Consolidated Financial Results for the Fiscal Year Ended December 20, 2015
[Japanese GAAP]
January 27, 2016
Name of registrant:
Milbon Co., Ltd.
Tokyo Stock Exchange, First Section
Code No.:4919
URL http://www.milbon.co.jp
Representative:
Ryuji Sato, President and CEO
Inquiries:
Masahiro Murai, Managing Director
TEL: +81-6-6928-2331
Scheduled date of annual general meeting of shareholders: March 17, 2016
Scheduled filing date for Securities Report: March 17, 2016
Scheduled starting date of dividend payments: March 18, 2016
Preparation of supplementary materials on the Consolidated Financial Results: Yes
Holding of an explanatory meeting on Consolidated Financial Results: Yes (For institutional investors and analysts)(Amounts of less than one million yen have been omitted.)

1. Consolidated financial results for the fiscal year ended December 20, 2015 (December 21, 2014 - December 20, 2015)(1) Consolidated operating results

Year ended December 20, 2015

Net sales
Million yen
27,377%
8.5

25,226

5.9

Year ended December 20, 2014
(Note) Comprehensive income

Operating income
Million yen
4,727
4,451

Year ended December 20, 2015

Yen
180.20

Diluted net income per
share
Yen
-

Year ended December 20, 2014

160.07-(Reference)

%
6.2
3.4

Year ended December 20, 2015: 3,280 million yen [13.0%]
Net income per share

Equity in earnings (losses) of affiliates(Percentages show year-on-year changes.)
Ordinary income
Net income
Million yen%
Million yen
%
4,427
4.9
2,950
12.6
4,218

3.9

2,621

4.2

Year ended December 20, 2014: 2,902 million yen [(8.5)%]

Return on equity (ROE)

Return on assets (ROA)

Operating income ratio

%
11.7

%
15.0

%
17.3

11.3

15.5

17.6

Year ended December 20, 2015: – million yen

Year ended December 20, 2014: – million yen(2) Consolidated financial position
Total assets
Million yen
30,799As of December 20, 2015
As of December 20, 2014
(Reference)

EquityNet assets
Million yen
26,212

28,138Equity ratio

24,104As of December 20, 2015: 26,212 million yen

Net assets per share
%
85.1

Yen
1,601.02

85.7

1,472.10

As of December 20, 2014: 24,104 million yen(3) Consolidated cash flows

Year ended December 20, 2015

Cash flows from operating
activities
Million yen
3,895

Cash flows from investing
activities
Million yen(2,834)

Cash flows from financing
activities
Million yen(1,135)

Cash and cash equivalents
at end of period
Million yen
7,086Year ended December 20, 2014

2,766

(1,236)(1,052)

7,147

Total dividends(Annual)Dividend payout Dividends onratio
equity (DOE)(Consolidated) (Consolidated)

2. Payment of dividends
Annual dividends

Year ended December 20, 2014-

End of 2ndquarterYen
34.00

Year ended December 20, 2015

-

35.00

-

Year ending December 20, 2016
(forecast)

-

38.00

-

End of 1st quarter
Yen

End of 3rd
End of fiscal year
quarter
Yen
Yen
34.00

Total
Yen
68.00

Million yen
1,113

%
42.5

%
4.8

39.00

74.00

1,211

39.3

4.8

40.00

78.00

39.4

3. Consolidated operating forecasts for the fiscal year ending December 20, 2016 (December 21, 2015 - December 20, 2016)(Percentages show year-on-year changes.)
Net salesYear ending December 20, 2016

Million yen
28,950

Profit attributable toOperating income
Ordinary income
owners of parent% Million yen% Million yen% Million yen
%
5.7
5,000
5.8
4,700
6.2
3,100
5.1

Net income per share
Yen
189.34

*Notes(1) Significant changes in subsidiaries during the period(changes in specified subsidiaries resulting in the change in the scope of consolidation)
New: 0 companies (Company name: ): NoneExclude: 0 companies (Company name: )(2) Changes in accounting policies, changes in accounting estimates and retrospective restatements
1) Changes in accounting policies due to amendment to theaccounting standards, etc.
: Yes2) Changes in accounting policies other than those in 1) above: None3) Changes in accounting estimates: None4) Retrospective restatements: None(3) Number of shares issued (common stock)1) Number of shares issued at the end of the period(including treasury shares)
2) Number of treasury shares at the end of the period

As ofDecember 20, 2015
As ofDecember 20, 2015
Year ended
December 20, 2015

3) Average number of shares during the period

16,558,617 shares
186,242 shares
16,373,127 shares

As ofDecember 20, 2014
As ofDecember 20, 2014
Year ended
December 20, 2014

16,558,617 shares
184,672 shares
16,374,865 shares(Reference) Summary of non-consolidated operating results
Non-consolidated financial results for the fiscal year ended December 20, 2015 (December 21, 2014 - December 20, 2015)(1) Non-consolidated operating results

Year ended December 20, 2015

Net sales
Million yen
25,934%
7.2

Year ended December 20, 201424,197

4.4

Net income per share

Operating income
Million yen
4,786
4,566

%
4.8
1.1

Year ended December 20, 2015

Yen
184.49Diluted net income per share
Yen-

Year ended December 20, 2014168.68-(Percentages show year-on-year changes.)
Ordinary income
Net income
Million yen%
Million yen
%
4,491
3.2
3,020
9.4
4,354

2.4

2,762

8.5

(2) Non-consolidated financial position
Total assets
As of December 20, 2015
As of December 20, 2014
(Reference)

EquityNet assets

Million yen
30,90028,037
As of December 20, 2015: 26,550 million yen

Equity ratio

Net assets per share

Million yen
26,550%85.9

Yen
1,621.69

24,33386.8

1,486.12

As of December 20, 2014: 24,333 million yen*Indication of the status of execution of audit procedures
As these financial results are not subject to audit procedures pursuant to the Financial Instruments and Exchange Act, said audit procedures were notcompleted at the time of disclosure of this report.
*Explanation on the appropriate use of operating forecasts and other special instructions
Operating forecasts and other statements regarding the future presented in these materials are based on information currently available and certain
assumptions deemed to be reasonable, and actual performance may differ substantially due to various factors. For notes on the use of preconditions ofoperating forecasts and the use of operating forecasts, refer to “1. Analysis of Operating Results and Financial Position (1) Analysis of operating results”
on page 2 of the supplementary materials.

Milbon Co., Ltd. (4919) Consolidated Financial Results for the Fiscal Year Ended December 20, 2015

Contents of supplementary materials
1. Analysis of Operating Results and Financial Position ............................................................................................................... 2(1)

Analysis of operating results ............................................................................................................................................ 2(2)

Analysis of financial position ........................................................................................................................................... 3(3)

Basic policy on the distribution of profit and dividends for the fiscal year under review and the following fiscal year .. 4

(4)

Business and other risks ................................................................................................................................................... 5

2. Outline of the Milbon Group...................................................................................................................................................... 6
3. Management Policy.................................................................................................................................................................... 8(1)

Basic management policies .............................................................................................................................................. 8(2)

Target management indices .............................................................................................................................................. 8(3)

Medium- to long-term management strategies and target management indices ............................................................... 8(4)

Tasks to be addressed by the Company ............................................................................................................................ 9

4. Basic Rationale for Selecting the Accounting Standards............................................................................................................ 9
5. Consolidated Financial Statements .......................................................................................................................................... 10(1)

Consolidated Balance Sheets ......................................................................................................................................... 10(2)

Consolidated Statements of Earnings and Consolidated Statements of Comprehensive Income ................................... 12(3)

Consolidated Statements of Changes in Shareholders’ Equity ....................................................................................... 14(4)

Consolidated Statements of Cash Flows ........................................................................................................................ 16-1-

Milbon Co., Ltd. (4919) Consolidated Financial Results for the Fiscal Year Ended December 20, 2015

1. Analysis of Operating Results and Financial Position(1)

Analysis of operating results
1)

Operating results for the fiscal year under review
During the fiscal year under review, the Japanese economy continued on a moderate recovery track, highlighted byrebounding domestic investment supported by the upturn in corporate earnings and other factors, as well as the
improvement trend in both household income and the employment environment. However, the outlook remains uncertain
due to factors including the correction in stock markets triggered by concerns about an economic slowdown in China. In thebeauty industry, challenging business conditions are taking shape amid a situation where demographic trends are making it
difficult for salons to attract customers and hire staff.
Amid this environment, the Milbon Group believes it is important that professionals with expertise respond to theawakening and heightening beauty needs of two generations of women―those in their 20s and those in their 40s.
Accordingly we have been working with salons premised on the goal of “raising the level of expertise of professionals andsupporting higher productivity in order to respond to women, who continue to shine in society, from those awakening tobeauty to those with heightened beauty needs.” This has involved concentrating on lending support to beauty salons in
helping bring about greater expertise, and thereby focusing on the changing beauty needs of women across different
generations.
Consolidated net sales during the fiscal year under review increased by 2,150 million yen to 27,377 million yen (up 8.5%
year-on-year). The increase is largely attributable to solid sales in the hair care product category of products containing
Milbon’s original keratin restoring ingredient CMADK, and also attributable to solid sales in the hair coloring productcategory of Ordeve Crystal, the hair coloring product line specialized for gray hair launched in June, which allows womenwith long hair to beautifully color their hair, and of Villa Lodola Color, a hair coloring product line specialized for gray hairlaunched in February, and the first such product in the industry to receive certification from an organic certification
authority. Moreover, favorable sales growth among overseas subsidiaries centered on East Asia was another factor for theincrease in overall sales, as proactive activities, primarily education in salons, resulted in an increase in transactions withleading salons.
Selling, general and administrative expenses increased by 8.8% over the previous year to 13,954 million yen largely as aresult of moves to increase the workforce and establish new business locations. Operating income increased by 276 million
yen to 4,727 million yen (up 6.2% year-on-year), ordinary income increased by 208 million yen to 4,427 million yen (up4.9% year-on-year) and net income increased by 329 million yen to 2,950 million yen (up 12.6% year-on-year).
Consolidated net sales and all levels of income were at new record highs.

Breakdown of net sales by product category and breakdown of net sales into domestic and overseas sales are shown below:[Breakdown of consolidated net sales by product category]
Product category(Unit: Million yen)Previous fiscal year

Current fiscal year

AmountAmountRatio (%)

Ratio (%)

Increase(decrease)amountYear-on-yearchange (%)

Hair care products

14,59757.8

16,195

59.1

1,597

10.9

Hair coloring products

8,817

35.0

9,506

34.7

689

7.8

Permanent wave products

1,520

6.0

1,410

5.2

(109)

(7.2)

Others

291

1.2

264

1.0

(26)

(9.1)

Total

25,226100.0

27,377

100.0

2,150

8.5

[Breakdown of net sales into domestic and overseas sales](Unit: Million yen)
Ratio (%)

Increase(decrease)amountDomestic sales

22,612

89.6

23,880

87.2

1,267

5.6

Overseas sales

2,613

10.4

3,496

12.8

882

33.8

Total

25,226100.0

27,377

100.0

2,150

8.5

Previous fiscal year
AmountCurrent fiscal year

Ratio (%)

-2-

AmountYear-on-yearchange (%)

Milbon Co., Ltd. (4919) Consolidated Financial Results for the Fiscal Year Ended December 20, 2015

2)

Outlook for fiscal 2016
Japan’s economic outlook is uncertain given potentially adverse impacts of slowing economies of China and otheremerging nations in Asia, growing lack of stability in the Middle East and other such developments. In the beauty industry,
although business conditions continue to pose challenges due to the adverse impact of demographic trends, patterns ofconsumption seem to be changing, and amounts that people spend in beauty salons on an annual basis appear to be on therise, among those in their late 20s and 40s, as well as those in their 50s whose household incomes and expenditures tend tobe higher than those of other demographic segments.
Amid this environment, the Milbon Group believes that professionals must respond to attitudes of female beauty whichvary from generation to generation. As such, we will work with salons premised on the goal of “helping to lend radiance tothe stages of beauty experienced by women as individuals, thereby seizing on the two demographic milestones of beauty —that of the ‘Hanako generation’ (women in their 50s embarking on a quest for beauty) and that of the ‘Hanako juniorgeneration’ (women in their 20s awakening to the notion of beauty).”
In terms of global expansion, we will launch the Global Milbon worldwide brand of hair care products, and will pick up thepace with business expansion involving in-salon treatments originating from Japan.
As a result of these efforts, the Company anticipates consolidated net sales of 28,950 million yen (up 5.7% year-on-year),consolidated operating income of 5,000 million yen (up 5.8% year-on-year), consolidated ordinary income of 4,700 million
yen (up 6.2% year-on-year), and consolidated net income of 3,100 million yen (up 5.1% year-on-year).

(2)

Analysis of financial position
1)

Assets, liabilities and net assets
Total assets at the end of the fiscal year ended December 20, 2015 increased by 2,660 million yen compared to the end of
the previous fiscal year to 30,799 million yen.
Current assets increased by 317 million yen compared to the end of the previous fiscal year to 14,624 million yen. This wasdue mainly to a 2,500 million yen increase in securities (jointly managed designated money trusts, etc.), a 170 million yen
increase in merchandise and finished goods, and a 2,474 million yen decrease in cash and deposits.
Non-current assets increased by 2,342 million yen compared to the end of the previous fiscal year to 16,174 million yen.
This was due mainly to a 400 million yen increase in land in conjunction with the purchase of land adjacent to the
Yumegaoka Plant, a 1,290 million yen increase in construction in progress largely due to partial prepayment for work toextend the Yumegaoka Plant, and an increase of 616 million yen in investment securities attributable to factors such as
higher prices of listed stocks.
Current liabilities increased by 486 million yen compared to the end of the previous fiscal year to 4,356 million yen. Thiswas mainly due to a 502 million yen increase in accounts payable - other and a 181 million yen increase in accounts payable- trade.
Non-current liabilities increased by 65 million yen compared to the end of the previous fiscal year to 230 million yen.
Net assets increased by 218 million yen compared to the end of the previous fiscal year to 26,212 million yen. This was due
mainly to an increase of 1,784 million yen in retained earnings and a 368 million yen increase in valuation difference on
available-for-sale securities attributable to factors such as higher prices of listed stocks.
As a result, the equity ratio changed from 85.7% at the end of the previous fiscal year to 85.1%. Net assets per share basedon the total outstanding shares as of the end of the period under review increased from 1,472.10 yen per share at the end of
the previous fiscal year to 1,601.02 yen per share.

2)

Cash flows
Cash and cash equivalents (hereinafter “net cash”) at the end of the current fiscal year decreased by 60 million yen
compared to the end of the previous fiscal year to 7,086 million yen, as a result of using the net cash provided by operating
activities for the payment of income taxes and the purchase of property, plant and equipment.
(Cash flows from operating activities)
Net cash provided by operating activities amounted to 3,895 million yen. This was mainly the result of posting 4,415
million yen in income before income taxes and minority interests, depreciation of 1,038 million yen and 1,437 million yen
in income taxes paid.
(Cash flows from investing activities)
Net cash used in investing activities amounted to 2,834 million yen. This was mainly due to the purchase of property, plant-3-

Milbon Co., Ltd. (4919) Consolidated Financial Results for the Fiscal Year Ended December 20, 2015

and equipment of 2,517 million yen.
(Cash flows from financing activities)
Net cash used in financing activities amounted to 1,135 million yen. This was mainly due to the cash dividends paid toshareholders of 1,129 million yen.
(Reference) Cash flow-related indicators
Year ended
December 20,
2011
Equity ratio (%)
Equity ratio based on market
value (%)
Interest-bearing debt to cash
flows ratio (%)

Year ended
December 20,
2012

Year ended
December 20,
2013

Year ended
December 20,
2014

Year ended
December 20,
2015

84.4

86.1

84.1

85.7

85.1

146.0

163.8

243.3

183.0

264.2

2.6

2.7

2.3

3.0

2.1

(Notes) Equity ratio: Equity/net assets
Equity ratio based on market value: Total market capitalization/total assets
Interest-bearing debt to cash flows ratio: Interest-bearing debt/cash flows*

All indicators were calculated using consolidated financial statements.

*

Total market capitalization was calculated by multiplying the closing stock price at the end of the period by the total number of*Cash flows were shown as an operating cash flow in the consolidated statements of cash flows.

*

Interest-bearing debt refers to all debt posted in the balance sheets upon which interest is paid. The amount of interest paid in

outstanding shares at the end of the period (excluding treasury shares).

the consolidated statements of cash flows was treated as an interest payment in the calculations above.
*

Interest-coverage ratio is not shown due to the fact that there were no interest payments.

(3)

Basic policy on the distribution of profit and dividends for the fiscal year under review and the following fiscal year
The Milbon Group considers the returning of profits to shareholders as an important management issue and makes it a basic
policy to pay dividends in accordance with its operating results, while enhancing its business structure by maintaining
internal reserves to the end of improving its earnings in the future. Moreover, we have set the target dividend payout ratio at
40%. Interim dividends are determined at the Board of Directors meetings and year-end dividends at the general meeting ofshareholders, and it is the Group’s basic policy to pay dividends twice every fiscal year.
For the current fiscal year, upon comprehensively taking into account factors including our financial position and profit
levels, we have decided to pay a year-end dividend of 39 yen per share. As a result, the total annual dividend per share willamount to 74 yen per share, which includes the interim dividend of 35 yen per share that has already been paid.
For the following fiscal year, we plan to pay an annual dividend of 78 yen per share.

-4-

Milbon Co., Ltd. (4919) Consolidated Financial Results for the Fiscal Year Ended December 20, 2015

(4)

Business and other risks
Risks that could potentially affect the operating results, stock price and financial position of the Milbon Group include thefollowing.
The future risks identified in this section are based on assessments made by the Company as of the end of the fiscal year underreview. The Group recognizes the possibility of these risk events actually occurring and has prepared policies to prevent andavert such risks and take appropriate measures to minimize the impact of such risks when they do occur.
1) Risks associated with global expansion
The Milbon Group is aggressively expanding its business into the overseas markets. Global expansion entails risks relating
to intellectual property rights including counterfeit goods, unforeseeable changes in laws and regulations, and risks ofsocial unrest due to terrorism, war and other factors. Such risks could have a major impact on the Group’s operating results
and financial position.
2) Information security
The Milbon Group has taken various measures to protect information assets including customers’ personal information andconfidential information. However, unforeseeable events, such as the leakage of information due to unauthorized access,could have a major impact on the Group’s operating results and financial position.
3) Risks associated with debt collection
The Milbon Group deliberates and records necessary reserves upon regularly reviewing its business partners from bothquantitative and qualitative perspectives and in terms of collection status. However, deterioration in the business partner’s
credit standing or events such as bankruptcy could have a major impact on the Group’s operating results and financial
position.
4) Risks associated with major accidents
The Milbon Group utilizes company cars in its sales activities. The Group implements safety measures that place maximum
priority on human life, including strict control over driving and the reinforcement of safety training. However, should amajor accident event occur, it could lead to the loss of the customers’ and the public’s trust in the Group and have a major
impact on the Group’s operating results and financial position.
5) Risks associated with product-related health hazards
Many Milbon Group products come into direct contact with consumers’ hair and scalp, and as such the Milbon Group
places top priority on its efforts to ensure product safety and quality. However, should an unforeseeable incident involving
a major health hazard occur, it could lead to the loss of the customers’ and the public’s trust in the Group and have a major
impact on the Group’s operating results and financial position.

-5-

Milbon Co., Ltd. (4919) Consolidated Financial Results for the Fiscal Year Ended December 20, 2015

2.

Outline of the Milbon Group
Name

Location

Capital stockor capital
contribution

Main line ofbusiness(Consolidated subsidiary)
MILBON USA, INC.

New York, USA

USD 2 million

Sale of hairproducts

Shanghai, China

JPY 430 million

Sale of hairproducts(Consolidated subsidiary)
Milbon Trading(Shanghai) Co., Ltd.
(Consolidated subsidiary)
Milbon Korea Co., Ltd.

Seoul,South Korea

KRW 3,000 Sale of hairmillion products(Consolidated subsidiary)
Manufacture and
MILBON (THAILAND) CO.,
Rayong, Thailand THB 450 million sale of hairLTD.
products(Note) All companies fall under the category of “specified subsidiary.”-6-

Percentage ofvoting rights held(%)

Relationship with theCompany

Sells the Company’s hairproducts in the U.S.
100.0 One executive holds
concurrent post at theCompany.
Sells the Company’s hairproducts in China.
100.0 Three executives holdconcurrent posts at theCompany.
Sells the Company’s hairproducts in South Korea.
100.0 Two executives holdconcurrent posts at theCompany.
Manufactures and sells theCompany’s hair productsin Thailand.
100.0
One executive holds
concurrent post at theCompany.

Milbon Co., Ltd. (4919) Consolidated Financial Results for the Fiscal Year Ended December 20, 2015

The following diagram shows the positioning of Milbon Group companies and the Group’s businesses.
（Diagram of business activities）

Milbon Co., Ltd. (Manufacturing and sales company)

Commercial use

MILBON USA, INC.
Milbon Trading (Shanghai) Co., Ltd.
Milbon Korea Co., Ltd.

Distributors

Store sales

Commercial use

Store sales

Commercial use

Store sales

Commercial use

Store sales

Commercial use

Store sales

Commercial use

Store sales

MILBON (THAILAND) CO., LTD.

Distributors

SalonsSalonsGeneral consumers

General consumers

Overseas transactions

Domestic transactions(Notes) 1. For overseas transactions, sales channels differ depending on the country.
2. The main items for store sales are hair-care products.

-7-

Milbon Co., Ltd. (4919) Consolidated Financial Results for the Fiscal Year Ended December 20, 2015

3. Management Policy(1)

Basic management policies
The Milbon Group has been developing its business that supports a beautiful way of life through hair designers.
Given our aim or building long-term relationships of trust with customers, we have created a brand statement which
embodies the value we deliver to our customers through business pursued by the Milbon Group, combined with a slogan
symbolizing the brand statement.
―Brand Statement―“To live beautifully.
It’s how we approach the world. It’s the one, single idea that drives us.
Our hair frames our personal beauty—how it’s styled, how it feels, how it flows.
It sets the stage for the inner self we radiate. Everyone’s hair is unique, and everyone’s beauty is, too. Our purpose is to help
every woman find, embrace, and express her individuality—to head out into each day confidently and gracefully, and to live
vibrantly.
For more than 50 years, professional stylists have been our partners: we learn from and inspire each other. What unites us is
our passion for transforming everything we touch into something beautiful. Together, we constantly push the boundaries of
the global haircare industry. Together, we help give women the confidence, sophistication, and grace with which they inspire
the world.”―Brand Slogan―
Find Your Beauty(2)

Target management indices
From the standpoint of effectively utilizing shareholders’ equity and boosting earning power, the Milbon Group aims to
exceed the following indices in 2019, the final year of the Medium Term 5-Year Business Vision (2015-2019).

(3)

1)

ROE (Return On Equity): 12%2)

Consolidated Operating Income Ratio:

20%

Medium- to long-term management strategies and target management indices
The Milbon Group has formulated a Medium Term 5-Year Business Vision (2015-2019) covering the 5-year period
beginning in 2015. The Milbon Group has set forth the following global vision: “Milbon aims to be the global No.1, first asa Japanese professional manufacturer, by cultivating global field ideas through human resource development and training inorder for hair designers to achieve their goals,” and aims to achieve consolidated net sales of 35,000 million yen,consolidated operating income of 7,000 million yen and overseas sales to total sales ratio of 18.6% in 2019, the final year of
the 5-year plan.
As a part of this, we will develop personnel who can conduct business on a global basis and who will lead the company in the
future, as well as develop products and engage in marketing activities on a localized basis.

-8-

Milbon Co., Ltd. (4919) Consolidated Financial Results for the Fiscal Year Ended December 20, 2015

(Vision by area)
Japan: Be the first in the world to create an aging beauty model to respond to the declining birthrate

East Asia: Foster local employees and promote educational and marketing activities to create a growthSoutheast Asia

: Start full-scale operation of the Thai Factory and create a foundation that will become a new

U.S. and Europe: Switch the business model to a distributor based system, and create opportunities to enter theand the aging of society
track which will be the pillar for Asia, including the earnings structure
growth pillar after Japan and East Asia
market in Europe(Global financial strategy)● Execute growth investment in order to build a global product supply framework and develop more localized marketing
activities in each region.
● Carry out shareholder returns with a target payout ratio of 40%, proactively returning to investors the profits earned
through growth. Also, conduct stock splits as appropriate in light of the share price and liquidity in the market.
Based on the above strategies, we aim to be No.1 in Asia and enter the top five in the world in the hair care products
professional use market in 2019, the final year of the 5-year plan.
(4)

Tasks to be addressed by the Company
1) In terms of the sales framework, in order to achieve further evolution in the Fieldperson (education-oriented sales
representative) strategy, raise the quality of sales activities and educational support for salons through selection andconcentration of field activities and create Milbon salons that will be the model for activities and success.
2) In product development, further improve Target Authority Customer (TAC) product development system, which catches thelatest changes in hair design trends and utilizes such information in development.
3) Discover customers’ latent needs and improve product development technologies with basic and fundamental research torespond to such needs.
4) Build a product supply framework which matches the needs of each region by improving the production capacity of plants inJapan and overseas, and by raising the efficiency of the distribution system.
5) In order to advance our global vision, develop a system for fostering human resources capable of international businessactivities, executives with a keen sense of management and specialists.

4. Basic Rationale for Selecting the Accounting Standards
The Milbon Group currently prepares the consolidated financial statements according to the generally accepted accounting
standards in Japan (Japanese GAAP), as it makes it possible to compare the consolidated financial statements against previous
fiscal year and against other companies.
With regard to adoption of International Financial Reporting Standards (IFRS), it is the Group’s policy to respond to this issue
appropriately based on consideration of various domestic and international circumstances.

-9-

Milbon Co., Ltd. (4919) Consolidated Financial Results for the Fiscal Year Ended December 20, 2015

5. Consolidated Financial Statements(1)

Consolidated Balance Sheets(Thousand yen)Previous Fiscal Year(As of December 20, 2014)

Current Fiscal Year(As of December 20, 2015)

7,386,867
3,427,276–
2,258,355
22,989795,564
253,254
207,507(44,289)
14,307,525

4,912,293
3,424,543
2,500,000
2,428,521
30,925835,568
278,166
263,456(48,570)
14,624,904

8,667,622(4,396,771)
4,270,850
4,666,773(3,590,100)
1,076,672
4,876,552
58,6352,034,557(1,786,379)
248,178
10,530,889
448,856

9,019,076(4,756,405)
4,262,671
4,891,566(3,771,219)
1,120,346
5,277,410
1,348,999
2,191,555(1,919,490)
272,064
12,281,492
398,357

1,908,728
257,649
58,657676,344(49,681)2,851,698
13,831,443
28,138,969

2,525,286
278,650
5,330
734,891(49,681)3,494,477
16,174,327
30,799,232

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Securities
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Machinery, equipment and vehicles
Accumulated depreciation
Machinery, equipment and vehicles, net
LandConstruction in progress
Other
Accumulated depreciation
Other, net
Total property, plant and equipment
Intangible assets
Investments and other assets
Investment securities
Net defined benefit asset
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets- 10 -

Milbon Co., Ltd. (4919) Consolidated Financial Results for the Fiscal Year Ended December 20, 2015
(Thousand yen)Previous Fiscal Year(As of December 20, 2014)
Liabilities
Current liabilities
Accounts payable - trade
Accounts payable - other
Income taxes payable
Provision for sales returns
Provision for bonuses
Other
Total current liabilities
Non-current liabilities
Net defined benefit liability
Deferred tax liabilities
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets- 11 -

Current Fiscal Year(As of December 20, 2015)

503,378
1,841,629
769,801
24,43689,198641,2883,869,733

684,978
2,343,762
749,005
18,394
108,823
451,599
4,356,565

20,238–144,883
165,121
4,034,855

27,425
117,962
84,745230,133
4,586,698

2,000,000
199,599
21,655,660(535,654)
23,319,606

2,000,000
199,748
23,440,262(542,094)
25,097,916

368,519

737,221

310,899
105,089784,508
24,104,114
28,138,969

311,451
65,944
1,114,616
26,212,533
30,799,232

Milbon Co., Ltd. (4919) Consolidated Financial Results for the Fiscal Year Ended December 20, 2015

(2)

Consolidated Statements of Earnings and Consolidated Statements of Comprehensive Income
Consolidated Statements of Earnings

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Company house defrayment income
Gain on surrender of insurance
Foreign exchange gains
Other
Total non-operating income
Non-operating expenses
Sales discounts
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of non-current assets
Total extraordinary income
Extraordinary losses
Loss on retirement of non-current assets
Total extraordinary losses
Income before income taxes and minority interests
Income taxes - current
Income taxes - deferred
Total income taxes
Income before minority interests
Net income

Fiscal Year Ended
December 20, 2014
(December 21, 2013 December 20, 2014)
25,226,510
7,945,233
17,281,276
12,830,186
4,451,089- 12 -(Thousand yen)
Fiscal Year Ended
December 20, 2015
(December 21, 2014 December 20, 2015)
27,377,173
8,695,222
18,681,951
13,954,349
4,727,601

7,792
45,56849,23745,702
13,877
23,249185,428

6,098
50,47861,611
43,962–
27,272
189,422412,880–
4,698
417,579
4,218,938

447,972
35,6195,910
489,501
4,427,523

811
811

1,403
1,403

26,434
26,4344,193,315
1,528,623
43,605
1,572,229
2,621,086
2,621,086

13,12813,1284,415,797
1,420,048
45,271
1,465,319
2,950,478
2,950,478

Milbon Co., Ltd. (4919) Consolidated Financial Results for the Fiscal Year Ended December 20, 2015

Consolidated Statements of Comprehensive Income

Income before minority interests
Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners ofparentComprehensive income attributable to minority
interests

Fiscal Year Ended
December 20, 2014
(December 21, 2013 December 20, 2014)
2,621,086- 13 -(Thousand yen)
Fiscal Year Ended
December 20, 2015
(December 21, 2014 December 20, 2015)
2,950,478

91,079190,457–
281,537
2,902,623

368,701
551(39,144)
330,108
3,280,586

2,902,623

3,280,586––

Milbon Co., Ltd. (4919) Consolidated Financial Results for the Fiscal Year Ended December 20, 2015(3)

Consolidated Statements of Changes in Shareholders’ Equity
Fiscal Year Ended December 20, 2014 (December 21, 2013 - December 20, 2014)(Thousand yen)
Shareholders’ equity
Capital stock

Balance at beginning ofcurrent period
Cumulative effects ofchanges in accounting
policies
Restated balance

2,000,000

Capital surplus

Retained earnings

Treasury shares

Total shareholders’equity199,183

20,069,024(516,646)

21,751,561–

2,000,000

199,183

20,069,024(516,646)

21,751,561

Changes of items during
periodDividends of surplus(1,034,450)(1,034,450)

Net income

2,621,086

2,621,086

Purchase of treasury
shares
Disposal of treasury shares
Net changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at end of current
period416(20,909)(20,909)

1,901

2,318

–

416

1,586,636(19,007)

1,568,044

2,000,000

199,599

21,655,660(535,654)

23,319,606

Total accumulated
other comprehensive
incomeTotal net assets

Accumulated other comprehensive income
Valuation difference
on available-for-salesecurities
Balance at beginning ofcurrent period
Cumulative effects ofchanges in accounting
policies
Restated balance

277,439

Foreign currencytranslation
adjustment
120,442

Remeasurements ofdefined benefit plans–

397,881

22,149,443–

277,439

120,442–

397,881

22,149,443

Changes of items during
periodDividends of surplus(1,034,450)

Net income

2,621,086

Purchase of treasury
shares(20,909)

Disposal of treasury shares
Net changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at end of current
period2,318
91,079190,457

105,089

386,626

386,626

91,079190,457

105,089

386,626

1,954,671

368,519

310,899

105,089784,508

24,104,114- 14 -

Milbon Co., Ltd. (4919) Consolidated Financial Results for the Fiscal Year Ended December 20, 2015

Fiscal Year Ended December 20, 2015 (December 21, 2014 - December 20, 2015)(Thousand yen)
Shareholders’ equity
Capital stock
Balance at beginning ofcurrent period
Cumulative effects ofchanges in accounting
policies
Restated balance

2,000,000

Capital surplus

Retained earnings

Treasury shares

Total shareholders’equity199,599

21,655,660(535,654)

23,319,606(36,103)2,000,000

199,599

21,619,557(36,103)(535,654)

23,283,502

Changes of items during
periodDividends of surplus(1,129,773)(1,129,773)

Net income

2,950,478

2,950,478

Purchase of treasury
shares
Disposal of treasury shares
Net changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at end of current
period148(6,933)(6,933)

493

642

–

148

1,820,704(6,439)1,814,413

2,000,000

199,748

23,440,262(542,094)

25,097,916

Total accumulated
other comprehensive
incomeTotal net assets

Accumulated other comprehensive income
Valuation difference
on available-for-salesecurities
Balance at beginning ofcurrent period
Cumulative effects ofchanges in accounting
policies
Restated balance

368,519

Foreign currencytranslation
adjustment
310,899

Remeasurements ofdefined benefit plans
105,089784,508

24,104,114(36,103)368,519

310,899

105,089784,508

24,068,011

Changes of items during
periodDividends of surplus(1,129,773)

Net income

2,950,478

Purchase of treasury
shares(6,933)

Disposal of treasury shares
Net changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at end of current
period642
368,701

551(39,144)

330,108

330,108

368,701

551(39,144)

330,108

2,144,522

737,221311,451

65,944

1,114,616

26,212,533- 15 -

Milbon Co., Ltd. (4919) Consolidated Financial Results for the Fiscal Year Ended December 20, 2015

(4)

Consolidated Statements of Cash Flows
Fiscal Year Ended
December 20, 2014
(December 21, 2013 December 20, 2014)

Cash flows from operating activities
Income before income taxes and minority interests
Depreciation
Increase (decrease) in allowance for doubtful
accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for sales returns
Increase (decrease) in provision for retirement
benefits
Decrease (increase) in net defined benefit asset
Increase (decrease) in net defined benefit liability
Interest and dividend income
Foreign exchange losses (gains)
Loss (gain) on sales of non-current assets
Loss on retirement of non-current assets
Decrease (increase) in notes and accounts receivable trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable trade
Other, net
SubtotalInterest and dividend income received
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Payments of loans receivableCollection of loans receivable
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of investment securities
Payments for guarantee deposits
Proceeds from collection of guarantee deposits
Purchase of insurance funds
Proceeds from cancellation of insurance funds
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities
Net decrease (increase) in treasury shares
Cash dividends paid
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period- 16 -(Thousand yen)
Fiscal Year Ended
December 20, 2015
(December 21, 2014 December 20, 2015)

4,193,315
1,008,915

4,415,797
1,038,954(11,090)

4,269

4,321
(2,153)

19,829(6,041)(55,564)–(94,720)
18,213(53,360)
1,426
(811)
26,434(142,640)
8,507(56,577)
19,364(1,403)
13,128(308,350)(2,959)(398,784)(219,025)(23,464)

184,220

111,121
4,415,445
55,028(1,703,691)
2,766,782

1,710
5,277,137
56,025(1,437,434)
3,895,728(1,059,512)
1,047(136,176)(4,130)17,074(9,097)
8,117–(104,333)
8,932(1,409)51,529(8,411)(1,236,370)(2,517,265)
1,403(96,293)(4,200)9,081(93,924)–(100,558)(65,831)35,778(49,572)
51,766(4,864)(2,834,480)(18,591)(1,033,494)(1,052,085)(6,290)(1,129,170)(1,135,461)

58,346

14,118536,671
6,610,371
7,147,043(60,094)
7,147,043
7,086,948