FY4/18 2Q
IR PRESENTATION

December 2017

2Q Results Overview© 2017 AIN HOLDINGS INC. All Rights Reserved.

1

Consolidated P/L
Net sales increased 13.3% year on year and 2.3% against the plan due to firm growth in same storesand stores that were opened in previous year. Ordinary income increased 62.1% year on year and25.6% against the plan due to the increase of net sales and the decrease of costs by improving
operations.
FY4/17 2Q
FY4/18 2Q
FY4/18 2Q
YoY
YoY
Vs plan(¥ million)

results

plan

Net
sales
（単位：百万116,844

129,400

132,342 +15,498

+13.3

+2.3

Gross profit

18,365

21,38022,390+4,025

+21.9

+4.7

% of net sales

15.7

16.5

16.9

13,315

14,68014,022

+707

+5.3

(4.5)

11.4

11.3

10.6

5,049

6,700

8,367

+3,318

+65.7

+24.9

4.3

5.2

6.3

5,346

6,900

8,665

+3,319

+62.1

+25.6

4.6

5.3

6.5

2,855

3,600

4,418

+1,563

+54.7

+22.7

% of net sales

2.4

2.8

3.3

Earnings per
share(¥)

90.07

109.91円）

SG&A expenses% of net sales

Operatingincome% of net sales

Ordinary income% of net sales

Profit attributableto owners of parent

resultschangechange(%)(%)

134.91 +44.84 +49.8 +22.7

Figures in the table are rounded down
© 2017 AIN HOLDINGS INC. All Rights Reserved.

2

Dispensing Pharmacy Business (Consolidated)
Net sales increased 13.1% year on year and 2.2% against the plan due to the increase ofprescription volume and average prescription price in same stores and stores that were openedin the previous year. Segment income increased 29.5% year on year and 9.9% against the plandue to the increase of net sales and the decrease of costs by improving operations.
FY4/17 2Q
FY4/18 2Q
FY4/18 2Q
YoY
YoY
Vs plan(¥ million)(%)
change change(%)
resultsplan
results

Net sales

104,297

115,400

117,991 +13,694

+13.1

+2.2

Gross profit

13,62015,670

16,541+2,921

+21.4

+5.6

% of net sales

13.1

13.6

14.0

6,401

7,040

7,160

+759

+11.9

+1.7

6.1

6.1

6.1

7,218

8,630

9,380

+2,162

+30.0

+8.7

6.9

7.5

7.9

7,494

8,830

9,702

+2,208

+29.5

+9.9

7.2

7.7

8.2

917

1,071

1,045

+128

+14.0

(2.4)

SG&A
expenses% of net sales

Operatingincome% of net sales

Segment
income% of net sales

Number ofpharmacies

Figures in the table are rounded down
Segment income is adjusted to ordinary income shown on the quarterly consolidated statements of income
Prescription volume: +15.3% YoY© 2017 AIN HOLDINGS INC. All Rights Reserved.

Average prescription price: (2.5)% YoY
3

Drug and Cosmetic Store Business (Consolidated)
Net sales increased 12.4% year on year and 3.6% against the plan due to contribution of stores that are
opened in the previous year and improvement of ability to attract customers in same stores. Segment income
turned positive to ¥163 million due to improvement of gross margin by active development of original brandand by an overhaul of procurement activities and due to the decrease of costs by raising operating efficiency.
(¥ million)

FY4/17 2Q
results

FY4/18 2Q
plan

FY4/18 2Q
results

YoYchangeYoYchange(%)

Vs plan(%)

Net sales

10,288

11,16011,566 +1,278

+12.4

+3.6

Gross profit

3,723

4,120

4,320

+597

+16.0

+4.9

% of net sales

36.2

36.9

37.4

4,136

4,390

4,177

+41

+1.0

(4.9)

40.2

39.3

36.1

(412)

(270)

143

+555

-

-

-

-

1.2

(384)

(210)

163

+547

-

-

-

-

1.4

51

50

50

(1)

(2.0)

(0.0)

SG&A
expenses% of net sales

Operatingincome% of net sales

Segment
income% of net sales

Number ofstoresFigures in the table are rounded down
Segment income is adjusted to ordinary income shown on the quarterly consolidated statements of income
Number of customers: +5.2% YoY© 2017 AIN HOLDINGS INC. All Rights Reserved.

Average spending per customer: +6.8% YoY
4

Consolidated B/S
Net cash increased by ¥31,266 million to ¥33,637 million and shareholders’ equity ratio
became 50.2% by fund-raising through a public offering and private placements.
(¥ million)(¥ million)

End-FY4/18 2Q

End-FY4/17
AssetsCurrent assets
Cash on handand in banks

Fixed assets
Investments insecurities

liabilities
65,420 Current
Short-term debt

29,775

Lease obligations

90,902Long-term
liabilities

72,955Current assets

7,596
594

Cash on hand andin banks

23,188Fixed assets

2,435

Long-term debt
Lease obligations

18,254958

Investments insecurities‐

Total net assets

60,178Deferred
assets156,323

Total liabilities
and net assets

156,323

Total assets

Deferred
assetsTotal assets

AssetsLiabilities

Net cash
Shareholders’ equity
ratio(%)

2,371
38.4

Liabilities
liabilities
91,711 Current
Short-term debt

57,059Lease obligations

88,700Long-term
liabilities

70,2857,457
520

19,472

2,438Long-term debt
Lease obligations

14,608834

125

Total net assets

90,779180,537

Total liabilities
and net assets

180,537

Net cash
Shareholders’ equity
ratio(%)

33,63750.2

Figures in the table are rounded down
Net cash = Cash on hand and in banks – Interest-bearing debt (Long- and short- term debt + Lease obligations)© 2017 AIN HOLDINGS INC. All Rights Reserved.

5

Assets
The balance of total assets increased by ¥24,214 million compared to those in the fiscal year
ended April 2017 due to fund-raising through a public offering and private placements.
(¥ million)

End-FY4/17 2Q

End-FY4/17

End-FY4/18 2Q

Change23,012
7,214
11,82329,775
9,990
11,66857,05910,25012,337+27,284+260+669

53,29565,42091,711+26,291

14,6809,525
1,285

15,365
9,958
1,166

15,180
9,784
1,040

(185)
(174)
(126)

27,74928,46427,931(533)

33,776
12

40,939839,49413(1,445)+5

Total intangible fixed assets

36,113

43,10941,569(1,540)Investments in securities

Deposits and guarantees

2,565
2,163
10,287

2,435
2,167
10,443

2,438
2,071
10,697

+3
(96)
+254

Total investments and otherassets

19,68819,32919,199(130)

83,552
136,847

90,902
156,323

88,700180,537(2,202)+24,214

Cash on hand and in banks
Notes and accounts receivable

Inventories
Total current assets
Buildings and structures,net
Land

Lease assets
Total property,plant andequipment
Goodwill
Lease assets

Deferred tax assets

Total fixed assets
Total assets

Figures in the table are rounded down

Fundraising

Change:End-FY4/18 2Q compared with End-FY4/17

Capital expenditures (Property, plant and equipment and intangible fixed assets + Deposits and guarantees) totaled ¥1,772 million© 2017 AIN HOLDINGS INC. All Rights Reserved.

6

Liabilities and Net Assets
The balance of liabilities decreased by ¥6,387 million compared to those in the fiscal year
ended April 2017 due to the repayment of debts etc.
(¥ million)

End-FY4/17 2Q

End-FY4/17

End-FY4/18 2Q

ChangeAccounts payable

37,69339,32540,326+1,001

Short-term debt

7,584
641

7,596
594

7,457
520

(139)
(74)

64,707

72,95570,285(2,670)12,1381,087

18,254958

14,608834(3,646)(124)

17,17781,88523,18896,144

19,47289,757(3,716)(6,387)

8,682
6,367
40,1938,682
6,367
45,286

21,89420,50048,120+13,212+14,133+2,83454,82454,961

59,91860,17890,514 +30,596
90,779 +30,601

136,847

156,323

180,537 +24,214

Lease obligations
Total current liabilities
Long-term debt
Lease obligations
Total long-term liabilities
Total liabilities
Common stock
Capital surplus
Retained earnings
Total shareholders’ equity
Total net assets
Total liabilities and net
assetsFigures in the table are rounded down

Change : End-FY4/18 2Q compared with End-FY4/17© 2017 AIN HOLDINGS INC. All Rights Reserved.

7

Consolidated C/F
The change of net increase in cash and cash equivalents became ¥27,376 million due tofund-raising through a public offering and private placements, etc.
(¥ million)

End-FY4/17 2Q

End-FY4/18 2Q

Change

6,090

6,886

+796

Profit before income taxes

5,298

8,104

+2,806

Depreciation and amortization

1,753

1,735

(18)

Amortization of goodwill

1,660

1,983

+323

(Decrease) increase in accounts
receivable

5,733

(92)

(5,825)

Increase in inventories

(651)

(583)

+68

Increase in other accounts receivable(1,525)

1,265+2,790

Increase (decrease) increase in accounts payable(2,918)806+3,724(3,053)(1,279)+1,774(1,544)(1,247)+297(2,293)(418)+1,875

Net cash provided by financing activities(2,616)

21,769+24,385

Proceeds from issuance of common sharesand sales of treasury shares-

27,635+27,635

420

27,376+26,956

22,312

56,611+34,299

Net cash provided by operating activities

Net cash used in investing activities
Payments for purchases of property, plantand equipment and intangible fixed assets
Purchase of subsidiaries’ shares resulting
in obtaining controls

Net increase in cash and cash equivalents
Cash and cash equivalents at end of the year
Figures in the table are rounded down
© 2017 AIN HOLDINGS INC. All Rights Reserved.

8

Business Value Analysis
End-FY4/17 2Q

End-FY4/17

End-FY4/18 2Q

Change

40.1
164.3
39.36
90.07
4.11
1,731.65(0.03)
1,559

38.4
156.6
30.79
250.71
4.09
1,895.63
5.4
14.0
21,90511.07(0.04)
2,371

50.2
152.1
28.72
134.913.02
2,560.59(0.37)
33,637+10.1(12.2)(10.64)+44.84(1.09)+828.94(0.34)
32,078

Shareholders’ value (¥ million)-

244,828--

Market capitalization (¥ million)

224,806

244,782

274,563

49,757

Shareholders’ equity ratio (%)
Market value equity ratio (%)
PER (times)
EPS (¥)PBR (times)
BPS (¥)ROA (%)ROE (%)EBITDA (¥ million)

EV/EBITDA (times)
Net D/E ratio (times)
Net cash (¥ million)

Figures in the table are rounded down
Change：End-FY4/18 2Q compared with End-FY4/17 2Q
Net D/E ratio = (Interest-bearing debt – Cash on hand and in banks) / Shareholders’ equity
Shareholders’ value = EV – Net interest-bearing debt
Market capitalization：Treasury stock is excepted
Share prices used to calculate market capitalization:
End-FY4/17 2Q ¥7,090 (End-Oct,2016), End-FY4/17 ¥7,720 (End-Apr,2017), End-FY4/18 2Q ¥7,750 (End-Oct,2017).
Net cash = Cash on hand and in banks – Interest-bearing debt (Long- and short- term debt + Lease obligations )© 2017 AIN HOLDINGS INC. All Rights Reserved.

9

FY4/18 Revised Plan (Consolidated)
Net sales went according to original plan reflecting the close of unprofitable stores in preparation for the revisionof April 2018, even though both dispensing pharmacy business and drug and cosmetic store business went strong
in FY4/18. We also decided to revise up our forecasts that ordinary income increase 22.7% because same storesin drug and cosmetic store business are shifting well and operating efficiency is improving.
(¥ million)

Net sales

Gross profit

FY4/17
results

248,110
42,092

267,500
46,53017.0

17.4% of net sales

SG&A expenses% of net sales

Ordinary income

Annual dividend (¥)

YoYchange (%)

267,500 +19,390
47,400 +5,308+12.6+1,871+6.8+3,437+23.6+3,420+22.7+1,251

+15.7

17.7

+7.8

29,400

11.1

11.2

11.0

14,563

16,60018,000

5.9

6.2

6.7

15,08017,00018,500

6.1

6.4

6.9

7,949

8,900

9,200

3.2

3.3

3.4

250.71

261.15269.96+19.25

+7.7

50.00

50.00

50.00

(0.00)(0.0)% of net sales

Earnings per
share(¥)

YoY
change29,930% of net sales

Profit attributableto owners of parent

FY4/18
revised plan

27,529% of net sales

Operating income

FY4/18original plan

Figures in the table are rounded down

YoY change, YoY change(%) :FY4/18 revised plan compared with FY4/17 results

Earnings per share is calculated including new shares issued through a public offering (2,820,000) a private
placement (270,000) and a private placement for a secondary offering using an over-allotment option (450,000).
© 2017 AIN HOLDINGS INC. All Rights Reserved.

10

2QReviewGrowth Strategy© 2017 AIN HOLDINGS INC. All Rights Reserved.

11

2QReview© 2017 AIN HOLDINGS INC. All Rights Reserved.

12

Review①（Vs FY4/17 2Q Results）■ Net sales +¥1.0 billion +¥0.6
FY4/17 2Q FY4/18 2Q
results
results

YoYchange(¥ million)
Net sales
Gross profit% of net
sales
SG&A
expenses% of net
sales
Operatingincome% of net
sales
Ordinary
income% of netsales

YoYchange(%)

116,844 132,342 +15,498 +13.3
18,36522,39015.7

16.9

13,315

14,022

11.4

10.6

5,049

8,367

4.3

6.3

5,346

8,665

4.6

6.5

Figures in the table are rounded down

+4,025 +21.9

+707

+5.3

Contribution of
New 19 stores+¥2.5 billion
Existing stores¥(3.1) billion

Close of
AYURA
Mail order unprofitable storesetc.

+¥15.4billion+13.3%+¥14.4 billion
Full contribution ofprevious year’s
openings

FY4/17 2Q
results

FY4/18 2Q
results■ Ordinary income+¥0.7 billion ¥(0.3)billion+3,318 +65.7

・Technical fees
・Use of WSS

Increase of operating cost+¥1.0 billion+3,319 +62.1

・Drug andcosmetic stores
・AYURA・Improvementof Mail order+¥3.3 billion+62.1%+¥1.9 billion
Increase of net sales indispensing pharmacy

FY4/17 2Q
results© 2017 AIN HOLDINGS INC. All Rights Reserved.

billion

FY4/18 2Q
results
13

Review②（Vs Plan）■ Net sales¥(0.6) billion
Unachieved

FY4/18 2Q FY4/18 2Q
plan
results

Vs planVs plan(%)

129,400 132,342 +2,942+2.3+¥0.4 billion openings
Previous year’s
openingsof this year ¥(0.2) billion
Close of Unprofitable stores(¥ million)
Net sales
Gross profit% of net
sales
SG&A
expenses% of net
sales
Operatingincome% of net
sales
Ordinary
income% of net
sales

21,38022,390 +1,010

16.5

14,022

11.3

10.6

(658)

(4.5)

8,367 +1,667 +24.9

5.2

6,900

FY4/18 2Q
plan

FY4/18 2Q
results

+4.7

16.9

14,6806,700

Existing stores+¥2.9
billion+2.3%+¥3.3 billion

6.3

8,665 +1,765 +25.6

5.3

6.5

Figures in the table are rounded down

■ Ordinary income

Unachieved+¥0.3 billion prescription+¥0.7 billion Increase of

net sales in・Drug andcosmetic stores dispensing
pharmacy
・AYURA・Improvementof Mail order+¥0.8 billion

volume+¥1.7 billion+25.6%

Control of operatingcost

FY4/18 2Q
plan© 2017 AIN HOLDINGS INC. All Rights Reserved.

¥(0.1) billion

FY4/18 2Q
results
14

Transition of Sales from Drugs per Prescription■ Transition of Hepatitis C drugs’ sales
FY4/17 results

600

FY4/18 results

Net sales(¥ million)
800

692
448

447

400

406

287

200

251

190

FY4/18 plan

0

May

180

Prescriptions of Hepatitis C drugs were higher than our plan

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

2017

Jan.

Feb.

Mar.

Apr.

2018

Aggregated the datafrom main 5 companies■ Transition of increase-decrease rate of other drugs’ sales per prescription (Except Hepatitis C drugs)
（%）
104.0

Sales from drugs
per prescription

Blockbuster generic drugs were placed on the market

102.0

FY4/18 results
Influenza was prevalent

100.0
98.0

FY4/18 plan

Switching to high price drugs

May

Jul.

96.0
Jun.

Aug.

Aggregated the data from main 5 companies© 2017 AIN HOLDINGS INC. All Rights Reserved.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

Considered the plan of May 2017 as 100%15

Response to Dispensing Fee Revisions of 2016
Comparison of 585 pharmacies of 4 main existing companies
Contents of revisions

Basic
dispensing
feeStandards fordispensing
systempremiums

Premiums forgeneric drug
dispensing
systems

Drug use
history
management
and guidancefee

Premiums for
specific drug
management
instruction

Points1

Except following

41

2Over 4,000 times and over 70%
or Over 2,000 times and over 90%
or Over 4,000 times from specific hospital

25

3Same group over 40,000 times /month and over 95% or Lease
contract with medical institution

20

Basic dispensing fee 41points & Inventory
1,200 items & Home healthcare services (1case / year) & Notification of primary carepharmacists & Supervising pharmacists
having operational experience for at least 5
years and enrollment for at least 1 year32

65-75%

18

Over 75%

22

Basic dispensing fee 41 points & Patients’handing over medication notebook & Patients’visiting within 6 months

38

Except the above

50

Primary care pharmacists instruction fee

70Specific drug management instruction

10

(¥)

March
2016

April
2016

ChangeApril
2017

ChangeOctober
2017

Change

382.8

312.9

(69.9)

337.1(45.7)

341.2(41.6)

146.9

118.0

(28.9)

174.5

+27.6

183.1

+36.2

191.6

147.3

(44.3)

184.0

(7.6)

189.7

(1.9)

382.6

435.1

+52.5

441.3

+58.7

443.9

+61.3

9.6

25.5

+15.9

25.2

+15.6

25.3

+15.7

(74.7)

+48.6

+69.7

Items and requirements mentioned above are a part of revisions of 2016
Average prescription price per a reception© 2017 AIN HOLDINGS INC. All Rights Reserved.

Change: Compared to March 201616

Growth Strategy© 2017 AIN HOLDINGS INC. All Rights Reserved.

17

Growth Strategy
We will develop stores and human resources that are able to adapt the environmental
changes by flexibly responding the system changes and ease of regulations and by
openings promising stores including M&As and creating “thinking environment”.

■ Top-line
Opening pharmacies in prime locations near hospitals andcontinuing secure M&As by evaluation method which we
considered coming revisions for three consecutive years■ Realization of pharmacy vision for patients
Response for KPI which evaluates the quality of nonhospital dispensing■ Recruiting and training human resources
Recruiting activity and development of human resources
with the energy of the entire company■ Growth of AINZ&TULPE
Improving the ratio of original products and grossprofit by active store openings in the metropolitan areaand by strengthening our brand equity© 2017 AIN HOLDINGS INC. All Rights Reserved.

18

Top-Line①
We raised a total of ¥27.6 billion mainly through a public offering and private placement in orderto strengthen financial position for our growth.
■ Offering Summary
Primary shares
Treasury shares
Over-allotment
Total

Type of
Offering

2,820,000 shares
180,000 shares
450,000 shares
3,450,000 shares*270,000 shares were allocated to Seven & i Holdings Co., Ltd. apart from the offering
Use ofProceeds

・Capital investment related to new openings of dispensing pharmacies and drug storesas well as renewal of existing stores・Capital investment related to introduction and switching systems
・Repayment of debt used for M&As, working capital and capital investment

Amount¥27,635 million■ Transition of main offering andCapital stock
Net sales
Ordinary income
Capital stock
ＲＯＩ

Aug.2009 Primary sharesOpen price¥2,104
Allocation 1,200,000 shares
Amount ¥2,390 million

200,000

100,000

Aug.2009
Capital stock¥6,308 million

Aug.2017 Public offering andOct.2017
allocation to third party
Capital stock
Open price¥7,760 ¥21,894 million
Offering
3,000,000 shares（¥million）
Allocation
720,000 shares
25,000
Amount¥27,635 million

Aug.2010
Capital stock¥8,682 million

20,00015,00010,00030.4% 28.3%29.3%

23.7%
20.6%

11.3%

0

5,000

0
FY4/00

FY4/02

FY4/04FY4/06

FY4/08

FY4/10FY4/12

ROI：Income before income taxes ÷（Net assets + Depreciation expenses）© 2017 AIN HOLDINGS INC. All Rights Reserved.

FY4/14

FY4/16

FY4/18（Plan）
19

Ordinary income

Net sales（¥million）
300,000

Aug.2010 Public offering andallocation to third party
Open price¥2,677
Offering
1,500,000 shares
Allocation
340,000 shares
Amount¥4,713 million

Top-Line②
We opened 19 stores including M&As and closed 42 stores in FY4/18 2Q. We forecast 76 new storesopening by active new store openings and promotion of M&A and 67 store closings in full year.

■ Total number of stores

1,095 (Dispensing pharmacy:1,045 Drug and cosmetic store:50)■ PlanFY4/18 2Q

FY4/18

FY4/18Plan

Results

Original
plan

Revised
plan

13
17

13
5

34
66

29
43

Drug and cosmetic store

1

1

8

4

Total

31

19

108

76

Dispensing
pharmacy

25

39

31

60

Drug andcosmetic
store

3

3

６

7

Total of closed stores

28

42

37

67

Dispensing
pharmacy

Close

Organic
M&A

Hokkaido
122

Tohoku137
Kanto,Koshinetsu
445

Hokuriku,Tokai,Kinki
255

Kyusyu,others
136

51 properties are secured

End-FY4/18 2Q■ Transition of dispensing pharmacies
Organic
M&A
EV/EBITDA ratio

Close
No. of total stores

FY4/09FY4/10FY4/11

FY4/12

FY4/13

FY4/14

FY4/15

FY4/16

FY4/17

FY4/18 2Q

24

21

18

27

38

36

40

32

27

13

3
2.21
8
375

3
3.45
2
397

35
5.60
5
448

28
5.51
9
494

38
5.09
10
560

26
3.94
6
616

119
4.77
21
754

110
5.37
15
881

182
5.50
24
1,066

5
3.88
39
1,045

EV/EBITDA ratio=EV(Purchase price)/EBITDA(Operating income + Depreciation and amortization)© 2017 AIN HOLDINGS INC. All Rights Reserved.

No. of stores include temporary closed stores from FY4/11
20

Top-Line③
Our company’s market share is increasing by active growth strategy. We will continue to open new
stores and to promote M&As considering the risk of dispensing fee revisions and payout period.
■ Sale composition ratio of top companies in dispensing pharmacy market
2011（¥billion）

2016

Dispensing
pharmacy sales

Component ratio

Dispensing
pharmacy sales

Component ratio

1,248

1.9%

2,174

2.9%

5,788

8.9%

11,38815.3%

10,40516.0%

18,887

25.4%

Dispensing pharmacy
sales in AIN Group
Total of top 10
companies
Total of top 50
companies
Market size indispensing pharmacy

65,13374,395Top 50companies

Top 50companies

16.0%

25.4%

2011

2016

¥6.5 trillion¥7.4 trillion

AIN HOLDINGS
Total of 11-50 companies© 2017 AIN HOLDINGS INC. All Rights Reserved.

Total of 2-10 companies
OthersOur estimates from DRUG MAGAZINE “Ranking inpharmaceutical industry”

21Transition of Dispensing Fee Revisions（¥ million）
250,000
200,000

80. 0%

Segment income

71.7%

55.8%

6

217,496
19,1105

150,000¥4.7 trillion

4100,000

70. 0%

60. 0%

15,00030. 0%

66,3925,000
1

10. 0%

4,081
0

0（Plan）
17
0.0 %

07

08

09

10

11

12

13

14

15

16

Revision ratio on dispensing
fees (%)

▲0.6

+0.17

+0.52

+0.46

+0.22

+0.17

Revision ratio on drug prices(%)(Drug prices base)

▲6.7

▲5.2

▲5.75

▲6.0

▲2.65

▲7.77

Pharmaceutical Technical fees in dispensing
management fee
operations（Year）06

2006
42points
19points

2008
40
18

2010
40
24

Basic
dispensing
fee

10,000

20. 0%

50,0000

20,00050. 0%

40. 0%

3

2

25,000

Segment income

Dispensing pharmacy
sａｌｅｓ

Dispensing pharmacy sales

7¥7.5 trillion （¥ million）

Non-hospital dispensing ratio(%)

Dispensing pharmacy market (¥trillion)

8

2016（Additional divisions and conditions）
41
25：Over 2,000 times and over 90% orOver 4,000 times from specific hospitalOver 2,500 times 20：Same group over 40,000 times a month and
2014
41
25

Over 4,000 times
Over 70%

Over 90%

over 95% or lease contract with medical institution

Review ofevaluation for
dispensing
pharmacies

2016
2012（Increase of inventory） 2014
Basic dispensing fee 41points & Inventory 1,200 items & 24-hour
10points：700 items
12：24-hour rotation support 32：rotation support & Home healthcare services (1 case / year) &30points：1,000 items
36：24-hour own support
Notification of primary care pharmacists & Supervising pharmacists

Standards fordispensing
systempremiums
Premiums forgeneric drug
dispensing
systems

Adjustment of evaluation for large
dispensing pharmacies in front of
hospitals is not included.

Open time

2006

2008(Dispensing ratio) 2010(Volume base) 2012

Over 30% 4points
Started promoting
GE drugs by changing
style of prescription

Drug use history
Management
and guidance fee(Instruction fee)2006
22points

Home healthcare services

Primary carepharmacists
instruction fee© 2017 AIN HOLDINGS INC. All Rights Reserved.

201622-30% 5points 55-65% 18points 65-75% 18points
25% 6points
30-35% 15points Over65% 22pointsOver75% 22points
25-30% 13points
Over30% 17points Over35% 19points

2008
30
35：For the elderly
aged over 75

2014(Having operational experience for at least 5 years & Enrollment atleast 1 year & Working over 32 hours per week)

2010
30

2012
41

2014
41
34
No notebooks

2016（Change of conditions）
38：Basic dispensing fee 41 points &Handing over medication notebook &Patients’ visiting within 6 month

50：Except the above

2016（New）70 points
Consent from patients & Pharmacists (Having operational
experience for at least 3 years & Enrollment for at leasta half year & Working over 32 hours per week)Premiums by revisions are excerpted from Japan Pharmaceutical Association
Revision ratio of 2014 Includes the correspondence to consumption tax(Dispensing fees ：+0.18%, Drug price：+2.99%）

Promotion ofgeneric drugs
Adjustment ofover-prescription
and double
medication, etc

Review ofstandard ofprimary carepharmacists

The income after FY 2008 is operating income
Adjustment of evaluation for large dispensing pharmacies
in front of hospitals is not included in revision ration of 2016.

22

Realization of Pharmacy Vision for Patients①
In “Pharmacy Vision for Patients（October 23, 2015 Ministry of Health, Labor and Welfare)”, the path
to reorganize present pharmacies to be primary care pharmacies was shown. We also keep trying tostrength the function of primary care dispensing pharmacies and to train up primary care pharmacists.
（No. of times）■ Primary care pharmacists
Primary care pharmacists
Primary care dispensing
pharmacies
Accumulated No. of
calculation of primarycare pharmacists’instruction fees

200,000（As of October 2017）936 pharmacies（As of October 2017）（From May 2016
to October 2017）

941

1,000,000

Accumulated No. of calculation of primary care pharmacists premium

1,412 pharmacists

941,171（No. of times）

160,000

800,000

Accumulated No. of consent form

164

120,000

600,000

80,000400,000

40,000200,000

0

Object : All pharmacies

0
May.
2016

Jul.

Sep.

Nov.

Jan.
2017

Mar.

May.

Jul.

Sep.

■ Calculation of premiums of preventing double medication and interaction
Accumulated No. of
calculated premiumsof preventing double
medication andinteraction, etc（No. of times）

303,178（From May 2016
to October 2017）

Object : All pharmacies

Accumulated No. of premiums of preventing double medication etc

303

250,000
200,000
150,000■ Doubt reference to doctor
Accumulated No. of
doubt references todoctors

300,000

798,252（From May 2016
to October 2017）

100,000
50,000Object : 756 pharmacies
18 month conversion by investigated result in certain
period of time
© 2017 AIN HOLDINGS INC. All Rights Reserved.

0
May.
2016

Jul.

Sep.

Nov.

Jan.

Mar.

May.

Jul.

Sep.

2017
23

Realization of Pharmacy Vision for Patients②
The standard of premiums for generic drug dispensing systems is getting higher every revision.
We have exceeded the national average by promotion of the wider use of generic drugs.
■ Progress of GE drugs use（%）100.0

GE drugs market share (volume)
GE drugs share in AIN GROUP (volume)
Premiums for GE drug dispensing systems in the group

14.7

16.3
15.0
60.0

40.0

12.4 12.9
6.4

28.2

31.7

58.9

60.1

65.3

32.1 34.6

51.2

53.8

74.5

74.8

20.0（Point）

19.3
69.2

63.1

12.4

18.5

14.7
70.3
64.8

68.8

15.0

70.0
10.0

58.8

23.7
20.0

0.0

-20.0

21.8

premiums

GE drugs share (Volume)

80.0

18.3

18.2

5.0
22.9

24.0

27.0

29.9

Revision of 2010
VolumePointOver 20%
6Over 25%
13
Over 30%
17

Revision of 2012
VolumePointOver 22%5Over 30%
15
Over 35%
19

Revision of 2014
VolumePoint－－Over 55%
18
Over 65%
22

Revision of 2016
VolumePoint－－Over 65%18
Over 75%
22

Apr.

Apr.

Mar.

Apr.

Apr.

Mar.

Apr.

Apr.

Oct.

Mar.

Apr.

Oct.

Apr.

2010

2011

2012

2012

2013

2014

2014

2015

2015

2016

2017

2017

2018

Before March 2013: GE drugs share (volume) is calculated by old standards before revisions

0.0

-5.0

（Plan）

Object :Main 4 companies© 2017 AIN HOLDINGS INC. All Rights Reserved.

24

Realization of Pharmacy Vision for Patients③
Index to promote primary care pharmacists and pharmacies was disclosed. The contents of theindex are same as the effort that our company has kept trying and we will continue to promote
this effort.
■ KPI (draft) to understand the progress of primary care pharmacists and pharmacies
Contents
Integrated andcontinuous
management ofdrug usage

ICT deployment such as digitalpatient medication notebook ordigital medication history
systemHome-based
healthcare

Home-based healthcare(Annual average over a visit
per month) Digital patient medication notebooks
We opened the digital patient medication notebooks
that we co-developed with NTT docomo to the public.
We will start their operation in all pharmacies.
 Home-based healthcare

As of October 2017

Over a visit per year

847 pharmacies

Over a visit permonth(annual average)

654 pharmacies

 Result of patients’ drug usage document（Number）

Pharmaceuticalmanagement andinstruction

Offer of patients’ drug usage
document (Annual averageover a visit per month)

Links with medical
institutions

Pharmacists who completed
health support pharmacy
training attend the meetings
that are for connecting withlocal other professionals.
（Over once per year)© 2017 AIN HOLDINGS INC. All Rights Reserved.

10,000

9,972

Accumulated number

5,0000May. Jul. Sep.Nov. Jan. Mar.May. Jul. Sep.
2016
2017

 Health support pharmacy training

As of November 2017
No. of completed
pharmacists

248 pharmacists

No. of pharmacies thatpharmacists are enrolled

175 pharmacies
25

Recruiting of Pharmacists
In April 2017, new 481 employees (pharmacists : 307, general staff : 174) joined our company.
We plan to recruit 510 new graduates (pharmacists : 350, general staff : 160) in April 2018.
As of the end of October, the number of prospective employees of pharmacists are 402.
■ The transition of No. of national examination passers and new qualified pharmacists in AIN Group2009（People）
No. of newly qualified
pharmacists hired in
AIN Group
No. of pharmacists’national examination
passers (Pass rate)
Rate of newly qualified
pharmacists hired in
AIN Group

2010

2011

2012

2013

2014

2015

2016

2017

2018

259

97

42

189

251

251

229

375

307

11,301

3,787

1,455

8,641

8,929

7,312

9,044

11,4889,479（74.4%） （56.4%） （44.4%） （88.3%） （79.1%） （60.8%） （63.2%） （76.9%） （71.6%）

2.3%（7.5%）

2.6%
（

-

）

2.9%
（

-

）

2.2%

2.8%

3.4%

（5.7%）（7.0%）（8.0%）

3.3%

3.2%（8.0%） （11.7%）

2.5%（9.5%）

350
（

-

）

（

-

）

Estimates : based on the result in AIN Group, and data from the Ministry of Health, Labour and Welfare, Council on Pharmaceutical Education.

（People）

600

General staffs

Pharmacists

No.of newly-hired
employees

500
400

375

307

350

173

174

160

16

17

300
200

259

0

189

97

100

251

229
251

44

78

42
27

47

53

28

09

10

11

12

13

14

© 2017 AIN HOLDINGS INC. All Rights Reserved.

93
15

18 （Year）（Plan）
26

FY4/18 Plan (Dispensing Pharmacy Business)■ Net sales +¥2.3 billion ¥(2.9) billion
FY4/17
results(¥ million)
Net sales

Gross profit% of net sales

SG&A expenses% of net sales

FY4/18
Revisedplan

YoYchange221,801 237,900 +16,099
32,09035,26014.5

14.8

13,432

14,860

6.1

6.2

Operatingincome% of net sales

18,65820,4008.4

8.6

Segment
income% of net sales

19,11021,0008.6

8.8

Figures in the table are rounded down

+3,170+1,428

Increase of net Close ofsales in existing unprofitable
storesstoresYoYchange
(%)

+7.3
+9.9

+10.6

Revision of 2018, etc

New 72 storesopenings+¥16.1billion+7.3%+¥12.7 billion
Full contribution ofprevious year’s
openings

FY4/17
results

FY4/18
Revisedplan■ Segment income¥(2.5) billion+1,742+1,890+9.3+9.9+¥2.3 billion
Increase of net
sales

Operatingcost by increaseof net sales¥(0.7) billion
Increase of laborcosts+¥3.5 billion
・Calculation oftechnical fees
・Use of WSS

FY4/17
results© 2017 AIN HOLDINGS INC. All Rights Reserved.

¥(0.6) billion+¥4.6 billion¥(0.7)
billionInventoryvaluation loss
Revisions of2018 etc.

+¥1.9billion+9.9%

FY4/18
Revisedplan

27

Expansion of AINZ & TULPE①
AINZ＆TULPE Odakyu Department Store Machida was opened in August 2017. AINZ＆TULPE Marui
Kichijyoji Store was opened in November 2017 and it will aim to be a new earnings model as abeauty specialized store which only sells cosmetics.
■ AINZ＆TULPE Odakyu Department Store Machida

Open

August, 2017

Item

13,000SKU

Sales floor

503.9㎡■ AINZ＆TULPE Marui Kichijyoji Store

Open

November, 2017

Item

8,000SKU

Sales floor

243.9㎡© 2017 AIN HOLDINGS INC. All Rights Reserved.

28

Expansion of AINZ & TULPE②Stores that passed over 2 years got a lot of visibility and same stores has been shifting well bystore renovations and measurement of sales promotion. Also, earning power has been improvedby the review of procurement activities, operating efficiency and promotion expenses.
■ Results
Vs plan
FY4/18 2Q
YoYPlan

Net sales

11,566+12.4

10,038+7.2

・Effect of store renovation in same stores
・Acquisition of inbound demands+3.6 ・Acquisition of new customers by sales
promotion activities
+3.0

1,528

+66.1

+7.8

Segment income

163‐

Same store

451+478.2%

Store openings in theprevious year

(60)

‐

(228)

‐

Same store
Store openings in theprevious year and others

Otherschange(%)

Net sales(¥ million)(%)‐ Ordinary income

・Improvement of gross profit by expansion of original
brand and an overhaul of procurement activities.
・Increase of operating efficiency and improvement‐of customer services
・Review of expenses such as store opening cost‐and sales promotion expenses, etc+47.7■ Transition of net sales and the ratio of gross profit to net sales（¥billion）

Net sales

Net sales

Gross profit

36.8

200
20
23.6

100
10
0
FY4/10FY4/11

FY4/12

FY4/13

FY4/14

FY4/15

FY4/16

FY4/17

FY4/18Net sales（¥billion）

13.6

14.8

15.3

16.7

17.9

17.8

20.8

21.3

23.6

No. of stores

49

53

56

61

59

56

52

52

49

© 2017 AIN HOLDINGS INC. All Rights Reserved.

（%）

40.0

20.0

0.0
(Plan)The ratio of grossprofit to net sales

300
30

29

Analysis of Results（Drug and Cosmetic Store Business）■ Net sales(¥ million)
Net sales

FY4/18 2Q FY4/18 2Q
Vs planPlan
Results

11,160 11,566

Gross profit% of net sales

4,120

4,320

36.9

37.4

SG&A expenses% of net sales

4,390

4,177

39.3

36.1

Operatingincome% of net sales

(270)

143

-

1.2

Segment income% of net sales

(210)

163

-

1.4

Figures in the table are rounded down

© 2017 AIN HOLDINGS INC. All Rights Reserved.

+406

Vs plan
（%）

+3.6

+200

+4.9

(213)

(4.9)

＋¥0.1 billion
Growth of storesthat are opened inprevious year+¥0.4
billion+¥0.3 billion
Growth ofexisting stores+3.6%

FY4/18 2Q
Plan

FY4/18 2Q
Results■ Segment income+413-+¥0.1 billion¥(0.1)billion

Increase of net sales Cost of closing stores+¥0.1billion

+373

-

Improvement ofgross margin+¥0.3 billion+¥0.4 billion

Control of cost of
opening stores

FY4/18 2Q
Plan

FY4/18 2Q
Results30

FY4/18 Plan（Drug and Cosmetic Store Business）(¥ million)
Net sales

FY4/18
Revisedplan

FY4/17
Results

YoYchange21,383 23,600 2,217

Gross profit% of net sales

7,623

8,680 1,057

35.6

36.8

SG&A expenses% of net sales

8,583

8,430

40.1

35.7

YoY
change(%)■ Net sales+¥0.5 billion¥(1.3) billion
New 4 stores
Close of unprofitable+¥1.2 billion
storesGrowth of existing
stores+10.4＋¥1.8 billion+13.9

Full contributionof opening inprevious year

FY4/17
Results

(153)

(1.8)

■ Segment income+¥2.2
billion+10.4%

FY4/18
Revised plan(0.1) billion

Cost of closing
Control of cost of storesopening stores+¥0.3 billion
Operatingincome% of net sales
Segment income% of net sales(959)

250 1,209

‐

(866)

1.1

280 1,146‐

Figures in the table are rounded down

© 2017 AIN HOLDINGS INC. All Rights Reserved.

‐

1.2+¥0.3 billion‐

Improvement ofgross margin+¥0.6 billion+¥1.1 billion

Adjustment ofoperation cost

FY4/17
Results

FY4/18
Revised plan31

FY4/18 Revised Plan (Consolidated)
Net sales went according to original plan reflecting the close of unprofitable stores in preparation for the revisionof April 2018, even though both dispensing pharmacy business and drug and cosmetic store business went strong
in FY4/18. We also decided to revise up our forecasts that ordinary income increase 22.7% because same storesin drug and cosmetic store business are shifting well and operating efficiency is improving.
(¥ million)

Net sales

Gross profit

FY4/17
results

248,110
42,092

267,500
46,53017.0

17.4% of net sales

SG&A expenses% of net sales

Ordinary income

Annual dividend (¥)

YoYchange (%)

267,500 +19,390
47,400 +5,308+12.6+1,871+6.8+3,437+23.6+3,420+22.7+1,251

+15.7

17.7

+7.8

29,400

11.1

11.2

11.0

14,563

16,60018,000

5.9

6.2

6.7

15,08017,00018,500

6.1

6.4

6.9

7,949

8,900

9,200

3.2

3.3

3.4

250.71

261.15269.96+19.25

+7.7

50.00

50.00

50.00

(0.00)(0.0)% of net sales

Earnings per
share(¥)

YoY
change29,930% of net sales

Profit attributableto owners of parent

FY4/18
revised plan

27,529% of net sales

Operating income

FY4/18original plan

Figures in the table are rounded down

YoY change, YoY change(%) :FY4/18 revised plan compared with FY4/17 results

Earnings per share is calculated including new shares issued through a public offering (2,820,000) a private
placement (270,000) and a private placement for a secondary offering using an over-allotment option (450,000).
© 2017 AIN HOLDINGS INC. All Rights Reserved.

32

Supplementary Information© 2017 AIN HOLDINGS INC. All Rights Reserved.

33

Dispensing Fee Revisions of 2016
Before revision

Basic dispensing
feeStandards fordispensing system
premiums
Premiums forgeneric drug
dispensing
systems
Drug use history
management andguidance fee
Premiums for
specific drug
management
instruction

Special case

Except following

Over 4,000 times and over 70%
Over 2,500 times and over 90%

Basic dispensing fee 41 points & Inventory 700 items& 24-hour rotation support & Home healthcare support

Point
41
（31）

25
（19）

12

Basic dispensing fee 41points & Over 600 times, less

After revision

Point

1

Except following

41
（31）

2

Over 4,000 times and over 70%
or Over 2,000 times and over 90%
or Over 4,000 times from specific hospital

25
（19）

3

Same group over 40,000 times /month and over 95% or Lease
contract with medical institution

20
（15）

Basic dispensing fee 41points & Inventory
1,200 items & Home healthcare services(1 case / year) & Notification of primary carepharmacists & Supervising pharmacists having
operational experience for at least 5 years andenrollment for at least 1 year

32

than 70% & Inventory 1,000 items & 24-hour own
support & home healthcare services (10 cases / year）

36

55%-65%1865-75%

18

Over 65%

22

Over 75%

22

Except following

41

Basic dispensing fee 41 points & Patients’handing over medication notebook &Patients’ visiting within 6 months

38

No notebooks

50

34

Except the above
Primary care pharmacists
instruction fee

Specific drug management instruction

4

Specific drug management instruction

1070

Condition for calculating
primary care pharmacists
instruction fee

Operational experience for at least 3 years, Working over 32 hours per week, Belongs topharmacy over 6 months, Certified pharmacists, Participation of community activity

Operation of primary carepharmacists

Guidance for drug usage, Integrated and continuous management of patients’ information,
24-hour support, Management of surplus drugs, Home-based healthcare© 2017 AIN HOLDINGS INC. All Rights Reserved.

34

Company Profile
Trade name
Representative
EstablishedMarket capitalization
Net sales andoperating income
Sales composition
Number of employees

AIN HOLDINGS INC
Kiichi Otani, President and Representative Director

August 1969
¥244,782 million As of April 30, 2017
Net sales: ¥248,110 million

Operating income: ¥14,563 million

As of April 30, 2017

Dispensing Pharmacy : ¥221,801 million, Drug and Cosmetic Store : ¥21,383 million,
As of April 30, 2017
Others : ¥4,925 million
9,774 (including pharmacists：4,518)
As of April 30, 2017
《Dispensing pharmacy》 AIN PHARMACIEZ Inc. and other 78 companies.

Group companies《Staffing services》 《Consulting services》 MEDIWEL Corp., Medical Development Co., Ltd. etc《Generic drug wholesales》 WHOLESALE STARS Co., Ltd
As of April 30, 2017

Number of stores

1,118 (1,066 dispensing pharmacies, 52 drug and cosmetic stores) As of April 30, 2017

Drug and Cosmetic
Store 8.6%
© 2017 AIN HOLDINGS INC. All Rights Reserved.

FY4/17 Consolidated
net sales¥248,110 million

Dispensing Pharmacy
89.4%
35

Comparison to Other Companies
（%）
8.0

7.0

6.0

B company

Operating margin

C company
5.0

A company AIN HOLDINGS

E company

Net sales：¥248,110 million

4.0

Operating margin：5.9%
3.0

Market capitalization：

D company¥244,782 million

2.0

1.0

0.0
0

40,00080,000120,000

160,000

200,000

240,000（¥ million）

Net sales
Based on each company’s summary of financial statement for FY 3/17 (Our company: FY4/17)
Size of circle is proportional to market capitalization on April 30, 2017
© 2017 AIN HOLDINGS INC. All Rights Reserved.

36Inquiries related to this presentation should be addressed to

AIN HOLDINGS INC.
Corporate Planning Division
TEL(81)11-814-0010
FAX(81)11-814-5550
http://www.ainj.co.jp/
This document may not be reproduced or distributed to any third party without
prior approval of AIN HOLDINGS INC. This document has been prepared for
information purpose only and does not form part of a solicitation to sell orpurchase any securities. Information contained herein may be changed orrevised without prior notice. This document may contain forecastingstatements as to future results of operations. No forecast statement can be
guaranteed and actual results of operations may differ from those projected.

© 2017 AIN HOLDINGS INC. All Rights Reserved.

37