march 1, 2016 to february 28, 2019 three years of change ...€¦ · 14/04/2016 · response to...

Three years of change, marked progress and stability toward 50th

anniversary, underpinning goal to be a ¥100 billion corporate group

April 14, 2016

March 1, 2016 to February 28, 2019

• Actual performance amounts less than a full unit are omitted, and percentages are rounded to one decimal place. Totals may not reflect the sum of component amounts.• In these materials, actual performance amounts for fiscal 2016, ended February 29, 2016, include yen-translated local-currency results by overseas subsidiaries converted at the

respective average exchange rates during the year. Anticipated exchange rates used by management in the determining performance targets for fiscal 2017 and later take into close account the recent trend in yen appreciation and are listed on the last page.

The Shape of the Aderans Group

ECSR2016

Management Philosophy

Servant leadership

management

Management Vision

Realizing “good company” standard

Establish management structure which is

highly transparent and trusted from inside and

outside the company

Sampo yoshi management

Our corporate mission, as the Aderans Group, is to utilize our hair-related businesses to help as many

people as possible acquire the physical and emotional qualities that underpin the realization of dreams

and promote a good impression, and in doing so, bring smiles to faces and support happy lives.

We strive for

“Product excellence” “Technological excellence” “Heartfelt omotenashi”

Establish sampo yoshi style of management

underpinned by thorough pursuit of ECSR: CS

(Customer Satisfaction), ES (Employee

Satisfaction) and CSR (Corporate Social

Responsibility/Trust by Society)

Pattern of executive behavior that

motivates employees, encourages them

to persevere and allows their talents to

blossom

New Medium-term Business Plan ECSR2016

1

Fiscal 2019, ending February 28, 2019, which is the last year of the new medium-term

management plan, also marks Aderans’ 50th anniversary.

Since its earliest days, Aderans has grown and expanded its presence as a

comprehensive provider of solutions to hair-related concerns, committed to helping as

many people as possible acquire the physical and emotional qualities that underpin the

realization of dreams and promote a good impression, and in so doing, bring smiles to

faces and support happy lives.

However, as Aderans approaches its 50th anniversary, management must face up to the

reality that the growth achieved to date is much more difficult to duplicate now.

To address constantly evolving social expectations and be a company that customers

continue to depend on even as the times change, Aderans, guided by a management vision

emphasizing realization of the “good company” standard, must strive to ensure sustainable

growth and enhance its true corporate value from the perspective of customer satisfaction

(CS), employee satisfaction (ES), and corporate responsibility and trust earned from

society (CSR).

Sanpo yoshi—literally, “three-way good”—is an ideal espoused by the merchant class

of the Edo Period (1603-1868) that emphasize the pursuit of business not only for

corporate gain but for the benefit of customers and society as well. Aderans abbreviated

sanpo yoshi management based on CS, ES and CSR, as ECSR, and applied the term to the

new medium-term management plan—ECSR2016—which will guide the Company and

the Group it leads on a three-year journey toward change, marked progress and stability.

And then, Aderans will initiate changes supported by all to become a ¥100 billion

corporate group by fiscal 2021 and a “good company”—a company with value—that

continues to meet market expectations 50 years and even 100 years into the future.

Global Strategy of Aderans Group

ECSR2016

ECSR 2016 Global Business Portfolio

2

Japan

Mature market

Heightened competition

Moderate but definite growth

・Capture attention of anyone

who uses wigs, beyond customer

base, through after-sale services

• Expand business domain

United States

Market growth/expansion

Evolution from stability to growth by

leaps and bounds

• HC (USA) to open more locations

and reinforce presence in women’s

market

• Bosley to pursue globalization and

expand medical business

• Aderans Hair Goods to widen

access routes

Europe

Market growth/expansion

Evolution from stability to growth by

leaps and bounds

• Enter regions where presence not

yet established

• Enhance marketing efforts for

custom-made products and

reinforce after-sale services

AsiaMarket growth/expansion

Shift from introduction to

growth

• Establish firm footing for

businesses providing

solutions to hair-related

concerns

Japan

United States

Europe

Asia

Focusing on solutions to hair-related concerns, offer total beauty and organic haircare products and establish higher profile in medical services market with hair

transplantation and androgenetic alopecia (AGA) treatments

Develop new services using strength of current doctor-facilitated medical business and promote in other countries, enhance healthy hair-growth services, and improve

response to demand from black people for wigs and hair-volumizing products and services as well as after-sale services.

Boost customer retention for custom-made wigs, accelerate entry into regions where presence has not yet been established, and attain No.1 share in each market by

securing an overwhelming advantage

Pursue business providing solutions to hair-related concerns, accelerate business growth in China, and set up locations in ASEAN region

Fiscal 2017 – From change to marked progressFiscal 2018 – From marked progress to

stabilizationFiscal 2019 – From stabilization to sustainable growth

3

Peripheral Business Sectors

Source: Hair Care Industry Market Report Overview by Yano Research Institute Ltd.

3,536 3,494 3,491 3,554 3,611 3,613

2,275 2,274 2,277 2,278 2,320 2,325

872 930 982 1,040 1,102 1,165 178 187 190 194 200 204

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2010年 2011年 2012年 2013年 2014年 2015年(見)

Market Size of Domestic Hair-Related Business Sectors

6,861

7,307CAGR+1.3%

■CAGR+6.0%■CAGR+0.4%■CAGR+0.4%

2010 2011 2012 2013 2014 2015 (Forecast)

(Hundred million yen)

■CAGR+2.8%

Esthetic beauty services Haircare Natural/organic cosmetics Transplantation/AGA treatment

Looking Back

On a consolidated basis, net sales up, EBITDA and operating income down

Looking Back: Overview

Lower sales and income from domestic operations

• Women’s market characterized by challenging demand conditions, through both custom-made and ready-made wig pipelines, due to the entry of more companies into the wig sector

and a noticeable trend toward low-priced wigs, as well as changes in consumer patterns of purchasing behavior.

• On the men’s side, the number of retained customers has stabilized.

• To promote growth, efforts directed toward presence at general merchandise stores and an aggressive push to open salons inside hospitals.

Higher sales and income from operations in United States

• HC (US) opened three Hair Club locations and acqured two franchises

• Bosley began providing full access to Follicular Unit Extraction (FUE), a new hair transplantation technique, and also opened two new offices and improved its new client contract

rate, but the company experienced system problems at its call center.

Higher sales but lower income from operations in Europe

• Acquired seven salons focusing on medical-use wigs and opened five new salons.

• Acquisitions of custom-made wig salons in Germany intended to enhance direct-response marketing efforts proved highly successful

Higher sales and income from operations in Asia

• China: Ready-made wig business enjoyed favorable results. Worked to develop skills of human resources, enhance efficiency of advertising and promotional activities, and implement

scrap-and-build profit structure.

• Taiwan: Salon business showing stability. Worked to make advertising and promotional activities more efficient and accelerated opening of ready-made salons.

• Singapore: Strengthened healthy hair-growth services and worked to develop skills of human resources.

Production point news: Savannakhet plant in Laos goes into full-scale operation

• Savannakhet plant in Laos went into full-scale production

• Established cooperative link between World Quality Co., Ltd., and Laos operations to facilitate distribution and import/export activities.

4

5

Consolidated Sales, and Comparison with Fiscal 2016 Estimates

341 343375

404 421 438389

154 148 153

276

348 385

407

(14) (17) (17) (2) (2) (13) -4

-100

0

100

200

300

400

500

600

700

800

900

474511

678

767

Domestic

Overseas


Consolidted

adjustment

810792

481

Fiscal 2011 Fiscal 2012 Fiscal 2013 Fiscal 2014 Fiscal 2015 Fiscal 2016 Fiscal 2016 (Feb. 2011) (Feb. 2012) (Feb. 2013) (Feb. 2014) (Feb. 2015) (Feb. 2016) (Feb. 2016)

(Estimates) (Actual)

6

EBITDA, and Comparison with Fiscal 2016 Estimates

-52

27

4150

42 41

1312

12

7

17 30

37

31

1

1

(1)

1 0

4

2

-80

-60

-40

-20

0

20

40

60

80


Domestic

Overseas

-39

4047

68

82

46

Consolidated

adjustments

72


(Estimates) (Actual)

7

Consolidated Opeating Income, and Comparison with Fiscal 2016 Estimates

-66

18

3443

32 30

37

6

2

(1)

2 11

11

1

(6)(5) (4) -5

-80

-60

-40

-20

0

20

40

60

80

Domestic

Overseas


-58

2536 36

29

-1

Consolidated

adjustments

37


(Estimates) (Actua l)

8

(Millions of yen)

Capital Expenditure, Depreciation/Amortization

2,531

3,559 3,616 2,880

-125

1,170 1,061

3,149

4,323 4,748

3,701

4,621

6,766 7,204

4,622

1,249

1,782

2,011

2,919

4,032

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

(1,000)

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Oprating income Depreciation/Amortization Consolidated EBITDA Capital Expenditure

Fiscal 2012 Fiscal 2013 Fiscal 2014 Fiscal 2015 Fiscal 2016(Feb. 2012) (Feb. 2013) (Feb. 2014) (Feb. 2015) (Feb. 2016)

Strategies in New Medium-term Business Plan

ECSR2016

Empahsize cross-border human resources development, M&A activity and stronger supply chain management system

Promote cost balance transparency and ensure suitability to operations

Develop and launch evidence-based products and services

Respond swiftly to changes in market environment

Enhance Group governance structure and approach to CSR

Expand share of global market and secure stable profit

ECSR 2016 Key Management Strategies

9

New Medium-term Business Plan TargetsECSR2016

10

New Medium-term Business Plan Targets: Consolidated Sales

389 410 430 450 480

407 405433

462522

(4) (2) (2) (2) (2)

-200

0

200

400

600

800

1000

1200


Domestic

Overseas

792 813861

9101,000

Consolidated

adjustments

Fiscal 2016 Fiscal 2017 Fiscal 2018 Fiscal 2019 Fiscal 2021

(Feb. 2016) (Feb. 2017) (Feb. 2018) (Feb. 2019) (Feb. 2021)

(Actual)

11

New Medium-term Business Plan Targets: Consolidated EBITDA

13 1521

2630

31 36

43

52

70

2 3

3

4

5

0

20

40

60

80

100

120


Domestic

Overseas

46

67

82

105

Consolidated

adjustments

54



(Actual)

12

New Medium-term Business Plan Targets: Consolidated Operating Income

3 38 13

251 9

15

26

55

-5 -5 -5 -5-8

-0.7%

0.8%

2.1%

3.7%

7.2%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

-20

0

20

40

60

80

100

120


-1

7

18

72

Overeseas

Domestic

Consolidated

adjustments

34



(Actual)

Key Performance Indicators

Medium-term Numerical Targets

Medium-term Numerical Targets

13

Toward Sustainable Growth and Maximized Corporate Value of the Aderans GroupA way point on a road to a numerical destination—consolidated net sales

of ¥100 billion by fiscal 2021, ending February 28, 2021.

Targets for the Final Year of the New Medium-Term Management Plan

Consolidated net sales: ¥91.0 billionEBITDA: ¥8.2 billion (9.0%)

Normalized operating income: ¥4.2 billion (4.6%) Operating income: ¥3.4 billion (3.7%)

Normalized ROE: 10%以上 ROE: 6.9%

Normalized EPS: ¥100以上 EPS: ¥79

Normalized PER: 25 times PER: 31 times

Normalized payout ratio: 25%以上 Payout ratio: 25%

Appendix

Exchange Rates

About Figures Provided

Local CurrencyJapan

Yen

US

DollarEURO

UK

Pound

Sweden

Krona

China

Yuan

Taiwan

Dollar

Singapore

Dollar

Thai

Baht

Philippine

Peso

Lao

Kip

Abbreviation ¥ US$ € STG SEK RMB NT$ SG$ THB PHP LAK

Used as basis for fiscal 2017

targets¥1.00 ¥113.00 ¥124.00 ¥157.00 ¥13.00 ¥17.00 ¥3.0000 ¥80.00 ¥3.00 ¥2.00 ¥0.0140

Actual rate in fiscal 2016 ¥1.00 ¥121.03 ¥133.68 ¥184.77 ¥14.32 ¥19.19 ¥3.8100 ¥87.88 ¥3.52 ¥2.67 ¥0.0149

Fiscal 2015 actual, or

Fiscal 2016 targets¥1.00 ¥105.00 ¥139.00 ¥173.00 ¥15.36 ¥17.06 ¥3.4779 ¥83.21 ¥3.24 ¥2.38 ¥0.0134

Fiscal 2014 actual, or

Fiscal 2015 targets¥1.00 ¥97.31 ¥129.23 ¥151.76 ¥14.93 ¥15.84 ¥3.27 ¥77.74 ¥3.17 ¥2.31 ¥0.0126

Normalized Performance Indicators

14

Normalized net income = Income before income taxes + Amortization of goodwill ±Extraordinary profit/loss

*Net income adds back amortization of goodwill to income before income taxes but excludes non-recurring extraordinary income (expenses).

Normalized operating income = operating income + Amortization of goodwill

Normalized ROE = (Normalized net income /((Net assets at the beginning of the fiscal term+net assets at the end of the fiscal term)/2)>10%

Normalized ROA = (Normalized net income ±Extraordinary profit/loss) /(Net assets at the beginning of the fiscal term+net assets at the end of the fiscal term)/2)>7%

Normalized EPS = Normalized net income /Average number of issued shares during the fiscal term excluding treasury stock>¥100

Normalized PER = Sock price/(Normalized net income /Average number of issued shares during the fiscal term excluding treasury stock≒ 25 times

Normalized payout ratio = Dividends per share x Number of issued shares excluding treasury stock /Normalized net income>25%

march 1, 2016 to february 28, 2019 three years of change ...€¦ · 14/04/2016 · response to...

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