FY2010 (6/09-5/10) Interim Results Explanatory Meeting
January 20, 2010
The earnings forecasts appearing in this material are based on the business environment at the present
time, and there is the possibility that actual earnings may differ from forecasts for various reasons.
Furthermore, only inquiries in Japanese are handled.
Inquiries should be direct to Mr. Nakaura or Mr. Ohno (045-979-3711) in the Corporate Planning Office.

1

1H FY2010
Consolidated Results(06/2009 – 11/2009)2

1. 1H FY2010 Consolidated Profit and Loss Statement
1H FY2010(consolidated)(million yen)

Share
(%)

% of projection(%)

Plan difference(million yen)

Net sales

75,019

100.0

101.5

+1,119Gross profit

19,703

26.3

99.2

-167

SG&A expenses

15,639

20.8

99.8

-30

Operating profit

4,063

5.4

96.7

-137

Recurring profit

4,242

5.7

96.4

-158

Net profit

1,793

2.4

89.7

-207

* Accounting period

CREATE SD HOLDINGS CO., LTD. June 1-November 30, 2009
CREATE SD CO., LTD.
June 1-November 30, 2009
Welllife Co., Ltd.
April 1-September 30, 20093

2. 1H FY2010 Consolidated Balance Sheet(million yen)

Main
Maincauses
causesofofchanges
changes
May 31, 2009(consolidate)November 30, 2010
(consolidated)

ChangeTotal assets

53,56054,810 +1,249

Current assets

30,654

31,241+587

Fixed assets

22,90623,568+662

Total liabilities

27,376

27,720+344

Current liabilities

24,811

25,180+369

Fixed liabilities

2,564

2,539

–24

Total net assets

26,18427,089+905

Total liabilities
and net assets

53,56054,810 +1,249

Total
Totalassets
assets
Products+1,138
Products+1,138million
millionyen
yen
Fixed
Fixedassets
assets +662
+662million
millionyen
yen

Total
Totalliabilities
liabilities
Accounts
Accountspayablepayable+729+729million
millionyen
yen

Total
Totalnet
netassets
assetsDividends-890
Dividends-890million
millionyenyenNetprofitfor
2Q+1,793
million
Net profit for 2Q +1,793 millionyen
yen

CapitalCapitalratio
ratioofof49.4%49.4%(Reference:(Reference:48.9%
48.9%forforFY2009)
FY2009)*End of 1H CREATE SD HOLDINGS CO., LTD. November 30, 2009
CREATE SD CO., LTD.
November 30, 2009
Welllife Co., Ltd.
September 30, 20094

3. 1H FY2010 Consolidated Statement of Cash Flows(million yen)

Major
Majorbreakdown
breakdown

November30, 2009(consolidated)

Net profit before taxes for 2Q 4,215 million yen
Net profit before taxes for 2Q 4,215 million yen
Depreciation
976 million yen Depreciation
976 million yen
 Corporate taxes paid
2,210 million yen
 Corporate taxes paid
2,210 million yen

Cash flow from operating
activities

2,404

Cash flow from investing
activities–1,726

Cash flow from financing
activities–1,165– 487

Opening balance of cash
and cash equivalents

12,317

Closing balance of cash andcash equivalents

11,829* Accounting period

Cash flows related to opening new stores:
Cash flows related to opening new stores: Purchase of fixed tangible assets
 Purchase of fixed tangible assets
1,279 million yen
1,279 million yen
 Joint loans for construction 418 million yen
 Joint loans for construction 418 million yen

Change in cash and cash
equivalents

Repayment of long-term loans 274 million yen
Repayment of long-term loans 274 million yen
Dividends
890 million yen
 Dividends
890 million yen


CREATE SD HOLDINGS CO., LTD. June 1-November 30, 2009
CREATE SD CO., LTD.
June 1-November 30, 2009
Welllife Co., Ltd.
April 1-September 30, 20095

Results for Each BusinessCompany61. 1H FY2010 Profit and Loss Statement(Create SD)
1H FY2010(million yen)

Share
(%)

YoY change
(%)

% of
projection (%)

Plan difference(million yen)

Net sales

74,653100.0 108.2

101.5+1,117Gross profit

19,57926.2 107.5

100.4

+72

SG&A expenses

15,75721.1 110.5

101.5

+233

Operating profit

3,821

5.1

96.8

96.0

-161

Recurring profit

3,948

5.3

97.4

96.4

-149

Net profit

2,235

3.0 108.7

97.3

-62
7

2. New Store Openings

Create SD

15
15newnewstores
storeswere
wereopened
opened(of(ofwhichwhich22were
werededicatedprescription
drugstores)dedicated prescription drug stores)
New store openings by area
Kanagawa
New stores opened
in 1H FY2010

8(1)

Sales
Saleswaswas108.2%
108.2%YoY
YoY

Figures in parenthesis are dedicated prescription drug storesTokyo Shizuoka Saitama

2(1)

3

1

Chiba

Gunma

Ibaraki

Total

0

0

1

15(2)

NumberNumberof
ofnew
newstores
storesby
byOTC
OTCtypetype(13(13stores):stores):11
suburban
stand
alone
and
2
suburban
11 suburban stand alone and 2 suburbancomplex
complex44storesstoreswere
wereclosed
closed(2(2ininKanagawa,Kanagawa,11ininTokyoTokyoandand11ininChiba)
Chiba)**The
2
storesclosedin
Kanagawa
were
S&B
storesandThe 2 stores closed in Kanagawa were S&B stores andthe
thecontract
contracthad
hadexpired.
expired.

Kanagawa
Total number ofstores as of the endof 1H FY2010

Tokyo Shizuoka Saitama

176(9) 46(2) 47

13

Chiba

Gunma

15

6

IbarakiTotal

8 311(11)8Create SD

3. SalesRespond
Respondto
tothe
thelow-cost
low-costorientation
orientationof
ofconsumers
consumerswhile
whilegenerating
generatinggross
grossprofits
profits
1H
1Hresults
resultsforforexisting
existingstoresstores(YoY):(YoY):sales
sales99.7%,
99.7%,number
numberof
ofcustomers
customers99.4%
99.4%
 Results
Resultsfor
forAugust-November
August-Novemberafter
afterefforts
effortswere
weremademadetotoimprove
improveprice
pricecompetitiveness(YoY):
sales
102.1%,
numberofcustomers
101.5%
competitiveness (YoY): sales 102.1%, number of customers 101.5%
June 2008–May 2009
Sales
98.9% YoY
Customers 98.1% YoY

105.0

June 2009–July 2009
Sales
95.1% YoY
Customers 95.7% YoY

YoY Change
in SalesAug. 2009–Nov. 2009
Sales
102.1% YoY
Customers 101.5% YoY
YoY Change in
Sales

100.0

YoY Change in Numberof Customers

YoY Change in Numberof Customers

95.0

Budget-Pleasing Sales, Sorry-If-Sold-Out Sales, Limited Time Specials

Lower Prices

90.0
.
ov
N

.
ct
O

t.
ep
S

.
ug
A

ly
Ju

ne
Ju

ay
M

il
pr
A

.
ar
M

b.
Fe

09
n.
Ja

.
ec
D

.
ov
N

.
ct
O

08

t.
ep
S

.
ug
A

ly
Ju

ne
Ju

Sales
Saleswere
were1,117
1,117million
millionyen
yen(101.5%(101.5%of
ofprojection)
projection)
94. Sales by Segment

Create SD

While
Whilethethegrossgrossprofit
profitmargin
margindeclined
declined0.2
0.2percentage
percentagepoints
pointsYoY
YoYas
asaaresult
resultof
ofsalessales
policies,
the
value
of
sales
rose
107.5%
YoY,
surpassing
projections
by
100.4%.
policies, the value of sales rose 107.5% YoY, surpassing projections by 100.4%.
Gross profit
margin1H FY2010

Sales(million yen)

Share
(%)

YoY
change(%)

YoY change(percentage
points)Medical andhealthproducts

17,427

23.3

112.5

39.5

-0.1

Cosmetics

13,069

17.5

104.5

30.4

-0.1

Food
products

23,048

30.9

110.2

15.9

-0.8

Daily
products

14,602

19.6

107.9

26.0

+0.1

Other

6,504

8.7

99.5

19.2

±0.0

Total

74,653

100.0

108.2

26.2

-0.2

Medical and health products
Medicaland health
Sales increased
to products
112.5% YoY (existing store sales: 104.2%) as a
Salesofincreased
to 112.5%
YoY the(existingstore
sales: 104.2%)
resultseveral factors
including
growthin prescriptions
andas aresultofseveralfactors
includingthegrowthinprescriptions
andthe impact of the H1N1 flu. The gross profit margin remained attheimpact
of
the
H1N1
flu.
The
gross
profitmarginremainedatabout the same high level as that for 1H 2009.
about the same high level as that for 1H 2009.
Cosmetics
Cosmetics
Sales increased to 104.5% YoY (existing store sales: 96.7%) even
Sales sales
increased
to 104.5%
YoY (existing
storeweaksales:and
96.7%)
thoughof contracted
cosmetics
remainedsalesevenofthoughof contracted
cosmetics
remainedSales
weakofandsales ofskincaresales
products
in November
were stagnant.
bathskin careproducts
in November
were stagnant.
Sales of bathproductsdue
to numerous
efforts including
the Budget-Pleasing
products
due to numerous
including
Budget-Pleasing
Sales
contributed
the results.efforts
The grossprofitthe
marginremained at
Salesthecontributed
the
about
same levelasresults.
that forThe
1H gross2009. profit margin remained atabout the same level as that for 1H 2009.
Food products
Food
products
Sales
increased to 110.2% YoY (existing store sales: 100.6%) as
Saleswereincreased
to 110.2%(existingsales: 100.6%)
aspricesloweredthrough YoYeffortssuch asstore
Budget-Pleasing
Sales.
priceswere
loweredthrougheffortssuchasBudget-Pleasing
Sales.
Sales were particularly strong since August, and four consecutive
Sales wereparticularly
strongsince August,andthefour
consecutive
monthsof YoYgrowth wererecorded.
However,gross
profitmonthsof
YoY
growthwererecorded.
However,thegrossprofitmargin declined 0.8 percentage points YoY.
margin declined 0.8 percentage points YoY.
Daily products
Daily
products
Sales
increased to 107.9% YoY (existing store sales: 99.5%),
Sales
increased
to 107.9%from
YoYthe(existingsales:for99.5%),
which wasan improvement
97.7%store
recorded
FY2009.
which
wasan improvement
frombythe0.1
97.7%
recordedfor FY2009.
The
gross
profitmargin improved
percentage
pointsThe grossprofit margin
improved
by 0.1 thepercentage
pointsbecauseof continuing
efforts
to decrease
cost of products
because ofevencontinuing
decrease
thethroughcost of various
productspurchased,thoughefforts
pricesto
wereloweredpurchased,eventhoughpriceswere
loweredthroughvariousmeasures such as Budget-Pleasing Sales.
measures such as Budget-Pleasing Sales.

* “Other” includes items such as baby products, clothing, pet products, gardening products, and film development services.

10

5. SG&A Expenses

Create SD

SG&A
SG&Aexpense
expenseratio
ratioincreased
increasedto
to21.1%
21.1%fromfrom20.7%
20.7%
There
Therewaswasan
anincrease
increaseininexpenses
expensesrelated
relatedto
tonew
newstores
storesandandefforts
effortsto
toraiseraisethethenumbernumberofemployees
inresponse
tothe
RevisedPharmaceutical
AffairsLaw.
of employees in response to the Revised Pharmaceutical Affairs Law.
* SG&A expenses is 101.5% of projections (102.1% for personnel expenses and100.9% for non-personnel expenses)

1. Factors behind the year-on-year increase in SG&A expense of 0.4 percentage points
Personnel
Personnelexpenses
expenses(+0.2
percentage(+0.2 percentagepoints)
points) Increase in employees in Increase in employees in
response
responsetotothe
theRevised
RevisedPharmaceutical
Affairs
Pharmaceutical AffairsLaw
Law
 Early hiring of new Early hiring of new
graduates
graduates Decrease in number of Decrease in number of
employees
employeesresigning
resigning

Depreciation
Depreciationexpense
expense(+0.1
percentage(+0.1 percentagepoints)
points) Investment in new stores Investment in new stores Introduction of Introduction of
automatic
automaticchangechangemachinesformachines forregisters
registers(introducedatall(introduced at allstores)
stores)

Rents
Rents
(+0.1
(+0.1percentage
percentagepoints)
points) Increase in the size of stores
 Increase in the size of stores More stores were opened than More stores were opened than
expected
expected(+2)(+2)
Business
Businessconsulting
consultingexpenses
expenses(+0.2
percentage
points)(+0.2 percentage points)
 In-house business with holding In-house business with holding
company
company

2. Factors behind expenses exceeding projections by 233 million yen
Personnel
Personnelexpenses
expenses(157
million(157 millionyen
yengreater
greaterthan
thanprojection)
projection)
 Number of employees at the end of 1H
 Number of employees at the end of 1H
increased
increasedtoto118.7%
118.7%YoY
YoY

Rents
Rents
(65
(65million
millionyen
yengreater
greaterthan
thanprojection
projection
 Increase in the size of stores
 Increase in the size of stores More stores were opened than expected More stores were opened than expected11

6. Prescription Operations

Create SD
39
39storesstoresat
atthe
theend
endof
of1H
1H

44new
newstores
storesopened
opened(11(11dedicateddedicatedprescription
prescriptiondrug
drugstoresstoresandand28
in-store
pharmacies)
28 in-store pharmacies)(2(2dedicateddedicatedprescription
prescriptiondrug
drugstoresstoresandand22in-store
pharmacies)
in-store pharmacies)

1H FY2010(million yen)

Share
(%)

YoY change(%)

Net sales

2,188

100.0

121.2

Gross profit

850

38.9

121.8

(Home
service
operations)

Existing
Existingstore
store
comparisonscomparisons
Sales
Sales
Prescriptions
Prescriptions

114.8%
114.8%
107.0%
107.0%

1H FY2010(million yen)

Share
(%)

YoY
change(%)

Net sales

97

100.0

149.8

Gross profit

53

55.0

168.5

Medication
Medicationguidance
guidanceby
byvisitvisit
Collaboration
with
10
nursing
Collaboration with 10 nursing
facilities
facilities

127. Fee-charging Nursing Home andPreventive Nursing BusinessWelllife

22fee-charging
fee-chargingnursing
nursinghomes
homeswithwithcarecarefacilities
facilitiesandand11daydayservice
servicecenter
centerwere
wereopened
opened1H FY2010(April 2009-September 2009)(million yen)

Net sales
Operating profit
Recurring profit
Net profit

Share
(%)

366
98
96
53

% of projection
(%)

100.0
27.0
26.3
14.4

101.1
105.4
94.4
92.5

Working
Workingto
toincrease
increasethe
thenumbernumberofofday
dayservice
servicecenters
centers(preventive
nursingandrehabilitative
training)(preventive nursing and rehabilitative training)
SecondSecondfacility
facilityisisplannedplannedto
tobe
beopened
openedininMarch
March2010
2010

13

FY2010 Forecasts(Full Fiscal Year)14

1. FY2010 Forecasts (Consolidated)
AimingAimingto
toincrease
increasesales
salesand
andprofits
profitsforforthethe9th9thconsecutive
consecutiveyear
year

No
Norevisions
revisionswere
weremademadetotoforecasts
for
the
full
fiscalyear
forecasts for the full fiscal year

FY2009(consolidated results)

FY2010(consolidated forecasts)(million yen)

Share
(%)

(million yen)

Share
(%)

Net sales

139,932100.0

148,400

100.0

106.1

Gross profit

37,26926.6

40,173

27.1

107.8

SG&A expenses

29,09420.8

31,548

21.3

108.4

Operating profit

8,175

5.8

8,620

5.8

105.4

Recurring profit

8,396

6.0

8,950

6.0

106.6

Net profit

4,510

3.2

4,570

3.1

101.3

YoY change

Capital expenditures

3,600 million yen (79.1% YoY)

Depreciation expense

2,140 million yen (114.9% YoY)15

2. FY2010 Forecasts(Create SD – Drug Store and Prescription Business)
No
Norevisions
revisionswere
weremademadetotoforecasts
forecasts
for
the
full
fiscalyear
for the full fiscal year

FY2009 (results)

FY2010 (forecasts)(million yen)

Share
(%)

(million yen)

Share
(%)

YoY change(%)

Net sales

139,932100.0

147,700

100.0

105.6

Gross profit

37,26926.6

39,450

26.7

105.9

SG&A expenses

29,16720.8

31,320

21.2

107.4

Operating profit

8,102

5.8

8,130

5.5

100.3

Recurring profit

8,316

5.9

8,360

5.7

100.5

Net profit

4,472

3.2

4,700

3.2

105.0

Capital expenditures

3,600 million yen (79.1% YoY)

Depreciation expenses

2,128 million yen (114.3% YoY)
16

3. FY2010 Forecasts(Welllife – Fee-charging Nursing Home and Preventive Nursing Business)
No
Norevisions
revisionswere
weremademadetotoforecasts
forecasts
for
the
full
fiscalyear
for the full fiscal year

FY2009 (results)(million yen)

Share
(%)

FY2010 (forecasts)(million yen)

Share

YoY
change(%)

Net sales

740

100.0

720

100.0

97.2

Operating profit

203

27.5

182

25.4

89.7

Recurring profit

222

30.0

200

27.8

90.0

Net profit

177

24.0

110

15.3

62.0

Plan
Plantotoopenopenthethesecondsecondday
dayservice
servicecenter
centerin
inMarchMarch2010
2010

17

4. Measures to Cover the Shortfall in Profit during the 2H
Figures are the difference from initial projections.

Cover
Coverthetheshortfall
shortfallofof150
150million
millionyen
yenin
inthe
theprojections
projectionsof
of1H
1Hrecurringrecurringprofit
profitRecoup 20 million yen in SG&A
expensesRecoup 130 million yen in gross profit
Increase sales and gross profit bylowering prices

x

Sales
Salestarget
target+1.6+1.6billion
billionyen
yen**2H
existing
store
sales
are
2H existing store sales areprojected
projectedto
to
be
99.7%
year
on
year,
the
same
level
as
be 99.7% year on year, the same level as
that
thatforfor1H
1H(2H(2Hinitial
initialprojection:
projection:97.6%)
97.6%)
Gross
Grossprofit
profittarget
target+130+130million
millionyenyen**Gross
profitmarginisprojected
Gross profit margin is projectedto
todecline
decline0.4
percentage
pointsto
26.5%
0.4 percentage points to 26.5%
However,
However,pricepricecuts
cutswill
willbebecarefully
carefully
examinedandwasteful
ones
examined and wasteful oneswill
willbebeeliminated.
eliminated.

Since expenses, including personnel
expenses and rents, are projected to be
150 million yen greater than forecast for2H as well (unfavorable variance), it isnecessary to develop measures to reduce
expenses by a total of 170 million yen.
Personnel
Personnelexpenses
expenses-63-63million
millionyen
yen

Advertising
Advertisingexpenses
expenses-40-40million
millionyenyenSupplies and repair expenses -46 million yen
Supplies and repair expenses -46 million yen
Outsourcing
Outsourcingexpenses
expenses-21-21million
millionyenyen

Ensure initial projections for the full fiscal year.

18