Be a dependable end-of-life partner by moving even closer tothe senior generation and their family members

SAN HOLDINGS, INC.
Results of Operations(Fiscal Year Ended March 31, 2022)
May 2022

Tokyo Stock Exchange, Prime Section
Stock code: 9628

Contents
1

FY3/22 Financial Overview

2

Funerals and Funeral Revenue at KOEKISHA …………………………..……….……….……….. P 12

3

SOU-SEN and TARUI Financial Highlights …………….……….…………………….……….……….. P 18

4Impact of COVID-19 on Revenue and Earnings ……………………………………………..….. P 21

5

FY3/23 Forecasts (Revenue and Earnings/Dividends) …………………………………….. P 23

6

The Previous Medium-term Management Plan (FY3/20 to FY3/22) ………….. P 28

7

Changes in the Business Climate .…………………………………………………….……….…………….. P 34

8

The San Holdings Group New 10-year Vision (FY3/23 to FY3/32) ……………….. P 39

9The San Holdings Group Medium-term Management Plan
(FY3/23 to FY3/25)…………………………………………………………………………….……….. P 02…………………………. P 44

2

FY3/22 Financial Overview

Be a dependable end-of-life partner by moving even closer tothe senior generation and their family members

Executive Summary

FY3/22
results

 Revenue and earnings increased YoY.
 Revenue growth was the result of a recovery in the large funeral category (number andprices) and a big increase in the number of ordinary funerals.
 The pandemic accelerated the shift to smaller funerals and this trend is continuing; Although
average revenue per ordinary funeral decreased, revenue in this category was higher
because of the larger number of these funerals.
 Earnings increased mainly because of higher revenue and measures that significant held
down operating expenses, such as the rigorous control of personnel expenses (including
reduced recruiting) and measures to improve efficiency.
 The operating margin increased to 16.9% and operating profit and ordinary profit surpassed
the FY3/20 record highs.

Earnings
forecasts

 Forecast higher revenue and earnings, although there is a risk of another wave of thepandemic. Earnings growth is expected to be small because of higher recruiting andpersonnel expenses for building a stronger workforce, which is a central goal of FY3/23 as
the first year of the new medium-term management plan.
 Plan on investments of ¥1,050 million, including the addition of six funeral halls.

Dividend
forecast Plan to pay a fiscal year dividend of 42 yen per share, up 4 yen per share (dividend increase
for the 7th consecutive year)(Expected dividend payout ratio: 21.3%)

3

4

FY3/22 Revenue and Earnings•

Operating revenue increased 6.0% YoY and operating profit increased 32.4%. The operating
margin increased 3.4 points to 16.9% because the pct. increase in operating expenses, which are
more than 90% of all expenses, was smaller than the increase in revenue.
• The declining size of funerals, a trend that accelerated due to the pandemic, is continuing.
Revenue up due to a large funeral recovery and larger number of ordinary funerals.
• Personnel expense controls and higher operating efficiency, mainly at the KOEKISHA Group, held
down the growth of expenses.

(Millions of yen)

FY3/21
Operating revenue
Operating expenses
SG&A expenses
Operating profit
Operating margin
Ordinary profit
Profit attributable toowners of parent
Net income per share (Yen)

18,86515,085
1,230
2,550
13.5%
2,536
1,562
141.24

FY3/22

YoY change
Amount%20,001
15,2791,345
Record-high 3,376
16.9%
Record-high 3,386
2,040
187.60

6.0%
1.3%
9.3%
32.4%
3.4pt
33.5%
30.6%
32.8%

Forecast (Revised on Feb. 8, 2022)

FY3/22

Results vs. Fct.

1,135
194
114
826

19,760 101.2%

849
477
46.36

112.9%
117.2%
116.1%

3,030
15.3%
3,000
1,740
161.55111.4%

Quarterly Revenue and Earnings

5• Revenue and earnings increased YoY in every quarter except the 3Q; in the 4Q, net profit was down
YoY due to an asset impairment charge of ¥190 million.
• Much higher revenue and earnings in the 1Q as pandemic restrictions were eased. Operating
margin remained higher than in FY3/21 in the last three quarters because of measures to holddown personnel expenses and improve operating efficiency.

(Millions of yen)
YoY change
%

1Q

2Q

YoY change%

3Q

YoY change%

4Q

YoY change%

Operating revenue

4,917

21.2%

4,595

1.0%

5,160

-3.5%

5,328

8.4%

Operating expenses

3,671

5.5%

3,610

-3.1%

3,854

-5.0%

4,143

8.3%

SG&A expenses

311

-1.2%

314

2.0%

335

10.0%

383

27.2%

Operating profit

934

256.4%

670

30.6%

970

-1.7%

801

1.7%

19.0%

12.5pt

14.6%

3.3pt

18.8%

0.3pt

15.0%

1.0pt

Ordinary profit939

258.3%

664

32.2%

969

-1.1%

812

2.7%

Profit610

274.7%

427

35.7%

623

-0.7%

378

-17.1%

Operating margin6

Quarterly Revenue and Earnings• Revenue was below FY3/20, which was before the pandemic, and about the same as in
FY3/18.
• Operating profit was above or about the same as the pre-pandemic level, except in the 2Q,
resulting in a record-high operating profit in FY3/22.
(Millions of yen)

FY3/18

Quarterly operating revenue

FY3/19FY3/20FY3/21

FY3/22(Millions of yen)

Quarterly operating profit

4Q

4Q

3Q

3Q

2Q

2Q

1Q

1Q

FY3/18

FY3/19FY3/20FY3/21

FY3/22

7

The Group’s Number of Funerals and Funeral Revenue
Record-high number of funerals (12.2% more than in FY3/20) but small, simple funerals
accounted for most of the increase, resulting in a 4.0% decrease in funeral revenue vs. FY3/20(before the pandemic). However, 4Q funeral revenue was relatively high because of a larger
number of funerals.
(Funeral)Quarterly number of funerals

FY3/18

FY3/19FY3/20FY3/21

FY3/22(Millions of yen)

Quarterly funeral revenue

4Q

4Q

3Q

3Q

2Q

2Q

1Q

1Q

FY3/18

FY3/19FY3/20FY3/21

FY3/22

8

Analysis of Changes in Operating Profit
Operating profit growth was mainly due to higher revenue at KOEKISHA and SOU-SEN. Personnel
expenses were reduced at KOEKISHA in the Kansai area and at EXCEL SUPPORT SERVICE but there
were higher advertising and funeral hall operating expenses due to new locations in the Tokyo area
and consulting fees for consulting services required by the holding company.
Analysis of Changes in Operating profit(Millions of yen)

FY3/22 Operating profit

Others(110)[Holding Companies]
Higher outsourcing expenses[KOEKISHA] Lower personnel expenses
at Kansai Area

[TARUI] Lower sales[SOU-SEN] Higher sales[KOEKISHA] Higher sales at Tokyo Area

[KOEKISHA] Higher sales at Kansai Area

FY3/21 Operating profit(113)[EXCEL SUPPORT SERVICE]
Lower personnel expenses[KOEKISHA] Higher advertising expenses
and funeral hall opening expenses at
Tokyo Area

(72)

Positive factor
増益要因
減益要因
Negative factor

(Reference) Analysis of Changes in Operating Profit (vs. FY3/20)

9

Revenue down but earnings up vs. FY3/20. Lower revenue at the three funeral companies and EXCEL SUPPORTSERVICE reduced earnings, but this was offset by a lower direct expense ratio mainly at the three funeral companies
and a decline in personnel expenses at the three funeral companies and EXCEL SUPPORT SERVICE. The result wasrecord-high operating profit for the first time in two years.
(Millions of yen)

Analysis of Changes in Operating profit (vs. FY3/20)

(427)
(696)
FY3/22 Operating profit

Others[EXCEL SUPPORT SERVICE]
Lower personnel expenses[EXCEL SUPPORT SERVICE]
Lower sales[The three funeral companies]
Lower personnel expenses[The three funeral companies]
Direct expense ratio improved[The three funeral companies]
Lower sales

FY3/20 Operating profit

The three funeral companies are KOEKISHA, SOU-SEN and TARUI.

Positive factor
増益要因
減益要因
Negative factor

10Changes in Assets in the Balance Sheet
Total assets increased ¥1,460 million from March 31, 2021.
Property, plant and equipment increased because of expenditures for new funeral halls andremodeling. Cash and deposits were used for these expenditures and shareholder dividends,
but still increased ¥400 million.
(Millions of yen)March 31,2021

Current assets
Cash and deposits
Trade accounts receivableand contract assets

Non-current assets

Property, plant and equipment

Buildings and structures
Construction in progress
Intangible assets
Investments and other assets

Total assets
Reference:

March 31,
2022

7,895
7,042
452
24,492
22,153
9,289
80
155
2,183
32,387

Capital expenditures on PP&E: ¥1,525 million (FY3/22)
Depreciation expenses of PP&E: ¥794 million (FY3/22)
Note: Only major accounts are shown.

8,715
7,443
759
25,132
22,662
9,761
32
218
2,251
33,847

Change

820
401
307
640
509
472
-48
63
68
1,460

Changes in Liabilities and Net Assets in the Balance Sheet
Current liabilities increased as revenue and earnings recovered in FY3/21 and equity increased
because of higher retained earnings. The treasury stock deduction increased due to stock
repurchases of ¥590 million in FY3/22. The equity ratio remained high, declining only slightly.
(Millions of yen)March 31,2021

Current liabilities
Trade accounts payable
Income taxes payableNon-current liabilities
Lease obligations
Long-term accounts payable-otherTotal liabilities
Shareholders’ equity
Retained earnings
Treasury shares
Total net assets
Total liabilities and net assets
Equity ratio
Note: Only major accounts are shown.

2,541
613
413
1,297
322
293
3,839
28,54821,749-1,261
28,54832,387
88.1%

March 31,
2022

3,026
851
558
1,191
246
178
4,217
29,62923,402-1,83529,62933,847
87.5%

Change

485
238
145
-106
-76
-115
378
1,081
1,653
-574
1,081
1,460
-0.6pt11

12

Funerals and Funeral Revenue at KOEKISHA

Be a dependable end-of-life partner by moving even closer tothe senior generation and their family members

13

KOEKISHA: Number of Funerals••

The number of funerals was far higher than before the pandemic, especially in the 1Q and 4Q.
Simple funerals accounted for most of the increase in the number of funerals. The larger numberof Kansai area simple funerals was the combination of the usual level of funerals and pandemicrelated funerals.
社会情勢の変化(Funerals)

Monthly Number of Funerals

Apr. May Jun. July. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar.

(Funerals)

Quarterly Number of Funerals

FY3/18

FY3/19FY3/20FY3/21

FY3/22

14

KOEKISHA: Number of Funerals and Revenue• The number of funerals and revenue increased in all four regional/funeral size categories as
performance recovered from the big pandemic downturn in FY3/21.
• Large funeral revenue growth was more than for ordinary funerals, with the Kansai area making a
big contribution to growth.
• A big increase in ordinary funeral revenue in the Tokyo area. In the Kansai area, revenue growth
was small in relation to the increase in the number of funerals, a clear indication that funeral size
is declining because of the pandemic.
Top: Number of funerals
Bottom: Revenue (Millions of yen)

Tokyo area
Kansai area

Total

Large funerals(More than ¥5 million)

2

Ordinary funerals

407
162

32

409
333

647
398

34

495
679

76
1,054

560

Total

474
1,088

409

970

15

KOEKISHA: Large Funeral Revenue••

Large funerals (more than ¥5 million), including farewell events, recovered in FY3/22 following thedownturn caused by the pandemic. The number of funerals was 73% and revenue was 77% of theaverage level for FY3/17 to FY3/20, which was before the pandemic.
In the 4Q, the number of large funerals was relatively low because of pandemic safety measures in
社会情勢の変化Tokyo, Kanagawa, Osaka and Hyogo triggered by the sixth wave of the pandemic. The impact wasparticularly severe in the Tokyo area.
(Millions of yen)

FY3/17

Large Funeral Revenue

FY3/18

FY3/19FY3/20 Average level for

FY3/17 to FY3/20

FY3/21

FY3/22

16

KOEKISHA: Tokyo and Kansai Area Funerals and Revenue
At KOEKISHA, the number of funerals increased 9.1% but revenue per funeral decreased 1.3%.
(Major causes of changes)
Ordinary funeral average revenue was down in the Tokyo and Kansai areas.
• The pct. of low-priced simple funerals increased.
• Revenue per ordinary funeral (narrow definition) decreased.
→ Average revenue for ordinary funerals (broad definition) was down 3.9% in the Tokyo areaand 5.8% in the Kansai area.
The number of simple funerals increased in the Kansai area because there were pandemicrelated funerals in addition to the usual number of funerals.
Top: Number of funerals
Bottom: Revenue (Thousands of yen)All

KOEKISHA
funerals

FY3/21

FY3/22

11,995
1,053

13,083
1,040

Tokyo Area
Change9.1%-1.3%

FY3/21

FY3/22

2,907
1,308

3,316
1,296

Kansai Area
Change

14.1%
-0.9%

FY3/21

FY3/22

9,088
972

9,767
953

Change7.5%-2.0%

KOEKISHA: Estimated Market Share (Pct. change from FY3/21)

17• Based on estimates, KOEKISHA’s market share decreased in the Kansai area due to differences in thepct. changes in the number of deaths and number of funerals. The Tokyo area market share
increased.
社会情勢の変化• Tokyo area market share is recovering from the pandemic
downturn in FY3/21. Kansai area market
share is decreasing mainly because of competition.

Number of deaths
Number of funerals
at KOEKISHA

Kansai
area

Tokyo
area

April 2020 to March 2021

Total

Kansai
area

Tokyo
area

Total

April 2021 to March 2022

18

SOU-SEN and TARUI Financial Highlights

Be a dependable end-of-life partner by moving even closer tothe senior generation and their family members

19

SOU-SEN Financial Highlights• A small decrease in revenue per funeral as the size of funerals decreased, partly due to thepandemic. The number of funerals increased 10.6%, mainly in the Yonago and Sakaiminato
areas, resulting in higher revenue.
• Operating profit increased despite higher personnel and other expenses.

FY3/21

FY3/22

ChangeNumber of funerals
Average price of funerals(Thousands of yen)－

Operating revenue(Millions of yen)
Operating profit(Millions of yen)

Note: Operating profit is before the allocation of parent company expenses.

YoY

20

TARUI Financial Highlights• The number of funerals was 3.6% higher than one year earlier mainly because of more funerals at locations thatwere remodeled to handle small funerals. The pct. of low-priced funerals with a small number of mourners
increased partly due to the pandemic, which lowered revenue per funeral and FY3/22 revenue.
• The operating profit decreased despite a lower direct expense ratio and progress with measures to reduce fixed
expenses and other operating expenses.

Number of funerals
葬儀件数（件）Average price of funerals
葬儀単価（千円）(Thousands of yen)
Operating revenue

営業収益（百万円）(Millions of yen)
Operating profit

営業利益（百万円）(Millions of yen)

FY2020FY3/21
４Q累計

FY2021
FY3/22
４Q累計

1,396
1,153
1,748
401

1,446
1,056
1,651
370

増減
Change

50
－ 96
▲
－ 96
▲
－ 30
▲

（注）ここでは営業利益は、親会社の費用配賦前の金額を示す。
Note: Operating profit is before the allocation of parent company expenses.

増減率
YoY

3.6%
-8.4%
-5.5%
-7.7%

21

Impact of COVID-19 on Revenue and Earnings

Be a dependable end-of-life partner by moving even closer tothe senior generation and their family members

Major Effects of COVID-19 on Revenue and Earnings
Major effects of COVID-19 on FY3/22 performance
1. Impact of postponements and cancelations of large funerals such as corporate
funerals and farewell events (SAN HOLDINGS estimates)
 Estimate of the difference between the pre-pandemic four-year average for large funeral revenue and
FY3/22 results  down ¥380 million at KOEKISHA

2. Impact of smaller ordinary funerals due to the lower number of mourners (SAN
HOLDINGS estimates)(Increase in simple, low-cost funerals, decrease in funeral rates)
 Estimated using certain assumptions* Revenue down ¥1,770 million at the three funeral companies (down ¥1,350 million at KOEKISHA)
Note: Excludes pandemic-related funerals*Estimate of the gap between actual funeral revenue and the benchmark, which is revenue assuming that the
number of funerals in each month is based on the composition of the number of funerals and funeral rates
using actual performance between April 2019 and January 2020, which was before the COVID-19 pandemic.

22

23

FY3/23 Forecasts(Revenue and Earnings/Dividends)

Be a dependable end-of-life partner by moving even closer tothe senior generation and their family members

24

Revenue and Earnings Forecasts
FY3/23• Forecast revenue and earnings growth, but there is a risk of another wave of the pandemic.
• Strategic expenditures, such as for new funeral halls and advertising, are expected toincrease. Also planning on higher personnel and recruiting expenses for a stronger workforce,
which is one goal of the medium-term plan that started in April 2022.
• Forecast lower first half operating profit but a small increase in FY3/23 operating profit.
(Millions of yen)

FY3/23
Forecast
Operating revenue
Operating profit
Operating margin
Ordinary profit
Profit20,800
3,400

16.3%

3,390
2,130

YoY change%

Amount4.0%
0.7%-0.5% pt
0.1%
4.4%

798
23
3
89

FY3/23
1H Forecast

9,800
1,460

YoY change%

Amount

3.0%
287
-9.0%
-144
14.9% -2.0% pt-154
1,450 -9.6%-108930 -10.4%

FY3/23
2H Forecast

11,000
1,940

17.6%

1,940
1,200

YoY change
%

4.9%
9.5%
0.7% pt
8.8%
19.7%

Amount

511
168
157
197

Major Assumptions Used for Forecasts (1)The revenue and earnings forecasts are based on the following assumptions.
Operating revenue• For ordinary funerals, the forecast assumes no change in the market share of existing funeralhalls based on the number of funerals but a larger number of funerals as the number of deaths
increases. Also includes the expected increase in revenue from six new funeral halls. The
forecast assumes that the increase in the number of non-pandemic ordinary funerals will offset
the end of the pandemic’s one-time contribution in FY3/22 to the number of funerals.
• We expect that revenue per ordinary funeral will stay the same or increase slightly.
• For large funerals (more than ¥5 million), we forecast higher revenue as the number of funerals
increases, although the pandemic may affect this market sector. (Forecast the number of large
funerals will recover to more than 80% of the average for FY3/17-FY3/20 and revenue will be
about 80% of this level.)• Forecast growth in revenue from sales of products and services associated with funerals.
Operating expenses• Direct expense ratio: Higher productivity, replacements of selected products with other items
and other measures are expected to further lower this ratio.
(continued on next page)25

Major Assumptions Used for Forecasts (2)26Operating expenses (continued)• Personnel expenses:
To strengthen the workforce, restarting recruiting activities thatwere suspended during the pandemic with a hiring plan that factors in thebenefit of higher productivity. (A stronger workforce is a key goal of the firstyear of the new medium-term plan.) = These activities are expected to raise
personnel expenses (including recruiting).
• Controllable expenses: Factors in benefits of the productivity improvement project. Funeralhall opening expenses, advertising expenses and other strategic
expenses will increase but other expenses will be held down.
• Fixed expenses:
Increase will be limited primarily to expenses at new funeral halls.
SG&A expenses:

Forecast higher strategic expenditures for recruiting activities and personal
expenses for new employees and higher depreciation due to the new IT
system.

Extraordinary Losses:¥60 million demolition expense at KOEKISHA Takarazuka Hall is to beclassified as an asset impairment charge.

Plan for investments• Planning on investments of ¥1,050 million for funeral halls and IT systems.
Investments: New funeral halls ¥430 million; renovations and relocations ¥350 million;
IT systems and equipment ¥270 million

27

Dividend Forecast
FY3/23•

Plan to pay interim and year-end dividends of 21 yen per share, a fiscal year dividend of 42 yen,up 4 yen per share. (7th consecutive years of dividend increase)
The expected dividend payout ratio is 21.3%.

•

(Yen)

(Forecast)

FY3/18Annual dividendInterimYear-end
Payout ratio (consolidated)

Notes:

50.00
24.00
26.00
17.9%

FY3/19
57.00
27.00
30.00
15.2%

FY3/20
30.00
16.00
18.8%

FY3/21
33.00
16.00
17.00
23.7%

FY3/22

FY3/23

38.00
17.00
21.00
20.3%

1. SAN HOLDINGS conducted a 2-for-1 common stock split on October 1, 2019.
2. Forecast payout ratio for FY3/23 was calculated based on the number of treasury shares as of March 31, 2022.

42.00
21.00
21.00
21.3%

28

The Previous Medium-term Management Plan
(FY3/20 to FY3/22) Accomplishments and Issues

Be a dependable end-of-life partner by moving even closer tothe senior generation and their family members

29

Performance vs. Goals of the Medium-term Plan
Operating revenue

Operating profit

Operating profit to net sales

Below the goal due to thepandemic that started in
FY3/20 4Q

Record-high operating profit
in FY3/22

Well above the 13%-levelgoal in all three years(Millions of yen)

Changes in operating revenue(%)(Millions of yen)

25,00021,281

22,10021,30018,86520,00015,000Changes in operating profit andoperating profit to net sales
22,90020,001

4,000
3,500
3,000

Achievement
rate

16.9%
3,091

3,376
2,810

2,500

99.6%

Achievement
rate 85.2%

10,000

Achievement
rate

87.3%

2,000
1,500

2,900
2,550

500
FY3/202020年3月期

FY3/212021年3月期
Results
実績

中計数値 plan
Medium-term

FY3/22
2022年3月期

14.5%
14.0%

13.5%

13.2%

13.2%

13.1%
FY3/202020年3月期

16.0%

15.0%

0

0

16.5%

15.5%

14.5%

1,000

5,000

3,030

17.0%

13.5%
13.0%

FY3/212021年3月期

FY3/22
2022年3月期

営業利益実績
Operatingprofit results

Medium-term plan operating profit goals
営業利益中計数値

Operatingmargin results
営業利益率実績

Medium-term plan operating margin
営業利益率中計数値
goals

Overview concerning the Plan’s Eight Key Goals 1/430

1. Broaden the Lineup of End-of-life Support

Established subsidiary Life Forward in April 2020 and achieved growth Started operating an end-of-life support portal site for seniors in July 2020 and enlarged
the lineup of services in the following years.
 Expanded operations from Tokyo to the Kansai and Chubu regions → The goal is nationwide
operations (FY3/23)
An End-of-Life Platform

End-of-life
choices foreveryone

FuneralsGraves

Ceremonies

Funeralcompany/hall info

Cemetery andgravestone info

Info about monks,
priests, etc.

EstateBelongings

Insurance

Info about estateplanning
professionals

Arrangements for
personal belongings

Sale of funeralinsurance withcounseling

Established a one-stop platform encompassing allneeds involving the end of life

Strengthened services for before and after funerals at KOEKISHA, TARUI and SOU-SEN A large lineup of products and services

 Building relationships with many customers

31

Overview concerning the Plan’s Eight Key Goals 2/4
2. Extend the Funeral Business to More Areas of Japan

Opened nine funeral halls during the medium-term plan while placing priority on
prime
locations and the efficiency of investments.
 東西の大都市圏を中心にエリアを拡大【首都圏２、関西圏６、山陰１】 Most new locations were in the Tokyo and Kansai areas (Tokyo area 2, Kansai area 6, San-in area, 1)
Four below the goal of 13 new funeral halls → Increase speed to reach the goal (FY2/23 to FY2/25)

Goal is76 locations

SAN HOLDINGS Group Funeral Halls

in March 2022

(Locations)

80
70

TARUI

SOU-SEN

KOEKISHA

60
50

44

45

40
30
20
10
0

48

51

53

54

57

28

31

33

36

64

67

41

42

45

63

71

71

48

48

76

52

23

24

27

13

13

13

13

12

12

12

12

12

12

12

12

13

8

8

8

10

10

9

9

10

10

10

11

11

11

FY3/10FY3/11

FY3/12

FY3/13

FY3/14

FY3/15

FY3/16

FY3/17

FY3/18

FY3/19FY3/20FY3/21

FY3/22

32

Overview concerning the Plan’s Eight Key Goals 3/4
3. Increase the operating margin by improving operating efficiency

Cut annual operating expenses by about ¥100 million since FY3/21
 Rigorous control of proper number of people and personnel expenses for holding funerals.
 Reexamined tasks and roles of employees, used IT and took other steps to improve how
people do their jobs (automation of nighttime funeral hall security, IT system for vehicle use, inventory
optimization, strict management of overtime use, and other measures).

Three-year performance: At least 13%

Three-year target: At least 13%

FY3/22: 16.9%

Targets (full-year)(Billions of yen; % in parentheses represent YoY change)
1st year of the medium-term plan

FY3/20

2nd year of the medium-term plan

FY3/21

3rd year of the medium-term plan

FY3/22

Results

Medium-term
Plan

Results

Mediumterm Plan

Results

Medium-term
Plan

Operating revenue

21.28(+2.5%)

21.30(+2.6%)

18.86(-11.3%)22.10(+3.9%)

20.01(+6.0%)

22.90(+21.4%)

Operating profit

3.09(+5.2%)

2.81(-4.4%)

2.55(-17.5%)2.90(-6.1%)

3.37(+32.4%)

3.03(+18.8%)Operating margin

14.5%

13.2%

13.5%

13.1%

16.9%

13.2%

Overview concerning the Plan’s Eight Key Goals 4/4

33

4. Firmly establish the new corporate philosophy

Held corporate philosophy information meetings for a unified mindset and goals.
5. Measures for a more powerful workforce

Established a competitive personnel system to support recruiting activities.
An evaluation system that recognizes people who take on challenges and makecontributions.
6. Started a system for improving the quality of services

Established a Quality Management Department and started using a quality
management cycle.
7. Reposition new businesses while making them more profitable

The ramen and senior nursing care businesses are still unprofitable due to the pandemic
despite actions to boost sales and cut costs; focusing new business resources on Life
Forward.
8. Upgrade risk management

Took actions concerning hazards and risk and for reinforcing the management of
personal information.

34

Changes in the Business Climate

Be a dependable end-of-life partner by moving even closer tothe senior generation and their family members

Market Size

35

 No prospects for significant growth of Japan’s funeral market, but the market is expected to remain
relatively steady.
• Revenue per funeral is declining because of smaller funerals and the pandemic• The number of deaths in Japan will continue to increase(Billions of yen)

Funeral revenue in Japan fell almost 20% because of thepandemic

1,900

1,767.8 1,754.5 1,759.3 1,753.6 1,765.4

1,800
1,700

1,783.3 1,795.7

1,812.1 1,813.2

After 10 years

1,705.7

1,695.9
1,617.9

1,600
1,506.0

1,500
1,400
1,300
1,200
1,100
1,000

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Source: The Funeral Business Today and Outlook, Yano Research Institute Ltd. (2021 edition)

2020

2021
(fct.)*Funeral revenue is calculated by multiplying average revenue per funeral (including beverages andcourtesy gifts) by the number of funerals (95% of deaths).
*Excludes temple/shrine expenses, cremation, household altars and gravestones～

2030(fct.)

36

Needs of Customers

 Dramatic shifts in the nature of the funeral market resulting from changes in people’s values and preferences
and the increasing speed of the growth of online services.
Changes in values

Changes in preferences

Increasing speed of online sector

Diversifying styles for funerals and memorial services because ofchanges in society and values

Shift from traditional,
formal funerals to smalland simple ceremonies

Online/digital sales and marketing activities
are needed as customers use the internet tolook for information

Traditionaland formal

Customers

New funeralformats

New memorialservice formats

 Increasingly diverse views of the role of funerals
because of changes in values involving householdcomposition/relationships among relatives andreligious ceremonies
 Direct cremation; simple cremation
ceremony Same-day cremation
 Non-religious funerals, etc.
 Aging population/fewer children make grave
maintenance difficult and alter values; new viewsof memorial services will be increasing Perpetual memorial service/Simple
memorial service/Crypt Tree ash scattering/Scattering ofashes/Scattering of ashes in space/Balloon
ash scattering/Other formats

Shift concerning
funeral stylepreferences

Small and
simpleMarketing activities
closely linked to
specific areas(Conventional
method)Digitalmarketingactivities

Higher quality offuneralsHigher customer
satisfaction

37

The Competitive Landscape Qualitative changes are significantly altering the competitive dynamics of Japan’s funeral market.

Change Vector 1

Faster funeral hall network expansion and
M&A activity

Large specialist companies

Mutual-aid companies

Change Vector 2

Intense competition

Local small/midsize
specialist companies

More heated competition in thesmall funeral market

Change Vector 3

New competitors

Emergence of a matchingbusiness

38

The Senior Market

 Japan’s population of seniors is increasing steadily
・Growth of the senior market will be fueled by the increasing number of seniors and the diversification ofseniors’ life styles.
 Household size is falling as nuclear families increase; more seniors living alone
・The demand among seniors for support services is expected to grow.

40
35

31.20
28.80
28.14
30.00
27.25
29.10
28.44
27.74
26.65

30
25
20

23.02
20.16

17.80
14.90 15.00
14.22
14.66
12.84 13.32 13.80

15
10
5
0

(Thousands of(千世帯)
households)

The Increasing Pct. of Seniors in Japan

(%)

9.11

35.30 36.80
32.80

21.40
20.20
19.20 19.60

11.08

8,963

9,000

8,418
7,959

8,000

7,512
6,717

7,000
6,000

5,928

4,700

5,000

Actual←→Estimate
Age 65+
65歳以上

The increasing Number of Single Senior Households

Age 75+
75歳以上

2005 2010 2015 2016 2017 2018 2019 2020 2021 2025 2030 2035 2040 2045

Source: Japan Census (Sept. 15, 2021), Ministry of Internal Affairs and Communications
Estimated Future Population of Japan (as of 2017), National Institute of Population andSocial Security Research

5,075

5,122

3,808

4,000
3,201
3,000

5,045

2015

Age 65+
65歳以上
2020

2025

2030

Age 75+
75歳以上
2035

2040

Source: Japan Census (Sept. 15, 2021), Ministry of Internal Affairs and Communications
Estimated Future Population of Japan (as of 2017), National Institute of Population andSocial Security Research

39

The San Holdings Group New 10-year Vision(FY3/23 to FY3/32)

Be a dependable end-of-life partner by moving even closer tothe senior generation and their family members

A guideline for progress as SAN HOLDINGS looks ahead to its
100th anniversary

40

We are dedicated to being a dependable end-of-life partner by moving even closer to the senior
generation and their family members. By providing Japan's best services that achieve outstanding
customer satisfaction, we are determined to continue growing as we play a role in a society where
people live to age 100.
The goals of the SAN HOLDINGS Group for the next 10 years
Our constant commitment even as the business climate changes dramatically → Reliability and Quality ofservices
We will continuously work on upgrading our reputation for reliability established over many years and theoutstanding services that underpin this reliability as we look ahead to our 100th anniversary.

We will take on two challenges with speed and no fear of change
1. To be a source of services that satisfy a broad spectrum of customers, we will expand our operations
from the Kansai/Tokyo/San-in areas to all areas of Japan.
2.

To contribute to improving our customers’ quality of life, we continue expanding our end-of-life support
business and use the final stage of life for the provision of an even larger range of value by creating new
businesses and services.

41

The End-of-Life Support Business This business contributes to society as a source of services and products needed for people to enjoy a fulfilling life stylewith confidence during the final stage of life. Activities include support for daily activities, preparations for this final stage
and a variety of other support.
The final stage of life
お一人おひとりのライフエンディング・ステージ

Meals, cleaning, etc.
Renovations and other home services

Security

SAN HOLDINGS Group

Daily
activities

Health management

Contract

Partner companies

Consultations

Seniors and theirfamily members

Financial affairs

SupportEstate planning
Final arrangements

Type of support• Face-to-face support by our staff• Telephone support by staff• Provision of services and products• Introduction of partner companies

The final stage of life
Personal belongings

Insurance

Senior living facility, etc.
Grief care
Grave

42

Medium-term Targets of the SAN HOLDINGS Group
Results(FY3/22)After 3 years(FY3/25)

After 10 years(FY3/32）210

Funeral Business
Number offuneral halls

107
76

100億円
¥10.0 bnEnd-of-Life Support
Business
Sales¥3.0 bn
30億円¥1.5 bn
15億円

43

The Purpose of the SAN HOLDINGS GroupEliminating concerns
by providing support
for the last stage oflife while seniors arestill active• Instructions for inheritance oftangible/intangible assets• Consultations for a broad range ofconcerns

Our purpose

Be a dependable end-of-life partner by moving evencloser to the senior generation and their family
members
Total support for all issues involving the final stage of life

Assistance for dealing
with grief andmoving forward• Grief care
• Consultations with family members about
many subjects

Funerals that meet all
expectations ofmourners• Funerals that reflect the wishes of individuals
and family members• Support for family members of the deceased• Assistance for inheritance arrangements• Support for deaths resulting from a natural
disaster or occurring outside Japan

44

SAN HOLDINGS Group Medium-term Management Plan
FY3/23-FY3/25
Stage 1 - Speed and challenges as we look ahead to our100th anniversary -Be a dependable end-of-life partner by moving even closer tothe senior generation and their family members

45

The Five Key Goals of the Medium-term Plan

We are dedicated to using business activities to contribute to society and increase corporate value
as a dependable end-of-life partner that has close ties with the senior generation and their family
members.
CS

GrowthBusiness growth for more corporate value

Use value-added,
high-quality services
to contribute tosociety

Growth of the funeralbusiness

Growth of the end-of-life
support business

Make the funeralbusiness morecompetitive

A stronger infrastructure
for Japan's best services
that achieve outstanding
customer satisfaction

Speed up the expansion of
the funeral hall network,
mainly by using a newfuneral services brand, tocover more areas of Japanand serve more customers.

Expand the end-of-life support
business, extending from whenpeople are still active through thepost-funeral stage, for long-term
support for customers and theirfamily members. Develop thisbusiness into another corebusiness.

Build a framework for the
SAN HOLDINGS Group toprovide high-quality services
with efficiency.

 Upgrade quality management, thekey to providing the outstanding
services that are the source ofcorporate value.
 Quickly train people who provide
funeral services and maintain thehigh quality of these people.
 Increase customer satisfaction

A more powerful foundation for business operations
 Use recruiting and training activities to increase the overall strength of the SAN HOLDINGS Group.
 Personnel systems for fully utilizing a diverse and skilled workforce and encouraging innovations; establishment of a soundemployee education infrastructure.
 Continue improving the efficiency of all operations of the SAN HOLDINGS Group.
 Many activities involving the environment, society and governance (ESG).

Growth of the Funeral BusinessOpen new locations faster, mainly using the new funeral brand46

Use the new funeral brand to open funeral halls in major cities
throughout Japan with facilities and prices targeting family
funerals and the ability to provide high-quality services.

The goal is 31 new locations
during the next 3 years(including existing brands)

The new funeral brand• A brand that stands for high-quality services at reasonable prices• A brand that can achieve the satisfaction of a broad spectrum ofcustomers• A brand for smaller funeral halls specializing in small family funerals(A low-investment, low-cost business model)

Continue opening
locations using existing
brands in current areas ofoperations (Tokyo area,
Kansai area, San-in)

10-year Plan for Network Expansion

210 halls
31 halls

New funeral halls
Number in prior FY

107
15

92
10

82
6

76
5
71

76

82

92

FY3/22
Results

FY3/23

FY3/24

FY3/25

Targets for the Medium-term Management Plan

FY3/32After 10 years

Growth of the Funeral Business

Use of an alliance to enter a new area of Japan

47■Business alliance with Kosaido Holdings Co., Ltd. and establishment of a joint venture(announced February 28, 2022)

Objective
The objective is the establishment of a jointly owned company for the purpose of operating afuneral business that combines the six well-established funeral and cremation locations in Tokyoof Kosaido Holdings subsidiary Tokyo Hakuzen with the funeral know-how and outstanding
services of the SAN HOLDINGS Group.
Profile of the joint venture
Company name:Grand Ceremo Tokyo Co., Ltd.
Equity ownership: Kosaido Holdings Co., Ltd.: 51%; SAN HOLDINGS, INC.: 49%
Head office:
13F, Seavans South Building S, 1-2-3 Shibaura, Minato-ku, Tokyo
Establishment:
April 1, 2022
Start of operations: July 2022

Growth of the End-of-Life Support Business48

Long-term support for customers and their families

Expansion of the end-of-life support business, extending from when seniors areactive to post-funeral assistance
Envisioned expansion of end-of-life support services

The current end-of-life support businessSupport provided before and after
funerals by KOEKISHA, SOU-SEN and
TARUI

Pre-funeral

FuneralPost-funeral

Life Forward

Goal

Operation of rehabilitation day-carefacilities and provision of meals atsenior care centers by group company
EXCEL SUPPORT SERVICE

Active stage

TodayProvides products and services byusing the end-of-life services portalsite for seniors operated by Life
Forward

Individuals (seniors, family members)

EXCEL SUPPORT SERVICE

The three funeral companies(KOEKISHA, SOU-SEN, TARUI)SAN HOLDINGS Group (Life Forward, EXCEL SUPPORTSERVICE, three funeral companies)

Become a source of long-term support for customers
and their families

Growth of the End-of-Life Support Business

49

Develop the next core businesses Our goal is to go beyond funerals by launching and expanding businesses that encompass all aspects of the
lives of seniors. We want to build an End-of-Life Partner business model that can help improve the qualityof life of our customers.
• From when seniors are active until just before the funeral, provide support involving a broad spectrum of
senior issues for an even better senior life; also provide funeral services.
• A variety of support after a funeral concerning grief care, inheritance and other procedures, and otheractivities for moving forward after the loss of a loved one.

 From a medium-to-long-term perspective, our goal is to share the knowledge of our group’s funeralbusiness and end-of-life support business with funeral and other companies to contribute to the growth of
the funeral industry. These activities may lead to the establishment of a solution model for funeralcompanies.
Individuals (seniors, family members)
Active stage

Pre-funeral

FuneralPost-funeral

Information about services for different stages of life

More services for a more fulfilling life for seniors

FuneralMore services to support families after the funeral

Business domain of
conventional funeral companies

The SAN HOLDINGS end-of-life support business domain

Build a business model for becoming a “senior life support partner” that no other company can match

Make the Funeral Business More Competitive
Build a framework for the SAN HOLDINGS Group to provide high-quality
services with efficiency■Profitability is improving due to activities to operate more efficiently and boost productivity.
More business process reforms are needed because there is still more potential for
improvements throughout the group.
■Build an infrastructure for efficiently supplying high-quality services by integrating theinitiatives and functions of group companies.
• Establish this high-efficiency/high-quality business operation infrastructure byconsolidating call center and funeral-related operations (provision of funeral ceremony
supplies, hearse operations, administrative tasks, etc.) and control functions for these
operations.
• Use digital marketing to make sales activities more effective.

50

A Stronger Infrastructure for Japan's best services that achieve outstanding
customer satisfaction

51

Upgrade quality management, the key to providing the high-quality, value-added
services that are the source of corporate value
Quickly train people who provide funeral services

 To provide Japan's best services that achieve outstanding customer satisfaction, we will provide
customers with high-quality services, products and locations (funeral halls) backed by a
dedication to hospitality and compassion. This is the source of corporate value.
To accomplish this goal, group companies will constantly maintain strong education and quality
management capabilities.

 A service certification program for specific roles performed by personnel involved with funeralservices in order to encourage people to continue upgrading their skills.

 For business growth, quickly train people who provide funeral services and maintain the highquality of these people.

A More Powerful Foundation for Business Operations

52

Recruit and train people to speed up strategic initiatives for growthMore progress with activities to make business operations more efficient People will be essential for our transformation into a dependable end-of-life partner that canmove even closer to the senior generation and their family members.
To adapt to changes in the business climate, we must have people with strategic planning andsenior business management skills. This is why recruiting and training activities will bestrengthened.
 Consolidate administrative functions for business operations to improve efficiency throughout
the group.

A More Powerful Foundation for Business Operations

The ESG Policy of the SAN HOLDINGS Group53

 We understand that our business operations must advance to a level where our business processes
incorporate measures for playing a role in solving environmental and social problems (SDGs, etc.). Thisrequires a business and management infrastructure that reflects these problems, compliance with Japan’s
revised Corporate Governance Code, and other considerations. To make ESG with emphasis on sustainability
an integral part of management, we announced the SAN HOLDINGS ESG Policy and ESG Responsible
Behavior Guidelines and established an ESG Committee on November 11, 2021. We have a strong
commitment to using ESG management for the creation of a sustainable society while using businessactivities to help accomplish the SDGs.

The SAN HOLDINGS ESG Policy
The SAN HOLDINGS Group is dedicated to constant growth while making significant contributions
to the creation of a sustainable society. By using activities based on the group’s mission, visionand values, we will create new value involving end-of-life total support services and use many
initiatives that target issues (SDGs, etc.) concerning the environment, society and governance.

A More Powerful Foundation for Business Operations

The SAN HOLDINGS Group Behavior Guidelines and ESG framework

54

 ESG Responsible Behavior Guidelines
1. Business activities that achieve sound growth
2. Compliance with laws and regulations
3. Environmentally responsible business operations
4. Use funeral halls for community and regional contributions
5. Increase customer satisfaction
6. Increase employee satisfaction
7. Disclosure of ESG information
 Framework for ESG activities
The ESG Committee discusses and makes decisions about policies
and action plans and other matters involving ESG. The committee
is chaired by an executive officer responsible for ESG, who isappointed by the company president, and the chairperson selects
the other committee members.
Reports on the discussions of the ESG Committee are submitted
regularly to the board of directors and actions are taken with all
associated departments in order to incorporate these activities
into business operations.

Board of Directors
ESG Committee
Chair: Executive Officer for ESG
Secretariat: General Affairs Department
Committee members are selected by the
Executive Officer for ESG
Other departments of the SAN HOLDINGS GroupA More Powerful Foundation for Business Operations

55

ESG Management

The SAN HOLDINGS Group uses grief care, embalming and other value-added end-of-life services
along with outstanding hospitality to serve customers and their family members and be a
responsible member of society.

Environment

Social Use of environmentally responsible products(caskets, etc.)
 Consider use of materials/packaging that can berecycled
 More hybrid vehicles (hearses, company cars), start
using electric vehicles
 Use of solar panels at funeral halls and otherbuildings
 Vegetation on roofs, walls and around entrances Reduce the amount of water used for businessactivities Reduce discarded flowers and find ways to reuse
flowers

 Suitable locations for funeral ceremonies
 Grief care services that meet high standards Grief care including embalming; on-site
services for natural disasters
 Support for communities where funeral halls
are located Many formats for doing jobs at groupcompanies
 Activities for increasing engagement with
employees

Governance Further upgrade internal controls
 More investor relations activities (dialogue
with investors)
 Establish a sustainability management
system Sustainability education programs
 Establish an effective risk management
systemGoals of the Medium-term Management Plan (FY3/23 to FY3/25)

56

Revenue and earnings growth to revenue of ¥23 billion and operating profit of ¥3.6 billion in FY3/25.
Although there will initially be expenses for strategic measures (expenditures for recruiting,personnel and opening new funeral halls), the plan’s goals are an operating margin of at least 15.5%
and an ROIC of at least 7.0%.
(Millions of yen)
Actual
FY3/22First year
FY3/23

Second year
FY3/24

Third year
FY3/25

Operatingrevenue

20,00120,80021,80023,000Operating profit

3,376

3,400

3,450

3,630

Operatingmargin

16.9%

16.3%

15.8%

15.8%

ROIC

7.3%

7.0%

7.0%

7.0%

*ROIC = Operating profit after tax / Invested capital
Invested capital = Interest-bearing debt + Net assets, operating profit after tax = Operating profit x (1 – Statutory effective tax rate)

57

Medium-term Plan Capital Allocation

 Large investments are planned for business growth. During the plan’s three years, operating

cash flows are expected to be more than ¥8.8 billion. Investments involving existing facilities
will be ¥1.0 to ¥1.5 billion and investments for growth will be more than ¥4.5 billion.

Medium-term plan
operating CF of
about ¥8.8bn(Reference)
Includes cumulative
depreciation of
about ¥3bn

Investments in existing
facilities
About ¥1.0 to ¥1.5 billion

Investments for growthMore than ¥4.5 billion

Shareholder
distributions

The basic policy is to hold renovations of existing
facilities to below depreciation.

Organic growth
Rapidly open more funeral halls
Strengthen the end-of-life businessInorganic growth
M&A, alliances
Dividends
Maintain stability while aiming for dividend growth
Stock repurchases
Stock repurchase decisions will be made based on
cash flows, the stock price and otherconsiderations.

Medium-term Management Plan
Shareholder Distribution Policy

58

Increase distributions to shareholders based on dividend stability
Our goal is to increase the distribution of earnings to shareholders from a medium to long-term perspective.
Dividends reflect consolidated sales and earnings, cash flows, the need to retain earnings for investments for medium to long-term growth, the need tomaintain financial soundness and other factors. Furthermore, our policy is to increase the dividend consistently even when the business climate ischallenging based on dividend stability.
Furthermore, we will consider repurchasing stock while taking into account the capital capacity, stock price and other applicable factors.

Total distribution ratio(Millions of yen)

1,400
1,200

Plan to increase thetotal shareholder
distribution ratio

Dividend
Stock repurchase

61.0%

70.0%
60.0%

Total distribution ratio (%)

49.7%

1,000
800

Forecast 7th consecutive
dividend increase

600

27.9%

24.5%

23.6%

400

18.8%

200

224
0

DPS

224

224

224

40.0%

224

252

17.9%

280

600

35.0%

30.0%

300

22.8%

23.7%

20.0%

15.2%

320

50.0%

349

369

413

453

FY3/12

FY3/13

FY3/14

FY3/15

FY3/16

FY3/17

FY3/18

FY3/19FY3/20FY3/21

FY3/22

¥20.0

¥20.0

¥20.0

¥20.0

¥20.0

¥22.5

¥25.0

¥28.5

¥31.0

¥33.0

¥38.0

FY3/23(Forecast)
¥42.0

27.9%

23.6%

22.8%

61.0%

18.8%

17.9%

15.2%

18.8%

23.7%

20.3%

21.3%

Dividend
payout ratio 24.5%

10.0%
0.0%

Reference Data Company Overview and Industry Characteristics 59
Company Overview
Name:
Established:
Capital:Listing:

SAN HOLDINGS, INC.
October 2, 1944 (Founded in August 1932)¥2,568.15 million
Tokyo Stock Exchange, Prime Section
Stock code 9628

Operating revenue: ¥20,001 million (FY3/22)

76 halls in
total

Sanin region
13 halls(includes 1 joint hall)

Current Areas of Operations
Tokyo area (Tokyo, Kanagawa)
Kansai area (Osaka, Hyogo, Nara)
San-in region (Tottori, Shimane)
The Funeral Industry
Japan has no regulatory agency and no
regulations for funeral companies
Reference: There were about 1.37 million deaths in Japan in 2020
and this is expected to increase to about 1.7 million by
2040. In 2020, funeral revenue was estimated to beabout ¥1,607 billion (1.37 million deaths x ¥1,173,000)

Tokyo and Kanagawa
15 halls
Osaka, Nara, Hyogo
Hyogo (west of Kobe)
37 halls
11 halls(includes 1 joint hall)
Be a dependable end-of-life partner by moving even closer tothe senior generation and their family members

Reference Data Corporate Philosophy

60

Corporate Philosophy

A partner for making people’s lives even more fulfilling and enjoyable
Become a source of total support for the final stage of life
Our philosophy expresses our mission in society of creating new forms of value and supplying services with
substantial added value for the purposes of enriching people’s lives and communities through the provision of
products and services and of making people’s lives even more fulfilling and enjoyable.

Be a dependable end-of-life partner by moving even closer tothe senior generation and their family members

61

Cautions

Forecasts of future performance in these materials are based on assumption
judged to be valid and information available to the management of SAN
HOLDINGS at the time the materials were prepared. Actual results may differ
materially from the forecasts.
Inquires： Corporate Planning Department, SAN HOLDINGS, INC.
TEL: +(81)6-6226-0038

Copyright 2022 SAN HOLDINGS, Inc. All Rights Reserved.

Be a dependable end-of-life partner by moving even closer tothe senior generation and their family members