Disclaimer This is an English translation of the captioned release. This translation is prepared and provided for the purpose of the reader’s convenience. All readers are recommended to refer to the original version in Japanese of the release for complete information News Release dated: July 4, 2012 To whom it may concern: Company Name: ASKUL Corporation (Code No.: 2678, TSE First Section) Representative: Shoichiro Iwata (President and Chief Executive Officer) Contact Person: Tuguhiro Tamai (Executive Officer, Finance & Corporate Communication Unit) Phone: (03) 4330-5130 FY5/2012 Full-Year Performance (Consolidated financial summary for fiscal year ended May 2012) ASKUL Corporation (hereinafter referred to as the “Company”) herewith attach the “FY5/2012 Full-Year Performance” (Consolidated financial summary for fiscal year ended May 2012) to provide supplementary information with respect to the “Summary of Consolidated Financial Results for Fiscal Year Ended May 2012 (Japanese GAAP).” These supplementary materials include forward-looking statements concerning current plans and the outlook for operating results. These statements are based on plans and forecasts that use currently available information. Forward-looking statements are not promises or guarantees about the future because actual operating results may differ from the Company’s outlook for a variety of reasons. These supplementary materials are unaudited and have not been reviewed by certified public accountants or auditors.
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Disclaimer This is an English translation of the captioned release. This translation is prepared and provided for the purpose of the reader’s convenience. All readers are recommended to refer to the original version in Japanese of the release for complete information
News Release dated: July 4, 2012
To whom it may concern: Company Name: ASKUL Corporation
(Code No.: 2678, TSE First Section) Representative: Shoichiro Iwata
(President and Chief Executive Officer) Contact Person: Tuguhiro Tamai
(Executive Officer, Finance & Corporate Communication Unit)
Phone: (03) 4330-5130
FY5/2012 Full-Year Performance (Consolidated financial summary for fiscal year ended May 2012)
ASKUL Corporation (hereinafter referred to as the “Company”) herewith attach the “FY5/2012
Full-Year Performance” (Consolidated financial summary for fiscal year ended May 2012) to
provide supplementary information with respect to the “Summary of Consolidated Financial
Results for Fiscal Year Ended May 2012 (Japanese GAAP).”
These supplementary materials include forward-looking statements concerning current plans
and the outlook for operating results. These statements are based on plans and forecasts that
use currently available information. Forward-looking statements are not promises or guarantees
about the future because actual operating results may differ from the Company’s outlook for a
variety of reasons.
These supplementary materials are unaudited and have not been reviewed by certified public
Copyright(c) 2012 ASKUL Corporation. All rights reserved. 1
0
FY5/2012 Full-Year Performance
July 4, 2012
ASKUL Posts Highest Ever Net Sales, Profit Growth Turns Positive in FY5/2012
Move from Stable to Significant Growth through Alliance with Yahoo Japan
⎯Reallocating Business Resources through Prioritized Selection of and Focus on New Businesses⎯
DisclaimerThis is an English translation of the captioned presentation material. This translation is prepared and provided for the purpose of the convenience of non-Japanese-speaking people. All readers are recommended to refer to the original version in Japanese of the presentation material for complete information.
1
Notes:This material contains ASKUL Group’s current plans and performance outlook. These plans, forecasts, and other forward-looking statements represent ASKUL’s plans and forecasts based on information currently available. Actual performance may differ from these plans and forecasts due to a variety of conditions and factors that could occur in the future. This material does not represent promises or guarantees regarding the achievement of these plans and forecasts. This material has not been audited by certified public accountants or auditing firms.
For the purposes of this material, the term “new businesses” refers to SOLOEL Enterprise, ASMARU, and Shanghai ASKUL. YASKUL (tentative name) refers to the online mail-order business for general consumers to be launched in alliance with Yahoo Japan Corporation. The term “existing businesses” refers to the rest of ASKUL’s businesses.
B-to-B refers to business-to-business transactions, while B-to-C refers to business-to-consumer transactions.
Copyright(c) 2012 ASKUL Corporation. All rights reserved. 2
2
I. FY5/2012 Results
II. Towards New Growth Strategy
III. Background of Decision-making on Business and Capital Alliance
IV. Striving for Significant Growth
V. FY5/2013 Outlook
3
Net sales exceeded ¥200.0 billion for the first time on the back of AlphaPurchase acquisition and expansion of web-only products lineup,increasing 8.0%, or ¥15.8 billion, on year.
Though the consolidation of AlphaPurchase, which had an earnings structure different from ASKUL, and the incentives to agents to ensure future growth had an impact on gross profit margin, gross profit was highest ever.
A wide range of cost-saving activities resulted in a 0.7 p.p. improvement in ratio of SG&A expenses to net sales on year, and operating income increased 23.5% from FY5/2011, an improvement of 0.4 p.p.
ASKUL posted net income, after a loss in FY5/2011, in a full recovery after the earthquake disaster, despite a temporary increase of ¥0.7 billion in total income taxes (a negative factor on profit).
New businesses improved their operating income on year.
FY5/2012 Consolidated Performance Summary
Full recovery from the earthquake disaster; net sales rose to highest ever and profit growth turned positive
Strictly adhered to operating income plan; actively invested for growth
Copyright(c) 2012 ASKUL Corporation. All rights reserved. 3
(%)
197,070 100.0 212,932 100.0 +8.0 220,000 -3.2
44,663 22.7 47,490 22.3 +6.3 50,000 -5.0
39,306 19.9 40,873 19.2 +4.0 43,500 -6.0
5,357 2.7 6,617 3.1 +23.5 6,500 +1.8
5,275 2.7 6,504 3.1 +23.3 6,400 +1.6
474 0.2 6,270 2.9 +1,221.3 − −
-1,015 -0.5 2,301 1.1 − 2,700 -14.8
Plan(¥ million)
Vs. Plan
4
FY5/2012 Consolidated Performance Overview
Stock issuance-related expenses, unbudgeted promotion expenses, etc.: ¥0.5 billion in total
Temporary increase in total income taxes: ¥0.7 billion (a negative factor on profit)(Change to tax rates: ¥0.38 billion; asset impairment of a subsidiary: ¥0.32 billion)
Incentives to agents: ¥0.8 billion
Extraordinary loss resulting from the earthquake disaster: ¥2.6 billion
ConsolidatedMonthly Net SalesMonthly net sales YoY growth (consolidated; adjusted for business days)
June Sep. Dec. Mar. June Sep. Dec. Mar. June Sep. Dec. Mar. June Sep. Dec. Mar.
2009 2010 20112008 2012
Notes: • There is no adjustment for business days in January 2011 (due to year-end and New Year holidays).• For the purposes of this material, the term “month” refers to a fiscal month that ends on the 20th of each month, commencing on the 21st of the preceding month.
We fully recovered from the impact of the earthquake disaster and achieved double-digit growth in 4Q (three months).
Copyright(c) 2012 ASKUL Corporation. All rights reserved. 4
-15%
-10%
-5%
0%
5%
10%
15%
6
Number of customers
Average customer spendLarge
price cuts
Both number of customers making purchases and average customer spend made a fully recovery from the impact of the earthquake.The rate of growth in average customer spend turned positive reflecting the widened product range.
Great East Japan Earthquake
Note: From March 2010 to February 2011, the preceding year’s results do not include Pochitto ASKUL’s data.
Non-consolidated
Number of Customers Making Purchases / Average Customer Spend
2009 2010
Jun JunJunSep SepDec Dec MarMar Sep Dec Mar
The impact of one fewer business day
YoY growth in average customer spend
YoY growth in the number of customers making purchases
2011 2012
7
0
500
1,000
1,500
2,000
2,500
FY5/2011 (actual)Consolidated net sales
¥197.0 billion
FY5/2012 (actual)Consolidated net sales ¥212.9 billion
Copyright(c) 2012 ASKUL Corporation. All rights reserved. 8
14
Web-only products contributed to sales of office supplies and office furnitureMedical (included in Others) had a strong showing reflecting synergy effects between widened product range and dedicated website
Net Sales by Product Category Non-consolidated
79,028 -0.5 79,399 +0.5
43,675 +2.1 46,530 +6.5
38,700 +5.2 40,985 +5.9
15,661 +9.4 17,455 +11.5
12,078 -7.4 13,306 +10.2
189,144 +1.5 197,677 +4.5
FY5/2011 FY5/2012
OA/PC supplies
Office supplies
Office amenities
Office furniture
Others
Total
Amount(¥ million)
Amount(¥ million)
YoY change(%)
YoY change(%)
15
Growth rate of all items accelerated in 4Q (three months)
The gross profit margin was affected by(1) The earthquake disaster’s impact on gross profit mix(2) Consolidation of AlphaPurchase, which had an earnings
structure different from ASKUL(3) Incentives for agents
Gross profit was highest ever as net sales expanded
FY5/2012 Consolidated Performance Highlights
17
Trend of Consolidated Gross Profit
24.0 %Gross profit margin
(*excl. the impacts of incentives for agents and the acquisition of
AlphaPurchase)
23.4 % 23.5 % 23.0 % 23.2 %
Gross profit was highest ever; basic gross profit margin is gradually recovering
Copyright(c) 2012 ASKUL Corporation. All rights reserved. 10
18
SG&A expenses: ¥40.8 billion Ratio of SG&A expenses to net sales: 19.2%YoY change: -0.7 p.p.; +¥1.5 billion Difference from the plan: -0.6 p.p.; -¥2.6 billion<Quarterly SG&A expenses ratio trend>
1Q: 19.7% 2Q: 19.2% 3Q: 18.5% 4Q: 19.4%<Breakdown of difference from the plan>
- A decline in variable cost as net sales fell short of the target -¥0.9 billion- Recording of incentives for agents as sales rebates -¥0.8 billion- Declines in depreciation and amortization of software -¥0.4 billion- Stock issuance-related expenses, unbudgeted promotion expenses +¥0.5 billion- Other, the outcome of the Cost Busters initiative -¥1.0 billion
Operating income: ¥6.6 billion (full-year plan: ¥6.5 billion)<Quarterly operating income to net sales ratio trend>
1Q: 2.6% 2Q: 3.2% 3Q: 3.8% 4Q: 2.8%- Operating income temporarily declined in 4Q due to payment of incentives and
occasional costs
FY5/2012 Consolidated Performance Highlights
19
18.0%
18.5%
19.0%
19.5%
20.0%
第1四半期(3ヶ月) 第2四半期(3ヶ月) 第3四半期(3ヶ月) 第4四半期(3ヶ月)
売上高販管費比率
売上高販管費比率(第三者割当増資関連費用・予算外販促コストを除く)
Trend of Ratio of SG&A Expenses to Net Sales (Quarterly)
Although 4Q has catalog cost, the ratio was roughly in line with 3Q when occasional costs were excluded.
Ratio of SG&A expenses to net salesRatio of SG&A expenses to net sales (excl. Stock issuance-related expenses, unbudgeted promotion expenses)
Copyright(c) 2012 ASKUL Corporation. All rights reserved. 11
20
Operating Income/Loss of New Businesses
-28
-24
-20
-16
-12
-8
-4
01Q累計 2Q累計 3Q累計 4Q累計
11/5期実績
12/5期計画
12/5期実績
Income improvement of Shanghai ASKUL was short of the plan. We will carry out selection of and focus on the new businesses
in FY5/2013.
(¥billion) Quarterly accumulation
1Q 1H 9 months Full year
FY5/2011 results
FY5/2012 plan
FY5/2012 results
-0.4
-0.8
-1.2
-1.6
-2.0
-2.4
-2.8
0
21
Extraordinary income: ¥0.8 billionGain on reversal of loss on disaster ¥0.60 billionGain on reversal of subscription rights to shares ¥0.23 billion
Extraordinary loss: ¥1.0 billion (full-year plan: ¥0.5 billion)Impairment loss on noncurrent assets ¥0.95 billion
Net income: ¥2.3 billion (full-year plan: ¥2.7 billion)⇒The impact of temporary increase in total income taxes of ¥0.7 billion
(a negative factor on profit)
Capital expenditures: ¥2.6 billion (full-year plan: ¥3.3 billion)Next-generation web development ¥0.64 billionMaterial handling system (DCM center) ¥0.45 billion
(Ref.) Depreciation and amortization of software: ¥3.0 billion (full-year plan: ¥3.4 billion)
Copyright(c) 2012 ASKUL Corporation. All rights reserved. 13
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Return existing business to a growth path by enhancing Web-based services.
Boost new businesses to return to double-digit growth.
FY5/1993 FY5/2011
Busin
ess e
xpan
sion
Rapid growth by a catalog business model
Sustained growth
New growth phase
(fiscal years)
Existing business growth
New business growth
Source: 1H FY5/11 earnings material
MRO
(mai
nten
ance
, rep
air, a
nd
oper
atio
ns) s
uppl
ies
Existing Growth Strategy
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Direction of New Businesses
ASMARU• Ended the alliance with netprice.com on July 4• Eying an integration into YASKUL (tentative name) within 2012 by
leveraging accumulated know-how and expertise
Expansion in Asia• Drastic business reconstruction is being considered for Shanghai ASKUL• AlphaPurchase have embarked on MRO supplies purchasing service in
China through a collaboration with SOLOEL Enterprise
SOLOEL Enterprise• Expected to post single month profit within FY5/2013 by strengthening
joint purchase efforts• Spin-off into a separate company in FY5/2013 is being considered to
accelerate business expansion by ensuring neutrality
Copyright(c) 2012 ASKUL Corporation. All rights reserved. 15
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e-commerce to overtake department and convenience stores:
Market size second to supermarkets
Total distribution amount for 2010(¥trillion)
About ¥14.5 trillion by 2016
Supermarkets Convenience Stores
e-Commerce Department Stores
Source: 2012 Nikkei Industry Map, 2012 IT Navigator
29
On April 23, 2012, Amazon of US launched MRO supply sales website called AmazonSupply.comIt offers more than 500,000 items spread over 14 categories including Janitorial & Sanitation, Lab & Scientific, Occupational Health & Safety, Office, Test, Measure & Inspect and various tools categories
Moreover, AmazonSupply.com introduced new service factors that were not available in the existing Amazon model1) Dedicated customer service staff2) Accepts orders not only online but also via phone and facsimile3) Extends credit
In addition to make a full entry into the B-to-B business, AmazonSupply.com challenges the major players in the US MRO market including Staples (office MRO supplies), Home Depot (home MRO supplies), Grainger and MSC (industrial MRO supplies)
Copyright(c) 2012 ASKUL Corporation. All rights reserved. 22
42
Osaka
Sendai
Tokyo
OpenJune 12, 2012
To open inJuly 2012
Sales bases + establishment of showrooms • Strengthen relationships with area agents• Practice marketing that leverages each area’s characteristics• Strengthen the office furnishing business evolving around
showrooms
Establishment of Regional Bases⎯Strengthening of Local Operations, Actual Products, Field Staff Capability
42
43
Widening of Product RangeAim to realize one-stop shopping for all MRO
Copyright(c) 2012 ASKUL Corporation. All rights reserved. 28
54
1. Steering Committee meetings1st meeting: May 13; No. of participants: 14
Meeting details: Discussion on concept (mission, philosophy)
2nd meeting: May 26; No. of participants: 26Meeting details: Discussion on service name, core strategy
Finalization of sub-committee membersDrafting of schedule
3rd meeting: June 11; No. of participants: 23Meeting details: Discussion of target market (customers, products)
Confirmation of service levels and system requirements
4th meeting: June 27; No. of participant: 36Meeting details: Unofficial decision on service name; discussion on
medium-term business plan
2. Organizational setupOn July 1, 16 Yahoo Japan employees joined on dispatch.
Carrying out personnel exchange with an eye on the business integration with ASMARU
Jump-Start of YASKUL (tentative name): Status
Participants of the 1st Steering Committee meeting*CEO of ASKUL, Mr. Iwata, and CEO of Yahoo Japan Corporation, Mr. Miyasaka, are 2nd and 3rd from left in the front row
CEOs of both companies attended
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3. Study of grand design for B-to-C businessEstablish six subcommittees⎯(1) Attracting customers, (2) Marketing, (3) Merchandising, (4) Customer Service, (5) Distribution, and (6) Design
Each sub-committee to carry out detail design for jump-start of YASKUL (tentative name)Overall optimization will be controlled by the steering committee mentioned earlier
4. Start of tie-up with Yahoo! JAPANLinks to be displayed on the top pages of websites of both companies
Copyright(c) 2012 ASKUL Corporation. All rights reserved. 30
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Handling of jump-start
Maintaining and improving the level
of service
Improving profitability
(Reducing logistics cost)
Strengthen the functions of existing distribution centers
Utilize existing supply-chain management system
Utilize existing delivery network
Expand areas under same-day delivery and products available for same-day or next-day delivery category by establishing new regional bases and increasing the size of key basesExpand resource-saving delivery service by using own delivery networkAchieve quick delivery by reviewing operation time
Take advantage of scale and improve operational efficiency by fully utilizing the existing logistics infrastructure (review of material handling equipment, etc.)
Reduce delivery costs by setting up regional bases
Streamline supply chain by collaborating with manufacturers
Three Key Points Upon Development of Logistics Platform
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59
Distribution Platform Development Investment Plan (Draft)
As an entity that links suppliers and customers, we have been implementing various environmental measures tied to the operations at each level of the distribution platform
We aim to deliver in “the most ecological format”
1 box for2 trees
Environmental Measures Across the Entire Distribution Platform
Copyright(c) 2012 ASKUL Corporation. All rights reserved. 33
64
Promoting efficient procurement
For FY5/2012, we reviewed the procurement method for some imported items, switching to direct delivery by ship to the port nearest to the distribution centers in various parts of the country
Significant reduction in vehicular delivery in JapanReduction in procurement cost andCO2 emissions
[Before reforms]
[After reforms]
Introduction of energy-saving light fixtures
Level 1 of Osaka DMC
[Before introduction – Mar 2012] [After introduction – May 2012]
About 40% reduction in electricity usage
We actively switched to energy-saving light fixtures such as LED lamps as part of measures to slash electricity use at distribution centers
LED lights at Osaka DMCApr 2012: Installed 760 lightsAug–Sep 2012: Plan to install about 2,000 more
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ECO-TURN Delivery
Started in April 2009 with the aim of enhancing the service to customers and to reduce environmental impact
Achieved 25% reduction in usage of packing materials per box in 3 years
25%reduction in packing
material per box
ECO-TURN SUPPLY(Collection service for toner and ink cartridges)
This is a service that collects toner and ink cartridges for free for reuse and recycling.
This contributes not only to 3R (reduce, reuse, recycle) initiatives at customer’s officebut also to cost reduction.
Achieves both differentiation as well as reduction of environmental burden
Copyright(c) 2012 ASKUL Corporation. All rights reserved. 34
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A project that is aimed at revitalizing the local community and preserving biodiversity through reforestation efforts in Indonesia.The project was launched in December 2011 in cooperation with an Indonesian NGO and the local community to plant Jelutong, a local Indonesian species.
Started in December 2011
Jelutong Area under planting
23,585,659 trees(total as of February 2012)
Project where ASKUL takes the responsibility in checking the raw materials for copier papers in the future by carrying out industrial planting of 2 or more trees for each box of original copier paper made in Indonesia.
Status of tree planting available on exclusive website
Responsibility as the Leader in Copier Paper Sales in Japan
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I. FY5/2012 Results
II. Towards New Growth Strategy
III. Background of Decision-making on Business and Capital Alliance
Copyright(c) 2012 ASKUL Corporation. All rights reserved. 35
68
We plan to achieve double-digit growth in net sales through the steady growth in B-to-B business fueled by the impact of enhanced product range as well as through increased revenue from B-to-C business (year-on-year growth of ¥26.0 billion, or 12.2%).
We expect the gross profit margin to rise on the back of growth in B-to-C direct sales format. We will continue with the incentives to agents that delivered a certain level of success (¥1.0 billion).
SG&A expenses are expected to increase by ¥7.8 billion due to costs for jump-starting B-to-C (sales promotion, campaigns, etc.).
We expect double-digit growth in operating income by securing profits at YASKUL (tentative name) and through stable growth in B-to-B business.
We expect a significant rise in excess of 80% year-on-year in net income as the one-time increase in total income taxes (which has a negative impact on profits) is eliminated.
We plan to achieve profitability at YASKUL (tentative name) from the first year and expect double-digit growth in sales and profits
based on the stable growth in B-to-B business
Summary of FY5/2013 Consolidated Performance Outlook
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FY5/2013 Consolidated Performance Outlook
69
212,932 100.0 239,000 100.0 +12.2
47,490 22.3 56,000 23.4 +17.9
40,873 19.2 48,700 20.4 +19.1
6,617 3.1 7,300 3.1 +10.3
6,504 3.1 7,200 3.0 +10.7
2,301 1.1 4,300 1.8 +86.8
Net Sales
Gross Profit
Selling, General and Administrative Expenses
Operating Income
Ordinary Income
Net Income
Amount(¥million)
Amount(¥million)
% of net sales
% of net sales
YoY change
%
FY5/2012 full year (actual) FY5/2013 full year (plan)
Factors Affecting FY5/2013 Consolidated Operating Income Forecast
Increase in variable costs on increased net sales: ¥3.6 billion
Policy cost for YASKUL (tentative name): ¥2.1 billion
Others (include fixed costs of YASKUL(tentative name): ¥1.9 billion
72
5.0
10.0
15.0
+5.8
+2.6 -7.8
0
73
Net sales ¥239.0 billion (YoY change: +¥26.0 billion; +12.2%)
We aim to achieve double-digit growth through the steady growth in B-to-B business fueled by the impact of expansion of product range and enhancement of own-brand products in addition to increased revenue from B-to-C business.
Capital expenditure ¥27.4 billion[Main items]• Distribution center investments (described earlier) ¥24.2 billion• B-to-C website construction ¥0.5 billion• Additional development for SOLOEL ARENA ¥0.2 billion
Allocate earnings based on the comprehensive assessment of various factors, striking a good balance between two goals⎯namely, “securing sufficient internal reserves for financing capital expenditures to increase the corporate value over a mid- to long-term period” and “pursuing a dividend policy as a means to deliver appropriate returns to meet the expectations of shareholders”⎯while ensuring strong cash flows and sound financial position.
FY5/2012 dividends (plan)
The total number of outstanding shares rose due to the issuance of new shares through third-party allocation, while we have secured funding for ensuring sound financial position and capital expenditures for the time being. At the same time, in addition to the tie-up with Yahoo Japan Corporation, we expect a significant increase in net income from the impact of prioritizing and focusing on business from FY5/2013 onwards. Based on the above policy, we therefore intend to make a stable payment of dividends from surplus to shareholders as planned at the beginning of the period.
Annual dividend of ¥30 (an interim dividend of ¥15 and a fiscal year-end dividend of ¥15) per share
FY5/2013 dividends (forecast)Annual dividend of ¥30 (an interim dividend of ¥15 and a fiscal year-end
Copyright(c) 2012 ASKUL Corporation. All rights reserved. 40
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Appendix
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(2) ASKUL original productsMay 2012
(single month)YoY change
May 2011 (single month)
Number of original products 3,602 +258 3,344
Ratio of Green Products: SKU basis
100.0%(75.9%)
+5.7 p.p.(-0.2 p.p.)
94.3%(76.1%)
Share in net sales 14.1% +0.9 p.p. 13.2%
(SKUs)
<Appendix>
Notes:1. The figures above are the results for the month of May each year.2. The ratio of Green Products is computed after excluding national brand products sold exclusively at ASKUL. Further, a new standard that also
includes products from an environmental perspective other than Green Mark has been adopted since 2Q of FY5/2012. The figures in parenthesis above are the ratios of Green Products based on the previous standard.
3. Net sales of original products used as the numerators in calculating the shares in net sales do not include net sales of original copier paper. 4. The figures above include the products listed in Medical & Care Catalogs and Medical Pro Catalogs.
(1) Share of orders placed on the Internet in net sales
FY5/2012 YoY change FY5/2011
Orders via the Internet 67.9% +4.1 p.p. 63.8%
Other 32.1% -4.1 p.p. 36.2%
Notes: 1. The percentages above are based on orders placed. 2. The figures above are results at the parent for each year.
Copyright(c) 2012 ASKUL Corporation. All rights reserved. 41
80
Construction in progress 8 -63.8% 23
Software in progress 87 -74.7% 344
(¥million)
(Reference)
ItemFY5/2012 FY5/2011
Amount YoY change Amount
[Capital expenditures] 2,621 +14.2% 2,296
Property, plant and equipment 1,086 +99.3% 545
Intangible assets 1,534 -12.4% 1,750
(3) Capital expenditures
Notes:1. Capital expenditures are stated on an accrual basis and do not reflect reductions.2. Construction in progress and software in progress partially include consumption and other taxes. 3. Major capital expenditure items for FY5/2012 were as follows.
Next-generation web development ¥0.64 billion
Material handling equipment system (DCM Center) ¥0.45 billion