Consolidated Financial Results for the Fiscal Year Ended December 20, 2014
[Japanese GAAP]
January 21, 2015
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 18, 2015
Scheduled filing date for Securities Report: March 18, 2015
Scheduled starting date of dividend payments: March 19, 2015
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, 2014 (December 21, 2013 - December 20, 2014)(1) Consolidated operating results

Year ended December 20, 2014

Net sales
Million yen
25,226%
5.9

23,8298.9Year ended December 20, 2013
(Note) Comprehensive income

Operating income
Million yen
4,451
4,302

Year ended December 20, 2014

Yen
160.07

Diluted net income per
share
Yen
-

Year ended December 20, 2013152.85-(Reference)

%
3.4
7.9

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

Equity in earnings (losses) of affiliates(Percentages show year-on-year changes.)
Ordinary income
Net income
Million yen%
Million yen
%
4,218
3.9
2,621
4.2
4,059

8.7

2,516

18.2

Year ended December 20, 2013: 3,170 million yen [42.9%]

Return on equity (ROE)

Return on assets (ROA)

Operating income ratio

%
11.3

%
15.5

%
17.6

11.8

16.2

18.1

Year ended December 20, 2014: – million yen

Year ended December 20, 2013: – million yen(Note) The Company conducted a 1.2 for 1 stock split of its common stock effective December 21, 2013. Consequently, the net income per share calculated and retrospectively
adjusted assuming that the stock split was conducted at the beginning of the previous fiscal year is presented.
(2) Consolidated financial position
Total assets
Million yen
28,138

As of December 20, 2014
As of December 20, 2013
(Reference)

EquityNet assets
Million yen
24,104

26,321Equity ratio

22,149As of December 20, 2014: 24,104 million yen

Net assets per share
%
85.7

Yen
1,472.10

84.1

1,352.34

As of December 20, 2013: 22,149 million yen(Note) The Company conducted a 1.2 for 1 stock split of its common stock effective December 21, 2013. Consequently, the net assets per share calculated and retrospectively
adjusted assuming that the stock split was conducted at the beginning of the previous fiscal year are presented.
(3) Consolidated cash flows

Year ended December 20, 2014

Cash flows from operating
activities
Million yen
2,766

Cash flows from investing
activities
Million yen(1,236)

Cash flows from financing
activities
Million yen(1,052)

Cash and cash equivalents
at end of period
Million yen
7,147Year ended December 20, 2013

3,511

(1,198)(1,387)

6,610

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

2. Payment of dividends
Annual dividends-

End of 2ndquarterYen
33.00

Year ended December 20, 2014

-

34.00

-

Year ending December 20, 2015
(forecast)

-

34.00

-

End of 1st quarter
Yen
Year ended December 20, 2013

End of 3rd
End of fiscal year
quarter
Yen
Yen
35.00

Total
Yen
68.00

Million yen
932

%
37.1

%
4.4

34.00

68.00

1,113

42.5

4.8

34.00

68.00

42.3

3. Consolidated operating forecasts for the fiscal year ending December 20, 2015 (December 21, 2014 - December 20, 2015)(Percentages show year-on-year changes.)Year ending December 20, 2015

Net sales
Million yen
26,900Operating income
Ordinary income
Net income% Million yen% Million yen% Million yen
%
6.6
4,661
4.7
4,369
3.6
2,630
0.3

Net income per share
Yen
160.62

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

3) Average number of shares during the period

16,558,617 shares
184,672 shares
16,374,865 shares

As ofDecember 20, 2013
As ofDecember 20, 2013
Year ended
December 20, 2013

16,558,617 shares
179,953 shares
16,462,012 shares(Note) The Company conducted a 1.2 for 1 stock split of its common stock effective December 21, 2013. Consequently, the number of shares issued at the end of the period,
the number of treasury shares at the end of the period, and the average number of shares during the period calculated and retrospectively adjusted assuming that the stock split
was conducted at the beginning of the previous fiscal year are presented.

(Reference) Summary of non-consolidated operating results
Non-consolidated financial results for the fiscal year ended December 20, 2014 (December 21, 2013 - December 20, 2014)(1) Non-consolidated operating results

Year ended December 20, 2014

Net sales
Million yen
24,197%
4.4

Year ended December 20, 2013

23,1808.3

Net income per share
Year ended December 20, 2014

Yen
168.68Operating income
Million yen
4,566
4,516

%
1.1
12.5

(Percentages show year-on-year changes.)
Ordinary income
Net income
Million yen%
Million yen
%
4,354
2.4
2,762
8.5
4,254

13.1

2,545

18.2

Diluted net income per share
Yen-

Year ended December 20, 2013154.66(Note) The Company conducted a 1.2 for 1 stock split of its common stock effective December 21, 2013. Consequently, the net income per share calculated and retrospectively
adjusted assuming that the stock split was conducted at the beginning of the previous fiscal year is presented.
(2) Non-consolidated financial position

As of December 20, 2014
As of December 20, 2013
(Reference)

EquityTotal assets
Million yen
28,037
26,192As of December 20, 2014: 24,333 million yen

Net assets
Million yen
24,333Equity ratio

22,533

Net assets per share
%
86.8

Yen
1,486.12

86.0

1,375.78

As of December 20, 2013: 22,533 million yen(Note) The Company conducted a 1.2 for 1 stock split of its common stock effective December 21, 2013. Consequently, the net assets per share calculated and retrospectively
adjusted assuming that the stock split was conducted at the beginning of the previous fiscal year are presented.

*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, 2014

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 .. 5

(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 ................................................................................................................. 8(4)

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

4. 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, 2014

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 experienced only a modest recovery, as despite the continued
improvement in the export environment in conjunction with the depreciation of the yen, personal consumption stagnated
due to the prolonged backlash following the earlier rush in demand ahead of the consumption tax hike in April, as well as
inclement weather during the summer months. The economic outlook remains murky due to factors including abruptchanges in foreign exchange rates as well as increasing concerns about economic slowdowns in emerging countries. In thebeauty industry, the situation remains challenging due to the impacts of factors including the unstable economic
environment and the population decline.
Under such circumstances, the Milbon Group, fully aware of the importance of enhancing “intangible value” that centerson communication to respond to the values of mature women, promoted initiatives intended for salons under the slogan of“Supporting the nurture of salon professionals with human appeal who will take the stage and live up to intrinsic, absolutevalue.” We focused on activities to raise the value of hair designers as professionals through basic research aimed atessential care for the changes in hair that occur with age, as well as by providing educational support to increase salons’expertise.
Consolidated net sales during the fiscal year under review increased by 1,396 million yen to 25,226 million yen (up 5.9%
year-on-year). This was primarily due to the extremely strong sales of Aujua Aging Care series Immurise line, which waslaunched in February, and leave-in treatment Deesse’s Elujuda Emulsion, which was launched in June. Favorable sales
growth at the overseas subsidiaries thanks to proactive educational activities conducted for salons and a change indistributor strategy was another factor for the increase.
Selling, general and administrative expenses increased by 8.1% over the previous year to 12,830 million yen, as a result ofvarious costs relating to extension work at the Central Research Institute and the renewal of sales promotion tools.
Operating income increased by 148 million yen to 4,451 million yen (up 3.4% year-on-year), ordinary income also
increased by 159 million yen to 4,218 million yen (up 3.9% year-on-year) and net income increased by 104 million yen to
2,621 million yen (up 4.2% year-on-year). Both consolidated net sales and line profits were 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

12,61652.9

14,597

57.8

1,981

15.7

Hair coloring products

9,288

39.0

8,817

35.0

(470)

(5.1)

Permanent wave products

1,623

6.8

1,520

6.0

(103)

(6.3)

Others

301

1.3

291

1.2

(10)

(3.5)

Total

23,829100.0

25,226

100.0

1,396

5.9

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

Increase(decrease)amountDomestic sales

21,94692.1

22,612

89.6

665

3.0

Overseas sales

1,882

7.9

2,613

10.4

730

38.8

Total

23,829100.0

25,226

100.0

1,396

5.9

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, 20142)

Medium Term 5-Year Business Vision (2010-2014) achievements
The fiscal year under review was the final fiscal year of the Medium Term 5-Year Business Vision (2010-2014) announced
in June 2010. Under this business vision, we have been undertaking initiatives based on the idea of “Contributing to thebeauty culture in all regions by customizing, for each region, the beauty product technologies that arise from Japan’s
detailed and delicate beauty-related technological capabilities and spirit of hospitality, as well as educational support
activities which pay respect to designers.” As a result of educational support programs for salons focused on hair care forthe domestic market which is experiencing a falling birth rate along with an aging population, as well as proactive overseas
business development centered on Asia, consolidated net sales of 25,000 million yen and an overseas sales to total sales
ratio of 10.4% were reached, both of which were set as targets in the Medium Term 5-Year Business Vision. Operating
income was 425 million yen below the target due to the fact that costs associated with global business development,
personnel system revisions and the increase in personnel exceeded the assumptions used when the Medium Term 5-YearBusiness Vision was formulated.

[Medium Term Business Vision targets and results]
Medium Term Business Vision(2014 targets)
AmountRatio (%)
Net sales(Unit: Million yen)
Current fiscal year
AmountDifference

Achievement
rate (%)

Ratio (%)

25,000100.025,226

100.0

226

100.9

Domestic

22,40089.6

22,612

89.6

212

100.9

Overseas

2,600

10.4

2,613

10.4

13

100.5

Operating income

4,877

19.5

4,451

17.6

(425)

91.3

Net income

2,754

11.0

2,621

10.4

(132)

95.2

3)

Outlook for fiscal 2015
Japan’s economic outlook remains uncertain, as consumer sentiment is unstable and the issue of the future consumption tax
rate still exists. In the beauty industry, demographics are having a growing impact on salons, such as the decline incustomers and difficulty hiring staff due to the decrease in the productive-age population (15 to 64 years old) and the dropin the number of beauty school students. Despite this environment, the yearly usage amount by mature women, centered on
women in their 40s, is on the rise, and the high employment rate has resulted in a recent rising trend in usage amounts by
women in their mid-20s as well.
Amid this environment, the Milbon Group believes that it is important that professionals with expertise respond to theawakening and heightening beauty needs of these two generations of women―those in their 20s and those in their 40s.
Efforts will be focused on salons with the goal of “raising the level of expertise of professionals and supporting higher
productivity in order to respond to women, who continue to shine in society, from those awakening to beauty to those withheightened beauty needs.”
In terms of global expansion, we will begin the full-fledged supply of products to overseas regions from the Thai Factory,
which came online in 2013. In addition, we will develop marketing activities with the aim of having Southeast Asia become
the second main pillar for growth behind East Asia.
As a result of these efforts, the Company expects consolidated net sales of 26,900 million yen (up 6.6% year-on-year),consolidated operating income of 4,661 million yen (up 4.7% year-on-year), consolidated ordinary income of 4,369 million
yen (up 3.6% year-on-year), and consolidated net income of 2,630 million yen (up 0.3% year-on-year).

(2)

Analysis of financial position
1)

Assets, liabilities and net assets
Total assets at the end of the current fiscal year increased by 1,817 million yen compared to the end of the previous fiscal
year to 28,138 million yen.
Current assets increased by 1,369 million yen compared to the end of the previous fiscal year to 14,307 million yen. Thiswas due mainly to an increase of 541 million yen in cash and deposits, an increase of 316 million yen in notes and accounts
receivable - trade, an increase of 271 million yen in merchandise and finished goods, and an increase of 187 million yen in
raw materials and supplies.

-3-

Milbon Co., Ltd. (4919) Consolidated Financial Results for the Fiscal Year Ended December 20, 2014

Non-current assets increased by 447 million yen compared to the end of the previous fiscal year to 13,831 million yen. Thiswas due mainly to an increase of 1,028 million yen attributable to capital expenditure including the extension work at theCentral Research Institute, a decrease of 1,001 million yen attributable to the recording of depreciation, an increase of 257
million yen in net defined benefit asset and an increase of 141 million yen in investment securities attributable to factors
such as higher prices of listed stocks.
Current liabilities decreased by 100 million yen compared to the end of the previous fiscal year to 3,869 million yen. Thiswas mainly due to the decrease in income taxes payable by 175 million yen.
Non-current liabilities decreased by 36 million yen from the end of the previous fiscal year to 165 million yen.
Net assets increased by 1,954 million yen compared to the end of the previous fiscal year to 24,104 million yen. This was
mainly due to the 1,586 million yen increase in retained earnings and the 190 million yen increase in foreign currencytranslation adjustment as a result of the depreciation of the yen.
As a result, equity ratio changed from 84.1% at the end of the previous fiscal year to 85.7%. Net assets per share based on
total outstanding shares as of the end of the current fiscal year increased from 1,352.34 yen per share at the end of theprevious fiscal year to 1,472.10 yen per share.
2)

Cash flows
Cash and cash equivalents (hereinafter “net cash”) at the end of the current fiscal year increased by 536 million yen
compared to the end of the previous fiscal year to 7,147 million yen, as a result of using the net cash provided by operating
activities for the payment of income taxes and the payment of dividends.
(Cash flows from operating activities)
Net cash provided by operating activities amounted to 2,766 million yen. This was mainly the result of posting 4,193
million yen in income before income taxes and minority interests, depreciation of 1,008 million yen and 1,703 million yen
in income taxes paid.
(Cash flows from investing activities)
Net cash used in investing activities amounted to 1,236 million yen. This was mainly due to the purchase of property, plantand equipment of 1,059 million yen.
(Cash flows from financing activities)
Net cash used in financing activities amounted to 1,052 million yen. This was mainly due to the cash dividends paid toshareholders of 1,033 million yen.
(Reference) Cash flow-related indicators
Year ended
December 20,
2010

Equity ratio (%)
Equity ratio based on market
value (%)
Interest-bearing debt to cash
flows ratio (%)

Year ended
December 20,
2011

Year ended
December 20,
2012

Year ended
December 20,
2013

Year ended
December 20,
2014

84.9

84.4

86.1

84.1

85.7

131.4

146.0

163.8

243.3

183.0

3.3

2.6

2.7

2.3

3.0

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

*

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
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.

-4-

Milbon Co., Ltd. (4919) Consolidated Financial Results for the Fiscal Year Ended December 20, 2014

(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. In addition, interim dividends are determined at the Boardof Directors meetings and year-end dividends at the general meeting of shareholders, 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 an interim dividend of 34 yen per share, and a year-end dividend of 34 yen per share, for a total
annual dividend of 68 yen per share. The Company conducted a 1.2 for 1 stock split of its common stock on December 21,
2013. When converted using the pre-stock split ratio, the annual dividend amounts to 81.60 yen per share.
For the following fiscal year, we plan to pay an annual dividend of 68 yen per share.
Internal reserves are used for capital expenditures required for the medium- to long-term expansion of our business as well as
R&D investments, to the end of enhancing our business structure.

(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 places
maximum priority on human life, including strict control over driving and the reinforcement of safety training. However,should a major accident event occur, it could lead to the loss of the customers’ and the public’s trust in the Group and havea major impact on the Group’s operating results and financial position.

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Milbon Co., Ltd. (4919) Consolidated Financial Results for the Fiscal Year Ended December 20, 2014

2.

Outline of the Milbon Group
Name

Location

Capital stockor capital
contribution

New York, USA

USD 2 million

Main line ofbusiness

Percentage ofvoting rights held(%)

Relationship with theCompany

100.0

Sells the Company’s hairproducts in the U.S.

(Consolidated subsidiary)
MILBON USA, INC.

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

Shanghai, China

JPY 430 million

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

Seoul,South Korea

KRW 3,000 Sale of hairmillion products

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.

(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-

Manufactures and sells the
100.0 Company’s hair productsin Thailand.

Milbon Co., Ltd. (4919) Consolidated Financial Results for the Fiscal Year Ended December 20, 2014

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

Store sales

Commercial use

Commercial use

Store sales

Commercial use

Store sales

Store sales

Commercial use

Store sales

Commercial use

Store sales

Commercial use

Store sales

MILBON (THAILAND) CO., LTD.

Trading companies

Distributors

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

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Milbon Co., Ltd. (4919) Consolidated Financial Results for the Fiscal Year Ended December 20, 2014

3.
(1)

Management Policy
Basic management policies
The Milbon Group has been developing its business that supports a beautiful way of life through hair designers.
“Beautiful ways of life and beautiful hair enrich people’s spirits. Milbon develops its business to contribute to the industry,
countries and regions around the world under the belief that people rich in spirit will develop culture, and that a society thatvalues culture will bring about peace.”
The Milbon Group’s corporate slogan has been “beautiful hair, beautiful people.” The domestic market has become
increasingly uncertain with the changing demographics, and it is now necessary to pursue globalization (to accelerate thespeed with which we enter markets by boosting the recognition of the corporate brand and product brands).
As we start a new fiscal year:● So that women who wish to live beautifully can discover a new self
● So that hair designers can be proud and take on new challenges● We declare that we will continue to assume challenges in new areas (globalization, new businesses), and in order to build
long-term relationships of trust with customers we have created a new brand statement and slogan to serve as its symbol.
―Brand Statement―“We believe that beautiful hair brings out an individual's true beauty.
This is something that is felt from the inside and radiates outward.
Milbon works closely with salon professionals to together deliver beautiful hair, inspire grace and confidence in 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
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, 2014

(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.

-9-

Milbon Co., Ltd. (4919) Consolidated Financial Results for the Fiscal Year Ended December 20, 20144.
(1)

Consolidated Financial Statements
Consolidated Balance Sheets
Previous Fiscal Year(As of December 20, 2013)

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
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 -(Thousand yen)
Current Fiscal Year(As of December 20, 2014)

6,845,649
3,110,419
1,987,133
21,957
607,585
269,733
151,201
ሺ55,548)
12,938,131

7,386,867
3,427,276
2,258,355
22,989795,564
253,254
207,507ሺ44,289)
14,307,525

7,721,653
ሺ4,066,624)
3,655,029
4,365,291
ሺ3,463,005)
902,286
4,867,542
835,253
1,828,754
ሺ1,672,808)
155,945
10,416,058
481,762

8,667,622
ሺ4,396,771)
4,270,850
4,666,773
ሺ3,590,100)
1,076,672
4,876,552
58,6352,034,557
ሺ1,786,379)
248,178
10,530,889
448,856

1,767,519
193,433
573,968
ሺ49,141)
2,485,780
13,383,601
26,321,732

1,908,728
257,649
58,657676,344
ሺ49,681)2,851,698
13,831,443
28,138,969

Milbon Co., Ltd. (4919) Consolidated Financial Results for the Fiscal Year Ended December 20, 2014

Previous Fiscal Year(As of December 20, 2013)
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
Provision for retirement benefits
Net defined benefit liability
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-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets- 11 -(Thousand yen)
Current Fiscal Year(As of December 20, 2014)

501,379
1,914,806
945,236
26,59083,995
498,640
3,970,648

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

55,564
146,076
201,641
4,172,289

20,238144,883
165,121
4,034,855

2,000,000
199,183
20,069,024(516,646)
21,751,561

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

277,439
120,442
397,881
22,149,443
26,321,732

368,519
310,899
105,089784,508
24,104,114
28,138,969

Milbon Co., Ltd. (4919) Consolidated Financial Results for the Fiscal Year Ended December 20, 2014(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
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, 2013
(December 21, 2012 December 20, 2013)
23,829,758
7,654,832
16,174,925
11,872,215
4,302,709- 12 -(Thousand yen)
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

15,03636,90948,031
3,119
43,292
13,056
159,447

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

401,882621
402,504
4,059,652

412,880
4,698
417,579
4,218,938

552
552

811
811

11,404
11,404
4,048,801
1,643,216(110,593)
1,532,623
2,516,177
2,516,177

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

Milbon Co., Ltd. (4919) Consolidated Financial Results for the Fiscal Year Ended December 20, 2014

Consolidated Statements of Comprehensive Income

Income before minority interests
Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to minority interests- 13 -

Fiscal Year Ended
December 20, 2013
(December 21, 2012 December 20, 2013)
2,516,177(Thousand yen)
Fiscal Year Ended
December 20, 2014
(December 21, 2013 December 20, 2014)
2,621,086

406,802247,935
654,738
3,170,916

91,079190,457
281,537
2,902,623

3,170,916-

2,902,623-

Milbon Co., Ltd. (4919) Consolidated Financial Results for the Fiscal Year Ended December 20, 2014(3)

Consolidated Statements of Changes in Shareholders’ Equity
Fiscal Year Ended December 20, 2013 (December 21, 2012 - December 20, 2013)(Thousand yen)
Shareholders’ equity
Capital stock

Balance at beginning ofcurrent period
Changes of items during
period2,000,000

Capital surplus

Retained earnings

Treasury shares

Total shareholders’equity199,120

18,476,098(51,035)

20,624,182

Dividends of surplus(923,251)(923,251)

Net income

2,516,177

2,516,177

Purchase of treasury
shares
Disposal of treasury shares

63(466,492)(466,492)

881

944

Net changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at end of current
period-63

1,592,926(465,611)

1,127,378

2,000,000

199,183

20,069,024(516,646)

21,751,561

Total accumulated
other comprehensive
incomeTotal net assets(256,856)

20,367,325

Accumulated other comprehensive income

Balance at beginning ofcurrent period
Changes of items during
periodValuation difference
on available-for-salesecurities

Foreign currencytranslation
adjustment(129,363)(127,493)

Remeasurements ofdefined benefit plans-

Dividends of surplus(923,251)

Net income

2,516,177

Purchase of treasury
shares(466,492)

Disposal of treasury shares
Net changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at end of current
period944
406,802247,935

406,802247,935

277,439

120,442- 14 -

654,738

654,738-

654,738

1,782,117-

397,881

22,149,443

Milbon Co., Ltd. (4919) Consolidated Financial Results for the Fiscal Year Ended December 20, 2014

Fiscal Year Ended December 20, 2014 (December 21, 2013 - December 20, 2014)(Thousand yen)
Shareholders’ equity
Capital stock
Balance at beginning ofcurrent period
Changes of items during
period2,000,000

Capital surplus

Retained earnings

Treasury shares

Total shareholders’equity199,183

20,069,024(516,646)

21,751,561

Dividends of surplus(1,034,450)(1,034,450)

Net income

2,621,086

2,621,086

Purchase of treasury
shares
Disposal of treasury shares

416(20,909)(20,909)

1,901

2,318

Net changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at end of current
period-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
Changes of items during
period277,439

Foreign currencytranslation
adjustment
120,442

Remeasurements ofdefined benefit plans-

397,881

22,149,443

Dividends 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- 15 -

Milbon Co., Ltd. (4919) Consolidated Financial Results for the Fiscal Year Ended December 20, 2014

(4)

Consolidated Statements of Cash Flows
Fiscal Year Ended
December 20, 2013
(December 21, 2012 December 20, 2013)

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
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, 2014
(December 21, 2013 December 20, 2014)

4,048,801
882,990(8,351)
12,1175,611
7,417(51,946)
5,460
(552)
11,4044,193,315
1,008,915(11,090)
4,321(2,153)(55,564)(94,720)
18,213(53,360)
1,426
(811)
26,434(134,932)(308,350)(228,920)(29,381)289,933
4,809,652
52,752(1,350,905)
3,511,499(398,784)(23,464)
111,121
4,415,445
55,028(1,703,691)
2,766,782(1,319,939)
1,859(153,837)(4,560)20,647(230,973)
514,505(34,269)
8,248(1,430)3,398(2,590)(1,198,939)(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)(465,548)(922,444)(1,387,992)
52,506
977,072
5,633,298
6,610,371(18,591)(1,033,494)(1,052,085)
58,346536,671
6,610,371
7,147,043