First Half Results for FY2016(Six months ended August 31, 2016)

Lawson, Inc.
October 13, 2016

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

1

Financial ResultsforFirst Half of FY2016
Yutaka Yoshitake
Chief Financial Officer

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

2

Earnings Summary: FY2016 1H
Consolidated OP 39.9bln yen (-5.0% YoY, +1.1% v. plan)+0.4bln yen v. plan: Sales slightly below target, but effective HQ-focused cost controls

Consolidated net profit 22.6bln yen (+14.1% YoY, +6.1% v. plan)+1.3bln yen v. plan: OP achieved target, unforeseen impact from tax effect accounting
Non-consolidated
OP 31.7bln yen (-2.6bln yen YoY)
Gross operating profit +10.3bln yen YoY
Existing-store sales*-0.9%(+0.3% YoY excluding ticket and other sales)
Gross profit margin* 31.3% (±0.0% YoY)
SG&A expenses+13.0bln yen YoY(*Including over 2.0bln of the cost to reinforce product range)

Advertising & Promotion+2.5bln yen
Facility expenses (new stores, etc) +4.0bln yen
Major subsidiary firms
Seijo Ishii OP 3.3bln yen (+0.3bln yen YoY)
Intl. operations OP -1.7bln yen (+0.2bln yen YoY)

Consolidated
OP 39.9bln yen (-2.1bln yen YoY)
Recurring profit 38.3bln yen (-2.4% YoY)
Non-operating loss (net) : 1.5bln yen (-0.2bln yen YoY)
Forex loss 0.6bln yen
Natural disaster (2016 Kumamoto
earthquake) 0.7bln yen
Net profit 22.6bln yen (+2.7bln yen YoY)
Special loss (net) : 2.5bln yen (-3.0bln yen)
Impairment loss 0.5bln yen (-4.1bln yen)
Income taxes-current: -9.3bln yen (+2.3bln yen)Tax effect of subsidiary liquidation +0.5bln yen*＊Existing-store sales & gross profit margin include Lawson and Natural Lawson combined operations

FY2016 consolidated OP target unchanged at 76.0 billion yen
Copyright (c) 2016 Lawson, Inc. All rights reserved.

3

“Creating Happiness and Harmony
in Our Communities.”

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

4Tender Offer by Mitsubishi Corporation
Outline of tender offer
 Current ownership (common stock) = 34.4%  Rise to 50% +100 shares Launch tender in January 2017, after completing anti-trust procedures Price of tender offer 8,650 yen per share of Lawson common stock※Refer to news release dated September 16, 2015 for more details

Aim / management vision

Management structure / governance

Strengthen operations through stronger collaboration

 Maintain current management structure Raise Lawson’s corporate value(Genichi Tamatsuka / Sadanobu Takemasu)
 Maintain independence and autonomy as a listedcompany, Nomination and Compensation Committee

 Drive synergy through out value chain
 Leverage corporate network and human resource

As Lawson remains an independent company, we will continue being
attentive to the stock market and reflect shareholder and investor
perspective in our corporate decisions.
Copyright (c) 2016 Lawson, Inc. All rights reserved.

経営体制・ガバナンス

5The aim of 1000-Day Action Plan
Social and businessenvironment- Aging population- Increase in double income, small households- React to local needs- Decrease in number of retail stores

Convenience store
industry- Three large players occupy 90% market share- Tough competition with drug stores and supermarkets

Change in market
environment of FC
stores- Scarcity of staff- Diversified store staff- Increasingly complex store operation- Encourage multiple store management

Utilize cutting-edge IT technology
and build next-generation systems
Copyright (c) 2016 Lawson, Inc. All rights reserved.

6

1000-Day Action Plan - Overview

Become an essential part of community living
Stronger
products

Stronger stores
Products to support
everyday life

Product
developmentStoreproductivity

Next-generation Lawson
Convenience-store Model

Raw materials
procurement,
production vendorsStoredevelopment

Strongerfranchise
supportStore-based
staff crews

Distribution& delivery“One Lawson”
Revolutionizing our operational system
Copyright (c) 2016 Lawson, Inc. All rights reserved.

7

1000-Day Action Plan – FY2016 1H
FY2016 1H
Strongerstores

Products/support
for Everyday Living

Strengthen supermarket alternative and core CVS ranges by investingin new display cases and expanding products

FF, in-store kitchen/homedelivery, and healthcare

Store development

Overhaul new store opening framework

Ensure stable new store
openings and long-term
franchisees

Review product development system and business processes

Full-fledged development ofcore food items, new products
and services

Raw materials
procurement,
manufacturing
vendors

Promote SCI, reinforce mega-vendor policy

Become a true manufacturingretailer based on small
commercial areas

Store productivity

Redefine operations with view to introducing new systems

Introduce tables, point-of-salestore computers, etc.

Store-based staff
crews

Improve capacity development, instore staff hiring

Standardize staff training,
reduce staff turnoverLaunch Lawson distribution center

Sweeping review of
distribution using visualization,
etc.

Establish a set supervisor training system
Boost efficiency of company-wide business processes

Consistent initiatives to boost
overall supervisor capability

Product
development

Stronger
products

Strongerfranchise
supportDistribution,delivery

Changecorporate
cultureGoing forward

Supervisor systems
All businessprocesses

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

8

Reinforce support for everyday life

Respond to customer’s daily need
Product range
Strengthen product range
across all Lawson stores

Product power
Strengthen products froman everyday user perspective- Become a community store that customers visit every day for their daily needs.
- Expand customer base of working women and senior customers.
- Respond to rising customer demand in the evening and night-time.

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

9

Reinforce support for everyday life
Display case investment- Higher shelf gondolas- New flatbed freezers- More chilled food caseapprox.

8,000

storesFranchise store support
Help ensure full range ofdeli and daily prepared
items

Expand product range(End August 2016)

Stronger promotion- TV advertising- Lawson market
specials!

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

Capital investmentover

5 billion yen

Franchise support + advertisingover

2 billion yen
10Reinforce support for everyday life
Achieve significant improvement of product range
With better hardware at store and improved ordering systems

store

3,500

Store number
by SKUs

SKU

Better hardware
Up 15%

Aug, 2016

 Shift to higher shelves
 More freezer flatbeds

Active systems
 Tailor product mix to suit
individual stores with preplanned orderingAug, 2015

This chart shows indicates a rough picture of the trend.

SKU

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

11

Reinforce support for everyday life

Support everyday life
As a supermarket
alternative
Offer product ranges that
support all daily needs
Satisfy growing CVS demandin the evening and night-timeCore CVS, over-thecounter fast food
Improve ready made foods
Expand competitive
over-the-counter fast foodMaximize semi-automatic andplanned orders
DigitalAnalogCopyright (c) 2016 Lawson, Inc. All rights reserved.

Reinforce store
operations
12Stronger Products
FY2016 1H Sales

Existing-store sales （excluding ticket sales and others) up 0.3% y/y- Support everyday living by investing in new display cases and extending product ranges- Boost number of deli and daily-delivered items purchased in the supermarket alterative category

Supermarket alternative
category
Product range
support fuels
large increase105%
No. of items
purchasedCore CVS category105%
No. of items
purchased

Recoverytrend from
July

100%

100%
Customer
visitsCustomer
visits

95%
Jan
1‐3月
-Mar

Apr
4月

May
5月

Jun
6月

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

Jul
7月

Aug
8月

95%
Jan
1‐3月
-Mar

Apr
4月

May
5月

Jun
6月

Jul
7月

Aug
8月

13

Supermarket Alternative Category
FY2016 1H sales
Emerging strong y/y rising trend following
investment in display cases and productexpansion- Delicatessen +14.0%（existing stores, y/y)
- Daily-delivered foods +24.0%- Frozen foods +19.0％

Product range support
fuels large increase105%

No. of items
purchased100%

Customer
visitsGradual increasing in 3-4 months
after expanding product ranges

95%
Jan
1‐3月
-Mar

Apr
4月

May
5月

Jun
6月

Jul7月 Aug8月

FY2016 2H sales strategy-Expand Lawson Select product range-Satisfy evening/night-time demandwith non-chilled FF (deli items)-Strengthen Natural Lawson brand(chilled drinks, pet food)-Expand Japanese sweets and other items
to appeal to elder customers

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

14

CVS Category
1H sales struggle
1H sales slump partly in comparison tobuoyant 40-year anniversary year last year

105%

No. of items
purchased

Recoverytrend from
July

100%

Recovery from July
- Adjust semi-automatic promotion logic- Optimize price bracket balance

Customer
visits
95%
1‐3月
Jan
-Mar

4月
Apr

5月
May

6月
Jun

Jul7月 Aug8月

2H product strategy- Offer strong lunchbox range (medium price range)- Offer more original light meals (soups, etc.)- Strengthen regular dessert items

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

15

Over-the-counter Fast Food & In-store Kitchen
Over-the-counter FF

In-store Kitchen

Boost sales from current 40,000 to
50,000 yen/day in FY2017

Expand stores with kitchens fromcurrent 3,500 to 5,000 in fiscal 2017

Having strengthened products in the supermarket alternative categoryin 1H, we intend to further strengthen Lawson’s competitive over-thecounter fast food in 2H and boost the number of In-store Kitchens

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

16

Reinforced support for franchise business
Revolutionizing store productivity
Build next-generation systems to reform store operations and address
challenges posed by complex, diverse CVS business, scarcity of staff
ExampleiInitiative

Current

Business devices are randomly placed,
resulting in repeated trips between shop
floor and back room
Reports
Information
analysis

Inspection

Concentrate all functions on one
tablet, so all processes can be
conducted from shop floor

InstorePC

Inventory
checksShop

FutureBackroom
OrdersInventory
setting

Inventory
checks ¥¥Shop
Inventory
setting

Ordering
terminal

Semi-automatic orders
Ensure steady inventory of cookedsnacks, eliminated discrepancies
between stores

Ponta member purchase data
Copyright (c) 2016 Lawson, Inc. All rights reserved.

Information
analysis

OrdersNew tabletbased terminal

Inspections

Planned orders
Reduce product shortages,
minimize opportunity losses
Aid product development and formingof area-specific strategies
17

Revolutionizing the work of supervisors

Boost overall SV capability
Individual growthStandardise the process

Store-enhancing practicaltraining
Management coaching
Strong capacity building

SV function rules
Central contact center
Store support desk
Standardization, streamlining
Consolidate HQ functions

Increasingly
diverse products
and services
Healthcare/
medical items

Create a completely
new, uniform
SV skill-building
systemSatisfying broad
everyday needs

Home-delivery,
In-store Kitchen

Sophisticatedsystems

Increasingly
complex store
business

Encourage
multiple store
management

Scarcity of staff,
stronger staff crew
training

New FC
contracts

Next-generation Lawson convenience-store model
requires more sophisticated operational functions by SVs
Copyright (c) 2016 Lawson, Inc. All rights reserved.

18

FY2016 Full-year Plan
FY2016 1H Result : Consolidated OP and net profit achieved targets
FY2016 Full Year Target : Consolidated OP of 76.0 bil yen
 2H estimates remain unchanged: Existing-store sales expected to rise 1.0% y/y and gross profit
margin to improve 0.3p y/y as positive impact from 1H expanded product range continues

FY2016 plan
Plan

Y/Y

ParentExisting-store sales* (y/y)+1.0% (1H:-0.9%*actual / 2H:+1.0%*plan)

Gross margin* (y/y)+0.2pp (1H:+0.0pp*actual / 2H:+0.3pp*plan)

SG&A (y/y)+5% ～ +10%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.

19

Corporate Philosophy“Creating Happiness and Harmony in Our Communities.”
Lawson commits to faithfully attend the stock market as an independent
listed company, and reflect shareholder and investor opinion in its
management decisions. Lawson commits to work closely with franchise
store owners to ensure continued full customer satisfaction, and serve
society as a community-based consumer lifeline.
Copyright (c) 2016 Lawson, Inc. All rights reserved.

20

Reference

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

21

Earnings Summary: FY2016 1H(Billions of yen)

Consolidated

Net sales for all stores
Operating profit
Operating profit ratio
Recurring profit
Net profit
EPS (Yen)
Dividend per share (Yen)

Total no. of stores in Japan

FY2014-1H
Actual
994.6
40.0
4.0%
39.6
21.8
219.15120

FY2015-1H
Actual
1,035.4
42.0
4.1%
40.7
19.8
198.11
122.5

Actual
1,076.5
39.9
3.7%
38.3
22.6
226.07125

11,987

12,305

12,733

FY2016-1H
YoY
vs. Plan
104.0%
99.7%
95.0%
101.1%▲0.4%P+0.1%P
94.1%
100.7%
114.1%
106.1%+27.96106.1%
+2.5
±0
+428

+11

Note: Total chain store sales of FY2015-1H and FY2016-1H include 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 of FY2015-1H and FY2016-1H is the total number of convenience stores in Japan operated by the Lawson Group plus the number of
directly operated Seijo Ishii stores.

 Operating profit down 5.0% YoY, but 0.4 billion yen or 1.1% above target
Despite a YoY contraction in existing-store sales generated by fierce competition, unseasonal
weather and a large decline in ticket sales, non-consolidated operating profit outstripped forecasts
following effective controlling of costs primarily at Lawson headquarters.
Consolidated operating profit also outstripped forecasts thanks to a strong contribution from United
Cinemas and other subsidiary firms.
 Net profit +14.1% YoY (+6.1% above target)
We had a significant fall in 1H impairment losses compared to the previous business year when we
refined our impairment loss standards.
Copyright (c) 2016 Lawson, Inc. All rights reserved.
22

Existing Stores (Non-consolidated*)＜FY2016 1H＞
Gross profit margin flat YoY*Lawson and Natural Lawson combined store total

Existing store sales down 0.9%
(number of customers down 0.9%, spending per customer down 0.1%)

 Existing-store sales down 0.9% YoY on unseasonal weather, and falling ticket sales (fewer large
public events compared to the previous year). Existing-store sales excluding ticket and othersales rose 0.3% YoY.
 Gross profit margin excluding cigarettes declined 0.1pp YoY on falling ticket sales. Gross profit
margin held steady YoY at 31.3% with cigarettes contributing a shrinking proportion of total
sales.
Copyright (c) 2016 Lawson, Inc. All rights reserved.

23

Store Openings (Non-consolidated*)(Net store increase)*Lawson and Natural Lawson combined store total(Daily new store sales in 1,000 yen)

425
213
212

 425 new store openings as planned (including 73 franchise stores from Save On and other chains) Closed 18 fewer stores than originally planned. Net increase in stores 18 stores higher than planned
as a result.
 New-store daily sales steady YoY at 497,000 yen.
Copyright (c) 2016 Lawson, Inc. All rights reserved.

24

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

Selling, general & administrative expenses
Non-consolidated

FY2016-1H
FY2015-1H
ActualActual Change vs.Plan
120.7
133.7
+13.0
▲ 1.4

＜Major Expenses＞
Personnel expenses
IT-related expenses(Hardware leasing, software amortization, maintenance, etc.)
Advertising and promotional expenses
Facilities expenses

Consolidated SG&A expenses

FY2016

Forecast
Increase 5-10%

19.3
4.9

20.7
4.6

+1.3
▲ 0.3

▲ 0.1
▲ 0.3

Increase 5-10%
Decrease 0-5%

5.1
67.1

7.6
71.1

+2.4
+4.0

▲ 0.5
▲ 0.1

Increase 10-15%
Increase 5-10%

171.8

186.2

+14.3

▲ 2.9

Increase 5-10%

Note: Figures in italic indicate the revised figures from the initial plan.

Compared to Plan

Compared to Fiscal 2015
Non-consolidated

 A&P: Stronger efforts to support everyday living
resulted in higher franchise store product range
support expenses.
 Others: Higher store numbers resulted in increased
HQ expenses, as HQ assumed a portion of
franchise-stores costs under new franchisecontracts.

Non-consolidated

 1.4 billion yen lower than expected on effective
cost controls primarily at HQ. HQ cost burden
down on efficient use of franchise-store
product range support funds. Lower electricity
unit prices reduced HQ electricity payment
burdened under new franchise contracts.

Consolidated

 In additional to non-consolidated factors,
consolidated expenses also rose on expansion of
Lawson ATM networks, and increased stores
numbers at Seijo Ishii and overseas subsidiary firms.

Consolidated

 2.9 billion yen below plan. In addition to nonconsolidated factors, the stronger yen reduced
SG&A expenses at our China-based
subsidiary firms in yen terms.

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

25

Earnings of Major Subsidiaries(Billions of yen)

Operating Profit of Major Subsidiaries
Lawson Store100, Inc.
SEIJO ISHII CO., LTD.
Lawson HMV Entertainment, Inc.
Lawson ATM Networks, Inc.
United Cinemas Co., Ltd.
Chongqing Lawson, Inc.
Shanghai Hualian Lawson, Inc.

FY2016-1H

FY2016

FY-endOwnership

ActualYoY change

Forecast

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

100.0%
100.0%
100.0%
76.3%
100.0%
100.0%
94.0%

0.37
3.31
0.97
3.24
1.60
▲ 0.25▲ 0.64+0.25+0.35▲ 0.72▲ 0.05
+0.80
+0.20
+0.11

0.80
7.60
2.10
6.00
2.00
▲ 0.40▲ 0.40Note: Figures in italic indicate the revised figures from the initial plan.
Note: Lawson Mart, Inc. has changed its name to Lawson Store100, Inc. since March 2016.
Note: United Cinema’s fiscal year end to February meant that the 1H of FY2016, which spanned the March- August period including the summer
holiday, is being compared to the less active January-June period of the previous year.

Lawson Store100

Favorable recovery in sales with existing-store sales rising 1.2% YoY. The subsidiary turn a profit, even afterincorporating the operating loss recorded on non-consolidated accounts.

SEIJO ISHII

Operating profit expanded further in FY2016 on strong sales and new store openings.
Fiscal 2016 includes 14 months of performance, owing to plans to change the subsidiary firm’s fiscal year-end from
December to February to align with Lawson parent.

Lawson HMVEntertainment

Operating profit down due to higher depreciation on new ticket systems.

United Cinemas

Operating profit increased sharply thanks to numerous hit movies. Also, the decision taken in FY2015 to shift United
Cinema’s fiscal year end to February meant that the 1H of FY2016, which spanned the March- August period
including the summer holiday, is being compared to the less active January-June period of the previous year.

Lawson ATM
Networks

Revenue up on higher ATM installations and steady YoY ATM transaction volume, but profit down slightly on costs
relating to introduction of new-style ATM machines.

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

26

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

FY2014-1H
Actual
21.3
2.9
2.4
0.8
27.5

FY2015-1H
Actual
18.2
2.4
8.7
0.4
29.7

FY2016-1H
Actual
16.8
3.3
7.6
0.9
28.8

FY2016
Plan
51.5
10.0
18.0
1.0
80.5

Leases

18.2

20.9

25.1

56.0

Depreciation and amortization

19.9

23.8

26.9

59.3

New stores
Existing stores
IT-related
Other
Subtotal for capital expenditure

Consolidated Cash flows（Billions of yen）

FY2014-1H
Actual92.1▲ 38.2FY2015-1H
Actual92.6▲ 33.2FY2016-1H
Actual91.4▲ 28.9Approx. 120.0
Approx. ▲85.0

53.8

59.3

62.4

(Cash dividends paid)▲ 8.6▲ 10.9▲ 24.1▲ 11.9▲ 27.7▲ 12.2

Approx. 35.0
Approx. ▲55.0
Approx. ▲25.0

Cash and cash deposits

113.7

112.1

104.0

-

Cash flows from operating activities
Cash flows from investing activities

Free cash flows
Cash flows from financing activities

FY2016
Forecast

 Leases increased sharply YoY following aggressive refurbishment of existing stores designed tohelp satisfy customers’ broad everyday needs.
Copyright (c) 2016 Lawson, Inc. All rights reserved.

27

FY2016 Company Forecasts (Consolidated )Net sales for 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
YoY
Plan
2,180.0
106.4%
76.0
104.8%▲0.1%P
3.5%
73.0
104.9%
35.5
113.1%
354.95
41.14
250
+5
13.2%
+1.2%P

Total no. of stores in Japan

12,383

12,515

13,229+714

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

100.0%
99.0%
31.3%

101.3%
101.4%
31.3%

100.6%
100.1%
31.5%+0.2%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*) *Lawson and Natural Lawson combined store total

Note: Figures in italic indicate the revised figures from the initial plan.
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 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.

 Maintain FY2016 full-year consolidated operating profit target of 76.0 billion yen. Full year
existing-store sales expected to rise just enough to compensate for the sharp 1H decline (2H
forecast remains unchanged). Plan to continue pursuing strategies implemented in the 1H tohelp achieve full-year OP target of 76.0 billion yen.
Copyright (c) 2016 Lawson, Inc. All rights reserved.

28

Half Year Breakdown of FY2016 Forecast (Consolidated)(Billions of yen)(Consolidated)

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

1H Initial Plan
1,080.0
39.5
3.7%
38.1
21.3

FY2016 Forecast
1H Actual
2H Plan
1,103.4
1,076.5
36.0
39.9
3.7%
3.3%
34.6
38.3
12.8
22.6

Full-Year Plan
2,180.0
76.0
3.5%
73.0
35.5

(Non-consolidated*) *Lawson and Natural Lawson combined store total

Gross profit of existing stores (YoY)
Net sales of existing stores (YoY)

Gross profit margin ratio

102.0%
101.0%
31.6%

99.2%
99.1%
31.3%

102.0%
101.0%
31.7%

100.6%
100.1%
31.5%

Note: Figures in italic indicate the revised figures from the initial plan.
Note: 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 the sales of direcctly operated stores are included.

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

29

First Half of FY2016 Balance Sheet (Consolidated)

As of Aug. 31, 2016

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)(Guarantee deposits)

Total Assets

279.0
104.7
86.5
594.7
320.4
86.2
44.8
188.0
41.7
93.4
873.7

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

(Billions of yen)
Change from
As of Aug. 31, 2016
Feb. 29, 2016

Change fromFeb. 29, 2016

+54.8
+34.9
+18.8
+15.7
+17.6
+1.6
▲ 1.4
▲ 3.5
+0.8
+0.9
+70.5

(Retained earnings)

373.0
133.0
124.3
220.2
56.9
280.4
58.5
163.8

+53.4
+20.7
+22.4
+9.6
▲0.5
+7.4
+9.2

Liabilities and net assets

873.7

+70.5

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

Net Assets(Common stock)30

FY2016 1H Performance by Group Segment(Billions of yen)Japan convenience-store business Lawson Store100 business
Seijo Ishii business
Sales ratio
YoY
Sales ratio
YoY
Sales ratio
Net sales for all stores
1,006.4
100.0%
103.9%
22.2
100.0%
90.6%
33.5
100.0%
Gross operating revenue
191.3
19.0%
107.6%
24.5
110.7%
90.5%
36.0
107.4%
Gross operating profit
176.0
17.5%
106.6%
7.2
32.7%
86.0%
13.8
41.3%
SG&A expenses
143.0
14.2%
111.0%
6.8
31.0%
82.7%
10.9
32.5%
Operating profit
32.9
3.3%
91.0%
0.3
1.7%
331.6%
2.9
8.8%

YoY
106.9%
107.4%
108.0%
106.6%
113.6%(Billions of yen)Entertainment business
Sales ratio

International businessYoY

Net sales for all stores
Gross operating revenue
Gross operating profit
SG&A expenses
Operating profit

35.7
17.6
15.3
2.2

104.3%
100.7%
97.5%
129.4%

14.3
11.4
3.9
5.6
▲ 1.7

Sales ratio
100.0%
79.9%
27.3%
39.5%
▲12.1%

Other businessYoY
129.7%
122.0%
134.7%
116.6%
89.5%

Sales ratio

YoY

13.3
13.3
10.1
3.1

102.3%
102.3%
105.2%
94.0%

Note: The Japan convenience-store business combines business results from the Lawson parent and SCI, Inc.
Note: The Lawson Store100 business refers to the business results of Lawson Store100, Inc.
Note: The Seijo Ishii business refers to the business results of Seijo Ishii Co., Ltd.
Note: The Entertainment business combines the business results of Lawson HMV Entertainment, Inc. and related consolidated subsidiaries such as United Cinemas Co., Ltd., etc.
Note: The International business combines the business results of overseas consolidated subsidiaries such as Lawson (China) Holdings, Inc., Shanghai Hualian Lawson, Inc. and Chongqing Lawson, Inc.
Note: Other business combines the business results of financial-service related subsidiaries such as Lawson ATM Networks, Inc. and consulting firm BestPractice Inc.

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

31

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.

32