March 1, 2016 to February 28, 2019

Transcription

1 March 1, 2016 to February 28, 2019 Three years of change, marked progress and stability toward 50th anniversary, underpinning goal to be a 100 billion corporate group April 14, 2016 Actual performance amounts less than a full unit are omitted, and percentages are rounded to one decimal place. Totals may not reflect the sum of component amounts. In these materials, actual performance amounts for fiscal 2016, ended February 29, 2016, include yen-translated local-currency results by overseas subsidiaries converted at the respective average exchange rates during the year. Anticipated exchange rates used by management in the determining performance targets for fiscal 2017 and later take into close account the recent trend in yen appreciation and are listed on the last page.

2 The Shape of the Aderans Group ECSR2016

3 1 New Medium-term Business Plan ECSR2016 Servant leadership management Management Philosophy Our corporate mission, as the Aderans Group, is to utilize our hair-related businesses to help as many people as possible acquire the physical and emotional qualities that underpin the realization of dreams and promote a good impression, and in doing so, bring smiles to faces and support happy lives. We strive for Product excellence Technological excellence Heartfelt omotenashi Pattern of executive behavior that motivates employees, encourages them to persevere and allows their talents to blossom Management Vision Realizing good company standard Establish management structure which is highly transparent and trusted from inside and outside the company Sampo yoshi management Establish sampo yoshi style of management underpinned by thorough pursuit of ECSR: CS (Customer Satisfaction), ES (Employee Satisfaction) and CSR (Corporate Social Responsibility/Trust by Society) Fiscal 2019, ending February 28, 2019, which is the last year of the new medium-term management plan, also marks Aderans 50th anniversary. Since its earliest days, Aderans has grown and expanded its presence as a comprehensive provider of solutions to hair-related concerns, committed to helping as many people as possible acquire the physical and emotional qualities that underpin the realization of dreams and promote a good impression, and in so doing, bring smiles to faces and support happy lives. However, as Aderans approaches its 50th anniversary, management must face up to the reality that the growth achieved to date is much more difficult to duplicate now. To address constantly evolving social expectations and be a company that customers continue to depend on even as the times change, Aderans, guided by a management vision emphasizing realization of the good company standard, must strive to ensure sustainable growth and enhance its true corporate value from the perspective of customer satisfaction (CS), employee satisfaction (ES), and corporate responsibility and trust earned from society (CSR). Sanpo yoshi literally, three-way good is an ideal espoused by the merchant class of the Edo Period ( ) that emphasize the pursuit of business not only for corporate gain but for the benefit of customers and society as well. Aderans abbreviated sanpo yoshi management based on CS, ES and CSR, as ECSR, and applied the term to the new medium-term management plan ECSR2016 which will guide the Company and the Group it leads on a three-year journey toward change, marked progress and stability. And then, Aderans will initiate changes supported by all to become a 100 billion corporate group by fiscal 2021 and a good company a company with value that continues to meet market expectations 50 years and even 100 years into the future.

4 Global Strategy of Aderans Group ECSR2016

5 2 ECSR 2016 Global Business Portfolio Europe United States Market growth/expansion Evolution from stability to growth by leaps and bounds HC (USA) to open more locations and reinforce presence in women s market Bosley to pursue globalization and expand medical business Aderans Hair Goods to widen access routes Market growth/expansion Evolution from stability to growth by leaps and bounds Enter regions where presence not yet established Enhance marketing efforts for custom-made products and reinforce after-sale services Asia Market growth/expansion Shift from introduction to growth Establish firm footing for businesses providing solutions to hair-related concerns Japan Mature market Heightened competition Moderate but definite growth Capture attention of anyone who uses wigs, beyond customer base, through after-sale services Expand business domain Fiscal 2017 From change to marked progress Fiscal 2018 From marked progress to stabilization Fiscal 2019 From stabilization to sustainable growth Japan United States Europe Asia Focusing on solutions to hair-related concerns, offer total beauty and organic haircare products and establish higher profile in medical services market with hair transplantation and androgenetic alopecia (AGA) treatments Develop new services using strength of current doctor-facilitated medical business and promote in other countries, enhance healthy hair-growth services, and improve response to demand from black people for wigs and hair-volumizing products and services as well as after-sale services. Boost customer retention for custom-made wigs, accelerate entry into regions where presence has not yet been established, and attain No.1 share in each market by securing an overwhelming advantage Pursue business providing solutions to hair-related concerns, accelerate business growth in China, and set up locations in ASEAN region

6 3 Peripheral Business Sectors (Hundred million yen) 8,000 7,000 6,000 6,861 Market Size of Domestic Hair-Related Business Sectors ,307 CAGR+1.3% ,040 1,102 1,165 5,000 4,000 2,275 2,274 2,277 2,278 2,320 2,325 3,000 2,000 3,536 3,494 3,491 3,554 3,611 3,613 1, 年 2011 年 2012 年 2013 年 2014 年 2015 (Forecast) 年 ( 見 ) Esthetic beauty services Haircare Natural/organic cosmetics Transplantation/AGA treatment CAGR+0.4% CAGR+0.4% CAGR+6.0% CAGR+2.8% Source: Hair Care Industry Market Report Overview by Yano Research Institute Ltd.

7 Looking Back

8 4 Looking Back: Overview On a consolidated basis, net sales up, EBITDA and operating income down Lower sales and income from domestic operations Women s market characterized by challenging demand conditions, through both custom-made and ready-made wig pipelines, due to the entry of more companies into the wig sector and a noticeable trend toward low-priced wigs, as well as changes in consumer patterns of purchasing behavior. On the men s side, the number of retained customers has stabilized. To promote growth, efforts directed toward presence at general merchandise stores and an aggressive push to open salons inside hospitals. Higher sales and income from operations in United States HC (US) opened three Hair Club locations and acqured two franchises Bosley began providing full access to Follicular Unit Extraction (FUE), a new hair transplantation technique, and also opened two new offices and improved its new client contract rate, but the company experienced system problems at its call center. Higher sales but lower income from operations in Europe Acquired seven salons focusing on medical-use wigs and opened five new salons. Acquisitions of custom-made wig salons in Germany intended to enhance direct-response marketing efforts proved highly successful Higher sales and income from operations in Asia China: Ready-made wig business enjoyed favorable results. Worked to develop skills of human resources, enhance efficiency of advertising and promotional activities, and implement scrap-and-build profit structure. Taiwan: Salon business showing stability. Worked to make advertising and promotional activities more efficient and accelerated opening of ready-made salons. Singapore: Strengthened healthy hair-growth services and worked to develop skills of human resources. Production point news: Savannakhet plant in Laos goes into full-scale operation Savannakhet plant in Laos went into full-scale production Established cooperative link between World Quality Co., Ltd., and Laos operations to facilitate distribution and import/export activities.

9 5 Consolidated Sales, and Comparison with Fiscal 2016 Estimates (Hundred million yen) Overseas Domestic Consolidted (14) adjustment(17) (17) (2) (2) (13) -4 Fiscal 2011 Fiscal 2012 Fiscal 2013 Fiscal 2014 Fiscal 2015 Fiscal 2016 Fiscal 2016 (Feb. 2011) (Feb. 2012) (Feb. 2013) (Feb. 2014) (Feb. 2015) (Feb. 2016) (Feb. 2016) (Estimates) (Actual)

10 6 EBITDA, and Comparison with Fiscal 2016 Estimates (Hundred million yen) Consolidated adjustments Overseas (1) Domestic -80 Fiscal 2011 Fiscal 2012 Fiscal 2013 Fiscal 2014 Fiscal 2015 Fiscal 2016 Fiscal 2016 (Feb. 2011) (Feb. 2012) (Feb. 2013) (Feb. 2014) (Feb. 2015) (Feb. 2016) (Feb. 2016) (Estimates) (Actual)

11 7 Consolidated Opeating Income, and Comparison with Fiscal 2016 Estimates (Hundred million yen) Consolidated adjustments Overseas Domestic (1) (6) (5) (4) Fiscal 2011 Fiscal 2012 Fiscal 2013 Fiscal 2014 Fiscal 2015 Fiscal 2016 Fiscal 2016 (Feb. 2011) (Feb. 2012) (Feb. 2013) (Feb. 2014) (Feb. 2015) (Feb. 2016) (Feb. 2016) (Estimates) (Actua l)

12 8 Capital Expenditure, Depreciation/Amortization (Millions of yen) 8,000 4,500 7,000 6,000 6,766 7,204 4,032 4,000 3,500 5,000 4,000 3,000 2,000 1,000 0 (1,000) 2,531 1,249 3,701 1,782 1,170 1,061 4,621 3,559 3,616 2,011 3, Fiscal 2012 Fiscal 2013 Fiscal 2014 Fiscal 2015 Fiscal 2016 (Feb. 2012) (Feb. 2013) (Feb. 2014) (Feb. 2015) (Feb. 2016) 2,919 2,880 4,323 4,748 Oprating income Depreciation/Amortization Consolidated EBITDA Capital Expenditure 4,622 3,000 2,500 2,000 1,500 1,

13 Strategies in New Medium-term Business Plan ECSR2016

14 9 ECSR 2016 Key Management Strategies Expand share of global market and secure stable profit Respond swiftly to changes in market environment Promote cost balance transparency and ensure suitability to operations Empahsize cross-border human resources development, M&A activity and stronger supply chain management system Develop and launch evidence-based products and services Enhance Group governance structure and approach to CSR

15 New Medium-term Business Plan Targets ECSR2016

16 10 New Medium-term Business Plan Targets: Consolidated Sales (Hundred million yen) Overseas , Domestic Consolidated (4) adjustments (2) (2) (2) (2) Fiscal 2016 Fiscal 2017 Fiscal 2018 Fiscal 2019 Fiscal 2021 (Feb. 2016) (Feb. 2017) (Feb. 2018) (Feb. 2019) (Feb. 2021) (Actual)

17 11 New Medium-term Business Plan Targets: Consolidated EBITDA (Hundred million yen) Consolidated 2 adjustments Overseas 13 Domestic Fiscal 2016 Fiscal 2017 Fiscal 2018 Fiscal 2019 Fiscal 2021 (Feb. 2016) (Feb. 2017) (Feb. 2018) (Feb. 2019) (Feb. 2021) (Actual) 30

18 12 New Medium-term Business Plan Targets: Consolidated Operating Income (Hundred million yen) % % % 6.0% % 0.8% % % Overeseas Domestic Consolidated adjustments % 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% Fiscal 2016 Fiscal 2017 Fiscal 2018 Fiscal 2019 Fiscal 2021 (Feb. 2016) (Feb. 2017) (Feb. 2018) (Feb. 2019) (Feb. 2021) (Actual)

19 Medium-term Numerical Targets Key Performance Indicators

20 13 Medium-term Numerical Targets Toward Sustainable Growth and Maximized Corporate Value of the Aderans Group A way point on a road to a numerical destination consolidated net sales of 100 billion by fiscal 2021, ending February 28, Targets for the Final Year of the New Medium-Term Management Plan Consolidated net sales: 91.0 billion EBITDA: 8.2 billion (9.0%) Normalized operating income: 4.2 billion (4.6%) Operating income: 3.4 billion (3.7%) Normalized ROE: 10% 以上 ROE: 6.9% Normalized EPS: 100 以上 EPS: 79 Normalized PER: 25 times PER: 31 times Normalized payout ratio: 25% 以上 Payout ratio: 25%

21 Appendix

22 14 About Figures Provided Local Currency Japan Yen US Dollar EURO Exchange Rates UK Pound Sweden Krona China Yuan Taiwan Dollar Singapore Dollar Thai Baht Philippine Peso Abbreviation US$ STG SEK RMB NT$ SG$ THB PHP LAK Used as basis for fiscal 2017 targets Actual rate in fiscal Lao Kip Fiscal 2015 actual, or Fiscal 2016 targets Fiscal 2014 actual, or Fiscal 2015 targets Normalized Performance Indicators Normalized net income = Income before income taxes + Amortization of goodwill ±Extraordinary profit/loss *Net income adds back amortization of goodwill to income before income taxes but excludes non-recurring extraordinary income (expenses). Normalized operating income = operating income + Amortization of goodwill Normalized ROE = (Normalized net income /((Net assets at the beginning of the fiscal term+net assets at the end of the fiscal term)/2)>10% Normalized ROA = (Normalized net income ±Extraordinary profit/loss) /(Net assets at the beginning of the fiscal term+net assets at the end of the fiscal term)/2)>7% Normalized EPS = Normalized net income /Average number of issued shares during the fiscal term excluding treasury stock> 100 Normalized PER = Sock price/(normalized net income /Average number of issued shares during the fiscal term excluding treasury stock 25 times Normalized payout ratio = Dividends per share x Number of issued shares excluding treasury stock /Normalized net income>25%