Our company’s core business is M&A, and as we repeat M&A, there is a large discrepancy between our cashflow generating ability at the beginning of the fiscal year, and that of after M&As during the fiscal year. We believe that such information asymmetry is undesirable for investors to make investment decisions in our company, which advocates Continuous Transformational Growth, and that it is important for us to present our M&A-consolidated cashflow generating ability in a timely and appropriate manner.

We consider the sales and profits that can be generated in a 12-month period to be the actual cashflow generating ability. The assumptions for this are that there will be no additional M&A activity, and therefore no one-time M&A-related expenses during the period, and no contribution to earnings by the target company of the M&A activity.

When we try to show you this actual ability, we cannot do so with a full-year forecast during the same fiscal year in which the M&A took place. This is because (1) one-time M&A-related expenses are included in the forecast for the year in which the M&A is announced, and (2) the M&A target company will contribute to the forecast for less than 12 months.

On the other hand, the actual cashflow generating ability is almost synonymous with the “next fiscal year” earnings forecast. This is because we do not incorporate undisclosed M&A into our earnings forecast, thus eliminating (1) and (2) above.

Therefore, in the future, when M&As during the fiscal year have a certain impact on our cashflow generating ability that are initially assumed at the beginning of the year, we expect to disclose such based on the assumption that M&A-related expenses are excluded and contribute to our performance for a full 12 months, i.e., our forecast for the following year, in a timely and appropriate manner without waiting for the full fiscal year results.

Although we will incur a certain amount of M&A-related expenses this fiscal year, we have already increased the KPI of EBITDA by 5.5 billion yen (+42%) from 13.0 billion yen to 18.5 billion yen at the end of the first half of the fiscal year. We would like to achieve transformational growth with M&A expenses rather than 13 billion yen +α growth avoiding M&A expenses.