Summary of Results for FY2015

Lawson, Inc.
April 14, 2016

Copyright (c) 2016 Lawson, Inc. All rights reserved.

1

Financial Results for FY2015

Yutaka Yoshitake
Chief Financial Officer

Copyright (c) 2016 Lawson, Inc. All rights reserved.

2

Earnings Summary for FY2015
Consolidated OP
Consolidated net profit
ROE
Non-consolidated OP 57.2bln yen (-6.1% YoY)
Existing-store sales*
Gross profit margin*
SG&A expenses+1.4% YoY
31.3% (±0.0pp YoY）
+8.0% YoY

1,007 new store openings (Group), 223 below plan

Operating profit at major subsidiary firms
SEIJO ISHII CO., LTD. 5.7bln yen (+4.2bln yen YoY)
United Cinemas Co., Ltd. 2.3bln yen (+2.1bln yen YoY)
International operations -2.8bln yen (+0.3bln yen YoY)

72.5bln yen (+2.9% YoY)
31.3bln yen (-4.0% YoY)
12.0%
Consolidated recurring profit 69.6bln yen (-2.9% YoY)
Non-operating loss:
2.9bln yen
Forex loss
0.8bln yen
Loss on lease cancellations
1.9bln yen
and others
Consolidated net profit 31.3bln yen (-4.0% YoY)
Special loss:
14.2bln yen
Retirement of fixed assets
4.3bln yen
Impairment loss
10.5bln yen
and others
Income taxes-deferred:-4.0bln yen
Deferred tax assets-1.8bln yen
and others＊Existing-store sales & gross profit margin include Lawson and Natural Lawson combined operations

Copyright (c) 2016 Lawson, Inc. All rights reserved.

3

FY2016 Estimates
Consolidated OP
Consolidated net profit
ROE
Non-consolidated OP 59.0bln yen (+3.1% YoY)
Existing-store sales+1.0% YoY
Gross profit margin
31.6% (+0.3pp YoY）
SG&A expenses+10 to 15% YoY
1,200 new store openings (Group) planned

Operating profit at major subsidiary firms
SEIJO ISHII CO.,LTD.
7.5bln yen (+1.7bln yen YoY)
Lawson Store100 Co., Ltd. 1.1bln yen (+0.7bln yen YoY)
International operations-2.9bln yen (-0.1bln yen YoY)

76.0bln yen (+4.8% YoY)
35.5bln yen (+13.1% YoY)
13.2%
<1000 Days Action Plan>
Heavy investment in boosting product mix andstore productivity
In-store investment, incl. chilled display cases
5.0bln yen～
IT system, incl. operational tablets
5.0bln yen～
Efforts to supported everyday living focused in 1H,
expected to weigh on profits
Consolidated OP 1H 39.5bln yen (-6.0% YoY)
2H 36.5bln yen (+19.7% YoY)
Incorporates 2.0bln yen expenditure in 1H on
measures to improve product mix＊Existing-store sales & gross profit margin include Lawson and Natural Lawson combined operations

Copyright (c) 2016 Lawson, Inc. All rights reserved.

4

“1000 Days Action Plan”
Toward a Next-generation Convenience Store Model

Genichi Tamatsuka
President and CEO
Representative Director
Copyright (c) 2016 Lawson, Inc. All rights reserved.

5

FY2015 Year Summary
Strengthen CVS business to challenge tough business environment
Stores

Products- Semi-automatic orderingsystem- Planned orders- Franchise store guidance- High quality store
openings- Strengthen CVS coreproducts, SM alterative
products- SCM reforming- More advertising /promotion

Franchise OwnerSupport- Accelerate new
franchise package- Investment inexisting stores

Recovered existing-store sales
Improved franchise owner’s profits
Copyright (c) 2016 Lawson, Inc. All rights reserved.

6

FY2015 Review
Consolidated OP 72.5 billion yen (+2.9% y/y, 1.5 billion v. plan)
Recovery of customer visits to existing stores driven by semi-automatic orderingsystem and more aggressive promotions.
Favorable performance of Seijo Ishii, United Cinemas. Progress in restructuring of
Lawson Store 100.
Large impact from refinement of impairment losses, net profit down y/y.

FY2015 Actual
Consolidated operating profit

72.5 billion yen(＋1.5 bln yen versus plan)

Consolidated net profit

31.3 billion yen（-3.9 bln yen versus plan)

Existing-store sales(parent, y/y)*101.4％（＋0.5％p versus plan）

Gross profit margin (parent)*

31.3％（±0.0％p versus plan）*Lawson and Natural Lawson store combined total
Copyright (c) 2016 Lawson, Inc. All rights reserved.

7

Business Environment

Changes in the macro economy
Ageingsociety,lower birthrateMore 1 or 2personhouseholds

Diverse customer
needs

More
doubleincome
households

Fallingworking age
population

Micro changes
Average figures do notexhibit all the facts

Fewer
shopping
placesWider variance ofstore quality level

Rapid consolidation of the CVS industry
Copyright (c) 2016 Lawson, Inc. All rights reserved.

8

1000 Days Action Plan

To become an essential part of our communities
Build a next-generation Lawson-style CVS model

Digital- Master the basics- Respond to changes- Rise to the challenge for
future growth

Develop theoperational framework

Stores

Products

AnalogChangethe working style

Franchise
support

Lawson’s Vision

To be a leading execution-driven company
Copyright (c) 2016 Lawson, Inc. All rights reserved.

9

1000 Days Action Plan

Next-generation Lawson-style CVS model
Convenience (24 hour, fulfil sudden demand)

Supporting everyday life,
becoming an essential
part of communities

Daily demand for essentials
Expand product range including supermarket alternatives, in-store
cooked food, home delivery, health related products and services

Raw material procurement

Visualize upstream &midstream
as manufacturing retailer

Inventory risk management, strong selling power
Reform distribution / logistics
Visualize manufacturing process

Operational reforms

Productivity revolution
High-grade store operation

Copyright (c) 2016 Lawson, Inc. All rights reserved.

Multiple store management
Develop next-generation systems

10

Strengthening Management Systems

CEO & COO
Chairman/CEO and President/COO work together
to speed up corporate transformation
Drive 1000 Days Action Plan by accelerating business transformation to suit changing
social dynamics
Join forces as the Lawson Group to overcome severe market competition
Expand business beyond Japanese CVS: international CVS operations, entertainment,
Seijo Ishii and others.

Chairman & CEO

President & COO

Genichi Tamatsuka

Sadanobu Takemasu- Responsible for overall management(Chairman of the Board of Directors, and Executive Committee Mtg)
- Control core Japanese CVS operation, lead 1000 Days Action
Plan, hands-on strong leadership of on-the-ground operations
Copyright (c) 2016 Lawson, Inc. All rights reserved.

- Further strengthen leadership as President, drive expansion of
Lawson Group business scope (International operations,entertainment, etc.),- Strengthen ties with Mitsubishi Corporation*Scheduled to take effect June 1, 201611

Renewal of Corporate Culture
Set New Corporate Vision and Code of Conduct
Corporate Philosophy (remains unchanged)
Creating Happiness and Harmony in Our Communities

VisionTo be a leading execution-driven company.
We think through the changing needs of our customers, execute strategy with speed
and become an essential part of our communities.

Code of Conduct
1. Everything starts with our customers, our communities and our stores.
2. Master the basics and strive to innovate.
3. Improve quality and speed of the PDCA (Plan-Do-Check-Act) cycle.
4. Act with discipline, take initiative and succeed as a team.
5. Pursue growth as individuals and support the growth of others.
Copyright (c) 2016 Lawson, Inc. All rights reserved.

12

Fiscal 2016 Action Plan
Expand product range tosupport all everyday
needs

Invest in existing-store equipment and shelves to actively expand
product range

Strengthen selling power,
develop new distribution
systems

Fully implement semi-automatic order system and planned orders

Build next-generation
systems to boost store
productivity

Use cloud-based IT system and artificial intelligence to modernize systems

Planning advertising to boost new merchandising

Launch distribution center with three different temperature zones(room, cold, freezing)

Revolutionize in-store working patterns by introducing tablets, etc.

Reforming business processes company-wide
Product
development

Store Management
guidance

Merchandiser

Supervisor

Store Location
development“Recruit Field Counselor”
store location consultants

Changing the working style
Copyright (c) 2016 Lawson, Inc. All rights reserved.

13

Strengthen daily support for our customers
Become an essential part of our communities
by supporting our customers’ everyday needs
Year 1（FY2016）

Year 2（FY2017）

Year 3（FY2018）

Satisfy manifest needs

Expand sphere of differentiation

Respond to latent needs

3
Expand OTC drug
sales and healthcare
related services

2
Expand in-store cooked
items and home delivery
service1Strengthen presence as a credible
supermarket alternative

Continue to strengthen fundamental CVS core products
Copyright (c) 2016 Lawson, Inc. All rights reserved.

14

Stronger Support for Everyday Life
Expand product range to support everyday living
FY2016 1st Half : Implement strategic measures
Investment in existing
storesStrengthen productfor everyday needs

Boost awareness of
new merchandising- Build more chilled food cases- Introduce flatbed freezers- Develop higher shelf gondolas- Renew Lawson Select series- Develop core CVS products- Increase staple product SKU- More fast food for dinner dishes- Continue regularly advertising- Increase TV ads on Lawson’s
supportive role for everyday needs

Existing-store CAPEXSKUs at LAWSON

A&P expenses+5.0bln yen～Y/Y+10%～Y/Y+2.0bln yen～Y/Y(Including leasing assets)(Parent basis)

Copyright (c) 2016 Lawson, Inc. All rights reserved.

15

Stronger Support for Everyday Life
Expand product mix by 10% to3,500SKUs

Stronger merchandising inchilled food open cases

Improve staple food and goods
merchandising

Fresh food, daily-delivered food, deli items
Build one more chilled food open cases

Processed foods, frozen items, daily goods
Introduce freezer flatbeds, higher shelves
to expand products to 2,700SKU

Fulfil all demands for daily life andencourage multiple purchases

Targeted purchases→Encourage repeat buying

Use chilled food open cases to encourage
multiple purchases from staple food and goods
Copyright (c) 2016 Lawson, Inc. All rights reserved.

16

Stronger Support for Everyday Life
With better hardware at store and improved ordering systems
Achieve significant improvement of “key merchandising items”
Store number by SKUs at“Key merchandising items”

2015
approx.
2,300SKU

2014
approx.
2,200SKU

2016
approx.
2,700SKU(Est)

Better hardware
Shift to higher shelves
More freezer flatbeds

Active systems
Tailor product mix to suit
individual stores with preplanned ordering

More SKUs = less deviation of store level
Copyright (c) 2016 Lawson, Inc. All rights reserved.

17

Stronger Support for Everyday Life

Boosting product mix across LAWSON stores

DigitalMake full use of
semi-automaticand pre-plannedordering

AnalogStrongermanagement skills ofsupervisors

10,000Createstores offering strong support forcustomers’ overall everyday life by end FY2016
Copyright (c) 2016 Lawson, Inc. All rights reserved.

18

Stronger Support for Everyday Life

Strengthen Lawson Select to meet abroader variety of daily needs
Expand categories for Lawson SelectOriginal Lawson deli-items and cut vegetables, andLawson’s private brand Oyatsugoro snacks adapted for
Lawson Select in March and June respectively

Strengthen activities with manufacturers
Develop products with major industry players and specialist manufacturers

Meeting the needs toward a health-conscious society
Offer products made with high-grade flavouring or ingredients

Copyright (c) 2016 Lawson, Inc. All rights reserved.

19

CVS Core ProductsContinue improvement of CVS core items
such as lunch boxes, and others
Utilizing common ingredients

More Niigata “Koshihikari” ricelunchboxes

Share ingredients forsuperior products
Hamburger(foodstuff item)

In a lunchbox

Teppanyaki hamburger
lunchbox with
Niigata Koshihikari rice

In an originaldeli-item

Copyright (c) 2016 Lawson, Inc. All rights reserved.

In a standpack item

Aged pork cutlets lunchbox
With Niigata Koshihikari rice

Grilled Kinka mackerel lunchbox
With Niigata Koshihikari rice

Grilled salmon lunchbox
With Niigata Koshihikari rice*computer-generated images

20

Health-related Products

Expand health-related product category
for food that is both tasty and healthyv. FY2015
60bln
yen

118blnyen

200blnyen

1.5 times

2013

2014

2015

2017 target(FY)

NATURAL LAWSON smoothie seriesOver 2.7mln units sold since May 2015
*Total number of “Green smoothie”, “Vegetable and fruit smoothie with chia seed“ and “Maqui berries smoothie”. (as of Feb. 2016)

Copyright (c) 2016 Lawson, Inc. All rights reserved.

21

Manufacturing Retailer Based on Small Commercial Areas
Stronger partnership withmega vendors（3 large-scale manufacturers）

More involvement in
manufacturing as Lawson

Control processes from raw material procurement to productdevelopment, manufacturing, and retail
Source raw materials through SCI*
Utilize semi-automatic ordering system linked demand prediction systems
Support new capex for automation, etc.
SCI direct participation to reform manufacturing processes more efficient
Backup from Mitsubishi Corporation*SCI, Inc. is a subsidiary of Lawson., Inc.

Products
Copyright (c) 2016 Lawson, Inc. All rights reserved.

Create specific superior taste/feature items
Keep a high standard for product quality
Offer safe, secure products
22

Transforming Distribution

Launch three temperature-zone distribution center
Lawson’s own full-line center

BeforeLawson’s first operating distribution center

5 deliveriesperstore/day

3 temperatures in one (room, cold,
freezing)
Launched March 2016
Outsource warehousing and truck delivery

1st
2nd
3rd
chilled run chilled run chilled run

Daily

Frozenfood runDryfood run

5 days a
week

After
4 deliveriesperstore/day

1st
2nd
3rd
chilled run chilled run chilled run
drinksFF

Daily

Frozenfood runDryfood run

5 days a
week

Visualize process and product flows in autonomous distribution center
Combined triple temperature zone system enables fundamental review ofdelivery frequency, improves store productivity
Copyright (c) 2016 Lawson, Inc. All rights reserved.

23

Reforming Business ProceduresStarted building next-generation systems
After

BeforeProduction
estimates lead tolosses waste

Production

StoresInformation analysis

StoresInformation
analysis
Data usage left
up to individual
staff

Distribution

Production

Distribution

Batch
processing oforder data

Analysis data

Cloud-base systems

Estimates can resultin excess deliveries

Real-time demand prediction
by store or individual item

Long lead times!
Can’t even predict
next-day stock!

Complicated, cumbersome store operation.
Ordering depends on individual experience andhunches
Copyright (c) 2016 Lawson, Inc. All rights reserved.

ＡＩ

ＡＩ

•
•

ＡＩ

ＡＩ

Control entire system in real time using
intelligent, demand forecast(Reduce lead times, boost efficiency)
Simplified, efficient operations
Prediction-based ordering. More time tofocus on creating attractive stores24

Reforming Business Procedures
Renew operation systems, improve store productivity

Next-generation
POS
Automaticchangedispensers

25％

Semi-automaticordering

more efficient

Operational
tablets

Distribution
reformPaperless2016 Nov: Introduce operational tablets
2017 Nov: Introduce new point of sale registers, new store PCs
and automatic cash dispensers
Copyright (c) 2016 Lawson, Inc. All rights reserved.

25

New Store Strategy
Focus on quality and quantity;
1,200 new stores scheduled for FY2016
FY2016 Lawson store opening
strategy in Japan
Open
1,200
Close

500

Net increase

700*Include Lawson Kochi, Inc., Lawson Minamikyushu, Inc. and Lawson
Okinawa, Inc.

Copyright (c) 2016 Lawson, Inc. All rights reserved.

26

FY2016 Plan
Parent profit to drive consolidated OP gains
Generate existing-store sales growth by boosting APP through stronger
support of everyday living
Aim to achieve gross profit margin back on solid growth track
FY2016 plan
ActualY/YParentExisting-store sales* (y/y)+1.0%Gross margin* (y/y)+0.3ppSG&A (y/y)+10% ～ +15%
59.0bln yen+1.7bln yen/+3.1%

Cons-parent differential

17.0bln yen+1.7bln yen/+11.2%

Consolidated operating profit

76.0bln yen+3.5bln yen/+4.8%

Consolidated net profit

35.5bln yen+4.1bln yen/+13.1%

Operating profit*Lawson and Natural Lawson combined store total
Copyright (c) 2016 Lawson, Inc. All rights reserved.

27

ROE
Temporary fall in FY2015 due to special losses
ROE expected to resume upward trend from FY2016 onwards
ROE
(%)

13.5％
(FY2016 forecast）(FY)
Copyright (c) 2016 Lawson, Inc. All rights reserved.

28

Dividend
No change in fundamental strategy to gradually increase
shareholder returns

Changes in annual dividends per share and dividend yield
(JPY)

250
JPY

(Forecast)
Copyright (c) 2016 Lawson, Inc. All rights reserved.

29

Medium-term Roadmap● Initiatives toward 1) 100 billion yen in operating profit and 2) ROE 20%● Maintain capital discipline with emphasis on ROIC
● Differentiation by products with high GPM● Capitalize on consolidation opportunities

Gross
operating profit

Consolidated
operating profit
100 billion yen

Non-consolidated
LawsonConsolidated
subsidiaries

ROE 20%
Dividend increase/share buy-back andcancellation

Copyright (c) 2016 Lawson, Inc. All rights reserved.

Selling,
general andadministrative
expenses

Existing stores'
gross profit

Net increasein stores
by 5% per year

Industry
consolidation

30

Creating Happiness and Harmony
in Our Communities

To be a leading execution-driven company.
We think through the changing needs of our customers, execute strategy with speed
and become an essential part of our communities.
Copyright (c) 2016 Lawson, Inc. All rights reserved.

31

Reference

Copyright (c) 2016 Lawson, Inc. All rights reserved.

32

Earnings Summary for FY2015
Net sales of all stores
Operating profit
Operating profit ratio
Recurring profit
Net profit
EPS (Yen)
Dividend per share (Yen)ROE

FY2013
Actual
1,945.3
68.1
3.5%
68.8
37.9
380.04220
16.1%

FY2014
Actual
1,961.9
70.4
3.6%
71.7
32.6
327.08240
13.0%

Total no. of stores in Japan

11,606

12,383(Consolidated：Billions of yen)

Actual
2,049.5
72.5
3.5%
69.6
31.3
313.81245
12.0%

FY2015
YoY
104.5%
102.9%▲ 0.1%P
97.1%
96.0%▲ 13.27+5▲ 1.0%P

vs. Plan
99.4%
102.2%+0.1%P
101.0%
89.2%▲ 38.19±0▲ 1.5%P

12,515

+132

▲ 331

Note: Total chain store sales from FY2014 onward includes sales from the convenience store operation in Japan, overseas operations and sales
from Seijo Ishii (consolidated items only). Regarding Seijo Ishii, only the sales of direcctly operated stores are included.
Note: The number of stores from FY2014 onward is the total number of convenience stores in Japan operated by the Lawson Group plus
the number of directly operated Seijo Ishii stores.
Note: Change indicates comparison with plan announced along with the FY2014 2Q results.

Consolidated OP increased 2.9% YoY, and came in 1.5bln yen or 2.2% higher than planned
Existing-store sales increased YoY but higher advertising and promotion and other expenses weighedon performance, knocking Lawson parent operating profit lower.
Consolidated operating profit rose thanks to strong contribution from Seijo Ishii, United Cinemas.
Consolidated net profit down 4.0% YoY and down 10.8% versus plan
Consolidated recurring profit down on yen-appreciation generated forex losses and lease cancellation
charges on store closures. Consolidated net profit also down on reduction in deferred tax assets andan increase in special losses related to renewed impairment criteria.
Copyright (c) 2016 Lawson, Inc. All rights reserved.

33

Existing Stores (Non-Consolidated*)* excluding LAWSON MART/LAWSON STORE100 business＜FY2015＞
Existing store sales up 1.4%
Gross profit margin flat YoY (number of customers up 0.9%, spending per customer up 0.4)

Existing-store sales up 1.4% YoY. Customer visits and spending per customer both improved
driven by higher advertising spend, and improvements in product mix following the introductionof semi-automatic ordering system.
Gross profit margin (excl. cigarette sales) down 0.3pp YoY on increased number of strategic
sales and campaigns, but overall gross profit margin steady YoY at 31.3% as cigarette sales
contribution continues to fall.
Existing-store gross profit, which has direct implications for franchisee’s profits, rose 1.3% YoY.
Copyright (c) 2016 Lawson, Inc. All rights reserved.

34

Store Openings (Non-Consolidated*)(Net store increase)*excluding LAWSON MART/LAWSON STORE100 business(Daily new store sales in 1,000 yen)

964

450

514
Opened 964 stores, approx. 200 less than originally planned, after only 66 of a forecasted 200 stores actually didtransfer from other chains * to LAWSON stores.
Daily sales per new store rose year on year to 494,000 yen.
FY2016 Group stores plans (incl. LAWSON STORE100): open 1,200, close 500. Net increase: 700.
＊These include transfer from subway kiosk stores.
＊＊The counting standard for store opening/closure has been changed in actual results from fiscal year 2015. Now the number of stores, which are converted into a different format within
LAWSON/NATURAL LAWSON and LAWSON STORE100/LAWSON MART, are also counted in “opening” and “closure”.

Copyright (c) 2016 Lawson, Inc. All rights reserved.

35

Key Components of SG&A Expenses(Billions of yen)

Selling, general & administrative expenses
Non-consolidated＜Major Expenses＞
Personnel expenses
IT-related expenses(Hardware leasing, software amortization, maintenance, etc.)
Advertising and promotional expenses
Facilities expenses

Consolidated SG&A expenses

Compared to Fiscal 2013

FY2014
Actual232.9

FY2015

251.6

Change+18.6

FY2016
Forecast
Increase 10-15%

36.6
12.7

39.2
11.3

+2.5
▲1.4

Increase 5-10%
Increase 0-5%

8.2
127.4

14.7
135.6

+6.4
+8.2

Increase15-20%
Increase 5-10%

299.3

354.9

+55.6

Increase 10-15%

ActualCompared to Plan

Non-consolidated

A&P: Sharply higher on aggressive advertisingthroughout the year.
Other expenses: Increased HQ expenses following
accelerated introduction of new franchise contracts
in which HQ takes on a portion franchise stores’
wastage disposal costs and electricity charges.

Non-consolidated

0.5bln yen below plan: TV ads and otheradvertising higher than expected, but
equipment costs fell on the back of lower new
store openings, and other expenses declined
on lower electricity unit costs.

Consolidated

In addition to non-consolidated factors, theconsolidation of full-year expenses from Seijo Ishii
and United Cinemas swelled total SG&A expenses.

Consolidated

1.3bln yen higher than plan:United Cinemaschanged fiscal year end and additional twomonths impacted on SG&A expenses.

Copyright (c) 2016 Lawson, Inc. All rights reserved.

36

Earnings of Major Subsidiaries(Billions of yen)

＜Operating Profit of Major Subsidiaries＞
Lawson Mart, Inc.
SEIJO ISHII CO., LTD.
Lawson HMV Entertainment, Inc.
Lawson ATM Networks, Inc.
United Cinemas Co., Ltd.
Chongqing Lawson, Inc.
Shanghai Hualian Lawson, Inc.

FY2016
YoY change Forecast▲ 1.38
1.10
+4.24
7.50
▲ 0.62
2.10
+0.25
6.10
+2.18
1.80
+0.12
▲ 0.50▲ 0.11▲ 0.50FY2015

FY-endOwnership

Actual

Feb.
Dec.
Feb.
Feb.
Feb.
Dec.
Dec.

100.0%
100.0%
100.0%
76.5%
100.0%
100.0%
94.0%

0.37
5.79
2.46
6.18
2.33
▲ 0.77▲ 0.75

Note: Lawson Mart, Inc. has changed its name to Lawson Store100, Inc. since March 2016.
Note: United Cinemas Co., Ltd.'s result of FY2014 is result of four months (from September 2014 to December 2014). Futhermore, due to changing closing month from March to
February in FY2015, the result of FY2015 is result of fourteen months (from January 2015 to February 2016) shown in consolidated statement of income.

Lawson Mart

Closed 345 stores (including stores that changed to another brand) as part of operational restructuring plan. Reported a
0.7bln yen operating loss for Lawson store100 business as a whole, including business division of Lawson, Inc.. Expect arecovery in sales to generate an operating profit in FY2016.

SEIJO ISHII

full-year performance incorporated for first time in FY2015. OP up on strong sales of super foods such as chia seeds andother categories. Expect continued rising sales and profit in FY2016. Business year end to shift from December to February.

Lawson HMVEntertainment

Strong sales of theme park entrance tickets, but increasingly fierce competition for large-scale concert ticket management
weighed on profitability, and dampened profits. Expect profit to fall again in FY2016 as the burden for new ticket systemdepreciation increases, etc.

UnitedCinemasOperating profit gain: Change in business year end to February meant 14 months of performance were included in the
FY2015 data, and a series of hit movies attracted more customers. Profit for FY2016 will decline in comparison to such astrong previous year performance.

Lawson ATM
Networks

Secured a profit gain on reduced daily ATM usage, higher ATM installations in line with rising net store numbers, and review
of ATM operating costs. Successful inbound response: introducing new-style ATMs, etc.

Copyright (c) 2016 Lawson, Inc. All rights reserved.

37

Cash Flows and Capital Expenditure (Consolidated)
Consolidated Capital Expenditures（Billions of yen）

Subtotal for capital expenditure

FY2013
Actual
32.2
7.0
5.3
2.0
46.7

FY2014
Actual
49.0
5.8
8.2
2.7
65.8

FY2015
Actual
40.4
6.7
15.8
1.4
64.5

FY2016
Forecast
51.5
10.0
18.0
1.0
80.5

Depreciation and amortization

47.8

41.8

49.2

59.3

New stores
Existing stores
IT-related
Other（Billions of yen）

Consolidated Cash flows
Cash flows from operating activities
Cash flows from investing activities

Free cash flows
Cash flows from financing activities(Cash dividends paid)

FY2013
Actual81.5▲ 47.933.5

FY2014
Actual110.5▲ 100.4
10.1

FY2015
Actual112.2▲ 68.643.5

FY2016
Forecast
Approx. 120.0
Approx. ▲85.0
Approx. 35.0

▲ 39.6▲ 20.9▲ 3.2▲ 22.9▲ 50.2▲ 24.2

Approx. ▲55.0
Approx. ▲25.0

68.7
76.7
69.7
FY2015 cash flow from investing activities declined YoY on lower acquisitions, free cash flow
recovered to 43.5bln yen. FY2016 cash flow from investing activities expected to reach ahigh level due to intended investment in store improvements and systems.

Cash and cash equivalents at end of period

Copyright (c) 2016 Lawson, Inc. All rights reserved.

38

FY2016 Company Forecasts (Consolidated)
Net sales of all stores
Operating profit
Operating profit ratio
Recurring profit
Net profit
EPS（Yen）
Dividend per share (Yen)ROE

FY2014
Actual
1,961.9
70.4
3.6%
71.7
32.6
327.08240
13.0%

FY2015
Actual
2,049.5
72.5
3.5%
69.6
31.3
313.81245
12.0%

FY2016 Forecast
Plan
YoY
2,170.0
105.9%
76.0
104.8%
3.5%
±0%P
73.0
104.9%
35.5
113.1%
355.00+41.19250+513.2%+1.2%P

Total no. of stores in Japan

12,383

12,515

13,229+714

Gross profit at existing stores (YoY)
Net sales at existing stores (YoY)
Gross profit margin ratio

100.0%
99.0%
31.3%

101.3%
101.4%
31.3%

102.0%
101.0%
31.6%+0.3%P

Gross profit margin difference excluding cigarettesales (YoY)±0.0%P▲0.5%P±0.0%P+0.5%P(Billions of yen)(Non-consolidated*)*excluding LAWSON MART/LAWSON STORE100 businessNote: Total chain store sales includes sales from the convenience store operation in Japan, overseas operations and sales from Seijo
Ishii (consolidated items only). Regarding Seijo Ishii, only the sales of direcctly operated stores are included.
Note: The number of stores is the total number of convenience stores in Japan operated by the Lawson Group plus the number of directly
operated Seijo Ishii stores.

Despite steadily rising expenses including advertising of our drive to support everyday living,
FY2016 consolidated profit expected to rise on the back of improved existing-store sales andgross profit margin at the Lawson parent, and contributions from consolidated subsidiaries.
Copyright (c) 2016 Lawson, Inc. All rights reserved.

39

FY2016 Full-year and Half-year Forecasts(Consolidated: Billions of yen)

Net sales of all stores
Operating profit
Operating profit ratio
Recurring profit
Net profit

FY2016 Forecast
2nd Half Full year
1st Half
1,080.0
1,090.0
2,170.0
39.5
36.5
76.0
3.7%
3.3%
3.5%
38.1
34.9
73.0
21.3
14.2
35.5

(Non-consolidated*) *excluding LAWSON MART/LAWSON STORE100 business

Gross profit at existing stores (YoY)

Net sales at existing stores (YoY)
Gross profit margin ratio

102.0%
101.0%
31.6%

102.0%
101.0%
31.7%

102.0%
101.0%
31.6%

Note: Total chain store sales includes sales from the convenience store operation in Japan, overseas
operations and sales from Seijo Ishii (consolidated items only). Regarding Seijo Ishii, only thesales of direcctly operated stores are included.
Note: The number of stores is the total number of convenience stores in Japan operated by the
Lawson Group plus the number of directly operated Seijo Ishii stores.

FY2016 1H operating profit expected to decline on concerted efforts to strengthen product mix
in support of customers’ everyday living needs, but full-year operating and net profit seen rising.
Copyright (c) 2016 Lawson, Inc. All rights reserved.

40

FY2015 Consolidated Balance Sheet

Total current assets(Cash and deposits)(Accounts receivable)

Total noncurrent assets
Property, plant and equipment
Intangible assets(Goodwill)
Investments and other assets(Long-terms loans receivable)(Guatantee deposits)

Total Assets

As of Feb. 29, 2016

Change fromFeb. 28, 2015

224.2
69.7
67.7
579.0
302.7
84.5
46.3
191.6
40.8
92.4
803.2

+0.5
▲6.9
+9.0
+38.0
+28.3
+5.0
▲1.8
+4.6
+3.6
▲0.7
+38.5

Copyright (c) 2016 Lawson, Inc. All rights reserved.

(Billions of yen)
Change from
As of Feb. 29, 2016
Feb. 28, 2015

(Retained earnings)

319.6
112.2
101.9
210.6
57.5
272.9
58.5
154.6

+18.5
+8.7
▲1.7
+10.8
▲0.8
+9.1
+7.4

Liabilities and net assets

803.2

+38.5

Total current liabilities(Accounts payable-trade)(Deposits payable)
Total noncurrent liabilities(Long-term loans payable)

Net Assets(Common stock)41

Cautionary Statement
This presentation contains forward-looking statements and forecasts regarding the future plans, strategies and performances of
Lawson and its subsidiaries and affiliates. These statements and forecasts are not historical facts. They are expectations based onassumptions and beliefs derived from information currently available to the Company and are subject to risks and uncertainties
including, but not limited to, economic trends, heightened competition in the domestic convenience store sector, personal
consumption, market demand, the tax system and other legislation. As such, actual results may differ materially from estimates.
Figures in this presentation have been rounded down.

Copyright (c) 2016 Lawson, Inc. All rights reserved.

42