement arrangements, and engagement platforms that disclose SR information in a timely manner.」

「Demand for SR services from listed-company clients has increased substantially while becoming more sophisticated and diverse. In addition to the increase in the ownership ratio of overseas institutional investors, the introduction of Japan’s Stewardship Code and Corporate Governance Code has increased the need for SR consulting among regional companies and relatively small-cap companies as well. …The company aims to further promote the adoption of SR consulting by strengthening and expanding proposal-based sales conducted by consultants.」