FY2016 (6/15-5/16) Results Explanatory Meeting
July 14, 2016
The earnings forecasts appearing in this material are based on the business environment at the present time, andthere 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. Kasai or Mr. Tamura (045-914-8241) in the Corporate Planning office.

1

FY2016 (6/15-5/16) Results Explanatory Meeting■FY2016 Consolidated Results
1. Profit and Loss Statement
3. Statement of Cash Flows
5. Changes in Dividend

2. Balance Sheet
4. Changes in ROE■Results of a main business company
1. Profit and Loss Statement 2. New Store Openings
3. Renovation of existing stores 4. Sales 5. Prescription Section
6. Gross profit margin 7. Expense rate

■Growth Strategy
1. New Store Openings 2. Renovation of existing stores
3. Efforts to improve productivity 4. Pharmacy efforts
5. Care Business 6. FY2017 Forecasts (Consolidated)
7. Medium-term vision2

FY2016
Consolidated Results(06/2015 – 05/2016)3

1. FY2016 Consolidated Profit and Loss Statement
FY2015FY2016(consolidated)(consolidated)(million yen)

Net sales

Share
(%)

213,918 100.0% ofadjustment inprojection

Share
(%)

YoY
change(%)

231,892

100.0

108.4

99.9

(million yen)(%)

Gross profit

57,51626.9

63,423

27.4

110.3

100.2

SG&A
expenses

46,78721.9

49,469

21.3

105.7

100.2

Operatingprofit10,7285.0

13,954

6.0

130.1

100.1

Recurringprofit10,982

5.1

14,314

6.2

130.3

100.1

Net profit

6,561

3.1

9,274

4.0

141.3

103.9

4

2. FY2016 Consolidated Balance Sheet(million yen)

May 31, 2015
(consolidated)

Total assets

May 31, 2016(consolidated)

88,767 99,334

Change+10,567

Current assets

51,51260,879+9,366

Fixed assets

37,25438,455+1,20042,807 45,749+2,942

Total
liabilities
Current
liabilities

39,384

41,760+2,375

Fixed liabilities

3,422

3,989

+566

Total net
assets45,960 53,585+7,624

Total
liabilities andnet assets

88,767 99,334+10,567

Main causes of changes

Total assets
・ Cash equivalent and accounts
receivable +6,643 million yen
・ Merchandise +2,305 million yen
・ Opening new stores, etc.
Fixed assets +1,200 million yen

Total liabilities
・ Accounts payable +1,873 million yen
・ Income taxes payable+335 million yen

Total net assets
・ Decline due to 1,475 million yen
in dividends
・ Net profit +9,274 million yen

53. FY2016 Consolidated Statement of Cash Flows(million yen)

FY2015FY2016(consolidated)(consolidated)

Major breakdown

ChangeCash flow fromoperatingactivities

11,811

11,843+32

Cash flow frominvestingactivities-4,975-4,282+693

Cash flow fromfinancing
activities-5,901-1,475 +4,426

Change in cash
and cashequivalents

933

6,085 +5,152

・ Net profit before taxes 13,906 million yen
・ Depreciation
2,942 million yen
・ Corporate taxes paid -5,029 million yen

・ Acquisition of fixed tangible assets due
to store openings and renovation-3,518 million yen
・ Joint loans for constraction-582 million yen
・ Construction in progress-756 million yen

・ Dividend payment

Opening balanceof cash and cash
equipments

19,335

20,268

Closing balanceof cash and cash
equipments

20,26826,354 +6,085-1,475 million yen

+933

6

4. Changes in ROE
IntendIntendROE
ROEMoreMoreThanThan15%
15%
operatingprofit margin （%）

Changes in ROE · operating profit margin
ROE（%）

2 0 .01 2 .018.6%
14.8%
1 5 .0

15.6%
14.1%

9 .0

13.5%

ROE

14.4%

1 0 .0

6 .0

5.5%

5.4%

6.0%

5.5%
4.6%

5.0%

5 .0

3 .0
operatingprofit margin

0 .0

0 .0
FY2011FY2012FY2013

FY2014FY2015FY20167

5. Changes in Dividend

FY2016FY2016performance
performance
Dividend
Dividendpayout
payoutratio
ratio18.2%
18.2%
Dividend
Dividendon
onEquity
Equity 3.4%
3.4%

StableStableandandSustainable
Sustainable
Increase
Increasein
inDividend
Dividend
Change in dividend per stock(yen)

・Conducted a stock split in 2015 December
・FY2016 performance is stock split before
conversion

90
80

65yen

70
60
50

80yen

45yen

50yen

54yen

58yen

initialprojection
70yen

40
30
20
10
0

FY2011FY2012FY2013

FY2014FY2015FY2016
8

Results of a main businesscompany91. FY2016 Profit and Loss Statement (Create SD)
FY2015(million yen)

FY2016
Share(%)(million yen)

Share
(%)

YoY
change(%)% ofadjustment inprojection(%)

Net sales

212,274

100.0

230,145

100.0

108.4

99.9

Gross profit

57,47627.1

63,458

27.6

110.4

100.2

SG&A
expenses

47,35822.3

50,136

21.8

105.9

100.3

Operatingprofit10,1184.8

13,321

5.8

131.7

100.0

Recurringprofit10,366

4.9

13,672

5.9

131.9

100.0

Net profit

6,256

2.9

8,966

3.9

143.3

104.8

10

2. New Store Openings
28
28new
newOTCOTCstores
storesandand66ethicalethicalpharmacies
pharmacies were
wereopened
opened(of(ofwhichwhich22were
werededicateddedicatedprescription
prescriptionpharmacies)
pharmacies)

New store openings by area
Kanagawa

OTC
New stores
opened in
FY2016in-store
pharmacies
Dedicatedprescription
pharmacies

Tokyo

Shizuoka

Chiba

Other

Total

4
0
0

2
0
0

2
2
0

2
1
0

28
4
2

18
1
2

・Drug Stores closing: 2 were S&B , 1 was contract expiration
・Dedicated prescription pharmacies closing: 1 was contract expiration
・In-store pharmacies closing : 2 were management efficiency enhancement
Kanagawa

Tokyo

Shizuoka

Chiba

Other

Total

263
67

80
19

66
12

25
3

37
10

471
111

Rate of pharmacy
establishment
in OTC stores

25.5%

23.8%

18.2%

12.0%

27.0%

23.6%

dedicated prescription
pharmacies

19

7

0

3

2

31

OTC
Total numberof stores as ofthe end of
FY2016in-store pharmacies

113. Renovation of existing stores
Expansion
Expansionof
ofmerchandize
merchandizeand
andrenovation
renovationofof
21
21storesstoresto
toimprove
improvefloor
floorspace
spaceallocation
allocation

・・Introduction
Introductionand
andexpansion
expansionof
ofnew
newmerchandize
merchandizeincluding
includingfood
food
andandmiscellaneous
miscellaneousproducts
products
・・Improvement
Improvementof
offloorfloorspace
spaceallocation
allocationper
persection
sectionto
tomeetmeetsales
sales
composition
compositionand
andregional
regionalcharacteristics
characteristics
Small-scale
Small-scalerenovation
renovationof
of13
13storesstoresto
tointroduce
introducenew
newcategories
categories
Renovation
Renovationof
ofthe
thefoodfoodsection
sectionto
tofacilitate
facilitatethetheintroduction
introductionofofmeat,meat,boxed
boxedlunches
lunchesand
andpreparedpreparedmeals
meals
Pharmacy
Pharmacy remodeling
remodeling 55storesstoresExpansion
Expansionof
offloorfloorspace
spaceand
andrenovation
renovationof
ofthe
thewaiting
waitingarea
area
ininprofitableprofitablein-store
in-storepharmacies
pharmacies124. Sales
The
Thetop-line
top-lineended
endedat
at+8.4%,+8.4%,boosted
boostedby
byexisting
existingstoresstoresthat
thatposted
posted+3.5%
+3.5%
・The
・Themainmainfactors:
factors:+1.0%+1.0%increase
increasein
inthe
thenumbernumberof
ofcustomers,
customers,ananincrease
increaseof
of+1.4%+1.4%perpercustomer,
customer,dispensing
dispensingdepartment
department+17.2%+17.2%
・Number・Numberof
ofcustomers
customersincreased
increaseddue
dueto
tothe
theexpansion
expansionof
ofmerchandize
merchandizeand
andthetheEDLPEDLPmeasures
measures・Average・Averagesales
salesperpercustomer
customerrose
rosethanks
thanksto
tothe
therevision
revisionof
ofselling
sellingprices
pricesandandthethedeployment
deploymentof
ofhigh-added-value
high-added-valueand
andlarge-sizedlarge-sizedproducts
products
Monthly changes in the existing store sales, the number of customers, customer unit price year-on-year
110%
108%

customer
unit priceSales

・Leap year
・Epidemic of flu
・Early dispersal of pollen

the number ofcustomers

106%
104%
102%
100%
98%
96%

Reaction fromthe exceptional demandbrought about by dengue feverin the previous year

Jun.

Jul.

Aug.

Epidemic delay of influenza
and the common cold

Sep.

Oct.

Nov.

Dec.

Suppression ofpoint promotional

Flyer promotional
suppression
Jan.

Feb.

Mar.

Apr.

May

13

4. Sales
Traction
Tractionexpertise
expertiseof
ofthethepharmacy
pharmacybusinessbusinessand
andthetheconvenience
convenienceof
ofgrocerygrocery

FY2015FY2016

Sales(million yen)

Share
(%)

YoY
change(%)

Sales(million yen)

Medical andhealth products

49,309

23.2

110.5

54,195

23.5

109.9

(O T C)35,522

16.7

104.0

37,487

16.2

105.5

(Prescription)

13,7876.5

131.8

16,7087.3

121.2

Cosmetics

31,780

15.0

102.2

33,669

14.6

105.9

Food products

80,886

38.1

111.8

88,727

38.6

109.7

Daily products

37,505

17.7

105.1

39,810

17.3

106.1

Other

12,7936.0

105.8

13,742

6.0

107.4

Total

212,274

100.0

108.4

230,145

100.0

108.4

Share
(%)

YoY
change(%)* “Other” includes items such as stationery, baby products, clothing, pet products, gardening products, and film development services.

14

5. Pharmacy department
Existing tore sales rose +17.2%

FY2016(million yen)

Share
(%)

YoY
change(%)
121.2

Net sales

16,708100.0

Gross profit

6,542

39.2

・Expanded remarkably as recognition rose against
the background of a large number of in-store
pharmacies handling mainly prescriptions issuedby multiple medical institutions
・Boosted by renovation and unifying store names
Sales in prescription operations and the number ofprescriptions issued
Line graph:

116.7

・Promotion
・Promotionof
ofgenericgenericproductproductusage
usage
Usage
rate
is
65.4%
(quantity
basis)
Usage rate is 65.4% (quantity basis)
・More
・Morecapital
capitalinvestments
investmentswere
weremade
madeindispensing
equipment
inorder
in dispensing equipment in orderto
to
raise
the
efficiency
ofoperations
raise the efficiency of operations
・Focus・Focuson
onthethedevelopment
developmentof
ofhumanhuman
resources
resources
AApharmacist
pharmacisttraining
trainingcenter
centerequipped
equippedwith
withadvanced
advanceddispensing
dispensing
equipment
andenoughspaceequipment and enough spacefor
foraa
numbernumberof
ofpeople
peopleto
toattend
attendclass
class
was
established
was established

Number of prescriptions issued(unit: 10,000)

Bar graph: Sales(unit : hundred million yen)

200

184

180

180

158

160

160

125

140

140

106

120
100

200

120

92

167

80

100

137

80

80
104
82

60
55
40

FY2011

60

68
FY2012FY2013

FY2014FY2015FY201640

15

6. Gross profit margin
Gross
Grossprofit
profitmargin
margin27.6％
27.6％ Previous
Previousyear
yeardifference
difference++0.5pt
0.5pt
Selling price measures

・・Gross
Grossprofit
profitof
ofeacheachproductproductwas
wascontrolledcontrolledby
byEDLPEDLPwhile
while
restraining
restrainingspecial
specialprices.
prices.
・・Pricing
Pricingthat
thatmatches
matchesthethemarket
marketprice
price
Deployment of high-value-added products
By
Bydeploying
deployinghigh-value-added
high-value-addedproducts,
products,improved
improvedbybythe
themixmixof
ofgross
grossprofit
profitExtension of the pharmacy department
Gross
Grossprofit
profitmargin
marginwas
wasimproved
improvedby
bythethehigher
highersales
salesshare
shareofofthethepharmacy
pharmacydepartment
departmentafter
afterpromoting
promotingnew
newopenings
openingsof
ofin-store
in-storepharmacies
pharmaciesin
inthe
thepastpastthree
threeyears
years
16

7. Expense rate
ExpenseExpenserate
rate21.8％
21.8％ Previous
Previousyear
yeardifference
difference--0.5pt
0.5pt
Cost
Costofofutilities
utilities ⇒⇒--0.2pt
0.2pt
・Curbing
・Curbingelectricity
electricityconsumption
consumptionby
byshifting
shiftingstore
storelighting
lightingto
toLED
LED
and
andtakingtakingpower-saving
power-savingmeasures
measuresin
instoresstores・・AAreduction
reductionin
infuelfueladjustment
adjustmentcost
costunit
unitprice
pricedue
dueto
tofallingfallingoil
oilprices
prices
Logistics
Logisticscost
cost ⇒⇒--0.1pt
0.1pt
TheThedistancedistancebetween
betweenstoresstoresandandlogistics
logisticscenters
centerswas
wasoptimized
optimized
bybyestablishingestablishingaanew
newlogistics
logisticscenter
centerDepreciation
Depreciation ⇒⇒--0.2pt
0.2pt Rent
Rent ⇒⇒--0.1pt
0.1pt
・A・Adecline
declinein
inthe
thecostcostforforopening
openingnew
newstores
storesdueduetotoaadelay
delayininactualactualopenings
openingsand
andcontinued
continuedrestraint
restraintin
inbuildingbuildingcosts
costs
・Additional
・Additionalinvestments
investmentswere
weremademadeininlarge-scalelarge-scalerenovation
renovationandandintroduction
introductionof
ofstorestorefixtures
fixturesandanddispensing
dispensingequipment
equipmentin
inthe
thesecondsecondhalf
half
17Growth Strategy

18

1. New Store Openings
New
Newdrugstores
drugstores40
40storesstores⇒⇒Previous
Previousyear
yeardifference
difference+12+12stores
stores・Opening
・Openingof
ofstoresstoresin
inKanto
Kanto(mainly(mainlyin
inKanagawa
Kanagawaprefecture
prefecture))
andandTokai
Tokairegions
regions・Improve・Improveconvenience
convenienceand
andenhanceenhancethe
thefood
foodandanddailydaily
necessities
necessitiesassortment
assortment
Dispensing
Dispensingpharmacy
pharmacy23
23storesstores⇒⇒Previous
Previousyear
yeardifference
difference+17+17stores
storesIn-store
pharmacies
20
stores（+16stores）
In-store pharmacies 20 stores （+16stores）
Dedicated
Dedicatedprescription
prescriptionpharmacies
pharmacies33stores（+1stores（+1store）
store）

・・Opening
Openingof
ofin-store
in-storepharmacies
pharmacieshas
hasbeenbeenspedspedupupagainagain
・・Profitable
Profitablepharmacies
pharmacieshave
havebeen
beenopened
openedinincoordination
coordinationwith
withmedicalmedicalinstitutions
institutionsso
soas
asto
tomeetmeetthetheallocation
allocationof
ofmedical
medicalinstitutions
institutionsin
inthe
thevicinity
vicinityand
andcopecopewith
withthetheexitexitofofin-hospital
in-hospital
pharmacies
pharmaciesfrom
fromhospitals
hospitals

19

2. Renovation of existing stores
Existing
Existingstoresstoresrenovatedrenovatedto
toincrease
increasethe
theconvenience
convenience30
30storesstoresExpansion
Expansionof
ofthe
thestore
storethatthatcancanprovide
providemore
moreconvenience
convenienceininaasmallsmalltrade
tradearea
area

・・Expanding
Expandingassortment
assortmentof
ofgroceries
groceries
・・The
Theintroduction
introductionof
ofmiscellaneous
miscellaneousproducts
products
Pharmacy
Pharmacy remodeling
remodeling 55storesstores

Improve
Improveprofitability
profitabilityby
byrenovating
renovatingpharmacies
pharmaciesthat
thathandle
handlehighhighnumbers
numbersof
ofprescriptionsprescriptions

・・Expansion
Expansionof
ofthe
thepreparation
preparationspace
spaceandandwaiting
waitingroom
room
・・Improve
Improvethe
thevisibility
visibilityfrom
fromthethedrugstore
drugstore20

3. Efforts to improve productivity
Raise
Raiseefficiency
efficiencyby
byexpanding
expandingaacomputer-assistedcomputer-assistedorderingorderingsystemsystemNot
Notonly
onlyshorten
shortenthe
thetimetimefor
forplacing
placingorders
ordersbut
butalsoalsoimprove
improvethetheaccuracy
accuracyof
ofsalessalesforecasts,
forecasts,ononwhichwhichorderingorderingis
isbased,based,
bybyexpanding
expandingthe
thestores
storesandandsections
sectionsthat
thathavehaveintroduced
introduced
aacomputer-assistedcomputer-assistedorderingorderingsystemsystemDevelopment
Developmentof
oflogistics
logisticssystemsystem・・Establish
Establishaalogistics
logisticssystemsystemto
tohandle
handleaanew
newselection
selectionofofmerchandize
merchandizeand
andimprove
improveefficiency
efficiencyin
inthe
thedelivery
delivery・・Improve
Improvework
workprocesses
processesby
byupgrading
upgradingmaterialmaterialhandling
handlingequipment
equipment21

4. Pharmacy efforts
Expansion
Expansionof
ofprescription
prescriptionnumber
numberof
ofpharmacies
pharmacies
dealingdealingwith
withprescription
prescriptionissued
issuedby
byaanumber
numberof
ofmedical
medicalinstitutions
institutions

・・Shorten
Shortenwaiting
waitingtimes
timesbybyimproving
improvingoperations
operationsthroughthroughthetheutilization
utilizationof
ofequipment
equipment・・MakeMakeannouncements
announcementsby
bytaking
takingadvantage
advantageof
ofdrugdrugstores’
stores’ability
abilitytotoattract
attractcustomers
customersas
aswellwellasasimprove
improveconvenience
convenienceby
byintroducing
introducing
aaprescription
prescriptiondrug
drugapp
app
The
Thedevelopment
developmentof
ofhumanhumanresources
resources
Utilize
Utilizethe
thePharmacist
PharmacistTraining
TrainingCenter,
Center,opened
openedininApril
April2016,
2016,
and
andthethecompletely
completelyrenewed
reneweddevelopment
developmentcurriculums
curriculums

22

4. Pharmacy efforts
Control
Controlof
ofstockstock
Utilize
Utilizethe
thelogistics
logisticscenter
centerto
tooptimize
optimizeinventories
inventoriesin
ineacheachstore
store
Corresponding
Correspondingto
tothe
themedical
medicalfee
feerevision
revision・Raise・Raisethetheraterateofofgenericgenericproductproductusage
usage ⇒
⇒70%
70%((4.3%
4.3%increase
increasefrom
fromthetheendendof
ofthe
theprevious
previousyear)
year)
・Acquire・Acquireextra
extrabasic
basicdispensing
dispensingfees
fees⇒
⇒20
20storesstores・Strengthening
・Strengtheningof
of"primary"primarycare"care"function
function⇒⇒Expansion
Expansionof
ofindividual
individualhome
homesupport
supportpharmacy
pharmacy⇒⇒Promotion
Promotionof
ofimplementation
implementationhealthhealthconsultations
consultations23

5. Care BusinessFee-charging
Fee-chargingNursing
NursingHome
Homebusinessbusiness
Improvement
Improvementof
ofthe
theoccupancy
occupancyrate
rate
bybystrengthening
strengtheningsales
salescapabilities
capabilities⇒⇒occupancy
occupancyrate
rate80%80%
Preventive
PreventiveNursing
Nursingbusinessbusiness
Focus
Focusononimproving
improvingthe
theprofitability
profitabilityof
ofexisting
existingfacilities
facilities
・・Switch
Switchfrom
fromaa10-person
10-personsystemsystemto
toaa16-person
16-personsystemsystem33facilities
facilities

・・Enhance
Enhancethe
theoperational
operationalrate
rateofofexisting
existingfacilities
facilities

withwithaacapacity
capacityofof16
16people
people ⇒
⇒to
to80%
80%at
atthe
theendendof
ofthe
theyear.
year.
・・PromotePromotethetheintroduction
introductionof
ofaahybrid
hybridsystemsystemof
ofmachinemachinetraining
trainingand
andmassage
massage・・Introduce
Introducetraining
trainingprograms
programsfor
forpreventing
preventingdementia
dementia24

6. FY2017 Forecasts (Consolidated)
FY2016(consolidated results)

FY2017(consolidated projection)(million yen)

Share
(%)

Net sales

231,892

100.0

Gross profit

63,423

27.4

67,730

27.3

106.8

SG&A
expenses

49,46921.3

53,030

21.4

107.2

Operatingprofit13,9546.0

14,7005.9

105.3

Recurringprofit14,3146.2

15,0006.1

104.8

Net profit

9,274

4.0

9,700

3.9

104.6

(million yen)

Share
(%)

YoY Change(%)

247,700 100.0 106.825

7. Medium-term visionLine graph: Sales(unit : hundred million yen)Bar chart: the number of stores

4,000

800

3,500

Medium-term target
3,500

700

Number of stores

700 stores

3,000

Amount of sales

600

2, 3182,500

2, 139500

700

1, 974
1, 819300

FY2013hundred million yen
Operating margin

2,000

400

379

3,500

419
FY2014446

FY2015471

1,500

6.0% or more
ROE

15.0% or more
FY2016FY20211,000
26