Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending May 15, 2019 [J-GAAP]

Transcription

1 Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending May 15, 2019 [J-GAAP] December 18, 2018 Name of listed company: TSURUHA Holdings, Inc. Listed on: Tokyo Stock Exchange, 1st Section Securities code: 3391 URL: Representative: Masashi Horikawa, President and Representative Director Contact: Makoto Murakami, Executive Officer and Chief Administrative Officer TEL: Scheduled date of filing quarterly financial report: December 28, 2018 Scheduled date to start dividends distribution: January 10, 2019 Supplementary quarterly materials prepared: Yes Quarterly results information meeting held: Yes (for institutional investors and financial analysts) (Figures shown are rounded down to the nearest million yen.) 1. Consolidated financial results for the second quarter ended November 15, 2018 (May 16, 2018 November 15, 2018) (1) Consolidated operating results (Percentage figures show changes from the same period in the previous year.) Net Sales Operating Income Ordinary Income Net Income Attributable to Owners of the Parent Millions of yen % Millions of yen % Millions of yen % Millions of yen % November 15, , , , ,940 (0.8) November 15, , , , , Note: Comprehensive income: November 15, 2018:13,122 million yen (-17.3%) November 15, 2017:15,868 million yen (44.0%) Net Income per Share Diluted Net Income per Share Yen Yen November 15, November 15, (2) Consolidated financial position Total Assets Net Assets Equity Ratio Net Assets per Share Millions of yen Millions of yen % Yen As of November 15, , , , As of May 15, , , , Reference: Equity capital: As of November 15, 2018: 200,240 million yen As of May 15, 2018: 190,847 million yen 2. Dividends Annual Dividends (Yen) First Quarter-end Second Quarter-end Third Quarter-end Year-end Annual Year ended May 15, Year ending May 15, Year ending May 15, 2019 (Forecast) Note: Revisions to the most recently announced dividend forecast during the period: None

2 3. Consolidated financial forecasts for the year ending May 15, 2019 (May 16, 2018 May 15, 2019) (Percentage figures show changes from the same period in the previous year.) Net Sales Operating Income Ordinary Income Net Income Attributable to Owners of the Parent Net Income per Share Millions of yen % Millions of yen % Millions of yen % Millions of yen % Yen Full year 771, , , , Note: Revisions to the most recently announced earnings forecasts during the period: Yes Notes (1) Significant changes to subsidiaries during the period (Transfers of specific subsidiaries with changes in the scope of consolidation): None (2) Application of the specific accounting methods for preparing the quarterly consolidated financial statements: None (3) Changes in accounting policies, accounting estimates and restatement of revisions 1) Changes in accounting policies due to revision of accounting standard, etc.: None 2) Changes in accounting policies other than 1): None 3) Changes in accounting estimates: None 4) Restatement of revisions: None (4) Number of shares issued and outstanding (common shares) 1) Number of shares issued and outstanding (including treasury stock) As of November 15, ,226,068 shares As of May 15, ,091,568 shares 2) Number of treasury stock As of November 15, ,038 shares As of May 15, ,038 shares 3) Average number of shares issued and outstanding in each period (quarterly consolidated cumulative period) November 15, ,275,076 shares November 15, ,087,015 shares * This financial results report is outside the scope of audit procedures conducted by certified public accountants or the independent auditor. * Explanation of appropriate use of financial forecasts and other special items This document contains projections of performance based on information currently available. Actual performance may differ from these projections due to changes in the economic environment and other uncertainties. Please refer to page 3 of the supplementary materials for further details about the above financial forecasts.

3 Contents 1. Qualitative information on quarterly financial results... 2 (1) Explanation of consolidated financial results... 2 (2) Explanation of consolidated financial position... 2 (3) Explanation of consolidated financial forecasts and other forward-looking statements Quarterly consolidated financial statements and related notes... 4 (1) Quarterly consolidated balance sheets... 4 (2) Quarterly consolidated statements of income and quarterly consolidated statements of comprehensive income... 6 (Quarterly consolidated statements of income)... 6 (Quarterly consolidated statements of comprehensive income)... 7 (3) Quarterly consolidated statements of cash flows... 8 (4) Notes on quarterly consolidated financial statements (Notes on premise of a going concern) (Notes on significant changes in the amount of shareholders' equity) (Additional information)

4 1. Qualitative information on quarterly financial results (1) Explanation of consolidated financial results In the first six months of the current fiscal year (May 16, 2018 to November 15, 2018), the Japanese economy continued to recover at a moderate pace and consumer confidence showed signs of picking up, despite an uncertain outlook in overseas economies, fluctuations in financial markets and other concerns. In the drugstore sector, the operating environment remained challenging, with the pace of consolidation and realignment accelerating, as competition to open stores and reduce prices continued to intensify. Against this backdrop, the TSURUHA Group continued to offer a high level of customer service mainly through advicebased sales, and implemented a number of strategic business initiatives. Specifically, in addition to focusing on advice-based sales of high value-added products that satisfy customer needs, the Group improved convenience for customers through store renovations centered on food sales areas in order to address the shrinking market caused by Japan s aging population and intensifying competition. Also, in private brands, the Group worked to advance its private brand product strategy through Group companies. Specifically, the Group overhauled its product lineup to improve efficiency, launched two new brands, Kurashi Rhythm and Kurashi Rhythm Medical, and reinforced product development and the sales network. In store openings, the Group targeted specific areas for multiple store openings as part of its area dominance store-opening strategy and implemented a scrap and build approach for existing stores. In the second quarter under review, the Group opened 74 new stores and closed 35 existing stores. B&D HOLDINGS Co., Ltd. (B&D HD) became a subsidiary of the Company on May 22, As a result, 65 drugstores and dispensing pharmacies in Aichi Prefecture operated by B&D Co., Ltd., a subsidiary of B&D HD, became part of the Group, resulting in a total of 2,035 directly managed stores at the end of the second quarter. TSURUHA Group store openings and closures (Number of stores) End of previous fiscal year Store openings Became subsidiary Store closures Net change End of current period Of which dispensing pharmacies Hokkaido Tohoku Kanto, Koshin Chubu, Kansai Chugoku Shikoku (2) Kyushu Total 1, , (The figure at the end of the current period excludes 20 overseas stores and two franchise stores.) As a result of the above, in the first six months of the current fiscal year, TSURUHA Holdings reported net sales of 382,947 million (up 24.4% year on year), operating income of 20,575 million (up 2.6%), ordinary income of 21,405 million (up 2.8%), and net income attributable to owners of the parent of 12,940 million (down 0.8%). (2) Explanation of consolidated financial position (Assets, liabilities and net assets) As of the end of the second quarter, assets totaled 364,728 million, an increase of 26,978 million compared with the end of the previous fiscal year. This mainly reflected an increase in assets due to the acquisition of B&D HOLDINGS Co., Ltd. Liabilities totaled 150,390 million, an increase of 16,629 million compared with the end of the previous fiscal year. This mainly reflected an increase in liabilities due to the acquisition of B&D HOLDINGS Co., Ltd. Net assets totaled 214,338 million, an increase of 10,349 million compared with the end of the previous fiscal year. As a result, the equity ratio was 54.9%, down 1.6 points from the previous fiscal year-end. (Cash flows) As of the end of the second quarter, cash and cash equivalents (cash) totaled 40,027 million, a decrease of 4,099 million compared with the end of the previous fiscal year. The Group s cash flow position and factors affecting cash flows during the first six months of the fiscal year were as follows: (Cash flows from operating activities) In the first six months, operating activities provided net cash of 19,195 million, an increase of 32.6% compared with the same period a year earlier. This mainly reflected cash positive items such as income before incomes taxes of 21,320 million, increase in notes and accounts payable trade of 4,397 million, and depreciation and amortization of 3,490 million, against cash negative items such as increase in inventories of 6,252 million and income taxes paid of 6,182 million.

5 (Cash flows from investing activities) In the first six months, investing activities used net cash of 19,067 million, an increase of 121.3% compared with the same period a year earlier. This primarily reflected cash used of 11,703 million for purchase of shares of subsidiaries, 5,037 million for purchase of property, plant and equipment and 4,521 million for payments for guarantee deposits related to new store openings. (Cash flows from financing activities) In the first six months, financing activities used net cash of 4,227 million, a decrease of 6.2% compared with the same period a year earlier. This mainly reflected cash used of 3,663 million for cash dividends paid. (3) Explanation of consolidated financial forecasts and other forward-looking statements The Group has revised its consolidated financial forecasts for the fiscal year ending May 15, 2019, announced on June 18, For more details, please see the separate press release, Notice of Revisions to Consolidated Financial Forecasts (Japanese only) issued today

6 2. Quarterly consolidated financial statements and related notes (1) Quarterly consolidated balance sheets (Millions of yen) As of May 15, 2018 As of November 15, 2018 Assets Current assets Cash and deposits 44,262 40,165 Accounts receivable-trade 23,178 25,306 Merchandise 85,019 93,611 Raw materials and supplies Short-term loans receivable 12 2 Others 14,255 13,150 Total current assets 166, ,275 Non-current assets Property, plant and equipment Buildings and structures, net 28,122 34,857 Machinery, equipment and vehicles, net 3 12 Tools, furniture and fixtures, net 9,431 10,304 Land 9,804 11,765 Leased assets, net 3,829 3,988 Construction in progress 2, Total property, plant and equipment 53,365 61,404 Intangible assets Goodwill 28,233 37,752 Software Telephone subscription right Others Total intangible assets 29,251 38,865 Investments and other assets Investment securities 33,837 33,170 Long-term loans receivable Deferred tax assets 4,560 4,594 Guarantee deposits 45,833 49,903 Others 4,200 4,587 Allowance for doubtful accounts (90) (91) Total investments and other assets 88,360 92,183 Total non-current assets 170, ,452 Total assets 337, ,

7 (Millions of yen) As of May 15, 2018 As of November 15, 2018 Liabilities Current liabilities Notes and accounts payable - trade 78,568 85,800 Short-term loans payable - 2,950 Current portion of long-term loans payable 1,206 2,745 Accounts payable-other 11,530 11,947 Lease obligations Income taxes payable 6,993 7,708 Provision for bonuses 4,132 4,422 Provision for directors bonuses Provision for point card certificates 3,841 4,296 Others 4,897 4,300 Total current liabilities 112, ,080 Non-current liabilities Long-term loans payable 2,909 4,801 Lease obligations 4,062 4,207 Deferred tax liabilities 7,239 7,034 Net defined benefit liability 1,892 2,380 Provision for directors retirement benefits Asset retirement obligations 2,491 2,750 Others 2,429 4,133 Total non-current liabilities 21,438 25,309 Total liabilities 133, ,390 Net assets Shareholders equity Capital stock 9,492 10,005 Capital surplus 27,545 28,058 Retained earnings 137, ,541 Treasury stock (5,311) (5,311) Total shareholders equity 168, ,293 Accumulated other comprehensive income Valuation difference on available-for-sale securities 21,924 21,006 Remeasurements of defined benefit plans (73) (60) Total accumulated other comprehensive income 21,850 20,946 Subscription rights to shares 1,128 1,111 Non-controlling interests 12,013 12,986 Total net assets 203, ,338 Total liabilities and net assets 337, ,

8 (2) Quarterly consolidated statements of income and quarterly consolidated statements of comprehensive income (Quarterly consolidated statements of income) November 15, 2017 (Millions of yen) November 15, 2018 Net sales 307, ,947 Cost of sales 218, ,641 Gross profit 88, ,305 Selling, general and administrative expenses 68,830 87,729 Operating income 20,053 20,575 Non-operating income Interest income Dividends income Gain on donation of equipment Rent income Compensation income Insurance income 5 61 Others Total non-operating income 996 1,175 Non-operating expenses Interest expenses Early withdrawal penalty Others 8 14 Total non-operating expenses Ordinary income 20,831 21,405 Extraordinary income Gain on sales of non-current assets - 42 Gain on reversal of subscription rights to shares - 47 Others 4 - Total extraordinary income 4 90 Extraordinary losses Loss on disaster - 79 Loss on retirement of non-current assets Loss on sales of non-current assets 0 48 Total extraordinary losses Income before income taxes 20,778 21,320 Income taxes-current 5,966 6,828 Income taxes-deferred 1, Total income taxes 7,176 7,278 Income 13,601 14,041 Net income attributable to non-controlling interests 559 1,101 Net income attributable to owners of the parent 13,041 12,

9 (Quarterly consolidated statements of comprehensive income) November 15, 2017 (Millions of yen) November 15, 2018 Income 13,601 14,041 Other comprehensive income Valuation difference on available-for-sale securities 2,257 (932) Remeasurements of defined benefit plans 9 13 Total other comprehensive income 2,266 (919) Comprehensive income 15,868 13,122 (Breakdown of comprehensive income) Comprehensive income attributable to owners of the parent 15,307 12,036 Comprehensive income attributable to non-controlling interests 561 1,

10 (3) Quarterly consolidated statements of cash flows November 15, 2017 (Millions of yen) November 15, 2018 Cash flows from operating activities Income before income taxes 20,778 21,320 Depreciation and amortization 2,570 3,490 Loss on disaster - 79 Amortization of goodwill 1,110 1,807 Increase (decrease) in allowance for doubtful accounts (0) 0 Increase (decrease) in provision for bonuses Increase (decrease) in provision for directors bonuses (238) (250) Increase (decrease) in net defined benefit liability Increase (decrease) in provision for point card certificates (210) 325 Increase (decrease) in provision for directors' retirement benefits (5) (413) Interest and dividends income (174) (221) Compensation income (57) (94) Insurance income (5) (61) Interest expenses Gain on donation of equipment (516) (443) Loss on retirement of non-current assets Loss (gain) on sales of non-current assets 0 5 Gain on reversal of subscription rights to shares - (47) Decrease (increase) in notes and accounts receivable trade (1,328) (1,499) Decrease (increase) in inventories (5,317) (6,252) Increase (decrease) in notes and accounts payable trade 2,948 4,397 Increase (decrease) in accrued consumption taxes (715) (410) Others 2,388 3,062 Subtotal 21,654 25,331 Interest and dividends income received Proceeds from insurance income 5 61 Proceeds from compensation Interest expenses paid (145) (261) Income taxes paid (7,216) (6,182) Net cash provided by (used in) operating activities 14,475 19,

11 November 15, 2017 (Millions of yen) November 15, 2018 Cash flows from investing activities Payments into time deposits (0) (0) Proceeds from withdrawal of time deposits - 5 Proceeds from sales of securities 12,000 - Purchase of property, plant and equipment (3,511) (5,037) Proceeds from sales of property, plant and equipment Purchase of software (88) (77) Purchase of investment securities - (0) Proceeds from sales of investment securities - 1 Purchase of shares of subsidiaries resulting in change in scope of consolidation (14,841) (11,703) Payments of loans receivable (0) (0) Collection of loans receivable 3 2 Payments for guarantee deposits (3,356) (4,521) Proceeds from collection of guarantee deposits 1,033 1,402 Others Net cash provided by (used in) investing activities (8,614) (19,067) Cash flows from financing activities Net increase (decrease) in short-term loans payable Repayments of long-term loans payable (603) (1,030) Repayments of lease obligations (117) (335) Proceeds from issuance of new shares Cash dividends paid (4,129) (3,663) Dividends paid to non-controlling interests (91) (112) Net cash provided by (used in) financing activities (4,505) (4,227) Net increase (decrease) in cash and cash equivalents 1,355 (4,099) Cash and cash equivalents at the beginning of period 42,492 44,124 Increase in cash and cash equivalents from newly consolidated subsidiary - 1 Cash and cash equivalents at the end of period 43,847 40,

12 (4) Notes on quarterly consolidated financial statements (Notes on premise of a going concern) There is no related information. (Notes on significant changes in the amount of shareholders' equity) There is no related information. (Additional information) (Application of Partial Amendments to Accounting Standard for Tax Effect Accounting ) Effective from the first quarter of the current fiscal year, the Company has applied Partial Amendments to Accounting Standard for Tax Effect Accounting (ASBJ Statement No. 28, February 16, 2018). As a result, the Company now classifies deferred tax assets as investments and other assets, and deferred tax liabilities as non-current liabilities