Aiming for More Growth Results of Operations for the Fiscal Year Ended March 31, 2014 April 30, 2014 Nihon Trim Co., Ltd. The information, forecasts, etc. available in this material are the Company’s judgment as of the preparation date thereof and do not always guarantee the accuracy of these information. Further, the Company and the information provider will not be responsible for any damages incurred according to these information. * The material is not prepared for the purpose of soliciting investments. IR Contact: Business Strategy & Management Dept. (TEL: +81-(0)6-6456-4633 E-mail: [email protected])
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Aiming for More Growth
Results of Operations for the
Fiscal Year Ended March 31, 2014
April 30, 2014
Nihon Trim Co., Ltd.
The information, forecasts, etc. available in this material are the Company’s judgment as of the preparation date thereof and do not
always guarantee the accuracy of these information. Further, the Company and the information provider will not be responsible for
any damages incurred according to these information. * The material is not prepared for the purpose of soliciting investments.
IR Contact: Business Strategy & Management Dept. (TEL: +81-(0)6-6456-4633 E-mail: [email protected])
Contents
2
1. Overview of the Nihon Trim Group Business
2. Business Performance, Forecast, Indices, etc.
3. Supplementary Materials
Pages 3 - 19
Pages 20 - 28
Pages 29 - 36
3
1. Overview of the Nihon Trim Group Business
FY3/14 Topics
4
❑ Sales and profits higher for five consecutive fiscal years
❑ Record-high earnings
❑ Rapid growth in the genetic diagnosis sector makes a big contribution to
earnings
❑ The Federation of Diet Members to Promote the Use of Highly Functional
Water was established (May 2013)
❑ Japan’s largest private cord blood bank became a consolidated subsidiary
(September 2013)
❑ Started OEM business with a major home appliance manufacturer
(December 2013)
5
❑ Full-scale start of operations with the sales company of a major home appliance
manufacturer
❑ Concentrating on business activities involving cancer-related genetics in the
genetic diagnosis business.
� Plan to submit an application in Japan for an external diagnostic drug
� Plan to receive CE mark certification to start operations in Europe and China
❑ Many activities for increasing the number of cord blood held at the cord blood
bank
❑ Plan to conduct human tests for the purpose of confirming the benefits of
Electrolyzed hydrogen water (EHW) regarding metabolic syndrome
❑ Expect to install electrolyzed water hemodialysis systems at four new locations
and will work on further expanding the use of these systems
❑ Agriculture: Started full-scale cultivation of reduced vegetables in May 2014 in a
1,300m2 greenhouse
❑ Using an alliance with a company in China to expand operations in this country
FY3/15 Topics
The Business Goals of the Nihon Trim Group
6
❑ Use highly functional water
❑ Help the people of Japan lead healthy lives
❑ Become an important industry for health care, agriculture and industry sectors
❑ Utilize technologies created in Japan
Transform from a household appliance supplier into a medical company
Positioning the Nihon Trim Group as a supplier of medical devices will also help
increase sales of household EHW systems.
• MGO measurement (TMI)
• Mutated gene detection kits (TRIMGEN)Prediction
• EHW (drinking EHW system)
• Reduced Vegetables
(EHW system for vegetables/functional crops)Prevention
• Electrolyzed water hemodialysis (EW-HD system)
• EHW (drinking EHW system)
• Cord blood bank (StemCell Institute)Treatment
Aiming for good
health and a long life
Lower health care
expenses
Realization of a Water Health Care Society
7
日本日本日本日本トリムトリムトリムトリム
1. About 5% of Japan’s approximately 50 million households use EHW systems
(water purifier ownership rate is about 40%)
2. Goal is to increase EHW system use to 20% by raising awareness of its benefits and performing research
to identify new uses for EHW
Benefit: Improve condition of stomach and intestines
50 million households x 20% (a) Improves health (b) Low costnote1 (c) Ecology
= 10 million households
3. Nihon Trim anticipates a market share of 30%
10 million households x 30% = 3 million households
(a) Equipment sales (one-by-one sales):
Total market for purifiers is ¥1 trillion = ¥300 billion (30% share)
(b) Replacement cartridges (consistent sales):
Purification cartridge sales of ¥20 billion/year
(assuming a 70% replacement ratio)
4. Global expansion by using the “functional water business,” a technology that originated in Japan
Note 1: Approx. 7 yen per liter when using TRIM ION HYPER for five years
and replacing the cartridge once each year
59.4%
14.9%
9.7%
1.0%
0.4% 0.1% 14.5%
Nihon Trim
Others
Company A
Company E
Company B
Company D
Company C
❑ Today, people want water with both “quantity” and “quality” (functions)
❑ Health care: Prevention to reduce treatment and nursing home care
Preventing diseases lowers health care expenses
Goal is to sell 3 million units of the EHW System!!
Source: Yano Research Institute
“2014 White Paper on Water Purifiers/Water Conditioners”
To Raise Utilization to 3 Million Units of EHW Systems
8
1. Demonstrate effectiveness regarding lifestyle
diseases
2. Launch of next-generation products
3. Strengthen promotional activities and improve
ratio of purchase decisions
4. Strengthen R&D activities at the industrial,
public and academic sectors
Demonstrate Effectiveness Regarding
Lifestyle Diseases
9
0
100
200
300
400
500
600
Blo
od
tri
gly
ceri
de
le
ve
l (m
g/d
l)
Blood triglyceride level
Before
consumption
After
consumption
0
50
100
150
200
250
300
350
400
Blo
od
su
ga
r le
ve
l (m
g/d
l)
Blood sugar level
Before
consumption
After
consumption
Human tests for drinking EHW
Announce results using symposiums
and research papers
Increase the use of EHW systems
Starting large-scale tests in the current fiscal yearStarting large-scale tests in the current fiscal year
Example of completed EHW testExample of completed EHW test
Experiment for benefits of drinking EHW Joint research with Kitano Hospital of the Tazuke Kofukai Medical Research Institute
Individuals used EHW as ordinary drinking water for at least 60 days with the goal of drinking about 2,000ml every day.
❑ R&D for mutated gene detection kits and gene extraction kits; goal is to expand
manufacturing and sales operations and grow on a global scale� Use exclusive technologies for R&D, manufacturing and sales for genetic testing kits
� Use individualized treatments for drug selection in order to reduce side effects; lowers cost
of treatment and risk of accidents involving treatment
FY3/14
1. Rapid growth in TrimGen Holdings Co., Ltd.: Results for FY3/14: net sales ¥619 million; operating income ¥467 million
(Reference: FY3/13 net sales ¥136 million; operating income ¥50 million)
2. Office was opened in Osaka for the purposes of building a stronger base for sustained growth, expanding into the
Japanese market, and listing its stock in Japan in the near future.
3. Developed new product with a clinical study company
Genetic Diagnosis: Forecast for FY3/15
17
<TrimGen earnings forecast>
(Millions of yen) FY3/14 Results FY3/15 Forecast
Net sales 619 150
Gross profit 575 128
SG&A expenses 108 188
Operating income 467 -60
Ordinary income 677 -81
FY3/15
1. Uncertainty about transactions for warfarin sensitivity kits with a clinical study company, which contributed to growth in FY3/14a) Tests are mostly completed with regard to trials with the U.S. FDA concerning the effectiveness of genetic tests prior to administering
warfarin
b) Use in FDA tests demonstrates the advanced technologies and reliability of TrimGen products
c) Tests results showed that requiring genetic tests prior to administering warfarin is possible = Raises expectations for rapid growth of
this market
2. Concentrate on growth in the original core market of genetic testing involving cancera) Applied in Japan for approval of external diagnostic drug = Started clinical trial with Mie University in December 2013
b) Aim to acquire CE mark certification for starting operations in Europe and China
3. Take steps involving capital, internal controls and other items to prepare for the IPO in Japan of TrimGen Holdings.
These actions will raise expenses.
a) Recruit more employees to strengthen R&D, sales and administrative activities
b) Expenses for audits and other activities to prepare for the IPO
4. Foreign exchange gains of ¥204 million was recorded in FY3/14. In FY3/15, we estimate foreign exchange loss of ¥25 million.
�To prepare for the IPO, infrastructure will be strengthened while expenses will increase
Electrolyzed Water Hemodialysis
18
[Sales and Promotions]
1. Plan to install electrolyzed water hemodialysis systems at four new locations
2. A sales agent agreement has been signed with Nikkiso Co., Ltd. to co-promote sales promotion activities (15 hospitals/190
beds at the end of April 2014)
3. The 7th Electrolyzed Water Hemodialysis Study Group meeting, which was hosted by the Association of Electrolyzed Water-
Hemodialysis (EW-HD) Study Group, was held on February 1, 2014
[R&D]
1. R&D project has started with subsidies of about ¥230 million(The Japan Science and Technology Agency and the Fukushima Prefecture Medical and Welfare Equipment Development Project)
2. Selected as one of the sessions for next-generation dialysis treatment methods at the Japanese Society for Dialysis Therapy
(Fukuoka, June 2013)
3. Clinical research with Karolinska Institute (Sweden) is currently underway
❑ A revolutionary treatment method that targets the high volume of water used for dialysis (patented)
❑ Using a dialysis fluid that includes hydrogen improves patients’ quality of life by reducing oxidation stress,
inflammations and side effects
Example of an electrolyzed water hemodialysis
system for many dialysis patients
A medical institution that uses
electrolyzed water hemodialysis
7th Electrolyzed Water Hemodialysis
Study Group Meeting
Regenerative Medicine
1919
1. StemCell Institute became a consolidated subsidiary in September 2013
Nihon Trim’s consolidated FY3/14 results include six months of StemCell Institute earnings
(sales of ¥312 million and operating income of ¥47 million)
Amortization of goodwill: about ¥34 million / year (six months of amortization in FY3/14)
2. There is much growth potential for Japan’s cord blood storage market while the storage ratio in
Japan is still low.[Cord blood storage ratio for newborns]
Japan (1 million): 0.4% USA (3.8 million): 7%
South Korea (0.49 million): 12% Taiwan (0.2 million): 5%
*Numbers in parentheses are annual births
[Uses of Cord Blood]
1. For the treatment of diseases [hematopoietic stem cell transplant]
Leukemia (brothers-sisters)/ Aplastic anemia (donor, brothers-sisters), and others
2. For diseases at the clinical trial stage (overseas) [regenerative medicine and
cellular therapy]
Cerebral palsy / Hypoxic-ischemic encephalopathy, and others
3. For diseases at the R&D stage (overseas, Japan) [regenerative medicine and
cellular therapy]
Chronic pneumonitis / Parkinsonian tremor / Cerebral infarction, and others
[Uses of Cord Blood]
1. For the treatment of diseases [hematopoietic stem cell transplant]
Leukemia (brothers-sisters)/ Aplastic anemia (donor, brothers-sisters), and others
2. For diseases at the clinical trial stage (overseas) [regenerative medicine and
cellular therapy]
Cerebral palsy / Hypoxic-ischemic encephalopathy, and others
3. For diseases at the R&D stage (overseas, Japan) [regenerative medicine and
cellular therapy]
Chronic pneumonitis / Parkinsonian tremor / Cerebral infarction, and others
❑ The long-term storage service of cord blood in anticipation of its use in regenerative medicine and
cellular therapy and for treating future diseases
❑ StemCell Institute Inc. is Japan’s largest private cord blood bank (31,132 individuals as of March 2014)
20
2. Business Performance, Forecast, Indices, etc.
FY3/14 Results: Consolidated Statement of Income
21
Amount % Amount %
Net sales 10,690 100.0% 13,144 100.0% 2,454 23.0%
Cost of sales 2,357 22.0% 2,987 22.7% 630 26.7%
Gross profit 8,333 78.0% 10,157 77.3% 1,824 21.9%
SG&A expenses 6,149 57.5% 7,043 53.6% 894 14.6%
Operating income 2,184 20.4% 3,114 23.7% 930 42.6%
Non-operating income 290 2.7% 398 3.0% 108 37.2%
Non-operating expenses 34 0.3% 70 0.5% 36 99.9%
Ordinary income 2,440 22.8% 3,442 26.2% 1,002 41.1%
Extraordinary income - - 143 1.1% 143 -
Extraordinary losses - - 42 0.3% 42 -
Income before income taxes 2,440 22.8% 3,543 27.0% 1,103 45.2%
Income taxes 906 8.5% 1,001 7.6% 95 10.5%
Minority interest in income 8 0.1% 35 0.3% 27 353.2%
Net income 1,526 14.3% 2,507 19.1% 981 64.3%
Net income per share 117.38 yen 65.5%
Change
(Amount)
Change
(%)
179.31 yen 296.69 yen
(Millions of yen)FY3/13 Results FY3/14 Results
Note: The Company conducted a 2-for-1 common stock split on October 1, 2013.
Net income per share for FY3/13 and FY3/14 have been adjusted to reflect the stock split.